P.K. Sivagaminatha Pillai vs N.K.S. Dharmalinga Mudaliar and Others

Kailasam, J.—The third defendant in the suit is the appellant in this second appeal. The plaintiff filed the suit on a mortgage bond dated 14-

3-1934 executed by one Sankaran Chettiar on his behalf and on behalf of his brother and minor sons, who are defendants 1 and 2, in favour of

one Punnavanam and Subbiah Pillai. The mortgage provided that the amount was payable on 14-7-1938. Sankaran Chettiar sold item 1 in

Schedule B to the plaint to the third defendant under Ex. B-3 dated 21-2-1942. One of the mortgagees Punnavanam gave a notice, Ex. A-4, on

26-9-1946 to Sankaran Chettiar claiming that he was entitled to the entire mortgage money. On 5-2-1947 under Ex. A-2 Punnaivanam, one of the

mortgagees, assigned the entire mortgage right to plaintiff for a sum of Rs. 4750. The mortgagor Sankaran Che-ttiar sold to the plaintiff one item of

the property mortgaged on 13-8-1949. Two questions were raised in this second appeal by Mr. Ramanujam, the learned counsel for the

appellant-third defendant. Firstly, he contended that as the mortgage amount was payable on 14-7-1938 the suit ought to have been filed on 13-7-

1956, whereas the suit was in fact filed only on 8-2-1957. The plaintiff relied on an acknowledgment by the mortgagor made under Ex. A-3 dated

13-8-1949. The learned counsel admits that Ex. A-3 would amount to an acknowledgment but would not keep the mortgage debt alive against the

third defendant who purchased item 1 schedule 3 property under Ex. B-3 dated 21-8-1942, long before the acknowledgment. The second

contention raised by the learned counsel is that the mortgage Ex. A-1 was in favour of Punnavanam Pillai and Subbayya Pillai, and that

Punnavanam Pillai by himself can only transfer half the mortgage rights under Ex. A-2 to the plaintiff.

The question that arise for consideration is whether the mortgagor can by an acknowledgment of liability extend the period of limitation against a

purchaser of one of the items of the mortgage prior to the date of acknowledgment.

Section 19(1) of the Indian Limitation Act provides as follows:

19(1). Where before the expiration of the period prescribed for a suit for application in respect of any property or right, an acknowledgment of

liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by

some person through whom he derives title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was

so signed.

Thus, it will be seen that the acknowledgment of liability must be by the party against whom such property or right is claimed or by some person

through whom he derives title or liability. The acknowledgment in this case is not signed by the party against whom the right is claimed. Therefore,

the question is whether the third defendant, who purchased one item of property before the acknowledgment, can be said to be a person deriving

title or liability under the mortgagor, who acknowledged the liability after the sale in favour of the third defendant. This question is not free from

difficulty, and ""much scan be said on both sides"".

This question came to be considered by a Full Bench of this court in Pavayi and Others Vs. Palanivela Goundan and Others, . In that case the

mortgage was executed on 12-11-1913. On 16-1-1919 a creditor of the mortgagors obtained a money decree against them and in execution of

that decree purchased the equity of redemption. On 16-12-1920 the first mortgagor paid to the mortgagees a sum of Rs. 200 towards the amount

of interest then due in respect of the mortgage debt and made an endorsement on the deed and affixed his signature. A suit to enforce the mortgage

was filed on 9-12-1938. The question that arose for decision by the Full Bench was whether the payment of Rs. 300 on 16-12-1920 would save

the suit from the bar of limitation. It was contended by the purchaser in court auction of the properties on 16-1-1919 that the mortgagor was not in

a position to acknowledge the liability u/s 19 after his purchase. The Full Bench observed as follows at page 773 (of Mad LJ) : (at pp. 472-473 of

AIR),

In certain of the cases to which I have referred the mortgagor retained an interest in part of the mortgaged 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 mortgaged property can by an

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

whom his interest has devolved. If he cannot bind the purchaser of the equity of redemption when the purchase covers the whole of the mortgaged

properties obviously he cannot bind the purchaser of part of the mortgaged properties.

The Full Bench considered the decision of the Calcutta High Court in Surjiram Marwari v. Barhamdeo Persad, 1 CLJ 337 and quoted with

approval a passage in the judgment of Mookerjee J. which runs as follows:

It is argued on behalf of the respondents that the ''second mortgagee derives his title or liability from the mortgagor, and, that consequently, an

acknowledgment by the mortgagor in favour of the first mortgagee, is operative against second mortgagee no matter whether such

acknowledgment was given before or after the second mortgagee derived his title. After careful consideration of this argument, I am unable to

accept it as well founded. I think that the proper construction to be put upon the section (Section 19 of the Limitation Act) is that when it makes an

acknowledgment given by one person operative as against another on the ground that the latter derives title or liability from the former, it

contemplates that the derivation of title or liability (which is the essential condition for the extended operation of the acknowledgment) takes place

after the acknowledgment has been given.

The Full Bench also approved of the decision in (Cadapalli) Yagnanarayana and Another Vs. Kaja Venkata Krishna Rao and Others, , where it

was held that in order to be binding on the assignee the acknowledgment must be made before the person making it had parted with his interest in

the property, and observed that if a mortgagor, who had lost all his interest in the mortgaged property could not bind the purchaser of the equity of

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

In Bank of Upper India Ltd. v. Robert Hercules Skinner, ILR (1942) All 660 : AIR 1942 PC 67, the Privy Council held that if the

acknowledgment was after the party had disposed of his interest to a purchaser, such acknowledgment did not bind the purchaser u/s 19(1) of the

Indian Limitation Act. Dealing with Section 19(1) their Lordships observed that the section was perfectly general and was not confined to

mortgages, that it applied to every form of property move-able and Immovable and that it would appear strange that a man in wrongful possession

of property might transfer it to a bona fide purchaser and that the latter was not quieted in his possession by the lapse of time but might be defeated

by acknowledgments made without his knowledge by the person from whom he derived title. Their Lordships of the Privy Council referred with

approval to the doctrine of Lord Westbury. They also adopted the reasoning of Mookerjee J. in 1 CLJ 337 and added that there might be

adduced the analogy of admission under the Indian Evidence Act which were binding if made by persons from whom the parties to the suit had

derived their interest, but only if they were made during the continuance of the interest of the person making the statements. Their Lordships

concluded that the acknowledgment made in that case by the mortgagors after they had parted with all their interest to the purchaser did not bind

the purchaser.

The reasoning in the two decisions cited above namely Pavayi and Others Vs. Palanivela Goundan and Others, , and ILR 1942 All 660 : AIR

1942 PC 67, is that when Section 19 of the Indian Limitation Act makes an acknowledgment given by one person operative as against another on

the ground that the latter derives title or liability from the former, it contemplates that the derivation of title or liability takes place after the

acknowledgment has been given (See Mookerjee J''s observation in 1 CLJ 337). The decisions in Pavayi and Others Vs. Palanivela Goundan and

Others, and ILR 1942 All 660 : AIR 1942 PC 67, have been followed in subsequent decisions of the other High Courts (Vide AIR 1944 163

(Nagpur) , Munshilal v. Hiralal, ILR (1947) All 11 : AIR 1947 All 74, Ram Khelawan Singh and Others Vs. Ramnandan Prasad Singh and

Others, , Manohar v. Yado, AIR 1952 Nag 404, Gopalrao v. Venkatadri, AIR 1957 AP 19 , and Raghoba Santanna v. Shaha Nilo Naik AIR

1960 Mys 187 . But as the cases in Pavayi and Others Vs. Palanivela Goundan and Others, happen to be cases in which the mortgagor lost all his

rights in the property, the decisions are sought to be distinguished. In the present case the mortgagor sold only one item of property to the third

defendant and retained some interest in the mortgaged property on the date of the acknowledgment. The learned counsel for the respondent

contends that this makes all the difference.

The learned counsel for the respondent strongly relies on a Bench decision of this court in R. Narayana Reddiar Vs. Venkatesa Reddiar and

Others, . The case related to a payment made towards interest due on a mortgage by the 2nd defendant, who was the person who could make the

payment and the endorsement. The learned Chief Justice Sir Alfred Henry Lionel Leach, who delivered the judgment referred to the Full Bench

decision in Pavayi and Others Vs. Palanivela Goundan and Others, and observed that that case had no application to the case before them, for the

Bench was concerned with the question whether the payment in question fell within Section 20 and started a new period of limitation affecting the

second mortgagee whose charge was created before the payment. It was observed that a payment made by a person entitled to make the payment

u/s 20 of the Limitation Act creates a fresh period of limitation against all persons who might have been sued within the prescribed period, it may

be noted that the decision was concerned with Section 20 of the Limitation Act which is differently worded from Section 19. Section 20(1) of the

Limitation Act provides,

20 (1). 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"".

It will be seen that if a person liable to pay any debt makes a payment before the expiration of the prescribed period a fresh period of limitation

shall be computed, whereas Section 19 relates to an acknowledgment of liability by a person against whom the right is claimed or some person

who claims title through the person who made the acknowledgment. The present case is one of acknowledgement u/s 19 and the decisions given

u/s 20 cannot be invoked. In Valliappa Chettiar v. Rangayya Gounden, 1955 2 MLJ 472 : AIR 1956 Mad 177 Govinda Menon J. was dealing

with a case of payment towards the debt by the mortgagor who had parted with the portion of his equity of redemption of the mortgage properties.

Referring to the Full Bench decision in Pavayi and Others Vs. Palanivela Goundan and Others, the learned Judge observed as follows :

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"".

The learned Judge also expressed his agreement with the view of Chandrasekhara Ayyar, J. in Kempamma Vs. Racha Setty and Others, The

learned Judge''s observation was confined to a payment u/s 20 of the Indian Limitation Act is clear from his observation that the decision in

Narayanappa Naicker v. Ramalingam Pillai 1950 2 MLJ 13 : AJR 1950 Mad 533 was confined only to a case of acknowledgment u/s 19. In

1950 2 MLJ 13 : AIR 1950 Mad 533 a Bench of this court held that as the person sought to be bound by the acknowledgment was a person who

had, prior to such acknowledgment or payment, acquired an interest in the property, the acknowledgment would be not binding upon him, although

he making the acknowledgment or payment was at the time possessed of some interest or other in the properties mortgaged. The Bench after

considering the decisions in Pavayi and Others Vs. Palanivela Goundan and Others, held that ah acknowledgment by the mortgagor who had an

interest in the property hypothecated in part will not be binding upon a prior alienee of a portion of the property.

This decision relates to an acknowledgment u/s 19 and is applicable to the facts of the case. I respectfully agree with the conclusions arrived at by

the Bench in Naranappa Naicker Vs. Ramalingam Pillai and Others, that the decisions in Pavayi and Others Vs. Palanivela Goundan and Others,

and ILR 1942 All 660 : AIR 1942 PC 67 though they related to the acknowledgment by a mortgagor after he had parted with all his interests in

the mortgage property, were intended to cover a case of acknowledgment by the mortgagor, who had some interest left in the mortgaged

property. In AIR 1944 163 (Nagpur) their Lordships after referring to the decision in Pavayi and Others Vs. Palanivela Goundan and Others, and

ILR 1942 All 660 : AIR 1942 PC 67 observed as follows :

It is of course possible to distinguish cases where the acknowledgment is given by the mortgagor after he has sold his entire interest in the property

and cases where the mortgagor still retains some interest in the property, but the Judicial Committee in ILR (1942) All 660 : AIR 1942 PC 67

made no such distinction and stated that their Lordships were prepared to adopt the reasoning of that very learned Judge (Mookerjee J.) in, 1 CLJ

337"".

For the reasons stated above I am of the view that the acknowledgment made by the mortgagor under Ex. A-3 will not extend the period of

limitation against the third defendant who purchased item 1 of schedule 3 under Ex. P-3.

The second contention raised by the learned counsel for the appellant also will have to be accepted. The original mortgage under Ex. A-1 was in

favour of Punavanam and Subbiah Pillai. Only Punnavana Pillai assigned his mortgage rights under Ex. A-2 dated 5-2-1947. No doubt in that

assignment he has referred to a made over of Subbiah Pillai''s rights in his favour. But that document has not been produced. Subbiah Pillai has

attested the assignment in favour of the plaintiff but that also will not have the effect of transferring the right in the Immovable property belonging to

Subbiah Pillai to the plaintiff. Therefore, the plaintiff can only claim the interest of Punnavanam Pillai and claim redemption of Punnavanam''s half

share.

In the result it has to be held that the claim against the third defendant is barred by limitation. The second appeal is allowed with costs. No leave.