Krishna Pillai vs Raman Charan

P. K. Shamsuddin, J.—Plaintiff in O. S. No. 131 of 1977 on the file of the Addl. Subordinate Judge''s Court, Parur, is the appellant. Suit was for rendition of accounts and for recovery of the mortgage amount. Plaint allegations may briefly be summarised as follows:- Plaintiff and defendant were friends and they started a partnership business in copra in 1967, and till 1973, the defendant accounted for the profits. Thereafter the defendant had made several payments to the tune of Rs. 1,000/-. The account was settled on 31st January, 1975 whereupon it was found that an amount of Rs. 7,413-73 was due to the plaintiff. After 1975, the defendant did not settle the account, nor did he pay any amounts due to the plaintiff as profits A usufructuary mortgage deed evidenced by Ext. A1 dated 2-3-1960 was executed by the defendant in favour of the plaintiff stipulating consideration of Rs. 1,700/-. But in 1975, the defendant without consent or permission or knowledge of the plaintiff had taken possession of the building and he started running a provision store therein, Though the defendant promised to fix reasonable rent for the building ho did not do so. On these allegations, the suit was filed.

Defendant denied the plaint allegations and contended that he purchased the property in the year 1954 and was running a provision store therein from 1955 onwards till 1973. In 1958, he decided to start a copra mill and for that purpose he purchased a mill from one Kunjumuhammad Haji. He also purchased another mill in 1965 He assigned all his rights in the property and the business in favour of his wife and children in 1973 and thereafter they were in possession of the same. He further, alleged that in the year 1960 the plaintiff approached him and expressed his desire to start a partnership business in betel nut. He had no cash and the plaintiff agreed to invest the entire sum for the business. Since the plaintiff allowed him to be a partner without investment, the plaintiff demanded execution of mortgage deed as a security. No consideration passed under the said document. No amount was also due from him to the plaintiff. After closure of betel nut business, the plaintiff did not settle the accounts and the amounts due to him were not paid. He also denied the averments in the plaint that the plaintiff invested further amounts and that no amounts were due from him to the defendant.

Lower court, on a consideration of the oral and documentary evidence came to the conclusion that Ext. A2 is in the handwriting, of the defendant and that would show that, an amount of Rs. 8,737,75 was due to the plaintiff as on 31-1-1975. It however, held that the claim was barred by limitation. As regards the usufructuary mortgage, the court below found that the case of the defendant that no consideration had passed cannot be accepted, that though the document purports to be a usufructuary mortgage, no possession was made over to the plaintiff and that since the suit was not filed within 12 years from the date of Ext. A1 the suit was barred by limitation. In the above view of matter, lower court dismissed the suit.

In this appeal, learned counsel for the appellant has challenged the finding of the lower court. Learned counsel submitted that the evidence of P.w. 1 would show that a sum of Rs. 1,000/- was paid on 31st January, 1975. But apart from his oral testimony, there is nothing to show that such payment was made. If such a payment was really made, there is no reason to make an entry regarding the payment in Ext. A2. In the circumstances, the view taken by the lower court that the claim based on Ext. A2 is barred by limitation appears to be correct and does not call for any interference.

Ext. A1 mortgage deed is dated 2-3-1960. It is a usufructuary mortgage and the consideration of the mortgage amount is shown, as Rs. 1,700/- received by the defendant from the plaintiff. In order to appreciate the contention raised by the learned counsel in regard to this claim of the mortgage amount, it is profitable to quote the relevant recital in Ext. A1 :

Learned counsel heavily relied on the expression " " used in the document and argued on its basis that limitation will run only on demand and that since no such demand was made, the finding of the lower court that the claim in respect of mortgage amount was barred by limitation is incorrect. In support of this contention, the learned counsel relied on the decision of the Madras High Court in Nettakaruppa Goundan v Kumaraswami Goundan and Others (ILR 1899(22) Mad. 20). In that case a suit was brought in 1895 on a hypothecation bond, dated 9th October 1880. The loan secured thereby was repayable on 9th October 1883, but it was stipulated that if interest was not paid at 10 per cent, per annum as provided, then the loan should be repaid with interest at 15 per cent, when the obligee should require it. It was held that though default had been made in the payment of interest in 1881, the obligee had not called for the money and therefore the suit was not barred by limitation. Learned counsel also relied on the observations of the Privy Council in AIR 1930 188 (Privy Council) and contended that the dictum laid down therein would also indicate that cause of action does not arise until demand is made by the mortgagee and is refused by the mortgagor. A Full Bench of the Madras High Court had occasion to consider and review the entire case law on the point in Duvvuru Lakshminarasamma and others v. Mandala Swami and Others ( AIR(32) 1945 Mad. 156). After reviewing the entire case law, the Full Bench held that when a mortgage bond provides that the mortgage money shall be payable on demand it becomes repayable at once and limitation starts from the date of the bond, and the position is not altered when the words used are "When required by you" or "Whenever demanded," as such expressions mean "on demand". There must be something more in a mortgage deed than this to justify the Court to hold that the cause of action on the bond only arises when a demand has in fact been made. Learned counsel for the respondent submitted that the expression means to require in any year which may mean to require in that year or in any subsequent year. Subsequent decision of the Madras High Court in S. A. Ramaiah Nadar and another v. Rajalakshmi Ammal and another (AIR 1976 Madras 15) has also been brought to my notice, which followed the Full Bench decision referred to above.

In Durga Prosad Chammaria v. Mario Galstaum and others (AIR 1955 Calc. 194), the recital in the document was that the mortgagor could pay the money at his convenience. The court held that it would mean that the payment could be made even before a demand was made and hence it could not be said that the mortgage money would become due only when a demand was made. In the light of the principles enunciated in the Full Bench decision referred to above, which was followed by the Madras High Court in the subsequent decisions and also the dictum laid down by the Calcutta High Court referred to above, it is clear that in a case where payment is contemplated on demand limitation will run from the date of the mortgage. It was also argued that in the instant case the" document is styled as a usufructuary mortgage, no possession was made over to the defendant and that id such Cases, limitation will run from the date of the document. The lower court found that no possession was made over to the plaintiff though the document contemplated possession to be made over. The evidence in the case would indicate that the defendant had not been put in possession of the property. In this context, learned counsel for the respondent invited ray attention to the -ruling in Shibnarain Mandar and Another Vs. Ramautar Singh and Others, . In that case the mortgagee was dispossessed subsequent to the date of mortgage. The suit was brought for recovery of the mortgage money after the date of dispossession The Patna High Court held that in such a case cause of action to bring an action for realisation of mortgage money arose when the mortgagee was dispossessed and the suit having been filed more than 12 years after that date, it was clearly barred by limitation. The same view was taken by a Division Bench of the Calcutta High Court in Afiruddi and Others v. Joy Chandra Naha and Others ( AIR. 1930 Calcutta 703), and in Dnynoba Gangaram v. Dattoba Balappa (AIR. 1947 (34) Bomb. 152). In Dnynoba Gangaram''s case, the mortgage deed contained a covenant to repay money within 5 years and to put mortgagee in possession byway of security and the mortgagor failed to deliver possession to the mortgagee, It was held that the right to sue for mortgage money accrues to the mortgagee under S. 68(1)(d), T. P. Act, immediately on the mortgagor''s failure to deliver possession of the mortgaged property as agreed upon, that is to say on the date of the mortgage, and a suit by the mortgagee after 12 years of the date of mortgage was barred by limitation u/s 132, Limitation Act even though it was within 12 years of the date on which (he money became due under the covenant to repay. The Privy Council considered the question in the context of Section 68 of the Transfer of Property Act in Lal Narsingh Partab Behadur Singh v. Mohammad Yaqub Khan and Others (AIR 1929 P. C. 139). The Privy Council held that:

Wherein mortgage which was a combination of a simple and an usufructuary mortgage the mortgagors failed to discharge their obligation of making over possession to the mortgagee and thereby deprived the mortgagee of part of his security then under S. 68 the money becomes payable and the mortgagees are entitled to a money decree for the same and under S. 67 a decree for sale can be made.

The Supreme Court had occasion to consider the question of starting point of period of limitation in Manimala Devi Vs. Indu Bala Debya and Others, in a similar situation. The Supreme Court held.

A suit to enforce a mortgage is governed by Art. 132 of the Limitation Act and has to be filed within twelve years from the date on which the money sued for became due, unless the period of limitation so prescribed is extended in the manner provided by Part III of the Limitation Act. Dispossession of the mortgagee is not one of the grounds prescribed by the Act for extension of the time prescribed for filing a suit.

Section 68 of the Transfer of Property Act confers a right upon the mortgagee to sue for the mortgage money in four different classes of cases and no others. These classes are:-

(a) where the mortgagor binds himself to repay the mortgage money;

(b) where, by any cause other than the wrongful act or default of the mortgagor or mortgagee, the mortgaged property is wholly or partially destroyed or the security is rendered insufficient within the meaning of Section 66, and the mortgagee has given the mortgagor a reasonable opportunity of providing further security enough to render the whole security sufficient, and the mortgagor has failed to do so;

(c) where the mortgagee is deprived of the whole or part of his security by or in consequence of the wrongful act or default of the mortgagor;

(d) where the mortgagee being entitled to possession of the mortgaged property, the mortgagor fails to deliver the same to him, or to secure the possession thereof to him without disturbance by the mortgagor or any person claiming under a title superior to that of the mortgagor.

The section does not deal with the period of limitation for filing a suit or extension of the period prescribed by the limitation Act for filing a suit. The right conferred by S. 68 is again not a right to enforce the mortgage but a right to sue for the mortgage money on the personal covenant or to claim compensation where the mortgagee is deprived of his security. A suit for enforcement of the personal covenant to pay the mortgage money when mortgagor has bound himself to repay the same is governed by Art 116 of the Limitation Act. Similarly the right to sue where the mortgagee is deprived of the mortgage security or where he is not secured in his possession of the mortgaged property or where possession is not delivered to him as agreed, the claim maintainable by the mortgagee is one for compensation and the period of limitation for a suit to recover the mortgage money is governed by Art 120 of the Limitation Act from the date of destruction or deprivation of the mortgage security possession and not from the date when the mortgage money is repayable.

Foregoing discussion would show that the cause of action of the plaintiff to sue started on the date of the mortgage deed as no possession was made over to him as stipulated in the mortgage. So viewed also the suit filed beyond. 12 years from the date of the mortgage deed is barred by limitation.

In the result, there is no merit in the appeal, and it is accordingly dismissed. However, the parties will suffer their costs. Respondent has filed a cross objection praying to allow costs of the respondent-defendant. The lower court has exercised its discretion and I do not think that I would be justified in interfering with the discretion exercised by the lower court. Cross Objection also is dismissed, without any order as to costs.