Full Judgment Text
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CASE NO.:
Appeal (civil) 1488-1489 of 2000
PETITIONER:
Philomina Jose
RESPONDENT:
Federal Bank Ltd. & Ors.
DATE OF JUDGMENT: 02/02/2006
BENCH:
ARIJIT PASAYAT & TARUN CHATTERJEE
JUDGMENT:
J U D G M E N T
WITH
CIVIL APPEAL NOS. 1490-91/2000
ARIJIT PASAYAT, J.
Challenge in these appeals is to the judgment of a
Division Bench of the Kerala High Court. The Civil Revision
petitions in proceedings under Order 34 Rule 5 of the Code of
Civil Procedure, 1908 (in short the ’Code’) were dismissed by a
common judgment dated 2.6.1997.
Factual position, which is practically undisputed need to
be noted in brief.
The decrees for sale in the above cases were passed on
8.2.1989 and 30.7.1985 respectively. At the time of passing
the decrees in the case, amendments as applicable to the State
of Kerala were in force. The amendment stood repealed by
virtue of Section 97(1) of the Code of Civil Procedure
(Amendment) Act, 1976 (Act 104 of 1976)(in short the
’Amendment Act’) which came into force on 1.2.1977.
By an amendment effected under Section 122 of the
Code, by the High Court of Kerala, Order 34 of the Code as
existed before 1.2.1977 was incorporated in the Code with
effect from 20.11.1990. It is thus clear that on the dates when
decrees were passed in the case, the Civil Procedure Code was
in force in the State of Kerala.
The prayer for redemption in terms of Order 34 Rule 5 of
the Code as made by the judgment debtors was rejected.
The High Court held that the petitions under Order 34
Rule 5 were not maintainable on two grounds namely.
(1). Under Section 60 of the Transfer of Property Act, 1882 (in
short the ’Act’) right to redemption continues to inhere in
a mortgage only until it is extinguished by act of parties
or by a decree of Court. By the passing of a decree, the
mortgage security merges in the decree and is replaced
by the security of the order of sale. Accordingly the right
of redemption is extinguished by the final decree under
Order 34 Rule 5(3) of Code. Reliance was placed on a
decision of the Patna High Court in Sheo Narain Sah v.
Mt. Deolchan Kuer (AIR 1943 Patna 208).
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(2). Though a right under Order 34 Rule 5 was available
under the Code, after the substitution of Order XXXIV by
the Kerala amendment there is no such right available to
the Mortgagor.
Learned counsel for the appellants submitted that the
High Court’s view is clearly untenable. First, the Kerala
amendment became non-est because of the Amendment Act.
Secondly, the view expressed by the Patna High Court was not
approved by this Court.
Learned counsel for the respondents on the other hand
submitted that it was commonly believed that the Kerala
amendment introduced on 15.1.1974 was in force at all times
and the fresh amendment done in November, 1990 was just by
way of clarification that it was effective till the amendment.
High Court has held that by the passing of the decree for
sale, the mortgage debt is merged into the decree and
thereafter right to redemption is not available. In taking that
view, the High Court has relied on the decision of the Patna
High Court in Sheo Narayan’s case (supra).
The view taken by the Patna High Court was held to be
not the correct view as observed by this Court in Mhadagonda
Ramgonda Patil and Ors. v. Shripal Balwant Rainade & Ors.
(1988 (3) SCC 298). It was held that unless and until a decree
of order debarring the mortgagor from redeeming the property
is passed under Sub Rule 3(a) of Rule 8 of Order XXXIV the
right of redemption is available. It was inter alia held as
follows:
"12. It is thus manifestly clear that the right
of redemption will be extinguished (1) by the
act of the parties or (2) by the decree of a
court. We are not concerned with the question
of extinguishment of the right of redemption
by the act of the parties. The question is
whether by the preliminary decree or final
decree passed in the earlier extinguished. The
decree that is referred to in the proviso to
Section 60 of the Transfer of Property Act is a
final decree in a suit for foreclosure, as
provided in sub-rule (2) of Rule 3 of Order 34
and a final decree in a redemption suit as
provided in Order 34, Rule 8(3)(a) of the Code
of Civil Procedure. Sub-rule (2) of Rule 3, inter
alia, provides that where payment in
accordance with sub-rule (1) has not been
made, the court shall, on an application made
by the plaintiff in this behalf, pass a final
decree declaring that the defendant and all
persons claiming through or under him are
debarred from all right to redeem the
mortgaged property and also, if necessary,
ordering the defendant to put the plaintiff in
possession of the property. Thus, in a final
decree in a suit for foreclosure, on the failure
of the defendant to pay al amounts due, the
extinguishment of the right of redemption has
to be specifically declared. Again, in a final
decree in a suit for redemption of mortgage by
conditional sale or for redemption of an
anomalous mortgage, the extinguishment of
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the right of redemption has to be specifically
declared, as provided in clause (a) of sub-rule
(3) of Rule 8 of Order 34 of the Code of Civil
Procedure. These are the two circumstances-
(1) a final decree in a suit for foreclosure
under Order 34, Rule 3(2); and (2) a final
decree in a suit for redemption under Order
34, Rule 8(3)(a) of the Code of Civil Procedure-
when the right of redemption is extinguished.
13. In the instant case, the earlier suit was
not a suit for foreclosure nor was either of the
mortgages, a mortgage by conditional sale or
an anomalous mortgage and, accordingly,
there was no declaration in the final decree
passed in the earlier suit for redemption that
the respondents would be debarred from all
right to redeem the mortgaged property. Rule
5(1) of Order 34 expressly recognized the right
of the mortgagor to redeem the mortgage at
any time before the confirmation of a sale
made in pursuance of a final decree passed in
a suit for sale. Similarly, Rule 8(1) of Order 34
permits the mortgagor to redeem the
mortgaged property before the confirmation of
the sale held in pursuance of a final decree in
a redemption suit, unless such final decree
debars the mortgagor from all right to redeem
the mortgaged property which, as noticed
earlier, is provided for in sub-rule (3)(a) of
Rule 8 of Order 34 relating to a mortgage by
conditional sale or an anomalous mortgage.
Thus, the provisions of Order 34 have laid
down in clear terms the circumstances when
the right of redemption of the mortgagor
would stand extinguished. It is also clear that
in a suit for redemption, a mortgage other
than a mortgage by conditional sale or an
anomalous mortgage, the mortgagor has a
right of redemption even after the sale has
taken place pursuant to the final decree, but
before the confirmation of such sale. In view
of these provisions, the question of merger of
mortgage-debt in the decretal-debt does not at
all arise. We are, therefore, of the view that
the decision in Sheo Narain case in so far as
it lays down the merger of the mortgage-debt
in the decretal debt and the consequent
extinguishment of the right of redemption of
the mortgagor after the passing of the final
decree in a suit for redemption is erroneous."
As there is no such final decree in this case, the right of
the mortgagor to redeem the property is available to him till
the confirmation of the sale in pursuance to the decree.
The High Court further held that the right of redemption
provided for under Order XXXIV Rule 5 is not available to the
appellants in view of the fact that by the time the applications
were filed, the Code as amended by substituting Order XXXIV
do not contain a similar provision with effect from 20.11.1990.
This view is also not correct. The decrees in the case were
passed at a time when the Code was in force in the State of
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Kerala and the amendment in 1974 so far as the State of
Kerala is concerned was not operative. Composite decrees
were passed in both under order XXXIV Rule 4 and 5 together.
Those were the provisions in regard to enforcement of
mortgages, and whatever may be the wording of the decree,
they shall be deemed to be passed under Order XXXIV Rule 5
as it stood at the time of the passing of the decree. It is not
necessary that all the clauses mentioned in the provisions
under which the decree is passed should be incorporated in
the decree. While interpreting such a decree, it must be read
as if all the provisions therein are incorporated in the decree.
The Court may not at the time of passing of the decree, be
aware as to which contingency will happen in future. Each of
the decrees was under Order XXXIV Rule 5 of the Code as it
stood before 20.11.1990.
The effect of Section 97(1) of the Amendment Act is that
all the local amendments made to any of the provisions of the
Code either by a State Legislature or by a High Court which
were inconsistent with the Code as amended by the
Amendment Act stood repealed irrespective of the fact whether
the corresponding provision of the Code had been amended or
modified by the Amendment Act and that was subject only to
what was found in sub-section (2) of Section 97. (See Ganpat
Giri v. IInd Additional District Judge, Balia and Ors. (AIR
1986 SC 589). That being so, till 20.11.1990, the Kerala
amendment was not effective from 1.2.1977.
While considering a case interpreting Order XX Rule 12 of
the Code in Chittoori Subbanna Vs. Kudappa Subbanna (AIR
1965 SC 1325) this Court laid down the principles to be
followed in interpreting such decrees when the decree has not
specifically mentioned all the clauses in the provision under
which the decree is passed.
Right of redemption of a mortgage is a substantive right
of Mortgagor which has accrued to him to be exercised under
Order XXXIV Rule 5 of the Code when the decree was passed
which cannot be taken away by the amendment of order
XXXIV of the Code which was made only after the decree in
this case.
An application under Order XXXIV Rule 5 is maintainable
until the final determination of proceedings to set aside the
sale under Order XXXIV either by way of appeal or revision.
(See Manganlal Vs M/s. Jaiswal Industries Neemach & Ors.
1989 (4) SCC 344, New Kenilworth Hotel (P) Ltd. Vs. Ashoka
Industries Ltd. & Ors 1995 (1) SCC 161, S. Sivaprakasam Vs.
B.V. Muniraj & Ors 1997 (9) SCC 636, U. Nilan Vs. Kannayyan
(Dead) Through Lrs. 1999 (8) SCC 511, Kharaiti Lal Vs.
Raminder Kaur & Ors 2000(3) SCC 664, V.K. Palaniappa
Chettiar (Dead) by LRs Vs. U. Ramaswamy Grounder & Anr.
2001 (4) SCC 413).
In the present appeals, the applications were filed before
the proceedings for setting aside the sale were pending before
the executing court or in appeal. In C.A. 1488-89 of 2000
proceedings under order XXI Rule 90 were pending and they
were finally decided in C.M.A 353 of 1995 by order dated
2.6.1997, along with the main order.
In C.A. No.1490-91 of 2000 proceedings under Order 21
Rule 89 to set aside the sale was finally decided only by the
order dated 2.6.1997 in C.M.A. 18 of 1993 and the application
under Order 34 Rule 5 was filed earlier.
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It is also seen that no order has been passed by the Court
confirming the sale as required under Order 21 Rule 92.
Above being the position, the impugned judgment of the
High Court is indefensible and is set aside. Appeals are
allowed. Costs made easy.