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1926 Supreme(SC) 43
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD PHILLIMORE, LORD SINHA, LORD BLANESBURGH, AND MR. AMEER ALI.
JAGANNATH PROSAD SINGH CHOWDHURY - Appellant
Versus
SURAJMAL JALAL - Respondents
On Appeal from the High Court at Calcutta.
Decided On : Oct. 19. 1926.
Solicitors for appellant: Watkins & Hunter.
Solicitors for respondents: Barrow, Rogers & Nevill.
In mortgage suits, the contract rate of interest applies until the redemption period expires. Thereafter, the court rate applies as the matter shifts from contract to judgment. If an appellate court varies the initial decree, the redemption period is calculated from the date of the appellate decree.
Headnote:(A) Code of Civil Procedure, 1908 - Order XXXIV, Rules 2 and 4 - Section 34 - Mortgage suits - Interest - In a suit for foreclosure or sale, the contract rate of interest, including compound interest and rests specified in the mortgage bond, remains applicable until the expiration of the redemption period fixed by the court. Once the fixed day for redemption expires, the matter passes from the domain of contract to the domain of judgment, and the rights of the mortgagee are then governed by the directions in the decree (court rate) rather than the contents of the bond.
(B) Appeal - Calculation of redemption period - Where a decree of the court of first instance is varied by an appellate court because the sum fixed for redemption was incorrectly calculated, the redemption period must be calculated from the date of the appellate decree and not from the date of the original decree.
Facts of the case:
A suit was filed to enforce the sale of a mortgage bond which stipulated interest at 12% per annum with quarterly rests. The court of first instance allowed a lower rate of interest. On appeal, the appellate court decreed interest at the contract rate of 12% per annum with quarterly rests until the date fixed for payment, and 6% per annum thereafter. The appellant challenged the rate of interest and the date from which the redemption period should be calculated.
Findings of Court:
The court found that the appellate court's decision was correct. The contract rate of interest applies up until the period for redemption has expired. Furthermore, since the original decree was varied, the appellant could not rely on the date of the original decree to calculate the redemption period.
Issues: Whether the interest should be simple or compound from the date of the decree, and whether the redemption period should be calculated from the date of the decree of the court of first instance or the appellate court.
Ratio Decidendi: Under Order XXXIV of the Code of Civil Procedure, 1908, the mortgage contract governs interest until the fixed day for redemption. After this date, the matter shifts from the domain of contract to the domain of judgment, and the court-mandated rate applies. If an appellate court varies the original decree, the original date cannot be used as the starting point for the redemption period as the judgment was incorrect.
Result: Appeal dismissed with costs.
Legal Category Hierarchy
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practice and procedure
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code of civil procedure
- decrees
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code of civil procedure
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property law
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mortgages
- interest and redemption
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mortgages
Judgement
Appeal (No. 108 of 1925) from a decree of the High Court (December 5, 1923) which varied a decree of the Subordinate Judge of Howrah.
The suit was brought by the first three respondents to enforce by sale a mortgage bond dated May 2, 1907. The plaintiffs were assignees of the mortgage debt. The bond provided for interest at 12 per cent, per annum with quarterly rests.
The issues framed on the pleadings included (2.) was the bond executed under undue influence? (5.) Is the stipulation for interest and compound interest illegal, void, and unconscionable?
Law. Rep. 54 Ind. App. 1 ( 1926- 1927) Jagannath Prosad Singh C howdhury V. Surajmal Jalal
139
The Subordinate Judge found all the issues in favour of the plaintiffs, except issue 5. He allowed interest at 9 per cent, until the date of the institution of the suit, and 6 per cent, from that date until payment.
The defendant-appellant did not appeal, but the plaintiffs-respondents appealed as to the interest allowed. The High Court (Chatterjea and Cuming JJ.) allowed the appeal and made a decree for interest at 12 per cent, per annum with quarterly rests, as stipulated in the bond, to the date fixed by the decree for payment, and thereafter at 6 per cent, per annum.
1926. Oct. 19. Sir George Lowndes K.C. and Dube for the appellant referred to Raghunath Prasad v. Sarju Prasad (( 1923) L. R. 511. A. 101,108.); Mangniram Marwari v. Dhowtal Roy (( 1886) L. R. 12 Calc. 569.); Sundar Koer v. Sham Krishen (( 1906) L. R. 34 I. A. 9, 21.); and Order xxxiv, rr. 2, 3, 4.
Dunne K.C. and Sen for the respondent-plaintiffs were not called upon.
The judgment of their Lordships was delivered by
LORD PHILLIMORE. On this appeal as it was lodged various points were presented which have not been insisted upon in argument before their Lordships Board. The one matter to which counsel for the appellant have confined themselves is the question of the rate of interest and whether it should be simple or compound from the date either of the decree of the High Court or, as put by one of the learned counsel, the decree of the Court of first instance.
Really this matter is determined beyond question by Order xxxiv of the Code of Civil Procedure, 1908. This may, for this particular case of mortgages, differ from the general provision of s. 34 of the Code ; but if so, the particular avoids the general. Under r. 2 of that Order it is provided " In a suit for foreclosure, if the plaintiff succeeds, the Court shall pass a decree—(a) ordering that an account be taken of what will be due to the plaintiff for principal and interest on the mortgage, and for his costs of the suit (if any) awarded to him on the day next hereinafter referred to .... and directing—(c) that if the defendant pays into Court the amount so due on a day within six months from the date of declaring in Court the amount so due to be fixed by the Court, the plaintiff shall deliver up to the defendant, or to such person as he appoints, all documents in his possession.... but (d) that, if such payment is not made on or before the day to be fixed by the Court, the defendant shall be debarred from all right to redeem the property." And r. 4 (1.) provides that in a suit for sale, if the plaintiff succeeds, the Court shall pass a decree as mentioned above, and then direct that the property shall be sold if it is not redeemed.
That is very well paraphrased by Lord Davey in delivering the judgment of the Board in Sundar Koer
v. Rai Sham Krishen; he says (L. R. 34 I. A. 9, 21) " Their Lordships have no hesitation in expressing their concurrence with the High Court of Calcutta, not only in allowing interest after the fixed day, but also in allowing interest at the Court rate and not at the mortgage rate. They think that the scheme and intention of the Transfer of Property Act was that a general account should be taken once for all, and an aggregate amount be stated in the decree for principal, interest and costs due on a fixed day, and that after th
