M. Ramanatha Pillai vs K.V. Annamalai Chettiar and Another

Ganapatia Pillai, J.—The first defendant is the appellant. The suit out of which this appeal arises was laid by the first respondent as plaintiff

for recovery of Rs. 365 due under an othi deed, dated 28th July 1943. This was executed by the appellant both on his own behalf and as guardian

of his elder brother''s sons, defendants 2 and 3, who were minors on the date of the othi deed. The sum claimed consisted of Rs. 200 principal and

interest at 51/2 per cent, per annum from the date of the mortgage deed. Contentions were raised as regards the validity and binding character of

the mortgage in regard to the share of defendants 2 and 3 and also on the question of the mortgage being a real transaction. I am not concerned

with these questions in this appeal. But, a question of limitation was raised on the ground that since the mortgagee was entitled to possession of the

mortgaged property and such possession was not delivered the suit ought to have been filed within twelve years from the date of the mortgage

deed and not within twelve years from the date of the expiry of the three years period fixed in the mortgage deed for repayment of the mortgage

amount. Both the lower Courts have negatived this contention. That is the only point arising for my consideration now.

The facts are not in dispute. The date of the mortgage deed, Ex. A.1, is 28th July 1943. The period fixed for repayment in the mortgage deed is

three years. It was alleged that the mortgaged property was leased back to the mortgagor on the basis of a tenancy from year to year. But, at the

end of the first year no rent was paid, nor possession of the property surrendered. Both the lower Courts proceeded on the assumption that this

lease was not given effect to and consequently the mortgagee was not given possession of the property. The suit was filed on 29th July 1958. It

would therefore be within time under Article 132 of the Limitation Act if the starting point for limitation was the end of three year period fixed in the

mortgage deed for repayment of the mortgage money. But it would be barred by time if the mortgagee had exercised option u/s 68(1)(d) of the

Transfer of Property Act and brought the suit for the money due on the mortgage since possession was not given to him.

Mr. Natesan, learned counsel for the appellant, raised two points.

The first was that the provisions of Section 68(1)(d) of the Transfer of Property Act (hereinafter called the Act) cast an obligation upon the

mortgagee in this case to file a suit for the mortgage money within twelve years from the date of default of the mortgagor to give possession and

consequently; the suit would be barred by limitation.

The second contention was that even if this provision in the Act is regarded as a provision for the benefit of the mortgagee upon which she could

base her cause of action as an alternative to the cause of action based upon the covenant in the mortgage deed for repayment of the mortgage

money, still the original mortgagee in this case had exercised the option to avail herself of the remedy provided u/s 68(1)(d) of the Act by the notice

Ex. A.7, issued on 15th September 1944 and consequently she was not entitled to rely on the personal covenant to bring a suit within twelve years

from the end of the three year period fixed in the mortgage deed for payment. If this argument is correct and an election was made by the

mortgagee on 15th September 1944, the date of Ex. A. 7, the suit would be barred by faro because it was admittedly filed more than three years

after the date of Ex. A. 7. The first respondent who filed the suit was an assignee of the mortgage from the mortgagee, but that fact does not enter

into the merits of the question which I have to decide.

Article 132 of the Limitation Act provides a twelve year period of limitation for suits to enforce payment of money charged on Immovable

property. This period of twelve years begins to run from the date when the money used for becomes due. According to counsel for the appellant

the money sued for became due under the personal covenant in the mortgage deed on the expiry of the three year period and alternatively it also

became due u/s 68(1)(d) of the Transfer of Property Act when the mortgagee (sic) defaulted to give possession of the mortgaged property to the

mortgagor (sic).

The argument was that the mortgagee cannot have two causes of action for the same claim and where the statute gave a right to sue for money, it

must prevail over the right contained in the contract. This argument proceeds on the misconception that there are two separate causes of action in

this case for the same right or relief, viz., recovery of money due under the mortgage. The nature of the right conferred u/s 68(1)(d) if analysed

would turn out to be nothing but compensation to the mortgagee for the default of the mortgagor to surrender possession of the mortgaged

property. A statutory right is given to the mortgagee to claim the mortgage amount in cases falling u/s 68(1)(d) of the Act which is only in the nature

of compensation to the mortgagee and not an alternative remedy for recovery of the mortgage money based on the right founded upon the personal

covenant contained in the mortgage deed to repay the mortgage money. It is true the amount recoverable by the mortgagee u/s 68(1)(d) is identical

in quantity with the mortgage money mentioned in the mortgage deed. But, that would not affect the nature of the claim dealt with in the statutory

provision. Consequently, merely because the amounts sued for in either case would be the same it could not be said that the cause of action is the

same though satisfaction for one cause of action would extinguish the other.

Really the cause of action under the mortgage deed is based upon contract while the cause of action for the recovery of the amount of the

mortgage claim money by virtue of the provisions of Section 68(1)(d) is in the nature of a right to claim compensation.

In cases of usufructuary mortgages containing a personal covenant by the mortgagor to pay the mortgage money and default takes place in giving

possession of the mortgaged property there is only one cause of action or recovery of the mortgage money because in such a case Section 68(1)

(d) would not be attracted if the suit is laid for the mortgage money after it becomes due according to the tenor of the mortgage deed. There is

therefore no force in the contention that in a case where a mortgagee as here has both a cause of action based upon the personal covenant in the

mortgage deed and a right to recover the mortgage money by virtue of the provisions of Section 68(1)(d) of the Act, he gets two causes of action

for the same claim.

In my view, there are two causes of action no doubt, but they are not for same claim. The object with which Section 68 was enacted would sup-

port my view because the right to sue for the mortgage money was conferred upon a usufructuary mortgagee who would normally be not entitled

to such a right because by the definition of ""usufructuary mortgage"" no personal covenant to repay the mortgage amount is involved in that class of

mortgages. Thus Section 68 was, really intended by the Legislature to confer upon a usufructuary mortgagee a right to sue for the mortgage money

if he otherwise would not have had that right. To construe Section 68 in the manner contended for by Mr. Natesan, would mean that the legislature

compelled a mortgagee who had a right to sue for the mortgage money by reason of the personal covenant in the mortgage deed to abandon that

right and to rest in his claim solely upon Clause (d) of Section 68(1). The object of that provision was to confer a right which did not already exist

in the mortgagee and not to take away any right which he already possessed by reason of the contract.

The nature of the right conferred by Section 68(1)(d) has been the subject of judicial pronouncements in many High Courts. It may be really not

necessary to traverse the entire field of case law on the subject because the preponderance of judicial opinion is that this is in the nature of a

privilege given to the mortgagee which he was free to reject in suitable cases. This implies that this privilege of suing for the mortgage money

conferred by Section 68(1)(d) could not be converted into an obligation when alone Mr. Natesan''s. contention could prevail.

Mr. Natesan attempted to show that in interpreting the language of Article 132 of the Limitation Act regarding the point when the period of

limitation starts, the term ""when the money sued for becomes due"" should be held equivalent to ""when the money becomes payable"". The term

when the bill, note or bond becomes payable"" in Article 80 of the Limitation Act, has come up for consideration in many'' decisions, but it will

serve no useful purpose to review them as the principles laid down in those decisions cannot apply to Article 132. However, certain observations

occurring in the Full Bench decision in Subbamma v. Narayya, ILR 41 Mad 259 : AIR 1919 Mad 1164 were relied on by Mr. Natesan in this

connection.

There a suit was brought for sale of usu- fructuarily mortgaged property on the allegation: that the defendant, viz., the mortgagor did not give

possession to the mortgagee. The question which arose for consideration of the Full Bench was whether the usufructuary mortgagee was not

entitled to sue for sale of the mortgaged property when the mortgagor failed to deliver possession of the property to the mortgagee and consequent

ly whether he was bound to sue for the money alone. The Full Bench held that when under a usufructuary mortgage possession was not given it

ceased to be a usufructuary mortgage and the power of bringing the property to sale on failure to pay the mortgage money could not be exercised

by him under the contract but he was entitled to sue for the money u/s 68 of the Act. In setting out this conclusion Wallis C. J. made the following

observations :

A mortgagee to whom possession has not been given is not a usufructuary mortgagee. Consequently he does not come within the proviso and is

entitled to sue for foreclosure or sale under the section (Section 69), in the absence of a contract to the contrary, ""at any time after the mortgage

money has become payable to him,"" Section 68 entitles the mortgagee to sue the mortgagor for the mortgage money ''where the mortgagee being

entitled to possession of the 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 other person. The first of these events having happened, the mortgagee has become entitled to sue for the

mortgage money, or in other words, the mortgage money has become payable to him, and he is entitled u/s 67 to sue for foreclosure or sale, in the

absence of a contract to the contrary which cannot be implied"".

The Full Bench concluded that once the mortgage money became payable under any clause in Section 68 there could be no reason for refusing

to give effect to Section 67 which allows a suit for foreclosure or sale at any time after the mortgage money has become payable.

It is true the learned Judges constituting the Full Bench considered that the right of a mortgagee to enforce a payment of the mortgage money u/s

68 carried with it the right to sue for foreclosure for sale. In describing this right, the learned Judges have mentioned that in a case falling u/s 68, the

mortgage money becomes payable to the mortgagee. But the question for their determination was not whether by thus becoming payable the

mortgagee loses the benefit of the personal covenant contained in the mortgage. They were not concerned with that question in the case before

them as that was a case of usufructuary mortgage, pure and simple, containing no personal covenant for payment. The observations in question

cannot therefore be relied upon as an authority upon Article 132 for construing the term ""When the money sued for becomes due."" The contention

of Mr. Natesan that these observations would imply that in a case covered by Section 68(1)(d) the mortgage money becomes payable not only for

the purpose of conferring the right to bring a suit for foreclosure or sale but also for the purpose of limitation cannot therefore be accepted as

correct.

Learned counsel then referred to the decision in Gangaram v. Raghubans, ILR 27 Pat 898, in support of his argument. There the question was

when the unpaid purchase money under a sale became due. Section 55(5)(b) of the Act provides for the liability of the purchaser to pay or tender,

at the time and place of completing the sale, the purchase money to the seller or such person as be directs.

The facts in that case were : out of the consideration for the sale a portion was paid in cash and the balance was left with the purchaser to be paid

to the mortgagee holding mortgages over the property sold. There was no indication in the sale deeds as to when the purchaser was bound, to pay

the amount due to the mortgagee. The purchaser not having paid the amount reserved with him for payment to the mortgagee, he obtained a

decree for recovery of the mortgage money due and the seller satisfied this decree by payment. Thereafter a suit was brought by him enforce the

statutory charge for recovery of the balance of purchase money due and the question arose when that amount became due under the Article 132 of

the Limitation Act.

The Bench held that in the absence of a contract to the contrary between the parties, the direction to the buyer to pay the price to the seller or to a

third party was not , a contract inconsistent with the existence or continuance of the statutory charge u/s 55(5)(b) and since there was nothing to

indicate that the seller had agreed to postpone payment of the unpaid purchase money to a future date, that amount was payable to the seller or to

the third party indicated in the deed of sale on the date of the sale itself and the statutory charge could be enforced within 12 years from the date of

the sale as the money became due on the date of the sale itself. Mr. Natesan contends that ore the analogy of this decision it should be held that the

money claimed in this litigation became due under Article 132 of the Limitation Act on the date when the right u/s 68(1)(d) arose.

A statutory charge differs from the right to compensation provided u/s 68(1)(d) of the Act, because I think it does not create a new cause of

action, but only provides a new remedy for an existing cause of action. A right to recover unpaid purchase money u/s 55(5)(b) of the Act is based

upon the covenant in the sale deed to pay the purchase money. That covenant could be enforced in more than one way according to the terms of

the contract. The statute, however, provides that in the absence of a contract to the contrary, the seller would be entitled to a charge for the unpaid

purchase money upon the property sold. This does not mean that a new cause of action is given to the seller under this statutory charge for claiming

the amount due as unpaid purchase money.

In another view also this decision can be distinguished because there the money in the hands of the purchaser remained the money of the

vendor and the purchaser was only an agent of the vendor with a direction to pay it to a particular individual. The fact that the agent did not carry

out the direction of the principal would make no difference in the character of the claim made by the principal for the recovery of the money left in

the hands of the purchaser. The cause of action for the recovery of that money was the original cause of action, viz., that contained in the contract

for sale. This decision would therefore have no application here.

Mr. Natesan also referred to the Privy Council decision in L. Narsingh Partab Bahadur Singh v. Mohammed Yaqub Khan, ILR 4 Luck 363 :

AIR 1929 PC 139 where the question was whether in the case of a combination of a simple mortgage and a usufructuary mortgage the mortgagee

could claim the rights conferred under S. 67 of the Act to bring the property to sale for nonpayment of the mortgage amount. The controversy

before the Privy Council was whether the mortgage in question fell under the classification anomalous mortgage and therefore was hit by the

provisions of Section 98. The conclusion that the mortgage deed in that case attracted Section 68 has no relevance to the question which I have to

decide here.

Mr. Natesan then referred to the decision in AIR 1932 207 (Privy Council) , and the decisions which followed it. But, in my opinion, these

decisions have no bearing on the question I have to decide because they were concerned with the provisions in the mortgage deeds and other debt

documents giving the right to the mortgagor to pay the amount of the mortgage money in instalments and providing that on default of payment of

any one instalment the entire mortgage money would become due.

The question of limitation now raised has been considered by a Bench of the Bombay High Court in Sidramaya Nilkanthayaswami

Wantmurimath Vs. Danava Shidramappa Deshnur and Others, . There the nature of the right conferred upon a mortgagee u/s 68(1)(d) was

analysed in all its bearings and it was held that it did not amount to an obligation but only amounted to a concession to the mortgagee. It was further

held there that if the mortgagee was entitled to enforce payment of the mortgage money both by reason of the personal covenant contained in the

mortgage deed and also by reason of the provision in Section 68(1)(d), it was open to him to wait till the expiry of the period fixed for payment in

the mortgage deed and to bring a suit within 12 years after the expiry of that period despite the accruing of the right to sue for the mortgage money

earlier u/s 68(1)(d). I am in respectful agreement with the view expressed by the Bench on this question. It is unnecessary for me to notice at length

the grounds for the conclusion mentioned by the learned Judges constituting the Bench because I have already indicated in this judgment the

principal grounds which have been relied on in that judgment.

There is one other point which I would like to mention as supporting my View, viz., that the mortgagee in this case not bound to sue for

recovery of the money within 12 years from the date when the mortgagor failed to deliver possession. A right to redeem the mortgage is a statutory

right and it arises u/s 60 of the Act after the principal money secured by the mortgage ""has become due"". This section was amended in 1929 and

the phrase ""after the principal money has become payable"" was altered and the phrase introduced by the Amending Act was ""after the principal

money has become due"". This alteration, in one sense, supports my view that what was intended by Article 132 when it used the expression ""when

the money sued for becomes due"" was the point of time indicated by the contract between the parties as the date fixed for repayment and not the

point of time indicated by Section 68(1)(d). If the mortgagor has a right to redeem the mortgage only after the principal amount has become due

according to the terms of the contract contained in the mortgage deed, it stands to reason that the mortgagor could not be given an earlier right for

redemption unless the mortgagee chooses to file a suit for recovery of the mortgage money u/s 68(1)(d).

Supposing in a case where a mortgagee is entitled to sue for the mortgage money both on the personal covenant contained in the mortgage deed

and u/s 68(1)(d) and, further supposing that the mortgagee does not choose to sue for the mortgage, money u/s 68(1)(d), but waits for the expiry

of the period for repayment fixed in the mortgage deed, could it be said that a right of redemption is conferred upon the mortgagor even before the

time fixed for payment arrives merely on the ground that u/s 68(1)(d) a right to sue for the mortgage money had already accrued to the mortgagee.

Of course, if a suit for recovery of the mortgage money is actually brought by reason of Section 68(1)(d) even before the expiry of the period fixed

in the mortgage document for payment of the mortgage amount, the Court is bound to give the option to the mortgagor to pay the amount and

redeem the mortgage before ordering sale of the mortgaged property. Thus a right of redemption is given to the mortgagor in such a case only if

and when the mortgagee exercises the right to sue for the money u/s 68(1)(d) before the date fixed for payment. In no other case could a

mortgagor claim the right of redemption before the date fixed for payment under the mortgage deed. To take any other view would lead to the

anomaly that by his own default the mortgagor would hasten the time when he could redeem the mortgage. This would be nullifying the intention of

the parties to the contract when they had fixed a period for, re-payment which carries the implication that before the expiry of that period the

mortgagor could not exercise the right of redemption. I therefore agree with both the lower Courts that the suit in this case was not barred by

limitation since the mortgagor (sic) was entitled to wait for a period of 12 years after the date fixed for payment in the mortgage deed before filing

the suit on the personal covenant for recovery of the mortgage money.

The next contention of Mr. Natesan based upon Ex. A.7 amounts to this that a notice issued by the mortgagee containing a demand for

payment, of the mortgage money basing the claim upon Section 68(1)(d) would amount to an irrevocable election to choose the statutory cause of

action implying an abandonment of the cause of action based upon the personal covenant in the deed.

In AIR 1934 473 (Oudh) , it was held by a Bench of the Oudh Chief Court that the occurring of default in payment of the interest due under

the mortgage deed which was made payable at stipulated periods even before the date fixed for the repayment of the principal gave an option to

the mortgagee to sue for the entire mortgage money together with interest and a suit laid after issuing of notice to the mortgagor calling upon him to

pay the entire amount was not premature.

In taking this view the Bench followed the Privy Council decision in AIR 1932 207 (Privy Council) , where it was observed that in such a case as

soon as the mortgagor defaulted in paying the interest due under the mortgage, the mortgage money became payable within the meaning of Article

132 of the Limitation Act provided the option had been exercised by the mortgagee to enforce the mortgage.

I am unable to see how this decision has any bearing on the question whether an option is exercised by the mortgagee. The mere issue of a

notice to the mortgagor, to pay the mortgage money on the happening of the contingency contemplated u/s 68(1)(d) does not amount to an

unequivocal act or election to abandon the remedy based upon the cause of action contained in the deed in preference to the remedy provided u/s

68(1)(d).

Mr. Natesan next referred to the fact that interest was claimed in the plaint from the date of the mortgage deed and not from the date of notice

Ex. A.7. I do not see how this has any bearing on the question as to the starting point for the period of limitation though the right to claim interest

from the date of the mortgage, may be doubted.

In my view a real election would arise in the case of a mortgagee electing to sue for the mortgage money under the provisions of Section 68(1)

(d) of the Act only as between two remedies, viz., suing for recovery of possession of the mortgaged property and suit for recovery of the

mortgage money. In electing for the one and not for the other it could be well said that the mortgagee in such a case had abandoned the other

remedy. But, there is really no option or election in a case like the present where the right to sue for the mortgage money is already secured by the

mortgage deed. An election involves the principle that one has to choose between two inconsistent rights of remedies. There could therefore be no

election in any legal sense in the case of a mortgagee entitled to sue for the mortgage money both by reason of covenant in the contract and the

provisions of Section 68(1)(d) who chooses to enforce the covenant and not the statutory right for getting payment. I therefore overrule this

contention also.

In the result, the second appeal fails and is dismissed with costs.

No leave.