SARAN SINGH Vs. LMITHTHAN LAL

JUDGEMENT

(1.) We shall deal first with this second appeal referred to the Full Bench, since its decision will enable the other two to be disposed of without difficulty. In 1915 a simple mortgage was created by a mortgagor, Mahipal Singh, over 136 bighas of land to secure repayment of a principal sum of Rs. 400 and interest. In 1917 the mortgagor created a second mortgage over the same property to secure repayment of Rs. 7000 and interest and at the same time, by agreement with the second mortgagee, left in his hands a sum of Rs. 436 out of the second mortgage consideration for the express purpose of the first mortgage and interest thereon up to that date being discharged by the second mortgagee. The first mortgagee was naturally no party to this transaction. In 1924 the mortgagor sold part of his equity of redemption in the mortgaged property and as a result of this sale (as affected by a compromise of certain proceedings which related to it) the position in 1925 was that the equity of redemption in 75 bighas expectant on the mortgages of 1915 and 1917 had passed to certain purchasers, while the equity of redemption in the remaining 61 bighas remained vested in the mortgagor.

(2.) Throughout this time the first mortgage of 1915 remained undischarged by the second mortgagee; and in 1927 the first mortgagee brought the present suit for sale. As between the first mortgagee on the one hand and the mortgagor and the second mortgagee on the other hand, there was, of course, no answer to the suit, and on 29 October 1927 the Court passed a decree for sale in respect of Rs. 5816 in favour of the first mortgagee. This figure was a very large one but we are told that it represented the then amount of principal and interest due on the 1915 mortgage. The actual figure is immaterial. The next step was that in 1940 the first mortgagee applied for execution of his decree; and conversely the mortgagor applied as an agriculturist for amendment of the decree of 1927 under Section 8, U.P. Debt Redemption Act, 1940. The question which immediately arose was whether, having regard to the definition of a loan contained in Section 2(9) of the Act, the sum secured by the first mortgage of 1914 could any longer be regarded as a loan, once the second mortgagee had in 1917, as between himself and the mortgagor, retained the sum of Rs. 436 out of the advance made to the mortgagor on the second mortgage and thereby, as between himself and the mortgagor, assumed the responsibility as from that date for paying it to the first mortgagee together with interest thenceforth accruing on it. The material part of the definition of a loan contained in para. 2(9), U.P. Debt Redemption Act is: Loan means an advance in cash or kind made before the first day of June 1940, recoverable from an agriculturist or a workman or from any such person and other persons jointly or from the property of an agriculturist or workman and includes any transaction which in substance amounts to such advance, but does not include an advance the liability for the repayment of which has, by a contract with the borrower or his heir or successor or by sale in execution of a decree been transferred to another person....

(3.) No one would suggest that, in the absence either of payment to, or a release by the first mortgagee himself, his right of suit on the 1915 mortgage against the mortgagor had been extinguished nor, indeed, that the first mortgagee s, remedy on the still outstanding first mortgage of 1915 lay against anyone but the original mortgagor. In that sense, therefore, it goes without saying that the mortgagor (apart from any possible question of limitation) remained the mortgagor of the first mortgagee on the 1915 mortgage. That, however, is not exactly the point we have to face. Our task is to construe Section 2(9), U.P. Debt Redemption Act, and to inquire whether, on the true construction of the definition of a loan contained in it, the "liability for the repayment" of the advance (i.e., of the advance of the Rs. 400) had been "transferred to another person" so as to take it out of the ambit of the Act. The material words are: Loan means an advance...recoverable from an agriculturist...or from the property of an agriculturist...but does not include an advance the liability for the repayment o? which has, by a contract with the borrower or his heir on successor or by sale in execution...been transferred to another person.... We have to remember that the purpose of the U.P. Debt Redemption Act was to benefit agriculturists, and none others. The question is whether the words "recoverable" and "liability for repayment" refer to the strictly formal right of recovery or right to enforce repayment which in the circumstances of the case exists only between the first mortgagee and the mortgagor, or whether they should be read in a wider sense so as to refer to the right to recover and the liability to repay in the sense of the ultimate incidence of the burden of the mortgage debt. In our view, both on the construction of the words of the definition itself and on a consideration of its purpose, it is the latter and wider construction that is the right one. In a case in which a mortgagor, as between himself and a third party, whether a second mortgagee or a purchaser of the equity, has left a sufficient part of the mortgage or purchase money in the hands of a second mortgagee or purchaser he has certainly, as between them, transferred the entire liability for the mortgage, in the sense of the ultimate burden of bearing it. And, in this respect, we can see no difference between a pecuniary burden payable out of the pocket and one payable out of land, since assessed in rupees the burden is exactly the same. The "repayment" of a loan is a repayment of "money." And the liability to repay is a liability to repay money, since "repayment" of money connotes relations in debt. When we find the Act speaking, therefore, of a "liability for repayment," we think it more naturally refers to the liability of the person (who in ninety-nine cases out of a hundred would be the owner of the equity of redemption in the land) who is under the obligation for the time being of bearing the money burden attached to the mortgage which has to be discharged in order to free the land from it. And we think that the words "recoverable from an agriculturist" are wholly consistent with this view since they at least as readily connote the personal and real incidence of the money obligation for the time being as the mere liability to be sued on the mortgage. And, in further support of this view, we attach some weight to the words "by a contract with the borrower...."