070-NLR-NLR-V-37-SAIBO–et-al.-ABUTHAHIR-et-al.pdf
Saibo v. Abuthahir.
319
1935
Present: Koch J. and Soertsz A.J.
SAIBO et al. v. ABUTHAHIR et al.
83—D. C. Badulla, 5,569.
Res judicata—Bond—Separate covenants as regards principal and interest—Action for interest—Subsequent action for principal—Civil ProcedureCode, s. 34.
Where it was stipulated by bond that the principal sum shall bepayable on demand, and that the interest shall be payable for a periodof four years once in six months and thereafter monthly,—
Held, that the covenants regarding the payment of principal andinterest were separate and independent, arid that an action -to recoverinterest was no bar to a subsequent action to recover the principal.
320
SOERTSZ A.J.—Saibo v. Abuthahir.
^PPEAL from a judgment of the District Judge of Badulla.
Keuneman (with him Theagarajah), for defendants, appellants.
H. V. Perera, for plaintiff-respondent and petitioner in Revision.
Cur. adv. vult.
October 3, 1935. Soertsz A.J.—
the piaintiffS-respondents sued the defendants-appellants to recovera sum of Rs. 1,500 the principal amount due on the document P 1 and asum of Rs. 195 as interest due for a certain period. They also claimeda sum of Rs. 69.10 the cost of two deeds of transfer executed by them infavour of the defendants.
The plaintiffs had on three prior occasions sued the defendants torecover certain amounts which they alleged were owing at the dates ofthe institution of those cases for interest payable on the bond, and hadobtained judgments for the amounts claimed.
In the present case, when they filed their plaint to recover the principalamount and balance interest due, they averred that although by theterms of the bond P 1 the principal amount was payable on demand,there was a subsequent agreement (document P 2) by which they under-took not to demand from the defendants the said principal sum until theyhad executed certain transfers in favour of the defendants. They hadnow executed those transfers and therefore claimed the principal sum.This averment was apparently made by way of explanation and justi-fication for their not suing for the principal in the earlier cases. Thedefendants, however, in their answer pleaded inter alia “ that as a matterof law the plaintiffs are estopped from bringing this action by virtue ofdecrees in cases No. 4,645 and No. 5,225 of this Court which operate as resjudicata ”. This was the question really debated on appeal. Beforegoing on to examine it, it is necessary to get a clear view of the twodocuments P 1 and P 2. P 1 is dated December 16, 1925. By it thedefendants and their deceased father of whose estate the first defendantis the administrator declared themselves “ jointly and severally held andfirmly bound unto ” the two plaintiffs “ jointly and severally in the sumof Rs. 1,500 being value of shop goods and furniture bought and receivedby the defendants from the plaintiffs which said sum we jointly andseverally do hereby engage and bind ourselves and our and each of ourheirs, &c., to pay the said obligees jointly and severally, their heirs, &c.,on demand together with interest thereon at the rate of 16J per cent, perannum computed from the date hereof for a period of four years, andthereafter, at the rate of 18 per cent, per annum, the said interest to bepayable half yearly for the first four years (the first of such payments to bemade on or before the 5th. day of May, 1926), and thereafter monthly
P 2 was executed six days later, the 22nd of December, 1925. By itthe first plaintiff alone “ stated ” that he would not “ demand paymentto me of the sum of rupees one thousand five hundred (Rs. 1,500) due to meon bond No. 903 dated December 16, 1925 …. from the obligees(should be obligors) mentioned in the said bond until I transfer andassign”, &c.
The first question that arises for consideration is whether the termsof the bond P 1 show the existence of two separate and independent
SOERTSZ A.J.—Saibo v. Abuthahir.
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covenants as regards payment of interest and of principal, and if they do,whether it was open to the plaintiffs to sue on separate occasions for only 'the interest that had fallen due, without being liable to be repelled by theplea of res judicata when later they came into Court seeking to recoverthe principal sum. This question was, if I may say so, argued with greatability on both sides, and having given it my most careful considerationI have come to the conclusion that the plea of res judicata fails on a trueconstruction of the terms of PI. It is clear that the principal waspayable on demand, and the interest was payable, for the first four yearsonce in six months, the first payment on or before May 5, 1926, andthereafter monthly. I am of opinion that the words “ together with ” inthe context of P 1 means nothing more than “ and ”. It does not mean• “ at the same time as ”. The non-payment of interest on May 5, 1926,clearly entitled the plaintiffs to sue the defendants for six months’ interest.
It gave them a cause of action. Similar defaults at the end of every otherperiod of six months for the first four years, and thereafter defaults everymonth gave rise to a fresh cause of action. As against this, a cause ofaction to sue for the principal arose only if a demand was made and wasnot complied with. That was an entirely different cause of action. Apartfrom demand, it did not accrue on the non-payment of interest on thedue dates. In the case of Sawmy Rao v. Official Assignee of Madras1where the material terms of a mortgage deed were:—“We and our heirsshall pay severally and jointly the said sum of rupees five thousand withinterest at 1 per cent, per mensem to you and your heirs wheneverdemanded. We shall pay the interest of the said debt every month withinthe fifth of that month, commencing from the fifth of the current month.We and our heirs pay the principal amount rupees five thousand and interestdue therefor to you and your heirs whenever demanded ”, the Court,Coutts Trotter C.J. and Krishnan J., held that a suit based on the covenantto recover interest did not bar a subsequent suit for the principal andinterest due on the bond. Krishnan J. said, “ If we look at the mortgagebond, it clearly contains separate covenants as regards payment of interestand of principal. It provides that the mortgagors * shall pay the interestof the said debt, every month, within the fifth of that month, commencingfrom the fifth of the current month May, 1921 ’. It then goes on toprovide that the mortgagors and their heirs shall pay the principal amount,Rs. 5,000 and the interest due therefor to the mortgagee and his heirswhenever demanded. It is quite clear that here we have two independentcovenants;.and it leaves it open to the mortgagee to call in his mortgagemoney whenever he likes, or to leave it under mortgage with the mortga-gors ; but the right to get the interest every month is specifically providedfor and requires no demand whatsoever, for the interest is payableindependently of demand on the fifth of every month. ”
That opinion is a applicable with even greater force to the facts in thepresent case.
This judgment of the Madras Court proceeds upon the authority of therulings of the Privy Council in the two cases of Muhammad Hafiz andanother v. Muhammad Zakariya' and Kishen Naraih v. Pala MaV. In
3 I. L. R. 48 Madras 703.2 I. L. R. 44 Allahabad Vll.
3 I. L. R. 4 Lahore 32.
322
SOER.TSZ A.J.—Saibo v. Abuthahir.
the former case the mortgage deed created security for the repayment tothe mortgagees of Rs. 14,000 principal and interest at the rate of eightannas per cent, per mensem. It provided that the interest should bepaid on the bond as each month went by and that if the interest was notpaid for six months, the creditor should be entitled to realize only theunpaid amount of interest due to him, or the amount of principal andinterest both by bringing a suit in Court without waiting for the expirationof the term fixed. The time was fixed by a clause which provided that ifthe amount secured by the bond with interest was not paid after theexpiration of three years, the creditor was entitled to realize by bringinga suit for the whole amount of the principal and interest. Three yearselapsed and no interest was paid and the mortgagee had the power so faras the terms of the deed were concerned, either to bring an action for thepurpose of realizing the security in order to obtain repayment of the fullprincipal and interest, or simply of the interest alone. He took thelatter course. About a year later proceedings were instituted to recoverthe principal and interest that had accrued due, less the amount whichhad been provided by the proceedings formerly taken. To that suitobjection was taken that it was not competent to the mortgagees byreason of Rule No.. 2 of Order No. 2 of the Code of Civil Procedure. Whatthen is this rule, and have we an equivalent rule? The rule in the IndianCode is in the following terms :“ Every suit shall include the whole of the
claim which the plaintiff is entitled to make in respect of the cause ofaction; but a plaintiff may relinquish any portion of his claim in order tobring the suit within the jurisdiction of any Court ”. In that state of thelaw and of the facts the Privy Council said, “ What was the cause ofaction that the plaintiffs possessed when the proceedings were firstinstituted? It was the cause of action due either to the fact that theinterest had been unpaid for more than six months, or that the threeyears had elapsed, and the principal was also unpaid, and in either casethey could have sued for realization to provide for the whole amountsecured by the deed. The plaintiffs purported to proceed Under theearlier clause, but even in that case the non-payment of the interest wasthe sole cause upon which they were entitled to ask either for the limitedrelief that was sought or the larger relief they abstained from seeking ”.They were therefore barred from bringing the second action.
In the latter case, the Privy Council said, “ It does not appear to theirLordships that if the mortgage had provided, as mortgages always do inthis country, for an independent obligation to pay the principal and theinterest, that in a suit brought to obtain a personal judgment in respectof the interest alone the rule would have prevented a subsequent claimfor payment of the principal ”.
In our law the equivalent provision to the Indian Rule No. 2 of OrderNo. 2 is to be found in section 34 which enacts:—“Every action shallinclude the whole of the claim which the plaintiff is entitled to make inrespect of the cause of action Except that our section uses the word“ action ” in place of the word “ suit ” in the Indian section—the pro-visions are identical. They require a plaintiff to exhaust all the claimshe may make on the cause of action on which he is suing.
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•Now In the case before us, the cause of action upon which the plaintiffssued in the earlier cases was the failure to pay the interests due accordingto the covenant. That failure did not result in the principal falling due.According to the bond the principal fell due on a demand being made andnot being complied with. It was quite a separate cause of action. If, forinstance, at the time the plaintiffs became entitled to sue for interest, theprincipal was also due to be claimed in consequence of a demand forpayment not compiled with, they were entitled to include that cause ofaction as well in their plaint and to sue for both interest and principal,but they were not bound to do so. They could have set about reclaimingthe principal in a separate action. In that view of the matter, even ifthe evidence in this case establishes the fact that before the plaintiffs. instituted the last action for the recovery of interest, a cause of action hadaccrued to them to sue for the principal in consequence of a disregardeddemand for its payment, the fact that the plaintiffs did not include a claimfor that amount in the action they brought to recover the interest, cannotprevent them from, suing in a subsequent action to recover the principal,for the two things were dependent upon separate causes of action. Thelaw provides that a plaintiff subject to certain restrictions may uniteseveral causes of action in one plaint. It is at his option. The casewould have been different if the bond had provided for the payment ofprincipal and interest without discrimination on demand, or on or before acertain date and there was failure to pay on demand, or the occurrenceof that date. In such an instance, both things fell due on the same causeof action, namely, the neglected demand, or the occurrence of the date.Spencer Bower on Res judicata puts the matter very vividly. Onpage 195 he says, “ A party is entitled to swallow two separate cherries insuccessive gulps, but not to take two bites at the same cherry. Hecannot limit his claim to a part of one homogeneous whole, and treat theinseparable residue as available for future use, like the good spots in theCurate’s egg”. To apply the simile to this case, every instalment ofinterest that fell due half yearly for the first four years, and monthlythereafter, was a separate cherry that ripened separately and that couldhave been gulped down successively. I hold, therefore, that the plaintiffsare not barred by the earlier cases from maintaining the present action.
In this view of the matter, it is not necessary to consider the otherinteresting questions raised and discussed in the course of the argumentwhether (1) the document P 2 was an agreement to vary the termsof P 1, or a mere declaration devoid of legal consequence, or*an under-taking which at best gave rise only to an action for damages withoutaffecting the obligations under PI; (2) whether, if it was an agreement,it bound both plaintiffs as they were joint and several obligees, althoughonly one of them was expressly a party to it; (3) whether, if the decreesin the earlier cases operated as res judicata, the defendants were notprecluded by section 207 of the Civil Procedure Code from setting up thepiea, as they had not set it up when sued a second and third time forinterest.
It only remains to say with regard to the claim in rec'onvention that thetrial Judge’s finding on it is supported by the evidence. The appeal,therefore, fails and must be dismissed with costs. The plaintiffs are
324
Suntharam v. Sinnatamby.
entitled to the costs of the trial in the Court below. I delete the order asto costs made by the District Judge. I do not interfere with the DistrictJudge’s finding as regards the Rs. 69.10 claimed by the plaintiffs.
There was an application for revision of the judgment so far as thesecond plaintiff was concerned. With regard to that, it is sufficient tosay that the grounds stated in the petition are inadequate for excusinghim his failure to avail himself of his right of appeal, and for exercisingthe extraordinary powers of this Court in revision, in order to grant himrelief.
Koch J.—I agree.
Appeal dismissed.