JAFAR HUSAIN Vs. BISHAMBHAR NATH

JUDGEMENT

(1.) This is a defendant's appeal arising out of final decree proceedings in a mortgage suit. The plaintiff obtained a preliminary decree on the basis of a mortgage deed on the 15 March 1933 and in due course applied for the preparation of a final decree when the defendant took certain objections. We are concerned with only one of them in this appeal. The defendant claimed that under the terms of the preliminary decree, the plaintiff was not entitled to the total interest claimed by him. This objection was disallowed by the Court below, and it was ordered that a final decree be prepared. The defendant has now come up in appeal to this Court and the only point which we have to decide is whether the defendant is entitled to a reduction in the interest granted by the Court below under the terms of the final decree. In Jagannath Prasad V/s. Surajmal Jalal , their Lordships of the Privy Council held that: On a preliminary decree for foreclosure or sale under Order 34, Rules 2, 4, Civil P.C. 1908 a mortgagee was entitled to interest at the rate, and with the rests, stipulated in the mortgage down to the date fixed for redemption by the decree; and if the decree was varied on appeal, down to the date fixed for redemption by the appellate Court.

(2.) This decision was given in the month of October, 1926. Both parties to the appeal are agreed before us that before the enactment of Rule 11, Order 34 the law was as stated in the above mentioned judgment of their Lordships of the Privy Council. The plaintiff contends that the law is still the same as it was when the case reported in Jagannath Prasad V/s. Surajmal Jalal was decided by their Lordships of the Privy Council. The contention of the defendant is, however, different. In 1930, Rule 11 of 0. 34, was enforced for the first time and the contention raised by Mr. Malik, learned Counsel for the defendant, is that by the introduction of Rule 11, Order 34, the Legislature has changed the law on the subject. This is the only question for consideration in this appeal before us. Before proceeding to discuss the point in issue we may be permitted to point out that Sir Dinshaw Fardunji Mulla in his Civil P. C. expressed the opinion that this new Rule 11 of Order 34 gives effect to judicial decisions under the Transfer of Property Act of 1882 and under Order 34 of the Code. That is to say it places in the Civil Procedure Code a rule laying down how the interest is to be calculated. Rule 11 of Order 34, enacts as follows: In any decree passed in a suit for foreclosure, sale or redemption, where interest is legally recoverable, the Court may order payment of interest to the mortgagee as follows, namely: (A) Interest up to the date on or before which payment of the amount found or declared due is under the preliminary decree to be made by the mortgagor or other person redeeming the mortgage: (i) On the principal amount found or declared due on mortgage at the rate payable on the principal, or where no such rate is fixed, at such rate as the Court deems reasonable, (ii) On the amount of the costs of the suit awarded to the mortgagee at such rate as the Court deems reasonable from the date of the preliminary decree and, (iii) On the amount adjudged due to the mortgagee for costs, charges and expenses properly incurred by the mortgagee in respect of the mortgage security up to the date of the preliminary decree and added to the mortgage money, at the rate agreed between the parties, or failing such rate, at the same rate as is payable on the principal, or failing both such rates at nine per cent, per annum; and (B) Subsequent interest up to the date of realization or actual payment at such rate as the Court deems reasonable, (i) On the aggregate of the principal sums specified in Clause (a) and of the interest thereon as calculated in accordance with that clause; and, (ii) On the amount adjudged due to the mortgagee in respect of such further costs, charges and expenses as may be payable under Rule 10.

(3.) The contention raised by learned Counsel for the appellant is that the words "on the principal amount found or declared due on the mortgage", in Clause (a), Sub-clause (i) have made a change in the method of calculating interest. Learned Counsel contends that the Legislature has enacted that in calculating the amount due to the mortgagee up to the date fixed for redemption, interest from the date of the decree till the date fixed for redemption should be calculated on the principal sum secured by the deed and not on the total amount due on the date of the decree on account of principal as well as compound interest. In other words, his argument is that the view expressed by their Lordships of the Privy Council in Jagannath Prasad V/s. Surajmal Jalal is no longer good law. As we have already pointed out, their Lordships have laid down in that case that a mortgagee was entitled to interest at the rate, and with the rests, stipulated in the mortgage down to the date fixed for redemption of the decree. According to the arguments of learned Counsel for the appellant, this view is no longer correct and that having regard to the provisions of Rule 11, Order 34, Civil P.C., the Court should not grant any interest to the mortgagee from the date of the decree till the date fixed for redemption on the sum which had already become due on account of compound interest. We are wholly unprepared to agree with this contention. In our opinion, the enactment of Rule 11, Order 34, has not made any change whatsoever in the law on the subject and the view expressed by their Lordships of the Privy Council in the above mentioned ruling still holds good.