Patna High Court
Lalji Bhagat And Ors. vs Babu Raghubans Prasad on 7 November, 1962
Equivalent citations: AIR1964PAT135, AIR 1964 PATNA 135, 1963 BLJR 462 ILR 43 PAT 694, ILR 43 PAT 694
JUDGMENT Ramratna Singh, J.
1. This Letters Patent appeal by the defendants of a mortgage suit is directed against the decision of a learned Single Judge of this Court. The plaintiff-respondent instituted a suit for recovery of his dues based on a simple mortgage bond. There was a compromise between the parties by which the defendant-mortgagors were allowed to pay a certain amount by annual instalments, and it was agreed that, on their failure to pay any instalment, the plaintiff would be competent to start proceedings for a final decree and to realise the dues by sale of the mortgaged property. A compromise petition was accordingly, filed on the 27th June, 1945 and a preliminary decree in terms thereof was drawn up by the trial Court on the 7th July, 1945.
The defendant-appellants defaulted in payment of the last instalment, and then the plaintiff-respondent made an application before the trial Court to make the decree absolute. This prayer was allowed and a final decree was prepared in respect of the dues in accordance with the terms of the compromise, except that the learned Subordinate Judge did not allow interest from the date of the decree, but allowed interest from the date of default. The plaintiff, therefore, came up to this Court, and the learned Single Judge modified the decree of the trial Court by allowing interest from the date of the decree, as stipulated in the compromise decree. The lenrned Single Judge also rejected the contention of the defendants that the order of the learned Subordinate Judge making the decree absolute was not appealable. Hence, this appeal by the defendants.
2. The first point pressed in the present appeal by Mr. Ugra Singh. learned advocate for the appellants, was that no appeal lay against the order of the Subordinate Judge. He argued that no final decree could be passed in this case, as the decree passed on the 27th June, 1945 was not a decree under Order 34, Rule 4, of the Code of Civil Pro-eedure. He further submitted that the proceeding before the Subordinate Judge star'ed on the failure of the defendants to pay Ihe last instalment was in the form of a supplemental proceeding, and not a proceeding under Order 34, Rule 5, of the Code of Civil Procedure.
3. In order to consider the arguments advanced, it is necessary to refer to the relevant terms of the compromise, which read as follows:
"A decree for Rs. 6, 758/- on account of claim and costs besides interests at the rate of eight annas per cent per mensem from the date of decree to the date of realisation may be passed in favour of the plaintiff, and the defendants may be allowed to pay Rs. 6,758/-, the decretal amount, in the course of six years by instalments as given below. If the defendants to this suit will continue to pay the decretal amount according to instalment year after year as stipulated (above) they would not be required to pay interest from the date of the decree to the date of realisation. In case of default of any instalment, the plaintiff will be competent to start proceedings for final decree and to recover at a time the balance of all the instalments both expired and unexpired, together with interest as mentioned above, by sale of the mortgaged property, as well as from the person and other proper-tics of the defendants".
On the basis of the above compromise, the learned Subordinate Judge passed the following order:
"Parties file a joint petition of compromise stating therein that the suit be decreed for Rs. 6758 /-payable in six annual instalments stated in the petition besides interest at the rate of 8as. p.m. from the date of decree till the realisation. It is further mentioned in the petition that if the defendants would pay the instalments in time they will have not to pay the interest and in default of any of the kists the plaintiff will be entitled to realise the same after getting the decree made final and by executing the same....."
Accordingly, a preliminary decree for sale in the form prescribed in the Code of Civil Procedure for a decree under Order 34, Rule 4, was passed. Admittedly, the defendant-appellants did not pay the last instalment of Rs. 1,503/- which was payable on the 30th Asarh, 1358 fs. The plaintiff-respondent then made an application under Order 34, Rule 5, of the Code of Civil Procedure on the 10th December, 1951 for making that decree absolute, and the defendant-appellants filed an objection thereto. After hearing both parties, the learned Subordinate Judge made the decree absolute and drew up a final decree for sale.
4. The true test for determining whether an absolute decree is necessary in such cases or not is to find out if the compromise decree is by itself capable of execution. Without further proceedings in the suit so that the decree-holder may realise his dues by sale of the mortgaged properties or otherwise. It is obvious from the terms of the compromise in the instant case that the compromise decree was not by itself capable of execution. One of the terms incorporated in the preliminary decree was that in default of payment of any of the instalments, the plaintiff would be competent to start proceedings for final decree and to recover the clues by sale of the mortgaged properly as well as from the person and other properties of the defendants. It is clear, therefore, that the decree dated the 27th June, 1945 could not have been executed without further proceedings in the suit itself. In view of the term just mentioned, and had the plaintiff made any attempt to sell the mortgaged properly by executing the decree dated the 27th June, 1945, he would have been confronted with this term.
5. Mr. Ugra Singh relied on the decision in Mangar Sahu v. Bhatoo Singh, AIR 1920 Pat 731 for the limited purpose that a decree in a mortgage suit drawn up in terms of a compromise could not be a decree under Rule 4 of Order 34 of the Code of Civil Procedure, and, therefore, no decree under Rule 5 of that Order could be passed. To that extent, of course, this decision supports him; but it goes against his contention that no final executable decree could be passed in such a case.
In that case also, the decree was payable by the mortgagor in instalments in terms of a compromise, which contained a term to the effect that, in default of payment of two consecutive instalments, the plainLit'fs would have the right to realise he whole decretal amount with interest at a certain rate and, "after having the decree made absolute, would have the right to realise the amount by sale of the mortgaged property, and, if this be insufficient to satisfy the entire decree, to realise the balance from the person and other properties of the defendant".
In that case also, on account of default made by the defendant, the plaintiffs put in a petition before the Subordinate Judge for making the decree absolute, and, in spite of objection by the defendant, the decree was made absolute and a final decree was passed. Sir Jwala Prasad, J., with whom Adami, J. agreed, observed:
"The mortgage decree in question was not prepared under Order 34 of the Code and therefore Rules 4 and 5 do not apply to it. It was prepared in accordance with the terms settled between the parties. The Code of Civil Procedure is not exhaustive and the provisions of Order 34 in the Code relating to the preparation of a mortgage decree are also not exhaustive. There is nothing to prevent the parties to a mortgage suit from dictating their own terms and form of ihe mortgage decree, and when they have done so they will be bound by the terms set forth in such a decree unless they are opposed to public policy. The terms in the present decree not being opposed to public policy, the parties will be governed by them, and not by Order 34, Rule 4 or Rule 5."
In that case also, there was an objection raised that the decree could not be made absolute, but the learned Judge repelled this argument with the following observation:
"We do not see any force in the contention on behalf of the judgment-debtors that the application of the decree-holders for a decree absolute was ultra vires inasmuch as there is no other provision under which the decree could be made absolute. There is an obvious fallacy in this reasoning. As already observed, Rule 5 is not exhaustive and that the rights of the parties are to be governed by the terms of the consent decree; and the mode in which that decree is to be enforced is also to be determined by the said terms".
And in support of this view, his Lordship cited several Indian decisions and an English decision. In conclusion, therefore, his Lordship said that the application of the decree-holders to make the decree absolute was not in any way irregular, illegal or ultra vires, and that the Court had jurisdiction to entertain the application to make the order absolute. This case is, therefore, an authority in support of the view that, even if Rules 4 and 5 of Order 34, do not apply to a compromise decree, a preliminary decree in a suitable form can be drawn I up on the basis of the compromise, and ultimately, a final decree may be passed in terms thereof.
6. Mr. Ugra Singh also relied on the decision, in the case of Ganganand Singh v. Rameshwar Singh, AIR 1927 Pat 271. In that case, their Lordships said that the consent decree prepared on the basis of the compromise petition was by itself ex-eculable and no further action was necessary in such a case before execution. But the facts of that were completely different. The respondent obtained a consent decree for Rs. 7,42,13,1-2-3 with-interest thereon at 6 per cent per annum. He gave a year to the defendants to pay up the amount and it was agreed that in default of such payment the mortgaged properly would be sold. There was neither a direction as to accounts being taken between the parties nor a declaration as to what sum would be due to the plaintiff-respondent at the date fixed for payment.
Their Lordships, therefore, observed that It was the obvious intention of the parties that it should be put into execution on the failure of the mortgagors to satisfy the claim of the mortgagee within the time allowed without having to go through the formality of obtaining a final decree under Order 34, Rule 5 of the Code".
This observation apparently goes against the contention of Mr. Ugra Singh in the present case. The facts in the case of Central India Spinning, Weaving and Manufacturing Co., Ltd. v. Khemraj Marwari, AIR 1939 Pat 514 were also different, inasmuch as, before a consent decree could be passed on the basis of a compromise petition, there was a hitch between the parties and it was not a case of a mortgage decree for sale through Court. There is, however, an observation in this case which shows that the intention of the parties is the determining factor. Manohar Lall, J., with whom Chatterji, J., agreed observed:
"In each case the Appellate Court will try to find as to what the true intention of the party was and the question whether an appeal lies or not will depend upon the conclusion arrived at by the Court".
Mr. Ugra Singh referred to several other decisions, namely Kunhammad Hajee v. C. P. Kozhuvammal, AIR 1928 Mad 38; Suraj Pal Singh v. Sarjoo Prasad, AIR 1949 All 317; Utanka Lal v. Tarak Nath Seal, AIR 1929 Cal 11; Ashwini Coomar Banerjee v. Ram Gopal, AIR 1926 Cal 975 and Surendra Narain Saha v. Kanai Lal, AIR 1934 Cal 735. But in all these cases the facts were absolutely different and the consent decree by itself was executable, inasmuch as the decree put an end to the entire controversy between the parties to the suit and nothing remained to be done by the Court. Three of these cases related to compromise decree for payment of mortgage dues by instalments. In the Madras case, AIR 1928 Mad 38, the compromise-decree itself provided for the sale of the property if the decretal amount was not paid within a certain time. It also provided that, if the proceeds of the sale were insufficient, the judgment-debtor would be personally liable to pay the balance of the decree.
In the Allahabad case AIR 1949 All 317, the relevant term was that, if there was a default in three consecutive instalments, the plaintiff would be entitled to get the mortgaged property of the morlgagor foreclosed in lieu of the decretal amount and he would also be entitled to apply for final decree for foreclosure by delivery of possession. It was held that the compromise decree was itself a final decree, notwithstanding a provision in the compromise regarding application for final decree. In the Calcutta case of AIR 1929 Cal 11, the relevant term of the compromise was that, in default of payment of two instalments, the whole amount of the balance then remaining due "would at once be recoverable". It was further stipulated that the mortgage lien would remain intact and the plaintiffs would be entitled to execute the decree "by obtaining a final decree with reference to their dues still remaining unpaid." In view of these terms, their Lordships of the, Calcutta High Court said that the compromise decree put an end to the suit and that, although under the terms of the compromise the decree-holders were bound to make an application for a final decree, that would not be an application falling under order 34, Rule 5 of the Code of Civil Procedure.
It will thus be seen that the terms of the com-promise in that case did not require any further action in the suit before execution because all the dues became payable immediately after the de- fault. In the present case, however, there is no term like this in the compromise. It is true that no decree could be passed under Rule 5 of Order 34; but, as observed in the Patna Case of Mangar Sahu, AIR 1920 Pat 731, a final decree subsequent to the preliminary decree was necessary before the plaintiff-respondent could proceed in ex- ecution to recover his dues, and, therefore, an appeal lay against that decree.
7. In view of the foregoing discussions, the correct legal position is this. If a mortgage suit is decreed in terms of a cornpromise, the consent decree amounts to a final decree only when nothing further is to be done in the suit in order to enable the decree-holder to execute the decree. But in case the consent decree cannot be executed without further proceedings in the suit, the decree-holder has to take steps in the suit to have the decree made absolute in ferms of the compromise; and whether any rule or Order 34, Code of Civil Pro- cedure, applies or not, the order making the decree absolute amounts to a final decree. Applying this test to the present case, it must be held that the final decree passed by the learned subordinate Judge was quite legal, inasmuch as the suit did not end with the consent decree. According to the terms of the compromise incorporated in the consent decree, the unpaid instalment, together with costs and interest, was not recoverable by the plaintiff in any mariner without obtaining a final decree. Of course, the final decree could not be a decree under Rule 5 of Order 34, of the Code of Civil Procedure. But that fact by itself did not make the decree illegal or ultra vires. Hence, it must also be held that appeal against this decree lay to the High Court and the judgment of the learned Single Judge was, therefore, not without jurisdiction. Thus, the first contention of Mr. Singh must fail.
8. The next and the only other point pressed by Mr. Ugra Singh was that the learned Single Judge was not justified in allowing interest to the plaintiff from the date of the decree. But the terms of the compromise, which have been reproduced earlier in extenso, clearly show that interest was payable from the date of the decree, and. not from the date of default. Of course, in the earlier part of the compromise it is stated that, if the defendants continued to pay the decretal amount according to the instalments year after year, they would not be required to pay interest "from the date of the decree to the date of realisation." But it is further stipulated that, in case of default of any instalment, the plaintiff would be competent, to start proceedings for final decree and to recover all the dues "together with interest as mentioned above". The words underlined (herein " ") clearly refer to interest from the date of the decide to the date of realisation. Hence, I agree with the learned Single Judge that the plaintiff-respondent was entitled to interest from the date of the decree, and not from the date of the default of the instalment, as wrongly held by the learned Subordinate Judge.
9. In view of the above findings, there is no merit in the appeal, which fails and is dismissed with costs.
Kanhaiya Singh, J.
10. I agree.