The Judgment of the Court was as follows:
Chakravartti, J.:— On the 8th of February, 1937, the Second Munsif of Asansol, exercising Small Cause Court powers, passed a decree in favour of the Petitioners and against the Opposite Parties in the following terms:—
“Decree
Rs.
A.
P.
Amount
..
..
..
200
0
0
Costs, etc.
..
..
28
6
0
Total
..
228
6
0
2. Defendant to pay costs within two months and the balance in the following kists:—
Rs. 50
in Aswin 1344
Rs. 50
in Aswin 1345
Rs. 50
in Aswin 1346
Rs. 50
in Aswin 1347
in default of one kist entire balance shall be payable at once.”
3. The Opposite Parties made no payment whatever under this decree and on the 7th May, 1941, the Petitioners applied for its execution for realising a sum of Rs. 151-10-3 pies, which was made up of the three instalments of 1345, 1346 and 1347 respectively and Rs. 1-10-3 pies on account of costs of execution. The claim for the costs awarded by the decree and the amount of the first instalment payable thereunder was abandoned. The application for execution, however, contained a statement to the following effect:
“The judgment-debtors have not made any payment as directed by the decree and have defaulted in the payment of instalments”.
4. Aswin, 1344 B.S, on which the first instalment was to be paid, would correspond to September-October, 1937. The application for execution was, therefore, made on a date which was beyond three years from the date of the first default, but within three years from all the dates on which the three instalments, sought to be re-covered, had respectively fallen due. The application for execution was met by the Opposite Parties with an objection under sec. 47 of the Code of Civil Procedure, which was to the effect that, under the terms of the decree, the entire amount had become payable as soon as the first default had occurred and the decree not having been executed within three years from that default, its execution was now barred by limitation.
5. The executing Court felt bound by certain decisions of this Court to give effect to this objection, although its own view was that the objection was not sound. The Court thought that a holder of an instalment decree had the right to forego the benefit of a default clause and if he did so, as the Petitioners had done in the present case, he was entitled to enforce his claim on the instalments, as such, within the period of limitation calculated from their respective dates. In view, however, of authority to the contrary which was binding on it, the executing Court felt obliged to dismiss the Petitioners' application. An appeal by them was similarly dismissed by the Subordinate Judge at Asansol, “having regard to the considerable body of decisions of our Calcutta High Court and the fact that the decree-holder has also based his cause of action for execution on the default clause”
6. The last reason obviously had reference to the statement in the application for execution which we have quoted.
7. Thereafter, the Petitioners moved this Court and obtained a Rule. It came up for final hearing before Mr. Justice Mukherjea and Mr. Justice Blank who noticed a conflict of opinion between the earlier and the later decisions of this Court and between this Court and other High Courts. Their own view was that the application of the Petitioners was in order and not barred by limitation. They thought that a default clause, expressed as the clause in the present case was, only gave the decree-holder an additional right and not a right restrictive of his rights under the order for instalments; and that, consequently, on the occurrence of a default, he might either treat the entire balance as due, in which case he would have to apply for execution within three years from the date of the first default, or abide by the instalments, in which case he would have, in respect of each instalment, three years' time from the date when it became due, under Article 182 (7) of the Limitation Act. The learned Judges dissented from the view taken in certain decisions that the option to call in the entire balance on the occurrence of a default could be waived only by some affirmative act, such as acceptance of an overdue instalment, and that if the decree-holder merely abstained from doing anything, he must be deemed not to have waived his option, but to have exercised it. As regards the proper Article of the Limitation Act applicable, they thought that Article 182 (7) could not apply to an application for recovery of the entire balance, treated as fallen due under the provisions of the default clause, but that it would apply when, in spite of a default having occurred, the application was for recovery of certain instalments, as such. Since, however, the majority of the decisions of this Court had adopted a view which did not appear to them to be correct, the learned Judges referred to a Full Bench the following question of law:
“Where a decree directs payment of the decretal amount by instalments on particular dates and provides that in case the Defendant fails to pay any instalment at the stipulated period, the entire decretal amount would be due, whether any application, made more than three years after the first default, but relating only to instalments which fell within three years of the date of the application, is within time and is governed by Art. 182 (7) of the Limitation Act.”
8. Except for its reference to the Article of the Limitation Act applicable, the question has been framed in the same language as that in the case of Ajodhia Prasad v. Bansilal(1) and the view taken by the learned referring Judges accords substantially with that taken by the Full Bench of the Oudh Chief Court in that case and by the High Courts of Patna, Allahabad and Bombay.
9. With great respect, it appears to us that the question referred, which has been framed as merely one of limitation, does not raise the real issue on which opinion has differed. The difference of opinion which looks apparently like one on a question of limitation, bears, in fact, on a different matter and is more fundamental. Regarded purely as a matter of limitation, the answer to the question referred appears to us to present little difficulty. The decree contemplated is one which directs the amount declared due to be paid in a certain number of instalments on certain specified dates and further provides that in default of payment of any one of the instalments, the entire amount outstanding shall become due. If, in spite of a default having occurred, the decree-holder applies for execution of the decree, not for recovery of the entire balance of the decretal amount, but only of some instalments and such application is within three years from the dates on which those instalments fell due, there can be little question as to whether, so far as limitation is concerned, the application is “within time” or “governed by Art. 182 (7) of the Limitation Act.” The application being one for the recovery of certain instalments, it is an application to enforce payments which the decree directed to be made at certain dates and, consequently Article 182 (7) applies in terms. Being made within three years from those “certain” dates, it is clearly “within time” under the language of the Article. The real question, however, is whether the application is maintainable at all, but that is not a question of limitation. The root question on which opinion has differed is whether, after a default has occurred, the decree-holder is no longer entitled to execute the decree for any of the subsequent instalments, but must execute it, if at all, for the entire balance of the decretal amount and it is consequentially to that question that the question of limitation has arisen. If it be still open to the decree-holder to execute the decree for instalments he will be within time if he seeks so to execute it within three years from the date of the instalments concerned; but if, after a default, he can only execute the decree for the entire balance, which the law will regard as having fallen due as soon as the default occurred, he will not be within time, if three years have elapsed from the date of such default. The real question is what the execution must be for, and when that question has been answered, the question of limitation will be found to answer itself. On the other hand, the question extends beyond limitation, for, if the consequence of a default be that the decree, so far as it provides for instalments, ceases to have effect, no application for recovery of certain instalments, as such, will be after a default has occurred, although it may be made within three years of the date of the default.
10. So far as mere limitation is concerned, there can be no doubt that when the application is for the recovery of certain instalments, the Article applicable would be Article 182 (7). When it is one for recovery of the entire balance under the provisions of the default clause, it has sometimes been debated whether Article 181 or Article 182 (7) will apply, but, as pointed out in the Order of Reference, it is immaterial which Article applies, because the period of limitation is three years in either case. According as the application is of the first kind or the second, the starting point of limitation will be the dates of the instalments concerned or the date of the first default, and the period will be three years in both cases, in the first case under Article 182 (7) and in the second case, under that Article or Article 181, whichever applies. But the real matter for determination is whether after a default has occurred, the decree-holder can any longer make an application of the first kind.
11. We are accordingly of opinion that the question, as framed, does not touch that basic difference of opinion of which the divergence of views, expressed as regards limitation, has been only a consequence. The answer to both parts of the question, as framed, must obviously be in the affirmative, but it appears to us that to return that simple answer will not be to resolve the real difficulty which arises in cases of this type. For, after the bar of limitation is crossed and a decision obtained that, as constituted, the application is within time, the question whether it is maintainable at all will have still to be faced. We, therefore, consider it right that in order that the question may cover the really important matter which is at the root of the difference of opinion as regards limitation, we should insert in the question, after the words “would be due” the words “whether, alter a default has occurred, any application for execution relating to subsequent instalments as such, is maintainable, and.” We feel all the more entitled to do so, because the learned referring Judges have themselves discussed the matter which we propose to include in the question and because, in any event, we shall have to deal with it in deciding the Revision Case itself which also has been referred to us. The question, as amended, would read as follows:
“Where a decree directs payment of the decretal amount by instalments on particular dates and provides that in case the Defendant fails to pay any instalment at the stipulated period, the entire decretal amount would be due, whether, after a default has occurred, any application for execution relating to subsequent instalments, as such, is maintainable and whether any application, made more than three years after the first default, but relating only to instalments which fell due within three years of the date of the application, is within time and is governed by Article 182 (7) of the Limitation Act.”
12. The questions actually referred by the Division Bench, about which we see no difficulty, if the application is otherwise maintainable, have already been answered. It was not argued before us, as it seems to have been argued in some of the cases cited, that Article 182 (7) did apply to such an application as contemplated by the question, but applied in a different way and with a different result. It has sometimes been said that when an instalment decree provides that the entire balance shall become payable on the occurrence of a default, the date of the default is the “certain date,” within the meaning of Article 182 (7), on which the decree “directs payment” of the entire balance to be made and, accordingly, after a default has occurred any application for the whole or a part of the unpaid balance must be made within three years from the date of the default under Article 182 (7). The answer to that argument is that a date which may or may not occur and which, when it occurs, does so by chance, cannot be a “certain date” secondly, that a provision which declares that an amount shall become payable on a certain date, does not “direct its payment” on that date; and thirdly, that for purposes of limitation, an application must be taken as it is and an application relating to instalments, whether it is maintainable or not cannot be treated as one made, on foot of the default clause. We are of opinion that so far as limitation is concerned, an application of the kind mentioned in the question referred, is clearly governed by Article 182 (7) and is within time. But the question of its maintainability remains to be considered.
13. That question, in our opinion, depends entirely on the construction of the particular decree concerned. Where the decree itself makes it obligatory on the decree-holder to execute it for the entire balance, if a default occurs, he cannot obviously adhere to the instalments and put the decree into execution for their realisation as such. A decree of this character fell to be considered in the case of Shib Dat…(Judgment-Debtor); v. Kalka Prasad…(Decree-Holder).(2) where the provision was that “in the event of default, the decree shall be executed for the whole amount.” In such a case, no question of construction really arises. But, more often, the default clause is expressed in a declaratory, rather than mandatory, form. It either says that in the event of a default, the entire balance “shall become due,” or “shall become payable,” or again, “shall become realisable”; or it expresses itself by reference to the decree-holder and says that he “shall have the power to execute the decree for the whole amount” or “shall have the liberty” to do so. With regard to default clauses of the last class, it may be said that they expressly give the decree-holder a mere option to demand immediate payment of the whole amount and if he does not take advantage of the option, which he is free not to do, the provision for payment by instalments is not affected. Even this distinction, however, did not avail in the majority of the cases decided by this Court, where it was held that in spite of the option, the decree-holder, if he was not to be barred by time, would be bound to execute the decree for the whole amount within three years of the date of the default, unless he waived the option by some affirmative act. But with regard to this class of cases also, there is no question of construction. The remaining class, however, of which the default clause in the present case is a specimen, does involve the question whether, on the language used in the decree, the decree-holder has any option at all.
14. In our opinion, he has, and default clauses of this type must be construed to be of the same effect as those in which the decree-holder is given a liberty or option to enforce payment of the whole amount.
“The proviso by which the whole amount of the decree becomes due upon default in payment of any one instalment”, said Petherasn, C.J, in Ram Culpo Bhattacharji v. Ram Chunder Shome(3) “is a proviso which, look at it how you will, is put for the benefit of the creditor, the decree-holder, and his benefit alone; and when a proviso is put into a contract or security, and in ‘security’ I included decree, for the benefit, of one individual party, he can waive it, if he thinks fit.”
15. The decree in that case provided that
“on default in payment of any one of such instalments being made, the whole of the decretal money should immediately fall due.”
16. And, in our opinion, it was rightly construed. An instalment decree, containing a default clause, consists really of three parts. First, there is the part which declares the amount due and it binds the decree-holder and the judgment-debts equally and absolutely. Next, there is the part, providing for payment by instalments, and It is for the benefit of the judgment-debtor. Lastly, there is the part providing that in case of a default, the whole of the unpaid balance shall become due, and it is for the benefit of the decree-holder, who is given a right to foreclose, as it were, the instalments. Such a provision, in our view, must, whenever possible, be construed in favour of the decree-holder whose right to get immediate payment has once been interfered with by the order for instalments and the correct way to construe it is to hold in favour of an option unless the language used in the decree clearly bars it. So it was held in the cases of Manindra Nath Roy v. Kanhai Ram Marwari(4) and Shankdr Prasad v. Jalpa Prasad(5) and in our opinion, those cases were rightly decided, A proviso in an instalment decree which merely says that in the event of a default, the entire amount shall immediately become due or payable does not, we think, exclude on option in the decree-holder to take advantage of it or not to do so: it is not intended to be substitutive of the order for instalments in case of a default, but only to come into force as an alternative at the will of the decree-holder.
17. But even if there be an option in the decree-holder, what is the practical effect when a default has occurred? On that question, a doctrine has been evolved by decisions of this Court for which we can see no warrant in principle.
“Where there is an optional right to enforce payment of money,” observed Banerjee and Rampini, JJ., in Sitab Chand Nahar v. Hyder Malla(6) “such right may toe waived; tout when it is not waived, or when there is nothing to show that it has been waived, limitation would run from the date when the right accrues.”
18. It was observed in other cases that mere abstinence from doing anything or sleeping over one's rights could not constitute waiver and that waiver could be established only by proof of some affirmative act, such as subsequent acceptance of an overdue instalment. Some decisions even went the length of holding that acceptance of an instalment was the only way in which the option could be waived. These decisions overlook the fact that an option is always between two alternatives and when there is no evidence of any act, there is no justification for presuming that it was exercised in favour of one of the alternatives, rather than the other. In our opinion, the correct view is not that when there is no evidence of waiver, the option must be deemed to have been exercised, but that when there is no evidence that the option has been exercised, it must be deemed to have been waived. When the decree-holder applies for realisation of instalments rather than for the whole amount, that itself is evidence that he does not wish to exercise his option or, to put it in another way, wishes to exercise it in favour of abiding by the instalments; and unless there is something to show that he had previously sought to enforce the default clause, it is not easy to see how it can be said that he must nevertheless be deemed to have done so. An option to which a person is held bound and which he is deemed to have exercised unless he expressly waives it, is no option at all and the decisions of this Court appear to us to convert an option into an imposition. We are also of opinion that if the option can be waived, there can be no justification for holding that it can be waived only by one method, vis., acceptance of an overdue instalment.
19. What we have said so far has brought us to the position that, in our view, a default clause in an instalment decree, under which it can be, but not must be, executed for the entire balance in the event of a default, is a provision entirely for the benefit of the decree-holder and merely gives him an option to avail himself of it, if he chooses, although it may be expressed in the form that the entire amount shall at once become due or payable; and, further, that he cannot be deemed to have abandoned his rights under the order for instalments and elected to rely on the default clause, unless there is clear proof of his having done so. This, in our opinion, follows from general principles and the language of the decree, but not, as the Petitioners contended, from anything contained in Article 182 (7) of the Limitation Act. It was argued on their behalf that since, in the case of instalment bonds, the legislature had enacted a general provision in Article 74, and a special provision in Article 7$ which recognised a right of waiver, but it had made no such special provision in the case of instalment decrees, such a provision recognising a right of waiver,- must be deemed to be implied in Art. 182 (7). As to this argument, it is enough to say that the substantive rights of parties under a bond or a decree cannot be derived from, or sought for in the Limitation Act.
20. If the only effect of a particular default clause be to give the decree-holder an option to execute the decree for the entire balance and if he cannot be deemed to have exercised his option in the absence of clear proof of having done so, we can find nothing in reason for still limiting him to the default clause and nothing in the Limitation Act to bar him from recovering anything under the instalments after three years from the default, provided he is within three years from the dates on which the instalments fell due. So far as reason goes, it seems to us plainly unreasonable that what was intended to be a penalty against the judgment-debtor, should be converted into a penalty against the decree-holder and that although the decree-holder may wish to forbear from withdrawing the indulgence of instalments from the judgment-debtor, the law should compel him to do so on pain of losing his money altogether. But the Opposite Parties contended that such was in fact the law. It was said that even if the decree-holder had an option, the running of limitation against him did not depend upon an exercise of the option but was caused by the very fact that an optical existed. If he was in a position to execute the decree for the whole amount, time would run against him, although he might be equally entitled at the time to adhere to the instalments. If he did not execute the decree for the whole amount within three years and secure his money, his parallel right to claim under the instalments would be extinguished as soon as his right to execute the decree for the whole amount was gone. After three years from the default had elapsed, he could have no surviving right to claim a part of the money under some of the instalments, for, the right to a part had gone with the right to the whole. To the rejoinder that the matter was concluded by the principle laid down by the Judicial Committee in the case of Lasa Din v. Gulab Kunwar(7), it was replied that the present case came within the exception made by their Lordships in the latter part of their judgment.
21. In our opinion, the principle laid down in Lasa Din's case applies to the case before us and the exception made by their Lordships does not. Apart from that exception with which we shall presently deal, we may point out that the contention advanced by the Opposite Parties is self-contradictory, for, while conceding an option on the one hand, it, on the other hand, negatives it. If, as they contend, the right to claim under the instalments must, in any event, be lost, because the right to claim the whole balance in one sum is lost, it is useless to say that nevertheless there was an option. The result contended for can happen only if the effect of the default clause be that a single default will operate to make the entire balance due eo instanti, without, to adopt the language of Lord Blanesburgh in the case of Pancham v. Ansar Husain(8),
“any act of election, cancellation or other form of response or acceptance on the part of the mortgagees and even, it would appear, against their desire.”
22. To say that such can be the effect of a default clause while admitting that there is an option under it, is to contend the impossible.
23. In our view, once it is conceded that there is an option, the principle of Lasa Din's case can no longer be excluded. In that case, dealing with a mortgage bond under which the date of payment was at the end of six years, but which at the same time provided that in the event of default in the payment of the annual interest, the mortgagee would have power to realise the entire mortgage money even within six years, the Judicial Committee held that the money did not “become due” within the meaning of Article 132 of the Limitation Act merely by the occurrence of a default and that in spite of a default, the mortgagee had an option to enforce his security at once or wait till the expiry of the full term. The substance of the decision is that the mortgage money did not automatically become due by the occurrence of the default, but had to be made due by the mortgagee by an exercise of his option to call it in. The same principle must apply in the present case and for the same reasons as given by their Lordships, which we need not repeat. Here too, the entire balance of the decretal amount did not become “payable” under the terms of the default clause, simply because a default had occurred, but had to be made payable by an exercise of the decree-holder's option. Since the decree-holder did not choose to exercise his option, he remained entitled to claim under the instalments, just as the mortgagee was held to have remained entitled to sue upon his mortgage on the expiry of the full term in Lasa Din's case.
24. We think that the exception made by their Lordships in the latter part of their judgment, besides being of a tentative character, does not bear upon this view of a decree-holder or mortgagee's rights under an option or this position in law. In the case before them, the suit was for the entire mortgage money and not for the realisation of the amount of the interest for any year which had not been paid. With reference to such a claim in such a suit, their Lordships observed that if the relevant Article of the Limitation Act had said that time would begin to run from the date when the cause of action arose, much might be said in support of the view that the suit would not be in time unless brought within the period of limitation, as calculated from the date of the default. Prima facie, this observation does not seem to accord very clearly with the view expressed as to the effect of the default clause; for, if the money did not “become due” till the option was exercised, equally could no cause of action arise till after the money had been made due by an exercise of the option and the debtor had yet failed to pay. But their-Lordships only say that in the event contemplated, much might be said in favour of the contention of the mortgagors and not that it would necessarily succeed. Besides, if there is this dictum in Lasa Din's case, there is another to the opposite effect in the case of Juneswar Dass v. Mahabeer Singh(9) where a suit was brought upon a mortgage in August, 1871, within six years from the date of payment (June, 1866), but beyond six years from the date (May 1865), when an event, on the happening of which the debt could at once be sued for, had happened. Their Lordships held that the suit was governed by clause 12 of the Limitation Act of 1859, under which the period of limitation was 12 years from the date when the cause of action arose, but referring to an argument founded on clause 16, under which the period was six years from the same starting point, Sir Montague Smith observed that upon a construction of the bond there would be good reason for holding that the cause of action had arisen within six years before the commencement of the suit. In this state of authority, we are of opinion that the Opposite Parties can derive no assistance from the apparent exception made in Lasa Din's case.
25. We are further of opinion that the exception cannot assist the Opposite Parties for a clearer difference in the present case on the facts. The application of the decree-holders was for the recovery of certain instalments only. The Opposite Parties could not point to any Article in the Limitation Act which could be said to apply to the application and under which the starting point was “when the cause of action arose.” They relied upon Article 181 and the starting point there mentioned, vis., “when the right to apply accrues” and contended that for the present purposes it was practically of the same effect. Although when the right to apply accrues “may mean” when it first accrues and may be practically synonymous with “when the cause of action arose”, we can see no reason for the assumption that Article 181 could apply to the application made by the Petitioners. So far as recovery of the instalments, as such, are concerned, an application for that purpose comes clearly, as we have pointed out, under Article 182 (7) and there is no room whatever for application of the residuary Article. There is thus no provision in the Limitation Act, applicable to the present case, under which the starting-point is the same or of the same effect as that considered by the Judicial Committee and, ac-cordingly, the exception made by their Lordships, assuming it is a real exception, is not available to the Opposite Parties.
26. To our mind, the distinction between Lasa Din's case and the case before us is this that there the claim which could have been made on the occurrence of the default and the claim actually made in the suit brought, were the same, vis., a claim for the entire mortgage money; and since the limitation for both would obviously be the same, the Judicial Committee said that if the starting point had been “when the cause of action arose,” i.e, cause of action for the entire money now sued for, the position might have been different, that is to say, the cause of action for the suit before them might have been said to have originated earlier. In the present case, the claim made in the application, viz., a claim for certain of the instalments, is not the same as that which could have been made on the occurrence of the default, vis., a claim for the entire balance, and not only is the limitation for the two different, but the starting point under the Article applicable to the application, as made, is not anything like “when the cause of action arose.” If the suit which the Judicial Committee had before them was a suit for some amount of the annual interest due and their Lordships had said that the claim was neither maintainable, nor within time, there might be some parallelism between that suit and the present application and such decision might perhaps be invoked by the Opposite Parties in their favour.
27. For the reason given above, we hold that both on principle and authority, the application made by the Petitioners is maintainable, that it is governed by Article 182 (7) of the Limitation Act and that it is within time. The answer to the question referred, both as framed by the Division Bench and as amended by us, must therefore, be in the affirmative as to all its parts.
28. It remains to deal with the Revision Case itself, since the application for execution was thrown out in limine on the ground of limitation, nothing else was decided and there is nothing else for us to consider. We do not think the Subordinate Judge was right in holding that the application was also based on the default clause.
29. The reference to the default was only a statement of fact and not a ground of the application. The application will now be restored and dealt with in accordance with law and execution will proceed, subject to any other objection which the Petitioners may have taken under sec. 47 of the Civil Procedure Code.
30. In the result, the question referred to a Full Bench, and as amended by us, is answered in the affirmative as regards all its parts. The Rule, is made absolute. The orders of both the Courts below are set aside and it is directed that the executing Court do proceed to deal with the application on its merits in accordance with law. Since the objection raised by the Opposite Parties had the support of the majority of the decisions of this Court, we direct that each party will bear its own costs throughout.
Biswas, J.:— I agree.
Blank, J.:— I agree.