MOHANLAL GANESHRAM Vs. GAJRAJSINGH BHILUSINGH

JUDGEMENT

(1.) THIS revision petition arises out of a suit filed by the applicant to recover Rs. 600/- advanced to Bhilusingh and his son Gajrajsingh. The present opponents are the legal representatives of Bhilusingh, who is now dead. The plaintiff's case is that on 13-2-1954, at the time of the loan transaction, Bhilusingh and Gajrajsingh executed a deed in his favour promising to repay Rs. 600/- after two years and giving possession of certain land to the plaintiff for appropriating the rent and profits thereof in lieu of interest on Rs. 600/-; and that he was put in possession of the land but was dispossessed after nearly two years. One of the pleas of the opponents in their defence is that the deed dated 13-21954 being a mortgage deed is not admissible in evidence as it is unregistered. The Civil Judge, Second Class, Kasrawad, who is trying the suit tried the question of the admissibility of the document as a preliminary issue and held that the deed in question is a usufructuary mortgage and does not contain any personal covenant to repay. Rs. 600/_ and that it is inadmissible even for the collateral purpose of proving the receipt of Rs. 600/- by the defendants. The plaintiff has, therefore, come up in revision to this Court.

(2.) IT is common ground that if the nature and the terms of the mortgage are such that it does not involve any personal liability to pay the debt, then the unregistered document cannot be received in evidence in a suit for the refund of the amount, and that if there is a personal covenant, it would be admissible in evidence. The question whether there is or is not a personal covenant to repay is a matter of construction of the terms of the deed. Mr. Sanghi, learned counsel for the applicant, relying on Maharaja Ramnarain singh v. Adindra Nath Mukherji, AIR 1916 PC 119 and on certain observations in mahomed Haji Wall Mahomed v. Ramappa, AIR 1929 Nag 254, argued that a loan prima facie involves a personal liability, that the nature and terms of the security may negative any personal liability, and that though in a usufructuary mortgage there is no personal liability express or implied, yet if in a usufructuary mortgage-deed there is a clause by the borrower promising to repay by a particular time, that would import a personal liability to pay in such a mortgage. It was said that by the deed in question, the plaintiff was given a right to appropriate the pro-fits of the land in lieu of interest, that in the deed there was no provision as to how the amount of Rs. 600/- would be paid, and that the borrowers did not bind themselves to pay Rs. 600/- out of any mortgaged property or fund but by the insertion of the clause in the deed that vkids pqdrs lky nks esa ns nsosxsa o gekjh tehu ge okohl ys ysosaxs** they undertook a personal liability to pay the amount. I am unable to accede to the argument of the learned counsel for the applicant that the deed contains a personal liability to pay the mortgage debt. The Privy council has no doubt laid down in AIR 1916 PC 119 (i) that a loan prima facie involves a personal liability (ii) that such a liability is not displaced by the mere fact that security is given for repayment of the Joan with interest, but (iii) that the nature and terms of such security may negative any personal liability on the part of the borrower. But as pointed out in the Full Bench decision in AIR 1929 Nag 254, this does not mean that every mortgage includes a personal covenant to repay the money lent unless it is negatived expressly or by necessary implication by the terms of the bond or the circumstances of the case. By observing that a loan prima facie involves a personal liability, but the nature and terms of such security may negative any personal liability on the part of the borrower, the Privy Council emphasized the fact that it is the nature and the terms of the security that ultimately determine the existence or absence of any personal liability. In AIR 1916 PC 119, their Lordships dealt with the case of a usufructuary mortgage in which the mortgagor had covenanted that if for any reason the rent fell short of the loan advanced, the mortgagee could recover the deficit from the mortgagor. It was contended on behalf of the mortgagee that this assurance on the part of the mortgagor amounted to a personal covenant to pay and the High court had held that the deed did create a personal covenant or at least did not negative it. The Privy Council rejected this contention that the deed contained any personal covenant to pay. The view that the personal liability of the borrower to repay the loan depends upon the nature and terms of the security was reiterated by the Privy Council in another case reported in Maharaj Ram Narayan Singh v. Adhindra Nath Mukherji, AIR 1916 pc 169. In that case also it was suggested on behalf of the mortgagee that a personal covenant to repay the money lent exists in every mortgage transaction unless it is negatived expressly or by necessary implication by the terms of the bond or the circumstances of the case. Repelling this argument, the Privy Council observed :

(3.) NOW, in the instant case the document sought to be admitted in evidence stated that the lender would be enjoying the rents and profits of the land in lieu of the interest on Rs. 600/-, that the borrower would pay after two years Rs. 600/-in a lump sum and take back the land, and that in case he failed to repay Rs. 600/even after two years then the creditor would continue to enjoy the profits of the land in lieu of interest till the amount of Rs. 600/- was paid, in my opinion, these terms do not import a personal covenant to pay Rs. 600/ -. They merely give the borrower an option of paying Rs. 600/-and redeeming the property. A mere promise to pay does not import a personal liability for such a covenant is to be found in every form of mort-gage. The essential thing to see is whether the covenant creates a legal obligation which does not merely give the borrower the option of paying the loan amount and redeeming the security but also confers on the mortgagee a right enforceable against the mortgagor to realise his money otherwise than out of the mortgage security. In Mulla's Transfer of Property Act, (fourth edition) it has been stated at page 443 that