IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated: 25/03/2004
Coram
The Honourable Mr. Justice T.V. MASILAMANI
C.R.P.(NPD)No.1474 of 1998
M/s.Central Bank of India,
rep. by its Branch Manager,
Virudhunagar. .. Petitioner
-Vs-
1. J. Maria Jesu Kennady
2. J.Anthoniammal
3. R. Madasamy
4. Margaret @ Margaret Mary
5. R.M.Selvaraj
6. Amuthapushpam
7. Inbakkani
8. R.M.Ganesan
9. M.Mareeswari
10.R.M.Nagarajan
11.R.M.Anantharajan
12.M.Chitra Devi .. Respondents
Civil Revision Petition against the fair and decretal orders dated 5
.8.1997 in I.A.No.305 of 1997 in O.S.No.196 of 1996 on the file of the
Subordinate Judge, Virudhunagar.
!For Petitioner : Mr.T.V.Sivakumar
^For Respondents : N.A.
:O R D E R
The revision petition is filed challenging the fair and decretal
orders passed by the Subordinate Judge, Virudhunagar in I.A.No.305 of 19 97 in
O.S.No.196 of 1996 dated 5.8.1997.
2. The revision petitioner is the nationalised bank and as plaintiff,
the bank filed the said suit on the file of the Subordinate Judge,
Virudhunagar for recovery of the mortgage money due from the
respondents/defendants on the basis of the registered mortgage deed executed
by the defendants in favour of the plaintiff for a sum of Rs.7,50,600 -85 with
interest and costs. A preliminary decree was passed on 13.1 1.1996 wherein
the Pleader’s fees had been calculated as per Rule 3(2 )(a) of the Legal
Practitioners Fees Rules, 1973 and a sum of Rs.10,0 56/- towards senior
advocate’s fees and Rs.3,352/- as Junior advocate’s fees had been taxed as per
the cost memo filed by the plaintiff, even though a sum of Rs.16,656/- and
Rs.5,559/- had been claimed by the plaintiff towards the fees payable by the
defendants to the senior advocate and the junior advocate respectively. Hence
the revision petitioner was constrained to file the said application to award
the schedule fees in accordance with the provision under Rule 3(2)(b) of the
said Rules. The learned Subordinate Judge having analysed the facts and the
provisions of law dismissed the application. Hence, the revision.
3. The learned counsel for the petitioner has argued at the outset
that the trial Court was not correct in holding that the legal practitioner’s
fee in this case has be calculated under Rule 3(2)(a) which is applicable only
with regard to suits for money based on negotiable instrument and loan.
Moreover, he has contended that the proper provision is Rule 3(2)(b) which is
applicable to the suits based on mortgage deed. He has also pointed out in
this connection that the procedure followed by the Subordinate Courts in this
regard is not uniform and therefore it has become necessary to decide whether
the advocate fees taxed by the Court below is in accordance with the said
Rules.
4. It is essential to extract Rules 3(2)(a) and (b) of the Legal
Practitioners’ Fees Rules, 1973 to appreciate the question involved in this
case as under:-
“In Courts Subordinate to the High Court, in suits for money, effects
or other personal property or for land or other immovable property of any
description, fees to legal practitioners shall be payable on the following
scale:-
(1) .. ..
(2) Original Suits:-
(a) for money based on negotiable instruments and loans:-
.. ..
(b) Other original Suits not falling under sub-clause (a) of
clause (2).
.. .. ”
5. In this context, it is relevant to mention that the suit filed by
the revision petitioner was not based on a negotiable instrument and
therefore, it is essential to find out whether the suit was based on any loan
transaction as per the said Rules. In effect, the question for consideration
is whether the principal and interest secured under mortgage is a loan within
the meaning of the said term.
6. The dictionary meaning of the term ‘loan’ as given in “THE CONCISE
OXFORD DICTIONARY (10th Edition)is as follows:-
“A thing that is borrowed, especially a sum of money that is expected to be
paid back with interest; the action of lending.”
Similarly, P.RAMANATHA AIYER’s “THE LAW LEXICON” (2nd Edition 1997) defines
“loan” as follows:-
“Loan means a loan whether of money or in kind, and included any transaction
which is in the opinion of the Court, in substance a loan. Act X of 1918
(Usurious Loans), S.2(2)”
Again if one has to find out the nature of money being the subject matter of
loan, the LAW LEXICON provides the definition of “loan of money” as follows:-
“By a loan of money, is meant the delivery by one party … and the receipt
by the other party …. of a given sum of money, upon an agreement, express
or implied, to repay the sum loaned with or without interest.”
7. In this context, it is necessary to refer to the case law on this
point with reference to Section 2(2) of the Usurious Loans Act, 1918 so as to
find out whether the mortgage transaction falls within the meaning of the term
loan. Section 2(2) of the said Act defines ” loan” as follows:-
“‘Loan’ means a loan whether of money or in kind and includes any transaction
which is, in the opinion of the Court, in substance a loan.”
8. In case of usufructuary mortgage, it was held that the transaction
whereby the mortgage money was secured originally would not fall within the
definition of a loan under Sections 2 and 3 of the Punjab Relief of
Indebtedness Act, 1934 (vide) AIR 1996 PUNJAB & HARIYANA 60 (M/S.GOODWIL INDIA
LTD v. M/S.P.S.B. PAPER MILLS PVT LTD).
9. In another decision in AIR 1955 NUC (MAD) 3187 (VEDACHAL NAICKER
v. MAHADEVA MUDALIAR AND OTHERS), it was held as follows:-
“In order to constitute a loan it is not necessary that money should
be handed over by the lender to the borrower, but is essential that the lender
must find and part with his money and though he may not transfer it to the
borrower must utilise it for the purpose of or on behalf of the borrower or at
his instance.
There is a distinction between a loan and a debt. The meaning of debt
is that what is due from one person to another that is a thing owed whereas
loan is that what is lent, i.e., what is given in the shape of money or of
money value.”
Similarly, it was held in the judgment rendered by a Division Bench of Patna
High Court in AIR 1941 PATNA 233 (BHULAN PRASAD v. RUP NARAIN) as follows:-
“Security bond for future contingent liability is not a loan.”
10. On the contrary, the mortgage is defined under Section 58(a) of
the Transfer of Property Act, 1882 as follows:-
“A mortgage is the transfer of an interest in specific immovable property for
the purpose of securing the payment of money
advanced or to be advanced by way of loan, an existing or future debt, or the
performance of an engagement which may give rise to a pecuniary liability.
The transferor is called a mortgagor, the transferee a mortgagee; the
principal money and interest of which payment is secured for the time being
are called the mortgage-money, and the instrument (if any) by which the
transfer is effected is called a mortgage-deed.”
Hence, it is clear from the said definition that the principal money and
interest secured under the mortgage are called the mortgage money and unlike a
loan, the mortgage deed with reference to such transaction of lending must be
registered so as to satisfy the requirement under law.
11. Similarly, the money advanced or to be advanced by way of loan,
an existing or future debt, or the performance of an engagement which may give
rise to a pecuniary liability may form part of the consideration in respect of
a mortgage, but, on the other hand, the loan transaction need not necessarily
be entered into by means of a registered document.
12. In QUARREL v. BECKFORD (1 MAD 278), while defining a mortgage,
it was held as follows:-
“Everybody knows, it consists of two things: it is a person contract
for a debt secured by an estate; and in equity, the estate is no more than a
pledge or security for the debt :- the debt is the principal; the Estate is
the security. Whether the mortgagee is, or is not, in possession of the
pledge his right is precisely the same, with this difference, indeed, that he
has never any right in equity to the estate except as a fund to pay him his
debt; for every other purpose the estate is the estate of the mortgagor, and
when the debt is paid all the mortgagee’s right and interest in the estate
ceases.”
13. Similarly, it is essential to point out that in the illustration
(d) to Section 37 of the Indian Easements Act, 1982, a case is cited as
follows:-
“A mortgages Sultanpur to B, and lawfully imposes an easement on the land in
favour of C in accordance with the provisions of Section 10. The land is sold
to D in satisfaction of the mortgage debt. The easement is not thereby
extinguished.”
Section 37 of the said Act provides for the extinction by dissolution of right
to servient owner as follows:-
“When, from a cause which preceded the imposition of an easement, the
person by whom it was imposed ceases to have any right in the servient
heritage, the easement is extinguished.
Exception: Nothing in this section applies to an easement lawfully
imposed by a mortgagor in accordance with Section 10.”
A careful perusal of the dissimilarities between a loan transaction and the
mortgage referred supra would indicate that the transaction under a mortgage
deed cannot at any stretch of imagination be termed as loan.
14. Above all, the contention of the learned counsel for the revision
petitioner is that under Order 34 Rule 4 and 5, Civil Procedure Code
contemplates preliminary decree and final decree in the suits filed by the
plaintiff for recovery of the mortgage money by selling the hypothica and
therefore he has urged that the Legal Practitioner’s work is more onerous in
the case of mortgage in relation to a suit based on negotiable instrument and
loan. Therefore, he has urged that the Pleader’s fees should commensurate
with the volume and quality of the expertise put in the respective cases by
the Legal Practitioners and if that be so, the suit based on a mortgage should
necessarily fall under Rule 3(2)(b) of the Legal Practitioner’s Rules, 1973.
15. Having regard to the above reasons on the aspect of the matter
under consideration, this Court is of the considered opinion that the proper
Rule to be invoked in this case should be rule 3(2)(b) of the said Rules. The
opinion of this Court is further supported by the High Court Original Side
Rules 1956 under Order V Rule 1(2)(c), in that the fee structure is more or
less similar to that of the one adumbrated under Rule 3(2)(b) of the Legal
Practitioners Fees Rules, 1973. For the above said reasons, the Civil
Revision Petition has to be allowed setting aside the impugned order.
16. Thus, the Civil Revision Petition is allowed. However, there
will be no order as to costs. The trial Court is directed to amend the decree
in the light of the observations in this order.
Index: Yes
Website: Yes
dpp
To
1. The Subordinate Judge, Virudhunagar.
2. The Section Officer, V.R.Section, High Court, Madras.