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PATNA HIGH COURT
Lakshmikanta Jha and Narayan JJ.
Sheobachan Pandey
Versus
Madho Saran Choubey
Appeal From Appellate Decree No. 206 of 1948 ;
Decided On : SEPTEMBER 18, 1951
REDEMPTION SUIT - SET-OFF - EQUITABLE SET-OFF - CROSS-CLAIM - MORTGAGE - DAMAGES - LIMITATION - TRANSFER OF PROPERTY ACT - INDIAN CONTRACT ACT - EVIDENCE ACT - LEGAL PRINCIPLES.
Fact of the Case:
Plaintiffs filed a suit for redemption of a usufructuary mortgage. The mortgagee set up a cross-claim for damages for loss of possession of a portion of the mortgaged land and for money advanced to the mortgagors for payment of nazrana to the Maharaja of Dumraon. The trial court decreed the suit for redemption with mesne profits and allowed the mortgagee's claim in part. On appeal, the lower appellate court allowed the mortgagee's appeal in part and dismissed the plaintiffs' cross-objection.
Finding of the Court:
The High Court held that the mortgagee was not entitled to claim damages by way of a cross-claim in the mortgagors' suit for redemption. The Court further held that the mortgagee's claim for damages was barred by limitation and that the ekrarnama, which was an unregistered document, could not be referred to in support of the claim.
Issues: 1. Whether the mortgagee was entitled to claim damages by way of a cross-claim in the mortgagors' suit for redemption. 2. Whether the mortgagee's claim for damages was barred by limitation. 3. Whether the ekrarnama, which was an unregistered document, could be referred to in support of the mortgagee's claim.
Ratio Decidendi: 1. A cross-claim may be set up as a shield or as a sword. When it is set up as a shield it is a defensive weapon and may be pleaded by the defendant to reduce the liability against him even to the full extent of the plaintiffs claim. A counterclaim in the shape of a defensive measure is what is technically known as a set-off. A set-off may, either be legal or equitable. There is a statutory provision in the Code of Civil Procedure regarding a legal set-off. If the amount claimed be an ascertained sum, it may be awarded by way of a legal set-off under Order 8, Rule 6, Code of Civil Procedure if legally recoverable. But if the claim be for un-liquidated damages for any alleged breach of contract or legal obligation, the amount that may ultimately be ascertained may be claimed as an equitable set-off, but not under the provision of the Code. The statutory provision of Order 8, Rule 6, does not preclude what is called an equitable set of. Therefore, the defendant may claim an equitable set-off provided his cross-demand arises out of the same transaction as the plaintiffs claim or transactions so connected in their nature and circumstances as to make it inequitable that the plaintiffs should recover and the defendants should be driven to a cross suit. 2. The mortgagee's claim for damages was barred by limitation. The mortgagee remained out of possession for three years, from 1917 to 1919. He had, therefore, six years under Article 116 of the Limitation Act to commence his action for compensation for the breach of the contract under the mortgage bond in suit. An acknowledgment of liability under the ekrarnama was made on the 29th September 1923. Therefore, the mortgagee had another six years from this date within which he could claim compensation by a suit. By an acknowledgment in the ekrarnama the period could not be extended beyond 1929. If the right to sue was barred in 1929, it could not be revived by an admission in the ekrarnama under which the plaintiffs covenanted to pay damages for me period of dispossession at the time of redemption. 3. The ekrarnama, which was an unregistered document, could not be referred to in support of the mortgagee's claim. The document though in form an agreement, if liberally construed is in substance a deed creating a charge. Therefore, the document required registration, and in the absence of registration the terms of the document cannot be referred to.
Final Decision: The High Court allowed the appeal, set aside the decree in favor of the mortgagee, and confirmed the decree of the trial Court in favor of the plaintiffs for redemption and recovery of possession with mesne profits.
Lakshmikanta Jha, J.
1. The plaintiffs are me appellants. The appeal arises out of a suit for redemption of a usufructuary mortgage in which the mortgagee set up a cross-claim. The trial Court decreed the suit with mesne profits and allowed the claim of the defendant in part by passing a separate decree in his favour. The defendant thereupon preferred an appeal and the plaintiffs filed a cross-objection. The Court of appeal below allowed the appeal in part and dismissed the plaintiffs cross-objection.
2. One Dhautal Pandey had three sons, Amrit, Sakhi and Mewa. Amrit died leaving four sons, Mahangu, Chanarman, Gena and Bhagwat. Sakhi died leaving a widow, Mehesha Kuer. The case of the plaintiffs is that Sakhi and Mewa died in a state of jointness as members of a joint Mitakshara family and that the family is still joint. Gena died leaving a son Rambachan, who is plaintiff No. 2, and Bhagwat died leaving a son Sheobachan, who is plaintiff No. 1.
3. Mahangu, Gena and Mt. Mahesha Kuer executed a mortgage bond in favour of one Gauri Shanker Chaube, defendant No. 1 (referred to in this judgment as the defendant) on the 3rd February, 1916, for a sum of Rs. 4,606/-, the due date of payment being 30th Jeth, 1325 Fasli (24th June 1918.) Khatas Nos. 63 and 70 of village Manjhauli, having an area 17 B fully set out in Schedule A to the plaint were given in usufructuary mortgage. On the 11th April 1944, plaintiff No. 1, executed three rehan deeds of Rs. 2,000.00 each in favour of one Ramrichh Chaubey, giving him in usufructuary mortgage 10 bighas (set out in Schedule C to the plaint) out of the 17 bighas which was in rehan with the defendant, and left with him Rs. 4,606/- to satisly the defendants mortgage. Rambrichh was impleaded as defendant No. 2, but later on he was transposed to the category of the plaintiffs. He died during the pendency of the suit and on his death his sons were substituted in his place. The case of the plaintiffs is that the money due under the mortgage bond in suits was tendered to the defendant by Rambrichh and on his refusal to accept the money he deposited it in Court under Section 83 of the Transfer of Property Act on the 25th April 1944, and got a notice of the deposit served in him (the defendant). The defendant having refused to withdraw the money the present suit was instituted for redemption claiming mense profits from the date of service of notice of deposit till recovery of possession.
4. It appears that before the execution of the mortgage bond in suit khata No. 63, which includes Plot No. 862, had been purchased by the Maharaja of Dumraon in execution of a money decree and delivery of possession thereof had been taken by him through Court. The plaintiffs case is that the sale was fraudulent and surreptitious and he continued in possession; but in order to purchase peace the plaintiff No. 1, obtained settlement of the land (fully set out in Schedule B to the plaint) from the Maharaja under a patta dated the 20th September 1923, on payment of Rs. 1,10007-as nazrana. The allegation of the plaintiffs is that the mortgagee was duly put in possession of the land in spite of the sale and the delivery of possession taken by the Maharaja of the land set out in Schedule B.
5. The defendant contested the suit. He denied the plaintiffs story of tender of the mortgage money and service of notice of the deposit under Section 83 of the Transfer of Property Act. He also claimed Rs. 1,100.00 with interest amounting to Rs. 248712/- on the allegation that he paid the nazrana money to the Maharaja on behalf of the plaintiffs on the 22nd December 1919, for settlement of Schedule B land. The defendant also claimed Rs. 3,651/- and odd, by way of damages for the loss of possession of 10 bighas of land of schedule B and payment of excess rent in respect of the rehan land. Thus he set up a cross-claim for a total sum of Rs. 5,000.00 over and above the mortgage money and paid Court-fee on the same. His ease is that the
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