Bombay High Court
Motiram vs Vitai And Anr. on 1 May, 1888
JUDGMENT Charles Sargent, C.J.
1. The questions intended to be referred to us are, we presume, first, whether the document in question is a mortgage which entitles the mortgagee to realize his mortgage-debt by sale of the mortgaged property; secondly, whether such suit falls under Article 132 or under Article 147 of the Second Schedule of the Limitation Act, XV of 1877.
2. By the document the property is stated to be mortgaged as a security for the principal and interest which the mortgagor had in the earlier part of the instrument undertaken to pay,--as to the interest, annually and, as to all the money due in respect of principal and interest, within four years from the date of the instrument,--and it is further provided that, in default of payment of principal and interest as agreed on, the mortgagee is to take the management of the land and house, and that the mortgagor "will redeem the property on the day on which he shall pay the principal and interest on making up the account." And the instrument concludes by saying: "We have this day put the said land and the house into your possession." It is, therefore, clearly a "mortgage" whether as defined by Section 58 of the Transfer of Property Act (IV of 1882) or as generally understood in the Courts of this Presidency where that Act is at present not in force It seems to fall under the class of mortgages termed "simple mortgages usufructuary" as described in Macpherson on Mortgages, page 11, one of the anomalous mortgages referred to in Section 98 of the Transfer of Property Act, and which Mr. Macpherson says, carry with them the right by the mortgagee to have the property sold on default.
3. It remains to consider within what period a suit to enforce that right must be brought. The High Court of Allahabad has held that Article 147 is applicable to all mortgage instruments--Shiv Lal v. Ganga Prasad I.L.R. 6 All. P. 551. In Aliba v. Nana I.L.R. 9 Mad. P. 218 the Madras High Court held that under a simple mortgage-bond passed before the date of the Transfer of Property Act a claim for the sale of hypothecated property was one to enforce a charge and came under Article 132 of the Limitation Act of 1877. The Court would appear, however, to have thought that such an instrument, if passed subsequent to the above Act, would fall under Article 147. In Girwar Singh v. Thakur Narain I.L.R. 14 Calc. p. 733 the Calcutta High Court held a suit on a simple hypothecation bond to enforce payment by sale of the premises was governed by Article 132. Wilson, J., in referring the case to a Full Bench, argued that "in such Acts as the Limitation Act forming a connected series, the presumption is strong against the intention to make a sudden and unexplained departure from the general line of policy running through the whole series; and that the policy as to mortgages is to keep the right of suit within narrow limits of time," and expressed the opinion that Article 147 only applied to mortgages in the English form "where the mortgagee usually prays for foreclosure or sale" in the alternative. The judgment of the Full Bench rests their decision on the circumstance that there is no material alteration in Article 132, which, previous to the Limitation Act of 1877, was always deemed applicable to suits for sale of mortgaged property, and second, that unreasonable consequences would, follow if Article 147 were made applicable beyond the original jurisdiction of the High Courts.
4. Under the prior Limitation Act of 1871 the only article applicable to suits for sale of mortgaged property under any mortgage instrument was Article 182 by treating mortgages as creating a charge. It may be fairly doubted whether it was the intention of the Legislature, when the Act of 1871 was passed, to include mortgages in that article; but in the absence of any article expressly referring to mortgages, Article 182 was, as a matter of practice, with which we may presume the framers of Article 147 of the Act, 1877, were acquainted, applied to the case of mortgages and, therefore, Article 147 of that Act, which, in terms, applies to mortgages generally, doubtless introduces a very important change in the relation of mortgagee and mortgagor; but we do not feel the force of the argument much relied on by the Calcutta High Court, that such a change, if intended, would have been made by an alteration in Article 132 itself. On the contrary, the more obvious and natural mode of effecting that intention would seem to be to introduce a special clause for suit by mortgagees, leaving Article 132 in its original form to apply to all other charges.
5. Again, as to the probability or improbability that such should have been the intention of the Legislature, it cannot, we think, be safely or properly treated as an element in the question. We may however, remark that the advantage of prolonging the period within which the mortgagee can exercise his rights of foreclosure and sale has often in the Presidency been urged in the interest of mortgagors. If, however, for the sake of argument we assume that there was no intention to alter the law as regards mortgagees in general, it appears to us still more extraordinary that an article couched in such general terms as No. 147 should have been introduced to affect such a very special and limited purpose as is attributed to it by the Calcutta Full Bench decision. Again, if Articles 147 and 148 are read in their plain and natural sense, they provide for two classes of suits, the object of which is the exercise of the well-understood reciprocal rights of mortgagees and mortgagors, viz., suits by mortgagees for foreclosure or sale on the one hand, and by mortgagors for redemption on the other. Moreover, it is difficult to suppose that the Legislature could have intended to have drawn such an important distinction in the period allowed for the exercise of those rights as is the necessary consequence of holding that "or" in Article 147 is not to be read distributively, and that the article only applies to mortgages in the English form, which are rarely to be met with out of the Presidency towns. The form of Suit No. 119 in the Fourth Schedule to the Civil Procedure Code does not appear to us to assist the argument for the restrictive construction of Article 147, as Suit No. 120 for redemption is in the same form, and yet it has never been contended that Article 148 is limited to mortgages in the English form.
6. Lastly, the argument of the Allahabad Full Court, that as the Bill which subsequently became the Transfer of Property Act was pending before the Legislature in the year in which the Limitation Act of 1877 was passed, it would be reasonable to infer that the Legislature used the word "charge" in the latter A ct in the sense in which it is used in the Transfer of Property Act, has, in our opinion, much force. Upon the whole, we see no sufficient reason for construing Article 147 otherwise than in its plain and natural sense, and the ruling of the Allahabad High Court in Shib Lal v. Ganga Prasad ought therefore, in our opinion, to be followed. Whether Article 147 would include the case in which the property is merely declared to be a security for the loan, having regard to Section 58(a) of the Transfer of Property Act, is a question of some difficulty. In the case of Khimji Bhagvandas v. Rama I.L.R. 10 Bom. p. 519, to which we have been referred, the Division Court, consisting of Birdwood and Jardine, J J., held that Article 147 applied to all suits properly brought by a mortgagee for foreclosure or sale, but that as the instrument in that case simply made the land a security for the loan, and contained no express power of sale, it was not a mortgage, but only created a charge within the sense of Section 100 of the Transfer of Property Act, to be realized within the period of twelve years fixed by Clause 132. This view as to the nature of the document would appear to agree with the decision of Sir Comer Petheram, C.J., in the Allahabad Full Bench decision--Sheoratan Kuar v. Mahipal Kuar I.L.R. 7 All. P. 258, differing, however, from the rest of the Court, who held that the Indian simple mortgage without possession was a mortgage within the contemplation of Section 58 of the Transfer of Property Act. It is to be remarked that in Girwar Singh v. Thkhur Narain the High Court of Calcutta treat the document in that case, which was a simple mortgage in the same form as exhibit 3, the subject of discussion in Khimji Bhagvandas v. Rama as a mortgage within the contemplation of the Transfer of Property Act, and it is certainly very difficult to suppose that the framers of that Act intended to exclude from their definition of mortgage a large class of instruments which were not only in every-day use, but regarded and described by the natives of this country us mortgages and treated as such by all the Courts of the mofussil. The question, however, does not arise on this reference, as the Transfer of Property Act (IV of 1882) does not apply in this Presidency, and we, therefore, abstain from expressing any decided opinion. But we see no reason for holding that in this Presidency such instruments have been otherwise regarded either by the people or the civil tribunals than as creating the relationship of mortgagor and mortgagee with its ordinary correlative rights.
Nanabhai Haridas, J.
7. I concur.
Birdwood, J.
8. I have no difficulty in holding that exhibit No. 24 in this case is a mortgage, as it gives the creditor the right to take possession of the property described in it for the purpose of realizing from the profits thereof the amount of the debt with interest of such amount is not paid within four years. When such a right is given for such a purpose there is "transfer of an interest in specific immoveable property for the purpose of securing the payment of money advanced," which brings the transaction within the definition of a mortgage contained in Section 58(a) of the Transfer of Property Act, 1882, which, though not in force in this Presidency, may, I think, be properly referred to when the question is as to the right construction of Articles 132 and 147 of Schedule II of the Limitation Act; for as Oldfield, J., remarks in Shib Lal v. Ganga Prasad I.L.R. 6 All. 555, "the Transfer of Property Bill of 1877 was before the Legislature at the time of the passing of the Limitation Act, and though it did not become law till 1882, and in a form considerably altered from that of the Bill of 1877, the latter recognized the distinction between mortgage and charge. It is reasonable, then, to suppose that, in introducing Article 147, while allowing Article 132 of the former law of limitation to remain in its altered form, the Legislature had in view the distinction between a mortgage and a charge, and that the suits for sale referred to in Article 147 are all suits brought by a mortgagee to enforce the remedy which the law has always given him, namely, to obtain a decree or order that the mortgaged property be sold to satisfy the debt." In this view I concur, though I do not concur with the Allahabad High Court in holding that a simple hypothecation bond, in which there is no express or implied agreement for sale without the intervention of a Court satisfies the definition of a mortgage contained in the Transfer of Property Act. It is the view practically held by Jardine, J., and myself in Khimji Bhagvandas v. Rama I.L.R. 10 Bom. 519 where we expressed the opinion that the special provision of Article 14 must now be applied to all suits properly brought by a mortgagee for fore closure or sale, and the general provision of Article 132 to suits for sale by a creditor having a right to realize a charge not amounting to a mortgage. We held that the creditor in that case was not a mortgagee, inasmuch as by the instrument, exhibit No. 3 on which he sued no power was given him, expressly or by implication, to sell the property out of Court. That decision seems to have caused some difficulty to the Subordinate Judge who has made the present reference; but it must be clearly read with exhibit No. 3 in the case, which, as we pointed out in our judgment, contained no stipulation for the entry of the creditor under certain circumstances on the property made security for the debt. The effect of our decision really was, not that there could only be a mortgage where there was an express or implied power of sale out of Court, but that where there was no right of entry and no power of sale except through the intervention of a Court there was no mortgage. Wherever there is a "transfer of an interest in specific immoveable property for the purpose of securing the payment of money advanced," there is, in my opinion, a mortgage within the meaning of Article 147 of the Limitation Act. Where there is no such transfer, as where land is merely appropriated or hypothecated for the discharge of a debt, only a charge is created, which, no doubt, can be realized by sale, but only after a decree has been obtained. In an ordinary hypothecation, which is the most common form of a Hindu mortgage, neither an absolute nor a special property in the subject of the security passes to the creditor, "nor any right of possession, but only a right of realization by judicial process in case of non-payment of the debt." See Fisher on Mortgage (4th ed.), Chap. I, Pt. 3, Section 133. In such a case, where a decree is obtained against the land, it is the decree which transfers the interest, not the original transaction between the parties. This view is in accordance with Sir Corner Petheram's judgment in Sheo Ratan v. Mahipat I.L.R. 7 All. 258 266. Where, however, a right of entry is given to the creditor, there is a transfer of an interest in immoveable property just as much as if possession were actually transferred. The delivery of possession of mortgaged property is recognized in the Transfer of Property Act as a transfer of such an interest, for usufructuary mortgages clearly come within the general definition of a mortgage given in Section 58(a). In the present case, indeed, though the creditor has not yet actually taken possession, the instrument contains the sentence "We have this day put the said land and the house into your possession."
9. The exhibit No. 24 being then a mortgage, the next question is whether the creditor has the right to ask for a decree for the sale of the mortgaged property. The mortgage in this case is, in my opinion, simply a usufructuary mortgage. It does not appear to me to be a combination of a simple and a usufructuary mortgage, because it contains no express or implied agreement that in the event of the debtor "failing to pay according to his contract, the mortgagee shall have a right to cause the mortgaged property to be sold." The mortgagee has that right, I think, in the present case; but it is given him, not by the instrument, but by law, that is, by Clause 3 of Section 15 of Regulation V of 1827. Under the Transfer of Property Act, a usufructuary mortgagee has not apparently such a right (see Macpherson on Mortgage, 7th ed., p. 667); but it is different in this Presidency. The circumstance that it is so would not apparently raise any implication as to the terms of the agreement entered into by the contracting parties. But however that may be, it is sufficient for the purposes of the present reference that the plaintiff, having the right to be placed in possession of the property, has the same right as to the sale of the property as if he had been placed in possession, and that he can, therefore, under the Regulation, "by the institution of a civil a suit, cause the property to be applied to the liquidation of the debt, the surplus, if any, being restored to the owner." I concur, therefore, but on the above grounds only, with the Chief Justice and Mr. Justice Nanabhai in holding that Article 147 of the Limitation Act applies to the present suit.