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1926 Supreme(SC) 55
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD PHILLIMORE, LORD SINHA, MR. AMEER ALI, AND LORD SALVESEN.
PANAGANTI RAMARAYANIMGAR (DEFENDANT NO. 1) - Appellant
Versus
MAHARAJA OF VENKATAGIRI - Respondents
On appeal from the High Court at Madras.
Decided On : Nov. 30. 1926.
Important Points
Subject
Civil Law - Property Law
Act Referred
Headnote
(B) Code of Civil Procedure - Order xxxiv, r. 1 - All persons having an interest in the mortgage security must be joined as parties to any suit relating to the mortgage to ensure all claims affecting the equity of redemption are disposed of in one suit and to avoid circuity of action.
Facts of the case:
A mortgage with possession was executed for a sum of money to clear existing encumbrances on several properties. Simultaneously, a lease was executed for part of the mortgaged property. The mortgagee paid off certain decrees, but lost possession of some properties due to court proceedings. The mortgagor failed to pay the stipulated rent under the lease. The assignee of the equity of redemption sought redemption, contesting the inclusion of rent arrears and certain interest claims in the mortgage account.
Findings of Court:
The mortgage was a single transaction charging all properties for the whole debt, not separate mortgages. The mortgagee is entitled to interest on the full amount paid into court for the benefit of the mortgagor until the date of recovery. The mortgage was an anomalous mortgage, not a pure usufructuary mortgage, as it included covenants for payment of principal and interest.
Issues: Whether the mortgagee was entitled to interest on the full amount paid into court regarding certain properties and whether arrears of rent under a lease executed as part of the mortgage transaction constituted a charge that must be discharged for redemption.
Ratio Decidendi: Section 62 of the Transfer of Property Act is inapplicable to mortgages that contain covenants for the payment of principal and interest. Such mortgages are anomalous or combined mortgages. Under Section 61, a mortgagor cannot redeem the property without paying money due under a separate mortgage or charge relating to the same property. To avoid circuity of action and per Order xxxiv, r. 1 of the Code of Civil Procedure, all such charges should be adjudicated in the redemption suit.
Result: Judgment of the High Court varied and the case remitted for the preparation of a decree including the rent arrears and corrected interest.
Legal Category Hierarchy
-
property law
-
mortgages
-
redemption
- usufructuary mortgage
- anomalous mortgage
- mortgage account
-
redemption
-
leases
- rent arrears
-
mortgages
-
practice and procedure
-
civil procedure code
- joinder of parties
-
civil procedure code
Solicitors for appellant:Douglas Grant and Dold. Solicitor for first respondent: H. S. L. Polak.
Judgement
82 Law. Rep. 54 Ind. App. 68 ( 1926- 1927) Panaganti Ramarayanimgar V. Maharaja of Venkatagiri
183
Appeal (No. 154 of 1924) from a decree of the High Court (April 19, 1920) varying a decree of the Subordinate Judge of North Arcot (March 21, 1917).
The suit was brought by the late Maharaja of Venkatagiri, now represented by the first respondent, for redemption of a mortgage with possession dated March 13, 1909; the mortgagors interest had been purchased by the plaintiff on October 22, 1915, and the mortgage had been assigned to the defendant-appellant on September 9, 1913.
The plaintiff by his plaint prayed (a) that an account might be taken of the amount due to the defendants on the securities; (b) on payment delivery of the documents and of possession of the properties free from any encumbrances.
The Subordinate Judge made a decree for redemption on payment of Rs. 2,47,884 with interest. On appeal to the High Court (Wallis C.J. and Seshagiri Ayyar J.) the decree was modified by adding a further Rs.29,711. The question in the present appeal was whether certain other sums should not be brought into the mortgage account, and whether sufficient interest had been allowed. Among those sums was the rent in arrear under a lease of the same date as the mortgage, whereby the mortgagee let to the mortgagor part of the mortgaged property.
The facts of the case, and the effect of the judgments in India, appear from the judgment of the Judicial Committee.
1926. Oct. 25, 26, 28. Upjohn K.C. and Kenworthy Brawn for the appellant.
Sir Herbert Cunliffe K.C., Dunne K.C. and Narasimham for the first respondent.
On the question whether the rent, assuming it was a charge upon the property, as was contended for the appellant, must be paid on redemption of the principal mortgage, reference was made to the Transfer of Property Act, 1882, ss. 58, 60, 62, 98; Order xxxiv, r. 1; Khuda Bakhsh v. Alim-un-nissa (( 1904) I. L. R. 27 A. 313.); Ramaswami Ayyar v. Vythinatha Ayyar (( 1903) I. L. R. 26 M. 760.); Jawahir Singh v. Someshar Datt (( 1905) L. R. 331. A. 42.) ; Ganga Rai v. Kirtarath Rai (( 1911) I. L.
R. 33 A. 393.); and Abdullah Khan v. Basharat Husain . (( 1912) L.R. 40 I. A. 31.)
Nov. 30. The judgment of their Lordships was delivered by
LORD SINHA. This is an appeal against a decree of the High Court of Madras, dated April 19, 1920, varying a decree of the Subordinate Judge of North Arcot, dated March 31, 1917, made in a suit filed in that Court on December 21, 1915.
That suit arose out of a transaction between the Raja of Kalahasti and the Raja of Tuni, which was embodied in ex. A, and ex. I. in the case.
Ex. A purports to be a deed of " mortgage with possession " of immovable properties described in schedules A, B, C and D (hereafter called the A, B, C and D properties) for a sum of 11 lakhs of rupees, with interest at 10 annas per cent, per month, to be recovered from the rents and profits. The mortgagor was to have liberty to pay off the mortgage money at the end of four years, with option to defer payment for a further period of two years. If the money was not paid on March 13, 1915, the entire amount then due was to carry interest at 1 per cent, per mensem—10 annas from the rents and profits and the remaining 6 annas to be payable by the mortgagor personally being also charged upon the properties.
82 Law. Rep. 54 Ind. App. 68 ( 1926- 1927) Panaganti Ramarayanimgar V. Maharaja of Venkatagiri
184
Ex. I purports to be a muchilka or counterpart lease, by which the mortgagor Raja takes a lease from the mortgagee of the A properties for a period of four years, from July 1, 1909, to June 30, 1913. The lessee was to pay a fixed yearly rent of Rs.18,750, in three equal instalments, which is equivalent to interest on 2 ½ lakhs at 10 annas per cent, per month. In default of payment of the rent reserved, the amount was to be recovered from the income of the ijara villages, and by means of the lessees other property " besides " the property
