Delhi High Court
The Jammu & Kashmir Bank Ltd vs M/S Mayur Exports & Anr on 17 January, 2017
Author: Rajiv Sahai Endlaw
Bench: Rajiv Sahai Endlaw
*IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 17th January, 2017
+ CS(OS) 723/1986
THE JAMMU & KASHMIR BANK LTD. ..... Plaintiff
Through: Mr. Dilip Pandita, Adv.
Versus
M/S MAYUR EXPORTS & ANR ..... Defendants
Through: None.
CORAM:-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
IA No.7177/2013 (of plaintiff u/O XXXIV R-3(2)&(3) CPC)
1. In this mortgage suit under Order XXXIV of Code of Civil Procedure,
1908 (CPC) for recovery of Rs.7,03,500/- with future interest @ 17% per
annum compounded quarterly from the date of institution of the suit till
realisation and for sale of the hypothecated and mortgaged properties for
realisation of the said amounts, on 26th April, 2001, a preliminary decree in
the sum of Rs.7,03,500/- along with interest @ 12.5% per annum with costs
was passed and the defendants were directed to pay into the Court the
decretal amount within six months therefrom. It was further provided that if
no payment is made, the plaintiff Bank would be entitled to seek a final
decree.
2. The defendants M/s Mayur Exports and Shri Anil Kumar Sethi though
had contested the suit by filing a written statement but the judgment dated
26th April, 2001 records that the defendants stopped appearing at the stage of
CS(OS) No.723/1986 Page 1 of 12
evidence and neither cross-examined the witnesses of the plaintiff Bank nor
led evidence of their own. Hence, the preliminary decree aforesaid was an
ex-parte decree.
3. No monies as decreed were deposited by the defendants in the Court
within six months of the decree dated 26th April, 2001 or thereafter.
4. Notwithstanding the same, the plaintiff Bank also did not apply
seeking final decree and filed this application only on 22nd April, 2013.
5. The application came up before this Court first on 2nd May, 2013. In
the order dated 20th May, 2013, it was observed that the application
"apparently, is not within time". The plaintiff Bank thereafter filed IA
No.15373/2013 under Section 5 of the Limitation Act, 1963 for condonation
of the delay in applying for final decree, though pleading that Order XXXIV
of CPC nowhere provides the period for applying for final decree. The said
application under Section 5 of the Limitation Act came up before the Court
first on 24th September, 2013 when the same was dismissed as withdrawn.
6. This application was dismissed in default of appearance of the
plaintiff Bank on 20th February, 2014 but was, on application of the plaintiff
Bank, on 15th July, 2014 restored.
7. The application was thereafter adjourned from time to time.
8. On 29th February, 2016, finding that notice even of the application had
not been issued to the defendants, notice was ordered to be issued.
CS(OS) No.723/1986 Page 2 of 12
9. Notices issued to both the defendants were returned unserved with the
endorsement that the defendants have shifted from the address given. On 8th
August, 2016, fresh notice was ordered to be issued to the defendants. The
plaintiff Bank however has not taken any steps therefor.
10. I have considered the application.
11. The plaintiff Bank has filed this application under Order XXXIV Rule
3(2)&(3) of CPC. Rule 3 of Order XXXIV of CPC provides for final decree
"in foreclosure suit". The plaintiff Bank in the plaint is found to have titled
the suit as a "mortgage suit" "under Order XXXIV of CPC" and not
specified whether it is a suit for foreclosure of the mortgage or for sale of the
mortgaged properties. In para 32 of the plaint however the particulars of
hypothecation and mortgage are given as under:
"4. Property subject to : Fabrics and Raw-materials, semi-
hypothecation finished and finished goods in the
nature of garments and brass
handicrafts, office equipments,
swing machines, stock-in-trade etc.
5. Property subject to : Land measuring 1008 sq. yrds. out
mortgage of Khasra No.96/68 situated in the
area and revenue estate of Village
Holambi Kalan, Delhi State."
CS(OS) No.723/1986 Page 3 of 12
12. The plaintiff Bank, in the prayer paragraph of the plaint, besides
seeking a decree for recovery of monies due has sought "a decree for sale of
the hypothecated properties and the mortgaged property (described
hereinabove) .... and sale proceed thereof be ordered to be paid to the
plaintiff Bank and in case of any short-fall after adjustment of the sale
proceed, the balance if any, due under the decree be got realised and
recovered from other properties both movable and immovable of the
defendants". Therefrom, it is borne out that this suit is a suit for sale of
mortgaged property and not a suit for foreclosure. Thus, the filing of the
application under Order XXXIV Rule 3(2)&(3) of CPC applicable to
foreclosure suits is erroneous.
13. Order XXXIV Rule 4 CPC provides for a preliminary decree in a suit
for sale and Order XXXIV Rule 5 CPC provides for a final decree in a suit
for sale.
14. The questions which arise are, A) whether service of notice of this
application on the defendants is mandatory; and, B) whether the long delay
by the plaintiff Bank in filing this application seeking final decree deprives
the plaintiff Bank to a final decree.
15. The defendants were ex-parte as aforesaid at the stage of passing of
the preliminary decree also and it appears that the defendants cannot be
served by ordinary means. If service of notice of this application on the
defendants is mandatory in law, the defendants will have to be served by
publication.
CS(OS) No.723/1986 Page 4 of 12
16. Neither Order XXXIV Rule 5 CPC nor any other provision is found to
be providing for service of notice of this application on the defendants. I
however find it having been held in Abdul Hai Vs. Rahatullah Mian AIR
1974 Pat 244, Nandlal Bhagirath Kanoria Vs. National Industrial
Development Corporation AIR 1998 MP 236, Bhojai Vs. Salim Ullah AIR
1967 All 221, Suresh Chandra Banerjee Vs. United Bank of India Ltd.
AIR 1961 Cal 534 (DB), Mahajan Raghubir Prasad Vs. Pyarelal Amar
Chand Kalars MANU/NA/0022/1943, Tikaram Namaji Vs. Tarachand
Gujoba AIR 1954 Nag 135 (DB) and Muchi Dola Behara Vs. Jujisti Jami
AIR 1935 Mad 716 (DB) that though Order XXXIV Rule 5 CPC does not
expressly require any notice to be issued to the judgment debtor before
passing of a final decree but as a matter of practice such notice should
generally be given on the principle that a party should be heard before any
order is passed against it. Non service of such notice, even where the
preliminary decree has been passed ex parte, has been held to be a ground
for setting aside thereof.
17. There is similarly no provision in Order XXXIV Rule 5 CPC or in any
other provision of CPC limiting time for applying for final decree for sale. I
have however wondered whether Article 137 of the Schedule to the
Limitation Act, providing limitation of three years commencing from the
date when the right to apply accrues, for "any other application for which no
period of limitation is provided elsewhere in this division" would apply. If it
were to apply, the right to apply for final decree accrued to the plaintiff Bank
on expiry of six months from preliminary decree i.e. on 27 th October, 2001
and this application filed on 22nd April, 2013 is much after the period of
CS(OS) No.723/1986 Page 5 of 12
limitation of three years and this application would be liable to be dismissed
on this ground alone.
18. The language of Order XXXIV Rule 5(3) "Where payment in
accordance with sub-rule (1) has not been made, the Court shall, on
application made by the plaintiff in this behalf, pass a final decree directing
that the mortgaged property or a sufficient part thereof be sold, and that the
proceeds of the sale be dealt within the manner provided in sub-rule (1) of
Rule 4" requires an application to be filed for final decree and once it so
required, the Court, in the absence of an application made by the defendant,
cannot pass a final decree. Once an application for final decree is statutorily
requisite, I am unable to think of any reason whatsoever as to why Article
137 of the Schedule to the Limitation Act would not apply to an application,
after the passing of a preliminary decree in a mortgage suit, for a final
decree. An application for final decree is an "application" within the
definition of application in Section 2(b) of Limitation Act which defines it as
inclusive of a petition. Section 3(1) of the Limitation Act provides that
every suit instituted, appeal preferred and application made after the
prescribed period shall be dismissed although limitation has not been set up
as a defence. Section 3(2)(c) provides that an application by notice of motion
in a High Court is made when the application is presented to the proper
officer of that Court. The period of limitation provided in Article 137
should thus be applicable to an application for final decree.
19. The only reason I can think of for holding Article 137 to be not
applicable to an application for final decree in a mortgage suit can be that
CS(OS) No.723/1986 Page 6 of 12
the limitation for instituting a suit for mortgage having been provided, if the
suit is instituted within the said period of limitation and a preliminary decree
is passed therein, the plaintiff cannot be non-suited for the delay in applying
for a final decree.
20. I find a Single Judge of the High Court of Madras in Sivan Pillai Vs.
Anbayyan 1976 (1) Madras Law Journal 385 to have indeed, after noticing
Article 137 and after noticing that the same applies to an application for final
decree, to have observed i) that Article 137 is a residuary Article not
specifically dealing with an application for the passing of a final decree in a
mortgage suit and it is by interpretation of Courts that this Article has been
held to apply to an application for the passing of a final decree; ii) that it is
too late in the day for questioning the correctness of the view that Article
137 applies to such an application, though a particular feature peculiar to
mortgage suits had not been noticed in the past; iii) a mortgage suit does not
terminate on the passing of the preliminary decree but terminates only on the
passing of the final decree; iv) if the plaintiff does not apply for a final
decree or applies beyond the period of limitation prescribed in Article 137,
the preliminary decree would still stand; v) moreover after the preliminary
decree, the suit remains pending till a final decree is actually passed and the
Code does not confer a power on the Court to dismiss the suit on the ground
that nobody has applied for passing of the final decree; vi) this leads to a
peculiar and nebulous position of the suit being still pending and the
preliminary decree already passed not having been cancelled but at the same
time the decree-holder in the suit being not able to realize the fruits of the
decree which he obtained under the preliminary decree. However, after
CS(OS) No.723/1986 Page 7 of 12
observing so, a final decree was passed inspite of having been applied for
beyond the prescribed time, for the reason of the preliminary decree being
defective and having not fixed any time for the judgment-debtor to make
payment and on non-payment within which time the decree-holder could
apply for final decree.
21. I am unable to concur with the observations aforesaid of the Single
Judge of the High Court of Madras. The said observations were premised on
the anomalous situation which would result on the application for final
decree becoming time barred. However in my view there is no such
anomaly. Once the application for final decree has not been filed within the
prescribed time, the judgment-debtor / mortgagor would be entitled to treat
the property mortgaged as free of mortgage. It would be a position akin to
execution of a decree becoming time barred, in which case also though the
decree stands but is inexecutable.
22. On the contrary, I feel that to hold that the property would remain
mortgaged for an indefinite time inspite of failure of the plaintiff mortgagee
to apply for a final decree would lead to an anomalous situation. A title in
immovable property cannot be permitted to indefinitely remain in a state of
flux and the spirit of the law of limitation is also that there should be
certainty of rights and title. The Limitation Act has been enacted to
consolidate and amend the law of limitation not only of suits but also of
other proceedings and for purposes connected therewith. To hold that there
is no limitation for filing an application for final decree would result in the
property remaining mortgaged forever inspite of the mortgagee, after
CS(OS) No.723/1986 Page 8 of 12
obtaining preliminary decree and notwithstanding the mortgagor not
depositing the decretal amount, having not applied for final decree for sale
of mortgaged property. The law of limitation, which per Section 27 of the
Limitation Act extinguishes rights to property on determination of the period
limited thereby for taking action, does not permit such a situation.
23. I may in this regard notice that the Supreme court in Dr. Chiranji Lal
Vs. Hari Das (2005) 10 SCC 746, with respect to a decree for partition of an
immovable property by metes and bounds, also held that if an application for
its execution is not filed within the prescribed time, it is inexecutable. It was
held that rules of limitation are meant to see that parties do not resort to
dilatory tactics but seek their remedy promptly. Noticing that there is no
statutory provision prescribing a time limit for furnishing of the stamp paper
for engrossing the decree or time limit for engrossment of the decree on
stamp paper and there is no statutory obligation on the Court passing the
decree to direct the parties to furnish the stamp paper for engrossing the
decree, it was held that it does not mean that the party can furnish stamp
paper at its sweet will and claim that the period of limitation would start
only thereafter as and when decree is engrossed thereon. Similarly here,
merely because Order XXXIV does not prescribe time for making an
application for final decree or for cancellation of preliminary decree on such
application having not been filed, cannot be held to mean that the plaintiff /
mortgagee can apply for final decree at its sweet will.
24. Else, I find the Supreme Court in Sudesh Vithal Hanamsheth Vs.
Sadanand Shivrao Koppal (1998) 8 SCC 591 to have, though in the context
CS(OS) No.723/1986 Page 9 of 12
of a suit for redemption of mortgage, proceeded on the premise that Article
137 of the Limitation Act applies to an application for preparation of a final
decree. However finding that the preliminary decree in that case also had
not been prepared in the form required, the period of limitation prescribed in
Article 137 was held not to have commenced running. Similarly, in
Monotosh Kumar Mitra Vs. Amrendranath Shah (2000) 2 SCC 672, the
Supreme Court considered the application for condonation of delay in
applying for a final decree in a mortgage suit on the premise that Article 137
applies. I must however acknowledge that the question does not appear to
have been directly raised in either of the said two judgments. To the same
effect is Sri Veera Hanuman Rice & Flour Mill Vs. State Bank of India
(2000) 5 SCC 248.
25. In K. Parmeswaran Pillai Vs. K. Sumathi (1993) 4 SCC 431, also in
the context of a suit for redemption of mortgage, it was held that though the
period of 3 years provided under Article 137 of the Schedule to the
Limitation Act starts running from the date of expiry of period fixed in
preliminary decree but in the case of preliminary decree for redemption of
usufructuary mortgage, no limitation begins to run until deposit is made
though there is a conditional preliminary decree and default was committed
by the mortgagor in compliance therefor. The reason of the mortgagee being
in possession/enjoyment of the property and being not disabled by
preliminary decree was given for carving out a distinction in the context of
usufructuary mortgage.
CS(OS) No.723/1986 Page 10 of 12
26. However otherwise I find consistency of view of the various High
Courts to the effect that Article 137 applies to an application for final decree.
Reference in this regard can be made to Baljit Singh Vs. J.I. Cunnington
AIR 1984 All 209, Smt. Amiya Debi Vs. Ranendra Narayan Saha AIR
1983 Cal 24, Raghunath & Sons Pvt. Ltd. Vs. Bijoy K. Goenka
MANU/WB/0438/1994, State Bank of Hyderabad Vs. Y. Venkat Reddy
2002 (1) Andhra Pradesh Law Time 391 and S. Veluchamy Nadar Vs.
Diravia Nadar 1991 (1) Madras Law Weekly 502. Reference may also be
made of R. Vijayakumar Vs. The Official Liquidator of RBF Nidhi Ltd.
MANU/TN/4127/2011(DB).
27. As far as this Court is concerned, in Punjab and Sind Bank Vs. Guru
Nanak Auto Supplies (India) MANU/DE/0102/1997 though the application
for condonation of delay in applying for a final decree was for consideration
but the preliminary decree was set aside on other grounds.
28. The question thus does not appear to be res integra. Even othersie I
am of the view that Article 137 applies to an application for final decree.
29. The only argument of the counsel for the plaintiff Bank may also be
noticed. It was his contention that Article 66 of the Limitation Act
providing for a period of 12 years "for a suit for possession of immovable
property when the plaintiff has become entitled to possession by reason of
any forfeiture or breach of condition" commencing from the date when the
forfeiture is incurred or the condition is broken, would apply. It was argued
that the application has been filed within 12 years of the expiry of the period
of six months from the preliminary decree.
CS(OS) No.723/1986 Page 11 of 12
30. However the counsel forgets that Article 66 is for a suit and the
plaintiff Bank has not filed a suit but an application for final decree. The
defendant / judgment-debtor, by not depositing the decretal amount within
the time provided in the preliminary decree, has not made the plaintiff Bank
entitled to possession of immovable property. The application also of the
plaintiff is for sale of the property and not for possession of the property.
31. The application of the plaintiff Bank for final decree is thus found to
be barred by time and has to be dismissed.
32. I am conscious that the plaintiff is a bank and public monies are
involved. However the plaintiff Bank has not applied for condonation of
delay; though it earlier filed an application therefor but withdrew the same.
33. Once the application is found to be barred by time, the question
whether notice thereof should be issued, pales into insignificance.
34. The application is dismissed as barred by time.
CS(OS) No.723/1986
35. The application for making final decree having been dismissed, the
suit is disposed of.
No costs.
RAJIV SAHAI ENDLAW, J.
JANUARY 17, 2017 Bs/gsr CS(OS) No.723/1986 Page 12 of 12