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Ramasubba Aiyar v. Muthu Kr. Ar. Pl. Arunachalam Chettiar

Madras High Court
Jan 18, 1946
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Structured Summary of the Opinion

Factual and Procedural Background

The plaintiff appeals from a decree of the Subordinate Judge of Madura dismissing his suit to recover Rs. 5,100 by enforcing a charge on properties described in the plaint schedule. The properties originally belonged to Mecca Meera Levvai Rowther, who executed two mortgages in favour of Srinivasa Ayyar on 21 December 1910 (for Rs. 2,000) and 25 September 1912 (for Rs. 3,000). The original owner alienated the properties in 1918 to Sikandar Rowther, and the plaintiff purchased the properties from Sikandar in 1920.

Prior to the plaintiff's purchase, one Syed Muhammad Rowther obtained an attachment before judgment in O.S. No. 24 of 1917 (properties attached March 1917) and later a decree; the attached properties were sold at auction and purchased by the decree-holder's representatives on 8 April 1929. The plaintiff remained in possession and resisted delivery to the auction purchasers.

Srinivasa Ayyar obtained a decree for sale in O.S. No. 146 of 1922 on the mortgages and assigned it to Narayanaswami Ayyar. There was also a 1917 mortgage in favour of Nagappa Chettiar. The plaintiff alleged he had discharged encumbrances and sought reimbursement. The Subordinate Judge held the plaintiff's purchase could not prevail against the auction purchasers but directed the purchasers to pay the plaintiff the amount alleged to have been paid by him before obtaining possession.

The auction purchasers appealed to the High Court in C.M.A. No. 465 of 1930. The High Court (Madhavan Nair and Jackson, JJ.) held the auction purchasers were entitled to possession free from the plaintiff's resistance because the mortgages were simple mortgages, and set aside the Subordinate Judge's order directing conditional payment prior to delivery. The High Court nevertheless declared that the plaintiff had a charge on the mortgaged properties for the amounts he had paid to discharge mortgages, and qualified that in any proceedings to enforce that charge the auction purchasers could raise objections that they could have raised on 8 April 1929 (the date they purchased the equity of redemption).

The High Court judgment and decree in the C.M.A. were dated 28 August 1931. The auction purchasers later sold the properties to the present respondent in 1937. The plaintiff instituted the suit from which this appeal arises on 13 August 1943 seeking recovery of Rs. 5,100 by enforcement of the charge declared by the High Court.

The Subordinate Judge of Madura found for the plaintiff on material issues except as to the Nagappa Chettiar mortgage, but dismissed the suit as barred by limitation. The plaintiff limited his claim to Rs. 5,100 (though his total alleged payments exceeded Rs. 15,000) and appealed the limitation dismissal.

Legal Issues Presented

  1. Whether the plaintiff's suit to enforce the charge declared by the High Court is barred by limitation under Article 132 of Schedule I to the Limitation Act, and if so, from which date the period of limitation should be reckoned.
  2. If the High Court's decretal declaration created a charge in favour of the plaintiff, whether the starting point for limitation is the date of that High Court decree (28 August 1931) rather than earlier dates (dates of payment, dates mortgages became payable, or the 8 April 1929 auction purchase).
  3. Whether the High Court's declaration was merely obiter (not creating an enforceable charge) or whether it created an actionable right that could be the basis of the plaintiff's suit.
  4. Secondary question raised on the merits by the respondent: whether the respondent is entitled to contribution or diminution of liability because portions of the property were not delivered to auction purchasers or were sold separately at revenue sale (a procedural/pleading issue as to whether it can be decided on this appeal).

Arguments of the Parties

Appellant's Arguments

  • The plaintiff (appellant) contended that the proper starting point for limitation is the date of the High Court's decree (28 August 1931) which declared a charge in his favour; accordingly his suit instituted on 13 August 1943 was within the period of limitation.
  • The appellant relied on the Privy Council decision in Batey Krishna v. Parsotam Das (1944) to support the proposition that a decree which declares or creates a charge merges the claimant's earlier right of subrogation into the decretal charge and that limitation should run from the decree.

Respondent's Arguments

  • The respondent argued that the High Court's declaration was at most an obiter observation and could not be the foundation of an independent suit to enforce a charge; therefore limitation should be reckoned from earlier events.
  • The respondent contended that an earlier date should be taken as the starting point for limitation, with alternatives pressed including (a) the date the mortgages became payable, (b) the dates when the plaintiff allegedly made payments in discharge of the mortgages (payments in 1923), or (c) the date of purchase by the respondent's predecessors at auction (8 April 1929).
  • The respondent relied on Perumal Reddiar v. Suppiah Thevar (Horwill, J., 1945) to support the limitation argument; the respondent also urged, on the merits, that the respondent should be entitled to contribution or diminution of liability because part of the property remained in plaintiff's possession (about 20 acres) and some acreage was separately purchased at a revenue sale (about 2 acres 53 cents). The court treated this as an inadequately pleaded contention not suitable for decision on appeal.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Batey Krishna v. Parsotam Das, (1944) 2 M.L.J. 330 : L.R. 71 I.A. 153 = I.L.R. (1944) All. 654 (P.C.) That a decree (in foreclosure or related proceedings) which recognises or declares a charge in favour of a person who has discharged prior encumbrances merges that person's rights into the decretal charge, and limitation for a suit to enforce that charge may properly be reckoned from the date of the decree. The court applied and followed this decision: it held the facts of the present case were similar, that the High Court's declaratory decree created/recognised a charge in favour of the plaintiff and that limitation should run from the date of the High Court's decree (28 August 1931), making the present suit (instituted 13 August 1943) timely.
Perumal Reddiar v. Suppiah Thevar, (1945) 1 M.L.J. 341 (Horwill, J.) Invoked by the respondent to argue against the appellant's position on limitation. The court distinguished this decision: it noted that in Perumal Reddiar there was no antecedent declaration of a charge in favour of the plaintiff as there was in the present case, and therefore the decision did not govern the present facts.

Court's Reasoning and Analysis

The court began by identifying Article 132 of Schedule I to the Limitation Act as the applicable provision, which prescribes limitation to run "when the money sued for becomes due." The court then set out five alternative dates which parties might press as the starting point for limitation:

  1. the date when the amounts became payable under the mortgages;
  2. the date when, according to the plaintiff, payments were made by him in discharge of the mortgages (payments occurred in 1923);
  3. the date of purchase by the defendant's predecessors in execution at auction (8 April 1929);
  4. the date of disposal by the High Court of C.M.A. No. 465 of 1930, i.e., 28 August 1931; and
  5. the date when the plaintiff was dispossessed of the suit properties (30 November 1931).

The court observed that if any of the earlier dates (1–3) were taken as the starting point the suit would be hopelessly barred when instituted on 13 August 1943, because the payments occurred in 1923 and the statutory period had elapsed. Therefore it was necessary for the plaintiff to rely on one of the later dates (the High Court decree date or dispossession date).

The appellant relied principally on Batey Krishna v. Parsotam Das (Privy Council, 1944). The court analysed that decision at length: in Batey Krishna the Judicial Committee held that payments made by a plaintiff to discharge prior encumbrances subrogated him to the mortgagees' rights and those rights merged in a final decree which declared a charge in the plaintiff's favour; consequently the decree created an effective basis for a suit and limitation should run from the decree. The court found the facts of the present case similar and concluded the plaintiff's rights, derived from payments to discharge mortgages, were merged in the High Court's order declaring a charge.

The court rejected the respondent's contention that the High Court's declaration was mere obiter. It relied on the text of the High Court's decretal order and the specific direction incorporated therein, concluding that the declaration was deliberately made to "safeguard the rights of the plaintiff" and thus was not an idle observation.

The court also rejected the respondent's argument that on the date of the High Court's order the appellant had no subsisting charge; accepting that argument would amount to negating a right expressly declared by the High Court. The court interpreted the High Court's qualification — permitting the auction purchasers to raise objections they might have raised on the date of purchase (8 April 1929) — as not authorising a total denial of the plaintiff's declared claim.

The court considered but did not decide the respondent's separate contention on contribution or diminution of liability based on partial non-delivery and a separate revenue sale. It treated that point as not properly raised in the pleadings and not covered by any specific issue, and noted that the plaintiff had limited his claim to Rs. 5,100 (despite total alleged payments exceeding Rs. 15,000), which made the asserted reductions immaterial to the present limited recovery.

Holding and Implications

Core Ruling: The court allowed the appeal and held that the plaintiff's suit to enforce the charge was not barred by limitation; it granted a decree in favour of the plaintiff for Rs. 5,100 with interest and costs.

Specific orders and consequential relief granted by the court:

  • Decree: Plaintiff awarded Rs. 5,100.
  • Interest: Further interest at 6% from the date of the plaint.
  • Costs: Costs awarded both here (the appellate court) and in the Court below.
  • Redemption time: Time for redemption fixed at three months.

Implications: The court concluded that the decretal declaration of a charge by the High Court (dated 28 August 1931) created an actionable right in favour of the plaintiff and that limitation for a suit to enforce that right runs from the date of that decree. The direct consequence is that the plaintiff's suit, instituted on 13 August 1943, was within the period of limitation and entitles him to the specified recovery. The court did not purport to lay down an innovation in legal principle beyond applying the Privy Council precedent (Batey Krishna) to the facts; it distinguished other authority relied upon by the respondent as inapplicable on the facts (e.g., Perumal Reddiar).

This summary is prepared solely from the provided opinion; no information beyond that text has been added.

Show all summary ...

1. This is an appeal by the plaintiff against the decree of the Court of the Subordinate Judge of Madura dismissing his suit for the recovery of Rs. 5,100 by the enforcement of a charge on the properties mentioned in the plaint schedule. These properties originally belonged to one Mecca Meera Levvai Rowther. He had executed in favour of one Srinivasa Ayyar, two mortgages on 21st December, 1910 and 25th September, 1912, for Rs. 2,000 and Rs. 3,000-respectively. The properties in suit and other properties were purchased by the plaintiff in 1920, from one Sikandar Rowther to whom the original owner had alienated these and other properties in 1918.

2. One Syed Muhammad Rowther, a creditor of the original owner, brought a suit O.S. No. 24 of 1917 on the file of the Court of the Subordinate Judge of Madura to recover an amount due to him and obtained an attachment before judgment of the properties of the debtor including the suit properties, which were actually attached in March 1917. Eventually he obtained a decree in the suit and his legal representatives brought the attached properties to sale and purchased them themselves on 8th April, 1929. The purchase by the plaintiff was therefore after this attachment before judgment. When the auction purchasers proceeded to obtain delivery of the properties, they were obstructed by the plaintiff, who was in possession under his purchase from Sikandar.

3. Srinivasa Ayyar obtained a decree for sale in O.S. No. 146 of 1922, Sub-Court, Madura, on the foot of the two mortgages in his favour above-mentioned and assigned this decree to one Narayanaswami Ayyar. There was also a mortgage in favour of one Nagappa Chettiar executed by the original owner in 1917. The plaintiff claiming to have discharged these encumbrances urged in the execution proceedings for delivery that in any event he was entitled to remain in possession till he was reimbursed in the amount paid by him to discharge the encumbrances subsisting on the property. The lower Court held that the purchase by the plaintiff could not prevail against the auction purchasers but directed the purchasers to pay to the plaintiff the amount alleged to have been paid by him in discharge of the mortgages on the property, before they obtained possession. The auction purchasers preferred an appeal to this Court, C.M.A. No. 465 of 1930. Madhavan Nair and Jackson, JJ., agreed with the contention on behalf of the auction purchasers that they were entitled to the possession of the properties unconditionally because the mortgages which the plaintiff claimed to have discharged were simple mortgages and not usufructuary mortgages. They therefore set aside the order of the lower Court and ordered that possession of the properties should be delivered to the appellants before them free from the resistance of the present plaintiff. With regard to his claim that he was entitled to be paid the amount which went to discharge the mortgages, the learned Judges observed as follows:

Mr. Seetharama Rao argues that as the respondent has discharged various mortgages the appellants may be asked to pay him in these very proceedings the amount of the mortgages discharged by him; but we think that as the respondent has no title to remain in possession of the property and as the appellants' right is undisputed he should enforce his right to recover the mortgage amount, by other appropriate proceedings. However, to safeguard his rights we will declare and this is not' objected to by the appellants that the respondent will have a charge on the mortgaged properties with respect to the amount paid for the discharge of the various mortgages but in any proceedings-which he may take to enforce his rights it is only right to say that the appellants will be entitled to raise whatever objections they might have raised on the date when they became the purchasers of the equity of redemption in the properties on 8th April, 1929.

The decretal order gives effect to this direction and contains a declaration that the plaintiff do have a charge for the amounts paid by him to discharge the various mortgages.

4. The date of the judgment and decree of the High Court in the C.M.A. was 28th August, 1931. In 1937, the properties in suit were purchased by the present respondent from the auction purchasers. On 13th August, 1943, the plaintiff instituted the suit out of which this appeal arises for the recovery of a sum of Rs. 5,100 (to which amount he confined his claim) by enforcement of the charge thus declared by the High Court against the respondent who had become the purchaser of the properties.

5. The learned Subordinate Judge of Madura held in favour of the plaintiff on all material issues except with regard to the plaintiff's claim in so far as it related to the discharge of the mortgage in favour of Nagappa Chettiar. But having regard to the fact that though the total claim which the plaintiff could make in respect of the amounts alleged to have been paid by him amounts to over Rs. 15,000 yet he has chosen to confine his claim to Rs. 5,100, Mr. Seetharama Rao the learned Counsel for the appellant intimated that it was not necessary to attack this finding. The learned Subordinate Judge, however, dismissed the suit on the ground that it was barred by limitation. The plaintiff appeals.

6. Admittedly the article applicable is Article 132 of schedule I to the Limitation Act. The starting point according to the third column is " when the money sued for becomes due." The several alternative dates which may be pressed into service on behalf of the appellant or the respondent are:

(1) The date when the amounts became payable under the mortgage;

(2) The date when according to the plaintiff payments were made in discharge of the mortgage;

(3) The date of the purchase by the defendant's predecessors in execution of the decree in O.S. No. 24 of 1917, that is 8th April, 1929;

(4) The date of the disposal by the High Court of C.M.A. No. 465 of 1930, i.e., 28th August, 1931; and (5) The date when the plaintiff was dispossessed of the suit properties, that is, 30th November, 1931.

The suit would be barred unless either of the last two alternatives is taken as the starting point. The payments were in 1923 and any suit on the foot of the mortgages themselves would be hopelessly barred on the date of the institution of the present suit.

7. For the appellant, a recent decision of the Privy Council in Batey Krishna v. Parsotam Das (1944) 2 M.L.J. 330 : L.R. 71 I.A. 153 = I.L.R. (1944) All. 654 (P.C.) was relied on for the position that the date of the High Court's decree is the proper starting point. In our opinion this decision should govern the present appeal. In that case the plaintiff became owner of certain property by virtue of a purchase on 27th July, 1910. In 1909 the original owner had executed a mortgage which was payable in 1912 and in 1915 he executed another mortgage over a part of the properties already mortgaged. There was a suit instituted on the mortgage of 1909 and a decree for sale obtained. In order to save the properties from being sold in auction, the plaintiff paid to the mortgagee-decree-holder in 1917 the decretal sum. The plaintiff also redeemed another mortgage which had been executed by the original owner in 1915 by a payment made in 1917. There was then a suit filed by subsequent mortgagees for foreclosure. To this suit the plaintiff was also made a party and he put forward a claim in respect of the payments made by him to discharge the prior encumbrances. This claim was recognised and a charge was declared in his favour and presumably incorporated in the decree. The plaintiff thereafter brought a suit for the enforcement of the charge within 12 years of the decree in the foreclosure suit but beyond 12 years of the payments made by him. The Allahabad High Court dismissed the suit as barred by limitation because it was beyond 12 years both from the date when the mortgages discharged by him became payable and from the date of payment. Their Lordships of the Judicial Committee allowed the appeal and held that the foreclosure decree created a charge in favour of the plaintiff which could be made the basis of his suit. It was contended before them that the decree only declared a charge which had existed before but did not create one, but their Lordships were unable to accept this argument. They say:

The plaintiff by making the two payments mentioned above had subrogated himself to the rights of the mortgagees whom he paid off and the rights which he had thus obtained became merged in the decree passed by the Subordinate Judge in the foreclosure suit. In the circumstances it is clear to their Lordships that the rights which the defendants have obtained can only be subject to the qualification of the rights of the plaintiff, i.e., a charge in favour of the plaintiff must be held to have been created by the final decree in Suit No. 13/39 of 1927 (the foreclosure suit)." The facts of the present case are similar. Here too though it may be said that the plaintiff by reason of the payments had the right to recover them, it must be held that his right became merged in the order of the High Court which declared a charge in his favour. In this view it is unnecessary to refer to the decisions which deal with the difficult question whether the starting point of limitation for a suit to enforce the right of subrogation by a puisne encumbrancer is the date of payment by him in discharge of the prior encumbrance or the date when the prior encumbrance itself became payable.

Mr. Panchapagesa Sastri for the respondent tried to whittle down the declaration granted by the High Court in favour of the plaintiff to a mere observation or obiter dictum which could not be made the foundation of the present suit. We do not agree with him. The learned Judges make it abundantly clear that they were granting a declaration to safeguard the rights of the plaintiff who was indisputably entitled to the right on account of his discharge of the mortgages on the property. It is not a case of a mere observation because there was a specific direction incorporated in the decretal order.

8. We do not also agree with the respondent that in respect of this declaration it is open to him to urge that on the date of the order of the High Court the appellant had no subsisting charge. An acceptance of this argument would mean the negation of a right declared by the High Court. We do not understand the qualification made by the High Court allowing the respondent's predecessors to raise objections which they might have raised on the date of their purchase of the equity of redemption in Court auction to mean that such objections could be in the total denial of the plaintiff's claim.

9. Mr. Panchapagesa Sastri relied on a decision of Horwill, J., in Perumal Reddiar v. Suppiah Thevar (1945) 1 M.L.J. 341, which no doubt was after the pronouncement of the judgment of the Privy Council in Batey Krishna v. Parsotam Das (1944) 2 M.L.J. 330 : L.R. 71 I.A. 153:I.L.R. (1944) All. 654 (P.C.), but in that case there was no question of an antecedent declaration of a charge in favour of the plaintiff as in the present case.

10. It was also urged for the respondent that the date of the purchase by the respondent's predecessors in execution of the decree in O.S. No. 24 of 1917, that is 8th April, 1929, should be the date from which time should be reckoned. It is true no doubt on that date there was a purchase by the defendant's predecessors but the plaintiff continued to remain in possession and when his possession was threatened he did put forward a claim in execution proceedings and the Courts therein did work out the relative rights of the plaintiff and the auction purchasers and the final result was the declaration made in favour of the plaintiff by the High Court. From the date of that declaration the suit is in time.

11. We therefore disagree with the learned Subordinate Judge of Madura that the suit is barred by limitation and set aside the dismissal of the suit.

12. On the merits, a point was sought to be made for the respondent that the respondent would be entitled to a right of contribution or at any rate to a diminution of the liability because of two facts : (1) The exclusion of about 20 acres in item 2 from delivery of possession to the auction purchasers which continued to remain in plaintiff's possession and (2) about 2 acres 53 cents were purchased by one Venkateswara Ayyar at a revenue sale. This is a question which cannot be decided now for the first time. We do not find it raised specifically in the written statement and there was no issue framed to cover this contention. It also appears to us that this contention was presumably not raised because the plaintiff was claiming only an amount of Rs. 5,100 though his total claim was over Rs. 15,000 and any reduction on the grounds alleged by the respondent could not further reduce the plaintiff's already reduced claim.

13. We therefore allow the appeal and grant a decree in favour of the plaintiff for a sum of Rs. 5,100 with further interest at 6 per cent, from the date of plaint with costs here and in the Court below. Time for redemption--three months.