ABDUL RAHMAN Vs. SHEO DAYAL

JUDGEMENT

(1.) This is an appeal by the defendants mortgagors arising out of a suit for sale on the basis of a mortgage-deed dated 27th, August 1924,executed by the father of the defendants in favour of the plaintiff and another person who is now dead. The mortgage-deed was for Rs. 25,000 and a period of five years was fixed for payment. It carried interest at 12 per cent per annum, interest being payable every quarter. If there was a default in the payment of interest in any quarter that interest had to be added on to the principal and the consolidated amount had to bear interest. There was a further provision that if default in payment of interest and compound interest be made for six months the mortgagees shall be at liberty to bring a mortgage suit and realize the entire amount due to them on account of the principal, interest and compound interest, costs in the suit and pendente lite and further interest, from the property mortgaged or from the person of the executants and the other properties either in the case of default made in payment of interest for six months as aforesaid or after the expiry of the period mentioned in this document, i.e., five years in short in the event of any of the two defaults being made in payment.

(2.) According to the plaintiff, interest was paid regularly up to 1 March 1927, but the first default for two consecutive quarters, that is, for an unbroken period, of six months, occurred in September 1927. This entitled the plaintiff to bring: a suit for the recovery of the whole amount. He filed a suit within two years of that date. The main pleas in defence were, that there had been no breach of the covenant and the plaintiff had no right to sue and that the rate of interest was excessive, exorbitant and unreasonable. The Court below has held that the suit was not premature and that the plaintiff is entitled to a decree. But it has reduced the rate of interest to one of 12 per cent per annum compoundable every six months instead of quarterly. The: defendants have accordingly appealed and the plaintiff has filed a cross-objection. The same two points are urged in appeal before us. As regards the first point the contention is that in view of the pronouncements of their Lordships of the Privy Council in Pancham V/s. Ansar Husain A.I.R. 1926 P.C. 85 and Lasa Din V/s. Gulab Kuar the default in payment of interest for six months did not make the mortgage money become due, and that therefore without doing some act showing that the mortgagee exercised his option and without communicating information of it to the mortgagors, the suit could not be filed.

(3.) So far as the terms of the mortgage-deed are concerned there cannot be any manner of doubt that there was an express contract giving the right to the mortgagee to sue for the recovery of the entire amount due to him, principal, interest and costs, in the event of there being a default in the payment of two successive instalments of interest. The deed itself does not contain any stipulation that before the right to sue accrues there must be a notice or a demand or any other act indicating that the option was going to be exercised. Going therefore by the express contract entered into between the parties under this document the defendants would have no case and it cannot be seriously contended on their behalf that the suit is premature and is not maintainable without proof that previous to its institution the mortgagee had done some act showing the exercise of his option. But great reliance has been placed by the learned advocate for the appellants on the observations of Lord Blanesburgh in Panahan's case A.I.R. 1926 P.C. 85 quoted above which is to be found at p. 464 (of 48 Ali.). His Lordship observed: Whatever else in relation to such provisos as the present may be open to debate, one thing is clear, viz., that such a default on the part of the mortgagors as was here relied upon by the High Court gave to the mortgagees a right by appropriate action to make the mortgage moneys immediately due.