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1952 Supreme(Nagpur) 136
HIGH COURT OF NAGPUR
Hidayatullah, V R Sen
DADOO VITHOBA AND ORS – Appellant
Versus
VENKATRAO TUKARAM AND ORS – Respondent
First Appeal No. 59 of 1945
Decided on : 24-11-1952
D B Najbile, D T Mangalmoorti, G J Ghate, M R Bobde, N R Raut, Advocates
A mortgage security is not extinguished merely by an agreement to transfer lands in satisfaction of the mortgage debt. The extinguishment of the mortgage takes place when the lands are actually transferred.
Headnote:
MORTGAGE - FORECLOSURE - DEFENCE - NOVATION - AGREEMENT TO TRANSFER LANDS IN SATISFACTION OF MORTGAGE DEBT - WHETHER MORTGAGE SECURITY EXTINGUISHED - ACCORD AND SATISFACTION - ESSENTIALS.
Fact of the Case:
The Appellants, who were mortgagors, contended that the mortgage debt and security had been discharged by an adjustment and compromise. They alleged that they had applied to the Debt Conciliation Board and had agreed to settle the mortgage debt by executing a conveyance of certain lands to the mortgagees. The mortgagees had agreed to this proposal and had withdrawn their claim before the Debt Conciliation Board. The Appellants further contended that a sale-deed was executed by all the Appellants except Nathu, who had become major by that time and refused to sign the agreement or the sale-deed.
Finding of the Court:
The Court found that the mortgagees had not accepted merely a promise to convey the lands and release the mortgage security. The extinguishment of the mortgage was to take place when the lands were actually transferred. Since the transfer of lands never took place, the mortgage debt and security were not discharged.
Issues: 1. Whether there was any final settlement before the Debt Conciliation Board between the mortgagors and the mortgagees regarding the mortgage in suit? 2. Has the settlement as alleged put an end to the liability under the mortgage in suit and is the Plaintiffs' remedy only to sue for specific performance? 3. Whether the Plaintiffs are in any manner estopped from suing on the mortgage?
Ratio Decidendi: 1. A mortgage security is not easily lost and can come to an end either by the payment of the mortgage debt or by such other satisfaction as the mortgagee may by a novated agreement allow to the debtor. 2. Payment, however, whether of the debt or satisfaction in the other way is a condition precedent to the extinction of the mortgage security. 3. Accord and satisfaction is a question of fact and in the present case, the mortgagees had agreed to accept payment, if made, in the shape of transfer of the lands. This transfer never took place and therefore the mortgage security was not set at naught and the debt or security discharged.
Final Decision: The appeal was dismissed with costs.
1. This appeal is against a preliminary decree for foreclosure. The Appellants are the first 5 Defendants in the case. The following genealogy shows their relationship:
VITHOBA ______________________|____________________ | | | Tukaram Daryaji Daloo (Deft. 1) | (Separate) __________|________ Chandrabhan (d. 1924) | | | = Narbadab; Ramrao Ajabrao Gujaba | (Deft. 2) (Deft. 3) (Deft. 4) Nathu (Deft. 5) (Born posthumous on 1-17-1924)
2. The suit was brought by Vyankatrao and Bhaurao sons of Tukaram on foot of a mortgage (Ex. P-31) dated the 6th February 1929. The sum secured, namely, Rs. 12,700/- was made up of certain antecedent debts and was payable in 3 years with interest. In default of payment, the property, which was mortgaged, was to be foreclosed. On the date of the suit the amount came to Rs. 26,035/- but the present -claim was limited to RS. 23,000/-.
3. The mortgage was executed by Dadoo, the first Appellant, for himself and as guardian of his minor sons, by Ramrao son of Dadoo and by Tukaram, paternal grand-father of Nathu.
4. The amount of the mortgage was not repaid and hence the suit. The claim as laid was simple enough but the Defendants contested that the suit did not lie. According to them, Dadoo, Ramrao and Nathu (through his mother Narbada) had applied to the Debt Conciliation Board in 1937 and 1938. Since the liabilities of these debtors exceeded the statutory limit, the mortgagees in the present suit were induced to give up their rights under the mortgage and accept certain fields and a share in a village as payment. According to them, there was an agreement in 1939 by which it was settled that the present Plaintiffs would receive those lands 'as' satisfaction of their mortgage and the debt and security were discharged. The Defendants aver that Vyankatrao also made a statement to this effect before the Debt Conciliation Board.
5. The Defendants further allege that in 1943 there was yet another agreement to the same effect and a sale-deed was also executed by all the Defendants except Nathu, who having become major by that time did not sign the agreement or the sale-deed. The Defendants contend that the rights under the mortgage were superseded by the agreement and the remedy of the mortgagees was to compel the performance of the novated agreement.
6. Since some dispute took place about the nature ''of the pleas in the case,'' it is convenient to reproduce some of the main pleadings on behalf of the parties on this point. The Plaintiffs stated in their plaint that the mortgagor (the first Defendant) had applied to the Debt Conciliation Board, Katol, and Ramrao and Nathu had also made similar applications. All these applications were decided on the 4th July 1939. The Plaintiffs state that- in these proceedings the above said Defendants admitted their liability to pay the suit debts and they during the pendency of these proceedings had proposed to settle the claim under the mortgage by executing a conveyance of 27 acres of their absolute occupancy and 'malik makbuza' lands together with a four annas village share of their mouza Sipikhapa tahsil Katol district Nagpur in full satisfaction of the mortgage claim in suit and the Plaintiffs were willing to settle the matter as proposed. But this proposal was not given effect to as the Defendants failed to execute a conveyance in favour of the Plaintiffs and the claim under the mortgage continued to subsist. Subsequently as the mortgage amount was not paid by any of the mortgagors, the mortgagees served the Defendants Nos. 1 to 8 with a notice dated 26-9-1941 claiming the amount of the mortgage claim from them. The Defendants Nos. 1 to 4 accepted the notice and by their reply notice dated 18-10-1941 admitted their liability to pay the mortgage debt. They further expressed their willingness to pay the amount or to settle the claim with a request to reduce the same.
The Defendants Nos. 5 to 8 refused to accept service of the abovesaid notice on them.
Later on the Defenda
