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TMI Blog1942 (4) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... title deeds relating thereto to secure payment of a sum of ₹ 5,000 by a writing dated January 14, 1937. Under the terms of the writing the plaintiff covenanted to pay to Keshavdas Mohandas on January 14, 1938, the sum of ₹ 5,000 and interest thereon at the rate of ten annas per ₹ 100 per Gujarati month with monthly rests. In connection with the construction of the said building a further sum exceeding ₹ 5,000 became payable by the defendant to Keshavdas Mohandas. The plaintiff again at the request of the defendant effected a further charge on the property in favour of Keshavdas Mohandas to secure a further sum of ₹ 5,000 and interest by a writing dated March 23, 1937. The due date for the payment of this sum was also January 14, 1938. Under this writing the rate of interest was the same as under the previous writing. On July 30, 1939, the defendant gave a writing to the plaintiff stating that in connection with the building transferred by the plaintiff to the defendant's name, the defendant would be responsible for discharging the mortgages on the same and that the defendant would execute another mortgage deed in favour of the mortgagee in place o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the suit is premature. Mr. Tendolkar relies for his arguments on Sections 124 and 125 of the Indian Contract Act, 1872. Section 124 defines the contract of indemnity as a contract by which one party promises to safeguard the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person. Mr. Tendolkar argues that what the promisor promises to save the promisee from is the loss caused to him and not loss which may be caused to him. Further, under Section 125 all that the promisee is entitled to recover from the promisor are damages which he may be compelled to pay in any suit in respect of any matter to which the promise to indemnify applies. Mr. Tendolkar contends that until the mortgagee files a suit against the plaintiff and obtains judgment which the plaintiff is compelled to satisfy the plaintiff is not entitled to sue the defendant. 3. If the whole law of indemnity was embodied in Sections 124 and 125 of the Indian Contract Act, there would be considerable force in the contention of Mr. Tendolkar ; but that is obviously not so. The Indian Contract Act is both an amending and a consolidating Act, and it is not exhaustive of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plaintiffs then filed a suit to recover ₹ 5,000 and interest from defendant No. 1 by sale of the mortgaged property and in case of deficit prayed for a decree against the estate of defendant No. 2 which was in the hands of his sons, defendant No. 2 having died during the pendency of the suit. On these facts the Court held that the plaintiffs could not sue the defendants in anticipation that the proceeds realised by the sale of the mortgaged property would be insufficient and there would be some deficit left. The Court construed the promissory note as an indemnity given by defendant No. 2 to the plaintiffs in case any loss was caused to them by his unauthorised meddling with their money. As pointed out in the judgment, it was open to the plaintiffs to repudiate the mortgage transaction altogether and claim the whole of the amount] from defendant No. 2, leaving him to file a suit against defendant No. 1 to recover the mortgage amount; but the plaintiffs chose to accept that mortgage transaction and to treat defendant No. 2 as their benamidar and, therefore, all that they claimed to recover from defendant No, 2 was the loss, if any, that they might suffer in consequence of the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l they paid the money to the mortgagee. If that was so, then the decision turns on the construction of the actual language of the covenant. Further, it does not appear whether the plaintiffs were personally liable to the mortgagees because it would be open to the mortgagees to enforce their mortgage claim against the property conveyed to the defendant's father, and if they could recover the full amount from the sale of that property, the plaintiffs might not be liable at all. In any case I prefer to follow the judgment of the same learned Judge in Osman Jamal Sons, Ltd. v. Gopal Purshattam, when he considered all the English authorities and delivered a considered judgment. In that case the plaintiff company agreed to act as commission agents for the defendant firm for the purchase and sale of hessian and gunnies and charge commission on all such purchases, and the defendant firm agreed to indemnify the plaintiff company against all losses in respect of such transactions. Pursuant to the agreement the plaintiff company purchased certain hessian from one Maliram Ramjidas. The defendant firm failed to pay for or take delivery of the hessian purchases. Maliram Ramjidas re-sold th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity and to pay it off. 8. It is further argued by Mr. Tendolkar that in this case the liability of the plaintiff is not absolute but contingent. Mr. Tendolkar says that there is nothing to show that if the mortgagee was to sue to enforce his mortgage and the property was sold, there would be any deficit for which the plaintiff would be liable. Mr. Tendolkar overlooks the fact that under both the mortgage and the further charge there is a personal covenant by the plaintiff to pay the amount due, and it would be open to the mortgagee to sue the plaintiff on the personal covenant reserving his rights under the security. Therefore, the liability of the plaintiff under the personal covenant is absolute and unconditional, and he would have no answer to a suit filed by the mortgagee under that covenant. Mr. Tendolkar suggests that if such a suit were filed the Court would, under Section 68, Sub-section (2), of the Transfer of Property Act, exercise its discretion and stay the suit until the mortgagee had exhausted all his available remedies against the mortgaged property or the mortgagee had abandoned his security. I do not propose to speculate as to what the Court might do in the eve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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