Alfred Henry Lional Leach, C.J.
1. The question in this appeal is whether a set-off can be pleaded in execution proceedings.
2. In O.S. No. 41 of 1932 of the Court of the Subordinate Judge of Berhampore,. the appellants sued the respondents to enforce a mortgage. On the 28th March, 1935 they obtained a preliminary decree for the payment of Rs. 6,539-4-0. On the 5th December, 1938 a final decree was passed for the same amount. The respondents then applied under the provisions of the Madras Agriculturists Relief Act for the scaling down of the decree. On the 21st September, 1939, they obtained an order scaling down the decree to Rs. 2,581-7-0.
3. The properties mortgaged consisted of agricultural lands which the respondents had leased to tenants. On the 16th April, 1934, that is, before the preliminary decree was passed, the appellants applied for the appointment of a receiver to collect the rents due. The tenants refused to attorn to the receiver and the 6nly course open to him was to file suits to recover the amounts due. The appellants failed to put the receiver in funds necessary for the institution of such suits and consequently the receiver took no action. On the 8th January, 1943, that is, over four years after the final decree had been obtained, the respondents applied to the Court to discharge the receiver and their application was granted.
4. In 1941 the appellants instituted proceedings in execution. The application for the sale of the mortgaged property was resisted by the respondents, who claimed that the receiver should have collected from the tenants some Rs. 9,000 which, they said, should be set-off against the decretal amount. They went further and asked the Court to order the appellants to pay to them the excess. The Subordinate Judge held that this application lay. After inquiry he came to the conclusion that as the result of the receiver's inaction, for which the appellants were responsible, the respondents had-been damnified to the extent of Rs. 1,000 and he directed that the amount should be set-off against the sum due under the decree. The appellants challenged the validity of this order in an appeal to this Court. The appeal was heard by Yahya Ali, J., who agreed with the decision of the Subordinate Judge. The present appeal is from the judgment of Yahya Ali, J., under Clause 15 of the Letters Patent.
5. In deciding in favour of the respondents Yahya Ali, J., relied on the judgments of the Bombay High Court in Hari v. Sakharam : AIR1923Bom391 , and Bal Lalbu v. Mohanlal : AIR1925Bom385 , and the judgment of this Court in Dhanarajgerji v. Parthasarathi I.L.R.(1932)Mad. 49.These cases have been fully examined in the course of the arguments addressed to us. In our opinion they do not support the learned Judge's decision.
6. In Hari v. Sakharam : AIR1923Bom391 , the plaintiff had obtained a decree for possession of certain lands, but before he was put into possession the judgment debtor committed waste by cutting down certain trees. In execution proceedings the decree-holder sought to recover from the judgment-debtor the amount by which the property had depreciated in value as the result of the waste committed. The Bombay High Court held that this was a matter which could be investigated in execution proceedings. The decree-holder was entitled to possession of the property in the state which it was in when the decree was passed and as the result of the action-of the judgment-debtor it had deteriorated in value. Therefore he was entitled to possession of the property plus a monetary payment to bring it up to the value at the date of the decree. The same principle was applied by the Bombay High Court in Bai Lalbu v. Mohanlal : AIR1925Bom385 . Here Macleod, L.J., said-
There does not appear to be much difference between a case where an appeal has been filed, and the party remaining in possession commits waste, and a case where possession is directed to be given by a decree, and before possession is given waste is committed. The question is really whether a successful party can be said to get possession of what was directed to be given to him by the decree. If the party in possession deliberately has caused damage to the property there is no reason why the question of damage should not be tried in execution.
These two cases were approved of by a Bench of this Court in Dhanarajagerji v. Parthasaradhi I.L.R.(1932) Mad. 49. In delivering the judgment of the Court, Venkatasubba Rao, J. emphasised that when a decree awards a person a certain property he is entitled to get the property in the state in which it was when the decree was passed. The question whether a judgment-debtor is entitled in execution proceedings to plead a set-off did not arise in any of these cases and therefore was not considered.
7. In the course of his argument Mr. K. Subba Rao, on behalf of the respondents, drew our attention to the decision of this Court in Ramanatha Aiyar v. Abdul Salam Sahib : AIR1945Mad179 , and suggested that the decision there goes further than those already considered. We do not agree. This was a case of a usufructuary mortgage in which a final decree for sale had been passed. The mortgagee was in possession. It was alleged by the judgment-debtor that he had committed acts of waste and consequently he was entitled to credit for the amount of the damage. The Court held that the principle on which the Bombay case and Dhanarajagerji v. Parthasaradhi I.L.R.(1932)Mad. 49, had been decided applied; in other words, the Court in executing a decree was entitled to inquire into waste committed after the decree whether it be committed by the-judgment-debtor or by the decree-holder.
8. What we are considering in the present case is whether- the respondents are entitled to set-off in proceedings instituted for the execution of a mortgage decree passed against them a claim for damages against the decree-holders based on their failure to supply funds to the receiver for the institution of suits for the recovery of the rents due by the respondents' tenants. To decide this question we can only look to the provisions of the Code of Civil Procedure. There is nothing in the Code which even suggests that a judgment-debtor has the right of setting off in execution of the decree passed against him a claim for damages which does not arise under the decree. Order 21, Rule 2, applies to a payment or an adjustment out of Court-in a case where money is payable under ' a decree of any kind '. In emphatic terms the rule precludes a Court executing a decree recognising a payment or adjustment which has not been certified or recorded. The respondents say that this rule is not applicable because there has been neither payment nor adjustment.. This is true, but the rule certainly qualifies to a very material extent the broad language of Section 47 of the Code and we can look at the rule when ascertaining the scheme of the Code in matters of execution.
9. What is due here is the sum of Rs. 2,581-7-0 plus subsequent interest and under the provisions of Order XXXIV, Rule 5, the decree-holder is entitled to have the property sold in order to realise the decretal amount. In Madan Theatres, Ltd. v. Dinshaw and Co., Bankers, Ltd. (1945) 2 M.L.J. 367 the Privy Council held that an adjustment made between the date of the preliminary decree and the final decree could be taken into consideration at the time of the passing of the final decree because Order 21, Rule 2 only applies in execution and there is nothing in the Code to qualify the provisions of Order XXIII, Rule 3. In the present case no objection was taken to the passing of the decree for the amount claimed by the appellants. The receiver had been appointed even before the passing of the preliminary decree and it was not suggested at any stage before the passing of the final decree that the respondents. were entitled to a reduction as a result of the failure of the receiver to collect rents due by the tenants.
10. Mr. K. Subba Rao, has conceded that his clients' claim must be limited to the loss suffered after the passing of the final decree, but he says that the subsequent loss is a matter ' relating to the execution, discharge or satisfaction of the decree.' This is not so. A judgment-debtor cannot evade payment of the decretal amount or obtain a reduction in the sum declared by the decree to be payable because he happens to have a claim for damages against the decree-holder for something done, or omitted to be done, by him, which leaves the hypotheca unaffected. It may be that the respondents have a claim for damages against the appellants-we express no opinion upon the question-but the value of the lands mortgaged remains unaffected and therefore the claim cannot be treated as a matter ' relating to the execution, discharge or satisfaction' of the mortgage decree. A plea to be allowed to set-off in execution proceedings a claim for damages is repugnant to the scheme of the Code and is outside the scope of the principle of equitable set-off which has been applied in certain suits.
11. For these reasons, the appeal is allowed and the case will be remanded to the execution Court to proceed with the execution without regard to the respondents' claim to set-off.
12. The respondents have asked that their petition to set-off be treated as a suit under the provisions of Section 47(2). This is reasonable and, subject to any objections as to limitation or jurisdiction it will be treated as a suit. If any such objection is preferred, it will be decided in the suit. The respondents will, of course, have to pay any additional Court-fee which may be required.
13. The appellants are entitled to their costs throughout.