RAMADH BIBI AMMAL Vs. KANDASAMI PILLAI

JUDGEMENT

(1.) Suit upon a hypothecation deed. In second appeal three arguments were advanced, which are 20 M. 245 ; 7 M.L.J. 222 ; 7 Ind. Dec. (N.S.) 174 that the suit is barred by limitation, 24 C. 281 ; 1 C.W.N. 229 ; 12 Ind. Dec. (N.S.) 854 that defendant was not liable as the hypothecation bond was executed to discharge certain decree debts for which she was not legally liable, and 1 Ind. Cas. 49 ; 36 C. 394 ; 9 C.L.J. 226 ; 13 C W.N. 1004 that the clause providing for compound interest was penal and should be relieved against.

(2.) The suit hypothecation bond provides for payment of the principal on 12th May 1900, and it is conceded that, if the Court vacation be excluded, the plaint was presented within 12 years of that date. But it is argued that, as the bond contains a clause that in default of payment of interest every 6 months the principal and interest will become immediately recoverable, the cause of action accrued upon the first default for all that then remained owing of the whole debt. The authorities relied on in support of this proposition are Perumal Ayyan v. Alagirisdmi Bhagavathar 20 M. 245 ; 7 M.L.J. 222 ; 7 Ind. Dec. (N.S.) 174; Sitab Chand Nahur v. Hyder Malla 24 C. 281 ; 1 C.W.N. 229 ; 12 Ind. Dec. (N.S.) 854 which followed Hemp v. Garland (1843) 4 Q.B. 519 ; 12 L.J.Q.B. 134 ; 7 Jur. 802 ; 3 G. & D. 402 ; 62 R.R. 423 ; 114 B.R. 994 and Reeves v. Butcher (1891) 2 Q.B. 609 ; 60 L.J.Q.R. 619 ; 65 L.T. 329 ; 39 W.R. 625 and the obiter dictum of Seshagiri Aiyar, J. in Narna v. Ammani Amma 35 Ind. Cas. 418 ; 39 M. 981 ; 4 L.W. 77 ; 20 M.L. T. 176 ; (1916) 2 M.W.N. 126 ; 31 M.L.J. 865 to the effect that if the mortgagee claimed interest at the enhanced rate it might well he argued that that became due when the first default was committed.

(3.) The important clauses in the suit document are in these terms:--"We shall pay in cash the interest accruing due from this date at the rate of Rs. 1-4-0 per cent, per mensem, once in every 6 months, and the principal amount on the 30th Chittarai of Andu 1075 (12th May 1900) and shall get back this document and the other documents given herewith. In default, we shall pay, whenever you require, the interest accruing due for the days overdue at the aforesaid rate, and the principal amount. In case of default in the payment of the interest according to the due date, you may recover, whenever you require and without reference to the due date fixed for the payment of the said principal amount, the aggregate principal and interest amount found due on adding to the principal the interest due every six months together with the interest due at the aforesaid rate on such aggregate amount." I read these clauses as creating a right in the mortgagee to recover at his option, in case of default in payment of interest regularly every six months, the principal and interest before the date fixed for payment of the principal. But nothing has come out at the trial to show that the mortgagee exercised his option in that way and made a requisition for payment of the principal at any time prior to the transfer of his interests to the plaintiff by the assignment of 8th January 1909, by which date the principal had long become due under the other terms of the hypothecation deed. I think we should follow the recent decision of this Court in Narna v. Ammani Amma 35 Ind. Cas. 418 ; 39 M. 981 ; 4 L.W. 77 ; 20 M.L. T. 176 ; (1916) 2 M.W.N. 126 ; 31 M.L.J. 865 so far as it decides that a mortgagee is not bound to take advantage of a default; and that the learned Judges of the Calcutta High Court who decided Sitab Chand Nahar v. Hyder Malla 24 C. 281 ; 1 C.W.N. 229 ; 12 Ind. Dec. (N.S.) 854 were wrong in applying the principle of Article 75 of the Limitation Act, which deals with defaults on promissory notes and instalment bonds, to suits upon mortgages, which are governed by Article 132, when the mortgage bond contains a clause leaving it to the option of the creditor to enforce the provision for immediate payment of the whole.