JANAKI NATH RAY Vs. ASAD REZA

JUDGEMENT

(1.) This is an appeal by the plaintiff in a mortgage action. The Subordinate Judge has dismissed the action on the ground that the mortgage was an anomalous mortgage, that there was no agreement for sale contained therein and that consequently the plaintiff was not entitled to a decree for sale of the property, nor was he entitled to a decree on the personal covenant as according to the conclusion at which the learned Judge has arrived, the plaintiff-mortgagee was in possession and that Section 68(2), T.P. Act, as it at present stands, applied. A number of other questions were decided by the Subordinate Judge, but some of them do not arise in the appeal. On the same date on which the mortgage was executed, a power-of-attorney in favour of the mortgagee was also executed by the mortgagor under which, so far as regards one part of the property, the mortgagee, either by himself or a substitute, was entitled to collect the rents and profits and set them off against the interest, and any balance thereafter remaining against the principal. There was a provision that the mortgagee was to account only for that which he had actually received. This latter provision the learned Judge has characterised as unconscionable, and the same view has been taken of the agreement entered into by the parties after the mortgage moneys had become due, under which in consideration of the mortgagee not enforcing his mortgage the mortgagor was to pay an increased rate of interest being 9 per centum per annum. This as I say has also been characterised by the learned Judge as unconscionable and as a penalty and therefore not recoverable.

(2.) But in this appeal Sir Sultan Ahmed who appears on behalf of the respondent agrees that he cannot support the Subordinate Judge's judgment on this point nor as regards what the Subordinate Judge describes as a penalty. We have therefore to consider only the question of whether the mortgagee is entitled to a decree for sale or on the personal covenant, and whether in the circumstances of the case it can be rightly held that he is a mortgagee in possession with the liabilities of a mortgagee in that position. The first point involves the question of the construction of the mortgage bond and the power-of-attorney. It is said by the respondent that, read together, these documents constitute an anomalous mortgage being a combination of an English and a usufructuary mortgage. The mortgage-deed was dated 28 August 1907, for a sum of Rs. 3,70,000, the due date being 31st August 1912, with interest at the rate of 8 per centum per annum with half-yearly rests. The bond was in the form used in the Presidency towns based on English conveyancing precedents. The power-of-attorney was, as I have said, executed on the same date. On 23 May 1921, after mortgage moneys had become due, and on the mortgagee, making a demand for payment thereof, the agreement to which reference has already been made was entered into under which the mortgagor agreed to pay interest and compound interest at the rate of nine per centum per annum instead of at the rate of eight per centum per annum as in the indenture provided. Apart from the statement of its existence we are not concerned with this agreement. The terms of the mortgage bond are important, the first of which is to this effect: Whereas the said mortgagor being heavily, involved in debts and with a view to save his properties from being sold in execution of his creditors hath applied to the said mortgagees to lend and advance to him the sum of rupees three lacs and seventy thousand which they, the said mortgagees, have agreed to do upon having the repayment thereof with interest thereon secured in manner following and upon the said mortgagor executing an irrevocable power-of-attorney in favour of the, said mortgagees authorising thorn or either, of them during the subsistence of this mortgage and until the whole of money hereby secured are fully paid up and liquidated to realise the several rents amounting to Rs. 2, 966-1-0 annually that will henceforth, that is from the month of Kartick 1314 B.S., become due from the several putnidars of the said mortgaged properties whose names are mentioned in the schedule annexed to such power-of-attorney which is to bear even date with these presents and to apply the same pro tanto first towards liquidation of the half-yearly instalment of interest that will become due to the said mortgagees and the balance, if any, towards the principal for the time being due under these presents.

(3.) It proceeds to grant, convey and transfer unto the said mortgagees all those several zamindaries, etc., etc., and the reversion and reversions, remainder and remainders, rents, issues and profits, etc., etc., of lands, messuages, tenements, hereditaments, etc.