JUDGMENT
Grimwood Mears, C.J., Piggott, Walsh, Ryves and Sulaiman, JJ.
1. Second Appeal No. 801 and Second Appeal No. 802 of 1920 are plaintiff’s appeals arising out of a suit for sale, on the basis of a mortgage-deed, dated the 16th of November, 1905, executed by the father of the present defendants in favour of the plaintiff. The defendants did not put in an appearance in the court of first instance and no written statement was filed on their behalf. The learned Subordinate Judge, relying on a clause in the mortgage-deed, which entitled the mortgagee to sue for the whole amount of principal and interest, on default of payment of annual interest, held that the claim to enforce the charge was barred by time under Article 132 of the Limitation Act, but he was, however, of opinion that the personal remedy was not barred. He, accordingly, granted the plaintiff a simple money-decree.
2. Both parties appealed to the learned District Judge who, holding that the personal remedy also was barred, dismissed the whole suit. The plaintiff appealed to this Court from the lower appellate court’s decrees and his appeals came up for hearing before a Bench of this Court which, in view of some apparent conflict of opinion, has referred these cases to a Full Bench. There are only two points which arise for our determination:
(1) Whether the plaintiff’s claim to enforce the charge by sale of the mortgaged property is barred by time.
(2) Whether, in any case, he is entitled to a simple money-decree.
3. As some argument has turned on the actual wording of the document in suit, we think it desirable to quote the operative portion of it in full. It is as follows:
I hereby covenant and give in writing that I shall pay the money aforesaid with interest at the rate of 8 annas per cent., per mensem, within a period of twelve years and shall pay interest from year to year. In case of non-payment of interest from year to year, the creditor has the option to add the interest to the principal and to charge interest thereon at the aforesaid rate or to recover through court principal and interest from me and hypothecated property and also from my other movable or immovable property and from my person within the stipulated period. The period fixed shall not bar the claim. In case of non-payment within the stipulated period, the creditor shall have the power to recover the money, principal and interest together with compound interest, from me, mortgaged property or other movable or immovable property of mine. If I am not able to pay the money within the stipulated period and with the consent of the creditor the money remains unpaid, the interest and compound interest at the aforesaid rate shall continue to run at the stipulated rate till the date of realization.
4. It is clear from the terms of this document that the ordinary period fixed for payment was 12 years, and, if no default were made, the mortgagee would not have been entitled to sue for the recovery of his money before the expiry of the period fixed. If, however, a default were made in payment of the annual interest it would be open to the mortgagee, if he so desired, to sue for the whole amount of principal and interest; and it is clear that, in that case, the mortgagor could not succeed on the plea that the claim was premature. On the other hand, there is nothing in the deed which makes it obligatory on the mortgagee to sue as soon as a default is made.
5. Now, there can be no doubt that a suit for sale on the basis of a mortgage-deed is one to enforce payment of money charged upon immovable property, within the meaning of Article 132 of the Limitation Act of 1908. The previous decisions to the contrary were overruled by their Lordships of the Privy Council in the case of Vasudeva Mudaliar v. Srinivasa Pillai (1907) I.L.R. 30 Mad. 426. This view has been accepted by the Legislature and the wording of Article 132 has remained unaltered and a special period of grace provided for in Section 31 of the new Act.
6. It being beyond question that Article 132 applies, we have to look to the words in the third column of that article in order to determine the point of time from which limitation begins to run. The period of limitation is 12 years from the time “when the money sued for becomes due.” We Have, therefore, to answer the simple Question, when did the money become due in the present case? Obviously money becomes due as soon as it becomes payable by the mortgagor to the mortgagee, that is to say as soon as it can be legally recovered by the mortgagee. The question whether the mortgagee chooses to wait and does not sue at once, is wholly immaterial. The money might be due and yet the mortgagee may not like to call it in at once and may safely wait for a period of 12 years. Examining the terms of the mortgage-deed in this light, it is obvious that as soon as the first default was made, a right accrued to the mortgagee to sue for the whole sum with interest. Whether he chose to avail himself of it or not, is another matter. On default having been made, the money certainly did become due at once; the mere circumstance that the creditor had the option of not calling in the money cannot wipe out the fact that the money had in fact become due.
7. The view expressed above is undoubtedly in consonance with the rule of law prevailing in England. In Hemp v. Garland (1848) 62 R.R. 423 (426) it was remarked, ”if he chose to wait till all the instalments became due, no doubt he might do so; but that which was optional on the part of the plaintiff would not affect the right of the defendant, who might well consider the action as accruing from the time that the plaintiff had a right to maintain it. The statute of limitation runs from the time the plaintiff might have brought his action, unless he was subject to any of the disabilities specified in the statute.” This case was followed by the English Court of Appeal in Reeves v. Butcher (1891) 2 Q.B.D. 509 where money had been lent for a. fixed period of five years “subject to the power to call in the same at an earlier period” under certain events, including a default in the payment of any quarterly interest for 21 days. It was held in that case that a claim brought more than six years after the first default was barred by time inasmuch as the cause of action arose on the first default, and that the time began to run from the earliest time at which the plaintiff could have brought her action. These cases are accepted law in England (vide Halsbury’s Laws of England, Vol. XIX, p. 44).
8. It has been very strongly urged before us that the effect of holding that time begins to run from the first default would be to strike out an important clause under which the mortgagee is given the option to wait, and this would be going against the express intention of the parties. But it is not quite easy to see what is really meant by saying that the mortgagee has the option of suing or not suing. In either case, he is not bound to sue at once; he can, in fact, wait for 12 years. If by the word “option” is meant that the parties agree that although the money does become recoverable yet the mortgagee can wait and at the same time keep the statute of limitation in abeyance, then it would be a case of contracting out of the statute. An agreement of this kind can never have the effect of preventing the period of limitation from running out. But as a matter of fact there is in the deed no covenant that limitation will not begin to run, and the option after all might not mean anything more than that a forbearance to sue would not disentitle the mortgagee from claiming interest, but that interest would continue to run though no suit is brought for some time. If this only is the intention of the parties, then no difficulty whatsoever arises.
9. Our attention has not been invited to any pronouncement of their Lordships of the Privy Council which would cover the point arising in this case. The only Privy Council case to which reference has been made is that of Juneswar Dass v. Mahabeer Singh (1875) I.L.R. 1 Calc 163. Although it is conceded that the point before us did not directly arise in that case and the remark relied upon by the learned vakil for the appellant was a mere obiter dictum, nevertheless any observation of their Lordships is entitled to the greatest weight and should be a guide to us. It is. therefore, necessary for us to consider that case carefully. There was a mortgage-deed executed on the 21st of June, 1856, which was subsequently registered and under which it was stipulated that the money would be repaid in June, 1866, but that in the event of the lands being sold in execution of a decree obtained by a third party, the mortgagee would be at liberty at once to sue for the recovery of the debt. On the 18th of May, 1865, the lands mortgaged were actually sold in execution of a simple money-decree. On the 30th of August, 1871, that is, more than six years after but within 12 years of the date of the sale, a suit to recover the amount on the mortgage-deed was instituted. The defendants pleaded that Clause 16 of Act XIV of 1859, which was the general clause applicable to suits for which no other limitation was expressly provided, was applicable, and that the claim was barred by the six years’ rule. Their Lordships repelled this contention, holding that the clause applicable was Clause 12 which governed suits “for recovery of immovable property or of any interest in immovable property to which no other provision of this Act applies.” Referring to the contention of the counsel for the defendants that the six years’ rule applied, their. Lordships remarked that they must not be supposed to give any countenance to the argument that the suit would have been barred if the limitation of six years under Clause 16 had been applicable to it.
10. Now it is to be noted that in the old Limitation Act of 1859 there was no clause which in any way corresponded to Article 132 of the present Limitation Act and their Lordships felt constrained to apply the general article for recovery of immovable property, corresponding to the present Article 144. No one contends that that applies in the present case. Furthermore the counsel for the appellant was driven to fall back on the omnibus Clause 16 for “suits for which no other limitation is hereby expressly provided,” corresponding to the present Article 120 which, it is contended before us, is inapplicable to the present’ case. In fact, there is a uniform course of decisions in all the High Courts that Article 116 of the Limitation Act would be applicable to a mere money claim based on a registered bond, and not the general Article 120. Their Lordships of the Privy Council also have, in the recent case of Tricomdas Cooverji Bhoja v. Sri Sri Gopinath Jiu Thakur (1916) 25 C.L.J. 279 accepted the interpretation put on Article 116 in a long series of Indian decisions and held ”that the compensation for the breach of a contract” does not only point to a claim for unliquidated damages but is used in a very wide sense and includes a claim for payment of a certain sum. It is, therefore, obvious that the case of Juneswar Dass v. Mahabeer Singh (1875) I.L.R. 1 Calc 163 cannot, in any way, be taken to have decided the point which arises before us, nor had their Lordships then to interpret the meaning of the expression “when the money sued for becomes due” which we have to consider.
11. Coming to the Indian Courts we find that the decisions have by no means been uniform. We do not, however, feel called upon to review the numerous authorities of the courts other than our own. We simply content ourselves with mentioning a few cases holding the two opposite views.
12. Sitab Chand Nahar v. Hyder Malla (1896) I.L.R. 24 Calc 281 Perumal Ayyan v. Alagirisami (1890) I.L.R. 20 Mad. 245 and Jagdeo Singh v. Bal Govind Singh (1909) 2 Indian Cases 653 tend to support the view that time begins to run from the date of the first default.
13. Nettakaruppa Goundan v. Kumarasami Goundan (1897) I.L.R. 22 Mad., 20 and Narna v. Ammani Amma (1916) I.L.R. 39 Mad. 981 favour the contrary view.
14. The case of Shankar Prasad v. Jalpa Prasad (1894) I.L.R., 16 All. 371 was the case of execution of an instalment decree for which different considerations altogether might arise. We consider it unnecessary to express any opinion about that case.
15. The case of Maharaja of Benares v. Nand Ram (1907) I.L.R. 29 All. 481 was the case of an instalment bond which was governed by Article 75 which expressly provides that the payee or obligee may waive the benefit of the provision entitling him to sue for the whole amount on default being made.
16. The cases of Ajudhia v. Kunjal (1908) I.L.R. 30 All 123 and Amolak Chand v. Baijnath (1913) I.L.R. 35 All. 455 are also cases under Article 75 and have no direct application to the present case.
17. The leading case in point is the case of Gaya Din v. Jhumman Lal (1915) I.L.R. 37 All., 400. In that case the majority of the learned Judges held that money “becomes due” within the meaning of Article 182, and time begins to run, from the date of the first default. The learned Chief Justice remarked: “It seems to me that the money is due when it can be legally demanded, and it is admitted in the present case that the money, secured by this mortgage, could have been legally demanded and recovered after the first default, and had a suit been brought for its recovery by sale of the mortgaged property, the defendants could not have pleaded that such a suit was premature.” We entirely agree with this view and consider that it lays down the right test to apply in such cases. Banerji, J., in his dissenting judgment, was mainly influenced by the circumstance that under the terms of the mortgage-deed then in suit, the mortgagee was ”competent to wait for the full period of 10 years stipulated in the bond and it is not obligatory on him to call in the money on the occurrence of a default in the payment of the instalments.” We are, however, distinctly of opinion that the question whether the mortgagee is bound to sue or not and whether he does at once sue or not, is wholly irrelevant to the issue. So long as he can sue, even though he does not choose to sue, the money has become due. We have, therefore, no hesitation in saying that the view taken by the majority of the learned Judges in the Full Bench case referred to above was correct.
18. The case of Mata Tahal v. Bhagwan Singh (1921) 19. A.L.J. 406 suggested a rule contrary to that laid down by the Pull Bench. Neither the report nor the judgment, however, shows that the previous Full Bench case was brought to the notice of the learned Judges. We shall have to revert to this case in connection with the second point raised in these appeals.
19. In the case of Girdhari Lal v. Gobind Ram (1921) 19. A.L.J. 456 the mortgage-deed had provided that in the event of non-payment of interest for two consecutive half-years, the mortgagees would have the power either to benefit themselves by charging compound interest or to sue without waiting for the period fixed for the whole of the principal and interest or to sue for the interest alone. The learned Judges were of opinion that when three options were given to the mortgagees and they “did not choose to exercise the option of suing for the whole amount on default of the payment of two consecutive instalments of interest by the debtor, it cannot be said that the time began to run from such abstention.” The previous Full Bench case was distinguished on the ground that “in that case no option, so far as we can see from the recital of the terms of the bond given therein, was given to the creditor.” We think that this ground of distinction is not well founded. In the Full Bench case the mortgagee was given ”the liberty to realize the entire amount with interest” and “if the mortgagee in his desire for interest does not bring a suit on any default, the interest shall continue,” and the judgment of Banerji, J., proceeded on the ground that the mortgagee had such an option. In any case, as we have already remarked above, the mere fact that a mortgagee has the option to sue or to wait would not prevent the money from becoming due and limitation running under Article 132 against him.
20. In the case of Pancham v. Ansar Husain (1921) I.L.R. 43 All., 596 the Full Bench case was followed, though presumably in deference to the view expressed in the earlier case of Girdhari Lal v. Gobind Ram (1921) 19. A.L.J. 456 a point was made that in the deed in question no option whatsoever was given to the mortgagee in the matter. We have already said that any distinction based on the existence of an option is a distinction without a difference and was, moreover, an error of fact. An option was given.
21. In the case of Nathi v. Tursi (1921) I.L.R. 43 All. 671 the view expressed in the case of Mata Tahal v. Bhagwan Singh (1921) 19. A.L.J. 406 was dissented from on the ground that it was in conflict with the Full Bench case, and it was held that “the statute in our view must run from the date of the first default. The liability to pay or, in other words, the test of whether money becomes due or not is the obligation which the borrower has taken upon himself by his signature to the written document. It cannot depend on the volition of the creditor.”
22. The case of Ram Das v. Muhammad Said Khan (1922) 20 A.L.J. 846 is, so far as we have been informed, the latest reported case of this Court following the previous Full Bench case.
23. Both on principle and the balance of authority, therefore, we are of opinion that the view taken by the court below is correct and that the first default having occurred more than twelve years before the suit, the money sued for became due then and the present claim for the enforcement of the charge is barred by time under Article 132 of the Limitation Act.
24. There remains the second question whether, even if the mortgagee cannot get a decree for sale, he is nevertheless entitled to a simple money-decree. Although the relief for recovery of money otherwise than by enforcing the charge would be governed by another article with a different period fixed, yet it would be a startling thing to find that the time for recovery of the amount due by sale of the property has begun to run, while that for recovering it as a simple debt has not yet started. One would suppose that the cause of action would be the same for both, though different periods might be fixed for the enforcement of the two reliefs. There is one case in which it has been actually held that although defaults were made yet the mortgagee was not bound to sue for the whole money as soon as there was failure in payment, and that time did not begin to run till after the date originally fixed. This is the case of Mata Tahal v. Bhagwan Singh (1921) 19 A.L.J. 406 already referred to. Let us examine what the decision in this case comes to. The mortgagee has a right to sue for the whole money if a default is made and his suit cannot be thrown out on the ground that it is premature. He has a perfectly good cause of action to sue if he so chooses, yet the limitation does not begin till the date originally fixed arrives. The result is that the mortgagee can sue long before the period of limitation for his suit begins to run. This is a reductio ad absurdum. We must, therefore, examine the premises on which the conclusion is based. The learned Judges have not quoted the article which, in their opinion, was applicable, but from the remark that the mortgagee had the option to wait till “the period fixed” we take it that they intended to apply Article 66 read with Article 116 of the Limitation Act. This would be in harmony with three earlier cases, namely, the cases of Gaya Prasad v. Sher Ali (1917) 15 A.L.J. 313, Makrand Singh v. Kallu Singh (1919) I.L.R. 41 All., 581 and Sham Lal v. Tehariya Lakhmi Chand (1920) 18 A.L.J. 476. In the last mentioned case Tudball, J., while referring to the two earlier cases, remarked “whether these decisions are right or wrong, we can see no reason whatsoever, in the present case at any rate, for expressing any opinion to the contrary. One of us was a party to one of these decisions and until these decision are set aside by a larger Bench, we can see no reason why we should not follow them.”
25. There can be no doubt that the basis of these decisions, namely, that the claim for a personal decree is governed by a different article and not by Article 132, and that, therefore, the Pull Bench ruling in Gaya Din v. Jhumman Lal (1915) I.L.R. 37 All. 400 is inapplicable, is perfectly sound and cannot be questioned. The mistake which was made in Gaya Prasad v. Sher Ali (1917) 15 A.L.J. 313 was in assuming that it was Article 66 read with Article 116 which governed the case. In the subsequent cases referred to above, it was simply taken for granted that Article 66 applied. We think that this was not a correct view. The expression “single bond” used in Article 66 is clearly borrowed from the English Law. In Lord Halsbury’s Laws of England, Vol. III. page 80, it is said that ” a bond merely for the payment of a certain sum of money without any condition in or annexed to it, is called a simple or single bond, and that such instruments are rarely, if ever, met with at the present day”…whereas a “double” or “conditional bond” is a form of bond accompanied by a condition in the nature of a defeasance providing that on due performance of the condition the bond shall be void. This distinction was very clearly pointed out by Collins, L.J., in Dixon, Keynes v. Dixon (1900) 2 Ch. D. 561 (582).
26. Now the bond in the present case is in marked contrast with that, before the Full Bench in Husain Ali Khan v. Hafiz Ali Khan (1881) I.L.R. 3 All. 600 which was obviously a single bond without any condition attached and it was then rightly held that Article 66 read with Article 116 applied. The bond in suit in the present case cannot at all be called a single bond within the meaning of Article 66. The period primarily specified for payment is 12 years, but it contains the condition that in case of non-payment from year to year the creditor would either add the interest to the principal and charge interest thereon or sue for the whole money and realize the amount from the property hypothecated as well as the other property of the mortgagor. It further provides that in case the money is not paid within the stipulated period, compound interest will continue to run till realization. In our opinion such a bond cannot be regarded as a single bond, the time for suing on which runs only from the day specified.
27. The expression “bond subject to a condition” as used in Article 68 seems also to have been borrowed from the English Law and refers to what is there called a double or conditional bond with a condition in the nature of a defeasance. The bond in question is not such a bond either. Nor is it an instalment bond within the meaning of Article 75. In our opinion the case falls under Article 80 which governs a “bond not herein expressly provided for” in which case the time begins to run from the date when “the bond becomes payable.” It is to be noted that in the old Limitation Act, XIV of 1859, which governed the case of Juneswar Dass v. Mahabeer Singh (1876) I.L.R. 1 Calc. 163 there was no clause similar to Article 80 of the new Act which could take the case out of the general clause. Reading Article 80 with Article 116 which would be applicable to a registered document, the period for recovery of a simple money decree on the basis of the registered deed in suit would be six years from the date “when the bond becomes payable.” Now the expression “becomes payable” is, in our opinion, very much the same thing as the words “becomes due” used in Article 132. Consequently the cause of action for both the reliefs would arise at one and the same time, and the period of limitation for both would begin to run simultaneously. Of course in the case of the enforcement of the charge, the period would be 12 years, whereas for a simple money-decree it would be only six.
28. In a very old case, Ball v. Stowell (1879) I.L.R. 2 All. 322 SPANKIE, J., was of opinion that a bond, somewhat similar to the one before us, was neither an instalment bond, nor a single bond, nor a bond subject to a condition, and that, therefore, neither Article 75 nor Article 66 nor Article 68 applied. He accordingly applied Article 80. The other learned Judge, however, took a different view.
29. In the case of Har Narain v. Beni Pershad (1905) 8 Oudh Cases 77 the view of SPANKIE, J., was followed by Chamier, ‘A’. C.J., who pointed out that “a single bond is a deed wherein a party acknowledges himself to be. bound or indebted to another in a certain sum of money which he promises to pay. If there is appended to it a condition that upon the performance of a certain act the bond is to be void, otherwise to remain in force, it is called a bond with a condition.”
30. We are aware that opinion in the various High Courts on this point is sharply divided. But agreeing with Spankie, J., and Chamier, A.C.J., we hold that the present bond does not fall either under Article 66 or Article 68 or Article 75, but falls under Article 80 read with Article 116. In this view of the case the time began to run against the mortgagee, for both the reliefs claimed, from the date of the first default when the money became payable. The learned District Judge was, therefore, right in dismissing the suit in toto.
31. The result is that both these appeals fail and are hereby dismissed with costs in all courts.
