Skip to content


Venku Shettithi and ors. Vs. T. Ramachandrayya and ors. - Court Judgment

LegalCrystal Citation
CourtChennai
Decided On
Judge
Reported in92Ind.Cas.342
AppellantVenku Shettithi and ors.
RespondentT. Ramachandrayya and ors.
Cases Referred and Baluswami Aiyer v. Venkitaswamy Naicker
Excerpt:
limitation act (ix of 1908), schedule i, article 134, scope of - transfer by mortgagee--suit for redemption--honest belief of transferee--limitation. - securitisation & reconstruction of financial assets & enforcement of security interest act, 2002 [c.a. no. 54/2002]section 17; power of tribunal to impose condition relating to deposit for grant of stay of auction held, there is no specific provision made under section 17 of securitisation act or under any other provisions of the said act empowering the tribunal to pass any interim order. but under sub-section (12) of section 19 of the recovery of debts due to banks and financial institutions act, 1993, the tribunal has been empowered to pass various interim orders. if sub-section (7) of section 17 of securitisation act is read along with..........to transfer an absolute interest and that the intention of the parties was that there should be an absolute transfer of title of property. the finding was accepted by the high court and the second appeal was dismissed. i do not think that this case really supports the appellants.4. mr. sitarama rao for the respondent relied on the case of kannusami thonjirayan v. muthusami pillai 38 ind. cas. 194 : 5 l.w. 250 in which my learned brother took part. he pointed out that the decision in veerabadra tevan v. veerappa tevan 15 ind. cas. 609 was really a case of an assignment of the mortgagee's interest. he also referred to prasanna venkatachella reddiar v. collector of trichinopoly 33 ind. cas. 45 which was a case of a transferee from a trustee. he agreed with the decision in pandu v. vithu 10.....
Judgment:

Ramesam, J.

1. This appeal arises out of a suit for redemption of a mortgage. The plaintiffs' predecessors-in-title, namely, Parameswari Hengsu and others mortgaged such of the properties as are comprised in Schedule A and the properties in Schedule A-1 to one Manjinatha Naicker by Ex. I, dated the 12th January 1872 for Rs. 14,000. The mortgagee conveyed the properties in Schedule A by Ex. II, dated the 16th July 1878 to one Venkappa, the ancestor of the defendants and the defendants obtained them for their share at a family partition. The mortgagors assigned the equity of redemption in the mortgaged properties by Ex. B, dated the 12th September 1906 to one Boobashetti from whom it devolved on the plaintiffs under the Aliyasantana Law. We are not now concerned with the properties in Schedule A-l as to which the interest of the mortgagee also has come to the plaintiffs' hands by various transactions. The Subordinate Judge dismissed the suit. In appeal, the claim for the properties in Schedule A-2 has not been pressed and no reference need be made to them and we are only concerned with the properties in Schedule A. Two points have been argued by the learned Vakil for the appellants.

(1) Whether Ex. I is a mortgage by conditional sale or a sale with an agreement for re-purchase?

(2) Assuming it is a mortgage, whether the suit is barred by limitation under Article 134 of the Limitation Act?

2. In the view I take of the second question, I think it is unnecessary to discuss the first. For the purposes of discussion I will assume in favour of the appellant that Ex. I ought to be construed only as a mortgage by conditional sale. The question now is whether the properties having been sold by Ex. II, Article 134 of the Limitation Act does not apply.

3. Mr. Anantakrishna Iyer the learned Vakil for the appellants contends that Article 134 of the Limitation Act can only apply where the transferee from the mortgagee took the properties in the belief that the transferor was absolutely entitled to them. That this was the law under the corresponding articles of the Acts of 1859 and 1871 admits of no doubt: see Radha-nath Doss v. Gisborne and Co.6 B.L.R. 530 : 2 Suth. P.C.J. 397 . But the words 'in good faith' which appeared in that Article have been omitted in the Acts of 1877 and 1908. The question is whether it can be contended that under the Acts of 1877 and l908 the knowledge on the part of the purchaser of the true nature of the interest of the transferor prevents the application of Article 134. Mr. Ananta-krishna Iyer relied on Singaram Chettiar v. Kalayanasundaram Pillai 26 Ind. Cas. 1 : (1914) M.W.N 1 L.W. 687. Though the remarks at page 7.38 Page of (1914) M.W.N.--[Ed.] of that decision are somewhat in favour of the appellant, the point was not actually decided in that case. The next decision relied on by him is Tholasinga Mudali v. Nagalinga Chetty 32 Ind. Cas. 265 : (1916) 1 M.W.N. 28 : 3 L.W. 19 where the obiter dictum in Singaram Chettiar v. Kalayanasundaram Pillai 26 Ind. Cas. 1 : (1914) M.W.N. 735 : 1 L.W. 687 was followed by Sadasiva Iyer, J,, and Napier, J. The next case relied on by him is the decision in Muthaya Shetti v. Kanthappa Shetti 43 Ind. Cas. 975 : (1918) M.W.N. 334 : 7 L.W. 482 . In that case, it is observed:

If the transferee bargained for and believed he is bargaining only for the interest of the mortgagee, he cannot acquire title as the absolute owner of the property. After all, Article 134 is only a branch of the law of prescription and the question to be determined would be, what it is that the purchaser prescribed for. The fact that he knew that his vendor had only a mortgagee right would not be conclusive on this question. The real test would be, did he ask for and obtain an absolute right in the property and believe himself that he was having an absolute interest in it? In Pandu v. Vithu 10 Ind. Dec. 95 that is the test that was suggested'. I do not see how these remarks of Seshagiri Iyer, J., help the appellant. If the transferee purported to purchase the absolute interest even though he knew that the transferor had only the interest of a mortgagee, the Article would still apply according to this view. Bakewell, J., added that 'If the title adduced by the vendor and the deed of transfer to the purchaser are consistent with an intention to transfer an absolute interest, the burden will lie upon the plaintiff to show that the circumstances of the transfer negative such an intention'. He made no reference to the case of Singaram Chetti v Kalayanasundaram Pillai 26 Ind. Cas. 1 : 1 L.W. 687 unlike Seshagiri Iyer, J. The finding shows that the deed of mortgage in that case was styled a sale-deed though construed by the High Court as a mortgage by conditional sale. The period for redemption fixed in it had expired and it was said that the vendee would naturally suppose that he was purchasing an absolute title. The finding accordingly was that the transferor intended to transfer an absolute interest and that the intention of the parties was that there should be an absolute transfer of title of property. The finding was accepted by the High Court and the second appeal was dismissed. I do not think that this case really supports the appellants.

4. Mr. Sitarama Rao for the respondent relied on the case of Kannusami Thonjirayan v. Muthusami Pillai 38 Ind. Cas. 194 : 5 L.W. 250 in which my learned brother took part. He pointed out that the decision in Veerabadra Tevan v. Veerappa Tevan 15 Ind. Cas. 609 was really a case of an assignment of the mortgagee's interest. He also referred to Prasanna Venkatachella Reddiar v. Collector of Trichinopoly 33 Ind. Cas. 45 which was a case of a transferee from a trustee. He agreed with the decision in Pandu v. Vithu 10 Ind. Dec. 95 and differed from Chamier, J.'s opinion in Ghasi Ram v. Kishna 30 Ind. Cas. 564 : 13 A.L.J. 877 and held that the purchaser need not prove that he purchased in good faith that is without constructive notice of the restricted nature of the vendor's title. In Baluswami Aiyer v, Venkitaswamy Naicker 40 Ind. Cas. 531 : 40 M. 745, it was held in the case of a transferee from a trustee that knowledge of the limited nature of the transferor's title will not disentitle the transferee from taking advantage of Article 134 of the Limitation Act. In the case of trusts this is the view also adopted in Subbaiya Pandaram v. Muhamad Musiapha Maracayar 21 M.L.T. 62 : 5 L.W. 690 which was afterwards affirmed by the Privy Council in Subbaiya Pandaram v. Muhamad Mustapha Maracayar 28 C.W.N. 493 : 2 Pat. L.R. 104 : 33 M.L.T. 285 , These decisions were referred to by the learned Judges who decided Muthayya Shetti v. Kanthappa Shetty 43 Ind. Cas. 975 23 M.L.T. 291 as consistent with their view. To sum up, the possible cases that may arise in a matter of this sort are four:

1. Where the transfer on its face purports to be an assignment of the mortgagee's interest only, into such a case Article 134 can never apply.

2. Where the transfer purported to be a sale-deed but as a matter of fact only an assignment of the mortgagee's interest was all that was bargained for, it may be conceded that in such a case also Article 134 does not apply. And this is all that was decided in Muthayya Shetti v. Kanthappa Shetti 43 Ind. Cas. 975 7 L.W. 482 .

3. Where the deed of transfer is a sale-deed and what was bargained by the transferee is also an absolute sale though he knew that the transferor has only a mortgagee's interest, in such a case, though under the Acts of 1859 and 1871, Article 134 may not apply, I think under the Acts of 1877 and 1908 it applies. This is also the view taken by the Calcutta High Court in Ram Kanai Ghosh v. Raja Sri Sri Sri Hari Narayan Singh Deo Bahadur 2 C.L.J.546 which was also a case of a trustee. Seeing that the Privy Council have, come to the same conclusion in Subbaiya Pandaram v. Muhamad Mustapha Maracayar 25 Bom. L. R. 1275 : 28 C.W.N. 493 400. L.J. 20, I do not think any value can be attached to the dissent from the decision in Ram Kanai Ghosh v. Raja Sri Sri Sri Hari Narayan Singh Deo Bahadur 2 C.L.J.546 in Singaram Chettiar v. Kalyanasundaram Pillai 26 Ind. Cas. 1 : (1914) M.W.N. 735 : 1 L.W. 687.

4. Where the transfer is in the form of a sale-deed and the transferee bargained for an absolute interest and acted bona fide throughout, to such a case there is no doubt that Article 134 will always apply. Only the third case is the one in respect of which there seems to be some difference of opinion. But it seems to me that the preponderance of opinion in this High Court, in Bombay, in Calcutta and in the Privy Council is in favour of the view that Article 134 applies. In the present case, though, we may now construe Ex. I to be a deed of mortgage, it is impossible to say that the purchaser under Ex. 2 acted otherwise than bona fide. According to the terms of Ex. 1, the debt was to be paid off after the 12th of January 1876 and before the 12th of January 1878 and in default of payment on the latter date, it was to operate as an absolute sale; under the law as it then stood, the mortgagee might have honestly thought that he obtained an absolute title by the default of payment within the stipulated date and the transferee might have also similarly thought that the transferor had an absolute title. That both were acting perfectly bona fide is clear from the recitals in Ex. II. It must be remembered that the Transfer of Property Act had not been enacted in 1878. The Privy Council held in Pattabhiramier v. Vencatarow Naicken 2 Sar. P.C.J. 623 that the principle that a mortgage is for ever redeemable was not known to the ancient law of India. It is true that in a later case Thumbuswamy Moodelly v. Hossain Rowthen 1 Ind. Dec. 1 (P.C.) their Lordships indicated a different rule in the case of mortgages after the year 1858. But the parties to Ex. II might well have thought that in the case of mortgage documents between 1871 and 1875 the decision in Pattabhiramier v. Vencatarow Naicken 13 M.I.A. 560 : 15 W.R.P.C. 35 : 7 B.L.R. 136 2 Sar. P.C.J. 623 applied. It is true that the Madras High Court repelled such a contention, but this was long after 1878. In the above remarks I assumed that the parties to Ex. II knew that the proper construction of Ex. I is that it was a mortgage by conditional sale. But even this is extremely doubtful. Whatever view we may now take of Ex. I there is nothing to show that the parties to Ex. II did not honestly suppose it to be a deed of absolute sale which is what it purported to be. I think the present case is a case where the transferee acted bona fide according to the strictest meaning of the term, and Article 134 applied. There is nothing to show that he did not pay the full value, according to the prices that ruled in 1878. I think the appeal fails on this ground and ought to be dismissed with costs.

Spencer, J.

5. I agree. I am unable to regard the omission of the words 'in good faith' which appeared in the corresponding Articles of the Limitation Acts of 1859 and 1871, as being without any significance, so as to throw the onus on a purchaser of the full interest from a mortgagee to prove that he acted in good faith before he can plead limitation. The same Article 134 governs both properties conveyed in trust and properties mortgaged when they have been transferred afterwards for valuable consideration. In the case of trust property, the Privy Council has decided in Subbiaya Pandaram v. Muhamad Mustapha Maracayar 25 Bom. L. R. 1275 : 18 L.W. 903 : 50 I.A. 295 (P.C.) that a purchaser for valuable consideration with notice of the trust can under Article 134 plead 12 years' adverse possession as a defence to a suit brought by the trustees. I see no reason to suppose that trustees were intended to be put in a worse position than mortgagors as regards recovery of alienated property. The only distinction between the positions of a purchaser from a mortgagee and a purchaser from a trustee is that a mortgagee as such has the mortgagee's interest which is assignable in the property, whereas a trustee as such has no transferable interest. This distinction is pointed out in Subbaiya Pandaram v. Muhamad Mustapha Marcayar 40 Ind. Cas. 50 but nevertheless it was held in that case that a transferee of trust property need not prove good faith before taking advantage of Articlr 134, and the decision was confirmed by the Privy Council in Subbaiya Pandaram v. Muhammad Mustapha Maracayar 74 Ind. Cas. 402 : 400. L.J. 20 : 50 I.A. 295 (P.C.). My judgment in Kannuswami Thonjirayan v. Muthusami Pillai 38 Ind. Cas. 194 was quoted with approval in Muthaya Shetti v. Kanthappa Shetti (1918) M.W.N. 334 : 7 L.W. 482 : 23 M.L.T. 291, and we have not been shown any reason for doubting its correctness beyond a foot-noteat page 516 of Rustomji's Commentary on the Law of Limitation (3rd Edition). The view of the majority of the Full Bench which decided Mulla Vittil Seeti Kutti v. Kunhi Pathumma 43 Ind. Cas. 31 that Article 134 does not apply to cases where the transferee from a mortgagee does not get possession of the property will not help the appellants before us who are out of possession and ask for delivery of possession. In every case where Article 134 is set up as a defence by a transferee from a mortgagee it is material to see what interest the mortgagee purported to transfer to him vide Rego v. Abbu Beari 21 M. 151 : 7 Ind. Dec. 463; Muthaya Shetti v. Kanthappa Shetti 23 M.L.T. 291; Veerabadra Thevan v. Veerappa Tevan 15 Ind. Cas. 609 and Baluswami Aiyer v. Venkitaswamy Naicker 40 M. 745. Exhibit II dated July 16th, 1878, purports to be an absolute sale of the properties in Schedule A. and not a mere assignment of a mortgage interest in them. I think that both seller and purchaser must have honestly believed that the entire interest of the owner was being transferred by this document, seeing that if Ex. I dated January 12th, 1872, were to be treated as a sale, with an option for re-purchase after five years and before six years, the date for re-purchase had passed and the property had become vested entirely in the purchaser on January 12th, 1878. The present suit was rightly held by the Subordinate Judge to be time-barred and the appeal must be dismissed with costs.


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