1. T. H. KHAN, J.-This appeal at the instance of the plaintiff is directed against the judgment and decree of the Subordinate Judge, 1st Court, Chittagong passed in Mortgage Suit No. II of 1960, of that Court.
2. The plaintiff is a banking- concern registered under the Companies Act and is running under a scheme sanctioned by the High Court. The plaintiff's case in brief is that the late Kamala Kanta Dey, popularly known as K. K. Dey, the predecessor of the defendants Nos. 1 to 4, was a military contractor under the M.E.S. He applied to the plaintiff-Bank for financial accommodation and the Bank agreed to give him an overdraft loan to the extent of Rs. 45,000, with interest at the rate of 12 percent on monthly interest on his executing a security bond for the overdraft account. The contractor opened a current deposit Account, being No. 622, with the plaintiff-bank on 9th April 1945, and executed a pro-note in favour of the bank and also executed and registered the security bond on 26th June'1945, in favour of the bank for granting him the overdraft facilities up to the maximum limit of Rs. 45,000.
3. The further case of the plaintiff-Bank is that the Bank having demanded further security of landed property against the overdraft loan, the contractor deposited the title deeds mentioned in the Schedule to the plaint on 8th November 1947, by way of equitable mortgage to cover the existing and future overdraft loans. Later, memorandum relating to the deposit of the title deeds was drawn upon 11th March 1948, which was duly executed and also registered. The contractor regularly transacted his business with the Bank for some time but subsequently became very irregular in his transactions with the result that a huge amount of interest accrued on the account and in spite of repeated demands he could not clear up his overdraft loans. In the meantime, some properties mortgaged with the bank fell into arrears for the Government rent and the bank had to advance the amount to be paid for the arrear rents to the contractor, who however, paid up the Government dues and deposited the challan with the bank. In spite of that, it transpired that some of the mortgaged properties had been sold in Certificate sale for non-payment of the Income-tax dues 'by the contractor and were purchased by the defendant No. 5. That notwithstanding repeated demands, the contractor, and after his death his legal heirs, the defendants Nos. 1 to 4, and the defendant No. 5, the purchaser of the equity of redemption, did not pay up the plaintiff's dues and the plaintiff was obliged to file the suit.
4. According to the plaintiff the total claim including the principal and the interest amounted to Rs.
5. 1,33,337, but the plaintiff levied its claim at Rs. 95,117, after giving up its claim of interest to Rs. 38,220.
6. The suit was instituted on 10th March 1960.
7. The three sons and the widow of Mr. K. K. Dey, viz. The defendants 1 to 3 and 4 respectively did not file any written statement and did not contest the suit although, it appears from the order sheet that the defendant No. 2 had taken time on several dates for filing a written statement. The defendant No. 3 being a minor, one Mr. Abdur Rashid Chowdhury, a Pleader, was appointed Court guardian for him, who after taking time on several dates informed the Court that the suit would be contested on behalf of the minor defendant No. 3. But he ultimately informed the Court by a petition dated 12-12-60 that the natural guardian did not give him instruction in the matter and as such it would not be possible for him to file any written statement on behalf of the minor. He further stated in the petition: "The defendants Nos. 1 and 2 appeared in the suit but they have also not filed W/S in the suit. I think they are not supplying necessary instructions in the matter intentionally."
8. The suit was contested alone by the defendant No. 5, the purchaser in certificate sale of some of the mortgaged properties by filing a written statement contending inter alia, that the suit on the basis of a, pro-note and a security bond was barred by Limitation inasmuch as the properties are alleged to have been mortgaged on 8th November 1947, and the suit was filed on 10th March 1960, that is to say, beyond twelve years. The other pleas were that there was no cause of action for the suit against him as he was neither a legal representative nor the heir of the alleged mortgage K. K.
9. Dey, that the suit was not maintainable inasmuch as the plaintiff'-bank went into liquidation; that the suit was barred under the provision of the Bengal Money-- Lenders Act and the claim on account of the alleged unpaid compound interest at an exorbitant rate was not recoverable according to law. The main defence of this defendant was that the suit was barred by Limitation.
10. The further case of defendant No. 5 was that he was concerned with the properties shown against items Nos. 15 and 17 only of Schedule `B' to the plaint which he purchased in a certifi--cate sale held for the recovery of the Government dues, viz. The income-tax dues which accrued and fell due for a period before the date of the alleged mortgage, which had been created in collusion with the plaintiff Bank to defraud the Government and as such the alleged mortgage, if there be any, cannot be effective and valid against this defendant. In this connection the defendant No. 5 also raised the plea that the suit was not maintainable without the Government being made a party to the suit. That he purchased the two items of the properties in suit free from all encumbrances and that he could not be impleaded in the suit. That the entire claim on account of principal was paid up and the claim in the suit relates only to the compound interest illegally charged. On the pleadings of the parties, the learned Subordinate Judge framed the following issues:-
(1) Is the suit barred by limitation?
(2) Is the defendant No. 5 a necessary party in the suit?
(3) Is the alleged mortgage a valid transaction?
(4) Is the suit bad for defect of parties for not bringing the Government on record?
(5) Is the claim barred under the provision of the M. L. Act and the rate of interest claimed illegally?
(6) To what relief, if any, is the plaintiff entitled?
11. Of the above issues, issues Nos. 3 and 4 were not pressed at the time of hearing of the suit. Issue No. 2 was answered in favour of the plaintiff: As regards the other issues the learned Subordinate Judge found that the plaintiff could not claim more than Rs. 90,000, inasmuch as the principal amount advanced as loan to K. K. Dey was only Rs. 45,000, but as the issue No. 1 was decided against the plaintiff, the learned Subordinate Judge held that the suit was barred by limitation and the plaintiff was not entitled to any relief.
12. The plaintiff examined one witness in support of its case who proved the documents filed on behalf of the plaintiff, while the contesting defendant No. 5 did not examine any witness nor does it appear that any document was filed on his behalf for substantiating the contentions raised in his written statement. P. W. 1 Birendra Kishore Chakraborty stated in his deposition that he was an officer of the plaintiff Bank since 1944 and was still in service. Mr. K. K. Dey the predecessor of the defendants 1 to 4 executed Exh. 1, the registered Security Bond, dated 29-6-1945 and Exh. 2, the registered Memorandum of Rnuitahle Mortgage dated 11-3-1948. In his presence Mr. K. K. Dey took an overdraft of Rs. 45,000 after handing over his title deeds marked Exh. 1 (146 sheets, but not separately marked) and that the dues were not paid in spite of demands. This witness also proved rate of interest on the loan at the rate of 12 percent per annum. All the transactions had been after noting on the ledger, Exh. 3 and the plaintiff's claim was true. He also proved the signatures of K. K.
13. Dey in Exhs. 4 and 5, letter of lien and the letter of continuity respectively, from K. K. Dey to the Agent of the Tripura Modern Bank Ltd., Chittagong dated 25-6-46, and the cash deposit vouchers Exhs. 6 and 6 (a), dated 19-4-55 and 15-12-55 respectively by K. K. Dey himself. He further stated that the demand of the claim was made on all the defendants for the last time on 15-1-60. In his cross- examination P. W. 1 reiterated that the entire account of K. K. Dey had been filed in the suit. He also reiterated that the deposit vouchers, namely, Exhs. 6 and 6 (a) concern the loan in question and no other loan. The occasion for the defence suggestion to which P. W. 1 gave the above answer was that Exhs. 6 and 6 (a) did not mention the account number. P. W. 1 stated that the Accountant made all the entries of the ledger in his presence and whose handwriting he was acquainted with.
14. He, however, admitted that although they came to know of the certificate sale of some of the properties in 1952, yet they did not try to have the sale set aside but informed the defendant No. 5 about the debts of Mr. K. K. Dey due to the bank. From the deposition of P. W. 1 as well as from the documents proved by him, there is hardly any doubt about the plaintiff's case for the equitable mortgage. Moreover, issue No. 3 was not pressed at the time of hearing of the suit. Furthermore, the learned Subordinate Judge in his judgment observed: "It is admitted that it is an equitable mortgage on the basis of which a loan of Rs. 45,000, was advanced to late Mr. K. K. Dey."
15. Besides this the decree was drawn up in the Form prescribed under Order XXXIV, rule 4 (1) of the Code of Civil Procedure. This question was not at all agitated before us by the learned ,lawyer for the respondent. On a scrutiny of each of the documents referred to above we find that they are genuine documents and represent the correct and true state of affairs. It is apparent from the entry dated 8-11-47 in the ledger book, that is, on the date of depositing the title deeds with - plaintiff-Bank, the loan stood at Rs. 40,536.
16. We find substance in this contention of the learned Advocate for the appellant. With regard to the Memorandum, the learned Subordinate Judge took the view. "This memorandum has been filed and it appears therefrom that it is simply a list of the deeds deposited on 8-11-47 and nothing else".
17. We find ourselves unable to agree with the construction placed on the Memorandum. This document, in our opinion, is to be considered along with the other documents proved on behalf of the plaintiff, particularly for example, the copy of the ledger of the current deposit Account No. 622 and the cash deposit Vouchers. It is needless to emphasise that the question of limitation and for that matter the very fate of the suit is dependant on the interpretation of the Memorandum. In view of the importance as well as for a fuller comprehension of the document, it will be better to reproduce the relevant portion thereof, which reads as follows:- "Kamala Kanta Dey.
18. Memorandum relating to deposit of title deeds To The Agent, The Tripura Modern Bank Ltd.. Chittagong.
19. Dear Sir, Please note that I have already deposited with you on 8-11-47 my under mentioned title deeds relating to my immovable properties to remain with you as security by way of Equitable Mortgage to cover my existing and future overdraft loans. The security will continue so long as the documents remain deposited with you as such and shall not be affected if ray account shows credit balance now and then. I also make it clear that the properties covered by the following title deeds are exclusively mine and I am in possession thereof. My overdraft limit is herein fixed at Rs. 50,000 (Rupees fifty thousand only). List of title deeds deposited on 8-11-47."
20. (Since 'the list of the documents is not relevant to the point under consideration it is omitted).
21. We have already indicated the construction placed on this document by the learned Subordinate Judge and the conclusion drawn and the finding arrived at on that basis. In our opinion, Exh. 2 has got two aspects. In the first place it serves as a document of ratification of the mortgage itself that had already been effected by the deposit of the title deeds on 8-11-47. Secondly, the recitals in this document read along with Exh. 3 constitute a conscious and unconditional acknowledgement of the existing and future overdraft loans. On the date of the execution of Exh. 2 I.e. On 11-3-48, the overdraft loan stood at Rs. 43,376-3 annas only as is evident from the entry in the ledger dated 5- 3-48, on which date Mr. K. K. Dey had drawn a sum of Rs. 4,700, totalling the overdraft loan at the aforesaid amount. The admission of the existing liability and the loan to be advanced in future as embodied therein is unconditional. Although under section 19 of the Limitation Act, the exact nature of the liability need not be disclosed by the acknowledgement as its exact nature may be established by evidence, yet the acknowledgement in itself should import that the person making it is under an ex-liability at the time This has been amply done in this case and the recitals in Exh. 2 are quite clear and unambiguous. Considering the document as a whole and giving the literal interpretation and the natural meaning to the recitals therein that the debtor had already deposited his title deeds with the creditor Bank as a security by way of Equitable Mortgage to cover his "existing and future overdraft loan" we find that they) constitute a clear and conscious acknowledgement of the debt on 11-3-48. We may, however, mention that on authority could be placed before us by the learned Advocate for the respondent in support of the proposition that a memorandum or a deed of ratification like the present one could not be treated as a written acknowledgement of the liability in respect of the properties in question signed by the party, although such an acknowledgement could be clearly spelt out from the document itself. In our opinion there is no such bar; it all depends upon the recitals in each particular document. Thus, having regard to the express terms of the Memorandum we hold that the provisions of section 19 of the Limitation Act are fully attracted in this case, which provides amongst other things, that where before the expiration of the period prescribed for a suit or application in respect of any property or right, an acknowledge--ment of liability in respect of such property or right has been made in writing and signed by the party against whom such property or right is claimed, or by some persons through whom he derives title or liability, a fresh period of limitation shall be computed from the time when the acknowledgement was so signed. There is no dispute as to the signature of Mr. K. K. Dey in the Memorandum inasmuch as the document went wholly unchallenged. There is no dispute that on 11th March 1948, the mortgage was enforceable, in other words the acknowledgement was made long before the expiration of the period of limitation. The suit was filed on 10th March 1960, on the last day of the 12th year. The suit was, therefore, filed in time. This finding alone is sufficient for disposal of the appeal decreeing the plaintiff's claim. But as the learned Advocate for the appellant has urged other points as well for assailing the bar of limitation from other standpoints it is desirable that we record our findings on those points too.
22. The learned Advocate for the appellant contended before us that if there was a mortgage made on a particular date to secure loans already advanced and to be advanced, then there is only a single mortgage covering all the sums advanced. He further submitted that in this case there was an agreement between the parties that the title deeds will remain as security for the sums advanced and to be advanced, as was evident from the recitals in the Memorandum, and it was, therefore single mortgage covering all the advances. That being so, the learned lawyer for the appellant contended that the period of limitation would run from the date of the last advance. In this connection, he referred us to the definition of mortgage as given in clause (a) of section 58 of the Transfer of Property Act, which reads as follows: "58 (a). A mortgage is the transfer of interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt or the performance of an engagement which may give rise to a pecuniary liability."
23. It hardly needs any emphasis that the success or otherwise of the point raised by Mr. Asrarul Hossain is entirely dependent on the facts of the case. The facts of the case must reveal that there was 'an agreement between the parties' that the title deeds will remain security for -money advanced and to be advanced. This is the cardinal point.
24. Mr. D. C. Bhattacharya the learned Advocate appeared on behalf of the defendant-respondent No. 2, but he retired from the case on the ground that he had no instruction in the matter.
25. We shall meet the contentions of the learned Advocate for the respondent No. 5 as we proceed with the discussion of the facts of the case but for the sake of convenience we may state first our views as to the soundness or otherwise of the legal proposition raised by the learned Advocate for the appellant. There is no manner of doubt in our minds that from the very definition of mortgage, as quoted earlier in this judgment, it follows that there can be a mortgage for the purpose of securing money advanced and also to be advanced. It further follows that if there is a transfer of an interest in specific immovable property, either by a deed, or by deposit of title deeds within the terms of section 58 (f) of the Transfer of Property Act, and if such transfer is made to secure advances already made and to be made, then there is only a single mortgage covering all the advances made both prior to the date of the said transaction and subsequent thereto, and in such a case the period of limitation would run from the date of the last of such advances.
26. Having stated the legal position we may now look at the facts of the case for considering whether they would justify the conclusion that in the present case there was a single mortgage to secure the advance already made on or before 8th November 1947 (that is, the date of deposit of the title deeds) and the advances to be made subsequent thereto. In other words, it is to be found as a matter of fact if there was any agreement between the parties that the title deeds will remain security for moneys advanced and to be advanced. There is no contemporaneous written document of that date. The written document subsequent to this date is the Memorandum dated 11-3-48. This document again assumes great importance for the purpose of determination of the point under investigation inasmuch as it furnishes the most essential ingredient or pre-requisite for the purpose, namely whether there was any agreement between the parties that the mortgage was made on the particular date to secure the advances already made and to be made. The Exh. 2 embodies the written confirmation of the purpose of the deposit made on 8-11-47. This document in explicit and unambiguous terms recites that the title deeds already deposited will "remain with you as security by way of Equitable Mortgage to cover my existing and future over--draft loan. The security will continue so long as the documents remain deposited with you as such and shall not be affected if my account shows credit balance now and then". From these clear recitals, we have no manner of doubt in our minds that there was an agreement between the parties that the title deeds would remain security for money advanced (that is, the existing debt of Rs. 43,376-3 annas on 3-11-48) and to be advanced in future as overdraft loan. This being the position, we hold in the facts and circumstances of this case that there was a single mortgage covering 'all the advances made both prior and subsequent to the date of the mortgage and the period of limitation would run from the date of the last of such advances, that is, from 1st September 1948, vide the entry of that date in the ledger Exh. 3.
27. "3. The bank having demanded further security of landed properties against the overdraft loan, the contractor deposited the title deeds of his properties as described in Schedule `A' of this plaint on 8-11-47 by way of equitable, mortgage to cover the existing and future overdraft loan, latter on, a memorandum relating to the deposit of title deeds was drawn up on 11-3-48 and duly executed and registered."
28. This paragraph speaks for itself and hardly needs any comment. In our opinion the averments made therein are clear that the deposit of the title deeds were made by way of equitable mortgage to cover "the existing and future overdraft loan". As regards the criticism that there is no evidence on record in support of the agreement, we wish to say that there is indeed no statement in the deposition of P. W. 1, but the best possible evidence has been furnished, vide the memorandum, Exh. 2, whose recitals, we have already pointed out are decisive on the point. It is true that no specific ground was taken in the Memorandum of Appeal filed in this Court, but the appeal had to be heard in part at intervals on the prayers of the Advocates of both parties and accordingly the learned Advocate for the respondent got ample notice of the point and got adequate time and opportunity for meeting the same.
29. Considering the facts and circumstances of the case we have already taken the view that there was a single mortgage in the present case covering the advances made both prior and subsequent to the mortgage. From this another consequence touching the point of limitation inevitably follows in view of the deposit vouchers, Exhs. 6 and 6 (a) dated 19-4-55 and 15-12-55, respectively and the corresponding entries in the ledger. We have already found these documents to be quite genuine and correct. We have also noticed the suggestion put to P. W. L. With respect to these exhibits which remained wholly unsubstantiated. The signatures of Mr. K, K. Dey in these exhibits were not challenged. It Is true that Exhs. 6 and 6 (a) do not mention the account number, but this is not enough to hold that they relate to some other account of Mr. K. K. Dey in the total absence. Of proof of any other account of Mr. K. K. Dey wits the bank. On the other hand we find that the amounts deposited by Exhs. 6 and 6 (a) have been correctly entered in the ledger. Thus from these deposits the provisions of section 20 of the Limitation Act is also attracted, which provides inter alia that where payment on account of debt or of interest on a legacy ig made before the expiration of the prescribed period by the person E liable to pay the debt or legacy or by his duly authorised agent, a fresh period of limitation shall be computed from the time when the payment was made. So considered from this stand. Point, the period of limitation commenced on and from 15-12-55, and the suit was, therefore, filed well within time.
30. From the foregoing discussions, it will have been noticed that the point of limitation has been approached from three different standpoints. In the first place, on an interpretation of Exh. 2 and taking 11-3-48 as the date of acknowledgement of the debt within the meaning of section 19 of the Limitation Act, we have found that the suit was in time, having been filed before the expiry of the last day of the 12th year.
31. Secondly on a consideration of the facts of the case. We have found that there was a single mortgage covering the moneys advanced and to be advanced and we have found that the suit was In time inasmuch as the period of limitation would run from 1-9-48 being the date of the last advance made. Thirdly, on the same view that is, the transaction was a single mortgage. We have found that the provisions of section 20 of the Limitation Act was attracted and the suit was in time in view of the last deposit made by Mr. K. K, Dey as per Exh. 6, (a) on 15-12-55. These standpoints, supported by the facts of the cases are necessary to be kept in view, otherwise confusion is likely to arise.
32. The learned Advocate for the respondent No. 5 relying on the terms and condition No. 10 of Exh. 1 sought to argue that Exh. 2 was executed pursuant to the terms and conditions contained in this clause and besides this, it had no other meaning or purpose. Item No. 10 of Exh. 1 is to the following effect:- "That if and when called by tile bank I shall immediately furnish fresh and further security in men or properties or both to the satisfaction of the bank and its officers and shall .; also deposit such proper document as may be necessary for the satisfaction of the bank."
33. We find ourselves unable to agree with the learned Advocate for the respondent on this point rather we find from this clause that on demand by the bank, the contractor Mr. K. K. Dey bound himself to deposit with the bank all his title deeds and other valuable securities and also to execute such documents as was considered necessary. Accordingly, the title deeds were deposited on 8th November 1947, which was ratified on 11th March 1948, by the memorandum wherein the existing and the future overdraft loans were also acknowledged.
34. The learned Advocate for the respondent referred us to the two decisions of this Court. One being the case of the Patuakhali Bank Ltd. v. Mohammad Emdad A.I and another (PLD 1964 Dacca 36) and the other being the case of one Nabadwip Chandra Podder and another v. S. D. Ahined, Official Receiver (PLD 1969 Dacca 529). Suffice it to may that the two cases have no application in the present case as the facts of the said reported cases are wholly different. The suit in the present case is on the basis of equitable mortgage. Whereas in the two reported decisions it was found that the suits were on the basis of the matual, open and current account some observations from the said decisions as to the facts of those cases on which the point of limitation was decided will illustrate the point. In paragraph 7 at page observed reported in their Lordships "Our above finding that the suit is on the mutual, open and current account, is itself sufficient to dispose of the appeal but as Mr. Guha has advanced some arguments on the question of limitation of the mortgage, we propose to deal with the same."
35. "Having regard to the nature of the transactions creating independent obligations of one party or the other, it can be safely said that the disputed overdraft account of the defendants was mutual.
36. Open and current account within the meaning of Article 85 of the Limitation Act, as has been rightly held by the trial Court. "
37. With respect to the amount of Rs. 90,000, that was found by the learned Subordinate Judge to be due to the Bank we may observe that this finding was not challenged before us by the learned Advocate for the appellant although a ground was taken in the memorandum of appeal that the learned Subordinate Judge was wrong in taking the view that interest could not exceed Rs.
38. 45,000.00, under the provisions of the East Bengal Money-Lenders Act. No argument on the basis of the tact that initially, overdraft limit was fixed at Rs. 45,000.00 but it was increased to R's. 50,000.00 on the basis of the Memorandum Exh.
2. Therefore, we leave the matter at that and accept the amount of Rs. 90,003.00 to be due to the Bank.
39. Lastly, we cannot overlook one aspect of the case. The properties involved in the case are considerably large. It is indeed true that ordinarily when two or more properties are jointly mortgaged for the same debt, each part of those properties is liable for the whole debt and the mortgage, at his option can proceed against the whole mortgaged properties or against a part of the mortgaged property. There may as well be special cases where an exception may be made, but in this case nothing had been shown by the defendant No. 5justify a departure from the ordinary rule. In the written statement even the dates of theand the confirmation thereof were not disclosed. No papers were proved in this case in support of the alleged certificate sale. No witness was examined to support the contents of the written statement. However, on this question, in the last two sentences of his cross-examination P. W. 1 obliged the defendant and said: "He came to know of the auction purchase of the properties in a certificate sale in 1952. We did not try to have the sale set aside but we informed the defendant No. 5 about the debt to our bank claim for K. K. Dey.
40. This statement is open to two interpretations. It could mean that the witness did not know the actual date or the year of the sale but he acquired the knowledge of the sale in 1952. It could also mean that the certificate sale actually took place in 1952. Be that as it may, notwithstanding these infirmities and having regard to the amount of the debt and the considerable properties involved and also having taken note of the fact that the value of landed properties in general has appreciated to a considerable extent since 1947, under the changed circumstances and in view of the fact that the defendant No. 5 purchased two items of the mortgaged properties in a certificate sale held for the arrears of the Income-tax dues of the debtor K. K. Dey, we think that it will be in consonance with justice and fairplay to lay down the principle of priority that is to be followed in the matter of sale of the mortgaged properties in default of cash payment of the decretal dues.
41. Furthermore, the mortgagee cannot be allowed to throw the entire burden, at the first instance, upon a portion of the mortgaged property sold in a certificate sale and purchased by the defendant No. 5. We accordingly direct that the mortgagee shall first pursue the mortgaged properties, other than the two items of the mortgaged properties purchased by the defendant No. 5 in a certificate for the realisation of the decretal dues, he would be entitled to pursue the said two properties purchased by the defendant No. 5 as a last resort for realisation of the balance of the decretal dues, if any.
42. The result, therefore, is that this appeal is allowed and the judgment and decree of the learned Subordinate Judge is set aside and the suit is decreed in a preliminary form only for Rs. 90,000.00 on contest against the defendant No. 5 and ex parte against the defendants Nos. 1 to 4. The decree will be drawn up in Form No. 5-A. Appendix D to the Code of Civil Procedure. The defendants are granted six months' time from the date of the decree to pay up the decretal dues. In passing the final decree for sale of the mortgaged properties, if and when necessary, the Court shall keep in view the direction contained in the judgment. Having regard to the facts and circumstances of the case. We direct that the parties will bear their own costs.
43. MAHMUD HUSSAIN, J.-I agree.