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  • art. 147 in the Limitation Laws of Act XIV of 1859 or IX of 1871; and art. 132
  • cl. 12, s. 1, Act XIV of 1859, and art. 132, Act IX of 1871;
  • Art. 148 of the present Limitation Act (XV of 1877),
  • art. 147 of the present Limitation Act
  • art. 135 of the Limitation Act.
  • art. 147 of the Limitation Act
  • art. 148 of Act IX of 1871
  • TRANSFER OF PROPERTY ACT
  • Limitation Acts of 1859
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  • art. 147 in the Limitation Laws of Act XIV of 1859 or IX of 1871; and art. 132
  • cl. 12, s. 1, Act XIV of 1859, and art. 132, Act IX of 1871;
  • Art. 148 of the present Limitation Act (XV of 1877),
  • art. 147 of the present Limitation Act
  • art. 135 of the Limitation Act.
  • art. 147 of the Limitation Act
  • art. 148 of Act IX of 1871
  • TRANSFER OF PROPERTY ACT
  • Limitation Acts of 1859
Smart Summary

Structured Summary of the Provided Opinion

Factual and Procedural Background

This reference raises whether Article 147 of the Limitation Act (Act XV of 1877) applies to suits brought to recover money secured by an instrument described in the opinion as a bond creating a simple mortgage or hypothecation.

The operative deed in question is dated 20th December, 1869. From a perusal of that deed the judges concluded that Khamani Singh bound himself personally to pay Rs. 63 with interest and that the deed gave the mortgagee a right to cause the mortgaged shares to be sold in the event of non-payment. The plaint sought recovery of the amount due under the bond with interest and the establishment of the right to enforce the hypothecation by auction-sale of the mortgagor's interest.

The procedural posture is a judicial reference: the Court was asked whether Article 147 (sixty years' limitation for a suit by a mortgagee for foreclosure or sale) applies to suits of this character, or whether Article 132 (twelve years for suits “to enforce payment of money charged upon immoveable property”) governs. Multiple judges (Straight, Offg. C.J., Brodhurst and Duthoit JJ.; Oldfield J.; Mahmood J.) gave reasons addressing the question, and the Court answered the reference in the affirmative: Article 147 applies.

Legal Issues Presented

  1. Whether a suit brought to recover money secured by an instrument constituting a simple mortgage (hypothecation-bond) and seeking enforcement of the lien by sale of the mortgaged property is governed by Article 147 of the Limitation Act (sixty years) or by Article 132 (twelve years).
  2. Whether an instrument described as a hypothecation or simple mortgage ought to be treated, for limitation purposes, as falling within the description of "suits by a mortgagee for foreclosure or sale" in Article 147, or within "suits to enforce payment of money charged upon immoveable property" in Article 132.
  3. What role, if any, the Transfer of Property Act and its distinction between mortgage and charge (and corresponding remedies) play in interpreting the scope of Articles 132 and 147 of the Limitation Act.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Martin v. Pursram Used as authority for treating the deed in question as one of hypothecation/simple mortgage. Mahmood, J. relied on this ruling (and its adoption by a Full Bench of the Calcutta High Court) to conclude the 20th December 1869 deed is a deed of hypothecation/simple mortgage.
Raj Coomar Ram Gopal Narain Singh v. Ram Dutt Chowdhry Adoption by a Full Bench of Calcutta of the principle in Martin v. Pursram regarding classification of such deeds. Mahmood, J. cited this adoption to support the characterization of the deed as a simple mortgage/hypothecation.
Radho v. Umar Daraz Khan Represents an expression of a different view (by Oldfield and Brodhurst JJ.) on the applicable limitation period for such suits. The opinion notes this as the only significant expression of a contrary view to the Court's prior practice of applying twelve years; it is identified as a differing authority but the present Court did not follow it.
Tawakkul Rai v. Sheoghulam Rai Explains the legal effect of the expiry of the "year of grace" under earlier law and the remedies available to mortgagees thereafter. Mahmood, J. referred to his decision in this case to explain that suits arising after expiry of the year of grace were treated differently under earlier law, and to situate art.147's present provision for suits by mortgagee for foreclosure.
Lallubhai v. Nairan (Bombay High Court) Represents a view that Article 132 was intended to include suits by a mortgagee to recover money secured on mortgage as a mere personal/money claim. Oldfield, J. rejected this interpretation in the opinion, stating that the words of art.132 show it refers to enforcing claims against the property charged and not mere money claims.

Court's Reasoning and Analysis

The Court conducted a textual and contextual analysis of Articles 132 and 147 of Act XV of 1877 and considered historical practice and contemporaneous legislative materials (notably the Transfer of Property Bill then before the Legislature).

Key analytical steps and points made by the judges:

  • Textual comparison: The judges contrasted art.132 ("to enforce payment of money charged upon immoveable property" — twelve years) with art.147 ("a suit by a mortgagee for foreclosure or sale" — sixty years). They observed that art.147 was a new provision in the Limitation Act of 1877 that did not exist in prior Limitation Acts of 1859 and 1871.
  • Legislative context and proximity: The Court noted art.147's placement immediately before the article providing sixty years for a mortgagor to redeem, suggesting a legislative pairing of the mortgagee's and mortgagor's remedies.
  • Character of the instrument: The judges examined the deed of 20th December, 1869 and concluded that the deed created a simple mortgage/hypothecation: the mortgagor (Khamani Singh) bound himself personally to pay Rs. 63 with interest, impliedly agreed that the mortgagee could cause sale of the mortgaged shares on default, and undertook not to alienate. Because the deed carried the incidents characteristic of a simple mortgage, the plaintiff in the suit occupied the legal position of a mortgagee.
  • Use of the Transfer of Property Act as an interpretive aid: The judges referred to the Transfer of Property Act (and its distinctions between "mortgage" and "charge") to ascertain what kinds of suits the legislature may have envisaged when it used the terms "suit for foreclosure" and "suit for sale" in the Limitation Act. They treated the Transfer of Property Act as illuminating legislative intent, while recognizing it could not control the Limitation Act.
  • Distinction between mortgage and charge: Oldfield, J. emphasized that art.132 is apt for suits to enforce a charge where the transaction does not amount to a mortgage, whereas art.147 is for suits by mortgagees to enforce the remedies traditionally available to mortgagees (foreclosure or sale). He pointed to statutory forms and illustrative material (Form No. 109, Sch. IV, and the Illustration to art.132) as reinforcing this distinction.
  • Substance over form: Oldfield, J. held that even if the plaint were not drafted in perfect form, the substantial relief sought — an order for sale to realize the mortgage-money on non-payment — indicated a suit for sale under art.147.
  • Symmetry and jurisprudential reasoning: Mahmood, J. argued by analogy and principle: since the mortgagor is allowed sixty years to redeem under the present Act, it is reasonable and just that the mortgagee be allowed a similar period (sixty years) to enforce his security. He acknowledged the apparent anomaly (that recovery of immovable property is governed by twelve years while realization of an interest in such property is allowed sixty) but explained differences (e.g., usufructuary mortgage recovery of possession differs from extinguishing the incumbrance).
  • Treatment of earlier practice and conflicting views: The Court recognized that earlier practice of this Court and previous Limitation Acts had commonly applied twelve years to such suits, and that at least one differing view (Radho v. Umar Daraz Khan) existed. The judges examined the changed statutory text and legislative context and concluded the present Act's language now unequivocally places suits by mortgagees for foreclosure or sale within art.147.
  • Final application to the case: All judges who gave reasons concluded that the specific suit in the reference — which was founded on a deed creating a simple mortgage permitting sale on default and which sought recovery by enforcement of that lien — falls within the description in art.147 and is therefore governed by the sixty-year limitation period.

Holding and Implications

Holding: The Court answered the reference in the affirmative: Article 147 of the Limitation Act (Act XV of 1877) applies to the suit in question. In consequence, suits of the kind before the Court (suits by a mortgagee for foreclosure or sale based on a simple mortgage/hypothecation) are governed by the sixty-year limitation period prescribed by art.147, the period to be computed from "when the money secured by the mortgage becomes due," as stated in the article.

Implications:

  • The direct effect on the parties in this case is that the plaintiff's remedy to enforce the lien by sale is governed by art.147's sixty-year limitation rather than art.132's twelve-year limitation.
  • The opinion makes clear that, as a result, similar suits (i.e., those founded on instruments properly characterised as simple mortgages/hypothecations and seeking sale/foreclosure) will henceforth be governed by the longer limitation period of sixty years under art.147.
  • The Court recognized this as an important alteration from earlier practice under preceding Limitation Acts and reviewed relevant legislative context to justify the conclusion; the decision operates to change the limitation applicable to the relevant class of suits as interpreted from the present Limitation Act.

    Shib Lal v. Ganga Prasad

    Straight, Offg. C.J, and Brodhurst and Duthoit, JJ.:— The question raised by this reference is one of serious importance, because, in the event of our holding art. 147 of the present Limitation Law to be applicable to suits of the kind mentioned in the referring order, they will henceforth be governed by a very much longer limitation period than has hither to been applied to them. For the purpose of answering it, we must carefully examine the terms of arts. 132 and 147 of Act XV of 1877. The first of these relates to suits “to enforce payment of money charged upon immoveable property” for which the limitation provided is twelve years from the date “when the money sued for becomes due.” Art. 147 deals with a suit “by a mortgagee for foreclosure or sale,” as to which sixty years is the limitation period, and time begins to ran “when the money secured by the mortgage becomes due.” This latter article had no place in the old Limitation Acts of 1859 or 1871, but first made its appearance in the present Limitation Law, XV of 1877, in immediate proximity to, and directly preceding the somewhat kindred article providing sixty years' limitation for a suit by mortgagor to redeem. So it is to be noticed that art. 132, which in the description column of the schedule to Act IX of 1871, stood “for money charged upon immoveable property,” now figures as “to enforce payment of money charged upon immoveable property.” Until recently it was the undeviating practice of this Court to treat suits for the recovery of money secured by simple mortgage or hypothecation of immoveable property, without any hesitation, as covered by this last mentioned article, when under the present or the preceding Limitation Law. The question as to the applicability of art. 147 thereto has now arisen, and we must determine whether it naturally and properly governs suits of such a character. As we have already remarked, the question is one of serious importance, because, at first sight, it does seem somewhat startling to allow a limitation period of sixty years to a suit by an obligee under what is popularly, spoken of in this Court as an hypothecation-bond, for enforcement of his lien, by sale of the immoveable property hypothecated. But this, after all, is only matter of first impression, because the legal status and responsibilities of the obligor and obligee, arising under one and the same contract, in which the immoveable property is hypothecated, there would seem to be no intelligible reason why, if there really is a mortgage of the land, the right of the one to bring to sale and of the other to pay off the incumbrance, should not stand upon precisely the same footing as regards the rule of limitation by which its enforcement in Court is to be governed. An hypothecation of immoveable property for money borrowed, in the absence of anything to show the contrary, is only in name but not in its incidents, different from what is known as a simple mortgage. The obligor is nothing more nor less than a mortgagor: the obligee nothing other than a mortgagee. When art. 147 of the Limitation Act speaks of a suit by a mortgagee for sale, why should we go out of our way to hold that it does not cover a case in which the plaintiff in his relation towards the defendant legally, and to all intents and purposes, stands in the position of a mortgagee? In this connection it seems to us that the Transfer of Property Act may not without advantage be referred to for the purpose of ascertaining the character of suits which the Legislature, when they passed that measure, regarded as falling within the category of suit for sale mentioned in art. 147. No doubt a distinction is drawn in that Act between a mortgage and a transaction by which immoveable property is “made security for the payment of money to another,” which “does not amount to a mortgage,” and to cases falling within this latter description art. 132 still applies. But we are not aware that this is anything more than a crystallisation of the principles enunciated in the many decisions of the Courts delivered on the subject. The first question then that we have to ask ourselves is, whether, looking to the nature of the instrument upon which the suit has been brought to which the reference relates, it can be tightly regarded as falling within the description of instrument it has been our practice hitherto to treat as constituting a simple mortgage, the incidents of which are now very clearly declared in cl. (b) of s. 58 of the Transfer of Property Act? We think that it must, it seems to us upon a perusal of the deed of the 20th of December, 1869, that Khamani Singh did bind himself personally to pay, the Rs. 63 with interest; that, from its language he did impliedly agree that, in the event of his failing to pay, the mortgagee should have a right to cause his two shares to be sold and the proceeds to be applied in satisfaction of the debt; and that in term he did undertake not to alienate, if the instrument was a simple mortgage, then the plaintiff in the suit was a mortgagee; his prayer was to have the property sold, and art. 147 was directly applicable. At the time Act XV of 1877, was passed, it is matter of history that the draft hill of what hag now become the Transfer of Property Act was before the Legislative authorities, and until the expressions “suit for foreclosure,” “suit for sale,” which are now to be found in ss. 86 and 88 made their appearance in that Act, suits so described were unknown to our Courts. Necessarily the Transfer of Property Act cannot affect our decision in the present case, but we think we are warranted in the absence of other sources of information, to refer to it to obtain any light it may be able to throw upon the meaning of “suit for sale.”

    In reply to the question put by the reference we would say that art. 147 applies.

    Oldfield, J.:— In order to dispose of the reference it is necessary to ascertain to what classes of suits arts 147 and 132, Act XV of 1877, respectively apply.

    Art. 147 is for suits by a mortgagee for foreclosure and sale, and gives a limitation of sixty years from when the money secured by the mortgage becomes due; art. 132 is for suits to enforce payment of money charged on immoveable property, and the limitation is twelve years from the time when the money sued for becomes due.

    There was no provision of the nature of that in art. 147 in the Limitation Laws of Act XIV of 1859 or IX of 1871; and art. 132 was introduced for the first time in Act IX of 1871, but in different terms from article 132, Act XV of 1877, being “for money charged upon immoveable property.” Suits in which the relief sought was the recovery of the money secured by mortgage by sale of the mortgaged property were dealt with under cl. 12, s. 1, Act XIV of 1859, and art. 132, Act IX of 1871; and, since the passing of Act XV of 1877, have been dealt with under art. 132 of the Act, the question of the application of art. 147 having only recently arisen.

    Art. 147, Act XV of 1877, now definitely provides the limitation for suits by a mortgagee for foreclosure and sale, and the Transfer of Property Act may be usefully referred to for the purpose of ascertaining the particular kind of suits the Legislature refers to as a suit for sale in art. 147, and a suit to enforce payment of money charged on immoveable property in art. 132.

    It will be seen that the Transfer of Property Act marks the distinction between a mortgage and charge in ss. 58 and 100, and provides by ss. 67 and 88 a suit for sale as one of the remedies of a mortgagee a remedy to which a mortgagee had always been entitled.

    The Transfer of Property Bill of 1877 was before the Legislature at the time of the passing of the Limitation Act, and though it did not become law till 1882, and in a form considerably altered from that of the bill of 1877, the latter recognized the distinction between mortgage and charge.

    It is reasonable than to suppose that in introducing art. 147, while allowing art. 132 of the former Law of Limitation to remain in its altered farm, the Legislature had in view the distinction between a mortgage and a charge, and that the suits for sale referred to in art. 147 are all suits brought by a mortgagee to enforce the remedy which the law has always given him, namely, to obtain a decree or order that the mortgaged property be gold to satisfy the debt.

    It is the class of suit for which a form of plaint is prescribed in Form No. 109 sch. iv, Code of Civil Procedure. On the other hand the suits governed by art. 132 will be those in which the relief sought is to enforce payment of money as a charge on immoveable property, where the transaction does not amount to a mortgage.

    The Illustration to art. 132 gives strength to this view, as it mentions the allowances and fees called malikana and haqqs as being money charged on immoveable property.

    It is difficult to see to what class of suits other than those to which I have referred art. 147 can apply, for the suggestion thrown out at the hearing that it is confined to suits for sale, when a power had been conferred by the mortgage-dead on the mortgage to sell the mortgaged property, is not tenable, as the article speaking generally of suits by a mortgagee for sale, and, dealt with as they are in the same article as suits for foreclosure, they would necessarily refer to the ordinary remedy of a mortgagee by suit for sale.

    Nor do I see any other reasonable way of reconciling and giving effect to the two articles 147 and 132 than that I have suggested.

    If art. 147 refers to suits by a mortgagee in which the relief sought is an order for sale, it is clear that art. 132 must apply to some other class of suits.

    I cannot think that art. 132 was intended, as the Bombay High Court say—Lallubhai v. Nairan (1), to include suits by a mortgagee to recover money secured on mortgage as a mere money or personal claim; the words in art. 132 “to enforce payment of money charged” show that it refers to suits to enforce a claim against the property charged to the exclusion of mere money claims.

    Suits for the recovery of money only have never been held by this Court to be governed by art. 132.

    The suit which is the subject of this reference had been brought on a bond which clearly creates a simple mortgage, by which the mortgagor agrees that the mortgagee shall have a right to cause the mortgaged property to be sold, in the event of the mortgagor failing to pay the mortgage-money, and the relies sought is, in the language of the plaint, the recovery of the amount due under the bond with interest, by establishment of the right to enforce the hypothecation, by auction-sale of the interest of the mortgagor in the property mortgaged.

    The plaint may not be drawn up in correct form, but the substantial relief sought—and it is that we must look to—is an order for sale in the event of non-payment by the mortgager of the amount found due, and it can he regarded as nothing else than a suit for sale referred to in art. 147, to which the limitation in that article will apply.

    Mahmood, J.:— In the view of the ruling of this Court in the case of Martin v. Pursram (2) which was adopted by a Full Bench of the Calcutta High Court in Raj Coomar Ram Gopal Narain Singh v. Ram Dutt Chowdhry (3) there can be no doubt that the deed of 20th December, 1869, to which this reference relates, is a deed of hypothecation or simple mortgage, the covenant against alienation, taken with the word “adh” which occurs in the deed, placing the matter beyond question. Nor can it be doubted that the nature of the suit was for recovery of the money duo on the deed by enforcement of the lien thereby created, by bringing the property to sale. The only question then, with which we are confined, is whether the suit is governed by art. 132 or 147 of sch. ii of the Limitation Act (XV of 1877). In other words, is the suit one “to enforce payment of money charged upon immoveable property,” or a suit “or a mortgagee for sale?”

    There can be no doubt that the practice of this Court has hitherto been to apply the limitation of twelve years to such suits, the only expression of a different opinion being found in the judgment of my learned brothers Oldfield and Brodhurst in the case of Radho v. Umar Daraz Khan. .

    The question before os is therefore of considerable importance because the answer to it will determine whether twelve or sixty years is to be the period of limitation for such suits as the one to which this reference relates.

    Having carefully considered the question, I have arrived at the same conclusion as my brother Oldfield, namely, that such suits fall under art. 147 of sch. ii of the Limitation Act, and are governed by the limitation of sixty years. Under Act IX of 1871 suits of this nature were regarded as falling under art. 132 of the Act, notwithstanding the somewhat significant language of the Explanation appended to the article; and suits for redemption fell under art. 148. In other words, the mortgagee was allowed only twelve years for recovering his mortgage-money, whilst the mortgagor had sixty years within which he could redeem. I must here observe that art. 148 of Act IX of 1871 contemplated only suit against mortgages for recovery of possession of them mortgaged property and was therefore limited to suits for redeeming property subject to a usufructuary mortgage. It did not contemplate suits for redeeming property subject to a simple mortgage or hypothecation, in which the question of recovery of possession naturally could Dot arise. Art. 148 of the present Limitation Act (XV of 1877), by introducing the words “to redeem or” has distinctly operated to extend the scope of the clause, so as to include suits for redeeming a simple mortgage. And it has introduced another important alteration also. Under art. 148 of Act IX of 1871 the period of sixty years' limitation in a redemption suit was computed from “the date of the mortgage,” under art. 148 of the present Act the period begins form the time “when the right to redeem or to recover possession accrues.

    Again, as it has been pointed out by may brother Oldfield, neither Act IX of 1871 nor the law which proceeded it made any specific provision as to suits for foreclosure. The reason probably was that such suits were invariably brought after foreclosure had occurred by lapse of the year of grace required by Regulation XVII of 1806. I have recently had occasion, in Tawakkul Rai v. Sheoghulam Rai to explain the exact effect of the expiry of the year of grace, and I have held that the expiry ipso facto invested the bybilwafa mortgagee with absolute ownership of the mortgaged property, so that if he was out of possession his remedy was to sue for proprietary possession, and, if in possession, it was optional for him to bring a declaratory suit to establish his absolute ownership. Such suits were clearly not governed by sixty years' limitation but art. 147 of the present Limitation Act leaves no doubt upon the question that suits by a mortgagee for foreclosure are now entitled to the benefit of that period.

    The relation of mortgagor and mortgagee, in common with other contracts, creates mutual rights and obligations. After the relation is once established, and viewing that relation with reference to the question now before us, the right of the mortgagor is to redeem the property from the incumbrance; the right of the mortgagee is to enforce his security, whether it is a simple mortgage, a usufructuary mortgage, or a mortgage by conditional sale. And it seems to me that if sixty years are allowed to the mortgagor for enforcing, his right by redemption, a similar period should reasonably be allowed to the mortgagee for enforcing his right according to the nature of his security. It is intelligible to me, therefore, that so long as the mortgagor is allowed sixty years to redeem, the mortgagee should be allowed a similar period to enforce his security by foreclosure or sale of the property, as the case may be. That the present Limitation Act has in produced an important alteration in the law cannot be doubted: that the alteration is consonant with natural justice and jurisprudential conceptions I folly believe.

    But it may be said that this conception of the symmetry of the law is inconsistent with the fact that the right of a usufructuary mortgage to recover possession of the mortgaged property under, the tenon of the mortgage still governed by twelve years' limitation under art. 135 of the Limitation Act. To this it seems enough to say that the recovery of possession by usufructuary mortgage does not extinguish the incumbrance by virtue whereof the possession is so obtained whilst redemption by the mortgagor and foreclosure or sale by the mortgagee undoubtedly has such effect—a distinction which amply accounts for the difference between the periods of limitation to which I have referred.

    I confess that at the hearing I was so far impressed with the argument of the learned Pandit who argued the case on behalf of the appellant, that I was disposed to regard it as anomalous that whilst suits for recovery of immoveable property are governed by only twelve years' limitation, a suit like the present, which is for realization of an interest in such property, should be allowed no less than five times that period. But upon consideration the disparity is perfectly accountable by reason of the fact that between the mortgagor and mortgagee exists a relation similar in nature to that of a trust, and the Limitation Act itself recognizes the fact by taking care to explain in s. 3 “that a mortgagee remaining in possession after the mortgage has been satisfied” cannot be regarded as a trustee. This circumstance alone is enough to account for and explain away the apparent, but not real, anomaly suggested by the argument of the learned Pandit.

    I am unaware of any provisions in the law of India which can justify the notion that there can be any suit by a mortgagee for sale other than a suit like the present, and the view is sue ported by the words in the third column of art. 147 of the Limitation Act itself, which provides that the period of limitation is to be computed from the time “when the money secured by the mortgage becomes due,” language which leaved no room for doubt that a suit by the holder of a simple mortgage or hypothecation for the enforcement of his lien by sale of the mortgaged property, is a suit which fails under the clause to which I have referred. And this is my answer to this reference.

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    Shib Lal v. Ganga Prasad
    (Jun 30, 1884)