Addulla Haji vs Ramakrishna Iyer

S. Velu Pillai, J.—In a kuri started in the year 1089 by the tarwad of defendants l to 38, the 63rd defendant who was the predecessor-in-

interest of the appellant, was a subscriber. He had prized half a ticket and had been paid the amount; with respect to 3/4 of a ticket which he held

and prized in addition, he had to be paid the amount. He executed a security bond, Ext. XXII, under which the foreman settled its liability to him at

Rs.1375-9as-8ps. It then leased item 2 of the properties in the suit by Ext.V in the year 1105, providing that out of its income 216 parahs of

paddy may be appropriated by him annually towards interest on the amount so settled. The lease was renewed by Ext. V in the year 1115, though

the annual interest was reduced to 165 parahs of paddy. The 63rd defendant then sued in O. S. 32 of 1118 to enforce his claim for the principal,

by the sale of item 2 and obtained decree Ext. X. The planintiffs in the suit out of which this appeal arises, who are two other subscribers, filed O.

S. 7 of 1118 for the administration of the assets of the kuri. By the pareliminary decree in this suit, which was passed on the 18th Meenom, 1125,

it was provided that those claims in the kuri against the foreman which were alive on that date may be proved but no others, and the amounts of

such claims may be realised by the sale of the kuri assets. So far as the appellant was concerned, the lower court has held that his claim was

barred by limitation on the date of the preliminary decree and has refused to entertain it. This appeal is directed against that part of the decree. In

the lower court, the appellant relied on an alleged acknowledgment of liability in a deposition of the first defendant, which was however found to be

no valid acknowledgment. In this court, his learned counsel relied on Section 21 (2) of the Travancore Limitation Act, 1100, under which the case

falls to be decided, which corresponds to Section 20 (2) of the Indian Act. That section is in these Terms:

Where mortgaged land is in the possession of the mortgagee, the receipt of the rent or produce of such land shall be deemed to be a payment for

the purpose of sub-section (1).

Counsel contended that the appellant''s predecessor was a mortgagee by virtue of Ext. II, which is the bond executed by the foreman to secure

eventual kuri liabilities and also by virtue of Ext. V or Ext. VII, which, though in terms a lease, was contended to be a mortgage. The latter

contention is without substance, for although by Exts. V and VII relationship of debtor and creditor as settled by Ext. XXII was recognised, the

property was not secured for the debt. The reliance by learned counsel in Kali Lakshmi v Kali Lakshmi (13 T. L. R. 70) and Mathura Singh and

Others Vs. Palakdhari Rai and Others, must be considered to be misplaced, in view of the rule accepted by the Supreme Court in Mahant

Ramdhan Puri Vs. Bankey Bihari Saran and Others, that ""once you get a debt with security of land for its redemption, then the arrangement is a

mortgage by whatever name it is called."". This essential element of land being made security for payment of the debt, is lacking in Ext. V and Ext.

VII, which have but made a provision for the appropriation of a part of the profits of the property towards interest on the amount outstanding. The

appellant cannot therefore be considered to be a mortgagee by virtue of Ext. V or Ext. VII.

The position is however different under Ext. II. It is styled an and by the operative words in it, the properties were given as an expression which

is almost a term of art and which necessarily implies a simple hypothecation. On this and the other provisions of Ext. II which are in consonance

with the above view, the argument of counsel for the 6th respondent-8th defendant, who now represents the foreman, that only a charge was

created by Ex.t. II cannot be accepted. I cannot give any weight to the fact that Ext. II was not executed in favour of any specified individual or

individuals or that the liability under it was contingent. These arc not distinctive of a charge either. I am fully satisfied, that by Ext. II there was a

transfer of an interest in specific immoveable property, in favour of the general body of kuri subscribers, and that it is a simple mortgage.

The further question is whether the receipt of rent or produce of the properties in pursuance of Ext. V or Ext. VII, came within the scope of

Section 21 (2). In my view, this is a provision which has to be interpreted liberally. The expression ""where mortgaged land is in the possession of

the mortgagee"" occurring in the Section is comprehensive, at least to cover the present case, where there is a mortgage of item 2 and the

mortgagee, the appellant''s predecessor, happened to be in possession of it, in pursuance of an arrangement for the payment of interest on the

mortgage amount, though not of the terms of the mortgage deed itself. I do not think that an examination of the decided cases referred to by

counsel necessarily leads to a different conclusion. In two of the cases relied on for the appellant, Bama Charan Chakraburty v Nimai Nandal

(A.I.R. 1922 Cal 114) and Droisami Naicken v Peru Su Am Periakaruppan Chettiar (A. I. R. 1941 Madras 475) the mortgagees came into

possession of the mortgaged properties not in pursuance of the terms of the mortgage deed, but under agreements or conveyances of sale of the

equity of redemption, which were found to be invalid, and the courts ruled, that such possession must be deemed to be possession held as

mortgagees and for this reason, these cases are not quite applicable. But in Bama Charan Chakraburty v Nimai Nandal (A.I.R. 1922 Cal 114) it

was held, that Section 20 (2) of the Indian Act, ""does not refer expressly to the intention of the party who receives the rent or produce, and may

well be construed to apply wherever mortgaged land is, in fact in the possession of mortgagee."" In Gaya Prasad v Bahu Ram (A.T.R. 1928 All

387) where the transfer of possession was not under the mortgage, but was, as in this case, under a lease which was held to be in favour of one of

the co-mortgagees, Sulaiman, J. sitting with Kendall, J. observed that ""there can be no doubt, that the receipt of the rents and profits would be

tantamount to a payment of interest and principal as provided in the lease."" The case was decided also on the ground, that there was written

acknowledgment of liability, but that does not detract from the weight of the observations of the learned Judge. In Palaniswami Goundan v

Ramasami Goundan (A.T.R. 1951 Mad 802) a Bench of the Madras High Court which consisted of Subba Rao and Somasundaram JJ. relied on

the observations in Bama Charan Chakkrahurty v Nimai Nandal (A.I.R. 1922 Cal 114) and ruled that the question of intention of the person in

possession of the property is irrelevant to the application of Section 20 (2) and observed, that in order to get the benefit of that provision, only two

conditions need be satisfied: one is ""that the person receiving the rents or produce must be a mortgagee and the other is, that he should be in the

possession of the land. These two conditions are satisfied here in this case."" In that case possession passed not under the earlier mortgage, which

was a simple mortgage, but under an usufructuary mortgage in favour of the same mortgagee and another and part of the consideration under the

latter was the amount of the former. But this feature does not affect the generality of the observations extracted above. In Patel Kempegowda v

Channaveeriah (A.I.R. 1958 Mysore 43) possession passed to the simple mortgagee under a distinct arrangement for appropriation of the income

of the mortgaged property towards interest on the mortgage amount. The Court held, that for Section 20 (2) of the Indian Act to apply, it is only

necessary that the mortgagee is in possession of the whole or part of the mortgaged property and not that he is in possession in pursuance of the

terms of the mortgage deed.

My attention was invited by learned counsel for the respondents to the observation of the Bombay High Court in Manikchand Bharmappa v

Rachappa Virsangappa (A. I. R. 1952 Bombay 226). The mortgage though a simple one provided that the mortgagee shall be in possession of the

mortgaged property and appropriate the income towards interest on the mortgage amount. Counsel relied on the following observation in the

judgment:

Therefore, if the mortgagee is in possession by reason of the mortgage deed and if in that capacity he receives any rent or produce from the

mortgaged property, then the receipt of the rent is deemed to be a payment for the purpose of sub-section (1).

Earlier in the same paragraph occurs the following observations with reference to Section 20 (2):

Now in our opinion, the expression, ""where mortgaged land is in the possession of the mortgagee'' does not merely apply to cases where the

mortgagee is in possession under a usufructurary mortgage; it applies to all cases where the mortgagee is in possession in his capacity as the

mortgagee and under the terms of the mortgage

It is apparent, that in making the observations relied on here, the court was concerned with extending the application of the provision beyond the

domain of usufructuary mortgages so as to take in a mortgage of the kind before it. The observations have therefore to be read and understood in

an inclusive sense and not as excluding other cases in which a mortgagee is in possession of the mortgaged property not in pursuance of the terms

of the mortgage, but in some other, manner. The precise point arising here did not arise in that case, and therefore it was not necessary to refer to

the decided cases referred to above. As a result of the above discussion, I come to the conclusion that Section 21 (2) of the Travancore Act

applies. If so, it was not disputed, that the possession of the appellant''s predecessor was sufficient to save the appellant''s claim from the bar of

limitation.

Defendants 46, 47 and 87, who are respondents, 39, 40 and 58 have preferred an objection memorandum against that part of the decree

rejecting their claim under the kuri as barred by limitation. Their remedy, if any, was by way of appeal against the decree and was certainly not by

way of objection memorandum against their co-respondent, who represents the foreman of the kuri. The cross-objection memorandum is

dismissed as unsustainable, but without costs. In the result, the decree of the lower court dismissing the claim of the appellant as barred by

limitation is hereby set aside and his appeal is allowed with costs in this court against the 6th respondent-8th defendant, but not in the lower court.

The case will now go back to the lower court for the settlement of the liability and for passing a fresh decree in accordance with the provisions of

Act XXXI of 1958.