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1955 Supreme(AP) 161

Andhra Pradesh High Court
Dhonavakonda Gopalarao - Appellant
Versus
Thatha Venkatadri - Respondent
Decided On : 08-12-55

An acknowledgment of liability by a mortgagor does not save limitation against a puisne mortgagee who derived his title from the mortgagor before the acknowledgment was made.

Headnote:

LIMITATION ACT - SECTION 19 - ACKNOWLEDGMENT OF LIABILITY BY MORTGAGOR - EFFECT ON PUISNE MORTGAGEE - DECLARATION OF AMOUNT DUE UNDER MORTGAGE - WHEN CAN BE GRANTED.

Fact of the Case:

Plaintiff, the prior mortgagee, filed a suit to enforce his mortgage by sale of the hypotheca. The 4th defendant, the puisne mortgagee, pleaded that the plaintiff's suit was barred by limitation. The plaintiff amended his plaint to include an alternative prayer for a declaration of the amount due under the mortgage.

Finding of the Court:

The court held that the plaintiff's suit for sale on the mortgage was barred by limitation and that the acknowledgment of liability by the mortgagor in his Insolvency Petition did not save limitation against the 4th defendant, the puisne mortgagee. The court also held that the plaintiff was not entitled to a declaration of the amount due under the mortgage.

Issues: 1. Whether the plaintiff's suit for sale on the mortgage was barred by limitation? 2. Whether the plaintiff was entitled to a declaration of the amount due under the mortgage?

Ratio Decidendi: 1. An acknowledgment by the mortgagor of a mortgage debt would be effective against the assignee of the equity of redemption or a puisne mortgagee only if the assignee or the puisne mortgagee derived his title from the mortgagor after the acknowledgment was made by him. 2. A mortgagor cannot give an acknowledgment of a prior mortgage debt so as to extend time against a subsequent mortgagee whose title or interest had been derived from the mortgagor before the acknowledgment was given by him. 3. A declaration of the amount due under a mortgage can be granted only in a suit to enforce the mortgage by sale and is required to be made by the terms of Order 34, rules 2 and 3, Civil Procedure Code.

Final Decision: The court dismissed the plaintiff's second appeal with costs.

( 1 ) PLAINTIFF is the appellant in this Second Appeal preferred against the decree of the District Judge of Nellore in A. S. No. 4 of 1950 dismissing the plaintiff s suit. The 1st defendant mortgaged his house in favour of the plaintiff under Exhibit A-1, dated 19th April, 1934 and executed a second mortgage of the same property on 10th November, 1939, in favour of the 4th defendant. Both were simple mortgages. The plaintiff purchased the house under Exhibit A-2, dated 7th April, 1942, from the Official Receiver in the insolvency of the 1st defendant and took possession. The 4th defendant filed O. S. No. 309 of 1946 on his mortgage and obtained a decree for sale of the house subject to the previous mortgage, exhibit A-1, in favour of the plaintiff. Thereafter, the plaintiff brought the present suit O. S. 240 of 1948 to enforce his mortgage Exhibit A-1 by sale of the hypotheca. To save the suit from the bar of limitation, the plaintiff relied on an acknowledgment of liability in respect of Exhibit A-1 made by the 1st defendant, mortgagor, in the schedule of debts filed by him in his Insolvency Petition No. 4 of 1939. The 4th defendant pleaded that the plaintiff s suit for sale on foot of Exhibit a-1 was barred by limitation. Realising the possibility of an adverse decision on the issue as to limitation, the plaintiff had his plaint amended in the trial Court by introducing an alternative prayer for a declaration of the amount due under his mortgage. The trial Court held that the plaintiff s suit for sale on foot of his mortgage was barred by limitation but granted a decree declaring the amount clue under the mortgage. There was no appeal by the plaintiff against the decree refusing him relief by way of sale in enforcement of his mortgage. The 4th defendant, the puisne mortgagee, appealed to District Court of Nellore which allowed the appeal and dismissed the suit, holding that the plaintiff was not entitled to the declaration granted by the lower Court. Hence, this second appeal by the plaintiff.

( 2 ) TWO points were argued before me by the learned advocate for the appellant. First, he contended that the suit for sale on the mortgage was not barred by limitation and secondly that even if it was so barred, the declaration of the amount due under the mortgage should not have been refused in the circumstances of this case.

( 3 ) AS regards the first point, there is a twofold obstacle in the plaintiff s way. The trial Court dismissed the suit in so far as it prayed for sale of the hypotheca on the ground that the claim was barred by limitation. The plaintiff did not appeal against the decree but was content with the declaration of the amount due under the mortgage granted by the trial Court. On appeal by the 4th defendant, the appellate Court declined to grant any declaratory relief and dismissed the suit. In such circumstances, the plaintiff cannot agitate the question of limitation on second appeal to this Court without appealing to the District Court against the decree of the trial Court dismissing his suit for sale of the hypotheca. The plaintiff has in effect directly appealed to this Court from the decree of the District Munsif and this course is not permissible. See Mahomed Khaleel v. Les Tanneris Lyonnaise, (1926) 51 M. L. J. 570: L. R. 53 I. A. 84 : I. L. R. 49 Mad. 435 (P. C. ).

( 4 ) IT was next contended that a suit for sale on the mortgage would be in time and therefore the lower appellate Court erred in reversing the decree of the trial Court declaring the amount due under the mortgage. I am of opinion that the plaintiff s suit for sale on the mortgage, Exhibit A-1, instituted as it was more than 12 years after the money became due, was barred under Article 132 of the Limitation Act and that the acknowledgment of liability under Exhibit A-1 made by the mortgagor in his Insolvency Petition No. 4 of 1939 was ineffective to save limitation against the 4th defendant, the puisne mortgagee, whose mortgage had been execute







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