R. Ratnasabapathy Chettiar and Others vs V. Devasigamony Pillai

Kumaraswami Sastri, J.—The question referred to us for decision is the period of limitation applicable for the recovery of money due under

a personal covenant contained in a registered deed of mortgage where the mortgage property has been sold and the claim is for the deficiency,

whether the proper article to be applied is Article 66 or Article 67 as the case may be of the First Schedule of the Limitation Act or Article 116 of

the same schedule.

Article 66 applies to cases on a single bond where a day is specified for payment and the period of limitation is three years computed from the

day so specified. Article 67 applies to cases on a single bond where no such day is specified, the period of limitation being three years computed

from the date of the execution of the bond.

A single or simple bond is a bond merely for the payment of a certain sum of money without any condition in or annexed to it (Halsbury, Vol.

III, p. 80). In Dixon, Heynes v. Dixon (1900) 2 Ch.D. 561 the distinction between single and double or double or conditional bond is pointed out

by Collins, L.J. (at page 582).

Article 116 provides for cases of compensation for the breach of a contract in writing registered, the period of limitation being six years

commencing from the time when the period of limitation would begin to run against a suit brought on a similar contract not registered. It is

necessary therefore in order to ascertain the period of limitation to refer to the corresponding, articles applicable to unregistered documents

evidencing contracts.

It is contended by Mr. Krishnaswami Aiyangar for the plaintiff-mortgagee that where a contract between the parties whether for payment of a

fixed or an ascertained sum or not is reduced to writing and registered, Article 116 is applicable even though the case may fall under Article 66 or

Article 67 and that the words ""compensation for the breach of a contract"" include a claim for an ascertained sum of money payable under a

contract.

Mr. Srinivasa Aiyangar for the defendant contends that Article 116 has no application to suits for the recovery of an ascertained sum of money

due on a bond, that even if it did, the article could only apply to cases not provided for specifically by any of the other articles, that where the

question is as to which of two articles of the Limitation Act is to be applied, the more particular and specific article should be regarded as the

article which has to be applied and that as Articles 66 and 67 make specific provision for the recovery of money due on a single bond, there is no

scope for the application of Article 116.

I am of opinion that Article 116 is the proper article to be applied.

Article 115 refers to suits for compensation for the breach of any contract, expressed or implied, not in writing registered and not herein

specially provided for; and the period of limitation is three years to run from the time when the contract is broken, or (where there are successive

breaches) when the breach in respect of which the suit is instituted occurs, or (where the breach is continuing) when it ceases.

In the next article, Article 116, the words ""and not herein specially provided for"" are omitted and the starting period is to be taken as the period

when time will begin to run if the contract was not registered.

The omission of the words ""and not herein specially provided for"" in Article 116 is, I think, significant.

The contentions of Mr. Srinivasa Aiyangar have been negatived in a series of decisions of all the High Courts in India and Article 116 has been

applied to suits for payment of rent under registered rental agreements, to suits on registered deeds of partnership, to suits on registered simple

bonds, to suits on registered agreements to pay dower and to suits for the recovery of the balance due on registered mortgage bonds after the sale

of the mortgage properties.

In Vythilinga Pillai v. Thetchanamurthi Pillai ILR (1880) Mad. 76 it was held by Kindersley and Muthuswami Aiyar. JJ., that Article 116 of the

second schedule of the Limitation Act governs a suit to recover arrears of rent payable on a registered contract. After pointing out that the words

not otherwise provided for"" which occur in ""Article 115 do not occur in Article 116 and that the period of limitation is to commence when the

period of limitation would begin to run against a suit brought on a similar contract not registered, the learned Judges observe:

These terms appear to us large enough to cover contracts for payment of rent, as well as other contracts when in writing registered. It was argued

that a suit for arrears of rent was not a suit for ''compensation'' for breach of contract. But ''compensation'' is the general term used also in the

Indian Contract Act, Section 73, to denote payment which a party is entitled to claim on account of loss or damage arising from breach of

contract. The effect in this place is to exclude suits for specific performance.

In Magahiri Garudiah v. Narayana Rungiah ILR (1881) Mad. 359 it was held by Sir. Charles Turner, C. J., and Muthuswami Aiyar, J., that

Article 116 applies to a suit on a registered bond to pay a certain sum of money in instalments. The learned Judges overruled the plea of limitation

on the ground that the bond was registered. They observe:

The plea of limitation cannot be sustained; the bond was registered, and the ruling of the Judge as to the article in the Limitation Act which governs

suits for the recovery of moneys payable under such instruments is supported by the decision of this and the other High Courts.

In Ranga Reddi v. Chinna Reddi ILR (1891) Mad. 465 : l M.L.J. 482 Muthuswami Aiyar and Shephard, JJ., held that a suit to recover an

amount due in respect of covenants in a registered deed of partnership was governed by Article 116 and not by Article 64. After referring to the

fact that the contract of partnership contained an express stipulation as to the payment of losses and that the origin of the obligation in the suit was

the registered contract, the learned Judges observe:

It was argued that Article 64, the article relating to suits on accounts stated, should he applied. That would be so, if the partnership contract had

not been registered, but that circumstance renders Article 116 applicable, as in the case of a suit against an agent it was held that the general

Articles 88 and 89 would not govern the suit, because the agreement with the agent was registered. (Harender Kishore Singh v. The

Administrator-General of Bengal ILR (1885) C. 357. It was also held in Vythilinga Pillai v. Thetchanamurthi Pillai ILR (1880) Mad. 76, that in a

suit for rent founded on a registered agreement the same Article 116 and not Article 64 should be applied. The intention was to extend the period

in favour of suits to enforce obligations based on registered instruments.

In Nobocoomar Mookhopadhaya v. Siru Mullick ILR (1880) C. 94 it was held by Sir Richard Garth, C. J., and Mitter, J., that a suit to

recover money due on a registered bond is a suit for compensation for breach of contract in writing registered and fell within the meaning of Article

116 of the Limitation Act. In Umesh Chunder Mundul v. Adarmoni Dasi ILR (1887) C.221 it was held that a suit to recover arrears of rent due

under a registered rental agreement is governed by Article 116, though Ghose, J., felt some doubt on the question whether a suit for the recovery

of arrears of rent on an agreement in writing registered is a suit for compensation for breach of a contract within the meaning of Article 116, but he

felt bound by the various rulings of the different High Courts as to the construction to be put upon Article 116.

In Din Doyal Singh v. Gopal Sarun Narain Singh ILR (1891) C. 506 it was held by Trevelyan and Banerjee, JJ., that Article 116 of the

Limitation Act applied to a suit on a registered instalment bond and not Article 74 which in express terms makes provision for instalment bonds.

The learned Judges observe:

We think that Article 116 is intended to apply to all contracts in writing registered, whether there is or is not an express provision in the Limitation

Act for similar contracts not registered, and this view seems confirmed by the distinction between the terms of this article and of Article US, in

which the words ''not herein specially provided for'' occur.

In Asiatulla v. Danis Mohamed ILR (1922) C. 253 it was held that a suit to recover dower fixed by a registered instrument was governed by

Article 116 of the Limitation Act.

In Mahamad Masaharal Ahad v. Mahamed Azimuddin (1922) 27 C.W.N. 210 the question as to whether a dower debt under a registered

instrument is governed by Article 116 or by Articles 103 and 104 is discussed at great length and all the authorities on the subject have been

reviewed, and it was held by Mookerjee and Rankin, JJ., that Article 116 applied to such suits and that Articles 103 and 104 would not apply

when there is no registered instrument.

In Husain Ali Khan v. Hafiz Ali Khan ILR (1881) All. 600it was held by a Full Bench of the Allahabad High Court that a suit on a registered

bond for the payment of money was governed by Article 116. This view is followed in Khunni v. Nasiruddin Ahmad ILR (1881) All. 255 and the

subsequent decisions of the Allahabad High Court. A similar view was taken in Ganesh Krishn v. Madhavrav Ravji ILR (1881) B. 75, where it

was held that a suit to recover a specific sum of money due on a registered bond or other written contract was a suit for compensation for breach

of contract and fell within the meaning of Article 116. In Lalchand Nanchand v. Narayan Hari ILR (1913) B. 656 it was held that Article 116

applied to suits for debts or sums due on registered documents, and Ram Narain v. Kamta Singh ILR (1903) A. 138 was not followed.

The same view was taken in Dinkar Hari v. Chhaganlal Natrsidas ILR (1913.)B. 177. There the suit was to recover money on a registered

document which was invalid as a mortgage for want of proper attestation and had therefore to be treated as a bond for the recovery of money on

personal covenant. It was held that the case was governed by Article 116 and not by Article 66.

A contrary view was taken in Ram Narain v. Kamta Singh ILR (1903) A. 138 and this case was followed in Jaggi Lal v. Sri Rant ILR (1912)

A11. 464, but this view was not approved by their Lordships of the Privy Council in 21 CWN 577 (Privy Council)

The decision of their Lordships of the Privy Council in 21 CWN 577 (Privy Council) puts the applicability of Article 116 to cases of registered

bonds for payment of ascertained sums of money beyond controversy. The suit arose out of a registered lease deed in respect of certain coal lands

which provided that the lessee should pay a minimum royalty of Rs. 4,000 per annum by four equal instalments subject to certain conditions, which

it is unnecessary to refer to. A suit was filed to recover the royalties due under this document. The plea of limitation was raised as the claim

covered the rent due for more than three years. The High Court held that the whole amount claimed was recoverable as the case fell within Article

116 of the Second Schedule of the Limitation Act. On appeal to the Privy Council, their Lordships upheld the decision of the High Court. Lord

Sumner after referring to the Limitation Acts of 1859, 1871 and 1877 observes:

Both these Acts draw, as the Act of 18S9 had drawn, a broad distinction between unregistered and registered instruments much to the advantage

of the latter. The question eventually arose whether a suit for rent on a registered contract in writing came under the longer or the shorter period.

On the one hand it has been contended that the provision as to rent is plain and unambiguous, and ought to be applied, and that in any case

''compensation for the breach of a contract'' points rather to a claim for unliquidated damages than to a claim for payment of a sum certain. On the

other hand it has been pointed out that ''compensation'' is used in the Indian Contract Act in a very wide sense, and that the omission from Article

116 of the words, which occur in Article 115, ''and not herein specially provided for,'' is critical. Article 116 is such a special provision, and is not

limited, and therefore, especially in view of the distinction long established by these Acts in favour of registered instruments, it must prevail. There is

a series of Indian decisions on the point, several of them in suits for rent, though most of them are in suits on bonds. They begin in 1880, and arc

1o be found in all the Indian High Courts. In spite of some doubts once only was it held in 1903 (Ram Narain v. Kamta Singh ILR (1903) A.

138), that in such a suit Article 110 and not Article 116 applied. Then in 1908, and in this state of the decisions, Act IX of 1908 replaced the

Limitation Act of 1877 without altering the language or arrangement of the articles and in 1913, in Lalchand v. Narain ILR (1913) B.656 the High

Court of Bombay'' held that, especially in view of this re-enactment, the current of decisions must be followed, and Ram Narain''s Case must be

disapproved. In the present case the High Court treated the matter as settled law in the same sense.

Where the terms of a statute or ordinance are clear, their Lordships have decided that even a long and uniform course of judicial interpretation of it

may be overruled, if it is contrary to the meaning of the enactment. (Pate v. Pale (1915) A.C. 1100). Such is not the case here. However arguable

the construction of Act XV of 1877 may have been when the matter was one of first impression, it certainly cannot be said that the construction,

for which the appellant argues, was ever clearly right. On the contrary, their Lordships accept the interpretation so often and so long put upon the

statute by the Courts in India, and think that the decisions cannot now be disturbed.

Turning to mortgages, it is difficult to see how if a claim for arrears of rent on a registered bond can fall within Article 116, a claim for money

due on a personal covenant in a mortgage document would not equally be governed by Article 116.

On this question again there has been a uniform course of decisions. It has been held by all the High Courts that where Article 132 applies to a

claim to enforce payment of money charged on Immovable property by a sale of that property, Article 116 governs a case where the suit is to

recover the deficiency arising out of such sale.

In Rama Rao v. Veda Aiyar ILR (1922) M. 435 : 1922 44 M.L.J. 373 it was held that a registered mortgage deed which was inoperative as

against the land comprised in the mortgage was good as regards the personal covenant to pay the mortgage money and enabled the mortgagee to

sue for it within six years as provided by Article 116 of the Limitation Act.

I may also refer to Thiruvendipuram Chengalamma Garu and Others Vs. Vemasani Veeraraghava Naidu and Another, where a similar view

was taken by myself and Reilly, J., and to Rathnaswami v. Subramania ILR (1887) M. 56, where it was held that Article 116 applies to a suit to

recover a mortgage debt due on a registered bond (see the observations of Sir Arthur Collins, C.J. and Muthuswami Aiyar, J., at page 59).

In Unichaman v. Ahmed Kutti Kayi ILR (1897) M. 242 : 1897 8 M.L.J. 81 it was held by Subramania Aiyar and Benson, JJ., that a suit to

recover money lent on a kanom which they treated as usufructuary mortgage owing to the mortgagor''s failure to put the mortgagee in possession

Was governed by Article 116.

The same view has been taken by the Calcutta High Court in a series of cases.

In Miller v. Runganath Moulick (1885) ILR 12 C. 389 it was held that a claim to recover money due on a personal covenant in a mortgage

bond was not governed by Article 132 but by Article 116. This case was referred to with approval by their Lordships of the Privy Council in AIR

1926 56 (Privy Council) which I shall refer to later on.

In Jogintee Mohun Chatterjee v. Bhoot Nath Ghosal ILR (1902) C. 654 it was held by Ameer Ali, J., that where a deed of mortgage is

ineffectual owing to registration by a Registrar having no jurisdiction over the property, the liability on the personal covenant is governed by Article

The learned Judge after finding that the Sub-Registrar had no jurisdiction over the property observes:

If I am right in that conclusion, it follows that the document cannot take effect as a mortgage deed; but, as it is registered, although the suit has been

brought more than three years after the date of the execution, the claim is not barred as was contended for by the defendant''s'' counsel.

In Rahmat Karim v. Abdul Karim ILR (1907) C. 672 it was held by Sir Francis Maclean, C.J., and Holmwood, J., that Article 116 applies to

a personal covenant to pay under a registered deed of mortgage.

A similar view was taken in Raja Rant Narain Singh v. Odindranath ""Mukerjde (1911) 17 C.W.N. 369.

The Allahabad High Court has also taken the same view in a series of cases.

In Naubat Singh v. Indar Singh ILR (1890) A. 200 it was held that a suit by a mortgagee to recover money clue on a registered mortgage

bond is governed by Article 116 of the Limitation Act. The observations of the learned Judges at page 204 are clear.

In Collector of Mirzapur v. Dawan Singh ILR (1908) A. 400,a suit to recover money due on a registered mortgage bond payable in

instalments was held to be governed by Article 116.

In Shib Dayal v. Meharban ILR (1922) A. 27,a Full Bench of the Allahabad High Court accepted the view that a suit on a personal covenant

in a registered mortgage bond was governed by Article 116. ''The learned Judges observe at page 36:

In fact there is a uniform course of decisions in all the High, Courts that Article 116 of the Limitation Act would be applicable to a; mere money

claim based on a registered bond, ''and not the general Article 120''.

It thus appears that all the High Courts have held that Article 116 of the Limitation Act governs suits to recover money on a personal covenant

in a registered bond or deed of mortgage : I have referred to the decisions in detail and to the views of the eminent Judges of the various High

Courts as it is argued that these decisions have been overruled by the decisions of their Lordships of the Privy Council in Ramdin v. Kalka Pershad

and AIR 1926 56 (Privy Council) which compel us to hold that notwithstanding the current of authority, the three years'' rule applies even in cases

of registered mortgage documents.

I am of opinion that neither of these cases is authority for the view contended for.

In Ramdin v. Kalka Pershad the contention was that Article 132 applied even to cases where the claim was on the personal remedy. In that

case the mortgage deed was dated the 25th of January, 1870, and the amount was repayable on the 13th of June of the same year. There was

another mortgage for Rs. 900 and both the deeds contained a personal covenant to pay. Suits were instituted on the 21st and the 23rd August,

1880, on the two mortgage-deeds. In both the suits, the contention was that no decree can be passed against the defendant personally as more

than six years had elapsed from the date of the execution of the bonds. The Subordinate Judge upheld the contention and passed a decree only for

the sale of the mortgage property which was governed by Article 132 of the Limitation Act. The District Judge reversed the decision of the

Subordinate Judge and held that Article 132 applied both to the remedy by sale and the personal remedy. But the High Court reversed the

decision of the District Judge and upheld the decision of the Subordinate Judge. The argument in the Privy Council was that Article 132 applied to

both the remedies, and this was negatived by their Lordships of the Privy Council. Their Lordships at page 505 observe:

A period of nearly 10 years elapsed from the time at which the mortgage money with interest became payable before the suit was instituted. The

question submitted for their Lordships'' consideration is whether, the lesser period of limitation, three or six years as the case may be, has barred

the personal remedy against the mortgagee even though the mortgage remains in full force, as against the mortgaged property.

It is significant that their Lordships use the expression ""three or six years as the case may be"" which obviously has reference to whether the

document is registered or not. Then their Lordships go on to consider the effect of Article 132. Later on their Lordships refer to six years''

limitation with regard to suits on foreign judgments and some compound registered securities. Their Lordships were dealing with the Limitation Act

IX of 1871 and I can see nothing in this decision which is authority for the view that even as regards registered mortgages the period of limitation is

three years. The suit was filed 10 years after the cause of action arose and the only contention was that Article 132 applied and gave the plaintiff a

period of 12 years even as regards personal remedy. And it was this argument that was repelled by their Lordships.

AIR 1926 56 (Privy Council) was also a case where a suit on a mortgage was instituted 10 years after the debt became payable, and there

was no question as to whether the three or six years'' rule applied as in either view the claim was over six years. The contention there also was that

Article 132 applied. The judgment was delivered by Mr. Ameer Ali and the statement in the judgment that

in the case of Ramdin v. Kalka Pershad it was held by the Judicial Committee that when a mortgagee sues on a personal covenant to make the

mortgagor responsible for any deficiency in the realisation of the mortgage debt out of the mortgage properties, the claim would be barred in three

years

is with all respect too wide if it is taken to include both unregistered and registered mortgages. As I pointed out, their Lordships in Ramdin v.

Kalka Pershad used the expression ""three or six years as the case may be.

I may also point out that their Lordships of the Privy Council refer to with approval Miller v. Runganath Moulick ILR (1885) C. 389, and the

concluding portion of the passage which they cite from the judgment of the Calcutta High Court is to the effect that the personal liability has

become barred as the suit was commenced more than six years after the accrual of the cause of action. The question was not whether Article 66

or Article 116 applied but whether Article 132 applied as the suit was filed beyond the period provided for both by Article 66 and Article 116. It

also appears from the statement of facts as set out in the judgment that the mortgage document was not executed in compliance with the provisions

of the Registration Act. It appears that the mortgagor Suryamani executed a power of attorney in favour of one Lakhan on the 29th July, 1884, to

execute and register the mortgage-deed and also a deed of sale and that it was registered on the 29th July, and that the mortgage and sale were

executed on the 23rd July. Their Lordships of the Privy Council after referring to Section 32 of the Registration Act agreed with the High Court in

thinking that the sale-deed was not validly executed. They also agreed with the High Court in thinking that

the principal mortgage purporting to have been executed by Suryamani was not executed in compliance with the provisions of the law so as to

make it binding on Suryamani.

I think that these facts show that the mortgage document in question was not properly registered and so was to be treated as an unregistered

document and if this is so Article 66 would be the article to be applied,

I may also point out in this connection that their Lordships have in two cases before them held that the six years'' rule was applicable in cases

of registered documents for payment of money.

In Kameshwar Pershad v. Rajkumari Ruttan Koer (1892) L.R. 19 IndAp 234 : ILR 20 C. 79 the suit was to recover money due on a

mortgage bond executed on the 1st of March, 1872 by one Rani Asmedh Koer whereby the money was repayable in September, 1875. She

surrendered her estate to ''one Run Bahadur Singh on condition that he would pay her an allowance for maintenance and pay off her liabilities. A

suit was filed by the mortgagee against the Rani and Run Bahadur Singh on the mortgage bond and it was held that the mortgage bond was not

binding on Run Bahadur Singh. There was a prior litigation which went to the Privy Council. On the 13th January, 1887, the appellant instituted a

suit to have him declared liable personally on the agreement between himself and the Rani to pay her debts, the contention being that the case was

governed by Article 132. Lord Morris observes:

The first objection taken to the suit was that it was barred by the law of limitation.

, Prima facie, this would be obvious, for the bond was by its terms made payable in the month of September, 1875, whereas the right to sue the

defendant for a personal debt would be limited to six years, and the present suit was not commenced until the month of January, 1887, an interval

of over 11 years. The appellant, however, alleges that he comes within the limitation applicable to a charge on Immovable property, which would

be 12 years; if he is right in that contention, the suit, being instituted 11 years and some months afterwards, is not barred.

But it is necessary for the appellant to satisfy this Board that the charge upon the estate was one which was binding upon it, and, bearing in mind

the facts of the earlier suit, and what was said by the Board in that case, their Lordships are not satisfied that it was so binding in fact In this view,

the period of six years, and not the period of 12 years, applies in this case, and the suit is consequently barred.

In (1894) L.R. 22 I.A. 31 (Privy Council) the suit was by the plaintiff as the assignee of a registered bond. Lord Hob-house in delivering the

judgment of the Board observes:

This appeal raises questions under the Indian Limitation Act, 1877. The suit is brought on a bond for Rs. 7,000 executed on the 20th June, 1876,

by Lala Laik Singh, whose estate is now under the management of the Court of Wards, in favour of the firm of Gopalji Kishen Das. The plaintiff,

who is now appellant, is assignee of the bond. The defendant, the Collector of Etawah, represents the Court of Wards.

The debt was made payable on the 1st November, 1876. Nothing has been paid on it. The suit was brought on the 6th November, 1888, more

than 12 years after the date of payment. The term of limitation is six years; so that the plaintiff has to prove circumstances which interfere with this

running of time.

Then his Lordship deals with the various circumstances and holds that those circumstances were not made out.

I have set out all the cases in detail and it seems to me that on the authorities as they stand the law is clear that the limitation is six years and that

it would require a clear pronouncement of their Lordships of the Privy Council overruling the long course of decisions as to mortgages to enable

me to hold that the period of limitation applicable is three years under Article 66. '' I do not think that the two cases AIR 1926 56 (Privy Council)

and Ramdin v. Kalka Pershad contain any such clear pronouncement of their Lordships of the Privy Council. On the contrary I do not think,

having regard to the considerations which I have already set out, their Lordships had in mind the question which is at present in issue, namely, the

applicability of Article 66 or 116.

I would answer the reference by stating that the period of limitation is governed by Article 116 where the claim is to recover money ''due on a

personal covenant contained in a deed of mortgage.