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PETITIONER: MANIMALA DEVI

       Vs.

RESPONDENT: INDU BALA DEBYA & ORS.

DATE OF JUDGMENT: 03/12/1963

BENCH: SHAH, J.C. BENCH: SHAH, J.C. SUBBARAO, K. HIDAYATULLAH, M.

CITATION:  1964 AIR 1295            1964 SCR  (5) 635

ACT: Limitation   Act  (IX of 1908), s. 20  and  Art.  116-Person liable  to pay debt if covers mortgagor after assignment  of his interest-Transfer of Property Act (IV of  1882), s.  68- Nature of  right conferred.

HEADNOTE: One  Rajkumar Singh was the proprietor of  three  properties A,B  and C. He borrowed a loan from Rabindra Nath  and  mort gaged  properties  A  and  B and by  the  deed  of  mortgage undertook personal liability to pay the dues and agreed that in  default  of  payment by the due date  the  mortgagee  do recover  his  dues  by sale of properties A,  B  and  C.  He created a second mortgage t secure another sum borrowed from Sasindra Nath and Indra Nath stipulating that he would repay the loan on or before a fixed date, and further  stipulating that  the mortgagees may receive royalty from the  terms  of property C. Five years later he assigned his interest in property A  and about  three months thereafter he assigned his  interest  in property  Subsequent  to this assignment an  endorsement  of part  payment was recorded on the first mortgage deed.   The mortgagor’s right title and interest in property C were sold at a court auction and the purchaser took possession of that property.   But  before  this date the  mortgagor  had  made another  part  payment and an endorsement was made  to  this effect  on the mortgage bond.  Sometime later the  appellant obtained  assignments of the rights of the mortgagees  under the mortgage deeds and filed a suit for a decree enforcement of  the  two mortgages by sale of the  mortgage  properties. This  suit was filed more than twelve years after t date  on which the mortgage amounts became payable. The trial court rejecting the pleas of limitation raised  by t  defendants  decreed the suit.  On appeal  by  the  fourth defend the High Court reversed the decree and dismissed  the suit. Held:     (i) The High Court was in error in holding that  t mortgagor’s interest in properties A & B only was mortgaged. (ii) A mortgagor whose interest in the equity of  redemption transferred  by  assignment  sale or  otherwise  to  another person  not  a "person liable to pay the  debt"  within  the

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meaning  of s. of the Limitation Act.  Part payment  in  the mortgagor  a transfer or assignment of his interest  in  the mortgaged  property will not therefore extend the period  of limitation under s. 20 of the Limitation Act. Pavai v. Palanivela Goundan I.L.R. [1940] Mad. 872. 636 (iii)     The  right conferred by s. 68 of the  Transfer  of Property  Act is not a right to enforce the mortgage  but  a right  to  sue  for   the mortgage  money  on  the  personal covenant  or  to claim compensation when  the  mortgagee  is deprived  of  his security.  A suit for enforcement  of  the personal covenant in such a case is governed by Art. 116  of the  Limitation  Act, 1908 and a suit for enforcement  of  a claim for compensation is governed by art. 120 of the Act. Unichaman v. Ahmed, I.L.R. 21 Mad. 242.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 560 of 1960. Appeal from the judgment and decree dated July 18, 1955,  of the Patna High Court in Appeal from original decree No.  500 of 1947. S.C. Agarwal and D.P. Singh, for the appellant. P.K. Ghosh, for respondent No. 1. December  3, 1963.  The Judgment of the Court was  delivered by SHAH  J.-Rajkumar Ran Bahadur Singh-hereinafter called  ’the mortgagor’ was the proprietor of a five annas share in Tauzi No.  16  of  Mauza  Bansjora, eight  annas  share  in  Mauza Simitanr  and  certain  interest in Mauza  Bahaldih  all  in District  Manbhum.  The mortgagor had leased 200  bighas  of coal-bearing  land out of his holding in Mauza  Bahaldih  to certain  lessees for an annual royalty of Rs. 2,000  payable in two equal instalments, the first in the month of Aswin of the Vikram year and the second in the month of Chaitra.   On June  14,  1922, the mortgagor borrowed Rs. 5,500  from  one Rabindra  Nath Chakravarty and executed a deed  of  mortgage whereby he agreed personally to repay the amount, and encum- bered  his  share  in  Mauzas  Bansjora  and  Simitanr   for repayment  of the amount borrowed with interest at the  rate of Rs. 1/8/- per mensem, and further agreed that in  default of payment, the mortgagee do recover the amount due by  sale of  his interest in Mauza Bansjora, Simitanr  and  Bahaldih. By  the  mortgagedeed  the mortgagor also  agreed  that  the mortgagee  do  receive the amount due as  royalty  from  the tenants under mining leases in Mauza Bahaldih in the month 637 of  Aswin.   By  another  deed  dated  August  27,  192  the mortgagor  created  a  mortgage in  favour  of  Sasindranath Chakravarty  and Indra Nath Chakravartyto secure payment  of Rs.  5,500  advanced  to  him  and  interest  thereon.   The covenants of this mortgage deed were substantially the  same as the covenants of the earlier mortgage-deed dated June 14, 1922  and it was agreed that the mortgagees were to  receive the  instalment of royalty payable in Chaitra in respect  of Mauza Bahaldih.  Under these mortgage-deeds the due date for payment was April 14, 1925. On  May  17, 1927, the mortgagor assigned  his  interest  in Mauza  Bansjora to one Mahendra Nath Rai and on  October  2, 1927  he  assigned  his interest in Mauza  Simitanr  to  one Pushpa   Moyee  Devi.  Thereafter in execution  of  a  money decree obtained against  the mortgagor, his right, title and interest in mauz Bahaldih was sold on January 16, 1937,  and after  th sale was confirmed, possession of  Mauza  Bahaldih

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was  taken by the auction-purchaser on April 7, 1937 By  two deeds  dated June 18, 1946, Manimala Devi the  plaintiff  in the   suit  out  of  which  this  appeal   arises   obtained assignments  of the rights of the mortgagees under  the  two deeds dated June 14, 1922, and August 27, 1922, and filed  a suit on July 12, 1946, in the Court of the Subordinate Judge at Dhanbad for a decree for enforcement of the two mortgages by  sale  of  the mortgaged properties.  To  the  suit  were impleaded as defendants the representatives of the  original mortgagees, the heirs of the mortgagor and certain  alienees of the mortgaged property. The suit was filed more than twelve years after the date  on which the mortgage amount because payable, and prima  facie, it  was barred by the law of limitation.  But the  plaintiff sought  to bring the claim within limitation,  relying  upon certain part payments towards the mortgage dues made by  the mortgagor.  On the deed dated June 14, 1922, was recorded an endorsement dated April 1, 1937, relating to payment of  Rs. 600  as interest which was signed by the mortgagor.  On  the mortgage-deed dated 638 August  27,  1922, there was recorded an  endorsement  dated August 16, 1934, of payment of Rs. 100 which also was signed by  the mortgagor.  The plaintiff relied upon part  payments evidenced  by  these endorsements to extend  the  period  of limitation in respect of the two mortgage claims. The   trial  Judge  rejected  the  defence  raised  by   the contesting  defendants and held that the suit in respect  of the  first mortgage was not barred by the law of  limitation because   the  mortgage  "was  partly  simple   and   partly usufructuary"  and even though the plaintiff could not  rely upon  part  payment of principal or interest to  extend  the period of limitation for the suit, she could still  maintain the suit relying upon the dispossession of the mortgagee  on April  7, 1937, by the auction-purchaser who  purchased  the mortgagor’s  rights in Bahaldih lands at the  Court  auction and  that the suit to enforce that mortgage was  accordingly within limitation.  In respect of the mortgage dated  August 27,  1922,  the  Judge  held  that  the  claim  was   within limitation both on account of part payment of principal  and interest  and  upon  the cause of action  furnished  by  the dispossession  of the mortgagees in respect of the  Bahaldih property. In  appeal by the fourth defendant--widow of  Mehandra  Nath Rai-the  High Court of Patna reversed the decree  passed  by the  trial  Court and dismissed the plaintiff’s  suit.   The High Court held that as the plaintiff had in her plaint  not relied  upon dispossession as a ground for extension of  the period  of  limitation,  that claim  should  not  have  been permitted to be made out by the trial Court.  The High Court also  held that Mauza Bahaldih was not given in mortgage  to the  mortgagees  under either of the two  mortgagedeeds  and dispossession of the mortgagees from Mauza Bahaldih or  part payments  of principal or interest after the  mortgagor  had parted with his interest in the mortgaged properties  Mauzas Bansjora and Simitanr could not operate to extend the period of  limitation  for the suit.  The High Court  further  held that in any event even if Mauza Bahaldih was 639 one  of the mortgaged properties, the mortgagor having  lost his interest in Mauzas Bansjora, Simitanr and Bahaldih prior to the payment of Rs. 600 by the mortgagor on April 1, 1937, as evidenced by the endorsement on the first mortgage  deed, the  plaintiff’s suit to enforce the mortgage  dated  August 27,  1922,  was  barred by limitation.   The  plaintiff  has

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appealed to this Court with certificate granted by the  High Court. The  first question which falls to be considered is  whether Mauza  Bahaldih was mortgaged under the two  mortgage-deeds. The  mortgagor  had  shortly after  the  two  mortgage-deeds transfered his interest in Mauzas Bansjora and Simitanr, and for  reasons which we will presently set out, the  mortgagor cannot,  by making part payments, seek to extend the  period of  limitation  against his assignee after he has  lost  his interest  in the property mortgaged.  The two part  payments dated  August 16, 1934, and April 1, 1937, could operate  to extend  the period of limitation if the mortgagor  continued to remain on those dates owner of the mortgaged property  or part  thereof.  The plaintiff could therefore avail  of  the extension of the period of limitation by part payments  only if th mortgagor’s interest in Mauza Bahaldih stood mortgaged at  the  dates of those part payments, for  the  mortgagor’s interest  in  Mauzas Bansjora and Simitanr was  assigned  to strangers many years before those par payments were made. The  terms of the two mortgage-deeds are  substantially  the same and such differences as there are in the covenants have no  bearing on the questions to be decided in  this  appeal. We will therefore set out the material recitals and  clauses in  the mortgage-deed dated June 14, 1922.  In the  preamble clause it was recited that Tauzi No. 16 of collectorate  and district Mandhum constitutes the zamindari interest and that on the death of his late father, the mortgagor acquired  the said zamindari and that he was entitled to transfer encumber or  sell the whole property included within the  said  Tauzi No. 16 at his free will.  By paragraph 4 640 the  mortgagor undertook to pay interest at the rate of  Rs. 1/8/-  (one  rupee eight annas) per cent per mensem  on  the amount of Rs. 5,500 borrowed by him.  In paragraph 5 it  was stated  that  it was not possible for the mortgagor  to  pay interest  every  year  on the amount  borrowed  by  him  and accordingly  he  had  agreed that the tenants  of  the  coal fields  in Mauza Bahaldih with whom he had settled the  coal mines  in  the  zamindari  shall  continue  to  pay  to  the mortgagee Rs. 1,000 on account of one of the instalments for rent,  minimum royalty and commission, due to the  mortgagor according  to  the terms of the contracts.  It  was  further stipulated  by paragraph 7 that the mortgagor  had  assigned the  amount  due  from  certain  tenants  mentioned  in  the schedule  under the instalments specified therein by way  of interest for peaceful realisation of the annual interest  of Rs.  1,000 every year, and the mortgagee was, in default  of payment by the tenants, competent to realise the same.   The mortgagor  also  undertook to issue notices to  the  tenants calling  upon  them  to pay the  amounts  according  to  the assignment.  By paragraph 9 it was agreed that in the  event of  the  tenants failing to pay the  amount,  the  mortgagor would  compensate  the mortgagee in respect  of  the  amount remaining  to  be realised.  Paragraph 12 provided  that  so long  as  all  the  amounts were not  repaid  in  full,  the mortgagor  was  not  competent to  gift,  sell  transfer  or encumber,  make  banami  or  permanent  settlement  of   the mortgaged  property  specified and described in  Sch.  (kha) i.e. Mauzas Bansjora and Simitanr with any one and that  the alienations made by him would be null and void.  He  further declared that the said properties had not been encumbered to any  person  and that he was in peaceful possession  of  the mortgaged  property  described  in  Sch.  (ka)  viz.,  Mauza Bahaldih and that he was peacefully realising the rents.  By paragraph  14  the  mortgagor  agreed  that  the  properties

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specified  and  described  in Sch.  (kha)  shall  always  be treated as mortgaged and security for realising the interest and principal due to the mortgagee, the amount and  interest due to the mortgagee having first charge on the same, that 641 "should any cause of action arise", the mortgagee "shall  be competent  to realise the full amount due to" him  "together with  interest and costs by selling the said  properties  in Sch.  (ka)  and (kha) by action", and that should  the  full amount  be not realised the mortgagee will be  competent  to realise  the  amount  from  other  moveable  and  immoveable properties belonging to the mortgagor.  By paragraph 13  the mortgagor  agreed to pay the principal and the interest  due on or after April 14, 1925. The  mortgagor admitted receipt under each o the  two  deeds the amount of Rs. 5,500 advance to him by the mortgagees and agreed to pay interest at the rate of Rs. 1/8/- per cent per mensem.  had also made an arrangement by which the  mortgage was to recover the interest on the mortgage debt out of  the instalments  of  Rs. 1,000 as royalty in  respect  of  Mauza Bahaldih.   There  was  a covenant that  the  event  of  the mortgagee  being unable to recover royalty from the  tenants the mortgagor would make good the same.  Again by  paragraph 13 in each of the two deeds there was a covenant for payment of  the amount of the principal and interest personal on  or after April 14, 192 5. A distinction was made paragraphs  12 and  14 between Mauzas Bansjor and Simitanr on the one  hand and  Mauza  Bahaldih  on the other.   By  paragraph  12  the mortgagor  had undertaken not to transfer or  assign  Mauzas Bansjora and Simitanr to any person, and had merely  assured the  mortgagee that he had not assigned the rights in  Mauza Bahaldih   till  the  date  of  mortgage  by  way   of   any encumberance  to  any other person.   But  that  distinction would,  for the purpose of ascertaining the true  nature  of the  document, be immaterial, for even in the absence  of  a covenant not to assign the mortgagor’s interest, so long  as the mortgage remained outstanding, the transfer made by  the mortgagor  of Mauzas Bansjora and Simitanr would be  subject to  the  mortgage.  In paragraph 14 it way  stated  that  as security for the realisation of the principal and  interest, Mauzas Bansjora and Simitanr were to 1/SCI/64-41 642 stand  mortgaged.  That may prima facie suggest  that  those two  Mauzas alone were mortgaged, but the mortgagor  had  in the  same paragraph agreed that should "any cause of  action arise " the mortgagee shall be competent to realise the full amount  due  to  him together with  interest  and  costs  by selling  Mauzas Bansjora simitanr and Bahaldih.   The  mort- gagee  could  not  sell the mortgagor’s  interest  in  Mauza Bahaldih  in satisfaction  on his mortgage claim, unless  it was  mortgaged  to him.  The intention appearing  from  this covenant  is therefore clearly to encumber Mauzas  Bansjora, Simitanr and Bahaldih. The  High Court, in our view, was in error in  holding  that the  mortgagor’s  interest in Mauzas Bansjora  and  Simitanr only  was mortgaged.  The question of limitation may now  be considered  in the light of the finding that Mauza  Bahaldih was  mortgaged  under  the  two  mortagage-deeds.The   later mortgage  was executed on August 27,1992 and the amount  due thereunder  was  payable on April 14, 1925.  On  August  16, 1934, an amount of Rs. 100/was paid by the mortgagor and  an endorsement  in  that behalf was made on  the  mortgage-bond under  his  signature,  and on  that  date  the  mortgagor’s interest in Mauza Bahaldih was not extinguished.  Under Art.

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132 of the Limitation Act, Sch. 1, a suit to enforce payment of  money  charged  upon immoveable property  may  be  filed within  twelve years from the date when the money  sued  for becomes  due.   The  suit filed by  the  plaintiff  was  for enforcement  of  payment of money  charged  upon  immoveable property and money sued for on the later mortgage had become due on April 14, 1925.  By s. 20 of the Limitation Act where payment  on account of a debt or of interest on a legacy  is made before the expiration of the ,prescribed period, by the person  liable to pay the debt, or by his  duly  ’authorised agent,  a fresh period of limitation will be  computed  from the  time  when  the payment was made.   The  mortgagor  had parted with his interest in Mauza Bansjora on May 17,  1927, and in Mauza Simitanr on October 2, 1927, and a 643 mortgagor  whose  interest in the equity  of  redemption  is transferred  by  assignment, sale or  otherwise  to  another person  is not a "person liable to pay the debt" within  the meaning of s. 20 of the limitation Act. Part payment made by him towards principal or interest therefore does not  extend the  period  of limitation for enforcement of  the  mortgage against  the transferee of the equity of redemption.  If  by transfer  or  assignment of his interest the  mortgagor  has lost  all  his  interest in  the  mortgaged  property,  part payment will not extend the period of limitation, for at the date  of  payment he is not "the person liable to  pay"  the mortgage  debt.   The  High Court of  Madras  was  right  in holding in Pavavi v. Palanivela Goudan (1) that a  mortgagor who  has lost all interest in the mortgaged property  cannot by payment of interest or principal within the meaning of s. 20  bind the person on whom the interest has devolved.   But the mortgagor’s interest in Mauza Bahaldih subsisted on  the date of payment by him of Rs. 100 towards the principal  and interest,  and such payment having been made  within  twelve years from April 14, 1925, the plaintiff’s claim to  enforce the mortgage dated August 27, 1922, was at the date of  the, suit not barred by limitation. The  amount due under the mortgage dated June 14, 1922,  was repayable  on April 14, 1925, and on April 1, 1937, Rs.  600 were  paid  by  the  mortgagor  to  the  mortgagee  and  the endorsement regarding payment was made on the  mortgage-deed recording  such  payment,  and on that date  the  period  of twelve years commencing from April 14, 1925, under Art.  132 of  the  limitation Act, had not expired.  But  before  that date  the mortgagor had lost interest in all the  properties mortgaged by him-in Mauza Bansjora on May 17, 1927, in Mauza Simitanr  on October 21, 1927, and in Mauza Bahaldih by  the auction  sale which became affective from January 16,  1937. The  period of limitation in respect of the  first  mortgage could not, for reasons already set out, be extended by part (1)  I.L.R. [1940] Mad. 872. 644 payment  made after the mortgagor lost all his  interest  in the  property mortgaged.  The plaintiff has not relied  upon any  other  part payment in respect of  the  first  mortgage before the mortgagor’s interest in the mortgaged  properties was  transferred, to extend the period of limitation  for  a suit to enforce the mortgage. But  the plaintiff relied upon the sale of  the  mortgagor’s interest  at  a  Court  auction  and  his  dispossession  as furnishing  a fresh cause of action for enforcement  of  the mortgage.   It  was  urged  that by  the  covenants  in  the mortgage-deed  dated June 14, 1922, a usufructuary  mortgage was  created on the mortgagor’s interest in Mauza  Bahaldih, and  by the attornment made pursuant to paragraph 7  of  the

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mortgage,  the mortgagor must be deemed to be in  possession till the mortgagor’s interest in that property was sold, and under  s.  68(1)  (b)  of  the  Transfer  of  Property   Act dispossession of the mortgagee from Mauza Bahaldih by virtue of  the  sale  under the money  decree  passed  against  the mortgagor,  a  cause of action accrued to the  mortgagee  to enforce  the mortgage and the plaintiff’s suit filed  within twelve years from the date of dispossession was within time. A suit to enforce a mortgage is governed by Art. 132 of  the limitation Act and has to be filed within twelve years  from the date on which the money sued for became due, unless  the period  of  limitation  so prescribed. is  extended  in  the manner   provided  by  Part  III  of  the  limitation   Act. Dispossession  of  the mortgagee is not one of  the  grounds prescribed  by the Act for extension of the time  prescribed for filing a suit. Section  68 of the Transfer of Property Act confers a  right upon  the  mortgagee to sue for the mortgage money  in  four different  classes  of cases and no others.   These  classes are- (a)  where the mortgagor binds himself to repay the mortgage money : (b)  where,  by  any cause other than the  wrongful  act  or default  of  the  mortgagor  or  mortgagee,  the   mortgaged property is wholly or partially 645 destroyed  or the security is rendered  insufficient  within the  meaning of section 66, and the mortgagee has given  the mortgagor  a  reasonable opportunity  of  providing  further security enough to render the whole security sufficient, and the mortgagor has failed to do so ; (c)  where the mortgagee is deprived of the whole or part of his  security  by or in consequence of the wrongful  act  or default of the mortgagor ; (d)  where the mortgagee being entitled to possession of the mortgaged property, the mortgagor fails to deliver the  same to  him, or to secure the possession thereof to him  without disturbance by the mortgagor or any person claiming under  a title superior to that of the mortgagor." The section does not deal with the period of limitation  for filing a suit, or extension of the period prescribed by  the Limitation Act for filing a suit.  The right conferred by s. 68 is again not a right to enforce the mortgage but a  right to sue for the mortgage money on the personal covenant or to claim  compensation  when the mortgagee is deprived  of  his security.   A suit for enforcement of the personal  covenant to  pay  the  mortgage money when the  mortgagor  has  bound himself  to  repay the same is governed by Art. 116  of  the Limitation  Act.   Similarly  the right  to  sue  where  the mortgagee  is deprived of the mortgage security or where  he is  not secured in his possession of the mortgaged  property or  where possession is not delivered to him as agreed,  the claim maintainable by the mortgagee is one for  compensation and  the  period  of limitation for a suit  to  recover  the mortgage money is governed by Art. 120 of the Limitation Act from the date of destruction or deprivation of the  mortgage security  or  possession  and not from  the  date  when  the mortgage  money  is  repayable :  Unichaman  v.  Ahmed.  (1) Assuming therefore that (1)  I.L.R. 21 Mad. 242 646 by the two deeds the mortgagees were placed in possession of the  right to recover royalty in respect of Mauza  Bahaldih, and  that  the sale of that property in enforcement  of  the decree  of  a  Civil Court constituted  deprivation  of  the

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security or disturbance of their possession by the creditors of  the mortgagor, dispossession having taken place in  1937 the suit filed on July 12, 1946, regarded as one to  enforce the  claim to recover the mortgage money under s. 68 of  the Transfer   of  Property  Act  was  barred  by  the  law   of limitation. This appeal will therefore be partially allowed.  The decree passed by the High Court will be set aside and there will be a  decree in favour of the plaintiff only in respect of  the mortgage  dated August 27, 1922.  The trial Court will  draw up  an appropriate decree in that behalf.   The  plaintiff’s appeal  will fail in respect of the mortgage dated June  14, 1922.   The  plaintiff  will pay the  costs  of  the  fourth defendant who alone has defended this appeal.  The plaintiff will  be  entitled to her costs in respect of  the  mortgage dated  August 27, 1922, from the original mortgagor’s  heirs and  the transferees-in-interest of the property  which  was the subject-matter of the said mortgage. Appeal partly allowed. 647