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P.C. Muthu Chettiar Vs. Muthuswami Aiyangar - Court Judgment

LegalCrystal Citation
SubjectLimitation;Property
CourtChennai
Decided On
Reported in(1932)63MLJ111
AppellantP.C. Muthu Chettiar
RespondentMuthuswami Aiyangar
Cases ReferredNewbould v. Smith
Excerpt:
- - this opinion is endorsed in velayudam pillai v. 337 endorsed obiter in yagnanarayana v. 6. the words of the english statutes are not precisely similar to those in section 19 of the indian limitation act, and we have been shown no case directly bearing upon the point. 12. i wish to guard myself by limiting my present opinion to a case like the present where at the time of making the acknowledgment the mortgagor through whom the purchaser undoubtedly claims, is under some liability, either personal or in respect of some other property, on the mortgage......husband's sale to himself, he (1st defendant's husband) was incompetent to acknowledge the mortgage liability so as to affect the properties sold, as he had no interest in them and could therefore be under no liability in respect of them.12. i wish to guard myself by limiting my present opinion to a case like the present where at the time of making the acknowledgment the mortgagor through whom the purchaser undoubtedly claims, is under some liability, either personal or in respect of some other property, on the mortgage. it is in the present case unnecessary to say whether after a mortgagor's personal liability had become barred and he had sold all the mortgaged property any acknowledgment by him of the mortgage debt can save limitation against the purchaser. it is sufficient to.....
Judgment:

Jackson, J.

1. The question for determination is whether an acknowledgment by the mortgagor in favour of a prior mortgagee precludes a puisne mortgagee, whose title accrued before the acknowledgment was given, from relying upon the Statute of Limitation as a bar. Can a mortgagor alienate the hypotheca and then acknowledge the mortgage debt so as to give a fresh period of limitation as against not only himself but the alienee?

2. A plain reading of Section 19, Indian Limitation Act, would suggest that the acknowledgment affects both the mortgagor and his alienee:

Where before the expiration of the period prescribed...an acknowledgment of liability...has been made...by some person through whom the party derives title, a fresh period shall be computed.

3. In Krishna Chandra Saha v. Bhairab Chandra Saha (1905) I.L.R.32Cal.1077 it was held that the mortgagor is the person from whom the alienee derives his title, and the section does not say that the acknowledgment must necessarily be given before the alienation. This opinion is endorsed in Velayudam Pillai v. Vaithialingam Pillai (1912) 24 M.L.J. 66 which is affirmed in Lakshmanan Chetty v. Muthaya Chetty (1919) 40 M.L.J. 126 at 127.

4. On the other hand there is the dissident opinion of a Judge in Surjiram Marwari v. Barhamdeo Persad (1905) 1 C.L.J. 337 endorsed obiter in Yagnanarayana v. Venkatakrishna Rao : AIR1925Mad1108 'the acknowledgment binds only assignees from him after the acknowledgment.' But one of the learned Judges of that Bench has questioned whether this obiter is correct in Second Appeal No. 1485 of 1927. Therefore the preponderating view both in Calcutta and Madras is that the acknowledgment is equally effective whether it be before or subsequent to the alienation. As Maclean, C.J., observes in Krishna Chandra Saha v. Bhairab Chandra Saha (1905) I.L.R. 32 Cal. 1077.

It seems difficult to get over the precise language of this section.

5. It has been argued, however, that the Courts ought to read 'derives title subsequently to the acknowledgment' into the section, for otherwise it will run contrary to English Law and to equity. If both parts of this plea were established we should still feel constrained to follow the plain reading of the statute, but it is not so clear that such a reading would offend either English Law or equity.

6. The words of the English statutes are not precisely similar to those in Section 19 of the Indian Limitation Act, and we have been shown no case directly bearing upon the point.

7. In 19 Halsbury p. 95 it is said that payment by a mortgagor after he has assigned the property charged does not prevent time running in favour of an assignee. But payment is not the same as acknowledgment, and we have not seen the ruling upon which this statement is based; apparently it is not forthcoming in Madras. As regards equity, to say that an alienee would be robbed of a natural right if his alienor were allowed to acknowledge a mortgage binding upon the alienated property even after the alienation, is to travel very far from actual reality. An alienee who takes property subject to a mortgage, expects that he will naturally have to meet that encumbrance, and can only regard it as a remote contingency that the mortgagee may sleep over his right and allow time to run. As the law stands, that contingency is rendered rather more remote by the circumstance that even when time has almost run out the mortgagor by his acknowledgment can extend the period. But if we agree with the respondent and put this extension out of the power of the mortgagor with regard to prior alienees, the contingency of the mortgagee allowing time to run and thus foregoing his right would still be very remote; and to speak of alienees in general being disappointed because they have not been relieved of their encumbrances by the statute of limitation is too fanciful On the other hand it is plainly equitable that a mortgagee should be paid his debt, and that the time should be extended if the mortgagor acknowledges that debt. It would be a great hardship if the mortgagee were led to put his trust in such an acknowledgment only to find that it was a dead letter because, say a day previously, the mortgagor had parted with the hypotheca. As observed in Krishna Chandra Saha v. Bhairab Chandra Saha (1905) I.L.R. 32 C. 1077 a mortgagee should not be deprived of his right by the act of parties entitled only to the equity of redemption.

8. It is unnecessary now to discuss the reasoning in Surjiram Marwari v. Barhamdeo Persad (1905) 1 C.L.J. 337 which has never met with approval except in Yagnanarayana v. Venkatakrishna Rao A.I.R. 1925 M. 107. Mukerjee, J., admits that there is no English case directly in point and relies upon the analogy of Section 13, Civil Procedure Code. But an analogy though it may fortify can hardly be made the basis of an argument; and since Section 19, Indian Limitation Act, is plain, there is nothing upon which an argument can stand. As the appellant is not precluded by limitation the next question is how far he is entitled to subrogate. We agree with the Lower Courts that the obviously equitable arrangement is that set forth in para. 21 of the first Court's judgment. A plea of subrogation is a plea in equity and there is no rule of law which would constrain us to decree anything less equitable.

9. The appellant succeeds in the main and is entitled to costs here and in the Lower Appellate Court against 5th defendant.

10. Time for payment three months from this date.

Krishnan Pandalai, J.

11. I agree on both points with my learned brother and wish to add a few words of explanation on the first, which is one of acknowledgment as saving limitation. The plaintiff sues on a third mortgage by 1st defendant's husband, dated 29th September, 1911, comprising several properties. In 1913 the mortgagor sold a few of those items to 5th defendant partly to pay off the first two mortgages due to the 5th defendant himself and partly to pay off a portion of the plaintiff's (third) mortgage. The 5th defendant did not pay to the plaintiff the portion of the mortgage amount which he undertook to pay. In 1920 the mortgagor (1st defendant's husband) made a statement in a deposition in Court which is an acknowledgment of the plaintiff's third mortgage. This suit was brought in 1926. It is plain that without the help of the acknowledgment of 1920 the suit for money by sale of the property would be, barred as it is brought more than 12 years from the date for payment and also from any other available starting point of limitation. The 5th defendant's contention is that after the 1st defendant's husband's sale to himself, he (1st defendant's husband) was incompetent to acknowledge the mortgage liability so as to affect the properties sold, as he had no interest in them and could therefore be under no liability in respect of them.

12. I wish to guard myself by limiting my present opinion to a case like the present where at the time of making the acknowledgment the mortgagor through whom the purchaser undoubtedly claims, is under some liability, either personal or in respect of some other property, on the mortgage. It is in the present case unnecessary to say whether after a mortgagor's personal liability had become barred and he had sold all the mortgaged property any acknowledgment by him of the mortgage debt can save limitation against the purchaser. It is sufficient to indicate that an acknowledgment under Section 19 must be an admission of some present liability of the person acknowledging, corresponding to a present right in some one else. If it did not imply that, it would be hardly correct to talk of it as an acknowledgment. But it is not necessary to pursue this point further.

13. The more limited point to be decided is whether when a mortgagor has sold a portion of the mortgaged property but remains personally or in respect of the unsold portion liable on the mortgage, an acknowledgment of the mortgage by him subsequent to the sale is ineffective to save limitation as against the property sold. I agree with my learned brother that the language of Section 19 does not require that the person through whom the 5th defendant claims (here 1st defendant's husband) must have made the acknowledgment before the alienation. Nor does the reason of the thing appear to demand it so long as at the time the acknowledgment is made the person making it is liable for what he acknowledges - in other words, so long as he is acknowledging his own liability and not alleging some one else's liability. The weight of Indian authority to which my learned brother has referred is also in the same direction.

14. As during the argument reference was made to the English law of limitation and decisions on it, I have taken some pains to discover whether there is in that law any corresponding idea to what is contended for by 5th defendant. I need not say, that except for the discovery of some general principle, it would be totally misleading and profitless to attempt to apply decisions on the English statutes of limitation to cases under the Indian Limitation Act. The differences between the two systems are glaring and lie on the surface. There is nothing about acknowledgment or part payments in the Limitation Act of 1623 which is still in force. The whole law on that topic in the class of suits governed by that Act is still Judge-made law. In such suits acknowledgments may be made even after the expiration of the period of limitation and provided they are within six years of the suit furnish a new cause of action as on a new promise to pay. In the case of acknowledgments statutorily provided for in 3 and 4 Will. IV. c. 27 and 3 and 4 Will. IV. c. 42 and Real Property Limitation Act, 1874, in some there is no provision as to the person to whom the acknowledgment is to be made, whereas in the others it is provided that it must be made to he person entitled to the payment or to his agent. In none of them is there any reference to acknowledgments made by a person through whom the defendant claims though much the same result is attained by the provision that the acknowledgment must be signed by the person liable or his agent. In the case of Newbould v. Smith (1886) 33 Ch.D.127 it was held that a mortgagor who had in July, 1878, assigned the mortgaged property to his nephews could not by making payment of interest in September, 1878, to the mortgagee save limitation in favour of the assignees. The ground stated was that after the assignment, the assignor was not the agent of the person, liable (the present owner) to make the payment of interest. I therefore think that the line of argument based on English law is not fruitful.


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