Arunachalam Pillai vs M. Velamma And Ors. on 2 March, 1967

Madras High Court
Arunachalam Pillai vs M. Velamma And Ors. on 2 March, 1967
Equivalent citations: (1967) 2 MLJ 490
Author: M Natesan


M. Natesan, J.

1. The plaintiff in a suit for recovery of mortgage money by sale of the mortgaged property, has preferred this second appeal, the Courts below having concurred in dismissing his suit as barred by limitation and barred under Order 2, Rule 2, Civil Procedure Code.

2. The material facts now beyond controversy may be briefly set out. Defendants 2 to 4 in the suit, mortgaged with possession the property described as item one of the plaint schedule under Exhibit A-2 dated 23-8-1120 (M.E.) for 3000 fanams. The second item of the plaint schedule was given as additional security for the mortgage amount. On the same date, the mortgaged property was taken back on lease, at the rate of Rs. 3.30 per mensem and the mortgagors defendants 2 to 4 continued in possession of the property. On the failure of the defendants to pay rents accrued, the plaintiff filed in a suit O.S. No. 720 of 1121 on the file of the Additional District Court, Nagercoil, for the arrears of rent accrued till then and obtained a decree. The mortgagors then brought about an arrangement for the discharge of the mortgage Exhibit A-2 and satisfaction of the decree in O.S. No. 720 of 1121. On 18-5-1122, they executed the mortgage Exhibit A-3 dated 18-5-1122, in favour of the first defendant, reserving the amounts due under the mortgage Exhibit A-2 and the decree in O.S. No. 720 of 1121, with him for their discharge. On the same date, the first defendant’s sister on her own behalf and on behalf of the first defendant, who was then a minor for the moneys reserved under Exhibit A-3 executed a conveyance of another property of their own, by Exhibit A-6 in discharge of the amounts due to the plaintiff under the aforesaid mortgage and decree. Accepting the conveyance, the plaintiff entered satisfaction of the decree in O.S. No. 720 of 1121, and gave a discharge of the mortgage Exhibit B-2, granting the mortgagors defendant 2 to 4, the registered receipt Exhibit B-l dated 28-5-1122. But in the suit O.S. No. 92 of 1121 on the file of the Additional District Munsif Court, Nagercoil, in which the plaintiff got himself impleaded under the provisions of conveyance in his favour to secure possession of the property conveyed to him, the sale in his favour and the mortgage in favour of the present first defendant, were rejected as not binding on the first defendant. The conveyance Exhibit A-6 was set aside. The plaintiff had also filed another suit O.S. No. 278 of 1950 against the first defendant for recovery of the property on the strength of the sale-deed. That suit was also dismissed, the sale in favour of the plaintiff being set aside. The plaintiff preferred appeals, but failed in the appeals also, the appeals being dismissed on 19th August, 1958. Having failed to sustain the validity of the conveyance in his favour in consideration of which he gave a discharge of the mortgage and entered satisfaction of the decree, he instituted the suit O.S. No. 44 of 1959 on the file of the Additional District Munsif Court, Nagercoil for recovery of a sum of Rs. 829-25 nP. as and by way of damages. The parties to this suit were the present defendants 1 to 4, that is, the mortgagors defendants 2 to 4 and the first defendant, whose transfer was set aside. The suit was dismissed and the appeal there from A.S. No. 178 of 1960 by the plaintiff also failed. The appellate Court while holding that a claim for damages in the circumstances was untenable observed:

I therefore hold on point 1 that the mortgage of 23-8-1120 had not become extinguished by the reason of the execution of Exhibit A-3 and on point 2 that the original mortgage had become revived by reason of the decision in O.S. No. 92 of 1121 which set aside Exhibit A-3 and on point, 3 that the remedy of the plaintiff is to file a separate suit on the original mortgage of 1120 to recover the mortgage amount together with interest…

The learned Subordinate Judge further observed in the course of his judgment…

it appears to me that the appellant can always fall back upon the original cause of action arising under the mortgage of 1120 provided his right to file such a suit on that mortgage is not barred by limitation.

It is in these circumstances that the plaintiff filed the suit out of which the second appeal arises, on 21st December, 1960. on the mortgage Exhibit A-2 dated 23-8-1120. It is stated in the plaint that by the decree on 22nd September, 1955, setting aside the sale in favour of the plaintiff, the plaintiff’s cause of action to recover the mortgage amount was revived on 22nd September, 1955, and the suit being within 12 years from that date was in time. The Courts below held that the suit is barred under Order 2, Rule 2, Civil Procedure Code, in view of the decision in O.S. No. 44 of 1959. On the question of limitation, it is held that the setting aside of the conveyance does not give a fresh lease of life to the mortgagee from 22nd September, 1955, and the suit not having been filed within 12 years of the mortgage is barred by limitation.

3. IN my view neither Order 2, Rule 2, Civil Procedure Code, nor the bar of limitation can stand in the way of the plaintiff having a decree on the mortgage. This is not a case where a single cause of action has given a right to several reliefs. This is a case where on the setting aside of the conveyance the plaintiff proceeded on the view that he could claim damages and failed. The alternative claim in the present suit on the mortgage no doubt arises out of the same transaction; but the cause of action in this suit on the mortgage is not the same. Order 2, Rule 2 does not require that when a transaction gives rise to several causes of action, the plaintiff must combine all the causes of action in one suit and if necessary base his claim alternatively on them in the same suit. The requirement of the rule is that where there is a cause of action, the plaintiff cannot split, the cause of action into parts and claim relief in parts by several actions. The principle of Order 2, Rule 2, Civil Procedure Code, is enunciated by the Judicial Committee in Payana v. Pona Lana Palaniappa (1914) 41 L.A. 142, thus:

the rule is directed to securing the exhaustion of the relief in respect of a cause of action, and not to the inclusion in one and the same action, of different causes of action, even though they arise from the same transaction.

The several clauses of Order 2, Rule 2 must be read together and along with Order 2, Rule 3. In Shripad v. Sidram , Rajadhyaksha and Shah, JJ, it is observed:

It is not the mere existence of more than one relief only that brings the bar under Order 2, Rule 2, into operation. If he is entitled to more than one cumulative relief but sues for only some of those reliefs and does not choose to sue for the remaining reliefs, then his right to sue for the latter reliefs is barred under Order 2, Rule 2. If on the other hand, he is entitled to only one relief out of several alternative reliefs and he sues for one of them, his remedy to sue for other alternative reliefs is not barred, for he cannot be said to have been entitled to more than one relief.

4. Rajagopala Ayyangar, J., as he then was, of this Court adopted these observations in Rangaswami Goundan v. Rangai Goundan (1955) 1 M.L.J. 10. The learned Judge observes referring to Sub-clause (3) of Order 2, Rule 2.

It does not apply to a case where a party is entitled to only one out of several reliefs and where he cannot have all of them simultaneously.

In Gurbux Singh v. Bhooralal , the Supreme Court points out that
to sustain a bar (under Order 2, Rule 2, Sub-clause (3) the defendant who raises the plea must make out, (1) that the second suit Was in respect of the same cause of action as that on which the previous suit was based, (2) that in respect of that cause of action, the plaintiff was entitled to more than one relief, (3) that being thus entitled to more than one relief the plaintiff, without leave obtained from the Court, omitted to sue for the relief for which the second suit had been filed.

Their Lordships emphasised in that case that as the plea is a technical bar, it has to be established satisfactorily and that it can be established only if the defendant files in evidence, the pleadings in the previous suit and thereby proves to the Court the identity of the cause of action in the two suits. The cause of action in the previous suit would be the facts which the plaintiff had then alleged to support the right to the relief that he claimed. As stated at the outset, the earlier suit in this case was a suit for damages on failure of the conveyance. The present suit is a suit on the original mortgage no doubt laid on the failure of the conveyance. But the basis of the claim is that the mortgage which was extinguished and discharged by the conveyance got resurrected on the failure of the conveyance. The plaintiff, who had failed in his claim for damages, now sues on the mortgage. The reliefs are not cumulative nor can it even be said that the cause of action is identical. It is argued for the defendants that in the earlier suit also, there was a claim on the mortgage. But the judgment in the former proceedings which alone have been exhibited in the case are clearly against the contention. It is emphatically stated in the judgment that the suit was one for damages. The defendants, who have not exhibited the pleadings in the earlier case cannot be heard to say that that suit was based on the mortgage-deed. The mortgage-deed was not. even exhibited in that case. In the earlier case the trial Court has specifically held that that was not a suit based on the mortgage-deed. The attack on the maintainability of the suit rested on Order 2, Rule 2, Civil Procedure Code, therefore fails.

5. To take up the question of limitation, the bar has been applied by the Courts below in a summary way without any discussion. If the judgment of the appellate Court in the former suit exhibited here as Exhibit A-l had been perused, it would have shown a way out of the plea of limitation. Quoting from Chitaley and K.N. Annaji Rao on Limitation Act it is observed therein:

In such cases, where the satisfaction or the discharge of the cause of action is nullified by subsequent event, the plaintiff is entitled to a fresh cause of action, consequent on such nullification, and a fresh period of limitation in respect of such cause of action.

It is surprising that this proposition has not been taken hold of and pursued in the Courts below by reference to authorities. It is needless to refer to the several cases which have been placed before me by learned Counsel for the appellant starting with the decision of the Judicial Committee is Renee Surnd Moyee v. Shooshee Mokhee Burmonia 12 M.I.A. 244 P.C. The question has been considered by me somewhat in extenso in the recent decision Murugayya Thevar v. The State of Madras I.L.R. (1966) 1 Mad. 206. I have pointed out therein that in certain circumstances, on the annulment of the satisfaction that had been entered of a claim, a separate cause of action may arise and the statute of limitation begin to run afresh. The satisfaction in such cases do not result in suspension of the original cause of action or arrest the running of time, against the provisions of Section 9 of the Limitation Act (IX of 1908). Section 9 provides only that once time has begun to run, no subsequent disability or inability to sue, stops it. But where there is an extinguishment of the liability then there is no need for seeking any remedy, and there can be no question of time running out. If by reason of subsequent events, the discharge of the liability or its satisfaction gets cancelled and if there is a revival in law of the original liability, the party becomes entitled to the remedy for the first time, a fresh cause of action accrues on the cancellation or the annulment of the discharge and a need to sue arises. In respect of a claim at the earliest only on the cause of action accruing, time under the statute of limitation can start running. When the claim is satisfied, the right of action on the claim disappears. It cannot be said that there is a suspension of the remedy then. The discharge or satisfaction of the claim then given is absolute. The suitor has no case to make a claim. But, if by reason of later events, the satisfaction or discharge is rendered nugatory or is found to be void, again a claim accrues to him. It may be that it is the original liability of the opposite party that has to be enforced. But there is a fresh cause for action. In Mussamat Baseo Kuar Lala Dhum Singh L.R. 15 I.A. 211, the respondent before the Board being indebted to the appellant agreed to convey certain property to him, setting off the debt against part of the price. A sale deed was executed and disputes arose between the parties as to its terms. The respondent-debtor unsuccessfully sought to enforce the conveyance and the creditor pleaded that he had a right to revoke the contract of conveyance. After the debtor failed in his attempt to enforce the sale the creditor filed the suit for the amount due to him, when the respondent-debtor met him with the plea of limitation. On the plea of limitation the Board held that limitation began to run when the debtor’s suit seeking to enforce the conveyance was dismissed. It was observed that the dismissal of the suit imposed, under Section 65 of the Indian Contract Act, a fresh obligation on the respondent to pay his debt. In their Lordships view:

the decree of the High Court, brought about a new state of things and imposed a new obligation on Dhum Singh. He was now no longer in the position of being able to allege that his debt to Barumal had been wiped out by the contract, and that instead thereof Barumal was entitled to the villages. He became bound to pay that which he had retained in payment for his land… The agreement became wholly ineffectual, and was discovered to be so when the High Court decreed it to be so.

On the particular facts of the case, their Lordships held that Article 97 of the Limitation Act applied. In Surjiram Marwari v. Barhamdeo Persad (1905) 1 Cal.L.J. 337, is a case where a mortgagee took a conveyance of a portion of the mortgaged property in satisfaction of his claim and the conveyance subsequently proved to be inoperative. Harrington and Moorkerjee, JJ. observed that the mortgage debt was revived and could be enforced by suit. It was held that the period of limitation for such a suit ran from the date of the revival of the cause of action. The eminent Judge Sir Asutosh Mookerjee observed (at page 348):

It is manifest, therefore, that in the case before me the plaintiffs got a fresh cause of action when the conveyance in their favour proved to be inoperative; and as the suit has been instituted within twelve years from the time when the money became due upon the revival of the cause of action, it is amply in time.

No doubt there is an observation in R.K. Singh v. R.P. Singh (1949) I.L.R. 28 Pat. 303 at 309, that the dictum of Harrington and Mookherjee, JJ. above referred to does not appear to be correct being inconsistent with the decision of the Judicial Committee in Lala Soni Ram v. Kanhaiya Lal (1913) L.R. 40 I.A. 74 : 25 M.L.J. 131. But Lala Soni Ram’s case (1913) L.R. 40 I.A. 74 : 25 M.L.J. 131, was at the most a case of mere personal liability as the necessary fusion of interest was not complete. The case was plainly within and excluded by Section 9 of the Limitation Act. Even in the case, R.K. Singh v. R.P. Singh (1949) I.L.R. 28 Pat. 303 at 309, the conveyance in question did not bring about an absolute extinguishment. It itself stipulated that in case of any defect in the properties conveyed, the mortgage could be enforced. It cannot be said that the instant case could be distinguished as a case where there was out and out extinguishment of the mortgage liability by the conveyance. The case of suspension of cause of action must be distinguished from cases where the liability is completely extinguished and by subsequent events law imposes the same liability.

6. A fresh cause of action would properly arise only in a case where the remedy in respect of a claim is not just clamped down and kept dormant to be revived in a contingency. When the claim is satisfied and the transaction entering up satisfaction does not warrant any inference that the satisfaction is tentative or contigemnt, the remedy is not just laid dormant. The cause of action ceases to exist and there can therefore, be no action on the original cause of action. On the satisfaction getting cancelled or rendered nugatory by subsequent events, we figuratively only say that there is a revival, but strictly speaking a new right of action accrues.

7. It is faintly suggested for the respondents that Article 97 of the Limitation Act should be applied. Clearly the right which the plaintiff gets by virtue of the conveyance being set aside is to enforce payment of money charged upon he immoveable property and the period of limitation of 12 years begin to run from when the money became due. The money in this case became due on the conveyance getting cancelled.

8. It was not questioned before me that the liability under the mortgage was revived, as it has been so held in the earlier litigation between the parties. Under Section 65 of the Indian Contract Act when an agreement is discovered to be void or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it or to make compensation for it, to the person from whom he received it. The obligation under that section to restore the advantage received under an agreement is not confined to parties to the agreement, but extends to any person that may have received the advantage. In the present case by reason of the conveyance by the first defendant the mortgagors got the benefit of a discharge of their mortgage liability. Once that conveyance got cancelled they have to give up the advantage of the discharge they had under the conveyance viz., the discharge of their mortgage liability. On the conveyance being set aside, the plaintiff acquired a right to realise the mortgage money from them. It follows that the plaintiff is entitled to a decree for the sale of the mortgaged property for the amounts due and that the claim is barred neither under Order 2, Rule 2, Civil Procedure Code, nor by limitation.

9. The fifth defendant is the vendee of the plaint schedule second item which was given as security for the mortgage amount. His purchase was in March, 1953 and he was not made a party to either of the proceedings which resulted in the conveyance being invalidated or to the subsequent suit by the mortgagee for recovery of damages. No attempt has been made to establish before me how he is bound by any of the prior proceedings. The principal amount due under the mortgage is 3000 fanams and the mortgagors, who had. remained in possession and covenanted to pay as rent at Rs. 3-30 per mensem. The plaintiff will be entitled to a mortgage decree for sale, for the recovery of the principlal and profits form the mortgaged properties at the aforesaid rate, from 22nd September, 1955. There will be a preliminary mortgage decree for sale of item No. 1, of the plaint schedule for the aforesaid amounts and the costs awarded here against defendants 2 to 4. The plaintiff having needlessly pursued a futile litigation earlier, costs are awarded to the plaintiff against defendants 2 to 4, only in the second appeal. Parties will bear their respective costs in the Courts below. The suit as against the fifth defendant now represented by her legal representative the sixth defendant in respect of item No. 2, and also as against the first defendant is dismissed, but with no order as to costs either here or in the Courts below. Time for payment to be provided for in the preliminary mortgage decree for sale-four months.

10. The second appeal is allowed accordingly as against defendants 2 to 4. No leave.

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