Skip to content


Kruttiventi Perraju Vs. Sabbella Bapireddi and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported inAIR1927Mad284
AppellantKruttiventi Perraju
RespondentSabbella Bapireddi and ors.
Cases ReferredIn Charu Chandra Bhattacharjee v. Karam Buxa Sikdar
Excerpt:
.....would be made to the creditor, the debtor would get an entry made on the back of the bond, of payment against the interest, and after the interest had been satisfied, of payment against the principal to the extent of the surplus, and it appeared that the amount due on account of interest on a certain date was considerably in excess of the sum paid by the debtor on that date, although nothing was expressly stated by either of the parties at the time of payment the inference was irresistible that the payment was made on account of interest as such. in this case the implication is perfectly clear. 5,000 of the consideration for the mortgage was good consideration. 5,000 for this mortgage if good, would be quite sufficient to cover the claim......learned counsel for him contends that the finding on the question of limitation is erroneous. the mortgage deed is dated 1st february 1905. the suit was brought on 20th november 1919; prima facie the suit would be barred as 12 years had expired from the date of the mortgage. but it is claimed that he suit is saved on account of a payment made to the plaintiff on behalf of the mortgagors by certain persons who purchased a part of the mortgaged property and who were directed by the mortgagors to pay the purchase money to the mortgagee, mr. perraju. that payment is found by the subordinate judge to have been made on 29th november 1907. if the finding is correct, and if this payment could be relied upon under section 20 of the limitation act as saving limitation, the suit would be in time......
Judgment:

Krishnan, J.

1. This is an appeal from the decree of the Additional Subordinate Judge's Court of Cocanada in O. S. No. 72 of 1919 brought by Mr. Perraju for the enforcement of a mortgage executed in his favour by Defendants Nos. 1 to 12. The suit has been dismissed by the Subordinate Judge on the ground of limitation. The appeal to us is thus by the plaintiff.

2. The learned counsel for him contends that the finding on the question of limitation is erroneous. The mortgage deed is dated 1st February 1905. The suit was brought on 20th November 1919; prima facie the suit would be barred as 12 years had expired from the date of the mortgage. But it is claimed that he suit is saved on account of a payment made to the plaintiff on behalf of the mortgagors by certain persons who purchased a part of the mortgaged property and who were directed by the mortgagors to pay the purchase money to the mortgagee, Mr. Perraju. That payment is found by the Subordinate Judge to have been made on 29th November 1907. If the finding is correct, and if this payment could be relied upon under Section 20 of the Limitation Act as saving limitation, the suit would be in time. The learned vakil for the respondents contends that the date of payment is not correctly arrived at. I think, however, that the Subordinate Judge is right in his finding that though the sale deed was dated 23rd August 1907 the money was actually paid over to the mortgagee only on 20th November 1907. The receipt, Ex. A, which has been given by the mortgagee, bears that date. Though no doubt the receipt does not say that the money was paid on that day, there is no reason to suppose that it was paid on any other date. There is oral evidence to support the fact that the money was paid on the date of Ex. A. That being so, the Subordinate Judge's finding that the money was paid on 20th November 1907 is correct and I accept it.

3. The Subordinate Judge has, however, held that this payment is of no avail for the purpose of saving limitation. The learned counsel for the appellant claims that this payment is sufficient as it is a payment of 'interest as such' within the meaning of Section 20. In the mortgage deed there are certain covenants to be considered with reference to this. The mortgage deed, after reciting that Rupees 8,000 had been borrowed, says:

We shall on demand pay the said principal sum of Rs. 8,000 with interest thereof at Rupees 1-0-6 per cent. per mensem. We shall pay the interest of each year at the end of that year, that is, on the 1st February of every year. In default of payment of the interest of any year at the end of that year, we shall add the interest of each year with the principal and we shall treat the said total amount as the principal and pay the same in the said manner with interest thereof at the rate of Re. 1-0-6 per cent per mensem till the amount is paid in full. It is arranged that if any payment is made in respect of this, the amount remaining after deducting the interest payable till then shall be credited towards the principal according to the stipulation in this deed.

4. It is clear that the covenant between the parties was that any payment made should be in the first instance credited towards the interest, and if there is any balance left, that should go towards the principal. From this covenant it will follow that out of the sum that was paid to Mr. Perrajn from the purchase price under Ex. A (1.) in 1907 the interest on the mortgage bond must be first taken. That being the covenant between the parties, it is not a far-fetched inference to say that parties, when making and receiving payment, must have intended to make a payment of interest; and the mortgagor would have intended that the payment was to be treated as interest and the mortgagee would have received it as interest. If this is correct there is no difficulty whatever in treating the payment as payment of interest as such. The Subordinate Judge's reasoning on this part of the case is somewhat curious. He says that the payment is to be credited towards interest in the first instance under the document, but in the document there is another covenant by which interest overdue for completed years was to be added to the principal and treated as principal.

5. He argues that the money paid to Mr. Perraju was under the document to be credited towards the two completed years' interest which had already fallen due, but this sum had become principal and therefore the payment should be taken for purposes of limitation as if it had been made towards principal; if of course the payment is to be treated as payment towards principal the payment must appear in the handwriting of the person making the same, to save limitation under Section 20. That being absent he holds that this payment is of no avail. In this argument he treats one and the same sum as interest in one part of it and as principal in another. That seems to be an erroneous view; if the payment is to be credited towards interest due for the two completed years, it must be taken as payment towards interest, and not towards principal, for the purpose of limitation as well. The fact that for the purpose of giving interest on interest, over-due interest is treated under the document as principal, has no bearing on the point. If, however, it is argued that when the document speaks of 'deducting the interest payable till then' it cannot refer to the interest which had already become principal under the covenant, then the money paid will have to be credited towards interest which had accrued due after the completed two years, in which case also the payment will be a payment towards interest as such.

6. It is suggested that this construction is not consistent with the words 'payable till then;' for it is said that interest is not payable by the mortgagors till the end of each year and that during the currency of the year no interest is payable at all. If both those arguments are to be accepted, there will be no scope left for the proviso that amounts repaid should in the first instance be taken towards interest due and the balance only towards principal. The proper construction seems to be that the payment was to be credited towards interest due for the two completed years, as well as towards interest accrued subsequently. In this view it seems to me that the argument of the Subordinate Judge cannot be supported. Here there was a payment of money which, under the covenant in the deed, must be taken to have been made towards interest. That payment must therefore be treated as a payment made towards interest as such.

7. A somewhat similar case arose in Gopi Nath Singh v. Hardeo Singh [1909] 81 All. 285 where a view similar to the one I am taking was taken by their Lordships. No doubt in that case there were some other circumstances which tended to show that the payment was a payment of interest as such, which do not exist here. But the main fact was that the covenant clearly said that any payment made should be treated as payment towards interest in the first instance and the balance alone was to be credited towards principal. This is not a case of an ordinary payment by a debtor to a creditor where if the debtor fails to apppropriate, the creditor may appropriate the money paid towards interest in the first instance and the balance towards principal. In such a case the creditor has no right to make an appropriation towards interest unless the debtor fails to make the appropriation. The mere payment on account cannot thus be treated as payment of interest as such in such a case though there may be interest due. The present case is different because of the covenant between the parties.

8. Another authority was brought to our notice reported in Charu Chandra Bhattacharjee v. Karam Buxa Sikdar [1918] 27 C L. J. 141 where their Lordships Asutosh Mookerjee and Beachcroft, JJ., held as follows:

Where a bond provided that whenever any payment would be made to the creditor, the debtor would get an entry made on the back of the bond, of payment against the interest, and after the interest had been satisfied, of payment against the principal to the extent of the surplus, and it appeared that the amount due on account of interest on a certain date was considerably in excess of the sum paid by the debtor on that date, although nothing was expressly stated by either of the parties at the time of payment the inference was irresistible that the payment was made on account of interest as such.

9. That case is very nearly parallel to this. We may have cases where the debtor when making the payment makes an express requisition that the money or some portion of the money should be taken towards interest in which case there would be no difficulty in applying the section. It is only when there is no express statement that the difficulty arises and the point to be then decided is whether there is no implication that the payment was made towards interest. In this case the implication is perfectly clear. Therefore it seems to me, that we must hold that interest in this case was paid as such and that the payment does save the suit from limitation.

10. The first issue which was raised by the defendants dealt with the point whether the suit mortgage was only a nominal transaction or not. That has been found against the defendants by the Subordinate Judge. The parties apparently agreed that at least Rs. 5,000 of the consideration for the mortgage was good consideration. It is only as regards the balance that any dispute arose. Considering that the plaintiff has abandoned a large portion of his claim he really being entitled to Rs. 27,000 under the mortgage and has only asked for a decree for Rs. 8,000 the consideration of Rs. 5,000 for this mortgage if good, would be quite sufficient to cover the claim. So there is no point in objecting to the balance of consideration.

11. There is no other point on which the respondents' vakil has tried to support the decree of the lower Court. The decree must therefore be reversed and a decree given to the plaintiff for the sum sued for. The ordinary mortgage decree will be drawn up with a provision that the properties included in the mortgage and sold to Defendants 13 to 17 will be exonerated. The decree will be as regards the balance of the properties.

12. The plaintiff would be entitled to get his costs of the suit and of the appeal from Defendants Nos. 1 to 12 and that amount will be added to the mortgage decree. There will be no personal decree either for the costs or for the mortgage debt.

Venkatasubba Rao, J.

13. I agree and I wish to add just a few words. The question to be decided in this appeal is, whether the payment made on behalf of the debtors on 20th November 1907, of Rs. 1,237-8-0 is a 'payment of interest as such' under Section 20 of the Limitation Act. When the payment was made the debtors did not make any express statement that it was to be credited towards interest. But is such an express statement always necessary? The mortgage deed contains a covenant which runs thus:

It is arranged that if any payment is made in respect of this, the amount remaining after deducting the interest accrued due till then shall be credited towards the principal according to the stipulation in this deed.

14. This clause imposes upon the creditor the duty of crediting any amount paid, in the first instance towards unpaid interest due on the date of the payment. In other words, the parties agreed in advance that if the debtor made a payment, the creditor was bound to appropriate it towards interest if such interest was due. In the absence of evidence varying this agreement, any payment made by the debtor must be referred to this covenant and the rights and obligations of the parties must accordingly be determined with reference to it. It is not an inflexible rule that for payment being treated as payment of 'interest as such' the debtor should at the time of making it explicity state that the amount should be credited towards interest. There is no difference in principle between a case where the debtor makes the statement at the time of the payment and a case where he gives the authorization in advance of the payment. In the present instance the debtor had given express authorization under the covenant in the mortgage deed.

15. In Charu Chandra Bhattacharjee v. Karam Buxa Sikdar [1918] 27 C L. J. 141 the learned Judges of the Calcutta High Court held that such a payment as the one before us ratified the requirements of Section 20 of the Limitation Act.

16. The only other question that remains to be considered is, was there a sum due for interest on 20th November 1907 the date of payment? The mortgage deed was executed on the 1st February 1905, and under its terms interest due at the end of each year was to be treated as principal. The result is that the interest that accrued duo for the two years ending 1st February 1906 and 1st February 1907, became converted under the terms of the bond into principal and it is doubtful whether for the purpose of limitation this amount can any longer be treated as interest. But there was still the period intervening between the 1st February 1907, and the 20th November 1907 when the payment in question was made. If interest for that period was payable, the creditor was bound to appropriate towards it a part of the amount paid. For the defendant, it is contended that under the terms of the bond interest becomes payable only at the end. of the year and that accordingly no interest was payable on the 20th November 1907.

17. I find nothing in the wording of the deed to lend support to this contention. I therefore find that on the date Rs. 1,287-8-0 was paid, there was an amount due and payable for interest under the bond and that by force of the covenant to which I have referred, the payment be regarded as payment of interest as such, The suit is thus within time.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //