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P.M. Subramania Pillai v. Corera

Madras High Court

Oct 8, 1924

Judgment

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Structured Summary of the Opinion — Civil Miscellaneous Appeals concerning Execution of a Mortgage Decree

Factual and Procedural Background

These proceedings comprise three Civil Miscellaneous Appeals (two from the Subordinate Judge of Ramnad and one from the Subordinate Judge of Tuticorin) raising practically identical points concerning the execution of a mortgage decree.

A preliminary decree was passed on 17 July 1920 by the Subordinate Judge of Tuticorin for a sum of Rs. 30,836 and odd, specifying recovery by sale of properties in the first schedule up to Rs. 20,000 and of properties in the second schedule up to Rs. 10,000, with any balance recoverable personally from the first defendant. The final decree was passed on 21 March 1922; between the preliminary and final decrees Rs. 10,000 was paid and the final decree records that payment.

On 10 November 1922 the mortgagee and the first defendant entered an agreement by which the mortgagor agreed to pay an enhanced rate of interest (Rs. 1-4-0 per hundred per mensem, i.e., 15% per annum) in consideration of being given time; the agreement provided for the enhanced rate to be recovered in execution. That agreement was reported to the Subordinate Judge of Tuticorin under a petition filed under Order 21, Rule 2, and the Subordinate Judge recorded the arrangement with the order "Adjustment as prayed for." The second defendant (a co-mortgagee) objected to recording the adjustment; his objection was overruled.

In February 1924 the mortgagor objected to the enhanced interest rate. Execution of the decree had been transmitted from Tuticorin to Ramnad, and the mortgagor raised the objection in both the Ramnad Sub-Court and in Tuticorin. Those objections were disallowed by the respective Subordinate Judges, leading to the present appeals.

Legal Issues Presented

Whether an agreement between the mortgagor and the decree-holder to pay an enhanced rate of interest (15% p.a.) can be enforced in execution proceedings (i.e., whether enforcing the agreement in execution would impermissibly alter the decree).
Whether the part-payment of Rs. 10,000 should be proportionately allocated between the properties in the first schedule (recoverable up to Rs. 20,000) and the properties in the second schedule (recoverable up to Rs. 10,000), or whether the decree-holder may apply part-payment against any part of the decree subject only to the schedule caps.
Whether items of property found in the premises of the ginning factory (an item in the first schedule) but possibly added later (accretions) should be excluded from sale.
Whether the sale proclamation should state the value of the first item as Rs. 40,000 when a prior proclamation mentioned Rs. 25,000 and no objection was then taken by the judgment-debtor.

Arguments of the Parties

Appellant (mortgagor) — main arguments

The agreement to pay an enhanced interest rate of 15% per annum cannot be enforced in execution proceedings because allowing enforcement in execution would effectively amend or alter the decree. A decree cannot be altered except in modes recognized by law (e.g., amendment to accord with judgment, review, or under Order 20, Rule 11(2)). The Advocate-General relied on Kotaghiri Venkata Subbamma Rao v. Vellanki Venkatarama Rao ((1900) ILR 24 M 1) for this proposition.
Implicitly, the appellant suggested that if the enhanced interest term had to be enforced it should be done by a fresh suit rather than by execution proceedings which give effect strictly to the decree.
The appellant also contended that the Rs. 10,000 part-payment should be proportionately applied to the first- and second-schedule limits (i.e., pro rata allocation between the Rs. 20,000 and Rs. 10,000 caps).
The appellant sought a direction excluding any properties found in the ginning factory premises (if such items are not properly part of the mortgaged factory) from sale.
The appellant contended that the sale proclamation should state the first item's value as Rs. 40,000 (allegedly a prior value adopted by the decree-holder) rather than the Rs. 25,000 stated in the last proclamation.

Respondent (decree-holder) — main arguments

The respondent argued that the mortgagor is estopped from raising the objection to enforcement of the enhanced interest rate in execution because the parties themselves reported and accepted the agreement and the court recorded the adjustment. The respondent relied on Sadasiva Pillai v. Ramalinga Pillai (LR 2 IA 219) and related authorities applying the estoppel principle (including Pisani v. Attorney-General of Gibraltar LR 5 PC 516 and Sheo Golam hall v. Beni Prosad (1879) ILR 5 C 27).
The respondent contended that, in consequence of that estoppel, whether the agreement technically altered the decree was a question the court would not enter into because the party was precluded by his conduct and by the action of the court recording the adjustment.
On the allocation of part-payment, the respondent maintained that the decree remains a single decree after part-payment and the decree-holder may apply payments to recover the balance from any properties subject only to the caps set for the first and second schedules.
On accretions to the ginning factory, the respondent implied that accretions pass with the sale as part of the mortgaged property, and that any items not properly part of the factory would not pass.
Regarding the proclamation value, the respondent did not object to the value being mentioned as Rs. 40,000 at the time of sale if that could be done, but noted that the appellant had waived the right to a fresh proclamation by not objecting earlier; stay of execution had been granted only on that ground.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Kotaghiri Venkata Subbamma Rao v. Vellanki Venkatarama Rao (1900) ILR 24 M 1	Principle that a decree cannot be altered by a Court except by modes recognised by law (e.g., amendment to accord with judgment, review, or application under Order 20, Rule 11(2)).	Cited by the appellant to argue enforcement of the enhanced interest in execution would unlawfully alter the decree. The court acknowledged the principle but considered whether estoppel precluded raising the objection.
Sadasiva Pillai v. Ramalinga Pillai (LR 2 IA 219)	Application of ordinary principles of estoppel to preclude a party from denying matters agreed to conduct or court proceedings; permitted recovery in execution of matters not expressly provided for in the decree where parties' conduct and security-bound undertakings supported it.	Relied upon by the respondent; the court applied the estoppel principle from this case and held the appellant estopped from objecting to enforcement of the enhanced interest in execution.
Pisani v. Attorney-General of Gibraltar (LR 5 PC 516)	Authority for enforcing agreements by parties to have questions determined by proceedings contrary to the ordinary cursus curiae; used to support estoppel-based enforcement.	Cited within Sadasiva Pillai and referenced by the court as support for the estoppel principle applied to the facts.
Sheo Golam hall v. Beni Prosad (1879) ILR 5 C 27	Applied Sadasiva Pillai; supports the view that a party may be estopped where the court has acted upon an agreement between parties.	Referred to by the court as an authority where the question whether an agreement contravened the rule that a court cannot add to its decree was nonetheless not entered into because the party was estopped by conduct and by court action taken thereunder.
Lakshmana v. Sukiya Bai (1884) ILR 7 M 400	One of the cases applying the principle that amounts not provided for in a decree may, in certain circumstances, be recovered in execution because of parties' conduct/security undertakings.	Listed among authorities applied to support the estoppel principle; used to show precedent for recovery in execution consistent with Sadasiva Pillai.
Narayan v. Raoji (1904) ILR 28 B 393	Similar application of estoppel/recovery in execution where facts warranted it.	Included by the court among cases supporting the estoppel-based enforcement in execution.
Thakoor Dyal Singh v. Sarju Pershad Misser (1892) ILR 20 C 22	Facts somewhat similar; applied principles supporting recovery in execution where parties' conduct and arrangements warranted it.	Referenced by the court as part of the group of cases supporting the estoppel approach.
Subramania Chettiar v. Rajah of Ramnad (1917) ILR 41 M 327 : 34 MLJ 84	Demonstrates the same principle (estoppel/recovery in execution) though with somewhat different facts.	Referred to by the court as additional support for applying estoppel and not entering into the question whether the decree had been altered.
Venkatagiri Aiyar v. Sadagopachariar (1900) 14 MLJ 359	An agreement was held void because it was not sanctioned by the Court; an agreement without legal existence cannot support an estoppel.	Cited by the court as a contrasting authority where estoppel was inapplicable because the agreement lacked legal sanction; the court noted the distinction in facts.
Lodd Govindoss v. Ramadoss (1915) M W N 225	Indicated circumstances where estoppel was not argued or where facts did not give rise to an estoppel.	Included by the court as not directly supporting estoppel on the facts of that case; used to distinguish circumstances.

Court's Reasoning and Analysis

The court proceeded by addressing each point raised in turn and by applying cited authorities and the facts recorded in the record of the arrangement:

On whether the enhanced interest provision could be enforced in execution: the court acknowledged the general legal principle (as in Kotaghiri) that a decree cannot be altered except by recognized modes (amendment, review, or under Order 20, Rule 11(2)). However, the court identified that the respondent relied on the estoppel principle, particularly Sadasiva Pillai v. Ramalinga Pillai, and related authorities in which parties were held bound by agreements and the court would permit execution of rights not expressly provided in the decree where the party's conduct and the court's action supported it. The court considered precedents applying estoppel (including Pisani and Sheo Golam hall) and distinctions drawn in cases like Venkatagiri Aiyar and Lodd Govindoss. Weighing these authorities and the factual matrix — namely that the agreement was reported to and recorded by the Subordinate Judge by consent of the plaintiffs and the mortgagor and the second defendant's objection was overruled — the court concluded that the mortgagor (appellant) was estopped from raising the objection in execution proceedings. The court therefore refused to disallow enforcement in execution on the ground that doing so would amend the decree.
On allocation of the Rs. 10,000 part-payment: the court reasoned that the decree is a single decree for approximately Rs. 30,836 and, despite the schedules limiting recovery from particular sets of properties (Rs. 20,000 from first-schedule properties and Rs. 10,000 from second-schedule properties), there is no basis on the facts to direct a proportionate allocation of the earlier part-payment between the schedules. The mortgagee is at liberty to recover the balance from any property he chooses subject only to not realising more than the respective caps from each schedule. Consequently, the appellant's contention for proportionate allocation was disallowed.
On the inclusion of items found in the premises of the ginning factory: the court held it unnecessary to give special directions. If accretions had been added to the mortgaged ginning factory in the interval, they would pass with the sale as accretions; items that cannot be regarded as part of the ginning factory would not pass. The court therefore left the matter to the usual course of sale.
On the sale proclamation and the valuation of the first item: the court noted that although Rs. 40,000 may have been a value earlier adopted by the decree-holder, a prior proclamation mentioned Rs. 25,000 and the judgment-debtor did not then object. The respondent did not object to mentioning Rs. 40,000 at the time of sale if it could be done, but the appellant had waived the right to demand a fresh proclamation (the stay of execution had been granted only on that ground). Varying the proclamation now would effectively give the appellant additional time. The court suggested that, if the appellant so desired, the Subordinate Judge could allow the officer conducting the sale to mention the fact at the time of sale, but declined to give any further directions.
On costs and final disposition: after considering the merits of the objections and the application of precedents and estoppel, the court disposed of the appeals as described below.

Holding and Implications

Holding: The appeals were dismissed. Specifically, C. M. A. Nos. 245 and 246 were dismissed with costs and C. M. A. No. 247 was dismissed without costs.

Implications and immediate consequences:

The court held that the mortgagor is estopped from objecting, in execution proceedings, to the enforcement of the enhanced interest rate agreed between the parties and recorded before the Subordinate Judge; accordingly the agreement may be given effect in execution despite arguments that enforcement would alter the decree.
The decree remains a single enforceable aggregate obligation; the prior part-payment of Rs. 10,000 need not be proportionately allocated between the scheduled properties — the decree-holder may apply recovery against any property subject only to the stated maxima for the first and second schedules (Rs. 20,000 and Rs. 10,000 respectively).
Accretions to the mortgaged ginning factory pass with the sale as part of the mortgaged property; items not properly part of the factory do not pass.
The court declined to order a variation of the earlier proclamation to substitute Rs. 40,000 for Rs. 25,000, noting the appellant's waiver of a fresh proclamation; it left to the Subordinate Judge limited discretion to have the auction officer mention the higher valuation at the sale if the appellant so desired, but refused broader relief that would amount to granting additional time.
No new broad legal principle was formulated; the decision applies established authority on estoppel and the limits on altering decrees to the facts, producing a decision that enforces the parties' recorded arrangement in execution while distinguishing cases where agreements lacked court sanction or where estoppel did not arise.

This summary is based exclusively on the text of the provided opinion. No information beyond that opinion has been added.

Show all summary ...

1. These are three Civil Miscellaneous Appeals, two being against the orders of the Subordinate Judge of Ramnad and one against the order of the Subordinate Judge of Tuticorin. Practically the same points arise in all the three appeals. The questions arise in execution of a mortgage decree. The preliminary decree was passed on the 17th July, 1920 by the Subordinate Judge of Tuticorin. It was a decree for a sum of Rs. 30,836 and odd and provides for the recovery of the amount by the sale of the properties in the first schedule up to a limit of Rs. 20,000 and of the properties in the second schedule up to a limit of Rs. 10,000. The balance, if any, was to be recovered from the first defendant personally. The final decree was passed on 21st March, 1922. In the interval between the two decrees, a sum of Rs. 10,000 was paid, and the final decree mentions this fact and provides for the usual decree for the balance. On the 10th November, 1922, an agreement was arrived at between the mortgagee-decree holder and the first defendant by which the mortgagor agreed to pay a higher interest at the rate of Rs. 1-4-0 per hundred per mensem or 15 per cent per annum, in consideration of the mortgagee giving him time. It also recites the fact that the mortgagor applied on earlier occasions for extension of time and was granted. The agreement further provided for the enhanced rate being recovered in execution. This agreement was reported to the Subordinate Judge of Tuticorin and an application was made to record it. The petition was filed under Order 21, Rule 2, and the Subordinate Judge passed an order accordingly, "Adjustment as prayed for." Order 21, Rule 2 strictly does not apply. There is really no adjustment that has been reported to the Subordinate Judge. The agreement merely provides for postponement of the execution of the decree and for an enhanced rate of interest being recovered by the decree-holder. If the application was made within six months from the date of the decree, Order 20, Rule 11 (2) would have been applicable to it; but if that provision of law was mentioned, probably then the application would have been held to be barred. Anyhow, no objection as to limitation was taken, and, by consent of the plaintiffs and the mortgagor, the order was passed. The second defendant, a co-mortgagee, objected to the record of the adjustment, but his objection was overruled. In February, 1924 the mortgagor began to object to the higher rate of interest. The decree having been transmitted for execution from Tuticorin to Ramnad, he took the objection both in the Ramnad Sub-Court and also in the Tuticorin Court. That is why we have got appeals from both Courts. The objection was disallowed by the Subordinate Judge.

2. The first point argued by the learned Advocate-General, who appeared for the appellant-mortgagor, is that the agreement by which the mortgagor bound himself to pay an enhanced rate of interest at 15 per cent per annum cannot be enforced in these execution proceedings. He contends that to allow the point to be taken in execution proceedings practically amounts to amending the decree. He relies on Kotaghiri Venkata Subbamma Rao v. Vellanki Venkatarama Rao (1900) ILR 24 M 1, where it was laid down by the Privy Council that a decree cannot be altered by a Court even with the consent of the parties, except in the modes recognised by law, viz., either by an application for the amendment of the decree to bring it in accordance with the judgment or by a review of the judgment or by an application under Order 20, Rule 11 (2). This decision has been followed and recognised in a number of other decisions both in Madras and in the other High Courts. He argues that though the agreement itself may be binding, it should be enforced in a suit and not in execution. To this objection Mr. Varadachariar, who appeared for the respondent, replies that the appellant is estopped from raising this point. He relies on Sadasiva Pillai v. Ramalinga Pillai LR 2 IA 219. In that case, Sir James Colville, who delivered the judgment of the Judicial Committee, said :

"But even if it did not, they think that upon the ordinary principles of estoppel the respondent cannot now be heard to say that the mesne profits in question are not payable under the decree....The Court here had a general jurisdiction over the subject-matter, though the exercise of that jurisdiction by the particular proceeding may have been irregular. The case therefore seems to fall within the principle laid down and enforced by this Committee in the recent case of Pisani v. Attorney-General of Gibraltar LR 5 PC 516 in which the parties were held to an agreement that the questions between them should be heard and determined by proceedings quite contrary to the ordinary cursus curiae."

In that case there was no decree for subsequent mesne profits but the defendant had executed certain security bonds in which he had undertaken to account in respect thereof to the Court, and their Lordships said that the amount of subsequent mesne profits not provided for in the decree could be recovered in execution. This case was applied in Sheo Golam hall v. Beni Prosad ( 1879) ILR 5 C 27, Lakshmana v. Sukiya Bai ( 1884) ILR 7 M 400, Narayan v. Raoji ( 1904) ILR 28 B 393 and Thakoor Dyal Singh v. Sarju Pershad Misser ( 1892) ILR 20 C 22 in which the facts are somewhat similar and Subramania Chettiar v. Rajah of Ramnad ( 1917) ILR 41 M 327 : 34 MLJ 84 where the principle is the same but facts were somewhat different. In Venkatagiri Aiyar v. Sadagopachariar ( 1900) 14 MLJ 359 the agreement itself was void as it was not sanctioned by the Court and an agreement which had no legal existence could not be relied on for the purpose of raising an estoppel. There is therefore no scope in that case for applying this principle. Nor does the point appear to have been argued. In Lodd Govindoss v. Ramadoss (1915) M W N 225 it does not appear that the facts are such as to give rise to an estoppel. Anyhow the point was not argued : and though these cases support the general principle that a decree cannot be altered by a Court, they are not authorities for not applying the principle in Sadasha Pillai v. Ramalinga Pillai LR 2 IA 219. It is argued for the appellants that in the case in Sheo Golam hall v. Beni Prosad ( 1879) ILR 5 C 27 and in other cases where the decision in Sadasiva Pillai v. Ramalinga Pillai LR 2 IA 219 was applied, the Court itself passed an order acting upon the agreement between the parties; and it was because of such an order that it was held that the party was estopped. We do not see any reason for thinking that the essential bases of the decision in Sadasiva Pillai v. Ramalinga Pillai LR 2 IA 219 is an order of the Court and not the conduct of the opposite party. Following the above cases we must hold that the appellant is estopped from raising this objection in execution. In the language of the learned Judges (Ainslie and Broughton, JJ.) who decided Sheo Golam hall v. Beni Prosad ( 1879) ILR 5 C 27 the question whether such an agreement does or does not violate the rule that a Court cannot add to its decree becomes under the circumstances one which the Court will not enter into : the party who seeks to raise such question being estopped by his own conduct and the action of the Court taken thereunder.

3. The second point argued by the appellant is that the part-payment of Rs. 10,000 towards the decree should be proportionately allocated towards the Rs. 20,000 recoverable from the properties in the first schedule and the Rs. 10,000 recoverable from the properties in the second schedule. We do not see any reason why this should be done. Beyond the limit of Rs. 20,000 imposed upon the execution of the decree from the properties in the first schedule there is no other restriction. The decree is all one. It was for Rs. 30,000 and odd. After the part-payment, it still remains a single decree and the mortgagee is at liberty to recover the amount to any extent from any property he likes subject to the only restriction that he cannot realise more than Rs. 20,000 from the properties in the first schedule and more than Rs. 10,000 from the properties in the second schedule. This contention must be disallowed.

4. The third point mentioned by the appellant is that it should be made clear that any properties to be found in the premises of the ginning factory which is an item of property in the first schedule ought not to be included in the sale; but we do not think that it is necessary to pass any directions in this respect. The mortgaged property was a ginning factory. If it had received any accretions in the interval they will also pass with the sale but properties which cannot be regarded as part of the ginning factory cannot pass with the sale. It is unnecessary to give any directions. The sale will take effect in the usual course and in the proper manner and will comprise only the mortgaged property with its accretions.

5. The last point argued by the appellant is that the sale proclamation should mention the value of the first item as Rs. 40,000. It would seem that this was the value at one time adopted by the decree-holder, but in the proclamation, as issued last, the value was mentioned as Rs. 25,000 and at the time no objection was made by the judgment-debtor. The respondent has no objection to the value being mentioned as Rs. 40,000 at the time of the sale, if it can be done; bur. the appellant has waived the right to ask for a fresh proclamation if the appeal is dismissed. Stay of execution was granted only on that ground and to vary the proclamation now will be to grant him additional time. If the appellant so desires the Subordinate Judge may provide that the fact might be mentioned at the time of the sale by the officer who conducts the sale. Beyond this we do not think it necessary to give any directions.

6. The appeals substantially fail and C. M. A. Nos. 245 and 246 are dismissed with costs and C. M. A. No. 247 is dismissed but without costs.