XXII, Rule 9 and Order XXIII, Rule 1 C. P. C.
12. Applying these principles to a second suit for sale by a mortgagee, it has first to be seen whether such a suit could be maintained under the provisions of the Transfer of Property Act. The right to obtain a decree for sale of the mortgaged property is conferred by S, 67 of the Transfer of Property Act. That section, so far as it is material for the present purpose, runs as follows:
'The mortgagee has at any time after the mortgage money has become due to him and before a decree has been made for the redemption of the mortgaged property, or the mortgage money has been paid or deposited, a right to obtain from the Court a decree that the mortgagor shall be absolutely debarred of his right to redeem the property, or a decree that the property be sold.'
The section deals with 'suits both for fore closure and for sale and the provisions contained therein must be read distributively in relation to the two subjects. So read, the section enacts that (1) a suit for foreclosure can be filed after the mortgage amount has become due and before a decree for redemption has been made and (2) a suit for sale can be filed after the amount has become due and before it has been paid or deposited in the manner provided. It has been suggested that there is nothing in Section 67 corresponding to the proviso in Section 60 on which the decisions in --'Raghunath Singh v. Hansraj Kunwar', 56 All 561 and -- 'Subba Rao v. Mattapali Raju', 1950 1 Mad L J 752 were based and that, therefore, the considerations applicable to a second suit for redemption would not be applicable to a second suit for sale.
But what is enacted in the form of a proviso to Section 60 is enacted as part of the section itself in Section 67 and in substance the position is not different. Even the differences in the form in the draftsmanship of the two sections might be due to the fact that while Section 60 deals only with the right to redeem, Section 67 deals with both the right to foreclosure and the right to sale and the language had to be adopted to cover both the rights. Thus on the language of Section 67 this action is clearly maintainable as the mortgage money had not been paid. As already mentioned there is not even the usual clause for redemption in the decree, Ex. P. 2 (a).
13. We may now turn to the provisions of Order XXXIV, C. P. C. and see what light they throw on the point now under consideration. Rules 2 and 3 deal with suits for foreclosure; rules 4 and 5 with suits for sale and rules 7 and 8 with suits for redemption. Rule 2 enacts that the preliminary decree in a suit for foreclosure shall order an account of the amount due or declare it as on the date of the decree; direct that on payment of such amount by defendants there shall be redemption; that in default of such payment the mortgagee shall be entitled to apply for foreclosure. The Court has the power to extend the time for payment. Rule 3 provides for a final decree being passed in terms of Rule 2. Dealing with suits for sale Rule 4 enacts that a preliminary decree has to be passed in the same terms as the decree in Rule 2; that is to say the amount payable should be ascertained as on the date of the decree; time for payment should be fixed and provision should be made for redemption on payment within time.
The only difference in the form of the decree is that in case of default in payment by the mortgagor, the mortgagee is to apply for a decree for safe and not for foreclosure. The preliminary decree in a suit for redemption under Rule 7 is to contain the same directions as a preliminary decree for foreclosure suit under Rule 2 and is to provide for the taking of accounts, declare the amount payable fixing a date for payment and provide for redemption on payment. In default of payment by the plaintiff, the defendant, mortgagee, is entitled to apply for a final decree for sale or for foreclosure according to the character of the mortgage which is the subject-matter of the suit. Rule 8 provides for the passing of an appropriate final decree.
14. It will thus be seen that whatsoever be the nature of the suits the preliminary decrees to be passed therein are in substance the same; the amount due to the mortgagee is to be ascertained, a time is to be fixed for payment of the amount, with a power in the court to extend the same and redemption is to be decreed on payment by the mortgagor. Thus all the three decrees run on the same lines. It is only in the case of default in payment that there is a difference in the form of the final decree to be passed; it will be a foreclosure decree in some cases and a decree for sale in others. This difference in the character of the final decree arises out of the difference in the nature of the mortgages and has no relation to the difference in the nature of suits filed thereon, whether it is for foreclosure, for sale or for redemption.
15. From the foregoing review of the statutory provisions it will be abundantly clear that whatever the nature of the suit that is filed on a mortgage, the rights and liabilities of the mortgagor and the mortgagee are the same. On principle it cannot be otherwise. In law the right to redeem and the right to foreclose are co-extensive; and the right to sell is, under the Indian law, a substitute for the right to foreclose, in the case of certain mortgages. In view of the fact that a mortgage transaction creates one jural relationship involving reciprocal rights and obligations between mortgagor and mortgagee, it will be illogical to hold that principles applicable to one of them are not applicable to the other.
Differentiation in the mutual rights and obligations of the mortgagor and mortgagee must inevitably result in anomalies in the administration of the law of mortgages. By way of illustration we can take the case of a usufructuary mortgage with a personal covenant. The mortgagee files a suit for sale on the basis of the covenant to pay; the suit is decreed but the execution of the decree becomes time barred. The law as now settled is that this decree does not preclude the mortgagor from filing a suit for redemption. In that suit it is open .to the defendant mortgagee, to apply for a decree for sale underOrder XXXIV rules 7 and 8. How is this to be reconciled with the view that a suit for sale by him is barred under Section 11 C. P. C.?
If the decree in the prior suit operates to extinguish the right of the mortgagee to sell the hypotheca which right thereafter becomes merged in the decree and could be exercised only thereunder, on what principle can a fresh decree for sale be passed in his favour in the f mortgagor's suit for redemption? The theory that the original cause of action is gone --'transit in rem judicatum' -- which is the foundation of the doctrine of 'res judicata' will be a bar to the grant of that relief in the mortgagor's action as well. It will be contrary to the provisions of the statute to hold in such a case that the mortgagor can get a decree for redemption under rules 7 and 8 but that no decree for sale could be passed in favour of the mortgagee under those provisions.
16. The view that, on principle, suits for sale stand on the same footing as suits for redemption derives considerable support from the judgment of Bhashyam Aiyangar J. in --'Vedapuratti v. Vallabha Valia Raja', 25 Mad. 300. He no doubt held that a second suit for redemption was barred, a view which has now been rejected but in discussing the legal position he examined both Ss. 60 and 67 of the Transfer of Property Act and proceeds on the view that the rights under both the sections are correlative. Vide pages 310 and 320. He also examines the provisions of the Act relating to the form of decree to be passed in suits for redemption, sale and foreclosure and observes.
'that whether the decree be in a suit for foreclosure or, in a suit for sale or in a suit for redemption there is in each a conditional decree for redemption in favour of the mortgagor, the condition being the payment by the mortgagor of the amount decreed on or before the day fixed.'
17. Dealing particularly with the plea of 'res judicata' the learned Judge referred to the decision in -- 'Maloji v. Sagaji', 13 Bom 567 where a prior suit for redemption by a mortgagor was held to bar a subsequent suit for sale by a mortgagee, notwithstanding that the prior decree did not provide for sale in default of payment and observed as follows:
'Whether or not the decision that the subsequent suit for sale which was brought by the defendants in the former suit was barred by the decree in the first suit is strictly warranted by Section 13 (Expln. II) C. P. C., it is certainly in conformity with Section 67 of the Transfer of Property Act which provides that a mortgagee can bring a suit for foreclosure or sale only before a decree has been made for redemption of the mortgaged property. It is, therefore, of the highest importance that decrees in mortgage suits should be complete not only so far as the rights of the plaintiff are concerned, but also in so far as the rights of the defendant are concerned; and the fact that the decree is imperfect will not enable the defendant to enforce his rights under the mortgage as plaintiff in a suit subsequently to be brought by him, if such rights could have been enforced by him in the former suit and provided for in the decree passed therein.'
A converse case to that decided in -- 'Maloji y. Sagaji', 13 Bom 567 came up for consideration in -- 'Ranga Aiyangar v. Narayana Chariar', 39 Mad 896. There a usufructuary mortgagee obtained a decree for sale but it was not executed. He, however, continued in possession of the properties. The mortgagor then filed a suit for redemption. It was held following the observations of Bhashyam Aiyangar J. in --'Vedapuratti v. Vallabha Valiaya Raja', 25 Mad 300 that the second suit was barred. The following observations of Sadasiva Aiyar J. may be quoted:
'A decree for redemption is almost invariably a conditional decree whether it is passed in a mortgagee's suit for sale or a mortgagor's suit for redemption. No doubt where It is passed in a mortgagee's suit for sale it is not usually passed on the invitation of the mortgagor (defendant) and in the language used in -- 'Adipuranam Pillai v. Gopalaswami Mudali', 31 Mad 354 'the defendant is a decreeholder in spite of himself, an involuntary decreeholder'. But I do not see how this could on principle make any difference in the decision of the question whether the mortgagor defendant who has been given such a decree is entitled only to execute that decree or whether he is entitled to bring a fresh suit for redemption despite the doctrine of res judicata'.
18. The facts in -- 'Ellarayan v. Nagaswami Aiyar', 49 Mad 691 were similar to those in --'Ranga lyengar v. Narayana Chariar', 39 Mad 896. There was a prior decree for sale in a usufructuary mortgagee's suit based on the personal covenant; it remained unexecuted arid became barred and a suit for redemption was instituted by the mortgagor. In holding that this suit was not maintainable, Wallace J. observed:
'It follows then, that, after a decree in a mortgage suit, whatever the form of that decree, whether for foreclosure, sale or redemption, the parties to the mortgage and to the suit and their legal representatives or assignees cannot maintain in future any separate suit or any claim arising out of the mortgage.'
Madhavan Nair J. observed at p. 711:
'It is no doubt true that in the present case the decree in the prior suit was one for the sale of the properties and not for redemption but if we have regard to the real nature of the decree for sale passed under Sections 88 and 89 of the Transfer of Property Act, it will be found that this difference does not really make the decision inapplicable.'
All these authorities proceed on the view that on the provisions of the Transfer of Property Act and Order XXXIV C. P. C., the nature of the suit that is laid on the mortgage makes no difference in the rights of the mortgagor and the mortgagee and that, therefore, a second suit for redemption would be barred under Section 11 whether the prior suit was one for redemption as in -- 'Vedapuratti v. Vallabha Valiaraja', 25 Mad 300 or was for sale as in -- 'Ranga Aiyangar v. Narayana Chariar', 39 Mad 896 and -- 'Ellarayan v. Nagaswami Iyer', 49 Mad 691.
19. When once it is held, as now it has been, that a second suit for redemption is maintainable so long as it is not barred under Section 60 of the Transfer of Property Act, it should logically follow that a second suit for sale should likewise be maintainable so long as it is not barred by Section 67 of the Transfer of Property Act. If Section 11 C. P. C. cannot operate to curtail or abridge the rights conferred by Section 60 of the Transfer of Property Act, on principle, it cannot operate to cut down the rights under Section 67 of the Transfer of Property Act either 'and the second suit for sale must accordingly 'be held to be not barred as 'res judicata'.
20. In -- .'Raghunath Singh v. Hansraj Kunwar', 56 All 561 the Privy Council observed that a second suit for redemption was not barred on the ground of res judicata because in the first suit the issue was what amount had to be paid then by the mortgagor for redemption whereas in the second suit the issue was what amount had to be paid at the time of that suit for redemption. This reasoning is obviously based on the form of the decree to be passed in redemption suits, which has to declare the amount due as on the date of the decree in' that suit, and provide for redemption on payment of that amount. The issue in 1896 suit was what amount was payable on the date of the decree in that suit whereas the amount payable in 1924 suit was the amount payable on the date of the decree in that suit. According to the Privy Council as the ascertainment of the amount payable by the mortgagor was .an essential issue in a suit for redemption and as that issue must be necessarily different in the two suits there could be no bar of 'res judicata'.
The same, reasoning must apply to suits for sale and foreclosure as well, as the amount payable by the mortgagor has to be ascertained and declared in the preliminary decree which is to be passed under rules 2 and 4 in suits for foreclosure and sale. Dealing particularly with the facts of this case, the decree in the prior suit Ex. P-2 (a) declared that Rs. 11804-4-0 was due to the appellant on 12-12-1939. In the present suit the plaintiff claims that' a sum of Rs. 10500 was due to her. The defendants dispute it. Issue No, 3 in the suit runs as follows:
.'What, if any, is the correct amount due to the plaintiff?'
The finding on that issue is that the amount claimed is correct. This issue could obviously not have been the subject-matter of decision in the prior suit and on the principle laid down in --'Raghunath Singh v. Hansraj Kunwar'. 56 All 561, it must be held that the decree Ex. P-2(a) cannot operate as res judicata in this suit.
21. Mr. N. Sivaramakrishna Aiyar brought to our notice the decision in -- 'Bhajanmal Tapondas v. Tikamdas', ILR (1946) Kar 110: AIR 1947 Sind 12, as authority for the position that a second suit for sale by a mortgagee is not maintainable. The facts of that case were, that one Tapondas executed a simple mortgage on 7-2-1920. In 1924, a suit O. S. No. 147 of 1924 was filed to enforce this mortgage and a preliminary decree for sale was passed. An application for final decree was filed on 29-2-1934 and was dismissed as barred by limitation. Then a second suit was filed in 1939 basing itself on the preliminary decree in O. S. No. 147 of 1924 and the question was whether such a suit was maintainable.
It was held that both under English and Indian law the right of a party is only to execute a decree and not to file a further action on it. The suit in that case was not one to enforce the mortgage dated 7-2-1950 and it would seem that such a suit would have been barred by limitation. The question whether a second suit on the mortgage itself was maintainable did not arise for determination and it is for this reason that the decision in -- 'Raghunath Singh v. Hansraj Kunwar', 56 All 561 (PC) is not even referred to in the judgment. This decision, therefore, is no authority for the position contended for on behalf of the respondents.
22. In conclusion we are of opinion that a mortgagee has a right under Section 67 of the Transfer of Property Act to file a suit for sale subject only to the conditions prescribed therein and of course subject to the law of limitation and that such a suit is not barred under Section 11, C. P. C. by reason of a decree for sale passed on the same mortgage in a prior suit and that under Section 100 of the Transfer of Property Act the same principle applies to a second suit for sale to enforce a charge.
23. In the result the suit will be decreed as prayed for with costs, both here and in the Court below as against defendants 8 to 13, who are the legal representatives of the 1st defendant. Time for payment, three months. In view of the finding on Issue No. 5 Items 36 to 46 of plaint schedule will be excluded from the decree.