V. Ramaswami Aiyengar and others Appellant Versus T. N. V. Kailasa Thevar [SC 1951 March]

Keywords: Execution of Mortgage Decree

The general law undoubtedly is that a mortgage decree is one and indivisible and exceptions to this rule are admitted in special circumstances where the integrity of the mtge. has been disrupted at the instance of the mortgagee himself; e.g., when there is severance of the interests of the mortgagors with the consent of the mortgagee. or a portion of the equity of redemption is vested in the latter.

AIR 1951 SC 189 : (1951) SCR 292

(SUPREME COURT OF INDIA)

(Before : Saiyid Fazl Ali, Mehr Chand Mahajan, B. K. Mukherjea And N. Chandrasekhara Aiyar, JJ.)

Appeal No. 32 of 1950, Decided on : 05-03-1951.

Civil Procedure Code, 1908—Section 2(2)—Mortgage Decree—Severance of interest—Permissibility—Excess in case of evidence to the contrary, a mortgage decree is one and indivisible.

Thus in case of a mortgage debt when the loan has been advanced to more than one person, if one of the debtors happens to be an agriculturist while others are not, the agriculturist debtor would certainly be entitled to have his debts scaled down under the provisions of this Act in spite of the provision of general law which prevents a mortgagor from denying the liability of the interest which he owns in the mortgaged property to satisfy the entire mortgage debt. There is, therefore, nothing wrong in law in scaling down a mortgage decree in favour of one of the judgment-debtors, while as regards others the decree is kept intact.

Civil Procedure Code, 1908—Section 38—Executing Court—Scope of power—It is the duty of executing court to give effect to the terms of decree—It cannot travel beyond the terms of decree—Though the executing court has to interpret the decree but in the guise of interpretation it cannot make a new decree for the party.

Counsel for the Parties:

Shri R. K. Kesava Aiyangar, Sr, Advocate (Shri T’. K. Sundararaman, Advocate with him ), instructed by Shri M. S. K. Sastri, Agent- for Applts.

Shri S. Ramachandra Aiyar, Advocates, instructed by Shri M. S. K. Aiyangar, Agent- for Resp.

JUDGMENT

B. K. Mukherjea, J—This appeal is on behalf of the decree- holders in a mtge, suit and it is directed against a judgment and order of a D. B. of the Madras H. C. dated 5-1-1948, by which the learned Judges reversed, on appeal, an order of the Dist. J., East Tanjore, made in a proceeding under S. 47 and O. 21, R. 2, Civil P. C.

2. The material facts are not in controversy and may be briefly stated as follows. The applts. before us are the representatives of three original plts. who, as mtgees., instituted a suit (being O. S. NO. 30 of 1934) in the Ct. of the Dist. J. of East Tanjore, for enforcement, of a mtge., against the present resp. who was deft. 1 in the suit, and six other persons. The mtge. bond, upon which the suit was brought, was executed by deft. 1 for himself and his minor undivided brother, the deft. 2 and also as authorised agent on behalf of defts. 3 to 7 who were interested in a joint family business. The suit was contested by all the defts. except deft. 1. against whom it proceeded ex parte, and there was a preliminary decree passed on 15-5-1937, by which a sum of ` 1,08,098 was directed to be paid by deft. 1 and defts. 3 to 7, in default of which the pltfs. were declared entitled to apply for a final decree for sale of the mortgaged properties, and the suit was dismissed against deft. 2. Against this decree, two appea1s were taken to the Madras H. C. one by defts. 3 to 7-being Appl. No. 48 of 1938-Who contended that the mtge. was not binding on them or on their shares in the joint family property; and the other by the pltfs. -being Appl. No. 248 of 1938-Who challenged the propriety of the judgment of the trial Judge in so far as it dismissed their claim against deft. 2. During the pendency of these appeals, the Madras Agriculturists’ Relief Act (Iv [4] of 1938) came into force and applns. were made by defts. 2 to 7 to the H. C. praying that in the event of a decree being passed against them, the decretal debt might be scaled down in accordance with the provisions of the Act. The deft. 1, who did not appear at any stage of the proceeding, did not make any such appln. The H. C. forwarded these applns. to the lower Ct. for enquiry into the matter and for return, with its finding on the question as to whether the appcts. were agriculturists, and if so,to what extent, the decretal dues should be scaled down. The Dist. J., after making enquiries, Submitted a finding that the appcts. were agriculturists and that the debt, if scaled down, would amount to ` 49,255 with interest thereupon at 6% per annum from1-10-1937 exclusive of costs. On receipt of this finding, the appeals were set down for final hearing and by their judgment dated 25-3-1942, the learned Judges of the H. C. accepted the finding of the Ct. below and held that defts. 2 to 7 were entitled to have the debts Scaled down; but as no appln. had been made on behalf of deft. 1, he was hold entitled to no relief under the Act. A decree was drawn up in accordance with the judgment. The amount due by defts. 2 to 7 was stated to be ` 49,255 with interest there on at 6% per annum; while, so far as deft.1 was concerned, the decree at the trial Judge was affirmed subject to a slight modification regarding the rate at interest. The deft.1 thereupon filed an appln, in the Court of the Dist, J., East Tanjore, claiming relief under the Agriculturists Relief Act alleging that he too was an agriculturists and hence entitled to the benefits of the Act. The appln was dismissed on 25-9-1943, on the ground that as the decree had already been passed by the H. C. definitely negativing his claim to any relief under the Agriculturists Relief Act, such appln. was not entertainable by the lower Ct. The next step taken by the deft, 1 was to file an appln, in the H. C. itself, praying for setting aside the ex Parte decree which excluded him from the benefits at Act IV [4] at 1938. This appln, was rejected by tbe H. C, on 13-12-1943,

3. As no payment was made in accordance with the preliminary decree passed by the H. C., a final decree in terms of the same was passed by the Dist. J. on 25-9-1943. Proceedings for execution of this final decree were started on 16-8-1944 in E. P. 2 of 1945 of the Ct. of the Dist. J., East Tanjore. Two lots of the mortgaged properties were put up to sale and purchased by the decree-holder for a total sum of Rs.12,005 on 15-7-1946. The sale was confirmed on 17-8-1946 and part satisfaction of the decree was entered for that amount. Apparently, certain terms of settlement were thereafter offered by the judgment-debtors. The estate of the decree-holders was in the hands of the Receivers and from the Receivers’ report dated 10-1-1947 it appears that the Receivers agreed with the sanction of the Ct., to receive Rs.94,000 only from or on behalf of deft. 2 and release him and his share of the mortgaged property from the decretal charge. Likewise, the Receivers were agreeable to receive ` 48,000 from defts. 3 to 7 and to release them and their properties from the decretal debt. Wirh. regard to deft. 1 the properties, which seems to have been accepted by the Receivers was that the amount payable by him under the decree was to be settled at Rs.37,500 and one Yacob Nadar would pay this amount on his behalf on consideration of the decree against deft. 1 being assigned to him by the Receivers excluding the rights of the latter to execute the decree against defts. 2 to 7 as scaled down by the H. C

4. The records of the execution case show that on 20-1-1947 a sum of ` 94,000 was paid on behalf of deft. 2; and his properties, namely, defts 2 and 6 were exonerated from the decree. On 27-1-1947 a sum of ` 30,000 was paid by defts. 3 to 7 and on February 17 following, they paid a further sum of Rs.18,610-12-0. These three amounts aggregated to ` 79,610-19-0. Nothing was done towards the payment of the sum of ` 37,500 by deft. 1 or by Yacob Nadar, but on 6- 3-1947 the dtft. 1 deposited in Ct. and sum of ` 3215 and put in a petn. under S. 47 and O. 21, R. 9, Civil P. C, praying that as the amount thus deposited together with the payments already made completely wiped off the amount due under the decree as scaled down by the H. C. in favour of defts. 2 to 7, full satisfaction of the decree might be recorded exonerating the mortgaged properties and also the deft. 1 himself from any further liability in respect of the decretal debt.

5. The position taken up by deft. 1, in substance, was that the mtge debt was one and indivisible and even though different amounts were mentioned as payable by two groups of defts. in the decree, the decree-holders were bound under the terms of the decree to release the entire mortgaged property even on payment of the amount directed to be paid by defts. 2 to 7. In other words, even though deft.1’s appln. for relief under the Madras Agriculturists’ Relief Act was expressly rejected and he was held liable for the entire amount of the mtge. debt, he would still be entitled to avail himself of the benefit of the scaling down of the decree in favour of defts. 2 to 7. This contention was negatived by the Dist. J., but was accepted by the H, C. on appeal, who allowed the appln. of deft. 1 and directed that the Ct. below should enter up full satisfaction of the mtge. decree. It is against this judgment that the decree-holders have come up on appea1 to this Ct.

6. The learned Judges of the H. C. observed at the outset that in the working at the Madras Agriculturists Relief Act alongside the provisions of the T. P. Act several curious and novel situations had arisen for which it was not possible always to find logical solutions. They then proceeded to discuss the various decisions of the Madras H. C. which had a bearing on this point and the conclusion which they reached may he summed up in their words as follows:

“It is no doubt somewhat odd that when person is declared liable to pay a larger amount he should on payment of or tender of a smaller amount get his property exonerated from liability that this is inherent in and arises out of the proposition estsblished by the decisions already dealt with, namely, that by the appln of the principle of unity and indivisibility of a mtge. decree a non-agriculturist can indirectly get relief which he cannot directly get.”

7. It seems to us that the H. C.’s approach to the case has not been a proper one and the conclusion it has reached cannot be supported in law.

8. The learned Judges appear to have overlooked the fact that they were sitting only as an executing Ct. and their duty was to give effect to the terms of the decree that was already passed and beyond which they could not go. It is true that they were to interpret the decree, but under the guise of interpretation they could not make a new decree for the parties.

9. As said above, the mtge. decree was scaled down by the H. C. in favour of defts. 2 to 7 only and the amended decree directs that the said defts. do pay into Cts. the sum of ` 49,255 with certain interests and costs on payment of which the pltf, was to bring into Ct. all the documents in his power or possession relating to the mtge. and reconvene or retransfer the property if so required. So far as deft. 1 is concerned, the decree states in clear and express terms that he is to pay the sum of ` 1,05,000 and odd and it is on payment of this sum only that redemption would be allowed of the mortgaged property. If the decision of the H. C. is correct, this direction in the decree would be manifestly unmeaning and without any effect. What is said, however, on behalf of the resp. is, that he is not claiming any benefit in violation of this clause. By virtue of the decree against defts. 2 to 7 being satisfied, the entire mortgaged property would, by force of the very decree, be freed from the debt and if the resp. gets any benefit thereby, such benefit would be merely incidental or consequential in its nature. The H. C. agreed in substance with this contention and based its decision entirely upon the view that by operation of the principle of indivisibility of the mtge. decree, a non-agriculturist debtor, whose debt has not been scaled down under the provisions of the Agriculturists’ Relief Act, may indirectly get the benefit of the relief which has been granted to his agriculturist co-debtor under the provisions of the Act,

10. The general law undoubtedly is that a mtge. decree is one and indivisible and. exceptions to this rule are admitted in special circumstances where the integrity of the mtge. has been disrupted at the instance of the mtgee. himself e. g., when there is severance of the interests of the mtgors. with the consent of the mtgee. or a portion of the equity of redemption is vested in the latter. It is to be noted, however, that the Madras Agriculturists’ Relief Act is a special statute which aims at giving relief not to debtors in general but only to a specified class of debtors, viz., those who are agriculturists as defined in the Act. To this extent it trenches upon the general law and S. 7 of the Act expressly provides that

“notwithstanding any law, custom, contract or decree of Ct. to the contrary, all debts payable by an agriculturist at the commencement of this Act shall be scaled down in accordance with the provisions of this chapter.”

Thus in case of a mtge. debt when the loan has been advanced to more than one person, if one of the debtors happens to be an agriculturist while others are not, the agriculturist debtor would certainly be entitled to have his debts scaled down under the provisions of the Act in spite of the provision of general law which prevents a mtgor. from denying the liability of the interest which he owns in the mortgaged property to satisfy the entire mtge. debt. There is, therefore, nothing wrong in law in scaling down a mtge. decree in favour of one of the judgment-debtors, while as regards others the decree is kept intact. The Madras H. C. expressly adopted this view in C. S. Ramiar v. B. N. Srinivansiah, 1940-2 M. L. J. 872 1, which is one of the decisions referred to in the judgment appealed from. The fact that in that case it was a punisne mtgee. and not a mtgor. whose appln. for relief under S.19, Madras Agriculturists Relief Act, was allowed, does not make any difference in principle. The puisne mtgee. was made a party deft. in the suit instituted by the first mtgee. to recover his dues and as the puisne mtgee. was liable to pay the debt due to the first mtgee., he was held to be a debtor and hence entitled to claim the benefit of S. 19, Agriculturists’ Relief. Act. It may be mentioned here that S.14, Madras Agriculturists’ Relief Act, which provides for separation of a debt incurred by a Hindu family, some members of which are agriculturists while other are not, affords a clear indication that the splitting up of a debt in such circumstances is quite in accordance with the scheme of the Act.

11. The catena of cases upon which the learned Judges of the H.C. relied in support of their decision seem to proceed on a different principle altogether and whether that principle is right or wrong, it has, in our opinion, no application to a case like the present. In this class of cases, the mtgors. were agriculturists and hence entitled to have their debts scaled down under the Agriculturists’ Relief Act, but there were purchasers of the mortgaged property who were not agriculturists, and the question arose whether a purchaser could get the benefit of the debt scaled down in favour of the original debtors. This question was answered in the affirmative. The reason for taking this view was thus given by the learned Judges in Arunachalam Pillai v. Seetharam Naidu,. 1941 -1 M.L. J. 561 where the purchase of the equity of redemption was at on execution sale:

‘When resp. 12 purchased the properties in court auction, he took them subject to the burden of the applt.’s mtge. and if the burden is by reason of the provisions of S. 8 referred to above reduced without payment, the purchase proves to that extent an advantageous one, and there is nothing in the Act to deprive him of the fruits of his lucky purchase even though he is not an agriculturist. He gets the benefit of the scaling down not because the provisions of the Act apply to him for obviously they do not, but because such benefit is a necessary incident of his purchase under the general law and the Act does not deprive him of it.”

12. A somewhat different reason was assigned in Satyanarayanamurthi v. Sathiraju, 1942-1 M. L. J. 506 which however was a case where a portion of the equity of redemption was transferred to a purchaser by a private sale. It was held that the Ct. by allowing the mtgor, to redeem the mtge. sale was not conferring on the purchaser, a non-agriculturist, the benefit of the Act, as he would have to refund to his vendor the purchase money reserved with him which as a result of the scaling down he would not have to pay to the mtgee. In both these cases, the question was raised in the proceeding for scaling down of the decree under the provisions of the Agriculturists’ Relief Act itself and not at the execution stage. There is however the case of Subramanian v. Ramchandra, 1946-2 M. L. J. 429, where the question arose in course of execution proceedings and a purchaser of a portion of the equity of redemption was held to be entitled to the benefit of the scaled down decree in favour of the mtgors., although his own appln. for relief under the Act was refused. It is not necessary for purposes of this case to express any opinion as to the correctness or otherwise of these decisions. It is enough to say that the ratio decidendi in all these cases is not applicable to the case before us. In the present case, there is no purchaser of the mortgaged property and consequently there is no question of the purchaser, who is not an agriculturist himself, being entitled to the benefit of a decree which has been scaled down in favour of the agriculturist mtgor. Here the judgment-debtors are the mtgors. themselves and according to the plain provisions of the Agriculturists’ Relief Act there could not be any objection to a decree for reduced amount being passed against an agriculturist debtor, while the same relief is not given to his co-debtors who do not fulfil that description.

13. Some exception could undoubtedly be taken to the form and wording of the decree that has been passed in the present case. The decree, in our opinion, should not only have stated the amount payable by deft. 1 and that by defts, 2 to 7 separately but should have expressly directed that on payment of the amount directed to be paid by defts. 2 to 7 their interest alone in the mortgaged property would not be liable to be sold. The further direction should have been that in case they did not pay this amount, the whole of the mortgaged property including their interest would be sold for the entirety of the mtge. debt for which deft, was made liable. It is true that the decree contains no such clear directions but reading the decree as a whole and having regard to the actual decision in the case, this must be taken to be its plain implication. The subsequent agreement between the parties arrived at in course of the execution proceedings by which the decree-holders agreed to release the interest of deft. 2 and that of defts. 3 to 7 separately on payment of certain specified amounts by them proceed clearly on the assumption that the mtge. debt and the security has been split up, and in our opinion it is not possible for deft.1 to contend that the mtge. debt remained indivisible. Our conclusion is that the view taken by the Dist.,J. was right and should not have been disturbed.

14. The result is that the appeal is allowed, the order of the H.C. is set aside and that of the Dist. J restored. We make no order as to costs of this appeal.