Citation Codes

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Case Number

First Appeal No. 484 of 1957 (with Civil Appeal No. 3451 of 1958), from the decision of R.Y Deshpande, District Judge, Aurangabad, in Case No. 19/1 of 1953-1954

Judges

Datar
Patwardhan, JJ.

Acts

art. 133 of the Hyderabad Limitation Act and that of art. 147 of the Indian Limitation Act of 1908.
Article 132 of the second schedule to the Indian Limitation Act.11. The Limitation Act of 1877
s. 6 of the Part B States (Laws) Act (III of 1951) the repeal of Hyderabad Limitation Act
Hyderabad Limitation Act. Proviso to s. 6 of the Part B States (Laws) Act (III of 1951)
Indian Limitation Act of 1871 (Act No. IX of 1871) repealed the earlier Act of 1859.
art. 147 of the Indian Limitation Act, 1908. The Hyderabad Limitation Act
provisions of s. 67 of the Transfer of Property Act.
INDIAN LIMITATION ACT
art. 133 of the Hyderabad Limitation Act
article of the Limitation Act of 1871,
art. 132 of the Limitation Act, 1908.15.
art. 147 of the Limitation Act of 1908
s. 67 of the Transfer of Property Act
s. 58 of the Transfer of Property Act.
art. 147 of the Indian Limitation Act
art. 132 of the Limitation Act, 1908.
article 147 of the Limitation Act
Limitation Act of 1877, art. 132
PART B STATES LAWS ACT
art. 132 of the Limitation Act
art. 147 of the Limitation Act
Indian Limitation Act, 1908,
TRANSFER OF PROPERTY ACT
money;.9. Act IX of 1871

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Smart Summary

Judgment Summary — Datar, J.

Factual and Procedural Background

This appeal arises from a suit for foreclosure instituted on February 10, 1954. The plaint prays that if the mortgage amount is not paid as directed by the Court, the defendant be ejected, the plaintiff's possession confirmed, and the plaintiff be held entitled to apply for a final decree debarring the defendant from all rights to redeem the mortgaged property. The underlying instrument is a possessory mortgage-deed dated 13-12-1934 (exh. P1, official translation placed on record) by which Ramprasad (executant/mortgagor) mortgaged a ginning factory ("Saraswati Gin") in favour of Tarabai Saheba for an agreed sum originally of Rs. 30,000 with later reckonings showing amounts due and a balance stated at various stages. The deed provided for repayment by annual instalments over a nine-year period beginning 19-12-1935, and contained a clause stating that on non-payment of five instalments (continuous or non-continuous) the mortgagee would be entitled to recover the entire mortgage amount and the factory would be deemed foreclosed in favour of the mortgagee, extinguishing the mortgagor's redemption right.

At trial the learned Judge held the transaction to be an usufructuary mortgage as defined in s. 58 of the Transfer of Property Act and addressed limitation questions under the Limitation Act. On appeal Datar, J. considered three principal points raised by counsel: (1) whether the mortgage was a usufructuary mortgage making a suit for foreclosure misconceived; (2) whether the suit was barred by limitation and, if so, which article applied; and (3) subsidiary points about date when the mortgage money became due. The appeal culminates in directions about the preliminary decree and accounts to be taken by the trial Court.

Legal Issues Presented

Whether the transaction evidenced by the mortgage-deed is an usufructuary mortgage (as defined in s. 58, Transfer of Property Act) such that a suit for foreclosure is misconceived.
Whether the suit for foreclosure (instituted 10-2-1954) is barred by limitation and, if not, which Article of the Limitation Act applies (i.e., whether art. 147 or art. 132 governs).
If art. 132 applies, the date on which the period of limitation begins to run — specifically whether the mortgage money became due on the date of default in payment of five instalments or only on expiry of the mortgage term (or upon exercise by the mortgagee of an option).
Whether the repeal of the Hyderabad Limitation Act and substitution by the Indian Limitation Act (1908) affected the period of limitation applicable to this suit, having regard to the proviso to s. 6 of the Part B States (Laws) Act (III of 1951).

Arguments of the Parties

Mr. Gokhale (for the defendant)

Contended the mortgage-deed contained all essentials of an usufructuary mortgage, and thus a suit for foreclosure was misconceived because a usufructuary mortgagee cannot institute a suit for foreclosure under s. 67 of the Transfer of Property Act.
Argued that the clause purporting to confer a right of foreclosure operates as a clog on the mortgagor's equity of redemption and should be ignored; therefore the transaction must be treated as an usufructuary mortgage.
On limitation, contended that the suit was barred because it was not instituted within the appropriate period; specifically maintained that the date of default (after non-payment of five instalments) — December 19, 1939 — triggered the mortgagee's right and limitation should run from that date.
Maintained that because the mortgage-deed stated payment "within the period of 9 years," there was no fixed period for redemption as in the Privy Council authority relied on, and therefore the mortgagor could accelerate redemption by paying earlier; that difference distinguished that authority.

Mr. Kotwal (for the plaintiff)

Contended that art. 147 of the Indian Limitation Act (prescribing 60 years for suits by a mortgagee for foreclosure or sale) did not govern the present suit because art. 147 applies only where the mortgagee is entitled to either foreclosure or sale in the alternative (i.e., English mortgage); and in the present case the mortgagee was not so entitled.
Argued that art. 132 of the Limitation Act applied to suits to enforce payment of money charged upon immovable property and therefore governed the present suit for foreclosure (period: 12 years from when money becomes due).
Maintained that the Hyderabad Limitation Act's art. 133 (which prescribed 30 years for a suit for foreclosure) was in force when the cause of action arose and that by virtue of the proviso to s. 6 of the Part B States (Laws) Act any right under the former statute was preserved; in substance argued that limitation should be governed by the Hyderabad Act in respect of rights accrued under it.
Argued (on limitation) that even if art. 132 applied, the suit was within 12 years from December 13, 1943 (the date the mortgage money became due after expiry of the nine-year term), and therefore was not barred.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Vasudeva Mudaliar v. Srinivasa Pillai	Held that art. 147 of the Indian Limitation Act applies only to mortgages where the mortgagee is entitled to either foreclosure or sale (English mortgage).	Relied upon to conclude that art. 147 does not apply to the present mortgage (since the mortgagee was not entitled to foreclosure or sale in the alternative).
Masjid Shahid Ganj Mosque v. Shiromani Gurdwara Parbandhak Committee, Amritsar	Principle that rules of limitation applicable to a suit are those in force at the date of institution of the suit (limitation is procedural).	Used to support the proposition that the Limitation Act in force on the date of institution governs, i.e., the Indian Limitation Act, 1908, applied on the date this suit was filed.
Hurrinath Chatterji v. Mohunt Mothoor Mohun Goswami	Law of limitation does not create rights but bars remedies after a period; limitation prescribes only a period and not the cause of action.	Employed to reinforce that limitation is procedural and does not create the right sued upon (i.e., mortgagee's right arose under Transfer of Property Act and the deed, not under Limitation Act).
Juneshwar (Juneswar) Dass v. Mahabeer Singh	Under earlier Limitation Acts, a suit by a mortgagee to recover amount due by sale of mortgaged lands was regarded as a suit for recovery of immovable property and governed by 12-year rule.	Referred to in tracing legislative history and supporting the view that foreclosure suits were treated as suits for recovery of money/immovable interest governed by a 12-year period (art. 132).
Dearman v. Wyche (English authority)	Observation that a bill for foreclosure, though seeking exclusion of an equity, is essentially a suit to recover money; in substance a suit to recover money due on mortgage.	Quoted to support the proposition that foreclosure suits are in substance suits to enforce payment of money charged on immovable property, aligning them with art. 132.
Nilcomal Pramanick v. Kamini Koomar Basu	Article 147 applies only where mortgagee has option of foreclosure or sale; where mortgagee has no such option, article 132 governs foreclosure suits.	Adopted to support that art. 132 of the Limitation Act governs suits for foreclosure where the mortgagee lacks the alternative remedy of sale.
Balaram v. Mangta Dass	Applied art. 132 (12-year rule) to suits for foreclosure of a mortgage by conditional sale.	Referred to as follow-up authority confirming application of art. 132 to foreclosure suits of the kind under consideration.
Girwar Singh v. Thakur Narain Singh	Earlier ruling that period of limitation for a suit of this nature is 12 years (art. 132).	Cited as persuasive local precedent aligning with the 12-year rule for foreclosure suits under art. 132.
Ram Chunder Ghosaul v. Juggutmonmohiney Dabee	Supported the proposition that foreclosure/recovery suits were governed by the 12-year period.	Used in the historical analysis tracing consistent judicial treatment applying art. 132 (or its predecessors) to foreclosure suits.
Sheoram Singh v. Babu Singh	Held that a suit on a mortgage by conditional sale for money or for foreclosure was governed by art. 132 of the Limitation Act, 1908.	Used to bolster the conclusion that art. 132 applies to foreclosure suits under the present Act.
Lasa Din v. Gulab Kunwar (Privy Council)	Held that where a mortgage stipulates a term and contains a proviso giving the mortgagee the option to enforce on default, the money does not become 'due' for limitation purposes until the stipulated period expires or the mortgagee elects to enforce; mortgagor cannot take advantage of his own default to accelerate redemption rights.	Applied directly to hold that because the mortgagee did not exercise the option, the mortgage money became due only on expiry of the full term (here held to be 13-12-1943), and thus the suit filed in 1954 was within 12 years under art. 132.
Vadju v. Vadju	Principle that, absent express or implied stipulation to the contrary, the rights of redemption and foreclosure are co-extensive (i.e., the period for redemption fixes the period for foreclosure).	Relied upon to interpret the mortgage-deed and rent note together, concluding that the period for redemption was fixed for nine years and the mortgagor could not redeem earlier than provided.

Court's Reasoning and Analysis

The Court's analysis proceeds in identifiable steps:

Nature of the mortgage: The Court examined the official translation of the mortgage-deed (exh. P1) and contemporaneous rent note (exh. P2). The deed described a possessory mortgage of the ginning factory, fixed annual instalments over a nine-year schedule, and a clause that on non-payment of five instalments the mortgagee would be entitled to recover the entire mortgage amount and the factory would be deemed foreclosed, extinguishing the mortgagor's right of redemption. Reading the document as a whole, the Court concluded the transaction was an "anomalous mortgage" whose terms expressly conferred a right of foreclosure on the mortgagee. Consequently, the trial Judge's conclusion that it was an usufructuary mortgage under s. 58, Transfer of Property Act, was held to be incorrect.
Tenability of suit for foreclosure: Because the transaction was held not to be an usufructuary mortgage, the Court held the present suit for foreclosure was prima facie tenable unless barred by limitation.
Which Limitation law applies: The Court considered whether the Hyderabad Limitation Act (art. 133) or the Indian Limitation Act, 1908 (arts. 132 and 147) governed limitation. Relying on the established principle that limitation is procedural and the rules in force at the date of institution of the suit apply (Masjid Shahid Ganj), the Court held the Indian Limitation Act, 1908, governed this suit as it was in force on the date of filing. The Court rejected the argument that the proviso to s. 6 of the Part B States (Laws) Act preserved a substantive right under the Hyderabad Act that would alter limitation — no right had been acquired under the Hyderabad Limitation Act that would be invoked to file the present suit.
Which Article of the 1908 Act applies: The Court considered art. 147 (suit for foreclosure or sale — 60 years) and art. 132 (to enforce payment of money charged upon immovable property — 12 years). Applying Vasudeva Mudaliar and related authorities, the Court accepted that art. 147 is limited to cases where the mortgagee has the alternative remedies of foreclosure or sale (English mortgage). Because the present mortgage did not entitle the mortgagee to both remedies in the alternative, art. 147 did not apply. The Court surveyed historical legislative development and consistent judicial interpretation (including Nilcomal, Balaram, Girwar Singh and others) to hold that a suit for foreclosure is to be treated as a suit to enforce payment of money charged upon immovable property and hence governed by art. 132.
Commencement of limitation under art. 132: The Court then addressed when the 12-year period begins to run. It examined the default-clause and the authorities, most importantly the Privy Council decision in Lasa Din v. Gulab Kunwar, which held that where a mortgage provides a stipulated term and reserves to the mortgagee an option on default to enforce security, the money does not become 'due' for limitation purposes until either the stipulated period expires or the mortgagee exercises his option. Applying Lasa Din, and noting that the mortgagee did not exercise any option, the Court concluded that the mortgage money became due only after expiry of the full term of the mortgage, i.e., on December 13, 1943. Thus the suit instituted in February 1954 fell within the 12-year period prescribed by art. 132.
Construction of the expression "within the period of 9 years": The Court rejected the defendant's contention that the words "within the period of 9 years" meant the mortgagor could pay and redeem earlier at will. The Court held those words were qualified by the specified instalment schedule (first instalment from 19-12-1935 and final instalment on 19-12-1944), and the contemporaneous rent note (lease with annual rent for 9 years) reinforced that the parties had fixed a nine-year redemption period; absent express contrary stipulation, the right to redeem is co-extensive with the right to foreclose (Vadju v. Vadju).
Accounting and consequential directions: Having found the suit to be within limitation and the mortgage not usufructuary, the Court allowed the appeal, set aside the trial Court's decree, and directed that a preliminary decree under O. XXXIV, r. 2, CPC be drawn only in favour of plaintiff No. 2 and defendants Nos. 2 and 3. Because accounts were necessary to quantify amounts due as at the date of the preliminary decree, the trial Court was directed to take accounts on the basis that the amount due on January 31, 1954 was Rs. 53,089-1-6 (as pleaded in para. 5(g) of the plaint) and to pass the usual preliminary decree after ascertaining the precise amount payable on the date of that decree. The trial Court was given directions about payment into Court and safeguarding the interests of multiple decree-holders via security if necessary.

Holding and Implications

Holding:

The Court's core rulings are summarized as follows:

The mortgage in suit is not an usufructuary mortgage under s. 58 of the Transfer of Property Act. The deed evidences an anomalous possessory mortgage that expressly confers a right of foreclosure on the mortgagee.
Article 132 of the Indian Limitation Act, 1908, governs the present suit for foreclosure. Article 147 (foreclosure or sale) does not apply because the mortgagee was not entitled to foreclosure or sale in the alternative.
The mortgage money became due only upon expiry of the full mortgage term (December 13, 1943), because the mortgagee did not exercise the option to enforce on earlier default; consequently, the suit filed on February 10, 1954 was within the 12-year period of art. 132.
Result: Appeal allowed; the decree of the trial Court set aside. A preliminary decree under O. XXXIV, r. 2, CPC is to be drawn in favour of plaintiff No. 2 and defendants Nos. 2 and 3 after accounting; the trial Court to take accounts and pass the preliminary decree based on the stated amount due on January 31, 1954 (Rs. 53,089-1-6).

Implications and consequences:

The direct consequence for the parties is that the plaintiff's foreclosure suit is held to be maintainable and was not barred by limitation; the trial Court's decree is set aside and remitted for account-taking and entry of a preliminary decree in favour of the designated decree-holders.
The Court applied established precedent and statutory interpretation to resolve which article of limitation applies and to determine the date from which limitation runs; the opinion does not purport to establish a novel legal principle beyond the applications of prior authorities (the decision rests on applying existing authorities such as Lasa Din, Nilcomal and Vasudeva Mudaliar).
Further procedural directions were given to the trial Court about how to effect payment into Court, security for distribution among multiple decree-holders, and that the trial Court may pass any orders necessary to safeguard decree-holders' interests both at the preliminary and final decree stages.

Disposition and Miscellaneous Orders

The appeal was allowed. Specific directions included:

The decree of the trial Court is set aside.
A preliminary decree under O. XXXIV, r. 2, CPC to be entered only in favour of plaintiff No. 2 and defendants Nos. 2 and 3 after accounts are taken by the trial Court to determine sums due on the date of the preliminary decree.
The trial Court to assume, for account purposes, that the amount due on January 31, 1954 was Rs. 53,089-1-6 (para. 5(g) of the plaint) and to proceed accordingly.
If amounts due are paid into Court, the trial Court is to consider payment to one or to all decree-holders equally and to require appropriate security if payment is ordered to one only.
The question of adoption (referred to in the appeal) need not be gone into and the suit will be dismissed as against the person concerned.
Costs of the appeal are to be costs in the trial Court.

End of summary — prepared strictly from the text of the provided opinion.

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Vijaykumar Motilal Hirakhanwala v. Ramprasad Dagduram

Datar, J.:— [His Lordship after setting out the facts of the case and dealing with a point not material to this report, proceeded.] Then the second point raised by Mr. Gokhale was that the suit for foreclosure was misconceived when the transaction in suit evidenced only a usufructuary mortgage. It cannot be disputed that the present suit is a suit instituted only for foreclosure. The relief prayed for in the plaint is that if the mortgage amount is not paid as directed by the Court, the defendant should he ejected and plaintiff's possession confirmed and he be held entitled to apply for a final decree debarring the defendant from all rights to redeem the mortgaged property. It is also undisputed that an usufructuary mortgagee cannot institute a suit for foreclosure in view of the provisions of s. 67 of the Transfer of Property Act. But is the mortgage on which the suit is instituted an usufructuary mortgage as contended by Mr. Gokhale? We have been supplied with a copy of an official translation of the original mortgage-deed which is exh. P1 on the record. We direct that the copy be taken on the records of the appeal. The relevant portions of the mortgage-deed may be set out herein below:—

“I Ramprasad son of Dagaduram…have mortgaged with possession with Tarabai Saheba wife of Motilal Saheb, the owner of the shop, “Narayandas Chunilal Hirakhan” Jalna the whole of the ginning factory owned and possessed by me, known as “Saraswati Gin”…under a possessory mortgage deed dated 5-9-1927 in consideration of Rs. 30,000… It was agreed that the amount was to be paid by instalments upto 6-9-1932 and in the event of default a right of foreclosure was given to the aforesaid mortgagee according to the above mentioned deed. As the period of mortgage has expired and as executant could not make the full payment of the claim and that the below mentioned amounts of the claim of the aforesaid lady are due by the executant…

The sum of Rs. 17,351-1-6 in respect of interest on the mortgage amount from 14-9-1927 to 13-12-1934; the total sum being Rs. 47,351-1-6… In all a sum of Rs. 20,996-1-9 has been paid. Thus a sum of Rs. 26,354-15-9 and a sum of Rs. 6,195-0-3 in respect of other claim under the khata making in all an amount of Rs. 32,500 are due by the executant. The lady at the request of the executant has relinquished her claim under the mortgage (for) Rs. 7,000. Now, as regards the rest of the claim there remains due and payable by the executant a sum of Rs. 25,550… In lieu of the amount (Rs. 25,550)… the ginning factory is mortgaged with possession in favour of Tarabai Saheba. The mortgagee shall continue to remain in possession and occupation of the said factory as before…

The payment of the amount of mortgage is to be made within the period of 9 years by instalments in the manner that annually Rs. 3,000 and the interest on the whole mortgage amount shall be paid, that the first instalment shall commence from 19-12-1935 and that in this way each year on the said date fixed, the instalment together with interest on the whole mortgage amount shall become payable, that the final instalment shall be of Rs. 1,550 together with the interest on the whole mortgage amount…

In the event of non-payment of continuous or non-continuous five instalments as specified above the mortgagee shall be entitled to recover the entire mortgage amount and in whatever the amount of mortgage remains payable in consideration thereof the aforesaid factory shall be deemed to have been foreclosed in favour of the mortgagee and that the right of redemption of mortgage of the executant shall become extinguished… In the event of there being no profits by reason of the fact that the factory remains closed for any reason whatever or there being no ‘joint’ or that the same cannot be rented out or that the same cannot be run, then the executant shall be liable to pay the principal and the interest thereon from his personal property…

Dated 13-12-1934

Sd. Ramprasad Dagaduram.”

2. Mr. Gokhale contends that the terms of the mortgage-deed contain all the essentials of an usufructuary mortgage except where the mortgage-deed contains a clause “the aforesaid mortgage shall be deemed to have been foreclosed in favour of the mortgagee and the right of redemption of mortgage of the executant shall become extinguished” which according to Mr. Gokhale operates as a clog on the equity of redemption and must, therefore, be ignored. It is not possible to accept this contention. If the document is read as a whole it seems to us that it evidences a transaction of an anomalous mortgage the terms of which expressly confer a right of foreclosure upon the mortgagee. In our view, the learned trial Judge was not right when he held that the mortgage under consideration was no doubt an usufructuary mortgage as defined in s. 58 of the Transfer of Property Act. We have, therefore, no difficulty in holding that the present suit for foreclosure is perfectly tenable if it is not otherwise barred by time.

3. The third point raised by Mr. Gokhale is that the present suit which is instituted on February 10, 1954, is barred by limitation. The learned trial Judge held that art. 147 of the Limitation Act which prescribes a period of 60 years for instituting a suit by a mortgagee for foreclosure or sale applied to the present suit and that even assuming that art. 132 applied as was contended before him by the defendant, the suit would still be in time as it had been instituted within 12 years from the date when the mortgage money became due. In the view of the learned Judge the period of limitation whether under art. 147 or under art. 132 started on the expiry of nine years as stipulated in the mortgage-deed. On the date of the execution of the mortgage-deed and even on December 13, 1943, when according to the plaintiff his cause of action for the present suit arose, the Hyderabad Limitation Act was in force. Under art. 133 of that Act the period prescribed for instituting a suit for foreclosure was 30 years. Mr. Kotwal emphasises the distinction between the wording of the first column of art. 133 of the Hyderabad Limitation Act and that of art. 147 of the Indian Limitation Act of 1908. In the former it is a suit for foreclosure only; while in the latter it is a suit for foreclosure or sale. In Vasudeva Mudaliar v. Srinivasa Pillai,1 it was held that art. 147 of the Indian Limitation Act was restricted to suits on mortgages when the mortgagee is entitled to either of the two remedies of foreclosure or sale in the alternative. Therefore, the article would apply only to an English mortgage (as defined in the Transfer of Property Act before its amendment of 1929) in which alone “the suit can be, and always is brought for ‘foreclosure or sale’”. In the present case the mortgagee is not entitled to either of the two remedies of foreclosure or sale in the alternative and the suit is instituted only for foreclosure. It is, therefore, clear that art. 147 of the Limitation Act of 1908 does not apply to the present suit. Mr. Kotwal, however, says that it is art. 133 of the Hyderabad Limitation Act which referred to a suit for foreclosure only (and not to a suit for foreclosure or sale in the alternative) and which was in force at the time when the cause of action arose that is applicable to the present suit, and that the aforesaid decision of the Privy Council which construed the words of the first column of art. 147 cannot be relied upon in construing the words of the first column of art. 133 of the Hyderabad Limitation Act which are materially different from those of art. 147 of the Indian Limitation Act, 1908. The Hyderabad Limitation Act was repealed and the Indian Limitation Act, 1908, was extended to the State of Hyderabad by the Part B States (Laws) Act, (III of 1951) and it is not disputed that it was the Indian Limitation Act, 1908, which was in force on the day on which the present suit was filed. But Mr. Kotwal says that in view of the proviso to s. 6 of the Part B States (Laws) Act (III of 1951) the repeal of Hyderabad Limitation Act shall not affect any right acquired under that Act and any legal proceeding in respect of any such right may be instituted as if Part B States (Laws) Act (III of 1951) had not been passed. In other words, the contention is that the present suit, though instituted after the Part B States (Laws) Act (III of 1951) came into force, is still governed for the purpose of limitation by the former Hyderabad Limitation Act. Proviso to s. 6 of the Part B States (Laws) Act (III of 1951) says

“Provided that the repeal shall not affect—…

(b) any right, privilege, obligation or liability acquired, accrued or incurred under any law so repealed,…

(d) any investigation, legal proceeding, or remedy in respect of any such right, privilege, obligation, liability…as aforesaid;

and any such investigation, legal proceeding or remedy may be instituted, continued or enforced… as if this Act had not been passed.”

4. It is difficult to accept the contention of Mr. Kotwal made in this behalf. No right whatever was acquired by the mortgagee or his heir under the former Hyderabad Limitation Act in respect of which the present suit is filed. The right to obtain a decree for foreclosure accrued to the mortgagee under s. 67 of the Transfer of Property Act and under the terms of the mortgage-deed and not under the Limitation Act. It is well settled that an Act of Limitation being a law of procedure governs all actions and proceedings to which its provisions are applicable from the moment of its enactment except so far as its operation is expressly excluded. In Masjid Shahid Ganj Mosque v. Shiromani Gurdwara Parbandhak Committee, Amritsar,2 their Lordships of the Privy Council observed that the rules of limitation which apply to a suit are the rules in force at the date of institution of suit, limitation being a matter of procedure. The statute of limitation prescribes only a period of limitation and does not create any right in favour of any person or define or create a cause of action. In Hurrinath Chatterji v. Mohunt Mothoor Mohun Goswami,3 their Lordships of the Privy Council observed that the intention of the law of limitation is not to give a right where there is not one, but to interpose a bar after a certain period to a suit to enforce an existing right.

5. If, therefore, it is the Indian Limitation Act, 1908, that applies to the present suit and if art. 147 of that Act does not apply to any mortgage other than an English mortgage as held in Vasudeva Mudaliar v. Srinivasa Pillai, which then is the article of the limitation act that applies to a suit for foreclosure as in the present case? Mr. Gokhale contended before us that art. 120 would apply to the present suit and the suit having been filed more than six years after the right to sue accrued to the plaintiff was barred by time. In the trial Court, however, the defendant relied upon art. 132 and contended that the suit was barred under that Article. Mr. Kotwal urged that the suit would be governed only by art. 132 and had been filed within 12 years from December 13, 1943, on which date alone the money sued for had become due (after the expiry of the period of 9 years stipulated in the mortgage-deed) as required under the 3rd column of the Article.

6. The art. 132 runs as follows:—

Description of suit. Period of limitation. Time from which period begins to run. 132—To enforce payment of money charged upon immovable property. Twelve years. When the money sued for becomes due.

7. This article in terms does not refer to a suit for foreclosure just as the art. 147 refers to a suit for foreclosure or sale. If we look into the history of legislation on this subject it will be seen that under Act XIV of 1859 (an Act to provide for the limitation of suits) no period of limitation had been expressly prescribed for a suit for money secured by a mortgage or otherwise charged upon immovable property, nor for a suit for possession, nor for foreclosure by a mortgagee. In Juneswar Dass v. Mahabeer Singh,4—a case under Act XIV of 1859, it was held by their Lordships of the Privy Council that a suit by the mortgagee to recover the amount due on the mortgage bond by sale of the mortgaged lands was in substance a suit for the recovery of immovable property or of an interest in immovable property and fell, therefore, within cl. 12 of s. 1 of the Act. Clause 12 of the section had prescribed a period of 12 years.

8. The Indian Limitation Act of 1871 (Act No. IX of 1871) repealed the earlier Act of 1859. Under this Act art. 132 provided for a suit to recover money charged upon immovable property. But there was no provision at all as regards suits for foreclosure. It seems, however, that a suit for foreclosure was treated as a suit for money charged upon immovable property and, therefore, fell within art. 132 of the Act. Same view was taken in some English cases. In Dearman v. Wyche,5 the Vice-Chancellor (Sir L. Shadwell) observed (p. 575):

“… although it has been said that a bill for foreclosure only seeks the exclusion of an Equity, yet it is, in substance, a suit in Equity for the recovery of money. If the opinion of any counsel were asked how money due upon mortgage could be recovered or got in, he would, at once, advise a bill of foreclosure. It is a suit to recover money;”.

9. Act IX of 1871 was repealed by the Indian Limitation Act, 1877 (Act XV of 1877). In this Act for the first time art. 147 provided for a suit by a mortgagee for foreclosure or sale. But this Article was construed by their Lordships of the Privy Council as applying only to an English mortgage where the mortgagee could claim either foreclosure or sale in the alternative. Thus there was no express provision even under the Act of 1877 as regards suits only for foreclosure. But such suits were held to be governed by art. 132 of the Act of 1877 which is the same as the present art. 132 of the Limitation Act, 1908. In Nilcomal Pramanick v. Kamini Koomar Basu,6 the learned Judges of the Calcutta High Court were considering the applicability of art. 132 to a mortgage by conditional sale. In that case plaintiff, the mortgagee, asked for a decree for foreclosure and the question arose as to which article of the limitation act of 1877 applied to his suit. The learned Judges observed (p. 272):

“…Article 147…applies only to those cases in which the mortgagee is entitled to the alternative remedies of foreclosure and sale. Now the mortgage in this case being by conditional sale, the mortgagee is not entitled to the remedy by sale. That being so, article 147 of the Limitation Act does not apply to this case…the only provision applicable to this case is, we think, article 132. A comparison of the language of article 132 of the present Act, which speaks of suit to enforce payment of money, &c., with that of the corresponding article of the Limitation Act of 1871, and the fact that the first decree in a foreclosure suit under the Transfer of Property Act is one that in the first place directs the mortgagor to pay off the mortgage money, go to support this view.”

10. This view was followed by a Special Bench of the same High Court in Balaram v. Mangta Dass.7 In that case also the suit was one for foreclosure of a mortgage by conditional sale. An earlier decision of the Full Bench of the same Court reported in Girwar Singh v. Thakur Narain Singh,8 was also relied upon and it was held that (p. 945):

“…according to the ruling of this Court in the case of Girwar Singh v. Thakur Narain Singh, the period of limitation prescribed for a suit of this nature is 12 years, as provided in Article 132 of the second schedule to the Indian Limitation Act.”

11. The Limitation Act of 1877 was replaced by the present Act IX of 1908. But arts. 147 and 132 remain the same, though there is some alteration in the Explanation to art. 132 which, however, it is not necessary to notice for our present purpose.

12. Thus it will be seen that, as in the previous Acts so in the present Act, there has been no express provision as regards suits for foreclosure only. But such suits for foreclosure under the previous Acts were regarded as suits for money charged upon immovable property and were governed by 12 years' rule for the purpose of limitation. In Juneshwar Dass v. Mahabeer Singh,—a case under Act XIV of 1859, a suit to recover the amount due on a mortgage bond by sale of the mortgaged lands was regarded as a suit brought, in substance, for the recovery of immovable property or of an interest therein and, therefore, the 12 years' rule was held to apply to such suit. The same period of limitation was held to apply to suits for foreclosure arising under the Acts of 1859 and 1871; see Ram Chunder Ghosaul v. Juggutmonmohiney Dabee,9 at pp. 302 and 303. In Nilcomal v. Kamini,—a case under the Limitation Act of 1877, art. 132 was held in terms to apply to a suit for foreclosure. Such a suit was regarded as a suit to enforce payment of money charged upon immovable property, in view of the fact that the first decree in a foreclosure suit under the Transfer of Property Act was one which directed the mortgagor to pay off the mortgage money. Under the present Civil Procedure Code a preliminary decree in a foreclosure suit also directs the defendant mortgagor to pay the mortgage dues in Court on or before a day to be fixed by the Court. As held in the English case referred to above, a suit for foreclosure is in substance a suit for the recovery of money, for enforcing payment of money charged upon immovable property. It is now well settled that a suit to recover money due upon a simple mortgage-deed is governed by art. 132. Such a suit is regarded as a suit to enforce payment of money charged upon immovable property. There is no reason why a suit for foreclosure should be differently treated and not considered as a suit to enforce payment of money charged upon immovable property. In the one case the enforcement of the payment of money is brought about by the sale of the mortgaged property, in the other by a decree that the mortgagor shall be absolutely debarred of his right to redeem the property. The manner in which the payment of money is enforced in the two cases may be ultimately different. But what is sued for in both the cases is essentially the same. It is the payment of money charged upon the immovable property.

13. In this view there should not be any difficulty in putting the same construction on art. 132 of the present Act as was done by the High Court of Calcutta in the cases, which had arisen under the previous Acts, and in holding that a suit for foreclosure as in the present case is governed by that Article for the purposes of limitation. This construction, in the words of their Lordships of the Privy Council, escapes the necessity of attributing to the Legislature a great and sudden change of policy, and it also gives effect to the ordinary presumption that the Legislature when it repeats in substance in a later Act an earlier enactment that has obtained a settled meaning by judicial construction intends the words to mean what they meant before.

14. In Sheoram Singh v. Babu Singh,10 it was held that a suit on a mortgage by conditional sale for money or for foreclosure was governed by art. 132 of the Limitation Act, 1908.

15. In the view we have taken it is clear, therefore, that art. 120 which is a residuary article is inapplicable to the present suit. If art. 132 applies to the present suit, when does the period of limitation begin to run against the plaintiff? What is the date upon which the principal money became due under the mortgage in the present case? Under the mortgage-deed the mortgage amount had been made payable by certain annual instalments and the first of such instalments was to commence from December 19, 1935. It was further stipulated that “in the event of non-payment of continuous or non-continuous five instalments, the mortgagee shall be entitled to recover the entire mortgage amount.” No instalments were ever paid by the mortgagor, and it is now contended by Mr. Gokhale that even if it be held that art. 132 applies to the present suit, the suit should have been filed within 12 years from December 19, 1939, when the default in the payment of 5 instalments was committed and when, therefore, the whole amount became due within the meaning of art. 132. A similar default clause as the one in the present mortgage-deed came to be considered by their Lordships of the Privy Council in Lasa Din v. Gulab Kunwar,11 where it was held that under art. 132 a suit to enforce a mortgage for a stipulated period can be instituted within 12 years of the expiry of the period, although a default by the mortgagor has occurred during the period and by the terms of the mortgage, the mortgagee thereupon had an immediate right to enforce the mortgage and that the money becomes payable within the meaning of that article only when either the stipulated period has expired or a default having occurred the mortgagee has exercised his option to enforce the mortgage. In the course of the judgment their Lordships observed that (p. 384):

“… a proviso of this nature is inserted in a mortgage deed ‘exclusively for the benefit of the mortgagees,’ and that it purports to give them an option either to enforce their security at once, or, if the security is ample, to stand by their investment for the full term of the mortgage. If on the default of the mortgagor—in other words, by the breach of the contract—the mortgage money becomes immediately ‘due,’ it is clear that the intention of the parties is defeated, and that what was agreed to by them as an option in the mortgagees is, in effect, converted into an option in the mortgagor. For if the latter, after the deed has been duly executed and registered, finds that he can make a better bargain elsewhere, he has only to break his contract by refusing to pay the interest, and “eo instanti,” as Lord Blanesburgh says, he is entitled to redeem… They are not prepared to hold that the mortgagor could in this way take advantage of his own default: they do not think that upon such default he would have the right to redeem, and in their opinion the mortgage money does not ‘become due’ within the meaning of art. 132 of the Limitation Act until both the mortgagor's right to redeem and the mortgagee's right to enforce his security have accrued. This would, of course, also be the position if the mortgagee exercised the option reserved to him.”

16. In the present case, the mortgagee did not exercise the option reserved to him under the mortgage-deed. In view of the Privy Council decision, it must, therefore, follow that the mortgage money became due only after the expiry of the full-term of the mortgage, i.e on December 13, 1943. The suit is within 12 years from that date.

17. Mr. Gokhale, however, contended that the decision of the Privy Council does not apply to the present case, as in the mortgage-deed in suit there is no period fixed for redemption. If such a period had been fixed in the mortgage-deed, as was the case before the Privy Council, the mortgagor by taking advantage of his own default could not accelerate his right of redemption before the full term of the mortgage. Mr. Gokhale relies upon the clause of the mortgage-deed which provides that the payment of mortgage is to be made within the period of 9 years by instalments and says that under this clause the mortgagor can pay the amount at any time within 9 years and that, therefore, the principle that the mortgagor would not be allowed to take advantage of his own default and break the contract did not arise in the present case. The Privy Council decision could be distinguished on this ground and, therefore, in the present case it was the date of the default only on which it must be held that the money became due.

18. It is not possible to accept Mr. Gokhale's construction of the clause in the mortgage-deed relating to the period of time for the payment of the mortgage money. The mortgage-deed says: “within the period of 9 years by instalments”. The dates of the instalments also are specified and fixed. The first instalment was to commence from December 19, 1935, and the last was to be paid on December 19, 1944. Thus it will be seen that the words “within the period of 9 years' have been qualified by the words “by instalments” which are specified in the sentences that follow. The intention of the parties as to the period for redemption must be gathered from all the relevant clauses in the mortgage-deed and from the terms of the rent note which was passed contemporaneously with the mortgage-deed. A copy of the official translation of the rent note, exh. P-2, has been supplied to us. We direct it to be placed on the records of the appeal. The rent note was executed by the defendant on December 13, 1934. Under the rent note, the defendant took the mortgaged property on lease agreeing to pay an amount of yearly rent of Rs. 1,500 for 9 years. This also indicates that the period for redemption of the mortgage, was fixed and that the mortgage debt was to remain outstanding, for 9 years. In Vadju v. Vadju,12 it was held that the general principle as to redemption and foreclosure is that in the absence of any stipulation express or implied to the contrary, the right to redeem and the right to foreclose are co-extensive. In that case the mortgage-deed stipulated that the mortgagor would pay the debt with interest within ten years and redeem the mortgaged property. In a suit for redemption instituted before 10 years, the mortgagee contended that the suit was premature. It was held that the suit was premature as the mere use of the “within” (Marathi word ) was not a sufficient indication of the intention of the parties that the mortgagor might redeem in a less period than 10 years. On a proper construction of the mortgage-deed it seems to us that the period stipulated for redemption extended for 9 years and that under the terms of the mortgage it was not open to the mortgagor to pay up the amount and redeem the mortgage otherwise than as mentioned therein.

19. Mr. Gokhale has not disputed the correctness of the amount of Rs. 53,089-1-6 as mentioned in para. 5(g) of the plaint; nor has he raised any point under the Money Lenders Act.

20. The result of our findings is that the appeal must be allowed and the decree of the trial Court set aside.

21. There will be a preliminary decree under O. XXXIV, r. 2, of the Civil Procedure Code, only in favour of plaintiff No. 2 and defendants Nos. 2 and 3. As, however, accounts have to be taken to find out as to what amount would be actually due to the decree holders at the date of the preliminary decree, and as the necessary material in that behalf is not placed before us, we direct the trial Court to take the necessary accounts and find out the total amount due from the defendant on the date on which it would be passing the preliminary decree and then pass the usual preliminary decree in favour of plaintiff No. 2 and defendants Nos. 2 and 3. In taking accounts the trial Court should proceed on the basis that the amount due on January 31, 1954, was Rs. 53,089-1-6 as mentioned in para. 5(g) of the plaint. If the amounts due from the defendant under the preliminary decree are paid into Court, the trial Court will consider whether such amounts should be paid to one of the decree holders only or to all of them equally. If the learned trial Judge decides to pay the amounts only to one decree holder he will call upon such decree holder to furnish proper security to safeguard the interests of other decree-holders. The learned trial Judge will pass any other order or orders that may be found necessary or proper after the amounts are paid into Court by the defendant. Similar orders to safeguard the interests of the decree-holders may also be passed on and after the final decree.

22. Since we have held that the question of adoption need not be gone into in the present appeal, the suit will have to be dismissed against him.

23. Costs of this appeal will be costs in the trial Court.

24. Appeal allowed.

Vijaykumar Motilal Hirakhanwala v. Ramprasad Dagduram

Judgment Summary — Datar, J.

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Mr. Gokhale (for the defendant)

Mr. Kotwal (for the plaintiff)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Disposition and Miscellaneous Orders

Vijaykumar Motilal Hirakhanwala v. Ramprasad Dagduram

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