M. Parthasarathi Aiyangar (deceased), M. Veeraraghavan L.R. of the deceased vs K. Ekambara Mudaliar and Others

Venkatasubba Rao, J.—This suit, brought upon a mortgage evidenced by two deeds of 1915 and 1916, was commenced on 30th July,

1932. The plaintiff, to save his claim from the bar of limitation, relies upon what he alleges amounted to a payment of interest on 30th July, 1920.

The alleged payment was not made by the mortgagors but by a third party, and the two questions that have been raised are (i) whether the

transaction relied upon amounts to a payment of interest and (ii) whether the person who made the payment was one ""liable to pay the debt"" within

the meaning of Section 20 of the Limitation Act.

The facts may be shortly stated. One of the properties comprised in the mortgage was agreed to be sold by the mortgagors to one Paramasiva

for Rs. 7,600, and it was stipulated that out of this sum he should pay Rs. 1,500 to the plaintiff (the mortgagee), who in his turn should release the

item purchased, from his mortgage security. There is sufficient evidence to show that the plaintiff gave his consent to this arrangement entered into

between the mortgagors and Paramasiva. The plaintiff was made to attest the sale-deed in token of his consent, and some difficulty in the case has

arisen from the fact, that it was intended to be executed on the 7th May, 1920, the date it bears, but the actual execution was on 30th July, when it

was presented for registration. The recitals in the sale-deed do not represent the arrangement that was eventually given effect to, but as to what

happened there can be little doubt. Simultaneous with the execution of the sale-deed, a release deed (Ex. C) was executed by the plaintiff in favour

of Paramasiva. It bears the date 30th July and recites that out of the amount due to the mortgagee, Rs. 1,500 was received for interest, and that in

consideration of the payment, the plaintiff relinquishes his mortgage right over the item sold. But it is clear from Ex. I, another document which

came into existence on the same day, that no money was paid, and that by agreement between Paramasiva and the mortgagee, the actual payment

was deferred to the 2nd August, 1920. It has also been shown that the money was in fact paid on the 7th August, 1920, on which date the

payment was endorsed on the back of the mortgage deed.

The suit has been contested by the fourth defendant, a subsequent purchaser. That the transaction to which we have referred amounts in law to

a payment, can hardly admit of doubt. The plaintiff acknowledged receipt of the amount and executed a release deed relinquishing his right to the

item in question. That no money passed makes, in the circumstances, little difference; the plaintiff waived payment and was content to treat the

promise to pay as actual payment. Would it have been open to the plaintiff after the release deed, to assert as against the mortgagors, that he did

not receive the amount? The effect of the transaction is undoubtedly that the sum due upon the mortgage became reduced by Rs. 1,500. This

seems to be clear on principle and if authority is needed, Maber v. Maber (1867) 2 Ex. 153 may be cited. There, it was held that to constitute a

payment of interest sufficient to take a debt out of the operation of the Statute of Limitations it is not essential that money should actually pass

between the debtor and the creditor. As observed by Martin, B., any facts which would prove a plea of payment of interest in an action brought to

recover it, would be a payment sufficient to bar the statute. As already said, in a suit by the plaintiff against the mortgagors, the release deed

mentioned above would be conclusive evidence of payment. The plaintiff would have a right of action against Paramasiva on an independent basis,

namely, his agreement to pay, but that would not render the transaction any the less a payment for the present purpose. To quote another passage

from the judgment of Martin, B.:

In my judgment, when a man comes prepared to pay a debt, and has the money, in point of fact, in his hand to pay, but the creditor thinks fit to

say, ''Do not pay me, I give you that money, and I consider it as having been paid'', at the same time handing the debtor a receipt for the money,

and making an indorsement of payment upon the security, that is, a payment. There is no necessity for the debtor to go through the form of taking

the money out of his pocket and giving it to the creditor, and the creditor returning it to him. If the Jury have found the'' real transaction to be as I

have stated it, all that prevented actual payment being, that it was thought unnecessary to go through the idle ceremony of one party taking the

money out, and the other handing it back again, that was equivalent to payment.(P. 156.)

We must therefore, disagreeing with the lower Court, hold that the transaction amounted in law to a payment of interest within Section 20 of the

Limitation Act.

That Paramasiva as the purchaser was a ""person liable to pay the debt"" is equally clear. This is established by Askaram Sowkar v.

Venkataswami Naidu (1920) 40 M.L.J. 218 : ILR 1920 44 Mad. 544. Buckley, J., in Bradshaw v. Widdrington (1902) 2 Ch. 430 expounds the

principle on which this rule rests. The learned Judge after observing that the whole idea is that the payment is an admission of the right of the person

to whom it is paid, goes on to say:

If the mortgagor has himself paid, or whether he has called upon somebody else and bound somebody else towards him to pay and that person

has paid, equally, as it appears to me, the mortgagor has made an admission. That is how I regard it upon principle.

Then the learned Judge quotes Chinnery v. Evans (1864) 11 H.L.C. 115 : 11 E.R. 1274 where it was held by Lord Westbury, L. C, that under

the statute the receiver in the receipt of the rents is, in point of fact as well as of law, the receiver of the mortgagor and that any payment made by

the receiver is payment in law by the legal agent of the person liable to pay. In Askaram Sowkar v. Venkataswami Naidu (1920) 40 M.L.J. 218 :

ILR 44 Mad. 544 already referred to, it was held that a purchaser of the equity of redemption is a person liable to pay the mortgage debt within

Section 20 of the Limitation Act. See also Bhuban Mohan Sinha v. Ram Gobinda Goswami I.L.R.(1926) 54 Cal. 179. The payment by

Paramasiva therefore takes the case out of the statute, he being the purchaser of an item comprised in the mortgage.

Apart from that, the facts already adverted to show that he was the mortgagor''s ""agent duly authorised"" to pay Rs. 1,500. On this ground also

the payment made by him on the 30th July, 1920, saves the claim from the bar of limitation.

For the plaintiff it is urged in the alternative, that even should the payment be deemed as made on the 7th August, the date when actual cash was

paid, he is in no worse position; indeed, his position is, if possible, better, that date being nearer the date of the suit. But the argument assumes that

Paramasiva''s authority extended to making the payment a week after the sale deed. This is a question we need not go into in the view taken by us

on the other point. The extent of an agent''s authority u/s 20 is a question to be decided on the facts of each case. As Mr. A. Viswanatha Aiyar for

the respondent rightly points out, a payment by an agent later than warranted by his authorisation would be an act detrimental to his principal, for,

the result of such a payment is to extend the period of limitation. In this case, as already observed, it is unnecessary to decide whether or not

Paramasiva had authority to make the payment on the 7th August.

In the result, the appeal is allowed and the lower Court''s decree is set aside. The plaintiff will have a mortgage decree for the amount claimed in

the plaint, with interest at 6 per cent, per annum on Rs. 4,000 from the date of plaint to the date fixed for payment. There will be no personal

decree. Time for payment is three months. Though the plaintiff has succeeded, we deprive him of costs, as he deliberately filed the plaint on the last

day of limitation with a court-fee of Rs. 2 odd, while more than Rs. 500 was payable, and made good the deficit only after several extensions. Our

order therefore is that each party will bear his costs both here and in the Court below.