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Advocates
  • S.R Parulekar, for the respondents, not called upon.
Judges
  • Sir John Beaumont, C.J
  • Mr. Macklin
  • Mr. Wassoodew, JJ.
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Citation Codes
Equivalent Citations
citation codes
Case Number
Advocates
  • S.R Parulekar, for the respondents, not called upon.
Judges
  • Sir John Beaumont, C.J
  • Mr. Macklin
  • Mr. Wassoodew, JJ.
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Smart Summary

Judgment Summary — Beaumont, C.J. (Concurring: Macklin, J. and Wassoodew, J.)

Factual and Procedural Background

In 1928 the plaintiff advanced Rs. 8,000 to the defendant and certain shares were charged to secure the loan. In 1931 the plaintiff sued for recovery and on 28 November a consent decree was entered. The decree recited the plaint and (in clause 1) ordered payment of a lump sum of Rs. 9,000 by yearly instalments of Rs. 2,000, contained a default clause making the whole amount payable on default of payment of two instalments, provided that a charge in favour of the plaintiff for Rs. 9,000 was kept upon the suit shares, and stated that if the defendant failed to pay the moneys in time, the amount should be recovered by sale of the said shares.

The defendant defaulted; in 1934 the charged shares were sold and realised Rs. 4,350. In 1936 the plaintiff filed the present darkhast to recover the balance by attachment and sale of a house belonging to the defendant. The defendant contended that by taking a charge on the shares the plaintiff had abandoned any right to recover by other means (or, alternatively, that the plaintiff must first obtain a personal decree for payment). The First Class Subordinate Judge at Dharwar decided in favour of the plaintiff. The defendant appealed to this Court.

Legal Issues Presented

  1. Whether, when a consent decree directs payment by instalments and creates a charge on specific property (the charged shares), the decree nevertheless constitutes a personal decree enforceable by attachment and sale of other property of the judgment-debtor after the charged property has been realised.
  2. Whether the creation of a charge on particular property by act of parties or by decree negatives the creditor's personal liability remedy, so that the creditor's remedy is against the charged property only (at least in the first instance).
  3. Whether principles and the scheme of Order XXXIV of the Civil Procedure Code (as applied to mortgage suits and preliminary mortgage decrees) should be analogously applied to consent decrees of the kind in question, thereby requiring a separate application for a personal decree before execution against other property.

Arguments of the Parties

Defendant's Arguments

  • The defendant contended that, because the plaintiff had taken a charge on specific shares, the plaintiff had thereby abandoned any right to recover the debt by other means (i.e., by attaching other property).
  • Alternatively, the defendant argued that if the plaintiff retained a right to proceed against other property, the plaintiff must first obtain a personal decree for payment (a separate order) before executing against any property other than the charged shares.

Plaintiff's Position (as reflected in the proceedings)

  • The plaintiff sought to recover the unpaid balance after realisation of the charged shares by attaching and selling other property (specifically, the defendant's house), relying on the consent decree's payment clause as a personal decree enforceable under the Civil Procedure Code.
  • The learned Subordinate Judge had accepted that the plaintiff could proceed, and the plaintiff maintained that taking a charge was intended to protect against intervening creditors and did not operate to restrict the ordinary remedies for enforcement of a payment decree.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court in this Opinion
Janardan v. Krishnaji Two conflicting treatments appear in the record: Mr. Justice Shah (Court of first instance) treated a consent decree directing payment as not being limited by the provision for sale of mortgaged property (i.e., prima facie a personal decree). The appellate bench (Sir Norman Macleod, C.J.) held that there must be a decree personally made against the mortgagor before execution against property other than the mortgaged property. Beaumont, C.J. prefers the view of Mr. Justice Shah and rejects the appellate bench's proposition. He holds the appellate Court's conclusion to be wrong and adopts the view that a decree directing payment is prima facie a personal decree enforceable against other property unless the decree's language restricts that right.
Raychand Jivaji v. Basappa Virappa (Letters Patent Appeal) The Court (Mr. Justice Broomfield) stated that, unless the contrary appears, where a charge is created by act of the parties the specification of the particular fund or property negatives a personal liability and the remedy of the holder of the charge is against the property charged (at least in the first instance). Beaumont, C.J. expressly disagrees with that conclusion. He considers applying such a rule to consent decrees to be wrong in principle and inexpedient in practice, and declines to adopt it for the decree in the present case.
Ambalal Bapubhai Gujarati v. Narayan Tatyaba Bhosale Concerned decrees and charges created by decree on immoveable property; held that the charge could be enforced by execution of the decree without a separate suit. Beaumont, C.J. notes this case as rather in favour of his view (that a consent decree can create a personal liability enforceable by execution) though he considers it distinguishable on its facts from the present case.
Gurupadappa v. Karveerappa Followed Ambalal (above); supported the proposition that a decree creating a charge on immoveable property could be executed without necessity of a separate suit. Beaumont, C.J. records this as being in favour of his approach, again noting distinguishing features but relying on the general proposition that such decrees can create enforceable personal liability.
Gurupadappa Mallappa Kalasgond v. Basappa Shiddappa Kalagi The learned Judge (Mr. Justice Kania) held that the particular decree under consideration was in the nature of a preliminary mortgage decree and that Order XXXIV of the Civil Procedure Code applied; accordingly a further application for a personal decree would be required. Beaumont, C.J. accepts the correctness of applying O. XXXIV where a decree is indeed a preliminary mortgage decree. He distinguishes the present decree from such a preliminary mortgage decree and therefore finds O. XXXIV inapplicable here.

Court's Reasoning and Analysis

Beaumont, C.J. begins by construing the consent decree on its face. He observes that clause (1) plainly directs the defendant to pay Rs. 9,000 by instalments and that such a direction, standing alone, is capable of being enforced by any method authorized by the Civil Procedure Code (including attachment and sale of any of the defendant's property). The judge emphasises that taking a charge on specific property (here, the shares) is commonly done to protect the creditor from intervening creditors while instalments are payable, and is primarily a protection against interference with that particular fund; it is not, in his view, intended to regulate the order in which the defendant's entire property is liable to execution.

Beaumont rejects the suggestion that the mere creation of a charge necessarily implies an abandonment of the creditor's other remedies. He reasons that an abandonment of the ordinary remedies should not be presumed in the absence of clear language indicating such an intention. To hold otherwise, he warns, would impose further delay and expense on the creditor and add to the opportunities for a judgment-debtor to delay enforcement.

The judge examines the authorities relied upon by the parties. He accepts that where a decree is in the nature of a preliminary mortgage decree (i.e., where Order XXXIV of the Civil Procedure Code governs the enforcement of mortgage/security of immoveable property), the statutory scheme may require a personal decree to be sought only after sale of the mortgaged property produces a deficit. But he declines to apply the mortgage-suit/code analogy to a consent decree unless the words of the decree justify such construction.

Considering the precedents:

  • He prefers Mr. Justice Shah's view in Janardan v. Krishnaji that a decree directing payment is not limited by a provision for sale of charged property and is prima facie a personal decree; he disagrees with the appellate bench's contrary conclusion in that case.
  • He cannot accept the rule articulated in the Letters Patent Appeal (Raychand Jivaji v. Basappa Virappa) that specification of particular property by agreement or decree necessarily negatives personal liability; he finds that rule unsound as a general rule of construction for consent decrees.
  • He notes other cases (Ambalal and Gurupadappa v. Karveerappa) which support his view that such decrees may create personal liability enforceable by execution, although he distinguishes their facts from the present record where necessary.
  • He agrees that if a decree is properly characterised as a preliminary mortgage decree then the provisions of Order XXXIV apply; but he finds that the present decree is not of that nature and instead plainly contains an order for personal payment.

On that basis, Beaumont, C.J. concludes that, since the decree contains a personal order for payment and does not in terms restrict enforcement against other property, the plaintiff was entitled to proceed to attach and sell the defendant's house to recover the balance after realised proceeds from the charged shares were insufficient.

Holding and Implications

Holding: The appeal is dismissed and the decree appealed from is upheld. The plaintiff may execute the consent decree against other property of the defendant (specifically, the defendant's house) to recover the unpaid balance after realisation of the charged shares. The appeal is dismissed with costs.

Implications and Practical Effect

The direct effect of the Court's decision is that the plaintiff, having obtained a consent decree directing payment and having taken a charge on specific shares, was not precluded from enforcing the decree by attachment and sale of other property when the charged shares did not realise the full decretal amount. The Court declined to treat the creation of a charge as ipso facto negating the creditor's personal remedy unless the decree's language clearly limited that right. The Court also clarified that Order XXXIV's scheme for mortgage suits applies where a decree is properly a preliminary mortgage decree, but that the mortgage scheme should not be analogically imposed upon consent decrees that, on their terms, create a personal obligation to pay.

No statement is made in the opinion about any further procedural steps to be taken beyond the dismissal of the appeal and the entitlement to execution against the defendant's house; the Court simply affirms the Subordinate Judge's decision in favour of the plaintiff and orders costs.

Summary prepared strictly from the text of the provided opinion (Beaumont, C.J.; concurring: Macklin, J. and Wassoodew, J.). No information beyond the opinion's content has been added.

Show full summary ...

    Gurappa Gurushiddappa Neeli v. Amarangji Vanichand

    Beaumont, C.J:—

    This is an appeal from a decision of the First Class Subordinate Judge of Dharwar, and it raises a question in execution, which has caused some difference of opinion in this Court, and is of very common occurrence.

    In 1928 the plaintiff made an advance of Rs. 8,000 to the defendant, and certain shares were charged to secure the amount. In 1931 the plaintiff sued to recover the amount due, and on November 28 there was a consent decree. The decree recites the plaint, and then (in cl. 1) directs the defendant to pay to the plaintiff a lump sum of Rs. 9,000 by yearly instalments of Rs. 2,000. Then there is a default clause making the whole amount payable on default of payment of two instalments. Then it is provided that a charge in favour of the plaintiff for the decretal amount of Rs. 9,000 is kept upon the suit shares, and then the decree goes on: “If defendant fails to pay the moneys in time, the same should be recovered by sale of the said shares.” The defendant failed to pay the instalments on the due dates, and in 1934 the shares were sold and realised Rs. 4,350. In 1936 the plaintiff took out the present darkhast to recover the balance of the debt by attachment and sale of a house belonging to the defendant. It is contended by the defendant that the plaintiff, having taken a charge on specific shares, has abandoned his right to recover the money by any other means. Alternatively, it is said that if he desires to recover the money by any other means, and has a right to do so, he must first of all proceed to get a personal decree for payment. The learned Subordinate Judge decided in favour of the plaintiff.

    Now, taking the decree as it stands, and without reference to authorities in the first instance, I should have thought that its meaning was perfectly plain. It is very common to have a consent decree for payment of money making the amount payable by instalments; but if the creditor agrees to instalments, he is, of course, abandoning his present right to execute the decree for the full amount due, and to compensate him for that it is very common for the debtor to give him a charge on property. In the present case, property, namely the shares, had been charged beforehand, but I think the same principle would apply if the charge had been created in the first instance by the decree. But in taking a charge it seems to me that what the creditor is looking to is his protection against the rights of intervening creditors, who may attach property of the judgment-debtor whilst the plaintiff's hands are tied by the time given for payment of instalments. That seems to me to be the object of a charge; not to regulate the order in which the defendant's property is liable to be attached. Taking cl. (1) of this decree, it is perfectly plain that it amounts to an order for payment, and, if such clause stood alone, it could be enforced by any of the methods authorized by the Civil Procedure Code, including attachment and sale of any of the defendant's property. There is nothing in the rest of the decree which expressly takes away or limits that right, and I can see no reason why it should be held that the plaintiff by implication has deprived himself of that right or delayed its enforcement, merely because he has protected himself against other creditors by taking a charge on part of the defendant's property. Therefore, if I had to construe the decree without reference to authorities, I should say that there was no doubt whatever that the plaintiff, having failed to realize the whole amount of his debt by sale of the charged shares, can proceed under the decree to attach any other property of the judgment-debtor which may be available.

    However, there are undoubtedly two cases in this Court, which are against that view. There is, first of all, a decision of an appellate bench in Janardan v. Krishnaji. The learned trial Judge distinguished that case by pointing out that it was a mortgage suit, as no doubt it was, but in that mortgage suit there was a consent decree, very much in the same terms as the decree in the present suit. Mr. Justice Shah, in the Court of first instance, said this (P. 956):—

    “I see no reason to limit the plain meaning of the decree as to the payment of the full amount in instalments by the provision as to the realisation of the full amount by the sale of the mortgaged property in default of the payment of any two instalments. The decree directs the defendants to pay the full amount, and the obligation is not in my opinion limited by the provision relating to the sale of the mortgaged property.”

    I think that is right; but in appeal Sir Norman Macleod, the Chief Justice, said (p. 958):

    “It seems clear to me that there must be a decree personally made against mortgagor before it can be executed against property other than the mortgaged property. The decree in this case cannot be said to be a personal decree merely because it directs that the defendants should pay the amount.”

    With all respect to the learned Chief Justice, I do not follow the last proposition. A decree which directs payment of the amount is prima facie a personal decree. The Court in that case purported to act by analogy to O. XXXIV of the Civil Procedure Code. Now, O. XXXIV is a Code, which regulates the enforcement by suit of mortgages, and the scheme of the Order is that in the preliminary decree there is a direction on the mortgagor to pay the amount found due into Court; on payment there is to be redemption, and on failure to pay, the morgaged property can be ordered to be sold; and then there is liberty reserved to the mortgagee to apply for a personal decree against the mortgagor for any balance not realized. That is the general scheme of the Code, and where one is dealing with a decree in a mortgage suit relating to immoveable property, one must follow that scheme. I agree that one must read the decree as a whole, and if a preliminary mortgage decree provided, in the first instance, that the mortgagor should pay the amount, not into Court but to the mortgagee, the Court would not be justified in construing that as an executable decree for payment, because, taking the decree as a whole, it provides that there is not to be a personal decree for payment until the mortgaged property has been sold and a deficit has resulted. But I cannot see any reason why one should apply the analogy of a mortgage decree to a consent decree, which must be construed according to the terms of the language used. Mr. Desai contends that the principles of O. XXXIV should be applied. I do not quite know what is meant by the principles of O. XXXIV. It would have been quite easy to provide in the Code that in the preliminary decree there should be a personal judgment for the balance remaining due after sale of the mortgaged property. There is no principle of equity which I know of, which would make such a provision improper; but it happens that is not the scheme of the Code framed by the Legislature. There is, however, to my mind nothing inequitable in construing an agreement between parties so as to provide that the mortgagor shall pay to the mortgagee anything remaining due after sale of the mortgaged property, or that there shall be a personal decree for payment, which may be enforced before recourse is had to the mortgaged property. There is nothing inequitable in requiring that a debtor shall pay his debt immediately after the liability has been ascertained. In my opinion, the decision of Mr. Justice Shah in Janardan v. Krishnaji is right, and the decision of the appellate Court was wrong.

    Then there is another case, to which we have been referred, a very recent decision of this Court in a Letters Patent Appeal from a decision of Mr. Justice N.J Wadia (Raychand Jivaji v. Basappa Virappa In that case there was a consent decree under which the defendant was directed to pay a certain sum by instalments: there was no default clause, but certain immoveable property was charged for the amount. It may be that the absence of a default clause creates a distinction; the case has not yet been reported, and I do not know the exact facts. But Mr. Justice Broomfield in giving the judgment of the Court refers to Janardan v. Krishnaji and to other cases, and he concludes in these words (p. 146):—

    “In every case it must be essentially a question of construction of the decree, but unless the contrary appears, we think the ordinary rule should be that when a charge is created by act of parties the specification of the particuar fund or property negatives a personal liability and the remedy of the holder of the charge is against the property charged only or at any rate against the property charged in the first instance. In my opinion that is the way in which the decree in this case should be constructed.”

    I am unable to agree with that conclusion. To apply such a rule of construction to a consent decree for payment of money would seem to me to be wrong in principle, and inexpedient in practice. In arranging consent decrees of the nature in question, it is usually the creditor, and not the debtor, who is master of the situation, and I can see no justification for holding that, by taking a charge upon specific property, the primary object of which, as I have pointed out, is to secure him against other creditors, the creditor abandons his right to proceed against other property of the debtor. Such an abandonment should not be presumed in the absence of language making clear the intention to abandon. On the other hand, to hold that the creditor can only attach other property after obtaining a fresh order for payment is to ignore the fact that the decree already contains an order for payment. The only effect of the latter construction would be to impose further delay and additional expense upon the creditor. In this country experience shows that there are opportunities in plenty afforded to a judgment-debtor to delay his creditor, and I am not disposed to add to the number.

    We were referred to other cases which can be distinguished. Ambalal Bapubhai Gujarati…Plaintiff v. Narayan Tatyaba Bhosale…Defendant . which was followed in Gurupadappa v. Karveerappa is rather in favour of the view which I take, but is no doubt distinguishable. In both those cases there had been a decree and a charge created by the decree on immoveable property, and it was held that the charge could be enforced by execution of the decree without the necessity of filing a separate suit. The cases were both based on the view that the decree, which for practical purposes was in the same terms as the present decree, created a personal liability for payment of the amount due, and to that extent the cases are in favour of the view which I take. The decision of Mr. Justice Kania in Gurupadappa Mallappa Kalasgond…(Original Judgment-Debtor), v. Basappa Shiddappa Kalagi…(Original Decree-Holder), .* is again distinguishable. The learned Judge there held that the particular decree, with which he had to deal, was in the nature of a preliminary mortgage decree, and that being so, the provisions of O. XXXIV applied to it. It is not necessary to consider whether I should have come to the same conclusion as to the construction of that particular decree, but I agree that if once you find that the decree is in its nature a preliminary mortgage decree, the provisions of O. XXXIV apply, and there must be a further application for a personal decree. But, in my opinion, the decree with which we have to deal is quite plain in its meaning. It does not in terms restrict the right of the creditor to proceed against other property, and it does contain a decree for personal payment. It can therefore be executed against the house of the judgment-debtor.

    In my opinion, therefore, the decree appealed from was right. The appeal will be dismissed with costs.

    Macklin, J.:—I agree and have nothing to add.

    Wassoodew, J.:—I agree.

    Appeal dismissed.
    Y.V.D
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    Comments

    Gurappa Gurushiddappa Neeli v. Amarangji Vanichand
    (Sep 6, 1940)