MADHAVI Vs. YAGNESWARA IYER

JUDGEMENT

(1.) This Second Appeal is in a suit by the respondents and by their deceased father, the first plaintiff, for damages suffered by them by way of costs decreed, in defending the litigation O. S.13 of 1956. They had executed a mortgage for five properties for Rs. 9000 in the year 1948. On the 10th September, 1955, they sold two of the properties to the defendant appellant by Ext. B1 for Rs. 4300/-, reserving Rs. 4000/- with her, to be paid to the mortgagee out of Rs. 6235 due under the mortgage. It is the case of the appellant, that the mortgagee did not accept such partial payment of Rs. 4000. The appellant then caused two notices, Exs. B-3 and B-5, both dated the 2nd December, 1955, to be issued to the vendor and to the mortgagee respectively. By Ex. B-3, the appellant called upon the venders, either to discharge the mortgage themselves or to pay the balance of the amount to the appellant and by Ex. B-5, the appellant intimated the mortgagee, that the amount of Rs. 4000 was available for immediate payment and that therefore she is no more liable for interest. The mortgagee did not reply to Ex. B-5, which, as seen from the endorsement of the postman made on it, was refused, but Ex. B-4 the reply dated the 13th December, 1955, to Ex. B-3 stated, that the vendors were not liable to pay the amount in lump because of the provisions of Madras Act 1 of 1955, and that the appellant may therefore proceed to deposit in court the amount left with her. Act 1 of 1955 had come into force on the Ist March 1955, that is before Ex. B-l. O.S. 13 of 1955 was commenced by the mortgagee on the 20th February, 1956, for the realisation of the mortgage amount in full, impleading the vendors as defendants 1 to 3 and the appellant as the 6th defendant. The appellant is seen to have deposited about Rs. 4000 in that court on the 9th July, 1956. In that suit, the vendors claimed the benefits of Act 1 of 1955 and a decree was passed, conferring on them such benefits with respect to the balance that remained payable; costs of the suit were also decreed against the vendors and the appellant, but their liability inter se was left open. It is this decree for costs that has occasioned the present suit.

(2.) The appellant contended that she had properly tendered the amount reserved to the mortgagee, but that the latter did not accept payment, that contemporaneously with Ex. B-1, the vendors had orally undertaken to obtain a release of the mortgage, by themselves making good the balance of the amount payable, but had failed to perform the undertaking, and that in any event the appellant is not liable. The first court dismissed the suit, but in appeal the District Judge held that the appellant had occasioned the suit by the mortgagee, by her failure to avail herself of the provisions of Madras Act 1 of 1955 and is therefore liable. This decree is assailed by the appellant before us.

(3.) There was a contention before us on behalf of the appellant, that the costs of the litigation by the mortgagee, was not within the contemplation of the parties at the time of the sale to her. Ext. B1 recited, that while the sum of Rs. 6235/- was payable under the mortgage, the appellant was to make payment only of Rs. 4000; this necessarily implied that the balance was to be made good by the vendors. In this view, the sale may be deemed to be free of the mortgage, the vendors themselves raising Rs. 4000 by Ext. B1 and leaving that sum with the appellant, the balance having to be found by them. So long as the mortgagee was not paid in full, the costs of the suit by the mortgagee to enforce the mortgage are, in our opinion, "such as may reasonably be supposed to have been in the contemplation of both the parties at the time they made the contract as the probable result of the breach of it", to quote the rule in Bailey v. Bermadale (See Pollock and Mulla's Contract Act, 8th edition, page 480). We overrule this contention.