1. This is a defendant's appeal in a suit praying for a decree for Rs. 638 against the defendant on the allegation that the defendant had wrongly obtained payment of Rs. 623-8-0 out of the surplus resulting from an auction-sale in execution of a decree on a simple mortgage obtained by the defendant against the plaintiff.
2. On behalf of a joint family certain property was made the subject of a simple mortgage in favour of the present appellant, Lachmi Narain, on the 9th of July, 1903, for a sum of Rs. 550. This was followed by two similar subsequent mortgages in favour of the same mortgagee on the 26th of November, 1906, and the 21st of December, 1906, for sums of Rs. 175 and Rs. 554 respectively.
3. The mortgagee Lachmi Narain brought a suit for sale on his first mortgage of the 9th of July 1903, and brought the property to sale. It fetched Rs. 1,800. Only Rs. 1,176-8-0 was due on this first mortgage. There was, therefore, a surplus of Rs. 623-8-0 which in ordinary circumstances the mortgagor would have been entitled to have paid over to him. The mortgagee had throughout these proceedings made no mention of the two later mortgages in his favour. When, however, he saw that there was a surplus available he put in an application, asking that it might be paid over to him in satisfaction of, so far as it would go, his later mortgages. The mortgagor objected but despite his objections the claim was allowed--the order giving the money to the mortgagee purporting to be passed under Section 73 of the Code of Civil Procedure and being dated the 29th of September,' 1922. Two days later, the mortgagee withdrew the money.
4. The members of the joint family, re-presented by the plaintiffs here, feeling aggrieved by this order, and having not appealed against it, filed the present suit claiming a refund of the Rs. 623-8 0 and interest thereon Rs. 14-8-0. The plaintiffs alleged that the order under Section 73 of the Code of Civil Procedure was without jurisdiction, that the two later mortgage-debts were time-barred, and that no consideration passed. These three points were, of course, challenged, and further the defendant pleaded that 'the plaintiffs are not at all competent to sue.' The trial Court dismissed the suit holding the order purporting to be under Section 73 to be legal and that the later mortgages were not time-barred and that there was consideration. It did not frame any special issue as to whether the plaintiffs were competent to sue.
5. The plaintiffs appealed and the lower Appellate Court, without deciding any other point, held that the two later mortgages were time-barred, the endorsements on them being not satisfactorily proved, and it decreed the suit. The defendant mortgagee comes to this Court in appeal.
6. It was contended before us that the order of the first Court was a legal order within the provisions of Section 73 of the Code of Civil Procedure (but this was not pressed); that if it did not come within that section, it came at least within the spirit of it; that it was a proper order under Order XXXIV, Rule 13; that the finding of limitation was so unreasonable as to justify this Court in interfering with it; and, finally, that whether the order was valid or invalid, the plaintiffs were not competent to sue. The defendant mortgagee, appellant here, is in effect asking us to hold that the plaintiffs have no remedy either by appeal or separate suit, even if they had been wrongfully deprived of their money.
7. To consider first the applicability of Section 73, and Order XXXIV, Rule 13:
8. [A] In our opinion, the scheme of the Code itself indicates that it is not contemplated that surplus assets after an auction-sale should be paid out to a subsequent incumbrancer otherwise than with the consent of the mortgagor, that is to say, that the surplus cannot be paid over to the subsequent incumbrancer, if the mortgagor challenges the existence or the validity of the incumbrance or any portion thereof, at any rate where these matters have not been determined in the prior proceedings. [A]
9. The framers of the Code would appear to have considered it futile to give a Court permission to pay over a surplus to a subsequent incumbrancer, where a mortgagor is a consenting party to such payment and does not challenge the existence or validity of subsequent incumbrance or any part thereof Clearly, any provision permitting the Court to do so would be superfluous. There are, however, two cases in which there might be claimants in regard to whom it was desirable to give some directions. First, with a view to stopping unnecessary litigation, provision was made in Section 73 for the case of other claimants against the assets of the judgment debtor who had already obtained decrees. A second case to be provided for was where there was a prior mortgagee, and that special case is provided for in Order XXXIV, Rules 12 and 13. This latter case is appropriately dealt with in the cider which specifically deals with suits relating to mortgages, for it can only arise in a mortgage suit. On the other hand, the provision for decree-holders coining in may arise in other kinds of suite, and, therefore, properly finds its place in the body of the Code.
10. Neither Section 73 nor Order XXXIV, Rule 13, are applicable to the present case, which is the simple one of whether or not a subsequent incumbrancer is to be paid out of the surplus assets arising from the auction-sale.
11. [B] In a case like the present, where there was a contest as to the disposal of the surplus--a contest which had not been determined in the suit or in the execution proceedings there is no provision for what might actually, though not in name become a prolonged civil suit; and the Court of first instance, and in this we agree with Mr. Justice P.C. Banerji's views in Bakhtawar Lal v. Baru Mal 4 A.L.J. 492; A.W.N. (1907) 201, should have referred the claimants to a civil suit. [B]
12. If a civil suit was the proper course to be followed in the first instance, it is clear that the aggrieved party, if an order has in fact been improperly passed against him will, having no right of appeal, hare his remedy in a civil suit.
13. Holding, as we do, that the plaintiff has a right to sue, the rest is concluded by the finding on the facts by the lower Appellate Court that the later mortgages were barred by limitation. The Court exercised a judicial discretion in weighing the evidence in regard to the endorsements of the payment of interest, and its finding is not open to attack in second appeal.
14. The appeal is dismissed with costs.