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Judgment
Alfred Henry Lionel Leach, C.J.—The appellant was the first defendant in the trial Court. The suit was to enforce a hypothecation bond
dated the 5th June, 1912, which was executed by the father of the appellant, a Sunni Mohammadan, in favour of respondents 2 to 9. The bond
was assigned to the first respondent who was the plaintiff in the suit, on the 19th July, 1928. The principle sum due under the mortgage was Rs.
5,000 which was repayable in 15 annual instalments of Rs. 375. The first of the instalments fell due in the year 1913 and the last in 1927. The
appellant''s father died soon after the mortgage bond had been executed, but the instalments for the years 1913, 1914, 1915 and 1916 were paid
regularly on behalf of his heirs. On the 17th September, 1917, the estate of the appellant''s father was partitioned amongst his heirs and the first
appellant was made responsible for discharging the debt under the hypothecation bond. No question arises as to the validity of the partition or of
the liability of the appellant under the bond. The instalment due for the year 1917 was not paid. It was not paid for the year 1918 and default was
made also in respect of the year 1919. On the 8th May, 1919, the uncle of the appellant, purporting to act as the guardian of the appellant, made
up an account of what was due under the hypothecation bond for these three years and set off against the amount a sum of Rs. 900, which was
due to the appellant by the mortgagees on another transaction. This left Rs. 136-7-0 as the amount due to the mortgagees in respect of the
instalments for these three years. This sum of Rs. 136-7-0 was sent to the representatives of the mortgagees by letter and was received by them on
the 24th May, 1919. The mortgagees accepted payment of this money, but on the 2nd July, 1920, they purported to assign the mortgage to one
Krishnan Nambudripad on the basis that a default had occurred in 1917 and that the amount due was the mortgage debt, less the instalments paid
in respect of the years 1913, 1914, 1915 and 1916. There appears to have been some question as to the validity of this assignment, and on the
19th September, 1928, a fresh assignment was executed by the mortgagees, the assignee in this instance being the first respondent. To this deed
Krishnan Nambudripad was a party. In the assignment to the first respondent the mortgagees gave credit for the sum of Rs. 136-7-0 received by
them on the 24th May, 1919 and regarded the instalments for the years 1917, 1918 and 1919 as having also been paid. The present suit was filed
on the 7th October, 1929, by the first respondent, who gave credit for the Rs. 900, which was due to the appellant in 1919 and shown in the
accounts submitted to the mortgagees in that year and also gave him credit for the sum of Rs. 136-7-0, which was received by the mortgagees on
the 24th May, 1919. The appellant defended the suit on the ground that the mortgage debt was time barred. The learned trial Judge, however, held
that it was in time. He based his finding on the fact that there had been a written acknowledgment of the debt in 1919 by the de facto guardian of
the appellant. This written acknowledgment was the letter written by the appellant''s uncle forwarding the sum of Rs. 136-7-0, It is clear that the
learned Judge here erred. Under Mohammadan Law a de facto guardian has no right to bind his ward and this was frankly conceded by the
learned Advocate for the first respondent.
The learned Advocate-General supported the appeal on another ground. He said that under the terms of the deed the whole of the mortgage
debt became due on default in payment of the first instalment. The first default here took place on the 12th May, 1917, and as the suit was not filed
until 1929, it was, he said, out of time. In support of this argument he referred us to the wording of Articles 75 and 132 of the Limitation Act.
Article 75 refers to a promissory note or a bond payable by instalments. The limitation here is three years from the date of the default, unless the
payee or pledgee waives the benefit of the provision. Under Article 132 the period of limitation in respect of a mortgage bond is twelve years from
the time the money becomes due. No mention is made here of waiver. The question whether the omission to include in Article 132 a provision
similar to the one in Article 75 operates to prevent a plea of waiver being set up has been the subject of considerable discussion in the High Courts
in India, but the matter has now been set at rest by the decisions of the Privy Council in AIR 1926 85 (Privy Council) and Lasa Din v. Gulab
Kunwar (1932) 63 M.L.J. 187 : L.R. 59 IndAp 376 : ILR 7 Luck. 442 (P.C.). In the first of these cases their Lordships discussed the question
whether the default in the payment of an instalment set the law of limitation in motion for the benefit of the mortgagee, but as a decision was not
necessary in that case the matter was left open for the time being. The question arose again in the case of Lasa Din: v. Gulab Kunzvar (1932) 63
M.L.J. 187 : L.R. 59 IndAp 376 : ILR 7 Luck. 442 (P.C.) and was there decided. At page 384 Sir George Lowndes who delivered the judgment
of their Lordships observed:
There can be no doubt that, as pointed out by Lord Blanesburgh in AIR 1926 85 (Privy Council) a proviso of this nature is inserted in a. mortgage
deed ''exclusively for the benefit of the mortgagees,'' and that it purports to give them an option either to enforce their security at once, or if the
security is ample, to stand by their investment for the full term of the mortgage. If on the default of the mortgagor--in other words, by the breach of
his contract--the mortgage money becomes immediately ''due'', it is clear that the intention of the parties is defeated, and that what was agreed to
by them as an option in the mortgagees is, in effect, converted into an option in the mortgagor. For if the latter, after the deed has been duly
executed and registered, finds that he can make a better bargain elsewhere, he has only to break his contract by refusing to pay the interest, and
''eo instanti'', as Lord Blanesburgh says, he is entitled to redeem. If the principal money is ''due'', and the stipulated term has gone out of
thecontract, it follows, in their Lordships'' opinion, that the mortgagor can claim to repay it, as was recognised by Wazir Hasan, J., in his judgment
in the Chief Court. Their Lordships think that this is an impossible result. They are not prepared to hold tha the mortgagor could in this way take
advantage of his own default: they do not think that upon such default he would have the right to redeem, and in their opinion the mortgage money
does not ''become due'' within the meaning of Article 132 of the Limitation Act until both the mortgagor''s right to redeem and the mortgagee''s
right to enforce his security have accrued. This would, of course, also be the position if the mortgagee exercised the option reserved to him.
In the present case, the mortgagees accepted the payment of the Rs. 136-7-0 tendered to them in 1919 and gave credit for the Rs. 900 due by
them to the appellant on another account. It is obvious that in so doing they had waived their right of enforcing the default clause in the
hypothecation bond. That right having been waived limitation did not run, and this being so the suit was filed within the period allowed by law. The
judgment of the learned trial Judge will, therefore, stand.
The learned Advocate-General has pointed out that the plaint does not give credit for the amount paid in respect of the 1919 instalment and that
the sum claimed as being due under the hypothecation bond is worked out on the basis that the whole amount became due in 1929. The
mortgagees did not exercise their right under the bond of calling in the amount and consequently are not entitled to calculate interest on the basis
that the amount of the principal sum became due in 1919. They are, however, entitled to charge interest on each instalment which was not paid.
The learned Advocate for the respondent accepts this as being correct. The interest on the instalments will, therefore, be calculated from the dates
on which the instalments fell due up to the date fixed for payment in the preliminary decree and the interest will be at the contract rate. The period
allowed for redemption will be six months from to-day. After the date for redemption has passed the decretal amount will carry interest at six per
cent. The learned Advocates say that they will submit an agreed statement of what is due under the mortgage on this basis.
The first respondent is entitled to his costs in the appeal.
This appeal came on for final hearing after the filing of the statement by the advocate for the first respondent in pursuance of the order contained
in the above judgment and the Court delivered the following
JUDGMENT
The learned Advocate for the respondent has filed a statement of what is due under the mortgage on the basis of our judgment of the 7th
October 1937. The learned Advocate for the appellant accepts the statement as being correct except that he challenged the first two items,
namely, Rs. 88-9-0 and Rs. 200-14-2 respectively. The learned Advocate for the respondent accepts the objection, and it is agreed that the total
amount due under the mortgage including interest and costs is Rs. 9, 532-7-10. The decree will be drawn up accordingly.