1940 (11) TMI 37 - HC - Indian Laws

Decree Reduced to Rs. 6540 with 6% Interest; Personal Decree Set Aside; Suit Not Barred Under Order 2, Rule 2, CPC.

The court reduced the decree amount to Rs. 6540, payable by 1st May 1941, with future interest at 6% per annum. It set aside the direction for a personal ... Consideration - failure of consideration - approbate and reprobate - bar under Order 2, Rule 2 and Explanation (iv) to Section 11, Civil P.C. - reduction of preliminary decree under Order 34, Rule 4, Civil P.C. - statutory cap on interest by amendment of Act 8 of 1934 effected by Act 12 of 1940 - personal decree against mortgagor - extinguishment of prior rightsBar under Order 2, Rule 2 and Explanation (iv) to Section 11, Civil P.C. - approbate and reprobate - failure of consideration - Whether the present suit on the mortgage is barred by the plaintiff's previous suit or by res judicata/Order 2, Rule 2, Civil P.C. - HELD THAT: - The earlier plaint (18 July 1931) was construed as a suit for refund of money on the basis of failure of consideration and not as a suit on the mortgage deed. Although the earlier plaint contained allegations that the mortgagor had no title and that the mortgage was invalid, the Court held that this amounted to suing for a simple money decree rather than proceeding on the mortgage. The plaintiff therefore did not abandon the mortgage nor approbate and reprobate the transaction in a manner that would bar the later suit. The cause of action in the 1931 suit (failure of consideration) was different from the cause of action in the present suit (enforcement of the mortgage), and Expln. (iv) to Section 11 and Clause (3), Order 2, Rule 2 do not operate to bar the present suit. The Court rejected the contention that the plaintiff was bound to have included, as an alternative, a claim on the mortgage in the earlier suit. [Paras 11, 12]The present suit is not barred by the previous litigation or by Order 2, Rule 2 / Explanation (iv), Section 11, Civil P.C.; the plaintiff may proceed on the mortgage deed.Consideration - What amount of consideration is established for the mortgage deed and what is the principal sum due on the mortgage? - HELD THAT: - Upon examination of the evidence and the prior transactions, the Court found that of the Rs. 8000 recited in the mortgage deed, consideration was proved only for two items: Rs. 500 admitted to have been paid before the Sub-Registrar and Rs. 2500 paid to Badar-ud-Din Qureshi. Other recited items were not established. Accordingly the Court held that only Rs. 3000 of the principal was supported by proved consideration. [Paras 13, 14]Principal sum due on the mortgage is Rs. 3000 (being Rs. 500 + Rs. 2500); remaining recited amounts are not established as consideration.Statutory cap on interest by amendment of Act 8 of 1934 effected by Act 12 of 1940 - reduction of preliminary decree under Order 34, Rule 4, Civil P.C. - personal decree against mortgagor - extinguishment of prior rights - Adjustment of interest, revision of the decree, and ancillary directions (personal decree, surplus, and prior rights). - HELD THAT: - The stipulated and claimed rates of interest in the deed and suit exceeded the statutory maximum effected by the cited amendment; the Court applied the statutory cap. It allowed interest at 71/2% (the capped rate) on the recited principal from 5 August 1925 to 30 April 1941, computed the interest component accordingly, and reduced the decree under Order 34, Rule 4, Civil P.C. The Court fixed the total sum payable on 1 May 1941 and directed future interest at 6% from that date. The trial Court's directions granting a personal decree against the mortgagor and ordering payment of any surplus to subsequent transferees were set aside. The rights claimed by Badar-ud-Din Qureshi were held to be extinguished. [Paras 14]Decree reduced to reflect interest limited by statute: interest at 71/2% applied up to 30 April 1941 and future interest at 6% from 1 May 1941; personal decree against mortgagor set aside; directions as to surplus to subsequent transferees set aside; rights of Badar-ud-Din Qureshi extinguished; parties to bear their own costs.Final Conclusion: Appeal allowed in part. The Court held the present suit not barred by the earlier proceedings, found proved consideration of Rs. 3000 only, applied the statutory cap on interest, reduced the decree to the sum computed on that basis payable 1 May 1941, fixed future interest, set aside the trial Court's directions for a personal decree and payment of any surplus to subsequent transferees, and declared the prior rights of Badar-ud-Din Qureshi extinguished; parties to bear their own costs. Issues Involved:1. Consideration of the mortgage deed.2. Abandonment of the mortgage transaction.3. Bar under Order 2, Rule 2, and Section 11, Civil Procedure Code (CPC).Detailed Analysis:1. Consideration of the Mortgage Deed:The plaintiff, Siraj-ud-Din, filed a suit for the recovery of Rs. 12,000 based on a mortgage deed executed by Shuja-ud-Din on 5th August 1925. The principal sum secured was Rs. 8000 with interest. The plaintiff claimed Rs. 4000 as interest, reducing the rate to Re. 1 per cent per mensem. The trial court granted a preliminary decree under Order 34, Rule 4, Civil P.C., but inaccurately declared the total amount due as Rs. 10,000. The appeal by the defendant, Shuja-ud-Din, contested the consideration of the mortgage deed, denying all items except Rs. 500 received before the sub-registrar. The court examined the prior dealings, including an unregistered mortgage deed executed on 13th July 1925 and subsequent transactions on 5th August 1925, involving a sale deed and the mortgage deed in question. The court found consideration for only Rs. 3000 out of the total Rs. 8000, consisting of Rs. 500 admitted payment and Rs. 2500 paid to Badar-ud-Din Qureshi.2. Abandonment of the Mortgage Transaction:The defendant argued that the plaintiff had abandoned the mortgage transaction by denying the defendant's title in a previous suit, rendering the mortgage dead. The previous suit, filed on 18th July 1931, sought a simple money decree for Rs. 10,000, claiming the mortgage was invalid due to the defendant's lack of title. The trial court dismissed the suit, and the High Court upheld this decision, interpreting the plaint as based on failure of consideration under Section 65, Contract Act, not on the mortgage deed. The court concluded that the plaintiff's choice to sue for a simple money decree did not constitute abandonment of the mortgage. The plaintiff was misled about the title and chose an alternative form of suit, which did not bar the present suit on the mortgage deed.3. Bar under Order 2, Rule 2, and Section 11, Civil P.C.:The defendant contended that the present suit was barred under Order 2, Rule 2, and Section 11, Civil P.C., arguing that the plaintiff should have included the claim on the mortgage deed in the previous suit. The court held that the cause of action in the previous suit was different, based on failure of consideration, not on the mortgage deed. Therefore, Clause (3) of Order 2, Rule 2, did not apply. Additionally, Explanation (iv) of Section 11, Civil P.C., did not bar the suit, as the plaintiff was not bound to include the claim on the mortgage deed in the previous suit. The court rejected the contention that the present suit was barred by the previous litigation.Conclusion:The court reduced the amount of the decree to Rs. 6540, payable on 1st May 1941, with future interest at 6 per cent per annum. The direction for a personal decree against the mortgagor and the surplus payment to subsequent transferees were set aside. The appeal was accepted to this extent, and parties were left to bear their own costs throughout.