Beaumont, C.J:—
This is an appeal from the decision of the Joint First Class Subordinate Judge of Belgaum. The plaintiffs sued to obtain a declaration that the defendant was not entitled to redeem the suit property, and they also sued to recover possession of the property as owners from the defendant, and for certain mesne profits. The plaintiffs' title arises under a document of November 25, 1908, which is a mortgage by conditional sale. The learned Subordinate Judge held that the plaintiffs' title was barred by limitation, and he therefore dismissed the suit; but he raised an issue as to whether the consideration for the document of November 25 was given, and he held that it was, and on that issue he discussed the evidence in some detail. The plaintiffs in this Court say that they will be satisfied by an order for possession, and they do not ask for any declaration that the defendant is not entitled to redeem.
The first point to consider, therefore, is, whether the plaintiffs' suit is barred by limitation; and for the purposes of that issue the facts can be shortly stated. The suit property originally belonged to a man called Shidagauda, who died sometime in 1897, and was succeeded by his widow. In the year 1900 the widow gave a possessory mortgage on the said property to her brother Parappa. The defendant disputes that the document was a mortgage, but he does not dispute that Parappa got possession of the property. In 1907 the widow adopted the present defendant, and she died soon thereafter. On November 25, 1908, the defendant executed the mortgage by conditional sale, to which I have referred. That document is Exhibit 45. It is made in favour of one Bhujang, who was the plaintiffs' father. It is expressed to be a deed of conditional sale, and the defendant stated that he had sold to Bhujang for Rs. 2,000 the suit property. Then it provides as follows: “If I repay you Rs. 2,000 (Two thousand) borrowed from you on the next day after the expiry of the period of five years from to-day, you should give (the land) to us by executing a sale-deed in our favour”. Then it is stated that the property has been let to one Malappa for cultivation for Rs. 80 for one year, and then the document runs: “And hence I have handed over to you the said Kabulayat (i.e, the tenancy agreement) … According to the terms of the said Kabulayat you are authorised to recover from him the said amount of rent. As soon as the period in the said Kabulayat expires, you should take the said land in your possession. I have duly received the said amount of rupees two thousand in cash paid by you”. So that the document appears on the face of it to be a mortgage by conditional sale with immediate possession given to the purchaser or mortgagee. In fact, however, possession was not given, because possession was still in the hands of Parappa under the mortgage of 1900. In the year 1917 the defendant recovered possession of the property from Parappa. He denies that he paid anything, but whether he did so or not is, in my view, immaterial. The plaintiffs started this suit on August 8, 1924, and the question is, whether time runs against them from November 25, 1908, the date of their mortgage or from 1917, the date when the mortgagor recovered possession of the suit property from Parappa.
The question turns, in my opinion, on Article 135 of the Indian Limitation Act. That Article provides that a suit instituted in a Court not established by Royal Charter by a mortgagee for possession of immoveable property mortgaged must be brought within 12 years, and then in the third column the date from which the time runs is this: “When the mortgagor's right to possession determines.” That Article was in the same terms under the Indian Limitation Act of 1877, but under the previous Act of 1871 the period ran from the time when the mortgagee was first entitled to possession. Whether there is any difference between the provisions of the two Acts is not very clear. Prima facie it would seem that the moment of time at which the mortgagee becomes entitled to possession is the same as the moment when the mortgagor's right to possession determines. However, we are only concerned with the present Act, IX of 1908. There is very little direct authority on this point, and one must deal with it in the first place as a matter of construction. It seems to me that a provision that time is to commence to run when the mortgagor's right to possession determines, presupposes that the mortgagor has a right to possession. If he has no right to possession, that right cannot determine. Mr. Nilkant Atmaram has argued that the mortgagor had a right to possession in this sense that he had a right to recover possession from Parappa. But it is not proved in this suit that Parappa was anything else than what he is expressed to be under the document, viz., a mortgagee, and if that is so, the right of the mortgagor to recover possession was only a conditional right a right to recover possession upon payment of what was due under the mortgage, in other words, a right to redeem, and that right was not determined by execution of the mortgage in favour of Bhujang. In my opinion, for the purposes of Article 135 the mortgagor must either have actual possession, or an unconditional right to recover possession from somebody who has in fact got it, and unless and until he has that right, time does not start to run. In construing Acts of limitation the Courts must always remember that the object of the legislature is to induce people to be active in the assertion of their rights, and to penalise those who sleep upon their rights; and if it is possible to avoid giving a statute of limitation a meaning which has the effect of destroying a right to sue before that right has effectively arisen, I think the Court should do so.
With regard to the authorities there from Oudh, Gokul Prasad v. Sukru, in which the learned Judicial Commissioner held that in a case where possession is outstanding in a prior mortgagee at the date of a subsequent mortgage, time runs against the subsequent mortgagee from the time of that mortgage, and not from the date when possession is recovered from the prior mortgagee. That view has been dissented from in two cases by the High Court of Lahore, Budha v. Mul Raj and Indar Singh v. Basanta,(3) and in my judgment the view of the Lahore Court is the correct one. I think, therefore, that until the mortgagor recovered possession in the year 1917, time did not begin to run against the plaintiffs under their mortgage of November 25, 1908. As soon as possession was recovered from the prior mortgagee, then the mortgagor's right to possession as between himself and the plaintiffs determined, but time did not begin to run against the plaintiffs until 1917. I think, therefore, on the question of limitation the decision of the learned Judge was wrong.
[His Lordship then dealt with the question of fact not material for the purposes of this report and concluded:]
In my opinion, we cannot disagree with the finding of fact of the learned Subordinate Judge, but he being wrong in holding that the plaintiffs' suit is barred by limitation, the appeal must be allowed.
Rangnekar, J.:—The plaintiffs-appellants brought this suit for a declaration that the defendant was not entitled to redeem the suit property, for possession of the property as owners, and for other reliefs. They rest their claim on a document Exhibit 45. The defendant contested the claim on the ground, among others, that the transaction was not one of sale but was a mortgage by conditional sale, that it was a hollow transaction and he had received no consideration for it, and that in any event the suit was barred by limitation. On the facts the learned Subordinate Judge held that the transaction was a mortgage by conditional sale, that Bhujang, the father of the plaintiffs, had paid consideration for the document, and that it was not a hollow transaction as contended by the defendant. But on the question of limitation he held in favour of the defendant, and dismissed the suit.
The plaintiffs appeal on the ground that the learned Judge was wrong in holding that the suit was barred by limitation. The defendant has filed cross-objections to the finding of the learned Judge on the merits. The principal question therefore is, whether the learned Judge was right in holding that the plaintiffs' suit was barred under Article 135 of the Indian Limitation Act. As stated above, the learned Judge held that the document, Exhibit 45, was a mortgage by conditional sale and that the relationship between the plaintiffs and the defendant was that of the mortgagee and the mortgagor. In that opinion I entirely agree, and indeed it has not been disputed before us by the learned counsel on behalf of the respondent.
At the outset I should like to deal with a point which Mr. Nilkant has taken in the course of his able arguments. He says that as the suit was framed, it was a suit for foreclosure and therefore it was barred under article 120 of the Indian Limitation Act, as the mortgage under Exhibit 45 was executed in 1908 and the suit was instituted in August 1924. As far as I can see, the point was not raised in the trial Court. Apart from that, it is clear that the suit was framed in this particular manner as the plaintiffs believed and contended that the document in their favour was one of sale. But assuming that the suit was one for foreclosure, and further assuming that it was barred when it was instituted, I am unable to see why it is not open to a mortgagee claiming under a mortgage by conditional sale to maintain the claim for possession. I may in this connection refer to the observations of the learned authors, Shepherd and Brown, in their Commentary on the Transfer of Property Act, at page 290: “… on the other hand, the fact that his right to foreclosure is barred does not prevent him from recovering the possession of which he has been deprived (Ammanna v. Gurumurthi).” Mr. Kelkar for the appellants made his position clear and stated that he would be satisfied with a decree for possession and would not ask for any declaration that the defendant is not entitled to redeem. In view of this and having regard to the conclusion to which we have come on the facts of the case, I do not think that any useful purpose would be served by pursuing this point further, and speaking for myself, I do not think that this was a foreclosure suit.
On the question of limitation, the learned First Class Subordinate Judge held that Article 135 applied to the facts of the case and time began to run against the mortgagee from the date of the execution of the mortgage deed, that is, from November 1908. The question is whether this view is correct. Article 135 gives a right to a mortgagee to sue for possession within 12 years, and the period of 12 years runs from the time the mortgagor's right to possession determines. Previous to the present Act we had the same article in the act of 1877. the article 135 in these two Acts corresponds with the Article 135 in the Act of 1871, but in that Act, limitation runs from the time “when the mortgagee is first entitled to possession”. In my opinion the change in the wording of the article in the act of 1877 and of the present act has not made any change in the time from which limitation is to run, and, as in the earlier Act, so in the present Act, the terminus a quo is in effect the same. I say so, because when the mortgagee first becomes entitled to possession, the right of the mortgagor to possession ceases and must cease, and he can be ejected, and while the mortgagor has a right to possession the mortgagee is not entitled to possession. In my opinion, Article 135 distinctly contemplates that possession must be with the mortgagor before the Article would apply and before time would begin to run under the Article. Mr. Nilkant relies on a decision of the Oudh Court in Gokul Prasad v. Sukru. With all respect to the learned Judicial Commissioner who decided that case I am unable to agree with his opinion. The learned Judicial Commissioner relied upon a previous decision of the same Court to the same effect. That earlier decision was dissented from by Mr. Justice Shadi Lal, as he then was, in Budha v. Mul Raj, and his judgment was followed by a Division Bench in a later case, Indar Singh v. Basant, consisting of Sir Shadi Lal, Chief Justice, and Mr. Justice Moti Sagar. I respectfully agree in the view taken by the Lahore High Court. In my opinion, a puisne mortgagee is not bound to file a suit for possession within 12 years from the date of the mortgage if the property is not in the possession of the mortgagor but in the possession of a third party or a prior mortgagee.
In this case the facts are that although the mortgage deed Exhibit 45 stated that the mortgagee was to recover possession from the tenant holding the land, it is common ground that the recital is false and that in fact the land was not in the possession of the mortgagor nor of any one holding under him, but that it was in the possession of Parappa to whom the land was mortgaged with possession by the adoptive mother of the defendant. The defendant obtained possession from Parappa in 1917 and the suit filed in August 1924 would, I think, be in time. I think, therefore, the view of the learned Judge that the suit is barred is erroneous, and the appeal must be allowed. [The rest of the judgment is not material for the purposes of this report.]
Appeal allowed.
J.G.R