DEO RAI Vs. ARTI RAI

JUDGEMENT

(1.) This is an appeal by the defendants in a suit for redemption of a usufructuary mortgage brought under the provisions of Section 12, Agriculturists Relief Act, 27 of 1934. The suit was instituted on 29 July 1941. The mortgage in question is dated 1 May 1914. The principal money mentioned in the deed is Rs. 8824-10-0. It is made up of a sum of Rs. 4866-10-0 payable by the mortgagors on account of their shares in three previous mortgages and a sum of Rs. 3958 borrowed in cash by the mortgagors on the date on which the mortgage deed in question was executed. The mortgagors were, Arti Rai, Shyam Rathi Rai and Sahdeo Rai, who are respondents 1 to 3 in this appeal, and three others named Lachhmi Rai, Bishundhari Rai and Mt. Lagmani Kunwar, who are now represented by respondents 4 to 6 in this appeal.

(2.) One of these mortgagors and the predecessors-in-interest of the rest had executed three previous mortgages, the first one on 7 May 1889, the second on 28 May 1901, and the third on 29 May 1901. All these were usufructuary mortgages. The principal amount in the first of these three mortgages was Rs. 4499-15-6. The second mortgage was for RS. 2499-15-0 and the third for Rs. 299-15-0. In these three mortgages the respondents in the present appeal had a two-third share and they were consequently liable to pay Rupees 4866-10-0. In each one of these three mortgages the mortgagees were the predecessors-in- interest of the present appellants. The mortgage deed in suit, which is dated 1st May 1914, was executed in favour of the present appellants. As stated above, a sum of RS. 4866-10-0, which represented the two-third share of the respondents in the three mortgages prior to the one in suit, formed part of the consideration of the latter mortgage. In each one of the three prior mortgages the mortgagees were put in possession of certain lands in lieu of interest. No rate of interest was settled between the parties, but it was agreed that the mortgagees would enjoy the usufruct of the property in lieu of interest and there shall be no accounting between the parties. On the date of the mortgage in suit the mortgagees were in possession of 51 bighas odd of land. When the mortgage in suit was executed, only 22 bighas odd of land was left in their possession, the rest being redeemed by the mortgagors. The suit out of which the appeal arises was instituted by the respondents on 29 July 1941. They claimed the benefit of Section 9, U.P. Debt Redemption Act, 13 of 1940, and pleaded that upon a calculation being made in accordance with the provisions of that section no money remained due under the mortgage in suit and hence they were entitled to have it redeemed without any payment.

(3.) The appellants pleaded in their defence that the mortgage in suit was a settlement of account between the parties and that settlement having been made before 1 January 1917, Section 9 did not authorise the reopening of the whole transaction as claimed by the respondents. They contended that the principal amount mentioned in the mortgage deed in suit must be taken to be the principal for the purposes of the calculation in accordance with the provisions of Section 9, U.P. Debt Redemption Act. They also raised some other" pleas, but they have not been pressed in this appeal and the only question for consideration, therefore, is : What is the result of the application of Section 9, U.P. Debt Redemption Act, so far as the rights of the parties are concerned? The Court below has accepted the contention of the respondents and holding that the principal as well as the interest to which the appellants were entitled in view of the provisions of Section 9, U.P. Debt Redemption Act, has been discharged out of the usufruct of the property which remained in the possession of the appellant it has allowed redemption without any payment, hence the present appeal. Section 9, U.P. Debt Redemption Act, runs as follows: (1) In a suit to which this Act applies or in amending a decree under the provisions of Section 8, the Court shall, notwithstanding anything to the contrary in any law, decree or contract or in any agreement purporting to close past transactions, determine the principal and take into account all sums paid by or on behalf of the debtor and in the case of a mortgage with possession the net profits realized by the mortgagee or which with the exercise of ordinary diligence might have been realized by him, and shall determine the amount, if any, due by the debtor in accordance with the provisions of the following sub-sections: Provided that for the purpose of determining the principal, the Court shall treat as principal any accumulated interest which has been converted into principal at any statement or settlement of account or by any contract in the course of the transaction made before the first day of January 1917, but shall treat as interest any accumulated interest which has been converted as aforesaid at any such statement, settlement or contract made on or after that date. (2) The amount due by the debtor shall not exceed the amount that would have been due if the rate of interest had been, in the case of a secured loan, four and a half per cent. per annum simple interest and in the case of an unsecured loan six per cent. per annum simple interest. (3) The amount due by the debtor as interest shall not exceed the amount of the principal outstanding on the date on which the amount due by the debtor is determined. (4) Nothing in this section shall entitle the debtor to a refund of any sum already paid by him.