JUDGMENT : ( 1. ) BY order dated 19th November 1971, this Court, while upholding the claim of the plaintiff, Dhanpal Patni the prior mortgagee, on the foot of the mortgage-deed, Ex. P-2, dated 5th February 1945,- exercised its discretion, under Order 34, rule 4 (3) of the Code of Civil Procedure, and directed that a decree for sale instead of one of foreclosure shall be passed, although the suit brought by the plaintiff was a suit for foreclosure, as it was not disputed that the mortgage was an anomalous mortgage. ( 2. ) IN the suit, the plaintiff had impleaded the subsequent mortgagee, the laxmi Bank Ltd. , Akola, as the defendant No. 5. ( 3. ) THE operative part of the Order, reads- 21. The difficulty arises because the official Liquidator appearing for the subsequent mortgagee, the Laxmi Bank Ltd. , in the cross-objection that he has filed that a decree in form 9 under Order 34, rule 4 (3) of the Code of Civil Procedure be passed. 22 Under Order 34, rule 4 (3) of the Code of Civil Procedure, the Laxmi Bank Ltd. as the subsequent mortgagee is entitled to have its rights under its mortgage adjudicated upon in this suit But, as the issues relating to the subsequent mortgage have not been, nor can be, decided on the record as it stands, the following issues are remitted to the trial court for its findings after recording the evidence of the parties," Seven issues were framed and the Court directed that-"the preliminary decree shall be drawn up after the findings are received. " that decree had to be passed against all the defendants, and in Form No. 9, Appendix D. ( 4. ) IT is necessary to state that the Court, by its order dated 11th February, 1972, had directed that the trial Judge shall, before recording evidence on the issues remitted, permit the parties to amend their pleadings, with respect to the subsequent mortgage dated 26th April 1952, Ex. 5d 1 held by the Laxmi Bank ltd. By its order dated 27th October, 1972, the Court also framed eight additional issues, in the light of the amended pleadings. ( 5. ) THE learned trial Judge, by order dated 30th August 1973, has recorded his findings on the remitted issues. The findings have been challenged before us on certain grounds. 5d 1 held by the Laxmi Bank ltd. By its order dated 27th October, 1972, the Court also framed eight additional issues, in the light of the amended pleadings. ( 5. ) THE learned trial Judge, by order dated 30th August 1973, has recorded his findings on the remitted issues. The findings have been challenged before us on certain grounds. Before setting out the grounds, a few facts will have to be stated first. ( 6. ) ONE of three mortgagors, Shivanand Singh, was engaged in a joint venture with the other two, Shridhar Gopal and Jagannath Saran, who were his relations. It appears that the business ran into a loss. Shridhar Gopal had an over-draft account with the Laxmi Bank Ltd. , which was being used for the benefit of all The Bank apparently was pressing the debtor for payment of its debt On 24th April 1952, an account was, therefore, made and a sum of Rs. 59. 706/7/6 was found due. Accordingly, the debtors, Shridhar gopal. Jagannath Saran and Shivanandsingh, along with Smt Jugnubai, mother of Shivanandsingh, as surety, executed the mortgage-deed, Ex. 5d-1, in favour of the Laxmi Bank Ltd , in respect of the property detailed in para 2 (e) of the plaint, and more particularly delineated in the sketch filed along with the plaint. ( 7. ) INCIDENTLY, the property mortgaged belonged to Smt. Jugnubai In lieu of the execution of the mortgage, the debt due from Shridhar Gopal stood extinguished, and the over-draft account standing in his name was treated by the Bank as having been finally settled and closed. ( 8. ) THE recitals of the mortgage-deed, so far as relevant, are as follows:-"5. AND WHEREAS the said Shridhar Gopal is indebted to the BANK at Chhindwara to the extent of Rs. 59,706-7-6 (Rupees Fiftynine thousand seven hundred six, annas seven and pies six) only as on 26th day of April 1952, inclusive of interest; 6. AND WHEREAS the said amount standing to the debit of Shri Shridhargopal alone in the books of the Bank at Chhindwara Branch of Rs. 59,706-7-6 (Rupees Fifty nine Thousand seven hundred six, annas seven and pies six) only was used for the benefit of all the DEBTORS; 7. AND WHEREAS the said amount standing to the debit of Shri Shridhargopal alone in the books of the Bank at Chhindwara Branch of Rs. 59,706-7-6 (Rupees Fifty nine Thousand seven hundred six, annas seven and pies six) only was used for the benefit of all the DEBTORS; 7. AND WHEREAS the DEBTORS desire to close the said account of Shri Shridhar gopal by paying to the Bank the entire amount outstanding against the said Shri Shridhar gopal alone; 8. AND WHEREAS the BANK is prepared to advance to the DEBTORS the said amount of Rs. 59,706-7-6 (rupees Fifty Nine Thousand seven hundred six, annas seven and pies six) only to pay off the said amount outstanding in the name of Shri Shridhar Gopal alone; * * * * 10. The DEBTORS have today received from the BANK at Chhindwara the sum of rs. 59706 7-6 (Rupees Fifty Nine thousand seven hundred six, annas seven and pies six)only the receipt of which amount the DEBTORS hereby acknowledge; 11. The DEBTOR agree to repay to the BANK the entire amount with interest thereon at 9% (Nine per cent) per annum with quarterly rests as under: (a) Rs. 1250 (Rupees one thousand two hundred fifty) per month to be paid weekly during the course of each month, for twelve months the final instalment to fall due on 30th April 1953; (b) Besides the above Rs. 5000 (Rupees Five thousand) to be paid on or before 31-7-52; (c) Another Rs. 5000 (Rupees Five Thousand) to be paid on or before 30-11-1952; (d) Balance with interest to be paid on or before 30-4-1954; (e) In case of default in terms of repayment of two consecutive instalments as mentioned in clause (a) above or any one of the terms of repayment as mentioned in clauses (b) to (d) above, the whole amount of the loan will become exigible. * * * * 13. As a security for the payment of the above noted loan the DEBTOR Shri Shiva nand Singh and SURETY Mst. Jugnoobai aged about 56 years W/o Late Shri Beni bahadur Singh both do hereby mortgage their property mentioned in the SCHEDULE hereunder; 14. In case the DEBTORS fail to repay to the BANK the loan taken by this indenture as stipulated above the DEBTOR Shri Shiva Nand Singh named above and surety Mst. Jugnoobai aged about 56 years W/o Late Shri Beni bahadur Singh both do hereby mortgage their property mentioned in the SCHEDULE hereunder; 14. In case the DEBTORS fail to repay to the BANK the loan taken by this indenture as stipulated above the DEBTOR Shri Shiva Nand Singh named above and surety Mst. Jugnoo Bai named above do hereby agree that the mortgaged property will be sold and the sale proceeds will be utilised towards the satisfaction of the loan taken under this indenture and interest thereon and if the sale proceeds fall short, we all the debtors and SURETY agree to pay it from our other property". ( 9. ) WHEN the suit was instituted by Dhanpal Patni on 31st December, 1958, the Laxmi Bank Ltd. , which had been impleaded as the defendant No. 5, was not in liquidation. On 26th February, 1959, it filed a written statement denying the plaintiffs claim, and prayed that the suit be dismissed. ( 10. ) A few days later, i. e. , on 30th May 1960, a petition was, however, presented by the Reserve Bank of India before the Bombay High Court under section 38 of the Banking Regulation Act, 1949, for the winding up of the laxmi Bank Ltd. , being Company Petition No. 14 of 1960. In those proceedings, the Bombay High Court passed an order on 28th June, 1960, for the winding up of the Bank, and for the appointment of the Official Liquidator as the Liquidator, (Ex. 5-D-35.) ( 11. ) MEANWHILE, Smt. Jugnubai applied for being adjudged an insolvent on 31st December 1955 by a petition under section 7 of the Provincial Insolvency Act. On 6-9-1956, the Court of the 1st Civil Judge, Chhindwara, passed the order of adjudication, under section 27 of the Act. The defendant No. 4, shri Guru Prasad Shrivastava, Advocate, was appointed as a Receiver of her estate, which includes the mortgaged- property. ( 12. ) THE preliminary decree for foreclosure was passed by the trial Court on 19th September, 1963. ( 13. ) ON 17th November, 1963, the mortgagors filed an application under order 44, rule 1 of the Code of Civil Procedure, before this Court, for permission to file the appeal in forma pauperis. In the meanwhile, the Official liquidator applied to the trial Court for amendment of the decree under section 152 of the Code. ( 13. ) ON 17th November, 1963, the mortgagors filed an application under order 44, rule 1 of the Code of Civil Procedure, before this Court, for permission to file the appeal in forma pauperis. In the meanwhile, the Official liquidator applied to the trial Court for amendment of the decree under section 152 of the Code. That application was allowed on 4th August, 1965, and the trial Court amended both the judgment and the decree. As a result of the amendment, the suit of the plaintiff stood decreed against all the defendants, i. e. , including the defendant No. 5. ( 14. ) ON 26th September, 1956, the Official Liquidator filed a cross-objection under Order 41, rule 22 of the Code, praying that the preliminary decree for foreclosure be substituted by a preliminary decree for sale, under Order 34, rule 4 (3) of the Code, and for a direction for adjudication of the rights, of the laxmi Bank Ltd. , under its mortgage-deed dated 24th April 1952. In particular, he prayed that the decree should be in Form No 9, Appendix D. That prayer of his was allowed by this Court, as already stated, in its order dated 19th November, 1971. ( 15. ) THAT completes the resume of facts necessary for our purposes. ( 16. ) THE mortgagors seek to avoid their liability under the mortgage-deed, ex. 5d-1. dated 24th April, 1952, executed in favour of the Laxmi Bank Ltd. , on the following grounds- (i) The consideration for the mortgage, in respect of the item of rs. 27,425/15 has not been proved; (ii) The stipulation in the mortgage deed, providing for the charging of compound interest @ 9% per annum, with quarterly rests, was "excessive", within the meaning of section 3 (2) (a) of the Usurious Loans Act, 1918, as amended by the Central Provinces Usurious Loans (Central provinces Amendment) Act, 1934, and, therefore, was liable to be scaled down under section 3 of the Act. In any event, the amount of interest decreed could not exceed the principal amount secured by the mortgage; (iii) By reason of section 28 (2) of the Provincial Insolvency Act, the hindu Womens estate, owned by Smt. Jugunbai, "vested" in the Receiver, and, therefore, she was not "possessed" of the same, within the meaning of section 14 (1), when the Hindu Succession Act, 1956, came into force. That being so, upon the death of Smt. Jugnubai on 29th March, 1967, during the pendency of the appeal, her limited widows estate lapsed and, consequently, the mortgage is not enforceable, after her death; (iv) The mortgage-debt was not binding on the reversioners in asmuch as there was no legal necessity to justify the incurring of the debt; (v) The claim on the mortgage was barred by limitation ; (vi) The non-joinder of Shridhar Gopal, who was a necessary party to the proceedings, was fatal. There is, in our opinion, no substance in any of the contentions. ( 17. ) THE contention that consideration for the mortgage, in so far as it secures the item of Rs. 27,425-15-0 is not proved, can hardly be accepted. This is sought to be spelled out from the following entry in Ex. 5-D-30, The submission is that the consideration of the mortgage was the extinction of the debt of Shridhar Gopal. It is said that the item of Rs. 27,425-15-0 is disputed, and it is suggested that the question is whether payment of this amount was ever made to Shridhar Gopal, and if so, whether on the 12th or the 17th December, 1951. The contention is that the Bank has proved the entry, and not the transaction. The only evidence led by the Bank is that of its Internal Auditor, C. L. Parande, (5 DW-1), but he was not able to throw any light, except that the entry pertains to a transaction of 17th December, 1951. ( 18. ) RELIANCE is placed on Chandradhar v. Gauhati Bank, AIR 1967 SC 1058 . and it is urged that mere proof of entry under section 4 of the Bankers Books Evidence Act, by itself, was not sufficient to charge any person with liability. It is said that the entry in Ex. 5d-30 is only a transfer entry, and the Bank should have produced the corresponding credit entry. The contention is devoid of substance. ( 19. ) IN the absence of any specific denial, the mortgagors cannot be permitted to urge that there was want of consideration, in respect of the item of Rs. 27,425-15-0. The Bank, in para. 4 of its written statement, as amended, pleaded that the principal amount advanced under the mortgage was a sum of rs. 59,706-7-6. A schedule was filed giving particulars of the dent. 27,425-15-0. The Bank, in para. 4 of its written statement, as amended, pleaded that the principal amount advanced under the mortgage was a sum of rs. 59,706-7-6. A schedule was filed giving particulars of the dent. The schedule, therefore, forms part of the pleadings. It contains the following entry:- The mortgagors had, therefore, notice of the fact that a sum of Rs. 27,425-15-0 was paid to Shridhar Gopal in cash. There was no specific denial of this fact alleged. ( 20. ) UNDER Order 8, rule 3 of the Code, every allegation of fact in the plaint will be taken as admitted if not denied specifically. See Govindram v. Gulabrao, 1949 NLJ 189=air 1949 Nag. 394=ilr 1949 Nag. 478. . This is particularly so in the case of a mortgage. In the instant case, the mortgagors have admitted execution of the mortgage. In view of that admission, there is presumption that the mortgage was for consideration. The burden of disproving the consideration or any part of it was on them. Not only there is no specific denial of the item of Rs. 27,425-15-0, Shridhar Gopal has also not been examined to deny the fact of its payment. ( 21. ) THE mortgage-deed, Ex. 5 D-1, contains in clauses 5, 6, 7, 8 and 10, a clear recital as to the passing of the consideration for the mortgage. That recital amounts to an admission, and is binding on the mortgagors. See Martin cashin v. Pater J. Cashin, AIR 1938 PC 103. Besides, Shivnandsingh admitted in Para. 4 of his deposition that Shridhar Gopal was indebted to the Bank to the extent of rs. 59,706. ( 22. ) EX. 5 D-30, the ledger account of the Bank, should be read as a whole. It contains debit and credit entries in the over-draft account of Shridhar gopal, for the period from 2-1-1952 to 26 4-1952, i. e. , the date of mortgage. At the foot of the document, there is the transfer entry of Rs. 27,425-15-0. It pertains to a transaction of 17th December, 1951. That is obvious from the entry next following, namely,-To Intt. from 17-12-1951 to Dr. 59106-7-8 9106-9" 11-4-1952 on Rs. 27425-15-0 that document shows that an account was made on 26th April, 1952 of the amount due from Shridhar Gopal. Shridhar Gopal never objected to his being debited with an item of Rs. 27,425-15-0. That is obvious from the entry next following, namely,-To Intt. from 17-12-1951 to Dr. 59106-7-8 9106-9" 11-4-1952 on Rs. 27425-15-0 that document shows that an account was made on 26th April, 1952 of the amount due from Shridhar Gopal. Shridhar Gopal never objected to his being debited with an item of Rs. 27,425-15-0. On the contrary, after executing the mortgage-deed, Ex. 5 D-1, the mortgagors opened a joint account with the bank, and they, including Shivnandsingh, were operating that account, and made repayments to the extent of Rs. 11,000 and odd. (See Exs. 5d-31, 5d-34, 5d-2 to 5d-4, 5d-9, 5d-10, 5d-14, 5d-16, 5d-17, 5d-21 and 5d-23 ). ( 23. ) SECTION 4 of the Bankers Books Evidence Act, reads- "4. Mode of proof of entries in bankers books.- Subject to the provisions of this Act, a certified copy of any entry in a bankers book shall in all legal proceedings be received as prima facie evidence of the existence of such entry, and shall be admitted as evidence of the matters, transactions and accounts therein recorded in every case where, and to the same extent as, the original entry itself is now by law admissible, but not further or otherwise. " Under this section, an entry from a Bankers book is prima facie evidence of the transaction pertaining to it. ( 24. ) THE decision in Chandradhar Goswami v. Gauhati Bank Ltd. (supra), is. distinguishable. There, the mortgagor not only disputed the correctness of the accounts, but went to the extent of alleging that they were fraudulent. In dealing with evidentiary value of such entries, in such circumstances, their Lordships, referring to section 34 of the Evidence Act, stated - "it is clear from a bare perusal of the section that no person can be charged with liability merely on the basis of entries in books of account, even where such books of account are kept in the regular course of business. There has to be further evidence to prove payment of the money which may appear in the books of account in order that a person may be charged with liability thereunder, except where the person to be charged accepts the correctness of the books of account and does not challenge them. In the present case, however, the appellants did not accept the correctness of the books of account. In the present case, however, the appellants did not accept the correctness of the books of account. We have already indicated that they went to the length of saying that the accounts were not correctly kept, and were fraudulent. They also said that no money had been taken by them after March 1, 1947. " ( 25. ) IN dealing with section 4 of the Bankers Books Evidence Act, their lordships observed- "it will be clear that section 4 gives a special privilege to banks and allows certified copies of their accounts. to be produced by them and those certified copies become prima facie evidence of the existence of the original entries in the accounts and are admitted as evidence of matters, transactions and accounts therein, but such admission is only where, and to the same extent as, the original entry itself would be admissible by law and not further or otherwise. Original entries alone under section 34 of the Evidence Act would not be sufficient to charge any person with liability and as such copies produced under section 4 of the Bankers Books Evidence Act obviously cannot charge any person with liability. Therefore, where the entries are not admitted it is the duty of the bank if it relies on such entries to show that the money was advanced as indicated therein and thereafter the entries would be of use as corroborative evidence. But no person can be charged with liability on the basis of mere entries whether the entries produced are the original entries or copies under section 4 of the Bankers Books Evidence Act. " That was a case which turned on its own facts. The observations have to be read, in the context in which they were made. This is brought out in the following passage: - "we have already pointed out that the appellants did not admit the correctness of the accounts produced specially after March 1, J947. . " In the present case, the correctness of the debit entry of Rs. 27,425/15 was never disputed. That being so, from the observations of their Lordships quoted above, it logically follows that no other evidence other than the entry was needed. This, indeed, is a converse case. ( 26. ) IN view of this, the contention regarding want of consideration must fail. ( 27. 27,425/15 was never disputed. That being so, from the observations of their Lordships quoted above, it logically follows that no other evidence other than the entry was needed. This, indeed, is a converse case. ( 26. ) IN view of this, the contention regarding want of consideration must fail. ( 27. ) THE rate of interest in mortgage suits is determined by Order 34 and not by section 34 of the Code of Civil Procedure. Under Rule 11 of that Order, the Court has to award- (1) interest on the principal prior to the date of the suit at the rate provided by the mortgage (Usury Laws Repeal Act, 1855, S. 2), unless the rate is penal, in which case the Court may award su;b interest as it deems proper khagaram v. Ram Shankar, (1915) 42 Cal. 652. (Indian Contract Act. 1872, section 74) or the interest is excessive and the transaction was substantially unfair in which case also the Court may reduce it (Usurious Loans Act, 1918, section 3); and (2) interest on the principal from the date of the suit upto the date fixed by the Court for payment of the mortgage-debt, also at the rate provided by the mortgage (Transfer of property Act, sections 86,* 88 now Order 34, rules 2 and 4) unless the rate is penal, in which case the Court may award interest at such rate as it deems proper (Surendra Nath Karandeo v. Digamber pathak, (50) A P 391.), or the interest is excessive and the transaction was substantially unfair in which case also the Court may reduce it. (In Raja Sir Mohammad v. Qazi Ramzan Ali, (1920) 24 CW N 977.) (3) interest on the aggregate amount of principal, interest and costs, from the date fixed for the payment of the mortgage-debt upto the date of realization or actual payment, at such rate as the Court deems proper. It may be allowed at the Court rate, that is, 6 per cent per annum (Sunder Koer v. Rai Sham Krishari, (1907) 34 Cal. 150.) or at any other rate (Lachmi Narain v. Uman Dat, (1907) 29 All 322. ). The Court is not bound to award it at the contract rate or it may not award any interest at all (Santi v Mulkh Raj, (37) AL 894.) ( 28. 150.) or at any other rate (Lachmi Narain v. Uman Dat, (1907) 29 All 322. ). The Court is not bound to award it at the contract rate or it may not award any interest at all (Santi v Mulkh Raj, (37) AL 894.) ( 28. ) SECTION 3 of the Usurious Loans Act, 1918, as amended by the Usurious Loans (Central Provinces Amendment) Act, 1934, so far as relevant, reads- "3. (1) Notwithstanding anything in the Usury I aws Repeal Act, 1855 (28 of 1855), where, in any suit to which this Act applies, whether heard ex parte or otherwise, the Court has reason to believe- (a) that the interest is excessive, or (b) that the transaction was, as between the parties, thereto, substantially unfair, the court shall exercise all or any of the following powers, namely- (i) re-open the transaction, take an account between the parties, and relieve the debtor of all liability in respect of any excessive interest; sub-section (2) (a), with the 1st proviso, provides-" (2) (a) In this section "excessive" means in excess of that which the Court deems to be reasonable having regard to the risk incurred as it appeared, or must be taken to have appeared, to the creditor at the date of the loan; (i) Provided that compound interest in excess of ten per cent on any loan made after such date, as the provincial Government may, by notification, fix, shall be deemed to be excessive;" (By Notification No. 1060-836-XIII.-dated 29th May 1934, the Government directed that compound interest in excess of 10% on any loan made after 14th June, 1934, shall be deemed to be excessive.) ( 29. ) IT is not suggested that the transaction was, as between the parties, substantially unfair. That leaves out clause (b) of sub section (1) of section 3. The question really is whether section 3 (I) (a) of the Act applies. It was strenuously urged that compound interest @9%, with quarterly rests, is excessive. That is not so, in view of the 1st proviso to sub-section (2) (a), which defines what is meant by term "excessive. " ( 30. ) COUNSEL for the appellants took time, and after calculations, with his usual fairness, frankly confessed that compound interest @9%, with quarterly rests, was less than compound interest @10% per annum, and, in fact, in the reply, the point was abandoned. ( 31. " ( 30. ) COUNSEL for the appellants took time, and after calculations, with his usual fairness, frankly confessed that compound interest @9%, with quarterly rests, was less than compound interest @10% per annum, and, in fact, in the reply, the point was abandoned. ( 31. ) THE Bank is, therefore, entitled to interest on the principal amount, at the stipulated rate, i. e. , compound interest @9%, with quarterly rests from the 24th April 1952, the date of mortgage till the date of amendment of the written statement. The question then is what should be interest pendente lite. ( 32. ) IN Soli Pestonji Majoo v. Ganga Dhar Khemka, AIR 1969 s C 600. Ramaswami J. , speaking for their Lordships, has stated- ". . there was no justification for the High Court to allow interest at the contractual rate from date of the suit on the amount adjudged. Prior to 1929 the legal position was that under section 34 of the Civil Procedure Code in granting a decree for payment of money the Court had full discretion to order interest at such rate as it deemed reasonable to be paid on the principal sum adjudged from the date of the suit onwards. But Order 34, rules 2 and 4 which applied to a mortgage suit, enjoined the Court to order an account to be taken of what was due to the plaintiff at the date of such decree for principal and "interest on the mortgage". The special provision in Order 34 had therefore to be applied in preference to the general provision in section 34. Till the period for redemption expired therefore the matter was considered to remain in the domain of contract and interest had to be paid at the rate and with the rests specified in the contract of mortgage but after the period for redemption had expired the matter passed from the domain of contract to that of judgment. The right of the mortgagee would henceforth depend not on the contents of his bond but on the directions of the decree - (See the decision in Jagannath Prosad Singh Chowdhury v. Surajmal Jalal, AIR 1927 PC1. The right of the mortgagee would henceforth depend not on the contents of his bond but on the directions of the decree - (See the decision in Jagannath Prosad Singh Chowdhury v. Surajmal Jalal, AIR 1927 PC1. By Act 21 of 1929, Order 34 of Civil Procedure Code was amended and a new Rule 11 was inserted which deals specially with interest and which states : his Lordship then quoted Rule 11, and observed-"it is apparent that the new rule 11 as inserted by the Amending Act 21 of 1929 provides that the Court may order payment of interest to the mortgagee upto the date fixed for payment at the rate payable on the principal. It was held by the Federal Court in Jai-gobind Singh v. Lachmi Narain Ram, AIR 1940 F C 20. that the language of the rule gives a certain amount of discretion to the Court so far as interest pendente lite and subsequent interest is concerned and it was no longer absolutely obligatory on the Courts to decree interest at the contractual rates upto the date of redemption in all circumstances even if there is no question of the rate being penal, excessive or substantially unfair within the meaning of the Usurious loans Act, 1918. In view of the principle laid down by the Federal Court in this decision, we are of opinion that in the circumstances of the present case the respondent should be granted interest on the principal sum due at the contractual rate till the date of the suit and simple interest at 6 per cent per annum on the principal sum adjudged from the date of the suit till the date of the preliminary decree and also at the same rate till the date of realisation". ( 33. ) THE decision of their Lordships of the Supreme Court is binding on us. ( 34. ) IT is, accordingly, directed that the Bank shall be entitled to compound interest @9%, with quarterly rests, on the principal from 24th April, 1952 to 26th February, 1959; to simple interest at 6% thereon from 27th February, 1959 till the date fixed for payment of the mortgage-amount, and to future interest @6%, simple, on the aggregate sum due, i. e. principal, interest and costs, from the date fixed for payment till the date of realisation. ( 35. ( 35. ) THERE is no warrant for the submission that the amount of interest should not, in any event, exceed the principal. The Madhya Pradesh Moneylenders Act, 1934, is not applicable, because of the exemption clause contained in section 2 (vii) (d), which provides that the Act shall not apply to loans advanced by the Banks. The rule of damdupat is also not applicable. That is a rule of Hindu law, and the Bank cannot be subjected to any such rule. ( 36. ) THE most crucial question is, whether Smt. Jugnubai was "possessed" of the property, within the meaning of section 14 (1) of the Hindu Succession act, 1956, on 17th June, 1956, the date on which the Act was brought into force. The contention of the appellants is that she was not so possessed, her estate having been vested in the Receiver, by reason of section 28 (2) of the provincial Insolvency Act. It is urged that the daughters limited estate which vested in the Receiver lapsed upon the death of Smt. Jugnubai on 29th March, 1967, and consequently, the mortgage was no longer enforceable. We are not impressed with this submission. ( 37. ) SECTION 28 (2) of the Provincial Insolvency Act enacts- "28 (2) On the making of an order of adjudication, the whole of the properly of the insolvent shall vest in the Court or in a Receiver as hereinafter provided, and shall become divisible among the creditors, and thereafter, except as provided by this Act, no creditor to whom the insolvent is indebted in respect of any debt provable under this Act shall during the pendency of the insolvency proceedings have any remedy against the properly of the insolvent in respect of the debt, or con mence any suit or other legal proceeding, except with the leave of the Court and on such terms as the Court may impose. " ( 38. ) THERE is a fallacy in the argument. It does not take note of the fact that though Smt. Jugnubai filed a petition under section 7 of the Provincial insolvency Act, i. e. , prior to the commencement of the Hindu Succession Act, 1956, for being adjudged an insolvent on 31st December, 1955 the order of adjudication was not made till 6th September, 1956, i. e. , after the Act was brought into force. Smt. Jugnubai was, therefore, "possessed" of the estate within the meaning of section 14 (1) of the Hindu Succession Act, 1956. ( 39. ) IT is said on behalf of the appellants that in view of the provision in section 28 (2) of the Provincial Insolvency Act, what vested in the Official receiver on the insolvency of Smt. Jugnubai, was the property which she, in law, possessed, whether actual or constructive. In other words, the effect of section 28 (2) of the Act was that, on the making of an order of adjudication, smt. Jugnubai was divested of all rights, title and interest to and in the property, and this continued during the whole period of her insolvency, i. e. till her death. ( 40. ) IT is then said that the effect of section 28 (7) of the Act, is that the adjudication is deemed to have taken place on the date of the presentation of the petition, i. e. , on 31st December 1955, and from that date, the property legally vested in the Official Receiver. ( 41. ) SECTION 28 (7) of the Provincial Insolvency Act reads- "an order of adjudication shall relate back to, and take effect from, the date of the presentation of the petition on which it is made. " ( 42. ) THERE can be no doubt that the effect of sub-sections (2) and (7)of section 28 of the Act, when read together, was that the whole of the property of Smt. Jugnubai vested in the official Receiver with effect from the date of the presentation of the petition in insolvency, for the equitable distribution of her property amongst her creditors. ( 43. ) SECTION 28 (7) of the Act only enunciates the well known doctrine of relation back in insolvency law. That is a provision enacted for the benefit of the whole body of the creditors for the preservation of the insolvents estate. That is the whole object and purpose of section 28 (7 ). ( 44. ) THE Act provides for three stages: (1) transfers made before the presentation of the insolvency petition ; (2) transfers made after the presentation of the petition and before the order of adjudication; and (3) transfers made after adjudication. A transfer made after adjudication is not binding on the receiver. ( 44. ) THE Act provides for three stages: (1) transfers made before the presentation of the insolvency petition ; (2) transfers made after the presentation of the petition and before the order of adjudication; and (3) transfers made after adjudication. A transfer made after adjudication is not binding on the receiver. A transfer made by an insolvent after the filing of the petition is also not binding on the Receiver, on the doctrine of relation back, subject to a protection clause. A purchase in good faith under a sale in execution section 51 (3) and a transfer inter vivos in good faith for valuable consideration (section 55) fall within the protected class of transactions. A transfer before the filing of the petition is binding on the Receiver unless it is annulled under sections 53, 54 or 54-A of the Act. ( 45. ) THE effect of section 28 (7) is that, transactions, entered into by the insolvent at any time between the commencement of insolvency and the date of the adjudication order, will not prevail against the Official Receiver, whose title by relation back dates from the commencement of the insolvency. (See Kashi-nath and another v. Ganesh and another, 1939 N L J 267=air 1939 Nag. 207=ilr 1939 Nag. 540. ( 46. ) THIS appears to be the only case of its kind, i. e. , of an insolvent hindu female. Counsel for the parties tell us that the question has not arisen before. We have looked in vain for an authority in the law books, but there is none ( 47. ) THE doctrine of relation back under section 28 (7) of the Act, is for purposes of protection of the insolvents estate. We do not think that the doctrine, which after all, is a legal fiction, can be stretched in a case like this, to defeat the full ownership of a Hindu female under section 14 (1) of the hindu Succession Act. A legal fiction is to be limited to the purpose for which it is created, and should not be extended beyond that legitimate field. ( 48. ) IN our judgment, it does not follow as a necessary corrollary, that section 28 (2), read with section 28 (7) of the Provincial Insolvency Act, would obstruct the heritage of a Hindu female under section 14 (1) of the Hindu succession Act. ( 49. ( 48. ) IN our judgment, it does not follow as a necessary corrollary, that section 28 (2), read with section 28 (7) of the Provincial Insolvency Act, would obstruct the heritage of a Hindu female under section 14 (1) of the Hindu succession Act. ( 49. ) THERE can be no doubt that on the date the Act came into force, smt. Jugnubai was factually, as also legally, "possessed" of the mortgaged property as a limited owner. After the commencement of the Act, i. e. , with effect " from 17th June 1956, she became a full owner thereof. No doubt, it is alleged that an Interim Receiver was appointed in January 1956, but there is no proof of that fact. Even so, on the appointment of the Interim Receiver, the general property of Smt. Jugnubai vested in the Interim Receiver. (See Pulgaon Cotton mills, Limited v. Gulabai, AIR 1953 Nag. 345=i R 1953 Nag. 201. ( 50. ) THE word "possessed", as used in section 14 (1) of the Act, is used in a broad sense and in its widest connotation. In Gummalappura Traggina matada Kotturuswami v. Setra Veerayya and others, AIR 1959 SC 577 . their Lordships stated - "the word "possessed" is used in section 14 in a broad sense and in the content possession means the state of owning or having in ones hands OR POWER. It includes possession by receipt of rents and profits. " . . . . . . It is sufficient to say that "possessed" in section 14 is used in a broad sense and in the context means the state of owning or having in ones hand or power. In the case of Gostha Behari v. Haridas Samanta, AIR 1957 Cal. 557, at p. 559. P. N. Mookherjee J. expressed his opinion as to the meaning of the words "any property possessed by a female Hindu" in the following words: - "the opening words "property possessed by a female Hindu" obviously mean that to come within the purview of the section the property must be in possession of the female concerned at the date of the commencement of the Act. They clearly contemplate the females possession when the Act came into force. That possession might have been either actual or constructive or in any form recognized by law. . . . . . They clearly contemplate the females possession when the Act came into force. That possession might have been either actual or constructive or in any form recognized by law. . . . . . " The law is stated in Mullas Hindu Law, 14th Edition, at page 901, thus "it need not be actual physical possession or personal occupation of the property by the female but may be possession in law. It may either be actual or constructive or in any form recognized by law. " So also, in Mangal Singh and others v. Smt. Rattno (dead), AIR 1967 SC 1786 . their Lordships observed- "it appears to us that the expression used in section 14 (1) of the Act was intended to cover cases of possession in law also, where lands may have descended to a female Hindu and she has not actually entered into them. It would, of course, cover the other cases of actual or constructive possession. On the language of section 14 (1), therefore, we hold that this provision will become applicable to any property which is owned by a female hindu even though she is not in actual, physical or constructive possession of that property. " the expression "possessed by" was used in the sense of connoting state of ownership and, while the Hindu female possesses the rights of ownership she would become full owner if the other conditions mentioned in the section are fulfilled. The section will, however, not apply at all to cases where the Hindu female may have parted with her rights so as to place herself in a position where she could, in no manner, exercise her rights of ownership in that property any longer. " That precisely is the case here. ( 51. ) ON a final and unconditional discharge, the insolvent is entitled to the surplus, if any, after his assets are realised and distributed among his creditors. That being so, Smt. Jugnubai must be regarded as "possessed of" the property and her limited ownership ripened into absolute ownership, under section 14 (1) of the Hindu Succession Act, after the commencement of the Act. The enlarged estate, of course, vested in the Official Receiver, with the passing of the order of adjudication, by virtue of section 28 (2) of the Provincial Insolvency Act. ( 52. The enlarged estate, of course, vested in the Official Receiver, with the passing of the order of adjudication, by virtue of section 28 (2) of the Provincial Insolvency Act. ( 52. ) THE nearest approach to the problem is that of an adoption by a hindu widow. After the Hindu Succession Act came into force, the question, in such a case, is whether the full ownership conferred on a Hindu female under section 14 (1) of the Hindu Succession Act is defeasible by the adoption made by her to her deceased husband. In that event, the adopted son acquires all the rights of a aurasa son and those rights related back to the date of the death of the adopted father. In Punithavalli Ammal v. Ramalingam, AIR 1970 SC 1730 . their Lordships held that the legal fiction of relation back in the case of adoption under the hindu Law stands abrogated to the extent it conflicts with the rights conferred on a Hindu female under section 14 (1) of the Act. In dealing with the question, their Lordships concluded, stating - "in our opinion the rights conferred on a Hindu female under section 14 (1) of the act are not restricted or limited by any rule of Hindu law. The section plainly says that the property possessed by a Hindu female on the date the Act came into force whether acquired before or after the commencement of the Act shall be held by her as full owner thereof That provision mikes a clear departure from the Hindu law texts or rulis. Those texts or rules cannot be used for circumventing the plain intendment of the provision. In our judgment the learned Judges of the Madras High Court were not right fn limiting the scope of section 14 (1) by taking the aid of the fiction mentioned earlier. That in our opinion is wholly impermissible. On the point under consideration, the decision of the Bombay High Court in Yamunabai v. Ram Maharaj Shreedhar Maharaj, AIR 1960 Bom. 463 . lays down the law correctly. " By parity of reasoning, the same principle ought to apply to the present case. ( 53. ) IN that view, the question of legal necessity does not arise. On the point under consideration, the decision of the Bombay High Court in Yamunabai v. Ram Maharaj Shreedhar Maharaj, AIR 1960 Bom. 463 . lays down the law correctly. " By parity of reasoning, the same principle ought to apply to the present case. ( 53. ) IN that view, the question of legal necessity does not arise. This was, indeed, contended at the bar But since the matter has been argued at length, we may briefly state that the consent of the presumptive reversioner, shivanandsingh, is presumptive proof of legal necessity, and on the death of his mother, Smt. Jugnubai, he is precluded from avoiding the transaction. Not only that, Shivanandsingh had taken a part to the transaction, and having taken benefit thereunder, is precluded from challenging the same. See, Rangaswami v. Nachiappa, AIR 1918 PC 196. Ramgowda v. Bhausaheb, AIR 1927 PC 227. Ramakottayya v. Viraraghavayya, ILR 52 Mad. 556 (F B ). Kalishanker Das v. Dhirendra Nath, AIR 1954 SC 505 . Mullas Hindu Law, 14th Edition, Pp. 227 and 230 (paras 183 and 184 respectively), and Raghavachariars Hindu Law (6th edition), page 613, paragraph 640. ( 54. ) IN T V. R. Subbu Chettvs Family Charities v. M. Raghava Mudaliar and Ors. , AIR 1961 SC 797 . their Lordships of the Supreme Court, stated- "if a presumptive reversioner is a party to an arrangement which may properly be called a family arrangement and takes benefit under it, he would be precluded from disputing the validity of the said arrangement when reversion falls open and he becomes the actual reversioner. The doctrine of ratification may also be invoked against a presumptive reversioner who, though not a party to the transaction, subsequently ratifies it with full knowledge of his rights by assenting to it and taking benefit under it. The mere receipt of benefit under an arrangement by which a Hindu widow alienates the property of her deceased husband would not, however, preclude a presumptive reversioner from disputing the validity of the said alienation when he becomes the actual reversioner. It must be always a question of fact as to whether the conduit of the said reversioner on which the plea of ratification is based does in law amount to ratification properly so called. ". ( 55. ) IN S. Shanmugam Pillai and Ors. v. K. Shanmugam Pillai and Ors. It must be always a question of fact as to whether the conduit of the said reversioner on which the plea of ratification is based does in law amount to ratification properly so called. ". ( 55. ) IN S. Shanmugam Pillai and Ors. v. K. Shanmugam Pillai and Ors. , Civil Appeal No. 693 of 1967, decided on 4th May, 1972. their Lordships have again stated- "this contention can best be answered by quoting a passage from the decision of the judicial Committee in Ramgouda Annaqoudas case (supra ). Therein, repelling a similar contention, the Judicial Committee observed: it was argued that Annagoudas contingent interest as a remote reversioner could not be validly sold by him, as it was a mere spec successionis, and an agreement to sell such interest would also be void in law. It is. not necessary to consider that question because he did not in fact either sell or agree to sell his reversionary interest. It is settled law that an alienation by a widow in excess of her powers is not altogether void but only voidable by the reversioners, who may either singly or as a body be precluded from exercising their right to avoid it either by express ratification or by acts which treat it as valid or binding. " It is true that a widow cannot enlarge her own estate by entering into a contract. But as observed by this Court in Krishna Beharilal v. Gulab Chand, AIR 1966 SC 1836 .- "it is well settled that a Hindu widow cannot enlarge her estate by entering into a compromise with third parties to the prejudice of the ultimate reversioner. But the same will not be true if the compromise is entered into with persons who ultimately become the reversioners " As observed by this Court in T. V. R. Subbu Chettys Family Charitiess Case (supra), that if a person having full knowledge of his right as a possible reversioner enters into a transaction which settles his claim as well as the claim of the opponents at the relevant time, he cannot be permitted to go back on that agreement when reversion actually falls open- "the application of the tests laid down in the above decisions leads to the firm conclusion that the plaintiffs are precluded from questioning the alienations of the various items of property. . . . . . . . . " It must, accordingly, be held that the mortgage deed, Ex. 5d-1, is binding on the mortgagors. ( 56. ) THE contention that the rights of the Bank, under its subsequent mortgage is barred by limitation is wholly misconceived and was, indeed, not pressed, in reply. There is no substance in the contention as well. ( 57. ) THE provisions of Order 34, rule 4 (4) of the Code of Civil Procedure are as follows:- " (4) Where, in a suit for sale or a suit for foreclosure in which sale is ordered, subsequent mortgagees or persons deriving title from, or subrogated to the rights of, any such mortgagees are joined as parties, the preliminary decree referred to in sub-rule (1) shall provide for the adjudication of the respective rights and liabilities of the parties to the suit in the manner and form set forth in Form No. 9, Form No. 10, or Form No. 11, as the case may be, of Appendix D with such variations as the circumstances of the case may require. " ( 58. ) THE requirements of sub-rule (4) are mandatory, and make it the duty of the Court to adjudicate on the rights of and liabilities of the puisne mortgagees impleaded in a prior mortgagors suit. It is wrong to characterise the written statement of a subsequent mortgagee as a "plaint", or the right of the adjudication of his rights as a "claim". It cannot also, in our opinion, be said that a subsequent mortgage- debt, set up by a puisne mortgagee, is a "counter-claim". Essentially, the rights of puisne mortgagee-defendant in a prior mortgagees suit are, first, the right to redeem the prior mortgage, and, secondly, the right to participate in the surplus sale proceeds. ( 59. ) IN S. P. Majoo v Ganga Dhar, AI R 1969 S C600. their Lordships have expressly recorded their approval to the following observations of Chakravartti C. J. in shiv Kumar v Improvement of Calcutta, 51 C W N 798. : "when he is impleaded as a defendant in a prior mortgagees suit, he is brought before the Court whether he wishes to come or not and his rights are adjudicated on by the Court under the compulsion of Order 34, rule 4 (4 ). : "when he is impleaded as a defendant in a prior mortgagees suit, he is brought before the Court whether he wishes to come or not and his rights are adjudicated on by the Court under the compulsion of Order 34, rule 4 (4 ). The legal position, therefore, is that the second mortgagee is merely made a party to the suit in order that he might have an opportunity to redeeming if he wished, and in order that he might receive his mortgage-money, or part of it, out of the surplus sale proceeds after satisfaction of the first mortgage, but the decree was not really a decree in his favour, and he could not insist upon a sale nor get a personal decree in his favour if the first mortgagee was satisfied by the mortgagor before the sale. " In that state of law, no question of limitation arises. ( 60. ) EVEN otherwise, by virtue of section 45 (o) of the Banking Regulation act, 1949, the entire period from the date of the presentation of the petition for the winding up of a Banking Company has to be excluded. That petition was made on 30th May 1960. In view of this provision, the rights of the Bank under its mortgage-deed, Ex. 5d-1, dated 24-4-1962, are within time. ( 61. ) THE next and the last contention that due to non-joinder of Shridhar gopal, the rights of the subsequent mortgagee cannot be adjudicated upon, under Order 34, rule 4 (4) of the Code of Civil Procedure, cannot be accepted. This was a suit by Dhanpal Patni, a prior mortgagee, in which the Bank was impleaded as the subsequent mortgagee and its rights had to be worked out. Order 34, rule 1 of the Code provides that all persons having an interest in the mortgage security or right of redemption, should be impleaded as parties to a suit on mortgage. Shridhar Gopal does not answer that description. He admittedly had no right in the mortgaged property or in the right of redemption. The last contention must, therefore, also fail. ( 62. ) WE, accordingly, set aside the preliminary decree for foreclosure, passed by the Additional District Judge, Chhindwara, and direct under order 34, rule 4 (4) of the Code of Civil Procedure, that- (i) a preliminary decree for sale be drawn, instead, in Form 9. The last contention must, therefore, also fail. ( 62. ) WE, accordingly, set aside the preliminary decree for foreclosure, passed by the Additional District Judge, Chhindwara, and direct under order 34, rule 4 (4) of the Code of Civil Procedure, that- (i) a preliminary decree for sale be drawn, instead, in Form 9. Appendix D, in favour of the plaintiff-mortgagee, who shall, in addition to the interest already allowed on the mortgage, be also entitled to future interest on the decretal debt at the rate of 6% per annum, from the date of the suit till realisation ; (ii) in the said preliminary decree for sale, it shall be declared that the defendant No. 5, the Laxmi Bank Ltd. . (in Liquidation), through "official liquidator" shall be entitled to recover an amount of Rs. 59,706/7/6, towards the principal, on the foot of the mortgage deed dated 24th April, 1952, with compound interest thereon at the rate of 9% per annum, with quarterly rests, from 24th April 1952 to 26th February 1959; to simple interest at 6% per annum thereon from 27th February, 1959 till the date fixed for payment of the mortgage-amount, and to future interest @6% per annum, on the aggregate sum due, i. e. principal, interest and costs, from the date fixed for payment till the date of realisation. ( 63. ) SUBJECT to these modifications, the appeal fails and is dismissed. The cross-objection must, however, succeed and is allowed. Since the appeal has substantially failed, the appellants must bear their own costs, and pay those of the respondents. Counsels fee, as per Schedule or Certificate, whichever is less. Preliminary Decree for Sale instead of Foreclosure passed. Cross-objection allowed.