Translate
Text Highlighter

Bookmark

PDF

Share

Report a problem
AMICUS AI
Citation Codes
Equivalent Citations
citation codes
Case Number
Judges
  • Broomfield
  • Lokur, JJ.
Acts
Are you a practicing lawyer?
Enhance your digital presence and reach by creating a Casemine profile.
Upload pleading to use the new AI search
Click here to upload
Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Judges
  • Broomfield
  • Lokur, JJ.
Acts
See more information ...
Smart Summary

Judgment Summary — Broomfield, J. (Second Appeal)

Factual and Procedural Background

The dispute concerns certain fields at Hukeri originally mortgaged in 1870 by Govind Krishna by a possessory mortgage (Ex. 44). Under that mortgage the mortgagee was to enjoy the property in lieu of interest and until the principal Rs. 150 was paid and the land redeemed. Govind Krishna died in 1881; succession passed to his brother's widow Ramabai (d. 1892) and thereafter to five distant cousins of Govind Krishna.

One cousin, Raghavendracharya (defendant 3 and the appellant in this appeal), brought a suit in 1931 under the Dekkhan Agriculturists' Relief Act for accounts and redemption. On account-taking it was found that nothing was due on the mortgage and, in 1932, a decree directed the heirs of the mortgagee to deliver possession free from the mortgage charge. Defendant 3 obtained possession pursuant to that decree.

In 1933 and 1934 two of the other cousins sold their rights (each purporting to sell one-fourth) to the plaintiffs (respondents 1–4). In April 1937 the plaintiffs sued, relying on those sale deeds, to recover a half share in the property. The trial court and the first appellate court held the plaintiffs' suit to be maintainable; the trial judge awarded the plaintiffs one-fifth and the Assistant Judge increased that to two-fifths. The present second appeal raises principally questions of limitation and the construction of Section 92 of the Transfer of Property Act.

Legal Issues Presented

  1. How should Section 92 of the Transfer of Property Act (subrogation of a redeeming co-mortgagor to the mortgagee's rights) be construed in relation to the rights of co-mortgagors and the remedy available to them?
  2. Whether a suit by co-mortgagors for possession against a co-mortgagor who has redeemed (and obtained possession) is maintainable, or whether their remedy is restricted to a suit for redemption/contribution.
  3. Whether, where accounts under the Dekkhan Agriculturists' Relief Act show nothing due, there has in law been "redemption" for the purposes of subrogation under Section 92.
  4. Whether the mortgage in this case should be treated as a usufructuary (self-redeeming) mortgage under Section 62 and, if so, how that would affect the rights and limitation period of co-mortgagors.
  5. Which article of the Limitation Act governs a suit by co-mortgagors against a co-mortgagor who has redeemed — specifically, whether Article 148 applies and from what date limitation runs.
  6. Whether any admission in an earlier plaint (in the 1931 suit) can be treated as an acknowledgement under Section 19 of the Limitation Act to toll or revive limitation for the plaintiffs' claim.

Arguments of the Parties

Defendant 3 (Appellant) — Principal Arguments

  • The suit for possession by the plaintiffs was not maintainable because, relying on Sections 92 and 95 of the Transfer of Property Act, a co-mortgagor who redeems is subrogated to the rights of the mortgagee and thus enjoys the mortgagee's rights (including the right to insist on being redeemed); other co-mortgagors' proper remedy is a suit for redemption/contribution, not a suit for possession.
  • Because the 1931 suit resulted in defendant 3 obtaining possession pursuant to a decree, he is entitled to take advantage of the law of limitation in respect of that possession.

Plaintiffs (Respondents) — Principal Arguments

  • No question of subrogation arises because accounts taken under the Dekkhan Agriculturists' Relief Act showed that the mortgagee had recovered principal and interest from income, leaving nothing payable — therefore, plaintiffs argue, there was no redemption in the ordinary sense.
  • Alternatively, the mortgage should be treated as a usufructuary (self-redeeming) mortgage under Section 62, in which case the possession of defendant 3 would be adverse and the applicable limitation article would differ (and plaintiffs relied on case law to that effect).
  • On limitation, plaintiffs relied on case law (A.I.R. 1930 Nag. 300) that limitation under Article 148 begins from the date the co-mortgagor redeems the mortgage, which would support their suit being within time.
  • Plaintiffs also argued (late in the proceedings) that an admission in the 1931 plaint by defendant 3 could amount to an acknowledgment under Section 19 of the Limitation Act to take the suit within time.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
16 ALL. 2541 In a usufructuary (self-redeeming) mortgage by several co-mortgagors satisfied out of the usufruct, each co-mortgagor can only recover possession of his share; a co-mortgagor who occupies the whole is adverse, not a mortgagee as to co-mortgagors (with consequence for applicable article of limitation). The Court noted the case and its holding but observed that it is not clear that it remains good law under the Transfer of Property Act as amended; in any event, the Court held the present mortgage was not of that usufructuary kind and so the case did not control the outcome here.
54 ALL. 9752 Used in support of the proposition that Section 92 might cover mortgages of the usufructuary kind. The Court referenced it as indicating that Section 92's language may extend to such mortgages, but ultimately held the present mortgage was not of that kind and did not rest the decision on this authority.
A.I.R. 1930 Nag. 300 Held that limitation under Article 148 begins from the date when the co-mortgagor redeems the mortgage (view taken by Niyogi A.J.C.). The plaintiffs relied on this case, but the Court dissented from that approach and preferred the contrary authorities; it did not adopt A.I.R. 1930 Nag. 300.
A.I.R. 1926 Nag. 844 A Nagpur decision (1926) concerning a subsequent mortgagee paying off a prior mortgagee; turned on construction of now-repealed Section 74. The Court mentioned it as background to A.I.R. 1930 Nag. 300 but did not rely on it; it observed that these decisions pre-dated Section 92.
50 Mad. 6265 Held that a puisne mortgagee who paid off a prior hypothecation was subrogated to the prior hypothecatee's right and the limitation period ran from the date a suit on the prior hypothecation should have been brought (i.e., original encumbrance), not from the date of payment. The Court cited this authority in support of the view that limitation runs from the date of the original encumbrance (not from the date of redemption/payment) and treated it as persuasive authority contrary to A.I.R. 1930 Nag. 300.
56 ALL. 1346 Held that a puisne mortgagee who pays off a prior mortgagee's decree does not thereby acquire a fresh charge giving a fresh start of limitation; if limitation for the prior mortgage has expired, the puisne mortgagee cannot enforce. The Court cited this decision to support the proposition that payment of a prior mortgage does not necessarily create a new limitation period and that the subrogee may be subject to the same limitation as the original mortgagee.
19 Pat. 9387 Decided that a suit against a co-mortgagor who has redeemed (and is subrogated to the mortgagee's position) is governed by Article 148 of the Limitation Act and time begins to run from the due date of the mortgage (i.e., original encumbrance). The Court treated this case as directly on point and consistent with the language of Section 92, and adopted its view as the correct approach to limitation in the present context.

Court's Reasoning and Analysis

The Court's reasoning proceeds from a textual construction of Section 92 of the Transfer of Property Act. Section 92, enacted in 1929, confers on a co-mortgagor who redeems the same rights "as regards redemption, foreclosure or sale" as the mortgagee whose mortgage he redeems. The Court reads these words in their plain and unqualified sense: subrogation is substitution, and a subrogee steps into the mortgagee's shoes with the mortgagee's rights in respect of that mortgage.

The Assistant Judge's narrower interpretation — that a co-mortgagor who redeems should not be sued for possession or that the rights are limited to matters involving other mortgages — was rejected as inconsistent with the plain language of Section 92. The Court held that a mortgagee under a possessory mortgage is entitled to remain in possession until a suit for redemption is brought, and that a subrogee has precisely the same right.

Addressing the plaintiffs' contention that no subrogation arises because accounts under the Dekkhan Agriculturists' Relief Act showed nothing due, the Court observed that the 1931 suit was a suit for redemption and the decree obtained by defendant 3 was in substance a decree for redemption. The fact that the Dekkhan Act application resulted in a finding of nothing payable does not negate that the proceeding was a redemption suit and did not prevent subrogation from operating in favor of defendant 3.

The Court examined the alternative argument that the mortgage was a usufructuary (self-redeeming) mortgage under Section 62, noting authorities that in such mortgages co-mortgagors may be limited to their shares and possession may be adverse. The Court however concluded (i) it was by no means clear that the authority relied on remains good law after the enactment of Section 92 and (ii) in any event the present mortgage was not of the usufructuary kind; thus that line of authority did not determine the case.

On limitation the Court considered conflicting authorities. It rejected the approach adopted in A.I.R. 1930 Nag. 300 (that Article 148 limitation begins from the date the co-mortgagor redeems) and accepted the view exemplified by 50 Mad. 6265, 56 ALL. 1346 and, most directly, 19 Pat. 9387 that where a co-mortgagor is subrogated to the mortgagee's rights the period of limitation for a suit against the subrogee runs from the date of the original encumbrance (the due date of the mortgage), not from the date of redemption or payment. The Court reasoned that if the subrogee truly has the same rights as the mortgagee, the period of limitation applicable to actions against him must be the same as would have applied against the mortgagee.

The plaintiffs' contention that an admission in the 1931 plaint amounted to an acknowledgement under Section 19 of the Limitation Act was rejected because (i) the point had not been taken in the courts below, (ii) the plaint was not even on the record and had not been proved, and (iii) Order VII, Rule 6 CPC requires that where a suit is instituted after the limitation period the plaint must show the ground upon which exemption from limitation is claimed. For these reasons the Court held that the plaintiffs could not be permitted to rely on that matter for the first time in this second appeal.

The Court acknowledged the potential hardship of the result but emphasized that limitation law is arbitrary and that the plaintiffs could have avoided prejudice by joining defendant 3 in the 1931 suit or by acting sooner. Because the decree in 1932 was in favour of defendant 3 alone, he is entitled to the benefit of limitation.

Holding and Implications

Core Ruling: Appeal allowed; the plaintiffs' suit is dismissed as barred by limitation.

Direct Consequences for the Parties

  • The suit by the plaintiffs is dismissed.
  • The plaintiffs must pay the costs of defendant 3 throughout.
  • Defendants 1 and 2 are to pay their own costs.

Legal Implications (as expressed in the opinion)

  • The Court construed Section 92 as conferring full subrogation: a co-mortgagor who redeems is subrogated to the mortgagee's rights (including rights of possession until redemption) and is subject to the same limitation period that would apply against the mortgagee.
  • For limitation purposes in this context the Court adopted the view that Article 148 runs from the due date of the original mortgage/encumbrance (as in 19 Pat. 9387 and related authorities), not from the date of redemption/payment.
  • The Court did not accept the plaintiffs' late reliance on an alleged acknowledgement in the 1931 plaint under Section 19 of the Limitation Act, because that point was not taken earlier and the alleged plaint was not proved or on the record.

The Court observed that this result may be harsh in individual circumstances but arises from the operation of limitation law and the parties' failure to assert or protect their rights earlier.

Show full summary ...

    Baghavendracharya Appacharya Katti v. Vaman Shriniwas Deshpande

    Broomfield, J.:— In this second appeal there is a question of limitation and also a question of the construction of Section 92 of the Transfer of Property Act. The property in dispute consists of certain fields at Hukeri which once belonged to a certain Govind Krishna. He mortgaged them as long ago as 1870 by a deed of possessory mortgage, Ex. 44. It provided that the mortgagee was to enjoy the property in lieu of interest on the mortgage debt and until such time as the principal of the debt Rs. 150 was paid off and the land redeemed. Govind died in 1881 and he was succeeded by his brother's widow Ramabai. She died in 1892 and the estate then passed to five distant cousins of Govind Krishna. One of these, Raghavendracharya, who is defendant 3 the appellant before us, brought a suit in 1931 for accounts and redemption of the mortgage under the Dekkhan Agriculturists' Relief Act. It was found on taking accounts that nothing was due on the mortgage and accordingly a decree was passed in 1932 directing the defendants in the suit, the heirs of the mortgagee, to deliver possession of the property free from the charge of the suit mortgage. Defendant 3 accordingly got possession. Subsequently, in 1933 and 1934 two of the other cousins of Govind interested in the mortgage along with defendant 3 sold their rights to the plaintiffs, respondents 1 to 4. Each of them purported to sell one-fourth of the property. In April 1937, the plaintiffs brought a suit on the strength of these sale deeds to recover a half share in the property.

    2. The principal contention of defendant 3 in the suit and in this appeal is that a suit for possession was not maintainable. Relying on Sections 92 and 95 of the Transfer of Property Act, he maintains that as a co-mortgagor who had redeemed the mortgage he had all the rights of the mortgagee including the right to insist on being redeemed. The other co-mortgagors have no right except to bring a suit for redemption and thereby to get possession. This argument was not accepted by the trial Court or by the Court of first appeal. It was held that the suit was maintainable as a suit for possession and was not barred by time. There was a difference as to the amount of the share to which the plaintiffs are entitled; the trial Judge held that they were entitled to one-fifth while on appeal the Assistant Judge increased to it two-fifths. Section 92 of the Transfer of Property Act, (I quote only the portion which is relevant for our purpose) provides that any co-mortgagor shall, on redeeming property subject to the mortgage, have so far as regards redemption, foreclosure or sale of such property, the same rights as the mortgagee whose mortgage he redeems may have against the mortgagor or any other mortgagee. The right conferred by this section which was newly enacted in 1929 is called the right of subrogation, and a person acquiring the same is said to be subrogated to the rights of the mortgagee whose mortgage he redeems.

    3. The view taken by the learned Assistant Judge is that the words “rights as regards redemption” cannot be interpreted to mean that a co-mortgagor should bring a suit for redemption against the redeeming co-mortgagor. Why he says that, however, we do not understand, because that is what the words plainly do mean. He also says that the right of redemption referred to in the section applies only to other mortgages on the property. But that again is inconsistent with the plain language of S. 92. “Subrogation” means neither more nor less than substitution. A person who is subrogated to the rights of the mortgagee has all the rights of the mortgagee, not merely some of the rights, and those rights must include rights in connexion with the particular mortgage by redeeming which he gets the benefit of the section. It cannot be disputed that the mortgagee under a possessory mortgage like the one in suit is entitled to remain in possession of the property until a suit is brought for redemption of the mortgage. Nor we think can it be disputed that by reason of S. 92 the subrogee has precisely the same right. We can see no grounds for qualifying or limiting the language of S. 92 in the way in which the learned Assistant Judge does. He has given the further reason for the view taken by him, viz., that when the original mortgage is extinguished by a decree of the Court Section 60 of the Transfer of Property Act, is a bar to any further suit for redemption. But one of the implications of the doctrine of subrogation is that the subrogee keeps the mortgage alive for his own benefit. The mortgage that is paid off is not extinguished but is treated as assigned to the subrogee. The position is in our view correctly stated in the note in Sir Dinshah Mulla's Transfer of Property Act, at p. 540. After referring to difficulties caused by the reference to the redeeming co-mortgagor's charge in the old S. 96, which have been removed since that section was amended in 1929, he says:

    The redeeming mortgagor has notimerely a charge, but the mortgage as to his share is extinguished, and as to the shares of the other mortgagors he stands in the shoes of the mortgagee, and limitation to enforce his right of contribution against the comortgagor, and for the co-mortgagor's suit to redeem him, is the same as in a suit to enforce or to redeem the mortgage.

    4. It has been argued on behalf of the plaintiffs that no question of subrogation arises because in fact in the circumstances of this case there has been no redemption. The basis of that argument is that when accounts were taken under the Dekkhan Agriculturists' Relief Act it was found that the mortgagee had recovered not only the principal money but also a fair rate of interest on it out of the income, and therefore by reason of the provisions of the Act the plaintiffs were not liable to pay anything. Mr. Belvadi referred us to the terms of Section 60 of the Transfer of Property Act, which provides, that at any time after the principal money has become due, the mortgagor has a right, on payment or tender, at a proper time and place, of the mortgage money to get a reconveyance. He argues that redemption implies payment of the mortgage debt, and if there is no mortgage debt to pay, there is no redemption. In our view this is not a correct statement of the position. No doubt the mortgagor cannot redeem without paying or tendering whatever amount may be due. But that does not mean that there is no such thing as redemption if in the circumstances it turns out that there is nothing to pay. It was only as the result of the application of the Dekkhan Agriculturists' Relief Act that nothing was found due. According to the terms of the mortgage itself, the mortgagee was entitled to remain in possession in lieu of the interest only, and however long he remained in possession he was entitled to receive the principal amount. Defendant 3, the plaintiff in that suit, was enabled to get these favourable terms because he established that he was an agriculturist. It does not follow that the other co-mortgagors would have been able to get redemption on the same terms. Apart from that, however, the suit brought by defendant 3 was undoubtedly a suit for redemption and the decree, the terms of which have already been given, was nothing less than or different from a decree for redemption.

    5. A further argument, which is really the same argument in a different form is that because it was found in the suit that nothing was due on the mortgage, the mortgage became a usufructuary or self-redeeming mortgage of the kind referred to in Section 62 of the Transfer of Property Act, that is to say where the mortgagee is authorised to pay himself the mortgage money from the rents and profits of the property. In that connexion, reliance was placed on 16 ALL. 2541. It was held there that in the case of a usufructuary mortgage of this kind by several co-mortgagors, when such mortgage is satisfied out of the usufruct, each co-mortgagor is not entitled to recover possession of more than his share of the mortgaged property. Consequently, where in such a case one of several co-mortgagors gets possession of the whole of the mortgaged property, he does not occupy the position of a mortgagee to his co-mortgagors but his possession is adverse to them. Of course if that is the position, the article of limitation applying would be Article 144 of the and not Article 118 of the and it was so held. It is by no means clear that this case is any longer good law under the Transfer of Property Act as it now stands. It would rather appear that the language of S. 92 would cover even a mortgage of that kind. In that connexion reference may be made to 54 ALL. 9752. But, however that may be, it is manifest that we are not dealing with a mortgage of that kind. It was a mortgage which could only be brought to an end by a suit for redemption such as the suit which was in fact brought. There is no ground therefore for holding that the doctrine of subrogation does not apply.

    6. The next point taken on behalf of the plaintiffs was that on the view that Art. 148 applies, limitation runs from the date of redemption. In A.I.R 1930 Nag. 3003 Niyogi A.J.C took the view that limitation under Art. 148 begins from the date when the comortgagor redeems the mortgage, and cited in support of that proposition a decision of the Nagpur Court in 1926 prior to the enactment of S. 92: A.I.R 1926 Nag. 844. That was a case of a subsequent mortgagee paying off a prior mortgagee, and turned on the construction of Section 74 of the Act, now repealed. On the other hand the Madras, Allahabad and Patna High Courts have all taken the view that limitation in such a case runs from the date of the original encumbrance. In 50 Mad. 6265 a puisne mortgagee had paid off a decree on a prior hypothecation. It was held that he was subrogated to the right of the prior hypothecatee and the period within which he could enforce it was twelve years from the date on which a suit on the hypothecation should have been brought and not twelve years from the date of payment. In 56 ALL. 1346 it was held that a puisne mortgagee who pays off a prior mortgagee's decree does not thereby acquire a fresh charge in his favour giving him a fresh start of limitation for a suit to recover the money by enforcement of the prior mortgage. If the period of limitation prescribed for a suit on the prior mortgage has already expired, he cannot bring a suit to enforce his remedy as against the mortgaged property.

    7. Finally there is a case expressly on the point before us: 19 Pat. 9387. There, it has been decided that a suit against a co-mortgagor who has redeemed a mortgage, and is therefore subrogated to the position of the mortgagee, brought by the other mortgagors for redemption is governed by Article 148 of the Limitation Act, and time begins to run against the plaintiffs from the due date of the mortgage. The case in A.I.R 1930 Nag. 300 was dissented from. We consider that this must be the correct view, because it is in accordance with the language of S. 92. If the subrogee has the same rights as the mortgagee, the period of limitation for a suit against him must be the same and not different. One other point was argued in connexion with limitation. Mr. Belvadi urged that in the plaint in the suit brought by him in 1931 defendant 3 admitted the mortgage and also admitted that the plaintiffs' vendors were among the heirs of the original mortgagor. He seeks therefore to treat this as an acknowledgment of liability under Section 19 of the Limitation Act, and so to bring the suit within time. In our view, however, it is not open to the plaintiffs at this stage to advance any such argument. No point of the kind was taken in either of the Courts below. Rule 6 of O. 7 of the CPC, provides that where the suit is instituted after the expiration of the period prescribed by the law of limitation, the plaint shall show the ground upon which exemption from such law is claimed. As I say, the point has never been taken and the plaint which is said to contain the admission is not even on the record and has not been proved. That being so, we think it is obvious that the plaintiffs cannot be allowed to take such a point in second appeal.

    8. In some ways this may be said to be a case of hardship, because there is no reason to suppose that defendant 3 when he brought his suit in 1931 intended to recover the property solely for his own benefit. But the law of limitation is and must be an arbitrary law. It frequently does cause hardship, though that can usually be avoided if people are vigilant about their rights. The plaintiffs might have joined defendant 3 in bringing the suit. Had they done so, they would no doubt have obtained a decree in their favour. We are informed that at a later stage of the proceedings they asked to be transferred as co-plaintiffs and the Court disallowed it. Whether that was so or not, the fact remains that they were not plaintiffs.

    9. The decree was in favour of the present defendant 3 alone and he is entitled as things are to take advantage of the law of limitation in his favour. On our view of Sections 92 and 95 of the Transfer of Property Act, this suit was plainly out of time. That being so it is unnecessary to consider the other part of the argument of the learned advocate for the appellant which relates to the share in the property which has been awarded to the plaintiffs. The appeal must be allowed and the suit dismissed with costs throughout, that is to say the plaintiffs must pay the costs of defendant 3 throughout. Defendants 1 and 2 will pay their own costs.

    10. Appeal allowed.

    Use AI to get other relevant cases.
    Try AI Pro free for 7 days Upgrade to AI Pro

    Comments

    Baghavendracharya Appacharya Katti v. Vaman Shriniwas Deshpande
    (Sep 23, 1942)