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Chunilal Motiram Vs. Shivram Naguji Ghule and ors. - Court Judgment

LegalCrystal Citation
SubjectLimitation
CourtMumbai High Court
Decided On
Case NumberLetters Patent Appeal No. 10 of 1947
Judge
Reported inAIR1950Bom188; (1950)52BOMLR250
ActsLimitation Act, 1908 - Schedule - Articles 181 and 182
AppellantChunilal Motiram
RespondentShivram Naguji Ghule and ors.
Appellant AdvocateS.G. Patwardhan, Adv.
Respondent AdvocateV.M. Tarkunde and ;R.N. Bhalerao, Advs.
Excerpt:
.....is three years from first default--indian limitation act (ix of 1908), article 181--waiver by decree-holder.;where an installment decree provides that on failure of payment of certain installments the whole amount due may be recovered, the decree-holder is not entitled to exercise his option to recover the whole amount then recoverable, if the first default has occurred more than three years before the filing of the execution application.;the right which is given to a decree-holder under a decree to enforce the payment of the full decretal amount in default of payment of any installment is a right given to a decree-holder for his benefit. he may or he may not enforce it. although a default may take place, he may treat the decree as still a decree for installments and he may pursue..........that on the failure of payment of certain instalments the whole amount due may be recovered, the decree-holder is entitled to exercise his option to recover the whole amount then recoverable, notwithstanding that the first default may have occurred more than three years before the filing of the execution application.2. the facts giving rise to the raising of this question may be briefly stated. an award decree was passed on 14th august 1931. the decree was for rs. 6,800 and it provided for payment by annual instalments of rs. 1,000 with interest; the first of such instalments was made payable in march or april 1932 and each subsequent instalments on the succeeding march or april of every year. it was also provided that in default of payment of any two instalments the plaintiff's might.....
Judgment:

Chagla, C.J.

1. The question referred to this Full Bench is whether in case of an instalment decree providing that on the failure of payment of certain instalments the whole amount due may be recovered, the decree-holder is entitled to exercise his option to recover the whole amount then recoverable, notwithstanding that the first default may have occurred more than three years before the filing of the execution application.

2. The facts giving rise to the raising of this question may be briefly stated. An award decree was passed on 14th August 1931. The decree was for Rs. 6,800 and it provided for payment by annual instalments of Rs. 1,000 with interest; the first of such instalments was made payable in March or April 1932 and each subsequent instalments on the succeeding March or April of every year. It was also provided that in default of payment of any two instalments the plaintiff's might recover the whole balance that would remain over after deduction of payments received in one lump sum by sale of the mortgaged property. A sum of Rs. 1,195 was paid by the judgment-debtor on 24th November 1931. A further sum of Rs. 1260 was paid on 14th November 1932, On 17th April 1933, a sum of Rs. 105 was paid by the judgment-debtor. On 5th October 1936, the decree-holder filed a darkhast claiming that in view of a default in payment of instalments the whole decretal amount bad become payable and claiming that amount. That darkhast was dismissed for non-prosecution on 2lst December 1936. A further darkhast was filed on 15th November 1938, and the executing Court held that the darkhast was barred by limitation.

3. Now, in order to determine whether the darkhast of 15th November 1938, was or was not in time, what we have to consider is whether the darkhast preferred on 5th October 1936, was within time. It is not disputed that the default in payment of two instalments did take place in March-April 1933 because the two sums which were paid of Rs. 1,195 and Rs. 1,260 were not the full amounts of the instalment and interest pay-able under the decree. It cannot be seriously disputed that the article under the Indian Limitation Act which applies is Article 181 and the period of limitation laid down under that article is three years and limitation begins to run from the time when the right to apply accrues. If the right to apply accrued to the decree holder in March-April 1933, then clearly the darkhast which was filed on 5th October 1936, was not within time, and really the very narrow question that we have to consider is whether on 5th October 1936, when the decree-holder applied for the execution of the decree for the whole amount, he had a subsisting right which he could enforce by the darkhast. It is well settled that the right which is given to a decree holder under a decree to enforce the payment of the full decretal amount in default of payment of any instalment is a right given to the decree-bolder for his benefit. He may or be may not enforce it. Although a default may take place, he may treat the decree as still a decree for instalments and he may pursue in execution his right to obtain the instalments as and when they fall due.

4. Mr. Patwardhan's contention before us has been that it was on 5th October 1936, that the decree-holder exercised his option to enforce the decree by claiming the whole amount due under the decree and, therefore limitation did not begin to run till that date. Mr. Patwardhan says that although the default took place in March-April 1933, it was open to the decree-holder not to exercise his right given to him under the decree, and till he exercised the right no question of limitation could arise. It is perfectly true that the decree-holder exercised his right on 5th October 1936. But the question that we have to consider is whether when he exercised his right that right was subsisting or whether the remedy for that right had been barred by the statute of limitation. If a right accrued to the decree holder in March-April, 1933, he may not be bound to exercise that right, but as far as the statute of limitation is concerned, limitation would begin to run and he would not be able to exercise that right after limitation had run out under the Limitation Act. The mere fact that the decree-holder has an option to exercise a right does not mean that the right does not accrue to him so long as he does not exercise the option. The right is there, it has accrued to him, but he may choose not to exercise it at the moment when it accrues to him. He may exercise it at a later date or he may not exercise it at all. It also cannot be disputed as a principle underlying the Limitation Act that limitation begins to run when the right accrues for the first time and once limitation begins to run, limitation cannot be stopped. It would be fallacious to argue that in case of each default there is a separate right which accrues to the decree-holder. There may be subsequent defaults, but the right having once accrued to the decree-holder, limitation would run notwithstanding the subsequent default and subsequent defaults would not give him further rights, the right having already accrued to him when the first default took place. The only exception to this proposition is a question of waiver or condonation on the part of the decree-holder. It would be open to the decree-holder not to treat the non-payment of the instalment on the due date as a default at all. He may waive or condone the default, in which case limitation would not run from the default which was condoned or waived, but from the default which the decree-holder treated as a default under the decree. In this case no question of waiver or condonation arises. The decree-holder treated the first default made by non-payment of two instalments as a default under the decree and it was on the basis of that default that he filed his darkhast of 1936 claiming the whole amount due under the decree. There is no direct authority of this Court on the question that we have to consider and answer, and therefore, judging the question as a matter of first impression, it seems to us that when the judgment-debtor committed a default in March-April 1933 and when the decree-holder became entitled to claim the full amount due under the decree, his right to apply within the meaning of Article 181 accrued and limitation began to run from that date, and as three years had expired before he preferred the darkhast of 1936, that darkhast was clearly out of time.

5. There are certain decisions of this Court which though, as I have pointed out earlier, not directly in point, throw some light on the question that we are considering. We would first look at the authority of Hanmant Bhimrao v. Gururao Swamirao : AIR1943Bom36 . In that case Sir John Beaument, who delivered the judgment, on there being a disagreement between Divatia and Macklin, JJ. laid down that on a default taking place the decree holder becomes entitled to two rights which are inconsistent, and those two rights are that he could continue under the decree to recover the amount by instalments, or he could recover the whole amount at once, but he could not do both. The learned Chief Justice points out that if the decree-holder elects to take his stand on one of these two rights, he then cannot fall back upon the other right. If he chooses to execute the decree for obtaining the full amount due under the decree, then he could not execute the decree for the instalments due under the decree. But the only importance of this case is that there is the observation of the learned Chief Justice which goes to show that in his opinion two inconsistent rights accrued to the decree-holder as soon as the default was made. It is that moment of time which gives rise to the creation of the two rights in favour of the decree-holder. Then there is one other judgment of this Court Veherbhai v. Javer Soma 37 Bom. L. B. 942: A. I. R 1936 Bom. 17, to which also Sir John Beaumont C. J. was a party. IN this judgment what is emphasised is that notwithstanding the default made by the judgment-debtor it was open to the decree-holder to treat the decree as an instalment decree. This emphasises the fact that it is for the benefit of the decree-holder that the provision is made in the decree that he could execute the decree for the full amount if there is a default in the payment of any instalment, and that aspect of the case was again emphasised by another Division Bench of this Court in Bomatu v. Goverdhandas 38 Bam. L. R. 492: A. I. R 1936 Bom. 269. But it is significant to note that in that case, Broomfield J. who sat with Wadia J. and delivered the judgment of the Court, points out at p. 498 that on any view the claim to recover the whole amount of the debt on default of payment of one or more instalments must be barred within three years of the default either under Article 182 or Article 181, Limitation Act.

6. There are two other decisions of this Court to which reference might be made. The first is the ease of Dulsook Rattanchand v. Chugon Narrun, 2 Bom. 356. There, Sir Michael Westropp C. J. and Melvill J. laid down two propositions. The first was that the decree payable by instalments, with a proviso that is default of payment of any one instalment the whole amount of the decree shall become payable at once, is barred if application for execution is not made within three years from the date on which any one instalment fell due and was not paid. The view there taken was that on a default taking place, the decree ceased to be an instalment decree and the only right that the decree-holder had was to execute the whole amount due pursuant to the provision with regard to the default. That view has been overruled by the Privy Council and by the later Bombay decisions to which I have already referred. The other proposition laid down by that bench was that the payment of instalments subsequent to default in payment of the first instalment at the date specified does not give the judgment-creditor a fresh starting point. This question related to a question of condonation or waiver and this question came up for consideration before a Full Bench in Kashiram v. Pandu 27 Bom. 1 : 14 Bom. L. R 688. The Full Bench was only considering the effect of waiver or condonation on the failure to pay instalments on the dates fixed under the decree, and Sir Lawrence Jenkins C. J., at p. 10 points out that :

'The true view appears to me to be, that, though there may be a failure to pay punctually under an instalment decree still the subsequent conduct of the parties may preclude either of them from afterwards asserting that payment was not made regularly and in satisfaction of the obligation under the decree.'

So this is the exception, to which we drew attention earlier, where limitation would not run from the date of the default under the decree. Where the parties agree not to treat failure to pay an instalment on the due date as a default, then in the eye of the law there is no default at all and limitation does not begin to run and the parties would be estopped from contending that there was a default when they did not in fact treat it as such A reference might also be made to the Privy Council decision in Lasa Din v. Gulab Kunwar . On a casual reading of this case it may appear as if their Lordships were laying down a proposition of law which would support the contention put forward by Mr. Patwardhan. But when one carefully looks at what their Lordships actually decided, it is clear that the principle of law enunciated is not in any way in conflict with what we have been suggesting is the true view of the matter. The case before their Lordships was a mortgage suit and the mortgage bond provided that the stipulated period for payment of the mortgage money was six years. It also provided that in default of payment of interest annually the mortgagee became entitled to realise the entire mortgage money in a lump sum. No interest was ever paid under the mortgage, and the mortgagee brought a suit to enforce his security within twelve years from the expiry of the stipulated period, but more than twelve years from the first default in the payment of interest, and the contention put forward was that the suit was barred by limitation under Article 132 because the mortgage money became due when the first default took place in payment of interest, and as the suit had not been brought within twelve years of that date, the suit was out of time. Their Lordships point out that moneys only became due under Article 132 when not only the mortgagee had the right to claim the money but also the mortgagor had the right to redeem the mortgage, and their Lordships also point out that the mortgagor by his own default in failure to pay instalments could not accelerate the period of redemption. Therefore, this case was decided on the construction of Article 132 as to when the mortgage money became due within the meaning of that article. At p. 1608 their Lordships consider certain Indian cases and they point out that if the question they had to consider was when did the mortgagee's cause of action arise, then the question they would have to consider would be, when did the mortgagee first become entitled to sue for the relief claimed by his suit. But as Article 132 did not refer to a mortgagee's cause of action but when the money became due, the matter had to be approached from a different point of view.

7. The other Privy Council decision on which Mr. Patwardhan has very strongly relied is in Maung Sin v. Ma Tok . The decree that their Lordships had there to consider was a decree for the payment of Rs. 2,000 annually and in default of payment of the same on the due date the plaintiff became entitled to possession of certain properties. The decree was passed in 1916. An application for execution was made in 1924 for two instalments of Rs. 2,000 each and also for possession of the property, and the contention put forward was that as no payment had been made from 1916, the default took place in 1936 and the application for execution was barred. Their Lordships at p. 276 state, and those are the observations on which Mr. Patwardhan very Strongly relies :

'Their Lordships cannot agree with this contention. They are of opinion that upon the construction of the decree itself, on the occasion of a default in each payment the right of the respondent to have the said property made over to her arose, and therefore the claim to the lands was not time barred.'

It is argued by Mr. Patwardhan that the Privy Council here has clearly laid down that the tight of the decree-bolder arises each time there is a default and each default gives a fresh cause of action to the decree-holder. According to Mr. Patwardhan, the decree-holder under this decree has a recurring right and that recurring right arises every time the judgment debtor commits a default in payment of instalments. Mr. Tarkunde has very ably pointed out to us the distinguishing features in the decree which their Lordships had to consider in the case before them and the decree which we have to consider in the case before us. The former decree was a decree obtained by a wife against her husband. It was a decree for an annuity and the annuity was fixed at Rs. 2,000. It was to be paid annualy and as security for that annuity certain lands were earmarked. This property was to continue with the defendant the husband, and the wife was given the right, on failure of payment by the husband of any annuity to recover the property which was her security for the payment of the annuity The difference in this decree and the decree before us will become apparent. In the first place, we have not in the Privy Council case a decree for a fixed amount payable by instalments. It is payment of Rs. 2,000 every year. In the second place, in default of payment of any annuity, no two inconsistent rights arose in favour of the plaintiff. She had both the rights; the right to obtain the specific annuity and also the right to obtain possession of the property. In the case before us, on failure to pay an instalment fixed under the decree two rights accrued to the plaintiff which were inconsistent, and one of which only be could exercise, viz., to claim the instalment which had fallen due or to claim the whole amount due under the decree. Therefore, it is clear that in the case before the Privy Council the wife had a recurring right which recurred every year and that right was the payment of the annuity of Rs. 2,000 and also to look upon the property with the husband as her security for that payment, and in any year if the annuity was not paid, she could recover that annuity and could also recover the property which was her security. It was on these special facts that their Lordships came to the conclusion that each default by the husband gave to the wife a fresh cause of action, and their Lordships are at pains to point out that they have come to this conclusion upon the construction of the decree itself.

8. Mr. Patwardhan has then relied on a judgment of a single Judge of the Madras High Court in Gopal v. Alagirisami I. L. R. (1942) Mad. 770 : A. I. R 1942 Mad. 581. There King J., was dealing with a preliminary mortgage decree which was made payable by instalments. There was failure to pay several instalments and then the decree-holder applied for a final decree, and the question was whether the application for a final decree was barred by limitation, and the learned Judge held that every fresh default gave rise to a new cause of action and that a final decree could be granted in the suit. It was not disputed that if limitation ran from the first default, then the application was out of time. With vary great respect to the learned Judge, he seems to have taken, the view that every default gave rise to a separate right in favour of the decree-holder. He also seems to have taken the view that as in Article 181 the word 'first' did not occur, therefore, it was not necessary to read that limitation began to run when the first default took place, and therefore the view of the learned Judge was that the enforcement of the decree-holder's right may follow upon any default as the decree-holder was at no time bound to enforce the penalty. In our opinion, it was not at all necessary for the Legislature to use the expression 'first' in Article 181. Article 181 itself provides the time when limitation begins to run and that time is when the right to apply accrues. It, is clear that limitation would begin to run when the right first accrues, and limitation once having begun to run it could not run again when a second or subsequent default took place, nor would another right or a different right accrue to the decree-holder by reason of a fresh or subsequent default. This view of the learned Judge, with respect is contrary to the observation of the Privy Council to which we have already referred in Lasa Din v. Gulab Kunwar . Therefore, with very great respect, we are unable to agree with the view taken by King J., that in a decree payable by instalments, limitation does not run from the date of the first default, and that limitation only runs when the decree-holder makes up hid mind to enforce his rights under the decree. As against the Madras view, Mr. Tarkunde has drawn our attention to two decisions of the Allahabad High Court which have taken the view which we think is the correct view as to the interpretation of Article 181, and those decisions are to be found in Joti Prasad v. Sri Chand : AIR1928All629 and Ram Prasad Ram v. Jadunandan Upadhia : AIR1934All534 .

9. We, therefore, answer the question submitted to us in the negative.


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