KHUSHAL SINGH Vs. ANTI RAM SHAH AND SONS

JUDGEMENT

(1.) This case raises a very simple point. A suit was brought for recovery of money due on a mortgage dated February 28, 1935. The interest provided for in the mortgage deed is only 3 per cent. The defendant, however, claimed that he was entitled to a reduction of interest from 1922 or at any rate from 1927. His contention found favour with the lower courts but a learned single Judge of this court allowed the appeal' and modified the decree passed by the lower court.

(2.) Lal Singh had a brother Chet Earn, and two nephews Khushal Singh and Prem Singh. On March 27, 1922, Lal Singh, representing his branch, and Khushal Singh, representing his branch, borrowed a sum of Rs. 2,000/- on a promissory note from one Anti Earn Sah. The family probably separated in between and on the January 10, 1927, the debt was split up into two halves and a fresh promissory note for half the amount i. e. Rs. 1,000/-, was executed by Lal Singh and his brother Chet Earn, and another promissory note for the other half, i. e. Rs. 1,000/- was executed by Khushal Singh and Prem Singh. The original debt of Rs. 2,000/- was borrowed at an interest of 15 per cent, per annum simple and the same rate of interest was fixed in the two promissory notes executed on January 10, 1927. After this splitting up of the debt into two in 1927, Lal Singh and Chet Ram became liable for Rs. 1,000/ only, which was the debt due from them, and Khushal Singh and Prem Singh became liable for the other sum of Rs. 1,000/-, which Was the amount for' which they had executed a promissory note. The loan of 1922 was thus split up into two fresh loans of 1927 (see Ketki Kuar v. Ram Sampt 1942 AWR (HC) 340 : A.L.J. 578 Lal Singh and Chet Earn renewed the promissory note of 10th January. 1927, by a fresh promissory note of 3rd February, 1931, for Rs 1.000, but the rate of interest was reduced from 15 per cent to 12 per cent. In 1934 Lal Singh died and a suit was filed against Chet Ram by the creditor, Anti Ram Sab, claiming recovery of Rs. 1,822/8 on the basis of the promissory note dated 3rd February. 1931, executed by Lal Singh and Chet Ram. Chet Ram repudiated his liability and urged that the money had really been borrowed by Khushal Singh and he was not liable under promissory notes of the 10th of January, 1927, and the 3rd of February, 1931. There was however, a compromise between the parties and on 28th February, 1935, Chet Ram sold certain properties to Khushal Singh and left the entire sale consideration in the hands of Khushal Singh to pay up the amount due under the promissory note of the 3rd of February, 1931. Khushal Singh, instead of paying the amount in cash, executed a mortgage deed on 28th February, 1935, in favour of the creditor. The suit was filed on the basis of this mortgage. The mortgage carried interest at only 3 per cent per annum compoundable, but in the plaint the claim was made for interest at the rate of 3 per cent simple only. It is not alleged that this rate was in any way in "excess of the rate provided for in the U.P. Debt Redemption Act. There is, therefore, no dispute so far as the mortgage in suit is concerned. The question raised, however, was whether appellant Khushal Singh could claim to reopen the accounts and ask for reduction of the interest payable under the promissory notes of 1922, 1927 and 1931. The decision of this question Would depend upon the decision of the point, whether on the 28th of February, 1935, Chet Ram had transferred the liability to Khushal Singh, After the liability under the promissory note of the 27th of March, 1922, was split up into two halves, Chet Bam and Lal Singh were responsible under the promissory notes executed by them, and Khushal Singh could not be said to be a co-debtor, or in any way liable for the amount due under the promissory note executed by Chet Ram and Lal Singh. There was clearly an innovation of contract between the debtors to which the creditor was also a party. Khushal Singh, though he may have been a co-debtor under the original debt of 1922, was not a co-debtor under the debt of 1927 and the transfer of the liability to him was the transfer of liability to a stranger within the meaning of Section 2 (9) of the U P. Debt Redemption Act. The decision of the learned single Judge was, therefore right.

(3.) The appeal has no force and must fail. It is dismissed with costs.