# KIDAR NATH v. MANGAT RAI & ORS

- **Citation:** [1970] 3 S.C.R. 213
- **Court:** Supreme Court of India
- **Decided:** 1969-10-31
- **Bench:** J. C. Shah, K. S. Hegde
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/kidar-nath-v-mangat-rai-ors-4904
- **Pages:** 9

## Headnote

Transfer of Property Act (4 of 1882)·, s. 58 (!), anomalous mortgage,
U'hat is.
Punjab Relief of Indebtedness Act, 1934, s. 30.-Whether legal representatives of debtor entitled to apply for relief-Scope of.
_ Usurious L0<;ns Act, 1918, ss. 2(3)(a) (b) and (c) ands, 3(2)(e)-
Scope of.
In a suit for redemption of a mortgage with possession under a mort·
gage deed of 1896, the Court declared the amount due on the mortgages.
No payment was made undeir the decree by the mortgagor.
Instead, on
his death, his replresentatives applied for relief under s. 30 of the Punjab
Relief of Indebtedness Act, 1934 and the Usurious Loans Act, 1918. as
amended by the East Punjab Amendment Act, 1948. The applicants were
given relief by the High Court and the representatives of the mortgagee
appealed to this Court.
HELD: (I) Under the covenants in the mortgage deed. there is a
stipulated rate of interest payable by the mortgagor, and the amount te·
covered from the income was to be first applied towards interest and the
bala~ce towards principal.
It was an anomalous mortgage and
not
a
usufructuary
mortgage.
The
liability
of the mortgagor to pay the
money due under the mortgage and to pay interest accruing due creates
a debt, even if it be assumed that the mortgagee had no right to enforce
the mortgage by sale but only had a right of foreclosure. [217 H, 218 C]
(2) The obligation is enfo<ceable against the estate of the debtor in
the hands of his legal representatives.
When it is so sOught to be enforced, in the absence of an express provision to the contrary, the re·
presentatives may set up the defence which the original debtor could, if
he had been sued.
There is no' warrant, therefore,
for the contention
that the jurisdiction of the court under s. 30 . of the Punjab Relief of
Indebtedness Act, is attracted only when the original debtor is the applicant and not on the
application of his legal
representatives. [218 H;
219 Al
( 3) The legal representatives were not entitled to claim the benefit of
the Usu'rious·Loails Act, 1918. Section 2(3) (a) and (b) do not apply
to a suit for redemption by the mortgagor and cl. ( c) only applies in
those cases where the security is given after the commencement of the
Usurious Loans Act. [219 G]
( 4) The legal representatives were entitled to the benefit of the Punjab
Relief of Indebtedness Act. . The application of s. 30 of the Act does !lot
depend upon the suit being one to which the Usurious Loans Act •PP!tes.
Even if the suit is not within the definition in s. 2(3) of the Usunous
Loans Act by virtue of s. 30 of the Punjab Relief of In,\!ebtedness A7t,
the amount receiyed by a creditor in excess. of. the amount due to him
under s. 3(2)(e) of the Usurious Loans Act" liable to be deducted from
twice the amount actually advanced. [220 El
214
SUPREME COURT REPORTS
[ 1970]3 S.C.R.
( 5) Section 30 uses the expressiort "sum found by the court to hav.::
been ·actually advanced.'
Such amount is not the amount found by the
court to be the amount due on taking account.
Therefore, the amount
declared by the court as the amount due cannot be deemed to be the
amount actually advancedi and under s. 30, the court cannot declare any
amount due under the n1o'rtgage which is in excess of twice the amount
actually advanced less any amount received in excess of the amount due
to the creditor under s. 3(2)(<) the Usurious Loans Act. [220 H]

## Text

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213
KIDAR NATH
v.
MANGAT RAI & ORS.
October 31, 1969
[J. C. SHAH AND K. S. HEGDE, JJ.)
Transfer of Property Act (4 of 1882)·, s. 58 (!), anomalous mortgage,
U'hat is.
Punjab Relief of Indebtedness Act, 1934, s. 30.-Whether legal representatives of debtor entitled to apply for relief-Scope of.
_ Usurious L0<;ns Act, 1918, ss. 2(3)(a) (b) and (c) ands, 3(2)(e)-
Scope of.
In a suit for redemption of a mortgage with possession under a mort·
gage deed of 1896, the Court declared the amount due on the mortgages.
No payment was made undeir the decree by the mortgagor.
Instead, on
his death, his replresentatives applied for relief under s. 30 of the Punjab
Relief of Indebtedness Act, 1934 and the Usurious Loans Act, 1918. as
amended by the East Punjab Amendment Act, 1948. The applicants were
given relief by the High Court and the representatives of the mortgagee
appealed to this Court.
HELD: (I) Under the covenants in the mortgage deed. there is a
stipulated rate of interest payable by the mortgagor, and the amount te·
covered from the income was to be first applied towards interest and the
bala~ce towards principal.
It was an anomalous mortgage and
not
a
usufructuary
mortgage.
The
liability
of the mortgagor to pay the
money due under the mortgage and to pay interest accruing due creates
a debt, even if it be assumed that the mortgagee had no right to enforce
the mortgage by sale but only had a right of foreclosure. [217 H, 218 C]
(2) The obligation is enfo<ceable against the estate of the debtor in
the hands of his legal representatives.
When it is so sOught to be enforced, in the absence of an express provision to the contrary, the re·
presentatives may set up the defence which the original debtor could, if
he had been sued.
There is no' warrant, therefore,
for the contention
that the jurisdiction of the court under s. 30 . of the Punjab Relief of
Indebtedness Act, is attracted only when the original debtor is the applicant and not on the
application of his legal
representatives. [218 H;
219 Al
( 3) The legal representatives were not entitled to claim the benefit of
the Usu'rious·Loails Act, 1918. Section 2(3) (a) and (b) do not apply
to a suit for redemption by the mortgagor and cl. ( c) only applies in
those cases where the security is given after the commencement of the
Usurious Loans Act. [219 G]
( 4) The legal representatives were entitled to the benefit of the Punjab
Relief of Indebtedness Act. . The application of s. 30 of the Act does !lot
depend upon the suit being one to which the Usurious Loans Act •PP!tes.
Even if the suit is not within the definition in s. 2(3) of the Usunous
Loans Act by virtue of s. 30 of the Punjab Relief of In,\!ebtedness A7t,
the amount receiyed by a creditor in excess. of. the amount due to him
under s. 3(2)(e) of the Usurious Loans Act" liable to be deducted from
twice the amount actually advanced. [220 El
214
SUPREME COURT REPORTS
[ 1970]3 S.C.R.
( 5) Section 30 uses the expressiort "sum found by the court to hav.::
been ·actually advanced.'
Such amount is not the amount found by the
court to be the amount due on taking account.
Therefore, the amount
declared by the court as the amount due cannot be deemed to be the
amount actually advancedi and under s. 30, the court cannot declare any
amount due under the n1o'rtgage which is in excess of twice the amount
actually advanced less any amount received in excess of the amount due
to the creditor under s. 3(2)(<) the Usurious Loans Act. [220 H]
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos.· 10 and
11 o.f 1966.
Appeals from the judgment and decree dated May 23, 1961
of the Punjab High Court in Regular First Appeals Nos. 184 of
1954 and 6 of 1955.
C. B. Agarwala and A. D. Mathur, for the appellant (in both
the appeals).
K. L. Gosain, N. N. Goswami and P. C. Khanna. for respondents Nos. 1 to 4 (i·n C.A. No. 10 of 1966) and respondents Nos.
1 to 6 (in S.A. No. 11 of 1966).
.B. Datta, for respondent No. 18 (in C.A. No. 10 of 1966) and
respondent No. 24 (in C.A. No. 11 of 1966).
The Judgment of the Court was delivered by
Shah, J.-On July 20,. 1896, L11dhia-grandfather of the
respondents-borrowed Rs. 5,000 from Ramji Dass and as security
for repayment thereof mortgaged with possession certain agricultural lands and a house.
The mortgage amount was to carry
interest at the rate of 12 annas per cent. per mensem, and in default
of payment of interest due at the. end of the year interest was
chargeable at 1 % per mens"em.
On May 17, 1897, Ladhia executed in favour of Ramji Dass another mortgage deed on the same
properties for Rs. 800. Interest under that mortgage was payable
at the rate of 2 % per mensem. Ladhia executed a third mortgage
deed in favour of Ramji Dass on May 21, 1897, for Rs. 600.
It
included the properties in the two earlier mortgages and 1/12th
share in other lands and two houses.
The properties mortgaged
in favour of Ramji Dass were subject to a previous mortgage in
favour of one Shugan Chand.
Ramji Dass redeemed that mortgage on payment of Rs. 650.
Lekh Ram son of Ladhla filed a suit for redemption of the
three mortgages.
On August 21, 1915, a preliminary mortgage
decree was passed in the suit by the Subordinate Judge, Hissar,
declaring that Rs. 62,293/11/9 were due on the mortgages. The
High Court of Punjab confirmed the decree on November 24.
1919. But no payment was made under that decree, nor was the
decree made final.
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SUPREME COURT REPORTS
[1970] 3 S.C.R.
A Division Bench of the High Court then held that under the
principle of s. 30 of the Punjab Relief of Indebtedness Act, the
mortgagee's representatives were entitled to receive Rs. 14,100,
being double the amount due as mortgage debt, and Rs. 1,420,
being double the amount of improvements made by the mortgagee. and the total amount received by the mortgagee as income
from the properties was Rs. 45,022, and deducting therefrom
Rs. 35,810 being the amount received in excess, the balance of
Rs. 9.212 remained.
A decree for redemption on payment ot
Rs. 6,308 (Rs. 15,520 less Rs. 9,212) was accordingly passed.
Against the decree passed by the High Court, these appeals have
been preferred by the re£resentatives of the mortgagee with
certificate granted by the High Court.
Three questions are raised in these appeals :
( 1) That s. ·30 of the Punjab Relief of Indebtedness
A.ct, 1934 has no application, because-
( a) there-is no debt due; and
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( b) that a legal representative of the original mortD
gagor cannot obtain the benefit of s. 30;
( 2) That the judgment of the Division Bench is
;nconsistent with the finding on the second question
cecorded by the Full Bench; and
(3) That the amount declared as due under the
preliminary decree in the earlier suit was for the purE
poses of s. 30 of the Punjab Relief of Indebtedness Act
the "amount actually advanced".
It is urged that s. 30 of the Punjab Relief of Indebtedness
Act. 1934, had no application, for the three mortgages being
usufructuary mortgages there is no debt due by the mortgagor,
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nor can the mortgagee enforce recovery of any debt under the•
coYenants of the mortgagees.
The first mortgage Ext. P-1 dated
July 20, 1896 recited that the mortgagor Ladhia had mortgaj!ed
with possession the properties set out therein for Rs. 5,000.
The mortgage deed contained the following, amongst other, covenants:
"First :-Interest on the mortgage money has been
fixed at Re. -/12/- per cent. per mensem.
Third :-I will be entitled to get from the mortgagee the income accruing from the mortgaged property aftet deduction of the
Government revenues
-therefrom.
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Fourth :-I will pay back the principal mortgage
money within a period of six years.
In case of default
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K!DAR NATH V. MANGAT RAJ (Shah, J.)
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Some time in 1951 the representatives oi Ladhia applied under
the Punjab Restitution of Mortgaged Lands Act, 1938, to the
Special Collector and obtained an order for restoration of the
agricultural lands.
Thereafter the mortgages remained outstanding only on non-agricultural properties.
The representatives of
Ladhia then instituted an action in the Court of the Senior Subordinate Judge, Hissar, for redemption of the non-agricultural
properties, and claimed an account under s. 30 of the Punjab Relief
of Indebtedness Act, 1934, and also oi Usurious Loans Act, 1918.
as amended by the East Punjab Amendment Act 4 of 1948. The
representatives of the mortgagee contended, inter alia, that the
suit was barred because no payment was made pursuant to the
preliminary decree in the earlier suit, that in any event it was
declared that the amount due in 1919 under the three mortgages
was Rs. 62,293/11/9, and that decision operated as res judicata.
and that account under s. 30 of the Punjab Relief of Indebtedness
Act should be taken on that footit1g.
The Trial Court held that the mortgage dues were R>. 7,050;
that the mortgagee had received Rs. 48,571 as income durin~ the
time he and his representatives remained in possession of the
mortgaged properties; that the preliminary decree in the earlier
suit declaring that Rs. 62,293/11/9 were due
operated as res
judicata; and that the present action not being one for recovery
of a Joan, the rule of Damdupat incorporated in s. 30 of the Punjab
Relief of Indebtedness Act, 1934 had no application; buts. 2 of
the Usurious Loans Act, 1918, as amended by the East Punjab
Act 4 of 1948 applied.
The Court held that the mortgagee was
entitld, besides Rs. 62,293/ 11/9 to Rs. 17 ,855/ 4/3 as interest on
the three mortgages aD'.l after giving credit for Rs. 48,571 received
as income, the balance due was Rs. 31,578.
The Trial Court
accordingly passed a decree for redemption of the properties in
~it on payment of Rs. 31,578.
In the appeal filed by the parties to the High Court of Punjab.
two questions were referred to a Full Bench :-
"1. Whether it is open to the legal representatives
of a debtor to invoke the help of s. 30 of the Punjab
Relief of Indebtedness Act in a suit for possession by
redemption ?
2. Whether the provisions contained in s. 3 of the
Usurious Loans Act, 1918, as amended in the Punjab,
would govern a suit for redemption of mortgage executed before the commencement of the Act ?"
The Full Bench answered the first question in the affirmative, and
the second. in the negative.
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KIDAR NATH V. MANGAT RAI (Shah, /.)
of payment of the whole or a part of it the mortgaged
property shall be considered as foreclosed in· favour of
the mortgagee, ....... .
Fifth :-1 will pay the interest year after year.
In
case of default I will pay interest on the amount of
interest also at the rate of Re. 1/- per cent. per mensem.
The mortgagee shall also be competent to file a separate suit regarding the amount of interest in Civil Court
and recover the same from me through it.
I shall not
have any objection thereto.
Seventh :-Till the principal mortgage money and
the interest are not paid off in full. temporary or permanent transfer of the mortgaged property by me to
any body else shall be considered illegal and invalid ..
"
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The mortgage deed Ext. P-2 dated May 17, 1897, for Rs. 800
contained similar covenants.-
It also recited that an amount of
Rs. 5,000 was borrowed under a deed dated July 20, 1896, and
the mortgagor agree<:! to repay the sum within six years
with
interest at the rate of Re. -/ 12/- per cent. per mensem.
By the
sixth clause it was provided :
"In case of default, viz., in default of payment of
the mortgage-money and interest along with the previous
mortgage money amounting to Rs. 5,000/-
(on the
basis of the mortgage-deed) dated the 20th of July,
·1896, agreed !o be paid back within a period of six
years, the surplus rights in the mortgaged property shal!
be considered as foreclosed and shall be the absolute
property of the mortgagee. . . . . . "
Exhibit P-3 dated May 21, 1897. aim referred to the two
earlier mortgages. By the first clause it recited that the mortgage
Money shall be paid back alongwith the mortgage money due
under the two earlier deeds of mortgage.
The second
clau~e
referred to the interest payable on the mortgage money at the rate
of Rs. 2/- per cent. per mensem.
The sixth clause recited that
till the entire mortgage money and intereot arc not pai:I off, the
mortgagor will not transfer by sale, mortgage or gift the mortgageJ
property to any body else.
The .seventh clause provides that the
money paid by the mortgagor shall first be credited towards the
interest on the two earlier mortgages and the balance shall be
accounted towards the principal. By the eighth clause it was
provid.~ that the mortgagor will pay interest on the mortgage
money upto the date of redemption of the mortgaged property.
Under the cove11ants in each of the deeds of mortgage, there
is a stipulated rate of interest payable by the m0rtgagor on the
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SUPREME COURT REPORTS
(1970] 3 s.c.R.
mortgage money and the amount recollered fn;>n1 the income is io
be first applied towards the interest and the balance towards the
principal.
The mortgagee is also entitl)'d 10 recover
by. suit
interest
accruing
due.
The niortgages are clearly anomalous
111ortgages.
Section 7 of the Punjab Relief o{ Indebtedness Act. I 934.
detincs a 'debt' as inclusive cf ''all liabilities of a debtor in cash
or in kind, secured or unse~1red. payable under a decree or order
ot' a civil court or otherwise. whether mature or not, . . . . ··
Th~ definition of the expression 'debt' therefore includes all liabi-
"lities of a debtor1 in cash or in kind, secured or unsecured.
The
liability of a mortgagor to pay the money due, under the mortgage
and to pay interest accruing due is clearly a debt. even if it be
assumed that the mortgagee had no right to enforce the mortgage" -
by sale .o.f the property and had a right only to foreclose the mortgages.
Under the terms of the mortgage deeds. if the mortgagor
pays the amount due. the mortgagee is bound to release the mortgaged property. It cannot be said that u.nder the three mortgages
there was no debt due by the mortgagor.
Nor do we agree with
counsel for the mortgagee thai the benefit of s._ 30 of the Punjab
Relief of fndebtedness Act is available only to the origim1l mortgagor and not to his representatives.
Section 30 of the Punjab
Relief of fndebtedness Act by the first sub-section provides :
"Tn any suit brought after the co1nn1encen1ent cf
th.is Act in respect of a debt as defined in section 7.
advanced before the commencement
of this Act no
court shall pass or execute a decree or give effect to an
award in respect of sucfi debt for a larger sum than
twice the amount of the sum found by the Court to
have been actually advanced, Jess any amount -already
received by a creditor in excess of _the amount due to
him under cl~use (e) of sub-s. (2) .of section 3 of the
Usurious Loans Act. 1918."
.-\ >llit lo redeem property on payment of the amount due on the
monguge is a suit in respect of a debt; anl:I the Court is bys. 30,of
the Act debarred from passing a decree for a sum larger than twice
the wnount of the ·sum found by the Court to have been actually
advanced.
The section imposes a restriction, in certain conditions. upon the power of the Court.
It is the nature of the suit
which decides the Court's jurisdiction :
the seciion makes no
reference to the status of the party claiming relief except in so far
as the definition of debt involves such reference.
On the plain
words of the section there is no warrant for the view that the
jurisdiction of the Court ;is attracted only when the person who
incurred the obligqtion to. pay the debt personally is a party to
the suit and not when his legal representatil;e is a party.
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KIDAR NATH v. MANGAT RA! (Shah, J.)
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obligation to pay a debt is not extinguished on the death of the
debtor.
The obligation is enforceable against the estate of 'the
debtor in the. hands of his legal representatives; and when it is so
sought to be enforced, in the absence of an express provision or
clear Jntendment to the contrary, the representatives may set up
the defence which the original debtor could if he had been sued
have set up. The representatives of the mortgagor were therefore
rightly held entitled to the benefit of s. 30 cf the Punjab Relief
of Indebtedness Act, 1934.
Each of the three mortgages created a debt due by the mortgagor within the meaning of s. 7 of t)le Punjab Relief of Indebtedness Act, 1934, and a suit filed by the representatives of the
mortgagor for redemption of the mortgages was a suit in respect
of a debt within the meaning of that section.
A suit for redemption of a mortgage executed before the commencement of the
Usurious Loans Act, 1918, was however not a suit to which the
Act applied, and on that account the mortgagor could not claim
the benefit of that Act.
Section 2(3) of the Usurious Loans Act
defines "suit to which this Act applies" as meaning any suit-
" (a) for the recovery of a loan made whether before
or after the commencement of this Act; or
(b) for the enforcement of any security taken or any
agreement whether by way of settlement of
account or otherwise made,
after the commencement of this Act, in respect of any loan
made either before or after the commencement
of this Act; or
( c) for the redemption of any security given after
the commencement of this Act in respect of any
loan made either before or after the commencement of this Act."
Evidently els. (a) and (b) of s. 2(3) have no application to a
suit for redemption by the mortgagor, and cl. ( c) also will not
apply because the security was given before the commencement
of the Act.
Clause ( c) only applies in those cases of redemption
of securities given after the commencement of the Act in respect
of any loan made either before or after the commencement of the
Act. . The mortgagor's representatives were, therefore, not entitlej
to claim the benefit of the Usurious Loans Act, 1918.
The mortgagor's representatives were still entitled to the
benefit of the Punjab Relief of Indebtedness Act.
By s. 30( 1 l
of that Act in a suit filed in respect cl a debt, the Court is enjoined
not to pass a decree for a sum larger than twice the amount found
by the Court to have been actually advanced, less any amount
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SUPREME COURT REPORTS
[ 1970 J 3 S.C.R.
already recr-ived by a creditor in excess of the amount due to him
under cl. (e) of sub-s. (2) of s. 3 of the Usurious Loans Act,
1918.
Clause (e) of sub-s. (2) of s. 3 of the U8urious Loans Act
was incorporated in that Act by s. 5 of the Punjab Relie.f of
Indebtedness Act. The clause reads :
"The Court shall deem interest to be excessive if it
exceeds seven and a half per centum per annum simple
interest or is more than two per centum over the Bank
rate, whichever is higher at the time of taking the Joan,
in the case of secured loans, or twelve and a half per
centum per annum simple interest in the case of unsecured loans :
Provided
"
There is nothing in s. 30 of the Punjab Relief of Indebtedness
Act which restricts the benefit of deduction oi amounts in excess
of the amount due under cl. (e) of sub-s. (2) of s. 3 to those
suits only to which the Usurious Loans Act applies.
The application of s. 30 of the Punjab Relief of Indebtedness Act does not
depend upon the suit being one to which the Usurious Loans Act
applies.
Even if the suit is not within the definition in s. 2 ( 3) '
of the Usurious Loans Act, by virtue of the express provisions of
s. 30 of the Punjab Relief of Indebtedness Act the amount received by a creditor in excess of the amount due to him under cl. ( e)
o.f sub-s. (2) of s. 3 of the Usurious Loans Act is liable to be
deducted from twice the amount actually advanced.
The High
Court was, therefore, right in directing that the amount received
in excess of the amount due under cl. ( e) of sub-s. (2) of s. 3 of
the Usurious Loans Act was liable to be deducted from twice the
amount actually advanced.
·
Counsel for the mortgagee's representatives contended that the
decision of the Civil Court in the earlier suit for redemption which
declared an amount of Rs. 62,293/11/9 due under the mortgages
must be deemed to be the amount actually advanced by the morigagee.
But the decree in the earlier suit merely declared
the
amount due at the date when the decree was passed : it did not
adjudicate that the amount declared was the amount actually
advanced under the
three mortgages.
The amount advanced
under a mortgage is not the amount found due on taking acc~unt
of the mortgage.
Section 30 uses the expression "sum found by
the Court to have been actually advanced". If apart from the
terms of the Punjab Relief of Indebtedness Act, the mortgagor
was seeking an account of the mortgage dues, the previous adjudication may be binding.
But the provisions of s. 30 of the Punjab
Relief of Indebtedness Act places an embargo upon the Court
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KIDAR NATH v. MANGAT RAJ (Shah, /.)
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declaring any amount due under the mortgage which is in excess
of twice the amount actually advanced less any amount received
in excess of the amount due to the creditor under cl. ( e) of sub-s.
(2) of s. 3 of the Usurious Loans Act.
The Court, therefor..,.
could not pass an order directing payment of an amount larger
than the amount which may be declared du~ under s. 30 of th~
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Punjab Relief of Indebtedness Act.
The appeals fail and are dismissed with costs.
One hearing
fee.
R.K.P.S.
Appeals dismissed.