PATNA HIGH COURT Appeal No, 159 and Civil Revision No. 241 of 1938 October 3, 1940

 

PATNA HIGH COURT

Appeal No, 159 and Civil Revision No. 241

of 1938

October 3, 1940

HARRIBS, C. J. AND MANOHAR LALL, J. TIKA SAO AND OTHERS-APPELLANTS

versus

HARI LAL AND OTHERS-RESPONDENTS

Mortgage Subrogation-Earlier bonds, if can be enforced against property not covered by bond in favour of person claiming right-Estoppel-No estoppel on question of law Civil Procedure Code (Act V of 1908), O. V r. 17, s. 34-Amendment of plaint enlarging subject-matter of claim against properties over which plaintiffs had right of subrogation, if justified-Interest pendente lite-Nine per cent per annum held fair-Bihar Money-lenders Act (III of 1938), 7-Relief granted to enforce earlier bonds 8.1, if applies to claim on those bonds.

The right of subrogation, gives full right to enforce the previous mortgage bonds which have been redeemed and kept alive and therefore the persons claiming such rights have full right to enforce the earlier bonds even against property not covered by the bond in suit. [p. 429, col. 1.1

A representation on a question of law does not amount to an estoppel. (p. 429, col. 2.]

In many cases where the plaint is allowed to be amended the subject-matter of the claim is necessarily enlarged and the defendant can hardly be heard to say that it is unjust that the plaint should be allowed to be amended simply because it will result in his having to pay the just dues of the plaintiff. Consequently an amendment of the plaint whereby the subject-matter of the claim has been enlarged by including the right to enforce the mortgage bond in suit against the properties which the plaintiffs were entitled in law to enforce by the right of subrogation which they possessed and to which they had expressly referred in their written statement in the earlier suit is justified. (p. 430, tol. 2.)

Where the plaintiffs are being granted a relief to enforce the earlier bonds also, and the Court passes a decree to enforce three earlier bonds as a part of the relief given to the plaintiffs to enforce their mortgage bond a. 7, Money-lenders Act is applicable to the claims on the old bonds. (p. 431, col. 2)

The fair rate at which interest pendente lite should be awarded to the plaintiffs is 9 per cent. per annum simple from the date of the suit. (p. 431, col. 1.)

A. and C. R. from original decree and order of the Sub-Judge, Patna, dated December 22, 1937, and April 14, 1938, respectively.

Messrs. B. P. Sinha Brahmadeo Narain and Girijanandan Prasad, for the Appellants (in No. 159). 

 

Mr. S. M. Mallick, Chaudhury Mathura Prasad, Messrs. Sarjoo Prasad, Ramanugrah Narain Sinha Brajakishore Prasad Sinha B. P. Mahasetti and P. Jha, for the Respondents (in No. 159)

Chaudhury Mathura Prasad, for the Petitioner, (in No. 241),

Messrs. B. P. Sinha

Girijanandan Prasad and Tarkeshwar Nath, for the Opposite Party (in No. 241).

Manohar Lall, J.-This appeal came before this Bench on November 28, 1939. when by an order of reference dated December 5, 1939 two questions were referred to the Full Bench for decision Tika Sao v. Hari Lal (AIR 1940 Pat 385; 189 Ind. CAS. 513; 19 Pat 759;91 PT. T 453 6 BR 813-13 RP 88 CF B), namely whether a subsequent mortgagee who pays up and redeems the earlier mortgages as part of the covenant in his mortgage is entitled to claim subrogation so as to entitle him to enforce the rights of the earlier mortgagees as a plaintiff in an action and secondly whether the pro- visions of s. 92 of the amended T. P. Act, 1882, are retrospective. The Full Bench have now unanimously decided the first question in the affirmative and by a majority the second question also in the affirmative. The hearing of the appeal was accordingly resumed by this Bench on September 4, 1940. It is unnecessary to set out once again the various mortgage bonds which have to be considered in deciding the matter now in controversy. Reference may -be made conveniently to the order of reference where all the mortgage bonds have been sufficiently set out. It is enough to state that the present suit is a suit, by the plaintiffs to enforce the mortgage bond dated April 25, 1927 by which the four earlier mortgage bonds, two of the year 1924 and the other two of the year 1925 (hereinafter referred to as the earlier bonds) executed by the mortgagors who are defendants. Nos. 1 and 2 in the action were paid off as part of the covenant. The mortgage bond in suit was executed in favour of the plaintiffs and in favour of defendants Nos. 3 to 6. The appellants who are defendants Nos. 8, 10, 11, 16 and 17 are mortgagees subsequent to the earlier bonds redeemed as aforesaid and also held a mortgage subsequent to the mortgage bond in suit giving rise to a number of complications which will be indicated hereafter.

It having been decided by the Full Bench that the provisions of s. 92 are retrospective the appellants contended in the first place that upon a true construction of the mortgage bond in suit no lien was sought to be given on the properties other, than those expressly stated in the mortgage bond in suit, and therefore the plaintiffs can- not take any advantage from the doctrines of subrogation beyond this that they will have priority only on those properties which are common to the mortgage bond in suit and the earlier bonds. The appellant relied upon the words of the bond in suit printed at p. 18 (Part III) that as security for the amount of loan on the bond of April 25, 1927 the mortgagors have hypothecated the shares in the villages specified therein "by keeping alive the effect of the previous mortgage lien covered by the bonds Nos. 1 to 4 aforesaid which have been satisfied from this amount of debt, taken back and made over to the said creditors." The words in the vernacular corresponding to "by" keeping alive" are "babahal mokaddam," that is, "and on keeping alive." It seems to me that the contention of the appellants is not well founded when they argue that these words should be interpreted to mean. that the parties intended that the previous security should be split up by giving a peculiar right of subrogation to the plaintiffs The right of subrogation, as has been decided by the Full Bench, gives full right to enforce the previous mortgage bonds which have been redeemed and kept alive and therefore the plaintiffs, in my opinion have full right to enforce the earlier bonds even against property not covered by the bond. in suit. But the learned Advocate for the appellant argued that this is the very interpretation which was placed by the plaintiffs at some stages of the litigation; even if this is so this will not have the effect of giving a different construction to the plain words of the mortgage bond. (After discussing evidence as to estoppel, his Lordship proceeded.) Have the appellants been induced by any act, omission or conduct of the plain- tiffs to make the payment on February 2, 1937 by the chalan Ex. F (1)? It is clear from what I have stated above that the appellants were determined to make that payment before the present suit was instituted and before either of the two statements in para. 14 of the plaint and in para. 6 of the written statement were filed.

The appellants having failed in the Court of the learned Subordinate Judge actually filed an appeal to this Court on a date anterior to the-dates of both these statements. It is true that the plaintiffs appear to have been under a misapprehension as to their legal rights and interpreted the words already quoted from the bond in suit in such a way as to think that they could only enforce their lien against the properties other than village Marsua, but they no- where expressly stated that they were giving up in terms their right to enforce their lien over village Marsua. The appellants had equal knowledge of the rights of the plain- tiffs which were founded upon the clear and unambiguous recitals in the mortgage bond in suit which I have already interpreted to mean to cover village Marsua so far as the previous encumbrances thereon were re- deemed and kept alive. It is well established that a representation on a question of law does not amount to an estoppel. The rule of estoppel is laid down by s. 115, Evi. Act, which enacts that:

"When one person has, by his declaration, not or omission intentionally caused or permitted another person to believe a thing to be true and to act upon such belief, neither he nor his representative shall be allowed.....to deny the truth of that thing."

In this case I have already shown that the plaintiffs had not by any declaration, act or omission intentionally caused the appellants to believe it to be true and to act upon such belief that village Marsua was free from the encumbrances which the plaintiffs can enforce. The appellants acted upon their own knowledge and belief and their interpretation of the bond in suit. Attention was however, drawn to, the evidence of one of the appellants who was examined as their second witness. He is Gopi Lal, defendant No. 10 in the action. He says that under orders of the Hon'ble High Court he deposited Rs 4,869-10-8 in February 1937 towards the dues of the mortgage bonds, namely, of July 5, 1926 and July 12, 1926, in which village Marsua had been mortgag ed. He goes on to state that in title suit No. 30 of 1936 the plaintiffs filed a written statement but did not claim priority therein in respect of village Marsua and that in the present suit also the plaintiff gives up his claim in respect of village Marsua and there- fore he states that he believed that the plaintiff give up his claim for village Marsua but had he claimed it he would not have redeemed the bond of July 5, 1926 and of July 12, 1926.

The learned Subordinate Judge did not believe this witness on the ground that the defendants had already applied for re- deeming village Marsua as early as August 12, 1935. But the learned Advocate for the appellants argued that even if the appellants had already applied for the redemption of village Marsua it should be held that they  would not have made the actual payment on February 2, 1937 were it not that the plaintiffs had in the meantime stated distinctly in writing in their plaint and in their written statement that they would not claim any lien on village Marsua. However, the witness was cross-examined and at line 30 stated that before depositing the amount he looked into the mortgage bond in suit and then stated that he did not look into the bond in suit. Towards the end of his cross- examination he also stated that he had not gone through the four bonds in question before making the deposit. It seems to me that it is impossible for this Court to take any view different from that of the learned Subordinate Judge who had the advantages of hearing and seeing the witness in the witness box. I am satisfied that the only conclusion which can be arrived at from a consideration of all the circumstances at tending the payment of February 2, 1937 is that the appellants did not make the payment being induced to do so by them statements made by the plaintiffs in the pre- sent suit or in the written statement of November 1936. In fact in the written statement of November 1936 the attention of the appellants was clearly drawn to the four bonds of 1924 and 1925 and that the plaintiffs were claiming the right of subrogation in respect thereof.

I now consider the question whether the learned Subordinate Judge ought to have allowed the plaint to be amended by his order dated December 9, 1937 so as to en- able the plaintiff to claim the right to make liable the share in village Marsua for the three bonds of 1924 and 1925. Order No. 67 dated December 9, 1937 shows that the plaintiffs submitted that by the redemption of the bonds of 1924 and 1925 the plaintiffs by operation of law have been subrogated to the rights of the mortgagees of these bonds in respect of the properties mentioned therein. and therefore they have a right to make the amendment in their plaint. The appellants resisted the amendment on the ground that as the plaintiffs did not include Marsua in the plaint they are estopped from doing so.at this stage because the defendants under a belief that the plaintiffs were not going to enforce their right of subrogation in respect of Marsua have redeemed the bonds dated July 5, 1926 and July 12, 1926 on payment of about Rs. 5,000 under the orders of the Hon'ble High Court and that they would not have done so if Marsua had originally been included in the plaint schedule. It will be noticed that it is nowhere stated in this  objection that the appellants relied upon the written statement filed by the plaintiffs in November 1936, but founded their belief only on the schedule to the plaint in this suit. The learned Subordinate Judge overruled the objection holding that as the right accrued to the plaintiffs by operation of law he did not see any reason why the plaintiffs could. not claim the right of subrogation in respect of the properties which were included in the bonds of 1924 and 1925, but were left out. in the plaint and that the defendants when they were redeeming the bonds of July 1926 could easily have seen that the plaintiffs could in law include village Marsua in the plaint schedule at any moment as they had acquired the right of subrogation in respect thereto and that they took the risk in believing that the plaintiffs would be estopped from claiming the right of subrogation. It seems to me that the circumstances amply justified the learned Subordinate Judge in allowing the plaint to be amend ed. Order VI, r. 17, Civil P. C. states that the

"Court may at any stage of the proceedings allow both party to alter or amend his pleadings in such manner and on such terms as may be just and all such amendments shall be made as may be necessary for the purpose of determining the real questions in. controversy between the parties."

But the learned Advocate for the appellants argued that it was unjust to allow the plain- tiffs to change the subject-matter of the claim by allowing this amendment. I do not see any injustice on the facts of this case. The subject-matter of the claim has no doubt been enlarged but only by including the right to enforce the mortgage bond in suit against the properties which the plaintiffs were entitled in law to enforce by the right of subrogation, which they undoubtedly possessed and to which they had expressly referred in their written statement in the earlier suit. In many cases where the plaint is allowed to be amended the subject matter of the claim is necessarily enlarged and the defendant can hardly be heard to say that it is unjust that the plaint should be allowed to be amended simply because it will result in his having to pay the just dues of the plaintiff. If however the claim as amended was barred by limitation and the defendants have not been given sufficient opportunity to meet the case of the plaintiffs the matter would be different. It is not pre- tended that the claim of the plaintiff is barred by limitation.

Have then the defendants any grievance that they have not been given sufficient opportunity to meet this new case set up by the plaintiffs? The order of December 8, 1937 is complete answer to this contention. It was submitted by the appellants to the learned Subordinate Judge that in the event of the amendment being allowed they should be allowed to the additional written statement. The Court however held that regard being had to the pleadings and issues already in the record the filing of additional written statement was not necessary but he allowed the learned Advocate for the appellants to suggest any additional issue if he liked consequent on this amendment. Accordingly on December 10, 1937, the learned Advocate for the appellant suggested the additional issue "Are the plaintiffs estopped from claiming priority in respect of Marsua?" That issue was accordingly added. The learned Advocate then requested that for filing other documents the suit should be adjourned for three days. This was allowed and then the defendants opened their case and began with their evidence. It seems to me that the appellants have no grievance. They only asked for three days' time and that time was given and the trial proceeded from the stage at which the plain- tiffs had closed their case and had amended their plaint before the appellants began their defence. For these reasons I am of opinion that the appellants have no grievances and the suit has been rightly decreed.

The appellants claimed relief under the Bihar Money-lenders (Regulation of Trans. actions). Act, 1939. It is not denied by the respondents that the amount for which the 1 suit should be decreed is for Rs. 13,000 principal, being the amount advanced under the band in suit and for another sum of Rs. 13,000 being the total interest and claim able from the date of the bond up to the date of suits, November 30, 1935. The plaintiffs are also entitled to interest pendente lite on the sum of Rs. 13,000. In the mortgage bond in suit the stipulation is to pay interest at Re. 1-2.0 per cont. per mensem compound, able every six months. The interest provided in the bond of May 26, 1924 in Re 1-1-0 per cant. Per mensem and the same, rate is in the bonds of August 1924, April 1925 and October 1925. But in the thica patia of May 20, 1926 (Ex. G. (1)] the interest provided in only 10 annas per cent. Per mensem wish annual reats; and in the two later bonds of July 1926 the rate of interest is again at Re. 14-0 per cent. Per mensem with similar rests. In these circumstances I think that the fair rate at which interest pendente lite should be awarded to the plaintiffs is 9 per cent. per annum simple from the date of the suit till two months from today which we fix as the period of grace and thereafter as the rate of 6 per cent. per annum till realization.

The appellants argued further that out of the amount which is being decreed on the bound in suits the burden which is thrown on three of the earlier bonds should also be regulated by the provisions of the Money-lenders Act, s. 7. (The first bond of May 26, 1924 is being, omitted from consideration because the plaintiffs do not seek to enforce that mortgage bond by virtue of the doctrine. of subrogation as village Marsua is not included as a security therein.) The learned Advocate for the respondents resisted this. Contention. He argued that these earlier bonds are not bunds in suit. But, in my opinion, the argument of the appellant is well founded. The plaintiffs are being granted a relief to enforce the earlier bonds also, and in fact we are passing a decree to enforce these earlier bonda as a part of the relief given to the plaintiffs to enforce the bond in suit. Section 7, Money-lenders Act, therefore, is equally applicable to the claims on these three bonds. The result is that out of the amount due under the bond in suit, the bond [Ex. 1 (a) will be enforceable to the extent of Rs. 2,000 up to the date of the suit and there- after carry interest at 9 per cent. on Ra, 1,000 principal up to the period of grace, there- after at the rate of 6 percent., Similarly the amount due under the bond [Ex. 1(b), dated April 30, 1925, will also be conforceable to the extent of Ra. 2,000 plus interest to be calculated in a similar manner. And lastly the dues on the bond (Ex. 1 (e)), dated October 23, 1925, will be limited to a sum of Rs. 2,400 together with interest thereafter at the rate of 9 per cent on Rs. 1,200 till the expiry of the period of grace and thereafter at 8 per cent till the date of realization. The appellants are also in their turn entitled to claim priority to the extent of the amount which they deposited in Court under the orders of the High Court in February 1937 to redeem the bonds F-1 of July 5, 1927 and F-1 (a) of July 12, 1926. The principle of the Bihar Money-lenders Act cannot apply to the claims on these two bonds because these transactions have already ripened into a degree. Similarly the appellants are entitled to priority with respect to the amount decreed in suit No. 30 of 1936 being a suit Instituted on their bond of October 3, 1920. Finally the appellants are entitled to priority with respect to the amount due on the bond [Ex. A (1) of August 3, 1926. The provisions of the Bihar Money-lenders Act will apply to this trans- action as the dues on this bond have not yet ripened into a decree. So that the appellants will be entitled to claim priority to, the extent of Rs. 3,000, that is to say Rs. 1,500 principal and Rs. 1,500 interest together with interest at the rate of 9 per cent. per annum from the date of the present suit till expiry of the period of grace and thereafter at 6 per cent. The dues of defendants Nos. 3 to 6 on their bond of November 4, 1927 have already ripened into a decree in suits Nos. 90 and 20 of 1933 and that decree cannot be re-opened.

Having determined the amounts due on the various mortgage bonds as aforesaid, it is necessary to give directions as to how the decree should be prepared in this case because it is distinctly provided in 0. XXXII, 1.4 (4), Civil P. Ca that when a sale is ordered by a preliminary decree in a mortgage suit in which subsequent mortgagees or persons deriving title from, or subrogated to the rights of, any such mortgagees are joined as parties, the preliminary decree shall pro- vide for the adjudication of the respective rights and liabilities of the parties to the suit in the manner and form set forth in form No. 9, form No. 10 or form No. 11 as the case may be, of Appx. D with such variations as the circumstances of the case may require. The learned Subordinate Judge by his order No. 85 dated April 14, 1938 direct- ed. the decree to be prepared in a proper form. I have examined that decree and I am of opinion that the decree is correctly prepared as required by law. The office will therefore adopt that decree but will vary

the amounts to be inserted in it and make such other alterations therein as may be necessary in accordance with the directions given in the course of his judgment regarding the dues on the various mortgage bonds. The result is that the appeal succeeds in part but in the circumstances I would allow the plaintiffs only proportionate costs throughout.

Civil Revision No. 241 of 1938. This application is directed against order No. 85 dated April 14, 1938 passed by the learned Subordinate Judge in amending the decree which he had already passed on December 22, 1937, and which is the subject of appeal No. 159 of 1938 which has been disposed of by the judgment just delivered. In this application the decree-holder seeks to vacate the decree as amended on the ground that this Court below had no jurisdiction to alter the decree already passed by him. It is un necessary to consider this contention because this revision has become infructuous in the circumstances. As the decree originally passed has been varied by this Court a new decree has to be passed which will govern the rights of the parties. Accordingly, this application is dismissed but without costs.

Harries, C. J.     I agree.

Order accordingly..