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Habib and ors. Vs. Daulatram and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtRajasthan High Court
Decided On
Case NumberEx. First Appeal No. 7 of 1954
Judge
Reported inAIR1956Raj121
ActsCode of Civil Procedure (CPC) , 1908 - Order 34, Rule 14 - Order 43, Rule 14; Transfer of Property Act - Sections 99
AppellantHabib and ors.
RespondentDaulatram and anr.
Appellant Advocate Chandmal, Adv.
Respondent Advocate Roshanlal and; Gumanlal, Advs.
DispositionAppeal allowed
Cases ReferredSheodeni Tewari v. Ram Saran Singh
Excerpt:
.....disqualification raised against the mortgagee by the rule in question clearly imports that he can bring a suit for sale to enforce his mortgage, and it is only where he can bring such a suit that the disqualification can be held to be applicable. we have no doubt that in interpreting the rule in this way, we are not legislating, and that we are interpreting it in accordance with the well known principle of interpretation of statutes which enjoins that due meaning should be given to every part of the provision sought to be interpreted and that no part of it should be considered to be a surplus age and in doing so there should be no straining of the language. in this connection we cannot also forget the consideration that in this kind of mortgage as in the case of other mortgages, a..........of order 34, rule 14.no argument was raised that the mortgagee with possession could not bring a suit for sale in enforcement of the mortgage. the only other point which came up for consideration was whether such a sale was void or voidable, and it was held that it was voidable at the instance of the mortgagor but we are not concerned with that in the present case.7. again in md. yakub v. hamid all, 1927 cal 884 (air v. 14) (d), it was held that where a mortgage deed and a lease back to the mortgagor form part of the mortgage transaction, the mortgagee landlord cannot bring the mortgaged property to sale in execution of a decree for arrears of rent due under the lease otherwise than by instituting a suit for sale in enforcement of the mortgage. reliance was placed on.....
Judgment:

Modi, J.

1. This is an execution first appeal by the decree-holders Habib and others against a judgment of the Civil Judge, Bhilwara, dated 26-4-1954.

2. The appellants are mortgagees. The respondent judgment-debtors executed a mortgage on 22-7-1947, of a house in favour of the appellants for a sum of Rs. 40,000/-. On the same date the mortgagees leased back the house to the judgment-debtors who executed a rent-note whereby they agreed to pay a sum of Rs. 200/- as rent to the mortgagees.

The mortgagors failed to pay the stipulated rent with the result that the mortgagees brought a suit and obtained a decree for Rs. 6200/-, as rent, on 29-11-1952. The mortgagees in execution of this decree attached the house. The judgment-debtors raised the objection that it was not open to the decree-holders to bring the property in question to sale, as such a sale was forbidden by the provisions of Order 34, Rule 14, C. P.C.

The case of the judgment-debtors was that there was an understanding between the parties (although there was no mention thereof in the mortgage deed) that interest was to be paid on the sum borrowed at the rate of eight annas per cent, per mensem and on that computation the interest amounted to Rs. 200/- per mensem, and rent was accordingly fixed at that figure and a lease was executed on the same day as the mortgage.

It was, therefore, argued that the mortgage deed and the lease were part and parcel of the same transaction and the claim under the lease was a claim arising under the mortgage and that consequently the provisions of Order 34, Rule 14 were clearly attracted. The decree-holders' reply was that Order 34, Rule 14 was not applicable in the circumstances of the case, and that in any case the judgment-debtors were prevented by the rule of waiver and this was during the course of arguments before us developed as the rule of constructive res judicata, from raising their objection as to the sale of the mortgaged property.

The executing court held that the provisions of Order 34, Rule 14 were applicable to the sale in question as the mortgage and the lease formed part of the same transaction and the decree arising out of the lease was one which arose under the mortgage.

That court further held that although several adjournments had been sought on behalf of the judgment-debtors for a compromise between the parties and for making an application under Order 21, Rule 83, C. P. C., for raising money by private sale of the mortgaged property, the judgment-debtors were not barred from raising the objection as to the non-sale ability of the property under Order 34, Rule 14. Consequently, the executing court allowed the objection. This appeal has been brought by the decree-holders from that order.

3. Learned counsel for the decree-holders raised the same contentions before us in this appeal as before the Court below. We propose to consider first the contention relating to Order 34, Rule 14, C. P.C. The material portion of this rule is in these terms:

'Where a mortgagee has obtained a decree for the payment of money in satisfaction of a claim arising under the mortgage, he shall not be entitled to bring the mortgaged property to sale otherwise than by instituting a suit for sale in enforcement of the mortgage and he may institute such suit notwithstanding anything contained in Order 2, Rule 2.'

A number of cases were brought to our notice as to the interpretation of this rule, and in these cases the main question which appears to us to have come up for consideration is whether the decree obtained, by the mortgagee for the payment of money was one which arose under the mortgage, and, generally speaking, it may be stated at once that in answering this question, the courts addressed themselves to the further question whether the mortgage and the lease (or similar other document on the basis of which the mortgagee obtained a simple decree for money) were part and parcel of the same transaction, and where the conclusion was reached that the two documents were part and parcel of the same transaction, it has been held that Order 34, Rule 14 was attracted into operation, and the mortgagee was prevented from bringing the mortgaged property to sale in execution of the decree for money, and he was left to institute a suit for sale in enforcement of the mortgage itself. We may now refer to a few decided cases in this connection.

4. The first case to which reference may be invited is Mt. Kadma Pasin v. Muliammadali, 1919 All 435 (AIR V. 6) (A). In that case certain lands and the right to collect offerings at a temple were mortgaged with possession and six months thereafter a subsequent agreement was entered into between the parties according to which the mortgagor agreed to make an annual payment of a certain sum of money in lieu of the offerings and in case of default to pay interest thereon.

The mortgagor failed to make the payment whereupon the mortgagee sued on this agreement and obtained a decree for money against the mortgagor, and in execution of the decree attached the mortgaged property and sought to have it sold. An objection was raised on behalf of the mortgagor on the ground that the claim under the subsequent agreement was one which arose under the original contract of mortgage within the meaning of Order 34, Rule 14, and this objection was allowed.

The main question which was considered in arriving at the above conclusion was whether the claim under the subsequent agreement could be said to have arisen under the mortgage, and the answer returned to that question was that the money in respect of which the decree was passed represented in substance the usufruct of the mortgaged property and was a direct consequence of the mortgage and was adopted as a means for giving effect to its conditions and, therefore, it was a claim arising under the mortgage.

We have nothing to say as regards that aspect of the matter. Piggot J. who delivered the main judgment in the case observed no doubt that a usufructuary mortgagee could also file a suit for money under Section 68 of the Transfer of Property Act but the position in law is clear that that would be possible, not in the normal course of things or in the generality of such cases, but, only where the conditions of that section are fulfilled (e.g., where the mortgagor disturbs the possession of the mortgagee Or withholds it from the latter.)

It appears to us that that line of reasoning was not pursued further or, at any rate to its logical conclusion, and if we may say so, with respect, it was not adequately appreciated as to what would or should be the position in those cases where the mortgagee was in possession, even though indirectly and through the mortgagor, but in legal possession all the same, and it is not at all open to him to take advantage of Section 68 of the Transfer of Property Act and bring any suit for sale to enforce his mortgage.

Having given our careful consideration to this aspect of this matter, we are inclined to the view that this class of case which is represented by a usufructuary mortgagee, who has not been deprived of his possession in law and is, therefore, unable to bring any suit for the mortgage money, does not legitimately fall within the mischief of Order 34, Rule 14 for the important reason that he is in law unable to institute a suit for sale in enforcement of his mortgage contemplated by the rule.

Putting the same thing in other words, what we wish to stress here is that the words 'otherwise than by instituting a suit for sale in enforcement of the mortgage' also require to be considered and interpreted in their due emphasis in examining the applicability of the rule in question to a particular case, and appear to us to have failed to receive the consideration which they deserve.

5. The above case was followed in Allahabad by a learned single Judge in piyare Lal v. Hasan Ahmad, 1936 All 708 (AIR V. 23) (B) but it does not take us any farther because the learned Judge there said that he was bound by the decision taken in the bench case.

6. In Bhaichand Kirparam v. Ranchhoddas, 1921 Bom 285 (AIR V. 8) (C), the Allahabad view was followed and it was held that the claim for possession and rent based on a rent note with respect to the mortgaged property must be held to have arisen under the mortgage and the sale was held to be in contravention of Order 34, Rule 14.

No argument was raised that the mortgagee with possession could not bring a suit for sale in enforcement of the mortgage. The only other point which came up for consideration was whether such a sale was void or voidable, and it was held that it was voidable at the instance of the mortgagor but we are not concerned with that in the present case.

7. Again in Md. Yakub v. Hamid All, 1927 Cal 884 (AIR V. 14) (D), it was Held that where a mortgage deed and a lease back to the mortgagor form part of the mortgage transaction, the mortgagee landlord cannot bring the mortgaged property to sale in execution of a decree for arrears of rent due under the lease otherwise than by instituting a suit for sale in enforcement of the mortgage. Reliance was placed on Ramarayaningar v. v. Govinda Krishna, 1S27 PC 32 (AIR V. 14) (E) to arrive at the conclusion that the two documents were part and parcel of the same transaction.

8. In Nanekeshwar Prasad v. Nand Gopal Ram, 1943 Pat 282 (AIR V 30) (P) the same view was adopted as in the Allahabad and Calcutta cases referred to above but here again the entire controversy centred round the question whether the claim on the lease was one which arose under the mortgage or not and the question was answered in the affirmative.

9. The same view prevailed in Kuttyal v. Sanjiva Rao, 1952 Mad 877 (AIR V. 39) (G) which was further approved in Kalyanasundaram v. Subramanya, 1954 Mad 675 (AIR V. 41) (H).

10. It is clear from the review of case law made above that in all these cases, the applicability of Order 34, Rule 14 was considered almost, solely on the test whether the money decree obtained by the mortgagee, in satisfaction whereof he claimed the sale of the mortgaged property, amounted to a claim 'arising under the mortgage or not; and once it was held that it was a claim which arose under the mortgage and was not distinct from it, this was considered sufficient to attract the operation of Order 34, Rule 14.

The further consideration, which in some of these cases certainly appears to arise, that it was not possible for the mortgagee to institute a suit for sale at all in enforcement of the mortgage received little or no consideration.

As we have already hinted above, we pause, at this stage to point out that in the case of a pure and simple usufructuary mortgage, it is impossible for a mortgagee in the normal circumstances to bring a suit for sale unless indeed he can bring his case within the four corners of Section 68 of the Transfer of Property Act, but where such a case does not in fact arise, the ordinary incidents of a usufructuary mortgage must prevail.

The law is indeed well settled, and it is scarcely necessary to cite any authority for this, that a mortgagor in a usufructuary mortgage as such is under no personal liability to pay, and, therefore, the remedies by way of foreclosure or sale are not open to him at all.

But if any authority is needed in that connection, we would refer to Mahomed Saeed v. Abdul Alim, 1947 Lah 40 (AIR V. 34) (FB) (I), Where Mahajan J., as he then was, in delivering the opinion of the Full Bench stated that the characteristics of a usufructuary mortgage were (1) that the possession of the mortgaged property is delivered or agreed to be delivered to the mortgagee; (2) that he is to appropriate the rents and profits either (a) in lieu of interest or (b) towards the principal (c) partly in lieu of interest and partly in payment of the principal; (3) that in none of these the mortgagor incurs any personal liability to repay; and (4) as the mortgagor does not bind himself to repay (but may repay if and when he chooses) there can be no forfeiture and therefore the remedies by way of foreclosure or sale are not open to the mortgagee.

It was further pointed out that it was an essential incident of a usufructuary mortgage that personal liability on the part of the mortgagor was excluded and that when there was a stipulation to the contrary, the transaction ceased to be one of usufructuary mortgage but was an anomalous mortgage.

11. The last case we should like to refer in this connection is Sheodeni Tewari v. Ramsaran Singh, 26 Cal 164 (J), which is a case directly in point. The learned Judges there dealt with the question under consideration from the very angle which we have felt persuaded to adopt in determining the applicability of Order 34, Rule 14, C. P. C.

This case was decided in 1898 and is based on Section 99 of the Transfer of Property Act, which contained the earlier corresponding provision on the point before us. Section 99 ran as follows:

'Where a mortgagee in execution of a decree for the satisfaction of any claim, whether arising under the mortgage or not, attaches the mortgaged property, he shall not be entitled to bring such property to sale otherwise than by instituting a suit under Section 67, and he may institute such suit notwithstanding anything contained in the Code of Civil Procedure, Section 43.'

In that case K had executed a mortgage in favour of the plaintiffs. The mortgagor continued to remain in possession under a lease which was granted on the same day and which covered the mortgaged property. The plaintiffs brought a suit for arrears of rent on the lease and sold a two annas share of the mortgaged property and purchased it themselves, and eventually filed a suit for possession of the property as auction-purchasers.

It was contended on behalf of the defendants, among other things, that as the mortgage in question was a purely usufructuary mortgage, the mortgagees had no right to sell under Section 67 of the Transfer of Property Act, and, therefore, it was unreasonable to apply the provisions of Section 99 to such a mortgage.

This contention did not find favour with the learned Judges. Their reasoning was that Section 99 was to be found in Chapter IV of the Transfer of Property Act which covered all mortgages including a usufructuary mortgage, and that the ordinary meaning of the language of Section 90 was that it prohibited the sale of the property under mortgage in all cases save in suits brought under Section 67.

It was further observed that there was no force in the argument that Section 99 did not apply if a suit to sell did not lie under Section 67, that the words of the section were general & uncontrolled, and that to accept such a contention would be to read some more words in the section such as 'that if under the terms of the mortgage no suit can be brought under Section 67, the mortgagee can sell the equity of redemption', and that to add these words would not be to interpret the law but would amount to legislating.

Now what we wish to point out in the first place is that the language of Order 34, Rule 14 is different from that of Section 99. That section covered all claims whether they arose under the mortgage or not. On the other hand, Order 34, Rule 14 is confined to claims arising only under the mortgage and not to claims which are unconnected with it.

It is, therefore, clear that it would be open to a mortgagee under the law as altered, to bring the property under the mortgage to sale if he has any claim against the mortgagor, which may not be connected with the mortgage. It may also be pointed out that the rule in question is no longer contained in Chapter IV of the Transfer of Property Act but forms part of the Code of Civil Procedure,

12. We are further of opinion that according to well established canons of interpretation of statutes, it is our duty to interpret the rule giving meaning to every part thereof, and it does not appear to us to be right to interpret it in such a manner that undue emphasis is given to one part thereof at the cost of any other.

It seems clear to us that whatever was the true meaning of Section 99 of the Transfer of Property Act in its own context and wording, we must take into consideration the alteration in the wording of that provision subsequently effected by the Legislature, and bearing that in mind, the first thing that strikes us is that while the earlier provision, applied in connection with the claim of a mortgagee, whether it was connected with his mortgage or not the same cannot hold good now under Order 34, Rule 14, C. P. C.

The immunity which was given to the mortgagor under the earlier rule has been curtailed, and it is open to a mortgagee to bring the mortgaged property to sale in satisfaction of his money claims which are not connected with the mortgage. There is no longer that absolute protection which might have been claimed under the earlier law, as it stood.

Further the obvious meaning of the rule, as it is worded at present, is that where a mortgagee has obtained a money decree in satisfaction of a claim arising under or out of his mortgage, 'he is prevented from bringing the mortgaged property to sale, and in order to bring it to sale, option has been left to him to institute a suit for sale in enforcement of the mortgage, and it has been further provided that such a suit would not be barred on account of his having brought an earlier suit for the simple money claim, and Order 2, Rule 2 will not stand in his way.

With great respect, it appears to us that the disqualification raised against the mortgagee by the rule in question clearly imports that he can bring a suit for sale to enforce his mortgage, and it is only where he can bring such a suit that the disqualification can be held to be applicable. As we have already pointed out, the mortgagee in the case of a pure and simple usufructuary mortgage cannot bring a suit for sale at all, and that being so, in fairness and justice, the disqualification raised by Rule 14 cannot, in our opinion, be held applicable to him.

13. We also wish to point out in this connection that we can understand this restriction being placed on other kinds of mortgagees who can bring a suit for sale, and the intention of the Legislature in such cases is to prevent the mortgagee from bringing to sale the bare equity of redemption where he can bring the entire property to sale on a suit for that purpose.

The policy of the Legislature in such cases is to give protection to the mortgagor, for a sale in execution of a simple money decree in respect of a claim arising under the mortgage does not and cannot give him those facilities which an ordinary suit for sale ensures. The question, however, is whether a similar protection to the mortgagor can be held to arise fairly on the rule, as it stands, in those cases also, where a mortgagee is prevented from filing a suit for sale in enforcement of his mortgage, as in the case of a pure and simple usufructuary mortgagee in legal possession.

We are of opinion that we are unable to read any such prohibition on the wording of Order 34, Rule 14 and that in order to make it applicable, two conditions are necessary: (1) that the claim on which the mortgagee seeks to bring the mortgaged property to sale arises under the mortgage and (2) that the mortgagee can, in a given case, bring a suit for sale in enforcement of his mortgage. Both these conditions must be fulfilled in order to attract the disability imposed by this rule.

We have no doubt that in interpreting the rule in this way, we are not legislating, and that we are interpreting it in accordance with the well known principle of interpretation of statutes which enjoins that due meaning should be given to every part of the provision sought to be interpreted and that no part of it should be considered to be a surplus age and in doing so there should be no straining of the language.

14. Further, the attributing of the meaning which the respondents want us to put on this rule would mean that the mortgagee in such a case would be placed in a very unfavourable position as he could neither bring the attached property to sale in execution of his simple decree for money, nor could he file a, suit for sale so far as his mortgage money is concerned a position which is, to our mind, considerably worse than the position of a mortgagee, for example, in a simple mortgage where he can undoubtedly bring the mortgaged property to sale by filing a suit for that relief and satisfy his entire claim including the simple claim for money arising out of the mortgage by reaching the mortgaged property.

The result on this view must be that a complete ban would be put on a usufructuary mortgagee being able to come upon the mortgaged property in execution of his money claim, and, in our opinion, we need not accept such an unreasonable position unless we are compelled to do so by the state of law on this point.

We are definitely of the opinion that the language of Order 34, Rule 14 does not necessarily or unavoidably lead to that conclusion and therefore we are not prepared to put an interpretation upon the rule which would produce a result which is obviously anomalous and unnecessarily harsh to the mortgagee.

In this connection we cannot also forget the consideration that in this kind of mortgage as in the case of other mortgages, a mortgagor is at perfect liberty to transfer his equity of redemption and this equity, on the altered wording of the rule as it stands now, can also be put to auction in all claims which are not connected with the mortgage.

In any case, therefore, those reasons which might have made plausible the interpretation of Section 99 of the Transfer of Property Act which the learned Judges in Sheodeni Tewari v. Ram Saran Singh (J) put upon it have lost much of their force at this date, and we are unable to adopt that view as it appears to us to be essentially unreasonable and does not give due meaning to the entire wording of the present rule.

We are conscious of the consideration that this matter has not been looked at from the angle which seems to us clearly to be the right one in any of the cases which have been cited before us, but, with respect that consideration cannot and should not deter us from interpreting the rule in question according to its plain language and the natural meaning which that language bears.

We, therefore, hold that the application of Order 34, Rule 14 cannot be attracted in the case of a usufructuary mortgage, pure and simple, when he seeks to bring the mortgaged property to sale in execution of a simple money decree, when it is not open to such a mortgagee to institute a suit for sale in enforcement of such a mortgage.

15. NOW, there is no question that, in the case before us, the mortgage was purely usufructuary and the mortgagees leased back the property to the mortgagors on a certain rent. It was faintly argued before us that the mortgagors had never handed over possession to the mortgagees and that that they had merely continued in possession, as they did before, after the mortgage and lease were executed.

But all this is of no avail because there can be no question that the mortgagors were in possession of the property by virtue of a lease granted by the mortgagees to the former, and it was, and is, not the case of the mortgagors that they had evicted the mortgagees from the property at any time.

We have, therefore, no hesitation in holding that this was a case of a pure and simple usufructuary mortgage. We are also of opinion that under the circumstances of this case, the claim of the mortgagees in execution whereof they seek to bring the mortgaged property to sale arose under the mortgage, and we accept the finding of the court below on this point.

But for the reasons which we have stated above, our conclusion is that the disability to bring the mortgaged property to sale under Order 34, Rule 14, C. P. C. can only arise when the mortgagee is capable of bringing a suit to enforce his mortgage, and as the appellants mortgagees in the present case cannot bring such a suit, Order 34, Rule 14 does not, in our opinion, stand in the way of their bringing the mortgaged property to sale in execution of their decree in the present case. We hold accordingly.

16. In this view of the matter, it is entirely unnecessary to decide the other question raised on behalf of the appellants that the respondents mortgagors were barred by the rule of constructive res judicata from raising the objection as to the applicability of Order 34, Rule 14, C. P. C. in this case.

17. For the reasons given above, we allow this appeal, set aside the order of the court below and send the case back to that court for being proceeded with according to law. As the decision of the appeal depended upon a point of law of considerable difficulty, we would leave the parties to bear their own costs of this court.


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