Zachariah v. Union of India — 1982 DIGILAW 170 (KER)

JUDGMENT 1. The Petitioner is an Upper Division Clerk in the department of Customs. In1975 a loan of Rs. 25,000 was granted to him for the purpose of constructing a building. The amount was paid to him in four installments and subject to the terms and conditions of Ext. P-5 mortgage. Ext. P-5 provides that the sum of Rs. 25,000granted to him as a loan was repayable in accordance with the "Rules to regulate the grant of advances to Central Government Servants for building, etc., of houses" (the "Rules") issued by the Government of India, Ministry of Works, Housing and Supply with their O.M. No. H. II. 27 (5)/54, dated the 12th April,1956. R.8 provides that the amount borrowed has to be repaid by monthly installments within a period not exceeding 20 years. It further provides that the borrower can repay the amount in a shorter period if he so desires. It is also provided that the property mortgaged to the Government shall be reconvened to the borrower if the advance together with the interest thereon has been repaid to the Government in full. 2. The petitioner has thus 20 years to repay the amount by monthly installments. The Government have no obligation to reconvey to him the property mortgaged by him in favour of the Government until the entire amount due from him hasbeen repaid in full. 3. The petitioner did not wish to continue the mortgage. He wanted to get the property released from the burden of mortgage by repayment of the total sum due from him to the Government. Accordingly he sent Ext. P-1 letter, dated 14thJanuary, 1982 to the Assistant Collector of Customs, the 3rd respondent reading as follows:- "My father, Rev. Fr. G. Sastry, Sankarathil, P.O. Kizhakkumpuram, Kumbazha,Quilon District, has agreed to give me an amount of Rs. 26,000 (Rupees twenty six thousand only) to clear my outstanding debts. I intend to utilize this amount to clear my H.B.A. arrears." The sum of Rs. 26,000 represented the total sum borrowed together with the interest accrued as on the date of the letter. By Ext. P-2, dated 27th January1982, the 3rd respondent replied as follows: - "With reference to his letter, dated 24th December 1981, Shri. G. Zachariah,U.D.C., Custom House, Cochin - 3, is informed that on verification, it has been found that the construction of the house has been completed as per the revised plan. By Ext. P-2, dated 27th January1982, the 3rd respondent replied as follows: - "With reference to his letter, dated 24th December 1981, Shri. G. Zachariah,U.D.C., Custom House, Cochin - 3, is informed that on verification, it has been found that the construction of the house has been completed as per the revised plan. He is, therefore directed to submit the completion report before he can be permitted to repay the balance loan amount and interest in lump sum." I am indeed surprised that the 3rd respondent was not willing to accept the money offered by the petitioner and release his property from mortgage. I should have thought that the Government would be interested in receiving the money back. The completion certificate is irrelevant if money is repaid in full. The object of securing the completion certificate from the petitioner is to make sure that the amount borrowed has been utilised in terms of the contract and that the security created in favour of the Government by way of mortgage remains intact. This is the object of clause.(c) of Ext. P-5 mortgage. It reads: "That the Mortgagor shall complete the construction of the house within eighteen months of the receipt of the first instalment unless an extension of time is allowed in writing by the Mortgagee. In case of default the Mortgagor shall be liable to repay forthwith the entire amount advanced to him together with interest calculated under the said Rules, in one lump sum. The Mortgagor shall report to the Mortgagee the date of completion of the house and furnish a certificate to the Mortgagee that the full amount of the advance has been utilised for the purpose for which it was sanctioned." 4. The maximum liability of the defaulter is the payment of the whole amount borrowed in one lump sum. It is that sum which the petitioner offered to pay by Ext. P-1 with a view to redeeming the mortgage. The petitioner, therefore, sent Ext. P-3 dated 6th February, 1982 urging the 3rd respondent to accept the total amount due from him and execute the reconveyance documents. He also stated that the completion certificate could not be obtained as the house was not completed. Ext. P-4 dated 20th February, 1982 is the reply of the 3rd respondent. It says: "...... The petitioner, therefore, sent Ext. P-3 dated 6th February, 1982 urging the 3rd respondent to accept the total amount due from him and execute the reconveyance documents. He also stated that the completion certificate could not be obtained as the house was not completed. Ext. P-4 dated 20th February, 1982 is the reply of the 3rd respondent. It says: "...... In view of these reasons, it has been concluded that the construction of the house has been completed as per the revised plan. Shri. Zacharia is further informed that as the Collector has ordered that as the construction is complete, he should submit the completion report ......". I do not see why there should be a controversy about the fact of construction of the house. Whether or not the construction of the house has been completed is not a matter of interest to the department any more as the petitioner offered to pay the whole amount. The 3rd respondent has no case that the money advanced to the petitioner has been utilised for purposes other than the construction of a house. In fact in Ext. P-4 she admits that the construction of the house has been completed. While the petitioner would insist that the construction was yet to be completed, the 3rd respondent would insist that it has been completed. I think it is a futile controversy reflecting a totally irrational approach on the part of the third respondent. 5. The rules in question do not and cannot impose a clog on the equity of redemption. The petitioner is entitled in terms of Ext. P-5 to repay the amount advanced to him by monthly instalments during a period of 20 years if he so desires. In that event he has an obligation to act in accordance with the contract and the rules. He must produce the completion certificate to show that the house has been constructed and the security created in favour of the Government isintact. If he fails to pay the instalments in accordance with the contract, he wouldbe liable to repay the whole amount outstanding in a lump sum. All this is for the purpose of keeping the mortgage intact for the entire period for which it was intended to last. But that does not mean that the mortgagor cannot free himself from the mortgage by repaying the entire amount in a lump sum. All this is for the purpose of keeping the mortgage intact for the entire period for which it was intended to last. But that does not mean that the mortgagor cannot free himself from the mortgage by repaying the entire amount in a lump sum. The mortgagee has no right to delay reconveyance by declining to accept the repayment offered. 6. There is no contention that the petitioner did not offer the entire amount that was outstanding inclusive of interest. There is no case that the petitioner misused the amount advanced. There is no case that the house was not constructed. There is no case that the petitioner has in any manner acted contrary to Ext. P-5except that there was some delay in the construction of the house and that he made deviation in the plans. All this does not stand in the way of his repaying the amount and getting the property released from the mortgage. 7. As I stated earlier, the full amount was offered on 14th January, 1982 inclusive of the interest. It should have been accepted within a reasonable time. On the other hand on 27th January 1982, by Ext. P-2 the 3rd respondent asked for a completion report as a condition precedent to accepting the total amount from him in a lump sum. That was an unreasonable demand making it impossible for the petitioner to repay the money and release his property from the mortgage. In the circumstances, I am of the view that the interest stopped accruing in respect of the amount as of that date, that is, 27th January, 1982. I am told that on the strength of an interim order of this Court in C.M.P.No. 4817 of 1982, the petitioner remitted Rs. 25,494.70. This amount in addition to the principal sum includes interest payable up to 14th January, 1982. The petitioner is liable to pay to the respondents the interest accrued between 15th January, 1982 and 27th January,1982. The petitioner's counsel submits that that amount will be paid to the department immediately upon determination of the same by the department. 8. 25,494.70. This amount in addition to the principal sum includes interest payable up to 14th January, 1982. The petitioner is liable to pay to the respondents the interest accrued between 15th January, 1982 and 27th January,1982. The petitioner's counsel submits that that amount will be paid to the department immediately upon determination of the same by the department. 8. In the circumstances, I am of the view that upon determination of the correct interest that is still outstanding from the petitioner and on payment of the same by him, the respondents should execute in favour of the petitioner whatever deeds are necessary to release the property in question from the mortgage. I direct respondents 2 and 3 to determine the interest outstanding for the period from15th January, 1982 to 27th January, 1982 within seven days from today and execute the necessary documents in favour of the petitioner within two weeks after the receipt of such amount from him. 9. The Original Petition is allowed with costs of the petitioner. Counsel's fee Rs.500.