C VARADARAJULU NAIDU Vs. BABY AMMAL

JUDGEMENT

(1.) THIS appeal is by the first defendant in the; suit O. S. No. 97 of 1959, Sub court, Vellore, objecting to the preliminary decree passed against him on foot of a mortgage admittedly executed by him. The objection relates only to the) interest payable and is based upon the fact that he is an agriculturist entitled to relief under Madras Act IV of 1938.

(2.) THE two defendants in the suit (the appellant and the second defendant)executed two simple mortgages for Rs. 7900 and Rs. 9000 on 19-2-1953 and 7-41953, respectively. On the date of the first mortgage a portion of the hypotheca was leased to the plaintiff mortgagee. The mortgage bonds stipulated that interest should be paid at 12 per cent per annum. There are covenants in the two mortgages authorising the mortgagee to deduct the interest payable as per the terms of the mortgage from the lease amount due from the mortgagee to the mortgagors. These covenants have been fully set out in the judgment of the learned Principal Subordinate Judge and they need not be set out over again in this judgment. The plaintiff's case, is that as per the authorisation in the two mortgages, Exs. A. 1 and A. 2, she has been appropriating the interest upto 1312-1959, the date of the institution of the-suit. She issued a notice on 21-111959, on the eve of her instituting the suit, under Ex. A. 3, in which she states that all interest due and payable by the mortgagors has been appropriated in accordance with the agreement between the parties and that the balance of Rs. 16,900 the principal is due. She demands from the defendants payment of that amount with subsequent interest till the date of payment.

(3.) THE main defence put forward by the defendants was that they were not liable to pay interest beyond the statutory rate fixed by Madras Act IV of 1938 they being agriculturists, that the appropriation made by the plaintiff mortgagee at the rate of 12 per cent adjusting the interest towards the lease amount would not be proper and would not bind them and that the plaintiff mortgagee was not entitled to recover anything more by way of interest than 5 1/2 per cent.