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Allahabad High Court
Lachmi Narain Sahu vs Sheikh Abdul Sattar And Anr. on 12 January, 1910
Equivalent citations: 5 Ind Cas 285
Bench: J Stanley, Banerji


1. The suit oat of which this appeal has arisen was brought by the plaintiffs to enforce specific performance of an alleged agreement for the sale of certain immovable property, and in the alternative for the recovery of money allowed to be due to them on foot of two mortgage bonds, one of the 12th of March 1892 and the other of the 1st of “December 1896. The two mortgage bonds were executed by Kandhaia Sahu, father of the appellant Lachhmi Narain Sahu. The plaintiffs alleged that he (Kandhaia Sahu), agreed to sell them half of the property comprised in the mortgages but failed to perform his contract. The defence set up was first as regards the alleged sale that there was no contract of sale whatever entered into between the parties. As to the bonds sued on. It was alleged that there was no consideration whatever for the bond of the 1st of December 1896; and as to the other bond the defence was that after the execution of the mortgage an agreement was made between the parties whereby the mortgagees entered into possession, and received the rents and profits of the property for the purpose of satisfying the mortgage debt, and that, they did out of the rents and profits satisfy the entire debt.

2. The lower Court found that there was no agreement for sale as alleged by the plaintiffs and dismissed the claim so far as regards the alleged sale. It also found that the consideration mentioned in the bond of the 1st of December 189P was not paid and consequently the suit in respect of that bond failed. It also came to the conclusion that no such agreement, as was set up by the defendants for possession and receipt of the rents and profits by the mortgagees, was ever entered into, and that as to the bond of the 12th of March 1892, the plaintiffs were entitled to recover the principal sum due on it, as also interest from the date of the bond.

3. The present appeal has been preferred by the defendant Lachmi Narain Sahu and two grounds of appeal only have been discussed before us. The first is that in view of the language of the hypothecation bond of the 12th of March 1892 interest is not chargeable against the defendant. The second ground is that the evidence conclusively establishes the alleged agreement for possession and that the mortgagees entered into possession of the property and received the rents and profits and satisfied thereout the mortgage debt.

4. In regard to the first question, namely the question of interest, the mortgage bond (which is No. 4 A of the record) contains the following covenant on the part of the mortgagor. “I agree and covenant in writing that I shall repay in full the said loan without interest in 3 years,” and later on after the hypothecation of the mortgaged property we find this passage: “If I, the executant, fail to pay the principal amount on the date promised, the creditors shall be at liberty to realise the principal amount due to them without interest from the property hypothecated in this document.” From this language we gather that the agreement between the parties was that interest should not be chargeable on the mortgage debt. The Court below, however, gave the plaintiffs a decree for interest apparently relying upon the provisions of Act No. XXXI of 1839. This Act enables a Court, if it shall think fit, to allow interest to a creditor at a rate not exceeding the current rate of interest upon all debts from the time when such debts became payable. In this case the mortgagee contracted himself out of the benefits of that Act by agreeing to the terms of the mortgage to which we have referred. There is nothing to prevent a party from waiving or agreeing to waive the benefit or advantage of a law or rule made solely for the benefit or protection of the individual in his private capacity and which may be dispensed with without infringing on any public right or public policy. An agreement by a mortgagee to lend money without the reservation of interest is not an infringement of any public right nor is it contrary to public policy Therefore, we think that in view of the express contract of the parties the Court below ought not, despite the terms of the contract, to have decreed interest in favour of the mortgagees. We must, therefore, in regard to this portion of the decree modify it, by allowing interest on the mortgage debt from the date of the institution of the suit only, namely, the 11th of March 1907.

5. As regards the remaining question, the only evidence before us in support of the allegation that the mortgagees entered into possession of the mortgaged property is that of several witnesses who alleged that they were present when such an agreement was entered into. There is no writing or document evidencing it. We have as against the evidence of these witnesses a number of receipts for years ranging from 1897 to 1907, which show that the rent was paid to and received by Shaikh Nasir Ali, who was the agent of the mortgagor, Kandhaia Sahu or by him and Kandhaia Sahu himself. These receipts are either signed by Nasir Ali as agent of Kandhaia Sahu, or are signed by both Nasir Ali and Kandhaia. In addition to this, we have on the record extracts from a dastur dehi of one of the villages in dispute, in which it is in express terms stated that Lachmi Narain Sahu collected the rents from the tenants in respect of the entire holding. This village paper is signed by Lachmi Narain, who attested it before the Settlement Officer, on the 3rd of September 1902. In view of this document and of the receipts, weight can not be given to the evidence of strangers to the parties, who deposed to the alleged verbal agreement. In addition to the receipts and the dastur dehi, there is also the fact that the mortgage deed was not returned to the mortgagor as would presumably have been done if the mortgage had been satisfied. Therefore, as regards this portion of the appeal it is without force and fails.

6. The result is that we vary the decree of the Court below in the matter of interest and allow interest on the principal sum due at the rate of 6 per cent, per annum from the 11th of March 1907 only to the date of payment. We direct that the amount due for principal and interest shall be calculated accordingly in the office and a decree passed for that amount and costs, if any, conformably to Order 34, Rule 4, of the Code of Civil Procedure We extend the time for payment of the amount so to be ascertained up to the 1st of July next. The parties will pay and receive costs proportionate to failure and success in both Courts. The costs of this Court will include fees on the higher scale.

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