Devalla, Guruswamiah and ors. Vs. E. Ramakrishna Naicker and anr.

Devalla, Guruswamiah and ors. vs E. Ramakrishna Naicker and anr.

Type Court Judgment Court Chennai Decided Aug 01, 1963

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Citation: sooperkanoon.com/798273
Court: Chennai High Court
Judge: Veeraswami, J.
Decided On: Aug 01, 1963
Case Number: Second Appeal No. 1044 of 1961 and A.A.O. No. 80 of 1962
Subject: Property

Case Summary

AI-generated summary - not the official court judgment text.

Transfer of Property Act (IV of 1882)--Sections 59-A, 69--Scope of--Civil Procedure Code (V of 1908)--In forma pauperis application--Sale under Section 69 of Transfer of Property Act by second mortgagee--No notice to first mortgage necessary--Recital in sale deed amounts to acknowledgment of liability ; The term mor...

Key legal issue: Property
Acts & sections: Transfer of Property Act - Sections 59A and 69; Limitation Act - Sections 19

Parties & Advocates

Appellant / Petitioner

Devalla, Guruswamiah and ors.

Respondent

E. Ramakrishna Naicker and anr.

Legal References

Acts: Transfer of Property Act - Sections 59A and 69; Limitation Act - Sections 19
Cases Referred: Green v. Humphreys
Reported In: AIR1965Mad142

Excerpt

transfer of property act (iv of 1882)--sections 59-a, 69--scope of--civil procedure code (v of 1908)--in forma pauperis application--sale under section 69 of transfer of property act by second mortgagee--no notice to first mortgage necessary--recital in sale deed amounts to acknowledgment of liability ; the term mortgage in section 69 does not cover a second mortgagee. section 59-a which also governs section 69, lays down a rule of interpretation. but the section makes a difference between mortgagors and mortgagees and the person deriving title from them respectively. therefore, unless a person deriving title does so, not as a second mortgagee or the like, but for instance, as an assignee of the interest of the mortgagor qua mortgagor, he will not be a mortgagor for the purposes of section 59-a.; the suit property belonged to one r. on his death his estate vested with the administrator-general for administering the same on behalf of r's minor sons. on 18th february 1938, the administrator-general sold the property to the father of the respondents. but the purchaser on the same date executed a mortgage to secure a part of the price not paid at that time. the purchaser was adjudged an insolvent and in the insolvency the official assignee, madras, sold the property to the insolvent's son, the respondent, on 23rd may 1955. that sale deed by the official assignee contained a recital: unto and to the use of he purchaser subject to all mortgages, litigations, etc., and the official assignee gave notice of it to the administrator general. the respondent's father and mother executed a second mortgage over this property. the quondam minors, on attaining majority, invoked their power to bring the property to sale under section 69 of the transfer of property act, and the respondents obtained an injunction restraining the appellants from bringing the property to public auction under section 69 of the transfer of property act without giving notice to the second mortgagee...........from the official assignee in the insolvency of his father. this affidavit referred to the fact that his father had executed a mortgage in favour of the administrator general for a definite sum in 1938 and that a sum of rs. 6000 was due on that mortgage. the court below held that this did not amount to an acknowledgment, as at the time the statement was made by the respondent, he had no subsisting liability to pay the debt. there is no doubt that this was the correct view to take. before me, learned counsel for the appellants relied on krishnayya v. venkatapayya, air 1925 mad 134 and fakirchand v. narmada bai, air 1943 bom 461 and contended that to constitute a valid acknowledgment under s. 19 of the limitation act, it was not necessary that the acknowledgor should at the time of the acknowledgment be under an existing liability and that it was sufficient that, at the time of the enforcement of the debt, the acknowledgor had become liable to pay the debt. the cases relied on no doubt support the contention. but with due respect, i can find no justification for that view. the bombay high court itself in fakirchand v. narmadabai, air 1948 bom 125 on appeal did not accept that view. so far as the madras judgment is concerned, i am relieved of the necessity of further examining it and other later cases since a full bench of this court in nallathambi nadar v. ammal nadachi, s. a. no. 937 of 1959: ((fb)) has not accepted the principle of the decision in air 1925 mad 134, as good law. there the learned judges held:"where the acknowledgment is in respect of a liability it implies that the person who acknowledges admits or owns the liability. it a person who is a stranger to the liability makes a statement as to the subsistence of the liability, it cannot amount to an acknowledgment in law because he cannot own or admit the liability."though the question did not directly arise before the supreme court, in shapoor fredoom mazda v. d. p. chamaria, it accepted as correct.....

Full Judgment

(1) In the second appeal the question is whether it is necessary, for valid exercise of the power of sale under S. 69 of the Transfer of Property Act, that the first mortgagee, who invokes the power, should give notice of it to the second mortgagee and in the other appeal, C. M. A. No. 80 of 1962, the question is one of limitation. The property in question originally belonged to one Devalla Ramaiah. On his death, his estate vested in the Administrator General for administering the same on behalf of Ramiah's minor sons. On 18-2-1939, the Administrator General sold the property to the father of the respondent in the second appeal. But the purchaser on the same date executed the mortgage to secure a part of the price not paid at the time. The respondent' father was adjudged as insolvent in I. P. No. 46 of 1942 on the file of this court and in the insolvency, the Official Assignee, Madras sold the property to the insolvent's son, the respondent, on 23-5-1955. It appears that the respondent's father and mother had executed a second mortgage over this very property. I do not think it necessary to refer to the litigation on the second mortgage and its result. The last of the minors became a major on 28-3-1945 on the completion on his 21st year. On the terms of the mortgage, in favour of the Administrator General, the amount due under it became payable on the date when the last of the minors became a major. The appellants, the quondam minors, invoked their power of sale under S. 69 of the Transfer of Property Act and took steps to bring the property to auction through auctioneers on 27-4-1957. But before the sale took place, the respondent brought the suit out of which this second appeal arises, for an injunction restraining the appellants from exercising their power of sale. There were a number of issues on which both the courts below were agreed except in regard to one question, namely, whether the power of sale could not be exercised by the appellants for their failure to serve notice on the second mortgagee. On that question, the lower appellate court, differing from the trial court, considered that such a notice was required under the terms of S. 69 read with Sec. 59A of the Transfer of Property Act. It was on that view the lower appellant court reversed the trial court's decree and decreed the suit. The second appeal is directed against this appellate decree.

(2) The civil miscellaneous appeal arises out of an order dismissing the appellant's application for leave to sue in forma pauperis on th view that the cause of action was prima facie barred by limitation. This view was formed by the trial judge on the ground that the suit should have been failed within 12 years of 24-3-1947, that is to say on 24-3-1959, the former date being the date when the last of the minors became a major and the amount due under the mortgage in favour of the Administration General became payable. He did not agree with the appellant's that the documents relied on by them amounted to an acknowledgment of the debt to save time.

(3) On the question of notice, I think the lower appellate court as clearly wrong. In my opinion, S. 69 of the Transfer of Property Act does not require a notice to be served on the second mortgagee in order that the first mortgagee second mortgagee in order that the first mortgagee may validly exercise his power of sale. That section no doubt says that no such power shall be exercised unless and until notice in writing requiring payment of principal money has been served on the mortgagor or one of several mortgagors and default has been made in payment of the principal money or part of it for the specified time after service. But the term "mortgagor" in the section does not, in my opinion cover a second mortgagee. It is true that S. 59-A, which governs also S. 69, lays down a rule of interpretation that unless otherwise expressly provided, references in the chapter to mortgagors and mortgagees should be deemed to include references to persons delivering title from them respectively. In a sense a second tittle from a mortgagee may be regarded as a person deriving title from a mortgagor. It is not in that sense, as I think, should the section be understood. The section makes a difference between mortgagors and mortgagees and the persons deriving title from them respectively. It seems to me, therefore, that unless a person deriving title does so, not as a second mortgagee or the like, but for instance, as an assignee of the interest of the mortgagor qua mortgagor he will not be a mortgagor for purposes of S. 59-A. That is the view a Bench of the Allahabad High Court in Piary Lal v. Dina Nath, ILR (1939) ALL 185 at p 190: (AIR 1939 ALL 190 at p. 192) was inclined to take with which I am in respectful agreement. The learned Judges opined:

Another argument was that a mortgagee would also derive title from mortgagor and therefore S. 59-A would also apply to mortgagees. We do not think that that is a correct interpretation of s. 59-A because that section state in regard to mortgagors and mortgagees that reference to them shall include 'references to persons deriving tittle form them respectively. A distinctions therefore drawn by S. 59-A between the two categories of mortgagors and mortgagees and doubtless the intention is that the persons who derive title from them are to be persons who deliver title s a mortgagor or as a mortgagee. That is, under the head 'mortgagor' would be included persons succeeding by inheritance or by will or by sale or by auction sale to the right of the equity of redemption held by a mortgagor and those words would not include persons who subsequently take mortgage from the mortgagor". It follows, therefore the view taken by the lower appellate court to the contrary cannot be sustained. The result is the second appeal is allowed.

(4) The application of the appellants to sue in forma pauperis was filed on 2-1-1961. A suit to enforce a mortgage brought on that date would certainly be barred by limitation unless time was saved by intermediate acknowledgments. On behalf of the appellants, two documents were relied on as acknowledgments. The first document is an affidavit dated 15-12-1954 sworn to by the respondent in support of an application for permission to purchase the suit property from the Official Assignee in the insolvency of his father. This affidavit referred to the fact that his father had executed a mortgage in favour of the Administrator General for a definite sum in 1938 and that a sum of Rs. 6000 was due on that mortgage. The court below held that this did not amount to an acknowledgment, as at the time the statement was made by the respondent, he had no subsisting liability to pay the debt. There is no doubt that this was the correct view to take. Before me, learned counsel for the appellants relied on Krishnayya v. Venkatapayya, AIR 1925 Mad 134 and Fakirchand v. Narmada Bai, AIR 1943 Bom 461 and contended that to constitute a valid acknowledgment under S. 19 of the Limitation Act, it was not necessary that the acknowledgor should at the time of the acknowledgment be under an existing liability and that it was sufficient that, at the time of the enforcement of the debt, the acknowledgor had become liable to pay the debt. The cases relied on no doubt support the contention. But with due respect, I can find no justification for that view. The Bombay High Court itself in Fakirchand v. Narmadabai, AIR 1948 Bom 125 on appeal did not accept that view. So far as the Madras judgment is concerned, I am relieved of the necessity of further examining it and other later cases since a Full Bench of this court in Nallathambi Nadar v. Ammal Nadachi, S. A. No. 937 of 1959: ((FB)) has not accepted the principle of the decision in AIR 1925 Mad 134, as good law. There the learned Judges held:

"Where the acknowledgment is in respect of a liability it implies that the person who acknowledges admits or owns the liability. It a person who is a stranger to the liability makes a statement as to the subsistence of the liability, it cannot amount to an acknowledgment in law because he cannot own or admit the liability."

Though the question did not directly arise before the Supreme Court, in Shapoor Fredoom Mazda v. D. P. Chamaria, it accepted as correct the view of Fry L. J. in Green v. Humphreys, (1884) 26 Ch D. 474 at p. 481 as succinctly and tersely representing the substance of the provisions contained in S. 19 of the Limitation Act. The English view was that an acknowledgment was an admission by the writer that there was a debt owing him. The Full Bench of this court has also made reference to this decision of the Supreme Court It follows, therefore, that the view of the court below, that the statement in the affidavit of the respondent did not amount to an acknowledgment, is correct.

(5) The next document relied on by the appellants before the court below was a statement in the sale deed dated 20-6-1955m executed by the Officials Assignee in favour of the respondent. That document contained a recital unto and to the use of the purchaser subject in all mortgages, litigations etc. The court below stated that the recital did not refer to the mortgage now in question as subsisting and that it would not be regarded as a specific acknowledgment of the same. It is not disputed, and indeed it cannot be, that the Official Assignee in whom the estate of the respondent's father. who was the debtor, had vested was competent to acknowledge the debt due under the first mortgagee. It is nobody's case that so far as the appellants were concerned, there was any other mortgage in their favour than the first mortgage here in question. The property was only subject to two mortgages one of them being in favour of the Administrator General. I am unable to agree with the court below that the recital did not refer to the suit mortgagee as subsisting. No doubt the recital did not in so many words say that the mortgage was subsisting on the date of the conveyance. But I think the recital in the context clearly indicated that there was the relationship of debtor, and creditor under the mortgage. This in itself, in my opinion, saved time.

(6) The matter does not stand there. Before the execution of the sale deed by the Official Assignee, he gave a notice dated 17-6-1955, a few days before the sale to the Administrator General, among others, notifying that he had sold the right title and interest of the insolvent in the suit property subject to all mortgages, litigations and risks to the respondent. Clearly and unmistakably, this notice addressed to the Administrator General referred to the mortgage executed by the respondent's father in favour of he Administrator General. Even if the recital in the sale deed contained any vagueness to regard it as an acknowledgment, this notice was specific enough and made it beyond doubt that the sale was subject to the mortgage in favour of the Administrator General. In my opinion, that clearly was an acknowledgment by the Official Assignee of the debt due under the first mortgage. It is true that this document was not filed in the application for leave to sue in forma pauperis. But it was part of the record in the second appeal and I do not think it will be unjustifiable to refer to this document, when both the appeals are considered by me together. On my finding that the notice at least contained an acknowledgment the suit must be held to be within time. On that view the civil miscellaneous appeal also is allowed.

(7) In the course of the arguments in the appeals on a suggestion from this court that it would not be fair to allow the appellants to pursue two remedies simultaneously, their learned counsel very properly after consulting his clients stated that they would not exercise the power of sale and that they would pursue their suit to enforce the first mortgage. This is recorded. There will be no costs in either of the appeals in this court. No leave.

(8) Appeal allowed.

Same Parties Devalla, Guruswamiah and ors. vs E. Ramakrishna Naicker and anr. Same Subject Property Same Judge Veeraswami, J. Acts & Sections Transfer of Property Act - Sections 59A and 69; Limitation Ac...

Property