CHALIKANI VENKATARAYANIM GARU Vs. VENKATA SUBADRAYAMMA

JUDGEMENT

(1.) Three questions are raised upon this appeal. They all arise out of the rights created under a mortgage deed which was executed on March 2, 1891, in favour of the first plaintiff in the suit by the first defendant. The appellants are assignees of the equity of redemption of that mortgage, and claim that in the accounts taken to determine the true amount due under the deed three mistakes have been made adverse to their interests. The mortgage deed itself is in a peculiar form. It is a mortgage with possession to secure the repayment of Rs. 1,80,000 with interest at the rate of rupee one per cent, per month; the principal of the debt is to be repaid by sums of Us. 10,000 payable year after year, beginning on February 1, 1892, down to February 1, 1898, and on February 1, 1899, the entire balance of the debt and the interest is to be paid. These instalments are protected not merely by the security of the mortgaged property but also by an express agreement in these terms: "We shall pay to you at Tuni, the principal according to the aforesaid instalments and the whole of the interest upon the entire debt calculated with reference to the instalments, along with the last instalment. "There was a further agreement in the deed by which certain charges which would be incurred by the mortgagee, when in possession, were fixed at the sum of Rs. 4,000 per annum. They are specified as being the usual earthwork repairs annually done to canals, etc., expenses on account of the village headmen, service Inams of village headmen, village deities, contingent charges, and other business expenses. The dead also contained two further material provisions. The first that notwithstanding the arrangement by which the mortgagee was to be put into possession a lease was to be granted by him to the mortgagee for a period of two years, and these cond that if the provisions of the mortgage deed as to redelivery of the estate to the mortgagee by the mortgagor at the expiration of the lease for two years were not carried out, the mortgaged estate should at the end of the time stand sold to the mortgagee for the entire amount due inclusive of the balance of principal and interest, and further that the mortgagor should not sell any portion of the estate to anybody except the mortgagee. Arrangements were also made by which the mortgagee was to pay all the necessary peishcush or quit rent or land cess, and a provision that if that should be raised there should be a further right on his part to recover the money from the mortgagor with interest as therein mentioned. What happened con-sequent upon the execution of the deed was this : The lease for two years was duly granted to the mortgagor, but at the expiration of the term he did not pay the second instalment due on February 1, 1893, nor did he redeliver possession to the mortgagee. The mortgagee accordingly instituted a suit for recovery and possession and for the amount of the second instalment. To meet this as amount Rs. 15,000 was paid into Court by the appellants on behalf of the mortgagor, but possession was not delivered up by him and he was in fact in possession at the time when the third instalment became due.

(2.) Shortly before this date, namely, on January 16, 1894, the mortgagor executed a sale deed for Rs. 1,60,000 for some of the mortgaged properties, and a mortgage for Rs. 60,000 for the others in favour of the appellants, and requested them to pay to the mortgagee Rs. 2,05,000, being the total Rs 2,20,000 after deducting the Rs. 15,000 already paid into Court. The appellants accordingly, on February 10, 1894, tendered the Rs. 10,000 due on February 1, to the mortgagee, who refused to accept the money upon the ground that there existed at that date a breach of the bargain made by the mortgagor as to redelivery of possession, and that consequently his acceptance might prejudice his rights. Their Lordships think that this is a mistaken view of the rights which the mortgagee possessed. The agreement for the payment of the instalments of the purchase- money is in fact the main obligation of the mortgage deed, and the whole of the other provisions, however extensive and far-reaching they may be are really nothing but the security to enforce this obligation. The acceptance of Rs. 10,000 due on February 1, 1894, would not have prejudiced the mortgagee in any way in the claim he had then pending against the mortgagor for possession, and their lordships think there was consequently no justification for his refusal of the tender. The fact that the tender was nine days after the due date is of course immaterial; accordingly, in taking the accounts, interest on the sum of Rs. 10,000 according to the terms of the deed must cease to be charged against the mortgagor from February 10, 1894.

(3.) On July 13, ] 894, the mortgagee obtained a decree for possession, and entered in pursuance of its terms, so that the agreement for the annual allowance of Rs. 4000 for the particular payments to which reference has been made became operative, and the next question is as to the validity of that agreement. It is urged on behalf of the appellants that it gives the mortgagee a collateral advantage under the deed which he is not entitled to exact, but their Lordships think that that contention cannot be supported. The truth is that it is a fixed payment to be made in respect of a variable charge, and though it may be assumed that the amount was not fixed so as to prejudice the mortgagee, there is nothing to prevent the mortgagor and mortgagee entering into a bargain as to what sum should be charged annually for expenses that may or may not exceed the agreed figure. They therefore think the objection to the Rs. 4,000 cannot be maintained.