This revision petition involves the construction of O. 34, R. 14 C. P. C. The petitioner before us was the plaintiff in a small cause suit, S. C. S. No. 87 of 1956, filed in the Court of the Subordinate Judge, Kumbakonam. That suit was instituted for the recovery of a sum of Rs. 830-10-3, being the amount alleged to be due for principal and interest under a promissory note dated 15th March 1954 for Rs. 740 executed by the respondent herein. The suit was decreed in bis favour. In execution of the decree, certain properties belonging to the respondent were brought to sale. These properties were subject to three usufructuary mortgages under three bonds, dated May 1953, July 1953 and March 1954, for Rs. 6000, Rs. 4000 and Rs. 1000 respectively, and executed by the respondent in favour of the petitioner, that is, the plaintiff-decree-holder in the small cause suit. The respondent objected to the proceedings in execution and filed an application E. A. No. 268 of 1958, praying that further execution proceedings might be dropped. The application purported to be made under O. 34, R. 14, C. P. C. How the respondent sought in aid the provisions of that rule is this. The respondent, after the execution of the usufructuary mortgages, took back the mortgaged properties from the mortgagee on lease on a certain rent. As he committed default in the payment of rent, he was compelled to execute the promissory note, on foot of which the small cause suit was brought.
The learned Subordinate Judge has found on the evidence that the promissory note was executed in discharge of the arrears of rent due and it must be regarded as a claim arising under the mortgages. This finding was not,—and indeed, could not be—challenged before me. O. 34, R. 14 (1) runs thus:
“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 initiating a suit for sale in enforcement of the mortgage, and may institute such suit notwithstanding anything contained in O. 11, R. 2.”
The respondent judgment-debtor contended that, as the decree which was being executed was a decree for the payment of money obtained by the mortgagee in satisfaction of a claim arising under the mortgages, he was not entitled to bring the mortgaged property to sale otherwise than by instituting a suit for sale in enforcement of the mortgages. This objection was upheld by the learned Subordinate Judge. The decree holder has filed the above civil revision petition against the said decision.
The petition came on originally before one of us, but was referred to a Division Bench.
Undoubtedly, the language of O. 34, R. 14 (1), prima facie, supports the view taken by the lower Court. Here, the mortgagee has obtained a decree for payment of money in satisfaction of a claim arising under the mortgage. It must be taken to be well established that a decree for rent arising out of a lease back in favour of the mortgagor by the mortgagee in possession as a part of the mortgage transaction is a claim arising under the mortgage. As already mentioned, this position was not seriously disputed. The mortgagee was therefore not entitled to bring the mortgaged property to sale in execution of such a decree. In Kuttyal v. Sanjiva Rao(1), the essential facts were similar to the facts in the present case. Chandra Reddi, J., as he then was, held that the prohibition contained in O. 34, R. 14 would apply. He explained the purpose of the provision thus:
“The provision was enacted by the legislature for the benefit of the mortgagor, so that the mortgagee may not purchase the equity of redemption in enforcement of a money decree which he may obtain against the mortgagor, in respect of a claim arising under the mortgage. The intention of the legislature seems to be that all claims arising under the mortgage should be adjudicated by the Court either at the time of the redemption of the mortgage or when the mortgagee brings a suit on his mortgage”.
In Kalyanasundaram v. Subramania(2), there is an elaborate discussion of the question whether a sale of the mortgaged property in contravention of O. 34, R. 14 C. P. C. is only voidable or, is altogether void. But we are not concerned with that question in this case, as the sale has not taken place and the respondent's application was to prevent a sale from taking place in contravention of O. 34, R. 14 of the Code.
The entire argument on behalf of the petitioner was founded on the admitted fact, that, as the mortgages executed by the respondent in his favour were usufructuary mortgages, he cannot institute a suit for sale in enforcement of the mortgages. The contention was that the prohibition contained in O. 34 R 14(1) would only apply when the mortgagee would have a right to institute a suit for sale in enforcement of the mortgage. If this requirement is not satisfied, then, the provision would have no application. Learned Counsel for the petitioner relied on the decision of the Rajasthan High Court in Habib v. Daulatram(3), in support of his contention. It was held there that, in order to make O. 34, R. 14 applicable, two conditions were necessary, namely, (1) that the claim on which the mortgagee seeks to bring the mortgaged properties 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. That case related to a pure and simple usufructuary mortgage, and as the mortgagee could not bring a suit for sale, the disqualification raised by O 34. R. 14, was held to be not applicable to him. Modi J. who delivered the judgement of the Division Bench, after referring to several decisions of different High Courts, proceeded to state as follows:
“It is clear from the review of case law made above that, in all there cases, the applicability of O. 34. R. 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 O. 34. R. 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.”
The ratio decidendi of the decision is to be found in the following passage;
“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 R. 14 cannot, in our opinion, be held applicable to him.”
With great respect to the learned Judges of the Rajasthan High Court, we are unable to find anything in the language of O. 34 R. 14. (1), which expressly or impliedly imposes a condition that the mortgagee should be able to institute a suit for sale in enforcement of the mortgage before the prohibition can apply. Logically, the contention on behalf of the petitioner would lead to the application of the rule of prohibition to the case of a simple mortgage, which inter alia provides that a suit for sale shall not be instituted till a certain date, and before that date the mortgagee obtained a decree for payment of money in satisfaction of a claim under the mortgage, say, for accrued interst. The construction sought to be placed by learned Counsel for the petitioner on O. 34 R. 14 C.P.C would permit the very mischief which, in our opinion, the provision was intended to provide against, namely, the extinguishment of the mortgagor's equity of redemption at the instance of the mortgagee without giving an opportunity to the mortgagor to exercise his right of redemption. It is well settled that, if in execution of a decree such as the decree in the present case, the mortgaged property is sold to either the mortgagee himself or to a third person, the mortgagor will lose his right of redemption.
The learned Judges of the Rajasthan High Court, apparently, thought that the application of the rule to the case of a usufructuary mortgage would entail hardship to the mortgagee. We do not think so. It must not be overlooked that a person who takes a usufructuary mortgage pure and simple is presumably aware that he can realise the amount advanced by him only by the enjoyment of the usufruct, that is, the rents and profits from the mortgaged property. Once it is found that a particular claim for money is a claim arising under the mortgage, on principle, the same rights and consequent disabilities should also apply to it. The amount due in respect of such a claim would also have to be recovered in the same way, namely, by enjoyment of the usufruct. The mortgagor would not be entitled to redeem the property unless he pays to the mortgagee not only the amount advanced, but also the amount for which the mortgagee has obtained a decree in satisfaction of a claim arising under the mortgage. When the usufructuary mortgagee is precluded from bringing the mortgaged property to sale to enforce his mortgage, he should be equally precluded from bringing the property to sale to satisfy a claim arising under the mortgage. With respect, we are unable to accept the reasoning or conclusion of the learned Judges of the Rajastan High Court. No other decided case was brought to our notice which supports the petitioner's contention.
The civil revision petition is dismissed with costs.
V.C.S