P L D 1966 Supreme Court 267 (PLP)

B.Z. KAIKAUS, J. -This appeal by special leave arises out of a suit filed by Nazeef appellant for a declaration that he had acquired rights of ownership in 38 kanals and 8 marlas of land comprising Khasras Nos. 648, 649 and 650 in Turlandi, Tehsil Swabi, district Mardan as this land had been mortgaged with possession in favour of his predecessors-in-interest in 1870 and the limitation for redeeming the mortgage had expired. The original mortgagee of land was Jahan Khan whose rights had devolved upon his grandson Sharif the father of the appellant. Sharif had died leaving behind him the plaintiff, Farid defendant No. 5 another son and Mst. Asro a daughter. The plaintiff had according to allegations in the plaint acquired the rights of his brother Farid and his sister Mst. Asro and had thus become the sole owner of the land. Defendants to the suit were the representatives-in-interest of the original mortgagors a$ well as Farid. The suit was originally contested by Abdus. Sattar defendent No. 52 alone who denied that his share in the property had been mortgaged with the plaintiff's predecessors-in-interest. An ex parte decree was passed in favour of the plaintiff, but was later on set aside on an application by defendants. In the fresh proceedings only the following issue was framed "Whether the plaintiff has become owner on account of mortgage having matured into ownership by prescription?" The Sub-Judge who tried the suit found that the mortgage was of the year 1870 and had not been redeemed. He found, however, that there was an earlier suit filed by Abdus Sattar and Abdul Ghaffar defendants for redemption of the land in suit in which a decree on the basis of compromise had been passed against Farid, the brother of plaintiff, alone, on the 20th January 1945. As there had been a redemption of the share of Farid, plaintiff was not entitled to any decree with respect to that share, but with respect to the remaining land, that is 23 kanals and 4/5 marlas the plaintiff was entitled to a declaration that he was the owner of the property. Before the Sub-Judge copy of a mutation had been filed showing that there was an additional charge which had been created on the land in dispute in the year 1916 and it was contended that this gave a fresh starting point for limitation. (There is no reference in the judgment to additional charge in 1909 though copy was on record). The Sub-Judge came to the conclusion that there was no proof of the identity of the land covered by the additional charge. He was at the same time of the opinion that there being a reference in the mutation of additional charge to a deed only the deed or its secondary evidence was admissible to prove the terms of the additional charge. He decreed the suit to the extent of 23 kanals and 4/5 marlas. On appeal the District Judge came to the conclusion that there had twice been novation of the contract by means of additional charges the first time in 1909 and the second time in 1916 and on account of such novations the period of limitation commenced only from 1916 and the mortgage was not time-barred. Accepting the appeal he dismissed suit. On further appeal a learned Single Judge of the High Court agreed with the District Judge as to there having been a novation and dismissed the appeal. . Leave to appeal had been granted in this case because it was contended on behalf of the appellant that the novations related to an area of 14 kanals and 13 marlas only and therefore could not affect the remaining land. The order granting leave says that leave is being granted to consider only whether the two mutations of additional charge would affect also the land which is not covered by those mutations. So, the leave was really confined to the remaining area, but that is in the circumstances of this case not very material because as will appear from what follows, we have reached the conclusion on the merits that so far as the area covered by the mutations of additional charge is concerned the plaintiff is not entitled to a decree. The question before us being only as to the effect of the additional charges, it will be proper to state in brief the contents of the relevant revenue records. The original mortgage is entered in the Misl-i-Haqiat of 1870. It is not 'clear whether the mortgage was created in 1870 or was of an earlier date: Probably it is of an earlier date. The terms and conditions of this mortgage are not fully stated. It is, however, stated that the period of the mortgage is 13 years. The mortgagors are Jafar Khan, etc. and the mortgagee Jahan Khan. The total area entered here is 35 kanals and 4 marlas. (The area now is 38 kanals and 8 marlas, but khasras numbers are the same and the difference in area is due to different measurements in the various settlements). The next relevant record consists of two mutations one of faq-i farzi and the other of mortgage being muta tion No. 1162 attested on 7-4-1908 and mutation No. 1317 attested on 29-9-1910 respectively. In the first of these mutations it is stated that Sardar mortgagor (who was one of the mortgagors) has taken more money from Sharif mortgagee in respect of 14 kanals and 13 marlas and therefore this faq-i farzi of the land is sanctioned. Mutation No. 1317 records that Sardar mortgagor has taken one hundred rupees more and the total amount of the mortgage is now rupees nine hundred. The area is stated as 14 kanals and 13 marlas. Duration of the mortgage is given in the remarks column as 14 years, but there is no reference to this duration either in the report of the Patwari or in the order of the Revenue Officer attesting the mutation. The order of the Revenue Officer shows that Sardar mortgagor accepted an increase in the mortgage money relating to 14 kanals and 13 marlas as so that the total amount now came to Rs.

900. In the remarks column the previous amount shown was Rs.

800. The next revenue record is mutation No. 2875 from which it appears that the previous mortgage money was Rs. 700 and Rs. 300 more had been taken by Sardar mortgagor by virtue of an agreement deed of 1-7-1913 with duration of 20 years. The order of the revenue officer is in the following words: "In open Court. Sardar identified by Sher Dil Khan lambardar in the presence of Sharif accepts increase of Rs.

300. The total mortgage money of Rs. 1,000 is verified. The duration of twenty years is accepted by both the parties. Therefore mutation for increase of mortgage money out of Khata No. 332 on land measuring 14 kanals and 13 marlas is sanctioned in the name of Sharif mortgagee." It may be explained here that there is here a difference in the mortgage amounts which is not clarified. Already by mutation of 1909 the amount of mortgage money on Sardar's share of land was Rs.

900. But mutation No. 2875 which was attested on 13-1-1916 shows in the remarks column the previous amount to be Rs.

700. However, the area is the same and the absence of this explanation is without any effect on the rights of parties in this case. To consider the effect of these two additional charges the contention which has been accepted by the Courts below is that because there was an additional charge there was novation of contract. Learned counsel for the appellant relies upon the full Bench judgment of the Lahore High Court in Sher Singh v. Daya Ram (1) A I R 1932 Lah. 465 to the effect that no fresh mortgage comes into existence when there is an additional charge without any alteration in the terms and conditions of the mortgage and that the transfer of interest takes place at the time of the original mortgage so that there is no further transfer of interest at the time when additional charge is created. On the other hand on behalf of the respondents it is contended that when an additional charge is created there is a novation because there is henceforth a mortgage for the whole of the amount including the additional charge. It is also contended that in this case there was an alteration of the conditions of mortgage because the period for which the mortgage was to subsist was changed so that even if it be accepted that a mere additional charge without change in the conditions of mortgage does not bring into existence any fresh transfer of interest in property there was a novation in the present case. Once a mortgage has been created it will remain in existence till it is brought to a termination either by operation of some law or by agreement of parties and if it remains unredeemed for the period of limitation provided for by the Limitation Act it matures into ownership. In the present case a mortgage had been created in 1870 if not earlier. The limitation for redemption being sixty years the mortgagor will have to show that this mortgage somehow came to an end if he wants to avoid the consequence that on account of lapse of time the mortgagee has become the owner. When the mortgagor relies upon an additional charge he has to show that the intention of the parties was to put an end to the previous mortgage and to substitute therefor a new contract with the total amount constituting the mortgage money. It is necessary to keep in mind that the termination of the old mortgage must be established, if the mortgagor is to be relieved of the effect of non-redemption of that mortgage. If the additional charge be created by a deed then that deed will have to be looked at for the determination of the intention of the parties as to whether a new mortgage was intended to be substituted for the old one. If there be no deed then only such inferences can be raised as are necessarily involved in the conduct of parties. If there be receipt of an additional sum of money by the mortgagor the necessary inference is only this that the mortgagor has taken more money and has said to the mortgagee that just as his land was security for the amount which he has already received as debt his property will also be security for the additional amount which he has taken as debt. He is also deemed to have agreed that it is only when he pays the whole amount that he will be entitled to redeem the property, this term being involved in the fact that he calls the fresh transaction an "additional" charge. However, the mere fact that he binds himself not only to pay the original sum, but also to pay a further sum before he can redeem the property does not necessarily mean that the original mortgage is put an end to and there is now a new mortgage. The principle to be followed in such cases is that when a person is possessed of a certain right and the question is whether by a particular conduct he has waived or renounced that right and his conduct is capable of two interpretation one involving loss of that right and the other preserving the right his conduct must be construed on the basis that he preserves his right. Every person is presumed to act to his own best advantage. If the mortgagee pays money to his mortgagor on the implied condition that the terms relating to this debt will be the same as relating to the original debt, his conduct is not inconsistent with the position that he retains all the benefits of the existence of the original mortgage and we should construe his conduct in accordance with his benefit. As a matter of fact it is the mortgagor who is in need of money and he would be prepared to accept terms favourable to the mortgagee and if the mortgagee wanted him to say explicitly that the previous mortgage will remain intact the mortgagor will probably agree, but the parties who are entering into a transaction without legal help are not aware of these intricacies and therefore such matters are not clarified. In the present case, however, there are certain inferences necessarily involved in the additional charges. To refer only to the second of the two charges it was admitted by both parties that twenty years would be the period of the mortgage. This statement was made in 1916 and this period of twenty years could start only from the time when the additional charge was created because the original period of thirteen years started in 1870 had expired long ago and it could not be the intention of the parties that that period was to be extended to twenty years. So far as the interpretation of this condition as to twenty years is concerned we have after giving the matter our earnest considera tion come to the conclusion that this term would debar the mortgagor from redeeming the land for a period of twenty years. It is true that the words used are vague, but the words are capable of the interpretation which we have put upon them and no other plausible interpretation has been suggested before us. On this interpretation Sardar mortgagor and Sharif mortgagee had accepted that 14 kanals and 13 marlas of land which was the share of Sardar mortgagor would not be liable to be redeemed for a period of twenty years, that is, even the original mortgage was not liable to be redeemed. It is not necessary to consider the effect of this term in its aspect of novation for the fact that the mortgagor is debarred from redeeming a particular mortgage for a period would give the mortgagor a fresh starting point of limitation and would lead to the same result as a novation. Sardar would not be entitled to redeem 14 kanals and 13 marlas of land till the expiry of twenty years from the date of the additional charge. Therefore with respect to this area limitation for redemption shad not expired when the suit was brought and in fact has not expired even now. The mortgagee is not entitled to decree in respect of the same. The next question to ask is whether Sardar was also not debarred from redeeming the remaining land during this period of twenty years. He was in his capacity as one of the mortgagors entitled to redeem the whole land which had been mortgaged and in fact he was entitled to redeem the whole land even as a person who had an interest in the equity of redemption, apart from his rights under the mortgage contract. But from the fact that 14 kanals and 13 marlas of land were not to be redeemed for a period of twenty years it does not necessarily follow that Sardar would not be entitled to exercise his right of redemption in respect of the remaining land. There was not express agreement between the parties with respect to the remaining land and we cannot infer such agreement unless it be necessarily involved in the conduct of parties. Even if the conduct of the mortgagee was capable of two interpretations it is to be construed to his advantage. It is to be noted that there was no particular advantage to the mortgagee in debarring Sardar from redeeming the remaining land for the other mortgagors were entitled to redeem that land. In fact they were entitled to redeem the whole of the original mortgage though that would not entitle them to redeem 14 kanals and 13 marlas in respect of the additional charge and the mortgagee would be entitled to keep possession of 14 kanals and 13 marlas of land on account of the additional charge for a period of twenty years. Had Sardar mortgagor been debarred even from redeeming the remaining land the result would be that he would get a fresh starting point of limitation for redemption of the whole land and the mortgagee could not acquire the right of ownership even if one of the mortgagors had a subsisting right of redemption. However, as Sadar was debarred only from redeeming 14 kanals and 13 marlas time continued to run so far as the remaining land is concerned and the title of the mortgagee to that land would mature on expiry of limitation. There are some points which need being clarified. The District Judge and the High Court decided against the plaintiff on the basis of novation of contract. It should be stated that the novation of the original contract there could not be because all the parties to the original contract were not parties to the additional charge and no contract can be absolutely wiped off unless all the parties to it agree. However, although t here could be no novation of the whole contract there was no bar to the variation of the, rights of some of the parties as they flow from the original contract. It was open to Sardar mortgagor and Sharif mortgagee to agree that the rights under the mortgage e contract will be altered in a particular way. That will not affect the original contract as between the mortgagee and the mortgagors who were not parties to the additional charge but the rights of and Sharif who had entered into a fresh transaction would be governed by the terms of the fresh transaction. The Sub-Judge had observed that there was a mortgage agreement relating to the additional charge and that under the law the terms of such an agreement could not be proved except by the production of the original agreement or its secondary evidence: It may be observed that this agreement was mentioned in the remarks column of the mutation, but was not mentioned either in the report of the Patwari or in the order of the revenue officer. The new charge was of Rs. 300 and an agreement relating to it being unregistered would not affect the rights of parties. Now if the situation was that the rights of parties were created only by agreement, then the Sub-Judge would be correct for the only evidence which could be produced of the terms of the agreement would be primary or secondary evidence of the agreement. However, the mere fact that there is an unregistered mortgage deed incapable of affecting rights of parties does not prevent the parties from creating rights and obligations by oral contract. We find in the present case from the order of the revenue officer that Sardar appeared before him and admitted that he had received a sum of Rs. 300 as an additional charge. He also accepted the duration of twenty years. These statements were made in the presence of Sharif mortgagee who apparently accepted them. There is no reference in the statement of Sardar to any deed. Even if a deed which was incapable of affecting rights of parties existed a contract would come into existence when these statements are made before the revenue officer by one party and accepted by the other. Under the circumstances the non-production of the mortgage agreement was not material. Reliance had been placed in the Courts below by the mortgagors on the fact that a mutation of a faq-i farzi had been sanctioned when the first additional charge was created. It was inferred from this mutation that the original mortgage had bee redeemed and a new one substituted in its place. The contention is based on a misapprehension. Rights of parties are affected by their own contracts and conduct and not by the form in which the revenue authorities make entries in their register. If the parties do not intend putting an end to the original mortgage the fact that a faq-i farzi is entered and sanctioned is of no consequence. The truth is that the revenue authorities if they want to sanction a mutation about an additional charge are forced to adopt the device of faq-i farzi because they are truly concerned with possession only and if the possession is already with the mortgagee there is no method by which they may enter a fresh mutation of additional charge. There can be no mutation simply for recording an increase in the amount of mortgage money. The revenue authorities, therefore, on the one hand enter a mutation of redemption and on the other enter a new mutation mentioning the whole amount due as the mortgage money. It is not necessary for the decision of this case to enter into a detailed discussion of what was held in Sher Singh v. Daya Ram. We would observe, however, that when property is mortgaged for one hundred rupees the transfer of interest therein is only to the extent of one hundred rupees, that is, the mortgagee is entitled to recover one hundred rupees from the corpus or usufruct but when an additional amount is received on the same terms there is further transfer of interest, that is, the mortgagee is entitled to recover two hundred rupees from the corpus or usufruct. Also there is little difference in principle between a second mortgage on the same and by the same mortgagor in favour of the same mortgagee and an additional charge. In accordance with what is stated above redemption of the mortgage of 1870 has become time-barred except with respect to share of Sardar the area of which in 1916 was 14 kanals and 13 marlas. The next point to consider is the effect of the compromise of 20-1-1945 with Farid in the suit which had been filed by Abdus Sattar and Abdul Ghaffar who are the representatives in interest of Sardar. The suit was originally for redemption of the whole land measuring 38 kanals and 8 marlas, but the compromise related only to the share of Abdus Sattar and Abdul Ghaffar amounting to 17 kanals and 1 marla. As the share of the representative in interest of Sardar has been protected already by the additional charge the compromise does not affect the rights of parties in the present suit. It may be stated here that although the area of this share in 1916 was 14 kanals and 13 rnarla, it is now 17 kanals and 1 marls. This is clear not only from the compromise deed, but also from the appellate judgment in the suit for mesne profits which was filed by Abdus Sattar and Abdul Ghaffar against Nazeef and which suit has been decreed in their favour. As a result the appeal is accepted and the suit of the plaintiff is dismissed with respect to 17 kanals and I marla of land which represent the share of Abdus Sattar and Abdul Ghaffar as representatives of Sardar mortgagor in the land in dispute. The suit is decreed with respect in the' remaining land. Parties will bear their own costs throughout. K. B. A. Appeal accepted.