R SHANMUGA RAJESWARA SETHUPATHI Vs. CHIDAMBARAM CHETTIAR

JUDGEMENT

(1.) In this case three appeals have been consolidated : two of these relate to minor questions as to interest, but the main appeal [C. M. P. No. 4220 of 1928] raises questions of more importance. These arise out of a mortgage suit brought on 15 April 1905, in the Court of the Subordinate Judge of Madura. The appellant in the main appeal (herein called "the appellant") is the grandson of the original mortgagor, whose eldest son, the appellant's father was defendant 1 to the suit. This defendant died pending suit and the appellant now represents the mortgagor: on one point, to be mentioned later, he has independent interests of himself and of his father to defend. Respondents 8 to 11 are the contesting respondents to the main appeal. They are the representatives of the original plaintiff in the suit. Subramaniam Chettiar who had succeeded his father Ramanathan Chettiar the original mortgagee. The decree dated 12 September 1917 of the trial Judge was modified in certain respects by the High Court of Madras whose decree, dated 26 April 1938, disposed of eleven appeals brought by divers parties. Their Lordships are concerned with two only of the appeals brought to the High Court- Appeal No. 26 of 1918 by the present appellant and Appeal No. 106 of 1918 by the plaintiff. The suit was brought to enforce three securities described as hypothecation bonds or deeds, the first being dated 21 November 1895; the second 7 November 1896, and the third 25th November 1896. They were given to Ramanathan Chettiar by the appellant's grandfather, the then Raja of Ramnad for the sums of Rs. 24,000, Rs. 71,000 and Rs. 35,000, respectively, amounting to Rs. 1,30,000. Interest on each bond was at the rate of 12 per cent. per annum, but in the case of the first two bonds only this was to be calculated as compound interest with annual rests from the date of default. The mortgaged subjects under the first and second bonds were certain jewels already in pledge to a moneylender named Anamalai and the Raja's allowance of Rs. 5500 per annum under a trust deed of 12 July 1895, executed by himself as hereinafter mentioned. Under the third bond, the jewels together with certain furniture as to which no question now arises, were the security.

(2.) Objection has been taken by the appellant to the plaintiff's right as mortgagee under these bonds to the principal sum of Rs. 1,30,000 claimed. It is said that Rs. 15,000 thereof comprised in the sum of Rs. 71,000 mentioned in the second bond, is without consideration, being the amount of a statute-barred debt of the Raja's father for which, on 25 November 1895, the Raja had given a promissory note. The objection on behalf of the appellant is that by the Raja's evidence, given on commission in January 1903, it is proved that the promissory note was given, but it is not proved that there was any stipulation for a fresh advance, and that accordingly this portion of the principal amount of the second bond is not recoverable unless, indeed, it be brought within Cl. 3 of S. 25, Contract Act. It is contended that it is not within this clause as it was not a debt of the mortgagor but of his father. Their Lordships are of opinion that the Courts in India have rightly rejected this objection. A promissory note having been given consideration is to be presumed. The question is not therefore whether the plaintiff has formally and sufficiently proved that there was a stipulation for a fresh advance, but whether it is sufficiently shown by the appellant that there was no consideration for the promissory note. This burden, the appellant has certainly not discharged, and there is every probability against him on the point. It is not necessary therefore for their Lordships to decide whether under Cl. 3 of S. 25 above mentioned a debt of which the creditor might have enforced payment from the mortgagor would be excluded by the circumstance that it was not a debt of his own. Their Lordships must not be taken to cast doubt upon the view taken by the High Court if this question, which does not arise, is not now discussed. Their Lordships are satisfied that the principal amount due on the bonds in suit is Rs. 1,30,000 as decreed by the Indian Courts.

(3.) The next question is whether the bonds in suit confer a valid charge upon the jewels and the allowance already mentioned. On this point, it is necessary to refer to the settlement of 12 July 1895 (herein called "the settlement"). The then Raja had become heavily involved in debt: a list of his creditors is given in Sch. 3 to this deed showing that he was indebted in a total sum of Rs. 20 lacs. His impartible zamindari of Ramnad was of great extent, covering no less an area than 2351 square miles. This and much other property, aggregating in value 50 lacs of Rupees, he conveyed to a trustee for the benefit of his heir apparent and eldest son, then a minor, and for the purpose of making provision for the maintenance of the settlor and several members of his family as mentioned in Sch. 2. The trustee was directed to pay Government revenue, certain expenses of management, of litigation and of repairs: in the fifth place he was directed to apply moneys in his hands to the payment of the interest on and principal of the debts mentioned in Sch. 3, and thereafter of the allowances mentioned in Sch. 2. It was provided that on the settlor's eldest son attaining the age of 21, the trustee should convey the trust premises, then existing, to him for the same estate as if he had inherited them, but subject to the several payments directed by the deed and to the several trusts which should then be subsisting in respect thereof. The first of the allowances mentioned in Sch. 2 is the allowance of Rs. 5500 per month to the settlor himself. In Sch. 3 among the creditors is mentioned the plaintiff's father Ramanathan (Muthia) Chettiar as a creditor for Rs. 1,30,000: this debt is entirely independent of the sum of Rs. 1,30,000 due upon the bonds now in suit. The creditor Anamalai is also mentioned as a creditor for Rs. 75,000, but in this deed there is no mention of the circumstance that Anamalai was a pledgee of any jewels.