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Ram Prasad Ram And Another (Judgment-Debtors) v. Jadunandan Upadhia (Decree-Holder).
Structured Summary of the Opinion
Factual and Procedural Background
This is an execution appeal by the judgment-debtors against an application for execution filed by the decree-holder under a compromise decree that fixed specific instalment payment dates. The decree provided that if there was default of two consecutive instalments the decree-holder could recover the whole amount by execution. The dates fixed in the decree were: 6 June 1925; 13 June 1926; 15 June 1927; 3 June 1928; 22 June 1929; 11 June 1930; 31 May 1931; and 18 June 1932.
The decree-holder filed the execution application on 21 May 1931, listing all instalments but marking the first three with cross-marks; he did not in the initial application state that those first three were paid or time-barred, nor did he seek recovery of them in that application. The judgment-debtors objected that the execution application was barred by limitation because, they said, the right to apply had accrued when two successive instalments first went into default in 1926. In response the decree-holder filed a later application alleging receipt of the first three instalments. The courts below found that the first three instalments had in fact been paid and allowed execution for all instalments except the last one, which the decree-holder did not press.
The judgment-debtors appealed, reiterating the limitation plea and contending that the lower courts should not have inquired into alleged out-of-court payments.
Legal Issues Presented
- Whether alleged payments made out of court and certified or asserted by the decree-holder after the controversy arose could be treated as valid certifications by the Court (i.e., whether the execution Court could take cognizance of such post-objection certifications).
- Whether the execution application was barred by limitation: specifically, whether Article 182(7) or Article 181 of the Limitation Act governs recovery of (a) instalments that had already fallen due and (b) future instalments recoverable by enforcing the default clause.
- If Article 181 applies to the enforcement of the default clause, from which date does limitation run — from the first occasion when the right to apply accrued or from a later occasion?
Arguments of the Parties
Appellants (Judgment-debtors) — Main Contentions
- The execution application was barred by limitation because, they assert, the right to apply for the whole amount accrued on the occurrence of two successive defaults in 1926.
- The lower courts were not entitled to go into the question of payments allegedly made out of court (i.e., that the decree-holder could not, after objection, certify out-of-court payments to cure the limitation objection).
Respondent (Decree-holder) — Main Contentions
- Initially filed an execution application listing all instalments and later asserted that the first three instalments had been paid (by filing an application after the judgment-debtors' objection).
- Implicitly contended that, because of claimed payments (and the cross-marks), execution could proceed and that the limitation objection did not bar recovery of the instalments claimed in the execution application.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Joti Prasad v. Srichand, A.I.R. 1928 All. 629 | (a) A statement purporting to certify a payment made out of Court after a controversy has arisen does not have the force of a certificate under Order 21, Rule 2, Civil P.C.; (b) The majority view on Article 182(7) vs Article 181: instalments already fallen due are governed by Article 182(7) while future instalments (enforceable only by a default clause) are governed by Article 181. | The court relied on this authority to hold that the decree-holder's post-objection assertions of payment could not be treated as valid certifications, so the alleged out-of-court payments must be ignored. The court also applied the Full Bench's analysis distinguishing Article 182(7) (for instalments already due) and Article 181 (for the default-clause remedy). |
| Lasa Din v. Gulab Kunwar, A.I.R. 1932 P.C. 207 | Their Lordships held that a fixed term in a mortgage transaction may benefit the mortgagee as well as the mortgagor, and that a mortgagor's default does not make the mortgage money become due before expiry of the fixed period; a mortgagor cannot take advantage of his own default to make time run against the mortgagee. | The court used this decision to reject the view that a creditor's option to accelerate payment (on default) necessarily starts the running of limitation as if the money had become due then. The court also noted the Privy Council's observation that, had the question been framed as "when did the mortgagee's cause of action arise?", the Allahabad view might have force — a nuance the court examined in determining when the right to apply accrues. |
| Gayadin v. Jhumman Lal, A.I.R. 1915 All. 189 | An Allahabad view (expressed in earlier Full Bench cases) that limitation begins to run from the date when the mortgagee first became entitled to exercise the option to sue (i.e., first date of default). | The present court recorded that this Allahabad view was disapproved by the Privy Council in Lasa Din, and treated it as overruled insofar as it would make the default-clause remedy be time-barred from the first occasion without regard to the distinction between instalments already due and the separate remedy to enforce the default clause. |
| Shib Dayal v. Meherban, A.I.R. 1923 All. 1 | Another Allahabad decision reflecting the view that time began to run from the date the mortgagee first became entitled to exercise the option. | The court noted this authority as part of the Allahabad line of decisions whose earlier approach was addressed and effectively displaced by the Privy Council's reasoning in Lasa Din; the present court relied on Lasa Din and its reading to resolve how limitation applies to the default-clause remedy. |
Court's Reasoning and Analysis
The court's reasoning proceeds in a sequence of legal determinations closely tied to the facts and to the authorities cited:
- Certification of out-of-court payments: The court accepted the principle from the Full Bench in Joti Prasad v. Srichand that a decree-holder's statement purporting to certify payment made after a controversy has arisen cannot be treated as a valid certificate under Order 21, Rule 2, Civil P.C. Applying that rule, the court concluded that the decree-holder's later attempt to assert that the first three instalments had been paid (after the judgment-debtors had objected) did not constitute a valid certification. Therefore the execution Court could not take cognizance of those alleged payments and, for the purpose of limitation analysis, the court assumed no payments had been made and that the judgment-debtors had defaulted in respect of the first three instalments.
- Characterization of relief sought and choice of applicable limitation provision: The court split the execution application into two parts: (a) recovery of instalments that had already fallen due (1928, 1929, 1930), and (b) enforcement of the default-clause remedy to recover the remaining unpaid balance (including instalments not yet due). For the first category, the court held Article 182(7) of the Limitation Act applies because the decree itself specified dates for payment; Article 182(7) requires an application for execution to enforce payment due on a certain date to be made within three years from that date. Thus instalments for 1928–1930 are governed by Article 182(7).
- Effect of the default clause and Article 181: For the remedy of enforcing the default clause (i.e., recovering the entire balance upon two consecutive defaults), the residuary Article 181 applies. The court considered whether the right to apply under Article 181 accrues on the first occasion when the option to enforce the default clause becomes available or whether it accrues afresh on subsequent defaults. Drawing on the Full Bench decisions and the Privy Council in Lasa Din, the court treated the first occasion when the right to apply accrues as the crucial date for limitation. In the present case that first accrual occurred on 13 June 1926 (when two successive instalments first went into default).
- Interaction with Privy Council authority (Lasa Din): The court examined Lasa Din to address whether the mortgagee's option to sue (on default) makes the money become due so as to start limitation. Lasa Din held a mortgagor's default should not make the money become due before the fixed period; thus an option given to a mortgagee does not necessarily make limitation run as if the money had become due at the first default. The present court nonetheless interpreted the phrase "right to apply accrues" to mean that the right to enforce the default clause accrued on the first occasion of two successive defaults (13 June 1926), so the remedy to enforce the default clause became time-barred three years from that date.
- Application to the facts: Because the instalments of 1928, 1929 and 1930 had specified dates and fell within three years prior to the execution application (made 21 May 1931), they were recoverable under Article 182(7). By contrast, the instalment due 31 May 1931 had not yet fallen due on the date of the application (it would fall ten days later) and recovery by enforcing the default clause was time-barred because the right to apply under Article 181 accrued on 13 June 1926 and more than three years had elapsed. Consequently the execution Court could not recover the 31 May 1931 instalment under the present application; the instalment for 1932 also could not be recovered by that application.
- Agreement of the concurring Judge (Mukerji, J.): Mukerji, J. concurred with the Chief Justice's conclusions, reiterating that the courts below were not entitled to accept post-objection certifications of payment and that the first accrual date is decisive for Article 181. He emphasized the distinction between the two separate rights created by the compromise decree — the periodic right to recover instalments as they fall due, and the separate right to accelerate recovery of the whole balance upon two successive defaults — and applied the authorities accordingly.
Holding and Implications
APPEAL ALLOWED IN PART
Holding (core rulings):
- The courts below were not justified in treating the decree-holder's post-objection allegations of out-of-court payment as valid certifications; those alleged payments must be ignored for the purpose of limitation and the application proceeded on the assumption that no such payments had been certified.
- The instalments that had already fallen due (specifically those falling in 1928, 1929 and 1930) are recoverable under Article 182(7) of the Limitation Act and the execution application in respect of those instalments was within time.
- The decree-holder's remedy to enforce the default clause (to recover the entire balance upon two consecutive defaults) is governed by Article 181; the right to apply under Article 181 accrued on the first occasion of two successive defaults (13 June 1926 in this case), and that remedy became time-barred after three years from that date. Therefore the decree-holder could not, by enforcing the default clause, recover the instalment due 31 May 1931 (because the application was made before that instalment fell due and the default-clause remedy was time-barred) nor the instalment due in 1932 under the present application.
Implications (direct consequences):
- Direct effect on the parties: The decree-holder may proceed to recover the instalments that fell due in 1928, 1929 and 1930 under Article 182(7). The decree-holder cannot, in the present execution application, recover the instalment due 31 May 1931 or the instalment due in 1932 by invoking the default clause because that remedy is time-barred.
- The lower courts' findings that the first three instalments were paid (based on the post-objection certification) are not upheld for execution/limitation purposes; the opinion treats those alleged payments as uncertified and not cognizable.
- No novel general principle of law was laid down beyond applying and reconciling earlier authorities (Full Bench decisions and the Privy Council decision in Lasa Din) to the facts; the decision applies existing authorities to determine which Limitation Act provision applies to different parts of the execution claim.
This summary is based exclusively on the contents of the provided opinion and does not introduce information beyond the text of that opinion.
1. This is an execution appeal by judgment-ebtors. A compromise decree fixing the payments of certain instalments on specified dates was passed. The decree further provided that in case of default of two consecutive instalments the decree-holder would have the right to recover the whole amount by execution. The dates fixed for payment were : 6th June 1925, 13th June 1926, 15th June 1927, 3rd June 1928, 22nd June 1929, 11th June 1930, 31st May 1931 and 18th June 1932.
2. The decree-holder filed the present application on 21st May 1931 in which he mentioned all the instalments but separated the first three from the rest by means of cross-marks. He did not indicate in his application that it was his case that these instalments were barred by time or that they had been paid, but it is a fact that he did not ask for recovery of these instalments. The judgment-debtors took objection that the application was barred by time because the right to apply accrued when the second default was made in 1926. The decree-holder replied by filing an application alleging that he had received payment of the first three instalments. The Courts below have found that the first three instalments were in fact paid and that there was no default. The lower appellate Court has accordingly allowed the appeal for execution for all the instalments except the last one as to which the application was not pressed by the decree-holder.
3. The judgment-debtors have come up in appeal and reiterate their plea of limitation and further urge that it was not open to the Courts below to go into the question of the payments out of Court.
4. It has to be conceded on behalf of the decree-holder that the payments alleged to have been made by the judgment-debtors out of Court were not certified in Court or recorded by the Court prior to the filing of the objection of the judgment-debtors. It was held by all the Judges in the Pull Bench case of Joti Prasad v. Sriohand A.I.R. 1928 All.629, that if a statement purporting to certify a payment out of Court is made by the decree-holder after the controversy had arisen it cannot have the force of a certificate. It is impossible to hold that the mere placing of certain cross-marks after the first three instalments amounted to any intimation to the Court that the decree-holder was certifying payment of those instalments. The idea did not seem to have struck the decree, holder till some time after the objection was filed by the judgment-debtors alleging that no payments had bean made and the application for execution itself was barred by time. It must accordingly be held that these payments had never been certified within the meaning of Order 21, Rule 2, Civil P.C. and therefore the execution Court cannot take cognizance of any such alleged payments. The Courts below therefore were not justified in enquiring into this matter. When these alleged payments are to be altogether ignored it must be assumed that no payments were in fact made. It would follow that it must be presumed that the judgment-debtors had made default in the payment of the first three instalments.
5. The next question is whether the present application is barred by time. The application can be split up into two parts. The first relief being for the recovery of the instalments of 1928, 1929 and 1930, and the second for the recovery of the subsequent instalments, one of which was later on not pressed for. As noted above, the application is for execution of a decree of Court which fixes certain instalments. So far as the instalments of 1928, 1929 and 1930 are concerned, dates were specified in the decree on which they had to be paid. It is therefore impossible to take the case out of Article 182(7), Limitation Act. Under that sub-clause an application for execution, where the application is to enforce any payment which the decree or order directs to be made at a certain date, must be made within three years from such date. The clause applies in express terms to the application for execution so far as these three instalments are concerned and it is not possible to take it out of that clause. In these circumstances the residuary Article 181 would not apply at all to these three instalments.
6. It is however contended on behalf of the appellants that inasmuch as the right to apply accrued on the occurrence of the second default in 1926 and the decree-holder became entitled to recover the whole amount, time began to run in respect of the instalments from that date and the whole claim is now barred by time.
7. This question came up for consideration before a Full Bench of this Court in Joti Prasad v. Srichand A.I.R. 1928 All. 629 of which both of us were members. The opinion of the majority of the Bench was that the Words "at a certain date" in Clause (7) of Article 182 meant a specified date and would not be wide enough to include any date of default not specified. It was accordingly held by the majority that when a default clause of this kind is sought to be enforced the appropirate article would not be Article 182(7) but the residuary Article 181. And air the three Judges took the view that so far as the instalments which had already fallen due were concerned the appropriate article was Article 182(7). It was only as regards the remaining unpaid balance in respect of the instalments which had not yet fallen due that two of the Judges thought that Article 181 applied. The view of the majority accordingly was that it was not necessary to enforce the default clause in order to recover instalments which had already fallen due and that an application for recovery of such instalments would be governed by Article 182(7) and would be in time if filed within three years of the dates of the various instalments. An application for recovery of instalments more than three years old would be beyond time unless there was an acknowledgment or payment sufficient to save limitation. But as regards the future instalments not yet fallen due and which were not yet recoverable unless the default clause was enforced the appropriate article was Article 181 and time would begin to run from the date when the right to apply accrued.
8. The further question as to the date from which the time under Article 181 would begin to run, namely, whether from the date when the right to apply accrued on the first occasion or from the date when it accrued on the last occasion did not directly arise in the case because all the instalments had fallen due before the application for execution was made. Mukerji, J., did not deal with this aspect of the case because he was of opinion that Article 181 did not apply at all. On p. 980 (of 26 A.L.J.) I remarked:
In such circumstances the application for the recovery of the amounts of instalments which fell due more than three years prior to the application would, unless it was saved by Sections 19 or 20, be barred by time; but the application would still be within time as regards those instalments which fell duo within three years, in spite of a default clause. As the dates fixed for all the instalments had expired before the application for execution was made, there; was no necessity for the decree-holder to enforce the default clause. His application is substantially one for recovery of the total amount of the instalments fallen due together with interest.
9. I further pointed out that the case would be different if the claim were to enforce the default clause before the dates fixed for the subsequent instalments had arrived. In my separate-judgment I did not deal with the question whether time would begin to run from the date when the right to apply first accrued or from any subsequent accrual of a similar right. Boys, J., seems to have held at p. 989 that Article 181 would apply to an application for execution in respect of the future instalments, but further added that the right to apply would accrue on the first date of default and again on the occurrence of each default in respect of that and the previous default. Thus, in the separate judgments that were delivered only one Judge had expressed the opinion that there would be successive accruals of the right to apply the other two did not express any opinion at all. In the opinion of the Court which was expressed at the end of the judgment and which was the opinion of the only Judge who had expressed it, it was accordingly mentioned that if the application is one for the remaining unpaid balance of the decretal amount under the second part of the decree (default clause) it is not governed by Article 182 at all, but by Article 181 and limitation will run from the date of any two successive defaults, the decree-holder being entitled to a decree for the whole of the balance due less the amount of any individual instalments, which regarded as individual instalments are not already barred by limitation.
10. It is quite clear therefore that Article 181 in the opinion of all the Judges of the Full Bench would not apply to the application for recovery of instalments of 1928, 1929 and 1930 in the present case. The application having been made after the instalments had fallen due the appropriate article is Article 182(7); the application for the recovery of this amount therefore was well within time. As regards the future instalments the decree-holder did not press his application for the instalments of 1932, but the lower appellate Court has ordered execution in respect of the instalments for 1931 which would have fallen due on 31st of May of that year. The application however was made 10 days earlier and was therefore premature unless the default clause can be enforced. The condition in the compromise decree already referred to laid down that the decree-holder would have the right to recover the whole amount on the occurrence of two successive defaults in the payment of instalments. There had been a considerable difference of opinion as to whether it is open to a creditor to waive his right to recover the whole amount where an option is given to him in case of default. So far as the right to sue for recovery of mortgage money is concerned it is now governed by the pronouncement of their Lordships of the Privy Council in Lasa Din v. Gulab Kunuiar A.I.R. 1932 P.C. 207 in which their Lordships have clearly pointed out that a fixed term for a mortgage transaction may be as much for the benefit of the mortgagee as for the benefit of the mortgagor and that it is impossible to hold that a mortgagor can, by making default, make the mortgage money become due within the meaning of Article 132, Limitation Act, before the expiry of the fixed period. Their Lordships held that a mortgagor could not take advantage of his own default and claim a right to redeem before the expiry of the period and that therefore the mere fact that there was an option given to the mortgagee for his own benefit to sue for the whole amount would not make the money become due so as to make the time run against the mortgagee. But in the latter portion of the judgment their Lordships also pointed out that:
If in the Indian cases the question ware 'when did the mortgagee's cause of action arise?' i.e., when did he first become entitled to sue for the relief claimed by his suit their Lordships think there might be much to be said in support of the Allahabad decision.
11. The Allahabad view, as expressed in two previous Pull Bench cases of Gayadin v. Jhumman Lal A.I.R. 1915 All. 189 and Shib Dayal v. Meherban A.I.R. 1923 All. 1 was that time began to run from the date when the mortgagee first become entitled to exercise option no matter whether he chose to exercise it or not. This view has been definitely overruled by their Lordships of the Privy Council, but their Lordships seem inclined to the view that if in the Indian cases the questions were "when did the mortgagee's cause of action arise?" the Allahabad view might well be correct. It seems to me that the expression "right to apply accrues" is more emphatic than the expression "cause of action arises." If the date when the cause of action arises is to be considered to be the first date when one becomes entitled to sue for the relief claimed by him then the date when he becomes entitled to apply is certainly the date when the right to apply by way enforcing the default clause accrued to the mortgagee when on the first occasion there was a default in the payment of two successive instalments, namely, in the year 1926. It is true that he did not then apply for execution claiming the whole amount, but certainly had the right to apply and so it cannot [be said that the right to apply did not accrue. The result would be that so far as the remedy for the enforcement of the default clause in the compromise decree is concerned it became time-barred after the expiry of three years from 13th June 1926. It is no longer open to the decree-holder to claim the recovery of future instalments merely because in some future years there has again been a default in the payment of two successive instalments. This however does not mean that his remedy to recover the instalments as and when they fall due is also equally barred. I have already pointed out that the application for execution of the decree for recovery of these instalments for which dates have been specified in the decree is governed by Article 182(7). As remarked by me on p. 980 (of 26 A.L.J.) in Joti Prasad's case A.I.R. 1928 All. 629 the application is still within time as regards these installments which had fallen due within three years " in spite of the default clause. " I would accordingly hold that the application for the recovery of the instalments for 1928, 1929 and 1930 is within time, whereas the application for the recovery of the instalment for 1931 was premature, I would accordingly allow the appeal in part.
Mukerji, J.
12. I entirely agree with the Hon'ble the Chief Justice, but having regard to the importance of the points raised in this appeal and having regard to the fact that points, similar to the one before us, arise very often in execution of instalment decrees, I would like to add a few words. The facts of the case are stated in the judgment of the learned Chief Justice and briefly they may be reiterated as follows : An instalment decree was passed on 12th May 1924 in favour of the respondent. It can after mentioning the several dates fixed for payment for instalments, as follows:
In the case of default in the payment of two successive instalments, the decree-holder would be entitled (decreedar ho ikhtiar hoga) to realize the entire balance of his decretal amount, irrespective of the fact whether or not instalments have fallen due, by execution of the decree.
13. The decree-holder applied for execution in respect of the last five instalments. He did not say in respect of the first three instalments whether they had been paid or not. "When the application for execution was made the judgment-debtors objected that they had never made any payment and the application was time-barred, inasmuch as the right to apply for execution accrued to the decree-holders on 13th June 1926. On this the decree-holder came forward with an application stating that he had received the first three instalments. The Courts below have found as a fact that the first three instalments were paid by the judgment-debtors. Having regard however to the decision of the Full Bench case in Joti Prasad v. Sriahand A.I.R. 1928 All. 629 it was not open to the decree-holder to certify payment of the first three instalments after the judgment-debtors had taken an objection to the execution of the decree on the ground that he had made no payment. It follows that the Courts below were not entitled to go into the question as to whether the first three instalments had been paid or not. The judgments of the Courts below therefore so far as they found that the payments had been made, must be regarded as non-existent. We must however further regard, for the purposes of this case, that the first three instalments were never paid. In the circumstances, the question arises whether the present application is time-barred. According to the terms of the decree the decree-holder had two distinct rights. The first right was to receive instalments as and when they fell due. The second right was to enforce the payment of all the instalments that might remain unpaid, in the case of two successive instalments remaining unpaid. If it be a fact that the second right is time-barred it would not follow that the first right would also be time-barred.
14. As regards the second right, namely, to realise the entire amount of the decree irrespective of the fact whether the instalments have fallen due or not, the majority of the Full Bench in the case already quoted, namely, Joti Prasad v. Srichand A.I.R. 1928 All. 629 held that Article 181, Schedule 1, Limitation Act, would apply. Then the question is when did the right to apply accrue to the decree-holder within the meaning of column 3 of Article 181. That right to apply would accrue on the first occasion. A right to apply may accrue on several occasions but for the purposes of limitation the first occasion when the right to apply accrues must be taken as the crucial date. This was indicated by their Lordships of the Privy Council in the case of Lasa Din v. Gulab Kunwar A.I.R. 1932 P.C. 207. The right to apply in this case therefore accrued to the decree-holder on 13th June 1926. More than three years having elapsed from that date it is no longer open to the decree-holder to apply for recovery of such instalments as had not fallen due on 21st May 1931, when he made his application for exeeution. It follows that he cannot recover the instalment due on 31st May 1931, which had not fallen due on the date of the application for execution. For similar reasons he could not apply for the recovery of the instalment of 1932.
15. I have already remarked that the fact that the decree-holder's second right is barred, does not force us to hold, as a necessary consequence, that the first right is also barred. As pointed out by all the Judges in the Full Bench case of Joti Prasad v. Sriohand A.I.R. 1928 All. 629 the instalments, as and when they fall due, are recoverable under Article 182(7), Schedule 1, Lim. Act. In that view the instalments of 1928, 1929 and 1930 are recoverable. 1 agree therefore that the appeal should be al-slowed in part by declaring that the instalment which fell due on 31st May 1931 is not recoverable under the present application for execution.
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