AMBICA PROSAD SANYAL Vs. SOORAJMULL NAGARMULL FIRM

JUDGEMENT

(1.) This is an appeal on behalf of the plaintiff and the suit was one for enforcement of a mortgage bond alleged to have been executed by defendant 1 by which certain lands and machinery were hypothecated to secure an advance of Rs. 1000. The mortgage bond is dated 9 December 1926. Defendants 2 and 3 were impleaded as parties to the mortgage suit on the allegation that they had purchased portions of the mortgaged property subsequent to the execution of the mortgage bond. Defendent 1 did not appear and contest the suit and the case was compromised with defendant 2. Defendant 3 who were the transferees of the machinery comprised in the mortgage were the only contesting defendant and they contended inter alia that the mortgage deed was without consideration and that the suit was barred by limitation under Art. 11, Limitation Act, it being brought more than a year after an adverse decision was passed in a claim petition made by the plaintiff in respect of the machinery under Order 21, Rule 62, Civil P.C. The trial Court overruled these defences and passed a decree ex parte against defendant 1 and on contest against defendant 3. The suit was also decreed on the basis of the compromise as against defendant 2. Against this decree there was an appeal taken by defendant 3 alone, and the Additional District Judge who heard the appeal reversed the decision of the trial Court so far as defendant 3 were concerned and dismissed the plaintiff's suit as against them on the ground that it was barred by limitation under Art. 11, Limitation Act. The decree against the other two defendants was kept intact. It is against this decision that the present second appeal has been preferred, and the only point for our consideration is whether the suit was barred under Art. 11, Limitation Act. It appears that in the year 1933 a creditor who had obtained a money decree against defendant 1 started an execution case, in course of which certain properties including the machinery which was included in the mortgage were attached and proclaimed for sale. On 13 November 1933, the plaintiff made an application which was headed as one under Order 21, Rule 62, Civil P.C., and he prayed that the machinery which was one of the items of the property attached by the decree-holder, might be notified for sale subject to the plaintiff's mortgage. This application was rejected on 14 November 1933 on account of the failure of the plaintiff to produce the mortgage bond which he was asked to produce and the machinery was sold to defendant 3 in the execution sale. The present suit which was instituted on 16 April 1935 is admittedly filed more than a year after the date of the order passed on the plaintiff's claim petition. The lower Appellate Court was of opinion that it was incumbent upon the plaintiff to institute a suit after the adverse order was passed against him under Order 21, Rule 62, Civil P.C., within a year from the date of the order and as he failed to do that, the summary order passed by the executing Court became final and conclusive and it would not be open to the plaintiff mortgage to say that he had any subsisting mortgage in respect of the machinery.

(2.) Now the question, as to whether there is a mortgage on an attached property can be raised in two different ways in execution proceedings. It may be raised, in the first place, when the Court prepares the proclamation of sale under Order 21, Rule 66, Civil P.C., and it is the duty of the executing Court acting under that Rule to state as fairly and accurately as possible after giving notice to the judgment-debtor and the decree-holder, any incumbrance to which the property is liable. At this stage apparently the Court cannot decide the question as to whether the mortgage is a valid and a subsisting mortgage and the information given in the sale proclamation constitutes a warning to the purchaser who purchases the property subject to all risks which this notice involves. It does not preclude him afterwards from questioning the validity of the mortgage in any subsequent suit or proceeding. Another way of raising this question of the mortgage or charge during the execution proceedings is by way of an application under the Claim Secs.contained under Order 21, Civil P.C. Order 21, Rule 62 is certainly an enabling provision and when the Court is satisfied that the attached property is subject to a mortgage or charge in favour of some person not in possession it Can direct the continuance of the attachment subject to such mortgage or charge. The order contemplated by this Rule clearly indicates that this is a judicial determination, though in a summary way of the question as to whether there is a valid mortgage or charge existing upon the attached property and when the Court passes an order directing the continuance of the attachment subject to such charge, what is put up to sale is nothing more than the equity of redemption which the judgment-debtor has got in the attached property. The decree holder or the purchaser cannot in such cases dispute the mortgage unless he brings a suit to set aside the summary order under Order 21, Rule 63, Civil P.C. The question is whether the same principle applies when the Court does not pass an order directing the continuance of attachment subject to a mortgage but the mortgagee's application to have such a direction is dismissed or refused.

(3.) It was held by the Bombay High Court in Ganesh Krishna V/s. Damoo Nathu (1916) A.I.R Bom. 179, under the old Code of 1882 that Section 282 (corresponding to Order 21, Rule 62 of the present Code) merely enables the Court to pass an order if it thinks proper that an attachment would continue subject to a lien or a mortgage. But the Section does not contemplate an order refusing to acknowledge the mortgage or lien and the Court has no power to direct the continuance of attachment free from such charge. In fact, it was held by the Bombay High Court that the executing Court had no authority to declare a mortgage to be invalid and in such circumstances it could do nothing except to notify the incumbrance under Order 21, Rule 66, Civil P.C. On the other hand, it was pointed out by the Allahabad High Court in Debi Das V/s. Rup Chand that the expression "where the Court is satisfied" would confer jurisdiction on the Court to come to a finding as to the existence of the mortgage. Without such finding of fact it can never be satisfied. Section 282 therefore in effect provides for two alternative and mutually exclusive orders. One is an order that as the mortgage exists the attachment shall be continued subject to it and the other is that no mortgage shall be deemed to exist. The latter order, no less than the former, is an order contemplated by Rule 63 or old Section 283. It seems to me that the view taken by the Allahabad High Court is sound. Whether the attachment on the property is directed to continue either subject to or free from the mortgage or charge, the order is one which comes within the purview of Order 21, Rule 62, Civil P.C. and if it is not set aside by a regular suit commenced under 0rder 21, Rule 63, the summary order becomes conclusive and the purchaser or the mortgagee cannot assert any right which that order denies. This is supported by the decisions of the other High Courts in India and reference may be made in this connexion to the decisions of the Madras, Lahore and Rangoon High Courts which are to be found in Muthiah Chetty V/s. Palaniappa Chetty (1922) 9 A.I.R. Mad. 447, Lakshmanan Chettiar V/s. Parasivan Pallai (1920) 7 A.I.R. Mad. 936, Nawal Kishore V/s. Khiyali Ram (1929) 16 A.I.R. Lah. 865 and Maung Aung My Myint V/s. Maung Tha Hmat (1931) 18 A.I.R. Rang. 310 The decision of the Bombay High Court in the case reported in Ganesh Krishna V/s. Damoo Nathu (1916) A.I.R. Bom. 179 referred to above can be distinguished not only on the ground that it was a decision under the old Code where the wording of Section 283 was different from that of 0rder 21, Rule 63 in the present Code but also on the ground, that on the facts actually found in that case the application by the mortgagee was held to come under 0rder 21, Rule 66, Civil P.C. It may seem somewhat anomalous no doubt that the question affecting the validity of the mortgage should be inquired in a summary manner in course of an execution proceeding. But the mortgagee is not obliged to prefer any claim at all and I concur with the observations made by the Lahore High Court that if he chooses to take advantage of a summary procedure he must suffer the disadvantages as well.