Sundaram and Others vs S.K. Muhammed Khani

Padmanabhan, J.—Preliminary decree in a suit for realisation of mortgage amount is challenged by the Defendants.

Ext. A-1 usufructuary mortgage dated 18th August 1961 involves a lease back by the Appellants evidenced by Ext. A-2 on the same date. The transaction is, therefore, hit by the provisions of Debt Relief Act 2 of 1970, which converts the mortgage by statutory fiction into a simple mortgage enabling the mortgagee to realise only the mortgage amount with 6 per cent interest. That alone was decreed. Plea of discharge directed to be considered in the final decree is not under challenge before me and hence I am not expressing anything on that aspect.

Main attack was against rejection of the plea of limitation. Though the mortgage and lease back were on 18th August 1961, the suit was filed only on 27th July 1978. Period of limitation under Article 62 is 12 years from the date on which money became due. Ext. A-1 provides for a term of three years. Therefore, the contention is that the suit ought to have been filed on or before 18th August 1976. Exts. B-1 to B-4 are the rent receipts, under the lease transaction, issued by the Plaintiff and admitted by the Appellants. The last one is Ext. B-4 dated 16th October 1967 and on its basis enlarged period of limitation was claimed till 16th October 1979 as an , A acknowledgment u/s 19 of the Limitation Act. The contentions are that Ext. B-4 cannot operate as acknowledgment because (i) it is not in the handwriting of, or in a writing signed by the Appellants who were making the payment as enjoined by the proviso to Section 19 of the Limitation Act, and (ii) Ext. B-4 is not before the expiration of the period of three years provided under Ext. A-2 lease back and hence the payment will not come u/s 19.

Both are untenable contentions. u/s 19 of the Limitation Act, it is the payment made before the expiry of the period of limitation that enables computation of a fresh period of limitation from that date. The acknowledgment in the handwriting of, or in a writing signed by the maker, is insisted only by the proviso. That is to prevent fraudulent oral testimony as to payment. It is not the endorsement, but the payment alone that saves limitation. The endorsement need not necessarily be simultaneous with the payment. It can be at any time after the payment, even after expiry of the period of limitation. But it must necessarily be before the institution of the suit because the acknowledgment saving limitation will have to be pleaded in the plaint since it is the duty of the Plaintiff to satisfy the Court that he has brought the suit within time. Even though it is the payment that saves limitation the legislature insists on a written or signed acknowledgment as the only proof of payment and excludes oral testimony. Unless there is acknowledgment in the required form, the payment by itself is of no avail Sant Lal Mahton Vs. Kamala Prasad, (1) and Arjunlal Dhanji Rathod Vs. Dayaram Premji Padhiar, (2). Simultaneous existence of the two conditions of payment within time and acknowledgment in writing either in the handwriting or in a writing signed by the debtor is necessary.

But there is the explanation to Section 19 in two parts, Clause (a) of which corresponds to Sub-section (2) of Section 20 of the old Act. Under explanation (a) when the mortgaged land is in the possession of the mortgagee, the receipt of rent or produce of such land by him itself shall be deemed to be payment u/s 19 for saving limitation. It is not necessary that the mortgagee should be in direct physical possession of the land. Constructive possession through lessee or agent is as good as his own possession. It is immaterial whether the lessee is the mortgagor himself of anybody else. Right to possession is the criterion. It applies not only to usufructuary mortgagees, but also to those mortgagees who are otherwise in possession. Rent should be construed ejusdem generis with produce. It is enough if he receives rent though he is not in actual possession. If he is in possession and taking the yield that is all the more sufficient. So long as he is in possession and taking the yield it will be considered as payment saving limitation and causing every time the starting of fresh period of limitation. That means limitation, so far as realisation of the mortgage amount is concerned, will not fun against him so long as he is in possession and enjoyment either directly or constructively. But constructive possession must be live.

Explanation (a) is separate and subsequent to the proviso and it is not governed or controlled by the proviso which governs the main section. In order to save limitation in a case coming under the proviso, it is not necessary that there should be an acknowledgment appearing in the handwriting of writing signed by the debtor. Insistence on such a condition will work hardships and render the explanation absurd. When the mortgagee is in direct possession, there will not be any acknowledgment from the mortgagor that he has taken yield. Acknowledgment to the lessee or agent will only be by the mortgagee and not mortgagor. Even though under Exts. A-1 and A-2 together the transaction is now statutorily treated as a simple mortgage under which 6 per cent interest alone could be claimed, that is only by fiction of law. For the purpose of Section 19 of the Limitation Act, it is a mortgage with possession.

The mere fact of receiving rent or profits is sufficient to save limitation. Sant Lal Mahton Vs. Kamala Prasad, (1) and Arjunlal Dhanji Rathod Vs. Dayaram Premji Padhiar, (2) relied on by the Appellants for contending to the contrary, are not applicable because they did not consider the applicability of Section 20(2) which is now explanation (a) to Section 19. Kumari Ittaman v. Bhaskara Menon AIR 1953 T.C. 63 (3) is authority for the position that a mortgagee who leased out the property will come within the ambit of the explanation. But the provision is confined, to cases where the mortgaged land is in the possession of the mortgagee who claims the mortgage amount and not to cases of redemption. Padmanabhan Pankajakshan v. Ayyappan Narayanan 1966 K.L.J. 559 (4) and the decisions and authors cited therein are apt to the point.

Explanation (a) makes the receipt of rent or produce by the mortgagee a payment for the purpose of Section 19 including the proviso. When rent is received by the mortgagee, then, in the eye of law, the conditions of the section and proviso are satisfied without anything more. Receipt of rent is as good as if the mortgagor made the payment and it appeared in his writing or a writing signed by him. The object of Explanation (a) to Section 19 is to dispense with actual payment evidenced by an acknowledgment and it is not controlled by the other provisions. A suit by the mortgagee for sale is a suit to recover a debt and in such a suit, the mortgagee is entitled to rely on the receipt of produce for saving limitation. Exts. B-1 to B-4 are admitted.

There is no force in the argument that Ext. B-4 is not acceptable for the reason that the payment or receipt is after the expiry of the period of limitation. It is true that in Ext. A-2 lease back there is a period of three years and Ext. B-4 was after that. But, admittedly, the Appellants continued in possession with liability to pay rent and they paid rent. Expiry of the term of Ext. A-2 is not a relevant factor. I fail to understand how the counsel thought it fit to argue that Ext. B-4 evidences a payment made after the debt is barred. The debt is the mortgage debt and it survives so long as the mortgagee is in possession either directly or constructively.

Equally untenable is the contention that the award of 6 per cent interest is wrong in the absence of contract to that effect in Ext. A-1. Liability for rent under Ext. A-2 is much higher than 6 per cent interest. That was reduced to 6 per cent interest only by a statutory provision. That is only a benefit to the Appellants. After having received the money and enjoyed the profits also, it was really uncharitable to raise these frivolous contentions in an attempt to avoid payment, especially when they had the benefit of statutory reduction of liability. There is also no point in the argument that the mortgage amount cannot be claimed u/s 68 of the Transfer of Property Act and hence the suit is bad. Ext. A-1 is a usufructuary mortgage statutorily converted into a simple mortgage enabling realisation of the mortgage amount with interest. Rent cannot be realised and property cannot be recovered. There must be some fairness in contentions.