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Zia UddIn Ahmad Khan and anr. Vs. Akbar Ali - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad
Decided On
Reported inAIR1932All358
AppellantZia UddIn Ahmad Khan and anr.
RespondentAkbar Ali
Excerpt:
.....which failed. we do not think this argument can hold good in the circumstances of the case before us. this was on 15th february 1928, well within three years. act, holding that the consideration paid by the plaintiff-respondent under the mortgage deed executed by the defendants-appellants in his favour failed on a decree being passed in favour of ismail khan. we are satisfied that this contention is not well founded......for recovery of rs. 3,580-10-0 as compensation for breach of a covenant container in a mortgage deed executed by the defendants-appellants in his favour. both the courts have decreed the suit. the facts are that the defendants executed, on 10th march 1928, a deed of simple mortgage for rs. 1,600 in favour of the plaintiff, hypothecating a house situate in firozabad, district agra. the plaintiff brought suit no. 10 of 1925 in the court of the subordinate judge, agra, for recovery of principal and interest due under the aforesaid deed by sale of the mortgaged property. a decree for sale under order 34, rule 4, civil p.c., was passed in favour of the plaintiff. ismail khan, the first cousin of the defendants, objected, in execution proceedings, to him the house being sold on the.....
Judgment:

Niamatullah, J.

1. This is an appeal by the defendants and arises out of a suit brought by the plaintiff-respondent for recovery of Rs. 3,580-10-0 as compensation for breach of a covenant container in a mortgage deed executed by the defendants-appellants in his favour. Both the Courts have decreed the suit. The facts are that the defendants executed, on 10th March 1928, a deed of simple mortgage for Rs. 1,600 in favour of the plaintiff, hypothecating a house situate in Firozabad, District Agra. The plaintiff brought Suit No. 10 of 1925 in the Court of the Subordinate Judge, Agra, for recovery of principal and interest due under the aforesaid deed by sale of the mortgaged property. A decree for sale under Order 34, Rule 4, Civil P.C., was passed in favour of the plaintiff. Ismail Khan, the first cousin of the defendants, objected, in execution proceedings, to him the house being sold on the allegation that it belonged to him and not to the mortgagors, the defendants. His objection was disallowed, and thereupon he instituted a regular suit for the declaration of his right to the house in question, which was dismissed by the first Court, but decreed, by the Court of the District Judge on appeal, on 15th February 1928. It was declared that the house in question could not be sold in execution of the decree 'obtained by the plaintiff on foot of his mortgage deed. Consequently the decree became infructuous. A suit for a simple money decree was barred on that date.

2. The suit, which has given rise to this appeal, was instituted on 10th July 1928 for damages for breach of a covenant contained in the mortgage deed, which runs thus;

If, in consequence of any act done by me, the executant, or my heirs or in consequence of a dispute raised by a third person, any loss is occasioned to the mortgagee as regards the sum due under the deed, the person and the other property of the executant shall be made liable to make good the loss and costs, etc.

3. The cause of action for the relief claimed by the plaintiff is said to have accrued to him on 15th February 1928, when the house mortgaged by the defendants-appellants under the deed, dated 15th March 1928, was declared to be the property of Ismail Khan and not liable to be sold in execution of the decree in favour of the plaintiff.

4. The main contention put forward in appeal is that the plaintiff's claim, which is in the substance a claim to the original debt with interest, is barred by limitation. It is argued that, in so far as, the plaintiff is claiming to recover money advanced to the defendants, Article 62, Lim. Act, is applicable and that the period of limitation began to run from the date of the deed. That article provides for suits

for money payable by the defendant to the plaintiff for money received by the defendant for the plaintiff's use.

5. We are clearly of opinion that that article has no application to the suit as framed by the plaintiff-respondent. It is not one for recovery of any money advanced by the plaintiff to the defendant for the use f the former, but seeks to enforce a covenant which is in the nature of indemnity. The learned Counsel for the defendants-appellants referred to a large number of rulings in which Article 62 was applied to cases in which the plaintiff sought to recover the consideration paid by him under a mortgage or a lease, which failed. In none of those cases did the plaintiff seek to enforce a specific covenant of indemnity contained in the deed. In determining the particular article of the Limitation Act applicable to a case much depends on the nature of the plaintiff's claim. If the plaintiff is entitled so to frame his suit as to make a certain article giving a favourable period of limitation applicable, it is not a valid objection to say that he could have framed it otherwise so as to make a less favourable article applicable. We should therefore find an appropriate article applicable to a suit for compensation for breach of a [Covenant of indemnity. In the Collector of Mirzapur v. Dawan Singh [1908] 30 All. 400 Article 116 has been applied and, in our opinion, correctly. It provides for suits

for compensation for the breach of a contract in writing registered.

6. The only question is as to when the period of six years, provided for by it, begins to run. It was contended that as the mortgaged property did not belong to the mortgagor, a breach of the covenant occurred on the date of the mortgage. We do not think this argument can hold good in the circumstances of the case before us. The covenant already quoted, entitled the plaintiff to sue for compensation on loss being occasioned to him in consequence of a dispute raised by a third party. The plaintiff's right to recover damages therefore accrued when loss was occasioned to him in consequence of a (dispute raised by Ismail Khan for the first time in execution proceedings taken in 1926, that is, within three years before the present suit was instituted. The loss was occasioned to the plaintiff when it was declared in the suit brought by Ismail Khan that the plaintiff-respondent was not entitled to have the house sold in execution of his own decree. This was on 15th February 1928, well within three years. It was on this date that the plaintiff was deprived of his security and of the right to have the mortgaged house sold in execution of his decree for sale, in these circumstances, we hold that the plaintiff's suit, which is governed by Article 116, Lira. Act, is within limitation, whether it is reckoned from the date of Ismail Khan's objection or the date of the decree nullifying the decree in favour of the plaintiff.

7. The lower appellate Court has applied Article 97, Lim. Act, holding that the consideration paid by the plaintiff-respondent under the mortgage deed executed by the defendants-appellants in his favour failed on a decree being passed in favour of Ismail Khan. The learned Counsel for the appellants made reference to a number of cases bearing on Article 97; but it is not necessary for us to consider the applicability of Article 97 or of the cases relied on by him in the view of the case we have taken.

8. It was also argued by the learned Counsel for the appellants that the decree obtained by the plaintiff-respondent for sale of the house mortgaged to him was based on a compromise and that the mortgage deed having thus become merged in the compromise and the decree based thereon, no covenant contained in the mortgage deed can be enforced. We are satisfied that this contention is not well founded. It may be correct to say that the mortgage debt became converted into a judgment debt; but this cannot have the effect of making all collateral covenants contained in the mortgage deed in operative. The compromise related to the controversy in the suit, namely, the amount to which the plaintiff-respondent was entitled and his right to obtain satisfaction of such amount by sale of the mortgaged property. It did not relate to any other matter, nor did the decree passed on the basis of such compromise. There was no question as regards the plaintiff's right to recover compensation for loss occasioned to him in consequence of a dispute raised by a third person. For these reasons, we hold that the covenant now sued on was unaffected by the compromise and the decree passed in pursuance thereof.

9. It was further contended that the only remedy which the plaintiff-respondent had was to obtain a decree over, under Order 34, Rule 6, Civil P.C. We do not think that the plaintiff could obtain a simple money-decree under that rule before the sale of the mortgaged property and the sale proceeds proving insufficient to satisfy the mortgage money. Where a decree for sale becomes inoperative on the mortgagor being declared not to have been the owner of the mortgaged property at the date of the mortgage, Order 34, Rule 6, can; have no application.

10. The appeal fails on all the grounds urged on behalf of the appellants. It is accordingly dismissed with costs, including counsel's fees in this Court on the higher scale.


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