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1998 DIGILAW 799 (KAR)

B. SHAMA RAO v. B. S. PANDURANGA RAO

1998-12-11

T.N.VALLINAYAGAM

body1998
T. N. VALLINAYAGAM, J. ( 1 ) THE plaintiff is the appellants who is aggrieved by the dismissal of the suit for redemption by the Trial Court. ( 2 ) THE geneological tree of plaintiffs family is given as follows: B. Shama Rao (Brothers) On 19. 2. 1948 possessory mortgage was created by the aforesaid three plaintiffs in favour of the second defendant for Rs. 10,000/- for five years. The mortgagor continued in possession of the mortgage property as a tenant on monthly rent of Rs. 97. 50 ps. There was a second mortgage, deed claimed by the second defendant for Rs. 3000/- representing the arrears of rent and executed on 12. 12. 1948. The second defendant had filed therefore O. S. 120/51-52 on the file of the 1 Munsiff, Bangalore, for recovery of Rs. 1225/ -. The suit was decreed in Ex. No. 1002/51-52. The schedule property was auctioned and the second defendant purchased the property on 11. 9. 1952. On 18. 2. 83 the present suit is filed seeking the relief of redemption of the schedule property. ( 3 ) IT is contended that the suit is in contravention of Order 34 Rule 14 CPC. The second defendant has gained an advantage against the mortgagors in respect of the suit schedule property. He holds the property for the benefit of the mortgagors subject to repayment of the mortgage money with the expenses properly incurred by the mortgagee, and to indemnify against the liabilities properly contracted in gaining such an advantage as per Section 90 of the Indian Trust Act. The property is situated opposite to Kino talkies, Seshadripuram and it was worth more than Rs. 50,000/- at that time and now it is worth more than Rs. 10,00,000/ -. It is thus seen that the mortgagee has gained considerable advantage by acquiring the suit schedule property in the sale held in pursuance of the decree obtained by him. So the second defendant is under an obligation to allow the plaintiffs to redeem the property. Thus, the suit was filed. ( 4 ) IN the written statement filed by the second defendant, it is contended that the suit is barred by limitation. According to him, the plaintiff should have taken steps for getting the sale set aside. So the second defendant is under an obligation to allow the plaintiffs to redeem the property. Thus, the suit was filed. ( 4 ) IN the written statement filed by the second defendant, it is contended that the suit is barred by limitation. According to him, the plaintiff should have taken steps for getting the sale set aside. The minors were not even born at the time of the transaction and as such they have no right to file the suit. In the additional written statement the second defendant contended that they have no knowledge of the death of Shivaraj about 12 years back. The property have been sold in auction. It is not open to the plaintiffs now to claim the setting aside of the auction. The second defendant died and. his L. Rs have been brought on record. ( 5 ) ON the above pleadings, the following issues have been framed by the Trial Court. 1. Whether the plaintiffs who are not the executants of the. mortgage deed dated 19. 12. 1948 are not entitled to challenge the sale proceedings in Ex. Case No. 1002/51-52? 2. Whether the suit as brought is liable to be dismissed for misjoinder of the above said plaintiffs who are not the executants of the mortgage deed referred to above? 3. Whether the 2nd defendant has become the absolute owner of the suit property by virtue of the execution of sale proceedings referred to above and is therefore nct liable to redeem as claimed by the plaintiffs? 4. Whether the 2nd defendant improved the schedule property to the extent of Rs. 4,00,000/-? addl. Issue: whether the Court fee paid by the plaintiff is not sufficient as contended by the second defendant? the trial Court answered the issues as follows : 1. Negative; 2. Negative; 3. Affirmative; 4. Negative; addl Issue: Negative. ( 6 ) THE trail Court held that the plaintiffs though have not executed the mortgage deed, are entitled to file a suit for redemption. The trial Court ultimately considering the law laid down in the decision reported in 1980 (2) K. L. J. p. 71, has held that the plaintiffs are no longer entitled to redeem the property and ultimately the suit was dismissed. The trial Court ultimately considering the law laid down in the decision reported in 1980 (2) K. L. J. p. 71, has held that the plaintiffs are no longer entitled to redeem the property and ultimately the suit was dismissed. ( 7 ) NOW in the appeal it is contended that all the facts have been admitted, the question whether Order 34 Rule 14 is a bar has not been considered by the Trial Court and the decision in 1980 (2) K. L. J. , 1971 has been wrongly applied. ( 8 ) AFTER hearing the Counsel, the only question to be decided by this Court is : "whether the plaintiffs are entitled to redemption?" ( 9 ) ORDER 34 Rule 14 reads as follows : "whether a mortgagee has obtained a decree for the payment of money in satisfaction of a claim arising under the mortgage, he shall not be entitled to bring the mortgaged property to sale otherwise than by instituting a suit for sale in enforcement of the mortgage, and he may institute such suit notwithstanding anything contained in Order II Rule 2. " ( 10 ) WHEN the mortgagee has obtained a decree for money he is not entitled to bring the mortgage property to sale. His right is to bring the property for sale in enforcement of the order. Law is very clear that this auction sale is prima facie illegal and cannot be sustained. In fact the dictum in KUTTYAL AND OTHERS vs p. SANJIVA RAO it was held thus :"under Order 34 Rule 14 a mortgagee cannot bring the properties to sale in enforcement of a claim arising under a mortgage except by instituting a suit for sale in enforcement of the mortgage. The provision was enacted by the Legislature for the benefit of the mortgagor so that the mortgagee may not purchase the equity of redemption in enforcement of a money decree which he may obtain against the mortgagor in respect of a claim arising under the mortgage. The intention of the Legislature seems to be that all claims arising under the mortgage should be adjudicated by the court either at the time of the redemption of the mortgage or when the mortgagee brings a suit on his mortgage. The intention of the Legislature seems to be that all claims arising under the mortgage should be adjudicated by the court either at the time of the redemption of the mortgage or when the mortgagee brings a suit on his mortgage. In this view, i must hold that the decision of the Courts below cannot be sustained and should be set aside and the objection of the judgment debtors would prevail. "in NARASIMHULU CHETTIAR vs K. RAMANATHA MUDALIAR, relied upon :"there is nothing in the language of Order 34 Rule 14 (1) which expressly or impliedly imposes a condition that the mortgagee should be able to institute a suit for sale in enforcement of the mortgage before the prohibition can apply. Such a construction of Rule 14 (1) would permit the very mischief which the provision was intended to provide against, namely, the extinguishment of the mortgagor's equity of redemption of the instance of the mortgagee without giving an opportunity to the mortgagor to exercise his right of redemption. "the dictum in UMESHWAR PRASAD SINHA vs DWARIKA PRASAD3 is to the following effect: "no doubt Order 34 Rule 14 has been enacted for the benefit of mortgagors, the apparent intention of the legislature being that the mortgagors should not be prejudiced in their right of redemption otherwise than under a suit for sale under the mortgage so that the Court may adjudicate upon all the rights and liabilities of the parties inter se. But that does not mean that a mortgagor should be entitled to pray in aid the provisions of order 34 Rule 14 in all cases in which the mortgagee has entered into some sort of arrangement with his mortgagor with respect to the properties mortgaged. The mortgagor can secure the benefit of Order 34 Rule 14 only in those cases in which it can be reasonably inferred that the decree for payment of money has been passed in satisfaction of "a claim arising under the mortgage', in other words, only in those cases in which the Court is satisfied that the transaction in question was a part and parcel of the mortgage transaction itself. Such a case can arise not only where the decree for payment of money arise out of the mortgage deed itself, but also where there are more than one separate deed which are so intimately connected with each other as could reasonably be said to form part of the same transaction. No hard and fast rule can be laid down for determining the question as to whether two apparently separate transactions are or are not parts of a single transaction. The safest rule to follow is that each case must be judged on its own facts as disclosec in the transaction between the parties, evidenced by one or more than one document. But one test may generally be applied to enable the Court to say that the two documents form part of ona and the same transaction, where it appears on a reasonable construction of the documents that the properties were given in security not only for the principal amount secured under the sudbharna (usufructuary mortgage) bond but also for the interest accruing thereupon. In other words, where the Court finds that though the documents have been taken the shape firstly of a mere usufructuary mortgage bond, the mortgagee purporting to take possession of the mortgaged properties, but in reality the second document whereby possession is purported to be given back to the mortgagor is merely a device to ensure regular payment of the interest, which also is secured oh the same mortgaged properties, it may generally be said that they are parts of the same transaction. Such a transaction may be evidenced by more than one document which may have been executed on different dates with varying periods of their operation, and possibly, even in the name of different parties benami for the real mortgagor and mortgagee. The Court has to look upon the transaction as a whole after tearing off the veil attempted to be thrown round the real intent of the parties. The dictum in BISHUNATH TEWARI AND OTHERS vs MST. The Court has to look upon the transaction as a whole after tearing off the veil attempted to be thrown round the real intent of the parties. The dictum in BISHUNATH TEWARI AND OTHERS vs MST. MIRCHI on difference in opinion as the matter was referred to a third Judge and ultimately the dictum was laid down as follows :"the mortgagee clearly stands in a position of fiduciary relationship and he cannot avail himself of his position as such to gain advantage in derogation of the rights of the mortgagor; and if the mortgagee obtains a money decree against the mortgagor and purchases the equity of redemption in execution sale, the mortgagee must under the express provision of Section 90 hold the mortgagor. It is not necessary for the application of the equitable principle that the mortgagor should sue for setting aside the money decree or the sale. His suit for redemption is in effect "to confess and avoid that sale by imposing a trust on the estage which passed under it. " It is not necessary therefore that the decree or sale should be set aside in order to grant to the mortgagor a decree for redemption. In the eye of law the sale certificate which mortgagees have obtained would enure to the benefit of the mortgagor and the property would be stamped with a trust in favour of the mortgagor. Again the dictum in RAMNARAIN PASI vs SUKHI TIWARI5, it is held as follows. "where a usufructuary mortgagee who is to appropriate the rent of the property in lieu of interest on the mortgage loan subsequently lets out the property to the mortgagor under a kerayanama executed by the mortgagor and the lease forms part of the mortgage transactions, the claim arising under the mortgage, and hence the mortgagee cannot execute the decree for rent obtained against the mortgagor by sale of the equity of redemption. "the Division Bench in BHAGAVATHI PILLA BHAVANI PILLA AND others vs PARVATHI PILLA AMMUKUTY PILLA, it is held as follows :"when a mortgagee defaults to make a payment which he was bound to make the mortgage property is in execution of a decree or under the Revenue Recovery Act and mortgagee whether purchases it at the execution sale or the Revenue sale in the name of a benamidar for him who purchases it from a bonafide purchaser in execution, Section 90 of the Trusts Act would be attracted and the mortgagee has to hold a property for the benefit of the mortgagors and has to submit to redemption by them. Section 90 does not strike down every advantage gained by a mortgagee. For attracting it an advantage should have been gained by himself availing of his position as a mortgagee or because he was the (mortgagee and it should have been gained in derogation of the right of the mortgagor. The term Karam ordinarily means tax, and used in relation to the State, it means the tax payable to the State. But in relation to a Jenmi that term means the annual michavarom payable to him by the Kudiyan and does not include the renewal in payble by the Kanomdar ohce in 12 years in renewal of the Kanon, which is of the nature of a capital payment and not a revenue payment, or Aradianthiram fee payable for certain special ceremonies in the Jenmis family which is of the nature of a casual payment. In the absence of a special agreement in mortgagee is bound to pay only the annual michavarom and not the renewal fee in Aradianthiram fee, and the renewal fee and Aradianthiram fee have to be paid by the mortgagor. "the dictum in PURAN CHAND vs HAR PRASHAD7, is to the following effect:"order 34 Rule 14 is really intended to create a prohibition to the mortgagee securing the sale of the mortgaged property without first bringing a suit for the sale thereof. "in the light of the above decisions, there is no doubt that the mortgagee is not entitled to bring the property for purchase it for himself for the recovery of money decree. ( 11 ) THE appellant relied upon the decisions which are dealt within detail infra. "in the light of the above decisions, there is no doubt that the mortgagee is not entitled to bring the property for purchase it for himself for the recovery of money decree. ( 11 ) THE appellant relied upon the decisions which are dealt within detail infra. ( 12 ) ON behalf of the appellants it was further submitted that the admitted facts are that the suit schedule property was originally mortgaged to the deceased second defendant by late B. Shjvarao, the younger brother B. Shamrao (the first plaintiff), his wife Smt. Lakshmi Bai (2nd plaintiff), Smt. Padma Bai, the daughter of the first plaintiff, Smt. Kamalabai wife of the deceased B. Shivarao, under a registered mortgage deed dated 19. 2. 1948 for a sum of Rs. 10,000/ -. Inspite of the said prossessory mortgage deed, the mortgagors continued to be in possession of the mortgaged property as tenants of the deceased second defendant on a monthly rent of rs. 97. 50. As the said mortgagors failed to pay rent due, the deceased second defendant having been obtained a decree for arrears of rent of Rs. 1225/- in O. S. 121/1951-52 on the file of the learned First Munsiff, Bangalore, brought the mortgaged property to sale under Ex. No. 1002/51-52 and in Court auction the deceased second respondent himself purchased the schedule property on 11. 9. 1952. In the above circumstances, it was urged by the appellants before the Trial Court that the said Court sale in favour of the deceased second respondent is contrary to Order 34 Rule 14. It was further urged that the deceased mortgagee, second respondent, availing himself of his possession as a mortgagee gained an advantage in derogation of the rights of the mortgagors in the schedule property and therefore holds the mortgaged property for the benefit of the mortgagors and payment of expenses properly incurred by the mortgagee and to indemnify against liability personally contracted by the mortgagee in gaining such an advantage as per section 90 of the Indian Trust Act. There is no discussion of the provisions of Section 60 in Indian Trust Act and there is no evidence in this case to show that the mortgagors have waived their rights in objecting to the sale of the mortgaged property to the mortgagee himself as specified under Order 34 Rule 14 CPC. There is no discussion of the provisions of Section 60 in Indian Trust Act and there is no evidence in this case to show that the mortgagors have waived their rights in objecting to the sale of the mortgaged property to the mortgagee himself as specified under Order 34 Rule 14 CPC. ( 13 ) THE plaintiff has given below the sequence of events whichare as follows : ( 21 ) THE dictum relied upon by the trial Court in V. KRISHNARAO vs SUB-DIVISIONAL MAGISTRATE is to the following effect:"even though the sale of the mortgaged property in execution of the decree for rent arose out of the mortgage claim and the sale of the property in execution was opposed to order 34 Rule 14 cpc, nevertheless such a sale was not void but was only voidable. It was open to third respondent to object to the sale or to take out proceeding for setting aside the sale. The third respondent having failed to take any such action, the remedy available to him having become barred by time prior to the karnataka Debt Relief Ordinance 1975 there was no right of redemption available to 3rd respondent and so he could not maintain an application under Section 4 (f) of the Debt Relief Act. Order 34 Rule 14 CPC is not conceived in public interest but is intended to safeguard the interest of the mortgagor and the mortgagor could waive His right. Hence, the violation of Order 34, Rule 14 CPC will not lead to invalidity or nullity of the sale in contravention of the rule. " ( 22 ) THE dictum in the above decision is not applicable to the facts of this case because the subject matter of that suit was about the relief under Debt Relief Act. In any event, even applying that decision, now it is the plaintiff who wants to avoid the sale. In fact, the learned Judge has decided that such a sale is voidable. The very suit for redemption automatically seeks to void such auction sale. Therefore, this case comes squarely within that dictum relied upon by this Court. There is no conflict between both dicta and findings so rendered by the trial Court is an error apparent on the face of the record. The very suit for redemption automatically seeks to void such auction sale. Therefore, this case comes squarely within that dictum relied upon by this Court. There is no conflict between both dicta and findings so rendered by the trial Court is an error apparent on the face of the record. ( 23 ) I am satisfied that Order 34 Rule 14 of CPC is a bar asrightly held by various High Courts. ( 24 ) IN this view, setting aside the judgment and decree of the Trial Court, the appeal is allowed and the suit is decreed with costs. ( 25 ) A preliminary decree for redemption will follow. --- *** --- .