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Palaniswami Goundan Vs. Ramasami Goundan and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty;Limitation
CourtChennai
Decided On
Case NumberLetters Patent Appeal No. 41 of 1947
Judge
Reported inAIR1951Mad802
ActsCode of Civil Procedure (CPC) , 1908 - Sections 20 and 20(2) - Order, Rule 1; Limitation Act, 1908 - Schedule - Article 132
AppellantPalaniswami Goundan
RespondentRamasami Goundan and anr.
Appellant AdvocateC.S. Venkatachariar and ;D. Ramaswami Ayyanyar, Advs.
Respondent AdvocateK.V. Ramachandra Ayyar, Adv.
DispositionAppeal dismissed
Cases ReferredDoraisami Naicker v. Periakaruppan Chettiar
Excerpt:
.....receipt of rent or produce of such land shall be deemed to be payment for purpose of section 20 (1) - section 20 (1) does not expressly refer to intention of party who receives rent or produce - wherever mortgaged land is in possession of mortgagee any such receipt of rent or produce of land should be deemed to be payment for purpose of section 20 (1). - - without success. dated 12-7-1922, as it was filed only on 14-7-1943 it was clearly barred by limitation, under art. 1. the rights of a subrogee are fairly well settled so far as this province is concerned. they have been summarized succinctly & with lucidity by a well-known author in the following terms :the rights of the subrogee are identical with those of the mtgee. was concerned, the charge was satisfied. , he is in..........321 of 1943 on the file of the ct. of the dist. munsif of tirupur on 14-7-1943 to enforce their mtge. rights under the mtge. deed dated 12-7-1922 against the auction purchaser, palanisami gounden in execution of the decree in o. s. no. 275 of 1940. he was the sole deft, to the suit. he raised various contentions which are reflected in the following issues :'1. whether the suit is in time? 2. whether both the pltfs. are entitled to priority? 3. whether the debt is wiped out by the enjoyment of the hypothecs by the pltfs? 4. to what reliefs are the pltfs. entitled?' the learned dist. munsif rejected all the pleas of the deft. & decreed the suit as prayed for the learned subordinate judge on appeal held in favour of the pltfs. on the question of limitation & also in regard to the plea.....
Judgment:

Subba Rao, J.

1. This appeal raises two points of law, (1) whether the suit was maintainable & (2) whether it was barred by limitation.

2. The facts of the case have been fully & accurately set out in judgments of the lower Cts. & also in that of Wadsworth, J. in the second appeal. We need not restate them except to the extent necessary for appreciating the contentions of the parties: One Shrinayya Gounden executed a mtge. deed, Ex. P. 1 dated 12-7-1922 in favour of one Periya Gounden for a sum of Rs. 500/-. On 24-6-1924 the same Sinnayya Gounden executed a second mtge. deed in regard to the same property in favour of one Rama Boyan. On 24-9-1928 Sinnayya Gounden for himself & as guardian of his then minor sons executed a usufructuary mtge. in lavour of Periya Gounden, that is, the mtgee. under Ex. P. 1 & also another by name Sinnammal for a sum of Rs. 1,300/-. The consideration for the mtge. was made up of two items : (i) a sum of Rs. 650/- due to Periya Gounden under Exs. P. 1 & (ii) a sum of Rs. 650/- paid by Sinnammal to the mtgori On 10-9-1929 under Ex. P. 3 Periya Gounden assigned his half share of right in the mtge. dated 24-9-1928 in favour of pltf. 1 for a sum of Rs. 650/-, Rama Boyan filed O. S. No. 275 of 1940 on the file of the Dist. Munsif's Ct., Tirapur, to enforce his mtge. impleading Ramasami & Chinnammal as defts. 3 & 4. Ramasami & Chinnammal filed written statements setting up rights to priority by reason of their discharging Ex. P. 1 by executing the usufructuary mtge. deed Ex. P. 2. Exhibit P. 4 is the copy of the judgment dated 22-8-1941 in that suit. The learned Dist. Munsif found in their favour & gave a declaration that they were entitled to priority in respect of the principal amount covered by Ex. P. 1. In execution of the decree in that suit the mtge. properties were sold & purchased by the deft, subject to the prior mtge. dated 7-12-1922 & he obtained possession on 14-4-1943. Ramasami & Chinnammal filed O. S. No. 321 of 1943 on the file of the Ct. of the Dist. Munsif of Tirupur on 14-7-1943 to enforce their mtge. rights under the mtge. deed dated 12-7-1922 against the auction purchaser, Palanisami Gounden in execution of the decree in O. S. No. 275 of 1940. He was the sole deft, to the suit. He raised various contentions which are reflected in the following issues :

'1. Whether the suit is in time?

2. Whether both the pltfs. are entitled to priority?

3. Whether the debt is wiped out by the enjoyment of the hypothecs by the pltfs?

4. To what reliefs are the pltfs. entitled?' The learned Dist. Munsif rejected all the pleas of the deft. & decreed the suit as prayed for The learned Subordinate Judge on appeal held in favour of the pltfs. on the question of limitation & also in regard to the plea under the Madras Agriculturists Relief Act but held that it was not competent for the pltfs. to institute a suit as the mtge. deed, Ex. P. 1 was not assigned to them. He allowed the appeal. Wadsworth, J. in the second appeal preferred by the pltf. against the decree & judgment of the learned Subordinate Judge held that the suit was not barred by limitation & that the pltf. was entitled to maintain the suit. In the result he set aside the decree of the lower Ct. & decreed the suit with costs throughout. The deft, has preferred the above Letters Patent appeal against the judgment of Wadsworth, J.

3. The learned counsel for the applt. raised again the two points which were argued by him before Wadsworth, J. without success. His first contention was that the pltf 1 could not maintain the suit as there was no assignment of the prior mtge. Ex. P. 1 In his favour, & that he could not maintain the suit on the judgment in O. S. No. 275 of 1940 because that judgment merely declared a pre-existing priority & did not purport to create any charge. This argument ignores the scope of the decision in O. S. No. 275 of 1940 & the legal effect of the purchase by the deft, of the property subject to the rights of the parties declared in that suit. As we have already stated, to that suit the present pltfs. were impleaded as defts 3 & 4 & the learned Dist. Munsif declared the right to priority in favour of defts. 3 & 4 in respect of the principal amount of Rs. 500/- under Ex. P. 1. The relevant portion of the judgment reads as follows :

'It is clear that defts 3 & 4 are entitled to priority in respect of Ex. P. 1. The principal amount on Ex. P. 1 is Rs. 500/-. Defts 3 & 4 are entitled to priority in respect of this principal amount.'

The question of interest due under Ex. P. 1 was left open as the pltf. pleaded that the interest was wiped off under the Madras Agriculturists Relief Act. It is, therefore manifest that the right of defts. 3 & 4 under Ex. P. 1 were declared in clear & unambiguous terms & deft, having purchased the property in execution of the decree subject to the rights so declared by the judgment is now obviously precluded from questioning the right of the pltfs. to enforce their right under Ex. P. 1. Presumably for the same reason Mr, Ramasami Iyengar the learned counsel for the applt. had not seriously contended against the maintainability of the suit before Wadsworth, J. in the second appeal.

4. The second contention of Mr. Ramasami Iyengar relates to the question of limitation. He argued that the decree in O. S. No. 275 of 1940 did not for the first time create a charge but only declared a pre-existing right. If the suit was to be considered, indeed it was so conceived, as one to enforce the mtge. dated 12-7-1922, as it was filed only on 14-7-1943 it was clearly barred by limitation, under Art. 132, Limitation Act. The question is whether the bar of limitation was saved by payments made within the meaning of Section 20 (2), Limitation Act. Section 20, Sub-section (2), Limitation Act reads as follows :

'Where mortgaged land is in the possession or the mtgee., the receipt of the rent or produce of such land shall be deemed to be a payment for the purpose of Sub-section (1).'

It has been held in the decision reported in a 'Bamacharan v. Nimai', 35 CLJ 58 : AIR 1922 Cal 114, that Section 20, Clause (2), Limitation Act does not expressly refer to the intention of the party who receives rent or produce & that wherever the mtge. land is In the possession of the mtgee. any such receipt of rent or produce of the land should be deemed to be a payment for the purpose of Sub-section (1). It is, enough if the mortgaged lands were in the possession of the pltfs. or their predecessors-in-interest when the rights under the mtge. deed Ex. P. 1 were subsisting. It was, therefore, argued by the learned counsel for the resp. that when Periya Gounden was put in possession of the property under Ex. P. 2 there was not only his right as the usufructuary mtgee. under Ex. P. 2 but also his mtge. right under Ex. P. 1 was subsisting to enable him to claim priority over Rama Boyan, whereas Mr. Ramasami Tvengar for the applt. argued that Periya Goundan's possession could be referred only to the usufructuary mtge. under Ex. P. 2 & that though he might claim priority over Rama Boyan, the mtgee. 2, his mtge. right under Ex. P. 1 was not subsisting as it had been discharged by the execution of the usufructuary mtge.

5. To resolve this conflict of arguments it may not be inappropriate to consider the scope of the decree in O. S. No. 275 of 1940, its legal effect on the rights of the parties & the rights of the subrogee generally. As we have already stated & it is not disputed by Mr. Ramasami Iyengar that the decree in O. S. No. 275 of 1940 did not for the first time create any charge but that it declared a pre-existing right in favour of the pltfs. under Ex. P. 1. The rights of a subrogee are fairly well settled so far as this province is concerned. They have been summarized succinctly & with lucidity by a well-known author in the following terms :

'The rights of the subrogee are identical with those of the mtgee. whose mtge. he discharges. He can therefore sue on the mtge. provided of course he does so within the period within which the mtgee. must have sued. The limitation for the suit runs from the date when the mtge money becomes due & not from the date of payment.'

In 'Kotappa v. Raghavayya : AIR1927Mad631 the question for decision was whether the subrogee could enforce his right within 12 years from the date on which the suit on the hypothecation should have been brought or within 12 years from the date of payment. Madhavan Nair, J. as he then was, who delivered the leading judgment observes at p. 635 :

'A subsequent mtgee. has the right to pay off the prior mtgee. By making such payment he acquires in respect of the property all the rights & powers of the mtgee. whom he has paid off. One of such rights is this power to enforce his charge against the property subject to the law of limitation. If, therefore at the time when the subsequent mtgee. seeks to enforce the security by virtue of subrogation, a suit by the first mtgee. Is barred by time the subsequent mtgee's right is also barred.'

Wallace, J. at p. 631 puts the legal position in a different manner though to the same effect. He observes :

'Thus the pltf.'s remedy was held to be a suit on his subrogated rights under the first mtge. charge. So far as the first mtgee. was concerned, the charge was satisfied. So far as the mtgor, was concerned, the charge had only been transferred from the first mtgee. to the second mtgee., who had now put himself in the proper legal position to enforce It.'

The said principle was recognised by Horwill, J. in the decision reported in 'Perumal Reddiar v. Sup-piah Thevar', : AIR1945Mad500 . The learned Judge states the taw tersely in the following words :

'There can be no doubt that the law in Madras is that when a person becomes subrogated to the rights of the mtgee. by redeeming a mtge., he is in precisely the same position as the mtgee. & must, therefore, bring his suit for recovery of the amount paid by him within 12 years of the original mtge.'

Therefore though Ex. P. 1 had been discharged by execution of Ex. P. 2 the pltfs., who have been held bv the decision In O. S. No. 275 of 1940 to have been subrogated to the rights of the mtgee. under Ex. P. 1. have the same rights which the mtgee. Periva Gounden had under Ex. P. 1. Applying this principle the position will be this. When Periva Gounden was in possession of the property under Ex. p. 2 he had two rights, his right as sub-rogee under Ex. P. 1 & his right as the usufructuary mtgee., under Ex. P. 2. As he received the produce when his rights under Ex. P. 1 were subsisting he would directly come under the provisions of Clause (2) of Section 20, Limitation Act. But Mr.Ramasami lyengar contended that he received the produce only in his capacity as the usufructuary mtgee. & that he had never the intention of receiving the produce in his capacity as mtgee. under Ex. P. 1. We have already pointed out that the intention of the mtgee. is irrelevant for the application of Clause (2) of Section 20, Limitation Act. To get the benefit of that clause only two conditions need be satisfied. One is that the person receiving the rents or produce must be a mtgee. & the other is that he should be in the possession of the land. These two conditions are satisfied here in this case & it is conceded that if Clause (2) of Section 20 applies the suit is clearly within time.

6. Mr. Ramasami Iyengar strongly relied upon the decision reported in 'Anpurna Kunwar v. Ram Padarath : AIR1927All417 . In that case a suit was brought to enforces simple mtge of 15-3-1898. The mtge. was for a sum of Rs. 13,200/-. On 1-11-1898 the mtgor. executed a second mtge. of the same villages. On 4-5-1900 the mtgor. executed a usufructuary mtge. in favour of the pltfs. for a sum of Rs. 17,712/- due on the mtge. of 15-3-1898 & the other items in all amounting to Rs. 22,500/- giving possession of the properties mortgaged. Under this the mtgee. was entitled to sue for the amount due to him only on dispossession & he would in that case be entitled to recover also from the property hypothecated under the bond of 15-3-1898. The pltfs. were dispossessed of one of the villages mortgaged on 24-2-1911. The pltfs. filed the suit on 9-12-1922. The suit was brought to enforce the mtge. dated 15-3-1898. It was held that the suit would be barred unless the produce or rents received by the pltfs. in the capacity of the usufructuary mtgees. saved the bar of limitation within the meaning of Clause (2) of Section 20, Limitation Act. The learned Judges held that the usufruct of the two villages was given to satisfy the interest on the principal amount covered by the usufructuary mtge. & not the interest due on the prior mtge. dated 15-3-1898 & therefore that the suit was barred by limitation. If that decision meant to lay down the rule of law that the intention of the mtgee. was material in the application of Clause (2) of Section 20. Limitation Act with great respect we are inclined to differ from those observations but that decision in our view, may be sustained on the peculiar facts of that case. As we have already pointed out, on the express terms of the usufructuary mtge. the pltfs' rights to enforce the mtge. of 15-3-1898 would arise only after he was dispossessed. Therefore he was in possession under the usufructuary mtge & the rights under the first mtge. were in suspension as it were & therefore when they were in possession their rights under the simple mtge. of 15-3-1898 were not subsisting. In our view that decision cannot help the applts. in the present case.

7. The learned counsel for the resp. contended that as his rights under the usufructuary mtge. were defeated by reason of the decree in O. S. No. 275 of 1940 filed by the mtgee. 2 his possession under the usufructuary mtge. must be deemed to have been possession under his first mtge. This argument was founded upon the decision reported in 'Doraisami Naicker v. Periakaruppan Chettiar : AIR1941Mad475 . In that case the mtgee. had obtained possession under an invalid agreement for sale but as the sale was held to be invalid he was made accountable to rents & profits as if he were the mtgee. in possession. The learned Judges in applying Section 20, Limitation Act observed :

'The fact that his sale proved to be invalid could not vitiate his title as mtgee. & the rents & profitswhich he received must in the circumstances be deemed to have been received by him as the mtgee. He may have thought that he was receiving them as the full owner of the property but as he did not in fact hold that position he could only have received them in the capacity actually held by him, namely, that of the mtgee.'

The learned counsel for the applts. pointed out that that principle could not be invoked in the present case as the usufructuary mtge. had not been held to be invalid &, therefore, the possession of the mtgees. was only under the usufructuary mtge. & could not be deemed to be possession under the earlier mtge. It was argued that as the usufructuary mtge. was not frustrated & was wholly operative between the parties to the transaction the said principle had no application to the facts of the present case. In the view we have taken it is not necessary to decide that point in this case & to give our final opinion on this contention.

8. In the result the appeal fails & is dismissedwith costs.


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