Supreme Court: In a case wherein appellants filed an appeal to enforce a mortgage executed by respondent on 18-5-1931, the Division Bench of M.C. Mahajan and S.R. Das*, JJ., opined that the mortgagees should be allowed only proportionate costs of the suit as the suit was for recovery of the amount as found by the Allahabad High Court (Lucknow Bench) (‘High Court’). The Supreme Court opined that as the mortgagor appealed and succeeded in the appeal only to the extent of reducing the claim and in reducing the amount of interest, thus she should get the costs of the appeal on the footing as if the appeal had been valued at the amount of interest by which the decretal amount was reduced.
Background
On 18-5-1931, the mortgagees sold a house to the mortgagor for Rs 17,000 but being unable to pay down the price in cash the mortgagor agreed to pay Rs 23,000 by monthly instalments of Rs 300 spread over a period of 6 years 5 months. The amount of Rs 23,000 was made up of Rs 17,000 being the price of the house and Rs 6000 being the interest calculated on Rs 17,000 for the period of 6 years 5 months. The mortgagees stated that the amount paid by the mortgagor was Rs 10,904 and after giving the mortgagor credit for the sum so paid, the mortgagees filed a suit for the recovery of Rs 24,642 with future interest and costs. The mortgagees claimed that they were entitled to Rs 6000 by way of interest up to the stipulated period of 6 years 5 months and thereafter at the rate of twelve annas per cent per mensem right up to the date of suit.
The trial court held that the mortgage deed had been duly attested and represented a genuine transaction and that respondent had executed the deed after fully understanding the nature and significance of it. The trial court also held that appellants were entitled to charge interest on the principal sum of Rs 17,000 at 9% p.a. from after the expiry of the period of 6 years 5 months. On 12-12-1944, the trial court passed a preliminary decree declaring that the amount due to appellants on the mortgage up to 12-6-1945 would be Rs 21,913-8-0 for principal and Rs 1861-8-0 for interest on Rs 17,000 at 9% p.a. pendente lite and Rs 2018-9-0 for the costs of the suit making in all a sum of Rs 25,793-9-0 and future interest at 3% p.a. after the date of the final decree till realisation.
The mortgagor preferred an appeal to the High Court and the High Court held that the mortgagees were not entitled to any interest after the expiry of the period of 6 years 5 months. The appeal court negatived the alternative claim of the mortgagees to interest founded on the Interest Act, 1839 or by way of damages or on any equitable principles. The appeal court thus modified the decree of the trial court to this extent that appellants were declared entitled to Rs 12,096 only as principal and Rs 847 as interest up to 12-12-1944 making a total of Rs 12,943 with future interest at 3% p.a. from 13-12-1944. Being aggrieved by the decision of the appeal court, the mortgagees had come up before this Court after obtaining a certificate under Sections 109 and 110 of the Civil Procedure Code, 1908.
Analysis, Law, and Decision
The Supreme Court noted that the only point urged before it was that “the mortgagees were entitled to claim interest from after the period of 6 years 5 months at 9% p.a. as held by the trial court”. The Supreme Court observed that the trial court held that the first condition of the deed, that is, “That I shall continue to pay Rs 23,000 in which are included principal and interest and in respect whereof ‘no interest shall be charged in future’ by monthly instalments of Rs 300 month by month to the mortgagees and I shall make no default in respect of any instalment for any month”, prevented the mortgagees from claiming “future interest”, that is, interest after the date of the mortgage and up to the expiry of the period of 6 years 5 months and that it did not negative the mortgagees’ claim to interest after the period. Thereafter, the appeal court held that the first condition negatived appellants claim for interest after the stipulated period.
The Supreme Court opined that assuming that the provision “no interest shall be charged in future” prevented the mortgagees from claiming any further interest beyond Rs 6000 up to the stipulated period, as contended by the mortgagees, it did not in terms and positively entitled them to claim interest after the stipulated period. The Supreme Court opined that stating no interest shall be charged up to the stipulated period did not mean that interest would be charged after the stipulated period. Thus, the first condition of the deed clearly contemplated payment of Rs 23,000 by regular monthly instalments of Rs 300 so that the entire amount would be paid up within the stipulated period and there would arise no question for the payment of any interest after the period.
The Supreme Court opined that the second condition of the deed that is, “That if I fail to pay the instalments for three months agreed to above, then after the default in payment of three instalments, the mortgagees shall have power to recover the entire money due to them at that time, in a lump sum, without any consideration for the period fixed for instalments, and during the stipulated period, by putting to sale the mortgaged property and also every kind of property owned by me, the executant, with costs of the court and future interest. I and my heirs shall have no objection to the payment”, provided that in a case where the mortgagor might fail to pay the instalments, the mortgagees would have the power to recover the entire money due to them at that time in a lump sum, that is, the mortgagees would be entitled to claim whatever amount remained due out of Rs 23,000.
The Supreme Court opined that the default must occur, if at all, within 6 years 5 months and in such a case, the mortgagees would become entitled to recover the entire money due to them at that time i.e., the whole of Rs 23,000 less whatever might have been paid by the mortgagor. Therefore, there could be no question of payment of any interest, after the date of default up to the expiry of the stipulated period. The entire balance thus becoming due, the mortgagees became entitled at once to institute a suit to recover the amount due to them under the second condition.
The Supreme Court further opined that the second condition then provided that the mortgagees would also be entitled to “costs of the court and future interest”, thus the provision for the payment of “future interest” did not mean interest after the date of default and up to the end of 6 years and 5 months, for, the date of default must have been within 6 years 5 months and the entire interest up to that period had already been allowed to the mortgagees. Therefore, there could be no question of their getting over again any “future interest” in the sense of interest for the period after the date of default up to the expiry of the stipulated period. The Supreme Court observed that the future interest in the second condition, thus, could only refer to interest after suit.
The Supreme Court opined that costs were usually in the discretion of the court and an appeal court should not interfere with the lower courts’ decision unless any question of principle was involved. In view of the special stipulation between the parties as to the costs of the suit and the attitude of the mortgagor, there could be no justifying reason for depriving the mortgagees of the entire costs of the suit and making them pay the mortgagor’s costs.
The Supreme Court observed that the appeal court reduced the amount due to the mortgagees and thus opined that the mortgagees should be allowed only proportionate costs of the suit as the suit was for recovery of the amount as found by the appeal court. The Supreme Court opined that as the mortgagor appealed and succeeded in the appeal only to the extent of reducing the claim and in reducing the amount of interest, thus she should get the costs of the appeal on the footing as if the appeal had been valued at the amount of interest by which the decretal amount was reduced.
The Supreme Court thus affirmed the decree of the appeal court subject to the following modifications:
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The mortgagees would get the costs of the suit on the basis that court fees should be calculated on the amount found due to the mortgagees by the appeal court;
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The mortgagor would get the appeal’s costs on the basis that court fee would be calculated on the amount by which the amount decreed by the trial court was reduced by the appeal court.
[Babu Ballabh Das v. Nawab Nigar Ara Begam, (1953) 1 SCC 286, decided on 20-2-1953]
Note: Quantum of Costs
Section 35 of the Civil Procedure Code, 1908 states that the costs of and incident to all suits shall be in the discretion of the Court, and the Court shall have full power to determine by whom or out of what property and to what extent such costs are to be paid. Further, the Court shall state its reasons in writing, where the Court directs that any costs shall not follow the event.
*Judgment authored by: Justice S.R. Das
Advocates who appeared in this case :
For the Appellants: S.P. Sinha, Senior Advocate (Raj Kr. Srivastava, Advocate, with him)
For the Respondent: S.C. Isaacs, Senior Advocate (Onkar Nath Srivastava, Advocate, with him)
