Naranappa Naicker vs Ramalingam Pillai and Others

Raghava Rao, J.—The question in these Civil Miscellaneous Appeals is whether the exe-oution petition out of which this appeal arises is

barred by time. The Court below has held that it is.

The appellant is a mortgagee decree. holder, who is in the present proceeding seeking to execute the decree against the properties in Sch. d, to

the plaint in the hands of the contesting respondent, respondent 22,. who came to be impleaded before decree as the legal representative of

defendant 5 in the suit. Defendant 15 is the purchaser of the properties subsequent to the mortgage as well as the charge. The present execution

petition against defendant 5 is one presented admittedly more than three years from the date of the order on the last execution petition, namely,

31st January 1941.

It was contended for the decree-holder in the Court below that the present execution petition stood saved from the bar of limitation by a letter

of aoknowledgment passed by defendant 15, Ex. P-1, dated 5th January 1944. The contention was rejected by the Court below on the ground

that Ex. P-1 was not a bona fide, but collusive document. The finding of collusion and fraud recorded by the Court below cannot, in our opinion,

be accepted. It is not based upon legal testimony, but only upon suspicion. There is no evidence on the side of the contesting respondent at all, the

evidence oral and documentary being all on the side of the appellant.

But then, this does not dispose of the appeal in favour of the appellant. The respondent seeks to support the order of the Court below on the

ground that no acknowledgment made by defendant 15, the purchaser of the property subsequent to the charge, can be binding on the charge-

holder or her legal representative. The contention is that u/s 19, Limitation Act, defendant 5 or her legal representative, respondent 22, cannot be

treated as a person deriving title or liability from defendant 15 long prior to whose purchase the charge in favour of defendant 5 had come into

existence. The contention is, in our opinion, borne out by the ruling of a Full Bench of this Court in Pavayi v. Palanivela, ILR (1940) Mad. 872:

AIR 1940 Mad. 470 to which our attention has been drawn by the learned counsel for the respondent and must, therefore, be accepted whatever

the view of this Court prior to that ruling.

Mr. Srinivasan for the appellant drew our attention to a good deal of prior authority--the cases in Lakshamanan Chetti v. Muthaya Chetti, 40

M.L.J. 126, P.C. Muthu Chettiyar Vs. Muthuswami Ayyangar, and Kanchari Modhugari Narayana and Others Vs. Nandigam Venkataramanna

Patnaik and Others, , which it is unnecessary to consider in view of the Full Bench ruling. Paragraph 1 of the head-note to the Full Bench ruling is

as follows:

A mortgagor who has lost all interest in the mortgaged property cannot bind by an acknowledgment u/s 19 or by a payment of principal or interest

u/s 20, Limitation Act, 1908, the person on whom his interest has devolved, whether the devolution is of the whole of the mortgaged properties or

only a part thereof. In order to be binding on the assignee, the aoknowledgment or payment must be made before the person making it has parted

with his interest in the property to the assignee.

It is the second sentence of para. 1 of the head-note that applies to the present case and applies adversely to the appellant.

Mr. Srinivasan for the appellant contends that what all is decided by this Full Bench ruling is that if the ''person making the acknowledgment has

lost all interest in the mortgaged properties any acknowledgment by him will not be binding upon the person on whom an interest in the mortgaged

properties either in whole or in part has devolved already. In our opinion, this is not the way to read the head-note to the judgment, which certainly

embodies two distinct and different propositiona: (1) that any acknowledgment or payment by the person making it must be of a person who is

interested in the properties mortgaged at the time that he makes it and (2) that in order that such an acknowledgment may be binding upon the

assignee, the assignee must be one, who claims under the person making the aoknowledgment or payment by a title subsequent to such

aoknowledgment or payment. If the person sought to be bound by the aoknowledgment or payment is a person, who has, prior to such

acknowledgment or payment, acquired an interest in the property, the aoknowledgment or payment will not be binding upon him, although the

person making the acknowledgment or payment is at the time possessed of some interest or other in the properties mortgaged. This will be

apparent on a reference to the discussion of the question in the judgment of the Full Bench at pp. 882 to 886 (top). The learned Chief Justice in the

judgment of the Court refers to the cases in P.C. Muthu Chettiyar Vs. Muthuswami Ayyangar, , (Cadapalli) Yagnanarayana and Another Vs. Kaja

Venkata Krishna Rao and Others, and certain other cases and winds up the discussion at the bottom of p. 885 and the top of p. 886 in the

following terms :

As I have shown, Coutta-Trotter C. J. and Bamesam J. in (Cadapalli) Yagnanarayana and Another Vs. Kaja Venkata Krishna Rao and Others,

accepted the opinion of Mookerjee J. in Surjiram Marwari v. Barhamdeo Persad, I C. L. J. 337, that, in order to be binding on the assignee, the

acknowledgment must be made before the person making it has parted with his interest in the property, and I see no reason to doubt the

correctness of this opinion. And if a mortgagor, who has lost all interest in the mortgaged property, cannot bind the purchaser of the equity of

redemption by an acknowledgment, he cannot bind his assignee by a part payment of interest or principal.

All that we need say with reference to the head-note of the decision of the Full Bench, which we have already reproduced, is that we are not quite

so clear whether the principle enunciated in the second sentence of the head-note is applicable to the case of a payment u/s 20 as well as to the

case of an acknowledgment u/s 19, It may be that there is some difference between the two cases because of the difference in language noticeable

between Section 19 and Section 20, the latter of which does not contain the words ""by some person through whom he derives title or liability,

which occur in the former. It is not necessary for our purpose in the present case to express any final opinion upon the question how far the

principle that is enunciated in the second sentence of para. 1 of the headnote to the Full Bench ruling in Pavayi v. Palanivela, I. L. R. (1940) Mad.

872 : AIR 1940 Mad. 470 is applicable to the case of a part payment as well as to the case of an acknowledgment.

The view that we have expressed above in regard to what the Full Bench ruling has decided concerning the validity of an acknowledgment by a

mortgagor as against a person, who has already acquired an interest in the hypotheca in part or in whole prior to the acknowledgment, gains

support from the decision of the Privy Council in Bank of Upper India Ltd. v. R. H. Skinner, I. L. R. (1942) 23 Lah 686: AIR 1942 P. C. 67,

which contains so full and lucid an exposition of the principle applicable at pp. 690 and 691 of the report by that very distinguished and learned

Lord, Lord Atkin that we cannot resist the temptation of reproducing here the passage concerned. Says his Lordship :

The question is whether the acknowledgment by a transferor in order to bind the transferee can be given after the transfer of title, or whether the

section only applies where the acknowledgment has been made before the transferee has derived his title from the acknowledgor. The matter has

been frequently discussed in the Courts in India with conflicting decisions. Their Lordships have had the advantage of having the principal decisions

discussed before them by counsel and have no doubt that ''much can be said on both sides.'' Bat it must be remembered that the section is

perfectly general, it is not confined to mortgages; It applies to every form of property movable and immovable; and it would appear strange that a

man in wrongful possession of property may transfer it to a bona fide purchaser and that the latter is not quieted in hie possession by the lapse of

time, but may be defeated by acknowledgments made without his knowledge by the person from whom he derived title. This is a doctrine which

Lord Westbury in Balding v. Lane, 1863 Deg. J. and Section 122 said leads to very extraordinary and alarming consequences. He was dealing

with a suggestion that under the Beal Property Limitation Act of 1943 an acknowledgment of the mortgagor entitles the first mortgagee to recover

all the arrears of the interest out of the land as against the second and subsequent mortgagees who would otherwise be protected by the statute.

''The Court'' he says, ''is bound by every principle of judicial interpretation to find if possible a construction of the statute which does not involve

consequences so inconsistent with natural justice,'' This principle was applied to this very section by Mukerji J.--Surjiram Marwari v. Barhmadeo

Prasad, 1905 Cal. L. J. 337 and their Lordships are prepared to adopt the reasoning of that very learned Judge in the present case. In addition to

the analogy used by Mukerji J. of Section 13, Civil P. C., there might be adduced the analogy of admissions under the Evidence Act which are

binding if made by persons from whom the parties to the suit have derived their interest but only if they are made during the continuance of the

interest of the person making the statements. The fact that the statute expressly limits the nature of the admission does not detract from the general

proposition that any different result would effect serious injustice.

The view expressed by Mr. Rustomjee in his Commentary, Edn. 5, which is before the rulings of the Full Bench and Privy Council above

referred to, is no doubt distinctly favourable to the appellant, but cannot be followed after and in view of those rulings. The matter as dealt with in

U. N. Mitra''s Law of Limitation and Prescription, 7th Edn. 1949 (vol, 1) at pp. 217 bottom and 218 top, although not quite erroneous, as we

consider the exposition of law in Rustomjee''s Commentary to be, is not at the same time quite clear. At the bottom of p. 217 the commentary says

:

The decision of the Madras High Court in (Cadapalli) Yagnanarayana and Another Vs. Kaja Venkata Krishna Rao and Others, has dissented

from Krishnachandra v. Bhairabchindra, 32 Cal. 1077: 9 C. W. N. 868 and has emphasised the distinction between cases of acknowledgment

and cases of part payment. So far there is no trouble.

The learned commentators then proceed to observe :

It (the Madras High Court) has held that an acknowledgment by a mortgagor after his Interest in the property has ceased will ''only'' bind him or

''persons claiming through him'' i. e., assignee from him after the acknowledgment.

That proposition too is perfectly clear to our minds, but the cases cited in the footnote to that statement of the law do not include the Full Bench

ruling of this Court, although they Include the Full Bench ruling of the Nagpur High Court: AIR 1944 163 (Nagpur) . Then comes the sentence,

which runs as follows:

It may be regarded as now definitely settled that an acknowledgment made by a mortgagor after he had parted with all his interest in the

mortgaged property will not bind the prior purchaser from him.

In the footnote to this sentence, we have reference made to the Privy Council ruling in Bank of Upper India Ltd, v. R. H. Skinner, ILR (1942) 23

Lab.. 686 :A. I. R. 1942 P. C. 67. But then, the word ""all"" in the sentence underlined (here italicised) by us may well raise the question whether if

the mortgagor making the acknowledgment has an interest in the property hypothecated, in part, at any rate, his acknowledgment will not be

binding upon a prior alienee of a portion of the property. As we have already stated, our opinion is that it will not be. The sentence just extracted

by us from Mitra''s Commentary is founded upon the last sentence of the paragraph of the Privy Council ruling in the case just cited above at p,

691 of the report, which we have not already reproduced and that is :

On the whole therefore their Lordships come to the conclusion that the acknowledgments made in this case by the mortgagors after they had

parted with all their interest to the purchaser do not bind the purchaser; and that the High Court cama to a correct conclusion on this point.

This sentence of the Privy Council judgment, in our opinion, has reference only to the facts of the particular case before their Lordships, while the

preceding part of the passage, as we have already quoted it, contains a discussion of principle, which makes it immaterial so far as the invalidity of

an acknowledgment by the mortgagor as against a prior alienee is concerned, that the mortgagor making the acknowledgment has some interest at

the time in the property hypothecated. In Mitra''s Commentary then comes the sentence :

In Pavayi v. Palaniveala Goundan, I L.R. (1940) Mad. 872 : A. I. R. 1940 Mad. 470, a Full Bench of tha Madras High Court has held that a

mortgagor or who has parted with the equity of redemption and the personal remedy against whom has also become barred cannot, by an

acknowledgment within tbe meaning of Section 19 or by the payment of interest or principal within the meaning of Section 20 bind the person on

whom hia interest has devolved."" The effect of the Full Bench decision, as so stated, is of course not incorrect, although it may not be an exhaustive

statement of the law as laid down by the Full Bench, as we have already made it clear.

In these circumstances, we have come to the conclusion that the order of the Court below is correct, though on a different ground to what the

learned Judge below has adopted as the ground of his decision. These Civil Miscellaneous Appeals accordingly fail and are dismissed, with costs

in C. M. A. no. 107 of 1947.