SITARAM SHEOLAL MARWARI Vs. KRISHNARAO BALAJI KUNBI

JUDGEMENT

(1.) ONLY three points are raised in this appeal. The first is whether, this being a lahan-gahan mortgage, the Court was at liberty, under Sections 58(g) and 98, T.P. Act, read with Order 34, Rule 4(3), Civil P.C., to order sale instead of foreclosure. That turns on whether a lahan-gahan mortgage is a mortgage by conditional sale or an anomalous mortgage. This point has been decided in Govind v. Jagannath (1915) 2 AIR Nag 63, and in Haji Mohammad Haji Wali Mohammad v. Ramappa (1929) 16 AIR Nag 254. It is also referred to in Bhagwant Rao v. Damodhar (1938) 25 AIR Nag 112, and though the point was not decided there, it was indicated that the previous Nagpur rulings probably laid down the right law. In our opinion we are bound by the decision of the Nagpur Full Bench, and since we agree with it, it must be accepted here that in the case of a lahangahan mortgage the Court can pass a decree either for sale or for foreclosure. It was argued that the mortgage in question is not a lahan-gahan mortgage but a mortgage by conditional sale and reliance is placed upon the following passage in the deed: If the amount of this mortgage deed is not satisfied according to the stipulation agreed upon, the mortgaged property shall stand foreclosed as given below. I will have no connexion with the mortgaged property in future.

(2.) IT was contended that the sentence "I will have no connexion with the mortgaged property in future" indicates a mortgage by conditional sale. In our opinion, this is the usual covenant in a lahan-gahan mortgage and since the words "lahan-gahan" have been used, we are bound by the previous decision of this Court. Therefore the lower Court was, in our opinion, wrong in holding that the mortgage was not an anomalous mortgage and that therefore it had no power to exercise its discretion. The next question is whether in this case the discretion given to the Court should be exercised or whether we should give effect to the contract between the mortgagor and the mortgagee. The mortgage was for Rs. 726 and was given on the 28th May 1921. The suit was filed on 27th January 1934, thirteen years later, and by that time, according to the plaintiff, the money due under the mortgage had swollen to over Rs. 8000 and he consequently claimed that amount. This was reduced by the lower Court, the learned Judge holding that the rate of interest was usurious and allowing one per cent. compound instead of Re. 1-12-0 per cent. Per mensem compound which was the rate claimed. That in itself is a feature which entitles us to exercise our discretion against the mortgagee. It is to be observed that under Section 3(1)(iii), Usurious Loans Act, (that is to say of the Act before the local amendment), the Court, when it is of opinion that the interest charged is usurious, is entitled to reopen the entire contract. Therefore the lower Court in this case, when it reopened the contract, would have been entitled to fix a much more reasonable rate of interest than it has done. Since the rate fixed is fairly high, we think that to be one of the grounds on which we can exercise our discretion in favour of allowing sale in place of foreclosure. Not only that, but as the Court is entitled to re-open the entire contract, it is therefore, when there is a condition for foreclosure, entitled to order sale instead. There is also the fact to be taken into consideration that the mortgagee waited for thirteen years before suing and allowed the sum due to mount up to over Rs. 8000. That in itself is an indication of the value which he attaches to this property.

(3.) THAT leaves outstanding a question about a charge which the appellant claims. He states that he paid a sum of Rs. 506-11-6 to the landlord of the holding of which the mortgagors were absolute occupancy tenants and that therefore under Section 9, C.P. Tenancy Act, he has obtained a first charge over the absolute occupancy fields for that sum. His reasoning is as follows. According to him Section 9, C.P. Tenancy Act, states that the rent of the holding of an absolute occupancy tenant shall be a first charge on the holding. This charge enures in favour of the landlord. Consequently it will also enure in favour of anybody Who pays the landlord because he is thereby subrogated to the landlord's position. The appellants are subsequent mortgagees; they were obliged to pay the rent, as the tenants would not, in order to save their security; therefore they state that the plaintiff should be called upon to redeem this charge before he is given a decree for sale. We do not think any question of subrogation arises. The charge given in Section 9 is a special statutory right, that is to say, it is a charge which, in the words of Section 100, T.P. Act, arises "by operation of law." That being so, its scope and limitations are those which the law creating it gives. Now a charge does not ordinarily get precedence over prior rights nor can it enure against a transferee for value who has purchased in good faith without notice. Section 9(1), C.P. Tenancy Act, sets these rules aside and states that notwithstanding anything contained in Section 100, T.P. Act, and Order 34, Schedule 1, Civil P.C, 1908, such holding shall be liable to sale for the satisfaction of such charge in execution of a decree for rent against the tenant, whether such decree orders such sale or not.