Eapen Cherian vs Manachee Khan Meerakhan and Others

Koshi, J.—The suit out of which this appeal arises was instituted by the Appellant to enforce payment of certain amounts due under two chitty hypothecation bonds which he failed to realise in enforcement of two prior decrees obtained on them by reason of his omission to implead in those suits the owners of the equity of redemption of certain items among the hypothecated properties. In the execution of the decree obtained on the second bond all the items constituting the hypotheca were brought to sale subject to the prior charge of all but an amount of Rs. 137-3-8 due under the decree obtained on the first bond, and himself purchased them. The various items were sold in separate lots and even after the sale of all the items, there'' was still a balance of Rs. 184-11-6 to be realised under the decree that was being executed. When the Appellant proceeded to take possession of the properties Defendants 2 and 3 in the present suit successfully obstructed the delivery of items 1, 2, 4 and 5 in the (present) plaint on the ground that long prior to the institution of the suit they had become owners of the equity of redemption over these items. The four items referred to above fetched altogether Rs. 871-12 0 at the sale. Item 3 in the present plaint consisted of three buildings on item 1 which Defendants 2 and 8 constructed after that item came into their possession. The Appellant brought the present suit to realise the balance due under the two bonds after giving credit for the sale price of the other items and the amount under the decree obtained on the first bond subject to which the sales were held. Defendant 3 resisted the suit on various grounds, but all of them except the one as to the quantum of the balance due failed before the trial Court. Against his claim for Rs. 1536-Chs. 19-8 cash made in the plaint, the learned Munsiff gave the Plaintiff decree for as. 463-21-1 alone and the appeal is with respect to the portion disallowed.

Defendant 3 has preferred a memorandum of cross-objections reiterating all the grounds on which he resisted the suit. It was contended, (1)that a fresh suit on the hypothecation bonds with respect to the certain items alone of the hypotheca was not maintainable; (2) that Appellant''s purchase of certain items comprised in the hypotheca had broken the integrity of the charge and that plaint items 1, 2, 4 and 5 should, therefore, be made liable only for the proportionate amount chargeable over those items and not for the entire outstanding balances (3) that Order 2, Rule 2, CPC (CPC), was a bar to this suit and (4) that satisfaction having been entered of the prior decree to the extent of the sale price of these items also the Appellant was not entitled to proceed against them over again. As these points touch the very maintainability of the suit they must first be dealt with before discussing the point raised by the appeal.

As for the first point the charge having been extinguished to a certain extent by the Appellant''s purchases that were not assailed, it is difficult to appreciate the argument that the present suit should have been with respect to or as against all the items comprised in the hypotheca. There has taken place an abatement of the mortgage to the extent proportionately chargeable on the items whose purchases stand. The Appellant is the owner of those items and he cannot be their owner and at the same time a charge-holder with respect to them As Defendants 2 and 3 were left out from the previous suits it is open to them to redeem the Plaintiff and in such a suit all the items comprised in the security will certainly have to be included. But the present argument that in a suit for sale by the hypothecatee after he has become the owner of certain items comprised in the hypotheca those items should again be brought to Bale is absolutely untenable.

The learned Advocate for the Appellants contended that the purchase of certain items in execution of the previous decree had in the circumstances of the case not the effect of disintegrating the charge. What was urged was that he purchased all the items and he never intended to do anything affecting the integrity of the charge. The fact remains that the purchase of some items proved to be infructuous. The charge remains alive as against those items and we are unable to accede to the Appellants'' argument or hold that the integrity of the charge has not been broken. In this connection it has also to be remembered that the various items were sold in separate lots and on two different dates. More than one year intervened between the two dates and we cannot hold that the charge remained undivided in spite of it. The circumstances that the integrity of the charge has been broken however happens to be of no importance here as the plea that the prices fetched at the execution sale were less than the amounts proportionately chargeable to the different items purchased by the Appellant has not properly been raised or pursued in the case. The written statement makes casual mention of it. No issue was raised about it and no evidence was also led as to the value of the different items comprised in the hypothecation bonds. The point was not raised before the lower Court at the time of the argument, nor is the point taken even in the memorandum of cross-objections filed in this Court. The Respondent''s learned Advocate, no doubt, stated during the course of the argument that the memorandum raises it. But we are unable to discover that point in it. The memorandum consists of four paras. The first one states that the lower Court''s judgment and decree are against law and evidence to the extent they are objected to in the memorandum. The second states that the suit is not maintainable and the third that the lower Court went wrong in passing a decree for the amount of Rs. 463-21-1. The last one is in the following terms:

Lower Court should have held that all the properties included in Exs. A and B were equally liable for the plaint amount if any due to the Plaintiff and the lower Court should have ordered the inclusion of all these properties in the plaint schedule. Plaintiff has deliberately left off certain properties included in Exs. A and B from being proceeded against in execution.

This ground has nothing to do with the second ground urged before us. It relates to the first ground already dealt with. The point that the amount claimed against the plaint items is in excess of the rateable share of the hypothecation debt chargeable over these properties is not, therefore, really before us. Even if we were inclined to permit the contesting Respondent to raise it, the question cannot bo decided without fresh or additional evidence and it is too late in the day to ask the Court to have a trial de move of the suit.

The question whether Order 2, R. 2, CPC (CPC), is a bar to a second suit for sale on a mortgage (or charge) is covered by a decided case of the Travancore High Court itself. See Aiyappa Reddiar v. Poulose 27 T. L J. 1065. The following extract from that decision may usefully be quoted in repelling this contention:

Defendant 11 who is interested in items Nos. 3 and 4 resists the suit on the ground that it is barred by O. 2, R. 2, CPC (CPC) It is contended that the Plaintiff having already obtained a decree against Defendants 1 and 2 and the plaint items he is not competent to sue again for the same relief based on the same cause of action. It is, however, well established that in order that R, 2 may apply, the two .suits must be between the same parties or between persons claiming through She same parties. Thus, where the Defendant in the subsequent suit is different from the Defendant in the previous suit the rule does not apply. Although in the present suit, Defendants 1 and 2 in the former suit also appear as parties, no relief is claimed against them; and Defendants 3 to 13 have been impleaded only in this suit. Further it is a recognised rule of law that a prior mortgagee suing on the mortgage, without making the puisne mortgagee a party to the suit is competent to institute a subsequent suit for sale of the property against the puisne mortgagee. As observed by Ananthakrishna Alyar, J., in Chandramma v. Gunna Seethan AIR 1931 Mad. 542 : 133 I. C. 497,

the circumstance that the mortgagee filed a suit against a wrong person does not affect the rights of the real owners of the equity of redemption. It does not affect them at all. one fails to see how they could be heard to say that by virtue of the prior suit which admittedly does not affect them a (second) suit against them is not maintainable. So far as they are concerned the second is the only suit against them and the first suit and the proceedings connected with the same must be taken to be "non est" in the eye of the law.

In an earlier passage in his judgment, Anantha-krishna Aiyar, J., had expressed his fall concurrence with the decision in Venkata Reddy v. Kunjappa Goundan AIR 1924 Mad. 650 : 47 Mad. 551 where it was expressly stated that there was no provision in the CPC (CPC) barring such a suit. In a subsequent passage the learned Judge went on to say that the view that in such circumstances the second suit is maintainable has been accepted by the Bombay High Court in Dattatrayav. Venkatesh AIR 1922 Bom. 334 : 69 I. C. 165, by the Rangoon High Court in T.C. Bose v. Obedur Rahman AIR 1928 Rang. 189 : 6 Rang. 297 and by the Allahabad High Court in Lachmi Narain Das and Another Vs. Hirdey Narain and Others It has been further observed that in the Madras High Court Boddam and Miller JJ., had so early as the decision in E. K. Kanaran v. V. K. Unnooli 80 Mad. 500: 17 M. L. 3. 431, expressed the same view.

In Venkata Reddi v. Kunjappa Goundan AIR 1924 Mad. 650 : 47 Mad. 551, Kumaraswamy Sastry and Waller JJ., said:

It is difficult to see how a second suit against a person not impleaded in the previous suit would be barred under any of the provisions of the CPC (CPC). It is no doubt true that the first mortgages who had notice of a puisne encumbrance could have impleaded that puisne encumbrancer in the suit on the first mortgage but the failure to do so would not necessarily bar the second suit against the puisne encumbrancer unless there is anything in the Code barring such a suit. The cause of action is not the same as In the previous suit nor would the points to be decided necessarily be the same.

This case has reviewed several earlier decisions bearing on the question from different High Courts and among the cases relied on the decision in Sham Dei v. Baljit Singh 32 ALL 119 : 5 I. C 451 is particularly instructive. The head-note of that case which correctly sets out the sense of the decision reads as follows:

The prior mortgagee of mortgaged property brought the whole of it to sale without impleading the subsequent mortgagee of a portion and purchased the mortgaged property himself. The subsequent mortgagee in turn brought a portion of the mortgaged property to sale without impleading the prior mortgagee and also himself became the purchaser. The prior mortgages, after an unsuccessful attempt to recover from the subsequent mortgagee possession of the mortgaged property so purchased, sued to bring that property to sale for the realisation of the unrecovered balance of the original mortgage money.

Held, that the suit was maintainable and was not barred by either Section 13 or Section 43, CPC (CPC), 1882.

In the body of the judgment it is said that neither Section 13 (present Section 11) nor Section 43 (Order 2, Rule 2) could bar the suit inasmuch as the owner of the equity of redemption was not a party to the first suit. It is unnecessary to multiply authorities as the point is so well-settled. The ''third point is also therefore without substance.

As for the last when the purchase of the plaint item at the execution sale has proved to be of no avail to the Appellant and it does not bind Defendants 2 and 3, it is difficult to understand how they could be heard to say that the certification that the decree debt has been satisfied to the extent of their value would preclude the Appellant from suing for the amounts covered by the certification again. The observations of Ananthakrishna Aiyar J. made in the case in Chandramma v. Gunna Seethan AIR 1931 Mad. 642 : 133 I. C. 497 : 27 T.L. J. 1065 may usefully be recalled to mind in this connection. When the sale becomes in fructuous the certification must necessarily follow suit.

We have now disposed of the memorandum of objections. As for the appeal, the only question is whether the Plaintiff is entitled to the full amount of his claim made in the plaint. We did not understand the Respondent''s learned Advocate as seeking to support the lower Court''s decision on the grounds mentioned in the judgment. The lower Court has misread para 9 of the plaint that all amounts due under the decree obtained on the first bond have been satisfied. As mentioned earlier, the reservation for the prior charge fell short of the amount of that decree by Rs. 137-3-8. The price fetched at the sale of plaint items 1, 2, 4 and 5 was Rs 871-12-0. Even after the sale of all the items an amount of Rs. 184-11-6 remained to be realised. The total comes to Rs. 1193-10-14. Even on the basis of the decree the Appellant, had to realise that amount with interest thereon from the date of the first sale in mithunom 1109. Even if interest at 6 per cent alone is calculated the principal amount and interest would not fall short of the plaint claim by more than Rs. 75 or thereabouts. But as between the Appellant and Defendants 2 and 3 or the properties they are interested the previous decree is not the basis for calculation to ascertain the balance still due. The Appellant can and must necessarily fall back on the hypothecation bonds themselves. What he did to ascertain the balance still due was to calculate interest on the principal amount at 12 per cent interest provided in the bonds till 24-5-1112 and thereafter at 6 per cent at the same time giving credit for all amounts realised whether by actual payments or as purchase price or by way of reservation of prior charge as and when such realisations were made. From 24-5-1112 the Appellant claims interest at 6 per cent. We are unable to find any thing wrong in the principle adopted nor was it pointed out to us that it was wrong or that the Appellant had made any mistake in the actual calculation of the amounts. If when the Plaintiff brought the two prior suits in 1101 to which Defendants 2 and 3 were not parties, be could not claim anything more than the principal amount, and interest amounting to half the principal, we fail to see why that should be taken to be the top-limit of all what he could receive out of the transaction even when he has to bring a fresh suit against fresh parties twelve long years afterwards. If the present suit were the first suit brought the Appellant could have after giving credit to payments made up till then claimed the principal amount and interest amounting to half the same if that were the real balance due according to the tenor of the two bonds and we fail to see why the rule should be any the different, when the previous suits failed of their purpose at least partly. He has only to give credit for all the amounts received. A party when he comes to Court is not bound to give credit for all the interest he has received in excess of half the principal amount and that is the basis on which the plaint claim is made. The lower Court would seem to think that as on the date of the sale the amount of the second decree came to Rs. 3155-23-12 and the sale of plaint items 1, 2, 4 and 5 was for Rs. 871-12-0 the appllant could only realise a share of Rs. 1650 (the principal and interest claimed in the previous suits) in the ratio of 871-12-0: 3155-23-12. We are unable to find reason or logic behind this.

In our opinion the appeal must succeed, and in modification of the lower Court''s decree, we pass a decree in favour of the Appellant against items 1, 2, 4 and 5, for the full plaint claim with future interest and costs (in both Courts) as prayed for, subject to the prior charges found by the lower Court in favour of Defendant 3 in paras 7 and 8 of its judgment. The memorandum of objections will stand dis missed with costs. Defendant 3 will bear his. costs throughout.