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Dadia Bhailal Motichand Vs. Vanad Maganlal Hirabhai - Court Judgment

LegalCrystal Citation
SubjectLimitation
CourtGujarat High Court
Decided On
Case NumberSecond Appeal No. 942 of 1960
Judge
Reported inAIR1966Guj59; (1965)GLR364
ActsIndian Limitation Act, 1908 - Sections 20(1) and 20(2)
AppellantDadia Bhailal Motichand
RespondentVanad Maganlal Hirabhai
Appellant Advocate K.M. Chhaya, Adv. for; G.B. Joshi, Adv. and;;N.B. Dave, Adv.
Respondent Advocate J.R. Nanavaty, Adv.
DispositionAppeal allowed
Cases ReferredBaijnath Prasad v. Jang Bahadur Singh
Excerpt:
.....the rate of 9 per cent per annum. act were applied to a shop building situated in the town of belgaum clearly indicates that according to the division bench of the bombay high court, the word 'land' in section 20 (2) would apply not merely to cultivable land but also to all lands meaning thereby, all immovable property. 11. i therefore allow this second appeal and set aside the judgments and decrees bothof the trial court as well as of the first appellate court......20 provides that where mortgaged land is in the possession of the martgagee, the receipt of the rent or produce of such land shall be deemed to be a payment for the purpose of sub-section (1), and, as i have just now pointed out, the proviso to sub-section (1) does not apply where the mortgaged land is in possession of the mortgagee. in the present appeal, two questions arise :-- firstly whether the immoveable property in suit, which was a house, can be said to be 'land' within the meaning of section 20(2) of the limitation act; secondly, whether the mortgage was in possession of the mortgaged property in view of the fact that on the very day on which the registered mortgage was created in favour of the plaintiff viz., on september 4, 1944, a rent-note was executed by the mortgagor in.....
Judgment:

1. The appellant in this Second Appeal is the original plaintiff and the respondent is the original defendant. The plaintiff filed a suit being Civil Suit No. 300 of 1957, in the Court of the Civil Judge, Junior Division, Jamangar, to realise the amount alleged to be due to him at the foot of the mortgage executed in his favour by the defendant. The only contention that appears to have been urged before the learned trial Judge was regarding limitation and the learned trial Judge held that the suit was barred by limitation and the learned trial Judge, therefore, dismissed the plaintiff's suit. The plaintiff thereupon went in appeal and at the stage of appeal, the learned District Judge, Halar, confirmed the decision of the trial Court and dismissed the appeal. He also held that the suit was barred by limitation. Thereafter the original plaintiff has filed the present Second Appeal against the decision of the learned District Judge.

2. In order to appreciate the point regarding limitation, it would be necessary to set out certain facts. On September 4, 1944, the defendant created a mortgage with possession infavour of the plaintiff and the mortgage was to secure a sum of Rs. 1800. The interest that was to be charged was at the rate of 4 1/2 percent per annum though in the judgments of both the trial Court as well as the first appellate Court it has been stated that the interest was to be charged at the rate of 9 per cent per annum. The contention of the plaintiff was that before he filed the suit, he had received two amounts, one of Rs. 150 and the other of Rs. 85 towards interest and the payment of Rs. 85 was on May 10, 1950 and the suit was filed on June 19, 1957.

3. The arguments in this Second Appeal have turned upon the interpretation of Section 20(2) of the Indian Limitation Act. Under Section 20, provision has been made for extending the period of limitation. Section 20 provides that where payment on account of a debt or of interest on a legacy is made before the expiration of the prescribed period, by the person liable to pay the debt or legacy, or by his duly authorised agent, a fresh period of limitation shall be computed from the time when the payment was made; and the proviso to Sub-section (1) of Section 20 does not apply to Sub-section (2) of Section 20. Sub-section (2) of Section 20 provides that where mortgaged land is in the possession of the martgagee, the receipt of the rent or produce of such land shall be deemed to be a payment for the purpose of Sub-section (1), and, as I have just now pointed out, the proviso to Sub-section (1) does not apply where the mortgaged land is in possession of the mortgagee. In the present appeal, two questions arise :-- firstly whether the immoveable property in suit, which was a house, can be said to be 'land' within the meaning of Section 20(2) of the Limitation Act; Secondly, whether the mortgage was in possession of the mortgaged property in view of the fact that on the very day on which the registered mortgage was created in favour of the plaintiff viz., on September 4, 1944, a rent-note was executed by the mortgagor in favour of the mortgagee and rent fixed under the rent-note was the exact equivalent of the interest payable on the mortgage amount at the rate of 4 1/2 per cent per annum.

4. In support of his contention that the property in question was not land, Mr. Nanavaty, for the respondent, relied upon a decision of the Madras High Court in the case of Ramakrishna Reddi v. Muniratnammal, AIR 1954 Mad 880. There a Division Bench of the Madras High Court consisting of Rajamannar C.J. and Rajagopala Aiyangar J. held as follows:

'Land in its ordinary connotation does not comprise a building. The word 'rent' in Section 20(2) must be construed as 'ejusdem generis' with 'produce' and from such a reading it would follow that 'land' in that sub-section could only refer to cultivable land and would not include either a house or even the site on which a house might have been built.'

The learned Judges of the Madras High Court in this case appear to have been impressed by the history of this particular piece of legislation, as para 4 of that judgment points out. In Act No. IX of 1871 the corresponding provision was Section 21. That section however did notcontain any provision such as is contained in Section 20(2) of the Limitation Act of 1908. It was in the subsequent Act of 1877 that for the first time a provision corresponding to Section 20(2) of the Act of 1908 was inserted but with a difference. The provision in that Act ran as follows:

'Where mortgaged land is in the possession of the mortgagee, the receipt of the produce of such land shall be deemed to be a payment for the purpose of this section.'

5. According to the Madras High Court this provision contemplated only land, that is to say, land which was capable of cultivation and yielding 'produce'. Pausing here for a moment, with utmost respect to the learned Judges of the Madras High Court, I am unable to agree with this reasoning of theirs viz., that the produce can only refer to agricultural produce which might be the result of cultivation. In the legal terminology, 'usufruct', meaning produce of a particular property, can apply not merely to agricultural produce but also to all income from that property; and it is not unreasonable to inter that the word 'produce' in that section was used to refer to all income arising from the mortgaged land. However, it appears that in the decision reported in Ummer Kulti v. Abdul Kadar, ILR 2 Mad 165 it was decided that the payment of rent was not a receipt of produce in virtue of a usufructuary mortgage so as to deem equivalent to a payment of interest. To remedy this difficulty which arose after the decision in ILR 2 Mad 165 in the Limitation Act of 1908, rent was also included as amounting to payment for the purpose of Section 20(1). It was in the light of this historical background that the learned Judges of the Madras High Court held that the word 'rent' must be construed as 'ejusdem generis' with 'produce' and then from that reading they held that the word 'land' in Section 20(2) could only refer to cultivable land and could not refer to a house or even a site on which a house might have been built.

6. With the utmost respect to the learned Judges of the Madras High Court, I am unable to agree with this decision. In my opinion, the word 'rent' in Section 20(2) of the Indian Limitation Act, 1908, cannot be restricted only to cultivable land in the manner in which the Madras High Court has interpreted it in that particular case. The word 'produce' does not necessarily refer to agricultural produce but, as I have indicated earlier, it is also capable of being interpreted as usufruct of a particular plot of land; and if it is interpreted in this manner, the principle of 'ejusdem generis' would not apply to the interpretation of the word 'rent' and that being the case the words 'rent' and 'produce' would indicate any income or any pecuniary benefit that might be derived from the mortgaged immoveablc property.

7. In this connection, it may be pointed out that in the case of Manikchand Bharmappa v. Rachappa, 54 Bom LR 85: (AIR 1952 Bom 226) a Division Bench of the Bombay High Court consisting of Chagla C.J. and Gajendragadkar J. (as he then was) dealt with a question arising under Section 20(2) of the Indian Limitation Act, 1908; and in that particular case the property in question was not merely agricultural land but was a shop situated in the Town of Belgaum. In that particular case, the Division Bench held as follows:

The expression 'where mortgaged land is in the possession of the mortgagee' in Section 20(2) of the Indian Limitation Act, 1908, does not merely apply to cases where the mortgagee is in possession under a usufructuary mortgage, it applies to all cases where the mortgagee is in possession in his capacity as the mortgagee and under the terms of the mortgage. Therefore if the mortgagee is in possession by reason of the mortgage deed and if in that capacity he receives any rent or produce from the mortgaged property then the receipt of the rent is deemed to be a payment for the purpose of Section 20(1) of the Act.'

This decision in 54 Bom LR 85: (AIR 1952 Bom 226) was considered by the Madras High Court in AIR 1954 Mad 890. It is true that in the decision 54 Bom LR 85: (AIR 1952 Bom 226) there is no discussion as to what is meant by the word 'land' occurring in Section 20(2) of the Limitation Act; but the fact that the provisions of Section 20(2) of the Lim. Act were applied to a shop building situated in the town of Belgaum clearly indicates that according to the Division Bench of the Bombay High Court, the word 'land' in Section 20 (2) would apply not merely to cultivable land but also to all lands meaning thereby, all immovable property.

8. In my opinion, when an immoveable property, say a house is mortgaged, what is transferred by way of security is the land together with the building standing thereon, and that being the case, it is essential in a transaction of mortgage of immovable property that an interest in land must be transferred at the time when the mortgage is created and thus an alienation in land takes place at the time when the mortgage of any house, as in the instant case, is created.

9. Mr. Nanavaty then argued that because a rent-note was executed almost simultaneously and on the same day as the document of mortgage; the rent being Rs. 6-12-0 per month, equivalent to the amount of the interest on the, loan of Rs. 1800 at the rate of 4 1/2 per cent per annum, the transaction between the parties was that of a simple mortgage without possession. In this connection, he relied on a decision of M.C. Shah J. in the case of Harilal Bhagwanji v. Hemshanker, 59 Bom LR 881: (AIR 1958 Bom 8). There what happened was that a mortgage with possession was created and as part of the same transaction, the mortgagee rented out the mortgaged premises to the mortgagor. Construing both the documents as being part of the same transaction, M.C. Shah J., sitting singly, held that the mortgage deed and the rent note formed part of one and the same transaction, that the passing of the rent note was merely a device to ensure regular payment of interest, that no relationship of landlord and tenant was intended io be created thereby and none was created and that, therefore, the plaintiff was not entitled to enforce the rent note and recover possession of the premises occupied by the defendant-mortgagor. It is one thing tosay that a rent note executed under such circumstances will not be enforced against the mortgagor because the relationship of landlord and tenant was not created, it is quite another thing to say that no mortgage with possession at all was created between the parties. In my opinion, the document in the instant case. Ex. 8, is very clear and in terms that registered document states that a mortgage with possession was being created in favour of the plaintiff. That being the case, the juridical possession was with the plaintiff mortgagee from the time that the mortgage document was executed. If the plaintiff mortgagee had sought to enforce his rights under the rent note, then the question might have to be considered whether in the light of the decision in 59 Bom LR 881: (AIR 1958 Bom 8) the mortgagee could have enforced those rights against the defendant mortgagor. However, so far as the realization of the amount due at the foot of the mortgage is concerned, there is no such difficulty because the mortgagor in terms created a mortgage with possession and the juridical possession from the time of the execution of the mortgage-deed passed to the mortgagee. It is clear that the possession which is contemplated by Section 20(2) of the Limitation Act is juridical possession and not physical possession, otherwise no question of the rent realised by the mortgagee would have arisen. In case the mortgagee has rented out or created a tenancy in respect of the mortgaged premises, juridical possession would remain with the mortgagee though the physical possession might be with the transferee or the lessee from the mortgagee. Under these circumstances, to my mind the decision in 59 Bom LR 881: (AIR 1958 Bom 8) can be distinguished and the mortgagor cannot say that as a result of both the documents, the transaction was that of a simple mortgage and not a mortgage with possession. M.C. Shah J. in that decision relied upon a decision of the Patna High Court reported in Baijnath Prasad v. Jang Bahadur Singh, AIR 1955 Pat 357 but it is not necessary for me in the instant case to consider the decision of the Patna High Court. Even the Patna High Court in that case does not hold that the transaction between the parties does not amount to a mortgage with possession. All that the Patna High Court said was that the mortgagor, under circumstances similar to the circumstances of the case before M.C. Shah J., could not be deemed to be a tenant of the mortgagee and the mortgagee was not entitled to eviction in my opinion therefore, this argument based on the decision in 59 Bom LR 881: (AIR 1958 Bom 8) cannot avail the defendant.

10. It is clear that an amount of Rs. 85 was paid by the defendant-mortgagor to the plaintiff mortgagee some time in the year 1950 and by combined operation of Section 20(2) and Section 20(1), the period of limitation viz., the period of 12 years, would begin to run from May 10, 1950, when the amount of Rs. 85 was paid to the mortgagee. Under these circumstances, both the Courts below were in error when they held that the plaintiff's suit was barred by limitation.

11. I therefore allow this Second Appeal and set aside the judgments and decrees bothof the trial Court as well as of the first appellate Court. Since both the Courts below havedecided the matter only on the point of limitation and have not gone into the merits of thecase, the matter will now go back to the trialCourt for disposal according to law in thelight of what I have stated in the course ofthis judgment. The defendant must pay thecosts throughout of the plaintiff upto this stage.Orders accordingly.


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