PANAGANTI RAMARAYANIMGAR Vs. SRI RAJAH VELUGOTI GOVINDA KRISHNA YACHENDRA BAHADUR VARU, MAHARAJAH OF VENKATAGIRI

JUDGEMENT

(1.) This is an appeal from a decree of the Subordinate judge of North Arcot in a suit for redemption brought by the 1st plaintift as assignee of the mortgagor, the Rajah of Kalahasti, now impleaded as the 3rd defendant against the 1st defendant who is the assignee of the original (mortgagee the Rajah of Tuni. The mortgage deed Exhibit A provided for an advance of 11 lakhs on a usfructuary mortgage of the properties comprised in Schedules A, B, C and D, but the Schedule D property may be disregarded as it is of small value and was only included with a view to registration in the District in which it is situated. Decrees for sale had been obtained by mortgagees against the properties comprised in Schedules A, B and C and the properties comprised in Schedules B and C had actually been sold by mortgagees, but proceedings were pending as to setting aside the sales. In the case of the Schedule C properties the sales were not ultimately set aside and the advance of six out of eleven lakhs which was to be contingent on setting aside the sale was never made, and we have no concern with them. Of the remaining 5 lakhs the recital shows that Rs. 2,50,000 was to be applied for the satisfaction of the decree against the A Schedule properties and 2,50,000 was to be retained by the mortgagee and applied partly in payment into court of the entire debt due by the mortgagor under the decree of O.S. No. 7 of 1899 by which the 23 villages included in B Schedule had been ordered to be sold. At the date of the mortgage the villages had been sold, but the sales had been set side and an appeal against the order setting them aside was then pending and subsequently was successful. The balance of the Rs. 2, 50,000 was to be applied for the expenses of this litigation, and for the mortgagor s expenses. The mortgagee paid Rs. 1,93,617 into Court in satisfaction of the decree in O.S. No. 7 of 1899, and incurred certain expenses in connection with the litigation. There was a provision in the mortgage deed entitling the mortgagee, in the event of the sales being confirmed, to draw the amount deposited in Court by the auction purchasers, The sales were afterwards confirmed by consent of the mortgagor on 31st January 1911, and the mortgagees widow on 20th March 1911 sued to establish her right to the money deposited in Court by the auction purchasers, at the same time alleging that the consent given by the mortgagor to the setting aside of the sales was fraudulent. This suit was settled and an order, made for payment out, but it is disputed whether the money so drawn on 24th April 1912 was Rs. 1,81, 412, 10 or Rs. 1,80, 412, 10, Exhibit H 4.

(2.) In the present suit the plaintiff has sought to recover on this head not only the difference between the sum paid into Court and sum drawn out by him, namely, 1,20,000, and the expenses he incurred in connection with the litigation, but also the balance with interest of the Rs. 2,50,000 which was never advanced to the mortgagor at all, on the ground that it must be deemed to have been kept by the mortgagee at the mortgagor s disposal. The Subordinate Judge declined to deal with these claims as he considered that this sum of Rs. 2,50,000 was not charged on the Schedule A properties which it is now sought to redeem, but was the subject of a separate mortgage effected in the same instrument on the Schedule B properties. It is however expressly provided in the deed that the properties in the four schedules were mortgaged for the whole eleven lakhs, and were to be put in the possession of the mortgagees. Again there is provision that the five lakhs lent on the properties A, B and D schedules with which alone we are concerned were not to be paid for four years, namely, until 13th March 1913, and that if the " entire amount" was then paid the mortgagee was to put the mortgagor in possession of the properties. A different period of redemption, six years was fixed for the C Schedule properties if they come under the mortgage, and there was also a provision that if the sale of four other villages which had been confirmed was set aside, they should be mortgaged against an advance of the auction purchase money (about two lakhs) " in the same way as the villages mentioned in B Schedule herein." There is really nothing in these provisions when properly understood to cut down the plain words of the instrument by which the properties in the four schedules were charged in respect of the whole mortgage debt. The further fact, on which the Subordinate Judge relies, that the mortgagee s widow sued to establish her right to the money deposited in court has really no bearing on the question. We have therefore come to the conclusion that the decree must be modified by including in the mortgage debt the difference between the amount paid into court by the mortgagee and the amount drawn by him under Exhibit H 4 as also his expenses in connection with that litigation. As regards the balance, the mortgagor in his written statement in Original Suit No. 13 of 1911, dated 27th July 1911, Exhibit HI, alleged that the mortgagee had failed to pay Rs. 53,226-13-11 and that there had been a failure of consideration to that extent. It was not suggested that anything had been advanced to the mortgagor except the money paid into Court and the expenses of litigation, and as regards the balance we think there has been a clear failure of consideration and that the plaintiff is not entitled to recover.

(3.) The next question is whether compound interest is provided for. The mortgage is an anomalous mortgage as it stipulates that, in case of non-payment within two years of the period prescribed for payment and six years from the date of the mortgage, interest is to run at 1 Rupee per mensem, as to which the rents and profits are to be reckoned at 10 annas. "Further it is agreed that in the event of a failure to pay the mortgage money within six years as per the terms of the document you shall enjoy the income of the lands in respect of 10 annas out of the 1 Rupee per mensem payable by us for interest and that as regards the additional six annas we (that is the mortgagors) shall add it to the principal and pay it on the security of the mortgaged properties . It is said for the mortgagee that the intention was that the interest being added to the principal should bear interest as such. Effect may be given to the provision about adding the interest to the principal by holding that it was intended not only to negative any liability on the part of the mortgagor to pay interest as it fell due, but also to prevent redemption without payment of the interest. There is no provision for annual rests and compound interest would have to be allowed with monthly rests if at all. Seeing that this additional six annas is a penal post dem rate, I think it would be going too far to infer an agreement to pay compound interest from the language of the instrument.