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Patel Narharilal Kuberdas and ors. Vs. Partners of the Firm of Pari Bhogilal Amratlal: (i) Manilal Bhogilal and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtGujarat High Court
Decided On
Case NumberSecond Appeal No. 571 of 1960
Judge
Reported inAIR1963Guj253; (1963)GLR939
ActsCode of Civil Procedure (CPC) , 1908 - Sections 34 - Order 34, Rules 2, 4 and 11
AppellantPatel Narharilal Kuberdas and ors.
RespondentPartners of the Firm of Pari Bhogilal Amratlal: (i) Manilal Bhogilal and anr.
Appellant Advocate B.J. Bhatt, Adv.
Respondent Advocate C.K. Shah and; S.C. Shah, Advs.
DispositionAppeal dismissed
Cases ReferredDawoodbhai Kassamji v. Shaikhali Alibhoy
Excerpt:
.....suit for sale of mortgage property or property charged amount to be declared due to plaintiff at date of preliminary decree to include principle and interest on mortgage - appellant's contentions not maintainable - held, appeal liable to be dismissed. - - the plaint therefore clearly prayed for the sale of the charged property and it was therefore a suit for the sale of the property charged and, therefore, comes within the purview of order 34, c. order 34, rule 11 clearly uses the words 'interest up to the date on or before which payment of the amount found or declared due is under the preliminary decree to be made'.the rule has, therefore, clearly a reference to the period between the date of the preliminary decree and the date on or before which the preliminary decree allows the..........were also awarded. it was further decreed that the decree was to be executed only against the suit property and not any other property belonging to the deceased in the hands of the defendants.2. in the plaint it was mentioned that the suit property was the subject-matter of a charge as security for money.3. in appeal the learned appellate judge thought that the suit was for the sale of the property charged and that, therefore, a preliminary decree should be passed. he, therefore, held that in a suit where a preliminary decree is to be passed for the sale of the property charged, no instalments can be granted. he, therefore, set aside the order relating to instalments. he also awarded interest from the date of the suit till the date of realization at the rate of 3 per cent, per.....
Judgment:

V.B. Raju, J.

1. This second appeal is filed by the original defendants 1 to 4. The respondents-original plaintiffs filed a suit and a decree was passed in their favour and the defendants were ordered to pay Rs. 6,000/- and odd to the plaintiffs. Certain instalments were also awarded. It was further decreed that the decree was to be executed only against the suit property and not any other property belonging to the deceased in the hands of the defendants.

2. In the plaint it was mentioned that the suit property was the subject-matter of a charge as security for money.

3. In appeal the learned appellate Judge thought that the suit was for the sale of the property charged and that, therefore, a preliminary decree should be passed. He, therefore, held that in a suit where a preliminary decree is to be passed for the sale of the property charged, no instalments can be granted. He, therefore, set aside the order relating to instalments. He also awarded interest from the date of the suit till the date of realization at the rate of 3 per cent, per annum.

4. This order is now challenged in second appeal and three contentions are urged (1) the appellate Court was wrong in holding that a preliminary decree should be passed for the sale of the charged property, (2) it erred in setting aside the order relating to instalments, and (3) it erred in awarding interest when after exercise of discretion, the trial Court declined to award interest. There is no merit in any of these contentions.

5. If we look at the plaint it is a plaint praying for a decree for Rs. 6000/- and odd to be recovered from all the estate of the deceased and also for the sale of the suit property if the money was not recovered. The plaint therefore clearly prayed for the sale of the charged property and it was therefore a suit for the sale of the property charged and, therefore, comes within the purview of Order 34, C. P. C. In such a case a preliminary decree should be passed under Order 34 Rule 4 and a final decree should be passed as provided in Order 34 Rule 5 and Order 34, Rule 6. Order 34, Rule 6 reads as follows:

'6. Where the net proceeds of any sale held under the last preceding rule are found insufficient to pay the amount due to the plaintiff, the Court, on application by him may, if the balance is legally recoverable from the defendant otherwise than out of the property sold, pass a decree for such balance.'

If the sale proceeds are insufficient to pay the amount due to the plaintiff, the Court can pass a decree for the balance to be recoverable from the defendant otherwise than out of the property sold. Instead of following this procedure, the plaintiff reversed the order, but, in effect, he prayed that the property charged be sold and, therefore, a preliminary decree is necessary under Order 34, Rule 4. In such a case no instalments can be granted as held by me in Prabhudas Uttamdas v. Lavar Bai, 1962-3 Guj LR 919.

6. As regards, the contention regarding interest, Section 34 of the Civil Procedure Code provides that in so far as a decree is for the payment of money, the Court may, in the decree, order interest at such rate as the Court deems reasonable to be paid on the principal sum from the date of the suit to the date of the decree. The Court has, therefore, a discretion, but, in the case of a suit for the sale of property mortgaged or charged, an account has to be taken of what was due to the plaintiff at the date of such decree as provided in Order 34 Rule 2 and Order 34, Rule 4. The Court has to take an account of the principal and interest on the mortgage and the amount due to the plaintiff on the date of the decree. The Court has, therefore, no discretion in the matter of taking accounts of the mortgage. It is, however, contended that Section 34 overrides Order 34 and that where Section 34 gives a discretion to the Court that discretion cannot be taken away by Order 34. But there is no inconsistency between the two. Section 34 gives a discretion to the Court in cases where the Court passes a pure money decree. Order 34 leaves no discretion to the Court where the Court is dealing with suits under Order 34. It is, however, provided in Order 34, Rule II as follows:

'11. In any decree passed in a suit for foreclosure, bale or redemption, where interest is legally recoverable, the Court may order payment of interest to the mortgagee as follows, namely:

(a) interest up to the date on or before which payment of the amount found or declared due is under the preliminary decree to be made by the mortgagor or other person redeeming the mortgage: (i) on the principal amount found or declared due on the mortgage, -- at the rate payable on the principal, or, where no such rate is fixed, at such rate as the Court deems reasonable,

(ii) ..............................

(iii) on the amount adjudged due to the mortgagee for costs, charges and expenses properly incurred by the mortgagee in respect of the mortgage-security up to the date of the preliminary decree and added to the mortgage-money -- at the rate agreed between the parties, or, failing such rate at such rate not exceeding six per cent, per annum as the Court deems reasonable; and

(b) subsequent interest upto the date of realization or actual payment on the aggregate of the principal sums specified in Clause (a) as calculated in accordance with that clause at such rate as the Court deems reasonable.'

Now, it is true that the word 'may' has been used. It is provided that the Court may order payment of interest. But what is provided in Order 34, Rule 11 is interest up to the date on or before which payment of the amount found or declared due is under the preliminary decree to be made. The rule, therefore, contemplates that a certain amount is found or declared due and that amount has to be paid on or before a date under the preliminary decree. The rule, therefore, contemplates interest on the amount found due from the date when it is found due upto the date on or before which payment is to be made under the preliminary decree. The amount found or declared due has reference to the amount mentioned in Order 34, Rule 2 and Order 34, Rule 4. That includes interest from the date of the suit till the date of the preliminary decree. A preliminary decree provides that the amount found or declared due may be paid into the Court on or before such date as the Court may fix within six months from the date on which the Court confirms and countersigns the account taken under Sub-clause (a) of Clause (1) of Order 34, Rule 2. The Court has, therefore, to take an account under Order 34, Rule 2, Sub-clauses (a), (b) and (c) of Clause (1). While taking such an account the Court has to include interest as provided in Clause (a) (i) of Rule 2(1). The Court then has to give time for payment of that amount and the time given should be less than six months. In regard to the subsequent period which should not exceed six months, the Court has a discretion under Order 34, Rule 11 to give interest or not as provided in Order 34, Rule 11. The Court has, therefore, no discretion in regard to the manner of taking account under Order 34, Rule 2 and Order 34, Rule 4 and is bound to include interest while arriving at the amount found due at the date of the preliminary decree. But under Order 34, Rule 11 the Court has a discretion whether or not to order interest for the subsequent period of six months from the date of the preliminary decree till the time of actual payment.

7. The learned counsel for the appellant, however, relies on Dawoodbhai Kassamji v. Shaikhali Alibhoy, 55 Bom LR 618: (AIR 1953 Bom 445). There it was observed as follows by Chagla, C. J. :--

'Order XXXIV, Rule 2, does not deal with the rate of interest that the Court should award at the time of passing the preliminary decree. Order XXXIV, Rule 2 (1) (i), merely indicates one of the heads in respect of which account has to be taken, but with regard to the question of the rate of interest Order XXXIV, Rule 11, is a self-contained rule which deals with payment of inter-rest in a mortgage suit under all circumstances, and Order XXXIV, Rule 11, leaves it to the discretion of the Court what interest should be awarded to the mortgagee in a mortgage suit from the date of the suit till the date fixed for redemption.'

It is difficult to agree with the observation that Order 34. Rule 11 deals with the payment of interest in mortgage suit under all circumstances and that it leaves to the discretion of the Court what interest should be awarded to the mortgagee in a mortgage suit from the date of the suit till the date fixed for repayment. Order 34, Rule 11 clearly uses the words 'interest up to the date on or before which payment of the amount found or declared due is under the preliminary decree to be made'. The rule has, therefore, clearly a reference to the period between the date of the preliminary decree and the date on or before which the preliminary decree allows the payment of the money, to be made. It has no reference to the payment from the date of the suit to the date of the decree. With great respect, it is difficult to agree with these observations of Chagla, C. J. in the Bom-bay case. It is true that Order 34, Rule 2 does not deal with the rate of interest on the mortgage but only speaks of interest on the mortgage. It does not say interest on the mortgage at the rate provided in the mortgage, but it is clear from Order 34, Rule 2 and Order 34, Rule 4 that when a preliminary decree is passed in a suit for sale of mortgage property or property charged, the amount to be declared due to the plaintiff at the date of the preliminary decree should include the principal and interest on the mortgage. Order 34, Rule 11, therefore, is in no way inconsistent with Section 34, C. P. C. or Order 34, Rule 4 or Order 34, Rule 2.

8. Apart from the question of the rate of interest, while taking account of the amount due to the plaintiff on the date of the preliminary decree, the Court has no option but it is under an obligation to include interest. Although 6 per cent, was the rate mentioned in the charge, the appellate Court awarded 3 per cent, from the date of the suit till the date of realization on actual recovery on or before 1st February 1959. But there are no cross-objections. Strictly speaking, there arc two different stages. One is to take into account interest while declaring the amount due to the plaintiff and the second is to decide whether or not to award interest and, if so, at what rate from the date of the preliminary decree till the date of actual realization. But this point need not be further considered because there are no cross-objections.

9. The appeal is dismissed with costs.


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