MUTHUKRISHNIER AND THREE ORS Vs. VEERARAGHAVA IYER

JUDGEMENT

(1.) Under Exhibit A the defendants mortgaged to the plaintiffs a house and a promissory note which had been executed to the defendants, by a third party as security for money owing by the defendants to the plaintiffs. The promissory note was not endorsed to the plaintiffs. It became time-barred, and the question is whether on the taking of accounts the plaintiffs should be debited with the amount due on the note. It was not suggested that the plaintiffs could sue on the note. It was contended that the note was evidence of a pre-existing debt due by the third party to the defendants, that debt was by the mortgage assigned to the plaintiffs, and that the plaintiffs being the parties who were entitled to sue for the assigned debt were under an obligation to the defendants, to do so before the right to recover the debt became barred by limitation. The promissory note refers to a pre-existing debt due by the third party to the defendants, but I have had some doubt whether on the documents alone, coupled with the fact that the maker of the note attested the mortgage to the plaintiffs and that is all we have to go on-there is evidence of a pre-existing debt. No attempt appears to have been made to show that there was no debt (in the Court of First Instance the defendants sought to show that the amount due on the note had been paid) and I think we are warranted in holding that there was a debt. The mortgage thereof was, in my opinion, a transfer of an actionable claim within the meaning of Section 130 of the Transfer of Property Act, which vested in the transferee the rights and remedies of the transferor, subject to the equities which remained in the transferor by reason of the fact that the transfer was by way of security. This is in accordance with the decision of the Privy Council, in the recent case of Mulraj Khataw v. Viswanath Prabhuram (1913) I.L.R., 37 Bom., 198 (P.C.), which does not appear to have been reported when this appeal was argued before Sundara Ayyar, J., and Sadasiva Ayyar, J. In the Privy Council Case the contest was between a party who held an assignment in writing of a policy and parties holding a deposit of the policy by way of security which was earlier in date than the assignment in writing. Their Lordships held in favour of the parties holding the written instrument. In the judgment they observe with reference to the assignment in writing "It may well be that although absolute in form it was intended to be only by way of security so as to be subject to a right of redemption, but this does not affect the rights of the parties under the circumstances of the present case." And again "He (the party claiming under the instrument) has an absolute right to the proceeds of the policy."

(2.) The rights of the transferor being vested in the transferee by the express words of the section, the transferee is the only party entitled to sue, and this being so, he is, I think, accountable to the transferor for having allowed the remedy to become time-barred.

(3.) I do not think any useful purpose would be served by a discussion of the English authorities. The cases turn on the language of Section 25(6) of the English Judicature Act, 1873. In the Privy Council decision to which I have referred, their Lordships observe "The error (of the Court in India) arose from the learned Judges not having appreciated that the positive language of the section precluded the application in India of the principles of English law on which they based their decision."