judgement:
Appeal No. 560 of 1960.
Appeal from the judgment and decree dated July 18, 1955, of the Patna High Court in Appeal from original decree No. 500 of 1947.
S.C. Agarwal and D.P. Singh, for the appellant.
P.K. Ghosh, for respondent No. 1.
December 3, 1963.
The Judgment of the Court was delivered by SHAH J.
Rajkumar Ran Bahadur Singh hereinafter called 'the mortgagor ' was the proprietor of a five annas share in Tauzi No. 16 of Mauza Bansjora, eight annas share in Mauza Simitanr and certain interest in Mauza Bahaldih all in District Manbhum.
The mortgagor had leased 200 bighas of coal bearing land out of his holding in Mauza Bahaldih to certain lessees for an annual royalty of Rs. 2,000 payable in two equal instalments, the first in the month of Aswin of the Vikram year and the second in the month of Chaitra.
On June 14, 1922, the mortgagor borrowed Rs. 5,500 from one Rabindra Nath Chakravarty and executed a deed of mortgage whereby he agreed personally to repay the amount, and encum bered his share in Mauzas Bansjora and Simitanr for repayment of the amount borrowed with interest at the rate of Rs. 1/8/ per mensem, and further agreed that in default of payment, the mortgagee do recover the amount due by sale of his interest in Mauza Bansjora, Simitanr and Bahaldih.
By the mortgagedeed the mortgagor also agreed that the mortgagee do receive the amount due as royalty from the tenants under mining leases in Mauza Bahaldih in the month 637 of Aswin.
By another deed dated August 27, 192 the mortgagor created a mortgage in favour of Sasindranath Chakravarty and Indra Nath Chakravartyto secure payment of Rs. 5,500 advanced to him and interest thereon.
The covenants of this mortgage deed were substantially the same as the covenants of the earlier mortgage deed dated June 14, 1922 and it was agreed that the mortgagees were to receive the instalment of royalty payable in Chaitra in respect of Mauza Bahaldih.
Under these mortgage deeds the due date for payment was April 14, 1925.
On May 17, 1927, the mortgagor assigned his interest in Mauza Bansjora to one Mahendra Nath Rai and on October 2, 1927 he assigned his interest in Mauza Simitanr to one Pushpa Moyee Devi.
Thereafter in execution of a money decree obtained against the mortgagor, his right, title and interest in mauz Bahaldih was sold on January 16, 1937, and after th sale was confirmed, possession of Mauza Bahaldih was taken by the auction purchaser on April 7, 1937 By two deeds dated June 18, 1946, Manimala Devi the plaintiff in the suit out of which this appeal arises obtained assignments of the rights of the mortgagees under the two deeds dated June 14, 1922, and August 27, 1922, and filed a suit on July 12, 1946, in the Court of the Subordinate Judge at Dhanbad for a decree for enforcement of the two mortgages by sale of the mortgaged properties.
To the suit were impleaded as defendants the representatives of the original mortgagees, the heirs of the mortgagor and certain alienees of the mortgaged property.
The suit was filed more than twelve years after the date on which the mortgage amount because payable, and prima facie, it was barred by the law of limitation.
But the plaintiff sought to bring the claim within limitation, relying upon certain part payments towards the mortgage dues made by the mortgagor.
On the deed dated June 14, 1922, was recorded an endorsement dated April 1, 1937, relating to payment of Rs. 600 as interest which was signed by the mortgagor.
On the mortgage deed dated 638 August 27, 1922, there was recorded an endorsement dated August 16, 1934, of payment of Rs. 100 which also was signed by the mortgagor.
The plaintiff relied upon part payments evidenced by these endorsements to extend the period of limitation in respect of the two mortgage claims.
The trial Judge rejected the defence raised by the contesting defendants and held that the suit in respect of the first mortgage was not barred by the law of limitation because the mortgage "was partly simple and partly usufructuary" and even though the plaintiff could not rely upon part payment of principal or interest to extend the period of limitation for the suit, she could still maintain the suit relying upon the dispossession of the mortgagee on April 7, 1937, by the auction purchaser who purchased the mortgagor 's rights in Bahaldih lands at the Court auction and that the suit to enforce that mortgage was accordingly within limitation.
In respect of the mortgage dated August 27, 1922, the Judge held that the claim was within limitation both on account of part payment of principal and interest and upon the cause of action furnished by the dispossession of the mortgagees in respect of the Bahaldih property.
In appeal by the fourth defendant widow of Mehandra Nath Rai the High Court of Patna reversed the decree passed by the trial Court and dismissed the plaintiff 's suit.
The High Court held that as the plaintiff had in her plaint not relied upon dispossession as a ground for extension of the period of limitation, that claim should not have been permitted to be made out by the trial Court.
The High Court also held that Mauza Bahaldih was not given in mortgage to the mortgagees under either of the two mortgagedeeds and dispossession of the mortgagees from Mauza Bahaldih or part payments of principal or interest after the mortgagor had parted with his interest in the mortgaged properties Mauzas Bansjora and Simitanr could not operate to extend the period of limitation for the suit.
The High Court further held that in any event even if Mauza Bahaldih was 639 one of the mortgaged properties, the mortgagor having lost his interest in Mauzas Bansjora, Simitanr and Bahaldih prior to the payment of Rs. 600 by the mortgagor on April 1, 1937, as evidenced by the endorsement on the first mortgage deed, the plaintiff 's suit to enforce the mortgage dated August 27, 1922, was barred by limitation.
The plaintiff has appealed to this Court with certificate granted by the High Court.
The first question which falls to be considered is whether Mauza Bahaldih was mortgaged under the two mortgage deeds.
The mortgagor had shortly after the two mortgage deeds transfered his interest in Mauzas Bansjora and Simitanr, and for reasons which we will presently set out, the mortgagor cannot, by making part payments, seek to extend the period of limitation against his assignee after he has lost his interest in the property mortgaged.
The two part payments dated August 16, 1934, and April 1, 1937, could operate to extend the period of limitation if the mortgagor continued to remain on those dates owner of the mortgaged property or part thereof.
The plaintiff could therefore avail of the extension of the period of limitation by part payments only if th mortgagor 's interest in Mauza Bahaldih stood mortgaged at the dates of those part payments, for the mortgagor 's interest in Mauzas Bansjora and Simitanr was assigned to strangers many years before those par payments were made.
The terms of the two mortgage deeds are substantially the same and such differences as there are in the covenants have no bearing on the questions to be decided in this appeal.
We will therefore set out the material recitals and clauses in the mortgage deed dated June 14, 1922.
In the preamble clause it was recited that Tauzi No. 16 of collectorate and district Mandhum constitutes the zamindari interest and that on the death of his late father, the mortgagor acquired the said zamindari and that he was entitled to transfer encumber or sell the whole property included within the said Tauzi No. 16 at his free will.
By paragraph 4 640 the mortgagor undertook to pay interest at the rate of Rs. 1/8/ (one rupee eight annas) per cent per mensem on the amount of Rs. 5,500 borrowed by him.
In paragraph 5 it was stated that it was not possible for the mortgagor to pay interest every year on the amount borrowed by him and accordingly he had agreed that the tenants of the coal fields in Mauza Bahaldih with whom he had settled the coal mines in the zamindari shall continue to pay to the mortgagee Rs. 1,000 on account of one of the instalments for rent, minimum royalty and commission, due to the mortgagor according to the terms of the contracts.
It was further stipulated by paragraph 7 that the mortgagor had assigned the amount due from certain tenants mentioned in the schedule under the instalments specified therein by way of interest for peaceful realisation of the annual interest of Rs. 1,000 every year, and the mortgagee was, in default of payment by the tenants, competent to realise the same.
The mortgagor also undertook to issue notices to the tenants calling upon them to pay the amounts according to the assignment.
By paragraph 9 it was agreed that in the event of the tenants failing to pay the amount, the mortgagor would compensate the mortgagee in respect of the amount remaining to be realised.
Paragraph 12 provided that so long as all the amounts were not repaid in full, the mortgagor was not competent to gift, sell transfer or encumber, make banami or permanent settlement of the mortgaged property specified and described in Sch.
(kha) i.e. Mauzas Bansjora and Simitanr with any one and that the alienations made by him would be null and void.
He further declared that the said properties had not been encumbered to any person and that he was in peaceful possession of the mortgaged property described in Sch.
(ka) viz., Mauza Bahaldih and that he was peacefully realising the rents.
By paragraph 14 the mortgagor agreed that the properties specified and described in Sch.
(kha) shall always be treated as mortgaged and security for realising the interest and principal due to the mortgagee, the amount and interest due to the mortgagee having first charge on the same, that 641 "should any cause of action arise", the mortgagee "shall be competent to realise the full amount due to" him "together with interest and costs by selling the said properties in Sch.
(ka) and (kha) by action", and that should the full amount be not realised the mortgagee will be competent to realise the amount from other moveable and immoveable properties belonging to the mortgagor.
By paragraph 13 the mortgagor agreed to pay the principal and the interest due on or after April 14, 1925.
The mortgagor admitted receipt under each o the two deeds the amount of Rs. 5,500 advance to him by the mortgagees and agreed to pay interest at the rate of Rs. 1/8/ per cent per mensem.
had also made an arrangement by which the mortgage was to recover the interest on the mortgage debt out of the instalments of Rs. 1,000 as royalty in respect of Mauza Bahaldih.
There was a covenant that the event of the mortgagee being unable to recover royalty from the tenants the mortgagor would make good the same.
Again by paragraph 13 in each of the two deeds there was a covenant for payment of the amount of the principal and interest personal on or after April 14, 192 5.
A distinction was made paragraphs 12 and 14 between Mauzas Bansjor and Simitanr on the one hand and Mauza Bahaldih on the other.
By paragraph 12 the mortgagor had undertaken not to transfer or assign Mauzas Bansjora and Simitanr to any person, and had merely assured the mortgagee that he had not assigned the rights in Mauza Bahaldih till the date of mortgage by way of any encumberance to any other person.
But that distinction would, for the purpose of ascertaining the true nature of the document, be immaterial, for even in the absence of a covenant not to assign the mortgagor 's interest, so long as the mortgage remained outstanding, the transfer made by the mortgagor of Mauzas Bansjora and Simitanr would be subject to the mortgage.
In paragraph 14 it way stated that as security for the realisation of the principal and interest, Mauzas Bansjora and Simitanr were to 1/SCI/64 41 642 stand mortgaged.
That may prima facie suggest that those two Mauzas alone were mortgaged, but the mortgagor had in the same paragraph agreed that should "any cause of action arise " the mortgagee shall be competent to realise the full amount due to him together with interest and costs by selling Mauzas Bansjora simitanr and Bahaldih.
The mort gagee could not sell the mortgagor 's interest in Mauza Bahaldih in satisfaction on his mortgage claim, unless it was mortgaged to him.
The intention appearing from this covenant is therefore clearly to encumber Mauzas Bansjora, Simitanr and Bahaldih.
The High Court, in our view, was in error in holding that the mortgagor 's interest in Mauzas Bansjora and Simitanr only was mortgaged.
The question of limitation may now be considered in the light of the finding that Mauza Bahaldih was mortgaged under the two mortagage deeds.
The later mortgage was executed on August 27,1992 and the amount due thereunder was payable on April 14, 1925.
On August 16, 1934, an amount of Rs. 100/was paid by the mortgagor and an endorsement in that behalf was made on the mortgage bond under his signature, and on that date the mortgagor 's interest in Mauza Bahaldih was not extinguished.
Under article 132 of the Limitation Act, Sch. 1, a suit to enforce payment of money charged upon immoveable property may be filed within twelve years from the date when the money sued for becomes due.
The suit filed by the plaintiff was for enforcement of payment of money charged upon immoveable property and money sued for on the later mortgage had become due on April 14, 1925.
By section 20 of the Limitation Act where payment on account of a debt or of interest on a legacy is made before the expiration of the ,prescribed period, by the person liable to pay the debt, or by his duly 'authorised agent, a fresh period of limitation will be computed from the time when the payment was made.
The mortgagor had parted with his interest in Mauza Bansjora on May 17, 1927, and in Mauza Simitanr on October 2, 1927, and a 643 mortgagor whose interest in the equity of redemption is transferred by assignment, sale or otherwise to another person is not a "person liable to pay the debt" within the meaning of section 20 of the limitation Act.
Part payment made by him towards principal or interest therefore does not extend the period of limitation for enforcement of the mortgage against the transferee of the equity of redemption.
If by transfer or assignment of his interest the mortgagor has lost all his interest in the mortgaged property, part payment will not extend the period of limitation, for at the date of payment he is not "the person liable to pay" the mortgage debt.
The High Court of Madras was right in holding in Pavavi vs Palanivela Goudan (1) that a mortgagor who has lost all interest in the mortgaged property cannot by payment of interest or principal within the meaning of section 20 bind the person on whom the interest has devolved.
But the mortgagor 's interest in Mauza Bahaldih subsisted on the date of payment by him of Rs. 100 towards the principal and interest, and such payment having been made within twelve years from April 14, 1925, the plaintiff 's claim to enforce the mortgage dated August 27, 1922, was at the date of the, suit not barred by limitation.
The amount due under the mortgage dated June 14, 1922, was repayable on April 14, 1925, and on April 1, 1937, Rs. 600 were paid by the mortgagor to the mortgagee and the endorsement regarding payment was made on the mortgage deed recording such payment, and on that date the period of twelve years commencing from April 14, 1925, under article 132 of the limitation Act, had not expired.
But before that date the mortgagor had lost interest in all the properties mortgaged by him in Mauza Bansjora on May 17, 1927, in Mauza Simitanr on October 21, 1927, and in Mauza Bahaldih by the auction sale which became affective from January 16, 1937.
The period of limitation in respect of the first mortgage could not, for reasons already set out, be extended by part (1) I.L.R. 644 payment made after the mortgagor lost all his interest in the property mortgaged.
The plaintiff has not relied upon any other part payment in respect of the first mortgage before the mortgagor 's interest in the mortgaged properties was transferred, to extend the period of limitation for a suit to enforce the mortgage.
But the plaintiff relied upon the sale of the mortgagor 's interest at a Court auction and his dispossession as furnishing a fresh cause of action for enforcement of the mortgage.
It was urged that by the covenants in the mortgage deed dated June 14, 1922, a usufructuary mortgage was created on the mortgagor 's interest in Mauza Bahaldih, and by the attornment made pursuant to paragraph 7 of the mortgage, the mortgagor must be deemed to be in possession till the mortgagor 's interest in that property was sold, and under section 68(1) (b) of the Transfer of Property Act dispossession of the mortgagee from Mauza Bahaldih by virtue of the sale under the money decree passed against the mortgagor, a cause of action accrued to the mortgagee to enforce the mortgage and the plaintiff 's suit filed within twelve years from the date of dispossession was within time.
A suit to enforce a mortgage is governed by article 132 of the limitation Act and has to be filed within twelve years from the date on which the money sued for became due, unless the period of limitation so prescribed.
is extended in the manner provided by Part III of the limitation Act.
Dispossession of the mortgagee is not one of the grounds prescribed by the Act for extension of the time prescribed for filing a suit.
Section 68 of the Transfer of Property Act confers a right upon the mortgagee to sue for the mortgage money in four different classes of cases and no others.
These classes are (a) where the mortgagor binds himself to repay the mortgage money : (b) where, by any cause other than the wrongful act or default of the mortgagor or mortgagee, the mortgaged property is wholly or partially 645 destroyed or the security is rendered insufficient within the meaning of section 66, and the mortgagee has given the mortgagor a reasonable opportunity of providing further security enough to render the whole security sufficient, and the mortgagor has failed to do so ; (c) where the mortgagee is deprived of the whole or part of his security by or in consequence of the wrongful act or default of the mortgagor ; (d) where the mortgagee being entitled to possession of the mortgaged property, the mortgagor fails to deliver the same to him, or to secure the possession thereof to him without disturbance by the mortgagor or any person claiming under a title superior to that of the mortgagor.
" The section does not deal with the period of limitation for filing a suit, or extension of the period prescribed by the Limitation Act for filing a suit.
The right conferred by section 68 is again not a right to enforce the mortgage but a right to sue for the mortgage money on the personal covenant or to claim compensation when the mortgagee is deprived of his security.
A suit for enforcement of the personal covenant to pay the mortgage money when the mortgagor has bound himself to repay the same is governed by article 116 of the Limitation Act.
Similarly the right to sue where the mortgagee is deprived of the mortgage security or where he is not secured in his possession of the mortgaged property or where possession is not delivered to him as agreed, the claim maintainable by the mortgagee is one for compensation and the period of limitation for a suit to recover the mortgage money is governed by article 120 of the Limitation Act from the date of destruction or deprivation of the mortgage security or possession and not from the date when the mortgage money is repayable : Unichaman vs Ahmed.
(1) Assuming therefore that (1) I.L.R. 646 by the two deeds the mortgagees were placed in possession of the right to recover royalty in respect of Mauza Bahaldih, and that the sale of that property in enforcement of the decree of a Civil Court constituted deprivation of the security or disturbance of their possession by the creditors of the mortgagor, dispossession having taken place in 1937 the suit filed on July 12, 1946, regarded as one to enforce the claim to recover the mortgage money under section 68 of the Transfer of Property Act was barred by the law of limitation.
This appeal will therefore be partially allowed.
The decree passed by the High Court will be set aside and there will be a decree in favour of the plaintiff only in respect of the mortgage dated August 27, 1922.
The trial Court will draw up an appropriate decree in that behalf.
The plaintiff 's appeal will fail in respect of the mortgage dated June 14, 1922.
The plaintiff will pay the costs of the fourth defendant who alone has defended this appeal.
The plaintiff will be entitled to her costs in respect of the mortgage dated August 27, 1922, from the original mortgagor 's heirs and the transferees in interest of the property which was the subject matter of the said mortgage.
Appeal partly allowed.

summary:
One Rajkumar Singh was the proprietor of three properties A,B and C.
He borrowed a loan from Rabindra Nath and mort gaged properties A and B and by the deed of mortgage undertook personal liability to pay the dues and agreed that in default of payment by the due date the mortgagee do recover his dues by sale of properties A, B and C.
He created a second mortgage t secure another sum borrowed from Sasindra Nath and Indra Nath stipulating that he would repay the loan on or before a fixed date, and further stipulating that the mortgagees may receive royalty from the terms of property C.
Five years later he assigned his interest in property A and about three months thereafter he assigned his interest in property Subsequent to this assignment an endorsement of part payment was recorded on the first mortgage deed.
The mortgagor 's right title and interest in property C were sold at a court auction and the purchaser took possession of that property.
But before this date the mortgagor had made another part payment and an endorsement was made to this effect on the mortgage bond.
Sometime later the appellant obtained assignments of the rights of the mortgagees under the mortgage deeds and filed a suit for a decree enforcement of the two mortgages by sale of the mortgage properties.
This suit was filed more than twelve years after t date on which the mortgage amounts became payable.
The trial court rejecting the pleas of limitation raised by t defendants decreed the suit.
On appeal by the fourth defend the High Court reversed the decree and dismissed the suit.
Held: (i) The High Court was in error in holding that t mortgagor 's interest in properties A & B only was mortgaged.
(ii) A mortgagor whose interest in the equity of redemption transferred by assignment sale or otherwise to another person not a "person liable to pay the debt" within the meaning of section of the Limitation Act.
Part payment in the mortgagor a transfer or assignment of his interest in the mortgaged property will not therefore extend the period of limitation under section 20 of the Limitation Act.
Pavai vs Palanivela Goundan I.L.R. 636 (iii) The right conferred by section 68 of the Transfer of Property Act is not a right to enforce the mortgage but a right to sue for the mortgage money on the personal covenant or to claim compensation when the mortgagee is deprived of his security.
A suit for enforcement of the personal covenant in such a case is governed by article 116 of the Limitation Act, 1908 and a suit for enforcement of a claim for compensation is governed by article 120 of the Act.
Unichaman vs Ahmed, I.L.R.


judgement:
Appeals Nos. 47 and 48 of 1961.
Appeals by special leave from the judgment and decree dated August 5, 1957, of the Bombay High Court in Appeal No. 1085 of 1954 with second Appeal No. 1086 of 1954.
G.S. Pathak and Naunit Lal, for the appellant.
I. N. Shroff, for respondent No. 1 M.S.K. Sastri and R.H. Dhebar, for respondent No. 2.
December 10, 1963.
The Judgment of the Court was delivered by MUDHOLKAR J.
This judgment will also govern C.A. No. 48 of 1961.
Both the appeals are by special leave from the judgment of the Bombay High Court in second appeal disposing of two appeals which arise out of two separate suits instituted by the appelant, the Borough Municipality of Bhusawal, against 907 the Bhusawal Electricity Co. Ltd., respondent No. 1 before us, to which suits the State of Bombay was later added as a defendant.
In each of the two suits the appellant had claimed refund of two sums of money paid by them to the respondent No. 1 under protest as electricity charges to which the respondent No. 1 claimed to be entitled by virtue of an order made by the Government of Bombay under the Bombay Electricity Supply (Licensed Undertakings War Costs) Order, 1944 (herein referred as Surcharge Order ).
The appellant succeeded in both the suits in the trial court as well as the District Court.
In second appeal, however, the High Court set aside the decrees passed by the trial court and dismissed the two suits.
While doing so, the High Court admitted on record certain documents by way of additional evidence and the only contentions raised before us by Mr. G.S. Pathak for the appellant are firstly that the High Court is incompetent in second appeal to admit additional evidence on record in asmuch as O. XLI, r. 27, Code of Civil Procedure is inapplicable to a second appeal.
Secondly, the provisions of O. XLI, r. 27 cannot be used to fill up the lacuna in the evidence left by a party.
We may incidentally mention that when the High Court, by its order dated April 30, 1958, decided to admit additional evidence on record, no objection was raised on behalf of the appellant before us.
It seems to us to be wholly unnecessary to decide in this case whether the High Court has the power to admit additional evidence in second appeal and also whether even if it has that power it was right in admitting the evidence in the circumstances of this case.
Basing itself on a particular interpretation of the agreements regarding payment of electric charges with respondent No. 1, the appellant claimed refund on the ground that it was not liable to pay the surcharge payable under the Surcharge Order, 1944 in respect of electrical energy consumed by it.
The substantial defence of the respondent No. 1 was that the dispute between it and the municipality was 908 decided by the Government of Bombay and that under the second proviso to cl. 5 of the Surcharge Order, 1944 the decision of the Government was final and binding both on the appellant and the respondent No. 1.The relevant provisions read thus: Clause 5: "Upon the rate of the War Costs Surcharge being fixed by the Provincial Government from time to time in accordance with this order, it shall not be lawful for the licensee or sanction holder concerned to supply energy at other than charges surcharged at the rate for the time being so fixed:" * * * * Second proviso: "Provided further that no War Costs Surcharge shall be effective upon the charges for the supply of energy under any contract entrered into after the 1st May, 1942, unless such contract provides for the same charges for energy as have been contained in similar previous contracts for similar supply by the licensee or sanction holder concerned (as to which in the event of dispute by any party interested, the decision of the Provincial Government shall be final) or unless and to such extent as such application may be expressly ordered by the Provincial Government.
" It is not disputed before us by Mr. Pathak that the decision of the Government upon the dispute is final and binding on the parties.
But, according to him, it was not established by the evidence led in the trial Court that the dispute between the parties had at all been referred to the Government and that a certain communication sent by the Government to the parties, exhibit 68 dated May 22, 1946 relied upon by the respondent No. 1, contains nothing but the opinion of the Government.
Mr. Pathak further urged that the proviso referred to by us purports to constitute the Govern 909 ment into an arbitrator and, therefore, there had to be a reference to the arbitrator by both the parties to the dispute under the provisions of the .
This latter point, however, had not been taken in the courts below nor is it found in the statement of the case.
We have, therefore, not permitted Mr. Pathak to rely upon it before us.
The communication of May 22, 1946 relied upon by the first respondent runs thus: "No. 6404/36 E1(1).
Public Works Department, Bombay Castel, 22nd May, 1946.
From The Secretary to the Government of Bombay Public Works Department (Irrigation).
TO The President, The Borough Municipality, Bhusawal.
Subject: War Costs Surcharge.
Dear sir, With reference to the correspondence ending with Government letter No. 6404/36, dated the 10th May, 1946 on the subject mentioned above, I am to inform you that Government has fully considered your case under the second proviso to clause 5 of the Bombay Electricity Supply (Licensed Undertakings War Costs) Order, 1944, and has decided that you should pay the surcharge to the Bhusawal Electricity Co. Ltd., at the rate of 15 % fixed in Government Order No. 6331/36 (IV) dated the 15th August, 1944, unless the Company raised its rate of supply of energy for street lighting to more than 4 annas per unit.
Yours faithfully, Sd/ D.N. Daruwala.
for Secretary to the Govt.
of Bombay.
Copy forwarded for information to: Public works Department, the Electrical Engineer to the 910 Government with reference to his No. LRM.57/ 5260, dated the 8th March, 1946.
The Account ant General, Bombay with reference to his No. O.A. 2888, dated the 2nd February 1946.
Messrs The Bhusawat Electricity Co. Ltd., Bombay with reference to correspondence ending with Government letter No. 6404/36 El.
(i) dated the 17th May 1946.
CC to E.E. Bhusawal for information sent on 25th May 1946.
" It is obvious from this communication that both the parties, that is, the appellant as well as the respondent No. 1 had stated their respective cases before the Government.
There was no occasion for them to do so unless they were both purporting to act under the second proviso to cl. 5 of the Order of 1944.
After consideration of the cases of both the parties the Government has stated in the aforesaid communi cation that it had decided that the municipality should pay to the Electricity Company surcharge at the rate of 15% fixed in a certain Government Order unless the Company raised its rate for the supply of energy for street lighting to more than four annas per unit.
There is no reason to think that what is on the face of it a decision is nothing but an opinion because if there were anything in the correspondence to which a reference is made in that letter as well as in the endorsement at the bottom which went to show that the appellant did not purport to refer any dispute to the Government, it was for the appellant to produce that correspondence.
Its omission to do so must be construed against it.
Then Mr. Pathak said that under the Surcharge Order itself the dispute had to be referred by both the parties and not by only one of them.
This contention is, however, untenable in view of the clear language of the proviso which says: "In the event of dispute by any party interested" the decision of the Provincial Government shall be final.
There is, therefore, no substance in the contention.
In our opinion the trial court and the District Court had wholly misconstrued this document which is not merely of evident 911 iary value but is one upon which the claim of the respondent No. 1 for the surcharge is based.
Misconstruction of such a document would thus be an error of law and the High Court in second appeal would be entitled to correct it.
This is what in fact has been done.
There is no substance in the appeals which are dismissed with costs.
Appeals dismissed.

dataset_name: IN-Abs

summary:
The Municipality filed two suits to claim refund of two sum of money paid by them to the respondent No. 1 under protest a, electricity charges.
The defence of the respondent No. 1 was that the dispute between it and the municipality was decided by the Government of Bombay and that under the second proviso to cl. 5 of the Surcharge Order, 1944 the decision of the Government was final and binding both on the appellant and the respondent No. 1.
The decision of the Government was communicates to the parties by the letter dated May 22, 1946.
The appellant succeeded in both the suits in the trial court as well as the District 906 Court.
In second appeal, the High Court dismissed the two units.
Hence this appeal.
Held: (i) The Municipality was not entitled to claim fund because the dispute between the parties had been decided by the Government under the second proviso to cl. 5 of the Surcharge order, 1944.
The decision of the Government was final and binding on the parties.
(ii) The communication dated May 22,1946 sent by the Govern ment to both the parties was a final decision under the second proviso to cl. 5 of the Surcharge Order, 1944.
There is no reason to think that the communication contains nothing but the opinion of the Government.
(iii) The second proviso to cl.
5 of the Surcharge Order does not require that the dispute has to be referred by both the parties.
Such a dispute can be referred by one of the parties as clear from the language of the proviso which says "in the event of dispute by any party interested" the decision of the provincial Government shall be final.
(iv) The Trial Court and the District Court had wholly mis construed the document dated May 22, 1946 which is not merely of evidentiary value but is one upon which the claim of the respondent No. 1 for the surcharge is based.
Misconstruction of such document would thus be an error of law and the High Court in second appeal would be entitled to correct it.


judgement:
minal Appeal No. 157 of 1962.
Appeal by special leave from the judgment and order dated February 9, 1962, of the Punjab 584 High Court (Circuit Bench) at Delhi in Criminal Revision Application No. 281 D of 1961.
J.P. Goyal, for the appellant.
B.K. Khanna and R.N. Sachthey, for the respondent.
November 29, 1963.
The Judgment of the Court was delivered by GAJENDRAGADKAR, J.
The appellant, Dr. Yash Pal Sahi, and his wife Dr. Susheela Sahi, are the proprietors, of a homoeopathic hospital at Jangpura in New Delhi.
They also run a journal called the "Homoeopathic Doctor".
It appears that on May 15, 1958 Misri Singh wrote to the appellant that the medicines manufactured by him were proving effective, and he therefore requested the appellant to send him his magazine "Homoeopathic Doctor" from January 15, 1958 up to the date of the letter.
In this letter, Misri Singh also requested the doctor to send him a list of medicines that might have been printed by him and he promised to pay the requisite prices and suggested that the same should be sent by V.P.P. Thereupon, a packet containing Exhibits P 1 to P 6 which are copies of the "Homoeopathic Doctor" and exhibit P 7, which is a list of medicines was sent to Misri Singh on May, 24, 1958.
Misri Singh had written to the appellant under the instructions of Mr ' Seth, who is an officer in the Delhi Administration.
That is why when the packet was received by Misri Singh it was opened by him in the presence of Mr. Seth and other witnesses and the packet was found to contain Exs.
P 1 to P 7.
The prosecution alleged that by sending this packet to Misri Singh both the appellant and his wife had committed an offence under section 3 read with section 7 of the Drugs and Magic Remedies (Objectionable Advertisement) Act of 1954.
Later, the complaint against Dr. Susheela Sahi was withdrawn and the case proceeded only against the appellant.
At the trial, evidence was given by Mr. Seth, Misri Singh and Dr. Anant Parkash, with whom 585 Misri Singh works as a clerk.
The appellant was questioned by the learned Magistrate, who tried the case, and he admitted that Exs.
P 1 to P 7 had been sent to Misri Singh.
On these facts, the learned Magistrate held that the appellant 'was guilty of the offence charged and sentenced him to pay a fine of Rs. 1,000.
The appellant challenged the correctness of this order by an appeal before the Additional Sessions Judge at New Delhi.
The learned additional ' Sessions Judge considered the evidence, and confirmed the findings recorded by the trial Magistrate.
In the result, the order of conviction passed against the appellant was affirmed; but in regard to the sentence the learned Additional Sessions Judge took the view that a fine of Rs. 500 would meet the ends of justice.
The findings made by the appellate Court show that the parcel containing Exs.
P 1 to P 7 had been sent by the appellant to Misri Singh.
Exhibits P 1 to P 6 which are the numbers of the publication "Homoeopathic Doctor" did not come within the mischief of the Act, but exhibit P 7, which is 'Fehrist i Mujarabat ' did come within the mischief of the Act.
It is a list of medicines, and it purports to advertise the said medicines by describing their effect, and prices of the medicines are also printed.
Inasmuch as it was found by the learned Additional Sessions Judge that the appellant had sent exhibit P 7 to Misri Singh, his conviction was held to be justified under section 3 read with section 7 of the Act.
The appellant then took this matter before the High Court by a revisional application It was urged before the High Court on his behalf that in deciding the question as to whether the appellant was guilty under section 3 read with section 7 the effect of the provisions contained in section 14(1)(c) had not been properly appreciated.
The High Court was not impressed by this argument.
Accordingly, the revisional application filed by the appellant was dismissed.
It is against this order that the appellant has come to this Court by special leave.
On his behalf, Mr. Goyal has contended that the conviction of the appellant is not justified, because 586 the case of the appellant falls under section 14 (1)(c) of the Act.
In deciding the merits of this argument it is necessary to refer to the relevant provisions of the Act.
This Act has been passed to control the advertisment of drugs in certain cases, to prohibit the advertisement for certain purposes of remedies alleged to possess magic qualities and to provide for matters connected therewith.
Section 2 contains the definitions.
Section 2(d) defines 'taking any part in the publication of any advertisement ' as including (i) the printing of the advertisement, (ii) the publication of any advertisement outside the territories to which this Act extends by or at the instance of a person residing within the said territories.
It would be noticed that the definition of the expression 'taking any part in the publication of any advertisement ' is an inclusive definition, and the two clauses bring out clearly the main postulate of the definition that if the prohibited article is sent, it would amount to publication within the meaning of the Act.
The printing of the prohibited article or advertisement is included in publication.
But publication does not mean printing alone; publication means sending out the said advertisement outside India under cl.
(ii), and so, if sending out the advertisement outside India is brought within the purview of the inclusive definition, it is difficult to resist the conclusion that sending out the same advertisement within the territories of India to which the Act applies would amount to publication.
Therefore it seems to us that the definition prescribed by section (2d) is wide enough to take in the printing of the advertisement and the sending of it to any part of India.
That takes us to section 3 of the Act.
Sections 3 (c) and (d) are the provisions with which we are concerned.
They provide that: "3.
Subject to the provisions of this Act, no person shall take any part in the publication of any advertisement referring to any drug in terms which suggest or are calculated to lead to the use of that drug for 587 (c)the correction of menstrual disorder in women; or (d)the diagnosis, cure, mitigation, treatment or prevention of any venereal disease or any other disease or condition which may be specified in rules made under this Act.
" It has been found and cannot be now disputed that the list of advertisements (exhibit P 7) contains medicines which fall within the scope of sections 3(c) and (d).
Section 7 provides for the penalty, and it lays down that: "Whoever contravenes any of the provisions of this Act shall, on conviction, be punishable (a)in the case of a first conviction, with imprisonment which may extend to six months, or with fine, or both; (b)in the case of a subsequent conviction, with imprisonment which may extend to one year, or with fine, or with both.
" This section shows that before a person is penalised it is not necessary to show that the contravention brought home to him is in the nature of a habitual contravention.
A single contravention proved against a person would make him guilty under section 7.
That is why the scheme adopted by the penal section is that it provides for a lesser punishment for the first offence and a relatively more serious penalty for sub sequent offences.
Mr. Goyal contends that in considering the question as to whether the appellant is guilty under section 3 and section 7 read together it is necessary to consider whether this case falls under section 14 or not.
He argues that section 3 begins with the clause "Subject to the provisions of this Act", and he urges that if the appellant 's case can fall under the provisions of section 14, section 3 cannot be invoked against him.
This contention is no doubt right.
Section 14 provides for exceptions, and it lays down that nothing in the Act shall apply to the cases falling under the clauses prescribed by it.
Mr. Goyal relies upon section 14 (1)(c), which provides that: 588 "Nothing in this Act shall apply to any advertisement relating to any drug sent confidentially in the prescribed manner only to a registered medical practitioner or to a wholesale or retail chemist for distribution among registered medical practitioners or to a hospital or laboratory;" His argument is that if Misri Singh wrote to the appellant and invited him to send the list of medicines it was not expected that the appellant should make an enquiry as to whether Misri Singh was a registered medical practitioner or not.
In this connection, he has invited our attention to the fact that Misri Singh is in fact working as a clerk with Dr. Anant ]Parkash, and this fact is pressed into service by Mr. Goyal to show that it may be that the appellant thought that Mr. Misri Singh was a registered medical practitioner.
Such a plea has, however, not been made in any of the Courts below.
In fact, the record does not show that the appellant knew any thing about Misri Singh or his employment.
Therefore, the point sought to be made by Mr. Goyal for the first time before us that the appellant might have bona fide believed that Misri Singh was a registered medical practitioner cannot avail him.
It has been proved as a fact that Mr. Misri Singh is not a registered medical practitioner, and so, the question arises whether the appellant can claim that his case falls under section 14(1)(c) at all.
It is true that in order to bring home to the appellant the offence charged the prosecution may have to show that the person to whom the list was sent was not a registered medical practitioner.
Once that fact is established, it is for the appellant to satisfy the Court that his case falls under section 14(1)(c).
It is in that connection that Mr. Goyal relied upon r. 6 of the Rules framed under the Act.
Rule 6 prescribes that: "All documents containing advertisements re lating to drugs, referred to in clause (c) of sub 589 section (1) of section 14, shall be sent by post to a registered medical practitioner or to a whole sale or retail chemist".
The Rule further adds that "Such documents shall bear at the top.
printed in indelible ink in a conspicuous manner, the words 'For the use only of registered medical practitioners or a hospital or a laboratory It is common ground that the list sent by the appellant to Misri Singh does bear printed in indelible ink the statement that it was meant for the use of registered medical practitioners alone.
Mr. Goyal suggests that once it is shown that the list complied with this part of the requirement of R. 6 it should be held that the case of the appellant falls under section 14(1)(c).
We are not prepared to accept this argument.
Rule 6 prescribes some conditions which have to be complied with by a person who sends lists of medicines to Which the Act applies so as to bring his case within section 14 (1)(c).
One requirement is that the list should have printed in indelible ink the statement to which we have just referred.
The other requirement to which it refers is that the list should be sent to a registered medical practitioner or wholesale or retail chemist.
In relation to this requirement, we have the statutory provision prescribed by section 14 (1)(c) itself that it must be sent confidentially to a registered medical practitioner.
The fact that one of the conditions prescribed by R. 6 has been complied with does not lead to the inference that the other conditions prescribed either by section 14(1)(c) or by R. 6 have also been complied with.
Therefore, we do not think that Mr. Goyal is justified in contending that his case falls under section 14(1)(c).
Mr. Goyal has also invited our attention to the fact that this was a case in which the appellant was virtually tempted to send exhibit P 7 to Misri Singh, and he argues that as soon as Mr. Misra Singh found that that Est contained in indelible ink the statement that it was meant for registered medical practitioners he need not have bothered to look into it, and in fact should have sent it back to the appellant.
This 590 argument, in our opinion, is not well conceived.
The whole object of the Act is to save ignorant people from being duped to purchase medicines just because their effect is advertised in eloquent terms.
That is why the Act provides that lists of medicines describing the qualities and attributes of different medicines should be sent only to registered medical practitioners or hospitals.
That being so, it would not be a fair argument to urge that even though the appellant might have sent the list to a person who was not a registered medical practitioner, the recipient of the list should have been out on his guard and should not have looked into the list.
We are, therefore, satisfied that the High Court was right in holding that the offence charged against the appellant has been duly proved.
In regard to the sentence, the learned Additional Sessions Judge has reduced the sentence of Rs. 1,000 fine imposed on the appellant by the learned trial Magistrate to Rs. 500 and that we think is a fair order to make.
In the result, the appeal fails, and is dismissed.
Appeal dismissed.

summary:
The appellant is the proprietor of a Homoeopathic hospital in New Delhi.
He runs a journal called the "Homoeopathic Doctor".
583 On the request of one Misri Singh the appellant sent copies of the said journal and a list of medicines by V.P.P. Misri Singh was neither a registered medical practitioner nor a wholesale or retail Chemist even though he was working with a registered medical practitioner as his clerk.
The list of medicines sent by the appellant to Misri Singh bore in printed indelible ink the statement that it was meant for the use of medical practitioners alone.
The appellant was prosecuted under section 3 read with section 7 of the Drugs and Magic Remedies (Objectionable Advertisement) Act, 1954.
The trial Magistrate found him guilty of the offence charged and sentenced him to a fine of Rs. 1000.
On appeal the Additional Sessions Judge confirmed the conviction but reduced the fine to Rs. 500.
The appellant 's revision petition was dismissed by the High Court The present appeal is on special leave granted by this Court.
On behalf of the appellant it was contended that section 3 is subject to the other provisions of the Act and therefore it is subject to section 14 which provides that any advertisement sent confidentially in the prescribed manner to a registered medical practitioner or wholesale or retail chemist is exempted from the other provisions of the Act.
Relying on this section it was argued that since the appellant requested in writing to send the offending articles the appellant had no duty to enquire whether that person is a registered medical practitioner or chemist.
Further the appellant relied on rule 6 of the Rules framed under the Act and contended that inasmuch as the list sent by him bore the words printed in indelible ink "For the use only of registered medical practitioners" he has complied with the provisions of law.
Held. (i) The definition of "taking any part in the publication of any advertisement" contained in section 2(d) of the Act is wide enough to include the printing of the advertisement and the sending of it in any part of India.
Before a person is penalised it is not necessary to show that the contravention brought home to him is in the nature of habitual contravention.
A single contravention will make a person guilty under section 7.
(ii)Section 3 is subject to the provisions of section 14 and if the appellant 's case falls under section 14, section 3 cannot be invoked against him.
The prosecution has to show that the person to whom the list was sent is not a medical practitioner.
Once this is established it is for the appellant to satisfy the court that his case falls under section 14(1)(c).
The fact that the appellant has complied with one of the conditions prescribed under r. 6 will not bring the case of the appellant under section 14(1)(c).


judgement:
Appeal No. 76 of 1950.
Appeal from the Judgment and Decree of the High Court of Madras dated 18th April 1945, in 895 Appeals Nos.
56 and 192 of 1941 reversing in part the decree of the Court of the Subordinate Judge of Masulipatani in Original Suit No. 29 of 1937.
B.Somayya (C. Mallikarjuna Row, with him) for the appellant.
K.Rajah Aiyar (R. Ganapathy Aiyar , with him) for Respondent No. 1.
Respondent No. 10 appeared in person.
May 18.
The Judgment of the Court was delivered by MUKHERJEA J.
The appellant before us is the sixth defendant in a suit, commenced by the plaintiff respondent in the court of the Subordinate Judge at Masulipatam (being Original Suit No. 29 of 1937) for recovery of a sum of Rs. 99,653 annas odd by enforcement of a simple mortgage bond.
The mortgage bond is dated 28th September, 1930, and it was executed by defendant No. 1 for himself and as guardian of his two minor sons defendants 2 and 3 all of whom consti tuted together a joint Hindu family at that time.
The plaintiff mortgagee happens to be the son in law of defendant No. 1 and at the time of the execution of the mortgage the first defendant was indebted to a large number of persons including the mortgagee himself, and being hard pressed by his creditors requested the plaintiff to lend him a sum of Rs. 1,25,000 on the hypothecation of the properties in suit, to enable him to tide over his difficulties and discharge his debts.
The total consideration of Rs. 1,25,000 as stated in the deed is made up of the following items : (1)Rs.
13,065, which was the amount due on a promissory note executed in favour of the plaintiff by the first defendant on the 17th January, 1928.
(2)Rs. 13,285 due under another promissory note dated 18th August, 1930 executed by defendant No.1 in favour of the wife of the plaintiff and later on transferred by her to the plaintiff on 28th September, 30.
(3)Rs.
25,000 paid by the plaintiff by endorsing in favour of defendant No. 1 a cheque for that amount 896 drawn in his name by the Co operative Central Bank, Ramchandrapuram on the Central Urban Bank, Madras.
(4) Rs. 937 8 0, the amount paid in cash by plain tiff to defendant No.1 for purchasing stamps for the mortgage document.
(5) Rs. 72,712 8 0, the amount of future advances which the plaintiff promised to make from time to time to defendant No.1 according to his convenience.
The money lent was to carry interest at 7 1/2 % simple per annum and the due date of payment of the principal money was 30th September, 1933.
The interest would, however, have to be paid annually on the 30th of September every year, in default of which the whole of the principal and interest in arrears would become repayable immediately with interest at 9% compound per annum with yearly rests.
It was expressly stated in the mortgage deed that if the mortgagee was unable to advance the entire amount of Rs. 1,25,000, the terms set out above would apply to the amount actually advanced.
It appears that after the execution of the mortgage bond a sum of Rs. 3,000 only was paid by the mortgagee to defendant No.1 on 5th of November, 1930.
In the plaint, which was filed by the plaintiff on the 15th September, 1937, the total claim was laid at Rs. 99,653 annas odd, out of which Rs. 55,287 annas odd constituted the principal money as stated above and the rest was claimed as interest calculated at the rate of 9% per annum compound with yearly rests.
Besides the original mortgagors, who were defendants Nos. 1 to 3 in the suit, there were three other persons impleaded as parties defendants.
Defendant No. 4 was the Receiver in insolvency in whom the entire estate of the defendant No. 1 vested by reason of his being adjudged a bankrupt by an order of the District Judge of Kistna dated the 18th January, 1932 in Insolvency Proceeding No. 20 of 1931, started at the instance of another creditor of the first defendant.
Defendant No. 5 was a lessee in respect of the mortgaged properties under defendant No. 4, while the sixth defendant was the purchaser of all the mortgaged 897 properties from the Receiver in insolvency.
The Receiver, it seems, had put up all the suit properties to sale subject to the mortgage on 19th April, 1937, and they were knocked down to defendant No. 6 for the price of Rs. 1,340.
A registered deed I of sale was executed by the Receiver in favour of the purchaser on 20th January, 1939.
The defendants 1 to 3 did neither appear nor contest the suit.
Defendant No. 4 appeared in person but disclaimed any interest in the suit properties.
The defendant No. 5 contended that he was a lessee under defendant No. 4 for one year only and was not a necessary party to the suit at all.
The suit was really contested by defendant No. 6, the purchaser at the Receiver 's sale.
The defence taken by defendant No. 6 in his written statement was substantially of a two fold character.
It was pleaded in the first place that the bond in suit was a collusive document not supported by any consideration and was executed by defendant No. 1 in favour of his own son in law, with a view to shield his properties from the reach of his creditors.
The other contention put forward was that the interest claimed was penal and usurious.
After the passing of the Madras Agriculturists ' Relief Act in March, 1938, this defendant filed an additional written statement, with the permission of the court, in which he raised the plea that as an agriculturist he was entitled to the reliefs provided in that Act and that the mortgage debt should be scaled down in accordance with the provisions of the same.
The trial Judge by his judgment dated the 29th July, 1940, decreed the suit in part.
It was held that the mortgage bond was not a collusive document executed with the intention of defrauding the creditors of the mortgagor; it was a genuine transaction and was supported by consideration.
On the other point, the court held that defendant No. 6 was an agriculturist and was entitled to claim the reliefs under Madras Act IV of 1938.
After deducting all outstanding interest which stood discharged under section 8(1) of the 898 Agriculturists Relief Act, the principal money due to the creditor on that date was found by the trial court to be Rs. 42,870 annas odd.
This figure was arrived at by taking only the original amounts actually advanced on the two promissory notes mentioned above and further, deducting from them, the payments made by the debtor towards the satisfaction of the principals in each.
Thus a preliminary decree was made in favour of the plaintiff entitling him to recover a sum of Rs. 42,870 4 0 together with interest at 6 1/4 per annum from 1st October, 1937, to 1st November, 1940, the date fixed for payment under the preliminary decree.
In default, the whole amount was to carry interest at 6% per annum.
It may be mentioned here that the Subordinate Judge in deciding issue No. 3 held expressly that the provision relating to payment of compound interest at an enhanced rate in default of payment of the stipulated interest on the due dates was in the nature of a penalty and should be relieved against; but as the court scaled down the interest under Madras Act IV of 1938, it became unnecessary to consider in what manner this relief should be granted under section 74 of the Indian Contract Act.
Against this decision, two appeals were taken to the High Court of Madras, one by the plaintiff and the other by defendant No. 6.
The plaintiff in his appeal (being Appeal No. 56 of 1941) assailed that part of the judgment of the Subordinate Judge which gave the defendant No. 6 relief under the Madras Agriculturists ' Relief Act; while the appeal of the sixth defendant (being Appeal No. 192 of 1941) attacked the very foundation of the mortgage decree on the ground that the mortgage being a collusive and fraudulent transaction, the plaintiffs suit should have been dismissed in toto.
The defendants 2 and 3, although they remained ex parts during the trial in the first court, filed, in forma pauperig, a memorandum of cross objection challenging the decree of the Subordinate Judge on the ground that as their interest in the mortgaged properties did not pass to the defendant No, 6 by virtue of the Receiver 's sale, their right of 899 redemption remained intact and ought to have been declared by the trial Judge.
Both these appeals as well as the cross objection were heard together by a Division Bench of the High Court and they were disposed of by one and the same judgment dated the 18th of April, 1945.
The High Court affirmed the finding of the trial Judge that the bond in suit was supported by consideration to the extent of Rs. 55,287 8 0 as alleged in the plaint and that it was a valid and bona fide transaction.
The learned Judges held, differing from the trial court, that the defendant No. 6 was not entitled to claim any relief under the provisions of the Madras Agriculturists ' Relief Act, and that in any event the court below was not right in reducing the amount of the principal money from Rs. 55,287 8 0 to Rs. 42,870, there being no renewal of a prior debt so far as defendant No. 6 was concerned.
The court agreed in holding that the provision relating to payment of enhanced interest in case of default amounted to a penalty and reduced the rate of interest from 9% compound to 71 % compound with yearly rests.
Lastly, the High Court allowed the cross objection of defendants 2 and 3, being of opinion that their interest in the mortgaged properties could not vest in the Receiver on the insolvency of their father and that the defendant No. 6 could not acquire the same by virtue of his purchase from the Receiver.
The defendants Nos. 2 and 3 were, therefore, allowed the right to redeem the mortgaged properties along with defendant No. 6.
The result was that the plaintiff was given a decree for a sum of Rs. 55,287 8 0 with interest at 7 1/2 compound with yearly rests up to the date of redemption and subsequent interest was allowed at the rate of 6% per annum.
Interest was to be calculated from 28th September, 1930, on Rs. 52,287 8 0 and.
from 5th November, 1930, on the amount of Rs. 3,000.
Against this decree, the defendant No. 6 obtained leave to appeal to the Privy Council and because of the abolition of the jurisdiction of the Privy Council, the appeal has come before us.
900 Mr. Somayya, who appeared in support of the appeal, did not press before us the contention raised on behalf Of his client in the courts below that the mortgage was a fraudulent transaction or was void for want of consi deration.
He assailed the propriety of the judgment of the High Court substantially on three points.
His first contention is, that the decision of the High Court allowing a right of redemption to defendants 2 and 3 cannot stand in view of the amendment introduced by the Provincial Insolvency Amendment Act, 1948, which has been expressly made retrospective.
The second point taken by the learned counsel is that the defendant No. 6 should have been given relief under the Madras Agriculturists ' Relief Act and the debt should have been scaled down in accordance with the provisions thereof.
It is said that the defendant No. 6 was an agriculturist himself and even if he was not, the relief under Madras Act IV of 1938 was still available to him by reason of the original mortgagors being agriculturists.
The third and the last point urged is that in any event having regard to the finding arrived at by the High Court that the stipulation to pay compound interest at an enhanced rate was a penalty, adequate relief should have been granted against it and no compound interest should have been allowed at all.
The first point raised by the learned counsel, in our opinion, is well founded and must succeed.
There was some difference of judicial opinion as to whether the powers of a father under the Mitakshara law to alienate the joint family property including the interest of his sons in the same for discharge of an antecedent debt not contracted for illegal or immoral purposes vests in the Receiver on the adjudication of the father as an insolvent.
Under the Presidency Towns Insolvency Act, this power was held to vest in the Official Assignee under section 52(2) of the Act(1).
As regards cases governed by , it was held by a Full Bench of the Madras High Court that the father 's power to dispose of his son 's interest in the joint family property for satisfaction of his untainted (1) Sat Narain vs Sri Kishen, (1936) 63 I.A. 384.
901 debts was not "property" within the meaning of section 28 (2) (d) of the Provincial Insolvency Act(1) ; while a contrary view was taken by a Full Bench of the Patna High Court (2) .
The conflict has now been set at rest by the enactment of section 28A in the Provincial Insolvency Amendment Act of 1948 which came into force on the 12th April, 1948.
The new Section reads as follows : " The property of the insolvent shall comprise and shall always be deemed to have comprised also the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the insolvent for his own benefit at the commencement of his insolvency or before his discharge.
" The language of the section indicates that its operation has been expressly made retrospective.
The result, therefore, is that the power of the defendant No. 1 to alienate the interest of his sons, the defendants 2 and 3, in the mortgaged properties for satisfaction of his antecedent debts, did pass to the Receiver as "Property" within the meaning of the and consequently OD a sale by the Receiver the interest of defendants 2 and 3 did vest in the sixth defendant, and he alone must be held competent to exercise the right of redemption.
The second point urged by Mr. Soinayya raises the question as to whether the appellant could claim relief under the Madras Agriculturists ' Relief Act.
The High Court decided this point against the appellant firstly on the ground that the appellant was not a debtor at the date of the commencement of the Act, he having acquired no interest in the equity of redemption at that time.
The other reason given is that the defendant No. 6 was not an agriculturist within the meaning of the Agriculturists ' Relief Act and although he was possessed of agricultural lands and hence prima facie came within the definition of an " agriculturist " as given in section 2 (ii) of (1) Ramasastralu vs Balakrishna Rao I.L.R. (2) Viswanath vs Official Receiver, I.L.R. (1936) 16 Pat, 60 (F.B.).
902 the Act, he was excluded from the definition by the operation of proviso (D) attached to the sub section.
So far as the first ground is concerned, section 7 of the Agriculturists ' Relief Act expressly lays down that " all debts payable by an agriculturist at the commencement of this Act, shall be scaled down in accordance with the provisions of this chapter".
The essential pre requisite to the application of the provisions of the chapter, therefore is the existence of a debt payable by an agriculturist on the date when the Act commenced, that is to say, on the 22nd March, 1938.
The learned Judges of the High Court were certainly right in saying that the sixth defendant was not a debtor on that date, as he did not become the owner of the equity of redemptin till the 20th of January, 1939, when the deed of sale was executed in his favour by the Receiver in insolvency.
But this by itself is not sufficient to disentitle the appellant to the privileges of the Agriculturists ' Relief Act.
It is not necessary that the applicant for relief himself should be liable for the debt on the date that the Act came into force.
The right to claim relief as is well settled by decisions(1) of the Madras High Court is not confined to the person who originally contracted the debt, but is available to his legal representatives and assigns as well; nor is it necessary that the applicant should be personally liable for the debt.
The liability of a purchaser of the equity of redemption to pay the mortgage debt undoubtedly arises on the date of his purchase; but the debt itself which has its origin in the mortgage bond did exist from before his purchase, and if it was payable by an agriculturist at the relevant date, the purchaser could certainly claim the privileges of the Act if he himself was an agriculturist at the date of his application.
The material question, therefore, is whether the mortgage debt was payable by an agriculturist on 22nd March, 1938 ? The appellant argues that it was payable by the mortgagors and they were certainly agriculturists.
We do not think that there is warrant for any such assumption on (1) Vide Periannia vs Sellappa, I.L.R. 903 the materials as they exist on the record.
The only issue before the trial Judge was, as to whether defendant No. 6 was an agriculturist.
There was neither any question raised nor any evidence adduced as to whether defendants Nos.
I to 3 were agriculturists as well.
In fact, this aspect of the case was not adverted to by the trial Judge at all.
Before the High Court it was argued on behalf of defendant No. 6 that even if he was not an agriculturist himself, yet if the defendants 2 and 3 were given relief as agriculturists, that would enure for his benefit as well and accordingly he invited the court to go into the question and hold that the original mortgagors were agriculturists.
This the learned Judges refused to do and dismissed this part of the claim of defendant No. 6 with these remarks: "In the present case, the mortgagors have not claimed such a benefit, nor have they adduced any evidence to show that they are agriculturists.
We therefore cannot accede to the request of the sixth defendant that the right of the mortgagors to relief should be investigated merely with the object of giving an accidental relief to the non agriculturist purchaser.
" As the point was not investigated at all, it is not possible for us to hold that the debt was payable by an agriculturist on the relevant date.
It may be that the mortgaged properties were agricultural lands but it is not known whether the mortgagors did possess other estates which might bring them within the purview of any of the provisos attached to the definition.
In these circumstances, the appellant must be deemed to have failed to show that there was in existence a debt payable by an agriculturist on 22nd March, 1938.
The High Court has held further that the defendant No. 6 was not an agriculturist because he was the purchaser of certain villages at a court sale in respect of which Peishkush exceeding Rs. 500 was payable.
Consequently, he became " land holder of an estate " under the Madras Estates Land Act and could not claim to be an agriculturist as laid down in the proviso (D) to section 2 (ii) of the Act.
Mr. Somayya 904 lays stress upon the fact that this purchase on the part of his client was merely as a benamidar for defendant No. 5 as has been held by both the courts below and consequently the proviso did not affect him at all.
This is a debatable point upon which the judicial opinion of the Madras High Court itself does not seem to be quite uniform.
A distinction can certainly be drawn between the rights of a person in his own individual or personal capacity and those which he exercises on behalf of another.
On the other hand, if we look to the definition of " land holder " as given in section 3 (5) of the Madras Estates Land Act, it may be argued that a benamidar of an estate, who is entitled to collect rents and is at least the titular owner of the estate could come within the description.
Having regard to the view taken by us that section 7 of the Agriculturists ' Relief Act is not applicable on the facts of the present case, this question does not really become material and it is not necessary for us to express any final opinion upon it.
For the identical reason section 8 (1) of the Act cannot also be invoked in favour of the appellant.
It may further be mentioned that Mr. Somayya in course of his arguments made it plain that he would not press for relief under the Agriculturists ' Relief Act if the high rate of in terest allowed by the High Court was substantially reduced.
This takes us to the third point and we think that the stipulation as to payment of compound interest in case of default, being held to be a penalty by both the courts below, the High Court should not have allowed interest at the rate of 71 % compound with yearly rests, The High Court seems to have been misled by a statement occurring in the judgment of the trial Judge that the original rate of interest was 7 1/2% compound with yearly rests.
This is not true and as a matter of fact, the original agreement was to pay interest at 7 1/2 % simple.
We consider it proper that the mortgage money payable to the plaintiff should carry interest at the rate of 7 1/2% simple up to the expiry of the period of redemption which we fix at six months from this date, 905 The result, therefore, is that we allow the appeal in part and modify the judgment of the High Court.
A preliminary decree should be drawn up in favour of the plaintiff against defendant No. 6 alone for a sum of Rs. 55,287 annas odd which will carry interest at 7 1/2 % simple per annum.
Interest will be calculated on Rs. 52,287 on and from the date of the mortgage, while on the balance of Rs. 3,000 interest will run from 5th November, 1930.
We make no order as to costs of this court or of the High Court.
The plaintiff will have his costs of the trial court.
Appeal allowed in part.
Agent for respondent No. 1 : Ganpat Rai.

summary:
Under the provisions of section 28A of the , as amended by the Provincial Insolvency (Amendment) Act of 1948, which has been expressly made retrospective, when a Hindu father governed by the Mitakshara law is adjudged a bankrupt, his power to alienate the interest of his sons in the joint family properties for the satisfaction of his antecedent debts not contracted for illegal or immoral purposes, passes to the Receiver as his "property" within the meaning of the Act.
Consequently, where a Hindu father who has mortgaged the joint family property for an antecedent debt which is not illegal or immoral becomes insolvent and the receiver sells the property, the interest of his sons in the property also vests in the purchaser, even in the case of a sale held before the Amendment Act of 1948 came into force, and the sons cannot redeem the property.
Sat Narain vs Sri Kishen (63 I.A. 384), Rama Sastrulu vs Balakrishna Rao (I. L. R. 1943 Mad. 83) and Viswanath vs Official Receiver (I.L.R. 16 Pat.
60) referred to.
Though the liability of a person who has purchased an equity of redemption after 22nd March, 1938, to pay the mortgage debt arises only on the date of his purchase, if the debt itself existed on the 22nd March, 1938, and if it was payable by an agriculturist on that date, the purchaser can claim the benefits conferred by section 7 of the Madras Agricultural Relief Act, 1938, if he himself was an agriculturist on the date of his application.
Periannia vs Sellappa (I.L.R. 1939 218) referred to.