P L D 1953 Federal Court 128 (PLP)

ABDUL RASHID, C.J.‑This is an appeal from a decision of the High Court of Judicature at Fort William in Bengal, dated the 1st of February, 1946, reversing the judgment and decree passed by the Subordinate Judge at Barisal, and directing that a fresh decree may be passed on the basis of the first mortgage bond dated the 21st of July 1902, in accordinance with the provi sions of section 36 of the Bengal Money Lenders Act, 1940. The material facts of the case are not in controversy and may, therefore be shortly stated. On July 21, 1902, Ananda Kumar Ray Chowdhury, father of respondent No. 1, borrowed a sum of Rs. 15,000 from Satya Bhusan Das, father of the appellants, on a mortgage of certain properties. It was stipulated in the mortgage deed that this sum of Rs. 15,000 will carry interest at the rate of 9 % per annum with yearly rests. Between July 1902, and August, 1915, a sum of Rs. 9,600 was paid by the mortgagor towards the amount due on the mortgage. On August 10, 1915, a renewed mortgage bond was executed by the debtor for a sum of Rs. 28,

500. It was recited in this mortgage bond that on accounts being taken a sum of Rs. 30,423‑11‑0 was found due on the first mortgage, that the mortgagee had remitted a sum of Its. 1,923‑11‑0 and that the renewed bond was therefore executed for the balance amounting to Rs. 28,

500. Some additional pro perties were given as security for repayment of this money. It was specifically provided in this mortgage bond that the previous mortgage dated the 21st July, 1902, would remain in force. The stipulation regarding interest in the second mortgage was exactly the same as in the first. Between 1915 and April 12, 1928, the debtor paid a sum of Rs. 10,291 to .the creditor on different dates. On April 12, 1928, a third mortgage bond was executed by the debtor for a con sideration of Rs. 65,

000. Even on this occasion, no fresh advance was made by the creditor, but a remission of Rs. 578 was granted to the debtor. All the terms of the third mortgage bond were the same as those of the first and the second mortgage bonds and it was definitely stated that both the previous mortgages shall remain in force. On the 15th February 1932, the mortgagee instituted a suit in the Court of the Subordinate Judge of Barisal for recovery of Rs. 99,073, on the basis of the third mortgage bond. A preliminary decree was passed in that suit on May 7, 1934, and was followed by a final decree on the 25th March, 1935. The decree‑holder took out execution and a sum of Rs. 4,600 was realized during the course of execution proceedings. There after the mortgaged properties were put to sale and were pur chased by the decree‑holder for a sum of Rs. 1,31,

623. The judgment‑debtor filed objections under Order 21, rule 90 of the C. P. C. and while these objections were pending, the Bengal Money Lenders Act, 1940, came into force. On the 11th September 1940, the judgment‑debtor presented an application under section 36 of the Money Lenders Act for reopening the decree. The decree‑holder opposed this application. The Subordinate Judge held that the decree was liable to be reopened. It was held that the third mortgage bond should be reopened as it was within 12 years from the date of the suit as contemplated by proviso (i) to subsection (1) of section 36 of the Money Lenders Act. The Court directed that accounts should be taken on the basis of the second mortgage and the principal amount of the loan should be taken to be Rs. 28,

500. The Court declined to reopen the second mortgage holding that it was beyond 12 years from the date of the mortgage suit. On the basis of this decision a new preliminary decree was passed on the 11th of November, 1941. Against this decision, two appeals were preferred in the High Court of Judicature at Calcutta. In the appeal preferred by the judgment‑debtor it was urged that the second mortgage bond should also be reopened and a decree should be passed on the basis of the first mortgage. In the appeal preferred by the mortgagee‑creditor it was stated that in view of the proviso (i) to subsection (t) of section 3b the decree was not liable to be reopened at all. The learned Judges of the High Court accepted the appeal of the judgment‑debtor and sent back the case to the Subordinate‑Judge with the direction that a new decree may be passed on the basis of the first mortgage bond. The appeal of the mortgagee‑creditor was dismissed with costs. This order of the High Court forms the subject‑matter of the appeal to this Court. Section 36 of the Bengal Money Lenders Act is in the following terms :‑ "(1) Notwithstanding anything contained in any law for the time being in force, if in any suit to which this Act applies, or in any suit brought by a borrower for relief under this section, whether heard ex parte or otherwise, the Court has reason to believe that the exercise of one or more of the powers under this section will give relief to the borrower, it shall exercise all or any of the following powers as it may consider appro. priate, namely shall‑ (a) re‑open any transaction and take an account between the parties ; (b) notwithstanding any agreement, purporting to close pre vious dealings and to create new obligations, reopen any account already taken between the parties ; (c)* * * * * * * * * * * * (d)* * * * * * * * * * * * (e)* * * * * * * * * * * * Provided that in the exercise of these powers the Court shall not (i) reopen any adjustment or agreement, purporting to close previous dealings and to create new obligations, which has been entered into at a date more than twelve years prior to the date of the suit by the parties or any person through whom they claim ........... It was strenuously ,urged by Mr. Asir for the appellants that proviso (f) to subsection (1) of section 36 of the Money Lenders Act was applicable to the facts of the present' case. It was maintained that in 1915 the second mortgage bond bad closed all previous dealings and had created new obligations. Similarly, the third mortgage bond had also closed previous dealings in 1928 and had created new obligations and that as 12 years had elapsed since the execution of the third mortgage deed, the decree passed on the basis of the third mortgage deed could not be reopened. This argument proceeds on the basis that the second mortgage deed cancelled the first mortgage deed in its entirety and created completely new obligations between the parties in the year 1915. Similarly, the third mortgage deed discharged the entire debt due 99 the basis of the second mortgage bond 94 April 12, 1928 and created new obligations which were the basis of the decree for Rs. 99,073 passed by the Subordinate Judge of Barisal on the 15th of February 1932. It was urged that although the third mortgage bond was executed within 12 years from the date of the mortgage suit it was beyond 12 years from the date of the presentation of the application under the Bengal Money Lenders Act and on the basis of this application dealings which terminated in the passing of the decree for Rs. 99,073 could not be reopened. It is obvious from the arguments of the counsel for the appellant that he relies on proviso (i) to subsection (1) of section 36 of the Money Lenders Act. In order to determine whether a new mortgage bond closes all previous dealings entered into on the basis of previous mortgages and creates new obliga tions, it is necessary to ascertain the intention of the parties at the time of the execution of the new mortgage bond. It is well-settled that this intention is to be gathered primarily from the language of the mortgage bonds, and if there is any doubt as to the meaning of the words the facts and circumstances of each case can be taken into consideration. When we turn to the second mortgage bond we find that at the very start it is described as a "renewed deed of mortgage". In para. 5 of the bond which relates to a small remission granted by the creditor to be debtor the deed is again termed as a "renewed" mortgage bond. It is stated that some properties are being mortgaged in addition to the properties that have already been given as security for the loan. The opening words of para. 7 of this mortgage bond are of the utmost importance. They run as follows :- "

7. For repayment of the said principal amount of Rs. 28,500 together with interest, we the executants Nos. 1, 2, 3 and 4, mortgage unto you, on keeping the previous mortgage in force, the properties mentioned in Schedule Kha and along with the same the properties mentioned in Schedule Ka below." The words "on keeping the previous mortgage in force" make it perfectly obvious that the debt due on the first mortgage bond was not discharged, and that if occasion arose, it was open to the mortgagee to enforce all the terms of the first mortgage. When we turn to the third mortgage bond, we again find it described as a "renewed" mortgage bond. It refers to the first and second mortgage bonds and states that this mortgage bond shall keep the previous mortgages in force. The word "mortgages" in plural is used in paras. 8 and 10 of the deed. The second and the third mortgage bonds, therefore, in express terms keep the previous mortgages in force which means that the debts due on the previous mortgages were not wiped out and the obligations arising from those mortgage deeds were kept in force in spite of the execution of the third mortgage bond. When clear and unequivocal words have been used keeping the previous mortgages in force, it is not open to the Court to enter into abstract speculations. It was contended by Mr. Asir that the following facts and circumstances show that the second mortgage bond closed the dealings relating to the first mortgage bond, and that the third mortgage bond similarly closed the dealings relating to the second mortgage bond and gave rise to new obligations : (1) At the time of the execution of the second and the third mortgage bonds a certain amount of remission was given to the debtor ; (2) In the second mortgage bond trustees of the property of the mortgagor were also made parties, whereas no trustees existed at the time of the execution of the first mortgage bond ; (3) Certain additional properties were given as security at the time of the execution of the second mortgage bond ; (4) The time at which interest was to become payable each year was varied. In our opinion, none of the facts and circumstances summarised above can necessarily lead to the conclusion that the dealings on the first and second mortgage bonds were closed by the execution of the third mortgage bond and that the third mortgage created completely new obligations. It is usual at the time of making up accounts to grant some minor remissions to the debtor. This however, does not terminate the previous dealings. The trustees and the mortgagor formed one party to the various transactions, and the mortgagee or creditor was the other party. The addition of three trustees in the second mortgage bond makes no difference in law. The amount of debt was rapid ly increasing as a result of non‑payment of interest. Certain additional properties were therefore given as security for the loan. The addition of properties is no indication of the fact that previous dealings bad been closed. If it was intended to close previous dealings, one fails to see why it was repeatedly mentioned in the third mortgage deed that the previous mortgages shall remain in force. The fourth circumstance, that is, the payment of interest in a particular month of the year or another, does not make the slightest difference. The rate of interest was the same in all the mortgage bonds, and in respect of interest that is the most important feature in the case. As there was an express provision in the second and third mortgage bonds that the first mortgage bond and the second) mortgage bond respectively shall remain in force, the burden of proving that the third mortgage bonds created new obligations lay heavily on the appellants. They have entirely failed to discharge this onus. On the other hand, we find that the first mortgage bond was never cancelled or returned to the mortgagor but was kept with the mortgagee and was produced in Court with other documents in the mortgage suit. This is an additional circum stance which leads to the conclusion that the parties never intended that the original obligation should be extinguished. The obliga tion in the second instrument was not in supersession of, but in addition to the obligation created by the first mortgage bond. The same remarks apply to the third mortgage bond. In view of the findings given above, no other question arises in this appeal. We therefore, dismiss this appeal with costs. The costs will be payable to respondent No.

2. A. H. Appeal dismissed.