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Karam Chand Moola Ram And Ors. v. Telu Ram And Ors

Punjab & Haryana High Court
Feb 20, 1968
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Summary of the Provided Opinion — Second Appeal Concerning Suit for Redemption

Factual and Procedural Background

This is a second appeal from concurrent decisions of the lower courts which had decreed the plaintiffs' suit. The plaintiffs are Telu Ram and Daya Ram. There are twenty defendants. Defendants 1–4 (Manak Chand, Hem Chand, Subash Chand and Deepak Kumar) and the plaintiffs were co-sharers in the disputed properties, described for convenience as Unit No. I and Unit No. II. In Unit No. I the parties held equal shares; in Unit No. II the plaintiffs held one-third and the defendants two-thirds.

The plaintiffs executed two mortgages in September and December 1943 in favour of Mst. Sunhari Devi (predecessor-in-interest of defendants 1–4). A third mortgage executed in September 1948 discharged the earlier two mortgages; the terms of all three mortgages were similar, with rents of the properties to counter-balance interest. The defendant-mortgagees (who were also co-sharers) had placed defendants 5–20 as tenants in the two units, and at the time of the 1948 mortgage defendants 5–20 were in possession as tenants under the mortgagees.

Following a partition suit between the plaintiffs and defendants 1–4, the properties were divided by metes and bounds; the portions in dispute fell to the plaintiffs' share subject to the mortgage in favour of the defendants. The defendants then instituted a suit for sale of the mortgaged property; a preliminary decree and thereafter a final decree were passed. In execution a part of the mortgaged property was sold; before the other part could be sold the plaintiffs paid the balance of the decretal amount into Court, and the final decree for sale was thereby fully satisfied.

On 5 January 1963 the plaintiffs filed the present suit for possession by redemption, impleading the erstwhile mortgagees as defendants 1–4 and the tenants as defendants 5–20. Defendants 1–4 confessed judgment; defendants 5–20 contested. The tenants raised several pleas, including that the suit was not maintainable in its present form. The lower courts decided this issue against the defendants. Defendants 5–20 appealed in a second appeal challenging that outcome.

Legal Issues Presented

  1. Whether, after a final decree for sale has been passed in a mortgage suit, the mortgagor can sue for partial or total redemption under Section 60 of the Transfer of Property Act, 1882.
  2. Whether a suit framed as one for redemption can be treated as a suit simpliciter for possession in the circumstances of this case.
  3. Whether defendants who are tenants (defendants 5–20) and who derive title from the mortgagees (defendants 1–4) may raise the objection that a redemption suit is not competent when the mortgage debt has merged in a decretal debt.
  4. Whether the plaintiffs should be permitted to amend the plaint to convert the suit for redemption into a suit for possession.

Arguments of the Parties

Appellants (Defendants 5–20; represented by Mr. D. N. Aggarwal)

  • Contended that no suit for redemption is competent after a final decree for sale; the proper remedy (if relief is sought) lies under Order 34, Rule 5 of the Civil Procedure Code.
  • Argued that the right to redeem under Section 60 of the Transfer of Property Act cannot be invoked once the mortgage debt has merged in the decretal debt following a final decree for sale.

Respondents (Plaintiffs; represented by Mr. G. C. Mittal)

  • Contended that the mortgagor can sue under Section 60 for (partial or total) redemption even after a final decree for sale.
  • Later argued that the suit for redemption should be treated as a suit for possession (i.e., a suit simpliciter for possession) given the factual circumstances that the mortgage had been paid off yet possession had not been delivered.
  • Contended that only defendants 1–4 could raise the objection that a redemption suit was incompetent (a contention the court did not accept).
  • Sought permission to amend the plaint to convert the suit for redemption into a suit for possession (a request refused by the court).

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Sheo Narain Sah v. Mt. Deolochan Kuer, AIR 1948 Pat 208 (Division Bench, Patna High Court) Holds that after a final decree for sale in a mortgage suit the mortgagor's right of redemption under Section 60 (including partial redemption) is extinguished and is replaced by the right created by Order 34, Rule 5 CPC to redeem the whole property by payment of the decretal debt; the mortgage debt and security merge in the decretal debt and decree. The court accepted this decision as directly controlling and expressed respectful agreement with the rule laid down by the Patna High Court. The Sheo Narain Sah reasoning formed the principal legal foundation for concluding that a redemption suit was not competent after the final decree for sale.
A judgment of their Lordships of the Privy Council reported as AIR 1936 PC 63 Establishes that under the ordinary rules of res judicata and the provisions of Order 34 CPC the mortgage debt merges in the decretal debt. Quoted to support the proposition that once a final decree is passed there is no longer a mortgage debt which the mortgagor can pay or tender; this merger point underpinned the court's conclusion that Section 60 rights are extinguished by the final decree.

Court's Reasoning and Analysis

The court first permitted counsel for the appellants to raise and argue the point that no suit for redemption is competent despite that the point had not been urged in the lower appellate court, because the question was purely one of law and the relevant facts were fully set out in the plaint.

The core legal question addressed was whether, after a final decree for sale in a mortgage suit, the mortgagor may still sue under Section 60 of the Transfer of Property Act for partial or total redemption. The court examined the interaction between Section 60 of the Transfer of Property Act and the procedure and effects of a final decree for sale under Order 34 of the Code of Civil Procedure.

Relying primarily on the Division Bench decision of the Patna High Court in Sheo Narain Sah v. Mt. Deolochan Kuer (AIR 1948 Pat 208), and supported by the Privy Council authority reported at AIR 1936 PC 63, the court accepted the following chain of legal reasoning (as articulated by Mr. Justice Bennett in the Patna case and adopted here):

  • The mortgagor's statutory right of redemption under Section 60 corresponds to the ordinary right to redeem the mortgage money, but once a suit for sale culminates in a final decree the mortgage debt merges into the decretal debt. Under Order 34 CPC and the Privy Council authority this merger is established and operative.
  • If the mortgage debt were to survive separately after a final decree, an anomaly would arise whereby the mortgagor could lose the full benefit of the decree and the mortgagee's security would be undermined — a result unlikely to have been intended by the legislature or by a proper construction of the provisions.
  • Consequently, the right to redeem under Section 60 (including the right of partial redemption) is extinguished by the final decree for sale passed under Order 34. In place of that right, the mortgagor (and each co-mortgagor) receives the statutory remedy provided by Order 34, Rule 5(1) CPC — namely, the right to redeem the entire property by payment of the full decretal debt — and the relationship between the parties is converted from mortgagor/mortgagee to judgment-debtor/judgment-creditor governed by the decree.
  • There was nothing inequitable in this result because, in the suit for sale, each co-mortgagor could have cross-claimed for partial redemption before the decree.

On the contention that the redemption suit should be treated as a simple suit for possession, the court refused to recharacterize the suit. The court noted the plaintiffs' suit was grounded on the existence of a mortgage (allegedly discharged by payment) and the fact that possession had not been delivered; but, because the right of redemption did not survive the final decree for sale, the court could not treat the purported redemption suit as a suit for possession. The court expressly declined to decide, in that appeal, the separate, broader question whether a distinct suit for possession would lie after a final decree for sale.

The court also rejected the argument that only defendants 1–4 could raise the objection regarding competence of the redemption suit. It held that defendants 5–20, who derived title from defendants 1–4, could raise and succeed on a defense available to their predecessors in title; the fact that defendants 1–4 sided with the plaintiffs did not prevent defendants 5–20 from asserting that the suit could have been defeated on that ground.

Finally, the court refused permission to amend the plaint to convert the redemption claim into a suit for possession because the two causes of action were different and the point had been contested in the trial court.

Holding and Implications

Holding: The court set aside the judgments and decrees of the Courts below and DISMISSED the plaintiffs' suit; there was no order as to costs.

Implications:

  • Direct effect: The plaintiffs' suit for possession by redemption was dismissed; the lower courts' decrees in favour of the plaintiffs were set aside. The plaintiffs therefore obtain no relief in this action as adjudicated in the appeal.
  • Substantive legal consequence as applied in this case: The court reaffirmed the principle (following the Patna Division Bench and the Privy Council authority cited) that a final decree for sale in a mortgage suit operates to merge the mortgage debt in the decretal debt and extinguish the specific statutory right of redemption under Section 60 (including partial redemption). The mortgagor's remedy thereafter is under the provisions of Order 34 CPC (not by a free-standing Section 60 redemption suit after the final decree).
  • Broader precedent: The opinion applies and follows existing authorities rather than announcing a new legal principle; the court expressly recorded respectful agreement with the Patna High Court decision it relied upon. The opinion does not purport to set a novel rule beyond that established by the cited authorities.

Opinion authored by Gurdev Singh, J.; another judge indicated agreement.

Show all summary ...

1. This second appeal is directed against the concurrent decisions of the Courts below decreeing the plaintiffs' suit.

2. The plaintiffs are Telu Ram and Daya Ram. There are 20 defendants in number. Defendants 1 to 4 are Manak Chand, Hem Chand, Subash Chand and Deepak Kumar, sons of Sri Chand. The plaintiffs and defendants 1 to 4 were the co-sharers in properties, including the suit property, for facility of reference, hereinafter mentioned as Unit No. I and Unit No. II. In Unit No. I, the plaintiffs and defendants had equal share and in Unit No. II, the plaintiffs had one-third share and the defendants two-thirds share. The plaintiffs effected two mortgages in 1943 in September and December in favour of Mst. Sunhari Devi, who is the predecessor-in-interest of defendants 1 to 4. In September, 1948, a third mortgage was executed whereby the first two mortgages were discharged. However, the terms of all tile three mortgages are similar. The rent of the properties mortgaged was to counter-balance the interest. The defendant-mortgagees, who were also co-sharers of the properties, had in ducted defendants 5 to 20 as tenants in these two units; and at the time of 1948 mortgage, the defendants 5 to 20 were in possession of these two units as tenants under the mortgagees.

As a result of the suit between the plain tiffs and defendants 1 to 4 for partition of the properties including the mortgaged properties, the properties were divided by metes and bounds. The properties in dispute fall to the share of the plaintiffs subject to the mortgage in favour of the defendants. The defendants then brought a suit for sale of the mortgaged property. A preliminary decree was passed and, thereafter, a final decree. In execution of the final decree, a part of the mortgaged property was sold. But before the other part could be sold, the plaintiffs paid the balance of the decretal amount in Court with the result that the remaining part of the mortgaged property was not sold; and the final decree for tale of the mortgaged property was fully satisfied.

3. On the 5th of January, 1963, the present suit for possession by redemption has been filed by the plaintiffs. They have impleaded the erstwhile mortgagees as defendants 1 to 4 and the tenants of the disputed properties as defendants 5 to 20. The erstwhile mortgagees confessed judgment. The tenants only contested the suit. Various pleas were raised by the tenants; but one of the pleas was that the present suit was not maintainable, or, in other words, that the suit did not lie in the present form. This issue was decided by both the Courts below against the defendants. Before the trial Court, the objection precisely was that the mortgage debt had been paid in full and that the plaintiffs, therefore, could not bring a suit for redemption; but could only bring a suit for recovery of possession. It appears that this matter was not agitated in the lower appellate Court. The defendants 5 to 20, who are dissatisfied with the decision of the Courts below, have come up in second appeal.

4. Mr. D. N. Aggarwal, learned counsel for the appellants, has raised the contention that no suit for redemption is competent. This contention is met by the learned counsel for the respondents on the ground that this matter was not agitated In the lower appellate Court. As the matter raised is purely one of law, neither the admission of the counsel nor his non-urging of the point in the lower appellate Court will bind the appellants. We have, therefore, permitted the learned counsel to urge the same. Moreover, this question goes to the root of the matter; and the facts, on which the decision of this question hinges, are fully set out in the plaint and no new fact has to be found. Those facts, we have already detailed earlier. The question, that arises for determination, is, whether after a final decree for sale on the basis of a mortgage has been passed, the mortgagor can sue for partial or total redemption under Section 60 of the Transfer of Property Act? Mr. G. C. Mittal, who appears for the respondents, contends that the mortgagor can do so; whereas Mr. D. N. Aggarwal, counsel for the appellants, contends that the mortgagor cannot do so; but his remedies are under Order 34, Rule 5, Civil Procedure Code. This matter is not res integra and is fully concluded by a Division Bench authority of the Patna High Court in Sheo Narain Sah v. Mt. Deolochan Kuer, AIR 1948 Pat 208. We are in respectful agreement with the rule laid down in this case. While dealing with this question, Mr. Justice Bennetl observed as follows:

. . . . The first debatable issue in this contention seems to me to be whether the right of partial redemption of a co-mortgagor, a party to the suit, survives under Order 34, Rule 5, Civil P. C., until confirmation of the sale made under a final decree for sale or whether the final decree for sale operates to extinguish the right of partial redemption. The mortgagor's right of redemption is a statutory right governed by Section 60, Transfer of Property Act, 1882. The wording of the final paragraph of that section shows clearly that the right of partial redemption thereby recognized is a right corresponding in all essential respects to the right to redeem conferred upon the mortgagor by para 1 thereof. But this right is expressly stated as a right to redeem the mortgage money and the mortgage money is referred to in Section 58(a) of the Act as
the principal money and interest of which payment is secured for the time being.

These monies are commonly referred to as the mortgage debt and there is no doubt whatever that, upon the ordinary rules as to res judicata, the mortgage debt merges in the decretal debt, and that that is so under the provisions of Order 34, Civil P. C., is clear from the judgment of their Lordships of the Privy Council in AIR 1936 PC 63. That being so, the moment the final decree is passed, there is no longer any mortgage debt or mortgage money which the mortgagor can pay or tender to the mortgagee. That this is so follows conclusively from the consideration of the posision as it would be if that were not so. In that event the mortgagor who, under the form of decree which the Court is directed to pass by the terms of Order 34, Rule 4(1) and Rule 5(3), is entitled to be paid thereunder, in addition to the mortgage money, the monies referred to in Order 34 Rule 2 (1) (a) (ii) and (iii), would find himself liable under Section 60, Transfer of Property Act, 1882, to be deprived of the full benefit of his decree and to lose his security against payment only of the mortgage money.

The Legislature cannot be taken to have intended this result; nor, indeed, does this result Sow from the application of the ordinary canons of construction to the statutory provisions in question. Order 34, Rule 5, must be read together with Section 60, Transfer of Property Act, if possible, and, if it cannot, then Order 34, Rule 5, the latter statutory enactment, which takes effect as if enacted in the Civil Procedure Code itself, will prevail. Not only can these two provisions be read together, but when Section 60, Transfer of Property Act, 1882, is given what I understand as above-mentioned to be its ordinary meaning, it in no way conflicts with the provisions of Order 34, Rule 5. It follows from these considerations that not only is the mortgage debt merged in the decretal debt, but also firstly, that as between the mortgagee and the mortgagors parties to the suit for sale, the mortgage security merges in the decree and is replaced by the security of the order for sale which merger is also in accordance with the ordinary principles of res judicata, the lower mortgage security which the mortgagee necessarily relies upon in his suit for sale merging in the higher security of the resulting decree; and secondly, that the right to redeem confer-ed by Section 60, Transfer of Property Act, 1882, including the corresponding right of partial redemption thereby conferred, is extinguished by the final decree passed under Order 34, Rule 5 (3) and that the mortgagor and so each co-mortgagor receives in exchange the right to redeem granted by Order 34, Rule 5 (1), namely, right to redeem the whole property by payment of the full decretal debt, the relationship between the parties as the use in Order 34. Rule 5, Civil P. C., of the words 'plaintiff and 'defendant' themselves also indicates being no longer that of mortgagor and mortgagee but that of judgment' debtor and judgment-creditor governed by the decree and the terms of Order 34, Rule 5, Civil P.C, There is nothing inequitable in the right of partial redemption being so extinguished, since in the suit for sale each co-mortgagor could have cross-claimed for partial redemption. . . Mr. G. C. Mittal argues that this case merely dealt with the right of partial redemption. But this is not so because the observation quoted above clearly show that their Lordship were dealing both with total and partial redemption. No authority to the contrary has been brought to our notice. Moreover, the rules under Order 34 of the Code of Civil Procedure indicate that once a final decree for sale in a mortgage suit has been passed, the rights of the parties get merged in that decree and have to be redressed in the manner provided in Order 34.

5. Mr. Mittal's next contention is that we should treat the suit for redemption as a suit simpliciter for possession. We are unable to do so. The very basis of the suit was that there was a mortgage, which had been paid off: and as the possession had not been delivered to the plaintiffs, their right of redemption still subsisted. As already held, there being no right of redemption subsisting in view of the fatal decree for sale in the mortgage suit, we cannot treat the redemption suit as a suit for possession. As a matter of fact, the question may still arise whether in view of the final decree, a separate suit for possession would lie. But, as at present advised, we do not propose hazarding any opinion on this question.

6. The next question, that has been raised by Mr. Mittal is that only defendants 1 to 4 could raise this objection, namely, that no suit for redemption is competent. We are unable to agree with this contention. Defendants 5 to 20 derived title from defendants I to 4 and they could defeat the suit if the suit could have been defeated on that ground by defendants 1 to 4. The mere fact that defendants 1 to 4 are siding with the plaintiffs will not affect the matter.

7. In the last resort, Mr. Mittal has railed the contention that he should be permitted to amend the plaint so as to convert the suit for redemption into a suit for possession. As the two causes of action are different we see no reason to allow this request, especially when this point was contested in the trial Court.

8. For the reasons recorded above, we set aside the judgments and decrees of the Courts below and dismiss the plaintiffs' suit, but there will be no order as to costs.

Gurdev Singh, J.

9. I agree.