Kannuri Venkata Chalapathi Rao vs Devineni Kanchayya

The appellant was the judgment-debtor in O.S. No. 354 of 1936 on the file of the Court of the District Munsiff of Gudivada. That was a suit for

money. There was first an ex parte decree on 16th July, 1937, but on the application of the appellant the ex parte decree was set aside. As a

condition of the setting aside of the ex parte decree the judgment-debtor was directed to give security of Immovable property for the satisfaction of

any decree which may be passed in the suit after trial. The appellant accordingly executed a security bond on 5th November, 1937, giving the

prescribed security. The suit was then tried and again resulted in a decree in favour of the plaintiff, who is the respondent in this civil miscellaneous

second appeal, on 15th December, 1937. The respondent executed his decree against the property which was given as security. He did not attach

that property and it is fairly clear from the execution record that he was intending to and believed that he could enforce his security in the course of

the execution proceedings themselves. The property which was given as security was sold on 22nd April, 1940, the respondent himself being the

purchaser for a sum of Rs. 1,855. There was an application by the appellant under Order 21, Rule 90 which was dismissed.

On 12th November, 1943, the appellant applied in E.A. No. 1076 of 1943 under Order 34, Rule 5 of the CPC for the setting aside of the sale.

He deposited the amount required to be deposited under that rule. The application was dismissed by the District Munsiff of Gudivada and an

appeal against that order was also unsuccessful. Hence the present civil miscellaneous second appeal.

The main point that arises for determination is whether the appellant can avail himself of the provisions of Order 34, Rule 5. That rule provides

that before the confirmation of a sale made in pursuance of a final decree passed in a mortgagee''s suit for sale the mortgagor-defendant may

deposit into Court the amount mentioned in the decree together with 5 per cent, of the amount of the purchase money and have the sale set aside.

Order 34, Rule 5 applies no doubt only to a mortgage, but under Order 34, Rule 15 all the provisions contained in the Order which apply to a

simple mortgage are made applicable inter alia to a charge falling u/s 100 of the Transfer of Property Act "" so far as may be."" The appellant''s

counsel argues that this is a charge within the meaning of Section 100 of the Transfer of Property Act and that by the combined operation of Order

34, Rules 5 and 15 his client can have the benefit of the procedure laid down in the former rule. There is no doubt that the security bond created a

charge over the Immovable property.

There has been considerable argument before me as to whether the charge had to be enforced by a suit as required by Order 34, Rule 14 or

could be enforced in execution. It is unnecessary to refer to the several decisions which have been cited on both sides. The distinction seems to be

fairly well established between a charge created before a decree is passed and a charge created either by the decree itself or after the decree. In

the former case the remedy of the person in whose favour the charge is created is by way of a suit, while in the latter case the charge can be

enforced in execution. This matter has been elaborately discussed in Narottan Dass v. Krishna Prasad ILR (1936) Pat. 545. To the same effect is

the decision in Ramaswami Naidu Vs. K.N.S. Subbaraya Tevar and Others, . Mr. Krishnamurthi, the respondent''s counsel, referred me to the

decision in K. Jagannatha Kone Vs. Ramachandra Naidu and Others, as establishing that a charge given before decree is also enforceable in

execution. It is true that the charge given in that case was before decree. It would be observed however that the security bond that was executed in

that case was in favour of the Court, just like the security bond which was executed in Raj Raghubar Singh v. Jai Indra Bahadur Singh (1919) 38

M.L.J. 302 : L.R. 46 IndAp 228 : ILR 42 All. 158 (P.C.) and in Eramullan Kunhi Moidin and Another Vs. Kunhi Koman Nair and Another, .

When a security bond is executed in favour of the Court it is well established that it does not create a mortgage as the Court is not a juridical

person and cannot take property and that if it cannot take property it cannot assign it. In such a situation where there is an unquestioned liability

created by a security bond the procedure which has been adopted in Raj Raghubar Singh v. Jai Indra Bahadur Singh (1919) 38 M.L.J. 302 : L.R.

46 IndAp 228 : ILR 42 All. 158 (P.C.) and the cases which subsequently followed it, is for the Court to make an order in the suit upon an

application to which the sureties are parties to the effect that the property charged would be sold unless before a date named the sureties pay the

money.

I may at once point out that the security bond in this case is not, like the secu"" rity bond in Raj Raghubar Singh v. Jai Indra Bahadur Singh

(1919) 38 M.L.J. 302 : 1919 L.R. 46 IndAp 228 : ILR 42 All. 158 (P.C.) and the other two cases which I have just now mentioned, addressed

to or executed in favour of the Court and that the security bond follows a form which was promulgated after and in consequence of the decision of

the Judicial Committee in Raj Raghubar Singh v. Jai Indra Bahadur Singh (1919) 38 M.L.J. 302 : L.R. 46 IndAp 228 : ILR 42 All. 158 (P.C.). It

creates a charge in favour of the decree-holder and therefore avoids the difficulty which had to be faced in Raj Raghubur Singh v. Jai Indra

Bahadur Singh (1919) 38 M.L.J. 302 : L.R. 46 IndAp 228 : ILR 42 All. 158 (P.C.). I am therefore unable to accept the argument that this charge

can be enforced in execution. If there is a valid charge in favour of the decree-holder created before the decree was passed, it seems to me that

according to the decision in Narottan Dass v. Krishna Prasad I.L.R.(1936) Pat. 545 and Ramaswami Naidu Vs. K.N.S. Subbaraya Tevar and

Others, the charge-holder can enforce his charge only by filing a suit and cannot seek to enforce it in execution of a money decree in his favour. In

this view therefore Order 34, Rule 14 will apply.

But this, however, does not touch the question which I am called upon to decide. Having regard to the provisions of Order 34, Rule 15 making

the rest of the order applicable to charges ""so far as it may be,"" it may be quite open to a person who is bound by a charge and whose property is

sold in execution of a decree obtained on foot of that charge to ask that he should be permitted to deposit the amount specified in Order 34, Rule

5 and seek a cancellation of the sale, provided he does so before that sale is confirmed. Here however there was no suit on foot of the charge and

there was no decree such as we would have when a charge is sued upon, fixing a date before which the amount for which the charge is created is

made payable and ordering that in default of such payment the property charged should be sold in execution of the decree.

As stated, the decree that was passed in the suit was a money decree. The decree-holder no doubt thought that he could enforce the charge in

the course of execution. His failure to attach the property as also his statements in the execution proceedings that the property, the sale of which he

was seeking was charged for his decree indubitably indicate that he was seeking to enforce the charge; but notwithstanding all these it is impossible

to say that there was a decree based on a charge and execution in pursuance of such a decree resulting in the sale of the property which is charged

and that therefore the procedure laid down in Order 34, Rule 5 should be available to the judgment-debtor. In my opinion such a supposition runs

counter to the established facts of the case and it is not possible for the Court to imagine that there was such a decree as is necessary for the

application of Order 34, Rule 5 read with Order 34, Rule 15 or that the sale was in execution of such a decree.

The appellant''s counsel placed considerable reliance on Ashutosh v. Behari Lal I.L.R.(1907) Cal. 61 but that case only decided that if property

is sold in contravention of Order 34, Rule 14, CPC or more precisely in contravention of Section 99 of the Transfer of Property Act which

corresponded to Order 34, Rule 14, the sale is not void but is only voidable at the instance of the mortgagor. The present application is not one for

setting aside the sale on the ground that Order 34, Rule 14 has been violated. Ashutosh v. Behari Lal I.L.R.(1907) Cal. 61 is no authority for

saying that such a sale would have the effect of rendering all the provisions of Order 34 applicable.

In the circumstances therefore I do not see how the provisions of Order 34, Rule 5 can be availed of by the appellant. The second appeal

therefore fails and is dismissed with costs. Leave refused.