S.C. Ghose and Hamilton Wincup Gordon, JJ.

1. This was a suit to enforce a mortgage bond. The mortgagewas executed in. favour of one Harihar Prasad. He died, leaving two sons,Jagadanand Das and Shamanand Das, both of them being minors at the time.

2. The suit was instituted on the 28th March 1892 byJagadanand Das against the mortgagor, Baid Nath Das, for recovery of the moneycovered by the mortgage bond, and he asked that the sum due might be realizedby safe of the mortgage property, and he further prayed that in the event ofthe mortgage property being found insufficient to liquidate the entire amount,the balance might be recovered from the defendant personally and from his otherproperties.

3. We should here mention that Jagadanand Das, who was theelder of the two brothers, stated in his plaint that he was the sole heir ofhis father, and that he had taken out a certificate of heirship in order toenable him to collect the debts due to his fathers estate.

4. The defendant in his written statement pleaded that thesuit was not maintainable, because the plaintiff had not joined his brother asco-plaintiff in the suit, and that the interest sought to be recovered by theplaintiff, namely at the rate of Rs. 3-2, was a penalty, and could nottherefore be allowed. He further set up a custom that prevailed in his family,under which he alleged no member of the family was entitled to mortgage thefamily property.

5. It appears that pending this suit Jagadanand Das died onthe 18th August 1892. Thereupon, his brother Shamanand Das, who was still aminor, through his mother and guardian, asked to be substituted as a plaintiffin the place of his deceased brother. Some other persons, who are half brothersof Harihar Prasad, also applied to be made plaintiffs in the suit, but it issufficient to dismiss their application by stating that the Court below heldthat it was beyond time, and therefore it could not be acceded to. So far asShamanand Das was concerned, the Subordinate Judge allowed him to besubstituted as plaintiff in the case in the place of his brother JagadanandDas, he being of opinion that, being a minor, his (Shamanands) application wasnot barred by the Law of Limitation.

6. The Subordinate Judge, upon the case coming up for trial,dealt with the contentions that were then raised before him, and he states thatthe contentions were-first, that the plaintiff Shamanand was not a minor;secondly, that the rule of primogeniture prevailing in defendants family was abar to the sale of the mortgaged property; and, thirdly, that without acertificate under the Succession Act, the plaintiff was not entitled to adecree. He negatived all these objections, and held that the plaintiff wasentitled to a decree charging the mortgaged property for the satisfaction ofhis claim, but that the personal relief claimed in the plaint against thedefendant could not be allowed, as it was barred by the Law of Limitation. Inregard to the question of interest that was raised before him, the SubordinateJudge held that the plaintiff was entitled to claim interest upon the principalonly at the rate of Re. 1-4 as agreed upon, and not the higher interest of Rs.3-2, but that he could recover interest at that rate upon the interest accruingupon the principal, that is to say, that he was entitled to compound interestat the higher rate of Rs. 3-2 mentioned in the bond. We observe, however, thatthe decree that was drawn up under the signature of the Subordinate Judgeallows interest at the higher rate upon the principal from the date of theinstitution of the suit.

7. Against this decree the defendant has preferred thisappeal.

8. The first point that has been discussed before us by thelearned Vakil for the appellant is that Jagadanand Das, the original plaintiff,was not entitled to sue without joining his brother, Shamanand Das.

9. As to this matter, it is sufficient to say that, thoughit was raised in the written statement, it was not insisted upon at the trialbefore the Subordinate Judge, nor has it been raised in the petition of appealpresented to this Court. It raises simply a question of non-joinder of parties,but it does not really affect the merits of the case, more particularly whenupon the death of Jagadanand Das, Shamanand Das has been substituted asplaintiff in his place, and the suit has been allowed to proceed at hisinstance.

10. The next ground that has been raised before us on behalfof the appellant is that the plaintiff was not entitled to get a decree withouta certificate of succession as provided by Section 4 of the SuccessionCertificate Act.

11. As to this matter, it appears that, although a decreewas asked for by the plaintiff both against the mortgaged property and againstthe debtor personally, still the only decree that was pronounced by the Courtbelow was a decree against the mortgaged property. No relief was grantedagainst the defendant personally. Section 4 of the Succession Certificate ActVII of 1889 provides:

No Court shall-

(a) Pass a decree against a debtor of a deceased person forpayment of his debt to a person claiming to be entitled to the effects of thedeceased person or to any part thereof; or (b) proceed upon an application of aperson claiming to be so entitled, to execute against such a debtor a decree ororder for the payment of his debt;" and so on.

12. The question here is whether the decree that has beenpassed by the lower Court is a decree against "the debtor for payment ofhis debt." This question seems to have been considered in two cases beforethis Court. In the case of Raghu Nath Shaha v. Poresh Nath Pundari I.L.R Cal.54 where the question was raised with reference to the language of Section 21of Act XXVII of 1860, Wilson, J., in delivering the judgment of the Court,observed as follows: "The words of the section are that no debtor of anydeceased person shall be compelled in any Court to pay his debt to any personwithout a certificate. It seems to me that this is limited to suits against adebtor, and can have no application to a suit against a purchaser of amortgaged property, who is in no sense a debtor; secondly, it seems to me thatthe words are limited to cases in which a Court is asked to compel a debtor topay, that is to say, to make a personal decree against the debtor. To me itseems to have no application to a suit such as the present."

13. The Act which the learned Judges had then to considerwas no doubt an Act different from that with which we are concerned in thepresent case; but it will be observed that the language of Section 2 of Act XXVII of 1860, so far as the question which arises in this case is concerned, isvery similar to the provisions of Section 4 of the Succession Certificate Act.

14. In a more recent case, Kanchan Modi v. Baij Nath SinghI.L.R.Cal. 336 where the question as to the construction of Section 42 of theSuccession Certificate Act came to be discussed, this Court observed asfollows:

Section 4 says: No Court shall pass a decree against adebtor for payment of his debt, and so on. A mortgagee might ask for a decreeagainst the person of the debtor, but the Court is not bound to make a personaldecree; it might, if the facts permit, make a decree only against the propertymortgaged by the defendant; and in the circumstances of the present case it wasquite open to the Court of First Instance-in fact, it was its duty-to refrainfrom making a personal decree and to pass a decree charging the property in thehands of the defendants, second party, for satisfaction of the claim of theplaintiffs. The relief that the plaintiffs asked for in the suit was not forrecovery of the debt, Ml but as observed by Sir Barnes Peacock in the FullBench decision in Sarwar Hossein Khan v. Gholam Mahomed B.L.R. Sup.879 : 9 W.R.170 it was a suit for the recovery of an interest in Immovable property. Thequestion that the learned Judges had to decide in that case was no doubt adifferent question. It was one of limitation, but we take it, as it has alwaysbeen understood in this Court, that a suit to enforce a charge againstImmovable property is a suit for the recovery of an interest in Immovableproperty; and if that be the correct view to take, it seams to be obvious thatthe plaintiffs were entitled, notwithstanding the absence of a certificateunder the Succession Certificate Act, to sustain the decree that had beenpronounced in their favour by the Court of first Instance, that being a decreecharging the Immovable property in the hands of the second party defendants.

15. There, no doubt, no personal relief was asked foragainst the mortgagor, and the decree that was allowed by the Court below was adecree against the mortgaged property in the hands of the assignee of themortgaged premises, but still the question that we have to decide in this casecame, though incidentally, to be considered by the Judges who dealt with thatcase.

16. In the case of Janki Bullav Sen v. Hafiz Mahomed AliKhan I.L.R Cal. 47 a somewhat different view seems to have been adopted; but itwill be observed upon a consideration of that case that the precise questionwhich we have to decide in the present case was not then discussed.

17. In the present case, no decree was passed by the Courtbelow against the debtor personally, and the only relief that has been grantedby that Court to the plaintiff is a relief against the property mortgaged; andthough no doubt the property is liable to be sold only in the event of thedefendant failing to pay the money due under the mortgage by the time fixed bythe Court, it could hardly be said that that is a decree against the debtor forpayment of his debt, properly so called. We are inclined to think that theconstruction put upon the words of Section 2 of Act XXVII of 1860, which are ineffect very similar to Section 4 of the Succession Certificate Act, by Wilson,J., in the case to which we have already referred, is the right construction,and may be adopted in the present case.

18. There was another view which was presented to us by thelearned Vakil for the respondent with reference to Section 4 of the SuccessionCertificate Act, and that is that it has no application to a case like thepresent where the original plaintiff had obtained a certificate under theSuccession Certificate Act, and another person was, during the pendency of thesuit, substituted in his place as the heir of the deceased plaintiff. It isperhaps not necessary, in the view that we have already expressed, to decidethis question, but it seems to us that it is extremely doubtful whether the Legislatureever intended that this section should apply, not only to a case where a personclaims to recover money under the title of succession to the original creditor,but also to a case, where, upon the death of that person during the pendency ofthe suit, some other person is substituted in his place as plaintiff in thecause.

19. We therefore overrule the contention of the defendant onthis head.

20. The third objection that was raised before us was inregard to the interest allowed by the Court below. The words of the mortgagebond, so far as they bear upon this matter, are as follows:

I will pay interest for the said amount at the rate of Re.1-4-0 per cent per mensem. And at the end of a year, i.e., 365 days, from thedate of the mortgage bond, I will pay the whole amount of interest due on theprincipal for that year. If I do not pay the interest in this way at the end ofeach year, I will be guilty of neglect. You will by instituting suit realizeinterest upon the arrears of interest (which will be regarded as principal) andupon the principal mentioned in the mortgage bond at the rate of Rs. 3-2-0 percent per mensem, from the mortgaged property and from my heirs, assigns andrepresentatives and from my other properties. I will continue to pay interestupon the principal for every year from the date of the mortgage bond at the endof that year as long as the amount of the mortgage bond is not paid. In defaultof payment you will act according to the condition stated above. I will repaythis money within three months from date and redeem the mortgaged property andmortgage bond. I will get the payments of interest or of principal endorsed (asoften they will be made) on the back of the mortgage bond. I will take noseparate receipt or releases, nor will produce any (in evidence). If producedthey will be at once rejected by the Court as inadmissible. If I fail to pay upthe principal money within the said specified time I will continue to pay upinterest upon the principal at the rate of Re. 1-4-0 per cent according to thesaid stipulation in the bond up to the date of the institution of the suit, andfrom the date of institution of the suit to that of the decree, and from thedate of the decree to that of the realization of the amount.

21. As already mentioned, the Court below has held that theplaintiff is not entitled to recover the higher rate of interest, namely, Rs.3-2-0, upon the principal amount, but that he is entitled to such interest uponthe interest accruing year after year. The question whether the mortgagee has aright to compound interest at the higher rate of Rs. 3-2-0 is not free fromdifficulty, but having regard to the judgment of a Full Bench of this Court inthe case of Kala Chand Koyal v. Shib Chunder Roy I.L.R Cal. 392 delivered byPigot, J., we think that the plaintiff is not entitled to this higher rate ofinterest, it being in the nature of a penalty within the meaning of Section 74of the Contract Act. In that case, the provision in the bond was that theprincipal should be repaid with interest on the due date, and that on failurethereof interest should be paid at a higher rate from the date of the bond upto date of realization; and the question that was discussed was whether thisprovision amounts to a provision in the nature of a penalty such as underSection 74 of the Contract Act could not be enforced. The majority of the Courtfollowed the decision of this Court in the case of Mackintosh v. GrowI.L.R.Cal. 689 and held that the said provision amounted to a stipulation forpayment of a penalty, and therefore it could not be given effect to. Thelearned Judges had, in deciding that case, to consider the correctness ofanother judgment of this Court, namely, in the case of Baij Nath Singh v. ShahAh Hossein I.L.R.Cal. 248 and Pigot, J., with reference to this case and to acase decided by the Madras High Court, made the following observations:

I think that the objection made in the judgment in Baij NathSingh v. Shah Ali Hossein I.L.R. Cal. 248 that cases such as the present do notcome within Section 74 of the Contract Act, because no sum is named, is not oneto which effect ought to be given. By the fixing of a rate of interest the sumto become payable, at any rate, as the Madras High Court says, at the time whendefault is made, is fixed, and this is what the section contemplates.

" Upon the second question I think that when theprovision in the contract in question amounts to a provision for a penalty (or,which is the same thing, stipulates for a sum in case of breach within themeaning of Section 74) that that goes to the whole sum which may accrue dueunder the provision, although it may be that by non-payment for an indefinitetime the aggregate amount ultimately payable may greatly exceed the amount-thefixed and ascertainable amount-to be due at time of default. I think theycannot be separated, and that Section 74 applies to all, that is, that itapplies to the money claimed at the increased rate of interest from the date ofthe bond until realization.

22. These last observations were made especially withreference to the question that was raised in the case, whether the plaintiffcould not recover the higher rate of interest from and after the due date, andit was held that the provision as to the increased interest was a provisionwhich could not be separated, and that therefore Section 74 of the Contract Actapplied both to the period before the due date as also to the period subsequentthereto.

23. It was contended before us by the learned Vakil for therespondent, relying upon certain observations of this Court in the case ofMangniram Marwari v. Rajpati Koeri I.L.R. Cal. 366 that Section 74 of theContract Act had no application to this case, because no sum was named as theamount to be paid in the event of a breach of the contract to pay; that theamount would vary with the time for which payment was withheld; and that, withregard to compound interest, there was but one rate stipulated, viz., Rs.3-2-0, and that therefore it could not be regarded as a penalty. We observe,however, that the first portion of this argument, as we understand it, is thesame that was used by Mitter, J., in the case of Baij Nath Singh v. Shah AliHossein, but it does not seem to have been accepted as correct by the majorityof the Judges who composed the Full Bench in the case of Kala Chand Koyal v.Shib Chunder Roy. They rather adopted the view of the law that was expressed bythe Madras High Court in the case of Nanjappa v. Nanjappa I.L.R Mad. 161. Thelearned Judges in that case, with reference to this question, observed asfollows:

It is said there is in the present case no sum named withinthe meaning of Section 74 of the Contract Act, and that therefore that sectionis not applicable. To that argument we would reply that, though no sum is namedin rupees, the extra sum payable is fixed and ascertainable beforehand or atany rate at the time when default is made. To hold that more than this isrequired, and that it is necessary that the exact sum should be mentioned inthe bond, is in our judgment to countenance an easy mode of avoiding the effectof the section altogether.

24. We may add with reference to the case of MangniramMarwari v. Rajpati Koeri, which was relied upon by the learned Vakil for therespondent, that the terms of the bond which the learned Judges were thencalled upon to consider are not identical with the terms of the bond in thepresent case.

25. It will be observed that the stipulation between theparties was that the interest would be payable at the end of each year, andthat in default of payment of such interest at the rate of Re. 1-4-0 per centper. mensem, the mortgagor should have to pay compound interest at theincreased rate of Rs. 3-2-0 per cent per mensem; and that in default of paymentof interest at the end of each year the creditor would be entitled to sue forthe interest at the increased rate. So that, although no sum was named in themortgage itself as would be payable upon a breach of the covenant on the partof the mortgagor, still the amount which the mortgagee would be entitled torecover from the mortgagor in the event of default of payment of interest atthe end of each year was at once ascertain able, and in this view of the matterwe think that the provision with which we are concerned falls within the scopeof Section 74 of the Contract Act; and we do not see it is possible to dividethis provision into two parts, one of the parts being applicable to theprincipal, and the other part to the interest. The whole provision, as it seemsto us, was one entire provision in the nature of a penalty which the mortgagorincurred in the event of default on his part to pay the stipulated interest atthe end of each year; and though in regard to compound interest there is butone rate (Rs. 3-2-0) mentioned, it is a rate higher than that at which interestwas payable, if there was no breach of the covenant, and in this sense may wellbe regarded as a penalty.

26. Upon these grounds we are of opinion that the mortgageeis not entitled to enforce the penal provision in the mortgage bond as regardsthe higher rate of interest.

27. While, therefore, we think that the decree of the Courtbelow should in the main be confirmed, we are of opinion that it should bemodified so as to allow the plaintiff to recover interest at the rate of Re.1-4-0 per cent per mensem upon the principal from the date of the bond to thedate of realization as also compound interest at the same rate; and we directthat a decree be drawn up in accordance with this declaration in terms of theTransfer of Property Act. Costs in proportion.

1 No debt recoverable without a certificate.

[Section 2: No debtor of any deceased person shall becompelled in any Court to pay his debt to any person claiming to be entitled tothe effects of any deceased person or any part thereof, except on theproduction of a certificate, to be obtained in manner hereinafter mentioned orof a probate, or letters of administration, unless the Court shall be ofopinion that payment of the debt is withheld from fraudulent or vexatiousmotives, and not from any reasonable doubt as to the party entitled.]

2 Proof of representative title a condition precedent torecovery through the Courts of debts from debtors of deceased persons.

[Section 4: (1) No Court shall-

(a) pass a decree against a debtor of a deceased person forpayment of his debt to a person claiming to be entitled to the effects of thedeceased person or to any part thereof, or

(b) proceed upon an application of a person claiming to beso entitled, to execute against such a debtor a decree or order for the paymentof his debt, except on the production, by the person so claiming, of

(i) a probate or letters of administration evidencing thegrant to him of administration to the estate of the deceased, or

(ii) a certificate granted under Section 36 or Section 37 ofthe Administrator-Generals Act, 1874, (II of 1874) and having the debtmentioned therein, or

(iii) a certificate granted under this Act and having thedebt specified therein, or

(iv) a certificate granted under Act XXVII of 1860 or anenactment repealed by that Act, or

(v) a certificate granted under the Regulation of the BombayCode No. VIII of 1827 and, if granted after the commencement of this Act,having the debt specified therein.

(2) The word "debt" in Sub-section (1) includesany debt except rent, revenue or profits payable in respect of land used foragricultural purposes.]

.

Shamanand Das vs.Baid Nath Das (31.08.1894 - CALHC)