Sheo Shankar And Others (Decree-Holders) v. Chunni Lal And Others (Judgement-Debtors).

Sundar Lal, J.:— These appeals arise out of orders passed by the court below under order XXI, rule 18, of the Code of Civil Procedure. It appears that three suits were filed in the court of the Subordinate Judge of Jaunpur to which the parties or most of them were impleaded either as plaintiffs or defendants. The first of these was filed by seven plaintiffs, viz., (1) Jamuna Prasad (2) Chunni Lal, (3) Lachmi Narain, (4) Bhagwan Das, (5) Persotam Das (6) Jairam Das and (7) Sheo Prasad against nine defendants viz.—(1) Changur Khan, (2) Shoo Shankar, (3) Haridas (4) Eai Rajnath, (5) Bhola Nath, (6) Raghunath Das, (7) Muluk Das, (8) Ram eshwar Das and (9) Jageshar Das.

The suit was for sale on a mortgage which the defendants pleaded was paid off and discharged;

The learned Subordinate Judge of Jaunpur dismissed the suit with costs, amounting to Rs. 365, awarded to defendants Nos. 2 to 4 and Nos. 6 to 9. The plaintiff appealed against the said decree to this Court, and on the 17th of September, 1910, the learned Chief Justice (Sir John Stanley) and Mr. Justice Banerji dismissed the appeal with costs in favour of the defendants amounting to Rs. 468-9-9, for the High Court, and affirmed the decree of the court below.

The second suit was by Sheo Shankar and others (the eight persons who were defendants Nos. 2 to 9 in the suit mentioned in the preceding paragraph) against Jamuna and others (the seven plaintiffs of that suit.)

The suit was for possession of certain properties with mesne profits. On the 6th of March, 1911, Stanley, C.J and Banerji, J., decreed the said suit, with coses and awarded future mesne profits, the amount of which was to be ascertained in the execution department. Apart from the question of mesne profits, the amount of which remains still unascertained, Sheo Shankar and others in these cases obtained against Jumna Prasad and others a decree awarding them, or some of them, costs of the suits (in the amounts as shown in these decrees.)

These two decrees may be described as decrees of the first set.

The last suit was one, instituted by Jamuna Prasad and the same seven persons, who were plaintiffs in the first mentioned suit, on foot of three mortgages, dated the 22nd of February, 1889, 30th of October, 1889, and 9th of September, 1893, for sale of the property mortgaged. The first three defendants were the heirs of the mortgagors; the fourth defendant was a prior mortgagee. Defendants Nos. 5 to 12 were Sheo Shankar and others (who are named as defendants Nos. 2 to 9 in the suit first mentioned) who had purchased a considerable part of the mortgaged property, and who were impleaded as such purchasers. The last two defendants (Nos. 13 and 14) were puisne mortgagees of a part of the property mortgaged. The suit was decreed by the court of first instance on the 17th of April, 1909, and the decree was upheld by the court in appeal on the 23rd of April, 1910. The decree was for the sale of the mortgaged property. This decree has been put in execution as also the two decrees of the first set. In execution of the decrees of the first set in which the proceedings for execution were initiated by Sheo Shankar, Raghunath Das and Rameshwar Das, the property of Jamuna Das and others was attached and put up for sale.

Chunni Lal, Bhagwan Das and Lachmi Narain, three of the decree-holders of the decree for sale, have applied to the court below to set off the amounts of the decrees of the first set against the amount of the third decree (i.e, the decree for sale) under rule 18, order XXI, of the Code, and their prayer has been granted. It is against this order that the three appeals (one in the case of each decree) have been preferred. The case for the appellants is that they were made defendants to the decree for sale in their capacity as purchasers of some of the mortgaged property. They were not liable personally for the amount of the decree. They were impleaded to foreclose their right of redemption as transferees of the mortgaged property which was of a much smaller value than the amount of the decree for sale or even the decrees for costs obtained by them. It was to give them the opportunity of saving the property purchased by them from sale if they chose to avail themselves of the option thus given to them that they were impleaded; they were not bound to pay up the decree in question. It was only in their character as purchasers of some of the mortgaged parcels that they had been impleaded in that suit. They do not propose to save the property so purchased by them from sale, but prefer to leave it to the decree-holders to bring them to sale, and to recover what they can of the amount of their decree for sale.

On the other hand, the amounts awarded to them by the two decrees for costs are personally recoverable from Jamuna Prasad and others. They would prefer to recover the amounts due to them on their decrees and have the property purchased by them to be sold for what it may be worth. If the property puchased by them is of very small value, and indeed much smaller in value than the amount of coats awarded to them, it is obviously to their advantage to repel the proposal to set off their decrees for costs, as prayed for the respondents, and the question in appeal is whether they can successfully repel the proposal. The answer to the question depends upon the interpretation to be placed on rules 18 and 20 of order XXI of the Code. Clause (1) of rule 18 aforesaid enacts that where two cross-decrees in separate suits “for the payment of sums of money” passed between the same parties are in execution in the same court, the court shall record satisfaction of the decree for the smaller amount, and also record payment of that amount against the amount due on the decree for the larger sum, and issue execution for the balance only. Prior to the passing of Act V of 1908, the present Code of Civil Procedure, it had been held that a decree for sale is not a decree for payment of money within the meaning of sections 230 and 246 of the Code of Civil Procedure. This point has been cleared up by rule 20 of this order. The provisions of rules 18 and 19 apply now to decrees for sale as well. Rule 20, however, does nothing more than make the provisions contained in rules 18 and 19, applicable to decrees for sale. The two decrees proposed to be set off against each other must come within the provisions of these rules before they can be so set off.

Rule 18 of order XXI of the Code now in force corresponds to section 246 of the old Code. Explanation III of that section enacted that the section in question did not apply unless “the decree-holder in one of the suits in which the decrees have been made is judgement-debtor in the other and each party fills the same character in both suits.” The same rule has been enacted in the Code now in force, and finds place in clause (3) of rule IS of order XXI. The question in the case is, do the judgement-debtors appellants, in the decree for sale on the mortgage, fill the same character as they do in their capacity as holders of the decrees of the first set for costs, which are sought to be set off against the decree on the mortgage?

To determine this point it is necessary to consider what character the defendants appellants fill in the decree for sale on the mortgage. In a suit for sale on a mortgage under rule 1, order XXXIV, “All persons having” an interest either in the “mortgage security, or in the right of redemption shall be joined as parties” under section 91 of the Transfer of Property Act, 1882, besides the mortgagor any one of the following persons may institute a suit for redemption, viz.:—

“(a) Any person (other than the mortgagee of the interest sought to be redeemed) having an interest in or charge upon the property.

“(b) Any person having an interest in or charge upon the right to redeem the property.

“(f) The judgement-creditor of the mortgagor when he has obtained execution by attachment of the mortgagor's interest in the property,

“(g) A creditor of the mortgagee who has in suit for the administration of the estate obtained a decree for sale of the mortgaged property”

By the combined operation of these two provisions a person who is a puisne mortgagee of a part only of the mortgaged property but whose puisne mortgage comprises numerous other properties more than sufficient to meet his claim on the plaintiffs mortgage has to be made a party defendant. He may not care at all to redeem the small bit of his mortgaged property comprised in plaintiff's mortgage, and be content to realize his mortgage money from the other property mortgaged to him. An attaching creditor under section 91(f) of the Act may be in a similar position. He may not care to redeem the small portion attached by him and may prefer to rely upon other property owned by the debtor for realizing his debt. Similarly a transferee of a portion of the mortgaged property (or even of the whole of the mortgaged property) may prefer to let the property be sold. The question is, do persons impleaded as such who are not liable on the contract of mortgage (being no parties to it) but who are impleaded to foreclose their rights of redemption “fill the same character” as that in which they obtained the decrees themselves for costs, sought to be set off?

“Apart from agreement, all rights of set-off are purely the creation of statute or rules of court” (Lord Halsbury's Laws of England, Vol. 25, page 485). The statutes of set-off were construed strictly by courts of Common Law (Ibid, page 486). Under rule 3 of order IX of the Rules of the Supreme Court of 1883, the Judge may if “such set-off or counter claim cannot be conveniently disposed of in the pending action, or ought not to be allowed, refuse permission to the defendant to avail himself thereof.” In this country, however, the practice of recording satisfaction of one decree and part satisfaction of the other and issuing execution for the balance is governed entirely by rule 18 of order XXI.

Our Code is, however, imperative on this point, and the court is bound to give effect to the plea provided the conditions prescribed by the rule are fulfilled. If the contention for the respondent be correct, a person impleaded merely in the character of a person who has purchased or attached a portion of the mortgaged property or who holds a puisne mortgage over apportion of such property is compelled to set it off against any decree for a debt obtained by him personally against his opposite party, which he was entitled to recover personally from his debtor. He is thus compelled to pay a debt, which he is not personally bound to pay and for the payment of which he is under no personal obligation. He is compelled to save from sale property which he does not care to save and which he is not bound to save from sale. In my opinion a person against whom a decree foreclosing his right to redeem a property from sale is passed in his character as a puisne mortgagee or an attaching creditor, is a judgment-debtor to that decree in a character different from the one in which he holds a decree made in his favour personally and which is enforceable against his judgement-debtor by the arrest of his person and the attachment of his property. In the one case he has obtained his decree for costs in his individual and personal capacity. In the other he is not ordered to pay any sum of money in his individual and personal capacity, but is only given an option to do so if he likes, to save from sale some property in which he is interested.

It was suggested in course of the argument that if the property in which the appellant is interested as a puisne transferee of very small value the equities of the case might be met by setting off only the value of the property in which the appellant was interested. If both parties were agreed as to the value of such property the ascertainment of the amount to be set off presents no difficulty. Rule, 18 of the Code, however, contemplates no inquiries when the point is disputed. The sums are ascertained and fixed by the decrees; all that rule 18 contemplates is the mechanical process of setting off one against the other.

Reliance has been placed on the case of Nagar Mal v. Ram Chand. In that case a decree for money was set off against a decree for sale by the court below. The holders of the money decree applied to this Court for the revision of the said order. The judgement-debtors in the decree for sale were not impleaded in that suit in a capacity different from that in which they had obtained their decree for money. The Court (Knox and Karamat Husain, JJ.) in that case saw no reason for interference in revision. In this case the character in which the defendants were sued in the case on the mortgage is different from the character in which they obtained their decrees for money. For these reasons I would decree the appeal and set aside the order made by the court below with costs.

Walsh, J.:— I entirely agree with the judgement of my brother Sundar Lal.

Appeal allowed and cause remanded.