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Mt. Bakhtawar Begam v. Husaini Khanum And Another
Factual and Procedural Background
The suit underlying these consolidated appeals was instituted in the Court of the Subordinate Judge of Cawnpore on 6 January 1899 by the plaintiff-respondent (Husaini Khanum) for redemption of a mortgage executed on 6 January 1830. The mortgage was by way of conditional sale over 12 villages in the Cawnpore district in favour of Ata-ullah Khan (deceased). The principal defendant named was Ali Hussain Khan, representative of Ata-ullah; he later died and is represented here by his widow, Bakhtawar Begam (the appellant). Other defendants are assignees of interests created by the original mortgagee or his representatives.
The original mortgage deed was not produced, but both Indian courts relied on proceedings of the Collector's Court dated 18 September 1830 as substantially setting out the contract. That contemporaneous statement indicated the sale would be cancelled on payment of the consideration in nine years.
The Subordinate Judge held the suit barred by limitation, taking the view that limitation began to run from the date of the contract. On appeal, the High Court of Allahabad partially reversed: it held that the plaintiffs' right to redeem in respect of seven villages (which remained in possession of the mortgagee's representatives) accrued only on expiration of the nine-year period and so those claims were not barred, but held that claims as to five villages transferred by the mortgagee to third parties were barred. The defendants appealed against the High Court's decision on the first part, and the plaintiffs cross-appealed.
Legal Issues Presented
- Whether the plaintiffs' claim for redemption is barred by the Statute of Limitations (Art. 148, Schedule II, Act XV of 1877) prescribing a 60-year period for suits for redemption or recovery of possession of mortgaged property.
- If limitation is at issue, the subsidiary question whether the right to redeem accrued (a) from the date of the contract (1830), (b) only on the expiration of the nine-year term specified in the contemporaneous agreement, or (c) at the time when, if ever, the mortgage debt was in fact satisfied under the contract.
Arguments of the Parties
Plaintiff (Respondent) — Principal contentions
- The contemporaneous contract provided that "the sale would be cancelled on payment of the consideration in nine years," and the plaintiffs allege the mortgagors were entitled to recover the property within that nine-year period on liquidation of the debt by means of the usufruct of the villages or by payment.
- The plaint contains an express allegation (supported by an annexed statement of accounts) that the whole mortgage debt with interest was paid up at the end of the year 1245 Fasli (noted in the text as between 4 September 1837 and 4 September 1838), and that thereafter the mortgagee retained balances without right. The plaintiffs rely on this factual allegation to show that the right to recover possession accrued at that earlier date.
Defendants (Appellants) — Principal contentions
- The defendants (as reflected in the Subordinate Judge's view and in submissions at the Bar) contended that limitation began to run from the date of the contract (1830), so that the 60-year limitation period had expired and the suit was time-barred.
- The High Court's different construction (that for villages remaining in the mortgagee's possession the right to redeem accrued only after nine years) was challenged by the defendants by appeal.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The court began by identifying the form of the transaction (mortgage by conditional sale) and noting Section 58 of Act IV of 1882 (Transfer of Property Act) as embodying the usual incidents of such transactions. The central statutory limitation provision applicable to suits for redemption or recovery of possession (a 60-year period) was Art. 148, Schedule II, Act XV of 1877.
The High Court had reasoned that if the contemporaneous agreement meant that the mortgagors might redeem at any time within the nine-year period, then limitation would run from the date of the contract and bar the suit; but if the parties intended that the debt remain outstanding for a fixed nine-year term, the right to redeem would accrue only on expiration of that period. The High Court, applying this construction, held that seven villages (in the mortgagee's possession) fell into the latter category while five villages transferred to third parties were already barred.
The appellate court (their Lordships) accepted that the contractual clause "the sale would be cancelled on payment of the consideration in nine years" was ambiguous and that ordinarily, absent a special provision, a mortgagor's right of redemption arises only at the expiry of a specified period. However, the court emphasized that the plaintiffs' pleading contained a specific factual allegation that the mortgage debt had been satisfied in 1245 Fasli and that they produced an account annexed to the plaint showing realizations by the mortgagee from 1830 to 1897, which expressly stated the debt was satisfied in 1245 Fasli (1837–1838).
The court treated that allegation of fact as decisive: if the debt was in fact satisfied in 1838 under the terms of the contract, the right to recover possession accrued then, and limitation would have run from that date. On that basis, and given the 60-year limitation period, the suit (instituted in 1899) was time-barred.
Consequently, their Lordships concluded that the High Court's partial decree should be set aside and the suit dismissed in its entirety (which also resulted in dismissal of the plaintiffs' cross-appeal). The court then addressed costs, awarding costs to Jamna Narain (representing the original assignee of the five villages) as previously decreed, directing plaintiffs to bear the costs decreed against them in the first court, and ordering that each party bear their respective costs of these appeals and the appeals to the High Court, including costs incurred on remand.
Holding and Implications
Core Holding: The appellate court set aside the High Court's partial decree and dismissed the plaintiffs' suit as barred by the statute of limitations; the cross-appeal by the plaintiffs was dismissed. The appeal (by the defendants against the High Court's partial decree) was allowed.
Implications for the parties: the plaintiffs' redemption claim fails in its entirety because, on the plaintiffs' own pleaded account, the mortgage debt was satisfied in 1245 Fasli (1837–1838), which caused the right to recover possession to accrue then and be barred by the 60-year limitation period by the time suit was brought in 1899. No broader precedent was declared beyond the application of the governing statutory limitation and the court's reliance on the plaintiffs' own factual pleading to determine accrual of the right to redeem.
Costs: Jamna Narain was awarded the costs decreed below and of these appeals; plaintiffs were ordered to bear costs decreed against them in the first court; and otherwise each party bears their respective costs of these appeals and the appeals to the High Court, including costs on remand.
Disposition: Appeal allowed. Cross-appeal dismissed.
Mr. Ameer Ali:
The suit which has given, rise to these consolidated appeals from a decree and judgment of the High Court of Allahabad was instituted by the plaintiff-respondent in the Court of the Subordinate Judge of Cawnpore for the redemption of a mortgage executed so long ago as the 6th of January, 1830. The suit was brought on the 6th of January, 1899, and the only and vital question presented at the Bar for determination in this is whether the claim is barred by the Statute of Limitation (Indian Act XV of 1877).
The plaintiff Husaini Khanum alleges that on the 6th of January, 1830, her father, Aga Fateh Ali, in conjunction with another relative named Aman Ali, executed a mortgage by way of conditional sale in respect of 12 villages lying within the district of Cawnpore in favour of one Ata-ullah Khan, since deceased. The other plaintiffs are persons who have acquired title from Husaini Khanum. The principle defendant in the action was one Ali Hussain Khan, who was the representative of Ata-ullah. He died since the decision by the High Court in the appeal from the decree of the Subordinate Judge, and he is now represented by his widow, Bakhtawar Begam, the appellant. The remaining defendants are assignees of interests created by the original mortgagee or his representatives in the mortgaged premises.
The mortgage-deed is not forthcoming, but both the Courts in India have found that the contract between the parties to the transaction is, for all material purposes, substantially set forth in the proceeding of the Collector's Court, dated the 18th of September, 1830, on an application for mutation of names in the Revenue Register.
The contract of mortgage by conditional sale is a form of security recognized throughout India, and its incidents have been embodied in Section 58 of Act IV of 1882 (the Transfer of Property Act). The form it usually takes is for the mortgagor to execute a deed of sale in respect of the mortgaged property in favour of the mortgagee, who on his side executes an agreement covenanting that on the liquidation of the debt, according to the terms of the contract, the sale would be cancelled, and he would reconvey the property to the mortgagor. On the breach of the condition relating to repayment the contract executes itself, and the transaction becomes one of absolute sale.
The proceeding which contains the contract in this case is set out in full in the judgment of the High Court. The only material part to which their Lordships need refer is the clause relating to repayment, which runs as follows :-
"On being asked, Sital Parshad, attorney of Atta-ullah Khan, stated that his client had executed and made over to Mirza Aman Ali and Fateb Ali an agreement to the effect that the sale would be cancelled on payment of the amount of consideration in nine years, and that, therefore, the sale was not an absolute but a conditional sale."
The period of limitation under the Indian Statute for suits for redemption or for recovery of possession of mortgaged property is sixty years from the date of the accrual of the right to redeem or to recover possession (Art. 148, Schedule II, Act XV of 1877). The Subordinate Judge was of opinion that limitation began to run from the date of the contract, and accordingly held that the suit was barred. The High Court of Allahabad on appeal have taken a different view. The learned Judges considered inter alia that the right to redeem in respect of the seven villages which were in the possession of the mortgagee's representatives accrued only on the expiration of the period of nine years for which the contract was made, but that as regards the five villages which had been transferred by the mortgagee to third parties the claim was barred. They accordingly decreed the plaintiffs claim in respect of seven villages and dismissed it with regard to the rest.
The defendants have appealed from the first part of the High Court decree, against which there is a cross-appeal on the part of the plaintiffs.
The first question to determine is whether the plaintiffs' right to redeem is affected by 60 years' limitation, for in that case her claim must fail in toto. The learned Judges dealing with this point give expression to their opinion in the following passage in their judgment :-
"If the meaning of this contemporaneous agreement was that the mortgagors might redeem at any time within the period of nine years, the plaintiffs' claim is barred by limitation. If, on the other hand the intention of the parties was that the debt should remain outstanding for a period of nine years certain then the right to redeem only accrued at the expiration of that period. Ordinarily, a mortgagor cannot before the time limited for payment to the mortgagee expires, take proceedings to redeem. The reason for this is, that it was the agreement of the parties that the mortgage should, during the intervening time, remain as security for the money advanced, and therefore it is not competent for either party to disturb that relation."
And they refer to a number of cases in support of their conclusion. Ordinarily, and in the absence of a special condition entitling the mortgagor to redeem during the term for which the mortgage is created, the right of redemption can only arise on the expiration of the specified period. But there is nothing in law to prevent the parties from making a provision that the mortgagor may discharge the debt within the specified period and take back the property. Such a provision is usually to the advantage of the mortgagor. In the present case, had the matter depended only on the construction of the contract as given in the proceeding of the Collector, much might be said in support of the High Court's conclusions. The expression that "the sale would be cancelled on payment of the consideration in nine years" is certainly ambiguous.
But here the plaintiffs' case is that the mortgagors were entitled to recover the property within the period of nine years on the liquidation of the debt with the usufruct of the property. In the second paragraph of the plaint the plaintiffs state as follows :-
"The terms of the mortgage as agreed were that the mortgagee should remain in possession of the said mortgaged villages . . that the amount of profits, if any, which shall remain after paying the Government revenue, interest, and pay of the persons making the collections, would be owned by the mortgagors and applied in the payment of the principal, and that whenever the mortgage-money would be satisfied (out of the usufruct, or paid (by the mortgagors) before or after the stipulated time the mortgaged property should be redeemed."
And the fact is emphasized in paragraph 8, which is in these terms :-
"The whole amount of the principal mortgage-money with interest mentioned in the mortgage deed was paid up at the end of the year 1245 Fasli according to the account which is annexed to this plaint and forms part of it. No portion of the mortgage-money, interest or any other demand is now due: on the other hand, there is a surplus amount due to the plaintiffs."
In their Lordships' judgment this is not a case of a wrong construction of a clause or condition in the contract. It is a distinct allegation of fact on which the right to recover possession is founded. But the matter does not rest there. The plaintiffs produced with the plaint a statement of accounts in respect of the 12 villages based on the settlement, records to show the amounts realized by the mortgagee from 1830 to 1897. In this document it is clearly stated that the whole debt was satisfied in 1245 Fasli. (4th September, 1837 4th September, 1838). From that time the balance of the realizations by the mortgagee after deduction of the legitimate outgoings is treated by the plaintiffs as sums retained by him without any right.
If the fact be, as the plaintiffs allege, that the mortgage-debt became satisfied under the contract in 1838, the right to recover possession accrued then, and the suit is clearly barred.
Their Lordships are, therefore, of opinion that the decree of the High Court partly decreeing the plaintiffs' claim should be set aside, and the suit dismissed, which will involve the dismissal also of the cross-appeal.
With regard to the costs, their Lordships think that Jamna Narain, who represents the original assignee of the five villages in respect of which the plaintiffs' suit has been dismissed by both the Courts in India, is entitled to the costs decreed in the Court of the Subordinate Judge and in the High Court, and to the costs of these appeals to His Majesty in Council. As regards the other parties, their Lordships think that the plaintiffs should bear the costs decreed against them in the First Court, but that each of the parties should bear their respective costs of these appeals and of the appeals to the High Court, including the costs incurred in the proceedings on remand.
And their Lordships will humbly advise His Majesty accordingly.
Appeal allowed.
Cross-appeal dismissed.
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