Venku Shettithi (dead) and Others vs T. Ramachandrayya and Others

Spencer, J.—I agree. I am unable to regard the omission of the words "" in good faith"" which appeared in the corresponding articles of the

Limitation Acts of 1859 and 1871, as being without any significance, so as to throw the onus on a purchaser of the full interest from a mortgagee to

prove that he acted in good faith before he can plead limitation. The same Article 134 governs both properties conveyed in trust and properties

mortgaged when they have been transferred afterwards for valuable consideration. In the case of trust property the Privy Council has decided in

Subbaiya Pandaram v. Muhammad Mustapha Marcayar ILR (1923) M 751 that a purchaser for valuable consideration with notice of the trust can

under Article 134 plead 12 years'' adverse possession as a defence to a suit brought by the trustee. I see no reason to suppose that trusts were

intended to be put in a worse position than mortgagors as regards recovery of alienated property. The only distinction between the position of a

purchaser from a mortgagee and a purchaser from a trustee is that a mortgagee as such has the mortgage interest, which is assignable, in the

property, whereas a trustee as such has no transferrable interest. This distinction is pointed out in Subbaiya Pandaram v. Muhammad Mustapha

Marcayar (1916) 32 MLJ 85 but nevertheless it was held in that case that a transferee of trust property need not prove good faith before taking

advantage of Article 134, and the decision was confirmed by the Privy Council in Subbaiya Pandaram v. Muhammad Mustapha Marcayar ILR

(1923) M 751 My judgment in Kannuswami Tanjirayan v. Muthuswami Pillai (1917) MWN 5 was quoted with approval in Muthaya Shetti v.

Kanthappa Shetti (1917) 34 MLJ 431 and we have not been shown any reason for doubting its correctness beyond a footnote at page 516 of

Rustomji''s commentary on the Law of Limitation (3rd Edition). The view of the majority of the Full Bench which decided Seeti Kutti v. Kunhi

Pathumma ILR (1917) M 1040 that Article 134 does not apply to cases where the transferee from a mortgagee does not get possession of the

property will not help the appellants before us who are out of possession and ask for delivery of possession. In every case where Article 134 is set

up as a defence by a transferee from a mortgagee it is material to see what interest the mortgagee purported to transfer to him vide Rego v. Abbn

Bean ILR (1897) M 151 and Muthaya Shetti v. Kanthappa Shetti (1917) 34 MLJ 431. Veerabhadra Tevan v. Veerappa Tevan (1912) 15 IC

609 and Baluswami Aiyar v. Venkatasami Naicker (1916) 32 MLJ 24. Ex. II, dated July 16, 1878, purports to be an absolute sale of the

properties in A schedule and not a mere assignment of a mortgage interest in them. I think that both seller and purchaser must have honestly

believed that the entire interest of the owner was being transferred by this document, seeing that if Ex. I, dated January 12, 1872, were to be

treated as a sale with an option for re-purchase after 4 years and before 6 years, the date for re-purchase had passed and the property had

become vested entirely in the purchaser on January 12, 1878. The present suit was rightly found by the Subordinate Judge to be time-barred and

the appeal must be dismissed with costs.

Ramesam, J.

This appeal arises out of a suit for redemption of a mortgage. The plaintiff''s predecessors in title, namely one Parameshwari Hengsu and others

mortgaged such of the properties as are comprised in Schedule A and the properties in Schedule A-1 to one Manjunatha Naika by Ex. I, dated

the 12th January, 1872, for Rs. 14,000. The mortgagee conveyed the properties in Schedule A by Ex. II, dated the 16th July, 1878, to one

Venkappa, the ancestor of the defendants and the defendants obtained them for their share at a family partition. The mortgagors assigned the

equity of redemption in the mortgaged properties by Ex. B, dated the 12th September, 1906, to one Booba Shetti, from whom it devolved on the

plaintiffs under the Aliyasanthana Law. We are not now concerned with the properties in Schedule A-1 as to which the interest of the mortgagee

also has come to the plaintiffs'' hands by various transactions. The Subordinate Judge dismissed the suit. In appeal the claim for the properties in

Schedule A-2 has not been pressed and no reference need be made to them and we are only concerned with the properties in Schedule A. Two

points have been argued by the learned vakil for the appellants- (1) Whether Ex. I is a mortgage by conditional sale or a sale with an agreement for

re-purchase? (2) Assuming it is a mortgage, whether the suit is barred by limitation under Article 134 of the Limitation Act ?

In the view I take of the second question, I think it is unnecessary to discuss the first. For purposes of discussion I will assume in favour of the

appellant that Ex. I ought to be construed only as a mortgage by conditional sale. The question now is whether the properties having been sold by

Ex. II, Article 134 of the Limitation Act does not apply.

Mr. Anantakrishna Aiyar, the learned vakil for the appellants, contends that Article 134 of the Limitation Act can only apply where the

transferee from the mortgagee took the properties in the belief that the transferor was absolutely entitled to them. That this was the law under the

corresponding articles of the Acts of 1859 and 1871 admits of no doubt. See Radhanath Doss v. Gisborne (1871) 14 MIA 1 But the words ""in

good faith"" which appeared in that article have been omitted in the Acts of 1877 and of 1908. The question is, whether it can be contended that

under the Acts of 1877 and of 1908 the knowledge on the part of the purchaser of the true nature of the interest of the transferor prevents the

application of Article 134. Mr. Anantakrishna Aiyar relied on Singaram Chettiar v. Kalyanasunda-ram Pillai (1914) MWN 735. Though the

remarks at page 738 of that decision are somewhat in favour of the appellant, the point was not actually decided in that case. The next decision

relied on by him is Tholasinga Mudali v. Nagalinga Chetty (1916) MWN 38 where the obiter dictum in Singaram Chettiar v. Kalyanasunda-ram

Pillai (1914) MWN 735 was followed by Sadasiva Aiyar and Napier, JJ. The next case relied on by him is the decision in Muthaya Shetti v.

Kanthappa Shetti (1917) 34 MLJ 431. In that case, it is observed : "" If the transferee bargained for and believed he was bargaining only for the

interests of the mortgagee he cannot acquire title as the absolute owner of the property. After all Article 134 is only a branch of the law of

prescription and the question to be determined would be what it is that the purchaser prescribed for. The fact that he knew that his vendor had

only a mortgage right would not be conclusive on this question. The real test would be, did he ask for and obtain an absolute right in the property

and believe himself that he was having an absolute interest in it ? In Pandu v. Vithu ILR (1894) B 140 that is the test that was suggested."" I do not

see how these remarks of Seshagiri Aiyar, J., help the appellant. If the transferee purported to purchase the absolute interest even though he knew

that the transferor had only the interest of a mortgagee the article would still apply according to this view. Bakewell, J., added that "" if the title

adduced by the vendor and the deed of transfer to the purchaser are consistent with an intention to transfer an absolute interest the burden will He

upon the plaintiff to show that the circumstances of the transfer negative such an intention."" He made no reference to the case of Singaram Chettiar

v. Kalyanasundaram Pillai (1914) MWN 735 unlike Seshagiri Aiyar, J. The finding shows that the deed of mortgage in that case was styled a sale

deed though construed by the High Court as a mortgage by conditional sale. The period for redemption fixed in it had expired when the deed of

transfer was executed and it was said that the vendee would naturally suppose that he was purchasing an absolute title. The finding accordingly was

that the transferor intended to transfer an absolute interest and that the intention of the parties was that there should an absolute transfer of title of

the property. This finding was accepted by the High Court and the Second Appeal was dismissed. I do not think that this case really supports the

appellants.

Mr. Sitarama Rao for the respondent relied on the case Kannuswami Thanjirayan v. Muthuswami Pillai (1917) MWN 5 in which my learned

brother took part. He pointed out that the decision in Veerabhadra Tevam v. Veerappa Tevan (1912) 15 IC 609 was really a case of an

assignment of the mortgagee''s interest. He also referred to Venkatachella Reddiar v. The Collector of Trichinopoly ILR (1914) M 1064. which

was a case of a transferee from a trustee. He agreed with the decision in Pandu v. Vithn ILR (1894) B 140 and differed from Chamier, J.''s

opinion in Ghasi Ram v. Kishna (1915) 30 IC 564 and held that the purchaser need not prove that he purchased in good faith, that is without

constructive notice of the restricted nature of the vendor''s title. In Baluswami Aiyar v. Venkataswami Naicker (1916) 32 MLJ 24 it was held in

the case of a transferee from a trustee that knowledge of the limited nature of the transferor''s title will not disentitle the transferee from taking

advantage of Article 134 of the Limitation Act. In the case of trusts this is the view also adopted in Subbaiya Pandaram v. Muhammad Mustapha

Marcayar (1916) 32 MLJ 85. which was afterwards affirmed by the Privy Council in Subbaiya Pandaram v. Muhammad Muslapha Marcayar ILR

(1923) M 751. These decisions were referred to by the learned Judges who decided Muthaya Shetti v. Kanthappa Shetty (1917) 34 MLJ 431 as

consistent with their view. To sum up, the possible cases that may arise in a friatter of this sort are four: (1) Where the transfer on its face purports

to be an assignment of the mortgagee''s interest only. In such a case Article 134 can never apply. (2) Where the transfer purported to be a sale

deed but as a matter of fact only an assignment of the mortgagee''s interest was all that was bargained for. It may be conceded that in such a case

also Article 134 does not apply. And this is all that was decided in Muthaya Shetti v. Kanthappa Shetti (1917) 34 MLJ 431. (3) Where a deed of

transfer is a sale deed and what was bargained by the transferee is also an absolute sale though he knew that the transferor has only a mortgagee''s

interest. In such a case, though under the Acts of 1859 and 1871 Article 134 may not apply I think under the Acts of 1877 and 1908 it applies.

This is also the view taken by the Calcutta High Court in Ram Kanai Ghosh v. Raja Sri Sri Hari Narayan Singh Deo Bahadur (1905) 2 CLJ 546

which was also a case of a trustee. Seeing that the Privy Council have come to the same conclusion in Subbaiya Pandaram v Muhammad

Mustapha Marcayar ILR (1923) M 751 I do not think any value can be attached to the dissent from the decision in Ram Kanai Ghosh v. Raja Sri

Sri Hari Narayan Singh Deo Bahadur (1905) 2 CLJ 546 in Singaram Chettiar v. Kalyanasundaram Pillai (1914) MWN 735 Where the transfer is

in the form of a sale deed and the transferee bargained for an absolute interest and acted bona fide throughout. To such a case there is no doubt

that Article 134 will always apply. Only the third case is the one in respect of which there seems to be some difference of opinion. But it seems to

me that the preponderance of opinion in this High Court, in Bombay, in Calcutta and in the Privy Council is in favour of the view that Article 134

applies. In the present case, though we may now construe Ex. I to be a deed of mortgage it is impossible to say that the purchaser under Ex. II

acted otherwise than bona fide. According to the terms of Ex. I the debt was to be paid off after the 12th of January, 1876, and before the 12th of

January, 1878 and in default of payment on the latter date, it was to operate as an absolute sale. Under the law as it then stood, the mortgagee

might have honestly thought that he obtained an absolute title by the default of payment within the stipulated date and the transferee might have also

similarly thought that the transferor had an absolute title. That both were acting perfectly bona fide is clear from the recitals in Ex. II. It must be

remembered that the Transfer of Property Act had not been enacted in 1878. The Privy Council held in Pattabhiramier v. Venkata Rao Naicker

(1870) 13 MIA 560. that the principle that a mortgage is for ever redeemable was not known to the ancient law of India. It is true that in a later

case Thambusami Moodelly v. Hossain Rowfher (1875) ILR 1 M 1 (PC) their Lordships indicated a different rule in the case of mortgages after

the year 1858. But the parties to Ex. II might well have thought that in the case of mortgage documents between 1871 and 1875 the decision in

Pattabhiramier v. Venkata Rao Naicker (1870) 13 MIA 560. applied. It is true the Madras High Court repelled such a contention, but this was

long after 1878. In the above remarks I assumed that the parties to Ex. II knew that the proper construction of Ex. I is that it was a mortgage by

conditional sale. But even this is extremely doubtful. Whatever view we may now take of Ex. I there is nothing to show that the parties to Ex. II did

not honestly suppose it to be a deed of absolute sale which is what it purported to be. I think the present case is a case where the transferee acted

bona fide according to the strictest meaning of the term, and Article 134 applied. There is nothing to show that he did not pay the full value,

according to the prices that ruled in 1878. I think the appeal fails on this ground and ought to be dismissed with costs.