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Pakshi Ramaswami Chettiar and anr. Vs. Kesavan Chettiar and ors. - Court Judgment

LegalCrystal Citation
SubjectLimitation
CourtChennai
Decided On
Reported in(1941)2MLJ248
AppellantPakshi Ramaswami Chettiar and anr.
RespondentKesavan Chettiar and ors.
Cases ReferredVaidhinadasami Aiyar v. Somasundram Pillai
Excerpt:
- - the court was considering the question whether, after a preliminary decree for sale on a mortgage has been passed, the mortgagor can institute a suit for redemption when the mortgagee has failed to execute the final decree and has remained in possession. when the property is sold under the decree, what would be sold is the interest of the mortgagee as well as the interest of the judgment-debtor. therefore, till the property is sold, he does not cease to be a mortgagee, though he also becomes a decree-holder by virtue of the debt having been merged in the decree and the amount payable under the mortgage having been precisely defined......within sub-section (1) of that section. the explanation to section 20 enacts that debt includes a decree debt. therefore, under section 20 (1), a debt would include a decree debt and therefore money payable under a mortgage decree. what is contended by mr. bhashyam in this case is, the moment a decree for sale has been passed on a mortgage, the mortgagee ceases to be a mortgagee and assumes the character of a decree-holder and therefore the possession of the mortgaged property would be held by him not in the character of mortgagee. this is the contention which prevailed with my learned brother, king, j. i am not able to agree with him in this contention. when the plaintiff filed the suit, he was in possession of the mortgaged land as mortgagee, and the decree for sale does not divest.....
Judgment:

Alfred Henry Lionel Leach, C.J.

1. There is only one question in this ' appeal, a question of limitation. The suit out of which the appeal arises was filed by the appellants in the Court of the District Munsif of Mayavaram to enforce payment of two mortgages, one dated the 1st November, 1921, for Rs. 1,000 and the other dated the 8th November, 1921, for Rs. 100. The first one was a usufructuary mortgage. The appellant obtained a preliminary mortgage decree on the 10th March, 1932, and a final decree on the 18th September, 1933, but did not apply for the sale of the mortgaged property until the 17th March, 1938. Throughout he had remained in possession of the property as a usufructuary mortgagee. The mortgagors contended that as more than three years had elapsed from the date of the final decree an application in execution was barred by the law of limitation. The District Munsif decided the question against the mortgagors and allowed the application for execution to proceed. His decision was affirmed on appeal by the Subordinate Judge of Mayavaram. The mortgagors then appealed to this Court and the appeal was allowed by King, J., who gave a certificate which has permitted the appellant to file this appeal under Clause 15 of the Letters Patent.

2. The decision turns on the interpretation to be placed upon Section 20 of the Limitation Act. Sub-section (1) of that section states 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. Sub-section (2) says that where mortgaged land is in the possession of the mortgagee, the receipt of the rent or produce of the land shall be deemed to be a payment for the purpose of Sub-section (1). There is added to the .section an explanation which states that the word 'debt' includes money payable under a decree or order of Court. Therefore when a usufructuary mortgagee is in possession, what he receives by way of rent or produce from the mortgaged property shall be taken to represent interest on the mortgage-debt, and each receipt starts a fresh period of limitation. The explanation makes it quite clear that the provisions of Sub-section (2) apply-even when a decree has been passed in favour of the mortgagee.

3. The appeal was allowed by King, J., because he was of opinion that once the final decree had been passed in the mortgage suit, the appellant could not be regarded as being in possession as a mortgagee, and he relied on the decision of the Privy Council in Sundar Koer v. Rai Sham Krishen where Lord Davey in delivering the judgment of the Board said that the scheme and intention of the Transfer of Property Act was that a general account should be taken once for all, and an aggregate amount be stated in the decree for principal, interest and costs due on a fixed day and that after the expiration of that day, if the property should not be redeemed, the matter should pass from the domain of contract to that of judgment, and the rights of the mortgagee should thenceforth depend, not on the contents of his bond, but on the directions in the decree. In Sundar Koer v. Rai Sham Krishen the Privy Council did not hold that a usufructuary mortgagee ceases to be in possession of the mortgaged property as mortgagee simply because a final decree for sale is passed in his favour. Notwithstanding that the matter is taken from the domain of contract and the rights of the parties fall to be regulated by the decree, the mortgagee may nevertheless still retain his character of mortgagee until the property is sold. His security for the loan made by him is the property which has been mortgaged to him. The final decree has decided what is due by the mortgagor to him and settles the question of interest. It also gives the mortgagee the right to sell, but the mortgagor in law has the right to redeem his property until the sale held in pursuance of the mortgage decree has been confirmed. The provisions of Order 34, Civil Procedure Code, make this quite clear.

4. Our attention has been drawn to an observation of Wallace, J., in Ellarayyan v. Nagasivami Aiyar (1926) SO M.L.J. 612 : I.L.R. Mad. 691 to the effect that after the preliminary decree for sale has been passed the right to redeem is extinguished, but I do not regard that case as having any bearing in the present case. There was no question of limitation. The Court was considering the question whether, after a preliminary decree for sale on a mortgage has been passed, the mortgagor can institute a suit for redemption when the mortgagee has failed to execute the final decree and has remained in possession. A more apposite judgment is that in Vaidhinadasami Aiyar v. Somasundram Pillai : (1905)15MLJ126 . In the judgment in that case, it was expressly stated that where a usufructuary mortgagee remains in possession after the mortgage decree has been passed, receipts by him of the profits must be treated under Section 20 of the Limitation Act as receipts by a mortgagee. King, ]., did not accept this statement as he regarded it as a mere obiter dictum. He was right in describing the statement as obiter dictum, but I consider that he should have accepted it as embodying a correct statement of the law. The observation appears to me to be fully justified on the wording of the section. A usufructuary mortgagee goes into possession under the contract of mortgage and the decree does not change the character of his possession. His possession is in no way dependent on the decree. He was in possession qua mortgagee before the decree and he continues in possession qua mortgagee. As the appellant was qua mortgagee in receipt of the income of the property within three years from the date of the application, I consider that he is entitled to the benefit of the section.

5. For the reasons stated I would allow the appeal with costs here and below.

Venkataramana Rao, J.

6. I agree. Section 20 of the Limitation Act would certainly apply to this case. Sub-section (2) to that section states that the receipt of rent or produce by a mortgagee shall be deemed to be payment within Sub-section (1) of that section. The explanation to Section 20 enacts that debt includes a decree debt. Therefore, under Section 20 (1), a debt would include a decree debt and therefore money payable under a mortgage decree. What is contended by Mr. Bhashyam in this case is, the moment a decree for sale has been passed on a mortgage, the mortgagee ceases to be a mortgagee and assumes the character of a decree-holder and therefore the possession of the mortgaged property would be held by him not in the character of mortgagee. This is the contention which prevailed with my learned brother, King, J. I am not able to agree with him in this contention. When the plaintiff filed the suit, he was in possession of the mortgaged land as mortgagee, and the decree for sale does not divest his possession. When the property is sold under the decree, what would be sold is the interest of the mortgagee as well as the interest of the judgment-debtor. Therefore, till the property is sold, he does not cease to be a mortgagee, though he also becomes a decree-holder by virtue of the debt having been merged in the decree and the amount payable under the mortgage having been precisely defined. It is not denied that the property in the possession of the decree-holder is mortgaged land, because until the property is sold it will be mortgaged land. Considerable reliance was placed by Mr. Bhashyam on, Order 34; Rule 5, Civil Procedure Code, under which the moneys due and payable under a final decree for sale must be paid into Court before a mortgagor can be allowed to redeem the property. Under the Transfer of Property Act, before the repeal of Section 89, it was held that once a decree for sale had been passed the security became extinct and when the day fixed for redemption has passed, the property is no longer liable to be redeemed. That was the view held by the Privy Council in more cases than, one, but after the repeal of that section, the security is no longer extinct. So long as it is not extinct, the mortgage is liable to be redeemed and until redemption it cannot be said the mortgagee loses the character of the mortgagee. Sundar Koer v. Rai Sham Krishen only stated that the interest payable. after a mortgage decree for sale will be the interest as defined in the decree and not under the contract, but that would not prevent the application of Section 20 (2) of the Limitation Act, because what is received by the mortgagee after the decree will be payment towards the decree and therefore towards interest-due and payable under the decree debt. Again, considerable reliance was placed by Mr. Bhashyam on the decision in Ellarayyan v. Nagaswami Aiyar : AIR1926Mad816 . What was decided in that case was that after the final decree, the right to redeem is lost. The learned Judges were not dealing with any question of limitation. No doubt there are certain obiter dicta on which Mr. Bhashyam relied, but if I may say so with respect, the learned Judges have not given due weight to the repeal of Section 89 of the Transfer of Property Act. Order 34, Rule 5 gives not only a power of redemption after the final decree but even after confirmation of sale. Therefore until confirmation of sale, it cannot be said that the character of mortgagee is lost. It seems to me, and I agree with my Lord, the Chief Justice, that the view of the learned Judges in Vaidhinadasami Aiyar v. Somasundram Pillai : (1905)15MLJ126 , that even after the mortgage decree the payments received by the mortgagee would be payments within the meaning of Section 20 of the Limitation Act, is correct. I would therefore agree with my Lord, the Chief Justice, in allowing the appeal.


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