Kuppuswami Ayyar, J.
1. This Civil Miscellaneous Second Appeal arises out of an application purporting to be filed under Order 23, rule 3, and Order 21, rule 2, and Section 151 of the Code of Civil Procedure, praying for recording an adjustment between the parties as per agreement, dated 15th January, 1935, and for passing an order in terms thereof.
2. The appellant was the plaintiff in the suit in which this application was filed and had obtained a preliminary decree for the sale of the hypotheca. The 1st respondent (defendant) filed this application subsequent to the passing of the preliminary decree for recording adjustment. His case was that subsequent to the passing of the ex parte preliminary decree there was an agreement between the parties on 15th January, 1935, that Rs. 100 was to be paid then and Rs. 900 a few days later, that for Rs. 1,000 two items of properties were to be conveyed and possession given to the plaintiff and that the balance of Rs. 1,000 was to be paid in six months. On the 13th March, 1935, this application was filed by the 1st respondent alleging that he had paid Rs. 100 on the date of the agreement and Rs. 900 a few days later, that he had also executed the two sale deeds, and handed them over with the keys of the two houses which were to be conveyed to the mediators, and that he was willing to pay the balance of Rs. 1,000 on the due date. The decree-holder objected to any action being taken on the application as it was not a case of adjustment by payment into Court as per the terms of the preliminary decree but an adjustment out of Court, and inasmuch as he was disputing the adjustment as the houses were not in the condition in which they were on 15th January, 1935. His further contention was it was not open to the Court to go into the truth or validity of the adjustment when it is disputed. The Court of first instance as well as the lower appellate Court held that the Court could go into the matter and ordered the petition as prayed for.
3. In this Court the appellant contends that the lower Courts had no jurisdiction to go into the matter and the petition should have been dismissed. That any adjustment out of Court could not be gone into in answer to a claim for a final decree in pursuance of a preliminary decree when it is disputed is pointed out in a number of rulings of this Court Singa Raja v. Pethu Raja : (1918)35MLJ579 . , Rasan Chettiar v. Rangayam Chettiar : AIR1930Mad105 . Adari Sanyasi v. Nookalamma I.L.R. (1930) Mad. 708. and Viswanatha Aiyar v. Chimmukutti Amma (1931) 62 M.L.J. 272 : I.L.R. 55 Mad. 320. In Rasan Chettiar v. Rangayan Chettiar : AIR1930Mad105 . , it has been pointed out that the general trend of the decisions under the present Code is that an application for final decree is not a proceeding in execution and therefore Order 21, rule 2, will not apply at all. It is urged however that in spite of the prohibition contained in Order 34 of the Code of Civil Procedure to the Court going into any adjustment or payment out of Court in the matter of passing-a final decree in pursuance of the preliminary decree, it is open to a party who pleads such an adjustment to move the Court under Order 23, rule 3, as the suit has to be considered to be pending till the final decree is passed or till a decree is passed under Order 34, rule 6, in cases where the right to proceed personally against the mortgagor subsists and that consequently the question of adjustment will have to be gone into for recording the adjustment and passing a fresh decree as directed in Order 23, rule 3. As already pointed out above, the trend of the decisions of this Court has throughout been against the right of a party to ask the Court to go into the question of adjustment or payment out of Court in respect of a preliminary decree passed in a suit on a hypothecation debt. It is true that the other High Courts have held that this question can be gone into, vide Ram Niwas v. Bam Dayal : AIR1939All174 . and V. M. R. P. Chettyar Firm v. Hajee Mahomed Sultan A.I.R. 1941 Rang. 316. , but no authority of this High Court has been cited ;in which it has been held that the matter could be gone into. The decision in Palaniappa Chettiar v. Narayanan Chettiar : AIR1936Mad34 . , referred to by the lower Court and relied on by the respondent has no application to the facts of this case. That was a case of adjustment subsequent to the passing of the final decree and before a petition was filed under Order 34, rule 6. The question as to the factum and validity of an adjustment between a preliminary decree and final decree in suits on hypothecation deeds cannot be gone into because the preliminary decree settles the amount and directs payment in a particular way, namely, by payment into Court. There is no such direction in the final decree. The right to enforce a claim personally as against a mortgagor arises only after the hypotheca is sold in pursuance of the final decree. Therefore any adjustment between the date of the final decree and the date of an application under Order 34, rule 5, cannot be said to be in contravention of the terms of the decree. After the final decree is passed it will be open to a party to pay out of Court and such payment can be recognised by the executing Court. I therefore do not think that the lower Court was justified in relying upon Palaniappa Chettiar v. Narayanan Chettiar : AIR1936Mad34 . as authority for the position that an adjustment between the preliminary and final decree could be gone into when a petition is filed under Order 23, rule 3. That the provisions of Order 34, rule 4, cannot be overridden by Order 23, rule 3, is pointed out in Basan Chettiar v. Bangayan Chettiar : AIR1930Mad105 . , where His Lordship Justice Wallace at the end of his judgment observes:
Order 23, rule 3, cannot be read to override the clear terms of Order 34, rules 3 and 4,
and this is what the other learned Judge, His Lordship Justice Pakenham Walsh, observes:
One other argument may be noticed, that Order 23, rule 3, applies and the Court is bound to recognise such adjustment out of Court. But Order 23, rule 3, relates to the satisfaction of a suit, not to the satisfaction of a decree, and to hold that parties' can adjust a preliminary decree between themselves out of Court and get such adjustment enforced under Order 23, rule 3, would render the whole scheme of Order 34, rule 3, nugatory. As stated above this procedure of paying into Court the amount due under the preliminary decree in a mortgage suit for sale was a deliberate restriction, of the previous privilege of paying the mortgagee out of Court under the Transfer of Property Act. The orders under the Code must be construed reasonably with reference to each other. I hold that Order 23, rule 3, is not applicable.
That the suit is pending till a decree is passed under Order 34, rule 6, is not disputed; but after the passing of the preliminary decree the suit is pending only for a particular purpose namely the purpose of enforcing the right declared by the preliminary decree in the manner set out in the decree and not for any other purpose. After the passing of the final decree the suit is pending for ascertaining, if personal remedy is available, whether any money remains due after paying the sale proceeds to the plaintiff or after giving credit to any payment or adjustment made subsequent to the passing of the final decree. The Lahore High Court has gone still further in Raja Ram v. Allahabad Bank, Ltd. I.L.R. (1939) Lah. 313 : A.I.R. 1939 Lah. 79. , His Lordship Justice Bhide observes:
The main contention of the learned Counsel for the appellant was that if the suit remains pending till the final decree, there is no reason why the provisions of Order 23, rule 3, should not apply. But a preliminary decree in a suit for sale is a formal adjudication of the rights of the parties with, reference to the mortgage and the decree directs that the plaintiff's claim shall be satisfied by a payment in Court in a certain manner. Any adjustment out of Court would, therefore, be obviously contrary to the terms of the decree. In this aspect of the question, the adjustment out of Court made without its sanction, may, I think, be looked upon as 'unlawful' and therefore inadmissible under Order 23, rule 3, Civil Procedure Code. The terms of a preliminary decree passed according to the provisions of Order 34, rule 4, Civil Procedure Code, as regards payment in Court, etc., are imperative.
Merely because a suit is pending after the preliminary decree is passed, it does not mean that all the provisions of the Code with regard to pending suits will apply to such suit. In Lachmi Narain Marwari v. Balmakund Marwari (1924) 47 M.L.J. 441 : L.R. 51 IndAp 321 : I.L.R. 4 Pat. 61 (P.C.). , it was pointed out that after the preliminary decree was passed in a partition suit, the suit cannot be dismissed under Order 17, rule 2.
4. In these circumstances I think the lower Courts were not justified in going into the question of adjustment and the petition ought to have been dismissed.
5. In the result the second appeal is allowed and the petition dismissed with costs in all the three Courts.