BISHAN DATT SINGH Vs. MATHURA PRASAD

JUDGEMENT

(1.) This is a defendant's second appeal arising out of a suit for enforcement by foreclosure of a mortgage by conditional sale. The mortgage in question was executed on 19 October 1929 for Rs. 2400 by Randhir Singh, defendant 1, and his son Bishanpal Singh, defendant 2. The plaintiff impleaded both the mortgagors and also the two minor sons of defendant 2; and the latter alone contested the suit. They are the appellants before us. Defendant 1 died during the pendency of the appeal in the lower Appellate Court. The suit was mainly contested on the ground that the mortgage was executed without legal necessity and was not for the benefit of this joint Hindu family. Both Courts have found that there was no legal necessity and that the transaction was not for the benefit of the family. The trial Court found further that the plaintiff was not entitled to a personal decree, but the learned Judge of the lower Appellate Court has reversed the decree of the trial Court and has passed a personal decree against defendant 2 as heir of defendant 1 and also against defendants 3 and 4 "if they are also heirs of Randhir Singh." The learned Judge of the lower Appellate Court observes: The learned Subordinate Judge was of opinion that a personal decree cannot be given, because there was no express personal covenant in the mortgage and the conditions in the mortgage were inconsistent with an implied personal covenant. But it appears to me that where a person obtains money for purposes of speculative investment by offering security, which is in fact illusory, he makes it impossible for himself to contest a suit for return of the money on the ground that the lender's only remedy under the terms of the illusory security bond was to proceed on the bond, and it appears to me that it is particularly impossible where the speculation has actually turned out successful, or successful to a certain extent, and the borrower or taker of the money is actually in possession of property bought with that very money itself.

(2.) It is on these grounds that the learned Judge has passed a personal decree in this suit. The only question before us in this second appeal is whether the Court was or was not competent to decree the suit personally against the defendants- appellants. We have read the mortgage-bond in suit and ascertained its terms and conditions. We find that the mortgagors covenanted to repay the principal and interest within three years from the date of execution, and it was stipulated that in default of such payment within the time specified the mortgagee would be entitled to sue for fore-closure; the mortgage bond would be regarded as a deed of sale, the consideration whereof would be the unpaid portion of the money advanced under the mortgage. Learned Counsel for the defendants appellants relies upon the first condition prescribed under Section 58(c), T.P. Act. He pleads that, apart from any objection as regards the validity of the transaction, sale became absolute on the expiry of three years subject to a suit for foreclosure by the mortgagee in which the mortgagor would have one last opportunity of redeeming the mortgage and there was no personal liability. Various authorities have been cited before us and we will proceed to discuss thorn. In Mt. kuraishi Begam V/s. Mumtaz Mirza (1909) 12 O.C. 275 a suit was brought upon a, mortgage bond, the terms of which were as follows: I hereby write and agree to pay within one year the said money with interest to the said Mumtaz Mirza Saheb. If perchance I fail to pay the said money with interest within the year, the said Mirza Saheb shall be competent to realize the entire amount with interest from the said house. Neither I nor my heirs shall have any objection. This deed of mortgage shall be deemed to be a deed of sale.

(3.) It was held by the learned Judicial Commissioner of the Oudh Chief Court that upon a true construction of these terms the mortgage created by the instrument was a mortgage by way of conditional sale and that it contained no personal contract to pay the mortgage money. The learned Judge at p. 277 observed: ...the real question on which the decision of the case turns is whether there is any personal covenant to pay money on this mortgage. As a general role, it may be said that a mortgage ordinarily also implies a personal covenant to pay the money on part of the mortgagor. This is however not so in the ease of a mortgage by way of conditional sale. In that case the only mode provided for the in payment of the money is by the transfer of the mortgaged property to the mortgagee, who has to take the property (whatever may be its value) in full discharge of the amount due on the mortgage.