Madhavan Nair, J.
1. The legal representative of the deceased 1st defendant is the appellant. This appeal arises out of a suit instituted by the plaintiff in the following circumstances.
2. The plaintiff is the Raja of Kalahasti. In O.S. No. 22 of 1908 on the file of the District Court of North Arcot, the 2nd defendant, the brother of the 1st defendant, obtained on 29th March, 1909, a money decree for Rs. 81,548-5-4 (Ex. A) against the predecessor of the present plaintiff who was sued as the legal representative of the previous Zemindar. Against this decree the judgment-debtor filed A.S. No. 93 of 1909 to the High Court; and applied for stay of execution of the decree pending disposal of the appeal. Execution was stayed on the applicant undertaking to furnish security for the performance of any decree that may be passed in the appeal. Ex. B is the security bond. Under it, 70 villages attached to the Kalahasti Taluk in the North Arcot District, subject to certain encumbrances, were furnished as security. The document described as the ' Security Bond executed by us' (The Rajah of Kalahasti) runs as follows:. Therefore we have furnished as security the properties worth six lakhs of rupees described in the schedule for acting according to the final decree that may be passed in Appeal No. 93 of 1909. A sum of about Rs. 2,74,426 is still due to Venkatagiri Rajah Garu on the said property under the decree obtained by him in O.S. No. 200 of 1907 on the file of the Sub-Court, North Arcot. We and our brothers have maintenance charge on the said property also besides on the whole of the Kalahasti Estate. The said property has been furnished as security under this bond subject to the aforesaid encumbrances. This is the security bond executed and given with our consent.
3. Appeal No. 93 of 1909 was dismissed and the Lower Court's decree was confirmed on 8th November, 1910. In C. S. No. 125 of 1899 a decree was passed by the High Court at the instance of one Sadagopachari against the Rajah of Kalahasti for about Rs. 9,000 and odd and it was transferred for execution to the District Court of North Arcot. In execution of that decree nine out of the 70 villages furnished as security in Appeal No. 93 of 1909 were proclaimed and sold, and were bought by the 1st defendant in the present suit for a sum of Rs. 32,000. Ex. V (4th January, 1912) is the sale proclamation and Ex. D (19th April, 1912) is the sale certificate. The sale was actually -held on 5th February, 1912. In both these Exs. V and D, the sale is mentioned to be subject to the security bond executed by the Rajah in Appeal No. 93 of 1909. Ex. D says:
The auction sale amount is Rs. 32,000 subject to the debt of Rs. 19,500 due to the Venkatagiri Maharajah Garu under the decree in O.S. No. 27 of 1910 on the file of the Sub-Court and subject to the security bond of Rs. one lakh given by the defendant in respect of the decree in O.S. No. 22 of 1908 in the District Court....
4. The 1st defendant obtained possession of the nine villages purchased by him between the dates 27th April, 1912 and 29th April, 1912. Exhibit E series are the delivery receipts and in all these it is noted that the villages are liable to the incumbrances mentioned in Exhibit D. There can be no doubt that the purchase of the nine villages by the 1st defendant was subject to the security created by the bond Exhibit B. In the meanwhile, the 2nd defendant began to execute the decree in Order S. No. 22 of 1908 by proceeding against the other properties belonging to the Rajah of Kalahasti. He obtained a transfer of the decree to the Nellore District Court and realised a considerable portion of the decree amount by obtaining rateable distribution. The statement, dated 19th September, 1925, containing the amounts realised by him in execution, shows that the decree in O.S. No. 22 of 1908 has been satisfied to the extent of Rs. 71,405-8-2.
5. In the above circumstances, the plaintiff claims that since the 1st defendant has purchased the nine villages subject to the security created in favour of the 2nd defendant in A.S. No. 93 of 1909 confirming O.S. No. 22 of 1908, it was his (1st defendant's) duty to have satisfied that decree and that, since on account of his failure to do so, other properties belonging to the plaintiff were sold by the 2nd defendant and he has in consequence suffered loss, the nine villages purchased by him should be sold by the Court and the balance found due after paying the decree amount due to the 2nd defendant should be paid over to him. This is the alternative prayer contained in the plaint and is the prayer pressed in the Court below and in this Court. The contention of the plaintiff which is purely a question of law is this,- that by his purchase of the properties subject to a charge, the 1st defendant has impliedly undertaken to indemnify him against the incumbrance affecting them and that if by his default loss is caused to him by the proceedings taken by the incumbrancer, then the 1st defendant is bound to indemnify him, and that the right to indemnify is to be worked out by the Court by the sale of the villages purchased subject to the incumbrance and the payment to him of the balance of the sale proceeds, if any, after paying the amount remaining due to the incumbrancer, i.e., the 2nd defendant. The main contentions of the defendants are that the security bond does not create any 'enforceable charge' on the properties mentioned in it, that the purchase of the properties by the 1st defendant did not involve any implied undertaking on his part to indemnify the plaintiff against the claims of the 2nd defendant and that the plaintiff has no cause of action till the entire decree amount was realised from him by the 2nd defendant. They also contend that the suit is barred by limitation. Rejecting these contentions, the learned Subordinate Judge passed a decree in favour of the plaintiff.
6. On the first part of the case, the plaintiff sought to support his argument by a series of decisions; but before dealing with them and the arguments of the appellant with reference to them, we will first briefly deal with the question whether the security bond, Exhibit B, creates an 'enforceable charge'. We have already referred to the terms of Exhibit B. The document is called 'Security Bond' and it states specifically that the properties mentioned in it are furnished as 'security'. It is thus a security of immoveable property. This security is given for acting according to the final decree that may be passed in Appeal No. 93 of 1909. It is clear that the security is in respect of a future liability, i.e., the liability arising from the decree that may be passed in Appeal No. 93 of 1909. If the executant of the bond succeeds in the appeal the properties will not be liable; otherwise, they will be security for the decree. As the liability is a future one, its incidents can be understood only by reading the bond along with the decree under appeal. That decree was one for payment of money due on a promissory note. We have no doubt that the essentials necessary for creating a charge are present in this document and, in our opinion, the charge created by it is also enforceable in law. In Subramanian Chettiar v. Raja of Ramnad I.L.R. (1917) Mad. 327 : (1917) 34 M.L.J. 84 it was held by this Court that immoveable property given by a judgment-debtor as security for the due performance of a decree in pursuance of an order staying execution under Order 41, Rule 5(3) of the Code of Civil Procedure can be realised in execution. See also Official Receiver, Tanjore v. Nagaratna Mudaliar : AIR1926Mad194 . There is nothing in the decision of the Privy Council in Raj Raghubar Singh v. Jai Indra Bahadur Singh (1919) L.R. 46 IndAp 228 : I.L.R. 42 All. 158 : (1919) 38 M.L.J. 302 (P.C) to support the contention of the appellant that the charge contained in Ex. B is unenforceable. Dealing with the document under consideration their Lordships observed that 'here is an unquestioned liability and there must be some mode of enforcing it and that the only mode of enforcing it must be by the Court making an order in the suit upon the application to which the sureties are parties that the properties charged be sold ....' i.e., that the properties may be proceeded against in execution. For these reasons we hold that Exhibit B contains a 'charge' and that the 'charge' is enforceable in execution.
7. The next question is whether when property is sold subject to a 'charge' the purchaser becomes bound in law to indemnify the owner against the incumbrance or, in other words, in this case, whether by purchasing the nine villages subject to the charge created on them by Exhibit B, the 1st defendant is expressly or impliedly under an obligation to indemnify the plaintiff against the incumbrance. In support of the contention that in such a case the purchaser is bound to indemnify the owner the plaintiff has relied mainly on the decisions in Izzat-un-nissa Begam v. Pertab Singh , - Veerappa Chetty v. Arunachellam Chetty (1924) 47 M.L.J. 168 and Mills v. United Counties Bank, Limited (1912) 1 Ch. 231. In Izzat-un-nissa Begam v. Pertab Singh the equity of redemption in certain property was sold in auction and was purchased by the decree-holder. The sale was subject to two prior mortgages. These mortgages were found to be invalid and the purchaser had nothing to pay on their account. The owner of the property then sued the purchaser to recover the amounts of these mortgages from him, as unpaid vendor's purchase money. Reversing the decision of the High Court, the Judicial Committee held that the purchaser of the equity of redemption was entitled to whatever benefit accrued to him by reason of the mortgages supposed to be existing on the property being found to be inoperative. Their Lordships stated the principle of the decision in the following terms:
On the sale of property subject to incumbrances the vendor gets the price of his interest, whatever it may be, whether the price be settled by private bargain or determined by public competition, together with an indemnity against the incumbrances affecting the land. The contract of indemnity may be express or implied. If the purchaser covenants with the vendor to pay the incumbrances, it is still nothing more than a contract of indemnity. The purchaser takes the property subject to the burthen attached to it. If the incumbrances turn out to be invalid, the vendor has nothing to complain of. He has got what he bargained for. His indemnity is complete....
8. It is argued that the purchaser in the present case, i.e., the appellant, cannot be said to have agreed impliedly to indemnify the owner of the property against the incumbrance, inasmuch as he is not the purchaser of the equity of redemption but has only purchased the property subject to a 'charge'. Or, in other words, the argument is that as a 'charge' does not import an agreement to pay as in the case of a 'mortgage', a contract of indemnity cannot be implied in the present case. We will presently consider the force of this objection. In Izzat-un-nissa Begam v. Pertab Singh their Lordships of the Judicial Committee followed Waring v. Ward (1802) 7 Vez. 332 : (1802) 32 E.R. 136 where this obligation to indemnify is described by Lord Elden as an obligation of conscience. It is similarly described in Mills v. United Counties Bank, Ltd. (1912) 1 Ch. 231 See also Adair v. Garden 29 Irish Rep. 469. If this is a true and correct (inscription, then it is difficult to say that the doctrine in Warning v. Ward (1802) 7 Vez. 332 : (1802) 32 E.R. 136 should be limited to the case of purchases of the equity of redemption though it must be said that in the decisions the application of the principle has arisen only in cases relating to mortgages. In this connection it may also be noticed that in Izzat-un-nissa Begam v. Pertap Singh the language used is 'encumbrance affecting the land', and a charge is certainly an encumbrance. In Veerappa Chetty v. Arunachellam Chetty (1924) 47 M.L.J. 168, on the dissolution of a partnership one partner who took over the firm's estates for consideration made himself personally liable for the partnership's debts and liabilities. In such a case the nature of the undertaking and the rights of the other partners are thus described by their Lordships:
But by that agreement the respondent, as between himself and each of his former partners, became solely responsible for the firm's debt to O.A.M. K., and Veerappa as one of these partners became entitled to an indemnity from the respondent against all liability as a former partner of his in respect of it. And he was entitled to. have that right of indemnity declared and enforced (by an order on the respondent, for example, to pay off the debt) if the right were disputed or the obligation neglected.. But he was entitled to no more. Veerappa could not recover the debt from the respondent unless and until he had himself paid it.
9. In In re Richardson Ex parte The Governors of St-Thomas's Hospital (1911) 2 K.B. 705 it was pointed out that right to indemnity may be found in cases of suretyship and contribution. From the above cases the following principles clearly emerge, viz., (1) that where property is sold subject to encumbrances the purchaser impliedly agrees to indemnify the vendor against the encumbrances; (2) that the operation of this right of indemnity is not restricted to sales of immoveable property but it would also apply to cases of dissolution of partnership, suretyship, contribution, etc. It is permissible to infer from these cases that the operation of the right may be extended to all cases where the facts suggest that such an obligation of the conscience should be cast on the purchaser. This is not decided in any case but it is only an inference. But if the inference is justified, as we think it is, from the nature and scope of this right, then the right would apply to cases of sales of property subject to a 'charge' also. In the present case it is strenuously argued that Exhibit B is only a security bond and does not contain any personal obligation to discharge the decree of the High Court But in our opinion it is not right to construe Exhibit B apart from the decree. Under the decree there is no doubt that the judgment-debtor is under a personal obligation to pay the decree amount to the decree-holder. After the execution of Ex. B, the decree-holder gets in addition a right to proceed against the property therein mentioned. Taking the decree and the bond together, we do not think it will be straining the language to say that the charge contained in Exhibit B in the circumstances of the case raises a personal obligation to pay and it therefore follows that in the present case as in the case of a 'sale of equity of redemption' the vendor gets a right to indemnify from the purchaser. Even if it was not so, we are prepared to hold from the essential nature of the obligation and its wide applicability that effect should be given to it even in a case of sale of property subject to a 'charge'. For these reasons we hold that the right of indemnity exists in this case and that the plaintiff can ask the Court to have it enforced on his behalf.
10. The next question is whether for its enforcement it is necessary that the entire decree debt should have been discharged by the plaintiff. Admittedly a sum of about Rs. 81,000 is still due to the 2nd defendant under his decree. It is argued that this amount remaining unpaid, the plaintiff can have no cause of action to institute the suit. This argument stands quite independent of the question of limitation which will be discussed later; for, if the argument is answered against the plaintiff his suit will have to be dismissed and no question of limitation will then arise. The objection raised can best be answered only by examining the nature of the relief claimed in the suit. The plaintiff does not ask for the payment to himself of the sale proceeds; what he in effect says is, that as he has suffered damages this being the amount collected from him by the 2nd defendant under rateable distribution-owing to the failure on the part of the 1st defendant to pay off the encumbrance, the Court should by way of enforcing the 'indemnity' against him sell the property subject to the charge and after discharging the debt of the 2nd defendant pay over the balance to him, if any remains, by way of damages. Of course as pointed out by the learned Judge it is not the whole of the balance that the plaintiff should be entitled to but only to the extent, if that be less, of the moneys that the 2nd defendant has recovered by rateable distribution with interest and if there is a margin over, that would clearly belong to the 1st defendant as the owner of the properties and not to the plaintiff. This is the alternative prayer mentioned in the plaint. The real nature of the claim is a declaration of the plaintiff's right of indemnity and the prayer is for its enforcement. Viewed in this light, the question whether the plaintiff has fully discharged the decree is not relevant, for what he is asking the Court is only to enforce the 'indemnity' against the 1st defendant by selling the villages and paying off the 2nd defendant and thus save him from damages which he will have otherwise to suffer owing to the default of the 1st defendant. Such an 'anticipatory' form of action though somewhat rare is not unknown to the English and the Indian, Law. In In re Richardson Ex parte The Governors of St. Thomas's Hospital (1911)2. K.B. 705 it was pointed out by Fletcher Moulton, L.J., that though under Common Law the right of indemnity can be availed of only after the person entitled to it has paid the debt, the rule in Chancery was slightly different and that 'you could file a bill against the principal debtor to make him pay the debt so that you would not be called upon to pay the debt and then you obtained a declaration that you were entitled to an indemnity'. In the same case Buckley, L.J. stated at p. 715 that
Indemnity is not necessarily given by repayment after payment. Indemnity requires that the party to be indemnified shall never be called upon to pay . . .
11. This case was followed in this Court in Mohideen Batcha Sahib v. Sheik Dawood Sahib : AIR1926Mad1035 . In that case the plaintiff obtained a decree in the High Court declaring that he was only a surety for a firm represented by defendants 1 to 3 and that they are bound to indemnify the plaintiff in respect of the decree in O.S. No. 9 of 1923 passed against him and the defendants; and that the defendants 1 to 3 are liable in the first instance to satisfy the 4th defendant's decree in O.S. No. 9 of 1923. It was held that
in the event of non-satisfaction of 4th defendant's decree by defendants 1 to 3 to the extent of the amount as decreed by the Sub-Court in Order S. No. 9 of 1923 within three weeks, plaintiff will have liberty to apply in execution to raise the amount due under the said decree by the appointment of a receiver or otherwise from the assets of the firm and have the same paid to the 4th defendant in satisfaction of the said decree.
12. In the course of the judgment Ramesam, J. observed that
If the plaintiff is a surety, he can be indemnified in an appropriate case before actual payment (the italics are ours) by an anticipatory action of this kind
and the result of the action shows that relief was given to him before he was called upon to pay the amount in O.S. No. 9 of 1923. The case in In re Richardson Ex parte The Governors of St. Thomas's Hospital (1911) 2 K.B. 705 and the other relevant cases bearing on the point were followed in Osman Jamal & Sons, Limited v. Gopal Purshattam I.L.R. (1928) Cal. 262 in which it was held that
Where commission agents had incurred liability on behalf of their principals, who had agreed to indemnify them, and the agents having subsequently gone into liquidation, the Official Liquidator sued the principals for the amount of liability, that he could recover the said amount even though the agents having gone into liquidation had not actually paid their vendor.
13. Considerable light is thrown on this question by the observation of their Lordships of the Privy Council in Veerappa Chetty v. Arunachellam Chetty (1924) 47 M.L.J. 168. Generally stated, that was a case where the question of indemnity was in certain circumstances considered, after the dissolution of a partnership in which at the time of the dissolution one of the partners on consideration took over the assets and liabilities of the firm, relieving the other partners from the liabilities. The relevant extract from the judgment has already been quoted while discussing the nature of the ' indemnity'. Their Lordships observed:
And he (Veerappa) was entitled to have that right of indemnity declared and enforced (by an order on the respondent for example, to pay off the debt) if the right were disputed or the. obligation neglected. But he was entitled to no more.
14. Their Lordships also observed that if Veerappa was claiming the debt, he could not do so unless and until he has himself paid it. We have already stated that in the present case the plaintiff does not demand that the sale proceeds should be paid to him; what he asks for is only that the properties should be brought to sale and the equities adjusted by the Court. For the above reasons we hold that having regard to the essential nature of the relief claimed the indemnity claimed by the plaintiff can be enforced against the 1st defendant though he has not paid the entire debt due under the decree.
15. It now remains to consider the last point argued before us, the question of limitation. In the Lower Court various suggestions seem to have been made on behalf of the appellant as to when limitation would commence in the suit. But in this Court Mr. Venkataramana Rao has clearly confined himself to two positions. His argument is that the plaintiff's suit is barred either under Article 83 or under Article 120 of the Limitation Act. On the other hand, Mr. Varadachari on behalf of the respondent contends that the Article applicable to the case is Article 132. After specifying the periods of limitation for suits by a surety against the principal debtor (Article 81) and by a surety against a co-surety (Article 82) the Limitation Act prescribes under Article 83 a period* of three years for a suit ' upon any other contract to indemnify,' and the period starts from the time 'when the plaintiff is actually damnified'. Article 120 prescribes a period of six years for a 'suit for which no period of limitation is provided elsewhere in this schedule ' and the period commences from the time ' when the right to sue accrues'. Article 132 prescribes a period of 12 years for a suit ' to enforce payment of money charged upon immoveable property' and the period begins from the time ' when the money sued for becomes due'. The question is which of these Articles applies to the present suit.
16. We will first take Article 83. For the purpose of his argument the appellant's learned Counsel is prepared to assume that the suit may be viewed as one to enforce a contract of indemnity as contended for by the respondent. His case is that if so treated, under Article 83 the period of limitation would commence from the time when the plaintiff is actually damnified. It is stated that the earliest date when the plaintiff may well have considered himself to have been damnified is when the sum of ' Rs. 24,855-10-8 was collected from him under rateable distribution on 9th March, 1916 (see the statement, dated 19th September, 1925). It is stated that till that date nobody could have said whether the plaintiff was going to be damnified of not, for, the 2nd defendant may well have collected the debt due to him by selling the properties secured under Ex. B. Instead of doing so, he proceeded against other properties and realised the above-mentioned sum on 9th March, 1916, under rateable distribution. The present suit was instituted on 5th April, 1922. It is therefore argued that having been damnified on 9th March, 1916, the suit not having been brought within three years from that date, it is barred under Article 83. It is clear to us that this argument cannot be accepted and that Article 83 does not apply to the case. The indemnity that is sought to be enforced is not a personal one. As mentioned before, an obligation to pay is involved in the ' charge ' created by the security bond and the indemnity sought to be enforced against the 1st defendant arises from out of this obligation which was passed on to him when he purchased the nine villages subject to the charge. The essence of this right of indemnity is that the liability to discharge the decree was cast by the security bond upon the property mentioned in it. This indemnity which arises under a charge, like the indemnity cast upon the purchaser of equity of redemption which is declared to be real (see Banning on Limitation, page 163 and Kinnaird v. Trollope (1889) 39 Ch. 636) should also be held to be real and not merely personal. Article 83 in our opinion applies only to personal contracts of indemnity and not to a case of indemnity arising under a charge. It therefore follows that this Article is inapplicable. In this connection it was also argued that even if the case is to be treated as one for the enforcement of a charge, Article 83 would apply as the necessity to enforce the charge arose only after 9th March, 1916. Obviously the argument is untenable for if the suit is to be treated as one for the enforcement of a charge, clearly Article 132 would apply as that is the special Article provided by the Limitation Act for that class of cases.
17. The next question is whether Article 120 would apply to the case or whether the Article applicable is Article 132. It is argued by Mr. Venkataramana Rao that the suit is for a declaration, that the plaintiff is entitled to enforce the indemnity relied on by him and that this right accrued the moment when the 1st defendant became liable to it by his purchase of the property. The sale certificate Ex. D is dated 19th April, 1912. It is argued that the plaintiff must be considered to have become entitled to the indemnity on that date and that the right to enforce it also accrued at the same time; and that since the suit was not brought within six years of that date, it is barred. To decide this point we have to consider the nature of the relief claimed by the plaintiff. We have already referred to it in detail in considering the first part of the case. There we have stated while explaining the exact nature of the plaintiff's claim that what he asks for is in its essence a declaration of his right to indemnity and for its enforcement by way of sale of the property subject to the charge; but in order to succeed in the suit it is not necessary that he should specially ask for a declaration that he is entitled to the indemnity. The declaration that he is entitled to the indemnity is involved in the relief asked for by the plaintiff, which is the sale of the property, and he need not separately ask for the declaration. The plaintiff's suit is in its nature, like a mortgage suit. It may be seen from the plaint that he has not asked for a declaration of his right to sell the properties but has only asked for their sale, obviously by enforcing the charge under the security bond. In this view, we think the Article applicable is Article 132 and time will start 'when the money sued for becomes due'. There can be no doubt that the security bond became enforceable only upon the passing of the High Court's decree, i. e., 8th November, 1910. The suit having been filed within twelve years from that date is not therefore barred under Article 132. In Ramasami Iyengar v. Kuppusami Iyer (1921) 14 L.W. 99 the appellant purchased certain items of property covered by what might be described as a security bond. The holder of the bond instituted the suit to enforce its terms against the executants and against the property bound by it. One of the contentions in the case was that the suit was barred under Article 83 of the Limitation Act. The learned Judges held that though Article 83 provides for suits on contracts to indemnify, and no doubt Ex. C. is a contract to indemnify, having regard to the fact that it created a charge, the suit should be treated as one to enforce payment of money charged on immoveable property and that it fell within Article 132 of the Limitation Act. Having regard to the nature of the relief claimed in the suit, we hold that Article 120 does not apply to the case and that it is governed by Article 132 and is not barred by limitation.
18. No other points were argued before us. In the result, the appeal is dismissed with costs.