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PETITIONER: S.R RAJAGOPALASWAMI NAIDU

       Vs.

RESPONDENT: BANK OF KARAIKUDI LTD.

DATE OF JUDGMENT: 22/09/1970

BENCH: GROVER, A.N. BENCH: GROVER, A.N. SHAH, J.C.

CITATION:  1971 AIR  884            1971 SCR  (2) 427  1971 SCC  (1)  18

ACT: Transfer  of Property Act 4 of 1882, s.  67A,  Applicability of-Usurious Loans, Act 1918--Rate of interest when penal.

HEADNOTE: The  appellant mortgaged his property bearing No. 162A  West Masi  Street Madurai Town for a sum of Rs. 45,000  with  the respondent  Bank on October 14, 1950.  In January  1952  the appellant  and  his  wife borrowed Rs.  25,000  and  jointly executed  a  pronote.  The wife deposited  her  title  deeds relating  to premises No. 162 West Masi Street On  June  25, 1952 the appellant and his wife created a mortgage of  their respective properties Nos. 162A and 162 West Masi Street  to secure  repayment  of  a sum of Rs. 8,850.   All  the  three mortgages  were in favour of the respondent Bank.   In  1953 the  Bank  instituted  a suit on the foot of  the  last  two mortgages  and obtained a decree against the  appellant  and his  wife.   This decree was satisfied.  In April  1958  the Bank filed a suit on the foot of the mortgage dated  October 14,  1950.  The main defence of the appellant, who  was  the sole  mortgagor, was that the suit was not  maintainable  in view of the provisions of s, 67A of the Transfer of Property Act  and that the stipulation of interest was penal  and  in contravention  of the provisions of the Usurious Loans  Act, 1918.   The trial court decreed the suit and the High  Court dismissed the appeal.  By special leave appeal was filed  in this Court. HELD : If a mortgagor has made two or more mortgages of  the same  property  or  of  different  properties  to  the  same mortgagee the mortgagor may redeem each separately but  the mortgagee  must  enforce  all  or  none.   To  attract   the applicability  of s. 67A it is essential that the  mortgagor must  be  the same and he should have executed two  or  more mortgages  in  respect of each of which he has  a  right  to obtain the same kind of decree under s.. 67.  In the present case  it was not possible to hold that the mortgagor in  the suit on the foot of the mortgage dated October 14, 1950  was the  same  as the mortgagor in the previous suit  which  was filed  on  the  foot  of the  mortgages  in  favour  of  the appellant  and his wife.  In the other two  mortgages  there were  two  mortgagors one the appellant and the  other,  his

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wife.  There is no statutory provision or rule or  principle by  which the wife and the husband could be treated  as  one entity for the purpose of the mortgage.  Each was owner of a separate and distinct property and both joined in mortgaging their  respective properties.  The bar of s.  67A  therefore could  not  possibly come in the way of the  institution  of the’ present suit. [429 B-F] Moro  Raghunath  v.  Balaji, I.L.R 13 Bom.  45,  approved  & applied. (ii)In the light of the provisions of the mortgage deed and all  the circumstances the interest rate of 12%  was  unfair and penal. Rate suitably Reduced. [429 G]

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1672 of 1966. Appeal from the judgment and order dated 16th March 1965  of the Madras High Court in Appeal Suit No. 139 of 1961. P.   Balagopal A. Y. Rangam and Lily Thomas,  Advocates  for the appellant. 4 28 M.Natesan, R. Ramamurthi lyer and R. Gopalakrishnan, for the Respondent. The Judgment of the Court was delivered ’by Grover, J. This is an appeal by certificate from a decree of the Madras High Court. The  appellant mortgaged his property bearing No. 162A  West Masi  Street,  Madurai town for a sum of Rs.  45,000/-  with the.  respondent  Bank on October 14, 1950.   He  agreed  to repay  Rs. 5,0001- within a specified date and  the  balance was  payable  within  two years from the date  of  the  deed together with interest, at 101%.  It was further agreed that if the mortgagor failed to pay the interest periodically and regularly he would be liable to. pay interest at the rate of 12% per annum from the date of such’, default and further it he  failed to pay the entire amount stipulated,  within  two years  he would have to pay the whole amount  together  with interest  at 3 1/2 % per annum.  The sum of Rs. 5,000/-  was paid  within  the time specified but  the  balance  remained unpaid.  In January 1952 the appellant and his wife borrowed Rs.  25,000/and,  jointly  executed  a  promote.   The  wife deposited her title deeds relating to premises No. 162  West Masi  Street.  On June 25, 1952: the appellant and his  wife created  a mortgage of their respective properties Nos.   ’1 62A  and, 162 West Masi Street to secure repayment of a  sum of  Rs. 8850/-.  All the three mortgages were in  favour  of the respondent Bank. In  1953 the Bank instituted a suit on the foot of the  last two,  mortgages and obtained a decree against the  appellant and  his wife., This decree appears to have been  satisfied. In  April 1958 the suit out of which the present appeal  has arisen  was  filed by the Bank on the foot of  the  mortgage dated October 14, 1950.  The main defence of the  appellant, who  was  the  sole mortgagor, was that  the  suit  was  not maintainable  in  view of the provisions of s.  67A  of  the Transfer  of  Property  Act  and  that  the  stipulation  of interest was penal and in contravention of the provisions of the Usurious Loans Act 1918.  A number of other issues  were framed  but  it is altogether unnecessary to  mention  them. The  trial  court  granted  a  preliminary  decree  for  the recovery of principal amount, of Rs.,40,000/- which remained unpaid with interest at 12% per. annum from August 1,  1952 till  the date of the decree and thereafter at 6% per  annum till  realisation.   An appeal was taken to  the-High  Court

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where two points were agitated.  The first was based on  the provisions of s. 67A of the Transfer of Property Act and the second related to the rate of interest.  The High Court  did not  accede  to any’ of the contentions  and  dismissed  the appeal.. Section 67A of the Transfer of Property Act provides that  a I mortgagee who holds two or more mortgages executed by  the same,. mortgagor in respect of each of which he has a right to  obtain the same kind of decree under s. 67 and who  sues to obtain such decree  429 on  any  one of the mortgages, shall, in the, absence  of  a contract  to the contrary, be bound to sue on all  mortgages in respect of which the mortgage-money has become due.  This section was inserted by the Amending Act 20 of 1929 in  view of  certain conflict among the High Courts in this  country, with  regard  to  the  right of  the  mortgagee  to  sue  at different   times  on  different  mortgages   although   the mortgagor was the same.  As pointed out in Mulla’s  Transfer of Property Act, 5th Edn at page 481 ss. 61 and 67A of  this Act  lay down the simple rule that if a mortgagor  has  made two or, more mortgages of the same property or of  different properties  to the same mortgagee the mortgagor  may  redeem each  separately but that the mortgagee must enforce all  or none.   To  attract  the  applicability  of  s.  67A  it  is essential that the, mortgagor must be the same and he should have  executed two or more mortgages in respect of  each  of which he has a right to obtain the same kind of decree under s. 67A.  In the present case it is not possible to hold that the mortgagor in the suit on the foot of. the mortgage dated October  14,  1950  is  the same as  the  mortgagor  in  the previous  suit which was filed on the foot of the  mortgages in  favour of the appellant and his wife.  In the other  two mortgages  there were two mortgagors, one the appellant  and the other his wife.  There is no statutory provision or rule or  principle  by which the wife and the, husband  could  be treated  as  one entity for the purpose  of  the  mortgages. Each was owner of a separate and distinct property and  both joined  in mortgaging their respective properties.  In  Moro Raghunath  v. Balaji(1) the first mortgage, was by two  bro- thers  and the second mortgage of part of the same  property was  by  one brother.  The Bombay High Court held  that  the suit  to  enforce the first mortgage did not bar a  suit  to enforce the second mortgage.  This was before the  insertion of  s.  67A but the principle embodied in  that  section  is clearly  illustrated  by  that  case. The  bar  of  s.  67A, therefore,  could  not  possibly  come in  the  way  of  the institution of the present suit. On the question of interest we are of the view in the  light of  the  provisions  of  the  mortgage  deed  and all  the circumstances that the rate of 12% is unfair and penal.   We are  inclined,  therefore,  to give  this  relief  that  the interest should be calculated ’at the rate of 10 1/2% (which was  the  original contractual rate) from the  date  of  the mortgage to the date of the preliminary decree.  Thereafter the interest shall be Payable as directed by the trial court ’at  the rate of 6% per annum till realisation.   With  this ’modification  the  appeal is dismissed but in view  of  the entire circumstances the parties are left to bear their  own costs in this Court. Appeal dismissed..    G.C. (1)  I.L.R. 13Bom. 45. 430

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