KESAVA BHAGAVATHAR Vs. VARDAYYA BHAGAVATHAR

JUDGEMENT

(1.) THE plaintiff is the appellant. The suit was on a mortgage to recover a sum of rs. 9,035. The mortgage was executed on 5-8-1966 by defendants 1 to 3 in favour of the plaintiff for a sum of Rs. 6,500. The 4th defendant purchased the property from defendants 1 to 3 under a registered sale deed date 27-8-1969 for a sum for Rs. 9,750. In defence to this suit on mortgage, the 4th defendant contended that out of the sale consideration of Rs. 9,750, he was directed to pay a sum of Rs. 6,500 to the plaintiff and that it was represented to him that only that much amount was due. He accordingly paid the amount on 29-8-1969 and got an endorsement of payment in the mortgage deed itself and the cancelled mortgage deed was taken delivery of by him along with other documents of title. The plaintiff stated in the plain that at the time of the sale transaction, the defendants required the mortgage deed to be given to them undertaking to discharge the mortgage out of the sale consideration. Since the first defendant was his brother and he had confidence in the 4th defendant, he gave the original mortgage deed to the defendants. But taking advantage of the custody of the original deed, the 4th defendant had forged an endorsement of discharge on the back of it. Both the courts below after consideration of the evidence came to the conclusion that the endorsement of discharge on the original mortgage deed was made by the plaintiff on receipt of a suit of Rs. 6,500 and that the entire mortgage had been discharged. In that view, the suit was dismissed. In this second appeal, though the learned counsel could not challenge the finding that the endorsement was signed by the plaintiff, he advanced an argument that the endorsement, in so far as it stated that the plaintiff had waived the interest, is inadmissible in evidence for want of registration and that at best the defendants could get credit for the payment of a sum of Rs. 6,500 and for the balance amount, he would be entitled to a decree. On the other hand, the learned counsel for the respondents contended that the waiver of the interest is not the one that discharges the mortgage, but it is the payment of the sum of Rs. 6,500 that discharges and that, therefore, the endorsement does not require any registration at all.

(2.) THE endorsement of discharge on the original mortgage deed stated that remitting the interest up to date out of grace, a sum of Rs. 6,500 was received towards principal and the mortgage has been discharged and the document handed over to the 4th defendant. This endorsement is not registered. Under S. 17 (1) (b) of the Registration Act, any non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, of the value of Rs. 100 and upwards to or in immovable property shall be registered and under S. 49 unless it had been registered, it cannot be received as evidence of any transaction affecting such immovable property. The question for consideration is whether the endorsement limits or extinguishes any rights, title or interest in immovable property so as to make it inadmissible in evidence for want of registration.

(3.) NUMBER of cases have come up for consideration and the Supreme Court had to consider a similar question in the decision reported in Kashinath Bhaskar v. Bhaskar Visweshwar, In that case, there was an agreement between the mortgagor and the mortgagee between subsequent to the execution of the mortgage in view of certain circumstances, for reduction of the rate of interest in respect of one mortgage and an agreement to receive a lesser amount than that was due under another mortgage. The entire amount due as per this agreement was paid to the mortgagee. In spite of it, the mortgagee filed a suit for the recovery of certain sums of moneys as being due as per the original terms of the mortgage deed ignoring to give effect to the agreement. The defence was that there was full satisfaction of the mortgage. The main evidence on which the defendant relied to prove satisfaction was the agreement and the payment of the money as per the agreement. The agreement was not registered. The Supreme Court had therefore to consider the question whether the agreement required to be registered and whether there was a discharge of the mortgage. The Supreme Court held that the agreement is a document which limits or extinguishes interest in immovable property within the meaning of S. 17 (1) (b) of the Registration Act, and since that has not been registered, payments made under that agreement could not be relied on as having effected a full discharge of the mortgage. The Supreme court further held--"one part of the 'interest' which a mortgagee has in mortgaged property is the right to receive interest at a certain rate when the document provides for interest. If that rate is varied, whether to his advantage or otherwise, then, in our judgment, his 'interest' in the property is affected. If the subsequent agreement substitutes a higher rate, then to the extent of the difference it 'creates' a fresh 'interest' which was not there before. If the rate is lowered, then his original 'interest' is limited. " the learned counsel for the respondents relying on Balasundara Naicker v. Ranganatha Iyer, 58 Mad LJ 503: (AIR 1929 Mad 794), contended that in the case where there is an agreement to waive interest or receive a lesser amount and give a discharge and the mortgagor paid the money as per the agreement it is not the agreement that limit or extinguishes the mortgage, but it is the payment as per the agreement that extinguishes the mortgage. If at all it is the agreement that will have to be registered, if it is in writing, and not the payment or the endorsement of payment.