Mortgagee in possession: rents and profits treated as payment, defeating the limitation bar on the final decree application.

Section 20(2) of the Indian Limitation Act applies where mortgaged land is in the mortgagee's possession and the receipt of rent or produce is treated as payment for limitation purposes. The decisive issue was the character of possession: mortgagees who had entered possession under an abortive arrangement for transfer of the equity of redemption could not claim ownership for one purpose and deny a valid transfer for another. On the facts, they were treated as mortgagees in possession, so the rents and profits they received attracted the statutory deeming provision. The application for a final decree was therefore not barred by limitation.

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Issues: Whether the application for a final decree in the mortgage suit was barred by limitation, and whether receipt of rents and profits by the mortgagees while in possession could be treated as payment so as to attract Section 20(2) of the Indian Limitation Act.

Analysis: Section 20(2) applies where mortgaged land is in the possession of the mortgagee, and the receipt of rent or produce is deemed to be payment for the purpose of Section 20(1). The decisive question was the character of possession. The Court held that the mortgagees, having entered into possession under an abortive arrangement for transfer of the equity of redemption, could not escape the statutory consequence by asserting ownership in one breath and denying a valid transfer in the next. On the facts as found, they were to be treated as mortgagees in possession, and the rents and profits received by them attracted the statutory deeming provision.

Conclusion: The application was not barred by limitation, Section 20(2) of the Indian Limitation Act applied, and the appeal succeeded.

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