Peria Valliappa Chettiar (died) and another vs Rangayya Goundan (died) 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 21st October 1913 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 hypothecs 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 20th October, 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 5th October 1942, that is, within 12 years of the endorsement under S. 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 hypothec. 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 S. 20, Cl. 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 20th October 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 Full Bench decision in Pavayi v. Palanivela

(1940) Mad. 872=61 L.W. 592 (F.B.) 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 whore 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 the Full 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 mortgagor In those circumstances the Full 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 page 885 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 popery can by an

acknowledgment within the meaning of S. 19 or by the payment of 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 hypothecs by the mortgagor would not make any

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

was made by the first defendant on 20th October 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 and 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 Askaram Sowcar v. Venkataswami Naidu 44 Mad. 544-13 L. W. 198., following Chinnery v. Evans 1864 2 H.L. cases 115 at

135, held that a purchaser of the equity of redemption is a person liable to pay the mortgage debt within S. 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 1862 1 Del. G.J, and Sm. 122, which was followed in

Chinnery v. Evans 1864 2 H.L. cases 115, 135. The Calcutta High Court has laid down the same proposition following Askaram Sowcar v.

Venkataswami Naidu 44 Mad. 544-13 L. W. 198, and the English cases. In Bhuban Mohan Sinha v. Ram Gobinda Goswami where B. B. Ghose

and Cammiade jj. had held that the expression ""a person liable to pay "" the debt in the first paragraph of Sub-S. 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 of

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 he 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 R. Narayana Reddiar Vs.

Venkatesa Reddiar and Others, , 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 Askaram Sowcar v. Venkataswami Naidu 44

Mad. 544=13 L. W. 193 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 cut 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 pay 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

C. 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 under 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 had 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 therefore, 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. vijayarghavachariar argued that the decision in Narayana Reddiar v.

Venkatesa Reddiar (1943) I M. L. J. 135 = 56 L. W. 75. is a case where the payment was made by the purchaser of some of the properties and

not by the mortgagor himself. 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 that the original mortgagor himself by making the payment can keep it

up. Both these cases were considered by Chandrasekhara Aiyar J. in Kempamma v. Racha Setty (1947) 1 M. L J. 153=60 L. W. 148.. 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 v. Palanivela 1940 Mad. 872=51 L, W. 592. 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 star 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 Wadsworth 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 continues to be liable under the mortgage he can make a payment which will serve under S. 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 in the notes of cases at page 21 in V.S.A.R.M. Annamalai Chettiar Vs. Vellayan Chettiar and Others,

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 Chinnery v. Earns (1864) 2 H. L. C. 115.

Next, reliance is placed upon the decks on of Raghava Rao and Krishnaswami Nayudu, JJ. in Narayanappa Naicker v. Ramalingam Pillai

(1950) 2 M.L.J. 13=63 L. W. 384 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 Full 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, Narayanappa Naicher v. Ramalingam Pillai (1950) 2 M.L.J. 13=63 L. W. 384 was a case of acknowledgment under S. 19 of the Limitation

Act and not a payment under S. 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.