Authored By : William Comer Petheram, Arthur Wilson

William Comer Petheram, C.J. and Arthur Wilson, J.

1. This suit has been brought to have it declared that twomortgages, dated the 29th of November 1882 and the 14th May 1884, in favour ofthe Plaintiff, have priority over a mortgage, dated 3rd of January 1884, infavour of the defendant, Bindobashinee Dossee, and to realize such twomortgages by bringing the mortgaged property to sale.

2. The facts are as follows: On the 29th of November 1882,Herembo Chunder Holdar, one of the defendants, mortgaged his one-third share ofa house in Calcutta and a garden in the 24-Pergunnahs to the plaintiff tosecure Rs. 1,000 and interest at 12 per cent.

3. On the 3rd of January 1884, Herembo Chunder Hoidarmortgaged his one-third share of the Calcutta house to the defendant BindobashineeDossee to secure Rs. 1,000, with interest at 18 per cent.

4. On the 14th of May 1884 the defendants, Herembo ChunderHoldar, Surut Chunder Holdar, and Benayak Chunder Holdar, mortgaged the wholesixteen annas of the two properties, included in the mortgage of the 29thNovember 1882, to the plaintiff, to secure Rs. 3,400 and interest at 18 percent.

5. This last mortgage recites the mortgage of the 29thNovember 1882, and a further loan by the plaintiff to Herembo Chunder Holdar ofRs. 100, and proceeds, Now in order to liquidate the said debt, and on accountof other necessities of ours, we three brothers do this day mortgage to youwhatever right, title and interest we three brothers have in the said twoproperties and take the loan of Rs. 3,400; out of this money we have alsoliquidated the said debt, therefore, for interest of the said money, we willpay at the rate of 1-8 per mensem, and within 12 months from this days date,we will repay the whole amount in full, principal as well as interest."

6. Upon these facts, Mr. Justice Trevelyan has dismissed thesuit altogether, holding that by the transaction of May 24th, 1884, the debt ofNovember 29th, 1882, was paid off, and the security created by the deed of thatdate satisfied and cancelled. It has been argued before us that, looking at thereal nature of the transaction, it did not amount to payment of the originaldebt, but was in fact a further advance and a fresh security, and that even ifthe effect of the transaction was that the original debt was paid, that did notnecessarily destroy the security, the real test being what must the plaintiffbe presumed to have intended to do under the circumstances if he had known allthe facts.

7. It was also contended that if the defendants contentionwas correct, the suit should not have been dismissed, as the plaintiff must beentitled, in any case, to some relief in the suit. In our opinion, all thesearguments are valid and must be given effect to, and we are unable to agreewith Mr. Justice Trevelyan in the conclusion at which he has arrived.

8. Looking at the construction of the deed of May 1884, wedo not think the transaction amounted to payment of the original debt; butlooking at what was done in fact, and not mere words, we think that it was inreality a fresh advance upon fresh security being given for both the old debtand the fresh advance, and upon a fresh arrangement being made as to interest,but that the old security for the old debt remained untouched. Even if thiswere not so, and the old debt was paid by the new transaction, the cases ofPhillips v. Gulteridqe 3 De G. and J., 531, Adams v. Angell I.R. 5 Ch. D. 634,Gokaldas Gopaldas v. Puranmal Premsukdas I.L.R. Cal. 1035, and Golnck NathMisser v. Lalla Prem Lal I.L.R. Cal. 307 show that that would not necessarilydestroy the security; but that if there was nothing to show a contraryintention, the creditor must be presumed to have intended to keep the securityalive for his own protection. We can see nothing in this case to indicate acontrary intention on his part, and we think that the plaintiff here must bepresumed to have had such an intention, and that in either view the security ofNovember 29th, 1882, is still subsisting, and the plaintiff is entitled to adeclaration that notwithstanding what has taken place, his mortgage of November29th, 1882, has priority over that of January 3rd, 1884, in favour of thedefendant Bindobashinee Dossee.

9. An account will be taken of what is due for principal andinterest under the mortgage of November 29th, 1882, and of what is due forprincipal and interest under the mortgage of May 14th, 1884, and it will bedeclared that the amount due under the first mortgage is a first charge uponthe property mentioned in that mortgage, and that the amount due on themortgage of May the 14th, 1884, is a charge upon the whole of the propertymentioned in that mortgage, subject to a charge in favour of the defendantBindobashinee Dossee for the amount due for principal and interest under hermortgage upon Herembo Chunder Holdars one-third share of the house inCalcutta, and that the plaintiff do sell the properties not included in suchlast mentioned mortgage first.

10. In taking the accounts as between the mortgagors and themortgagee, the amount found to he due under the mortgage of November 29th,1882, minus the interest from November 29th, 1882, and May 14th, 188i, must bededucted from the amount found to be due under the mortgage of that date inorder to arrive at the sum now due from the mortgagors, the Holdars, to theplaintiff, and for which he is entitled to bring the mortgaged properties tosale.

11. The plaintiff will be entitled to add his costs to hismortgage and, under the circumstances of the case, the costs of the defendant,Bindobashinee Dossee, should also be added to her mortgage.

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Gopal Chunder Sreemanyvs. Herembo Chunder Holder and Ors.(18.03.1889 - CALHC)