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Judgment
The first Defendant and his deceased brother Jagannatha Row executed on the 3rd April 1886 an instrument of hypothecation for Rs. 5,000 in
favour of Ammayamma, wife of the seventh Defendant, Ammayamma undertaking to pay to a creditor of the first Defendant and his brother the
sum of Rs. 5,000 due to him from them. Admittedly only Rs. 2,000 of this amount was paid by Ammayamma and the Plaintiffs, who claim as
transferees of Ammayamma''s interest in the hypothecation, have brought the present suit for the recovery of interest said to be duo on this sum of
Rs. 2,000 for six years from the 13th July 1892. The District Munsif gave a decree for the sum sued for against Defendants Nos. 1 to 7. On
appeal, the Subordinate Judge in modification of this decree held that Defendants Nos. 1 to 6, of whom Defendants Nos. 2 and 3 are sons of the
deceased Jagannatha Row and Defendants Nos. 4 to 6 the sons of the first Defendant were not liable in respect of the claim and dismissed the suit
as against them.
On behalf of the Plaintiffs-Appellants-the contention that Defendants Nos. 1 to 6 should have been held responsible was sought to be
supported, so far as we were able to follow the argument, in two ways-firstly, that their liability was deducible from the language of the instrument
of hypothecation itself, and secondly, that, even if such construction was not well founded, the failure of the arrangement made in the instrument for
the liquidation of interest cast upon those Defendants the duty of making good the interest in question.
The provisions of the instrument so far as they bear on the question under consideration are as follows: ""Hence interest hereon for each year at
10 annas per cent, per mensem being Rs. 375, you have agreed that your husband should pay till the payment of the debt under this document
towards the interest for the debt due to you, Rs. 375 being the balance after deducting from Rs. 500 payable to us yearly by your husband
Muttukuru Sitaram Pantulu in accordance with the izara patta granted this day by us to him...not only Rs. 20 which we have heartily remitted to him
out of the izara amount, but also Rs. 105 on account of sircar quit-rent, etc. Therefore you should, at the end of Ani each year, recover from him
the amount of interest payable to you. We shall pay to you within seventeen years the amount of principal due to you or we shall pay it within eight
months from the date of demand after the expiry of seventeen years...."" Now, the lease referred to here as executed on the same date was for a
term of twenty-eight years, and it, in its turn, refers to the instrument of hypothecation and provides that the net rent of Rs. 375 payable thereunder
to the lessors should be paid by the lessee to his wife Ammayamma and that, after the debt to Ammayamma was cleared, the gross rent of Rs. 500
should be paid directly to the lessors.
Now the simultaneous execution of the hypothecation and the tease, the facts that the term of the latter covered the whole period fixed in the
hypothecation for repayment of the principal, the relationship between the hypothecation creditor and the lessee, which, of course, points to their
interests in the matter being practically identical and, lastly, the specific reference in each instrument to the appropriation of the rent to the interest,
indubitably show that the transaction between the parties was of a tripartite character intended to relieve the obligors from any responsibility in
respect of interest and to entitle the obligee to look for liquidation of interest solely to the source pointed out. Were it otherwise, the language of the
instrument would have been certainly different and a promise on the part of the obligors to pay interest either generally of on the happening of
specific contingencies would have found a place in the document. The absence of any such promise coupled with the direct and unambiguous
covenant relating to the repayment of principal in the concluding part of the instrument makes it quite clear that the arrangement relied on by the
Defendants was not a mere subsidiary provision implying an ultimate liability on the part of the mortgagors for any interest not realized by receipt of
rent, but the entire contract on the point between the parties operating as a complete adjustment of the obligee''s right to interest by an unqualified
assignment to her of the right of the obligors to the rent for the whole period fixed for the re-payment of the principal. The suggestion made on
behalf of the Appellants that the mere fact that the parties contemplated a right in the obligee to interest on the principal would imply an undertaking
on the part of the mortgagors to pay the same, notwithstanding the special provisions in the document relating to the liquidation thereof, is clearly
untenable. We may here refer to Mathew v. Blackmore 1 H. and N. 762 where a somewhat similar contention was urged, but unsuccessfully, in
respect of principal and interest lent under an arrangement that it was to be repaid out of certain specific sources. That loan had been contracted
by the Defendant from the Plaintiff for the purpose of paying off the debts of one Leman under whose will the Defendant was executor and trustee,
and the instrument evidencing the loan provided for its repayment ""out of the moneys which should come to his hands as such trustee."" The
instrument, however, more than once spoke of the sum borrowed as money ""lent and advanced."" For the Plaintiff it was contended that a general
liability to repay the money ought to be implied from the description ""money lent and advanced."" Pollock, C.B., who delivered the judgment of the
Court, rejected the contention, dealing with the matter thus: ""In the present case the question is whether a contract by parol can be implied for
repayment when there is an express covenant under seal relative to it. The rule of law as well as of reason and good sense is expressum facit
cessare tacitum and where there is an express covenant that the Defendant shall out of trust funds...pay the sum advanced, we think it impossible
that, at the same time, he made himself absolutely liable for the payment of it simpliciter; and, at all events, to do so would be to create a contract
by implication different from and much more onerous than that entered into by the express words used...."" This reasoning is applicable in the
present instance and the contention under notice must accordingly fail.
As to the case of Venkateshwara v. Kesava Shetti ILR 2 Mad. 187 cited for the Appellants, the facts and circumstances there were different,
since the observations of the learned judges clearly show that the arrangement in question there was merely of a subsidiary character not intended
to affect the primary liability of the mortgagor for the mortgage amount.
Passing to the other argument of the Appellants, based on the failure of the arrangement, no clear account of the circumstances resulting in such
failure appears to have been given by either party. The lease itself was, as said before, for a period much longer than that fixed for repayment of
the principal. The instrument of lease reserved to the lessors no power whatever to terminate the lease during its term. It is not alleged that there
was a forfeiture of the lessee''s right in consequence of any act or default on his part warranting such forfeiture. It is difficult, therefore, to see how
the lease was in point of law at an end. And the fact that the Plaintiffs hold a decree for the amount sued for against the seventh Defendant is not
consistent with the supposition that the lease has terminated. Be this as it may, all that appears is that on the 1st July 1889 the first Defendant and
his deceased brother, ignoring the lease to the seventh Defendant, demised the whole village to one Pokkal Reddi and in execution of a decree
against him brought to sale his leasehold rights and purchased the same themselves. Assuming that the seventh Defendant has been actually ousted
in consequence of the transactions with or proceedings against Pokkal Reddi, a matter which is not explicitly dealt with by the Courts below, it is
difficult to see how that would render the mortgagors liable for what is claimed here as interest. None of the covenants u/s 65 of the Transfer of
Property Act applies to a case like the present. But granting that, with reference to the terms of the arrangement entered into between
Ammayamma, the seventh Defendant and the first Defendant and his brother, the two last acted wrongfully in regard to the Plaintiffs also in
interfering with the possession and enjoyment of the seventh Defendant, such interference may expose them to an action for damages, but it would
not entitle the Plaintiffs to ask the Court to read the instrument of hypothecation as if it contained a promise on the part of the mortgagors to pay
interest in the events which have happened and thus in effect to readjust, in the language of Muthusami Aiyar, J., in the case already cited, the
original contract on an equitable basis supposed to be better suited to the altered state of things.
The decree appealed from should therefore be sustained and we accordingly dismiss this second appeal with costs of the Defendants Nos. 1 to
6.