KESAVAN CHETTIAR Vs. PAKSHI RAMASWAMI CHETTIAR

JUDGEMENT

(1.) This appeal raises an interesting point in the law of limitation. It arises out of proceedings taken in execution of the final decree in a mortgage suit, O.S. No. 181 of 1931. That suit was upon two mortgages of 1921, the more important of which was a usufructuary mortgage by the terms of which the mortgagee was put in possession of five shops and permitted to appropriate the total income from the shops in part payment of the interest due to him. The final decree was obtained on 18 September 1933, and on 10 March 1938, i.e., four and half years later, the legal representatives of the mortgagee decree-holder brought the present application for execution. During that period he and they had remained in possession of the shops receiving the income therefrom as before. They rely on Sub-section (2) of Section 20, Limitation Act, to bring their application within time and both the Courts below have held that the application is not barred. The question before me is whether that decision is right or wrong. Sub-section (2) runs as follows: Where mortgaged land is in the possession of the mortgagee, the receipt of the rent or produce of such land shall be deemed to be a payment for the purpose of Sub-section (1).

(2.) It is contended for the appellant that the income received from 1933 to 1938 was not received by the mortgagee and the respondents in their capacity as mortgagees, but only in their capacity as decree-holders. It is contended for the respondents that the mere fact of the passing of the final decree does not affect the status of the mortgagee who remains as much a mortgagee after the decree as before. It is not disputed that from the date of the final decree the decree- holder was entitled to interest at only 6 per cent, and not according to the terms of the mortgage bonds; and also that he was entitled to this interest not upon the amount borrowed on the bonds, but upon the total amount declared to be due in the final decree. I think the contention of the appellant in this appeal must prevail. In Sunder Koer V/s. Rai Sham Krishen ( 07) 34 Cal. 150 at p. 161, the effect of the provisions of a mortgage decree is considered and it is pointed out that when the mortgaged property is not redeemed within the time allowed the matter passes from the domain of contract to that of judgment, and the rights of the mortgagee henceforth depend not upon the contents of his bond, but upon the directions in the decree.

(3.) It is also pointed out that the practice of allowing interest in the decree upon the aggregate sum then found due is justifiable only upon the assumption that the mortgagee is now treated as a decree-holder or judgment-creditor. In Ellarayyan V/s. Nagasami Iyer ( 26) 13 A.I.R. 1926 Mad. 816, it was held that when a final decree for sale was obtained by a mortgagee who continued in possession without executing it, the mortgagor was debarred on the principle of res judieata from instituting a suit for redemption. On page 703 it is pointed out that payments made before a final decree are payments by a mortgagor : payments made after it are by a judgment-debtor. Now it is true that in neither of these cases just quoted was any question of limitation in issue, but I think, nevertheless, that they are of primary importance in the decision of this appeal. What, after all, is the principle underlying the law of limitation? Surely it is this that a claimant must take action within the time prescribed by law but that that time can be extended by some action on the part of his opponent who acknowledges the claim. The most common form which this action takes is that of payment. Now the receipt of rent by a mortgagee in possession is not payment by the mortgagor in the ordinary sense of that word. Section 20 says that it shall be deemed to be payment. Why Clearly, I think, because the mortgagor has himself consented to it in his contract with the mortgagee. It is thus an acknowledgment, continually repeated so long as the contract is in force, by the mortgagor of the mortgagee's claim under the mortgage. But a final decree puts an end to the contract and in regard to payment substitutes new terms to regulate the rights of the parties. It is no longer open to the mortgagee, who has become the decree-holder, to appropriate the income of the mortgaged property towards his interest. That interest is limited to 6 per cent, and he must recover it by sale of the mortgaged property. If he remains in possession and appropriates to himself the income of the mortgaged property that is no longer an action to which the mortgagor, who is now the judgment-debtor, has consented - and is therefore in no sense any acknowledgment by him. It can be regarded in law as the action of the mortgagee decree-holder alone - and nothing that a claimant himself does can avail him to extend his period of limitation. I am of opinion therefore that Section 20 cannot successfully be called in aid by the respondents on the facts of this case. I need refer only briefly in conclusion to an authority cited for the respondents, Vaidhinathasamy Iyer v. Somasundara Pillai `( 05) 28 Mad. 473. This ruling also does not deal directly with any question of limitation, being concerned with the question of the adjustment of a decree under what is now Order 21, Rule 2, but on. p. 478 occur these words: Reference was next made to the case of a mortgagee in possession of the mortgaged property and in receipt of the usufruct even after, the mortgage decree was passed. No doubt under Section 20, Limitation Act, such receipts are treated as payments to the mortgagee.