RAJANI KANTA DHARA Vs. MANMATHA NATH DAS

JUDGEMENT

(1.) The appellant, Rajani Kanta Dhara, has obtained a mortgage decree for sale for a sum which now amounts to about Rs. 5000 against defendants 2 and 3 in Title Suit No. 15 of 1933 in the Court of the First Subordinate Judge, Howrah; while defendants 2 and 3 in turn have been awarded by the same decree costs amounting to about Rs. 1400 against the plaintiff. The appellant has no personal remedy against the defendants in respect of the amount decreed in his favour. Defendants 2 and 3 have sought to execute their decree for costs in Title Execution case No. 27 of 1941 of the same Court, and the appellant has claimed a set-off of the amount due by him for costs against the amount due to him on the mortgage decree; he relies on the provisions of Rules 19 and 20 of Order 21, Civil P. C. The appellant's claim for set-off has been refused by the trial Court, hence this appeal.

(2.) When asked why his clients object to the set-off, Mr. Das on behalf of the respondents, states that the property will probably not fetch more than Rs. 1700 on a sale. If this is correct then if set-off is allowed defendants 2 and 3 will in fact get nothing out of their decree for costs. If, however, the property is worth on a sale Rs. 5000 the amount of the appellant's decree, or more, then it is financially immaterial to the parties whether set-off is allowed or not. If the property is worth less than Rs. 5000 the appellant's net receipts will be diminished to the extent of the shortage, if no set-off is allowed, while those of the respondents will be diminished by a similar amount if set-off is allowed, vanishing to nothing if the property fetches on sale Rupees 3600 or less.

(3.) On behalf of the appellant reliance is placed on a series of cases, mostly of the Madras Court in which it has been held that a set-off may be made even in cases where there is no personal liability to pay the decretal amount, and in some of which stress is laid on the terms of Order 21, Rule 20 of the Code, which make the provisions of Rules 18 and 19 of the same Order applicable to "decrees for sale in enforcement of a mortgage or charge." In cases in which set-off has been held to be not permissible either no reference is made to the terms of Rule 20 at all, or else it has been held that Rule 20 does not literally apply the provisions of Rules. 18 and 19 to all mortgage decrees for sale, but only to such as can be brought within the terms of those rules, and it is held that decrees where there is no personal liability to pay are either (1) not decrees "for the payment of" sums of money (Rule. 18) or (2) not decrees under which the decree-holder who can bring about the sale is, "entitled to recover" a sum of money from the defendant, (Rule 19) or (3) that the respective parties do not "fill the same character" (Rule 18(3) (a)). In Hazari Bam V/s. Bansidhar ( 37) 24 A. I. R. 1937 P. C. 39 which was an appeal before the Judicial Committee from the judgment in Bansidhar V/s. Hazari Earn. ( 33) 20 A. I. R. 1933 Pat. 210, Sir George Rankin stated it is true that under Rules 18 to 20 the set-off of decrees is not a discretionary matter depending upon equitable considerations such as may emerge from the circumstance that both decrees arise out of the same transaction. Whatever they may arise from, circuity of proceedings thereunder can be avoided and should be avoided--this is the principle of the rules. The main question for decision was whether a mortgage decree for sale could be set-off against the decree for costs, that is to say, one under Rule 18 read with Rule 20. The judgment showed that the right of respondents 1-16 in the mortgage suit before the Judicial Committee to a personal judgment subsisted. The principal argument before the Court was that Rule 20 only applies where both decrees are mortgage decrees. This was not accepted. The question whether there could be a set-off in cases where there was no personal liability under the mortgage decree was not discussed, but their Lordships remarked that they would be slow to give effect to a rule of set-off so as to alter substantive rights or to produce consequences, beyond the scope of an intention to avoid circuity of proceedings. It was stated that the observations of Noor J. in the judgment under appeal and his discussion of the authorities (Nagar Mal V/s. Ram Chand ( 11) 33 All. 240, Sheo Shankar V/s. Chuni Lal ( 16) 3 A. I. R. 1916 All. 290, Burma Oil Co., Ltd. V/s. Ma Tin ( 30) 17 A. I. R. 1930 Rang. 68 and Venkata Reddi V/s. Dorasami Pillai ( 33) 20 A. I. R. 1933 Mad. 63) would afford assistance to the Board and the Courts in India when the matter arose for decision. Before referring to the above cases, we may first discuss cases in which it has been clearly held that a set-off is allowable even where there is no personal liability on the part of one party. These are Shankara Menon V/s. Gopala Pattar (1900) 23 Mad. 121 and Nagar Damodar V/s. Gange ( 38) 25 A. I. R. 1938 Mad. 638. The latter relies on the former, and each cites Bhagwan Singh V/s. Ratan ( 94) 16 All. 395 in support of the view taken. We may discuss this case first as it seems to have been misunderstood in the later eases; incidentally it may be noted that it was a case before 1908 when Order 21, Rule 20 was first enacted. In this Allahabad case there was a decree under Section 92 of Act 4 of 1882 for redemption, and foreclosure in default. The mortgage money plus costs of Rs. 31-1-6 amounted to Rs. 1004-7-0. The plaintiff was awarded Rs. 6-10-0 costs. The plaintiff within time deposited Rupees 1003-11-6, or- 0-11-6 short of the decretal amount. The mortgagee "being of the mind of Shylock of old", as the learned Judges remark, sought to foreclose as the decretal amount had not been deposited. The Court expressed disagreement with the view taken in Kalka Prasad V/s. Earn Din ( 83) 5 All. 272 relied on by the mortgagor, and allowed the set-off. It would appear that the case was not really one under Section 247 at all. It is certainly not one that would be covered by Rule 20 as there was no decree for sale in default. The mortgagee, in execution, was applying for foreclosure. The mortgagor never applied for execution, he was exercising his option to deposit the decretal amount when he made that deposit. At best it would seem that the case was one where by analogy to Section 247 the doctrine of equitable set-off might have been applied as was done in Ishri V/s. Gopal Saran ( 84) 6 All. 351 which we will have occasion to refer to below. The learned Judges felt the difficulty and appear to have relied on the point that the costs of Rs. 31-6-0 awarded to the defendant were "recoverable" from the plaintiff, since they noted that there would have been a difficulty in the absence of such an award, as there was nothing recoverable from the plaintiff, the decree being one for foreclosure in default. Thus the set-off was explicitly allowed on the basis that there was a personal remedy on the side of the defendant. Though the Court expressed disagreement with the view in Kalka Prasad V/s. Earn Din ( 83) 5 All. 272, it does not appear to have been necessary for them to do so. In that case there was a decree for sale and it had been expressly held that there was no personal liability, the defendant's claim to set off costs was refused. 3. In Shankara Menon V/s. Gopala Pattar (1900) 23 Mad. 121 there was a decree in favour, of the mortgagor for redemption and for sale in default, there was no personal liability; the mortgagor was awarded costs, and sought to arrest the mortgagee in execution. The lower Court had relied on Kalka Prasad V/s. Earn Din ( 83) 5 All. 272 and had refused set-off. The High Court remarked that the decision by Straight J. in this case was inconsistent with the decision in Ishri V/s. Gopal Saran ( 84) 6 All. 351, already referred to above, and relying on Bhagwan Singh V/s. Ratan ( 94) 16 All. 395, allowed set-off. We, can, with respect, find no inconsistency between the two Allahabad cases mentioned. In Ishri V/s. Gopal Saran ( 84) 6 All. 351 there was a decree for pre-emption under Section 214 of the then Code. The pre-emptor was granted costs, and deposited an amount that was less than the decretal amount, though in excess if set-off for his own costs were allowed. He subsequently applied for delivery of possession and for recovery of the balance of his costs. The doctrine of equitable set-off was applied by analogy of Secs.221 and 247 of the Code, the judgment pointing out that the sections had no direct application, saying with regard to the latter section that it would be stretching the language of that section to an unjustifiable extent to hold that the purchase money which a pre-emptor decree-holder has to deposit as a condition precedent to obtaining possession under his decree is a sum which the vendor (or vendee) judgment-debtors are entitled under the same decree to recover or for which they could, in any case, take out execution .