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Case Number

Appeal No. 77 of 1920.

Attorney(S)

Messrs. P. Narayanamurti and Y. Surayanarayana for the Appellants.
Mr. P. Somasundaram and P. Satyanarayana for the Respondents.

Judges

Sadasiva Aiyar
Spencer, JJ.

Acts

article 132 of the Limitation Act

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Smart Summary

Structured Summary of the Provided Opinion

Factual and Procedural Background

This appeal was brought by defendants 3, 4, 13 and 14 (the appellants). The underlying suit was brought by the plaintiff for sale of plaint properties described as items 1 to 16, founded on a simple mortgage (Ex. A) dated January 1886 for Rs. 4,000. The mortgage (Ex. A) incorporated three parts of consideration: (1) Rs. 3,010 described as due under a simple debt bond of 1879 (Ex. A-3), (2) Rs. 590 under a promissory note, and (3) Rs. 400 in cash.

Prior to Ex. A there were: (a) a usufructuary mortgage of items 1 to 8 by defendants 1 and 2 in favour of the plaintiff; and (b) five usufructuary mortgages (Exs. I–V) executed between 1880 and 1883 in favour of Srinadhu Appadu, affecting items 9 to 16, with a total sum due of Rs. 3,200. In 1915 defendants 3 and 4 paid Rs. 3,200 to Srinadhu Appadu and thereby redeemed those usufructuary mortgages (Exs. I–V).

Procedurally, the lower court accepted the plaintiff's construction of Ex. A and held that the debt under Ex. A became due only on redemption of Srinadhu Appadu (i.e., 1915), and accordingly the lower court did not find the suit barred by limitation. On appeal, the court reversed that view, holding the suit barred by limitation and dismissing the suit. The memorandum of objections was dismissed. Costs: parties bear their respective costs in the lower court; appellants recover their costs from the plaintiffs in the appeal; no costs in the memorandum of objections.

Legal Issues Presented

Whether the plaintiff's suit founded on the simple mortgage deed Ex. A of January 1886 is barred by limitation (Article 132 of the Limitation Act being relevant).
If limitation is in issue, the subsidiary question: on what date did the amount borrowed under Ex. A become due — on execution in 1886 or on redemption of Srinadhu Appadu's usufructuary mortgages (1915)?
Whether the whole Rs. 4,000 of consideration under Ex. A was proved to have passed, or only a lesser sum (contentions included Rs. 3,010 proved by the lower court; appellants contended only Rs. 1,800 passed; plaintiffs contended the full Rs. 4,000 passed).
Whether the suit against the 14th defendant (impleaded as receiver of Basava Reddi's estate) was maintainable without prior sanction of the District Court which had appointed the receiver.
Whether the plaintiffs could obtain a decree for sale of items 1 to 8 subject to the plaintiffs' own prior usufructuary mortgage in their favour.

Arguments of the Parties

Plaintiff / Respondents' Arguments

The plaintiff contended that the date when money became due under Ex. A was the date of redemption of items 9 to 16 from the usufructuary mortgagee Srinadhu Appadu (i.e., 1915), and therefore the suit was not barred by limitation.
In their memorandum of objections the plaintiffs contended that the whole Rs. 4,000 consideration under Ex. A had passed.
The plaintiffs relied on testimony (the 1st witness, who was the 7th defendant and co-mortgagee) stating that the Rs. 590 and Rs. 400 items of consideration mentioned in Ex. A also passed; the court accepted this evidence.
The plaintiffs implicitly disputed the appellants' contention that only Rs. 1,800 passed and challenged the lower court's finding that only Rs. 3,010 was proved.

Defendants / Appellants' Arguments

The appellants argued that if the cause of action arose in 1886 the suit was barred because there were no acknowledgments of indebtedness after 1890 and Article 132 of the Limitation Act applied.
The appellants contended that only Rs. 1,800 of the Rs. 4,000 passed, relying on a clerical omission in Ex. A where Rs. 3,010 was referred to as the principal amount of Ex. A-3 instead of principal and interest due under Ex. A-3; the court rejected this contention.
The appellants advanced that the suit as to half the equity of redemption (the share of Basava Reddi) should have been dismissed because the 14th defendant was impleaded as a receiver without the plaintiffs obtaining the sanction of the District Court which had appointed that receiver; they relied on principles concerning receivership and sanction.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Ammukutty v. Manavikramun (1920) I.L.R. 43 Mad. 793	That sanction (permission) from the court which appointed a receiver is necessary for maintaining a suit against a receiver, but failure to obtain such sanction may be cured during the course of litigation; omission does not affect jurisdiction.	The court applied this precedent to conclude that the failure to obtain sanction could be cured and that the objection to want of sanction was no longer available because the receiver had been substituted by the heirs of Basava Reddi; therefore the objection did not bar the suit as pressed by appellants.
Subramania v. Balasubramania (1915) I.L.R. 38 Mad. 927 : 29 M.L.J. 195 (F.B.)	Authority for the proposition that a plaintiff entitled to a decree for sale may obtain sale of land subject to the plaintiff's own prior usufructuary mortgage.	The court cited this authority to reject the lower court's view that the plaintiff could not sue for sale of items 1 to 8 subject to the plaintiff's prior usufructuary mortgage; the principle supports sale subject to the prior encumbrance.

Court's Reasoning and Analysis

The court's principal analytical task was the proper construction of Ex. A to determine when the debt became due for limitation purposes. The lower court had accepted the plaintiff's construction that the debt under Ex. A became due only upon redemption of Srinadhu Appadu's usufructuary mortgages (which occurred in 1915). The appellate court disagreed and undertook a textual and contextual construction of Ex. A.

The appellate court examined the clause of Ex. A describing security: items 1 to 8 (subject to the plaintiffs' prior usufructuary mortgage) and items 9 to 16 (subject to Srinadhu Appadu's usufructuary mortgages) were described as security. The clause also included an undertaking to "discharge the principal and interest of these documents" and to discharge Srinadhu Appadu's usufructuary mortgages so as to make the properties better security. The court found that this language was more consistent with an obligation to improve the security by discharging the prior usufructuary mortgages than with an agreement to postpone the date on which the cause of action to enforce Ex. A would arise.

The court gave weight to practical considerations disclosed in the document: Srinadhu Appadu's usufructuary mortgages could have been obstacled from redemption for at least sixty years from their dates, and it was implausible that the hypothecatee under Ex. A (who already had items 1 to 8 hypothecated to him and other securities) would have agreed to wait for such an indeterminate and long delay to recover Rs. 4,000 together with large accumulations of interest. On this basis the court concluded that Ex. A created security without stipulating any period for repayment and that the amount was therefore payable on or from the date of execution (i.e., the cause of action arose in 1886).

On the question of the quantum of consideration proved, the court rejected the appellants' contention that only Rs. 1,800 passed (based on a clerical omission) and disagreed with the lower court's conclusion that only Rs. 3,010 was proved. The court accepted the plaintiffs' evidence (including testimony of the 1st witness, the 7th defendant) and held that the whole Rs. 4,000 should be treated as having passed, noting also the inference that consideration for an old document not questioned for more than thirty years should be taken as proved.

Regarding the receivership/sanction issue, the court relied on the principle in Ammukutty v. Manavikramun and on the text cited from High on Receivers to observe that failure to obtain sanction could be cured and that a receiver might waive or be estopped from raising the plea. Because the receiver had been substituted by the heirs of Basava Reddi, the court found the objection unavailable as against the plaintiff.

The court also noted the lower court's unexplained view that plaintiffs could not sue for sale of items 1 to 8 subject to the plaintiffs' own prior usufructuary mortgage and rejected that view, citing Subramania v. Balasubramania for the proposition that sale subject to such a prior usufructuary mortgage is permissible.

Spencer, J., delivered a concurring opinion on the point of limitation, agreeing with the result but emphasizing that where a document does not expressly fix a date of payment, the amount secured must be assumed payable on the date of execution (19 January 1886). He underscored the absence of any clear wording indicating an intention to allow mortgagors to postpone liability by delaying redemption of the prior mortgagee, and said he would expect explicit expression if the parties had intended to extend the statutory limitation period.

Holding and Implications

Holding: The appeal was allowed and the decree of the lower court was reversed; the suit founded on Ex. A is dismissed. The court's core ruling can be stated as: APPEAL ALLOWED — SUIT DISMISSED.

Consequences and implications:

Direct effect: The plaintiff's suit for sale of the plaint properties founded on the simple mortgage Ex. A is dismissed as barred by limitation because the cause of action arose in 1886 (the date of execution) rather than in 1915.
On the quantum of consideration, the court found that the full Rs. 4,000 consideration under Ex. A was to be regarded as having passed; the appellants' contention that only Rs. 1,800 passed was rejected.
Receivership/sanction objection: the court held that the omission to obtain sanction could be cured and that the particular objection was no longer available after substitution of the receiver by the heirs; accordingly the objection did not succeed.
Sale subject to prior usufructuary mortgage: the court affirmed that plaintiffs, if entitled to a decree for sale, could have the properties sold subject to their prior usufructuary mortgages (citing Subramania v. Balasubramania).
Costs: parties bear their respective costs in the lower court; appellants recover their costs from the plaintiffs in the appeal; the memorandum of objections is dismissed with no costs.
No new precedent: the opinion resolves the dispute on construction and limitation as applied to Ex. A and applies existing authorities. The court did not purport to lay down a novel legal principle beyond its specific construction of the instrument and application of established authority.

This summary is derived exclusively from the provided opinion and does not add or infer information beyond that text.

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Jagana Sanyasiah v. Mycherla Peda Atchanna Naidu

1. Defendants 3, 4, 13 and 14 are the appellants. The facts are somewhat complicated and in setting them out 1 shall for the sake of brevity describe the parties to old transactions who are the ancestors of some of the parties to the suit as if they were themselves parties to the suit. There was first a usufructuary mortgage of items 1 to 8 by defendants 1 and 2 to the plaintiff. Next there were five usufructuary mortgages under Ex. I to V executed in the years between 1880 and 1883 in favour of Srinadhu Appadu of items 9 to 16, the total sum due under these five usufructuary mortgages being Rs. 3,200. Next there was a simple mortgage (Ex. A) in January 1886 for Rs. 4,000 made up of three items :--(1) Rs. 3,010 due under a simple debt bond of 1879 (Ex. A-3,), (2) Rs. 590 due under a promissory note and (3) Rs. 400 paid in cash. It is on this bond Ex. A that the present suit for sale of the plaint properties items 1 to 16 is brought.

2. The equity of redemption in half, of items 1 to 8 is now vested in the 13th defendant and the equity of redemption in the other half in the 14th defendant while the equity of redemption in items 9 to 16 is vested in defendants 3 and 4 as a result of transactions which it is unnecessary to set out in detail.

3. The important and preliminary question in the case is whether the plaintiff's suit on this bond of 1886 is barred by limitation. One more fact ,might be stated, namely that in 1915 defendants 3 and 4 in whom the equity of redemption in items 9 to 16 was vested paid Rs. 3,200 to the usufructuary mortgagee Srinadhu Appadu and thus redeemed the usufructuary mortgages of 1880 to 1883 (Exs. I to V). The plaintiffs' contention is that the date when the money became due to him under the simple mortgage deed Ex, A sued on is the date of the redemption of items 9 to 16 from the usufructuary mortgagee (i.e. 1915) and hence this suit is not barred. It is admitted that if his cause of action arose in 1886 itself the suit would be barred as there are no acknowledgments of indebtedness after the year 1890, and as admittedly article 132 of the Limitation Act applies. Hence the question for decision is what is the date on which the amount borrowed under Ex. A became due according to the proper construction of its terms. Those terms are to the following effect. "We shall discharge the principal and interest of these documents on the security of the 13 garces of land" (that is items 1 to 8) "usufructuarily mortgaged under the document of 1879) and also on the 15 garces of land usufructuarily mortgaged to Srinadhu Appadu" under Ex. I to V i. e. the lands mortgaged as the second set, namely items 9 to 16, to be security after discharging the debt due to Srinadhu Appadu) and we shall pay up the hypothecation debt on the securities above set out and get back this hypothecation bond." That according to me is the effect of the language used in Ex, A the construction of which it may be conceded, owing to its involved grammatical construction, is not free from obscurity. The lower court accepted the plaintiff's contention and held that the parties intended that the amount due under Ex. A was to become due only when at some future uncertain date, the mortgagors or their representatives in interest chose to redeem Srinadhu Appadu and that as Srinadhu Appadu was redeemed only in 1915, it was then that the debt due under Ex. A became due. After hearing full arguments I am unable to agree with the lower court on the construction put by it upon Ex. A, The provision about Srinadhu Appadu's usufructuary mortgages which occurs in the portion which describes the second set of properties items 9 to 16 given as additional secrity was, I think, intended to embody merely the undertaking given by the mortgagors to discharge those usufructuary mortgage deeds Exs. I to V so as to make the properties better security and not to postpone the date from which the cause of action for the plaintiffs' enforcement of his right to recover money under Ex. A was to arise. The redemption of Srinadhu's usufructuary mortgages would not be barred for at least sixty years from their respective dates and I am unable to believe that the hypothecatee under Ex. A who had not only items 9 to 16 hypothecated to him subject to Srinadhu's mortgage but other properties, items 1 to 8 would have agreed to wait for 60 years and for the contingency of those properties 9 to 16 being redeemed to get back the Rs. 4000 lent by him under Ex, A with the enormous accumulation of the interest provided for under it. In my opinion, the reasonable construction of Ex. A is that items 1 to 8 subject to the plaintiffs' prior usufructuary mortgage and items 9 to 16 subject to Srinadhu's usufructuary mortgages were made security for the Rs. 4000 borrowed under Ex. A without a stipulation for any particular period for repayment of the amount borrowed. On this construction therefore the suit is barred and must be dismissed reversing the decree of the lower Court.

4. Though if is unnecessary to consider the other questions' raised in the lower court and also argued here, I shall shortly give my opinions on the more important of those other questions also as we were informed that the case might be taken before their Lordships of the Privy Council. The Subordinate Judge considered that of the Rs. 4000 consideration under Ex. A, only the payment of Rs. 3010 was proved. The appellants say that only Rs. 1800 passed while the plaintiffs in their memorandum of objections contend that the whole of Rs. 4000 should be found to have passed. The appellants contention that Rs. 1800 alone passed is based upon a clerical omission in Ex. A which, when referring to Rs. 3010 refers to it as the principal amount of Ex. A-3 instead of as the principle amount and interest due till then under Ex. A-3, The appellants' contention on this point is therefore rejected.

5. The respondents' contention in their memorandum of objections would in my opinion have to be allowed as the passing of consideration for a document which is more than 30 years old and which was never questioned till this suit was brought should be taken as proved even if the direct evidence is not as strong as might be naturally expected in respect of recent transactions. The plaintiffs' 1st witness, the 7th defendant who is the co-mortgagee with the plaintiffs proves that the second and third items of consideration, Rs. 590 and Rs. 400 mentioned in Ex. A, also passed and I see no reason to disbelieve his statement. I therefore differ from the lower court's conclusion on that point.

6. Then there was a contention raised by the appellants that as the 14th defendant was impleaded as the receiver of the estate of a person, Basava Reddi, who owned one half of the equity of redemption in items 1 to 8 and was sued without the plaintiffs' obtaining the permission of the District Court which had appointed him receiver in a litigation involving the rights of the representatives of Basava Reddi, the suit so far as that half share was concerned should have been dismissed. In Ammukutty v. Manavikramun (1920) I.L.R. 43 Mad. 793 this Bench held that while such sanction was necessary for the maintainability of the suit, the failure to obtain the sanction can be effectively cured by the plaintiffs obtaining the sanction during the course of the litigation and that the necessity to obtain the sanction was imposed by the common law merely to enforce due respect towards Courts of justice and that the omission does not affect the jurisdiction of the Courts. It appears from High on Receivers paragraph 261 that a receiver might waive his right to put forward such a plea and that he might by his conduct be estopped from raising such a plea in certain circumstances. The receiver has now been substituted by the heirs of Basava Reddi himself and I think that the objection to want of sanction is no longer available as against the plaintiff, the receiver having ceased to be on the record.

7. Then the lower court thought that the plaintiff could not sue for sale of items 1 to 8 subject to the prior usufructuary mortgage in plaintiffs' own favour. It gives no reason for its view. If plaintiffs are entitled to get a decree for sale of items 1 to 8, they are entitled to have them sold subject to their prior usufructuary mortgages--see Subramania v. Balasubramania (1915) I.L.R. 38 Mad. 927 : 29 M.L.J. 195 (F.B.).

8. There were one or two other difficult questions argued; but I shall not deal with them.

9. The parties will bear their respective costs in the lower court and that the appellants will get their costs from the plaintiffs in this appeal. The Memorandum of objections is dismissed. There will be no costs therein.

Spencer, J.

10. I agree with my learned brother on all points but I desire to express my opinion only on the point of limitation as we are reversing the lower court's decree on that point. As the date of payment is not expressly mentioned in Ex. A it must be assumed that the amount secured by the mortgage was payable on the date of the execution of the document, that is, on 19th January 1886. The wording of this document implies an expectation on the part of the executants that the mortgagors or the mortgagees would redeem the prior mortgagee Srinadhu Appadu at an early date. At the same time I do not think that it was intended by the parties that the mortgagors should have the power to postpone their liability to pay their debt to the mortgagee plaintiffs by means of their own action in delaying to pay off Srinadhu Appadu's debt. If there had been a real intention to extend the period of limitation beyond the statutory period of 12 years I should expect to find an expression in apt words of the terms of the agreement relating to the date of repayment) and it would not have been left to be inferred from the words used to describe the items composing the second part of the security for the loan.

11. The Appeal must be allowed and the suit dismissed with costs in this Court.

Jagana Sanyasiah v. Mycherla Peda Atchanna Naidu

Structured Summary of the Provided Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Plaintiff / Respondents' Arguments

Defendants / Appellants' Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Jagana Sanyasiah v. Mycherla Peda Atchanna Naidu

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