These appeals arise out of an order allowing the execution of a decree for arrears of rent obtained by a usufructuary mortgagee against his mortgagor who is the lessee of the hypotheca. In the execution petition the mortgagee sought to bring to sale the equity of redemption in the mortgaged property in order to realise the decree for arrears of rent. An objection, which was disallowed in the lower appellate Court, was based on O. 34, R. 14, Civil Procedure Code to the effect that the decree was in fact a decree for payment of money in satisfaction of a claim arising under the mortgage and that therefore the decree-holder was not entitled to bring the mortgaged property to sale otherwise than by a suit for sale in enforcement of the mortgage.
The appellant (mortgagor-lessee) mortgaged his property usufructuarily to the respondent by a deed dated 30th November 1930 and by another deed dated 1st December 1930 the mortgagee leased the property back to the mortgagor. The mortgage itself provides for redemption on the 1st Kumbham 1107 or any date upto the 30th of that month or during the same period in successive years. The lease is for a period of one year ending on the 1st Kumbham 1107 on which date the lessee undertakes to surrender the property. The liabilities undertaken by the mortgagee in respect of Government revenue, michavaram etc., under the mortgage deed are the subject of special covenants in the lease deed. The question of the relation between the lease and this mortgage has come up for consideration in a previous litigation arising out of the lease. The rent due under the lease deed was not paid and the lessor-mortgagee filed a Small Cause Suit for the arrears and got a decree which was executed on the Original Side of the Sub Court. In execution the decree-holder sought to bring to sale the equity of redemption in the mortgaged property. An objection was preferred on the strength of O. 34, R. 14, Civil Procedure Code. On this petition the Subordinate Judge passed orders holding that the application for sale was barred under O. 34, R. 14, and allowed the objection petition. The judgment in this matter is Ex. A. The execution with which we are now concerned was under the decree in a later suit O.S No. 215 of 1934, the arrears in question being arrears of rent for years subsequent to the year actually covered by the lease. The execution petition was filed in the Court of the District Munsif and the same objection under O. 34, R. 14 was taken to the application to bring to sale the equity of redemption. It was also objected that the application was barred by res judicata by reason of the former order Ex. A. The trial Court upheld the objection but the learned Subordinate Judge has allowed the execution to proceed.
It is, I think, well established that when a lease back is part of a transaction of mortgage and is merely a piece of machinery for realising the interest on the mortgage, a suit for rent under that lease would in fact be a suit to realise the interest on the mortgage and under a decree in such a suit the equity of redemption could not be brought to sale unless the suit was actually framed as a suit on the mortgage. It is however contended that this lease must not be regarded as part of the mortgage transaction and that it is an entirely separate transaction on a different date with features which indicate an intention that it should not be merely a portion of the mortgage transaction. The differences upon which the learned Subordinate Judge relies are as follows: Firstly, there is an interval of one day between the two deeds. Secondly, there is the difference in the period of the lease which is for one year only, whereas the mortgage is redeemable at the end of the same period or at subsequent dates. Thirdly, there is the fact that the lease provides for the payment of what is called Kattakanam which, I am informed, means an advance paid as security for future rents. It seems to me that the fact that the mortgage was on one day and the lease on the next day has very little bearing on the question whether the lease and the mortgage form part of the same transaction, more especially in the circumstances of the present case wherein the standing crops on the land were to be reaped by the mortgagor, so that both the full possession of the property and the actual effect of the lease were to begin at a subsequent date when the standing crops were harvested. Nor do I think the fact that an advance by way of security for rent was paid necessarily makes the lease something separable from the mortgage. And as to the difference in the term the fact that the lease is expressed as ending on the same date as the date on which the right of redemption begins, is to my mind a clear indication that both the deeds form part of one and the same transaction. Reading these two documents together I have no doubt in fact that they are both part of the same bargain and that the lease was intended to implement the undertakings of the mortgage. Instead of providing for a simple mortgage with payment of interest in cash, the common device was employed of drafting the mortgage as a usufructuary mortgage and making the mortgagor a tenant paying rent. The transaction was in its essence a mortgage in which interest was collected in the shape of rent.
Moreover it seems to me that it is not open to the respondent to contest the identity of the transaction of lease with the transaction of mortgage. The matter was thrashed out at length between the same parties in connection with the same transaction in the execution petition in a former suit for rent. It is contended that though the principle of res judicata applies to successive execution petitions in the same suit under the same decree, there is no res judicata in respect of a decision in an execution petition under a former decree when the same matter arises for decision in an execution petition under a subsequent decree. This contention seems to me to overlook the essential basis of the rulings with reference to the applicability of the principle of res judicata to proceedings in execution. The difficulty which arose in applying the principle of res judicata to execution proceedings arose from the fact that successive execution petitions in the same suit could not be regarded strictly speaking as decisions in successive suits between the same parties. Therefore in terms S. 11 Civil Procedure Code had no application. But it was held that though the precise rule embodied in S. 11 did not apply, the parties were governed by the principle that when in one stage of a suit a matter had been finally decided, the same matter could not be agitated again in a subsequent stage of the same suit. But when we are concerned with the decision of an issue between the same parties in a prior execution petition under a different and anterior decree, this difficulty does not arise. What we have is the decision of a question arising in part of the proceedings in one suit and an attempt to raise the same matter at a similar stage of the proceeding in a subsequent suit. The principle of S. 11 applies directly and it is unnecessary to call in aid the reasoning of the Privy Council in Ram Kirpal v. Rup Kuari(1) and subsequent cases as to the application of the same rule by analogy to successive stages of the same suit.
The most that can be said for the decree-holder is that the order Ex. A in the former proceedings only decided that the lease in this case was part of the transaction of mortgage and that in execution of the decree for arrears under that lease the hypotheca could not be brought to sale; whereas now we are concerned with the execution of the decree for arrears due from the tenant holding over after the expiry of the lease. So that the question is not precisely the same. But in so far as it involves a decision as to the oneness of the transaction of lease with the transaction of mortgage, the matter cannot in my opinion be re-opened between the parties. I do not think that it makes any difference to the applicability of O. 34, R. 14 that we are now concerned with arrears of rent due from a tenant holding over after the expiry of the term of the lease. The relation between the parties is still governed by the terms of this lease even though the original period fixed has expired. The rent claimed is still in its essence a sum of money due under the mortgage. Therefore O. 34 R. 14 still applies.
It is however argued that in so far as the decree is a decree for costs this rule will have no application and the respondent quotes the case in Haribans Rai v. Sri Niwas Naik(2). That case is not quite an authority for the position which the respondent takes up. It was a case of a usufructuary mortgagee who was not given possession of the hypothecs and sued for possession and incidentally got a decree both for possession and for costs. It was held that the decree so far as it related to costs was not a decree for money due under the mortgage and that therefore O. 34, R. 14 did not bar its execution by the sale of the hypotheca. The position however is somewhat different here. It is true that the mortgagee is suing for possession but his substantial claim is for arrears of rent and those arrears are, in the view I have taken, an essential part of the mortgage amount. By the analogy of O. 34, R. 10 the decree in so far as it is a decree for costs must be deemed to be added to the claim under the mortgage even though the suit is not in terms a suit based on the mortgage. I do not think that there are any grounds for separating the costs on the relief for possession from the costs in the rest of the suit. The essential thing which the mortgagee wishes to recover is the money due from his tenant which is in effect the interest due on his mortgage. This he cannot recover by sale of the equity of redemption otherwise than under a mortgage decree.
In this view I allow the appeal, set aside the order of the lower appellate Court and restore the order of the District Munsif dismissing the execution petition and allowing the objection with costs throughout (in A.A.A.O No. 121 of 1937 only).
Leave granted.
Appeal allowed.
N.R.R