Perumal Reddiar And Ors. vs Suppiah Thevar And Ors. on 20 November, 1944

Madras High Court
Perumal Reddiar And Ors. vs Suppiah Thevar And Ors. on 20 November, 1944
Equivalent citations: (1945) 1 MLJ 341
Author: Horwill


Horwill, J.

1. Defendants 1 and 3 mortgaged the suit property to the plaintiff on the 21 st July. 1924 by Ex. P-2. Prior to that mortgage, there was a mortgage by defendants 1 and 2 under Ex. P-1 a on the 24th August 1921 to one Narayana Reddi and in 1933 the mortgagee brought O.S. No. 429 of 1933 on his mortgage, impleading the plaintiff as a puisne mortgagee. A decree was passed; and on the 29th July 1936 the plaintiff paid Rs. 667-8-0 to satisfy the decree. Satisfaction of the decree was entered up on the 18th June 1937. The plaintiff then brought O.S. No. 233 of 1937 asking for a decree against his mortgagors and against the hypotheca claiming to be subrogated to the rights of the mortgagee under Ex. P-1 a of the 24th August 1921. The lower appellate Court held that he was not entitled to a decree, for his mortgagors had no right in the property whatsoever, because on the date of the mortgage in favour of the plaintiff they had parted with their interest in the property; and so the plaintiff was not a person interested within the meaning of Section 91 of the Transfer of Property Act. The lower appellate Court was inclined to hold that he was a person interested within the meaning of Section 69 of the Contract Act and would therefore be entitled to a decree for the money paid by him together with interest; but took the view that his suit was out of time. It held that Article 61 of the Limitation Act applied and that as the suit had not been brought within three years of the payment of money, it was barred by time.

2. The first contention of the appellants the legal representatives of the plaintiff) is that depite the fact that it was found in this litigation that the plaintiff’s mortgagors had no right to the property on the date of the mortgage, yet the plaintiff was a person interested, because he made the payment in good faith, believing that his mortgagors had title. Many cases have been cited in support of this contention. If the mortgagors had held the property under a title that was merely voidable, there would be no difficulty, because a person who acquires a right under a transaction that is voidable has a right until the transaction is declared void. Even in cases where the mortgagor had no title, it has been held that a person who pays off money in thebelief that his mortgagors had title, has an interest in the property and is therefore entitled to redeem under Section 91 of the Transfer of Property Act. It is unnecessary to discuss this question at any length; because it is conceded by Mr. Sitarama Rao for the respondents that the plaintiff was entitled to be subrogated to the rights of the prior mortgagees when he paid off the sum of Rs. 667-8-0 on the 29th July, 1936. Reference may however be made to Maramittath Theruvil Mootha-chettiam Veettil Kelu v. Kuttiyil MachiRaniy Chekaracheppan as an authority for the position that even though a person has no title whatsoever, he may redeem if he believes in good faith that his mortgagor has title.

3. The more important question is whether the suit is in time; and that turns on the question whether, when the plaintiff became subrogated to the rights of the prior mortgagee, his right to bring a suit on the mortgage amount is deemed to have arisen on the date of the original mortgage or whether his right arose out of the decree itself, in which case he would have twelve years under Article 132 of the Limitation Act from the 29th July, 1936. There can be no doubt that the law in Madras is that when a person becomes subrogated to the rights of the mortgagee by redeeming a mortgage, he is in precisely the same position as the mortgagee and must therefore bring his suit for recovery of the sum paid by him within twelve years of the original mortgage. “That was laid down very clearly by Wallace and Madhavan Nair, JJ., in Kotappa v. Raghavayya. The leading judgment was written by Madhavan Nair, J. Wallace, J., not only agreed with Madhavan Nair, J., but in a separate judgment considered an earlier judgment of his own in Parvati Ammal v. Venkatarama Iyer in which he was inclined to hold a somewhat different opinion. The only question now is whether Kotappa v. Raghavayya can be considered to be still good law in view of the later Privy Council decision in Batey Krishna v. Parsotam Das where a puisne mortgagee paying off the prior mortgagee’s debt was held to be entitled to twelve years from the date of the payment. It is incredible that the Privy Council intended to lay down a general rule on the important question raised and decided in Kotappa v. Raghavayya on which there was some conflict of opinion in the various High Courts. The Madras view that the puisne mortgagee is entitled to twelve years from the date of the original mortgage is shared by the High Courts of Patna and Calcutta, whereas the Allababad and Rangoon High Courts considered that the payment gives rise to a fresh period of limitation and that the puisne mortgagee’s suit on this payment would therefore be in time if filed within twelve years of payment. Not a single case of any High Court is referred to in Batey Krishna v. Parsotam Das. The decision turned on the form of the final decree passed by the Trial Court and not on any principle of subrogation. The decree was not before their Lordships, but they were satisfied that the decree followed the terms of the operative portion of the trial Court’s judgment, which they set out in their judgment. They pointed out that there was a specific clause in the operative portion of the judgment which gave the puisne mortgagee a charge for the amount paid by him. It was in this form,
A charge of Rs. 4542 or for such lesser amount if any as may be found due to defendant 3, in respect of the deed dated the 3rd April, 1917.

The question that their Lordships had to consider was whether the decree declared a charge which had existed before or whether it created one. Their Lordships pointed to the concluding portions of the Subordinate Judge’s judgment and said that it was clear that the decree had created a charge. It may be noted that the form which the decree took in that case was not the usual one in a suit for foreclosure; for under the circumstances of that case it was necessary for the Court to consider what were the rights of the various parties to the suit. I am therefore of the opinion that Batey Krishna v. Parsotam Das did not overrule by implication Kotappa v. Raghavayya which is still good law as far as this High Court is concerned. If that is so, then the suit is out of time.

4. The lower appellate Court, as I have said, was of opinion, that a decree might have been passed under Section 69 of the Contract Act were it not for the fact that the suit was out of time. It was of opinion that Article 61 of the Limitation Act applied, which relates to a money suit ” for money payable to the plaintiff for money paid for the defendant,” for which the period of limitation is three years from the time when money is paid. That description would apply equally well to a payment made under Section 69 as to one under Section 70 of the Contract Act. In Kotappa v. Raghavayya, Madhavan Nair, J., said:

If his right to recover the amount is considered merely as a right for the reimbursement of the money, then the three years’ period under Article 61, Schedule I of the Limitation Act during which the right may be exercised having admittedly passed he is now precluded from claiming the amount in this case.

and followed Shah Lal v. Munilal (1921) I.L.R. 44 All. 67 and Sibanand Misra v. Jagmohan Lal (1922) I.L.R. 1 Pat. 780 : 68 I.C. 707. The learned advocate for the appellants relies on Saradamba v. Pattabhiramayya (1930) 60 M.L.J. 13 53 Mad. 952, in which Article 120 was applied. It is said that the nature of the claim in that case was somewhat similar to that in this and that therefore Saradamba v. Pattabhiramayya (1930) 60 M.L.J. 13 53 Mad. 952 is an authority for the position taken by the learned advocate for the appellants that Article 120 applies to a claim made under Section 69 of the Contract Act, it being argued that Article 61 of the Limitation Act would apply only to a claim under Section 70 of the Contract Act. In Saradamba v. Pattabhiramayya (1930) 60 M.L.J. 13 53 Mad. 952, however it was conceded in argument that the claim made was not one either under Section 69 or under Section 70 of the Contract Act, but was a claim by an executor de son tort. That being so, this can be no authority on the question of the proper article of the, Limitation Act to be applied to a suit under Section 69 of the Contract Act.

5. There remains for consideration the claim by the appellants that in paying off the mortgage amount on the 29th July, 1936, the plaintiff became entitled to an equitable charge on the property which had been mortgaged to the person whom he paid off. There is however no scope for the application of an equitable principle granting a charge when the plaintiff is Entitled under Section 92 to be surrogated to the rights of the mortgagee. He then stands in the shoes of the mortgagee and is in a stronger position than if he had had a more equitable charge. The reason for his wishing to be considered an equitable mortgagee by reason of the payment is to give scope for an argument that at the time of the payment he became entitled to a charge under the decree which would give twelve years from the date of the decree. A similar claim was considered by Madhavan Nair, J., in Kotappa v. Raghavayya (1926) 52 M.L.J. 532 : I.L.R. 50 Mad. 626 quoted above, where he said:

It is conceded in Shib Lal v. Munni Lal, that the puisne mortgagee obtains the charge under Section 74 of the Transfer of Property Act. If so there is no justification for the conclusion that the period of limitation should be calculated from the date of payment as if a new charge had come into existence by such payment.

7. One other point has been raised. During the pendency of the suit, the second defendant died; and it is said that the first defendant is his heir. If so, then it might be said that since the first defendant had purported to mortgage the property to the plaintiff on the 21st July, 1924, the plaintiff would be entitled to proceed against the property which had now come into the possession and ownership of the first defendant. After the second defendant died, the plaint was not however amended; and there was no issue on this question. It is therefore impossible for me in second appeal to consider any claim that the plaintiff might have on this head. He was not bound to amend his plaint, for the cause of action arose after the suit had been filed; and so the plaintiff can be left to pursue such other remedies as he might have against the first defendant in view of any changes that might have resulted from the death of the second defendant. Nor is it necessary or even proper to adjudicate on the various questions that have arisen with regard to the bringing on record of the fourth defendant.

8. The appeal is dismissed with costs.

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