MOHARAJA RAM NARAIN SINGH Vs. ODINDRA NATH MOOKERJEE

JUDGEMENT

(1.) This appeal is directed against the preliminary decree in a suit for recovery of money. The circumstances under which the suit was commenced by the plaintiffs-respondents have not formed the subject of controversy in this Court. On the 14th April, 1896, Jadu Nath Mukerjee, the predecessor of the plaintiffs, advanced to the defendant by way of loan a sum of one lac and thirty thousand rupees, to bear interest at the rate of seven and a half per cent, per annum. The loan was intended to be secured by a mortgage, the mortgagee to be placed in possession of various properties of the defendant, and to apply the profits thereof in satisfaction of his dues A usufructuary mortgage-deed was drawn up and executed by the defendant; but for reasons about which we need not speculate, the instrument was not duly attested by two witnesses. The document was registered on the 10th June 1896, and the creditor took possession of the properties mentioned therein. He continued in possession up to the time of his death and thereafter the plaintiffs entered into occupation as his representatives in interest. The case for the plaintiffs in substance is that by reason of the interference of the defendant, and his otherwise unjust acts and conduct, they could not realise from the properties in their possession the sums which it was assumed in the document of the 14th April, 1896, could be collected from year to year. They, therefore, commenced the present action on the 13th January, 1909, for recovery of one lac, fifty-seven thousand, nine hundred and eighty-five rupees as the sum still due to them. The defendant did not repudiate the transaction, but contended that the suit had not been properly framed; that the claim was barred by limitation, and that, in any event, the instrument had not created any enforceable charge on immoveable properly. On the merits, the deferdant denied the truth of the allegations in the plaint, and pleaded that the debt had been satisfied from the usufruct. The Subordinate Judge raised ten issues, same of which, at any rate, were superfluous. He discussed the pleas in bar, overruled them as untenable, and referred to a Commissioner the trial of the questions on the merits. Upon the present appeal, the preliminary decree of the Subordinate Judge has been assailed on three grounds, namely: fir it, that the suit, as framed, is not maintainable; secondly, that the claim is barred by limitation, and thirdly, that the Subordinate Judge ought not to have delegated the trial of the suit on the merits to a Commissioner. No cross-objections have been preferred on behalf of the plaintiffs respondents against the conclusion of the Subordinate Judge that the document was inoperative as a mortgage, and did not create any charge on immoveable property.

(2.) In support of the first two grounds which are closely connected and may be considered together, it has been urged that the plaintiffs were bound to sue for damages, and that if time is taken to run from the successive dates when the plaintiffs suffered loss by reason of the alleged misconduct of the defendant, the claim is barred by limitation. To test the force of this objection, we must examine the provisions of the deed of the 14th April, 1896. The document recites that Rs.1,30,000 was borrowed by the defendant Mahajan, and that, for the re- payment of the said loan, principal with interest, the creditor was to be placed in possession of properties up to the end of Pous, 1959, Sambat, which corresponds with the 13th January, 1903. Lists were appended to the document of the properties of which the creditor was to be in possession from year to year. It is desirable to mention that the creditor was to be placed in possession of one set of properties from the very first year, of another additional set from the beginning of the next year, and in the same manner, of further sets of properties from the beginning of the third and fourth years. The names of the tenants and the amounts recoverable from each of them were stated in detail. An account was also annexed to indicate how the debt was to be reduced from year to year, with the result, that on the 13th January, 1903, not only would the debt stand completely wiped out but there would be a balance due to the Maharaja to the extent of Rs. 230. The deed contained a provision that the creditor would be entitled to realise arrears of rent by institution of suits in his own name, but that, if any tenant was ejected, a new tenant could be inducted upon the land by the Maharaja at his pleasure, or he might occupy the land himself, with the result that the creditor would receive his dues from the new tenant or the Maharaja, as the case might be. The deed further provided, that if any excess collection was made by the creditor, the money would be refunded to the Maharaja year after year; while if the rent decreased in any village, the creditor would be entitled to the deficiency from the Maharaja. The deed also contained a covenant, that during the term, the debtor might at any time, upon payment of whatever was due, take back possession of the properties, and that, in any event upon the expiry of the term, he would be entitled to possession. The allegation of the plaintiffs is that, though they were in possession as provided in the deed, the debt has not been satisfied by reason of four circumstances, namely, first, that upon the death of some of the tenure-holders, the defendant himself entered into possession and prevented the collection of rents by the plaintiffs: secondly, that the rents realisable in respect of some villages were in fact less than the amounts mentioned in the schedule to the document: thirdly, that the defendant and his father had in some instances collected rents in advance, so that the plaintiffs could not realise as much as was mentioned in the document: and fourthly, that in the case of other villages, upon the ejectment of tenants in default, the defendant took possession, but n8ither satisfied the rent decrees, nor paid the subsequent rents. The plaintiffs have attached to the plaint a detailed specification of the properties comprised in each of these classes, and their claim is for recovery of the unsatisfied balance of the debt due to them. In answer to this claim, it is argued on behalf of the defendant, that as there was no personal covenant, the defendant cannot be held liable upon the document that at best the plaintiffs can only claim damages which must be deemed to have accrued on each several occasion, when the plaintiffs found themselves unable to collect the sums mentioned in the document, and that, treated from this point of view, the claim is barred by limitation. In our opinion, these contentions are untenable. As was pointed out by this Court in Ethel Georgina Kerr v. Clara B. Ruxton 4 C.L.J. 510 every loan implies a promise to re-pay, and an unqualified admission of indebtedness is equivalent to an express covenant and creates a personal obligation. In the case before us, the Maharaja took by way of loan a large sum of money; that, obviously, implied a personal obligation to repay the loan. No doubt, a mode of payment was prescribed, but it cannot be suggested that the creditor was limited to that mode alone, even if it was found insufficient to satisfy the debt. The case, therefore, does not fall within the principle laid down by the Judicial Committee in Narotam Das v. Sheo Pargash Singh 11 I.A. 83 : 10 C. 740 and Kalka Singh v. Paras Ram 22 I.A. 83 : 10 C. 740. As pointed out in Parbati Charan v. Gobinda Chandra 4 C.L.J. 246 the cases just mentioned merely lay down that if there is a covenant and an agreement to pay which is not absolute, but qualified in its terms for instance, if there is a covenant to pay only in a particular manner or out of a specified fund, it does not create the relation of creditor and debtor as upon a simple loan of money. The case before us is of an entirely different description. The document provides a mode of payment of the debt, but expressly lays down that the debtor would be responsible for any deficiency. In our opinion, the suit can well be maintained as upon a personal obligation to repay the money borrowed.

(3.) The question next arises whether the claim or any portion thereof is barred by limitation. As pointed out in Ethel Georgina Kerr v. Clara B. Ruxton 4 C.L.J. 510 a suit to recover money due on a registered bond is a suit for compensation for the breach of a contract in writing registered within the meaning of Article 116 of the second Schedule of the Limitation Act: that view accords with the earlier decisions in Nobocoomar v. Siru Mullick 6 C. 94 and Husain Ali v. Hafizali 3 A. 600. It is clear that Article 116 has to be read along with Article 115, and the time within which the suit must be instituted is six years from the date when the contract is broken, or where there are successive breaches, from the date of the breach in respect of which the suit is instituted, or where the breach is continuing, from the date when it ceases. It has not been suggested on either side, that the present case can be brought within the third division of the Article, which may, therefore, be at once dismissed from consideration. The real question is, within which of the other two divisions, this case falls. On behalf of the plaintiffs- respondents, it has been argued that the contract was that the entire debt would be re-paid within the 13th January, 1903, that the contract was broken, when upon that date the debt still remained unsatisfied in part, and that consequently six years ought to run from that date. On behalf of the defendant-appellant it is argued, on the other hand, that the contract was that a specified sum would be paid out of the income of certain properties at prescribed times towards the satisfaction of the debt, and that whenever the plaintiffs found it impossible to collect the sums mentioned at the appointed time, there was a breach of contract with the result, that time ran from the date of each successive breach. We are unable to accept the latter contention as well founded. The document must be construed as a whole, and the situation of the parties determined from all its terms. The document plainly indicates that the debtor was to be allowed seven years for the re-payment of the loan, and that if the debt remained unsatisfied at the end of that period, the plaintiffs might recover damages for breach of contract. It could never have been intended that upon failure of the plaintiffs to realise from a tenant the sum assumed in the deed to be payable by him in a particular year, they would at once become entitled to institute a suit for the recovery of the specific sum from the Maharaja. That would imply that the parties contemplated the possibility of numerous isolated suits during the term of seven years. There is no Clause in the deed which compels us to impute such an extraordinary intention to the parties concerned. On the other hand, the plaintiffs might, so long as they were in possession, collect in one year what had remained unpaid during the preceding year; the position would necessarily be of this description in all cases where the plaintiffs might institute suits for arrears of rent as they were authorised to do by the document. We think the obvious intention of parties was that their liabilities should be adjusted on the expiry of the term when the possession of the plaintiffs would terminate, and when, if nothing went wrong, the debt of the defendant would also be wiped oat. We are not prepared to accept the contention of the appellant and construe the document as if it were an instalment bind, under which, upon default of payment of one instalment, the creditor becomes immediately clothed with the right to sue the debtor. In the case before us, the defendant was further entitled to be restored to possession upon payment of the amount due at any time within the seven years. In view of these provisions, the contention cannot be supported that the plaintiffs were bound to sue whenever they failed to realise a sum mentioned in the document at the precise point of time when it was assumed to be recoverable from the tenant in question. The first two grounds urged on behalf of the appellants consequently fail. It becomes, therefore, unnecessary for us to consider whether, if the case was considered to be one of successive breaches, there was such an acknowledgment by the defendant as would make Section 19 of the Limitation Act applicable.