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Pavayi and ors. Vs. Palanivela Goundan and ors. - Court Judgment

LegalCrystal Citation
SubjectLimitation
CourtChennai
Decided On
Reported inAIR1940Mad470; (1940)1MLJ766
AppellantPavayi and ors.
RespondentPalanivela Goundan and ors.
Cases Referred and Newbould v. Smith
Excerpt:
- - a record of this payment was endorsed on the deed and signed by the first mortgagor. in that case the mortgagee undertook to deliver a quantity of paddy in payment of principal and interest and the deliveries of paddy were endorsed on the deed. after the sale had taken place a paid part of the principal as well as interest under the mortgage to b and made an acknowledgment of his liability under it. after careful consideration of this argument, i am unable to accept it as well-founded. it follows that in my judgment the decisions of this court which have not applied this principle should no longer be regarded as good law......paid to the mortgagees rs. 200, towards the amount of interest then due in respect of the mortgage debt. a record of this payment was endorsed on the deed and signed by the first mortgagor. a suit to enforce the mortgage was filed on the 9th december, 1932. the question which arises is whether the payment of the rs. 200, on the 16th december, 1920, saves the suit from being barred by the law of limitation. that the personal remedy against the mortgagors is barred is conceded but it is said that inasmuch as the payment of the rs. 200 towards interest was made within eight years of the creation of the mortgage a fresh period of limitation started and the suit having been filed within twelve years from the date of the payment of interest the appellants are entitled to have the.....
Judgment:

Alfred Henry Lionel Leach, C.J.

1. This appeal raises a question of limitation and one of some difficulty. The appellants filed a suit in the Court of the District Munsif of Salem to enforce a mortgage which had been created on the 12th November, 1913 by a Hindu father and his son. The appellants are the assignees of an interest in the mortgage. Under the terms of the mortgage deed the debt became payable in one year. On the 16th January, 1919 a creditor of the mortgagors obtained a money decree against them and in execution of that decree purchased the equity of redemption. On the 16th December, 1920, the first mortgagor paid to the mortgagees Rs. 200, towards the amount of interest then due in respect of the mortgage debt. A record of this payment was endorsed on the deed and signed by the first mortgagor. A suit to enforce the mortgage was filed on the 9th December, 1932. The question which arises is whether the payment of the Rs. 200, on the 16th December, 1920, saves the suit from being barred by the law of limitation. That the personal remedy against the mortgagors is barred is conceded but it is said that inasmuch as the payment of the Rs. 200 towards interest was made within eight years of the creation of the mortgage a fresh period of limitation started and the suit having been filed within twelve years from the date of the payment of interest the appellants are entitled to have the property sold in order to realise what is due to them. The District Munsif held that the payment of interest on the 10th of December, 1920, did operate to save limitation and granted the appellants a decree. On appeal the Subordinate Judge of Salem held that the suit was out of time.

2. The Subordinate Judge's decision was based on his interpretation of Section 20 of the Limitation Act which says that where interest on a debt or legacy is, before the expiration of the prescribed period, paid as such by the person liable to pay the debt or legacy, or by his agent duly authorised in this behalf, a fresh period of limitation shall be computed from the time when the payment was made. By the Indian Limitation (Amendment) Act, 1927, a proviso was inserted to the effect that after the 1st January, 1928 acknowledgment of the payment must be in the handwriting of, or in a writing signed by, the person making the payment. As I have indicated there was such an acknowledgment in writing by the first mortgagor, but as this was not necessary at the time the Rs. 200 was paid the mere payment would have been sufficient if the section applied. In this Court it has been contended on behalf of the appellants that both Sections 19 and 20 can be called in aid to save limitation. Section 19 states that where before the expiration of the period prescribed for a suit or application in respect of any property or right, an acknowledgment of liability has been made in writing signed by the party against whom the property or right is claimed, or by some person through whom he derives title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was signed.

3. For the respondent, it has been argued that inasmuch as the mortgagors had parted with all their interest in the properties as the result of the Court auction on the 16th January 1919, they were not personally liable to pay the mortgage debt, and therefore did not come within Section 20 of the Limitation Act. On the same basis it was contended that they were not in a position to give an acknowledgment of liability within the meaning of Section 19. There are several decisions of this Court bearing on the question, which has also been raised before the Calcutta High Court. I will state the effect of these decisions and then discuss the principle involved in the light of certain English decisions which in my opinion also have bearing.

4. The decisions of this Court are those given in Velayudham Pillai v. Vaidhilingam Pillai (1912) 24 M.L.J. 66, Yagnanarayana v. Venkata Krishna Rao : AIR1925Mad1108 , Muthu Chettiar v. Muthuswamy Iyengar : (1932)63MLJ111 , and Narayana v. Venkataramana : AIR1935Mad899 . In Velayudham Pillai v. Vaidhilingam Pillai (1912) 24 M.L.J. 66, a person executed a deed of gift of the whole of his (property. After the gift had been made he paid interest in respect of the amount due on a promissory note signed by him before the date of the gift. Benson and Sundara Ayyar, JJ. held that by reason of the provisions of Section 20 of the Limitation Act the payment was sufficient to keep alive the debt against the universal donee. In Yagnanarayana v. Venkata Krishna Rao : AIR1925Mad1108 , Coutts-Trotter, C.J, and Ramesam, J. considered that a person who Was a party to a mortgage contract could make an acknowledgment even after his interest in the properties had ceased, but they added, that the acknowledgment bound only him or persons claiming through, him i.e., assignees from him after the acknowledgment. They accepted the opinion expressed by Mookerjee, J. in Surjiram Marwari v. Barhamdeo Prasad (1905) 1 C.L.J. 337, to which I shall presently refer. In Muthu Chettiar v. Muthuswamy Iyengar : (1932)63MLJ111 , Jackson, J. held that an acknowledgment of mortgage debt made by a mortgagor after he had lost his interest in the mortgaged property affected both him and his alienee, but Krishnan Pandalai, J. who formed the Bench with Jackson, J. did not go to this length. In his view an acknowledgment of the mortgage debt made by a mortgagor who had sold a portion of the mortgaged property, but remained personally, or in respect of the unsold portion, liable on the mortgage was effective to save limitation as against the property sold. In Narayana v. Venkataramana : AIR1935Mad899 , Ramesam and Stone, JJ., held that by reason of Section 19 of the Limitation Act an acknowledgment by the mortgagor subsequent to the sale of the mortgaged property saved limitation and made the purchaser of the equity of redemption liable on the mortgage. In that case the mortgagee undertook to deliver a quantity of paddy in payment of principal and interest and the deliveries of paddy were endorsed on the deed. The deliveries of paddy were made on the 3rd January, 1904, 14th January, 1911, and 12th January, 1914, in payment of interest. The mortgagor sold the equity of redemption on the 5th January, 1908. The mortgagee filed a suit on the mortgage within twelve years from the 12th January, 1914. The purchaser of the equity of, redemption contended that the suit was barred as the mortgagor, could not bind his successors, but this contention was nolf accepted. In that case the defendant relied on the following dictum of Lord Westbury in Bolding v. Lane (1863) 1 De. G.J. & S. 122 : 46 E.R. 47, where the Lord Chancellor said:

It was not the intention nor is it the effect of the section to give to the mortgagor or other person, who is 'by law compellable to pay the interest,' a statutory power to deprive, by his acknowledgment-given to a prior encumbrancer, the subsequent encumbrancers, the benefit of the statute, which would be monstrously unjust, but to enact a plain and simple rule that no person having a charge on lands shall recover more than six years' interest on such charge against any other person having an interest in the lands without an acknowledgment in writing, signed by such person or by some former owner from whom the interest is derived.

5. Ramesam and Stone, JJ., rejected this argument on the ground that they did not see any injustice in making a purchaser or subsequent encumbrancer liable in such circumstances in view of the fact that in India there was a law of registration and every purchaser or encumbrancer can easily know of the existence of a prior mortgage.

6. I will now turn to the Calcutta decisions. In Krishna Chandra Saha v. Bhairab Chandra Saha I.L.R. (1905) Cal. 1077, a Bench of that Court (Maclean, C.J., and Mitra, J.), held that Section 19 of the Indian Limitation Act applied in these circumstances. A mortgaged several properties under a deed dated 28th April, 1887. He then sold one of them to B who mortgaged it to C and in a mortgage suit by C the property was sold and purchased by D. After the sale had taken place A paid part of the principal as well as interest under the mortgage to B and made an acknowledgment of his liability under it. The question was whether the acknowledgment kept the mortgage debt alive against the property bought by D. It was held that it did. Maclean, C.J., expressed a similar opinion sitting with Holm-wood, J., in Domi Lai Sahu v. Roshan Dobay I.L.R. (1906) Cal. 1278. But these decisions of the Calcutta High Court are not in accord with that of Mookerjee, J., in Surjiram Marwari v. Barhamdeo Prasad (1905) 1 C.L.J. 337, on which reliance was placed in Yagnanarayana v. Venkata Krishna Rao : AIR1925Mad1108 . Mookerjee, J., there said:

It is argued on behalf of the. respondents that the second mortgagee derives his title or liability from the mortgagor, and, that, consequently, an acknowledgment by the mortgagor in favour of the first Mortgagee, is operative against the second mortgagee, no matter whether such acknowledgment was given before or after the second mortgagee derived his title. After careful consideration of this argument, I am unable to accept it as well-founded. I think that the proper construction to be put upon the section (Section 19 of the Limitation Act) is that when it makes an acknowledgment given by one person operative as against another on the ground that the latter derives title or liability from the former, it contemplates that the derivation of title or liability (which is the essential condition for the extended operation of the acknowledgment) takes place after the acknowledgment has been given.

7. In certain of the cases to which I have referred the mortgagor retained an interest in part of the mortgaged properties sold, but I do not consider that this makes any difference in principle. The question is whether a mortgagor who has lost all interest in the mortgaged property, can by an acknowledgment within the meaning of Section 19 or by the payment of interest or principal within the meaning of Section 20, bind the person on whom his interest has devolved. If he cannot bind the purchaser of the equity of redemption when the purchase covers the whole of the mortgaged properties obviously he cannot bind the purchaser of part of the mortgaged properties.

8. As I have shown, Coutts-Trotter, C.J., and Ramesam, J., in Yagnanarayana v. Venkata Krishna Rao : AIR1925Mad1108 , accepted the opinion of Mookerjee, J., in Surjiram Marwari v. Barhamdeo Prasad (1905) 1 C.L.J. 337, that in order to be binding on the assignee the acknowledgment must be made before the person making it has parted with his interest in the property, and I see no reason to doubt the correctness of this opinion. And if a mortgagor, who has lost all interest in the mortgaged property cannot bind the purchaser of the equity of redemption by an acknowledgment he cannot bind his assignee by a part payment of interest or principal. A payment of interest to start a fresh period of limitation must be made by the person liable to pay the debt or by his agent duly authorised in that behalf. If the personal remedy against the mortgagor is barred he is no longer liable to pay the debt. If the mortgagee's remedy against the property is not barred the mortgagor or his representative in interest can avoid the sale by payment of the mortgage debt, but that does not make him liable to pay. He may pay if he chooses. If he does not choose the mortgagee is left to his remedy against the property.

9. I do not share the opinion that the English authorities are not in point. There is no fundamental difference between the provisions of Sections 19 and 20 of the Indian Limitation Act and the corresponding provisions of the English Act. Section 40 of the Act for the Limitation of Actions and Suits relating to Real Property (3 and 4 Will. IV Ch. 27) was in these terms:

That after the said 31st December, 1833, no action or suit or other proceeding shall be brought, to recover any sum of money secured by any mortgage, judgment or lien, or otherwise charged upon or payable out of any land or rent, at law or in equity, or any legacy, but within twenty years next after a present right to receive the same shall have accrued to some person capable of giving a discharge for or release of the same, unless in the meantime some part of the principal money, or some interest thereon, shall have been paid, or some acknowledgment of the right thereto shall have been given in writing signed by the person by whom the same shall be payable, or his agent, to the person entitled thereto, or his agent; and in such case no such action or suit or proceeding shall be brought but within twenty years after such payment or acknowledgment or the last of such payments or acknowledgments, if more than one, was given.

10. Section 40 of the Act of 1833 has been replaced by Section 8 of the Real Property Limitation Act, 1874 (37 and 38 Vic. Ch. 57), but the only difference between the two sections is that a period of limitation of twelve years has been substituted for one of twenty years. It seems to me that Sections 19 and 20 of the Indian Limitation Act embody all the elements of this section.

11. I have already quoted the observations of Lord Westbury in Bolding v. Lane (1863) 1 De. G.J.S. 122 : 46 E.R. 47 and no English authority has been quoted to us which throws doubt on the opinion there expressed. In fact, the Court of Appeal applied the same principle in Newbould v. Smith (1886) 33 Ch. D. 127. In that case a solicitor lent money to a client on equitable mortgage, and on the 12th February, 1866, an account was settled between them as to the amount due. In July, 1878, the client assigned the mortgaged property to his two nephews, and the question was whether an entry dated 10th September, 1878, in a diary kept by the solicitor, who had since died was admissible in evidence. That entry showed the receipt of money paid by the mortgagor by way of interest. North, J., held that this entry was not admissible in evidence. On appeal it was held that assuming the entry to be admissible evidence, as to which the Court gave no opinion, it proved nothing but a payment on account of interest by a person who when he made it had no interest in the mortgaged property, and was not shown to be the agent of the assignee. Therefore, the payment of interest did not start a new period of limitation. Cotton, L.J., said:

'In my opinion even if in fact C.E. Smith' (the client) 'in September, 1878, paid a sum in respect of interest on this mortgage, that would not be sufficient to prevent the statute running in favour of those to whom previously to this time he had transferred the property. It is said that he had assigned it subject to the mortgages and charges thereon. That is so, but that does not make him an agent to pay interest on behalf of those to whom he has transferred the property. It may be he might have a claim against them, but that is not the question which we are considering. The question is whether this payment is to be considered as their payment, that is to say, whether he is to be considered as their agent in making it. They say in their statement of defence that if this payment was made it was not made by their authority or with their knowledge. In my opinion, then, even if the entry is admissible, it does not prove anything that can help the plaintiff'.

12. Lindley and Lopes, LLJ., delivered judgments to the same effect. I can see no reason why the principle propounded in Bolding v. Lane (1863) 1 De. G.J.S. 122: 46 E.R. 47, and Newbould v. Smith (1886) 33 Ch. D. 127, should not be applied in India. The principle is one which accords in full with the spirit of the equity and unless the Indian Statute of Limitation is so worded as to preclude its application - and I have said sufficient to indicate my opinion that it does not - it must be applied. It follows that in my judgment the decisions of this Court which have not applied this principle should no longer be regarded as good law.

13. I hold that the case has been rightly decided by the Subordinate Judge and that the appeal should be dismissed with costs.

King, J.

14. I agree.

Krishnaswamy Ayyangar, J.

15. I agree.


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