Namagiri Lakshmi Ammal v. Ko. Srinivasa Aiyangar

JUDGMENT

1. The 3rd defendant is the appellant. Defendants Nos. 1 and 2 are sisters, while the, plaintiff is their brother and the 3rd defendant their niece. The plaintiff filed Original Suit No. 60 of 1900 against the 1st defendant and obtained a money decree, in execution of which he attached and purchased on the nth August 1906 the morgage-debt alleged to be due by the 2nd defendant to the 1st defendant on a deed of mortgage dated the 26th November, 1890. Prior to his purchase, the 2nd defendant sold the mortgaged property to the 3rd defendant by a registered deed of sale dated the 20th June 1901; the deed of mortgage, with an endorsement that the amount due on it had been paid, was given to the purchaser. The suit out of which this second appeal arises was filed by the plaintiff as purchaser of the mortgage-debt for the recovery of the about due on the ground that the mortgage was not discharged and that the sale to the 3rd defendant was a fraudulent transaction entered into with the object of defrauding him. The 3rd defendant pleaded inter alia that the sale to her was bona fide and for consideration and that the mortgage was discharged by payments made by the 2nd defendant to the 1st defendant out of moneys paid by the 3rd defendant.

2. The District Munsif disbelieved the evidence of discharge and held that the amount due on the mortgage was not paid.

3. On appeal the District Judge held that it was proved to the extent of Rs. 215, and modified the decree of the District Munsif. The 3rd defendant files this second appeal against that part of the decree as in favour of the plaintiff and the plaintiff has filed a memorandum of objections against that part of the decree which modified the decree of the District Munsif.

4. The only issue raised on this part of the case was issue No. 3 which runs as follows:—“Was the plaint debt paid up as alleged by the 3rd defendant?” Treating the case as one of discharge, pure and simple, it is difficult to see how we can in second appeal disturb the findings of fact.

5. It is argued by the appellant's Vakil that as it was open to the mortgagee to remit the whole or any part of the mortgage debt, as the mortgagor and mortgagee agreed to treat the mortgage as discharged long prior to the attachment and purchase by the plaintiff and as the property was sold free from all encumbrances to the 3rd defendant, it was not open to the plaintiff to treat the mortgage as subsisting. It is also argued that Section 53 of the Transfer of Property Act has no application as there is no transfer of any immovable property, but only the relinquishment of a debt without any benefit having been reserved for the transferor.

6. The endorsement, Exhibit I, on the deed of mortgage (Exhibit A) runs as follows: “1901 May 26, Towards principal and interest on this bond the amount received previously in several instalments is Rs. 870. The amount received in cash to-day is Rs. 215. Total Rs. 1,085. As this sum of Rs. 1,085 has been paid, this bond has been cancelled and returned.” The mortgage, therefore, was alleged to have been discharged by payments made from time to time amounting to Rs. 870 and a payment of Rs. 215 made on the date of the endorsement. Both Courts have found that Rs. 870 was not paid and having Tegard to the relationship between the defendants and the fact that the plaintiff had obtained a money decree against the 1st defendant shortly before the endorsement and sale to the 3rd defendant, there can be no little doubt that the object of the defendants was to prevent the plaintiff from attaching the mortgage debt. The effect of a creditor voluntarily remitting the whole or a portion of a debt will be to put it out of the reach of his creditor just as much as a gift of the debt to a third person. In either case there is no consideration for the transaction and though Section 53 of the Transfer of Property Act will not apply in terms, the principle on which it is based will apply. It is not necessary under S. 53 that the transferor should reserve a benefit to himself, as gifts to a third party are as much voidable as other transfers. Supposing that the only property a person has is a large sum due to him from a relation of his and that he to defeat his creditors, remits the debt, is there any principle on which the case can be distinguished from one where he makes a gift of the debt to a third person? We think not. No authority has been cited for such a distinction being drawn, and it would open a wide door to fraud if the remission of a debt is placed on a different footing from a transfer.

7. Even assuming that the parties agreed to receive Rs. 215 in full settlement of the mortgage-debt and that the transaction was bona fide, the mortgage having been created by a registered document, it cannot be cancelled or rescinded either orally or by an unregistered document. Exhibit I, the endorsement on the mortgage bond, was cancelled and returned as the amount due was paid. It, therefore, falls under Section 17, clause (n) of the Registration Act. Hari Narain Banerjee v. Shama Sundari Dasi(1) and Uppalakandi Kunhi Kutti v. Kunnam Mithal Kottaprath(2) were cases where the endorsement of receipt did not purport to extinguish the mortgage. Exhibit I cannot, therefore, be received in evidence to prove discharge. Nor is oral evidence admissible to show cancellation. In Srinivasaswami Aiyangar v. Athmarama Aiyar(3) it was held that Section 92, clause 4 of the Evidence Act precludes evidence of an oral agreement to rescind a registered contract. This case was followed in lyetaly Surayya v. Nalamilli Vemkamna(4). It has, no doubt, been held in Appamma Nayuralu v. Ramanna(5) that an instrument which purports to extinguish a mortgage might even if unregistered, be received in evidence of payment and that oral evidence can be admitted in proof of payment, even if the receipt was inadmissible for want of registration. A similar view was also taken in Trimbak Gangadhar Ranade v. Bhagwandas Mulchand(6), Kattika Bapanamma v. Kattika Kishnamma(7). In these cases the question was one of discharge by payment. No terms were sought to be varied, but it was sought to prove that the debt was extinguished by payment, that is, that the contract was fulfilled in the manner specified in the registered deed of mortgage. Where however it is sought to prove that though the parties provided in the registered mortgage for performance in a particular way, e.g, by repayment of the debt in a particular manner, an agreement whereby a lesser amount was agreed to be taken in full discharge or a different period was fixed, would be a variation of the terms and would fall within S. 92.

8. The second appeal fails and is dismissed with costs. The memorandum of objections is also dismissed with costs, as it does not raise any question of law.

S.N/R.K

9. Appeal dismissed.