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Smart Summary

Structured Summary of the Opinion (S.A. Nos. 1657 & 536 of 1927)

Factual and Procedural Background

The suit arises from an execution sale and subsequent dispute over title and possession of certain immovable properties belonging to one Ramakrishna Naicken. In O.S. No. 3 of 1915 (Periakulam Munsif's Court) the plaintiff obtained an ex parte decree against Ramakrishna Naicken for a promissory note dated 15 October 1912 for Rs. 600. The decree led to attachment of the plaint properties on 16 August 1915 and a Court auction held on 31 August 1917, when the plaintiff purchased the properties. When the plaintiff sought possession, he was obstructed by the defendants, giving rise to the present suit (O.S. No. 27 of 1920) by the purchaser to establish title.

The judgment-debtor, Ramakrishna Naicken, had earlier executed a mortgage (Ex. 2) on 18 August 1909 for Rs. 5,000 in favour of defendant 1's wife (Subbammal). In recompense for assistance in discharging debts, Ramakrishna executed a sale deed (Ex. 1) of all his properties in favour of defendant 1 dated 14 December 1914. Defendant 1 defended the plaintiff's suit on the strength of Ex. 1; other defendants derive title from defendant 1.

After a quarrel between defendant 1 and Ramakrishna, Ramakrishna instituted O.S. 52 of 1917 on 12 April 1917 seeking to set aside Ex. 1; defendant 1 filed a written statement in that suit on 23 August 1917. The plaintiff's Court sale post-dated that written statement (sale on 31 August 1917), giving rise to a lis pendens contention by defendant 1. Ramakrishna later sought to withdraw O.S. 52 of 1917 with liberty to file afresh but failed to comply with costs order, and the suit was dismissed.

In the present suit various issues were framed, including whether Ex. 1 was sham (Issue 1), whether the execution sale to the plaintiff was affected by lis pendens (Issue 8), and whether Ex. 1 was executed to defeat creditors (Issue 12). The Subordinate Judge found for defendant 1 on Issue 1, but for the plaintiff on Issues 8 and 12, and granted the plaintiff a decree for possession subject to payment of Rs. 17,644-12-0 (found to be consideration under Ex. 1 and payments to discharge certain decrees).

Defendant 1 did not appeal the Subordinate Judge's decree but the plaintiff appealed against aspects of it; the District Judge (lower appellate Court) modified the decree. Two second appeals followed: S.A. 1657 of 1927 (filed by defendant 1) challenging the lower appellate Court's interference and asserting the plaintiff's purchase was affected by lis pendens and that defendant 1 could support the original decree under O. 41, R. 22 CPC; and S.A. 536 of 1927 (filed by the plaintiff) challenging the appellate Court's modification (principally that the plaintiff should not have to pay any part of the consideration under Ex. 1 since Ex. 1 fell under Section 53, Transfer of Property Act).

Legal Issues Presented

  1. Whether a respondent who has not appealed against a decree of the trial Court and has not filed timely memorandum of objections can, under Order 41, Rule 22 of the Code of Civil Procedure (CPC), urge before the appellate Court contentions which would, if upheld, attack or invalidate the decree passed against him (for example, that the plaintiff’s execution sale was vitiated by lis pendens and the suit should therefore have been dismissed).
  2. Whether, under Order 41, Rule 33 CPC, the appellate Court should exercise discretion to permit a respondent (who did not file an appeal or timely memorandum of objections) to raise a point that the plaintiff's suit should be dismissed (in the special circumstances of this case).
  3. Whether, when a transfer is set aside as intended to defeat or delay creditors, the transferee is entitled to recover payments made by him beyond amounts representing mortgage debt binding on the property (i.e., whether sums paid to discharge other debts or to remove attachments are recoverable by the transferee).
  4. Questions on costs, interest and mesne profits as decided by the lower appellate Court (S.A. 536 of 1927): correctness of proportionate costs award; correctness of award of interest at 15% under Ex. 2; proper base for calculating interest (principal or principal plus accumulated interest); and whether interest on mesne profits should have been allowed.

Arguments of the Parties

Defendant 1 (Appellant in S.A. 1657 of 1927) — Principal Arguments

  • Contended that the plaintiff's execution sale (31 August 1917) was affected by lis pendens because O.S. 52 of 1917 (to set aside Ex. 1) had been instituted earlier and defendant 1 had filed a written statement on 23 August 1917.
  • Asserted entitlement under O. 41, R. 22 CPC to support the decree of the Subordinate Judge by urging grounds decided against him in that Court and to insist that the first Court should not have passed any decree (i.e., to attack the decree without having filed an appeal).
  • Sought permission to file a memorandum of cross-objections (or objections) late under Section 151 CPC to impugn the validity of the lower Court's decree; argued that he could press those points at the appellate hearing despite not having appealed from the trial decree.
  • Contended that additional payments he made (sums totalling Rs. 6,470 and a special sum of Rs. 3,250 for release from attachment) should have been allowed in his favour as part of consideration or as refundable amounts.

Plaintiff / Respondent — Principal Arguments (as reported in the opinion)

  • Contended Ex. 1 (sale to defendant 1) was nominal/sham and also bad under Section 53, Transfer of Property Act; therefore the plaintiff should not be required to pay any part of the consideration alleged under Ex. 1.
  • Opposed the late filing of the memorandum of objections by defendant 1; in affidavits and pleading the plaintiff's representatives disputed assertions made in support of late filing and noted that defendant 1 had not appealed when he could have.
  • Argued (in relation to costs, interest, mesne profits) that the lower appellate Court's orders on these heads should be scrutinized and that certain calculations or awards (as to interest base or additional costs) might be incorrect; plaintiff specifically appealed the District Judge's modification of the Subordinate Judge's order regarding payment of part of the Ex. 1 consideration.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Motilal v. Karrabuldin [1898] 25 Cal. 179 Authority relevant to the doctrine of lis pendens (raised in contest whether execution sale was affected by lis pendens). Mentioned as a decision that renders the Subordinate Judge's lis pendens reasoning open to question; Court did not fully resolve lis pendens on that basis because it decided the procedural point against the appellant first.
Kishan Kishore v. Din Muhammad, A.I.R. 1929 Lah. 684 Principle that without an appeal or cross-objections a decree should not be set aside in favour of a party who took no appeal. Quoted to support the proposition that it is not permissible to set aside a decree without appeal or cross-objection; used to reject appellant's attempt to overturn the trial decree without having appealed.
Mahammad Ali v. Parama Nand [1918] 45 I.C. 282 Holds that a respondent content with the lower Court's decision may yet resist an appeal on the ground that the decree errs in favour of the appellant. Considered by the Court but not followed; Court observed this decision did not properly construe O. 41, R. 22 CPC and declined to accept its reasoning as authoritative for the present case.
Sri Ranga Thathachariar v. Srinivasa Thathachariar, A.I.R. 1927 Mad. 801 Interprets O. 41, R. 22 CPC as not permitting a respondent to have rights adjudicated in the appellate Court which were decided against him in the Court below where he filed no appeal/memo of objections. Followed as supporting the view that a respondent cannot attack a decree in the appellate Court in the manner urged by the appellant where he had not appealed.
Pichai Konar v. Narasimha Rama Iyer, A.I.R. 1930 Mad. 471 Supports the principle that respondents cannot raise points which, if sustained, would render the decree invalid (though not decided under O. 41, R. 22 CPC). Referred to as another authority that supports the Court's approach to limit the respondent's capacity to attack the trial decree without appeal.
Shailesh Chandra v. Bechai, A.I.R. 1925 Cal. 94 Illustrates that respondents who did not file cross-objections under O. 41, R. 22 cannot take grounds that would render the decree invalid. Adopted as persuasive: the Court used it to reinforce the rule restricting respondents from seeking to invalidate decrees when they have not appealed or filed cross-objections.
Ramaswami Ayyangar v. Official Receiver, A.I.R. 1926 Mad. 672 Interprets the discretionary power under O. 41, R. 33 CPC allowing the appellate Court in proper cases to permit respondents to raise a point that the plaintiff's suit should be dismissed even though no appeal/memo of objections was filed. Cited and distinguished: Court acknowledged the discretionary power but held the present facts did not justify exercise of that discretion (point raised late; no adequate reason for omission; appellant was party to Ex. 1 and had contested facts against him).
Viswanatha Reddi v. Raja Venkata Reddi, A.I.R. 1927 Mad. 278 Principle that where a transfer is set aside as intended to defeat creditors the transferee is entitled only to credit for mortgage debts binding on the property, not for other discharged money debts of the transferor. Followed by the Court to hold that the District Judge was correct in disallowing the appellant's claims for various other amounts (beyond the mortgage debt) paid to discharge the transferor's debts.
Subroya Goundan v. Perumal Chettiar [1918] 43 I.C. 956 Similar principle to Viswanatha Reddi: limits the transferee's recovery to mortgage debt when transfer is set aside as fraudulent/done to defeat creditors. Relied upon together with Viswanatha Reddi to support the decision disallowing the appellant's claims for sums other than the mortgage amount.

Court's Reasoning and Analysis

The Court structured its analysis by first addressing S.A. 1657 (defendant 1's second appeal) because a successful outcome there would render the plaintiff's second appeal unnecessary. The Court examined two distinct procedural rules: Order 41, Rule 22 CPC (on what a respondent may urge in support of a decree without having appealed) and Order 41, Rule 33 CPC (discretion to permit certain late contentions).

On the memo of cross-objections filed by the appellant: the Court accepted the lower appellate Court's conclusion that the memo was filed long out of time and that permission to file it was rightly refused. The appellant had not appealed the Subordinate Judge's decree, and his belated attempt to file objections occurred after the appeal had been heard and remitted for certain findings; the district courts had repeatedly refused the late application.

Interpreting O. 41, R. 22 CPC, the Court distinguished between 'supporting' a decree and 'attacking' it. The statutory language permits a respondent who did not appeal to support the decree by urging grounds decided against him which nevertheless uphold the decree. It does not permit a respondent to raise contentions which, if accepted, would invalidate or require setting aside the decree passed against him. The Court concluded that allowing such an attack without appeal would be inconsistent with the statutory scheme and with cases like Kishan Kishore and the Madras decisions cited.

The appellant relied on Muhammad Ali v. Parama Nand to argue otherwise, but the Court found that decision failed to construe O. 41, R. 22 and was not followed by this Court; in contrast, decisions such as Sri Ranga Thathachariar and Pichai Konar supported the narrower reading that a respondent cannot have adjudicated on rights decided against him in the trial Court where he filed no appeal or memorandum of objections.

The Court also considered whether discretion under O. 41, R. 33 could be exercised to permit defendant 1 to press the lis pendens point despite procedural default. It acknowledged that in Ramaswami Ayyangar the appellate Court had such a discretion and exercised it where exceptional circumstances existed (a subsequent overruling of authority after the appeal was filed). But the Court found no comparable justification here: the point was an afterthought, had not been pressed at the earlier hearing, the appellant was a party to Ex. 1 and implicated in conduct found to be intended to defeat creditors, and no adequate explanation was offered for failing to take the appeal earlier. On these grounds the Court refused to exercise the discretion to permit the late contention.

On the substantive monetary claims (ground No. 10) the Court reviewed the District Judge's allocation: the appellant was allowed credit for the mortgage debt binding on the property (Ex. 2) but not for other sums claimed (totaling Rs. 6,470) paid to discharge Ramakrishna's various debts, nor for the special payment of Rs. 3,250 made to remove attachments. The Court followed a line of authority (Viswanatha Reddi; Subroya Goundan) holding that where a transfer is set aside as intended to defeat creditors, the transferee is entitled only to be credited with the mortgage debt binding on the property and not with payments of other debts of the transferor. The District Judge's calculation on the mortgage amount was upheld, and the Court rejected the appellant's claim for additional interest beyond the date when, on the construction of Ex. 1, the mortgage would have been discharged.

As to S.A. 536 (the plaintiff's second appeal), the Court considered costs, interest and mesne profits. It accepted the District Judge's exercise of discretion to award proportionate costs to the plaintiff (who was only partly successful), found the award of interest at 15% under Ex. 2 correct because the contractual condition for that rate had arisen, and agreed that interest was properly calculated on the amount found due (Rs. 6,113-8-0) rather than only on the original principal, given the document's terms and the fact that interest had not been paid annually. The mesne profits rate was a factual finding common to both Courts and the denial of interest on mesne profits was supported by the reasons recorded by the District Judge and not disturbed.

Holding and Implications

Holding:

The Court dismissed both second appeals. Specifically:

  • S.A. 1657 of 1927 (defendant 1's appeal) — dismissed. The appellant was not permitted to attack the trial Court's decree in the appellate Court under O. 41, R. 22 CPC where he had not appealed and where his memorandum of objections was filed too late; the discretionary power under O. 41, R. 33 CPC was not exercised in his favour on the facts.
  • S.A. 536 of 1927 (plaintiff's appeal) — dismissed. The District Judge's orders on costs, interest (15% under Ex. 2), calculation of interest on Rs. 6,113-8-0, and mesne profits were upheld.

Implications / Consequences:

  • Procedurally, the decision reinforces the Court’s construction that Order 41, Rule 22 CPC permits a respondent who has not appealed to support (but not attack) the decree of the trial Court; a respondent cannot, without having appealed or timely filed cross-objections, urge a contention which would invalidate the trial decree.
  • The appellate Court declined to exercise discretionary powers under O. 41, R. 33 CPC because the appellant's late reliance on that power was an afterthought, there was no adequate explanation for failing to appeal earlier, and the appellant was a party to a document found to be intended to defeat creditors.
  • On the merits of monetary claims, when a transfer is set aside as intended to defeat creditors, the transferee (defendant 1) is entitled to credit only for mortgage debt binding on the property (as allowed by the lower Courts) and not for other debts of the transferor discharged by him; the District Judge’s financial calculations and awards regarding interest, costs and mesne profits were affirmed.
  • The immediate practical result is that the Subordinate Judge's decree, as modified by the District Judge and as upheld by this Court, stands; both second appeals were dismissed with costs. The opinion does not purport to announce any novel legal principle beyond applying and following existing authorities and procedural rules as discussed in the judgment.
P.R.S/V.S

Disposition: Appeals dismissed.

    Gangama Naik v. N.L.V.R. Veerappa Chetti

    1. (S.A No. 1657 of 1927.) Defendant 1 is the appellant. This second appeal arises out of a suit to establish his title instituted by a defeated claimant in execution proceedings. The plaintiff obtained an ex parte decree against one Ramakrishna Naicken in O.S No. 3 of 1915 on the file of the Periakulam Munsif's Court in respect of a promissory note dated 15th October 1912 for Rs. 600. In execution of the decree the plaint properties were attached on 16th August 1915 and sold in Court auction and were purchased by the plaintiff on 31st August 1917. When he tried to take possession of the properties, he was obstructed by the defendants and hence the present suit was filed by him to establish his title.

    2. The judgment-debtor, Ramakrishna Naicken, had various dealings with different persons. He had executed a mortgage on 18th August 1909 for Rs. 5,000 in favour of defendant 1's wife Subbammal. In 1914 various decrees were obtained against him and he was put in jail. At that time defendants 1 and 5 agreed to help him to discharge his debts and in consequence, by June 1915 almost all his debts were discharged. In recompense for his services Ramakrishna Naicken executed a sale deed of all his properties in favour of defendant 1 on 14th December 1914 (see Ex. 1). Defendant 1 resists the plaintiff's suit on the strength of this document. Generally stated, the other defendants derive their right to the properties from defendant 1.

    3. By April 1917 defendant 1 and Ramakrishna Naicken had quarrelled and so, on 12th April 1917 Ramakrishna Naicken instituted O.S 52 of 1917 to set aside Ex. I, the sale deed in favour of defendant 1, referred to above. The written statement in this suit was filed on 23rd August 1917. I may here mention that the Court sale of the suit properties in favour of the plaintiff was held on 31st August 1917, i.e after the filing of the written statement in O.S 52 of 1917. This fact is important in connexion with the plea of lis pendens urged by defendant 1 to which reference will be made later. On 30th January 1918 the present plaintiff, who had by that time purchased the plaint properties, desired to become a party plaintiff in O.S 52 of 1917 filed by Ramakrishna Naicken. That application was opposed by Ramakrishna Naicken on the ground that the exparte decree obtained by the plaintiff was not a valid one and that he was intending to take proceedings to set aside that decree. While the application was pending on 10th January 1919 Ramakrishna Naicken filed an application to withdraw the suit, O.S 52 of 1917 with liberty to bring a fresh suit. On Ramakrishna agreeing to pay the costs ordered by the Court within a prescribed time, he was given permission to withdraw the suit. But as he failed to comply with the Court's order regarding costs, the suit was dismissed; and with it the plaintiff's petition to be made a party was also dismissed.

    4. In the present suit the plaintiff stated at first that Ex. I, the sale deed to defendant 1, is a nominal and sham transaction. By I.A 291 of 1921 he sought an amendment of the plaint to raise the question that the document, Ex. I, was bad under Section 53 of the Transfer of Property Act, and this was allowed on 8th November 1921 and an additional issue was raised on 2nd February 1922.

    5. Various issues were raised in the case. Three of the important issues wore:

    Issue 1.—“Whether the sale in favour of defendant 1 is sham and colourable?”

    Issue 8.—“Whether the execution sale in favour of plaintiff is true and even if true, is affected by lis pendens?”

    Issue 12.—“Whether the sale deed to defendant was executed to defeat, delay or defraud the creditors of Ramakrishna Naicken?”

    6. On issue 1 the Subordinate Judge found in favour of defendant 1. On issues 8 and 12 he found in favour of the plaintiff. In the result, the plaintiff obtained a decree and was granted possession of the suit properties but subject to the condition that he should take possession only after paying Rs. 17,644-12-0 which the learned Judge found to have been the consideration paid under Ex. I and independently, for the discharge of certain decrees against Ramakrishna Naicken.

    7. No appeal was filed by defendant 1, the present appellant, against the above decree, nor did he call into question the finding that Ex. I is a transaction to be avoided as coming under Section 53 of the Transfer of Property Act; but the plaintiff-respondent filed an appeal stating that as Ex. I is found to fall within the scope of Section 53 of the Transfer of Property Act, he should not have been asked to pay any part of the consideration said to have been paid under that document and towards the decrees obtained against its executant, Ramakrishna Naicken. In appeal the learned District Judge modified the decree of the Subordinate Judge to the extent indicated in his decree.

    8. Against this decree of the District Judge the plaintiff has filed S.A 536 of 1927 urging that the decision of the lower appellate Court in so far as it is against the appellant is contrary to law.

    9. Against the same decree defendant 1 has filed S.A 1657 of 1927 urging that the lower appellate Court should not have interfered with the original Court's decree, for the reason that the plaintiff's suit should have been dismissed on the ground that his purchase was affected by lis pendens and for other reasons and stating that, though he had not filed an appeal against the original Court's decree, he is entitled under O. 41, R. 22 of the CPC, to support it before the appellate Court by urging the aforesaid contention; and that the lower appellate Court was wrong in not having allowed him to raise that plea.

    10. I shall first take up S.A 1657 of 1927 filed by defendant 1 inasmuch as if he succeeds in his second appeal the result will be that the plaintiff will have to be content with the first Court's decree in which case it will be unnecessary to proceed with his second appeal 536 of 1927. But before discussing the main question raised in the second appeal I shall first deal with the question whether the memo of cross objections filed by the appellant impugning the validity of the decree passed by the first Court was rightly disallowed by the lower Court and whether the plaintiff's suit should have been dismissed on the ground of lis pendens.

    11. I have no doubt that the memo of objections was rightly dismissed by the lower Court. As already stated the appellant did not prefer any appeal against the decree of the first Court nor did he file any memo of objections to the, appeal filed by the respondent. In the affidavit filed in support of the petition for permission to file the memo, of objections, the appellant's vakil stated that

    “he was allowed to argue that some of the findings in favour of the appellant could not be supported.”

    but this statement was contradicted in the affidavit filed by the pleader who appeared for the respondent., No reference to these points appears in the judgment of the appellate Judge, Mr. Bards well, which distinctly states that no appeal was filed by the present appellant against the decree of the lower Court. It appears to me that the appellant discovered his mistake only after the appeal was after full hearing remitted to the lower Court for findings on the question of mesne profits and then he filed his application for permission to file a memo of objections under Section 151 of the CPC, on 26th March 1924, that is after the hearing of the appeal on 29th January 1924 and the order calling for findings on 21st February 1924. The finding was due by 1st July 1924. This petition was posted for hearing after notice to the other side along with the appeal which had been posted to 3rd July 1924. After various adjournments the petition was dismissed on 23rd October 1925 by the then District Judge (now Reilly, J.) by the following order:

    “This memo, of objections was presented long out of time and cannot be accepted. The petition is dismissed.”

    12. After this the defendant-appellant sought to raise the points covered by his memo, before Mr. Burn, the District Judge who finally disposed of the appeal but was again dsallowed from doing so. I am of opinion that the memo, of objections sought to be filed was rightly disallowed by the lower Court as being long out of time.

    13. The next question is whether the plaintiff's suit should have been dismissed by the learned Subordinate Judge on the ground of lis pendens, i.e on the ground that his purchase of the suit properties was made on 31st August 1917 after the institution of O.S 52 of 1917 Ramakrishna Naicken in which the written statement was filed by the present defendant 1 on 23rd August 1917. It will be remembered that suit was ultimately dismissed owing to the failure on the part of Ramakrishna to pay the costs ordered by the Court. The learned Subordinate Judge held that the doctrine of lis pendens does not apply as the suit properties had been already attached by the respondent; and that though he no doubt “is a person who derived the right, title and interest ??? Ramakrishna” his right to question the alienation and to avoid it is an independent right. This reasoning is contested by Mr. Krishnaswami Ayyar on various grounds. Having regard to the decision in Motilal v. Karrabuldin . [1898] 25 Cal. 179 and the fact that the respondent is not entitled to get possession except through his right by the purchase of the properties at the Court auction the decision of the learned Subordinate Judge seem to be open to question, but in the view that I am prepared to take on the main question “whether the appellant is entitled to argue this question at all under O. 41, R. 22.”

    14. I do not think it is necessary to deal with in detail the arguments and the counter-arguments addressed to me on this point. For the purpose of this second appeal, I am prepared to assume that the execution sale in favour of the respondent is affected by lis pendens and that the learned Subordinate Judge should have dismissed his suit on that ground; but the question is—and this is the main question in this second appeal—whether the appellant who has not filed any appeal against the decree passed against him by the first Court and has also not filed any memo of objections in the appeal filed by the respondent, can be allowed to support the decree and insist that it should not be interfered with by the appellate Court urging the contention that the first Court was wrong in passing the decree against him.

    15. It is clear that if the appellant's contention that the execution sale is vitiated by lis pendens is upheld, the learned Subordinate Judge was wrong in passing any decree at all against the appellant; he should have dismissed the suit in toto. The appellant by preferring an appeal against the decree of the Subordinate Judge urging this contention would have succeeded and got the decree set aside; but he did not file any appeal nor did he file any memorandum of objections, as already stated, impugning the validity of the adjudication made against him on those various points decided against him by the first Court. It is urged that he did not want to get the decree set aside by preferring an appeal as he was quite content to accept the decree that was passed against him and that he was entitled to urge the present plea at the time of the hearing of the appeal preferred by the respondent in the lower appellate Court. “Can be do so?” is the question which I have to decide. Reliance is placed on O. 41, R. 22 of the CPC, in support of the appellant's contention. That order states that

    “any respondent though he may not have appealed from any part of the decree, may not only support the decree on any of the grounds decided against him in the Court below but take any cross-objection to the decree which he could have taken by way of appeal……. (The italics are mine).”

    16. In this case we are not concerned with any cross-objections by the appellants, whether he is entitled to file any cross-objections or not, he did not file any such objections in time and when he asked for permission to file them at a late stage in the appeal the permission was rightly refused. In my opinion the words of O. 41, R. 22 of the CPC, do not support the appellant's contention. Though a respondent may not have appealed from any part of the decree he is given permission under the provisions of this order to urge the points decided against him in the Court below in supporting the decree of the lower Court. The words used are “support the decree” and not “attack the decree.” A contention that a ground on which the lower Court has decided against the respondent should have been decided in his favour and therefore the lower Court should not have passed the decree under appeal is in my opinion not aground which supports the decree but is one which attacks the decree and therefore cannot be urged by the respondent under this order. In support of the lower Court's decree the only grounds decided against him by the lower Court which can be urged by a respondent without filing an appeal against the lower Court's decree are those which will support the decree of the lower Court and not render that decree invalid. If the contention of the respondent is accepted, then it means that though he has not filed an appeal or a memo of objections, he is to be allowed to have the benefit of the same indirectly which I think is not permissible under the provisions of O. 41, R. 22 of the CPC. If the Court disagrees with the opinion of the lower Court on the point in question, how can the Court doing so allow the lower Court's decree to stand without setting it aside? The result will be as pointed out in Kishan Kishore v. Din Muhammad, A.I.R 1929 Lah. 684, to which I shall presently refer that

    “without any appeal or cross-objections we will have to set aside a decree which has been passed in the plaintiffs' favour which is not permissible.”

    17. The appellant's contention is supported by a decision of the Punjab Chief Court reported in Mahammad Ali v. Parama Nand . [1918] 45 I.C 282.. The argument that the respondent who has not filed any appeal against the lower Court's decree or, lodged a memorandum of objections should not be allowed to urge a contention impugning the validity of the decree was thus met by the learned Juges of the Punjab Chief Court in Muhammad Ali v. Parama Nand:

    “But we fail to see Why a party who is content to accept the lower Court's decision should not resist an appeal from that decision on the ground that the decree errs in favour of the appellant. The respondent not having appealed nor filed any cross-objections, cannot ask that the decree should be altered in his favour but surely he is entitled to urge that, if he can show that the decree errs in favour of the appellant, it should not be disturbed.”

    18. With all deference to the learned Judges I may observe that the words of O. 41, R. 22 of the CPC, have not been considered by them in this judgment and I am not inclined to accept their view. This decision has not been followed in this Court and has been dissented from in the Lahore High Court in A.I.R 1929 Lah. 684 at p. 686. With respect to a similar contention urged before them relying strongly on the decision of the Punjab Chief Court, the learned Judges of the Lahore High Court made the following observations.

    “We should have thought that the matter was so obvious that no elaborate discussion thereof was necessary. But the learned counsel relies particularly on Muhammad Ali v. Paramo,, a judgment of a Division Bench of the Chief Court of the Punjab. That judgment might afford some support to the respondent's contention but it was dissented from in Sri Ranga Thathachariar v. Srinivasa Thathachariar . A.I.R 1927 Mad. 801.”

    19. Then stating that perhaps the facts of the Punjab case are distinguishable from the facts of the case before them they stated,

    “In any case, we are not prepared to hold that the case is a clear authority in favour of the respondent's contention.”

    20. In Sri Ranga Thathachariar v. Srinivasa Thathachariar, this Court, after referring to Muhammad Ali v. Parana expressed the opinion that under the rule O. 41, R. 22;

    “it is not open to respondent to have adjudicated by the appellate Court rights or causes of action which have been decided against him in the Court below and in respect of which he has filed no appeal or memorandum of objections.”

    21. In this connexion attention may also be drawn to the decision in Pichai Konar v. Narasimha Rama Iyer . A.I.R 1930 Mad. 471, which also supports the principle contended for by the respondent though it is not a decision under O. 41, R. 22. An argument similar to the present one was considered and overruled by the Calcutta High Court in Shailesh Chandra v. Bechai . A.I.R 1925 Cal. 94. That was an appeal by the plaintiff and arose out of a suit for the enforcement of a mortgage by sale of the mortgaged properties. The mortgage was executed by defendant 1 in favour of the assignor of the plaintiff. Defendants 2 to 28 were impleaded as having, acquired some interest in different portions of the mortgaged property subsequent to the mortgage. The Subordinate Judge passed a decree in favour of the plaintiff for Rs. 381-0-6 calculating the interest on the principal at the rate of 14 annas per cent, against all the defendants. The plaintiff preferred the appeal against this decree raising various grounds to which it is not necessary to refer in this connexion. The defendants did not prefer any appeal nor did they file any memorandum of cross-objections but in support of the decree they argued that the frame of the suit was in contravention of O. 34, R. 1 of the CPC, and that the suit should have been on that ground dismissed by the first Court. This argument was based on the allegation in the written statement that defendant 8 has cosharers who have not been made parties. This question was raised in issue 3 in the Court below and decided against the defendants. Though they did not file any appeal against the decree of the lower Court or lodge, any cross-objections, they sought to argue the point under O. 41, R. 22, by way of supporting the decree of the lower Court. The learned Judges answered the argumet thus:

    “No cross-objection was filed by the respondents in this Court under O. 41, R. 22 of the Code, and it is not therefore open to them to take that ground as it is not one in support of the decree made, but which, if sustained, would render the decree invalid.”

    22. Then they stated that as defendant 8 represented the interest of his posharers “the decree cannot therefore be reversed on that ground” meaning thereby that the argument that the suit should have been dismissed on the ground urged was untenable even if the defendants were permitted to raise it. I do not think Mr. Krishnaswami Ayyar's contention that the sentence in the judgment “the decree cannot therefore be reversed on that ground” should be interpreted as meaning that the learned Judges refused to allow the defendants to raise the contention based on O. 34, R. 1 of the CPC, because the defendants actually wanted to get a reversal of the appeal in their favour urging that ground, can be accepted. The learned Judges have clearly explained the reason for disallowing the defendants to raise the contention on the extract quoted above. In further support of his argument Mr. Krishnaswami Iyer invited my attention to O. 58, R. 6, of the English Rules of Practice which he says corresponds to O. 41, R. 22, but the language of the statute is totally different from the language of the rule referred to; and further, the respondent's learned advocate contends that, even according to the English statute and the decisions thereunder he would be able to show that the appellant would be clearly precluded from raising his contention. As the terms of O. 41, R. 22, are clear, and as the decisions of this and other Courts interpret those terms in the way I have indicated, I do not think any useful purpose will be served by a consideration of O. 58, R. 6 of the English Rules of Practice in relation to the present argument.

    23. The appellant's argument has no authority to support it except the decision in Muhammad Ali v. Paramo, which, as I have pointed out, has not been followed by this Court and other Courts and is clearly not warranted by the terms of O. 41, R. 22 of the CPC.

    24. In the result, I must disallow this argument of the appellant. The second appeal will be posted for argument with respect to ground No. 10 raised in the memo of second appeal.

    25. [The said Second Appeal No. 1657 of 1927 and Second Appeal No. 586 of 1927 again coming on for hearing on Tuesday, the 18th day of November 1930 and having stood over for consideration till this day, the Court delivered the following:]

    JUDGMENT

    26. Before arguing the point raised in ground No. 10 Mr. Krishnaswami Iyer argues that, as it was open to the lower appellate Court under O. 41, R. 33: see Ramaswami Ayyangar v. Official Receiver . A.I.R 1926 Mad. 672, to allow the respondent before it to argue that the plaintiff's suit should be dismissed though he may not have filed an appeal against the decree of the first Court or a memorandum of objections in the appeal filed by the plaintiff, I should now remand the entire case to the lower appellate Court for consideration as to whether it would exercise the discretion vested in it by O. 41, R. 33, in favour of the present appellant (respondent) before it. The records of the case clearly show—and his is not very seriously disputed—that this point was not raised before the District Judge either at the time of the argument before the remand order made by him or in the memorandum of objections which was filed long out of time. No doubt it was stated in the memorandum of objections that the plaintiff's suit should have been dismissed. This was with reference to the argument under O. 41, R. 22, which I have already dealt with in my judgment dated 22nd October 1930. It is now stated that, as the memorandum of objections has been put in under Section 151 of the CPC, it must be deemed that this aspect of the argument also comes under it. This is clearly an afterthought. However the point was not raised before me on the last occasion. It comes for consideration for the first time only now. This by itself is a sufficient ground for refusing the appellant permission to raise the point at this stage of the case. However I shall consider the argument on its merits.

    27. It is true, as held in Ramaswami Ayyangar v. Official Receiver, that the appellate Court, in a proper case, can allow the respondent who has not filed an appeal or a memorandum of objections to argue that the plaintiff's suit should be dismissed. Obviously this power will not be exercised by Courts except on sufficient grounds. In Ramaswami Ayyangar v. Official Receiver the appellate Court exercised its discretion in favour of the respondent because the decision, in which reliance was placed to show that the decision on which the first Court based its judgment was overruled, was passed by the High Court only after the appeal was filed. It was therefore thought by the appellate Court that the case was a proper one in which the discretion vested in it under O. 41, R. 33 should be exercised in favour of the respondent. But no such consideration arises in the present case. The Full Bench judgment, Ramaswami Ayyangar v. Official Receiver reported recently did not in any way alter the law. It interpreted the scope of the power vested in the appellate Court under O. 41, R. 33. There was no prior decision in this Court saying that the appellate Court has no such power. The appellant had therefore no justification for not raising the point before the learned Judge. Apart from this, I do not think the circumstances of the case are such as would justify the exercise of the Court's discretion in the appellant's favour. He is a party to the document Ex. 1 which was intended to defeat or delay the creditors. It has been found that various false receipts some of them ante-dated have been filed to prove the payments made by the appellant. If he wanted to attack the lower Court's decree which clearly held that Ex. 1 is a document intended to defeat and delay the creditors, he should have filed an appeal against it. This he failed to do and no adequate reason is assigned for this omission. The assertion that the appellant was content to allow she first Court's decree to stand as it was, though the plaintiff's suit ought to have been dismissed is not, having regard to the circumstances of the case, a sufficient explanation for not filing an appeal against the first Court's judgment. For these reasons I must reject the plea urged on behalf of the appellant with reference to O. 41, R. 33.

    28. Now coming to ground No. 10 the District Judge has held that it is obligatory an the part of the respondent, that is the plaintiff to pay the appellant only the Amount including interest which was due;o the mortgagee under Ex. 2 and that it is not necessary that he should pay the various other payments that have been made by the appellant on behalf of Ramakrishna Naicken. Mr. Krishnaswami Iyer argued that the learned District Judge should have held that the respondent should pay him the other amounts also or at least the amount of Rs. 3,250 paid by him to release the property purchased by the respondent from attachment in execution of O.S No. 449 of 1913 and O.S No. 201 of 1914. He also argues that the calculation of the District Judge with respect to the amount due on the mortgage is wrong. This latter objection is not covered by ground No. 10 and further, I find from the memoranda filed in the lower Court by the respondent's pleader that the calculation is correct. The only question therefore is whether the District Judge should have allowed in his favour payments amounting to Rs. 6,470 made by the appellant in discharge of Ramakrishna Naicken's various debts.

    29. It has been held in a series of decisions in this Court: see Viswanatha Reddi v. Raja Venkata Reddi . A.I.R 1927 Mad. 278, S.A No. 979 and 1449 of 1925 and Subroya Goundan v. Perumal Chettiar . [1918] 43 I.C 956., that when a transfer of immovable property is set aside, on the ground that it was intended to defeat and delay the creditors, the transferee is entitled to get credit only for the mortgage debt binding on the property that he may have discharged as part of the consideration for the document and not for the money debts of the transferor discharged by him. In this case, as already observed, the mortgage amount due under Ex. 2 has been allowed in favour of the appellant. Following the decisions which I have just referred to, I hold that the learned District Judge was right in disallowing the various other amounts claimed by him. With respect to the sum of Rs. 3,250 a special argument has been advanced. It was argued that this amount should be treated separately because it was paid to release the suit property from the existing attachment. An attachment does not create any charge on the property and therefore there is no justification in according to this amount the same consideration that was given to the amouns under Ex. 3, and further, the payment of this amount is not described as one of the considerations in Ex. 1.

    30. It is next argued that the learned District Judge should have allowed interest on the mortgage amount, Rs. 6,113-8-0 found due to the appellant from 14th December 1914, the date of Ex. 1 up to 30th December 1917, the date of the symbolical delivery of possession to the plaintiff, and reliance is placed in support of this contention on Pichai Konar v. Narasimha Rama Iyer I do not think that the general principle laid down in this decision can be applied to the present case having regard to the terms of Ex. 1. Under it, it is assumed that the mortgage debt under Ex. 2 has been discharged by that time. The appellant is therefore entitled to get only the amount of the mortgage and the interest up to that date. If he is allowed interest up to 30th December 1917 it will involve the assumption that the mortgage remained undischarged up till that date which will be contrary to the terms of Ex. 1. I think it is on this basis that the lower Courts have proceeded in finding what is the amount due to the appellant with respect to the discharge of Ex. 2. Having regard to the facts of this case, I would hold that the to where Court was not wrong in not awarding interest in favour of the appellant on the amount found due to him under the mortgage Ex. 2.

    31. No other points were argued before me in connexion with this second appeal. For the reasons given above, this second appeal is dismissed with costs.

    32. S.A No. 536 of 1927.—The plaintiff is the appellant. This second appeal is connected with the other second appeal just disposed of, both arising out of the same original suit filed by the plaintiff, i.e O.S No. 27 of 1920. The facts of the case have been mentioned in the judgment in the other S.A No. 1657 of 1927.

    33. The questions for decision in this second appeal are simple ones and relate to “costs” “interest” and “mesne profits” awarded by the lower Court. The lower appellate Court awarded proportionate costs to the appellant since he was only “part successful” in the appeal. It is argued that he should have been awarded a sum of Rs. 444-11-0 by way of additional costs. This sum is calculated apparently with reference to the amount of the mortgage Ex. 2 discharged by defendant 1. It must be noticed that this sum was also included in the appeal filed by the plaintiff, the present appellant, to the lower appellate Court. It is argued that if an endorsement by the mortgagee regarding the discharge of the mortgage had been filed in the first Court, this sum would not have been included in the appeal. I have no doubt that all these considerations must have been present in the mind of the learned District Judge when he passed his order relating to costs. Courts have a very wide discretion in making orders as to costs. In this case the learned Judge has given his reason for ordering only proportionate costs for the appellant. I cannot find any ground for interfering with the order as to costs made by him. In the first Court the learned Judge did not make any order as to costs “considering the circumstances of the case.” It is argued that the plaintiff should have been awarded his costs in the first Court. What I have said already regarding the order of costs made by the District Judge applies in this case also.

    34. The next argument relates to the award of interest at 15 per cent for the amount due under the mortgage. It is argued that the appellate Court should have decreed interest only at the primary rate, of 14 annas per mensem and not at the rate of 15 per cent. Under the document, Ex. 2, the interest at 15 per cent becomes payable if the principal is not paid in five years. When the amount was not paid within the stipulated time the condition for the enforcement of the 15 per cent interest came into existence and I think the lower Court was right in awarding interest at that rate. I do not consider the rate to be penal.

    35. It is then argued that interest should have been calculated not on Rs. 6,113-8-0 found due under the mortgage together with interest, but only on the principal sum of Rs. 5,000. Having regard to the fact that interest was not paid at the end of each year, I think on a proper construction of the terms of the document the decision of the learned Judge that interest should be calculated on Rs. 6,113-8-0 cannot be said to be wrong.

    36. The next question to be dealt with relates to the rate of the mesne profits allowed by the lower Court. Both the Courts have come to the same conclusion regarding the rate. This is a pure question of fact. It is argued that interest on mesne profits should have been allowed in favour of the appellant and that the lower Court was wrong in not allowing it having regard to Section 2(12) of the CPC. No doubt, ordinarily the appellant would be entitled to interest on mesne profits but such interest may be disallowed on special grounds. In this case (see para. 6 of his judgment) the learned Judge has given sufficient reasons to show why the appellant should not be given such interest and I cannot therefore interfere with his order. No other points were argued before me in this second appeal. In the result, this second appeal fails and is dismissed with costs.

    P.R.S/V.S

    37. Appeals dismissed.

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