Mohamad Yusuf and Others vs Narayana Pillai (died) and Others

Venkataramana Rao, J.—The question involved in this second appeal is one of limitation. The facts necessary for its disposal may be briefly

stated. The suit property belonged to one Doraisami Pillai who mortgaged it to one Narayanasami Aiyar in 1903. Subsequent to this mortgage,

Doraisami Pillai executed another mortgage of the said property and some other property in favour of one Swaminatha Pillai in 1905. In 1906,

Narayanasami Aiyar instituted a suit on his mortgage, O.S. No. 265 of 1906 on the file of the District Munsiff''s Court of Tiruvarur, without

impleading the second mortgagee Swaminatha Pillai, and in execution of the decree obtained thereon, purchased the property in 1908 and took

delivery of the same in March, 1909. In 1915 the suit property was sold to the plaintiff''s father and it was in the possession of the plaintiff''s family

till 1928, when the plaintiff was dispossessed in execution of the decree obtained by the fourth defendant. Swaminatha Pillai assigned his mortgage

in 1910 to the fourth defendant who filed O.S. No. 33 of 1920 in the Sub-Court of Mayavaram for the realisation of the monies due under the

mortgage. He therein impleaded the plaintiff as a party defendant to the suit. A decree for sale was passed therein and it was confirmed by the

appellate Court in appeal and the appellate decree (Ex. D) ran thus:

The mortgaged property hereunder described be sold subject to the prior mortgage of Ex. 1 on which Narayanasami Aiyar had obtained a decree

in O.S. No. 265 of 1906 on the file of the Tiruvarur District Munsiff''s Court.

The fourth defendant applied for execution of the decree which he obtained and brought the suit property to sale subject to the mortgage in

favour of Narayanasami Aiyar and purchased the property and obtained delivery of possession in July, 1928. The plaintiff having been

dispossessed filed the present suit for recovery of the money due on the mortgage, Ex. A. The main defence is one of limitation. Prima facie, the

suit being on the mortgage of 1903, it is certainly barred by limitation. But Mr. Rajah Aiyar contends that the date of dispossession gave him a new

cause of action. In support of this he relies on a recent decision of this Court mSambasiva Aiyar v. Subramania Pillai ILR (193S) Mad. 312. In

that case Ramesam and Stone, JJ., held that where a prior mortgagee institutes a suit on his mortgage without impleading the puisnee mortgagee or

a purchaser of a portion of the equity of redemption and the property is sold and purchased either by the prior mortgagee or by a stranger, there

are two courses open to the prior mortgagee or the purchaser in execution of the decree:

(1) to sue on the mortgage, in which case, the suit has to be brought within twelve years from the time when the mortgage amount becomes due

and payable, or

(2) to proceed on the cause of action derived from his title as auction-purchaser, in which case, the date of the execution sale or the date of

resistance to delivery of possession in pursuance of the sale might furnish the starting point for limitation.

Madhavan Nair, J., in Vadavatte Gopalan Nair Vs. Moideen Madar Rowthen, would seem to suggest that the starting point for limitation must

be computed only from the date of the sale certificate. But it is unnecessary to go into this question because the suit is specifically based on the

mortgage and could only be based on the mortgage in view of Ex. D. The action would therefore be barred unless there is an acknowledgment of

liability or payment of interest to save limitation. What is relied on is that between 1903 the date of taking delivery of possession by Narayanasami

Aiyar in execution of his mortgage decree, up to the date of the dispossession by the fourth defendant, the plaintiff and his predecessor-in-title

were in possession of the property and in receipt of rents and profits thereon and therefore, the perception of such rents and profits would save

limitation by virtue of Section 20, Clause (2) of the Limitation Act which runs thus:

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).

The learned District Judge in the Court below overruled the contention on the ground that the property having been sold and purchased by

Narayanasami Aiyar before the new Code of Civil Procedure, all rights as mortgagee became extinguished and Narayanasami Aiyar and his

assigns must be deemed to have been in possession of the property only as purchasers and not as mortgagees and therefore Section 20, Clause 2

of the Limitation Act is not applicable to the case. It is no doubt true under the law as it previously stood before the enactment of the CPC of 1908

on the passing of decree for sale on foot of the mortgage, all rights to the mortgage security are extinguished and the only right thereafter is a right

to a sale of the property conferred by the decree. But in the suit instituted by the fourth defendant there was a final decree of a competent Court in

and by which the suit property was directed to be sold subject to the mortgage in favour of Narayanasami Aiyar. Whether this decision is right or

wrong, the fourth defendant acquiesced in the judgment and it would not be open to him to contend now that under the said decree no rights were

conferred on the plaintiff. (Vide Sukhi v. Ghulam Safdar Khan (1921) 42 M.L.J. 15 : L.R. 48 IndAp 465 : ILR 43 All. 469 (P.C.).) The result of

the decree obtained by the fourth defendant is that the mortgage of Narayanasami Aiyar must be deemed to subsist and that the plaintiff must be

deemed to be an assignee of Narayanasami Aiyar''s mortgage and also of the ultimate equity of redemption, that is, the assignee of the rights of the

mortgagor in the property. For the applicability of Section 20, Clause 2 of the Limitation Act the perception of rents and profits must be by a

person in the capacity of a mortgagee. Where a person was also the owner of the property, as the present plaintiff was, the perception of rents and

profits by him cannot be said to have been only in the capacity of a mortgagee. Mr. Rajah Aiyar relied on a decision of the Calcutta High Court,

namely, Bama Charan v. Kishore Mohan Roy (1921) 64 I.C. 903. In that case after the preliminary mortgage decree for sale, the mortgagor

entered into an agreement to transfer the equity of redemption to the mortgagee in satisfaction of the decree. In pursuance of the agreement, the

mortgagee entered into possession but no transfer was effected and the mortgagor sold the property to a third party who dispossessed the

mortgagee. On an application for a final decree, the question arose whether the perception of rents and profits by the mortgagee while he was in

possession would not prevent the application from being barred by virtue of Section 20, Clause 2 of the Limitation Act. The learned Judges held it

would. In that case the learned Judges observed:

Section 20, Clause 2"" may well be construed to apply wherever mortgaged land is, in fact, in the possession of the mortgagee.

This observation must be deemed to have been made with reference to the facts of that case. The contract for sale was not legally carried into

effect and the mortgagee never obtained a title to the equity of redemption, so as to become full owner of the property and he could have been in

possession only as a mortgagee. But in this case, so far as the mortgagor was concerned there was a valid transfer of the equity of redemption in

favour of Narayanasami Aiyar.

Another case relied on by Mr. Rajah Aiyar was (1926) L.R. 53 I.A. 142 (Privy Council) . It would be seen from the facts of that case that a

sale-deed executed in pursuance of a decree of Court in a suit for specific performance against the Kartha of a joint family was set aside at the

instance of junior members. Part of the consideration went in discharge of a simple mortgage which was admitted binding on the family. To adjust

equities between the parties by reason of the fact that the sale must be treated as not binding on the plaintiffs in that case, their Lordships of the

Judicial Committee held that one of the terms on which the sale should be set aside should be that the vendee should have the full benefit of the

mortgage which has been discharged and the possession of the property, although unwarranted, as a purchaser should not be treated as that of a

mortgagee in possession with all the burdens of such a possession. In this view the vendee was not held accountable for ""profits, nor would he be

entitled to any interest. This case therefore proceeds on the footing that the sale being invalid the vendee must be treated as a mortgagee in

possession and does not help Mr. Rajah Aiyar.

The plaintiff''s suit is therefore barred by limitation. In. the result the second appeal fails and is dismissed with costs.