Mohammad Yusuf and Others vs Narayana Pillai 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 Ayyar in 1903. Subsequent to this mortgage,

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

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

impleading the second mortgagee Swami-nath 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 executtion of the decree obtained by defendant No. 4. Swaminath Pillai assigned his mortgage in

1910 to defendant No. 4 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 Ayyar had obtained a decree

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

Defendant No. 4 applied for execution of the decree which he obtained and brought the suit property to sale subject to the mortgage in favour

of Narayanasami Ayyar 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 defense is one of limitation. Prima facie, the suit being on the

mortgage of 1903, it is certainly barred by limitation. But Mr. Rajah-Ayyar 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 in Sambasiva Ayyar Vs. Subramania Pillai and Others, . In that case Ramesam

and Stone, JJ. held that where a prior mortgagee institutes a suit on his mortgage without impleading the puisne 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

12 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 of 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 starling 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 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 Ayyar in execution of his mortgage decree, upto the date of the dispossession by defendant No. 4, 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, 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 Ayyar before the new Code of Civil Procedure, all right as mortgagee became extinguished and Narayanasami Ayyar and his

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

2, 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 a 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 defendant No. 4 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 Ayyar, Whether this decision is right or

wrong, defendant No. 4 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 43 A 469 : 65 Ind. Cas. 151 : AIR 1922 PC 11 : 48 IA 465 : (1921) MWN 445 :

14 LW 162 : 26 CWN 279 : 42 MLJ 15 : 30 MLT 175 : 24 Bom. LR 590 . The result of the decree obtained by defendant No. 4 is that the

mortgage of Narayanasami Ayyar must be deemed to subsist and that the plaintiff must be deemed to be an assignee of Narayanasami Ayyar''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, 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 Ayyar relied on a decision on the Calcutta High Court, Rama Charan v. Kishore Mohan Roy 64 Ind. Cas.

903 64 Ind. Cas. 903 : AIR 1922 Cal. 114 : 35 CLJ 58. 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, 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 whatever 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 Ayyar. Another case relied on by Mr. Rajah Ayyar was Ram Charan v. Bhagwan Das 48 A 443 : 95 Ind. Cas. 898 :

AIR 1926 PC 68 : 53 IA 142 : 24 ALJ 622 : (1926) MWN 503 : 3 CWN 783 : 31 CWN 108 : 38 MLT 18 .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 consideration went in discharge of a simple mortgage which was admittedly 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 mortgagee in

possession and does not help Mr. Rajah Ayyar. The plaintiff''s suit is, therefore, barred by limitation. In the result the second appeal fails and is

dismissed with costs. Leave refused.