RAMABHADRA THEVAR Vs. ARUNACHALAM PILLAI

JUDGEMENT

(1.) The first point for consideration is the construction of the mortgage deed executed by the father of the defendants Nos. 1 to 3 in favour of the 1 plaintiff's manager, 4 defendant. The 1 plaintiff on his own behalf and on behalf of his minor son, 2nd plaintiff, sold certain property to the father of 1 defendant under Ex. 1 on nth September, 1909. There was a prior mortgage on this property, dated 9 February, 1908. As there was this prior mortgage and also because one of the vendors was a minor, the 1 defendant's father did not pay the whole of the purchase money, but retained a sum of Rs. 4,625. On the 15 September, 1909 the 1 defendant's father hypothecated the property he bought for this amount and stipulated that the 1 plaintiff should execute a security bond for Rs. 6,000 on or before the 14th September, 1910. The relevant provisions in this mortgage deed which we have to construe are as follows: I shall pay the aforesaid amount of principal together with the interestas soon as you execute and get registered before the 14 September, 1910, a security bond in respect of immoveable properties estimated by the mediators at Rs. 6,000If security is not given before the said stipulated date, I shall up to the date on Which the security is given, add interest on principal and interest on interest at the said rate with twelve months rests and pay you, the amount of principal and interest accruing due

(2.) The Lower Court has held, and I think rightly held, that the execution of this security bond was a condition precedent to the demand for the mortgage money and that therefore this suit for the money is not maintainable because the security bond had not been executed, but as the parties came to an agreement during the suit that the mortgage should be adjusted by means of this suit and that the suit should not be dismissed, the Lower Court proceeded with the trial and held that there was no obligation on the 1 plaintiff to execute a security bond on any particular date and that therefore the mortgagor must pay compound interest on the amount of the mortgage from September, 1910, because the deposit made in Court was not a valid deposit, being conditional. This conclusion is somewhat inconsistent with the finding that the execution of the security bond was a condition precedent to the enforcement of the mortgagee's right, and it is now contended for the appellant that the 1 plaintiff was bound to execute the security bond after the date fixed therefor, namely, 14 September, 1910, and that therefore when the mortgagor deposited the mortgage amount coupled with a request for the execution of the security bond it was a valid tender under Section 83 of the Transfer of Property Act, although it was coupled with this condition. The question therefore for determination is whether the mortgagee was under an obligation to execute the security bond, an obligation which can be enforced by the 1 defendant. To adopt the interpretation put upon the document by the Lower Court is to hold that the mortgage is irredeemable except at the option of the mortgagee, and this would constitute a clog on the equity of redemption which cannot be enforced. Consequently, if the language is ambiguous, I think that we must adopt an interpretation which would remove that clog. The document itself is an extraordinary document because it provides that on default by the mortgagee the mortgagor is to be penalised, and similarly if the mortgagee fulfils his bargain and the mortgagor commits default, the mortgagee is to be penalised by the compound interest being reduced to simple interest. However this may be, I think it is undoubted that there was an obligation on the mortgagee to execute this security bond, and consequently that obligation could be enforced by the other party to the contract. He was therefore entitled to demand a security bond before paying the money, and the execution of the security bond was not left to the will of the mortgagee to perform at any time he chose. If that is the correct view, the deposit of the mortgage money coupled with a request for the security bond is not a deposit coupled with a condition outside the contract for the condition was one enforceable under the contract. The deposit was therefore a valid deposit under Section 83.

(3.) There remains then the question whether the mortgage money ceases to bear interest from the date of deposit under the terms of Section 84 of the Transfer of Property Act. Notice of the deposit was sent to the plaintiff, but he refused to accept the money and subsequently the 1 defendant withdrew the amount from Court. On similar facts it was held in Krishnaswami Chettiar V/s. Ramaswami Chettiar that interest did not cease to run, the ground for the decision being that the deposit must be left in Court in case the mortgagee changes his mind. This decision is somewhat at variance with the decision in Velayuda Nayakar V/s. Hyder Hussan Khan Sahib (1918) ILR 41 A 245, where it was held that once a tender had been made and refused, interest ceases to run, although in that case the money had been taken back from the mortgagor by the lender after refusal by the mortgagee. The decision in Krishnaswami Chettiar V/s. Ramaswami Chettiar was considered in Thevaraya Reddy v. Venkatachala Pandithan (1879) 10 ChD 434 where Ayling and Tyabji, JJ. differed. The case went up in appeal and was decided in Thevaraya Reddy V/s. Venhatachala Pandithan (1878) 10 ChD 388. I was one of the members of that Bench and dissented from the decision in Krishnaswami Chettiar V/s. Ramaswami Chettiar , and apparently Abdur Rahim, Offig. C.J., was inclined to the same view, although he held that it was not necessary to decide the point. On the other hand Seshagiri Aiyar, J., was of opinion that Krishnaswami Chettiar V/s. Rama-swami Chettiar was rightly decided. The question has been considered in Hnkam Singh V/s. Babu Lal, and there a Bench of that Court followed my judgment in Thevaraya Reddy V/s. Venkaiachala Pandithan (1878) 10 ChD 388, and accepted the reasoning therein. I have very little to add to my judgment in that case, but I will add a few words regarding the decision in Krishnaswami Chettiar V/s. Ramaswami Chettiar , from which I venture to differ. In the judgment in that case the question was asked whether when the mortgagor had deposited the money and issued a notice to the mortgagee he had not done all that has to be done by him to enable the mortgagee to take the amount out of Court; and can he then withdraw the money even before the mortgagee appears to claim it? The answer was given in the negative; and a further question was asked why should he be at liberty to do so because the mortgagee appears and refuses to take it? The answer I would give to that question is that the mortgagee is under a duty to take the money when tendered and the cessation of interest on his refusal is a penalty for not performing his duty of submitting to redemption. A mortgagor might be able to collect the mortgage money and interest accrued to date of deposit, but unable to raise any more to meet further interest. Is he to be compelled either to forego his undoubted right to redeem, or else to leave his money lying idle, until the mortgagor chooses or is compelled to accept it? In the case of an usufructuary mortgage the injustice to the mortgagor is obvious as he is deprived of the benefit of his property and of his money. One consideration which appears to have escaped the notice of the learned Judges in that case is that if the mortgagor leaves his money in Court deposit after refusal by the mortgagee it might lapse to Government before the amount is withdrawn; who, in that case, is to bear the loss, the mortgagor or the mortgagee? In the present case the deposit was made in 1913 and this suit was not brought until 1922. If, therefore, the 1 defendant had left the money in|deposit, the money woud long ago have lapsed to Government. Section 84 is very clear and says that interest shall cease when once the mortgagor has done all that he can to enable the mortgagee to draw the money. When a mortgagee has received notice that the money is actually in Court and that he can draw it at that time, what more can be done by the mortgagor to enable him to draw it? Proceeding strictly on the interpretation of the section I still adhere to my opinion that Krishna-swami Chettiar Vs. Ramaswami Chettiar is wrong and I am inclined to think that the legislature did not intend to make the law in India identical with the law in England. In England when a tender has been made it is also necessary that the mortgagor should always be ready to pay the amount, but the burden of proving that he is not so ready is on the mortgagee. I take it therefore that, when there has been a tender and there is no evidence of any subsequent refusal to pay, the provisions of the English Law would be complied with, and the tender would be valid, except perhaps in cases where it was shown that the tenderer had subsequently derived profit from the money tendered.