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Judgment
T.N. Vallinayagam, J.—The Plaintiff is the Appellants who is aggrieved by the dismissal of the suit for redemption by the trial Court.
The genealogical tree of Plaintiffs family is given as follows-
B. Shama Rao (Brothers) B. Shiva Rao (Dead) | | | | | | Lakshmi Bai | Kamala Bai (Wife) | (Wife) (4th Plaintiff) | | | | | | Padma Bai | | (Daughter) | | (3rd Plaintiff) | | | | | | | | | | | | | | | | | | | | | | | B.S. Yashodabai B.S. Sathyanarayana Indira Bai (5th Pltf.) (6th Pltf.) (8th Platf.) | | | | | | | B.S. Panduranga Rao Bhavani Bai | (1st deft) (7th Pltf.) | Jhansibai (9th Pltf)
On 19.2.1948 possessory mortgage was created by the aforesaid three Plaintiffs in favour of the second Defendant for Rs. 10,000/- for five years. The mortgagor continued in possession of the mortgage property as a tenant on monthly rent of Rs. 97.50ps. There was a second mortgage deed claimed by the second Defendant for Rs. 3,000/- representing the arrears of rent and executed on 12.12.1948. The second Defendant had filed therefore O.S. 120 of 1951-52 on the file of the I Munsiff, for recovery of Rs. 1225/-. The suit was decreed in Ex. No. 1002 of 1951-52. The schedule property was auctioned and the second Defendant purchased the property on 11.9.1952. On 18.2.1983 the present suit is filed seeking the relief of redemption of the schedule property.
It is contended that the sale is in contravention of Order 34, Rule 14 Code of Civil Procedure. The second Defendant has gained an advantage against the mortgagors in respect of the suit schedule property. He holds the property for the benefit of the mortgagors subject to repayment of the mortgage money with the expenses properly incurred by the mortgagee, and to indemnify against the liabilities properly contracted in gaining such an advantage as per Section 90 of the Indian Trust Act. The property is situated opposite to Kino Talkies, Seshadripuram and it was worth more than Rs. 50,000/- at that time and now it is worth more than Rs. 10,00,000/-. It is thus seen that the mortgagee has gained considerable advantage by acquiring the suit schedule property in the sale held in pursuance of the decree obtained by him. So the second Defendant is under an obligation to allow the Plaintiffs to redeem the property. Thus, the suit was filed.
In the written statement filed by the second Defendant, it is contended that the suit is barred by limitation. According to him, the Plaintiff should have taken steps for getting the sale set aside. The minors were not even born at the time of the transaction and as such they have no right to file the suit. In the additional written statement the second Defendant contended that they have no knowledge of the death of Shivaraj about 12 years beck. The property have been sold in auction. It is not open to the Plantiffs now to claim the setting aside of the auction. The second defendent died and his L.Rs have been brought on record.
On the above pleadings, the following issues have been framed by the trial Court.
Whether the Plaintiffs who are not the executants of the mortgage deed dated 19.12.1948 are not entitled to challenge the sale proceedings in Ex. Case No. 1002 of 1951-52?
Whether the suit as brought is liable to be dismissed for misjoinder of the above said Plaintiffs who are not the executants of the mortgage deed referred to above?
Whether the 2nd Defendant has become the absolute owner of the suit property by virtue of the execution of sale proceedings referred to above and is therefore not liable to redeem as claimed by the Plaintiffs?
Whether the 2nd Defendant improved the schedule property to the extent of Rs. 4,00,000/-?
Additional Issue-
Whether the court fee paid by the Plaintiff is not sufficient as contended by the second Defendant?
The trial Court answered the issues as follows-
Negative;
Negative;
Affirmative;
Negative;
Additional Issue: Negative.
The trial Court held that the Plaintiffs though have not executed the mortgage deed, are entitled to file a suit for redemption. The trial Court ultimately considering the law laid down in the decision reported in 1980(2) KLJ P.71, has held that the Plaintiffs are no longer entitled to redeem the property and ultimately the suit was dismissed.
Now in the appeal it is contended that all the facts have been admitted, the question whether Order 34, Rule 14 is a bar has not been considered by the trial Court and the decision in 1980(2) KLJ 1971 has been wrongly applied.
After hearing the Counsel, the only question to be decided by this Court is-
Whether the Plaintiffs are entitled to redemption.?
Order 34, Rule 14 reads as follows:
Whether a mortgagee has obtained a decree for the payment of money in satisfaction of a claim arising under the mortgage, he shall not be entitled to bring the mortgaged property to sale otherwise than by instituting a suit for sale in enforcement of the mortgage, and he may institute such suit notwithstanding anything contained in Order II, Rule 2.
When the m ortgagee has obtained a decree for money he is not entitled to bring the mortgage property to sale. His right is to bring the property for sale in enforcement of the order. Law is very clear that this auction sale is prima facie illegal and cannot be sustained. In fact the dictum in Kuttyal and Others Vs. P. Sanjiva Rao, it is held thus:
Under Order 34, Rule 14 a mortgagee cannot bring the properties to sale in enforcement of a claim arising under a mortgage except by instituting a suit for sale in enforcement of the mortgage. The provision was enacted by the Legislature for the benefit of the mortgagor so that the mortgagee may not purchase the equity of redemption in enforcement of a money decree which he may obtain against the mortgagor in respect of a claim arising under the mortgage. The intention of the Legislature seems to be that all claims arising under the mortgage should be adjudicated by the court either at the time of the redemption of the mortgage or when the mortgagee brings a suit on his mortgage. In this view, I must hold that the decision of the courts below cannot be sustained and should be set aside and the objection of the judgment-debtors would prevail.
In Narasimhulu Chettiar v. K. Ramanatha Mudaliar AIR 1961, relied upon:
There is nothing in the language of Order 34, Rule 14(1) which expressly or impliedly imposes a condition that the mortgagee should be able to institute a suit for sale in enforcement of the mortgage before the prohibition can apply. Such a construction of Rule 14(1) would permit the very mischief which the provision was intended to provide against, namely, the extinguishment of the mortgagor''s equity of redemption of the instance of the mortgagee without giving an opportunity to the mortgagor to exercise his right of redemption.
The dictum in Umeshwar Prasad Sinha Vs. Dwarika Prasad, is to the following effect:
No doubt Order 34, Rule 14 has been enacted for the benefit of mortgagors, the apparent intention of the legislature being that the mortgagors should not be prejudiced in their right of redemption otherwise than under a suit for sale under the mortgage so that the court may adjudicate upon all the rights and liabilities of the parties inter se. But that does not mean that a mortgagor should be entitled to pray in aid the provisions of Order 34, Rule 14 in all cases in which the mortgagee has entered into some sort of arrangement with his mortgagor with respect to the properties mortgaged. The mortgagor can secure the benefit of Order 34, Rule 14 only in those cases tin which it can be reasonably inferred that the decree for payment of money has been passed in satisfaction of ''a claim arising under the mortgage'', in other words, only in those cases in which the court is satisfied that the transaction in question was a part and parcel of the mortgage transaction itself. Such a case can arise not only where the decree for payment of money arise out of the mortgage deed itself, but also where there are more than one separate deed which are so intimately connected with each other as could reasonably be said to form part of the same transaction. No hard and fast rule can be laid down for determining the question as to whether two apparently separate transactions are or are not parts of a single transaction. The safest rule to follow is that each case must be judged on its own facts as disclosed in the transaction between the parties, evidenced by one or more than one document. But one test may generally be applied to enable the court to say that the two documents form part of one and the same transaction, where it appears on a reasonable construction of the documents that the properties were given in security not only for the principal amount secured under the sudbharna (usufructuary mortgage) bond but also for the interest accruing thereupon. In other words, where the court finds that though the documents have been taken the shape firstly of a mere usufructuary mortgage bond, the mortgagee purporting to take possession of the mortgaged properties, but in reality the second document whereby possession is purported to be given back to the mortgagor is merely a device to ensure regular payment of the interest, which also is secured on the same mortgaged properties, it may generally be said that they are parts of the same transaction. Such a transaction may be evidenced by more than one document which may have been executed on different dates with varying periods of their operation, and possibly, even in the name of different parties benami for the real mortgagor and mortgagee. The court has to look upon the transaction as a whole after tearing off the veil attempted to be thrown round the real intent of the parties.
The dictum in Bishunath Tewari and Others Vs. Mst. Mirchi, on difference in opinion as the matter was referred to a third Judge and ultimately the dictum was laid down as follows-
The mortgagee clearly stands in a position of fiduciary relationship and he cannot avail himself of his position as such to gain advantage in derogation of the rights of the mortgagor; and if the mortgagee obtains a money decree against the mortgagor and purchases the equity of redemption in execution sale, the mortgagee must under the express provision of Section 90 hold the mortgagor. It is not necessary for the application of the equitable principle that the mortgagor should sue for setting aside the money decree or the sale. His suit for redemption is in effect "to confess and avoid that sale by imposing a trust on the estate which passed under it.". It is not necessary therefore that the decree or sale should be set aside in order to grant to the mortgagor a decree for redemption. In the eye of law the sale certificate which mortgagees have obtained would enure to the benefit of the mortgagor and the property would be stamped with a trust in favour of the mortgagor.
Again the dictum in Ramnarain Pasi Vs. Sukhi Tiwary, it is held as follows.
Where a usufructuary mortgagee who is to appropriate the rent of the property in lieu of interest on the mortgage loan subsequently lets out the property to the mortgagor under a Kerayanama executed by the mortgagor and the lease forms part of the mortgage transactions, the claim arising under the mortgage, and hence the mortgagee cannot execute the decree for rent obtained against the mortgagor by sale of the equity of redemption.
The Division Bench in Bhagavathi Pilla Bhavani Pilla and Others Vs. Parvathi Pilla Ammukuty Pilla and Others, , it is held as follows-
When a mortgagee defaults to make a payment which he was bound to make the mortgage property is in execution of a decree or under the Revenue Recovery Act and the mortgagee either purchases it at the execution sale or the Revenue sale in the name of a benamidar for him who purchases it from a bonafide purchaser in execution, Section 90 of the Trusts Act would be attracted and the mortgagee has to hold a property for the benefit of the mortgagors and has to submit to redemption by them. Section 90 does not strike down every advantage gained by a mortgagee. For attracting it an advantage should have been gained by himself availing of his position as a mortgagee or because he was the mortgagee or because and it should have been gained in derogation of the right of the mortgagor. The term ''Karam'' ordinarily means tax, and used in relation to the State, it means the tax payable to the State. But in relation to a Jenmi that term means the annual michavarom payable to him by the Kudiyan and does not include the renewal in payable by the Kanomdar once in 12 years in renewal of the Kanon, which is of the nature of a capital payment and not a revenue payment, or Aradianthiram fee payable for certain special ceremonies in the Jenmis family which is of the nature of a casual payment. In the absence of a special agreement in mortgagee is bound to pay only the annual michavarom and not the renewal fee in Aradianthiram fee, and the renewal fee and Aradianthiram fee have to be paid by the mortgagor.
The dictum in AIR 1935 Lah 672 (Puran Chand v. Har Parshad) is to the following effect-
Order 34, Rule 14 is really intended to create a prohibition to the mortgagee securing the sale of the mortgaged property without first bringing a suit for the sale thereof.
In the light of the above decisions, there is no doubt that thy mortgagee is not entitled to bring the property for purchase it for himself for the recovery of money decree.
The Appellant relied upon the decisions which are dealt with in detail infra.
On behalf of the Appellants it was further submitted that the admitted facts are that the suit schedule property was originally mortgaged to the deceased second Defendant by late B. Shivarao, the younger brother B. Shamrao (the first Plaintiff), his wife Smt. Lakshmi Bai (2nd Plaintiff), Smt. Padma Bai, the daughter of the first Plaintiff, Smt. Kamalabai wife of the deceased B. Shivarao, under a registered mortgage deed dated 19.2.1948 for a sum of Rs. 10.000/-. In spite of the said possessory mortgage deed, the mortgagors continued to be in possession of the mortgaged property as tenants of the deceased second Defendant on a monthly rent of Rs. 97.50. As the said mortgagors failed to pay rent due, the deceased second Defendant having been obtained a decree for arrears of rent of Rs. 1225/- in O.S. 121/1951-52 on the file of the learned First Munsiff, Bangalore, brought the mortgaged property to sale under Ex. No. 1002 of 1951-52 and in court auction the deceased second Respondent himself purchased the schedule property on 11.9.1952. In the above circumstances, it was urged by the Appellants before the trial Court that the said court sale in favour of the deceased second Respondent is contrary to Order 34, Rule 14. It was further urged that the deceased mortgagee, second Respondent, availing himself of his possession as a mortgagee gained an advantage in derogation of the rights of the mortgagors in the schedule property and therefore holds the mortgaged property for the benefit of the mortgagors subject to the redemption by the mortgagors and payment of expenses properly incurred by the mortgagee and to indemnify against liability personally contracted by the mortgagee in gainsing such an advantage as per Section 90 of the Indian Trust Act. There is no discussion of the provisions of Section 60 in Indian Trust Act and there is no evidence in this case to show that the mortgagors have waived their rights in objecting to the sale of the mortgaged property to the mortgagee himself as specified under Order 34, Rule 14 Code of Civil Procedure.
The Plaintiff has given below the sequence of events which are as follows-
19.2.1948 Possessory mortgage deed executed by first 3 Plaintiffs in favour of 2nd Defendant for Rs. 10,000/- for 5 years. Mortgagor continued in possession of mortgaged property as tenant on a monthly rent of Rs. 97.50.
12.12.1948 Second mortgage deed alleged by the 2nd Defendant for Rs. 3,000/-. As the mortgagor failed to pay the rent.
1951-52. Suit in OS. No. 120 of 1951-52 on the file of the I Munsiff, Bangalore filed by 2nd Defendant for recovery of out of Rs. 1225/-. The suit was dcreed.
Execution No. 1002 of 1951-52.
Schedule property auctioned and the Defendant bought the property on 11.9.1952.
18.2.1983 Present suit is filed by Plaintiff seeking relief of redemption of schedule property.
31.7.1990 Suit in OS 632/1983 is dismissed.
Present appeal has been filed by the Plaintiff.
The second Respondent contended that the difference between equity of redemption as it exists in England and redemption as it is in India.
Equity of redemption as it exists in England-On the creation of mortgage, the ownership also passes on to the mortgagee. The right of redemption, to the mortgagor is a right in equity and known as equity of redemption.
Redemption in India-The right of redemption in India is provided in Section 60 of Transfer of Property Act and it is a statutory right. On creation of mortgage the ownership does not pass on to the mortgagee and it remains with the mortgagor.
When the mortgagee purchases the mortgaged property at an execution sale for defaults committed by the mortgagor the right of redemption is extinguished and mortgagee becomes absolute owner of the mortgaged property.
In the instant case the sale was completed in the year 1952 and the mortgagor has not taken steps for setting aside sale for over a period of thirty years.
The possession of the mortgaged property by the mortgagee becomes adverse to that of mortgagor.
The mortgagor has no right to redeem the mortgage.
It was further submitted that the deceased second Defendant had taken the schedule property under possessory mortgage dated 19.2.1948 on payment of Rs. 10,000/- for a period of five years from the Plaintiffs. However, the Plaintiffs-mortgagors continued in possession as tenants on monthly rent of Rs. 97.50. As the Plaintiffs-mortgagors failed to pay rents, suit in OS 120 of 1951-52 filed for recovery of Rs. 1,225/- towards arrears of rent. The suit was decreed and the same was put in Execution No. 1002 of 1951-52 and mortgagee, second Defendant, purchased the schedule property in court auction on 11.9.1952. The said auction sale was confirmed under Order 21, Rule 92 of Code of Civil Procedure. Thus the second Defendant became the absolute owner of the schedule property. The result is that the sale held on 11.9.1952 was the sale of the right of Plaintiffs in the alleged mortgaged property in question which came to be purchased by the second Defendant and the said sale having become final, there was no right of redemption subsisting on the date of confirmation of sale as mortgage came to an end. Thus the suit which is filed for redemption of the schedule property is misconceived, frivolous and is not maintainable in law. It was also submitted that the property once mortgaged was sold in court auction and consequently the property never subsists as a mortgaged property. The auction sale is not void but voidable unless the mortgagor avoids such a sale by taking recourse to legal proceedings in the absence of which he will not be entitled to exercise his right of redemption as there is no such right exists. It was open to the Plaintiffs to take such steps as was necessary to prevent the sale being held or to institute such proceeding as was necessary to get the sale set aside. The Plaintiffs failed to avail the remedy available to them in law within the time available under the Limitation Act and thus allowed the sale to become final and invoidable. Therefore, the Plaintiffs waived their rights.
It was further submitted that on the date of the suit, the Plaintiffs had no right over the property as clearly mentioned above and there was no cause of action; Order 34, Rule 14 has no application to this case. The court sale having been confirmed and the sale certificate having been issued in favour of 2nd Defendant, the right, title and interest in the mortgaged property had passed in favour of the 2nd Defendant on the date of sale 11.9.1952 and thus the mortgage came to an end. The Plaintiffs were parties to the rent suit and the execution of the rent decree. In spite of this, the Plaintiffs have filed the above suit in the year 1983 after a lapse of 31 years. The Plaintiffs have suppressed the real facts and filed the above suit on the wrong assumption that the mortgage transaction is in existence which is not correct either on facts or on law. No case is made out by the Plaintiffs; no evidence led and no documents produced in proof of their case. The suit was filed after a long lapse of 31 years, after the second Defendant having become absolute owner. Hence, the suit is hopelessly barred by time.
The Respondent relied upon the following decisions-
In Sohan Lal and Others Vs. Mohan Lal and Others, the following passage is relied-
In selling what is popularly called his "equity of redemption"., even a usufructuary mortgagor is in reality selling the property itself and the sale of the interest of such mortgagor is of tangible property. He can therefore sell it by placing the buyer in possession of the property (provided that the property was of less value than Rs. 100) without executing a registered instrument.
The dictum in Suraj Prasad Vs. Mt. Aguta Devi and Others, , is as follows-
The important points of difference between the old English law and the Indian law on the subject of mortgage may be noted. Firstly, no such expression as the "equity of redemption". has been used in the Indian law. The right which a mortgagor has been given u/s 60 of the Transfer of Property Act is the right to redeem. It will be quite incorrect to consider this expression to be a substitute for "the equity of redemption". because the latter expression imports that the ownership at law is vested in some one other than the holder of the equity of redemption. Secondly, a mortgage is according to Section 58 of the Transfer of Property Act, the transfer of an interest in specific immovable property and not that of the immovable property itself. Ownership does not pass by way of mortgage but by way of sale as defined in Section 54.
The dictum in Mt. Barti Kuer and Another Vs. Brahmchari Singh and Others, the following passage is relied upon.
Where in a case of a mortgage with possession the liability to pay rent is on both the mortgagor and the mortgagee and the sale of the mortgaged property in execution of a decree for rent is brought about due to the default of both, the right of the mortgagor to redeem the mortgage is extinguished even if the mortgagee himself is the purchaser at the auction sale, and the principle of Section 90 of the Indian Trusts Act has no application to such a case. Case law fully discussed.
The dictum in Sachidanand Prasad Vs. Babu Sheo Prasad Singh, is as follows-
The question left open by Das Gupta J. arises for decision in the present case. This is a case where the mortgaged property is part of a larger holding the mortgagee agreed to pay a portion of the rent of the entire holding and the mortgagors agreed to pay the balance rent payable in respect of it. The mortgagors defaulted in payment of the rent payable by them. The mortgagee paid almost the entire amount of the rent payable by him but defaulted in payment of a trifling sum. The portion of the rent which the mortgagee failed to pay is so small that it is impossible to say that the property was brought to sale for it or that his default was in any real sense a contributory cause of the sale of the property. It is not shown that non-payment of the trifling sums by the mortgagee was made mala fide or with the ulterior object of the property being put up for sale and his becoming the purchaser of it. The mortgagee did not gain any advantage by availing himself of his position as such or of a situation brought about by his own default. The real effective cause of the sale was the default of the mortgagors alone. In the circumstances, Section 90 of the Indian Trusts Act and Illustration (c) to it are not attracted, and the purchase by the mortgagee does not enure for the benefit of the mortgagors. The rent sale and the certificate sale extinguished the right of redemption. Consequently, the suit by the mortgagors for redemption of the mortgaged property is liable to be dismissed.
The dictum in AIR 1915 All 70 (Lal Bahadur Singh v. Abharan Singh) is to the following effect-
This leads to the question whether by reason of the provisions of Section 99 of the Transfer of Property Act, the auction sale at which Rani Dharam Raj Kunwar purchased the equity of redemption was a nullity. As has been pointed out by the learned Chief Justice, the course of rulings in this Court has been that such a sale is merely voidable, and not having been avoided before confirmation, it binds the mortgagor and those whom he represented as the managers of the joint family. I deem it unnecessary to refer to those rulings. The only case in which a contrary view was held was that of Jhabba Lal v. Chajju Mal decided by Mr. Justice Dillon. With all respect I am unable to agree with him.
The next case on which the learned Vakil for the Respondents relies is the recent ruling in Sirdar Shingh v. Ratan Lal. In that case Mr. Justice Rafique distinguished the cases reported in Tara Chand v. Imdad Husain;Banh Bal v. Manni Lal;Krishan Lal v. Umrao Singh on the ground that the sale in those cases was not in favour of the mortgagee but in favour of a third party. With great deference I fail to see any distinction between the case of a purchase by the mortgagee and that of a purchase by a third party. What the section declares is that a mortgagee shall not be entitled to bring to sale the equity of redemption of his mortgagor in execution of any claim which he may have, whether arising under the mortgage or not. It does not prohibit the purchase of the property by the mortgagee, if the court permits him to purchase it and allows a sale to take place. If Section 99 does not render a sale in violation of the section absolutely null and void, there is nothing to prevent a mortgagee purchasing under such a sale with the leave of the court. It has been held by their Lordship of the Privy Council that a mortgagee who purchases with the leave of the court is exactly in the same position as any other purchaser. Therefore, the fact of the purchaser being a person other than the mortgagee, in my opinion, makes no difference so far as the application of Section 99 is concerned. The learned Judges in that case do not, as it seems to me, go to the length of holding that a sale in contravention of Section 99 is absolutely void. If that is so, and if such a sale is only voidable, it not having been avoided before confirmation, the title of the mortgagor or the those whom he represents or of those who derive title from him passes absolutely to the purchaser, and no right remains in those persons by virtue of which they can claim redemption.
The dictum in Tukaram Rangrao Patil v. Subhedar Nanaji Patil AIR 1936 Bom 177 is as follows-
The first question was answered by holding that a sale held in contravention of Section 99, Transfer of Property Act, is not a nullity but an irregular sale liable to be avoided merely on proof that the terms of Section 99 have been contravened, and further that the application to set aside the sale must be made u/s 244 of the Code of 1882, and must be made before confirmation of the sale, unless the applicant proves that owing to fraud or other reasons he was kept in ignorance of the sale proceedings preliminary to sale.
It was held that where a mortgagee has in contravention of Section 99 Transfer of Property Act, attached the mortgaged property and brought it to sale and purchased it himself, the mortgagor or his transferee cannot successfully maintain a suit for redemption of the property without first getting the sale set aside.
In Uttam Chandra Daw v. Raj Krishna Dalal AIR 1920 Cal 363 it is held as follows:
The mortgagor''s right in this respect is provided for in Section 99, Transfer of Property Act, 1882, but inasmuch as it has been decided by the Full Bench of this Court that a sale, though held in contravention of Section 99 is not a nullity but is an irregular and voidable sale, liable to be set aside merely on proof that the terms of the section have been contravened, it follows that under the circumstances mentioned in the question referred to the Full Bench, the mortgagor, in order to establish and enforce his right of redemption and to have accounts taken as between mortgagor and mortgagee, must get the sale set aside in accordance with the procedure and within the time prescribed, before he can sue for redemption.
The dictum in AIR 1961 J&K 85 (L. Shiv Lal v. L. Sham Lal) the following passage is relied upon.
Held that the mortgage could in no case be construed as a simple mortgage.-The mere fact that the rent happened to be equal to interest on the mortgage money was immaterial. Reading the mortgage and the lease back it must be held that the mortgage was usufructuary mortgage and by virtue of lease deed executed by the mortgagor in favour of the mortgagee a relationship of landlord and tenant was created between the parties. The lease was not a device for regular payment of interest. The mortgagee therefore was entitled to recover arrears of rent from the mortgagor.
The decision in AIR 1948 Pat 353 (Isra Nonia v. Karinam Pandey) is as follows-
In the absence of any collusion or fraud or employment of any unfair means by the mortgagees, in bringing about the sale of the mortgaged properties the question of resulting trust coming into being in favour of the mortgagors does not rise.
The dictum in Habib and Others Vs. Daulatram and Another, is to the following effect-
Where a usufructuary mortgage deed and a lease back to the mortgagor form part of the mortgage transaction, the mortgagee- landlord can bring the mortgaged property to sale in the execution of a decree obtained against the mortgagor-tenant for arrears of rent due under the lease. Such a sale is not barred under Order 34, Rule 14
The evidence of DW.1 in the examination in chief was relied upon, which is also extracted here-
My husband got the suit schedule property by way of possesory mortgage. The property was leased to the mortgagor himself by the mortgagee. The mortgagor failed to pay the rent. Suit was filed for recovery of rent and a decree was obtained. The mortgage property was brought to sale in the execution proceedings. My husband purchased the property in the auction. The sale was confirmed. All this happened more than 38 years back. Since then we have been in possession and enjoyment of the property. The mortgage came to an end when the property was purchased by my husband in auction. After the purchase the property in auction, nobody putforth any claim over the property.
The sum and substance of all the above decisions is that Order 34, Rule 14 was incorporated by the legislature for the benefit of the mortgagor so that the mortgagee may not purchase equitable redemption in enforcement of a money decree which he may obtain against the mortgagor in respect of a claim arising under the mortgage. Under Order 34, Rule 14 a mortgagee cannot bring the property to sale in enforcement of a claim arising under the mortgage except by instituting the suit for sale in enforcement of the mortgage. The provision was incorporated by the legislature for the benefit of the mortgagor so that the mortgagee cannot purchase the equitable redemption in enforcement of the money decree which he may obtain against the mortgagor in respect of a claim arising under the mortgage. The intention of the legislature seems to be that all claims arising under the mortgage could be adjudicated by the court either at the time of redemption of the mortgage or when the mortgagee brings a suit on the mortgage. The dictum in AIR 1996 SC 126 will not be applicable to the facts of this case in view of the finding therein to the following effect "the mortgagor has defaulted in payment of rent which was payable by them. The mortgagee, however, paid almost the entire amount of the rent payable by him but defaulted in payment of a trifling sum. The portion of the rent in respect of which the mortgagee committed default was so small that it was impossible to say that the property was brought to rent sale by the landlord for it or that this default was in any real sense, a contributory cause of the rent sale of the property.". In such circumstances, the purchase by the mortgagee has held not to enure to the benefit of the mortgagee. In that the question involved was Illustration (c) to Section 19 of the Indian Trust Act. In the case relied upon by the Respondent himself in AIR 1915 Allahabad 70, the Allahabad High Court following the Privy Council''s decision, held that the purchaser being a person other than the mortgagee does not make a difference. The sale is only voidable if not having been avoided before the confirmation, the title of the mortgagor or all those whom he represents or of those who derive title from him passes absolutely to the purchaser.". In fact it is made clear that "if Section 99 does not render a sale in violation of the section absolutely null and void, there is nothing to prevent a mortgagee purchasing under such a sale with the leave of the Court.". Now in this case the purchase from the leave of the court does arise at all. The Division Bench of Bombay High Court also held that the sale to the mortgagee is not a nullity and the mortgagor is bound to follow the procedure allowed by the law to get the sale set aside. The authorities relied upon by the Defendant are based on Section 99 of the Transfer of Property Act and Section 99 has been repelled by the CPC u/s 156, Schedule V. Therefore, those decisions cannot be relied upon for any purpose whatsoever. We are concerned therefore that Order 34, Rule 14. It is necessary to repeat Order 34, Rule 14 again.
Suit for sale necessary for bringing mortgaged property to sale.-(1) Where a mortgagee has obtained a decree for the payment of money in satisfaction of a claim arising under the mortgage, he shall not be entitled to bring the mortgaged property to sale otherwise than by instituting a suit for sale in enforcement of the mortgage, and he may institute such suit notwithstanding anything contained in Order II, Rule 2.
In the light of the specific provision in the Code, the sale becomes automatically void. To recapitulate again AIR 1915 All 70; Isamoddin Ajmoddin Vs. Ajmoddin Shamsoddin, & Isar Nonia and Others Vs. Karinam Pandey and Others, are not applicable at all. The dictum in AIR 1956 Rajasthan 121 is based upon a finding that the mortgagee cannot bring a suit for sale at all and that being so in fairness of justice the disqualification raised by Order 34, Rule 14 cannot be held applicable. Therefore that decision is not applicable to the facts of this case. 1912(15) Indian Cases 589 also relied upon referring to Section 99 of the Transfer of Property Act. Consequently, the same is also not applicable. Taking into consideration the principle of law relied upon by the Appellants and holding that the section is very clear regarding the right of redemption in respect of a mortgage, the objections are overruled and the Appellants are held to be entitled to redeem the mortgage.
The dictum relied upon by the trial Court in 1980(2) KLJ 71 (V. Krishna Rao v. Sub-Divisional Magistrate) is to the following effect-
Even though the sale of the mortgaged property in execution of the decree for rent arose out of the mortgage claim and the sale of the property in execution was opposed to Order 34, Rule 14 Code of Civil Procedure, nevertheless such a sale was not void but was only voidable. It was open to third Respondent to object to the sale or to take out proceeding for setting aside the sale. The third Respondent having failed to take any such action, the remedy available to him having become barred by time prior to the Karnataka Debt Relief Ordinance 1975 there was no right of redemption available to 3rd Respondent and so he could not maintain an application u/s 4(f) of the Debt Relief Act.
Order 34, Rule 14 CPC is not conceived in public interest but is intended to safeguard the interest of the mortgagor and the mortgagor could waive his right. Hence, the violation of Order 34, Rule 14 CPC will not lead to invalidity or nullity of the sale in contravention of the rule.
The dictum in the above decision is not applicable to the facts of this case because the subject matter of that suit was about the relief under Debt Relief Act. In any event, even applying that decision, now it is the Plaintiff who wants to avoid the sale. In fact, the learned Judge has decided that such a sale is voidable. The very sit for redemption automatically seeks to void such auction sale. Therefore, this case comes squarely within that dictum relied upon by this Court. There is no conflict between both dicta and findings so rendered by the trial Court is an error apparent on the face of the record.
I am satisfied that Order 34, Rule 14 of CPC is a bar as rightly held by various High Courts.
In this view, setting aside the judgment and decree of the trial Court, the appeal is allowed and the suit is decreed with costs.
A preliminary decree for redemption will follow.