JUDGMENT Divan, C.J.

1. The petitioners in each of these two special civil applications are the same, namely, a limited-company, carrying on business of manufacturing textile cloth in Ahmedabad. The petitioners, namely, <ORG> and <NAME>, Income-tax Officer, <ORG>, are respondents in both these special civil applications. The two special civil applications refer to separate notices issued by the second respondent in each of these special civil application under section 147(a) of the Income-tax Act, 1961, seeking to reopen assessments for different years and the grounds on which the assessments are sought to be re-opened are identical. The petitioners challenge these notices under section 148 of the Act of 1961 seeking to re-open assessments under section 147 . Special Civil Application No. 517 of 1971 refers to notices to re-open assessments for assessments years 1962-63 and 1963-64 whereas notices which are challenged in Special Civil Application No. 218 of 1972 are in connection with re-opening of the assessments for assessment years 1964-65 and 1965-66. Since the notices for these four different reassessment years are being challenged on the same grounds, it will be convenient to dispose of both these special civil application by this common judgment.

2. The petitioners have their registered office at Commercial Ahmedabad Mills' Premises, near Idga Chawky, Asarwa, Ahmedabad, and the petitioners are owners of two textile units both of which are situate at Ahmedabad. The petitioners have been assessed to Income-tax under the Indian Income-tax Act , 1922, and after the coming into force of the Income-tax Act , 1961, under that At as well. The assessments of the petitioners for the assessment years 1958-59 to 1965-66 were completed in due course. At the time of assessment, according to the petitioners, they had disclosed truly and fully all particulars necessary for the grants of depreciation allowance and had also furnished the relevant particulars of sale of assets, in the respective assessment years as and when such sales took place. It is the case of the petitioners that after verifying the records, the assessments of the petitioners had been completed and in the course of those assessments, the petitioners were granted necessary depreciation allowance while the liability on account of balancing charge on sales of assets was also brought to charge in the respective assessment years 1962-63 to 1964-65. By his letter dated March 18, 1971, the second respondent intimated to the petitioners that he intended to initiate proceedings against the petitioners under section 147(a) of the Act of 1961, in respect of assessment years 1962-63 to 1965-66 the corresponding accounting years being 1961 to 1964. This action was proposed because, according to the second respondent, the petitioners had been granted excessive depreciation allowance in assessment years 1960-61 to 1965-66 and the second respondent further stated in the said letter that certain capital gains arising on transfer of assets had not been assessed in assessment years 1962-63 to 1964-65. By the letter dated March 24, 1971, the petitioners intimated to the second respondent that the action proposed to be taken by the second respondent was without jurisdiction and/or without authority of law. The petitioners further contended that no income had escaped assessment by reason of failure or omission on the part of the petitioners to disclose fully and truly all material facts necessary for the assessments for the relevant years. Thereafter, two notices, both dated March 30, 1971, were issued by the second respondent. Those notices were in respect of assessment years 1962-63 and 1963-64 and they were issued under section 148 of the Income-tax Act 1961. These notices were issued as, according to the second respondent, income chargeable to tax for the said two assessments years had escaped assessment within the meaning of section 147 of the Act and the second respondent proposed to reassess the income for the said assessment years and had called upon the petitioners to submit returns in the prescribed form. These two notices, both dated March 30, 1971, have been challenged in Special Civil Application No. 517 of 1971. Thereafter, on January 17, 1972, two further notices were issued by the second respondent in respect of assessment years 1964-65 and 1965-66 and these notices, exhibit-B collectively to Special Civil Application No. 218 of 1972, have been challenged in that special civil application. As we have mentioned earlier, the grounds of attack against all the four notices are the same and it will, therefore, convenient to dispose of both these matters by this common judgment. In the affidavit-in-reply filed in Special Civil Application No. 517 of 1971, the second respondent has stated in paragraph 3 :

"In the original return of income filed by the petitioner, depreciation was claimed on machineries on the written down value basis and it was accordingly allowed. However, in respect of certain block of machineries initial depreciation was allowed to the extent of Rs. 2,24,764. The total depreciation, which included the aforesaid amount of initial depreciation, allowed up to the assessment years 1958-59 in fact exceeded the total cost of the said machineries. As the total depreciation allowed exceeded the cost of machineries, in view of the provisions of section 34(2) (i), no further depreciation in respect of the said block of machineries was admissible from the assessment year 1959-60 and onwards. The petitioners, however, claimed depreciation on the said block of machineries on the written down value basis without disclosing the initial amount of depreciation, which was allowed to the extent of Rs. 2,24,764 and the subsequent allowance of depreciation. The Petitioner failed to bring to the notice of <ORG> the fats and figures correctly and made a false claim of depreciation in its return with a view to defraud the revenue. The petitioner also failed to rectify the incorrect figures of written down value supplied by it during the course of the assessment proceedings. Consequently, the petitioner falsely claimed depreciation as allowable though, in fact, it was not due for allowance."

3. In order to appreciate the rival contentions at this stage, it is necessary to refer to some of the provisions of the Indian Income-tax Act , 1922, hereinafter referred to as "the Act of 1922". Under section 10 , sub-section (1) of the Act of 1922, the tax was to be payable by an assessee under the head "Profits and gains of business, profession or vacation" in respect of the profits or gains of any business, profession or vocation carried on by him. Under sub-section (2), such profits or gains were to be computed after making the allowances set out in the different clauses of that sub-section. Under section 10(2) (vi) in respect of depreciation of buildings, machinery, plant or furniture being the property of the assessee, a sum equivalent to such percentage on the original cost thereof to the assessee as may in any case or class of cases be prescribed was to be allowed. Under the second paragraph of clause (vi), where the building have been newly erected, or the machinery or plant being new, has been installed, after the 31st day of March, 1945, and before the first day of April, 1956, a further sum which was however not to be deductible in determining the written down value for the purposes of the clause in respect of the year of erection or installation, was to be allowed. The proviso to section 10(2) (vi) contained three clauses (a), (b) and (c) clause (c) is material for the purpose of this judgment :

"Provided that -.....

(c) the aggregate of all allowance in respect of depreciation made under this clause and clause (via) or under any Act repealed hereby, or under the Indian Income-tax Act , 1886 (II of 1886), shall, in no case, exceed the original cost to the assessee of the building, machinery, plant or furniture, as the case may be."

4. Thus under the Act of 1922 depreciation of three kinds could be allowed, namely : (1) ordinary depreciation; (2) initial depreciation which was granted in the first year of installation but which was not to be taken into consideration for the purpose of arriving at the written down value; and (3) additional depreciation which was climbable for a period of five years but which, like ordinary depreciation, was to be taken into consideration for the purpose of working out the written down value. As regards the initial depreciation, it was in terms provided that this initial depreciation was not to be deductible in determining the written down value for the purpose of section 10(2) (vi). Under section 10(5) (b) of the Act of 1922 the written down value in the case of assets acquired before the previous year was to be the actual cost to the assessee less all depreciation actually allowed to him under that Act or any Act repealed thereby, or under executive orders issued when the Indian Income-tax Act , 1886, was in force. But by virtue of the provision in the second paragraph of section 10(2) (vi), initial depreciation was not to be deductible in determining the written down value for the purpose of the clause. The case of the revenue as set out in the letter dated March 18, 1971, was that the petitioner-company had been allowed excess depreciation on the oldest block of machinery as on January 1, 1952. The written down valued of the said block at the end of the assessment years 1958-59 was Rs. 2,46,558 but the initial depreciation allowed on that machinery was Rs. 2,24,764. Hence, in view of the provisions of section 10(2) (vi), proviso clause (c), the allowable depreciation for the assessment year 1959-60 could not have exceeded Rs. 21,724. But the petitioner had been granted depreciation on the said block for the assessment year 1959-60, to the tune of Rs. 36,984. Thus with the depreciation allowance of Rs. 36,984 granted for the assessment year 1959-60, the aggregate of depreciation allowance, whether ordinary or initial granted, in respect of that block of machinery exceeded the original cost to the petitioner-company of that block of machinery and according to the second respondent in that letter of March 18, 1971, excess depreciation was granted to the petitioner-company by Rs. 75,190 in the assessment year 1959-60. It was, therefore, contained that no depreciation was to be available for subsequent years on the said block and it was proposed to withdraw the excess depreciation allowed for the assessment years 1962-63 to 1965-66. It is obvious that since the provisions of section 147(b) could not be invoked because the period of limitation of four years from the assessment years under consideration had expired and since there was a period of eight year even for invoking the provisions of section 147(a) of the Act of 1961, the second respondent proposed to confine his action to the depreciation allowance granted to the petitioner-company during the assessment years 1962-63 to 1965-66, because those four years would be within the period of eight years immediately preceding March 31, 1961.

5. The second ground for which reopening of the assessment was proposed was that some machinery was sold during assessment years 1962-63 to 1964-65, and half of the profits estimated under section 41(2) had been allowed and the sale proceeds had been charged as a balancing charge only to the extent of half instead of full bow there was no written down cost of the oldest machinery and also the said balance of sale price, i.e., half of the said profits was charged as profits under section 41(2) of the Act of 1961 and the second respondent proposed to reopen the assessments for assessment years 1962-63 to 1965-66 for these two purpose, namely, for the excess depreciation allowance allowed during these respective four years and also in connection with the balancing charge of the sale proceeds which were not fully taxed under section 41(2) .

6. Section 41(2) of the Act of 1961 provides for what is known as the balancing charge. Under that sub-section where any building, machinery, plant or furniture which is owned by the assessee and which was or has been used for the purpose of business or profession is sold, discarded, demolished or destroyed and the moneys payable in respect of such building, machinery, plant or furniture, as the case may be, together with the amount of scrap value, if any, exceed the written down value, so much of the excess as does not exceed the difference between the actual cost and the written down value shall be chargeable to Income-tax as income of the business of profession of the previous year in which the moneys payable for the building, machinery, plant or furniture became due and if there is any surplus still left, then it would be charged as capital gains under section 45 of the Act of 1961. As <NAME> and <NAME> in the Commentaries on Income-tax Law, 1971 edition, have pointed out at page 746 :

"Where any allowance or deduction had earlier been made in respect of any loss, expenditure or trading liability and subsequently the assessee has obtained or realised any amount towards such loss, expenditure or trading liability, section 41(2) deems such realisation, etc., as the assessee's income for the year in which he has realised it.

Section 41(2) is a necessary corollary to section 41(1) in respect of allowed depreciation, if, in respect has been building, machinery, plant or furniture, any depreciation has been allowed had subsequently such building, etc., is sold, discarded, demolished or destroyed, the assessee may get some value either as a result of the sale or from insurance or from salvage or compensation thereabout."

7. The authors illustrated the problem in this manner :

"Let the original cost of the building be taken as X and depreciation already allowed in respect thereof be taken as Y. On sale, etc., the assessee realise a total sub, Z, when the written down value was X - Y. If Z is greater than X - Y, the balancing charge, viz., treated, by virtue of section 41(2) , as the assessee's income for the year in which Z becomes payable.

The necessity to keep section 41(2) as a provision in addition to section 41(1) arises from the fact that, in its very nature depreciation is neither loss nor expenditure nor a trading, which are the subject-matter of section 41(1) ."

8. He has also been pointed out :

"There may be cases where the moneys payable in respect of sale, etc., of the asset are grater than the written down value plus the depreciation actually allowed. In such a case, the gross surplus (that is sale price minus the written down value) will be bifurcated into (i) depreciation actually allowed, and (ii) further surplus. The depreciation actually allowed shall be includible in the total income as balancing charge under section 41(2) , and the further surplus shall be treated as capital gains (if a transfer' of the asset is involved) under section 45 .

Suppose, A imported a machine at a cost of Rs. 1,00,000. During the years A used it for his business, he had been allowed a depreciation totaling to Rs. 36,000. Its written down value of Rs. 64,000. At such a time, A sell it for Rs. 1,60,000. The gross surplus, Rs. 1,60,000, minus Rs. 64,000, i.e., Rs. 96,000, is bifurcated into (i) depreciation actually allowed, Rs. 36,000, and (ii) the further surplus, Rs. 60,000. Thus, Rs. 36,000, shall be includible in A's total income as balancing large under section 41(2) and Rs. 60,000 shall be includible as capital gains under section 45 ."

9. It is against this background of the provisions of law that we have to consider the validity of the notices issued under section 148 of the Act of 1961. We may point out that in Special Civil Application No. 218 of 1972, the petitioners has annexed to the petition the different assessment order for assessment years 1963-64 to 1965-66 together with the annexures to those assessment order for the relevant years. There annexures to the assessment orders set out the working made by the Income-tax Officer concerned in arriving at the written down value of each of the different pieces of machinery, etc. In each of these three years for which consideration of section 41(2) arises, the Income-tax Officer has indicated in the assessment order how the amount was charged under section 41(2) . In the assessment years 1962-63, sale proceeds of machinery sole in the course of the assessment year came to Rs. 68,314 and one-half of that amount of sale proceeds, namely, Rs. 34,157, was included under section 41(2) or under section 10(2) (vii) which was the equivalent section of the Act of 1922. In the assessment year 1963-64, the total amount of sale proceeds was Rs. 1,16,840 and one-half of those sale proceeds, namely, Rs. 58,420, was included as profit under section 41(2) . Similarly, for the assessment year 1964-65, the total amount of sale proceeds was Rs. 4,350 and the profit Income-tax Officer included the whole amount of Rs. 4,350 as profit under section 41(2) but subsequently the Appellate Assistant Commissioner had reduced it by half and had only included the amount of Rs. 2,175 as profit under section 41(2) . In the annexures to the assessment orders for the relevant years which are to be found annexed to the petition in Special Civil Application No. 218 of 1972, the reason why one-half of the amount of sale proceeds was included has been given. In the annexure to the assessment order for the assessment years 1965-66 in paragraph 12 it has been mentioned as follows :

"During the year the assessee has sold off certain machineries worth Rs. 1,16,201. The machineries sold were old ones. Following the practice adopted in the past, 50% of it is considered as profit under section 41(2) of the Act, i.e., Rs. 58,540."

10. Thus, it appears that the usual practice of this department was, at the time of applying section 41(2) , to take one-half of the sale proceeds as profits under section 41(2) and not work out the actual figures as contemplated by section 41(2) and the method which the passage which we have quoted from Chaturvedi and <NAME> requires the Income-tax Officer to do.

11. The question, therefore, that we have to consider is whether there was any escapement of income from assessment by reason of any failure or omission on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of the petitioner for the relevant year. This will apply both to the question of depreciation allowance and also to the question of profits under section 41(2) . As regards the question under section 41(2) , it obvious that it is because the old practice which was being followed by the Income-tax department for several years in connection with the computation of the profit under section 41(2) was discontinued that the second respondent proposed to reopen the assessment regarding the profits under section 41(2) in these three years. The written down value of each piece of machinery which was sold was apparently disclosed by the petitioner-company but, following the usual practice, the Income-tax Officer, in two of the three years under consideration, and the Appellate Assistant Commissioner in the third year, had treated one-half of the sale proceeds as the profits under section 41(2) . Merely because the Income-tax authorities changed their practice or started applying the provisions of section 41(2) in full force, it cannot be said that that part of the sale proceeds, which was deemed income as profit under section 41(2) , escaped assessment by reason of any omission or failure on the part of the assessee, that it, the petitioner, to disclose fully and truly all material facts necessary for the assessment for the assessment year under consideration.

12. The question, therefore, remains whether failure on the part of the petitioner to mention the amount of initial depreciation that had been allowed to the petitioner-company under the provision of section 10(2) (vi), second paragraph, in the earlier years, amounted to failure or omission on its part to disclose fully and truly all material fats necessary for the assessment in the years under consideration. It is true that excess depreciation had been allowed to the petitioner-company, that is, depreciation allowance in excess of what was permissible to it in view of the provisions of section 10(2) (vi), proviso, clause (c), inasmuch as the aggregate of all depreciation allowance (ordinary allowance plus initial depreciation allowance) was in excess of the original cost and, therefore, it cannot be gainsaid that by virtue of excess depreciation allowance having been granted, income chargeable to tax had escaped assessment. The question, however, is whether there was any omission of failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessments inasmuch as the amount of initial depreciation was not disclosed by it to the Income-tax Officer at the time of the assessment for the relevant year and, secondly, whether the income had escaped assessment by reason of such omission or failure on the part of the petitioner-company because it is only if the income has escaped assessment by reason of such omission or failure on the part of the petitioner-company that the Income-tax Officer can have reason to believe that by reason of such omission of failure on the part of the petitioner-company income chargeable to tax had escaped assessment and then only the Income-tax Officer, the second respondent herein, would get jurisdiction to proceed under section 147(a) .

13. The position under section 34 of the Act of 1922 and section 147 of the Act of 1961, which are identical provision, has been explained in several decision of the of <ORG>. We may only refer to <CITATION> . At page 371 <NAME>, as he then was, delivering the judgment of <ORG>, has pointed out :

" Section 34 confers jurisdiction upon the Income-tax Officer to issue a notice in respect of the assessment beyond the period of four years, but within a period of eight years, from the end of the relevant years, if two conditions exist - (1) that the Income-tax Officer has reason to believe that income, profits or gains chargeable to Income-tax had been under-assessed; and (2) that he has also reason to believe that such 'under-assessment' has occurred by reason of either (i) omission or failure on the part of an assessee to make a return of his income under section 22 , or (ii) omission or failure on the part of an assessee to disclose fully and truly all material fats necessary for his assessment for that year. These conditions are cumulative and precedent to the exercise of jurisdiction to issue a notice of reassessment."

14. We are in the present case concerned with the second condition, namely, that the Income-tax Officer must have reason to believe that income escaped assessment or there was under-assessment by reason of omission of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that year. It is no doubt true that if the Income-tax Officer had consulted his own records, he could have found out without the least trouble as to what initial depreciation had been allowed in respect of the different items of machinery and what depreciation had been allowed from year to year in respect of that piece of machinery and thus by looking at his own records for the previous years, the Income-tax Officer could very easily have ascertained whether the aggregate of all depreciation, whether initial or ordinary or additional, allowed in respect of that particular piece of machinery. Apparently, the Income-tax Officer had not consulted his own records and had not checked up whether the aggregate of all depreciation, ordinary, initial or additional, when combined together, exceeded the original cost of the piece of machinery to the petitioner-company.

15. A similar case came up for consideration before <ORG> in Special Civil Application No. 545 of 1966, decided by a Division Bench on August 31, 1970. There <ORG>, <ORG> and <ORG> were concerned with the following facts. The petitioner was a public limited company carrying on business of manufacturing pottery and sanitary were and, in respect of assessment year 1957-58, the petitioner filed its return of income before the Income-tax Officer. The petitioner put in a claim for Rs. 3,58,325 as depreciation allowance in respect of its capital assets. The Income-tax Officer allowed depreciation to the the tune of Rs. 5,05,487. The order was rectified under section 35 of the Act of 1922 and the total income of the petitioner was redetermined and in spite of all ratification, appeals, etc., the depreciation allowance to the tune of Rs. 5,05,487 was not disturbed and it remained unchanged. Similarly, in respect of assessment year 1959-60 the Income-tax Officer concerned has allowed depreciation and development rebate to the tune of Rs. 3,87,926. It was subsequently realised that because of the omission to take into consideration the initial depreciation, excess depreciation allowance had been granted to the assessee for assessment years 1957-58 and 1959-60 and the Income-tax Officer started reassessment proceedings under section 147(a) and at that stage the Special Civil Application was filed in this court.

16. Two contentions were urged before <ORG>, namely : (1) whether the assessee was bound during the course of the Previous assessment proceeding to disclose fully and truly all material facts necessary for its assessment for the relevant years to the assessing authority although such material was admittedly on the record of the department and it was not exclusively within the knowledge of the assessee; and (2) whether, on a true and proper interpretation of section 147(a) of the 1961 Act, the jurisdiction of the Income-tax Officer to reassess income that had escaped assessment or to recompute loss or depreciation allowance, was affected in case where the material necessary for the assessment in respect of which the alleged omission or failure to disclose had occurred, is such as could have been gathered by him from an investigation into the records of the department. On both these points <ORG> decided against the assessee. <ORG> observed :

"Since the fact that initial depreciation allowance was granted to the petitioner in respect of certain items of its capital assets is admittedly a material fact for the purpose of the assessment of the petitioner, it was bound to disclose the said fact to the Income-tax Officer during the course of the previous assessment proceedings to enable the assessing authority to determine the true amount of the allowance to which it was entitled..... Even if the material necessary for the assessment in respect of which the alleged omission or failure to disclose has occurred is such as could have been verified or obtained by an investigation of the material on the record or the facts disclosed thereby or from other inquiries or search into the records of the previous assessment proceedings but which was not in fact so obtained, the jurisdiction of the Income-tax Officer to proceed under section 142 is not affected."

17. <ORG>, therefore, rejected the submission made on behalf of the petitioner that, since the fact that initial depreciation in respect of certain items of the capital assets of the petitioner was granted to the petitioner under section 10(2) (vi) of the 1922 Act was already on the record of the department and could have been found out by the Income-tax Officer during the course of the previous assessment proceeding by investigation of the record, there was no obligation on the part of the petitioner to disclose the said material in the course of its previous assessment proceedings and there was, therefore, no failure or omission on the part of the petitioner to disclose fully and truly all material necessary for his assessment for the relevant years within the meaning of section 147(a) of the Act.

18. In view of this <ORG> judgment, with which we are in agreement, it is obvious that the petitioner in the present case must be held to have omitted or to have failed to disclose fully and truly all material facts necessary for the assessment of the petitioner-company for assessment years 1962-63 to 1965-66 by failing to refer to the grant of initial depreciation that had been granted to it in the past and we well proceed in the course of this judgment on the footing that at least as regards the excess of depreciation allowance granted to it in the past, such excess depreciation was allowed and, therefore, income had escaped assessment for these different years under consideration but the question that still remains to be considered is whether the income chargeable to tax so far as the petitioner was concerned had escaped assessment by reason of the omission or failure on the part of the petitioner to disclose fully and truly such material facts.

19. Under section 10(2) (vi), proviso, clause (c), as we have noticed, the aggregate of all allowances in respect of depreciation made under section 10(2) (vi) of the Act of 1922, and under clause (via) or under any Act repealed thereby, or under the Indian Income-tax Act , 1886, was, in no case, to exceed the original cost to the assessee of the buildings, machinery, plant or furniture, as the case may be. Therefore, it was the duty of the Income-tax Officer concerned who was assessing the income of the petitioner-company in the years 1962-63 to 1965-66 to see to it that the aggregate of all depreciation allowances, ordinary depreciation allowance or initial depreciation allowance or additional depreciation allowance, allowed under the provisions of section 10(2) (vi) or section 10(2) (via) did not exceed the original cost to the petitioner-company. Just as there was an obligation on the part of the petitioner-company to see to it that the factum of initial depreciation was disclosed by it, there was also a duty on the part of the Income-tax Officer concerned to see to that the aggregate of all allowances in respect of depreciation made under section 10(2) (vi) of the Act of 1922 did not exceed the original cost to the petitioner-company. If that duty had been properly discharged by the Income-tax Officer, it is obvious that no excess depreciation would have been allowed in the assessment years 1962-63 to 1965-66. The fact remains that such excess depreciation allowance was allowed and two factors apparently were responsible for such granting of excess depreciation : the failure or omission on the part of the petitioner-company to mention in its return or in the papers filed along with the return or in the course of the assessment proceedings the fact that initial depreciation has been allowed in respect of certain pieces of machinery and to disclose the quantum of that initial depreciation. However, the other factor which led to such excess depreciation allowance being allowed was the dereliction of duty on the part of the Income-tax Officer himself. He failed to notice that the aggregate of all allowances in respect of depreciation made under section 10(2) (vi) had exceeded the original cost to the assessee of the relevant pieces of machinery. It is because of the combined operation of the omission or failure on the part of the petitioner-company to disclose these material fats to the Officer in failing to see that the aggregate of all allowances in respect of depreciation under section 10(2) (vi) had exceeded the original cost to the petitioner-company that the situation came about under which the petitioner-company was in fact allowed excess depreciation in the assessment years under consideration. It is, therefore, not possible for us to say that it was by reason of the omission or failure on the part of the petitioner-company to disclose fully and truly all material fats necessary for its assessment for the relevant years that the income chargeable to tax escaped assessment for those years.

20. It may be pointed out that <ORG> has emphasised the duty of the Income-tax Officer in determining what the correct amount of depreciation is. <CITATION> , at pate 356 <NAME>, delivering the judgment of <ORG>, approved of the decision of <ORG> in <CITATION> and observed :

"It was next argued by the learned Attorney-General that the written down values determined under section 35 are not final and can be redetermined in the following assessment years and in support he referred to <CITATION> , where the original cost of the machinery purchased, Rs. 3,40,000, was accepted in the successive assessment years till it was doubted in the assessment year 1946-47 and was determined at Rs. 2,80,000 and it was contended that the Income-tax Officer had to take the written down value of the previous year as correct. Thus, the question there raised was whether the Income-tax predecessor ever since the assessment year 1939-40. It was held that neither the principle of res judicata nor estoppel nor the terms of section 10(2) (vi) of the Act prevented prevented the Income-tax Officer from determining for himself what the actual cost of the machinery had been and that depreciation had to be calculated for every year and it was open to the Income-tax Officer not merely to perform 'a mathematical operation, on the basis of the written down value of the previous year, but one of determining the written down value himself.'"

21. It was also observed at page 357 :

"The limit to which the Income-tax Officer can go back does not stop at the written down value of the previous year by extends up to the figure of the original cost, and the method enjoined by section 10(5) (b) is not that the Income-tax Officer should merely sale down the written down value of the previous year but that he should take into consideration the actual cost, determining it for himself, if necessary, take also into consideration the allowances granted in the past and then make his own computation as to the write down value for the assessment year with which he is concerned. Thus, it cannot be said that merely because under section 35 some written down value and the depreciation amount have been determined they are a final determination binding for all times to come nor does the determination operate as estoppel or res judicata for the following years."

22. It is thus clear that according to <ORG> the method enjoined for the purpose of ascertaining the written down value while granting depreciation allowance was that the Income-tax Officer should take into consideration the actual cost determining it for himself, if necessary, take into consideration the allowance granted in the past and then make his own computation as to the written down value for the assessment year with which he was concerned. Hence, it is obvious that if the Income-tax Officer who passed the assessment orders in the case of the petitioner-company at the time of the original assessments for the assessment years 1962-63 to 1964-65 had followed this method which is enjoined upon him and had taken into consideration the actual cost determining it for himself if necessary and had taken also into consideration the allowances granted in the past (inclusive of the initial allowance) and then had made his own computation as to the write down value for the assessment year with which he was concerned, it is obvious that no excess depreciation allowance would have been granted for assessment years 1962-63 to 1965-66, though no doubt true, chargeable income escaped assessment in the case of excess depreciation allowance, and though there was failure or omission on the part of the assessee, namely, the petitioner-company before us, in not disclosing fully and truly all material fats which were necessary for the assessment for those four years, still it is not possible for us to say that it was only by reason of such omission or failure on the part of the assessee that the income chargeable to tax had escaped assessment. The income escaped assessment also by reason of the fact that the Income-tax Officer concerned in the relevant year had not followed the method enjoined upon him for the purposes of calculating depreciation allowance and not taking into consideration all allowances granted in the past in respect of these different pieces of machinery.

23. We may point out that in <CITATION> , <ORG> remanded the matter back to <ORG> because <ORG> did not consider whether the income escaped assessment by reason of the omission or failure on the part of the company to disclose fully and truly all material facts necessary for assessment. There also there was a question of initial depreciation in respect of certain machinery and the aggregate of depreciation allowances including initial depreciation on the machinery exceeding the ordinal cost, but merely because of the failure on the part of the assessee-company to mention the amount of initial depreciation, it was not held by <ORG> that income had escaped assessment by reason of the omission or failure on the part of the company to disclose fully and truly all material facts necessary for the assessment.

24. In our opinion, therefore, sine it is not possible to say that income had escaped assessment by reason of the failure or omission on the part of the petitioner-company to disclose fully and truly all material facts necessary for the assessments for the years under consideration, the Income-tax Officer cannot be said to have reason to believe as had been set out in section 147(a) of the Act of 1961.

25. We may point out that in <CITATION> , a Division Bench of <ORG>, following the decision in <ORG> v. commissioner of Income-tax, has held that it is open to the Income-tax Officer to determine afresh for himself the original cost of the depreciable asset in the assessment of each year. Therefore, it can be now treated as well-settled law that the method of arriving at the amount of depreciation in each assessment year which the Income-tax Officer allows in the case of any assessee must be arrived at by him by following the above mentioned method and while following that method it is incumbent upon him to take into consideration the actual cost and also the allowances granted in the past. That being the law, the conclusion we have reached would necessarily follow and, therefore, the income chargeable to tax cannot be said to have escaped assessment by reason of the omission or failure on the part of the petitioner-company to disclose fully and truly all material facts necessary for its assessment.

26. Under these circumstances neither of the grounds on which the Income-tax Officer, the second respondent herein, proposed to initiate reassessment proceedings against the petitioner-company survives. Because on neither of these two grounds can it be said that by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment, income chargeable to tax had escaped assessment, the conditions precedent for the exercise of the jurisdiction under section 147(a) cannot be said to exist so far as the present cases are concerned.

27. Under these circumstances we allow both these Special Civil Application and quash and set aside the notices issue under section 148 by the second respondent. The two notices which we are quashing in Special Civil Application No. 517 of 1971 are annexure "D" to the petition each dated March 30, 1971, and in Special Civil Application No. 218 of 1972 they are annexure "E" date January 17, 1972. The respondents will pay the costs of the petitioner in each of these Special Civil Applications. Rule is made absolute accordingly.


JUDGMENT <NAME>, C.J.

1. The facts of this case are as follows : On 20th February 1902, <NAME> executed a mortgage-deed in favour of the respondents for Rs. 1,000, carrying interest at rupee 1-80 per cent per mensem "promising to repay the same in eight years." The strictly literal translation of the vernacular words, though not grammatical, would be "on the promise of eight years payment." The deed provided that if the interest for one complete year remains unpaid the creditors shall have power to recover the interest and shall also be at liberty to recover the principal and interest without having any regard "for the stipulated period." On 8th September 1903 another mortgage deed was executed by the same person in favour of the same mortgagees for Rs. 700 at the same rate of interest "promising to pay off the amount in eight years." There was a stipulation that if the interest and compound interest were not paid for one year the creditors shall, after the expiry of one year, have power to recover the principal amount with interest and compound interest "without waiting for the expiry of the stipulated period." There was an additional clause in the second mortgage-deed in the following terms:

Whenever I the executant shall pay any amount the creditors aforesaid shall receive it without any objection and shall, after setting it off against the interest, credit the balance towards the principal, and the interest will be reduced in proportion to the amount paid.

2. Admittedly interest was not paid and there were defaults at the expiry of one year on account of both these mortgage-deeds. There was an acknowledgment of both these mortgage debts on 3rd March 1906, which gave a fresh start for the purpose of limitation. One consolidated suit was filed on 22nd February 1916, to recover the amounts due on both these documents and in 1917 the claim was decreed. On 20th February 1929, after all the mortgaged properties had been sold, there still remained a balance of over Rs. 2,000 to be realized. The mortgagees accordingly filed an application on 21st August 1929, under Order 34, Rule 6 for a personal decree against the mortgagors. The mortgagors objected to this application on the ground that the personal remedy was barred by time. The <ORG>, below has disallowed this plea. The mortgagors have appealed to this <ORG>. The Bench before which the case came up for disposal, on these facts, referred the following question to the Full Bench:

Whether in the circumstances mentioned above limitation for a decree under Order 34, Rule 6 commented to ran after the expiry of one year within which the mortgagor made continued default of payment; of interest, or whether, it commenced to run after the expiry of eight Years' terra stipulated in the deed.

3. Before 1932 the view which prevailed in this Court was that the limitation being to run against a mortgagee from the date of the first default which entitles him to sue for the whole amount. It is not necessary to refer to earlier cases. But in <CITATION> A.I.R. 1915 All. 189, the majority of <ORG> held that money becomes "due" within the meaning of Article 132 as soon as it can be legally demanded and recovered by suit and the mortgagor can no longer plead that the suit is premature. The view of <ORG> was followed by a larger Full Bench in <CITATION> A.I.R. 1923 All. 1. In this case it was laid down that the question whether the mortgagee is bound to sue or not and whether he does at once sue or not was wholly irrelevant to the issue; so long as he can sue even though he does not choose to sue, the money has become due. The Full Bench in <NAME> case A.I.R. 1923 All. 1 then considered the question of limitation with reference to the personal liability and came to the conclusion that the starting point of limitation should be the same for the recovery of the amount by sale of the property and for recovery of it as simple debt, as the cause of action for the enforcement o both the reliefs was one and the same. They held that Article 80 read with Article 116 , Limitation Act , was the appropriate Article for money claim under a registered bond and held that the expression "becomes payable" was very much the same thing as the words "become due," and accordingly the cause of action being the same the periods of limitation for both would begin to run simultaneously and the claim for a personal decree would be barred after six years from the first default. <ORG> and <ORG> took the same view as was taken in Allahabad, but the Madras and Patna <ORG>s took a different view. The <ORG> appears to have gone further and held that even the mortgagor's right to redeem can accrue as soon as the default is made. This could be supported only on the assumption that the stipulated period was a "term of years or the date of default, whichever is the earlier." Although the view in this Court was that the money became duo within the meaning of Article 132 go as to make the period of limitation for a suit for sale run from the date of the default, it was never held that the mortgagor also can by his own default entitle himself to redeem before the expiry of the stipulated period. The mortgagor's suit for redemption would be governed by Article 148 , Limitation Act , the words in the third column of which were different from the words in the third column of Article 132. His right to redeem or recover possession cannot accrue contrary to a special contract fixing a period of time within which he could not redeem. <CITATION> A.I.R. 1926 P.C. 85, was a case in which there was somewhat similar clause giving power to the mortgagee to recover the whole amount in case of default of payment of interest. Their Lordships of <ORG> were able to dispose of the case on a different ground but Lord <NAME>, who delivered the judgment of their Lordships observed that this <ORG> applying the previous decision in <NAME> case A.I.R. 1915 All. 189 and other cases, had held that a single delimit on the part of the mortgagors without without any act of election, cancellation or other form of response or acceptance on the part of the mortgagees, and even, it would appear against their desire, operates eo instanti, to make the money scoured by the mortgage 'become due' so that all right of action in respect of the security is finally barred 12 years later.... All this the <ORG> held, notwithstanding that the mortgage is for a term certain, a provision which may be as much for the benefit of the mortgagees as for the mortgagors, and notwithstanding that the proviso is exclusively for the benefit of the mortgagees.

4. Their Lordships recognizing the seriousness of the view taken by <ORG>, which according to their Lordships, had been "emphasized and perhaps extended" as it has be on by a later <ORG> decision to the same effect : see <CITATION> A.I.R. 1923 All. 1, considered it manifestly desirable that the question should be examined noon. <CITATION> A.I.R. 1932 P.C. 207, there was a mortgage-deed which contained a clause that in case of default the creditor shall at all times within and after the expiry of the stipulated period have to power to realize the entire mortgage money with interest. Their Lordships of <ORG> definitely overruled the <ORG> cases of Gaya Din A.I.R. 1915 All. 189 and Shib Dayal A.I.R. 1923 All. 1, so far as the interpretation of Article 132 was concerned.

5. Their Lordships considered it a matter of great regret that they had to pronounce upon this important and difficult question without the assistance of counsel for the respondents, but as the case had been placed before their Lordships very fully and fairly by the counsel for the appellant their Lordships had the opportunity to give full consideration to their judgment. Their Lordships accordingly laid down that a proviso of such a nature is inserted "exclusively for the benefit of the mortgagees" and that it purports to give them an option either to enforce their security at once, or, if the security is ample, to stand by their investment for the full term of the mortgage. Their Lordships pointed out that if on the default of the mortgagor the mortgage money becomes immediately due the option in the mortgagees would be converted into an option in the mortgagor for, as hold by <ORG>, the mortgagor can claim to repay the amount before the expiry of the stipulated term, which, in their Lordships' opinion, was an impossible result as the mortgagor could not be allowed in this way to take advantage of his own default. It was accordingly laid down that the mortgage money does not become due within the meaning of Article 132 , Limitation Act , until both the mortgagor's right to redeem and the mortgagee's right to enforce his security have accrued and that this would, of course, also be the position if the mortgagee exercised the option reserved to him. Their Lordships pointed out that if they had words like "cause of action arises" to interpret, there might be much to be said in support of the Allahabad decisions.

6. There is accordingly no doubt whatsoever that the Full Bench cases of this Court have been expressly overruled and are no longer good law. The learned advocate for the mortgagor contends before us that the Full Bench case of <CITATION> A.I.R. 1923 All. 1, has not been overruled so far as the bar of limitation against the personal remedy is concerned, and that on this latter point that Fall Bench decision is binding upon this Court. It is urged that even if the reasons on which the latter decision was based have now disappeared the decision itself is binding on this Court because it cannot be considered to have been overruled by their Lordships of <ORG>. The learned Counsel points out that whereas the words in Article 132 are "when the money sued for becomes due" the words in Article 80 applied by the Full Bench to such cases, are "when the bond becomes payable." It is therefore argued that when the words to be interpreted are different it is the decision of the Full Bench of five Judges which is binding on this Court and not the decision of their Lordships of <ORG> the learned Counsel further draws our attention to the passage in the judgment of their Lordships quoted above where it was laid down that the mortgage money does not become due until both the mortgagor's right to redeem and the mortgagee's right to enforce his security have accrued. It is then contended that in the present case the mortgagor had already a right under the deeds to red earn before the expiry of the fixed period, and so when the mortgagee also came to have the right to sue, there was perfect mutuality and the-money must be deemed to have become duo within the moaning of Article 132. It is further pointed out that in the Limitation Act , the words "become due" or "falls due" and the word "payable" are used in different senses, Reference is made to Article 69 whore on a bill of exchange or a promissory note payable at a fixed time after date limitation begins to run from the date when the bill or note falls due. If the period of grace is added under Section 22 , Negotiable Instruments Act , the two dates would be different.

7. No doubt if one were to be strictly literal and very technical, one might say that the decision in <CITATION> A.I.R. 1923 All. 1, has been overruled on one point only. But I feel that it would not be proper for this <ORG> to adhere to the original view when its basis has been destroyed by the pronouncement of their Lordships of <ORG> and the ratio decidendi has altogether disappeared. I take the pronouncement of their Lordships to mean that a clause of this nature is exclusively for the benefit of the mortgagee and gives him a perfect option or liberty to sue for his money or to stand by his investment for the full term of mortgage, and so long us the mortgagee does net by means of any act of election, cancellation or other form of response or acceptance make the money become due, time does not begin to run against him. The mere fact that the mortgagor has made a default and thereby deprived himself of the protection which the stipulated term gave him, would not suffice for limitation to commence to run against the mortgagee if the latter waives his right to sue and chooses not to exercise his option. In view of this interpretation of the law the ground on which <NAME> case A.I.R. 1623 All. 1 was decided can no longer be sustained.

8. It has already been pointed out that the reason given by <ORG> for holding that limitation began to run from the same data so far as the personal liability also was concerned was the same, namely, that the cause of action for claiming both the reliefs have accrued simultaneously on account of the default. Indeed, <ORG> considered that the words "bond becomes payable" in Article 80 meant very the same thing as money becomes due" in Article 132. Further their Lordships of <ORG> in <NAME> case A.I.R. 1926 P.C. 85, at p. 464, (of 48 All.), considered that <ORG> had not only emphasized, but perhaps extended the view taken in <NAME> case A.I.R. 1915 All. 189 previously. It therefore seems to me that the basis of both the views must be deemed to have gone on account of the latest pronouncement of their Lordships. I have therefore no option, but to hold that the ruling in <NAME> case A.I.R. 1923 All. 1, has been definitely overruled so far as the applicability of Article 132 is concerned and has by necessary implication been overruled so far as the commencement of the limitation on the first default under Article 80 also concerned. It follows that time did not begin to run on the two bonds before the expiry of the stipulated periods. It is not necessary to decide in this case when time would begin to run if a mortgagee were to enforce a default clause; nor is it necessary to consider whether the mortgagor had a right of redemption even before the expiry of the stipulated period.

9. So far as the deed of 1903 is concerned there can be no doubt as to when the mortgagor could redeem, as there was an express clause to that effect at the end of the document. There may be some doubt as regards the first document, but I should say that the question whether a period specified in the document is for the benefit of both the mortgagor and the mortgagee or for the benefit of only one of them is a question of interpretation of the document. Sometimes a stipulated period may be for the protection of the mortgagor so as to prevent a demand being made from him before the expiry of that period. Sometimes it may be to ensure to the mortgagee an investment of his money for at least a fixed period. Again in some cases it may be for the benefit of both. Each document has to be interpreted on its own terms and the words used have to be read in conjunction with all the other stipulations in the deed, and the real intention of the parties deduced there from. It may not be fair to take a few words out of the context and lay down a general rule of interpretation as to their proper meaning. Ordinarily, and in the absence of a special condition entitling the mortgagor to redeem during the term for which the mortgage is created, the right of redemption can only arise on the expiration of the specified period, before which the mortgagee also cannot sue : <CITATION> A.I.R. 1914 P.C. 36, at p. 199 (of 36 All.).

10. But I must say that if a document says that the mortgagor shall have a right to redeem it "within a fixed period" there is some difficulty in holding that it necessarily means that the mortgagor cannot redeem it before the expiry of the period. On the other hand where the mortgage is for a stipulated period, ordinarily it would be a fixed term binding upon both the parties. In cases where ambiguous words are used the intention of the parties has to be gathered from the whole document. As the question does not directly arise, I should not like to commit myself in this case as to whether when the mortgage is payable "in a fixed number of years" it is necessarily redeemable before the expiry of that period. On the one hand if the word is taken literally one would think that it would be so redeemable, otherwise one would have to give to the word in" the meaning of the word "after." But on the other hand the context of the document may show that the word "in" was used loosely for the word "for." I may in this connexion point out that in the mortgage-deed which was before their Lordships of <ORG> for consideration in <CITATION> A.I.R. 1926 P.C. 85 the words were "stipulated to be paid in 12 years." Their Lordships took it for granted that the time fixed for repayment was 12 years and that the mortgage was for a term certain.

11. My answer to the question referred to us is therefore that the limitation began to run after the expiry of the stipulated period.

<NAME>, <NAME>

12. I agree. It seems to me that their Lordships of <ORG> in <CITATION> A.I.R 1923 P.C. 207 by expressly overruling the <ORG> decision of <CITATION> A.I.R. 1923 All. 1, on the question of limitation for a suit for sale, have by necessary implication overruled it also on the question of limitation for a suit for a personal decree. The <ORG> held that the starting point must be the same for both classes of suits, as the expression "becomes due" in Article 132 is very much the same thing as 'becomes payable" in Article 80. I quite agree, and indeed I think we are bound by the authority of the larger <ORG> on this point which certainly has not been overruled by <ORG>.

13. Now on the authority of <NAME> case A.I.R. 1623 P.C. 207 we are, in my opinion, bound to hold that the mortgage money did not "become due" when the mortgagor made default in payment of interest for one year, unless the mortgagee chose to exercise his option by demanding the entire mortgage money or by instituting a suit for sale. It is argued that <NAME> case A.I.R. 1932 P.C. 207 does not apply when the mortgagor has a right to redeem before the expiry of the stipulated period. Their Lordships observed that the money does not become due, within the meaning of Article 132 , until both the mortgagor's right to redeem and the mortgagee's right to enforce his security have accrued. This seems to imply that the money does become due when both the right of redemption and the right of enforcement have accrued. In the present case the mortgagor certainly had a right to redeem the mortgage of 1903 before the expiry of the stipulated period. So when the mortgagee's right of enforcement accrued by reason of the mortgagor's default in payment of interest, it is certainly arguable that the money had become due" within the meaning of Article 132. In my opinion however this would not be a correct interpretation of their Lordships' views in <NAME> case A.I.R. 1932 P.C. 207. They lay stress upon the point that the provision enabling the mortgagees to sue before the expiry of the stipulated period is inserted "exclusively for the benefit of the mortgagees," giving them an option either to enforce their security at once or to stand by their investment for the full term. I take this to mean that the mortgagee has an option of treating the money as having become due" by demanding or suing for it, and that it does not become due unless he exercises his option, even though the mortgagor may already have a right to redeem in accordance with the terms of the mortgage contract. If we hold that time begins to run for a suit to enforce the mortgage from the date of the first default that gives an optional cause of action, then it could not be said that the provision is inserted exclusively for the mortgagee's benefit. He would have to sue within 12 years from the date of the first default although he might prefer to stand by his investment for the full term and then sue within 12 years from the expiry of that term. He might indeed be compelled to sue before the expiry of the full term, if the term were 13 years or more. In my view therefore the question whether the mortgagor has a right to redeem before the expiry of the stipulated period is immaterial. Time does not begin to run against the mortgagee before the expiry of that period unless he avails himself of the option inserted exclusively for his benefit.

14. If this view is correct then the money did DOC become flue, within the meaning of Article 132 , until the expiry of the stipulated period. I think it follows, on the authority of the <ORG> decision in <NAME> case A.I.R. 1923 All. 1, that the money did not "become payable," within the meaning of Article 80 until the same date.

Niamatullah, J.

15. The facts of this case have been fully stated by the learned Chief Justice It will appear that there is an important distinction between this case and <CITATION> A.I.R. 1932 P.C. 207, in so far that the bond in suit in that case contained a stipulation that the mortgagee was not entitled to call in his money within the term fixed by the deed, nor was the mortgagor entitled to pay within the aforesaid term. From the report of the case it does not appear what the precise terms of the bond were. Their Lordships however accepted it as a fact not disputed by either side that the mortgage was for a term of six years certain. In the case before us the deeds cannot be so read as to make them for a term certain. The words used in both the deeds are "ba waida adai ath sal," which have been, in my opinion, rightly translated by the office as "promising to repay...in eight years." In one of the deeds (dated 8th September 1903), it is expressly stipulated that whenever I, the executant, shall pay any amount, the creditor aforesaid shall receive it without any objection and shall, after setting it off against the interest, credit the balance towards the principal, and the interest will be reduced in proportion to the amount paid.

16. Quite apart from a stipulation of the kind I am of opinion, that a condition like the one found in these deeds is always for the benefit of the mortgagor, who cannot be sued by the mortgagee within that term but may himself pay it if he likes. The term is always intended as a measure of forbearance which the mortgagee agrees to show.

17. It has been argued on the authority of the cases that clauses which provide that the mortgage money shall be paid "in so many years" or "within so many years" should be construed as providing for a term certain, so that neither the mortgagor can pay nor the mortgagee can recover within that term. In <NAME> v. <ORG> 131, <ORG> of this Court had the occasion to consider a document in which there was a stipulation that the mortgagor would redeem the mortgaged property "within 15 years." One of the learned Judges following <NAME> v. <NAME> (1880) 5 Bom. 22 held that in the absence of any agreement express or implied to the contrary the right to redeem and the right to foreclose must be regarded as co-extensive and that the mere use of the words "andar miad" in the mortgage-deed is not enough evidence of a contract that the mortgagor was given a right to redeem before the expiry of the stipulated period for which the mortgage was effected. At one place the learned Judge mentioned that the mortgagor had usufructuarily mortgaged the property for a term of 15 years, viz., from Kharif 1300 to the end of 1314 Fasli.

18. This is followed by a stipulation to the effect that the mortgagor would redeem within 15 years. It may be that the deed,, read as a whole, showed in that case that the use of the word "within" was wrong and that the intention of the parties that the mortgagor should not be at liberty to redeem within the stipulated term was perfectly clear from other parts of the deed. It may be conceded that if there are clear indications in a deed showing, that the mortgagor was debarred from paying within the stipulated term which was as much for the benefit of the mortgagee as for his own, the mere use of the words "andar miad" may not neutralise such indications; but I am strongly of opinion that, in the absence of other words showing that the mortgagor is precluded from redeeming within the term, the use of the words "in so many years" or "within so many years" in itself implies that the right to redeem and the right to foreclose have not been made coextensive by the parties. The other learned Judge composing <ORG> observed that if the matter were res integra, I would be prepared to hold that 'andar miad' meant before the expiry of 15 years and that, according to the stipulation contained in the mortgage bond this suit was not premature.

19. But the learned Judge thought that <CITATION> (1886) 8 All. 95 and <CITATION> A.I.R. 1914 P.C. 36 were conclusive on the point. I have carefully examined these cases and entertain no doubt that the question was res integra and is so, at any rate, 30 far as this Full Bench is concerned.

20. <CITATION> (1886) 8 All. 95 the deed was in a different language and in any case that ruling did not make the question otherwise than res integra so far as this Court is concerned. There is nothing in <CITATION> (1907) 29 All. 471, which may justify the view that the word "in" or "within" should be ignored. The learned Judges had not to consider a clause occurring in any deed. They concluded that on the evidence afforded by the proceeding before the Collector we are of opinion that the agreement of the parties was that the advance made by <NAME> was to be left outstanding for a period of nine years and that within that period the mortgagee could not foreclose the mortgage nor could the mortgagor redeem it.

21. Similarly in <CITATION> A.I.R. 1914 P.C. 36, which is a decision of their Lordships of <ORG> on appeal from <CITATION> (1907) 29 All. 471, there is nothing to warrant the view that the use of the word "within" or "in" does not imply that the mortgagor has a right to redeem before the expiry of the term. Their Lordships have made it perfectly clear that the mortgage deed is not forthcoming, but both She Courts in India have found that a contract between the parties to the transaction is, for all material purposes, substantially set forth in the proceedings of <ORG> dated 18th September 1830 on an application for mutation of names in <ORG>.

22. In that case the intention of the parties had to be gathered from certain proceedings taken as a whole, and nothing turned upon the use of the word "in" or "within." Another case, relied on by the learned advocate for the respondents is <CITATION> A.I.R. 1932 All. 155. The material clause occurring in the deed in question in that case was as follows:

Whereas I have taken a loan of Rs. 1,225.... I have made a usufructuary mortgage for a term of 10 years.... The agreement is that when I, the mortgagor, do pay to the mortgagee within ton years the entire mortgage money cash and in a lump sum, then the property mortgaged will stand redeemed.... Hence I have executed this usufructuary mortgage deed by a conditional sale of ten years that it may serve as evidence when necessary.

23. In that case the words "in ten years" were clearly qualified by such expressions as "for a term of ten years," and again "mortgage-deed by conditional sale of ten years." I am clearly of opinion that a condition such as "I shall pay in ten years" or "I shall redeem within ten years" implies that the mortgagor is at liberty to pay within that time and shall enjoy immunity from being sued by the mortgagee. To hold in such cases that the mortgagor is not entitled to pay with in the stipulated term would make the condition demonstrably absurd. When a man says that he would pay or redeem in or within ten years, it would be absurd to say that he means that he is not to pay or redeem within that term. Such a construction implies the assumption of a negative where the parties clearly meant the affirmative. For these reasons I hold that in deciding the present case we must start with the hypothesis that the mortgagor was at liberty to pay at any time after the execution of the mortgage-deed, a fact which was not present in either of the two cases decided by their Lordships of <ORG>. <CITATION> A.I.R. 1926 P.C. 85, in which the respondent was not represented, it was assumed that the mortgage was for a term of 12 years certain, within which the mortgagor could not redeem. The same was the case in <CITATION> A.I.R. 1932 P.C. 207. The former case was disposed of on another ground, though their Lordships made certain observations which were accepted in the second case. That observation is as follows:

Applying certain previous decisions of the <ORG> and in particular a <ORG> decision in <CITATION> A.I.R. 1915 All. 189 the High <ORG> held that under a clause in the above form a single default on the part of the mortgagors, without any act of election, cancellation or other form of response of acceptance on the part of the mortgagees, and even, it would appear, against their desire, operates eo instanti to make the money secured by the mortgage become due, so that all right of action in respect of the security is finally barred by 12 years later, that is, in the present case, on 21st February 1906. All this the High <ORG> held, notwithstanding that the mortgage is for a term certain, provision which may be as much for the benefit of the mortgagees as of the mortgagors, and notwithstanding that the proviso is exclusively for the benefit of the mortgagees.

24. It seems tome that, though their Lordships did not decide the question, their view is sufficiently indicated by what they considered to be reductio ad absurdum resulting from the view taken by <ORG>. Though their Lordships make a reference to "a term certain," the essential reason for the view implied in that observation seems to be that the mortgagor has, in such a case, a right of "election" or "cancellation," and that the clause being for the benefit of the mortgagee he can waive the benefit. In the subsequent case greater stress has been laid on another ratio decidendi, viz., that money does not "become due," unless there is a mutuality and the mortgagor can pay and the mortgagee can call in his money. They assumed, there being no contest on the point, that the mortgage was for a term certain, so that it was not open to the mortgagor to pay before the expiry of that term and therefore money did not become due. This is perfectly clear from paragraph the last but three. It gives one an impression that if the mortgagor has got the right to pay, and it is also open to the mortgagee to call in his money by the exercise of an option given to him by the deed, the money becomes due. If this is the right view of the decision of their Lordships of <ORG>, the appellants' contention must prevail, because, as I have already held, the mortgagor was at liberty to pay at any time after the execution of the deeds and the term of eight years was for his benefit and intended as an indulgence to him, which benefit or indulgence was forfeited by his continued default for one year in paying interest so that the mortgagee was no longer bound by the eight years' term and was entitled to sue for the mortgage money after the expiry of the first year.

25. This line of argument is very attractive having regard to the material part of the ratio decidendi adopted in <CITATION> A.I.R. 1932 P.C. 207, but it seems to me that their Lordships intended to rest their conclusion on two grounds, either of which can support it. As I read para the last but three of their Lordships' judgment, money does not "become due," unless : (1) the mortgagor is at liberty to pay and the mortgagee is at liberty to sue, and (2) the mortgagee having an option to claim immediate payment did not avail himself of the option by claiming it before the expiry of the term. Their Lordships point out that in cases in which the mortgagee elects to sue before the expiry of the term and does make a demand or institute a suit, the mortgagor is at liberty to pay within the term, so that the rule of mutuality is enforced by acts of parties. In the case before us, though the mortgagor had the right to pay at any time within the stipulated term the mortgagee did not avail himself of his option to call in his money, and therefore the money sued for did not become due. The question in the present case is not whether the claim is barred by Article 132 , Schedule 1, Limitation Act . The mortgagee instituted his suit for recovery of his mortgage money by sale of the mortgaged property and obtained a decree. The sale proceeds did not suffice to pay up the mortgage money. The present proceedings arose from his application for a simple-money decree in respect of the unsatisfied point of the mortgage money. Article 116 read with Article 80 is applicable. The starting point of limitation under Article 80 is when the money sued for becomes payable." It is argued that their Lordships of <ORG> have excluded a claim of this kind from the operation of the rule on which they based their judgment when they observed that:

If in the Indian cases the question were, when did the mortgagee's cause of action arise, that is, when he first became entitled to sue for the relief claimed by his suit, their Lordships think that there might be much to be said in support of the Allahabad decisions.

26. It is contended that we are not concerned with the words "become due" occurring in Article 132 , Limitation Act , but with Articles 116 and 80, and the question is when the money sued for became payable, which means in substance "when did he (mortgagor) first become entitled to sue for the relief claimed." The contention is plausible, but I do not think that any distinction can be made between the expressions "when money becomes due" and "when money becomes payable" if in either case the mortgagee has an option to disregard the term and he did not exercise that option. Precisely the same reasoning holds good in a case in which Article 116 read with Article 80 is applicable as in a case under Article 132. To accede to the above contention would be to introduce an anomaly which is highly undesirable. For the reasons mentioned above I agree in answering the question referred to <ORG> in the manner proposed by the Hon'ble Chief Justice.