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Judgment
Chapman, J.—This is an appeal against an order made in the course of the proceedings taken after a decree absolute in a mortgage suit. Two questions arise. The first question is as to the awarding of interest after the day of grape. The second question is as to the valuation of the property for the purposes of the sale.
The mortgagee claimed in his plaint that interest should run up to the date of realisation. In a judgment, dated the 14th of September 1911, the Subordinate Judge directed that interest should run at the contract rate from the date of the suit to six months from the date of the judgment: ''During when, the money thus decreed it payable or in defoult, out of the sale of the mortgaged properties or sufficient portion thereof. Which probing insufficient the plaintiff shall be at liberty to apply for a personal decree."
The mortgagors appealed against this judgment to the High Court. The appeal was dismissed on the 5th of June 1914, in the meantime the decree-holder applied for a decree absolute. The application was disposed of after notice to the judgment-debtors. The judgment-debtors did not, however, appear. The order was in the following terms:
I make the preliminary decree absolute as prayed for with costs and interest at 6 per cent, per annum from the date of the expiry of the grace time till paid out of the sale of the mortgaged properties.
The judgment-debtors objected that this final decree was not in accordance with the preliminary decree inasmuch as it awarded interest after the day of grace. The objection was overruled. The judgment-debtors appeal to this Court.
There can be no doubt that under the decisions of the Privy Council and the terms of the law as recently amended and having regard to the justice of the case, the decree-holder was entitled to interest after the day of grace. The question is whether this Court should now interfere with an order made in a final decree awarding interest after the day of grace. There having been no appeal against the final decree I am of opinion that this Court should not interfere. If the final decree had purported to be merely in accordance with the preliminary decree, I am of opinion that the judgment-debtors could at any time prior to the sale have taken objection as to the correctness of the final decree. But here the final decree was made by the Judge who had passed the preliminary decree, and the order expressly directs that an addition should be made to the preliminary decree. That being so, if the judgment-debtors who had received notice of the application for final decree, objected to the terms of the final decree, they should have appealed against it. Rightly or wrongly the Subordinate Judge ''held that he was entitled to make an addition to the terms of the preliminary decree by allowing interest after the due date. And there is something to be said for so holding. The preliminary decree appears only to be intended to deal with the period up to the day of grace, and it can be reasonably interpreted to mean that the question of interest after the day of grace should remain open. The question of jurisdiction, to make an order in the final decree for the payment of interest after the day of grace is not free from doubt. There, is I understand, a practice in England that Upon an application by a judgment-debtor for leave to pay after the day of grace, the Court may direct that he Should pay interest up to the date of payment. I am of opinion that the Subordinate Judge''s final decree that interest should run after the day of grace was not a manifest mistake capable of being objected to in the proceedings in execution of the decree absolute. I am of opinion that the only remedy was an appeal against the final decree.
The next point is as to the valuation.
The learned Subordinate Judge, has dealt with the question of valuation in a very purfunctory manner.'' The decree-holder did not offer any statement as to, the valuation of the property. He should have done so. I am not satisfied that the materials upon which the learned Subordinate Judge has arrived at the valuation afforded any basis for the conclusion at which he has arrived. In the circumstances I am of opinion that on return of the record he should make a short enquiry as to the valuation of the property and enter that valuation in the sale proceedings.
The judgment-debtor has failed upon, a very material point and has succeeded upon another. I, therefore, make no order as to costs.
Jwala Prasad, J.
I entirely agree.I do not think it is open to the judgment-debtors to object in execution proceedings to the validity of the final decree on the ground that the direction in it to pay interest at 6 per cent, per annum from the date of the expiry of the day of grace till realisation, is in excess of the preliminary decree which directed that the interest should run at the current rate from the date of the suit to six months from the date of the judgment.
The Court was apparently under the impression that in a preliminary decree the Court should only mention the amount which would be payable by the judgment-debtor on the day of grace fixed by the Court and hence calculated interest at the contract rate up to that date only. It is possibly due to the fact that the first portion of Rule 4, under which the preliminary decree was prepared, provides that the basis of the account in the preliminary decree shall be that prescribed by Rule 2(a), (b) and (c) for the preparation of a foreclosure decree.
In a foreclosure decree prepared under Rule 2 the interest is calculated only up to the date of grace and no direction is made for the payment of future interest.
The Court may have, however, in a foreclosure decree, enlarged the time fixed for payment on such terms as it thinks fit and hence can award future interest as a consideration for extending the time. This is based apparently upon English practice, (Vide Seton''s Judgments and Orders, Volume III, page 1914, 7th Edition, where upon the authority of English cases it is laid down that: The terms upon which the time for payment is usually enlarged are the payment of interest and cost and carrying on the account of sub-sequent interest and cost." Fisher on ''Mortgage'' in paragraph 1836 also mentions. this practice.
It appears that the Court overlooked the difference between a foreclosure decree and a preliminary decree for sale as to the future interest up to the date of payment. The Court, therefore, did not consider it necessary at the time of preparing the preliminary decree to direct payment of future interest.
It is apparent that the Court did not intend to disallow future interest but only reserved the necessary direction to be made when the amount fixed in the preliminary decree were not paid and the final decree would be passed. This intention of the Court is apparent from the fact that when the decree-holder applied for passing the final decree, the Court in the Order Sheet did make an order allowing future interest. The final decree has been prepared on the basis of this order which was passed after due notice, having been given of it to the judgment-debtors. Rules, 4 and 5, Order XXXIV, regarding the makingof the preliminary and the final decrees, have taken the place of Sections 88 and 89 of the Transfer of Property Act. These latter sections did not provide expressly for the direction as to the future interest from the, day of grace up to the date of payment.
There was at One time some doubt as to whether under those sections interest subsequent to the date fixed for the payment of the mortgage-debt was allowable. It was, however held by their Lordships of the Privy Council that those sections did not preclude payment of such interest.
Rules 4 and 5, Order XXXIV, Code of Civil Procedure, have accordingly been so amended as to make it, clear that the decree-holder is so entitled. There is no question, therefore, that as a matter of right the decree-holder is entitled to subsequent "interest, but what would be the rate, of future interest is entirely in the discretion of the Court and it need not necessarily be the contract rate. (Fisher''s Law of Mortgage, paragraph 1809).
The decree in this case has given the rate of interest at 6 per cent., and not at the contract rate. Thus the decree-holder in the final decree had got only what was his just due. If by any inadvertence, or by any erroneous view of the form of the preliminary decree, the Court omitted to make necessary directions regarding the future interest, there does not appear to be any reason why the Court should; not give in the final decree what is the just and equitable right of the decree-holder to get. Interest may on further consideration be awarded on the amount entered in the certificate, (Vide Seton''s judgments and Orders, page 332, Volume I). The preliminary decree was obviously not in accordance with Rule 4, nor in accordance with Form No. 4, in Appendix D of the Code of Civil Procedure.
The final decree was prepared after due notice to the judgment-debtors and if they were in any way dissatisfied with it they ought to have taken objection at that time, or by way of an appeal from the final decree. The view in Moha Prosad Singh v. Ramani Mohan Singha 4 Ind. Cas. 546 ; 13 C.W.M.N. 744, that it is not permissible to direct in the decree absolute that future interest shall be payable, when the preliminary decree does not contain such a direction, was based upon Section 89 of the Transfer of Property Act, which did not provide for the preparation of a final decree but only provided for an order absolute on the basis of the preliminary decree. It was possible to contend under Sections 88 and 89 that the Court could not in the order absolute vary the terms of the preliminary decree which was the only decree in the suit. Under the present law in Rule 5 of Order XXXIV, the final decree has to be prepared setting out fully the terms of the decree. Here the Court is not deprived of. the power to make such a direction in the final decree as the law permits and which the end of justice requires. It is also clear that the Court in passing the preliminary decree did not intend to deprive the decree-holder of the interest, for there is no mention, in the decree or in the judgment, of any reason for not allowing future interest to the decree holder till realisation. The judgment and the decree are silent about it. The presiding officer who passed the final decree is the same officer-that had passed the preliminary decree and most have been satisfied that he did not intend to refuse - future interest when: the preliminary decree was prepared. The final decree being explicit in its terms, the executing Court cannot be asked to modify or vary it in any way by construing it in the light of the preliminary decree. The Court must execute the decree as it is. The objection of the judgment debtors was rightly overruled by the; Court below.
I also agree with the view that the dower Court should determine the valuation of the property after an enquiry into it, as required by Rule 66, Order XXI, of the Code.
I agree with the order proposed by my learned brother in its entirety.