Mandepalli Chenchu Rama Rao vs State Bank of India

L. Narasimha Reddy, J.—The Respondent filed O.S. No. 15 of 1999 in the Court of Senior Civil Judge, Addanki, against the Appellant for foreclosure of mortgage. An ex parte preliminary decree was passed on 16-10-2000. Thereupon, the Appellant filed I.A. No. 477 of 2005, under Order IX Rule 13 C.P.C, with a prayer to set aside the ex parte decree. The application was allowed on 19-07-2006, on condition that the Appellant herein shall deposit half of the decretal amount. The condition was not complied with. The Appellant proceeded on the assumption that no decree as such existed, by that time. Alternatively, he has also filed an application to enlarge the time for depositing the amount. Even that application was dismissed. Ultimately, I.A. No. 477 of 2005 was dismissed on account of noncompliance with the condition.

The Appellant filed C.M.A. No. 876 of 2008 before this Court, against the order in I.A. No. 477 of 2005. The C.M.A. was dismissed through order dated 22-03-2010. However, the Appellant was granted time of one week, from the date of the order, to deposit half of the decretal amount.

The Appellant deposited a sum of Rs. 1,14,800/- on 29-03-2010, i.e., within the time stipulated by this Court. The trial Court has taken up the matter for consideration, particularly with reference to the compliance with the condition as to deposit of the amount. Through a detailed order, dated 25-08-2010, the trial Court dismissed the I.A., holding that there was shortfall of Rs. 7,640.50 ps., in the deposit and thereby, the condition imposed by this Court is not complied with. The Civil Miscellaneous Appeal arises out of the said order.

The learned Counsel for the Appellant submits that the trial Court was not sure as to the amount covered by the decree, and what was taken into account was, the amount claimed in the suit. He contends that, once this Court granted time for payment of the amount, and the Appellant paid the same according to his calculation, the trial Court ought not to have dismissed the I.A. It is also urged that, in case the trial Court entertained any doubt as to the compliance with the order passed by this Court, it ought to have left it to the parties to seek necessary clarification from this Court.

The appeal is mainly contested by the auction-purchaser. He contends that the property was brought to sale, long ago, and the sale consideration was also deposited. It is stated that the Appellant remained indifferent throughout, and he does not deserve any indulgence.

The suit for foreclosure of mortgage was filed by the Respondent. It appears'' that the Appellant was set ex parte. A preliminary decree was passed way back on 16-10-2000. About five years thereafter, the Appellant filed I.A. No. 477 of 2005 with a prayer to set aside the ex parte decree, stating the circumstances under which, he came to be set ex parte. It was also stated that he was aware of the subsequent proceedings. The trial Court allowed the application on 19-07-2006, imposing the condition that the Appellant shall deposit half of he decretal amount.

It is not uncommon that Courts impose conditions, directing payment of part of the decretal amount, while setting aside the ex parte decrees, particularly in suits for recovery of money. Compliance with such conditions would become possible only when the decrees are passed, may be ex parte. In many suits, drawing of a decree, as provided for under Order 20 Rule 11 Code of Civil Procedure, may not pose any problem. For all practical purposes, the concluding portion of the judgment would be summed up as a decree, by adopting Form No. 2 of Appendix-D of the First Schedule of the CPC Such decrees would simply mention the amount due, rate of interest, the date from which, it is td be calculated and the costs of the suit, if awarded.

In a suit for mortgage, however, various stages are involved. On the conclusion of the hearing of the suit, a preliminary decree, as provided for under Order 34 Rule 2 is to be prepared in Form-III of Appendix-D of CPC An elaborate exercise is to be undertaken for preparing the preliminary decree in a suit of that nature. The components of the decree are indicated as under:

Order. 34 Rule. 2 :

(a) ordering that an account be taken of what was due to the Plaintiff at the date of such decree for--

(i) principal and interest on the mortgage,

(ii) the costs of suit, if any, awarded to him, and

(iii) other costs, charges and expenses properly incurred by him up to that date in respect of his mortgage-security, together with interest thereon;

or

(b) declaring the amount so due at that date, and

(c) directing--

(i) that, if the Defendant pays into Court the amount so found or declared due on or before such date as the Court may fix within six months from the date on which the Court confirms and countersigns the account taken under Clause (a), or from the date on which such amount is declared in Court under Clause (b), as the case may be, and thereafter pays such amount as may be adjudged due in respect of subsequent costs, charges and expenses as provided in Rule 10, together with subsequent interest on such sums respectively as provided in Rule 11, the Plaintiff shall deliver up to the Defendant, or to such person as the Defendant appoints, all documents in his possession or power relating to the mortgaged property, and shall, if so required, re-transfer the property to the Defendant at his cost free from the mortgage and from all incumbrances created by the Plaintiff of any person claiming under him, or, where the Plaintiff claims by derived title, by those under whom he claims, and shall also, if necessary, put the Defendant in possession of the property; and

(ii) that, if payment of the amount found or declared due under or by the preliminary decree is not made on or before the date so fixed, or the Defendant fails to pay, within such time as the Court may fix, the amount adjudged due in respect of subsequent costs, charges, expenses and interest, the Plaintiff shall be entitled to apply for a final decree debarring the Defendant from all right to redeem the property.

The Defendant in such a suit has six months time to pay the amount, after the preliminary decree is prepared. A final decree would follow in the event of failure on the part of the Defendant to comply with the preliminary decree. That, in turn, involves various stages covered by Rules 3, 4, 5 and 6 of Order 34 Code of Civil Procedure

In the instant case, no preliminary decree appears to have been drawn by the time the trial Court allowed I.A. No. 477 of 2005. The Appellant expressed his inability to comply with the condition, stating that the preliminary decree was not prepared, and at one point of time, he applied for extension of time also. None of these grounds weighed with the trial Court. The I.A. was ultimately dismissed on 19-07-2006, on the ground that the Appellant did not comply with the condition.

C.M.A. No. 876 of 2008 was filed by the Appellant. The fact that no (preliminary) decree was prepared, is evident from the observation made by this. Court, in its order dated 22-03-2010, in C.M.A. No. 876 of 2008. It reads,

Though no decree was passed, at the same time, the trial Court allowed the application on condition of depositing half of the decretal amount.

All the same, the Appellant was granted a week''s time to comply with the condition.

The Appellant assumed to himself, the suit amount as the decretal amount, and paid half of it, namely, Rs. 1,14,800/-on 29-03-2010.

The trial Court took the view that the suit was filed claiming recovery of Rs. 2,20,800/- with interest at 6%, and that together with interest it would be Rs. 2,44,881/- On the ground that half of it, namely, Rs. 1,22,440.50 ps., was not paid, and that there was deficit of Rs. 7,640.40 ps., it dismissed the I.A.

It appears that by the time the I.A. No. 477 of 2005 was filed, the mortgaged property was sold by the Court on 21-10-2005 for a sum of Rs. 5,41,000/-.

The approach of the trial Court cannot be countenanced. First of all, it failed to prepare a preliminary decree, as contemplated under Order 34 Rule 2 Code of Civil Procedure, and there was absolutely no basis for it, to indicate any amount. In that view of the matter, the very condition requiring the Appellant to deposit half of the decretal amount was not at all a meaningful exercise. At least, when the Appellant pointed out the same, necessary steps ought to have been taken. Finding himself to be in a piquant situation, the Appellant volunteered to determine the decretal amount, based on the suit claim. The view taken by the trial Court, that the interest component also ought to have been added, is absolutely without basis.

In a mortgage suit, a preliminary decree can be passed only after undertaking some exercise, such as ascertaining the costs, component of interest, as indicated under Rule 2 of Order 34. A two-line pronouncement, namely, that ''the suit as prayed for is decreed'', cannot, by itself, become a preliminary decree and obligate a judgment-debtor to comply with it. The trial Court ought to have bestowed its attention to the relevant provisions of law, that govern the suit for mortgage, and ensured that the lapses pointed out against it, are complied with.

Hence, the C.M.A., is allowed, and it is held that the deposit of the amount by the Appellant shall constitute compliance with the condition imposed in I.A. No. 477 of 2005, as modified by this Court, in C.M.A. No. 876 of 2008. As a result, the ex parte preliminary decree shall stand set aside and consequently, the sale of the property effected on 21-10-2005. The auction-purchaser shall be entitled to withdraw the deposited amount, together with interest, if any, that has accrued on the amount.

There shall be no order as to costs.