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1930 Supreme(SC) 35
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD BLANESBURGH, LORD RUSSELL OF KILLOWEN, AND SIR LANCELOT SANDERSON.
NILKANTH BALWANT NATU - Appellant
Versus
VIDYA NARASINH BHARATI (DEFENDANTS) - Respondents
On appeal from the High Court at Bombay.
Decided On : Apr. 1. 1930.
Solicitor for appellants: H. S. L. Polak.
Solicitors for respondents: Stanley Jackson & Allen; T. L. Wilson & Co.
Jurisdiction under Section 17 of the CPC is limited to courts within British India. The right to sell mortgaged property under the 1827 Regulation persists regardless of possession, and limitation for mortgages without a fixed repayment date begins only upon demand and refusal.
Headnote:(A) Code of Civil Procedure, 1908 - Sections 16(c) and 17 - Jurisdiction over immovable property - The phrase "situate within the jurisdiction of different Courts" in Section 17 refers only to Courts within British India to which the Code applies - A court in British India lacks jurisdiction to entertain a suit for foreclosure or sale regarding properties situated outside British India. (Paras 23-27)
(B) Regulation V of 1827 - Section 15 - Right of sale of mortgaged property - In the absence of a special agreement or recognized law or usage to the contrary, a mortgagee is entitled to cause the mortgaged property to be applied to the liquidation of the debt - This right is not limited to cases where the creditor remains in possession of the property - The cessation of collecting rents and profits does not constitute an abandonment of the security or the right to sell. (Paras 43-48)
(C) Limitation Act - Cause of action in mortgages - Where no specific time is fixed for the repayment of the mortgage debt, the cause of action does not arise, and the money does not become due, until a demand for payment is made by the mortgagee and refused by the mortgagor. (Paras 51-54)
Facts of the case:
A suit was instituted to enforce six mortgages executed in the 1840s. The mortgaged properties were located both within British India and in a state outside British India. The mortgagees had ceased to collect rents from the properties within British India around 1859 or 1860. The lower courts had held that the security for properties within British India was abandoned and that the court had jurisdiction over the properties outside British India.
Findings of Court:
The court found that it had no jurisdiction over the properties situated outside British India. Regarding the properties within British India, the court held that there was no evidence of a re-transfer or agreement to surrender the security. The right to sell the properties under the 1827 Regulation remained intact despite the mortgagee not being in possession. Furthermore, the suit was not barred by limitation as no demand for payment had been made prior to the suit.
Issues: Whether a court in British India has jurisdiction over properties outside British India under Section 17 of the Code of Civil Procedure; whether the right to sell mortgaged property is lost if the mortgagee is not in possession; and whether the suit was barred by limitation in the absence of a fixed repayment date.
Ratio Decidendi: Section 17 of the Code of Civil Procedure is limited to courts within the territory to which the Code extends. Under the 1827 Regulation, the right to liquidate a debt through the sale of mortgaged property is a general right not contingent upon continued possession. In mortgages without a fixed repayment date, the limitation period begins only upon demand and refusal.
Result: Cross-appeal allowed; plaintiffs' appeal allowed in part. Decree set aside regarding properties outside British India; decree granted in favour of plaintiffs for the debt and right to sell properties within British India.
Legal Category Hierarchy
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practice and procedure
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jurisdiction
- territorial jurisdiction
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jurisdiction
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property law
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mortgages
- usufructuary mortgages
- right of sale
- consolidation of mortgages
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mortgages
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limitation law
- cause of action
Judgement
Consolidated Appeal (No. 71 of 1927) from two decrees of the High Court (February 12, 1924) varying a decree of the First Class Subordinate Judge of Satara (July 21, 1919).
The appellants instituted a suit on August 6, 1910, against the respondents in the Satara Court to enforce six mortgages executed between 1840 and 1844 by the respondents predecessor in favour of the appellants predecessor. Some of the properties mortgaged were in the Bombay Presidency, some were not within British India, being in the Kolhapur State. The mortgages were all substantially in the same form. They provided for interest at a fixed rate, that the mortgagee should have the right to collect the rents and manage the properties, and provided for an annual account being taken to ascertain the amount remaining due under the mortgages. No date for repayment was provided. It was found that the mortgages had been treated as being consolidated. Since 1859 or 1860 the mortgagees had not exercised their right to collect the rents from the properties in British India.
The High Court (Macleod C.J. and Shah J.), varying the judgment of the trial judge, held that the plaintiffs were entitled under Bom. Reg. V. of 1827, s. 15, sub-s. 3, to an order for sale in respect of the properties in Kolhapur State ; but that the suit should be dismissed with regard to the properties in British India, as it was to be inferred that the mortgagees had abandoned their security upon those properties.
1930. March 3, 6. Dunne K.C. and Jardine for the appellants (respondents to cross-appeal). There was no evidence to justify the finding that the mortgagees had abandoned their security upon the properties in British India. Permitting the mortgagors to collect the rents did not affect the mortgagees security upon the properties Juggeewundas Keeka v. Ramdas Brijbookundas . (( 1841) 2 Moo. I. A. 487, 500.) If there was any dispossession it was only of the usufruct, not of the right to sell. The mortgages were not strictly usufructuary mortgages, as they provided for interest at a fixed rate. The mortgagees had a right of sale by Bom. Reg. V. of 1827, 8. 15, sub-s. 3, as the mortgages contained nothing which could be construed as a " special agreement " nor was there any recognized law or usage, to the contrary.
De Gruyther K.C. and Parikh for respondent No. 1; E. B. Raikes K.C., Parikh and Joshi for respondent No. 2 (appellant in cross-appeal). The Court had no jurisdiction to entertain the suit with regard to the properties not in British India ; the words " situate within the jurisdiction of different Courts " in s. 17 of the Code of Civil Procedure, 1908, refer solely to Courts in British India Setrucherla Ramabhadraraju v. Maharaja of Jeypore . (( 1919) L. R. 46 I. A. 151.) The mortgages imposed no liability upon the mortgagor to pay; they were purely usufructuary mortgages, and conferred no right of sale Macpherson on Mortgage, pp. 11, 13 ; Shephard and Brown on the Transfer of Property Act, 7th ed., pp. 288, 288. There was therefore a " special agreement " excluding the operation of s. 15, sub-s. 3, of the Regulation Sawaba Khandappa v. Abaji Jotirav (( 1887) I. L. R. 11B. 475.); Shaik Idrus v. Abdul Rahiman (( 1891) I. L. R. 16 B. 320.); Sadashiv Abaji Bhat v. Vyankatrao Ramrao . (( 1895) I. L. R. 20 B. 296,) The proper inference from the facts is that the mortgagee abandoned his security upon the properties in British India. The decision in the case in 2 Moores I. A. has no bearing upon that point. Further the suit was barred as to the properties in British India. The mortgagees sole right under the mortgages was to possession. He ceased to have possession in 1859 or 1860, and the suit was barred upon the expiration of six years from that date by s. 1, sub-s. 16 (or twelve years, under sub-s. 12), of the Limitation Act, 1859. It was barred also by the Limitation Act, 1871, Sch. I., art. 132, upon the expiration of twelve years from the execution of the mortgage. The A
