Translate
Text Highlighter

Bookmark

PDF

Share

Report a problem
AMICUS AI
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
Judges
Are you a practicing lawyer?
Enhance your digital presence and reach by creating a Casemine profile.
Upload pleading to use the new AI search
Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
Judges
Smart Summary

Structured Summary of the Provided Opinion (Braund, J.)

Factual and Procedural Background

Abdul Rahman was the owner of about 276 bighas of land and died before 1914, leaving a widow, Mst. Hakim-un-nissa, and five children (four sons and one daughter). Under Mohammadan law the property devolved in specified siham shares among the widow, the four sons and the daughter.

A sequence of mortgages affected overlapping shares of this property:

  • 1914 mortgage (12 June 1914): three sons (Abdul Noor, Abdul Shakur and Abdul Ghafur) mortgaged their fourteen siham shares each (42 sihams) to Hira Lal and Chiranji Lal and another for Rs. 2,000 plus interest.
  • 1918 mortgage (27 May 1918): the same three sons and the widow mortgaged the same 42 sihams plus the widow's nine sihams (51 sihams) to the 1914 mortgagees to secure a fresh principal of Rs. 2,700 plus interest.
  • 1919 mortgage (14 February 1919): two sons (Abdul Koor and Abdul Shakur) mortgaged their equities of redemption in their respective fourteen siham shares to Gokul Chand and Kallu Mal, subject to the 1914 and 1918 mortgages, to secure Rs. 1,500 plus interest. The present dispute principally concerns this mortgage.
  • 1926 mortgage (2 February 1926): two sons (Abdul Noor and Abdul Shakur) and Mst. Tamiz-un-nissa mortgaged their combined shares (36 sihams) to Hira Lal and Chiranji Lal to secure Rs. 3,250, with part allocated to pro tanto redemption of the earlier 1914 and 1918 debts; the instrument recited the earlier mortgages and stated they were becoming barred by limitation.

Subsequent events of procedural significance:

  • After the death of the widow, the widow's nine sihams devolved, producing two-siha increments to each of four sons and one siham to the daughter.
  • In June 1929 Gokul Chand and Kallu Mal (1919 mortgagees) sued for sale under the 1919 mortgage and obtained a final decree (18 October 1930). The decree was transferred to Munshi Lal (the present defendant-appellant), who purchased half the property comprised in the 1919 mortgage in execution (1932) and entered possession in February 1933.
  • On 4 July 1938 Hira Lal and Chiranji Lal (1926 mortgagees) filed the present suit against the 1926 mortgagors (or their representatives) and Munshi Lal seeking realization of the Rs. 3,250 (and interest) secured by the 1926 mortgage; the plaint described only the 1926 mortgage though the plaintiffs relied also on earlier mortgages as a shield against the appellant's intervening estate.
  • The trial court framed issues whether Munshi Lal was a purchaser under a prior encumbrance and whether the plaintiffs could sell the property without paying the appellant's charge; the trial judge held in effect that the plaintiffs could enforce their security in priority to Munshi Lal's title, and entered a decree accordingly.

Legal Issues Presented

  1. Whether, under section 101 of the Transfer of Property Act, 1882, the 1914 and 1918 prior mortgages were kept alive (i.e., not extinguished by merger) when the 1926 mortgage was executed, so that the 1926 mortgagees could rely on the earlier mortgages as a shield against an intervening incumbrancer (the 1919 mortgagee and his successor Munshi Lal).
  2. Whether the plaintiffs, having sued on the 1926 mortgage (and not pleading the 1914 and 1918 mortgages), could nevertheless obtain relief based on the earlier mortgages against the appellant, particularly given the pleading form and parties.
  3. Whether the 1926 mortgage instrument contained an acknowledgment within the meaning of section 19 of the Limitation Act, 1908, sufficient to create a fresh starting point for limitation as against intervening mortgagees who were not parties to the 1926 instrument.
  4. Whether the document filed by the 1919 mortgagees on 11 July 1929 in the 1919 suit constituted an acknowledgment (or an estoppel) that would start a fresh period of limitation in favour of the 1926 mortgagees and/or preclude the appellant from asserting priority.
  5. Whether, on the facts and applying limitation rules, the plaintiffs are entitled to decrees declaring priority (and to sale) over the shares purchased by Munshi Lal in execution of the 1919 decree.

Arguments of the Parties

Appellant (Munshi Lal) — Principal Contentions

  • Munshi Lal claimed he was not a subsequent purchaser but "the purchaser of the prior charge"—i.e., that his title (derived by purchase in execution under the 1919 mortgage) was prior to and superior to the 1926 mortgage.
  • Implicitly relied on limitation and on the fact that the 1919 mortgagees had acquired their title before the 1926 mortgage acknowledgment (and thus could not be bound by that acknowledgment), thereby maintaining his priority as against the plaintiffs.

Plaintiffs (Hira Lal and Chiranji Lal) — Principal Contentions

  • Plaintiffs contended that section 101 of the Transfer of Property Act operated to prevent merger and kept the 1914 and 1918 mortgages alive; thus they were entitled to invoke those earlier mortgages as a shield against the appellant's estate derived under the 1919 mortgage.
  • They relied on the 1926 mortgage instrument (which recited and allocated funds to the earlier mortgages) as evidencing an acknowledgment that would operate under section 19 of the Limitation Act to create a fresh starting point for limitation.
  • Alternatively, they argued that the 11 July 1929 document filed by the 1919 mortgagees in their suit constituted an acknowledgment (and, secondarily, an estoppel) that bound the appellant's predecessors-in-title, thereby creating a fresh limitation period in favour of the plaintiffs as against the 1919 mortgagees and their successor.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Gopal Chunder Sreemany v. Herembo Chunder Holdar (Calcutta case) Illustrates that where a prior mortgage is "kept alive" it supplies the cause of action which alone can give a puisne incumbrancer priority over an intervening estate; suit may be brought to realize both mortgages and relief may account what is due on both. The court relied on this case to illustrate how a prior mortgage kept alive under section 101 can provide the cause of action that enables a subsequent encumbrancer to obtain priority over an intervening estate.
Shankar Sarup v. Mejo Mal (Judicial Committee) Supportive of the effect that a prior mortgage, when properly understood, can operate to give priority; the court noted the effect when facts are correctly understood. The court observed that the principle in that case, when facts are correctly understood, is consistent with the view that a prior mortgage kept alive can give priority to the later encumbrancer.
Munna Lal v. Chunni Lal (Full Bench) Decision turned entirely on section 92 of the Transfer of Property Act and, therefore, is not treated as authority for cases under section 101 or for matters of acknowledgment under the Limitation Act. The court stated it was unnecessary and improper to discuss the decision at length and indicated it should not be taken as authority on the questions decided under section 101 or concerning acknowledgments.
Surjiram Marwari v. Barhamdeo Prasad (Calcutta, Sir Asutosh Mookerjee) Held that an acknowledgment by a mortgagor in favour of a prior mortgagee does not bind an intermediate mortgagee whose title accrued before the acknowledgment; section 19 of the Limitation Act should be construed so as not to produce consequences inconsistent with natural justice. The court adopted this principle and held that the 1919 mortgagees (whose title accrued before the 1926 instrument) were not bound by the acknowledgment in the 1926 mortgage instrument.
Bank of Upper India Limited v. Robert Hercules Skinner (Privy Council) Approved the reasoning of Sir Asutosh Mookerjee in Surjiram Marwari v. Barhamdeo Prasad concerning the construction of acknowledgment under the Limitation Act. The court relied on the Privy Council's approval to support the view that an acknowledgment given after an intermediate mortgagee has acquired title will not bind that intermediate mortgagee.
Bolding v. Lane (Lord Westbury) Expressed the principle that allowing an acknowledgment by a mortgagor to defeat the rights of a second mortgagee whose title predated the acknowledgment would produce consequences inconsistent with natural justice. The court quoted Lord Westbury's observations as foundational support for the conclusion that section 19 must be construed to avoid such unfair consequences.
Seth Radhakishan Ram Lal Palliwal v. Babu Hazarilal (Nagpur Full Bench) Reached a view consistent with Surjiram Marwari that acknowledgments given after an intervening interest has arisen do not bind the intervening mortgagee. The court cited this recent Full Bench as further support for applying Sir Asutosh Mookerjee's principle to cases where the mortgagor retains an equity of redemption as well as where he has parted with all interest.

Court's Reasoning and Analysis

The court's reasoning proceeded through several connected legal steps, closely following the facts and applicable statutory provisions as presented in the opinion.

  1. Operation of section 101 (Transfer of Property Act): The court held that section 101 applied so that the 1914 and 1918 mortgages were not extinguished or merged by the execution of the 1926 mortgage; rather, they were "kept alive" for the purpose of enabling the later mortgagee to invoke the earlier incumbrances as a shield against an intervening estate. The court explained that this operation does not give the prior mortgage a new life but preserves the existing cause of action on the prior mortgage.
  2. Pleading/form of suit: The court recognized a difficulty because the plaint pleaded only the 1926 mortgage (not the 1914/1918 mortgages). It observed that ideally the cause of action on the earlier mortgages should have been pleaded if large-scale relief based on them was sought. Nevertheless, because the intervening title-holder (the appellant) was made a party and the issue of priority was raised in the appellant's written statement (and treated as such by consent at trial), the court treated the availability of the prior mortgages as an issue properly before it.
  3. Limitation principle for "keeping alive": The court reasoned that the principle of section 101 preserves a prior incumbrance only if it was capable of being sued on at the date of the subsequent incumbrance. In other words, section 101 "keeps alive" but does not "give a re-birth" to a mortgage already dead by limitation at the time the subsequent mortgage was executed.
  4. Effect of acknowledgments under section 19 Limitation Act: The court examined whether the 1926 mortgage instrument contained an acknowledgment by the mortgagors effective under section 19 to restart limitation as against intermediate mortgagees who acquired title before that acknowledgment. Applying the principle in Surjiram Marwari (as approved by the Privy Council), the court held that an acknowledgment given in the 1926 instrument could not bind the 1919 mortgagees because the 1919 mortgagees' title had accrued before the 1926 instrument and they were not parties to it.
  5. 11 July 1929 document filed by 1919 mortgagees: The court turned to the document filed by Gokul Chand and Kallu Mal on 11 July 1929 in the 1919 suit, in which they applied to "exempt" the 1926 mortgagees from the suit on the ground they were prior mortgagees. The court analyzed the language and context and concluded that the 1919 mortgagees thereby acknowledged the existence of the 1914 and 1918 mortgages and their own liability in respect of the right of priority of those earlier mortgages (the only right they could be asked to concede in that proceeding). That acknowledgment, the court held, was unequivocal as to the 1918 mortgage and therefore sufficient under section 19 to start a fresh period of limitation from 11 July 1929 in favour of the 1926 mortgagees as against the 1919 mortgagees and their successor.
  6. Application to 1914 and 1918 mortgages: The court noted that by 1929 the 1914 mortgage was already time-barred as against the 1919 mortgagees (its limitation expired in June 1926). Consequently, the 11 July 1929 acknowledgment could not revive the 1914 mortgage as against the 1919 mortgagees. By contrast, the 1918 mortgage was not then time-barred, and the 1929 acknowledgment therefore operated to restart limitation in respect of the 1918 mortgage.
  7. Estoppel argument: The plaintiffs also contended the 1929 document constituted an estoppel. The court examined whether the plaintiffs had altered their position in detrimental reliance on that document and found no ground to conclude any such alteration occurred; thus the estoppel contention was not accepted.
  8. Net result and allocation of priority: Putting these elements together, the court concluded that the plaintiffs could rely on the 1918 mortgage (by virtue of the 1929 acknowledgment) and on the 1926 mortgage (to the extent its security was not already covered by the 1918 mortgage). The appellant retained priority in respect of those parts of the shares he purchased in 1932 that were subject to the 1914 mortgage (which remained time-barred as against the 1919 mortgagees and thus in favor of the appellant).

Holding and Implications

Holding: The appeal is allowed in part. The defendant-appellant (Munshi Lal) succeeds in respect of the 1914 mortgage but fails in respect of the 1918 mortgage.

Implications and direct effects:

  • The plaintiffs (Hira Lal and Chiranji Lal) are entitled to a preliminary mortgage decree in respect of the 1918 mortgage which the court finds was kept alive and for which a fresh period of limitation began on 11 July 1929 by the acknowledgment supplied by the 1919 mortgagees in the 1929 proceedings. By that decree the plaintiffs will have a declaration of their priority over the appellant's estate in the fourteen sihams purchased by him in 1932, insofar as those fourteen sihams are comprised in the 1918 mortgage.
  • The plaintiffs are also entitled to a preliminary mortgage decree in respect of the 1926 mortgage, but only to the extent that the principal, interest and property charged by the 1926 mortgage are not already covered by the 1918 mortgage.
  • The appellant is entitled to a declaration of priority in respect of any part of the fourteen sihams vested in him that are not comprised in the 1918 mortgage (even if they are included in the 1926 mortgage), effectively preserving the appellant's priority against those parts as to the 1926 mortgage.
  • No broader novel legal precedent was created beyond the court's application of established principles (section 101 keeping prior mortgages alive; construction of section 19 acknowledgments; and the effect of an acknowledgment given by an intervening mortgagee). The decision resolves the parties' rights on these facts and determines the scope to which prior mortgages and subsequent acknowledgments affect priority and limitation among overlapping mortgages and purchasers in execution.
  • Costs: Each party is to bear their own costs throughout.

Note: This summary is drawn exclusively from the text of the provided opinion. No information has been added beyond what appears in that opinion.

    Munshi Lal v. Hira Lal

    Braund, J.:— This is a first appeal referred to us as a Full Bench.

    A certain Abdul Rahman was the owner of some 276 bighas of land in a village in the Bulandshahr district. Abdul Rahman died prior to 1914, leaving a widow, Mst. Hakim-un-nissa, and five children—four sons and one daughter. The sons were Abdul Rashid, Abdul Noor, Abdul Shakur and Abdul Ghafur, and the daughter was Mst. Tamiz-un-nissa. Under Mohammaddan law Abdul Rahman's property descended as to fourteen shares or sihams to each of his four sons, as to seven shares or sihams to his daughter, Mst. Tamiz-un-nissa, and as to nine shares or sihams to his widow, Hakim-un-nissa.

    By a mortgage (hereinafter called the “1914 mortgage”) dated the 12th June, 1914 the three sons, Abdul Noor, Abdul Shakur and Abdul Ghafur, charged their respective fourteen siham shares (making forty-two sihams in all) in favour of Hira Lal and Chiranji Lal, the plaintiffs in the present suit, together with one Durga Prasad, as mortgagees to secure a principal sum of Rs. 2,000, and interest at the rate of eight annas per centum per mensem, calculated with six-monthly rests.

    By a second mortgage (hereinafter called the “1918 mortgage”) dated the 27th May, 1918, the same three sons, together with Mst. Hakim-un-nissa, the widow, charged the same forty-two sihams as were included in the 1914 mortgage, together with the nine sihams of the widow (making fifty-one sihams in all) to the mortgagees of the 1914 mortgage to secure the further principal sum of Rs. 2,700, with interest thereon at the rate of seven annas per centum per mensem, calculated at yearly rests.

    By a third mortgage (hereinafter called the “1919 mortgage”) dated the 14th February, 1919, the two sons, Abdul Koor and Abdul Shakur, mortgaged the equity of redemption in their respective fourteen siham snares to Gokul Chand and Kallu Mal, subject to the 1914 and 1918 mortgages respectively, to secure a principal sum of Rs. 1,500 and interest thereon. It is with this mortgage that the questions in this suit are concerned.

    At that point Mst. Hakim-un-nissa died. On her death, her nine siham shares (subject to the 1918 mortgage) descended as to two sihams each to Abdul Rashid, Abdul Noor, Abdul Shakur and Abdul Ghafur respectively, and as to the remaining one siham to Mst. Tamiz-un-nissa. After that nothing further occurred for seven years. On the 2nd February, 1926, yet another mortgage (hereinafter called the “1926 mortgage”) was entered into by the two sons, Abdul Noon and Abdul Shakur, of their several respective sixteen siham shares (being their original fourteen sihams, together with the two sihams which had accrued to them respectively on the death of their mother) and by Mst. Tamiz-un-nissa of four out of her eight siham shares, in favour of Hira Lal and Chiranji Lal, who were two of the mortgagees under the 1914 and 1918 mortgages respectively, to secure a principal sum of Rs. 3,250, together with interest at the rate of 7 annas 6 pies per centum per mensem, calculable with yearly rests. The 1926 mortgage instrument is Ex. 6 in the proceedings before us. It recites the devolution of the property in the manner set out above and refers to the debts due under the 1914 and 1918 mortgages as debts which Abdul Noor, Abdul Shakur and Mst. Tamiz-un-nissa were liable to pay, by reason of the fact that they were debts presumably originally incurred by the parent, Abdul Rahman, in the year 1906. The 1926 mortgage instrument then proceeded to notice that the 1914 mortgage was about to become barred by limitation and that the aggregate sum for principal and interest at that date outstanding on the 1914 and 1918 mortgages together amounted to Rs. 6,418. After those recitals, the 1926 mortgage went on to allocate the fresh loan of Rs. 3,250; as to Rs. 3,209 (being half of the gross amount outstanding on the 1914 and 1918, mortgages) to the pro tanto redemption of those mortgages, and as to the balance of forty-one rupees by payment to the 1926 mortgagors in cash. It then charged the entire thirty-six siham shares of Abdul Noor, Abdul Shakur and Mst. Tamiz-un-nissa with the repayment of the principal sum of Rs. 3,250, together with interest thereon, in favour of the two mortgagees who are the plaintiffs in the present suit. We are told that the other half of the 1914 and 1918 mortgages has since been paid off from other sources.

    The next event was that by a suit begun by a plaint of June 1929, Gokul Chand and Kallu Mal, the mortgagees under the 1919 mortgage, sued for sale of the twenty-eight sihams compromised in that mortgage, and, on the 18th October, 1930, obtained a final decree. This decree was in due course transferred to Munshi Lal, the present defendant-appellant. He, in turn, in execution of the decree, himself in 1932 purchased half the property—i.e half the twenty-eight sihams—comprised in the 1919 mortgage, and entered into possession of the shares so purchased on the 24th February, 1933. The plaint in this suit of 1929 originally included Hira Lal and Chiranji Lal, the 1926 mortgagees as defendants, on the ground presumably that, they were mortgagees subsequent to the 1919 mortgage. But at a very early stage of the suit an application was made by the plaintiff, in circumstances which will be explained in greater detail later on, to dispense with Hira Lal and Chiranji Lal as defendants on the ground that they were in truth not subsequent, but prior, mortgagees, and so unnecessary parties. The application to “exempt” the two 1926 mortgagees from the 1929 suit, and its language, will have to be considered when it comes to seeing how far it constituted an acknowledgment by the 1919 Mortgagees that the 1925 mortgage was entitled to priority over the 1919 mortgage.

    On the 4th July, 1938, the present suit was started by Hira Lal and Chiranji Lal (the mortgagees under the 1926 mortgage), and it is necessary, in view of the issues involved, to refer to the plaint in some detail. The defendants to the suit were Abdul Noor, the representatives of Abdul Shakur, who was himself then dead. Mst. Tamiz-un-nissa, a certain Abdullah Khan (with whom we are not at the moment concerned), and the present appellant, Munshi Lal. Thus there were before the court the three mortgagors under the 1926 mortgage, or their representatives, and also Munshi Lal, who in 1932 had become the purchaser in the execution sale of part of the property comprised in the 1919 mortgage. Neither the fourth brother Abdul Ghafur, nor his representatives, were parties to the suit. The plaint by paragraph 2 set out the particulars of the 1926 mortgage only, describing the sum secured as being the sum of Rs. 3,250 secured by that mortgage and the security as consisting of the sixteen siham shares of Abdul Shakur, the sixteen siham shares of Abdul Noor and the four siham shares of Mst. Tamiz-un-nissa. By paragraph 7, the plaint explained that the cause of action arose on the 2nd February, 1926—the date of the execution of the 1926 mortgage—, and the relief claimed was that:—

    “A sum of Rs. 3,250 the principal and Rs. 3,082 the interest according to the new law, in all Rs. 6,332, may be caused to be awarded to the plaintiffs against the defendants within a time to be fixed by the court, otherwise after the expiry of the period, the amount due to the plaintiffs may be caused to be paid by sale of the mortgaged property.”

    i.e, of the property charged by the 1926 mortgage.

    Neither in this appeal nor in the court below has anyone questioned the validity of the suit on the ground that it is beyond limitation, and we do not, therefore, pause to consider the reasons which may account for the note which appears at the end of the plaint of the 4th July 1938, stating that the period of limitation for the suit expired only on the 30th June, 1938, during the long vacation and that, accordingly, the date of the filing of the plaint was the 4th July, 1939, the day of the re-ripening of the courts.

    The plaint concluded with a further specification of the property comprised in the 1926 mortgage. By his defence, the defendant, Munshi Lal, claimed that he was not a “subsequent purchaser of the property in question”, but was, on the other hand, “the purchaser of the prior charge”. We think this must be taken to imply, as was done in the court below, that the present appellant asserted his title to the property comprised in the 1919 mortgage acquired by his purchase of 1933 in priority, to the mortgage of 1926. The learned Civil Judge of Bulandshahr who tried the case in the court below, therefore, treated the pleadings as raising an issue whether the effect of the 1926 mortgage was to keep alive the mortgages of 1914 and 1918 respectively in favour of the plaintiffs, so as to preclude the appellant, Munshi Lal, from relying on his purchase of 1932 in execution of the 1919 mortgage decree as giving him a title to the property purchased in priority to the 1926 mortgage. The actual issues framed by the learned Judge, so far as this question was concerned, were:—

    “2. Whether the defendant No. 11 is a purchaser under prior incumbrance and whether the property purchased by him is liable to be sold in this debt? and

    4. Whether the plaintiff is entitled to sell the property on this debt without payment of the charge of the defendant No. 11.”

    The learned Judge on these issues decided that the effect of the 1926 mortgage was that the plaintiffs were entitled to enforce their security in priority to the title of Munshi Lal derived under the 1919 mortgage, and he accordingly passed a decree in the suit which was in effect (though certainly not in form) a decree based upon the 1914 and 1918 mortgages as well as on the 1926 mortgage.

    Those, briefly stated, are the facts of the case. As the learned Judge in the court below rightly recognized, the first issue was whether the plaintiffs, suing as mortgagees under the 1926 mortgage, were entitled in this suit as framed to avail them themselves of their interest in the 1914 and 1918 mortgages as a shield against the appellant's estate in so much of the property comprised in the 1926 mortgage as was also comprised in the 1919 mortgage and had been acquired by the appellant in execution of the decree based on the latter mortgage.

    We have no doubt that in the present case section 101 of the Transfer of Property Act, 1882, and its principle, did apply, with the result that, subject to the questions of limitation dealt with later, the 1914 and 1918 mortgages were not extinguished, as between mortgagor and mortgagee, as a shield against the 1919 mortgage, and for that purpose did not merge in the mortgage of 1926. The only matter that has caused us some slight difficulty is the form of the present suit which on its face is a suit based on a cause of action constituted by the 1926 mortgage. We think that the effect of the operation of section 101 of the Transfer of Property Act, 1882, and of the principles on which it is based is that they merely prevent a merger, or, in other words, in this case kept the 1914 and 1918 mortgages alive, subject always to any question of limitation. The truth, it seems to us, is that when the later mortgagee—in this case the 1926 mortgagee—comes to invoke the assistance of the earlier mortgage as a protection against the intermediate estate, he really suing on the cause of action constituted by the earlier mortgage as well as on the cause of action was constituted by the later one. It is for this very purpose that the cause of action on the earlier mortgage is kept alive. The point is well illustrated by the leading Calcutta case of Gopal Chunder Sreemany v. Herembo Chunder Holdar(1), which, both in the form in which the suit was brought (that is to say as a suit to realize the first mortgage as well as the later mortgage), and from the form of the relief given, which was an account of what was due on both the mortgages, makes it clear that it is the cause of action on the first mortgage—kept alive for the purpose—which alone is effective to give the owner of the puisne incumbrance priority over the intervening estate. This is, we think, equally the effect of the case in the Judicial Committee of Shankar Sarup v. Mejo Mal, when the facts of that case are correctly understood. In the suit before us the only cause of action actually, pleaded by the plaintiffs is the cause of action on the 1926 mortgage, there being no mention in the plaint at all of the 1914 and 1918 mortgages. If the matter had rested there, we should have entertained some doubt whether the plaintiffs, at least without amendment, could have taken a decree in this suit, superseding a person deriving title under the 1919, mortgage, which in effect rested on a cause of action on the two mortgages of 1914 and 1918 which had never been pleaded. Against this, however, it is true that the person who now represents the estate in the part of the property comprised in the 1919 mortgage was made a party to the suit. We are told, though there is no evidence to that effect, that the portion of the property purchased by the appellant in the 1932 execution proceedings on the 1919 mortgage was sufficient to discharge the whole principal and interest then outstanding on that mortgage, and that accordingly there now exists no other intermediate interest than the estate of the appellant in the fourteen sihams which he bought in 1932. The appellant by his written statement in this suit did in fact raise, or, at least, by common consent in the court below, was treated as raising, the issue whether his interest in the mortgaged property was paramount to that of the plaintiffs, and in view of that circumstance we think it would be wrong now, whatever may be the right view as to the proper form of pleading, not to treat it as an issue in the suit. If, therefore, the plaintiffs are able to overcome the other obstacles in their way, they should, we think, have a declaration of their priority as against the appellant's estate in the property.

    This opens the way to the remaining issue in the suit, which are issues of limitation. The circumstance that it is the prior mortgage itself which alone gives to the later encumbrancer or purchaser his title to priority over any intervening estate seems to lead logically to the conclusion that the later mortgagee or purchaser can only rely on the prior mortgage if, apart from section 101, it was capable of being sued on at the date of the subsequent-mortgage. As it has been put, the effect of the principle involved in section 101 is to “keep alive” the prior incumbrance, and not to “give it a re-birth”. Thus, a mortgage, which, at the date of the subsequent incumbrance, is already dead in the sense that, owing to the operation of the Limitation Act, it can not be sued upon, will not be revived as a protection against an intermediate incumbrancer.

    Since this judgment was pepared, our attention has been called to a very recent decision by a Full Bench of five Judges of the Court in the case of Munna Lal v. Chunni Lal. We do not feel it to be either necessary or proper to discuss this decision, except to say that in our view it turned entirely upon the terms of section 92 of the Transfer of Property Act, 1882, and is to be taken as no authority either in a case under section 101 of that Act or in a case involving a consideration of the effect of an acknowledgment so as to diminish the force of what was said by Sir Asutosh Mookerjee in Surjiram Manuari v. Barhamdeo Prasad(2) as subsequently approved in the case of the Bank of Upper India Limited v. Robert Hercules Skinner(3) by the Privy Council.

    In the present case the period of limitation against the 1914 mortgage would have expired on the 12th June, 1926; and, against the 1918 mortgage, on the 27th May, 1930. The 1926 mortgage was, therefore, executed before either of them had become time barred. The present suit was started on the 4th July, 1938, and would be within time, so far as any reliance on the 1914 and 1918 mortgages was concerned, only if a fresh starting point of limitation for each of them was constituted by the execution of the 1926 mortgage. The question, therefore, which has next to be considered is whether the mortgage instrument of 1926 contained any acknowledgment within the meaning of section 19 of the Limitation Act, 1908; and, if it did, whether such acknowledgment was effective as against the appellant's predecessors-in-title—the 1919 mortgagees—who were no parties to the 1926 mortgage. If the latter of these two questions is answered in the negative, then the former question does not arise.

    Looking at the language of section 19 of the Limitation Act, 1908, an effective acknowledgment of liability in respect of any right for a suit on which a period of limitation is placed by the Act, may be given not only by the party against whom such right is claimed, but by the person “through whom he derives title or liability”. The present case is a case in which the acknowledgment of 126 was given long after, the creation of the 1919 mortgage, and accordingly the question arises whether the appellant, as representing the 1919 mortgagees, can be bound by an acknowledgment to which the 1919 mortgagees were no parties given subsequently to the date on which they acquired their interest. This question was considered in 1905 by a Bench of the Calcutta High Court of which Sir Asutosh Mookerjee was a member in the case of Surjiram Marwari v. Barhamdeo Prasad. The learned Judge, basing himself on the observations of Lord Westbury in Bolding v. Lane), held that an acknowledgment given by a mortgagor in favour of a prior mortgagee did not preclude an intermediate mortgagee, whose title accrued before the acknowledgment was given, from relying on the Limitation Act as a bar. Lord Westbury in dealing with a case under the Real Property Limitation Act, 1833, had said that the adoption of the view that an acknowledgment by a mortgagor in favour of a first mortgagee would operate against a second mortgagee whose title originated before the acknowledgment had been given would lead to very extraordinary and alarming consequences. He said:—

    “If it be well founded, then according to the true intent and meaning of this statute, the right of one man may be taken away by the act of another. If the second mortgagee be in possession, and the first mortgagee seeks to recover his principal and arrears of interest for twenty years by a suit for foreclosure or sale, is the second mortgagee to be at liberty to plead or insist on this enactment? It is impossible to deny his right so to do. But according to this decision, if the first morgtagee obtains at any time the acknowledgement in writing of the mortgagor or his representative, the right of the second mortgagee is defeated, and all the arrears are recoverable against the second and subsequent mortgagees. That is to say, the mortgagor or his representative, who may have no interest whatever in the lands (for the ultimate equity of redemption may not be worth one shilling), shall be enabled to charge the estate a new with any amount of arrears of interest as against the second and subsequent mortgagees. The court is bound by every principle of judicial interpretation to find, if possible, a construction of the statute which does not involve consequences so inconsistent with natural justice….”

    With these observations in view, Sir Asutosh Mookerjee decided that section 19 of the Limitation Act should equally be construed so as not to involve a consequence inconsistent with natural justice, and it has to be remembered that a court is bound to give a liberal construction to an Act curtailing rights. It is not, we think, necessary to follow the course of the many decisions in Indian Courts since 1905. But the Judicial Committee of the Privy Council in the case of the Bank of Uppgr India, Limited v. Robert Hercules Skinner on appeal from ??? own Court referred to the case before Sir Asutosh Mookerjee in terms which cannot amount to less than approval of the entire principle which he enunciated. It is true that in this case the fact was that the acknowledgment was given by a transferor who at the date of the acknowledgment had no interest left in the property at all. But their Lordships, after referring to the observations of Lord Westbury in Bolding v. Lane (ubi supra) said:—

    “This principle was applied to this very section by Mookerjee, J., in Surjiram Marwari v. Barhamdeo Prasad and their Lordships are prepared to adopt the reasoning of that very learned Judge in the present case….”

    In our view the principle enunciated by Sir Asutosh Mookerjee, to which the approval of the Privy Council was given in the case referred to above, applies no less to a case in which the mortgagor giving the acknowledgment has retained some scintilla of interest in the form of an equity of redemption than to a case in which he has parted with his interest altogether. The same view was taken very recently in a Full Bench case in the High Court at Nagpur in Seth Radhakishan Ram Lal Palliwal v. Babu Hazarilal (ubi supra). For these reasons, in our opinion, the appellant before us, in the absence of any other special circumstances, would not have been bound by any acknowledgment given by the 1926 mortgagees in the 1926 mortgage instrument.

    That would have concluded the matter, so far as priority was concerned, in favour of the appellant but for certain considerations with which it is now necessary to deal. In 1929, the 1919 mortgagees, Gokul Chand and Kallu Mal, brought a suit on the 1919 mortgage. To this suit in the first place they made defendants not only the 1919 mortgagors but also the present plaintiffs. Unfortunately, we have before us only what appears to be an amended plaint. But it seems—and, indeed, no other alternative has been suggested to us—that the only capacity in which they could have made the 1926 mortgagees defendants to their suit was as mortgagees subsequent in priority to the 1919 mortgage. This was followed almost exactly a month later by an application made by the plaintiffs to the court in which the suit was pending in the following terms:—

    In the above-mentioned case, it is submitted that defendants Nos. 3 and 4 had obtained a simple mortgage in lieu of the prior debt due to them. Therefore, they are prior mortgagees and it is not necessary that they should be made parties to the suit.

    It is, therefore, prayed that their names may be removed from the array of the defendants and in the heading No. 3 may be substituted for No. 5 and the names of defendants Nos. 3 and 4 with the serial number may be struck off.

    Petitioner—Babu Ram Sarup Vakil for the plaintiffs.

    Signature of Gokulchand in Hindi.

    Signature of Ivallumal, in Urdu.

    (Sd.) RAM SAROOP,

    11th July 1929.”

    On this application the Munsif made an order on the same day: “Amend and exempt as prayed for”. In the judgment in the court below the learned Judge has said that this application on the part of the plaintiff to the 1929 suit (the 1919 mortgagees) was prompted by the objection of the present plaintiffs “to the effect that they were prior mortgagees”. We do not know on what material it was that the learned Judge in the court below based this statement, but, in the absence of any suggestion that it is incorrect, we feel bound to assume its truth. On these facts the learned counsel for the present respondent-plaintiffs advances the argument that whatever may have been the position of the appellant prior to 1929, he is now, in view of the acknowledgment contained in the foregoing application by his predecessors-in-title, in any event precluded from asserting any priority over the 1926 mortgagees in respect of the earlier mortgages. It is put in two ways. As we understand, it is first said that in the 1929 proceedings there was only one capacity in which the 1926 mortgagees could possibly have been made defendants in the first place and only one right that could possibly have been claimed against them. That capacity was as subsequent mortgagees; and the only right that could have been claimed against them was a right of priority. That being so, the acknowledgment contained in the application set out above (subject, of course, to its actual construction) was an acknowledgment that the 1926 mortgagees were entitled to the right of relying on the earlier mortgages as a protection against the 1919 mortgage. To put that in another way, a fresh starting point of limitation had arisen in favour of the 1926 mortgagees as between them and the 1914 and 1918 mortgagors by virtue of the acknowledgment contained in the mortgage instrument itself of 1926. This however, as we have shown, did not bind the 1919 mortgagees in the matter of priority. But it is said that the 1919 mortgagees themselves supplied the acknowledgment necessary to start a fresh period of limitation in favour of the 1926 mortgagees as against them by the document of the 11th July, 1929, set out above. In this way the result is said to follow that the present plaintiffs in their suit on the 1914 and 1918 mortgages are barred by limitation neither as against the 1914 and 1918 mortgagors, nor, in respect of their right of priority, as against the 1919 mortgagees. The second way in which the matter is put is that it is said that the acknowledgment contained in the document of the 11th July, 1929, filed by the predecessors-in-title of the present appellant in the 1929 proceedings constitutes an estoppel, by which the appellant is now bound, against asserting any right of priority for his estate as against the present I plaintiffs, the mortgagees under the 1916 mortgage.

    So far as any claim by the present plaintiffs for priority over the 1919 mortgage by virtue of the 1914 mortgage is concerned, there is an obvious fallacy in this view. The fallacy is that in 1929 the 1914 mortgage had, so far as the 1919 mortgagees were concerned, already become time barred. We have already held that the 1919 mortgagees were not bound by the acknowledgment of 1926, and accordingly in 1929 more than twelve years had elapsed. That being so, no acknowledgment given in 1929 could be relied on to support a right of priority derived through the 1914 mortgage. This, however, does not apply to the 1918 mortgage, since in 1929 the limitation period had not expired. It remains, therefore, to examine the effect of the document of the 11th July, 1929, so far as the 1918 mortgage is concerned. The 1919 mortgagees in their application to the court “submitted”—we take that to be the equivalent of a statement—that the 1926 mortgagees had taken the 1926 mortgage “in lieu of a prior debt due to them”. They then set out what was perhaps not a conclusion of fact, but was certainly a conclusion of law, viz., that the 1926 mortgagees were “prior mortgagees” to them. Now, it is clear that a document said to constitute an acknowledgment has to be construed in the context in which it is given and that, where its language is not clear in itself, the context may be examined to see what it is to which the words refer. That is not to say that any equivocation in an acknowledgment can be cured by ascertaining what the probable intention of the acknowledgor was. That is quite a different thing. But, where, after examining in the light of the context what it was that the person giving the acknowledgment was actually referring to the conclusion follows that it is an unequivocal acknowledgment of a right, then that acknowledgment is sufficient to satisfy section 19 of the Limitation Act. In this case, we cannot doubt that, read in its context, the only things that the 1919 mortgagees can have been referring to when they spoke of the prior debts and the prior rights of the 1926 mortgagees were the debts and the rights under the 1914 and 1918 mortgages. We know that these documents and rights did exist and the appellant has not alleged that there were any other mortgages or rights which might lead to any equivocation in the acknowledgment. In our view, therefore, on its true construction the document of the 11th July, 1929, can only be taken as constituting an acknowledgment by the 1919 mortgagees both of the existence of the 1914 and 1918 mortgages and of their, own “liability” in respect of the right of priority of those mortgages over them, which was the only right which could have been asserted against them in the 1929 proceedings. In that view of the matter, we think, not without some reluctance, that the respondent-plaintiffs to his suit are right in saying that they had on the 11th July, 1929, an acknowledgment from the predecessors-in-title themselves of the present appellant of their liability to submit to the plaintiffs' right or priority under and by virtue of the 1918 mortgage. So far as the second contention by the plaintiff-respondents is concerned to the effect that the document of the 11th July, 1929, constituted an estoppel, apart, altogether from an acknowledgment, we propose to deal with that shortly by saying that we have been unable to find any ground for supposing that what was said led to any alteration by the plaintiff-respondents in their position. We have difficulty, therefore, in following how it could have constituted an estoppel.

    In the result, therefore, we think that the defendant-appellant succeeds in the present suit in respect of the 1914 mortgage, but fails in respect of the 1918 mortgage. To recapitulate the steps by which this result has been arrived at, the plaintiffs, the mortgagees under the 1926 mortgage, were entitled, subject to any question of limitation, to rely on the 1914 and 1918 mortgages' as a shield against the appellant's estate derived through the 1919 mortgagees. The 1919 mortgagees were not, in our judgment bound by any acknowledgment given by the mortgagors of the 1914 and 1918 mortgages contained in the mortgage instrument of 1926, because that instrument came into being after their title had accrued and they were no parties to it. At that stage the appellant would in our view, have succeeded in maintaining his priority as against the plaintiffs-respondents suing under the 1926 mortgage. Nevertheless, we are compelled to the view that by the document of the 11th July, 1929, filed by the 1919 mortgagees in the 1929 proceedings they themselves supplied the acknowledgment of their own liability to concede priority to the present plaintiffs in respect of the 1918 mortgage, and by so doing started a fresh period of limitation from the 11th July, 1929, in favour of the present plaintiffs-respondents for the purpose of enabling them to assert their priority over the present appellant's estate.

    For these reasons we think that the result of this suit is that the plaintiffs-respondents are entitled to a preliminary mortgage decree in respect of the 1918 mortgage which has been kept alive in their favour. They are also entitled to a preliminary mortgage decree in respect of the 1926 mortgage, so far as the principal and interest secured, by and the property comprised in it are not already covered by the 1918 mortgage. In the former preliminary mortgage decree the plaintiffs-respondents will have a declaration of their priority over the estate of the appellant in the fourteen sihams which he acquired through the 1919 mortgagees in the year 1932. In all other respects, that is to say in respect of any part of the fourteen sihams vested in the appellant which are not comprised in the 1918 mortgage, notwithstanding that the same may be included in the 1926 mortgage, the present appellant is entitled to a declaration that he has priority to the 1926 mortgage.

    We, accordingly allow the appeal to the foregoing extent. We think that the proper order for costs will be that each party should bear their own throughout.

    Use AI to get other relevant cases.

    Comments

    Munshi Lal v. Hira Lal
    (Apr 11, 1946)