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  • Article 116 of the First Schedule of the Indian Limitation Act, 1908 (9 of 1908),
  • Section 90 of the Indian Trusts Act
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citation codes
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  • Article 116 of the First Schedule of the Indian Limitation Act, 1908 (9 of 1908),
  • Section 90 of the Indian Trusts Act
Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

The plaintiffs (respondents) sought redemption of a zarpeshgi deed dated 2nd January, 1905 executed by their predecessor-in-interest Nakchhed in favour of Jado Lal (predecessor-in-interest of the appellants) for Rs. 1,000. The suit also involved lands earlier mortgaged by Nakchhed under a deed dated 17th September, 1885. As an alternative relief, the plaintiffs claimed Rs. 51,000 as compensation if they were found not entitled to redeem.

The plaintiffs alleged that the mortgagee was liable to pay rent but defaulted and, in collusion with the landlord's agents, a suit for recovery of arrears of rent resulted in a money decree. In execution of that decree an area of about 16 bighas of khata no. 152 was put to sale and purchased by Sitaram (in the name of Biltu).

Admittedly, the plaintiffs' claim to redeem the property mortgaged under the 17th September, 1885 deed was time-barred when the suit was instituted, so the suit was pressed only in respect of the property under the deed dated 2nd January (the record also refers to 1903 in one place).

The appellants admitted execution of the zarpeshgi sought to be redeemed and that a rent suit had been brought and executed, but contended that the auction sale extinguished the plaintiffs' right of redemption. They denied liability to pay rent, averred they had in fact paid rent, and relied on subsequent sale-deeds (Imamuddin to Hito Singh and to Ramgulam Singh) and a compromise in Title Suit No. 445 of 1923 (filed by Hito Singh) as extinguishing the mortgage.

The trial court dismissed the plaintiffs' suit in its entirety. The lower appellate court held that the execution sale or the compromise did not affect the validity of the mortgage or the plaintiffs' right to redeem, found the appellants liable to have been under a duty to pay rent, disbelieved appellants' contention that they had paid rent to the plaintiffs, but nonetheless held that because Hito Singh had redeemed, the plaintiffs could not get back possession and therefore awarded the plaintiffs compensation (Rs. 2,000 per bigha for the mortgaged land, after deducting the mortgage sum of Rs. 1,000), excluding land mortgaged in 1885.

Legal Issues Presented

  1. Whether the plaintiffs' right of redemption survived after the sale in execution of the money decree for arrears of rent, or whether that sale extinguished the right to redeem.
  2. Whether the plaintiffs' alternative claim for compensation for breach of the mortgage-deed obligations is barred by limitation (specifically under Article 116 of the First Schedule of the Indian Limitation Act, 1908).

Arguments of the Parties

Appellants' (Defendants First Party) Arguments

  • The auction sale under the execution of the rent decree extinguished the plaintiffs' right of redemption.
  • The appellants were not liable to pay rent; in any event they paid the rent of the plaintiffs.
  • Subsequent sale-deeds from Imamuddin transferred the disputed land to Hito Singh and Ramgulam Singh, and Hito Singh filed Title Suit No. 445 of 1923 which was compromised; thus the mortgage in their favour was extinguished and could not be redeemed by the plaintiffs, nor could plaintiffs obtain compensation.
  • As articulated by counsel Mr. Kailash Roy, specific points urged included: (i) the appellate court was wrong to hold that the right to redeem survived after sale; (ii) plaintiffs could not claim compensation for loss of mortgaged property due to the mistake of the mortgagees; (iii) plaintiffs' failure to satisfy the landlord's decree amounted to contributory negligence barring compensation; (iv) at any rate plaintiffs could not get compensation for the entire property; and (v) the relief for compensation is barred by limitation.

Plaintiff-Respondents' Case (as reflected in the opinion)

  • Plaintiffs sought redemption of the 2nd January zarpeshgi and alleged mortgagee default in paying rent, collusion with landlord's agents, a rent suit converted into a money decree, and an execution sale depriving them of the mortgaged property.
  • Alternatively, plaintiffs sought compensation (Rs. 51,000) for being deprived of their mortgaged property due to the mortgagee's breach.
  • Plaintiffs contended entitlement to redeem the mortgage (except for the 1885 mortgage which was time-barred).

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Sivachidambara Mudaliar v. Kamatchi Ammal (I.L.R. XXXIII Madras 71) Authority for the proposition that a mortgagor's suit for compensation (after sale caused by mortgagee's failure to pay revenue) brought more than six years after sale but less than six years from date of decree in redemption suit may not be barred under Articles 115/116 read with Section 23 of the Limitation Act. The Court distinguished this decision as inapplicable: in that case only part of the mortgaged properties were sold so the equity of redemption was not extinguished and a prior redemption decree had been obtained; in the present case the equity of redemption was extinguished (1916) and the mortgage-deed stood redeemed in 1924, so the Madras decision did not help the plaintiffs.

Court's Reasoning and Analysis

The bench examined two principal legal questions and decided the appeal on those grounds. The court's analysis proceeded in these steps:

  1. On the factual findings of the courts below: the courts did not accept the plaintiffs' allegation of collusion between the landlord and the mortgagees; the auction purchaser was found to be a bona fide purchaser. Because of those findings, Section 90 of the Indian Trusts Act (invoked in argument) was not applicable. The court explicitly noted this factual conclusion and its legal consequence.
  2. Characterisation of the rent decree as a money-decree was critical. The court held that where a decree for rent takes the form of a money-decree, the execution sale operates as a sale of the mortgagor's right to redeem (i.e., it sells the right of redemption rather than extinguishing only a part of the security). On that basis the court found that the plaintiffs' equity of redemption came to an end with the execution sale. The appellate court below had erred in holding that the right to redeem survived the sale; nevertheless, because the right had been extinguished, dismissal of the redemption relief was correct.
  3. Regarding the compensation claim, the court applied the Limitation Act. It held that Article 116 of the First Schedule (six years for suits for compensation for breach of a contract in writing registered) governed the plaintiffs' compensatory claim. The court explained how the limitation period runs: from the time the contract is broken or when the relevant breach occurs (or, for continuing breaches, when it ceases), and that Article 116 refers to the corresponding time-limits which would apply under Article 115 for an unregistered contract.
  4. The court determined the relevant dates from which limitation would run: the equity of redemption was extinguished on 7th September, 1916; the mortgage deed itself stood redeemed in 1924. The present suit was instituted in 1960 (per the opinion), which is materially beyond six years from either of those dates. Consequently, the relief for compensation was held to be barred by limitation.
  5. The court considered and distinguished the Madras High Court decision cited by plaintiffs (Sivachidambara Mudaliar v. Kamatchi Ammal). It explained that in that case there had been only partial sale at revenue sale leaving some equity of redemption intact and a prior redemption decree had been obtained; therefore that decision did not assist the plaintiffs in the present facts where the equity of redemption had been extinguished and there had been no timely suit within the six-year period.
  6. The court expressly limited its consideration to the two grounds on which the appeal would succeed (extinguishment of the equity of redemption by sale; limitation bar to the compensation claim) and declined to decide other contentions raised by appellants because those were not necessary to the decision.

Holding and Implications

APPEAL ALLOWED

Holding: The Court allowed the appeal. It concluded that (a) the execution sale of the mortgaged property (in execution of the rent decree which was a money-decree) extinguished the plaintiffs' equity of redemption, so the plaintiffs were not entitled to redeem; and (b) the plaintiffs' alternative claim for compensation was barred by limitation under Article 116 of the Limitation Act.

Immediate Consequence: The judgment and decree of the lower appellate court were set aside; the judgments of the court of first instance were restored (except in respect of costs). The parties were directed to bear their own costs throughout.

Broader Implications: The opinion applies established principles about the effect of execution sales under money decrees on the equity of redemption and the operation of limitation (Article 116) to compensation claims arising from alleged breach of mortgage obligations. The court distinguished an earlier Madras High Court decision on its facts; the opinion does not purport to establish a new general precedent beyond applying these principles to the facts before it.

Appeal allowed.

This summary is strictly confined to information contained in the provided opinion; no facts or authorities beyond those in the opinion have been added.

    Janki Sah & Others v. Girja Singh & Others

    Shambhu Prasad Singh and A.N Mukharji, JJ.:— This appeal is by defendants first party. It arises out of a suit in which the plaintiff respondents claimed redemption of a zarpeshgi deed, dated the 2nd January, 1905 executed by Nakchhed, their predecessor-in-interest, in favour of Jado Lal, the predecessor-in-interest of the appellants, for a sum of Rs. 1,000/-. It also included some lands which had been previously given in zarpesbgi by Nakchhed to Madari, brother of Hito Singh, by a deed, dated the 17th September, 1885. In the alternative, the plaintiff-respondents claimed a decree for Rs. 51,000/- as compensation in case it was found that they were not entitled to redeem the zarpeshgi bond. The plaintiff-respondents alleged that, though the mortgagee was liable to pay the rent of the mortgaged land to the landlord, he deliberately defaulted in payment thereof, and, in collusion with the agents of the landlord, got a suit for recovery of arrears of rent filed, which ended in a money decree, and in execution thereof, an area of 16 bighas and odd of khata no. 152 was put to sale and purchased by Sitaram, son of Hito Singh, in the name of one Biltu.

    2. Admittedly, the relief for redemption in respect of the property mortgaged by Nakchhed under the deed dated the 17th September, 1885 had become time-barred on the date the Buit was instituted. The suit was, there fore, pressed only in respect of the property mortgaged under the deed dated the 2nd January, 1903, excluding that mortgaged by the deed dated the 17th September, 1885. The appellants did not dispute the execution of the zarpeshgi sought to be redeemed, nor did they dispute the allegations that the landlord had brought a suit for recovery of arrears of rent in respect of the land covered by the zarpesbgi, which was decreed, and the land was auction-sold and possession delivered to the auction-purchaser in Execution Case No. 1271 of 1916. They, however, claimed that the auction-sale extinguished the right of redemption of the plaintiff-respondents. They denied that the liability to pay rent was on the mortgagee. They further averred that, though they were not bound to pay the rent, they paid the rent of the plaintiff-respondents. According to them, one Imamuddin purchased the interest of the landlord, and transferred an area of 12 bighas of the disputed land to Hito Singh by means of a sale-deed dated the 12th May, 1922. Imamuddin also transferred 4 bighas 17 kathas 5 dhurs of land to Ramgulam Singh by virtue of a sale-deed dated the 5th May, 1919. On the basis of the sale-deed in his favour, Hito Singh filed a suit for redemption against the defendants first party, which was numbered as Title Suit No. 445 of 1923. The plaintiff-respondents were also impleaded in that suit. The suit was ultimately compromised and Hito Singh and others got possession of the land purchased by them from Imamuddin. Thus, according to the defendants-appellants, the mortgage in their favour was extinguished and could not be redeemed by the plaintiffs nor could they get a decree for compensation.

    3. Some other defendants, who filed written statements, supported the case of the appellants.

    4. The Court of first instance held that the plaintiff-respondents were not entitled to either of the two reliefs. It, accordingly, dismissed the suit in toto. The lower appellate court has held that the sale in execution of the decree for arrears of rent, which had the effect of a money-sale, or the compromise in the redemption suit, did not affect the validity of the mortgage in question and the right of the plaintiffs to redeem. It further held that, in terms of the mortgage, the mortgagee-appellants were liable to pay the rent and the landlord had to bring the suit for recovery of arrears of rent as they defaulted in payment thereof. It also disbelieved the case of the appellants that they had paid the rent in respect of the mortgaged land to the plaintiff-respondents. It however, thought that, in view of the redemption of the mortgage by Hito Singh, the plaintiff-respondents could not redeem the mortgage and get back the property; but as the sale took place on account of default in payment of rent by the appellants, the plaintiff-respondents were entitled to compensation at the rate of Rs. 2,000/- per bighas for the land mortgaged, excluding the land which was the subject matter of the mortgage of 1885, after deducting the mortgage money of Rs. 1,000/-. From the judgment of the lower appellate court, it appears that the learned Additional District Judge was not inclined to believe the case of the plaintiff-respondents of any collusion between the landlord and the appellants.

    5. Mr. Kailash Roy, learned counsel for the appellants, has urged the following points:—

    (i) that the Court of appeal below is wrong in holding that the right of redemption survived after the sale;

    (ii) that the plaintiff-respondents could not claim compensation for loss of the mortgaged property due to the mistake of the defendant-mortgagees;

    (iii) that, as the plaintiff-respondents did not satisfy the decree of the land-lord in the rent suit, there was contributory negligence on their part and hence they could not get any compensator;

    (iv) that, at any rate, the plaintiff-respondents could not get compensation for the entire property; and

    (v) that the relief for compensation, which has been granted, is barred by limitation.

    6. In our opinion, as the appeal must succeed only on two of the grounds urged by Mr. Roy, namely, that the right of the plaintiff-respondents for redemption did not survive after the sale, and that the relief for compensation is barred by limitation, we do not consider it necessary to go into the merits of the other contentions raised by Mr. Roy.

    7. As observed earlier, the Courts below have not believed the case of the plaintiffs that there was any collusion between the landlord and the mortgagees and have held that the purchaser at the auction sale was the real purchaser. In that view of the matter no question of the application of Section 90 of the Indian Trusts Act arises. As the decree in the rent suit had the effect of a money decree, the mortgage subsisted, and what was sold was the right of the mortgagors to redeem the mortgage. Therefore, with the sale, the right of the plaintiffs to redeem came to an end. That being the position, though the Court of appeal below has wrongly held that the right of redemption survived even after the sale, it has rightly dismissed the suit so far as the relief for redemption was concerned.

    8. The decree for compensation in favour of the plaintiffs has been passed only on the basis that there was breach of contract on the part of the mortgagee-appellants, and the plaintiff-respondents were deprived of the mortgaged properly on that account. The suit for such a relief filed in the year 1960 would be governed by Article 116 of the First Schedule of the Indian Limitation Act, 1908 (9 of 1908), which prescribed six years' period of limitation for a suit. For compensation for the breach of a contract in writing registered (as is the case here). That period of six years would begin to run from the time, when the contract is broken, or (where there are successive breaches.) When the breach in respect of which the suit is instituted occurs or (where the breach is continuing) when it ceases. Actually Article 116, as to the time from which period begins to run, says “When the period of limitation would begin to run against a suit brought on a similar contract not registered”, that is, the time from which the period would begin to run, if the case would have been governed by Article 115, and what has been stated above is actually mentioned in column 3 against Article 115 of the Act. There can be not breach of any term incorporated in a mortgage deed after the equity of redemption is extinugished, or, at best the mortgage does not subsist. The equity of redemption of the plaintiffs was extinguished on the 7th September, 1916. The mortgage deed itself stood redeemed in the year 1924. The present suit has been filed after much more than six years from either of these two dates. Therefore, the relief for compensation, as claimed in the suit, must be held to be barred.

    9. In reply to the contention of learned counsel for the appellants that the suit was barred by limitation, learned counsel for the plaintiffs has placed strong reliance on a decision of the Madras High Court in (1) Sivachidambara Mudaliar v. Kamatchi Ammal (I.L.R XXXIII Madras 71). It was held in that case that where the mortgagee in possession, who was bound by the terms of the mortgage deed to pay the Government revenue due on the land, neglected to do so and the mortgaged land was sold, a suit for compensation by the mortgagor, brought more than six years after such sale and less than six years from the date of the decree in the redemption suit brought by the mortgagor, was not barred under Articles 115 and 116 of the Limitation Act, read with Section 23 of the Act. In our opinion, that decision is distinguishable and is of no help to the plaintiff respondents. In that case, at the revenue sale, which took place on account of the default of the mortgagee to pay the revenue, the entire property mortgaged was not sold but only certain items of the properties mortgaged were sold. Hence, the equity of redemption of the mortgagor was not extinguished, as he remained a mortgagor in respect of a part of the properties mortgaged. Further, the suit for redemption filed by the mortgagor earlier bad already been decreed against the mortgagee and it was no more open to the mortgagee to say that the right of equity of redemption of the mortgagor bad come to an end as a result of the revenue sale. The decree in the redemption suit operated as res judicata in the subsequent suit for compensation on the question of existence of the right of redemption in the mortgagor. The expression “so long as the mortgagor's right to redeem is not barred” used in the judgment of their Lordships of the Madras High Court has been used in a wider sense. It does not necessarily mean “barred by limitation”. Their Lordships wanted to emphasise that the mortgagee's obligation to put the mortgagor in possession of the properties mortgaged could not cease so long as the mortgagor's right to redeem subsisted. In other words, the said obligation of the mortgagee comes to an end as soon as the mortgagor's right to redeem comes to an end, or the mortgage does not subsist. In the case before us, the mortgagor's right to redeem came to an end in the year 1916. The mortgagee's obligation to put the original mortgagor, of his successors-in-interest, in possession on redemption also came to an end in the year 1924. The present suit has been filed much beyond six years from either of these two dates.

    10. A cross-objection has also been filed on behalf of the plaintiff-respondents praying that the court of appeal below ought to have passed a decree for redemption itself, and not for the alternative relief for compensation. But the cross-objection has not been pressed obviously because there is no merit in it.

    11. In the result, the appeal is allowed, the judgment and the decree of the court of appeal below are set aside and those of the Court of first instance, except with regard to costs, are restored. In the circumstances of the case, the parties shall bear their own costs throughout.

    Appeal allowed.

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    Comments

    Janki Sah & Others v. Girja Singh & Others
    (Nov 24, 1972)