1940 (3) TMI 11 - HC - Indian Laws

Summary

Issues Involved:
1. Question of limitation.
2. Interpretation of Section 20 of the Limitation Act.
3. Applicability of Sections 19 and 20 of the Limitation Act.
4. Effect of acknowledgment or payment by a mortgagor who has parted with interest in the property.
5. Relevance of English legal principles to Indian law.

Detailed Analysis:

1. Question of Limitation:
The appellants filed a suit to enforce a mortgage created on November 12, 1913. The debt became payable in one year, and a payment of Rs. 200 towards interest was made on December 16, 1920. The suit was filed on December 9, 1932. The issue was whether this payment saved the suit from being barred by the law of limitation. The District Munsif held that the payment saved the limitation, but the Subordinate Judge of Salem held that the suit was out of time.

2. Interpretation of Section 20 of the Limitation Act:
Section 20 states that where interest on a debt is paid before the expiration of the prescribed period, a fresh period of limitation shall be computed from the time when the payment was made. The proviso added by the Indian Limitation (Amendment) Act, 1927, requires an acknowledgment in writing by the person making the payment. Although such an acknowledgment was present, it was not necessary at the time of payment. The Subordinate Judge's decision was based on the interpretation that the mortgagors, having parted with their interest, were not liable to pay the debt under Section 20.

3. Applicability of Sections 19 and 20 of the Limitation Act:
Section 19 states that an acknowledgment of liability made in writing before the expiration of the prescribed period starts a fresh period of limitation. The appellants contended that both Sections 19 and 20 could be used to save limitation. However, the respondents argued that the mortgagors, having sold their interest, could not provide a valid acknowledgment under Section 19 or make a payment under Section 20.

4. Effect of Acknowledgment or Payment by a Mortgagor Who Has Parted with Interest:
Several decisions were considered:
- Velayudham Pillai v. Vaidhilingam Pillai (1912): Payment by a mortgagor after gifting his property kept the debt alive.
- Yagnanarayana v. Venkata Krishna Rao (1925): A person could make an acknowledgment even after losing interest, binding only him or his assignees.
- Muthu Chettiar v. Muthuswamy Iyengar (1932): Acknowledgment by a mortgagor after losing interest affected both him and his alienee.
- Narayana v. Venkataramana (1935): Acknowledgment by a mortgagor after selling the property saved limitation against the purchaser.

The principle derived was that acknowledgment or payment by a mortgagor who has lost all interest cannot bind the purchaser of the equity of redemption.

5. Relevance of English Legal Principles to Indian Law:
The court considered English cases:
- Bolding v. Lane (1863): Payment by a mortgagor who has transferred the property does not bind the assignee.
- Newbould v. Smith (1886): Payment by a person with no interest in the property does not start a new period of limitation.

These principles were deemed applicable in India, aligning with the spirit of equity. The court held that the decisions not applying this principle should not be regarded as good law.

Conclusion:
The court concluded that the Subordinate Judge's decision was correct, and the appeal was dismissed with costs. The acknowledgment or payment by a mortgagor who has parted with interest does not bind the purchaser of the equity of redemption. The principles from English law were applicable, and the relevant Indian decisions should be reconsidered in light of these principles.

Separate Judgments:
- King, J.: Agreed with the judgment.
- Krishna Swamy Ayyangar, J.: Agreed with the judgment.