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Gurubhaktatilaka N. Sreekantiah and ors. Vs. K. Suryanarayanappa and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty;Limitation
CourtKarnataka High Court
Decided On
Case NumberSecond Appeal No. 33 of 1954
Judge
Reported inAIR1960Kant136; AIR1960Mys136
ActsLimitation Act - Sections 19, 20, 20(1) and 21; Code of Civil Procedure (CPC), 1908 - Order XXXIV
AppellantGurubhaktatilaka N. Sreekantiah and ors.
RespondentK. Suryanarayanappa and ors.
Excerpt:
.....one of two properties mortgaged, they continued to hold interest in second item and were therefore persons liable to pay mortgage debt within meaning of section 20. - code of civil procedure, 1908. section 105 (1): [s. abdul nazeer,j] scope and ambit of meaning of the words affecting the decision of the case employed in section 105 held, the words affecting the decision of the case employed in section 105, means affecting the decision of the case on merits. it is clear that party need not file an appeal against all interlocutory orders and he can challenge the same in an appeal filed from the original decree if that interlocutory order has affected the decision of the case. only such order, which affects the decision of the case, alone can be challenged along with the appeal filed..........court there will be a preliminary mortgage decree for recovery of the mortgage amount with interest and charges, if any allowable, in accordance with the relevant provisions of order xxxiv of the c.p.c. by sale of both the suit items. time for payment three months from today. defendants 3 and 4 will pay the costs of the plaintiff in all the three courts.(12) appeal allowed.
Judgment:

(1) The appellants are the legal representatives of the deceased plaintiff in Original Suit No. 266 of 1951-52 on the file of the Court of the Munsiff, Hassan. The plaintiff filed the suit to enforce a mortgage, Ex. A, dated 7-7-1919 executed by the 1st defendant and his brother Nanjappa in favour of one Balaguru Venkanna, who later assigned the said mortgage to the plaintiff on 30-9-1944. Nanjappa having died sometime in 2028-29, the 2nd defendant his only son was impleaded as his legal representative and as such interested in the mortgage properties. Those properties are two in number.

The first of them was sold on 11-8-1933 in execution of a money decree obtained by the 3rd defendant against the 2nd defendant alone; the 3rd defendant having purchased the said item at the execution sale sold it to the 4th defendant. That was why defendants 3 and 4 were impleaded in the suit. The plaintiff claimed that the suit was in time by reason of certain endorsements contained on the mortgage document evidencing payment of interest in respect of it. The contesting defendants 3 and 4 questioned the genuineness of the assignment in favour of the plaintiff and also the availability of endorsements to save limitation. They state in their written statement that it is learnt that the 2nd item has been sold away for arrears of revenue. Paragraph 7 of the written statement reads as follows:

'7. Even though Venkanna or the plaintiff might have brought into existence endorsements on the hypothecation bond from defendants 1 and 2 who have no possession for a period more than 12 years the said endorsements do not bind these defendants or the schedule 1st item of the property. As the 2nd item is not with the defendants 1-2 likewise, even that item is not liable.'

(2) The mortgage Exhibit A fixed a period of 2 years for payment. The mortgage money therefore became payable on 7-7-1921. There are five endorsements on the mortgage document, all evidencing payment of interest: Ex. A1 dated 31-1-1930 signed by the 1st defendant alone; Ex. A2 date 10-2-1932 signed by defendants 1 and 2; Ex. A3 dated 20-6-1934 signed by both the defendants; Ex. A4 dated 6-2-1945 signed by defendants 1 and 2. The suit was filed on 6-8-1951.

(3) The trial Court held that both the mortgage as well as the assignment in favour of the plaintiff were true and also that the 2nd item of property had been sold for arrears of land revenue, accepting the evidence of the 1st defendant as P.W. 3 that the 2nd defendant had told him that the said item was forfeited to the Government, that that item was not in their possession but in the possession of one Sannegowda alias Rangegowda since 1936. The trial court held that the endorsements cannot be true and genuine because the 2nd defendant has not been examined to speak to them although the 1st defendant deposed to the truth of the endorsements and the payments of interest recorded in them.

Finally the trial Court held even if these endorsements were true, since the mortgagors had lost interest in both the properties by about 1936, by which time the personal remedy against them had also got barred, the endorsements Exhibits A 4 and A5 were not available to save limitation on the principle stated by the Full Bench of the Madras High Court in Pavayi v. Palanivela Goundan, ILR (1940) Mad 872: AIR 1940 Mad 470.

(4) On appeal by the plaintiff the learned Subordinate Judge of Hassan confirmed the dismissal of the suit so far as the first item is concerned but decreed the suit as against the 2nd item. He accepted the findings of the trial Court that both the mortgage as well as the assignment in favour of the plaintiff were true. Although the learned Judge discussed the contention of the respondents (defendants 3 and 4) that, endorsements exhibits (defendants 3 and 4) that endorsements exhibits A4 and A5 were collusive and subsequently got up in order to bolster up the plaint claim, he does not say in so many words whether he accepts that contention or not.

According to the learned counsel for the 4th defendant appearing before me the discussion contained in the judgment of the lower appellate Court points to the conclusion that it did not accept the genuineness of the endorsements Exhibits A4 and A5. I do not think however that this interpretation of the judgment is correct. The trial Court, as already stated, had given two reasons for dismissing the suit: (1) that the endorsements were not true and (2) that even if true they had been made after the mortgagors had ceased to be liable under the mortgage, either of which alone was sufficient to support the dismissal of the suit. In confirming therefore the dismissal of the suit only against the first item and not against the second item, the learned appellate Judge cannot be held to have agreed with the finding of the trial Court that the endorsements were not genuine because if the endorsements were not genuine he could not possibly have granted a decree for sale of the second item.

After confirming the dismissal of the suit so far as the 1st item is concerned, the learned appellate Judge proceeds to state that different considerations arise in respect of the other item. On the evidence his finding was that there was no proof of the 2nd item having been sold for revenue arrears. It is clear, therefore, the reason for dismissing the suit against the first item and decreeing the same against the second item was that the mortgagors had lost interest in the first item but had not so lost interest in the second item.

(5) The position on facts therefore as found by the lower appellate Court is that all the endorsements were genuine and evidenced payment of interest in respect of the mortgage, that by the time the last two endorsements Exhibits A4 and A5 came to be made, the mortgagors had ceased to be personally liable and had lost interest in one of the items of the mortgaged properties but continued to retain interest in the other item. As already stated, the mortgage money was payable on 7-7-1921.

The second endorsement dated 10-4-1932 which is the first to be signed by both the defendants is within 12 years of the date fixed for payment. Ex. A3 dated 20-6-1934, which is also signed by both the defendants is within 12 years of Ex. A2 and Ex. A5 dated 15-5-1946 signed by both the defendants is within 12 years of Ex. A3. The suit was filed on 6-8-1951, less than 12 years from Ex. A5.

(6) On these facts the learned counsel for the appellants argues the lower court should have held that the suit was in time in respect of both the items and not the 2nd item alone. According to him the endorsements are relied upon to save limitation not on the ground that they are acknowledgements within the meaning of S. 19 of the Limitation Act but on the ground that they evidence payments on account of the mortgage debt by persons liable to pay that debt within the meaning of S. 20 of the Limitation Act.

(7) I am of the opinion that the contention raised on behalf of the appellants is sound and must be accepted. it is well established that whereas an acknowledgement for purposes of S. 19 of the Limitation Act must be by the party against whom the property or right in question is claimed or by some person though whom he derives his title or liability, a payment for purposes of S. 20 of the Act need only be by a person liable to pay the debt. That liability to pay may either be by virtue of a contract to which the person is a party or by virtue of the said person being the owner of a property out of which the debt is to be met.

In the case of a simple mortgage there are both the personal liability as well as the property liability. So long as the personal liability is not barred, there is no question that the mortgagor is a person liable to pay the debt. Even after the personal liability gets barred the mortgagor so long as he retains interest in the mortgaged property will continue to be liable under the mortgage because the mortgage money is recoverable out of the property in which he holds an interest. If, however, the personal remedy is barred and the mortgagor loses or parts with all his interest in all the mortgaged properties, he will cease to be a person liable to pay the mortgage debt.

(8) The proposition that the liability of the person who makes the payment under S. 20 need not necessary be personal was accepted in England as far back as in 1863 in Bolding v. Lane, (1863) I De. G. J. and S. 122 and was affirmed by Lord Westbury in Chinnery v. Evans, (1864) 11 HL 115. The words of the English statute are 'the person by whom the same is payable' which mean the same thing as the words in the Indian statute 'the person liable to pay the debt.' The observations of Lord Westbury in (1864) 11 HL 115, which have been often quoted are as follows :

'What was decided in (1863) 1 De. G. J. and S. 122 was this: that the words, 'the person by whom the same is payable, or his agent,' were words of such large import and meaning that they should not only comprehend the mortgagor and his personal representatives upon whom the contract would be personally binding, but would also include the 2nd or the third mortgage, by whom the principal and interest due to the first mortgagee might with propriety be said to be payable, inasmuch as the estate and right of the second mortgagee was subject and posterior to that of the first mortgagee and he would be entitled to redeem the first mortgagee upon the payment of the principal and interest.'

These observations were followed and applied by a Bench of the Madras High Court in Askaram Sowcar v. Venkataswami Naidu, ILR 44 Mad 544: 40 Mad LJ 218: (AIR 1921 Mad 102) in which their Lordships held that a payment of interest as much to a mortgagee decree-holder by the auction purchaser of the equity of the mortgage decree. A bench of the Calcutta High Court has also accepted this proposition in Bhuban Mohan singh v. Ramgobinda Goswami AIR 1926 Cal 1218, where their Lordships following the observations of Lord Westbury and the Bench decision of the Madras High Court in ILR 44 Mad 544: (AIR 1921 Mad 102) held that the term 'person liable to pay the debt' occurring in S. 20(1) of the Limitation Act includes subsequent mortgagees as well as purchasers of the equity of redemption.

(9) The learned counsel for the contesting respondents strongly relied upon certain observations made by Leach, C. J. of the Madras High Court in the Full Bench ruling reported in ILR (1940) Mad 872: (AIR 1949 Mad 470) cited in the judgment of the trial Court. Those observations are:

'In certain of the cases to which I have referred the mortgagor retained an interest in part of the mortgaged properties sold, but I do not consider that this makes any difference in principle. The question is whether a mortgagor who has lost all interest in the mortgaged property, can by an acknowledgment within the meaning of S. 19 or by the payment of interest or principal within the meaning of S. 20, bind the person on whom his interest has devolved. If he cannot bind the purchaser of the equity of redemption when the purchase covers the whole of the mortgaged properties, obviously he cannot bind the purchaser of part of the mortgaged properties. * * * * * *

If the personal remedy against the mortgagor is barred he is no longer liable to pay the debt. If the mortgagee's remedy against the property is not barred, the mortgagor or his representative-in-interest can avoid the sale by payment of the mortgage debt, but that does not make him liable to pay. He may pay if he choose. If he does not choose the mortgagee is left to his remedy against the property.' It should however be pointed out that the Full Bench did not answer any question of law, but actually decided a particular case the facts of which were that the payment relied upon as saving limitation was one made by a mortgagor at a time when he had parted with all his interest in all the mortgaged properties and the personal remedy against him was also barred. That was how the Full Bench ruling was explained by another Bench of the Madras High Court consisting of Wadsworth and Patanjali Sastri, JJ. in Thayyanayaki Ammal v. Sundarappa, ILR (1942) Mad. 308: AIR 1942 Mad. 200, in which a part payment by a mortgagor who had parted with all his property but who remained personally liable to pay on his covenant was held to be sufficient to save limitation.

That this interpretation of the Full Bench ruling was correct was accepted by Leach. C. J. himself in a subsequent judgment of his reported in Narayana Reddiar v. Venkatesa Reddiar, AIR 1943 Mad. 395, in which the decision was that a payment falling within S. 20 by a purchaser of a portion of the hypothecation would save the mortgagees' claim against the unsold properties also. Chandrasekhara Ayyar, J. of the same High Court in Kempamma v. Racha Setty : AIR1947Mad329 , after referring to the Full Bench decision as well as the two subsequent Bench decisions pointed out:

'The principle is that so long as the mortgagor has not parted with his interest in the mortgaged properties and continues to be liable under the mortgage, he can make a payment which will serve under S. 20 of the Limitation Act to start a fresh period of limitation.'

Later in 1955, Govinda Menon, J. of the same High Court discussed all these cases in Peria Valliappa Chettiar v. Rangayya Goundan, 1955-2 Mad L. J. 472: (AIR 1956 Mad 177), and stated the principle to be as follows:

'It is, therefore, clear that either the personal liability or the property liability must remain with the person making the payment. If he has disposed of all his interest in the property but the personal liability remains and the payment is made within six years then AIR 1942 Mad 200 is an authority for holding that the suit is not barred. If on the least part of the mortgage property remains with the mortgagor or his assignees, then the payment made by such a person would bind the person on whom the other properties have developed.

(10) On the findings recorded by the lower appellate Court in this case although the personal remedy under Ex. A against defendants 1 and 2 was barred and they head lost interest in one of the two properties mortgaged, they continued to hold interest in the second item and were therefore persons liable to pay the mortgage debt within the meaning of S. 20 of the Limitation Act. No occasion arises in this case to consider whether the definition of 'authorised agent' given in S. 21 of the Limitation Act has any relevance, because the endorsements relied upon were signed by both the 1st and 2nd defendant.

(11) The result is the Second Appeal is allowed and in modification of the decree of the lower appellate Court there will be a preliminary mortgage decree for recovery of the mortgage amount with interest and charges, if any allowable, in accordance with the relevant provisions of order XXXIV of the C.P.C. by sale of both the suit items. Time for payment three months from today. Defendants 3 and 4 will pay the costs of the plaintiff in all the three courts.

(12) Appeal allowed.


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