P L D 1959 (W (PLP)

MUHAMMAD YAQUB ALI, J.‑--The question which falls for decision in this appeal is whether the suit brought by Mst. Rafia Begum, appellant, for the recovery of Rs. 6,990 on account of principal amount and interest on the basis of a mortgage against Miraj Din, respondent, was barred by Order II, rule 2, C. P. C.

2. The facts relevant to the determination of the question in hand are that the respondent had on the 18th April 1945, mortgaged with possession three houses situated in Lahore with the plaintiff for the sum of Rs. 10,000 out of which Rs. 6,600 was paid in cash to the respondent and the balance left with the appellant for redeeming an earlier mortgage of one of the houses in favour of Mst. Inayat Begum which sum has admittedly not been paid so far. The mortgage in favour of the plaintiff' was for no fixed period and the principal amount was to carry interest at the rate of 10 per cent. per month which was expressly made payable on the expiry of each month. Simultaneously with the execution of the mortgage deed the respondent had executed a lease deed of‑ the three houses in favour of the appellant under?taking to pay rent at the rate of Rs. 62‑8‑0 p.m., which was equivalent to the amount of monthly interest on the principal amount.

3. In 1945 the appellant instituted a suit against the respon?dent for the recovery of Rs. 2,002‑7‑0 on account of arrears of rent which was compromised and a decree for payment of Rs. 1,278‑12‑0 was passed in favour of the appellant. On the 12th March 1950, the appellant instituted the present suit for the recovery of Rs. 6,990 against the respondent on account of principal money and interest thereon after giving credit for the sum of Rs. 2,002 realised on account of rent of the mortgaged property up to date. In reply the respondent admitted the creation, of the mortgage and the receipt of Rs. 6,600 as principal money as well its the tix4tion} 9f interest 4t the rate of 10 per cent. per month but raised a preliminary objection that inasmuch as the appellant n had omitted to sue for the principal amount and interest due on it in the earlier suit he had by virtue of Order II, rule 2, C. P. C., precluded himself from maintaining the present suit. In substance the plea raised was that the cause of action in both the suits was the same and if the plaintiff chose to claim only one relief in the earlier suit she had deprived herself of the other relief which formed the basis of the present suit under the aforesaid provisions of the Code. The objection has prevailed in the trial Court resulting in the dismissal of the appellant's suit and aggrieved by it she has preferred this appeal.

4. In assailing the decree of the trial Court Mr. Muhammad Amin Khan, learned counsel for the plaintiff, has raised two‑fold contention, firstly, that the agreement of lease and mortgage were two independent transactions and gave rise to separate causes of actions and, secondly, that the mortgage deed contained a clause by which the obligation to pay interest and principal amount was independent of each other and as such furnished separate cause of action. In support of the former proposition he has relied upon Pindi Das and others v. Lal Chand (A I R 1916 Lah. 296), Budha Shah v. Suleman and others (A I R 1917 Lah. 260), Muhammad Hussain v. Abdul Ghajur Khan (I L R 3 Lah. 1), Ralia Ram and another v. Amir Chand and others (I L R 4 Lah. 52), Gurdial Singh v. Diwan Chand and others (A I R 1928 Lah. 732), and in support of the latter on Kishan Narain v. Pala Mal and others (A I R 1922 P C 412), Sultan Singh and another v. Joti Sarup and another (A I R 1928 Lah. 269) and Puthanpuravil Nittookandi Kappalli Krishna Kurup and another v. Kottikollon Mammad and others (A I R 1932 Mad. 466).

4. In reply Kazi Muhammad Ashraf Israili, learned counsel for the respondent, has relied on the following autho?rities :‑ Natha Singh v. Chuni Lai and others (69 P R (1918)). Rala Ram and others v. Diwan Chand (A I R 1921 Lah. 225). Muhammad Hafiz v. Muhammad Zakria (A I R 1922 P C 23). Lakhmi Das Gopichand v. Ghulam Nabi (A I R 1935 Pesh.84) Naba Kumar Hazra and another v. Radhashyam Mahish and others (A I R 1931 P C 229). Ganeshi Lai v. Bansi Dhar and others (A I R 1933 All, 84).

5. After carefully examining the authorities cited from the bar, we have come to the conclusion that in the instant case the mortgage had provided for an independent obligation to pay the principal amount and interest which according to the observation of Lord Buckmaster in Kishan Narain v. Pala Mal and others reproduced below, precluded the application of Order II, rule 2, C. P. C. :-- "That Rule 2 of Order li of the Code of Civil Procedure is the relative section of the Code applicable to the dispute is not in contest. The whole question is what does it mean? It does not appear to their Lordships that if the mortgage had provided, as the mortgages always do in this country, for an independent obligation to pay the principal and the interest, in a suit brought to obtain a personal judgment in respect of the interest alone, the rule would have prevented a subsequent claim for payment of the principal. In such a case the cause of action would have been distinct************** * If, therefore, the plaint originally brought came to be properly interpreted as claiming only a personal relief in respect of the unpaid interest, the appellant's case would be on surer ground ; but although their Lordships are anxious that claims for a just debt should not be defeated by the intricacies of legal procedure, yet they are unable to hold that the plaint that was originally issued by the appellant can properly bear the interpretation."

6. In the present suit the relevant clause in the mortgage deed Exh. P. 1, at pages 29 to 31 of the paper‑book, reads as follows :‑ "Profit on the principal amount fixed at 10 per cent. per month I (mortgagor) shall pay every month. In case of default the amount shall be charged on the mortgaged property." Besides this stipulation in the mortgage, as mentioned above, an agreement of lease was entered into by the parties whereunder the respondent was to pay Rs. 62‑8 p.m., as rent of the mortgage property which made abundantly clear the intention of the parties that the appellant could enforce the payment of interest during the subsistence of the mortgage as an independent obligation. In principle there is no bar in this country to the creation of a mortgage whereby the mortgagee may be entitled to sue for the recovery of interest and keep alive the mortgage ; at least no such provision of law was brought to our notice. In Sultan Singh v. Joti Sarup, which follows the dictum of Lord Buckmaster repro?duced above, Tek Chand, J., after enumerating the ingredients of a simple mortgage, has concluded thus: "The mortgage transaction in question gave rise to two independent obligations ; the right of recovering the amount due as a loan and that of enforcing the relief against the property, and each of them furnished an independent cause of action. In the former suit the plaintiffs claimed a personal decree for interest against the mortgagors and so enforced the first obligation only. In the present suit they seek relief against the property and the cause of action, therefore, is wholly distinct. Consequently no question of the applicability of Order II, rule 2, arises." It may be pointed out that in the present case, as in Sultan Singh v. Joti Sarup, the decree obtained in the former suit was against the person of the defendant and not against the mortgaged property and the bearing which this fact has on the application of Order II, rule 2, C. P. C., to a subsequent suit for the recovery of the principal amount and interest is brought by Tek Chand, J., in pointing out that in Kishan Narain v. Pala Mal the claim in the former suit was for recovery of interest "recoverable from mort?gaged property" and it was on account of this that their Lordships had held that the second suit was barred by Order II, rule 2, C. P.C.

7. The remaining authorities cited by the learned counsel for the plaintiff proceed on the findings that the agreement of lease was a separate transaction from the mortgage in question and, therefore, cause of action in the suit for the recovery of rent and for enforcing payment of the mortgage money by sale of the mortgaged property was separate. As will be seen this is purely a question of fact in each case whether the two transactions are in reality one and the same. We must accordingly turn to the facts of the present case to determine whether the mortgage and the agreement of lease form one and the same transaction or not.

8. The authorities relied upon by the learned counsel for the respondent may now be adverted to. In Natha Singh and others v. Chunilal and others it was held: "That where a mortgage deed and a contemporaneous lease form in reality one transaction (the latter merely providing a mode for realising interest) a previous suit for rent instituted after the principal mortgage debt had become due bars a subsequent suit for recovery of the principal and interest due on the mortgage, vide Order II, rule 2 of Civil Procedure Code". In Rala Ram and others v. Diwan Chand the learned Judge reached the same conclusion by observing that: "The rent payable under the deed of lease was to be devoted to the liquidation of a part of the interest and was merely a method of realization". The decision in Rala Ram and others v. Diwan Chand is not of much help because in an earlier suit between the parties to that case it had been held that the transaction of lease and mortgage were one and the same and the decision operated as res judicata. Great stress was, however, laid by the learned counsel on the decision of the Judicial Committee in Muhammad Hafiz v. Mirza Muhammad Zakariya in which Lord Buckmaster held that second suit for principal and further interest was barred if there was option to sue for interest or principal and interest and suit for interest alone was instituted after the expiration of the term of the mortgage. The decision in this case proceeds on its own peculiar facts which may be briefly stated thus. The mortgage deed executed on the 24th September 1910, was to serve as security for repayment to the mortgagee of Rs. 14,000 principal and interest at the rate of 8 per cent. per month. It was then provided that the interest should be paid on the expiry of each month and that in case of default for six months, the mortgagee should be competent to realise only the unpaid amount of interest due to him ; or the amount of principal and interest both by bringing a suit in Court without waiting for the expiration of three years, the time fixed for payment of the mortgage money. Three years elapsed after the deed had been executed and no interest was paid with the result that in April 1914, the mortgagee had the power either to bring an action for realising the principal amount and the interest thereon or interest alone and on the 16th April 1914, he instituted a quit for interest in accordance with the pro?visions of the mortgage deed amounting to Rs. 3,

010. The suit was decreed on the 11th August 1914, granting the relief but in the words of their Lordships of Privy Council, the decrce was not a decree which the plaintiff had asked for and certainly not the decree to which the defendants were entitled. What the learned Judge did was that he declared the amount due to the mortgagee for principal, interest and costs as Rs. 3,217‑12‑0 although nothing had been paid out of the principal amount of Rs. 14,

000. He then provided that if the defendants paid into Court the amount so declared to be due which was the amount of interest and costs only on or before the 11th February 1915, the mortgagee should deliver up the documents relating to the property and if required retransfer it to the defendants freefrom the mortgage and from all encumbrances. The money was paid into Court but the mortgagor never asked for the retransfer of the property and the property, therefore, remained still subject to the mortgage. On the 23rd January 1915, the representatives of the mortgagee instituted a second suit claiming that the amount due on the mortgage was the principal money minus the interest that had accrued due that is the amount which had been paid in the pro?ceedings in the former suit and they sought realization of the suit amount by the sale of the mortgaged property. To that suit objection was taken by the defendant that it was not competent under Order II, rule 2, C. P. C. After noticing these facts Lord Buckmaster observed that the plaintiff purported to proceed under clause 2 of the mortgage deed but even in that case the non?payment of the interest was the sole cause upon which they were entitled to ask either for the limited relief that was sought for or the larger relief which they claimed in the second suit and that the only relief that was sought in both the cases was realization of the mortgage security because the mortgage did not contain any express covenant for the payment of the principal and the interest. Order II, rule 2, C. P. C., was, therefore, held applicable to the second suit but in order to appreciate the dictum of their Lordships, it is important to bear two things in mind. Firstly, that in the former suit the amount of interest was sought to be recovered by proceedings against the mortgaged property and secondly that the only relief that could be sought in both the cases was by proceeding against the mortgage security as there was no covenant on the part of the mortgagor for payment of the principal and the interest. The learned counsel for the respondent wanted us to infer from this judgment that a suit for recovery of the principal amount and interest as such, or in the form of rent, always arose from the same cause of action and that if the creditor chose to sue' for one, he invariably deprived himself of the other. We are, however, of the view that their. Lordships did not lay down any such rule and we are fortified in this by the later observa?tion of Lord Buckmaster in Kishan Narain. v. Pala Mal; reproduced above.

9. In Lakhmi Das v. Ghulam Nabi, the learned Additional Judicial Commissioner took notice of the fact that the judgments in Muhammad Hafiz v. Mirza Muhammad Zakariya and Kishan Narain v. Pala Mal were delivered by the same noble Lord and observed that both the rulings were to be read as laying down one consistent proposition. At page 89 of the report it is pointed out that the non‑payment of interest in Muhammad Hafiz v. Muhammad Zakariya would have caused the principal to become payable only within the period of the mortgage, but the former suit for recovery of interest had been filed after the expiry of that period and that after the principal has become payable the obligation to pay principal and interest was one and there was one single cause of action. There are cases in which it has been held that suit for recovery of interest did not bar subsequent suit for the realization of the principal amount if the former suit was instituted before the expiry of the period fixed for the mortgage for the obvious reason that cause of action to maintain the second suit had till then not arisen. There is a second category of cases in which the principal amount fell due on account of default in payment of interest and thus one single cause of action gave rise to two separate reliefs, namely, recovery of interest and realiz4tion of principal amount. The cause of action being one in these cases it is obvious that if the creditor chose to give up one of the reliefs to which he was entitled in the former suit, Order II, rule 2, C. P. C., came in his way if he sought to press the second relief in a subsequent suit. Cases of this nature were perhaps in the mind of the learned Judicial Commissioner when he emphasised that in Muhammad Hafiz v. Muhammad Zakariya the former suit had been instituted after the expiry of three years and that what Lord Buckmaster was considering in Kishan Narain v. Pala Mal was the question of the principal and interest becoming payable by some default within the period of mortgage and in support of it relied upon the following observation at page 414 of the report :‑ "The matter is, however, different if the non‑payment of the interest causes the principal money to become due, as in that case the cause of action, the non‑payment of the interest, gives rise to two forms of reliefs which, Civil Procedure Code pro?vides, shall not be split". From this the learned A. J. C., concluded that if interest and principal amount became payable on account of default on the part of the mortgagor to pay interest on expiry of the stipulated period of mortgage invariably only one suit could be maintained to claim both these reliefs and for this interpretation relied on the decision of the Madras High Court in Swamy Rao v. Official Assignee (1925 Mad. 1120). We are, however, unable to agree with this view because the statement of law by Lord Buckmaster in Kishan Narain v. Pala Mal is quite categorical and not qualified as suggested by the learned Judges. The real distinction in the decision of Muhammad Hafiz v. Muhammad Zakaria and Kishan Narain v. Pala Mal, as mentioned above is that in the former case the decree for the amount of interest was made payable by proceeding against the mortgaged property as there was no covenant in hat case on the part of the mortgagor to pay the principal amount and interest thereon, while in a case contemplated by Lord Buckmaster in making the observation reproduced above, the decree in the former suit would be against the person of the mortgagor for payment of interest and not against the mortgaged property, This distinction has been clearly brought out by Tek Chand, J., in Sultan Singh v. Joti Sarup.

10. In Naba Kumar Hazra and another v. Radhashyam Mahish and others their Lordships of the Judicial Committee have laid down: "The relief for rent and profits which could have been prayed for in a previous suit for conveyance of properties and arising out of the same cause of action cannot be prayed for in a subsequent suit". The case proceeds on its own facts and does not render any help 'to the respondent's contention that the present suit instituted by the plaintiff for the recovery of the principal amount is barred by Order II, rule 2, C. P. C. The decision in Puthanpurayil Nitookandi Kappalli Krishna Kurup and another v. Kottikollon Mammad and others actually goes in favour of the plaintiff for it is laid down in it that if the mortgage deed provides for payment of principal and interest as independent obligations mortgagees' previous suit for interest did not bar subsequent suit for principal under Order II, rule 2, C. P. C., and further that in case of mortgage with possession if the mortgagee leases back to the mortgagor the mortgaged property suit on the basis of lease for arrears of rent did not bar suit for principal amount. In the next case Ganeshi Lal v. Bansi Dhar the plaintiff had taken a mortgage of a certain house from the defendant. In order to secure payment of interest due under the mortgage he had leased back the house to the mortgagor under an instrument by which it was agreed that if there was a default in the payment of, interest for three years consecutively, the mortgagee was entitled to evict the mortgagor. The rent not having been paid, he sued the mortgagor for arrears of rent but did not ask for possession though entitled under the lease. He subsequently sued for possession of house and it was held that the suit was barred under Order II, rule 2, C. P. C., as the cause of action for possession of the house by eviction of the mortgagor had accrued in his favour when he brought the prior suit for rent and that he could not be allowed to split the claim for reliefs piecemeal. The decision in this case does not help the respondent very much, because the second suit was not for the recovery of the principal amount as is the present case and further with due respect we are unable to see how the second suit for ejectment was barred. It was of course open to the plaintiff to claim both the reliefs in one suit and if he chose to give up one of them he was precluded from claiming it in 'a second suit based on the same cause of action, but it did not mean that whenever there was a fresh default in payment of rent giving rise to a new cause of action, the former suit operated as a bar to a suit for ejectment of `the mortgagor.

11. Turning now to the facts of the present case earlier we have pointed out that under the mortgage deed interest was expressly made payable from month to month which indicates the intention of the parties that while the cause of action to proceed against the mortgage security was to remain intact mortgagee was authorised to maintain a suit for realisation of interest after the expiry of each month. The execution of the lease deed by the mortgagor simultaneously with the creation of the mortgage also points in the same direction because this authorised the mortgagor to recover interest in the form of rent as an independent obligation. Nevertheless it cannot be denied that the mortgage and the agreement of lease formed one transaction, A but as found earlier it gave rise to two distinct obligations in favour of the mortgagee, namely, to realise interest by proceedings against the person of mortgagor and to recover the mortgage amount by proceeding against the mortgaged property and in the light of the authorities discussed above the provisions of Order 11, rule 2, C. P. C., did not bar the present suit although the amount of rent claimed in the former suit was in reality interest due on the principal amount.

12. We accordingly allow this appeal and decree the plain?tiff's suit for recovery of the principal amount at the stipulated rate and costs in both the Courts. A preliminary decree in the prescribed form will be drawn up by the office for payment of the aforesaid amount within six months from today failing which the appellant may apply for a final decree. K.B.A.???????????????????????????????????????????????????????????????????????? ??????????????????????? Appeal accepted.