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Ram Dawar Rai and ors. Vs. Bhirgu Rai and ors. - Court Judgment

LegalCrystal Citation
CourtAllahabad
Decided On
Judge
Reported in15Ind.Cas.240
AppellantRam Dawar Rai and ors.
RespondentBhirgu Rai and ors.
Cases ReferredSrinath Das v. Khetter Mohun Singh
Excerpt:
mortgage by conditional sale - foreclosure--limitation act (xv of 1877), schedule ii, articles 135, 147, 147--limitation act (xiv of 1859), section i, clause 12--limitation act (ix of 1908), section 30, schedule i, article 135. - - 614, proceed on the assumption that when a mortgage by conditional sale contains a stipulation that on failure to pay on the due date the mortgagee is entitled to possession as an absolute owner and discard the provisions of section 8 of regulation xvii of 1806. strictly speaking, they have no bearing on the limitation applicable to a foreclosure suit. 90, in a suit upon mortgage by conditional sale providing that the mortgage-debt should be paid on the 9th of july 1s55 and that on default of payment the deed of conditional sale should become one of absolute..........of the argument of the learned vakil for the appellants is as follows:the mortgage by conditional sale in suit was executed when regulation xvii of 1806 was in force. section 8 of that regulation allowed a mortgagee to apply for foreclosure on the expiration of the stipulated period or at any time subsequent before the sum lent is re-paid and fixed no time within which to apply. with regard to the language of the section, a full bench of this court in buldeen v. golab koonwer n.w.p.h.c. 1867 (f.b.) 102 held that there was no limitation for an application to foreclose under regulation xvii of 1806. the limitation acts of 1859 and 1871 contain no express provisions for foreclosure suits nor was there anything in section 28 of act xv of 1877 to extinguish the mortgagee's right to take.....
Judgment:

1. On Sawan Sudi Asntami 1237 (28th July 1830), a mortgage by conditional sale was executed by Pabarn Rai and Chittra Bal Rai, predecessors-in-title of the defendants Nos. 1, 2 and 3, in favour of Bachan Rai, predecessor-in-title of the plaintiffs, to secure a sum of Rs. 800. The deed contains a provision to the effect that the mortgagee shall be entitled to possession at the end of 1257 (18th of September 1850) on default of payment of the mortgage-debt on the due date. I may note here that due date in the judgment of the first Court is stated as the 4th of October, 1850 and in that of the lower Appellate Court as the 4th of April 1850.

2. No application for foreclosure was ever made under Regulation XVII of 1806, but on 11th of July 1910, a suit for foreclosure was instituted. Limitation was pleaded in defence. The Courts below accepted it and dismissed the suit.

3. The contention in second appeal is that the suit is not time-barred. The substance of the argument of the learned Vakil for the appellants is as follows:

The mortgage by conditional sale in suit was executed when Regulation XVII of 1806 was in force. Section 8 of that Regulation allowed a mortgagee to apply for foreclosure on the expiration of the stipulated period or at any time subsequent before the sum lent is re-paid and fixed no time within which to apply. With regard to the language of the section, a Full Bench of this Court in Buldeen v. Golab Koonwer N.W.P.H.C. 1867 (F.B.) 102 held that there was no limitation for an application to foreclose under Regulation XVII of 1806. The Limitation Acts of 1859 and 1871 contain no express provisions for foreclosure suits nor was there anything in Section 28 of Act XV of 1877 to extinguish the mortgagee's right to take foreclosure proceedings. Such being the case, the right to foreclose was in existence when Act X V of 1877 came into force and Article 147 of that Act gave to' the mortgagee the right to sue for foreclosure 60 years from the dale when the money secured by the conditional sale became due i.e., the 18th of September 1850. The suit, therefore, which was brought on the 11th of July 1910 was, according to the provisions of Section 31 of the present Limitation Act (IX of 1908), not barred by limitation.

4. Article 135 of Act XV of 1877 has no application to a foreclosure suit. In terms it applies to a suit for possession as a mortgagee and there is a radical distinction between possession as a mortgagee and possession as an owner.

5. The Calcutta High Court cases, in Deonath Gangooly v. Nursing Proshad Dass 14 B.L.R. 87 : 22 W.R. 90, Ram Chunder Ghoasul v. Juggutmanmohiney Dobee 4 C. 283 : 3 C.L.R. 338; Modun Mohun Chowdhry v. Ashad Ally Beparee 10 C. 68 : 13 C.L.R. 51 and Shurnomoyee Dasi v. Srinath Das 12 C. 614, proceed on the assumption that when a mortgage by conditional sale contains a stipulation that on failure to pay on the due date the mortgagee is entitled to possession as an absolute owner and discard the provisions of Section 8 of Regulation XVII of 1806. Strictly speaking, they have no bearing on the limitation applicable to a foreclosure suit. The Privy Council case in Srinath Das v. Khetter Mohun Singh 16 C. 693 at p. 700 : 16 I.A. 85 is based on the notion of an English mortgage in which the mortgagee becomes the absolute owner of the property mortgaged with a liability to re-convey on the happening of certain events.

6. The cases in Murlidhar v. Kanchan Singh 11 A. 144 and Karim Dad Khan v. Mustaqim Khan 26 A. 4 are in conflict with the Full Bench case in Buldeen v. Golab Koonwer N.W.P.H.C. 1867 (F.B.) 102. That Full Bench case had not been overruled. The learned Vakil for the respondent urges that the rulings of the Calcutta and the Allahabad High Court?, which have been referred to by the learned Vakil for the appellants, expressly lay down that twelve years' limitation applies to the present case, that the Privy Council case in Srinath Das v. Khetter Mohun Singh 16 C. 693 at p. 700 : 16 I.A. 85 is conclusive on the point and that the cases in Janki v. Musammat Jai Dei 9 O.C. 147 and Moman v. Ishri Pershad 35 P.R. 1899 are to the same effect.

7. Apart from the case law on the subject, there is much force in the contention of the learned Vakil for the appellants that there is no limitation for an application to foreclose under Regulation XVII of 1806 and that the present suit is not barred by time, but the rulings of this Court, the Calcutta High Court, of Oudh, of the Punjab and of the Privy Council are against him.

8. So far back as in Denonath Gangooly v. Nursing Proshed Dass 14 B.L.R. 87 : 22 W.R. 90, in a suit upon mortgage by conditional sale providing that the mortgage-debt should be paid on the 9th of July 1S55 and that on default of payment the deed of conditional sale should become one of absolute sale and that the mortgagee should thereupon acquire the absolute proprietary right, it was held that the cause of action arose on the 9th of July 1855. when default was made in payment of the mortgage-debt and the suit not having been instituted within twelve years from that date, was barred by Section 1 Clause 12 Act XIV of 1859 and that no new cause of action arose by reason of the foreclosure proceedings on the expiry of the year of grace in August 1868.

9. Since the decision in the above case, the trend of authority in the Calcutta High Court has been in the same direction regarding suits on mortgages by conditional sale which contain a stipulation to the effect that on failure to pay on the due date the mortgagee will be entitled to possession. In Ram Chunder Ghosaul v. Juggutmanmo-hiney Dobee 4 C. 283 : 3 C.L.R. 338, it was held that the suit by a mortgagee under a conditional sale was barred by Act XIV of 1859 as being brought more than 12 years after the cause of action arose and that that Act not only barred the remedy but extinguished the right and that, therefore, the plaintiff could derive no advantage from the extended period of limitation given by Article 149 of Act IX of 1871 which repealed the Act of 1859.

10. Modun Mohun Chowdhry v. Ashad Ally Beparee 10 C. 68 : 13 C.L.R. 51 expressly draws a distinction between the conditional sales in which there is a stipulation that the mortgagee on default of payment of the mortgage debt is to take possession of the property and those in which there is no such stipulation and lays down that in the former case he has twelve years from the date of default and that in the latter the right of the mortgagee to take possession does not accrue until after the expiration of the year of grace.

11. Shurnomoyee Dasi v. Srinath Das 12 C. 614 rules that a mortgage in the English form between Hindus in the mofussil outside Calcutta has always been treated by the Courts as a mortgage by conditional sale and that under Act XIV of 1859 a mortgagee was ordinarily bound to bring his suit within twelve years from the date of default and was barred thereafter. This is an important case. It went up in appeal to the Privy Council and the decision of the High Court was upheld. See Srinath Das v. Khettar Mohun Singh 16 C. 693 at p. 700 : 16 I.A. 85. In Girwar Singh Thakur v. Narain Singh 14 C. 730 at p. 736 the following important passage occurs: 'Under the Acts of 1859 and 1871, the law of limitation governing suits by mortgagees under Kut-Tcoiala or bill of conditional sale was as follows: Where a kut-kobala gave to the mortgagee the right to recover possession on default of payment, the period of limitation for a suit based upon this stipulation was 12 years, see Brojonath Kundu Chowdhry v. Khelat Chandra Ghose 14 M.I.A. 144 : 8 B.L.R. 104 : 16 W.R. (P.C.) 33, Article 135 of the Act of 1871. In Courts not established by Royal Charter in the Presidency of Bengal, the period of limitation for a suit for possession of the mortgaged property, upon the conditional sale be-coming absolute under the provisions of Regulation XVII of 1806, was 12 years from the date when the sale became absolute, Ghinaram Holey v. Ram Monaruth Dobey 7 C.L.R. 580 : 6 C. 566 note; Madun Mohun Chowdhry v. Ashid Ally Beparee 10 C. 68 : 13 C.L.R. 51, But in the cases where the right of the mortagagee has been extinguished by the law of

12. Madun Mohun Chowdhry v. Ashad Ally Beparee 10 C. 68 : 13 C.L.R. 51. Now in the year 1877 when the present Act was passed, foreclosure suits were not known in the Courts not established by Royal Charter in the Bengal Presidency. In the year 1877, therefore, suits under kut-kobalas or conditional bills of sale for possession of the mortgaged property were not covered by Article 147. The period of limitation for such suits, which was 12 years under the Act of 1871, was consequently not altered by. the new Act. Srinath Das v. Khetter Mohun Singh 16 C. 693 at p. 700 : 16 I.A. 85 is the most important case on the point. Their Lordships of the Privy Council in it remark: ' Prom this decree sixteen of the defendants appealed to the High Court. The Court was of opinion that the mortgagee right to possession determined on the Tagore's February 1866; that the mortgagee's right 7th of bring a suit for possession was barred to 17th of February 1878; that with the possession was lost the right to take right to proceedings under the Regulation foreclosure and that suits for foreclosure were of 1806; known in the Bengal Mofussil. Then the unconcluded that the suit was barred by force of Article 135 and they dismissed by force of defendants except Huri Narain it against all appeared, and their Lordships in.... No one has the advantage of hearing.... No one has port of the decree; but argument in consider their Lordship after taking time to agreement with the High Court find themselves 135 is the one applicable Court.... If Article (sic)years there (sic) the to the case, the 12 (sic) ran out in the month of August (sic) latest. In order to succeed then, the plaintiff must show that Article 135 is wholly inapplicable to this case. To do so it is contended that Article 135 applies only to those cases in which a mortgagee desires to take possession in that character; that if he wishes to foreclose he may do so within the time limited by Article 147, that on the 1st July 1882 the right to maintain foreclosure suits was conferred on Bengal mortgagees; and that the Limitation Act immediately fastened' on those suits, and provided 60 years as the limit for them.

To this argument it is sufficient for the present case to answer that in the year 1878 when no suit for foreclosure could be brought,' the right of Shama Sundari to possession was wholly extinguished, and the title of the' purchasers under Huri Narain freed from mortgage. The subsequent creation of suits for foreclosure could not except by clear enactment revive the extinct right, and in effect the clear enactment is the other way for Section 2 Clause (c) of the Transfer of Property Act says that nothing therein shall affect any right or liability arising out of a legal relation' constituted before this Act comes into force, or any relief in respect of such right or liability.' Their Lordships consider that within the meaning of this section the rights of the purchasers to unencumbered ownership of their plots have arisen out of the legal relations between them and Huri Narain and Shama Sundari. It is therefore, unnecessary to discuss what has been so mush urged at the bar, viz., the effect to be attributed to Article 147 a provision which appeared for the first time in the Act of 1877.

13. The ruling not only lays down that Article 135 applies to the present case but answers almost all the points urged by the learned Vakil for the appellants. Janki v. Musammat Jai Dei 9 O.C. 147 was a suit on a mortgaga by conditional sale, dated the 3rd May 1863, in which the stipulation was that in default of payment on the due date the mortgagee would be entitled to possession. Article 135 of the Limitation Act of 1877 was applied. Wells, A. J. C., had considerable doubts about the case bat the rulings of the Calcutta High Court and especially the ruling of the Privy Council in Srinath Das v. Khetter v. Mohun Singh 16 C. 693 at p. 700 : 16 I.A. 85 made him hold that the suit was barred by limitation.

14. Regulation XVII of 1806 is still in force in the Punjab and in a suit on a conditional sale Moman v. Ishri Pershad 35 P.R. 1899 in which foreclosure proceedings were instituted more than 12 years after the determination, of the mortgagor's right to possession, it was held that the suit, not having been brought within 12 years of the date fixed in the mortgage for the payment of the mortgage money, was barred by limitation either under Article 135 or Article 144 of the Limitation Act of 1877. In Nagar v. Saudagar 115 P.W.R. 1908 : 57 P.R. 1908, it was held that there was no time limit for the foreclosure of a mortgage by conditional sale and that a mortgagee in possession was entitled to take out such proceedings at any time during the subsistence of his mortgage and the learned Judges who decided the latter case distinguished the former on the ground of possession. Our own Court in Murlidhar v. Kanchan Singh 11 A. 144, although the case of Buldeen v. Golab Koonwer N.W.P.H.C. 1867 (F.B.) 102 was referred to, by the learned Subordinate Judge in his judgment, held that in a suit for foreclosure upon mortgage by conditional sale executed in, 1846, the plaintiff's remedy was barred by reason of Act XIV of 1859 during the currency of that Act and that the time within which he was entitled to maintain an action for foreclosure, if he had taken the proper proceedings, expired in 1863. The learned Judges disregarded the distinction drawn by the Calcutta High Court in cases in which the mortgagee was entitled to possession in default of payment on the due date and the cases in which he was not. They said: 'It now appears that no proceedings were taken under that Regulation. But even if they had been taken, we should be prepared to hold that the cause of action was the original non-payment of the mosey-on the due date and that the provisions in Regulation XVII of 1806, which was passed for the protection of the mortgagor, could not create a fresh cause of action.

15. In Karimdad Khan v. Mustaqim Khan 26 A. 4, the view taken in Murlidhar v. Kanchan Singh 11 A. 144 was accepted and the case of Buldeen v. Golab Koonwer N.W.P.H.C. 1867 (F.B.) 102 was sought to be distinguished on a ground which is difficult to follow.

16. We, however, are bound by the ruling of the Privy Council in Srinath Das v. Khetter Mohun Singh 16 C. 693 at p. 700 : 16 I.A. 85 and must hold that the cause of action in the case before us arose on the failure to pay the mortgage-money on the due date, i.e., the 18th of September 1850, that the mortgagee's right to possession of the property mortgaged was extinguished under Section 1, Clause (12), Act XIV of 1859, as soon as twelve years had elapsed from the due date and that the subsequent creation of foreclosure suits could not revive the extinct right. Section 31 of the present limitation Act (IX of 1908) has, therefore, no application and the suit is barred by Article 135 of the present Limitation Act, Corresponding with Article 135 of the Limitation (sic)


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