Judgement

Appeal from a judgment and decree of the High Court (March 3, 1916), affirming a decree of the Subordinate Judge of Vizagapatam.

The suit was brought by the respondent in the Court of the Subordinate Judge of Vizagapatam to enforce a mortgage over land which was situate partly in the district of Vizagapatam and partly within the district, commonly known as the Agency Tracts, which by Act

XXIV. of 1839 is a scheduled district.

The facts and the effect of the decisions in India appear from the judgment of their Lordships.

1919. Feb. 13, 14. Sir William Garth for the appellants. The High Court rightly held that upon the true construction of the mortgage deed of July 4, 1911, the principal was not due until January 4, 1916. The respondent not being entitled at the date of the suit to sell the property for the principal, the High Court wrongly held that the decree for sale could stand. The rights of the parties in a suit depend solely upon the position at the date of the plaint Evans v. Bagshaw (( 1870) L. R. 5 Ch. 340.); Buys v. Royal

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Exchange Assurance Corporation ([ 1897] 2 Q. B. 135.) ; Ram Rattan Sahn v. Mohant Sahn . (( 1907) 6 Cal. L. J. 74.) The fact that the due date arrived pending the appeal, therefore, did not increase the respondents rights. Secondly, part of the mortgaged land being in a scheduled district, neither the Subordinate Judge nor the High Court had jurisdiction Maha Prasad v. Ramani Mohan Singh . (( 1914) L. R. 41 I. A. 197.) Sect. 17 of the Code of Civil Procedure, 1908, applies only where each of the different Courts within whose jurisdiction the land is situate is a Court subject to the Code. The decision of the Board in the case last cited shows that the whole decree is invalid, not merely that part of it which ordered a sale of the land in the Agency Tracts. The objection to the jurisdiction was taken at the hearing in the High Court; that was not too late. In Maha Prasad1 s Case (4) the objection was taken only during the hearing before the Board. Sect. 21 of the Code applies only where the right " place of suing " is one subject to the Code. In the present case there was an entire absence of jurisdiction under the Code, at any rate so far as concerns the land in the Agency Tracts.

De Gruyther K.C. and Kenworthy Brown for the respondent.

Upon the true construction of the deed of July 4, 1911, the respondent was entitled at the date of the plaint to recover principal and interest, there being a default in the payment of the yearly interest. The words " the said amount " (at the end of the deed) refer to the principal and interest. If not, they are otiose, because under the covenant to pay interest it could be recovered " then and there. But in any case the due date having been passed at the date of the appeal, the High Court rightly affirmed the decree made. There was power to do so under Order xli., r. 33. Although part of the land was in the Agency Tracts, the Subordinate Judge had jurisdiction under s. 17 of the Code of Civil Procedure. That section is wider than the corresponding provision in s. 19 of the Code of 1882, and applies so long as the suit is brought in a court subject to the Code. Act XXIV. of 1839 provided that suits arising in the Agency Tracts should be brought in particular courts, but otherwise it did not affect procedure, as appears from the rules made under that Act see Madras Code, 4th ed., vol. 2, Appendix, p. 1264. The decision of the Board in Maha Prasads Case (L. R. 41 I. A. 197.) depends entirely upon legislation peculiar to the Sonthal Parganas. In any case, there was power to decree a sale of the land not in the Agency Tracts ; otherwise the respondent cannot enforce the mortgage by sale at all.

Sir William Garth in reply. Apart from the provisioh in the deed the interest in default was not recoverable Kannu v. Natlsa. (I. L. R. 14 M. 477.) It therefore is not necessary to construe that provision as applying to the principal.

Feb. 25. The judgment of their Lordships was delivered by

LORD DUNEDIN. On January 4, 190(5, the appellants, who are zamindars, borrowed from the respondent, the Maharaja of Jeypore, 5 lacs of rupees, and in security thereof mortgaged certain lands. The mortgage is in ordinary form, providing for payment of interest and compound interest, but contains the following special clause " These properties are mortgaged and retained in our possession. But in case at any time any amount remains due out of the amount of interest payable on the due dates of any two years consecutively, or in case, within seven years from this date, the entire amount of principal and interest then remaining due be not paid, though the interest is paid according to instalments, we shall raise no sort of objections to your entering on and taking possession of the " above-mentioned mortgaged properties, irrespective of the said mortgage term."

The term of payment was, therefore, on January 4, 1913. By January 4, 1911, the borrowers were two years in arrear in payment of interest, and were in need of further monies. Accordingly, a second

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mortgage was granted in July, 1911, for the said two years of interest and compound interest and further monies, amounting in all to Rs. 120,000. The deed, after reciting the various sums, which amount to the Rs. 120,000, continues as follows " We shall pay the above principal sum of Rs. 1,20,000 and the interest accruing according to the terms of the deed, in full, on January 4, 1916. Further, though January 4, 1913, is the date due for the mortgage deed for Rs. 5,00,000.0.0 executed on January 4, 1906, in your favour by Nos. 1, 2, 3, 4, 5 and 7 among us and by the late Sri Somasekhararaju Bahadur Garu, and registered as No. 22 of 1906 in the Sub-Registrars office at Parvatipur, you and we have settled now that the due date for the said deed should also be January 4, 1916, along with this deed. Therefore, by this change, the entire terms of the registered deed, dated January 4, 1906, are deemed to have been included in this deed, and we shall agree to the said terms, even regarding the discharge of the principal and interest of this deed also and be bound by them, If, according to the terms of this deed, the interest of each year be not paid on the respective due date, these terms will not prevent you from recovering the said amount then and there, if you should so desire, without waiting for the due date, namely, January 4, 1916."

The appellants paid no interest whatever after the date of the second deed, and accordingly, in July, 1913, there being two years interest in arrear, the respondent brought the present suit for decree for the whole sum due and for an order of sale of the mortgaged properties. To this action the appellants pled in defence first, that the mortgage was a usufruct mortgage, and did not authorize sale ; and secondly, that the action was premature, the term of January 4, 1916, not having yet arrived. The learned Subordinate Judge held that the mortgages were simple mortgages, with merely an alternative power of entry into possession, and granted decree and order for sale in ordinary form.

Appeal being taken to the High Court of Madras, that Court affirmed the view that the mortgages were simple mortgages. They further held that the sale of the lands for principal was premature at the date of the decree of the Subordinate Judge, but in respect that by the time the case was before them the term of January 4, 1916, had been passed, and no payment had been made, they allowed the decree of the Subordinate Judge to stand.

Appeal being taken to this Board, the appellants urged that, inasmuch as the Appeal Court had held that the sale was premature in respect of the principal, arid only good for the interest, it was not permissible for them to enlarge the suit as laid, because at the time they came to deal with the appeal a decree for the principal on a new suit would have been competent, to which the respondent replied that, as the proceeding was entirely executory, it was proper for the appellate Court to pronounce a decree which would regulate the true rights of parties as they stood at the time when the final judgment came to be pronounced.

The first question, however, which arises, and which if settled one way renders any further discussion unnecessary, is whether, in view of the terms of the second mortgage, the suit raised in July, 1913, for the whole sums due was, or was not, premature. This question depends on the meaning of the clause "If according to the terms of this deed, the interest of each year be not paid on the respective due date, these terms will not prevent you from recovering the said amount then and there, if you should so desire, without waiting for the due date, namely, January 4, 1916."

It is settled that, apart from special stipulation, there is no right to demand a sale of mortgaged lands for payment of interest in arrear. The learned judges of the High Court thought that " the said amount " meant interest alone, and that the clause received meaning as giving the right of sale for interest. Their Lordships do not think that that is the meaning of the clause. It was a most natural thing that, as nothing had been ever paid by the borrowers, the lender, on being asked to allow

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the surplus interest to become principal in a new mortgage, and to postpone the term of the old mortgage, should stipulate that, if this nonpayment of anything should continue, he might be done with the whole matter and call everything up. Besides, a power to enter into possession if interest was not paid had already been given, for all the terms of the first mortgage are incorporated in the second. It seems, therefore, antecedently much more probable that the meaning of the clause, if ambiguously expressed, should be .to give the power of recalling the prolongation of the term than to give a mere power of sale for interest, which would avail little. This view would lead to an affirmance of the decree, though on different grounds.

There is, however, another point. Some of the lands of which sale had been decreed are situate in what are known as the Agency Tracts. Now, the suit is raised in terms of the Code of Civil Procedure, 1908. By s. 1, sub-s. 3, the Code is, with the exception of certain sections not here in point, excluded from the scheduled districts, and by Act XXIV. of 1839 the district in which the lands above referred to are situate was scheduled. The learned judges of the High Court thought that the matter was met by s. 21 of the Code, which provides that no objection as to the place of suing shall be allowed by any appellate Court unless the objection was taken in the Court of first instance, which in this case had admittedly not been done. Their Lordships cannot agree with that view. This is not an objection as to the place of suing ; it is an objection going to the nullity of the order on the ground of want of jurisdiction. The order for sale is made under sections of the Code of Civil Procedure, which the Code itself says are not to apply to the scheduled district.

The learned counsel for the respondent sought to justify the decree in respect of the terms of s. 17, which provides that " Where a suit is to obtain relief respecting, or compensation for wrong to, immovable property situate within the jurisdiction of different Courts, the suit may be instituted in any court within the local limits of whose jurisdiction any portion of the property is situate." Their Lordships think that " Courts " here must be held as meaning Courts to which the Code applies, and that therefore no help is to be claimed from this section.

Their Lordships think, therefore, that the decree pronounced by the High Court must be varied by deleting the order for sale so far as applicable to the lands situate within the Agency Tracts. This will be, of course, without prejudice to the respondents right to apply in the Agency Court for an order for sale of those lands.

This variation is insufficient in their Lordships opinion to deprive the respondent of any portion of his costs here or in the courts below. Their Lordships will humbly advise His Majesty accordingly.