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Gurappa Gurushiddappa Neeli Vs. Amarangji Vanichand - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtMumbai
Decided On
Case NumberFirst Appeal No. 151 of 1939
Judge
Reported inAIR1941Bom90; (1941)43BOMLR26
AppellantGurappa Gurushiddappa Neeli
RespondentAmarangji Vanichand
DispositionAppeal dismissed
Excerpt:
decree--charge created by decree--failure to pay instalments under decree--sale of charged property--balance remaining due after such sale--execution of decree--attachment and sale of judgment-debtor's other property--personal decree not necessary--civil procedure code (act v of 1908), order xxxiv. a money decree passed by consent directed the defendant to pay to the plaintiff the amount of rs. 9,000 by yearly instalments of rs. 2,000 each, and made the whole amount payable on default of payment of two instalments. it further gave a charge in favour of the plaintiff for the decretal amount on certain shares belonging to the defendant, and provided: 'if defendant fails to pay money in time, the same should be recovered by sale of the said shares.' the defendant having failed to pay two..........sir norman macleod, the chief justice, said (p. 958):it seems dear to me that there must be a decree personally made against the mortgagor before it can be executed against property other than the mortgaged property. the decree in this case cannot be said to be a personal decree merely because it directs that the defendants should pay the amount.18. with all respect to the learned chief justice, i do not follow the last proposition. a decree which directs payment of the amount is prima facie a personal decree. the court in that case purported to act by analogy to order xxxiv of the civil procedure code. now, order xxxiv is a code, which regulates the enforcement by suit of mortgages, and the scheme of the order is that in the preliminary decree there is a direction on the mortgagor.....
Judgment:

S.A. Desai.

1. I submit that where in the course of a suit a charge is created, such charge negatives personal liability. Secondly, by expressly mentioning a particular remedy granted by a decree the other reliefs are denied: expressio unius exclush alterius. Thirdly, you cannot divorce a decree from the plaint, for Section 11, expln. V, of the Civil Procedure Code, provides: 'Any relief claimed in the plaint, which is not expressly granted by the decree, shall, .... be deemed to have been refused.' Fourthly, the principle of Order XXXIV of the Code applies to the present case where charge is created for the first time by the decree itself. On the last point there is a divergence of opinion among Judges of our Court. Further question is whether Order XXXIV applies to moveables in principle.

2. In his second edition of the Transfer of Property Act, 1882, Sir Dinshah Mulla says (p. 547): 'When a charge is created by act of parties the specification of the particular fund or property negatives a personal liability. The remedy of the holder of the charge is against the property charged only.' The decree in the present case, being one passed in terms of a compromise, is on the footing of a contract between two parties. The judgment-debtor has made a concession by admitting the whole amount claimed and has therefore consented to the creation of a charge. Hence probably the creditor agreed to be content with the creation of the charge only. Even if the decree is so construed, the darkhast must be dismissed. The parties should be held to the contract.

3. The Allahabad High Court in Raghukul Tilak v. Pitam Singh (1930) I.L.R. 52 All. 901. said (p.904): 'It appears to us that the question whether a charge-holder has a personal remedy against the person over whose property he holds a charge is a matter of contract. In the case of a simple mortgage it has been recognized that in the absence of a contract to the contrary, a simple mortgage carries a personal liability. Where there is a simple mortgage, there is a presumption that there is a personal liability, and unless the personal liability is excluded by an express contract it will exist. No such rule applies to the case of a charge.' See also Posti Mal v. Radha Kishan Lalchand I.L.R. (1932) All. 763.

4. In the case of an ordinary money decree the principle of Order II, Rule 2, will apply. That principle does not apply to mortgage decrees, which are governed by Order XXXIV, Rule 14, in so far as a mortgagor may waive his right to the institution of the second suit. The latter provision should be confined to a charge created before the institution of a suit, and not to a charge which came into existence during the progress of a suit. In every case, however, it must be a question of construction of the decree. It is laid down by Broomfield and Divatia JJ. in the recent case of Raychand Jivaji v. Basappa Virappa : AIR1941Bom71 : '. . .the principles underlying Order XXXIV, although they may not strictly apply in the case of a charge, may be applied and ought to be applied by analogy to charges created by a decree, unless indeed the terms of the decree make it clear that the remedy of recovering the decretal amount from the property charged was not given in lieu of the personal remedy, but in addition to it.' The learned Judges referred with approval to Janardan v. Krishnaji : (1920)22BOMLR953 . which has been followed over and over again not only in this High Court but in other High Courts also. It is recently followed by Kania J. in Gurupadappa Mallappa v. Basappa Shiddappa : AIR1940Bom276 . Ordinarily, when you create a charge, you prima facie exclude personal liability. The whole question is one of construction, and in the light of certain canons of interpretation the decree stands on the same footing as any other contract between parties thereof. It is open to parties to provide for various eventualities. If they do not, they take the consequences. The decree should be construed in the light of explanation V of Section 11, Civil Procedure Code, inasmuch as in the present case the plaintiff had prayed in the plaint for a personal decree which has not been expressly granted in the decree. Furthermore a charge excludes personal liability.

5. Shah J. in Ambalal v. Narayan : (1919)21BOMLR698 . was of opinion (p. 705): Order XXXIV, Rule 14, meant 'that the decree should relate to the payment of money in satisfaction of a claim arising under the mortgage, i.e., a mortgage independent of the decree. It can have no application where the charge or the mortgage is created by the decree and where the direction as to payment of money is in no sense in respect of a claim arising under the charge or the mortgage.' This case can be distinguished on three grounds: (1) liberty to apply was reserved in that decree; (2) decree was merely declaratory; and (3) in the present case, the charge was created prior to the decree by a compromise.

6. I submit that either Order XXXIV applies or it does not apply. If it applies, then there must be a separate application for a personal decree. If it does not apply, then Section 11, expln. V, comes in in any event. The Order does not apply where the mortgage does not exist prior to the decree. Here, prior to the passing of the decree, the charge was created by the compromise. If Order XXXIV applies, in the present case no application for personal decree under Rule 6 has been made and hence the darkhast must be dismissed.

7. The analogy from a decree for maintenance as in Srinivasa Ayyar v. Lakshmi Ammal (1932) I.L.R. 56 Mad. 343. as was pointed out in the case before Lokur J. in Lakshmibai v.Shantaram (1938) 41 Bom. L.R. 420, is irrelevant; where you mention a particular relief in a decree you are confined to that relief only.

8. There also are cases which bear against my contention. The first one is Gurupadappa v. Karveerappa : AIR1934Bom241 , which emphasizes that Order XXXIV, Rule 14, has no application to the execution of a decree which creates a charge for the first time, there being no prior mortgage. The principle of Order XXXIV, however, applies only to immoveable property. It demands that if there is a deficit from sale of property mortgaged, the decree-holder should apply for a personal decree. If Order XXXIV does not apply, the decree-holder comes under Section 11, expln. V, or else he should file another suit. Where there is a money decree plus something else, that something else changes the character of the decree: Gurupadappa v. Karveerappa : AIR1934Bom241 , per Barlee J. Where there is a complicated decree, you should read it as a whole. So read, it is clear that the personal relief is not expressly granted.

9. Secondly, there is the unreported judgment of Barlee J. in The Automobile Sales Company, Ltd. v. Anant Subrao Yatgiri (1935) First Appeal No. 61 of 1934, decided by Barlee J., on August 22, 1935, which is directly against me In Shibu Bera v. Chandra Mohan Jana I.L.R. (1906) Cal. 849. a mortgagee first instituted a suit to enforce his security and took merely a money decree, but failed to obtain satisfaction of the decree. He then brought a second suit to realize the debt by the sale of the mortgaged property. In holding that the second suit was not competent Maclean C.J. said (p. 851): 'Apart from authority, I should have thought that, inasmuch as the plaintiff elected to take a decree in the form he did, in the former suit, and practically abandoned or waived his right, which he then undoubtedly had, to have the mortgaged property sold in the event of the money not being paid, he cannot now, having regard to the provisions of Section 13 of the Code of Civil Procedure, successfully ask that the property should be sold in the present suit.' Much more so in the present case. The principle of res judicata is not confined to the terms of Section 11, Civil Procedure Code, i.e., Section 11 is not exhaustive. It applies not only when the question arises in two suits but also in a darkhast, a suit or vice versa or in the continuation of the same suit: Mulla's Civil Procedure Code, 10th edn., p. 86.

10. The case of Official Assignee, Bombay v. Chimniram Motilal : (1932)34BOMLR1615 . is against me. But it is an authority for Rule 14 of Order XXXIV and not Rule 6. A decree passed by consent creates estoppel by judgment. Order XXXIV, Rule 14, does not apply to consent decrees. If the principle of Order XXXIV is followed here, the decree-holder should first apply to the Court for a personal decree.

11. In The Co-operative Hindusthan Bank, Ltd. v. Surendranath De I.L.R. (1931) Cal. 667. the Calcutta High Court applied the rules of Order XXXIV to mortgages of moveables, and in Mahamaya Debi v. Haridas Haldar I.L.R. (1914) Cal. 455. it was held that foreclosure, as a remedy of the mortgagee, was not confined to mortgages of land; it was equally applicable to mortgages of chattels.

12. Explanation V to Section 11 applies as much to consent decrees as to contested decrees. The rule applies not only to mortgages but also to charges (see Mulla's Civil Procedure Code, 10th edn., p. 1022). At any rate the principle of Rule 6 of Order XXXIV should be applied to the present case of moveables because it is a rule of procedure based on equitable considerations.

S.R. Parulekar, was not called upon.

John Beaumont, C.J.

13. This is an appeal from a decision of the First Class Subordinate Judge of Dharwar, and it raises a question in execution, which has caused some difference of opinion in this Court, and is of very common occurrence.

14. In 1928 the plaintiff made an advance of Rs. 8,000 to the defendant, and certain shares were charged to secure the amount. In 1931 the plaintiff sued to recover the amount due, and on November 28 there was a consent decree. The decree recites the plaint, and then (in Clause 1) directs the defendant to pay to the plaintiff a lump sum of Rs. 9,000 by yearly instalments of Rs. 2,000. Then there is a default clause malting the whole amount payable on default of payment of two instalments. Then it is provided that a charge in favour of the plaintiff for the decretal amount of Rs. 9,000 is kept upon the suit shares, and then the decree goes on: 'If defendant fails to pay the monies in time, the same should be recovered by sale of the said shares.' The defendant failed to pay the instalments on the due dates, and in 1934 the shares were sold and realised Rs. 4,350. In 1936 the plaintiff took out the present darkhast to recover the balance of the debt by attachment and sale of a house belonging to the defendant. It is contended by the defendant that the plaintiff, having taken a charge on, specific shares, has abandoned his right to recover the money by any other means. Alternatively, it is said that if he desires to recover the money by any other means, and has a right to do so, he must first of all proceed to get a personal decree for payment. The learned Subordinate Judge decided in favour of the plaintiff.

15. Now, taking the decree as it stands, and without reference to authorities in the first instance, I should have thought that its meaning was perfectly plain. It is very common to have a consent decree for payment of money making the amount payable by instalments; but if the creditor agrees to instalments, he is, of course, abandoning his present right to execute the decree for the full amount due, and to compensate him for that it is very common for the debtor to give him a charge on property. In the present case, property, namely the shares, had been charged beforehand, but I think the same principle would apply if the charge had been created in the first instance by the decree. But in taking a charge it seems to me that what the creditor is looking to is his protection against the rights of intervening creditors, who may attach property of the judgment-debtor whilst the plaintiff's hands are tied by the time given for payment of instalments. That seems to me to be the object of a charge; not to regulate the order in which the defendant's property is liable to be attached. Taking Clause (1) of this decree, it is perfectly plain that it amounts to an order for payment, and if such clause stood alone, it could be enforced by any of the methods authorized by the Civil Procedure Code, including attachment and sale of any of the defendant's property. There is nothing in the rest of the decree which expressly takes away or limits that right, and I can see no reason why it should be held that the plaintiff by implication has deprived himself of that right or delayed its enforcement, merely because he has protected himself against other creditors by taking a charge on part of the defendant's property. Therefore, if I had to construe the decree without reference to authorities, I should say that there was no doubt whatever that the plaintiff, having failed to realize the whole amount of his debt by sale of the charged shares, can proceed under the decree to attach any other property of the judgment-debtor which may be available.

16. However, there are undoubtedly two cases of this Court, which are against that view. There is, first of all, a decision of an appellate bench in Janardan v. Krishnaji : (1920)22BOMLR953 . The learned trial Judge distinguished that case by pointing out that it was a mortgage suit, as no doubt it was, but in that mortgage suit there was a consent decree, very much in the same terms as the decree in the present suit. Mr. Justice Shah, in the Court of first instance, said this (p.956):--

I see no reason to limit the plain meaning of the decree as to the payment of the full amount in instalments by the provision as to the realisation of the full amount by the sale of the mortgaged property in default of the payment of any two instalments. The decree directs the defendants to pay the full amount, and the obligation is not in, my opinion limited by the provision relating to the sale of the mortgaged property.

17. I think that is right; but in appeal Sir Norman Macleod, the Chief Justice, said (p. 958):

It seems dear to me that there must be a decree personally made against the mortgagor before it can be executed against property other than the mortgaged property. The decree in this case cannot be said to be a personal decree merely because it directs that the defendants should pay the amount.

18. With all respect to the learned Chief Justice, I do not follow the last proposition. A decree which directs payment of the amount is prima facie a personal decree. The Court in that case purported to act by analogy to Order XXXIV of the Civil Procedure Code. Now, Order XXXIV is a code, which regulates the enforcement by suit of mortgages, and the scheme of the Order is that in the preliminary decree there is a direction on the mortgagor to pay the amount found due into Court; on payment there is to be redemption, and on failure to pay, the mortgaged property can be ordered to be sold; and then there is liberty reserved to the mortgagee to apply for a personal decree against the mortgagor for any balance not realized. That is the general scheme of the Code, and where one is. dealing with a decree in a mortgage suit relating to immoveable property, one must follow that scheme. I agree that one must read the decree as a whole, and if a preliminary mortgage decree provided, in the first instance, that the mortgagor should pay the amount, not into Court but to the mortgagee, the Court would not be justified in construing that as an executable decree for payment, because, taking the decree as a whole, it provides that there is not to be a personal decree for payment until the mortgaged property has been sold and a deficit has resulted. But I cannot see any reason why one should apply the analogy of a mortgage decree to a consent decree, which must be construed according to the terms of the language used. Mr. Desai contends that the principles of Order XXXIV should be applied. I do not quite know what is meant by the principles of Order XXXIV. It would have been quite easy to provide in the Code that in the preliminary decree there should be a personal judgment for the balance remaining due after sale of the mortgaged property. There is no principle of equity, which I know of, which would make such a provision improper; but it happens that that is not the scheme of the Code framed by the Legislature. There is, however, to my mind nothing inequitable in construing an agreement between parties so as to provide that the mortgagor shall pay to the mortgagee anything remaining due after sale of the mortgaged property, or that there shall be a personal decree for payment, which may be enforced before recourse is had to the mortgaged property. There is nothing inequitable in requiring that a debtor shall pay his debt immediately after the liability has been ascertained. In my opinion, the decision of Mr. Justice Shah in Janardm v. Krkhnaji was right, and the decision of the appellate Court was wrong.

19. Then there is another case, to which we have been referred, a very recent decision of this Court in a Letters Patent Appeal from a decision of Mr. Justice N.J. Wadia (Raychand Jivaji v. Basappa Virappa : AIR1941Bom71 , since reported.).In that case there was a consent decree under which the defendant was directed to pay a certain sum by instalments; there was no default clause, but certain immoveable property was charged for the amount. It may be that the absence of a default clause creates a distinction; the case has not yet been reported,1 and I do not know the exact facts. But Mr. Justice Broomfield in giving the judgment of the Court refers to Janardan v. Krishnaji and to other cases, and he concludes in these words (p. 1122):--

In every case it must be essentially a question of construction of the decree, but unless the contrary appears, we think the ordinary rule should be that when a charge is created by act of parties the specification of the particular fund or property negatives a personal liability and the remedy of the holder of the charge is against the property charged only or at any rate against the property charged in the first instance. In my opinion that is the way in which the decree in this case should be construed.

20. I am unable to agree with that conclusion. To apply such a rule of construction to a consent decree for payment of money would seem to me to be wrong in principle, and inexpedient in practice. In arranging consent decrees of the nature in question, it is usually the creditor, and not the debtor, who is master of the situation, and I can see no justification for holding that, by taking a charge upon specific property, the primary object of which, as I have pointed out, is to secure him against other creditors, the creditor abandons his right to proceed against other property of the debtor. Such an abandonment should not be presumed in the absence of language making clear the intention to abandon. On the other hand, to hold that the creditor can only attach other property after obtaining a fresh order for payment is to ignore the fact that the decree already contains an order for payment. The only effect of the latter construction would be to impose further delay and additional expense upon the creditor. In this country experience shows that there are opportunities in plenty afforded to a judgment-debtor to delay his creditor, and I am not disposed to add to the number.

21. We were referred to other cases which can be distinguished. Ambalal Bapubhai v. Narayan Tatyaba I.L.R. (1918) Bom. 631 which was followed in Gurupadappa v. Karveerappa (1934) 36 Born. L.R. 523. is rather in favour of the view which I. take, but is no doubt distinguishable. In both those cases-there had been a decree and a charge created by the decree on immoveable property, and it was held that the charge could be enforced by execution of the decree without the necessity of filing a separate suit. The cases were both based on the view that the decree, which for practical purposes was in the same terms as the present decree, created a personal liability for payment of the amount due, and to that extent the cases are in favour of the view which I take. The decision of Mr. Justice Kania in Gurupadappa Mallappa v. Basappa Shiddappa : AIR1940Bom276 . is again distinguishable. The learned Judge there held that the particular decree, with which he had to deal, was in the nature of a preliminary mortgage decree, and that being so, the provisions of Order XXXIV applied to it. It is not necessary to consider whether I should have come to the same conclusion as to the construction of that particular decree, but I agree that if once you find that the decree is in its nature a preliminary mortgage decree, the provisions of Order XXXIV apply, and there must be a further application for a personal decree. But, in my opinion, the decree with which we have to deal is quite plain in its meaning. It does not in terms restrict the right of the creditor to proceed against other property, and it does contain a decree for personal payment. It can therefore be executed against. the house of the judgment-debtor.

22. In my opinion, therefore, the decree appealed from was right. The appeal will be dismissed with costs.

Macklin, J.

23. I agree and have nothing to add.

Wassoodew, J.

24. I agree.


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