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Vadlamani Kalidas Vs. Fakir Mohammad Saheb and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai High Court
Decided On
Case NumberSecond Appeal No. 712 of 1948
Judge
Reported inAIR1952Mad786; (1952)IMLJ634
ActsCode of Civil Procedure (CPC) , 1908 - Order 34, Rule 4
AppellantVadlamani Kalidas
RespondentFakir Mohammad Saheb and ors.
Advocates:P. Somasundaram and ;P. Suryanarayana, Advs.
DispositionAppeal allowed
Cases ReferredJagannath Rao v. K.
Excerpt:
.....4 of code of civil procedure, 1908 - second appeal against dismissal of application for passing final decree - suit for sale or suit for foreclosure in which sale ordered - subsequent mortgagees or persons deriving title from or subrogated to rights of any mortgagees joined as parties - no decree can be passed in favour of plaintiff alone without determining amount due to subsequent mortgagees - amount due to first mortgagee which puisne mortgagee paid off was paid to him by receiver on behalf of mortgagors - puisne mortgagee received amount and passed receipt without prejudice to his rights - preliminary decree amended - decree in favour of appellant given - held, appellant entitled to apply for passing of final decree for sale. - - it is clearly the object of the legislature in..........a. no. 179 of 1944 for passing a final decree in his favour not only for the amount due under the suit mortgage but also for the amount due under the subsequent mortgage held by him. on 30th march 1944, the learned district munsif dismissed that application on the ground that there was no provision in the preliminary decree directing the passing of final decree for the consolidated sum of the two mortgages, one in favour of the plaintiff and the other in favour of defendant 9. but he held that defendant 9 was entitled to a final decree in his favour for the sum which he paid over to the prior mortgagee. on the same day, defendant 9 filed i. a. no. 363 of 1944 for amending the preliminary decree so as to bring it in conformity with form no. 9 of appendix d of schedule 1, c. p. c. pending.....
Judgment:

Subba Rao, J.

1. This second appeal arises out of J. A. No.169 of 1946, an application filed by the appellant for passing a final decree in his favour. One V. Kama Sastri filed O. S, No. 28 of 1940 on the file of the Court of the District Munsif of Amalapuram to enforce the mortgage dated 18-3-1913. Defendants 1 to 6 were either the mortgagors or their legal representatives. Defendant 7 was the subsequent purchaser of portion of the hypotheca. Defendants 8 and 9 were the subsequent mortgagees. Defendant 9, one of the puisne mortgagees impleaded in the suit prayed in his written statement for a decree on the foot of his mortgage. A preliminary decree was passed on 11-3-1943. Defendant 9 paid the amount due to the plaintiff. Having paid the amount, he filed I. A. No. 179 of 1944 for passing a final decree in his favour not only for the amount due under the suit mortgage but also for the amount due under the subsequent mortgage held by him. On 30th March 1944, the learned District Munsif dismissed that application on the ground that there was no provision in the preliminary decree directing the passing of final decree for the consolidated sum of the two mortgages, one in favour of the plaintiff and the other in favour of defendant 9. But he held that defendant 9 was entitled to a final decree in his favour for the sum which he paid over to the prior mortgagee. On the same day, defendant 9 filed I. A. No. 363 of 1944 for amending the preliminary decree so as to bring it in conformity with form No. 9 of Appendix D of Schedule 1, C. P. C. Pending that application, the receiver appointed for the administration of the mortgagor's estate paid the amount due on the first mortgage with subsequent interest to defendant 9. Defendant 9 received that amount without prejudice to his rights, which can only mean Without prejudice to his rights which he was agitating in the aforesaid application. Full satisfaction of the plaintiff's mortgage claim was recorded on 1-8-1944.

The application for amendment was disposed of by the learned District Munsif on 3rd September 1945. He allowed the amendment and directed the decree to be brought in conformity with Form No. 9 of Appendix D of Schedule 1, C. P. C. He also rejected the plea that the application should not be allowed as full satisfaction of the decree was recorded. After the decree was amended, he filed the present application for the passing of the final decree. But that was dismissed by another District Munsif on the ground that the application for final decree at the instance of defendant 9 was not maintainable as full satisfaction of the preliminary decree was recorded. When an appeal was filed to the Subordinate Judge, he confirmed the same. Defendant 9 preferred the above second .appeal. The respondents are not represented by counsel.

2. The rights of a puisne mortgagee who is impleaded as defendant to a suit on the prior mortgage are governed by Order 34, Rule 4(4), C. P. C. It reads :

'Where, in a suit for sale or a suit for foreclosure in which sale is ordered, subsequent mortgagees or persons deriving title from, or subrogated to the rights of, any such mortgagees are joined as parties, the preliminary decree referred to in Section-rule (1) shall provide for the adjudication of the respective rights and liabilities of the parties to the suit in the manner and form set forth in Form No. 9 Form No. 10 or From No. 11, as the case may be. of Appendix D with such variations as the circumstances of the case may require.'

Under Form No. 9, the amounts due to the first mortgagee and the second mortgagee are declared. The defendants or any of them are directed to pay the amount due to the first mortgagee in court within the prescribed time. It also directs the mortgagor to pay into court on or before the prescribed date the amount due to the second mortgagee. If the amount due to the plaintiff is not paid, the property of the mortgagor is directed to be sold. The procedure to be followed if the hypotheca is directed to be sold is found in Clause 4(iii) of Form No. 9. It says : 'In the case where a sale is ordered under Clause 4(ii).....the money realised by such sale shall be paid into court and be duly applied (after deduction therefrom of the expenses of the sate) in payment of the amount payable to the plaintiff under this decree and under any further orders that may have been passed in this suit and in payment of the amount which the court may adjudge due to the plaintiff in respect of such costs of this suit and such costs, charges and expenses as may be payable under Rule 10, together with such subsequent interest as may be payable under Rule 11 of Order 34 of the First Schedule to the Civil Procedure Code, 1908 and that the balance, if any, shall ba applied in payment of the amount due to defendant No. 2; and that if any balance be left, it shall be paid to the defendant No. 1 or other person entitled to receive the same;' Under Section-clause (iv) of Clause 4 :

'if the money realised by such sale shall not be sufficient for payment in full of the amounts due to the plaintiff and defendant No. 2, the plaintiff or defendant No. 2 or both of them as the case may be, shall be at liberty (when such remedy is open under the terms of their respsctive mortgages and is not barred by any law for the time being in force) to apply for a personal decree against defendant No. 1 for the amounts remaining due to them respectively.'

Clause 5(a) says:

'If defendant No. 2 (2nd mortgagee) pays into court to the credit of this suit the amount adjudged due to the plaintiff but defendant No. 1 makes default in the payment of the said amount, defendant No. 2 shall be at liberty to apply to the court to keep the plaintiff's mortgage alive for his benefit and to apply for a final decree.'

Clause 6 provides the manner in which the second mortgagee, who paid the first mortgage amount will be paid and also recognises his right to obtain a personal decree for the balance, if the amount realised is not sufficient to discharge both the mortgages. Form No. 10 relates to a suit by the second mortgagee impleading the first mortgagee as Rarty. Form No. 11 refers to a suit by a sub-mortgagee.

3. The 'aforesaid provisions show that the mortgagee, who is the plaintiff, is ordinarily in charge of the suit. In case the mortgagor makes default in paying the amount declared due to him, he will have to apply for the passing of a final decree and for the sale of the property. In a particular contingency, the second mortgagee is entitled to apply for a final decree that is, when he pays off the first mortgagee and thereby subrogated to his right. In that contingency, he is entitled to treat the suit brought by the first mortgagee as one for his benefit. He can apply to the court under Clause 5 of Form No. 9 to keep the plaintiff's mortgage alive for his benefit and to apply for a final decree in the same manner as the plaintiff might have done under Clause 4. But can a puisne mortgagee, who obtained a preliminary decree in his favour also apply for the passing of a final decree if the first mortgage of the plaintiff is paid off by the mortgagors? If he cannot, it may cause unexpected and undeserved hardship to the puisne mortgagee. A puisne mortgagee, who is made a party to a suit by a prior mortgagee, may agitate his rights in that suit and get a preliminary decree for payment. The suit may drag on for a number of years and if the mortgagors pay off the first mortgagee, the rights of the puisne mortgagee to institute another suit therefor may get barred.

4. Order 34, C. P. C. provides a machinery for ascertaining the rights of the puisne mortgagee and for declaring the amount due to him. Form No. 9 also provides for a decree directing the mortgagor to deposit the amount due to him in court within the time specified. But it does not expressly provide for a case where after such a preliminary decree was made, the mortgagor pays off the first mortgagee. Order 34, Rule 4(4) is not exhaustive of the terms to be embodied in a preliminary decree for Section-rule (4) of Order 34(4) provides for such variations as the circumstances of the case may require. Further, when there is a preliminary decree in favour of the puisne mortgagee, unless that decree is discharged by any of the ways known to law, the party in whose favour such a decree is made will be entitled to pursue the other and necessary steps to realise the amount decreed to be paid to him. In 'Vedavyasa Aiyar v. Madura Hindu Sabha Nidhi Co. Ltd.', 42 Mad 90 the facts were :

'In a suit for sale by a prior mortgagee against the mortgagor and a puisne mortgagee, the decree not only directed the sale of the mortgaged properties for the amount found duo to the prior mortgagee but also ascertained the amount due to the puisne mortgagee and ordered the payment to him of this amount out of the surplus sale proceeds.' When the puisne mortgagee filed another suit, it was argued that Section 47, C. P. C., was a bar to that suit and thst the remedy of the puisne mortgagee was to execute the decree made in his favour in the suit by the prior mortgagee. At page 94, the learned Judges say: 'The utmost that can be said is that if the first mortgagee for some reason or other doss not apply for sale in spite of the fact that he has not been paid the other mortgagees can apply for sale in order to work out the rights to share in the surplus if any. This is quite different from their applying to sell the property to discharge the amount declared due to each of them. If the mortgagor pays off the amount for which alone a sale in default of payment was directed, it is difficult to see how under the express terms of the decree, each puisne encumbrancer can come forward and ask for sale. No time is fixed in the decree for redeeming them. There is no direction in the decree directing the mortgagee to pay them any amount and the right to share which is dependent on there being a sale and a surplus after paying off the plaintiff mortgagee cannot be enforced if for any reason the sale cannot take place at the instance of the plaintiff.'

This judgment is therefore based upon the terms of the preliminary decree, which did not provide for redemption of the second mortgage. The second mortgagee also did not discharge the iirst mortgage.

In 'Jagannath Rao v. K. V, Sastry', AIR 1948 Mad 336 another Bench of this court had to consider the scope of Order 34(4). In that case, a mortgagee brought a suit for sale against the mortgagor, his sons and the puisne mortgagee. In that suit, the amount due to the puisne mortgagee and the question whether the subsequent mortgage was binding upon the sons were decided. The question arose whether the decision was binding on the principle of res judicata in a subsequent suit filed by the subsequent mortgagee. In the prior suit, a decree was drawn up in the manner required by Order 34, Rule 4, and in the words found in Form 9, Appendix D. At page 337, the learned Judges censidered the scope of Order 34, Rule 4 and observed,

'That sub-rule says that where in a suit for sale subsequent mortgagees are joined as parties, the preliminary decree shall provide for the adjudication of the respective rights and liabilities of the parties to the suit in the manner and form set forth in form No. 9 of Appendix D. It is clearly the object of the legislature in this sub-rule that not only the rights of the prior mortgagee but also those of the subsequent mortgagees should be worked out in order to finally determine the claims on the property, which is the subject of the suit. As already pointed out, it provides an additional right on the part of the subsequent mortgagee to execute the decree as the plaintiff himself could provided that he pays off and redeems the mortgage of the plaintiff. No decree can therefore be passed in favour of the plaintiff alone without also determining the amount due to the subsequent mortgagees.'

In this case it is not necessary to express my final opinion on the larger question raised as the puisne mortgagee paid off the first mortgagee. When he applied for final decree, it was dismissed on the ground that there was no provision in the preliminary decree directing the passing of a final decree for the consolidated sum of the two mortgages. On the same day, he applied for the amendment of the decree. The decree was amended on 3-9-1945 and in the amended decree, defendants 1 to 6 were directed to pay into court the amount due to the puisne mortgagee. Meanwhile, on behalf of the mortgagors, the amount due to the first mortgagee which the puisne mortgagee paid off, was paid to him by the Receiver on behalf of the mortgagors. The puisne mortgagee received that amount and passed a receipt without prejudice to his rights, which he was agitating in the application for amendment. The recording of full satisfaction in the circumstances of the case was only a tentative one subject to the result of the said application. As the preliminary decree was now amended & as a decree in the appellant's favour was given, he would be entitled to apply for the passing of a final decree for sale. The order of the lower court is therefore set aside and the appeal is allowed with costs throughout.

5. Leave refused.


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