Butto Kristo Roy v. Gobindaram Marwari

Chatterji, J.:— This appeal arises out of a suit for recovery of Rs. 24,941-11-3 for minimum royalty with interest from the principal defendants 1 to 3 (who will be hereinafter referred to as defendants). The royalty is payable under a registered lease dated 28th March 1907, executed by Thakur Giridhari Singha, deceased father of pro forma defendant 4, in favour of Prasanna Kumar Rai, deceased father of defendants 1 and 2 and grandfather of defendant 3, in respect of 220 bighas of coal land in Mauza Kenduadih. The annual minimum royalty reserved by the lease was Rs. 2200 pay able in six instalments subject to the payment of interest at Rs. 3-2-0 per cent, per month in case of default of payment of any kist. It is alleged in the plaint that out of this annual royalty of Rs. 2200 Giridhari Singh had assigned Rs. 275 to another person and the remaining Rs. 1925 was being paid annually by Prasanna and, after him, by the defendants, to Giridhari Singh and, after him, to the pro forma defendant. On 29th November 1922, the pro forma defendant borrowed from the plaintiffs Rs. 15,000 carrying compound interest at 2 per cent, per month with yearly rests under a registered mortgage bond, hypothecating thereby the aforesaid 220 bighas of coal land with another property, namely the entire mauza Nautandih. This last-mentioned mauza which was mainly comprised of coal lands was also in lease with one Damodar Lal Lala at an annual jama of Rs. 4720. By the mortgage bond the plaintiffs were given the right to realise the annual minimum royalty of Rs. 1925 from the defendants and Rs. 4720 from Damodar Lala. The plaintiffs after the mortgage sent notices to the defendants and also to Damodar Lala and thereupon the defendants used to pay the annual royalty of Rs. 1925 to them but Damodar Lala sent a reply stating that he was not liable to pay royalty until the railway siding in mauza Nautandih was constructed. The defendants paid to the plaintiffs the royalty up to Aswin kist 1333 B.S but since then have not paid anything in spite of repeated demands. The plaintiffs, therefore, instituted the present suit on 29th November 1934, claiming the royalty for six years from Agrahayan kist 1335 (November-December, 1928) to Aswin kist 1341 B.S (September-October, 1934) with interest at Rs. 3-2-0 per cent, per month from the date of default of each kist.

2. This suit was contested by the defendants mainly on the following allegations: The plaintiffs under their mortgage which was a simple mortgage had no right to realize the rent of the mortgaged properties but were merely consitituted agents for collection of the same. The defendants paid rents to the plaintiffs from Agrahayan 1329 to Aswin 1333 under the direction of their landlord, defendant 4. The said agency was terminated in 1926 by defendant 4 who directed the defendants not to pay the rent to the plaintiffs any more as their mortgage had been fully satisfied but to pay to his managing agent Biseswar Chakrabarty. In pursuance of this direction the defendants paid rent to Biseswar till Maga kist 1333; and in order to avoid trouble, they duly informed the plaintiffs of the matter who remained quiet. In April 1927, one Sailesh Kumar Sarkar intimated to the defendants that he had purchased the right, title and interest of defendant 4, at a court sale and called upon them to pay the rent to him. Accordingly they paid rents to him from Chait kist 1333 to Magh kist 1337. The plaintiffs, therefore, are not entitled to receive any rent from the defendants. As regards the allegation in the plaint that Rs. 275 out of the annual royalty of Rs. 2200 was assigned, it was denied by the defendants in the written statement. They, however, admit that Rs. 1925 is annually payable by them. They also denied the liability to pay any interest and further pleaded that the interest claimed was excessive.

3. The learned Subordinate Judge who tried the suit has decreed it, disallowing the claim for interest. The defendants have preferred this appeal and the plaintiffs also have filed a cross objection with regard to interest. The points urged by Mr. P.R Das on behalf of the appellants are; (1) That the plaintiffs' mortgage being, if not a simple mortgage, an anomalous mortgage, the rights and liabilities of the parties shall be determined by their contract as evidenced in the mortgage deed and the defendants being no parties to the contract, its terms are not enforceable against them. (2) That under the mortgage the plaintiffs have no authority to realize the rents from the defendants in their own right, the effect of the mortgage being merely to constitute them as agents for collection of the rents of the mortgaged properties, and the agency having been already terminated by defendant 4 in 1926, the plaintiffs have no longer any authority to realize the rents. (3) The annual royalty reserved under the lease in favour of Prasanna Kumar Rai being Rs. 2200, the plaintiffs' mortgage which was in respect of Rs. 1925 only was bad in law, being an assignment of a portion of a debt. (4) That the defendants have in good faith paid the rents for the period under claim to Sailesh Kumar Sarkar and are therefore protected under Section 50 of the Transfer of Property Act. Point No. 1. — The relevant portion of the mortgage bond Ex. 1 is as follows:

As security for repayment of the entire amount of principal and interest, I mortgage the properties, described in the schedule below, rightfully held possession of by me. You will be competent to realize the amount due on this mortgage bond of yours by selling my right and interest in the said properties. Out of the properties, mentioned in the said schedule, the annual minimum royalty of Rs. 4720 is due to me for the property of item I. In respect of property of item 2 of the schedule, the annual jama of Rs. 1925 is due to me. From this day you obtain the right of realizing the amount of the said minimum royalty and jama from my tenants, mentioned in the schedule. You will realize the same amicably or by suit and you will send to me a copy of the account by way of testimony of the amounts you will realize amicably or by suit and at first you will credit the amounts you will realize towards the interest due to you, and after crediting the same, if you get money in excess, you will credit towards principal. In addition to my minimum royalty on account of the property of item 1, mentioned in the schedule, commission is due to me. That also you will be competent to realize; and according to the former rule, you will credit the amount you will get therefor towards principal and interest due to you. I shall be liable for the legitimate costs, which will be incurred for realizing commission and royalty and rent. At first, after deducting your costs out of the amount realized you will credit, according to the above-mentioned rule, towards principal and interest due to you. If there be any obstacle to realizing the aforesaid royalty and rents and commission or there be delay in it or any other wrongful act done comes to light, or any of the terms of this deed is violated, you will be able to sue against me for the amount of principal and interest, mentioned in the schedule below and realize the money by selling the mortgaged property, mentioned in the schedule below, treating it as mortgaged. I have not encumbered in any way or transferred the property, specified in the schedule, previously; and until the amount due to you is repaid, I shall not be competent to create any encumbrance on the said property, or transfer the same. In case the entire amount due to you for this bond is not satisfied by the sale of the mortgaged property specified in the schedule, you will be competent to realize the remaining amount from my person as well as from any of my other properties.

4. The mortgage, in so far as it gives the mortgagees the right to realize their mortgage money by selling the mortgaged properties, is a simple mortgage; at the same time, it has the characteristic of a usufructuary mortgage inasmuch as the mortgagees are given the right to realize the rents of the mortgaged properties and appropriate the same firstly towards interest and secondly towards principal. In the case of a tenanted property, the only way in which possession can be given to a usufructuary mortgagee is to give him the right to realize the rents and appropriate them towards the mortgage money. The mortgage in question is thus a combination of a simple mortgage and a usufructuary mortgage. It is agreed on all hands that this mortgage, if it is what is called an anomalous mortgage, will be governed by the provisions of Section 98 of the Transfer of Property Act, as it stood before the amendment of 1929. The old Section which was headed “anomalous mortgages” was as follows:

In the case of a mortgage, not being a simple mortgage, a mortgage by conditional sale, a usufructuary mortgage, or an English mortgage or a combination of the first and third, or the second and third, of such forms, the rights and liabilities of the parties shall be determined by their contract as evidenced in the mortgage deed, and so far as such contract does not extend, by local usage.

5. The present mortgage, as I have already pointed out, is partly of the nature of a simple mortgage and partly of the nature of a usufructuary mortgage and thus being a combination of these two particular forms of mortgage, does not fall within “anomalous mortgages” as described in the old S. 98. Mr. Das contends that the combination of two forms of mortgages contemplated in the Section means that it must have all the characteristics of each of the two forms, and judged by this test, the present mortgage which does not possess all the characteristics of a usufructuary mortgage as defined in Section 58, clause (d) of the Transfer of Property Act, cannot be classed under such combination as is recognized by the Section. This argument is opposed to the very tenor of the Section. The general recognized forms of mortgages are defined in S. 58, but parties in course of business are sometimes apt. to import in particular mortgage transactions some terms which do not strictly come within any of these general forms. The terms may partly be of one form of mortgage and partly of another, and this is the sort of combination which is contemplated by S. 98. Ordinarily, a combination of an entirely simple mortgage and an entirely usufructuary mortgage is hardly conceivable. In my view therefore the present mortgage falls outside the scope of old S. 98.

6. The question then arises as to what are the rights of the plaintiffs under the mortgage. There can be no doubt that the rights must be determined with reference to the terms of the mortgage deed Ex. 1. Now, what the deed in substance provides is that the mortgagees will have the right to realize the rents of the mortgaged properties and apply the amount realized firstly towards interest and secondly towards the principal, and in case there is any difficulty in realization of the rents, the mortgagees will be entitled to realize their mortgage money by selling the mortgaged properties. The mortgaged properties being in possession of tenants, the realization of rents from them is the only mode by which the mortgagees can enjoy possession of the properties. The mortgagees in the exercise of such rights of possession are entitled to recover the rents by suit where they are not paid amicably. Of course, they have also the option, instead of suing the tenants for recovery of rents, to sue the mortgagor for sale of the mort gaged properties. But this is their option which, if not exercised, does not debar them from enforcing their right of suit against the tenants for recovery of rents. The plaintiffs have chosen to enforce this latter right to which they are undoubtedly entitled under the terms of the mortgage.

7. I should, however, observe that even if the mortgages fell within the scope of old Section 98 of the Transfer of Property Act, I fail to see how the plaintiffs' rights would be affected. In any view, the terms of the mortgage must govern the rights and liabilities of the parties. The right to receive rents of the mortgaged properties has been assigned by the mortgage to the mortgagees and the tenants, once they are given notice of the assignment, are bound in law to pay the rents to the mortgagees so long as their mortgage is alive. I should here make it clear that the mortgage does not amount to an absolute assignment of the rent but an assignment to the limited extent just indicated.

8. Point No. 2. — Mr. Das's contention on this head is based on the assumption that the mortgage in question is entirely a simple mortgage. The fallacy of this assumption has already been exposed while dealing with the first point and it needs no further discussion. But I may add that upon a perusal of the mortgage deed, Ex. 1, it is impossible to construe it as clothing the mortgagees merely with the power of an agent so far as realization of the rents of the mortgaged properties is concerned.

9. Point No. 3. — No doubt, under the terms of the kabuliyat (Ex. 2) the annual minimum royalty payable was Rs. 2200 and the plaintiffs in their plaint stated that out of this Rs. 2200, the original lessor Giridhari had assigned Rs. 275 to another person and the remaining Rs. 1925 was being paid annually to him by the lessee. This allegation about the assignment was denied by the defendants in para. 3 of their statement. They, however, in the same paragraph admit that Rs. 1925 is annually payable by them. But when we come to the evidence in the case, we find that the truth of the matter is that one Rajendra was a two annas co-sharer with the defendants and he was liable to pay Rs. 275 for his quota of the rent. This is the statement of D.W 2 Sailesh Kumar Sarkar, the auctionpur chaser of the pro forma defendant's interest, to whom the defendants are said to have paid rents for the period under claim. D.W 5 who is a clerk of defendant 1 for fourteen or fifteen years also says:

Rs. 275 out; of our rent has been remitted by defendant 4; it was orally; Rajen (sic) is our co-sharer for two annas in the said colliery.

10. The rent receipts (Ex. 5 series) which were granted by the plaintiffs to the defendants for rents paid by them up to Aswin kist 1333 also clearly mention that Rs. 1925 was the annual rental in fourteen annas share. The admitted evidence thus clearly establishes the fact that Rajen is a co-sharer with the defendants and the defendants themselves are actually liable to pay Rupees 1925 annually as the minimum royalty to the pro forma defendant and it was the right to receive this entire amount of annual royalty from them that was assigned under the mortgage in question to the plaintiffs. Consequently, the question of assignment of part of a debt does not arise. If the defendants' case had been that they are liable to pay the entire royalty of Rs. 2200, the position might have been different. In that case by reason of the assignment under the plaintiffs' mortgage they would have been, liable to pay Rs. 1925 only to the plaintiffs and the remaining Rs. 275 to another person.

11. But Mr. Das argues that the evidence to show that the principal defendants are liable to pay Rs. 1925 as the annual royalty being in variation of the terms of the registered instrument of lease, is inadmissible under Section 92 of the Evidence Act. The answer to-this contention is two fold. Firstly, it is an admitted fact that the defendants are liable to pay Rs. 1925 only as the annual royalty. Under Section 58 of the Evidence Act, facts admitted need not be proved. Evidence is required to prove a fact when it is in dispute. It is then that the question arises as to whether any particular evidence is admissible or not. S. 92, as a salutary rule of evidence prescribes that the terms of a written contract should not be permitted to be varied by oral agreement except under certain contingencies. Upon the facts of the present case there is no room for the application of S. 92.

12. Secondly, the fact which transpires from the defendants' own evidence, namely that Rajen is a co-sharer with them to the extent of two annas is not a matter which can be said to vary the terms of the lease within the meaning of Section 92 of the Evidence Act. How Rajen came to be a co-sharer is not clear. It may be that at the very inception of the lease he was taken as a partner in the lease in which case his position would be that of an undisclosed partner, his name not appearing in the lease, or it may be has by some sub-sequent arrangement agreed to by all the parties concerned he was allowed to come in as a partner or co-sharer. In either case the arrangement by which he came in as a two annas co-sharer does not offend against the provisions of Section 92 of the Evidence Act. On the first hypothesis, the arrangement, if it at all comes under S. 92, will be covered by proviso 2 which permits evidence to be given of the existence of any separate oral agreement as to any matter on which a document is silent and which is not inconsistent with its terms. On the second hypothesis the matter falls wholly outside the scope of S. 92, because it is in effect an assignment by the lessees in respect of their two annas share. How the assignment was effected and its validity or otherwise, if it was oral, are matters which do not fall to be determined in the present litigation in which Rajen is not a party nor is alleged to be a necessary party.

13. In this connexion Mr. Das has referred to a decision of the Judicial Committee in 40 IA 2231 at p. 233 where it was held that the defendant who was sued for rent on the basis of a registered lease could not be permitted to prove that by an oral agreement the lessor had reduced the rent. In that case there was evidence that the lessor did for some time accept a reduced rent but their Lordships observed, that this fact was consistent with the reduction having been a mere voluntary and temporary abatement. This decision has no bearing on the present case. No doubt D.W 5 says that defendant 4 granted an oral remission of Rs. 275 cut of the entire rent. But as I have already pointed cut this sum of Rs. 275 is payable by Rajan for his two annas share. Whether Rajen has been allowed remission is a matter between him and the lessor. So far as the principal defendants are concerned, they are liable to pay Rs. 1925 only.

14. Point No. 4.—Section 50 of the Transfer of Property Act, on which the contention is based runs thus:

No person shall be chargeable with any rents or profits of any immovable property which he has in good faith paid or delivered to any person of whom he in good faith held such property, not withstanding it may afterwards appear that the person to whom such payment or delivery was made had no right to receive such rents or profits.

15. The defendants' case is that for the period under claim they paid the rents in good faith to Sailesh Kumar Sarkar. They therefore in order to get the benefit of S. 50 must prove firstly that they did in fact pay to Sailesh and secondly that they did so in good faith. Admittedly the plaintiffs soon after their mortgage gave a notice to the defendants asking them to pay the rents to them; and the defendants after receipt of such notice actually paid the rents to them from Agrahayan kist of 1329 to 1333 Aswin kist, the last payment being made on 28th December 1926 under the receipt, Ex. 5(a). The defendants however discontinued payment to the plaintiffs since then and the reason assigned for their doing so is this. On 9th June 1926, defendant 4 sent them a letter, Ex. P. (4), asking them be stop payment of the royalty to the plaintiffs and to pay it be his manager, Babu Hari Pado Mukerji. Thereupon defendant 1 is said be have sent a letter on 17th June 1926 to the plaintiffs informing them of the said notice and stating that he would not be able to pay them anything thereafter on account of the royalty. The plaintiffs denied having received this letter. Ex. L is a typed copy of the letter which is said to have been sent by ordinary post.

16. The learned Subordinate Judge has dis believed the evidence concerning this letter, and I think rightly. Mr. Das did not place so much reliance upon ib, and in appears rhat in spite of in the defendants, some months later, on 28th December 1926 paid rent to the plaintiffs under the receipt Ex. 5(a). On 18th December 1926, one Bisweswar Chakrabarty describing himself as a managing agent of defendant 4 sent a notice (Ex. C) to defendant 1 asking him to pay the royalty to him as he was appointed the managing agent of defendant 4 by a registered deed dated 14th (December 1926. Then on 2nd February 1927, defendant 4 sent a pleader's notice (Ex. A) to defendants 1 and 3 asking them not to make any further payment on ac count of royalty, etc., to the plaintiffs whose mortgage, it was stated, had been fully satisfied; the notice further directed them to pay the royalty to Babu Bisweswar Chakrabarty who was appointed the managing agent of defendant 4. Again on 6th February 1927, defendant 4 himself sent a notice Ex. F(5) to defendants 1 and 3 confirming the notice Ex. A already given by his pleader. Thereupon defendant 1 is said to have sent a letter dated 7th February 1927 to the plaintiffs by registered post. Ex. L(1) which is a copy of this letter is as follows:

Babu Shewdanmull Marwari

Babu Gajadhar Marwari.

P.O Dubra, (Manbhum).

Dear Sir,

Thakur Ran Bahadur Singh of Barora has informed me by a postal registered letter that the amount due to you from him has been paid off; and for that reason he has asked me to pay now to his managing agent Babu Bisweswar Chakrabarty the rent of 220 bighas of coal land of mouza Kenduadih after the last Aswin kist, which he directed (me) to pay to you by letter dated 11th July 1923. For that reason I Informed you that I shall no longer be able to pay to you any amount out of the said rent after the Aswin kist. I write to you for information.

Yours faithfully, (Sd.) Butto Kristo Roy.

17. On the same day, 7th February 1927, defendant 1 sent a letter of which Ex. L(2) is a copy to defendant 4 by registered post with acknowledgment due in which he acknowledged the receipt of defendant 4's letter, dated 5th February 1927 and also intimated that he paid that day (7th February) Rs. 350 to Bisweswar Chakrabarty. In the meantime, on 16th July 1925; the interest of defendant 4 in mauza Kenduadih was purchased by Sailesh Kumar Sarkar in execution of a decree obtained by him against defendant 4 the sale being confirmed on 12th December 1925 (vide sale certificate Ex. 3). Sailesh took delivery of possession on 3rd October 1926 (vide Ex. G). Thereafter, on 2nd April 1927, he, through his pleader, sent two notices, one (Ex. H) to the defendants and another Ex. H(4) to the plaintiffs, intimating the fact of his auction-purchase and demanding payment of the royalty from the defendants and forbidding the plaintiffs to realize the same. In the notice (Ex. H) to the defendants it was also mentioned that a similar notice (meaning Ex. H-4) was sent to the plaintiffs. Again on 15th March 1928 Sailesh through his same pleader sent a notice Ex. H(1) to the defendants in which he referred to his previous notice dated 2nd April 1927 and repeated the demand for payment of royalty to him. Subsequent to the receipt of this last-mentioned notice, the defendants are said to have paid rents to Sailesh and obtained from him the receipts Exs. I to I(15) the earliest of which is dated 27th May 1928 and the latest dated 11th August 1934, the total amount covered by the receipts being Rs. 5,938-12-3. The claim in the present suit being for six years from Agrahayan kist 1335 (November-December 1928) to Aswin kist 1341 (September-October 1934), the payments said to have been made under the receipts Ex. I series excepting Ex. I(10) which is dated 27th May 1928 are covered by the period under claim.

18. The defendants in support of their plea of payment in good faith to Sailesh rely on their letter Ex. L(1) and the subsequent conduct of the plaintiffs. What they contend is that when they received the notice (Ex. A) dated 2nd February 1927 from defendant 4's pleader and the notice Ex. F(5) dated 5th February 1927, from defendant 4 himself they sent the letter Ex. L(1) on 7th February 1927 to the plaintiffs by registered post to which no reply having been received, they honestly believed as true the representation conveyed to them by defendant 4's pleader in his notice (Ex. A) that the plaintiffs' mortgage had been fully satisfied. Their belief was further strengthened by the fact that the plaintiffs, although payment to them was stopped, remained quite silent and made no further demands for payment from them. The plaintiffs on the other hand deny having received the letter Ex. L(1) and also assert that they made repeated demands for payment though orally.

19. The first question for consideration, therefore, is whether the letter Ex. L(1) is genuine. The learned Subordinate Judge after considering the evidence has held that it is not so. What is significant with regard to this letter is that although on the same day defendant 1 sent the registered letter (Ex. L-2) to defendant 4 with acknowledgment due, the letter Ex. L(1) to the plaintiffs, which was from the point of view of the defendants far more important, was sent without acknowledgment due. The original letter was signed by defendant 1 and though he was present in the Court room, as admitted by his clerk D.W 3 in his evidence, he did not come forward to pledge his oath. It also appears from D.W 5's evidence that the defendants maintain a press copy but the copy Ex. L(1) does not bear any trace of being a press copy. Great stress is laid on the registered receipt Ex. M granted by the post office on 7th February 1927. This receipt, so far as it is decipherable, shows that the letter was addressed to “Shew Nandan Lal (torn) ewary and B (illeg.).” This address must have been copied by the postal clerk from the address mentioned in (sic) the envelope. The names of the addressees as mentioned in the letter Ex. L(1) are Babu Shewdanmull Marwari and Babu Gajadhar Marwari. Thus the names of the addressees in the postal receipt, Ex. M do not tally with those mentioned in Ex. L (1). We cannot assume that the address on the envelope mentioned the names of the addressees differently from the enclosed letter. The genuineness of the postal receipt Ex. M need not be doubted, but it might refer to some other letter addressed to some other persons than the plaintiffs. In these circumstances the evidence adduced by the defendants does not appear to be convincing enough to establish the genuineness of the letter, Ex. L(1).

20. Next assuming that the letter, Ex. L(1) is genuine, let us see how it affects the position of the parties. The plaintiffs, being under the mortgage assignees of the rent, are entitled in law to realize it from the defendants subject to this condition that if the latter paid the rent in good faith to the lessor without notice of the mortgage, they will not be bound to pay it again to the plaintiffs. But the plaintiffs did give notice of their mortgage to the defendants and in pursuance of that notice, the defendants did pay the rents to them for four years from Agrahayan 1329 to Aswin kist 1333. They therefore knew full well that they were liable to pay the rents to the plaintiffs. This liability would, in law, continue until the plaintiffs' mortgage was extinguished or unless the plaintiffs assen ted to their paying the rent to the mortgagor. Section 50 of the Transfer of Property Act, will be of no avail unless they establish that they had sufficient reasons for honestly believing that the plaintiffs' mortgage had been satisfied and that in that honest belief they paid the rents to Sailesh. Now the letter, Ex. L(1) which I have already quoted, far from disclosing any desire on the part of defendant 1 to be satisfied by enquiry from the plaintiffs themselves as to whether their mort gage was in fact paid off, appears to have conveyed to them merely for their information his own view that he would no longer be liable to them for the rent. His attitude is made more manifest by his letter, Ex. L(2) of the same date which he wrote to defendant 4 and which is as follows:

Rajkrishna Thakur Ran Bahadur Singh, Ramnagargarh, P.O Mahuda, B.N.R

Respect,

From the Registered letter hearing your signature dated 5th February 1927, 1 learn that hereafter I shall have to pay to Bisweswar Chakrabarty, the managing agent of your estate, the rent due to you from me and my minor nephew on account of 220 bighas of coal land of mauza Kenduadih which I have, according to your direction, paid to Shew-danmull Marwari of Dnbra up to Aswin kist. After receipt of the said letter, I have paid this day to the said Bisweswar Chakrabarty Rs. 350 (three hundred fifty) payable in our share for Agrahayaa and Magh kists and taken receipt signed by him. Submitted for your information.

yours faithfully, (Sd.) Butto Kristo Roy.

21. By this letter he readily expresses his willingness to pay the rent to Bisweswar without even waiting for a reply to Ex. L(1) from the plaintiffs and if he actually paid that day Rs. 350 to Bisweswar, as stated in the letter, it seems he quietly made the-payment on the mere asking of defendant 4. This is wholly inconsistent with the plea of good faith. Consequently, the letter Exhibit L(1), even if genuine, is of no assistance.

22. As I have already mentioned, the payments for the period under claim are said to have been made to Sailesh. Indeed, Sailesh through his pleader did send to the defendants the notice Ex. H, dated 2nd April 1927, and again the notice Ex. H(1), dated 15th March 1928. But Sailesh being, the purchaser of the mortgagor's interest, was obviously most interested in asserting, that the mortgage had been paid off and any number of notices sent by him would not afford any protection to the defendants from their liability to pay the rent to the mortgagees. It is not suggested that after receipt of the notices from Sailesh's pleader the defendants sent any notice to the plaintiffs or made any enquiry from them. Sailesh was not their original landlord and was a transferee; so also were the plaintiffs. The defendants had already notice of the plaintiff's mortgage and were in fact paying the rents to them. When therefore the defendants received the notices from Sailesh's pleader it was their duty, before they made any payment in good faith to Sailesh, to make enquiries from the plaintiffs as regards the real situation. If they had only enquired from the plaintiffs they would have come to know at once that their mortgage was still unsatisfied. When they were told that the plaintiff's mortgage had been satisfied, they did not even care to ascertain whether the mortgagor got back the satisfied mortgage bond. Their failure to make any enquiry from the plaintiffs must be characterized as grossly negligent, if not wilful. As defined under Section 3 of the Transfer of Property Act, “a person is said to have notice of a fact” when he actually knows that fact, or when but for wilful abstention from an enquiry or search, which he ought to have made, or gross negligence, he would have known it. This test may well be applied here. Under these circumstances, it is hardly possible to accept the plea that the defendants made payments to Sailesh in good faith.

23. As regards Sailesh's notice, Ex. H(4) dated 2nd April 1927, which was addressed to the plaintiffs, it must be observed that there is no legal proof that it was actually served on them. It was sent in a registered cover which purports to have been received back as the addressee refused to accept it, but the peon who endorsed the refusal on the cover has not been examined nor even his handwriting has been proved. Of course a letter, if posted and not received back through the Dead Letter Office, shall be presumed to have been received by the addressee. But this presumption does not apply where the letter purports to have been returned as being refused by the addressee. In this connexion reference may be made to 19 CWN 489.2 The position therefore is that there is no legal evidence to prove that the notice Ex. H(4) was actually tendered to the plaintiffs and refused by them. But even assuming that this notice was served on the plaintiffs, it does not improve the defendants' position at all. They had already notice of the plaintiffs' mortgage and the plaintiffs were under no duty to inform them that their mortgage was still outstanding. Their silence when they had no duty to speak could not be construed as conveying by implication a representation to the defendants that their mortgage was satisfied. Consequently, the defendants cannot take any advantage of the supposed silence on the part of the plaintiff.

24. Some stress has been laid upon the fact that the plaintiffs allowed the rent for two years from Agrahayan kist 1333 to Aswinkist 1335 to be barred and they further waited for six years before bringing this suit. The explanation offered by them on this point is that they could not sue earlier owing to differences between them from 1927 which led to separation amongst themselves. This explanation cannot be altogether disregarded. The fact remains that their mortgage is still in force and their rights thereunder cannot, in any way be affected merely because they allowed two years rent to be barred. This is a matter which will arise as between them and the mortgagor when there will be accounting at the time of redemption. It should be observed here that the defendants though they suggested that the plaintiff's mortgage was satisfied, have made no attempt to substantiate the suggestion. I have so far discussed the plea of good faith under Section 50 of the Transfer of Property Act, on the assumption that the defendants in fact made the alleged payments to Sailesh. They also allege to have made some payments to Bisweswar Chakrabarty, but those can be ignored because they fall outside the period under claim. The payments to Sailesh, as I have already stated, are covered by the receipts, Exs. I to I(9) and I(11) to I(15), the total amount of these payments being Rs. 5005-7-3. Sailesh himself has given and proved these receipts. D.W 5 has also given evidence of the payments. It must be remembered that Sailesh is now in the position of the mortgagor and if the plaintiffs get a decree in this suit, the amount that will be realized by them in execution of the decree will diminish their claim under the mortgage to the extent of the amount so realized. Sailesh's evidence with regard to the payments therefore is against his own interest and it will be unreasonable to assume that he is falsely admitting the payments, if there was none. In this view, I feel disposed to accept his evidence. It is rather unfortunate that the learned Subordinate Judge has not come to a definite finding on this point. It has been faintly suggested that Sailesh is in collusion with the defendants. It appears from the sale certificate, Ex. 3 that he purchased mauza Kenduadih for Rs. 1000 subject to a heavy mortgage in favour of one Dharani Dhar Rai for Rs. 1,00,000. This property is also subject to the plaintiffs' mortgage. Sailesh knowing that he had no right to realize the rents from the defendants so long as the plaintiffs' mortgage remained unpaid, might perhaps be tempted to grant collusive receipts to the defendants on receipt of some money, but this is after all a speculation which cannot justify our rejecting the positive evidence, oral and documentary. If really Sailesh intended to grant collusive receipts, we would have expected the receipts to have been given for the entire rents. But in fact the receipts for six years cover only Rs. 5005-7-3 which is less than half the total amount of rent payable for six years. It also appears from receipt, Ex. I that the payment was made by Suresh Chandra Mazumdar, the Receiver of the Trigunait Brothers' estate. It appears to me that there is no valid reason for rejecting the receipts. I therefore find that the payments are true.

25. The defendants however cannot take the benefit of these payments because I have already held that they have failed to establish the plea of good faith within the meaning of Section 50 of the Transfer of Property Act. Of course, it may be said that they were not likely to have made the payments to Sailesh unless they thought that he was really the person entitled to receive the rents. But under the law, it was the plaintiffs and not Sailesh to whom the defendants were liable to pay the rents and if they, without proper inquiry, made the payments to a wrong person, they must take the consequences. All the contentions raised by the appellants fail and I would therefore dismiss the appeal but in the circumstances without costs.

26. Then remains the question of interest raised by the plaintiffs in their cross-objection. In the kabuliyat, Ex. 2 there is a clear stipulation for payment of interest at Rs. 3-2-0 per cent, per month. The reason given by the learned Subordinate Judge for disallowing interest is that under the mortgage bond, Ex. I the rent only was assigned and not the interest. This reason is entirely fallacious. The right to realize rent carries with it the right to realize it with interest in case of default of payment at the kist time. Under the terms of the kabuliyat the defendants are undoubtedly liable to pay interest from the date of expiry of each kist, and if the learned Subordinate Judge's argument were to be accepted, the defendants would be liable to pay only the principal amount of the rent to the plaintiffs. To whom then would they pay the interest which is justly due from them? Obviously to the mortgagor, if the learned Subordinate Judge's argument were to prevail. This is absurd, because the mortgagor already par ted with his interest in the mortgaged property by way of mortgage. In my opinion the plaintiffs are entitled to interest. The question then is, at what rate? The stipulated rate of Rs. 3-2-0 per cent, per month seems to be exorbitant and penal. Considering all the circumstances I think it will be fair and proper to allow six per cent, per annum which will be calculated from the date of expiry of each kist till the date of this decree. Future interest is disallowed. I would therefore allow the cross-objection to this extent but there will be no order as to costs of this Court. The plaintiffs however will get additional proportionate costs of the lower Court upon the amount of interest that will be found due according to the said calculation till the date of institution of the suit.

Harries, C.J:— I entirely agree.

N.S/R.K

27. Order accordingly.