1. The main question which has been argued in a very interesting discussion in this appeal is the question which article of the Limitation Act applies to this mortgage. The learned Judge in the Court below has applied Article 132. If this is a mortgage by conditional sale, that would be right. We are of opinion that it is a mortgage by conditional sale. In the first place the parties so described it. That would not be conclusive, but the vernacular word employed is always used as meaning mortgage by conditional sale, and the general form of the document corresponds to such mortgages as drawn in these Provinces. In the second place, there is a provision that if default is made in payment of interest, at the time of such default the mortgage-deed shall be treated as a sale-deed. In other words, it is ostensibly a sale, or perhaps it would be more accurate to describe it as a bargain and sale to be defeated by a condition subsequent, namely, the payment of interest. But if default is made in the payment of interest, then it becomes a real sale, and the definition in Section 58, T.P. Act, provides that where a mortgagor ostensibly sells on condition that on default of payment of the mortgage money on a certain date the sale shall become absolute, or that on payment being made the sale shall become void, such transaction is called a mortgage by conditional sale. Thirdly, the plaintiffs by their plaint did not ask for foreclosure or sale, or for a sale at all, but sued for the money or for foreclosure, clearly treating their rights as governed by the law applicable to a mortgage by conditional sale in respect of which a decree for sale is prohibited by Section 67.
2. We are asked, on the other hand, to hold that Article 147 applies on the ground that this was not really a mortgage by conditional sale, and (although not an English mortgage), a mortgage in respect of which the mortgagee might sue for foreclosure or sale, and we were asked to apply Article 147 to such a document in spite of the judgment of the Privy Council in the case of Vasudeva Mudaliar v. Srinivasa Pillai (1907) 30 Mad 426. We are unable to do so. We regard the judgment of the Privy Council in that matter as peremptory and binding upon us. Whether or not their Lordships' observations wore necessary for the disposal of the case, they were considered observations delivered for the express purpose of setting at rest a question which was much controverted at the time in India, and they held that Article 147 was applicable only to the class of mortgage generally known and defined by the Transfer of Property Act as an English mortgage. They give what they described as preponderating reasons for adopting this view. The second was that there was a presumption that the Legislature, when it repeated in a later Act an expression which had obtained a settled meaning by judicial construction, intended the words to mean what they meant before. That reason applies with even greater force to their Lordships' view at the present day than it did then. The judgment was delivered in 1907. The provisions of the Transfer of Property Act were re-enacted so far as they apply to remedies in respect of mortgages in the first schedule to the Civil Procedure Code of 1905, and Art 147, Lim. Act, has been re-enacted in the Limitation Act of 1908 without change, and therefore bearing the narrower interpretation given to it by the judgment of the Privy Council to which we have referred.
3. We hold therefore that Article 132 applies to this case. It follows that the claim is barred unless the plaintiffs establish payment of interest sufficient to take the case out of the mischief of the statute. We are bound in this Court, where the law has been finally settled until it is reversed elsewhere, to hold the view that in a mortgage in this form the statute begins to run from the time when default is made in payment of an instalment of interest, where the mortgagee is given the right on such default to sue for the whole amount. The question of the payment of interest is a question of fact which the learned Judge has disposed of in an emphatic judgment, It is not necessary to enter into the details of this question.
4. It is not quite clear whether or not the learned judgment to hold that all the entries of payments in the plaintiffs' books wore false. In some respects however the criticisms which might be made on the plaintiffs' case are stronger than the learned Judge recognized. There its absolutely no excuse for, the failure of the plaintiffs to enter their books in the list required by law under Order 7, Rule 14. The failure to do so was, in any view, a piece of gross neglect by Brij Narain, their vakil. He produced them almost at the last moment, namely in March. The defendants entered a strong objection. The learned Judge gave leave for their production, but was obviously unfavourably impressed by the failure of the plaintiffs to give notice at the proper time of the existence of these documents. The deliberate withholding of these books was a flagrant breach of the endorsement which the plaintiffs themselves and their vakil had put on the plaint, that whatever papers were in the possession of the plaintiffs would be filed. These papers were in the possession of their vakil, either as an ex-arbitrator or as their vakil or as both. From the moment that he chose to act as their vakil he could not deny that he held them as the plaintiffs' representative, and it is not to be wondered at, inasmuch as they were withheld for some weeks, and the witnesses who were called to support them also called late in the hearing, that the Judge regarded them with suspicion. Even if the books contain genuine entries of actual payments made by the family of the defendants, the entries entirely fail to identify such payments with a liability for interest in respect of this bond, There is no reference to the principal due under the bond. There were admittedly other transactions with the debtor. Some of the entries undoubtedly related to other transactions, and none of them can be clearly identified as relating to this transaction, though some of them, if genuine, may have done so. The total entries shown by the plaintiffs in their books amount to over Rs. 1,500, and they alleged in the plaint that only Rs. 600 had been paid. Their oral evidence entirely failed to explain anything.
5. In our view the plaintiffs failed to discharge the onus which lay upon them, and nothing has been shown which would justify us in differing from the learned Judge upon these findings of fact. The result is that the appeal fails and is dismissed with costs.
Kanhaiya Lal, J.
6. I wish to add a few observations as to the questions which have been argued before us in the course of the hearing. The plaintiffs sought to recover money due on a mortgage effected by Darshan Singh, the predecessor on the defendants, in favour of Prag Singh, the predecessor of the plaintiffs on the 7th of August 1903. The mortgage-deed provided for payment of the mortgage-money with interest thereon at eleven annas per cent. per mensem within seven years and further contained a stipulation that the interest accruing due for the half year shall, if not paid up be added to the principal amount and that if interest for any six months remained unpaid, the mortgagee shall have power either to bring a suit in respect of the entire mortgage money and interest without waiting for the expiry of the stipulated period or to wait for the payment of the principal and interest and compound a interest till the expiry of the term fixed. It is further stated that both the conditions were left entirely to the choice or option of the mortgagee that the mortgagee bad liberty to act in accordance with either of those conditions, that is to say either to bring a suit in respect of the entire mortgage money and interest without waiting for the expiry of the stipulated period or to waive the default and wait for the payment of the principal and interest and compound interest agreed till the expiry of the term fixed. In fact the mortgagor covenanted that in no circumstances he shall have power to raise any objection or make any refusal, and he further agreed that if at the stipulated time the money remained unpaid the mortgage dead shall be treated as a sale deed and the mortgage money as the sale consideration.
7. The allegation of the plaintiffs was that they had received Rs. 600 on account of interest at different times from one of the defendants, and they sued for the foreclosure of the mortgage in case the mortgage money was not paid within such time as might be fixed by the Court for the purpose.
8. The defendants pleaded inter alia that they had made no payments towards the mortgage-money and that the claim was barred by limitation. There were other pleas raised in defence with which this appeal is not concerned.
9. The Court below dismissed the suit holding that the plaintiffs had failed to establish that the defendants had made any payments towards interest as such within the meaning of Section 20 of the Limitation Act (IX of 1908). On the other points raised in the suit it gave its findings in favour of the plaintiffs.
10. The sole question for determination in this appeal therefore is whether the claim of the plaintiffs is within time, either by reason of the covenants shattered in the mortgage-deed or of the payments alleged to have been made by the defendants. The Court below applied Article 132 of the Indian Limitation Act which provides a limitation of 12 years for a suit to enforce payment of money charged upon immovable property and that period is to be computed from the time when the money becomes due. Under one covenant that money was to have fallen due on the expiry, of seven years unless repaid at any time within that period. By another covenant it could have been claimed on the non-payment of interest for any six months unless the default was waived by the mortgagee, who was given the right or an option by the contract of mortgage to disregard it and wait till the expiry of the longer term. The argument addressed to us here is that the contract gave the mortgagee authority, option or liberty to act in either one of the two ways mentioned in the deed on the happening of a certain event, and it was open to him to waive the one and adhere to the other. In other words it is suggested that the effect of the waiver by the mortgagee authorized by the contract would be not to stop the running of limitation, but to postpone the cause of action or starting of it till the other default provided for by the deed had taken place. Whatever might be said in favour of the view contended before us, the Full Bench decision in the case of Shib Dayal v. Meharban AIR 1923 All 1 is conclusive on the matter and we are constrained to hold that, despite the authority given by the contract the operation of the clause which gave an option to the mortgagee for his own benefit could not be waived so as to prevent or postpone the starting of limitation against him.
11. It is argued however that the mortgage-deed in question is in terms not a mortgage by conditional sale and that under Order 34, Rule 4, Clause (2) the plaintiffs could he given either a decree for foreclosure or for sale within the meaning of Article 147 of the Indian Limitation Act, which was introduced for the first time by Act XV of 1877. As observed by their Lordships of the Privy Council in the case of Vasudeva Mudaliar v. Srinivasa Pillai (1907) 30 Mad 426 suits of the present class were governed before Act XV of 1877 was passed by Article 132 of Act IX of 1871, which referred to suits for money charged upon immovable property. The language of Article 132 has since then been slightly altered. The Limitation Act of 1871 provided a limitation of 60 years for a suit to recover possession of the immovable property mortgaged from the mortgagee from the data when the right to recover possession accrued. There was no provision in that Act for suits 'to redeem' a mortgage other than a mortgage accompanied by possession. By Act XV of 18(SIC)7 suits against the mortgagee to redeem a mortgage were also provided for, and it is suggested that in order to make the remedies of the mortgagor and the mortgagee co-extensive, a departure was deliberately made when Article 147 was introduced for the first time. Whether this was so or not, the decision of their Lordships in the case of Vasudeva Mudaliar v. Srinivasa Pillai (1907) 30 Mad 426 and the earlier decision of Wilson and Porter, JJ. in the case of Girwar Singh v. Thakur Narain Singh (1887) 14 Cal 730 (F B) which they followed does not leave it any longer open to us to determine how far Article 147 of the Limitation Act of 1877 was intended to apply to suits for foreclosure like the present.
12. The learned Counsel for the plaintiffs-appellants has argued that the mortgage in question is an anomalous mortgage within the meaning of Section 98 and not a mortgage by conditional sale, and reading by Section 67 of the Transfer of Property Act with Order 34, Rule 4, Clause (2) of the Civil Procedure Code a decree for either foreclosure or sale can be passed in the present case. The mortgage-deed does not purport to provide for the immediate sale of the property conditionally or otherwise. It only provides for the enforcement of the deed by foreclosure at the expiry of the stipulated period but as observed by their Lordships of the Privy Council in the case of Thumbuswamy Moodelly v. Hossain Rowthen (1877) 1 Mad 1, the essential characteristic of a mortgage by conditional sale is that on the breach of the condition of repayment, the contract executes itself and the transaction is closed and becomes one of absolute sale to be enforced in a particular manner. Section 58 of the T. P Act defines a mortgage by condition a sale as a transaction by which the mortgagor ostensibly sells the mortgaged property on condition that on default of payment of the mortgage money on a certain date the sale shall become absolute. The deed in the present case is not exactly worded in that form but in substance it adopts that form; and as pointed out in the case of Ali Ahmad v. Rahmatullah (1892)14 All 195 such defaults in which deeds are generally executed are intended to operate as deeds of mortgage by conditional sale. Article 147 of the Limitation Act IX of 1908, cannot therefore be applied to the case.
13. The only other question is that of the alleged payments said to have been made towards interest but the account-books produced only go to show that there was a general account between the mortgagor and the mortgagee in connexion with this deed and certain other advances independently made by the mortgagee, about which an arrangement appears to have been made by the mortgagor to pay the moneys due by instalments of Rs. 400 per year. The account books contain certain entries showing payments made towards these instalments, but they do not show these payments were made towards interest as such due on the deed in suit and the oral evidence produced on the point to supplement what is not entered in the books cannot be believed. The Court below was therefore justified in holding that these payments if made did not save limitation.
14. I agree in the order proposed.