P.V.Ar.Kr. Arunachellam Chettiar vs Madaswami and Others

The father of the defend-ants Nos. 1 to 3 mortgaged in 1806 to ore Sankaralingam certain Immovable proper-ties and his rights in a Chit

transaction. Sankaralingam assigned the mortgage to the plaintiff. The suit is to enforce the mortgage. The 4th defendant is the manager of the Chit

Fund. The Munsif gave a decree against defendants Nos. 1 to 3 for the Bale of the Immovable properties and against the 4th defendant for the

amount of the Chit Fund. The Subordinate Judge has reversed the latter portion of the decree. We are unable to agree with him. He has

proceeded on the assumption that the Chit transaction was a chose in-action. He seems to be right: however that may be, we shall also deal with

the second appeal on that assumption without deciding the point.

The first question for consideration is whether the mortgagee of a chose-in action is entitled to institute in his own name a suit to recover the

amount due under it. So far as this Court is concerned, that question is covered by authority. In Muthukrishna Aiyar v. Veeraraghava Aiyar 21 Ind.

Cas. 316 : 88 MK 297 : 25 M.L.J. 356 : (1913) M.W.N. 839 : 14 M.L.T. 411 a Full Bench of this Court held that by mortgaging a chose-in-

action a complete assignment of it was effected. The learned Chief Justice says that, after the mortgage, the only party who can sue to recover the

amount das is the mortgagee. The same view is taken in Bombay; vile Ardesir Bejonji Surti v. Syed Sirdar Ali Khan 4 Ind. Cas. 891 : 33 B.K 610

: 10 Bom.L.R. 1146. The decision of the Judicial Committee in Mulraj Khatau v. Vishwanath Prabhuram Vaidya 17 Ind. Cas. 627 : 37 BP 198 :

(1912) M.W.N. 1247 : 12 M.L.T. 652 : 11 A.L.J. 7 : 24 M.L.J. 60 : 17 C.W.N. 209 : 15 Bom. L.R. 9 : 17 C.L.J. 162 : 40 I.A. 24 although the

language of the Committee suggests that the assignments in that case may not have been by way of mortgage, has been understood in the Fall

Bench in this Court as holding that a mortgage operates as a transfer of the right of action in the chose-in-action. We do not want to refer to

English authorities on this subject because, as pointed out is Durham Brothers v. Robertson (1898) 1 Q.B. 765 : 67 L.J.Q.B. 484 : 78 L.T. 438,

the matter was complicated in England to some extent by the conflicting jurisdictions of law and equity although, after the Judicature Acts, the

question had been settled. It is clear from the decision of the Court of Appeal in the case referred to by us that, although the mortgagor should be

made a party to prevent him from subsequently suing the promisor under the chose-in-action the right to recover on the chose-in action is in the

mortgagee. Language of Section 134 of the Transfer of Property Act indicates the same conclusion. The section speaks of the transferee of a

chose in action, to whom it has been assigned ""for the purpose of securing the existing or future debt,"" being entitled to recover the amount due

under it and as being bound to apply the money in a particular manner, in other words, although there is the duty of accountability on the part of the

mortgagee, he is the only person whom the Court of law would recognise as entitled to maintain an action for the recovery of the amount due, That

being the position of a mortgagee of a chose-in action, we are wholly unable to understand the somewhat hazy notion which seems to have guided

the Subordinate Judge in dealing with this matter. If we understand him rightly, he seems to hold that, if a suit is brought on the chose- in- action

against the mortgagor it would be barred by limitation, having been instituted more than six years after the date of the mortgage, the claim against

the holder of the Chit is barred. He speaks of a principal right and of a subsidiary right and concludes that as the principal was barred, the

subsidiary right cannot be enforced. The learned Vakil for the respondent used similar language before us. We are wholly unable to understand the

idea which underlies this contention. As we pointed out, the only person who can sue upon the chose in action is the mortgagee. No suit by the

assignee of a chose-in-action against the assignor to recover money is contemplated, consequently there is not a principal right and an accessory

right. If the mortgagee, owing to his default, failed to recover the money, as pointed out by the learned Chief Justice in Muthukrishna Aiyar v.

Veeraraghava Aiyar 21 Ind. Cas. 316 : 88 M K297 : 25 M.L.J. 356 : (1913) M.W.N. 839 : 14 M.L.T. 411 he will be liable to the mortgagor to

account for his failure. It follows that the mortgagor has no right to prosecute his claim against the holder of the Chit. It is for that very reason that

the mortgagee is compelled, as was pointed out in Durham Brothers v. Robertson (1898) 1 Q.B. 765 : 67 L.J.Q.B. 484 : 78 L.T. 438, to implead

his mortgagor a� a party defendant so that the matter may be settled in his presence.

We must, therefore, reverse the decree of the Subordinate Judge. The learned Vakil for the respondent suggested that there are questions of

limitation and that he also intends to raise the question that the Chit right is not a chose in action. We express no opinion upon these contentions.

On remand, the Subordinate Judge will deal with them. He must also deal afresh with the necessary objection. Costs will follow the event. Re-fund

of Court-fee allowed.