Ram Lagan Singh and Others vs Ram Bilochan Singh and Others

Agarwala, J.—This first appeal is by the plaintiffs. The facts are that on 18th May 1925, defendants first party mortgaged certain property to defendants second party to secure an advance of Rs. 1800 On 7th January 1927, a two anna share in the same property was mortgaged to defendants third party to secure a loan of Rs. 600. The property was again mortgaged to the plaintiffs on 7th June 1927. This bond contained a provision that the plaintiffs should pay off an earlier mortgage to one Jugeshwar Singh which had been executed in 1923 and should be subrogated to his rights. The due date of Jugeshwar Singh''s mortgage was 31st July 1934. The plaintiffs redeemed Jugeshwar Singh''s mortgage by the payment of Rs. 3515 on 26th May 1927, that is to say, a few weeks before the mortgage in their favour was executed. The plaintiffs sued on the mortgage on 22nd June 1937. Defendants second and third parties claimed priority as their mortgages were earlier in time than the mortgage in suit. The plaintiffs, however, relied on the fact that they had redeemed the mortgage of 1923 and been subrogated to the rights of Jugeshwar, the mortgagee under that bond. To this defendants second and third parties replied that more than 12 years had elapsed since the due date of that bond. The plaintiffs'' answer to this was that they acquired a fresh terminus a quo from the date on which Jugeshwar''s mortgage was redeemed. The contention was negatived in the Court below but was again raised by the plaintiffs in the present appeal. In the view which I take of this case, however, it is unnecessary to decide this question. The reason is this: in the plaintiffs'' mortgage of 6th June 1927, the mortgagor acknowledged that the rights of Jugeshwar under the bond of 1923 had, vested in the plaintiffs. It is not disputed that this '' acknowledgment is sufficient to provide a fresh terminus a quo against the mortgagor, but it is contended that it does not provide a fresh terminus a quo against defendants second and third parties. The solution of that question depends on the construction to be placed on Section 19(1), Limitation Act, which provides:

Where, before the expiration of the period prescribed for a suit or 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 person against whom such property or right is claimed, or by some person through whom he derived title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed.

The question resolves itself into this: Is the mortgagor a person through whom defendants second and third parties derived their title? It is contended on their behalf that as the mortgages in their favour were executed before the acknowledgment they are not bound by it. Reliance is placed on the decision in Ram Sarup Vs. Sahu Bhagwati Prasad and Another, , where it was stated that an acknowledgment by a mortgagor cannot be said to be one by a person through whom a mortgagee derives his title or liability if the acknowledgment is subsequent to the latter''s mortgage, Reference was made in that case to certain English decisions one of which was Bolding v. Lane (1863) De. G.J. 1 & Section 122, where Westbury L. C. held that an acknowledgment by a mortgagor does not preclude a puisne mortgagee from relying on limitation where the mortgage has been taken previous to the acknowledgment. It does not, in my opinion, serve any useful purpose to refer to English cases on this point which must be decided on the language of the Indian statute. As was observed in Kanchari Modhugari Narayana and Others Vs. Nandigam Venkataramanna Patnaik and Others, :

Whatever may be said in England to be the effect of holding that an acknowledgment by mortgagor is binding on a prior purchaser or incumbrancer--and it is not clear that even the English authorities are satisfied with Lord Westbury''s description monstrously unjust--we do not see any injustice in so holding in this country where we have got a Law of Registration and every purchaser or encumbrancer can easily know of the existence of any prior mortgage The subsequent purchaser or encumbrancer who knows the existence of a mortgage ought also to know the possibility of the mortgage being kept alive by acknowledgment or payment and as he purchased only the equity of redemption it cannot be said that he is disappointed. He gets what he bargained for. He has no right to expect that the mortgage would become barred and he can make a profit in the transaction.

Accordingly it was held in that case that an acknowledgment by the mortgagor subsequent to the sale kept the mortgage alive and that the purchaser of the equity of redemption was liable. A similar view has been taken in a large number of cases in this country: Krishna Chandra v. Bhairab Chandra 32 Cal. 1077 , Lakshmanan Chetty v. Muthaya Chetty AIR 1920 Mad. 1026, is R.H. Skinner v. Bank of Upper India Ltd. AIR 1937 Lah. 507 , Velauda Reddi v. Narasimha Reddi AIR 1918 Mad. and Arbindakeb Rai Vs. Jageshar Rai and Others, . The last case is a decision of a Division Bench of the Allahabad High Court and Walsh, J. in that case observed:

The real question is, not when was the acknowledgment given nor when did the transaction of transfer take place, but was the acknowledgment really a genuine acknowledgment as and when it was given?

To confine the word ''acknowledgment'' in Section 19, Limitation Act, to an acknowledgment made prior to a transfer or mortgage would mean qualifying the phrase ''some person through whom he derives title, by reading it as ''some person through whom he derives title subsequent to the acknowledgment,'' and as pointed out in P.C. Muthu Chettiyar Vs. Muthuswami Ayyangar, , it is not permissible to add to or alter the language of a statute in this way. The contrary view which was expressed by Mokerjee, J. in Surjiram Marwari v. Barhamdeo Persad 1 C.L.J. 337 , does not appear to have met with the approval of any Court except in the decision of the Allahabad High Court in Ram Sarup Vs. Sahu Bhagwati Prasad and Another, , which decision is itself contrary to the earlier Division Bench decision of the same Court in Arbindakeb Rai Vs. Jageshar Rai and Others, . In my opinion, the acknowledgment contained in the plaintiffs'' mortgage of 7th June 1927, provides a fresh term of limitation, with the result that the plaintiffs'' suit,, which was instituted on 22nd June 1937, within 12 years of the plaintiffs'' mortgage of 7th June 1927, which contained the acknowledgment, must be held to be within time. I would, accordingly, set aside the decree of the Court below and decree the plaintiffs'' suit with costs throughout. Time for payment is three months from to-day.

Manohar Lall, J.

The facts which are no longer in controversy may be summarised thus:

On 14th August 1923, defendant first party, the mortgagor, executed a mortgage bond in favour of one Jugeshwar Prasad Singh to secure on some property Rs. 3000 the due date of payment being 31st July 1924. Subsequently, the mortgagor took a loan of Rs. 1800 from defendants second party by executing a mortgage bond on 18th May 1925, on the security of the same property. On 7th January 1927, the mortgagor took a loan of Rs. 600 from the defendants third party on executing a mortgage bond in which he gave as security a portion of the property already mortgaged to Jugeshwar Prasad Singh and to defendants second party. Finally on 7th June 1927, the mortgagor executed the mort gage bond in suit in favour of the plaintiff (on the security of the above mentioned properties); it recites that a sum of Rs. 3515 was due to Jugeshwar Singh (the mortgagee of 14th August 1923) and that this sum was being kept with the mahajan (the plaintiff) so that he himself may pay debt due to Jugeshwar Prasad Singh and take back the mortgage bond of 14th August 1923, and keep the same with him as evidence. The balance, Rs. 485, was received by the mortgagor partly in cash and partly by adjustment of the dues on a handnote dated 1st Badho 1333, in favour of the plaintiff., The recitals in this deed are not quite accurate '' because it appears that on 25th May 1927, Jugeshwar Prasad Singh had already received Rs. 3515 on account of principal and interest in full through the hand of the plaintiff (see endorsement on the back of the mortgage bond of Jugeshwar Prasad Singh). The obvious explanation is that the draft of the mortgage bond in suit was prepared and agreed upon before 25th May 1927, although it actually came to be executed and registered on 7th June 1927. There is a further recital in the mortgage bond in suit:

The mortgage lien possessed by the former mahajan Jugeshwar Prasad Singh, in respect of the mortgaged share...is acquired entirely by the present mahajan Bam Parichan Singh.

The present suit was instituted on 22nd June 1937, which, it will be noticed, is more than 12: years from the due date of payment fixed in the mortgage bond of Jugeshwar Prasad Singh but within 12 years of the date of the payment of those dues to Jugeshwar Prasad Singh.

The learned Subordinate Judge came to the conclusion that the mortgage bond sued upon was genuine, valid and for consideration; but he dismissed the suit on the ground that the suit was barred by limitation inasmuch as it was instituted more than 12 years after the due date so far as the plaintiff wanted to enforce the security of Jugeshwar Prasad Singh on the doctrine of subrogation in order to obtain priority against defendants second and third parties. Hence the appeal by the plaintiff.

The only point argued before this Court is whether the learned Subordinate Judge was correct in the view which he took on the question of limitation.

It cannot be denied that the plaintiff acquired the right of subrogation whether the old law, which prevailed before the amended Section 92, T.P. Act, came into operation, applies or the new section applies, because the plaintiff had been expressly given the right of subrogation by contract in writing and. registered. A large number of cases were cited before us in support of the argument that the period of limitation for instituting a suit by the subrogee is 12 years from the date when the right to sue accrued upon the original mortgage bond which-had been redeemed (as was contended by the respondents) or is 12 years from the date of payment by the subrogee (as was contended by the appellants). It is now well settled that a subrogee, in the position of the present plaintiff, by paying off the earlier mortgage acquires the rights of that mortgagee who had been paid off. But a distinction has been drawn in a number of decisions where the payment is made by the subsequent mortgagee to discharge the decree which had been actually obtained by the earlier mortgagee. In such, a case it is suggested that the period of limitation should run not from the due date of the mortgage which had been discharged but from the time of payment which went to discharge the decree obtained on the mortgage: (Saiyed) Alam Ali Vs. Beni Charan and Others, , Ram Sarup Vs. Sahu Bhagwati Prasad and Another, , and a recent decision of this Court in Dulhin Kamlapati Devi Vs. jageshwar Dayal and Others, . Reference would however be made to the decision in Gopi Narain Khanna v. Bansidhar 27 All. 325 , where the decree had been paid off by the subsequent mortgagee, who'' claimed to enforce his rights as a subrogee (which accrued to him under the old Section 74 by a separate suit. Their Lordships held that all that the subsequent mortgagee acquired was a right to enforce the previous mortgage which he had redeemed, that the decree, on the payment being made by the decree-holder, became fully satisfied and could no longer be executed; and for these reasons granted; the plaintiff the relief claimed by the separate suit of his own. Their Lordships observed further that in such an event where the subsequent mortgagee is made a party to the mortgage action, the decree itself should provide that upon payment being made by the subsequent mortgagee he should be allowed to execute the decree. In a still later decision of this Court in 1 Mukh Narain Singh and Others Vs. Ramlochan Tiwari and Others, , it was held by a Division Bench consisting of my learned brother and Rowland, J. that when a co-mortgagor had redeemed the earlier mortgage his right to enforce it begins from the due date of the mortgage which had been redeemed and not from the time of the payment.

This interesting and, in view of the contradictory decisions of the Indian Courts, somewhat difficult question does not arise for consideration in this case in the view which I take of the effect of the recital in the mortgage bond in suit that the mortgage lien possessed by Jugeshwar Prasad Singh is being kept alive and of the fact that Jugeshwar Prasad Singh had received the interest on 25th May 1927, (along with-the principal in full) from !> the plaintiff as the duly authorised agent of the mortgagor.

It was argued by the learned advocate for the appellants that the present suit was within time as it was brought within 12 years of 25th May 1927, that being the date when Jugeshwar Prasad. Singh received the interest due upon his bond of 14th August 1923, and therefore the provisions of Section 20, Limitation Act, apply to enlarge the limitation. In my opinion this argument is well founded and must prevail. As already stated, there is an endorsement on the back of the mortgage bond in favour of Jugeshwar Prasad Singh dated 25th May 1927, which should be reproduced here:

I received in full the money covered by this bond, principal with interest amounting to Rs. 3515 (three thousand five hundred and fifteen), after setting off the amount paid, through Ram Parichhan Singh mahajan, and made over the bond. It is correct: Jugeshwar Prasad Singh, by my own pen. Dated Jeth 9, 1333 Fasli 25th May 1927.

It may be noticed that the payment is made before 1st January 1928. The payment was made by the plaintiff who was duly authorised to make this payment in accordance with the recitals in the mortgage bond in favour of the plaintiff already referred to. The argument that the payment evidenced by this endorsement does not amount to payment of interest as such is not sound. The endorsement shows that the total sum of principal and interest has been paid and therefore the interest has been paid in full as such. But a more serious argument was advanced that the payment being a payment of the entire dues of Jugeshwar Prasad Singh in the bond, resulted in paying him off completely and therefore that payment oould not be treated to be a payment within the meaning of Section 20. Having considered this argument carefully, I am of opinion that this has no substance. It is true that the payment wipes off the dues of Jugeshwar Prasad Singh but on the express terms of the agreement between the parties and under the provisions of Section 92 of the amended T.P. Act (which must be held to apply even to this transaction on the recent decision of the Full Bench of this Court) notwithstanding the payment of interest and principal the mortgage lien on the property covered by Jugeshwar Singh''s bond has not been discharged but has been kept alive in favour of the plaintiff. In these circumstances the payment of interest as such can be validly treated as a payment on the bond of Jugeshwar Singh and therefore attracts the provision of Section 20, Limitation Act to enlarge the period of limitation for a suit to enforce the liability which has been transferred to the plaintiff by the doctrine of subrogation. No subsequent mortgagee could be heard to complain of this right which has accrued to the plaintiff as a subrogee. All subsequent mortgagees are bound by the agreement between the mortgagor and the plaintiff which gives him this right. A fortiori they are also bound by the payment which is the very foundation of those rights and which declares that the mortgage lien which was in favour of Jugeshwar Singh is being transferred to the plaintiff.

In this view of the matter, it is unnecessary to consider whether the plaintiff is not entitled to rely upon the recital in the mortgage bond in his favour as an acknowledgment of his liability to pay the dues under the mortgage bond of Jugeshwar Singh, The current of authorities, as has been shown by my learned brother in his judgment, which I have had the advantage of reading, is distinctly in favour of the view that a genuine acknowledgment which is made by the mortgagor is binding upon the mortgagee even though the acknowledgment was made after, and not before, the mortgage was executed in favour of that mortgagee. The contrary view is supported by the distinguished authority of Sir Shah Mohammad Sulaiman in Ram Sarup Vs. Sahu Bhagwati Prasad and Another, , already referred to. But it is not necessary to decide the question. For these reasons I agree that the appeal should be allowed and the suit of the plaintiff decreed with costs throughout.