JUDGMENT ON LIMIATION FOR MORTGAGED PROPERTY------Madras High Court M. Ramanatha Pillai vs K.V. Annamalai Chettiar And Anr. on 4 May, 1962
Para No.
15 Page No. 6
M. Ramanatha Pillai vs K.V. Annamalai Chettiar And
Anr. on 4 May, 1962
Equivalent citations: AIR1963MAD342,
(1963)1MLJ263, AIR 1963 MADRAS 342, 1976 MADLW 815, ILR (1963) MAD 580, (1963)
1 MADLJ263
JUDGMENT
Ganapatia
Pillai, J.
1.
The first defendant is the appellant. The suit out of which this appeal arises
was laid by the first respondent as plaintiff for recovery of Rs. 365 due under
an othi deed, dated 28th July 1943. This was executed by the appellant both on
his own behalf and as guardian of his elder brother's sons, defendants 2 and 3,
who were minors on the date of the othi deed. The sum claimed consisted of Rs.
200 principal and interest at 51/2 per cent, per annum from the date of the
mortgage deed. Contentions were raised as regards the validity and binding
character of the mortgage in regard to the share of defendants 2 and 3 and also
on the question of the mortgage being a real transaction. I am not concerned
with these questions in this appeal. But, a question of limitation was raised
on the ground that since the mortgagee was entitled to possession of the
mortgaged property and such possession was not delivered the suit ought to have
been filed within twelve years from the date of the mortgage deed and not
within twelve years from the date of the expiry of the three years period fixed
in the mortgage deed for repayment of the mortgage amount. Both the lower
Courts have negatived this contention. That is the only point arising for my
consideration now.
2.
The facts are not in dispute. The date
of the mortgage deed, Ex. A.1, is 28th July 1943. The period fixed for
repayment in the mortgage deed is three years. It was alleged that the mortgaged
property was leased back to the mortgagor on the basis of a tenancy from year
to year. But, at the end of the first year no rent was paid, nor possession of
the property surrendered. Both the lower Courts proceeded on the assumption
that this lease was not given effect to and consequently the mortgagee was not
given possession of the property. The
suit was filed on 29th July 1958. It would therefore be within time
under Article 132 of
the Limitation Act if
the starting point for limitation was the end of three year period fixed in the
mortgage deed for repayment of the mortgage money. But it would be barred by
time if the mortgagee had exercised option under Section
68(1)(d) of the Transfer of Property Act
and brought the suit for the money due on the mortgage since possession was not
given to him.
3.
Mr. Natesan, learned counsel for the appellant, raised two points.
The
first was that the provisions of Section 68(1)(d) of the Transfer of Property Act (hereinafter
called the Act) cast an obligation upon the mortgagee in this case to file a
suit for the mortgage money within twelve years from the date of default of the
mortgagor to give possession and consequently; the suit would be barred by
limitation.
The
second contention was that even if this provision in the Act is regarded as a
provision for the benefit of the mortgagee upon which she could base her cause
of action as an alternative to the cause of action based upon the covenant in
the mortgage deed for repayment of the mortgage money, still the original
mortgagee in this case had exercised the option to avail herself of the remedy
provided under Section
68(1)(d) of the Act by the notice Ex. A.7,
issued on 15th September 1944 and consequently she was not entitled to rely on
the personal covenant to bring a suit within twelve years from the end of the
three year period fixed in the mortgage deed for payment. If this argument is
correct and an election was made by the mortgagee on 15th September 1944, the
date of Ex. A. 7, the suit would be barred by faro because it was admittedly
filed more than three years after the date of Ex. A. 7. The first respondent
who filed the suit was an assignee of the mortgage from the mortgagee, but that
fact does not enter into the merits of the question which I have to decide.
4. Article 132 of the Limitation Act provides a twelve year period of limitation
for suits to enforce payment of money charged on immoveable property. This
period of twelve years begins to run from the date when the money used for
becomes due. According to counsel for the appellant the money sued for became
due under the personal covenant in the mortgage deed on the expiry of the three
year period and alternatively it also became due under Section 68(1)(d) of the Transfer of Property Act when the
mortgagee (sic) defaulted to give possession of the mortgaged property to the
mortgagor (sic).
The
argument was that the mortgagee cannot have two causes of action for the same
claim and where the statute gave a right to sue for money, it must prevail over
the right contained in the contract. This argument proceeds on the
misconception that there are two separate causes of action in this case for the
same right or relief, viz., recovery of money due under the mortgage. The
nature of the right conferred under Section 68(1)(d) if analysed would turn out to be nothing but
compensation to the mortgagee for the default of the mortgagor to surrender
possession of the mortgaged property. A statutory right is given to the
mortgagee to claim the mortgage amount in cases falling under Section 68(1)(d) of the Act which is only in the nature of
compensation to the mortgagee and not an alternative remedy for recovery of the
mortgage money based on the right founded upon the personal covenant contained
in the mortgage deed to repay the mortgage money. It is true the amount
recoverable by the mortgagee under Section 68(1)(d) is identical in quantity with the mortgage
money mentioned in the mortgage deed. But, that would not affect the nature of
the claim dealt with in the statutory provision. Consequently, merely because
the amounts sued for in either case would be the same it could not be said that
the cause of action is the same though satisfaction for one cause of action
would extinguish the other.
Really
the cause of action under the mortgage deed is based upon contract while the
cause of action for the recovery of the amount of the mortgage claim money by
virtue of the provisions of Section 68(1)(d) is in the nature of a right to claim
compensation.
In
cases of usufructuary mortgages containing a personal covenant by the mortgagor
to pay the mortgage money and default takes place in giving possession of the
mortgaged property there is only one cause of action or recovery of the
mortgage money because in such a case Section 68(1)(d) would not be attracted if the suit is laid
for the mortgage money after it becomes due according to the tenor of the
mortgage deed. There is therefore no force in the contention that in a case
where a mortgagee as here has both a cause of action based upon the personal
covenant in the mortgage deed and a right to recover the mortgage money by
virtue of the provisions of Section 68(1)(d) of the Act, he gets two causes of action for
the same claim.
In
my view, there are two causes of action no doubt, but they are not for same
claim. The object with which Section 68 was enacted would sup-
port
my view because the right to sue for the mortgage money was conferred upon a
usufructuary mortgagee who would normally be not entitled to such a right because
by the definition of "usufructuary mortgage" no personal covenant to
repay the mortgage amount is involved in that class of mortgages. Thus Section 68 was, really intended by the Legislature to
confer upon a usufructuary mortgagee a right to sue for the mortgage money if
he otherwise would not have had that right. To construe Section 68 in the manner contended for by Mr. Natesan,
would mean that the legislature compelled a mortgagee who had a right to sue
for the mortgage money by reason of the personal covenant in the mortgage deed
to abandon that right and to rest in his claim solely upon Clause (d) of Section 68(1). The object of that provision was to confer a
right which did not already exist in the mortgagee and not to take away any
right which he already possessed by reason of the contract.
5.
The nature of the right conferred by Section 68(1)(d) has been the subject of judicial
pronouncements in many High Courts. It may be really not necessary to traverse
the entire field of case law on the subject because the preponderance of
judicial opinion is that this is in the nature of a privilege given to the
mortgagee which he was free to reject in suitable cases. This implies that this
privilege of suing for the mortgage money conferred by Section 68(1)(d) could not be converted into an obligation
when alone Mr. Natesan's. contention could prevail.
6.
Mr. Natesan attempted to show that in interpreting the language of Article 132 of the Limitation Act regarding the point when the period of
limitation starts, the term "when the money sued for becomes due"
should be held equivalent to "when the money becomes payable". The
term "when the bill, note or bond becomes payable" in Article 80 of the Limitation Act, has come up for consideration in many' decisions,
but it will serve no useful purpose to review them as the principles laid down
in those decisions cannot apply to Article 132. However, certain observations occurring in
the Full Bench decision in Subbamma v.
Narayya, ILR 41 Mad 259 : (AIR 1919 Mad 1164) (FB) were relied
on by Mr. Natesan in this connection.
7.
There a suit was brought for sale of usu-
fructuarily
mortgaged property on the allegation:
that the defendant, viz., the mortgagor
did not give possession to the mortgagee. The question which arose for
consideration of the Full Bench was whether the usufructuary mortgagee was not
entitled to sue for sale of the mortgaged property when the mortgagor failed to
deliver possession of the property to the mortgagee and consequent ly whether
he was bound to sue for the money alone. The Full Bench held that when under a
usufructuary mortgage possession was not given it ceased to be a usufructuary
mortgage and the power of bringing the property to sale on failure to pay the
mortgage money could not be exercised by him under the contract but he was
entitled to sue for the money under Section 68 of the Act. In setting out this conclusion
Wallis C. J. made the following observations :
"A mortgagee to whom possession
has not been given is not a usufructuary mortgagee. Consequently he does not
come within the proviso and is entitled to sue for foreclosure or sale under
the section (Section 69), in the absence of a contract to the contrary,
"at any time after the mortgage money has become payable to him,"
Section 68 entitles the mortgagee to sue the mortgagor for the mortgage money
'where the mortgagee being entitled to possession of the property,, the
mortgagor fails to deliver the same to him, or to secure the possession thereof
to him without disturbance by the mortgagor or any other person. The first of
these events having happened, the mortgagee has become entitled to sue for the
mortgage money, or in other words, the mortgage money has become payable to
him, and he is entitled under Section 67 to sue for foreclosure or sale, in the
absence of a contract to the contrary which cannot be implied".
8.
The Full Bench concluded that once the mortgage money became payable under any
clause in Section 68 there could be no reason for refusing to give effect to
Section 67 which allows a suit for foreclosure or sale at any time after the
mortgage money has become payable.
9.
It is true the learned Judges constituting the Full Bench considered that the
right of a mortgagee to enforce a payment of the mortgage money under Section
68 carried with it the right to sue for foreclosure for sale. In describing
this right, the learned Judges have mentioned that in a case falling under
Section 68, the mortgage money becomes payable to the mortgagee. But the
question for their determination was not whether by thus becoming payable the
mortgagee loses the benefit of the personal covenant contained in the mortgage.
They were not concerned with that question in the case before them as that was
a case of usufructuary mortgage, pure and simple, containing no personal
covenant for payment. The observations in question cannot therefore be relied
upon as an authority upon Article 132 for construing the term "When the money
sued for becomes due." The contention of Mr. Natesan that these
observations would imply that in a case covered by Section 68(1)(d) the
mortgage money becomes payable not only for the purpose of conferring the right
to bring a suit for foreclosure or sale but also for the purpose of limitation
cannot therefore be accepted as correct.
10.
Learned counsel then referred to the decision in Gangaram v. Raghubans, ILR 27
Pat 898, in support of his argument. There the question was when the unpaid
purchase money under a sale became due. Section 55(5)(b) of the Act provides for the liability of the
purchaser to pay or tender, at the time and place of completing the sale, the
purchase money to the seller or such person as be directs.
The
facts in that case were : out of the consideration for the sale a portion was
paid in cash and the balance was left with the purchaser to be paid to the
mortgagee holding mortgages over the property sold. There was no indication in
the sale deeds as to when the purchaser was bound, to pay the amount due to the
mortgagee. The purchaser not having paid the amount reserved with him for
payment to the mortgagee, he obtained a decree for recovery of the mortgage
money due and the seller satisfied this decree by payment. Thereafter a suit
was brought by him enforce the statutory charge for recovery of the balance of
purchase money due and the question arose when that amount became due under
the Article
132 of the Limitation Act.
The
Bench held that in the absence of a contract to the contrary between the
parties, the direction to the buyer to pay the price to the seller or to a
third party was not , a contract inconsistent with the existence or continuance
of the statutory charge under Section 55(5)(b) and since there was nothing to
indicate that the seller had agreed to postpone payment of the unpaid purchase
money to a future date, that amount was payable to the seller or to the third
party indicated in the deed of sale on the date of the sale itself and the statutory
charge could be enforced within 12 years from the date of the sale as the money
became due on the date of the sale itself. Mr. Natesan contends that ore the
analogy of this decision it should be held that the money claimed in this
litigation became due under Article 132 of the Limitation Act on the date when the right under Section
68(1)(d) arose.
11.
A statutory charge differs from the right to compensation provided under Section 68(1)(d) of the Act, because I think it does not
create a new cause of action, but only provides a new remedy for an existing
cause of action. A right to recover unpaid purchase money under Section 55(5)(b) of the Act is based upon the covenant in the
sale deed to pay the purchase money. That covenant could be enforced in more
than one way according to the terms of the contract. The statute, however,
provides that in the absence of a contract to the contrary, the seller would be
entitled to a charge for the unpaid purchase money upon the property sold. This
does not mean that a new cause of action is given to the seller under this
statutory charge for claiming the amount due as unpaid purchase money.
12.
In another view also this decision can be distinguished because there the money
in the hands of the purchaser remained the money of the vendor and the
purchaser was only an agent of the vendor with a direction to pay it to a
particular individual. The fact that the agent did not carry out the direction
of the principal would make no difference in the character of the claim made by
the principal for the recovery of the money left in the hands of the purchaser.
The cause of action for the recovery of that money was the original cause of
action, viz., that contained in the contract for sale. This decision would
therefore have no application here.
13.
Mr. Natesan also referred to the Privy Council decision in L. Narsingh Partab Bahadur Singh v.
Mohammed Yaqub Khan, ILR 4
Luck 363: AIR 1929 PC 139) where the question was whether in the case of a
combination of a simple mortgage and a usufructuary mortgage the mortgagee
could claim the rights conferred under S. 67 of the Act to bring the property to sale for
nonpayment of the mortgage amount. The controversy before the Privy Council was
whether the mortgage in question fell under the classification anomalous
mortgage and therefore was hit by the provisions of Section 98. The conclusion
that the mortgage deed in that case attracted Section 68 has no relevance to the
question which I have to decide here.
14.
Mr. Natesan then referred to the decision in Lasa Din v. Mt. Gulab Kunwar, ILR
7 Luck 442: (AIR 1932 PC 207), and the decisions which followed it. But, in my
opinion, these decisions have no bearing on the question I have to decide
because they were concerned with the provisions in the mortgage deeds and other
debt documents giving the right to the mortgagor to pay the amount of the
mortgage money in instalments and providing that on default of payment of any
one instalment the entire mortgage money would become due.
15. The question of limitation now
raised has been considered by a Bench of the Bombay High Court in Sidramaya
v. Danava, . There the nature of the right conferred upon a
mortgagee under Section 68(1)(d) was analysed in all its bearings and it was
held that it did not amount to an obligation but only amounted to a concession
to the mortgagee. It was further held there that if the mortgagee was entitled
to enforce payment of the mortgage money both by reason of the personal
covenant contained in the mortgage deed and also by reason of the provision in
Section 68(1)(d), it was open to him to wait till the expiry of the period
fixed for payment in the mortgage deed and to bring a suit within 12 years
after the expiry of that period despite the accruing of the right to sue for
the mortgage money earlier under Section 68(1)(d). I am in respectful agreement
with the view expressed by the Bench on this question. It is unnecessary for me
to notice at length the grounds for the conclusion mentioned by the learned
Judges constituting the Bench because I have already indicated in this judgment
the principal grounds which have been relied on in that judgment.
16.
There is one other point which I would like to mention as supporting my View,
viz., that the mortgagee in this case not bound to sue for recovery of the
money within 12 years from the date when the mortgagor failed to deliver
possession. A right to redeem the mortgage is a statutory right and it arises
under Section 60 of the Act after the principal money secured
by the mortgage "has become due". This section was amended in 1929
and the phrase "after the principal money has become payable" was
altered and the phrase introduced by the Amending Act was "after the principal money has
become due". This alteration, in one sense, supports my view that what was
intended by Article
132 when it used the expression
"when the money sued for becomes due" was the point of time indicated
by the contract between the parties as the date fixed for repayment and not the
point of time indicated by Section 68(1)(d). If the mortgagor has a right to
redeem the mortgage only after the principal amount has become due according to
the terms of the contract contained in the mortgage deed, it stands to reason
that the mortgagor could not be given an earlier right for redemption unless
the mortgagee chooses to file a suit for recovery of the mortgage money under
Section 68(1)(d).
Supposing
in a case where a mortgagee is entitled to sue for the mortgage money both on
the personal covenant contained in the mortgage deed and under Section 68(1)(d)
and, further supposing that the mortgagee does not choose to sue for the
mortgage, money under Section 68(1)(d), but waits for the expiry of the period
for repayment fixed in the mortgage deed, could it be said that a right of
redemption is conferred upon the mortgagor even before the time fixed for
payment arrives merely on the ground that under Section 68(1)(d) a right to sue
for the mortgage money had already accrued to the mortgagee. Of course, if a
suit for recovery of the mortgage money is actually brought by reason of
Section 68(1)(d) even before the expiry of the period fixed in the mortgage
document for payment of the mortgage amount, the Court is bound to give the
option to the mortgagor to pay the amount and redeem the mortgage before
ordering sale of the mortgaged property. Thus a right of redemption is given to
the mortgagor in such a case only if and when the mortgagee exercises the right
to sue for the money under Section 68(1)(d) before the date fixed for payment.
In no other case could a mortgagor claim the right of redemption before the
date fixed for payment under the mortgage deed.
To take any other view would lead to the anomaly that
by his own default the mortgagor would hasten the time when he could redeem the
mortgage. This would be nullifying the intention of the parties to the contract
when they had fixed a period for, re-payment which carries the implication that
before the expiry of that period the mortgagor could not exercise the right of
redemption. I therefore agree with both the lower Courts that the suit in this
case was not barred by limitation since the mortgagor (sic) was entitled to
wait for a period of 12 years after the date fixed for payment in the mortgage
deed before filing the suit on the personal covenant for recovery of the
mortgage money.
17.
The next contention of Mr. Natesan based upon Ex. A.7 amounts to this that a
notice issued by the mortgagee containing a demand for payment, of the mortgage
money basing the claim upon Section 68(1)(d) would amount to an irrevocable
election to choose the statutory cause of action implying an abandonment of the
cause of action based upon the personal covenant in the deed.
18.
In Rajendra Bahadur v. Raghubir Singh. AIR 1934 Oudh 473, it was held by a
Bench of the Oudh Chief Court that the occurring of default in payment of the
interest due under the mortgage deed which was made payable at stipulated
periods even before the date fixed for the repayment of the principal gave an
option to the mortgagee to sue for the entire mortgage money together with
interest and a suit laid after issuing of notice to the mortgagor calling upon
him to pay the entire amount was not premature.
In
taking this view the Bench followed the Privy Council decision in ILR 7 Luck
442: (AIR 1932 PC 207), where it was observed that in such a case as soon as
the mortgagor defaulted in paying the interest due under the mortgage, the
mortgage money became payable within the meaning of Article 132 of the Limitation Act provided the option had been exercised by the
mortgagee to enforce the mortgage.
19.
I am unable to see how this decision has any bearing on the question whether an
option is exercised by the mortgagee. The mere issue of a notice to the
mortgagor, to pay the mortgage money on the happening of the contingency
contemplated under Section 68(1)(d) does not amount to an unequivocal act or
election to abandon the remedy based upon the cause of action contained in the
deed in preference to the remedy provided under Section 68(1)(d).
20.
Mr. Natesan next referred to the fact that interest was claimed in the plaint
from the date of the mortgage deed and not from the date of notice Ex. A.7. I
do not see how this has any bearing on the question as to the starting point
for the period of limitation though the right to claim interest from the date
of the mortgage, may be doubted.
21.
In my view a real election would arise in the case of a mortgagee electing to
sue for the mortgage money under the provisions of Section 68(1)(d) of the Act only as between two remedies,
viz., suing for recovery of possession of the mortgaged property and suit for
recovery of the mortgage money. In electing for the one and not for the other
it could be well said that the mortgagee in such a case had abandoned the other
remedy. But, there is really no option or election in a case like the present
where the right to sue for the mortgage money is already secured by the
mortgage deed. An election involves the principle that one has to choose
between two inconsistent rights of remedies. There could therefore be no
election in any legal sense in the case of a mortgagee entitled to sue for the
mortgage money both by reason of covenant in the contract and the provisions of
Section 68(1)(d) who chooses to enforce the covenant and not the statutory
right for getting payment. I therefore overrule this contention also.
22.
In the result, the second appeal fails and is dismissed with costs.
23.
No leave.