093-NLR-NLR-V-42-AMARASEKERA-v.-ARUNASALEM-CHETTY.pdf
Amarasekera v. Arunasalem Chetty
371
1941
Present: Keuneman J.
AMARASEKERA v. ARUNASALEM CHETTY.
162—C. R. Negombo, 44,390.
Mortgage bond—Payment of interest in advance—Right of mortgagor to redeem
bond—Recovery of interest overpaid—Condictio sine causa.
Payment of interest in advance on a mortgage bond does not fetter themortgagor’s right of redemption during the period for which the paymentin advance is made.
Where a mortgagor who has paid interest in advance exercises hisright of redemption during the period for which the payment in advanceis made and, while paying the capital in full, makes it clear that he doesnot waive his right to claim the interest overpaid.
Held, that he is entitled by means of the condictio sine causa to recoversuch interest.
T
HIS was an action instituted by the plaintiff to recover a sum ofRs. 100 alleged to be overpaid in respect of a mortgage bond dated
October 5, 1938. The facts appear from the judgment. Plaintiff’s actionwas dismissed.
C. E. S. Perera (with him Gilbert Perera), for plaintiff, appellant.—Amortgagor can always redeem unless his power to redeem has expresslyor impliedly been taken away. In the present instance that power hasnot been expressly or impliedly taken away. Notwithstanding hisacceptance of interest for a period in advance a mortgagee can claimpayment within that period (.Fernando v. Fernando1), and so it may beargued that notwithstanding his paying interest in advance a mortgagorcan redeem at any time within the period for which interest has beenpaid. The payment of interest in advance is no bar to a debtor’s rightto redeem. See Wiley v. Mudinch ”.
A mortgagor has the right to claim a return of interest paid by himupon demand provided that at the time he made the payment, he did sosubject to a clear protest that the sum was not due. See Snyman v,Pretoria Hypotheek Maatschapij ’.
L. A. Rajapakse, for defendant, respondent.—Each case must be decidedaccording to the particular terms of the bond in question. Under this bondthe creditor can claim payment of the principal on demand but the debtoris not given the right to repay the principal at any time he likes. Theinterest for the current half year becomes due at the commencement ofthe half year and the creditor can therefore at the very commencementof the half year ask for the full half yearly interest if the debtor fails topay. See Sockalingam Chettiar v. Munasinghe '.
The South African case is distinguishable because of the presence thereof specific provision allowing the debtor to pay up the principal aftergiving 3 months’ notice in advance. In short, everything turns on theterms of the particular bond that comes before the Court.
Cur. adv. vult.
33 N. L. R. 313.
(1902) 19 S. C. 447.
»(1916) C. P. D. 263, at p. 266.* 41 N. L. R. 42 at pp. 44 <fc 47.
372
KETJNEMAN J.-—Amarasekera v. Arunasalem Chetty.
May 29, 1941. Keuneman J.—
In this case plaintiff sued defendants for the recovery of Rs. 100alleged to be interest overpaid in respect of mortgage bond P 1 datedOctober 5, 1938. Plaintiff’s action was dismissed with costs and heappeals.
The circumstances are as follows :—P 1 was a mortgage bond executedby plaintiff in favour of the defendants, in the sum of Rs. 2,000. Underthe bond plaintiff undertook “ to repay the said sum of Rs. 2,000 to thesaid creditors …. on demand, and until such repayment to payinterest on the said sum of Rs. 2,000 at and after the rate of 15 per centumper annum to be computed from the date hereof and payable once inevery six months in advance …. Provided, however, that ifthe payments of interest be regularly made in manner aforesaid the saidcreditors …. shall be bound and obliiged to accept interest…. at the rate of only 12 per centum per annum …. ”.
On October 4, 1939, the plaintiff paid Rs. 120 being the six months,interest in advance. On November 4, 1939, he tendered to the defendantsRs. 1,900 as being the capital sum of Rs. 2,000 less Rs. 100 being theexcess payment of interest paid for the period beyond November 5, 1939.The defendants refused to accept this sum and discharge the bond.Thereupon the plaintiff paid defendants the sum of Rs. 2,000 subject to aclear and unequivocal protest that the sum of Rs. 100 was not due to thedefendants.
The bond clearly gives the right to the creditors to repayment ondemand. It does not specifically deal with the right of redemption bythe debtor. But to use the language of Villers C.J. in Darling v. Registrarof Deedsl, “ It is of the essence of every mortgage or pledge that themortgagor or pledger has the right, of redemption, and this right can onlybe taken away by express words or by way of necessary inference.” Canwe say in this case that there has been any agreement whereby the rightof redemption has been fettered or postponed or fixed for any particulardate? There is clearly no express agreement to that effect. But it issuggested that there is an implied agreement in view of the fact that theplaintiff undertook to pay interest in advance. It is said that thisimplies that the plaintiff cannot exercise his right of redemption duringthe period for which the payment in advance is made.
In my opinion this cannot be implied. The agreement to pay interestin advance is quite distinct from the right of redemption inherent in theplaintiff. By paying -in advance the plaintiff obtains a 3 per cent,reduction of interest. There is nothing in this agreement which affectsthe plaintiff’s right of redemption.
I think the present case falls within the principle enunciated by Willeon Mortgage and Pledge in South Africa at page 314 :
“ If a mortgagor, who has paid interest in advance on his mortgagedebt, voluntarily repays the capital sum before it is due, withoutstipulating that any interest .shall be refunded to him, he cannotclaim back interest accruing between the date of payment and the datewhen the debt became payable (Wiley, N. O. v. Mudinch & Co.'). But
1 S. A. Rep. (1912) A.D. at p. 28.
(1902) 19 S. C. 447.
MOSELEY J.—Abraham v. Alvois.
373
if the mortgagor at the time of paying the capital in full, makes it clearthat he does not waive his right to claim a refund of interest previouslypaid in advance by him and that he reserves his right to do so later on,then he is entitled by means of the condictio sine'•causa to recover theinterest paid in advance in respect of the period unexpired at the dateof repayment (Snyman v. Pretoria Hypotheek Maatschapij. *.
The second case mentioned is unfortunately not available, but inWiley’s case it was argued by Counsel that the receipt of six months’interest in advance was an implied undertaking by the mortgagee not tocall up the bond within six months, and that the payment of the saidinterest was an implied undertaking on the part of the mortgagor not topay off the principal due on the bond within those six months. Thismatter was not actually decided in that case. But it is interesting tonote that in Fernando v. Fernando", Macdonell C.J. held that acceptanceof interest by the mortgagee in advance for a period of six months didnot operate as a waiver of the right to demand payment during that period,where the bond provided for payment on demand of the principal sum,and also for the payment of interest in advance every six months.
In this case I think the Commissioner was in error in dismissing theplaintiff’s action. I allow the appeal and set aside the judgment appealedagainst, and enter judgment for the plaintiff as prayed for with costs inboth Courts.
Appeal allowed.