Peria Valliappa Chettiar and another vs Rangayya Goundan and others

Govinda Menon, J.—The fourth defendant is the appellant and on his death pending the second appeal his legal representative has come on

record as the second appellant. The suit was to enforce a mortgage, Ex. P. 1, for Rs. 1000 dated 21-10-1918 executed by the first defendant for

himself and as guardian of his minor undivided son, the second defendant In favour of the first plaintiff. In execution of a money decree against the

joint family of the first defendant one item of the mortgaged properties was sold in Court auction and was purchased by the decree-holders

themselves represented by defendants 4 to 7 and 14.

Their rights have now vested in the fourth defendant. The plaintiffs prayed for sale of the items comprised in the hypotheca including the item now

claimed by the 14th defendant and the defence is that so far as that item is concerned, the suit is barred by limitation. The answer of the plaintiffs to

get over the plea of limitation was that there was a registered endorsement of payment of Rs. 25 on 20-10-1930, that is, before the property

liability under Ex. P. 1 and that even as regards the item sold out the claim is not barred by limitation since the suit was brought on 5-10-1942, that

is, within 12 years of the endorsement under Sec. 20 of the Indian Limitation Act.

The trial court dismissed the suit as against the item claimed by the 14th defendant but the lower appellate court has reversed that decree and

passed a preliminary decree against the entire hypotheca. Hence this second appeal by the fourth defendant claiming to have the item purchased by

him exonerated from the operation of the mortgage decree.

Under Sec. 20 clause 1 of the Limitation Act where payment on account of a debt or of interest on a legacy is made before the expiration of the

prescribed period by the person liable to pay the debt or legacy or by his duly authorised agent a fresh period of limitation shall be computed from

the time when the payment was made. If, therefore, it is held that the endorsement dated 20-10-1930 evidenced the payment made by the person

liable to pay the debt, then the decision of the lower appellate court is right but what is argued is that in regard to the item which is claimed by the

14th defendant, it had gone out of the ownership of the first defendant''s Joint family long before the payment was made towards the debt and that

in that case any payment made towards the debt could not be a payment made by the person liable to pay the debt In respect of the property

which has gone out of the ownership.

Thus it is urged that no liability is imposed upon the property in which the equity of redemption has ceased to be with the mortgagor to pay any

portion of it and if such payment is made, it cannot be considered to be one made under S. 20 of the Limitation Act. The Pull Bench decision in -

Pavayi and Others Vs. Palanivela Goundan and Others, lays down that a mortgagor who has lost all interest in the mortgage property cannot bind

by an acknowledgment under S. 19 or by a payment of principal or interest under S. 20 of the Limitation Act a person on whom his interest has

devolved whether the devolution is of the whole of the mortgage properties or only a part thereof.

In order to be binding on the assignee the acknowledgment or payment must be made before the person making it has parted with his interest in

the property to the assignees. In the case before a Pull Bench the payment was made after the equity of redemption in the entire properties had

been assigned by the mortgagor to a third party and after the mortgagees had lost all their personal remedies against the mortgagee In those

circumstances the Pull Bench held that the payment made by a person who has no liability whatever either personal liability which had become

barred or liability against the property which has already been transferred and the ownership in it has been lost by him cannot bind the purchaser of

any portion of the mortgage property. Learned counsel for the appellant invited my attention to a passage at pp. 472-473 of the report wherein the

learned Chief Justice observes as follows:

In certain of the cases to which I have referred the mortgagor retained an interest in part of the mortgage properties sold but I do not consider that

this makes any difference in principle. The question is whether a mortgagor who has lost all interest in the mortgage property can by an

acknowledgment within the meaning of Sec. 19 or by the payment or interest or principal within the meaning of S. 20 of the Limitation Act bind a

person on whom his interest has devolved.

Because the learned Chief Justice did not consider that the retaining of interest in part of the hypotheca by the mortgagor would not make any

difference in principle, it is urged for the appellant that the Pull Bench decision applies to the facts of the present case since at the time the payment

was made by the first defendant on 20-10-1930 except one item purchased by the fourth defendant, he had the ownership and possession of the

rest of the items and that being the case he was personally liable to pay the debt.

It is further urged that the words ""by the person liable to pay the debt"" specified in S. 20(1) of the Limitation Act implies & connotes a personal

liability existing and not a liability charged or impressed upon the property but this argument is against the trend of decisions of this court which has

been followed by the Calcutta High Court as well.

This Court in '' S. Askaram Sowcar Vs. Venkataswami Naidu and Others, following ''Chinnery v. Evans'', (1864) 11 HLC 115 at p 135 (C), held

that a purchaser of the equity of redemption is a person liable to pay the mortgage debt within Sec. 20 of the Limitation Act and hence if under a

mortgage decree for sale of the mortgaged property to which he is a party though exempted from personal liability he pays interest as such, such

payment gives a fresh period of limitation for execution of the decree but the auction purchaser of the mortgagor''s interest is undoubtedly not a

person who has any personal liability. This decision lays down following the identical language of the English statute, that he is a person liable to

pay the mortgage debt.

The learned Judges also refer to the earlier case, - ''Bolding v. Lane'', (1863)

I. De J & S 122 (D) which was followed in (1864)

II. HLC 115 (C). The Calcutta High Court has laid down the same proposition following S. Askaram Sowcar Vs. Venkataswami Naidu and

Others, and the English cases. In - Bhuban Mohan Singh and Others Vs. Ramgobinda Goswami, , B. B. Ghose & Cammiade JJ. has held that the

expression

a person liable to pay the debt in the first paragraph of sub-sec. 1 of S. 20 of the Limitation Act comprehends not only the mortgagor and his

personal representatives upon whom the contract is personally binding but Includes the purchaser if the equity of redemption also.

No decision laying down any contrary, principle has been cited before me. It is, therefore, clear that when the first defendant made the payment

he was a person liable to pay the debt because 12 years had not elapsed from the date of the execution of the mortgage in which case a suit for the

sale of the properties brought, on that date would not have got barred. The further question is even if it is paid by the person liable to pay the debt,

whether the property which no longer belongs to him can be made liable by such payment.

There are two decisions of this court, which take a view contrary to the contentions of the appellant. Lionel Leach C. J. and Lakshmana Rao J.

had to consider a case in - ''Narayana Reddiar v. Venkatesa Reddiar'', AIR. 1943 Mad 395 (F), where the facts were as follows: After the

mortgagor had created two mortgages, on certain properties he was adjudged insolvent but before that, some of the mortgage properties, had

been sold by him and the rest of the properties were sold by the Official Receiver. The legal representatives of the purchaser of the rest of the

properties from the Official Receiver paid a sum towards the interest due on the mortgage and this payment was duly endorsed on the mortgage

deed.

The question was whether such a payment would keep the mortgage debt alive even on the properties sold by the insolvent before he was

adjudged. The decision in S. Askaram Sowcar Vs. Venkataswami Naidu and Others, '', was followed by the learned Judges in holding that the

purchaser of the equity of redemption is one liable to pay the mortgage debt within; the meaning of S. 20 of the Limitation Act. They also refer to

the decision of Wadsworth and Patanjali Sastri JJ. in - Thayyanayaki Ammal by agent Viswalingam Chettiar Vs. Sundarappa alias Apath Sahaya

Kandiar, by his mother and guardian Alamelu Ammal (dead) and Others, , where at the time the payment and endorsement were made., the

property had passed out of the ownership of the mortgagor but the personal liability remained -

As the payment was within six years of the mortgage, Wadsworth and Patanjali Sastri JJ. held that a part payment by a mortgagor who has already

parted with the mortgage property but is a. person liable to nay under his covenant saves the right of suit against the purchaser of the equity of

redemption.

Following that observation and applying it to a case of the survival of the property liability Leach O. J. held that a payment which falls within the

provisions of S. 20 of the Limitation Act starts a fresh period of limitation for an action on the debt against all persons who are liable thereon. They

also refer to the Full Bench'' decision and distinguish it on the ground that it related to a case where the mortgagor who had lost all interest in the

mortgage property and was not a person liable to pay the debt could not bind by an acknowledgment under S. 19 or by payment of principal or

Interest u/s. 20 of the Limitation Act the person on whom his interest had devolved.

It was further elaborated by stating that in order to bind the assignee the acknowledgment or payment must be made before the mortgagor bad

parted with his interest in the property. Therefore though the Full Bench decision was expressly restricted to a case where there was neither

personal liability nor property liability subsisting at the time of the payment the observation that it does not make any difference in principle whether

the mortgagor has retained interest in part of the mortgage property should be understood in the light of the explanation given by the learned Chief

Justice in R. Narayana Reddiar Vs. Venkatesa Reddiar and Others, ''. It Is, there fore, clear that either the personal liability or the property liability

must remain with the person making the payment.

If he has disposed of. all his interest in the property but the personal liability remains and the payment is made within six years then Thayyanayaki

Ammal by agent Viswalingam Chettiar Vs. Sundarappa alias Apath Sahaya Kandiar, by his mother and guardian Alamelu Ammal (dead) and

Others, , is an authority for holding that the suit is not barred. If on the other hand, the personal liability is barred, but at least part of the mortgage

property remains with the mortgagor or his assignees, then the payment made by such a person would bind the person on whom the other

properties have devolved.

But Mr. Vijayaraghavachariar argued that the decision in R. Narayana Reddiar Vs. Venkatesa Reddiar and Others, is a case where the payment

was made by the purchaser of some of the properties and not by the mortgagor him. self. I do not find any difference in principle for the reason

that the purchaser of part of the properties who makes the payment if anything has not got the same liability as the original mortgagor.

If such a purchaser by making a payment can keep the mortgage debt alive as against the other items of properties it is all the more reasonable that

the original mortgagor himself by making the payment can keep it up. Both these cases were considered by Chandrasekhara Aiyar J. in -

Kempamma Vs. Racha Setty and Others, , where the payment was made after the mortgagor had parted with one item and his personal liability

had got barred. The learned Judge observes as follows:

The Full Bench decision in Pavayi and Others Vs. Palanivela Goundan and Others, gives rise to some doubt whether in such a case it could not be

successfully urged that the suit was barred but two later decisions have made it abundantly clear that if a payment is made under S. 20 of the

Limitation Act by the person liable to pay the debt a fresh period of limitation would start in favour of the creditor. The decisions are Thayyanayaki

Ammal by agent Viswalingam Chettiar Vs. Sundarappa alias Apath Sahaya Kandiar, by his mother and guardian Alamelu Ammal (dead) and

Others, and R. Narayana Reddiar Vs. Venkatesa Reddiar and Others, .

The second decision accepts the interpretation of the Full Bench decision given by Wads-worth and Patanjali Sastri JJ. The Chief Justice delivered

the judgment in the Full Bench case as well as in R. Narayana Reddiar Vs. Venkatesa Reddiar and Others, The principle is that so long as the

mortgagor has not parted with his interest in the mortgage properties and continue to be liable under the mortgage he can make a payment which

will serve under Sec. 20 of the Limitation Act to start a fresh period of limitation.

With respect I am in entire agreement with the observations of the learned Judge.

In a discussion of the Full Bench case (A), in the notes of cases at p 21 in 1940-2-Mad LJ at p 23, there is the following statement: ""In between

these two views there is another line of thought that at any rate if the mortgagor making the payment has at that time some interest in the mortgage

properties the prior assignees from him would be bound by such payment. ''Vide 1864-11 HLC 115 (C).

Next, reliance is placed upon the decision of Raghava Rao and Krishnaswami Nayudu JJ. in Naranappa Naicker Vs. Ramalingam Pillai and

Others, , where there are certain observations to the effect that if the person sought to be bound by the acknowledgment or payment is a person

who has prior to such acknowledgment or payment acquired an interest in the property the acknowledgment 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.

But this decision makes no reference whatever to the explanation of the Pull Bench case by the learned Chief Justice himself in R. Narayana

Reddiar Vs. Venkatesa Reddiar and Others, .

There is also no discussion as to whether the person who makes the payment is one liable to pay the debt. It has also to be remembered that the

case, Naranappa Naicker Vs. Ramalingam Pillai and Others, was a case of acknowledgment under Sec. 19 of the Limitation Act and not a

payment under Sec. 20 of the said Act.

There is certainly some difference between the two and I do not think that the observations of Raghava Rao J. can be made applicable to a

payment under S. 20 of the Limitation Act. I am therefore of the opinion that the decision of the lower court is right. The second appeal fails and is

dismissed with costs.

Leave granted.