Skip to content


Phaltan Bank Ltd. Vs. Baburao Appajirao and anr. - Court Judgment

LegalCrystal Citation
SubjectBanking;Limitation
CourtMumbai High Court
Decided On
Case NumberSecond Appeal No. 849 of 1950
Judge
Reported inAIR1954Bom43; (1953)55BOMLR762; ILR1953Bom1176
ActsLimitation Act, 1908 - Schedule - Articles 181 and 182(2); Code of Civil Procedure (CPC), 1908 - Sections 2(2), 47, 107, 107(2) and 144 - Order 7, Rule 11 - Order 34 - Order 41, Rule 3; Transfer of Property Act
AppellantPhaltan Bank Ltd.
RespondentBaburao Appajirao and anr.
Appellant AdvocateG.R. Madbhavi, Adv.
Respondent AdvocateD.M. Parulekar, Adv.
Excerpt:
.....in respect of this application is the day on which the second appeal was dismissed by the phaltan high court on 9-11-1944, then the application is clearly within time. on the other hand, it the starting point of limitation is the date on which the district court dismissed the mortgagors' appeal on 27-7-1942, the present application is clearly beyond time. 4. it is true that under order 41, rule 3, an appellate court is expressly empowered to reject a memorandum of appeal if it is satisfied that the memorandum is not drawn up in the manner as prescribed. but this does not mean that the appellate court's power to reject the memorandum of appeal is confined only to the cases falling within rule 3 of order 41. it is well settled that reading the provisions of section 107,..........decree made final? 2. it is now clear that if an appeal has been preferred against a preliminary decree passedunder the provisions of order 34, an application which is to be made to make the decree final is governed by the provisions of the residuary article 181, limitation act. under this article, limitation is three years and the starting point is the time when the right to apply accrues. ordinarily, such a right would accrue to the party seeking to apply for a final decree on the date when the preliminary decree is passed. there is, however, no doubt that if an appeal is preferred against such a preliminary decree, the starting point for applying to make the decree final would commence from the date when the appellate court disposes of the appeal on the merits. in other words, if an.....
Judgment:

Gajendragadkar, J.

1. This appeal raises a short question of limitation under Art. 181Limitation Act. The appellant) the Phaltan Bank Limited, had sued the respondents to recover the amount due on a mortgage executed in its favour (Civil Suit No. 174 of 1937). A preliminary decree was passed in favour of the Bank for Rs. 2,242-3-6 on 21-12-1939. The mortgagors preferred an appeal in the District Court of Phaltan. as paupers (Appeal No. 6 of 1941). This appeal was dismissed with costs on 27-7-1942. Thereafter, the mortgagors preferred a pauper appeal in the High Court at Phaltan. This appeal was preferred beyond 30 days which is the period of limitation for a pauper appeal, but within 90 days which is the period of limitation for an ordinary appeal. It is clear that the fact that the pauper appeal was beyond time was not noticed by the High Court and notice was issued on the appeal.

When the Bank appeared, it drew the attention of the High Court to the fact that the pauper appeal was initially filed beyond time. The High Court thereupon apparently decided to treat the appeal as an ordinary appeal and at the request of the appellants gave them time to pay the requisite court-fee on the memorandum of appeal. The requisite court-fee was not paid by the appellants, with the result that the appeal was dismissed with costs on 9-11-1944. On 11-9-1947, the Phaltan Bank applied for making the preliminary decree final, and this application is resisted by the mortgagors principally on the ground that it is barred by limitation under Art. 181.

If the starting point of limitation in respect of this application is the day on which the second appeal was dismissed by the Phaltan High Court on 9-11-1944, then the application is clearly within time. On the other hand, it the starting point of limitation is the date on which the District Court dismissed the mortgagors' appeal on 27-7-1942, the present application is clearly beyond time. The question which therefore falls to be considered in the present appeal is: Which is the starting point of limitation for the application made by the appellant to have the preliminary decree made final?

2. It is now clear that if an appeal has been preferred against a preliminary decree passedunder the provisions of Order 34, an application which is to be made to make the decree final is governed by the provisions of the residuary Article 181, Limitation Act. Under this article, limitation is three years and the starting point is the time when the right to apply accrues. Ordinarily, such a right would accrue to the party seeking to apply for a final decree on the date when the preliminary decree is passed. There is, however, no doubt that if an appeal is preferred against such a preliminary decree, the starting point for applying to make the decree final would commence from the date when the appellate Court disposes of the appeal on the merits. In other words, if an appeal is preferred from a preliminary decree,, the decision of the appeal on the merits is substituted as the starting point of limitation under Art. 181, Limitation Act.

There was some doubt and confusion as to this position when the provisions with regard to the mortgage decrees were contained in the Transfer of Property Act. But since the said provisions have been incorporated in Order 34, Civil P. C., this position has been clarified beyond all doubt. It may be relevant in this connection to refer to the decision of the Privy Council in -- 'Jowad Hussain v. Gendan Singh', AIR 1926 PC 93 (A), where their Lordships have held that in case there has been an appeal from a preliminary decree and the appellate Court has not extended the time for payment, the period of three years within which under Article 181 an application for a final decree must be made runs from the date of the decree of the appellate Court) not from, the expiry of the time for payment fixed by the preliminary decree. There would be no change in this position although the appeal was by the mortgagee and the question which the Court of appeal had to consider was merely as to the amount for which the preliminary decree should be made.

3. The Courts below have held that the starting point of limitation in the present case is the date of the decision of the first appeal in the District Court and not the date on which the second appeal was dismissed with costs. Mr. Madbhavi contends that this view is wrong because according to him a decree has been formally drawn by the Phaltan High Court and according to this decree it appears that the second appeal preferred by the mortgagors has been dismissed with costs. Mr. Madbhavi's argument is that this decree must be treated as a decree passed by the second appellate Court on the merits; and if that is so, there should be no difficulty in holding that the time for making an application under Art. 181 can start only from the date when the order was passed by the High Court in the second appeal.

In dealing with this question, it must be remembered that the High Court at Phaltan did not deal with the merits of the second appeal at all. In fact, it is clear that when dealing with this appeal an initial irregularity was committed in that the appeal was admitted as a pauper appeal without realising that it had been filed beyond the narrow limitation prescribed for pauper appeals. When this mistake was pointed cut to the Phaltan High Court, the appeal was treated as an ordinary appeal and indulgence was shown to the appellants by giving them further time tp pay adequate court-fee on the memorandum of appeal, andwhen the requisite court-fee thus ordered to be paid was not paid by the appellants, the appeal was dismissed with costs. In the context, the order passed by the Phaltan High Court dismissing the appeal with cost's must mean that the memorandum of appeal was rejected on the ground that it did not bear proper court-fee.

4. It is true that under Order 41, Rule 3, an appellate Court is expressly empowered to reject a memorandum of appeal if it is satisfied that the memorandum is not drawn up in the manner as prescribed. But this does not mean that the appellate Court's power to reject the memorandum of appeal is confined only to the cases falling within Rule 3 of Order 41. It is well settled that reading the provisions of Section 107, Sub-section (2), and Order 7, R. 11, together, the Court of appeal would be entitled to reject the memorandum of appeal on any of the grounds mentioned in Order 7, Rule 11. Amongst the grounds on which a memorandum of appeal can thus be rejected under Order 7, Rule 11, failure of the appellant to pay the requisite court-fee is included.

Order 7, Rule 11, authorises the trial Court to reject a plaint for the grounds mentioned in four Sub-sections under the said rule and by reason of the provisions contained in Section 107, Sub-section (2), these powers can be exercised by the Court of appeal in respect of the appeals filed before it. Therefore, in our opinion, the Phaltan High Court had jurisdiction to reject the memorandum of appeal on the ground that it was written upon an insufficiently stamped paper, and the order which was passed while rejecting this memorandum must be construed as an order of rejection in spite of the fact that in form it purported to be an order of dismissing the appeal and though a formal decree including the said decision has been drawn.

It is quite clear that the High Court at Phaltan was never possessed of the second appeal as such. Unfortunately, the appeal was ordered to be numbered without calling upon the appellant to pay the adequate court-fee, but that mistake was subsequently rectified by calling upon the appellants to pay the necessary court-fees; and unless the proper court-fee was paid, the stage to hear the appeal on the merits did not arise and could not have arisen.

The question as to the proper order which should be passed by an appellate Court in such a case has been considered by this Court in --'Kashiram Senu v. Ranglal Motilalshet', AIR 1941 Bom 242 (B). At the first hearing of the appeal which had been filed in this Court, an objection was raised by the respondent's pleader that proper court-fee had not been paid. The said objection was upheld and the appellant was called upon to pay the deficit court-fee within three weeks' time. The appellant failed to pay the court-fee as ordered. When the appeal came up before the Bench for final disposal on these facts, Beaumont C. J. considered the question as to whether the appellant could be ordered to pay the costs of the respondent. He observed that logically it was somewhat difficult to reject an appeal and then proceed to make an order for costs in the appeal, but he added that in practice such orders were made and he came to the conclusion that this practice on the whole was just and fair. In making an order directing the appellant topay the costs of the respondent, the learned Chief Justice however took the precaution of making it clear that the costs which were ordered to be paid were the costs of the hearing of the preliminary objection.

It would thus be noticed that if we read the order passed by the High Court at Phaltan in the light of this decision, we would not be doing violence to the form in which the order has been ultimately drawn up if we hold that this order was really intended to be and in law does amount to an order rejecting the memorandum of appeal as being insufficiently stamped coupled with the direction that the appellants should pay the respondent's costs of the hearing of the preliminary objection. If that be so, it would be difficult to hold that in the order passed by the High Court at Phaltan the decree of the lower appellate Court is merged and so the cause of action to make an application for a final decree arises as on the date of the order passed by the High Court.

5. Mr. Madbhavi however contends thatl even if we treat this order as an order reject-ing the memorandum of appeal passed under: Section 107, Sub-section (2), read with Order 7, Rule 11, Sub-section (c), such an order amounts to a decree; and if this order is a decree, it must follow that the decree of the lower appellate Court is merged in this decree. Mr. Madbhavi's argument is that a decree as denned under Section 2, Sub-section (2), is deemed to include the rejection of a plaint, and he suggests that rejection of a memorandum of appeal must also partake of the character of a decree because it has been passed by the appellate Court in exercise of the powers under which a plaint is rejected by the trial Court. If the rejection of a plaint under the provisions of Order 7, Rule 11, amounts to a decree, there is no reason why the rejection of a memorandum cf appeal ordered under the same provisions by the Court of appeal should not amount to a decree. That in short is Mr. Madbhavi's contention.

We are unable to accept this contention. Section 2, Sub-section (2), defines a decree and in doing so it provides that the rejection of a plaint and the determination of any question within Section 47 or Section 144 shall be deemed to be a decree; it further provides that it shall not include any adjudication from which an appeal lies as an appeal from an order or any order of dismissal for default. It seems to us difficult to accept Mr. Madbhavi's contention, because we do not think we can add to this definition other orders of adjudication on the ground that they are similar to the orders which are included in the definition itself.

If Legislature had intended that an order rejecting a memorandum of appeal should be included in the decree, it would have been so easy for the Legislature to make appropriate additions in the definition of the decree itself. It seems to us that it would not be open to the Court to add to this definition any other kinds of adjudications however similar they may appear to be, to the adjudications which are expressly included in the definition. Besides, the order rejecting a memorandum of appeal would in a sense amount to an order of dismissal for default. It is possible to take the view that default which is mentioned in Section 2, Sub-section (2)(b), of the Code, need not necessarily be the default of the plaintiff. If the appellant is ordered to pay the deficit court-fee within a certain time and if he commits a de-fault in complying with this order and takes the consequence of having his memorandum of appeal rejected, it may perhaps be treated as an order of rejection consequent upon the appellant's default. If that be so, it would be an order of dismissal of the appeal for the appellant's default and would be expressly excluded from the definition of the word 'decree'.

However that may be, it is clear that the rejection of a plaint would not have been included in the definition of the word 'decree' if its inclusion had not been specifically provided for. The Legislature has included the rejection of a plaint, but has not included the rejection of a memorandum of appeal which the Legislature, knew could be ordered by an appellate Court in circumstances similar to those in which the trial Court could order the rejection of a plaint. It is a matter of a definition, and as I have already mentioned, it would not be open to the Court to add to. this definition on any ground whatever. In this connection, some assistance may be obtained from the judgment of Beaumont C. J. in --'Kashiram's case (B)' to which I have already referred. The Division Bench, while dismissing the appeal for failure of the appellant to pay the requisite court-fee, had in that case to consider the further question as to whether the cross-objections filed by the respondent could be heard, and they held that since the appeal was rejected, there can be no respondent and no cross-objections.

In other words, the view that was accepted by this Court was that the rejection of the appeal must be deemed to have been done at the initial stage without the respondent on the record and So there would be no occasion for the respondent to make any cross-objections against the decree under appeal. If the order rejecting the memorandum of appeal amounts to a decree, then it would be a decree passed by the appellate Court, the decree of the lower appellate Court would merge in such a decree and it -would not be competent to the appellate Court to refuse to hear the cross-objection's of the respondent. The fact that the cross-objections were treated as incompetent supports the conclusion that the learned Judge took the view by inference that it was not a decree at all.

6. On the question as to whether the rejection of a memorandum of appeal for failure of the appellant to pay adequate court-fee amounts to a decree or not, there is a conflict of judicial opinion. But, on the whole, it appears that the majority of the High Courts have taken the view that a rejection of the memorandum of appeal does not amount to a decree. It is unnecessary to refer to these decisions in detail. It may be enough to state that the Full Benches of the Madras High Court -- 'Kayambu Pillai In re', AIR 1941 Mad 836 (C) and the Nagpur High Court --'Balaji Dhumnaji v. Mt. Muktabai', AIR 1938 Nag 122 (D) and the Division Benches of the Calcutta High Court -- 'Jnanadasundari Shaha v. Madhabchandra', : AIR1932Cal482 and Oudh Chief Court -- 'Jagdish Kumar v. Hari Kishen Das', (F) are in favour of the view which we have expressed. -- 'Lekha v. Bhauna', 18 All 101 (G) can also be treated as supporting this view because it has been held in this case that an order rejecting the appeal on the ground thata proper security was not furnished by the appellant as he was called upon to do does not amount to a decree.

On the other hand, -- 'Gour Charan v. Mohun Sahu', 23 Pat 635 (H) and a single Judge of the Calcutta High Court in -- 'Abdul Majid v. Amina Khatum', : AIR1942Cal539 have held that an order rejecting the memorandum of appeal on the ground that it has not been properly stamped amounts to a decree. With respect, we do not agree with this latter view.

7. There is another aspect of the matter which it is necessary to consider because Mr. Madbhavi has put his argument in another form. Mr. Madbhavi says that whether or not the order passed by the High Court at Phaltan amounts to a decree, it should still be deemed to be a decision by the Phaltan High Court on the merits of the appeal, and in support of this contention Mr. Madbhavi has referred us to a decision of the Madras High Court in --'Jujisti Mahapatro v. Magata Patro', AIR 1933 Mad 442 (J).

In this case, the learned Judges of the Madras High Court were dealing with the question of limitation in respect of an application for a final decree which was made within three years from the date of the order passed by the appellate Court by which the appeal before the appellate Court was allowed to be withdrawn and was then dismissed with costs. The learned Judges held that the order allowing the withdrawal of the appeal and then dismissing it with costs amounted to an order passed by the Court of appeal on the appeal itself and as such limitation should start from the date of the appellate order.

Now, in dealing with this question, two decisions of the Privy Council were considered by the learned Judges. They are the decisions in -- 'Abdul Majid v. Jawahir Lal', AIR 1914 PC 66 (K) & in--'Batuk Nath v. Munni Dei', AIR 1914 PC 65 (L). In both these appeals, the agents of the appellants had not taken proper steps to prosecute the appeals and they were ultimately dismissed for non-prosecution. It was held that such a dismissal did not give a fresh starting point for an application to make the decree final and the view thus expressed was considered by the learned Judges of the Madras High Court in dealing with the point of limitation which arose before them. It was pointed out by Madhavan Nair J. who delivered the prinicipal judgment of the Bench that the observations made by the Privy Council should be read in the context that the appeals in question had formally not reached the forum of the Privy Council at all. The appellant had failed to take the preliminary steps to prosecute the appeals and in consequence the Privy Council had no occasion to deal with the appeals on the merits at all.

It was held that the position in regard to an appeal which was admitted, which became ripe for hearing and which in the presence of the respondent was allowed to be withdrawn and was then dismissed with costs is materially different from the appeals with which the Privy Council were dealing. That is why the Madras High Court held that the order allowing the appeal to be withdrawn and then dismissing the anneal with costs amounted to such an order passed by the appellate Court as would give a fresh starting point of limitation to the party applying for a final decree under Article 181, Limitation Act. It is unnecessary for us to consider whether we would take the same view about the effect of an order allowing the appeal to be withdrawn. It would be enough for the present purpose to state that the order with which we are dealing is not at all analogous to the order allowing the withdrawal of the appeal.

In the present case, the appeal could not technically have been numbered and should not have been admitted until the court-fees were paid. It was because through oversight it was admitted that the respondent was called upon to appear before the appellate Court and on his preliminary objection the Court directed the appellant to pay proper court-fees. Strictly and legally the appeal was not before the Court on the merits. The appeal did not come before the Court for disposal on the merits at all & so the order with which we are concerned is very much similar to the orders with which the Privy Council were dealing in the two cases to which I have just referred.

Their Lordships of the Privy Council had themselves occasion to consider the observations made by them in the said two cases in a subsequent decision in -- 'Abdulla Asghar Ali v. Ganesh Das' . In this latter case, Sir George Lowndes delivering the judgment of the Board pointed out that in the two earlier cases the appellate Court had no occasion to deal judicially with the matters before it at all and he cited the observations of Sir John Edge in one of the said cases where it was stated that (p. 70):

'there was...... no order of His Majestyin Council dismissing the appeal, nor was it necessary that any such order, should be made in the appeal. Under rule V of the Order in Council of 13-6-1853, the appellant or his agent not having taken effectual steps for the prosecution of the appeal, the appeal stood dismissed without further order.'

It would thus be noticed that the authority of the Privy Council is in support of the view that if an order has been made by the Court of appeal rejecting the appeal on the ground that proper court-fees have not been paid, the appeal virtually has not come before the Court of appeal for disposal on the merits, but it has faded out for the reason that the preliminary steps to present the appeal before the appellate Court properly and effectively were not taken by the appellant.

It is true that in -- 'Abdulla Asghar Ali's case' (M), the Privy Council held that if an appeal is admitted and notice on the respondent is served but it is ultimately found that it has abated, the order regarding the abatement of the appeal is a final order and it would give a new starting point of limitation for three years prescribed for an application to execute the decree. This decision was in reference to Article 182 (2), Limitation Act where different considerations would come into operation. Therefore, in our opinion, the decision of the Madras High Court on which Mr. Madbhavi relies does not assist his contention. On the other hand, the decisions of the Privy Council, just cited, with respect, lend support to the conclusion to which we have arrived. In our opinion, therefore, the lower appellate Court was right in holding that the application made by the Phaltan Bank is barred by limitation under Article 181.

Mr. Madbhavi has strenuously contended that this view would be inequitable and would work hardship against the creditor. Mr. Madbhavi points out that if an appellant files an appeal and obtains time for paying court-fees and ultimately fails to pay the court-fees, the respondent is sometimes tempted not to make an application for a final decree and the default of the appellant ultimately works out to the prejudice of the respondent. In the present case, there is no doubt that the irregular manner in which this appeal has been dealt with by the High Court at Phaltan has resulted in prejudice to the appellant. But these considerations, in our opinion, have no relevance when we are dealing with a question of limitation.

Besides, it was perfectly open to the appellant to have applied for a final decree in spite of the fact that the mortgagors had preferred an appeal. That is a step which any mortgagee-decree-holder should and can adopt to save his interest. If the appellant did not adopt this course, he cannot wholly blame the respondents for the present unfortunate result.

8. The appeal, therefore, fails and must be dismissed with cosfs.

9. Appeal dismissed.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //