Saradambal vs A.M.P. Arunachalam

M.M. Ismail, J.—The appellant herein who was the judgment-debtor in O.S. No. 5 of 1953, filed an application under Order 21, Rule 90,

CPC on 30th September, 1963 for setting aside the sale of the property that took place in execution of the decree in the suit and purchased by the

respondent herein, and also filed an application for dispensing with the furnishing of security contemplated by the proviso to Order 21, Rule 90,

Civil Procedure Code. I must mention the fact that the suit itself was based on a mortgage and the respondent herein who was the decree-holder

purchased the property in auction for a sum of Rs. 2,005. The application filed by the appellant for dispensing with the furnishing of security was

numbered as E A. No. 525 of 1963, the same was dismissed and the appellant herein was directed to furnish security for a sum of Rs. 2,000

within one month from the date of the order, dated 14th November, 1963. The learned Subordinate Judge of Chingleput who disposed of that

application stated that the point for determination before him was whether it Was a fit case for dispensing With security to be furnished under

Order 21, Rule 90, CPC and then answered the point as follows:

On behalf of the petitioner, an affidavit filed by Valliammal in C.M.P. No. 2194 of 1953 In C.M.A. No. 127 of 1953, high Court, Madras, has

been marked as Exhibit A-1 and in paragraph 5 of the said affidavit, it is alleged that the building was fetching, a rent of Rs. 500 per month. Exhibit

A-2 gives the value of the property at Rs. 60,600 while according to Exhibit A-1, the four mortgage debts amounted to Rs. 35,000. It is

contended that all the mortgages are old and have ripened to decrees and that no amount was paid, whether towards principal of interest, and that

the property has deteriorated, in value, and therefore security cannot be dispensed with. On the materials placed before me, I find that it is a fit

case to call upon the applicant to furnish security to the extent of Rs. 2,000 and therefore the petition for dispensing with the security to be

furnished under Order 21, Rule 90 of the Civil Procedure Code, is dismissed with costs. The time one month.

Thereafter the appellant furnished an extent of 72 cents of punja in S. No. 88/6 in Aviyur village, Gingee Taluk, South Arcot District as security.

The respondent herein opposed it on the ground that the same Was insufficient. Thereafter, by an order dated 10th December, 1964 the learned

Subordinate Judge of Chingleput held that the security offered by the appellant was hot sufficient, that the same could not be accepted as security

furnished in terms of the order in E.A. No. 525 of 1063 and that once the security was not furnished as called for, the application could not be

maintained ; and he consequently dismissed with costs the application E.A. No. 15 of 1964 filed by the appellant for setting aside the sale. The

present appeal has been filed against that order.

Mr. A. Ramanathan, the learned Counsel for the appellant, advanced the following contentions.

The order dated 14th November, 1963 made in E.A. No. 525 of 1963 was erroneous on two grounds : (i) that the proviso to Order 21, Rule

90, Civil Procedure Code, requiring the urnishing of security has no application to a mortgage decree ; and (ii) that even assultiing that it has

application, the learned Subordinate Judge-erred in demanding security on the facts of this case;

The order dated 14th November, 1963, made in E.A. No. 525 of 1963 can be questioned by the appellant in the present appeal which has

been preferred against the order dated 10th December, 1964 made in E.A. No. 15 of 1964; and

On 16th January, 1964 the learned Subordinate Judge had admitted E.A. No. 15 of 1964 and consequently after the stage of admission he had

no jurisdiction to demand security. These contentions of the learned Counsel for the appellant are refuted by Mr. R. Rajagopal Aiyar, the learned

Counsel for the Respondent.

Logically I shall take the second contention first, because if I came to the conclusion that the appellant is not entitled to challenge the correctness

of the order dated 14th November, 1963 in the present appeal, it will be unnecessary for me to go into the first question whether that order is

correct or not. The argument of the learned Counsel in this behalf is that the order dated 14th November, 1963 is merely an interlocutory order

and it does not determine the rights of the parties; nor does it put an end to or terminate the application filed by the appellant for setting aside the

sale. According to the learned Counsel the dismissal of the application to dispense with the security will have only the consequence of compelling

him to furnish security and only if he does not furnish security in terms of the order dated 14th November, 1963 his application for setting aside the

sale Would become liable to be dismissed. Therefore, the order, dated 14th November, 1963 is only an interlocutory order which can be

challenged in the appeal preferred against the final order, dated 10th December, 1964. For this contention the learned Counsel relied on several

decisions and the provisions contained in Section 105 read with Section 108, Civil Procedure Code. In Maharaja Mokeskur Singh v. Bengal

Government (1865) 7 M.I.A. 283, the Privy Council stated:

We are not aware of any law or regulation prevailing in India which renders it imperative upon the suitor to appeal from every interlocutory order

by which he may conceive himself aggrieved, under the penalty, if he does not so do, of forfeiting for ever the benefit of the consideration of the

appellate Court. No authority or precedent has been cited in support of such a proposition and We cannot conceive that anything Would be more

detrimental to the expeditious administration of justice than the establishment of a rule which would impose upon the suitor the necessity of so

appealing; whereby on the one hand he might be harassed with endless expense, and delay, and on the other inflict upon his opponent similar

calamities.

In Chandrabala Debi v. Prabodh Chandra Ray ILR (1909) Cal. 422, time had been repeatedly granted ""by the Court at the instance of the

judgment-debtor with the consent of the decree-holders for compromise and on the final date to which payment was adjourned, the judgment-

debtor prayed for further time and the decree-holder demanded it as a condition precedent to the grant of further time that the judgment-debtor

should definitely agree that upon her failure to pay the money on the date to be fixed, her right to challenge the validity of the sale should finally

cease. Notwithstanding this arrangement, the Court subsequently extended the time for payment of the money and permitted the judgment-debtor

to deposit part of the decree amount on a particular day and gave her further time to pay the balance of the money. On the judgment-debtor

complying with this order, the sale was set aside. Against the order setting aside the sale, the auction-purchaser filed the appeal. The question

arose whether in that appeal the auction-purchaser could challenge the earlier order passed by the Court granting time to the judgment-debtor to

pay the money. A Division Bench of the Calcutta high Court took the view that he could challenge the earlier order and he was not bound to prefer

a separate appeal .against the earlier order. The learned Judges pointed out:

In our opinion it was not necessary for him to do so. As was pointed out by this Court in Behary Lal Pundit v. Kedar Math Mullick ILR (1891)

Cal. 469, an appeal need not be preferred against every order in an execution proceeding. If the contrary view prevailed, and if appeals were

allowed to be preferred against interlocutory orders, there might be innumerable appeals in the course of one execution proceeding. It is open to

the party aggrieved to challenge by an appeal against the final order which determines the fights of the parties, the propriety of the interlocutory

orders made in the course of the proceedings.

These principles have been given statutory sanction in the form of Section 105 Civil Procedure Code. Sub-section (1) of Section 105 provides

Save as otherwise expressly provided, no appeal shall lie from any of order made by a Court in the exercise of its original or appellate jurisdiction;

but where a decree is appealed from, any error, defect or irregularity in any order , affecting the decision of the case, may be set forth as a ground

of objection in the memorandum of appeal.

It may be observed that the second limb of the sub-section applies not only to non-appealable orders but also appealable orders which are not

appealed against. This is clear from the language of the section itself. Apart from that, Sub-section (3) of Section 105 which provides an exception

to the second limb of Sub-section (1) of Section 105 states that any party aggrieved by an order of remand is precluded from disputing its

correctness, if he has not preferred an appeal against the said order where such order is appealable. Consequently the language of Section 105

makes it clear that it is open to a party not to prefer an appeal against no order which is appealable under CPC and yet to challenge its correctness

in an appeal preferred against the final decree where that order has affected the decision of the case. Mr. Rajagopala Iyer contended that the

second limb of Sub-section (1) of Section 105 will apply only to orders against which an appeal lies and that too when the ultimate appeal is

preferred against a decree and not against an order. I have already pointed out that the second limb of Sub-section (1) of Section 105 applies to

orders, whether appealable or non-appealable. Otherwise, the observations referred to by me, in the decisions cited above, will have no meaning,

because there can be no question of a party not being obliged to prefer an appeal against an order which is not appealable. With regard to the

second part of the objection of Mr. Rajagopala Iyer, it has to be pointed out that by virtue of Section 108, Civil Procedure Code, the provisions of

Section 105 will apply to the case of an appeal against final order also. In Alagappa Chetty v. Annamdai Chetty (1916) 4 L.W. 411., Seshagiri

Iyer, J., observes:

I am inclined to think that the principle of Section 105, Civil Procedure. Code, Would apply not only to decrees and interlocutory orders, but also

to orders and interlocutory orders which lead upto the final order. The principles enunciated in Jones v. Gough (1865) 8 M.P.C. 12, and Cameron

v. Fraser (1842) 4 M. I.A. I to which Mr. Rajah Aiyar on behalf of the respondent drew my attention support, this view.

This has been followed by Menon, J., in Muthayyan Swaminatha Sastrial and Others Vs. S. Narayanaswami Sastrial and Others, , The

Supreme Court in Satyadhyan Ghosal and Others Vs. Sm. Deorajin Debi and Another, , after elaborately referring; to Section 363 of the CPC of

1859 and the corresponding provisions in the subsequent Civil Procedure Codes, and to Section 105 of the present Code of Civil Procedure,

stated:

It is clear therefore that an interlocutory order which had not been appealed from either because no appeal lay or even though an appeal lay an

appeal was not taken could be challenged in an appeal from the final decree of order.

In the light of these decisions, I am of the view that the appellant in the present case is entitled, to challenge the validity or the correctness of the

order dated 14th November, 1963 dismissing the application of the appellant to dispense with the furnishing of security, in the present appeal

preferred against the order dismissing his application to set aside the sale. The learned Counsel points out that in the grounds of appeal preferred to

this Court he has challenged the correctness of the order dated 14th November, 1963. In this connection Mr. Ramanathan, the learned Counsel

for the appellant, invited my attention to the decision of the Travancore-Cochin high Court in Mohamad Ali v. Abdul Rakiman AIR 1952 T.C.

In that case the execution Court declared that the decree-holder was entitled to interest on mesne profits awarded to him by the decree,

though the decree itself did not make any such provision. However, no appeal was preferred against the order declaring that he Was entitled to

interest; but that order was sought to be challenged in the appeal preferred against the final order. The learned Judges of the Travancore-Cochin

high Court took the view that the appellant was entitled to do so. However, the learned Judges Were of opinion that if the appellant had not raised

the question in the memorandum of appeal, he would not be entitled to do so. The learned Judges observed:

The circumstance that the appellant had not in his memorandum of appeal made the correctness of the execution Court''s order as to interest on

mesne profit a ground of objection disentitled him to raise the question before the lower appellate Court.

I would like to make one comment With regard to this observation. If this observation of the learned Judges merely referred to the general

principle that it is in the discretion of the Court whether it will allow an appellant to urge a point at the time of the hearing, which was not raised in

the ground of appeal, or not, there can be no dispute with regard to the statement of the learned Judges. But If they are of the view that the right of

an appellant to canvass the correctness of an earlier order in the subsequent appeal is available to him at all only if he had raised the question in the

grounds of appeal, I find it difficult to subscribe to such a proposition.

There is an unreported decision of this Court in Santhia, Servai v. Soldyappa Chettiar C.M.A. Nos. 86 and 92 of 1959, to which I am referred

to by the learned Counsel for the appellant. In that case the appellant applied for setting aside the sale under Order 21, Rule 90, CPC and the

execution Court passed an order under the proviso to Order 21 Rule 90, CPC directing the appellant to furnish security for the amount obtained at

the sale. But as he did not take steps for testing the security offered, the application Was ultimately dismissed. Against the order dismissing the

application for non-prosecution, C.M.A. No. 92 of 1959 was filed in this Court. After dismissal of the application, the appellant filed an

application for setting aside the order of dismissal for default. That application was also dismissed by the lower Court and against that order

C.M.A. No. 86 of 1959 was preferred in this Court. It must be remembered that no independent appeal was preferred by the appellant in that

case against the order of the execution Court directing him to furnish security for the amount obtained at the sale. Notwithstanding that, in the

appeals against the final order, a Division Bench of this Court Went into the correctness of the execution Court''s order passed on the earlier

occasion directing the appellant to furnish, security allowed the appeals. In view of these decisions, I hold that the appellant in the present case is

entitled to challenge in the present appeal the correctness of the order, dated 14th November, 1963 made in E.A. No. 525 of 1963.

With regard to the first contention, I am of the view that there is no substance in that part of the contention of the learned Counsel where he

argues that the proviso to Order 21, Rule 90, has no application to a mortgage decree. The rule ""With the proviso is in the following terms:

Where any immovable property has been sold in execution of a decree, the decree-holder or any person entitled to share in a rateable distribution

of assets or whose interests are affected by the sale, may apply to the Court to set the sale aside on the ground of a material irregularity or fraud in

publishing or conducting it.

Provided that the Court may, before admitting the application, call upon the applicant either to furnish security to the satisfaction of the Court for an

amount equal to that mentioned in the sale warrant or that realised by the sale, whichever is less, or to deposit such amount in Court.

Thus it will be seen that the rule applies to every case where an immovable property has been sold-whether it is in execution of a mortgage decree

or any other decree and the language of the rule does not warrant any distinction being made between the sale of an immovable property made in

execution of a mortgage decree and that in execution of any other decree. Mr. Ramanathan, in support of his contention, relied upon the

unreported decision of this Court referred to by me above. The relevant observations in that decision on which the learned Counsel relied are as

follows:

We are satisfied that on the merits of the case the lower Court should not have demanded security from the appellant. The decree was on the basis

of the mortgage. There was therefore ample security for the amount due thereunder. To require the judgment-debtor or his representative to give

security once over for amount covered by the decree. In our opinion, the terms of the proviso to Order 21, Rule 90, Civil Procedure Code, which

requires security to be furnished either in respect of the amount mentioned in the sale proclamation, or in respect of the sale amount would be

inappropriate in the case of a mortgage decree, as there is already a subsisting security for the decree amount. It may ""be that in certain cases on

account of the delaying tactics adopted by the judgment-debtor, the existing security might depreciate and in such event it might be considered

equitable that there should be a power in Court to demand security for the deficiency viz., between the amount realised at the sale and the present

value of the property. But there is no provision in Order 21, Rule 90, Civil Procedure Code, to cover a case of such deficiency in security. In the

case of a mortgage decree it will be apparent from the above discussion that a Court can be said to be exercising its jurisdiction wisely if it does

not demand security under the proviso to Order 21 Rule 90, Civil Procedure Code.

The above observations make it abundantly clear that the learned Judges in deciding that case were merely concerned with the exercise of

discretion on the part of the Court under the proviso to Order 21 Rule 90, CPC and were of the view that the discretion must be exercised in a

particular manner in relation to a mortgage decree. The said observations do not establish that the proviso to Order 21, Rule 90, CPC is not

attracted to a case of mortgage decree. However the second part of the contention of Mr. Ramanathan is well founded. I have already extracted

the order of the learned Subordinate Judge dated 14th November, 1963 in which he has concluded that it was a fit case to call upon the appellant

to furnish security to the extent of Rs. 2,000. The learned Subordinate Judge referred to Exhibit A-1 which mentioned the rent fetched by the

property as Rs. 500 per month and also Exhibit A-2 which mentioned the value of the property as Rs. 60,000. At the same time the learned

Subordinate Judge pointed out that all the four mortgages which included the mortgage on the basis of which the present decree was obtained,

amounted to"" Rs. 35,000. The learned Subordinate Judge thereafter referred to the contention put forward on behalf of the respondent herein and

without taking into as account the value of the property With reference to the total liability that was existing on the property, he considered it a fit

case for directing the appellant to furnish security. Mr. Rajagopala Iyer contended that admittedly there were four mortgages over the property,

that for a number of years no amount was paid either towards the principal or interest, that consequently the liability on the property was swelling

day after day, that in the sale in question the property was sold only for Rs. 2,005 and that therefore there was a risk of the property fetching less

in any further subsequent sale. I am however unable to accept this contention. In the case of a mortgage decree a proper exercise of discretion on

the part of the execution Court will be to direct furnishing of security only if it comes to the definite conclusion that the value of the property will not

be sufficient to cover the liability on the property, including the amount for which the property was sold. So long as the learned Subordinate Judge

has not come to a positive conclusion on this aspect, he will not be exercising : his discretion properly or legally, if he directs the applicant to

furnish, security. Therefore, I am of the view that on the facts of this case the learned Subordinate Judge was not justified in dismissing the

application of the appellant to dispense with security and directing him to furnish security.

Then remains the third contention of Mr. Ramanathan. According to him on 16th January, 1964 the execution Court passed the following

order:

Test warrant not returned. Title deeds. Await 27th January, 1964 and. notice.

The argument is that this was an order made by the Court on the present E.A. directing notice to the other side, that would amount to admitting

the petition, that in terms of proviso to Order 21, Rule 90, Civil Procedure Code, the jurisdiction of the Court to demand security is available only

before admitting the petition and that once the Court has admitted the petition no such jurisdiction is available to it. The learned Counsel in support

of this proposition, relied on the decision of this Court in Vaidyanatha v. Indian Bank Ltd. AIR 1952 T.C. 316. In my view that decision does not

help the appellant''s contention. In the present case, as I have already stated on 14th November, 1968, the learned Subordinate Judge has directed

the appellant to furnish security within a period of one month. Thereafter the appellant furnished security. It is only at that stage on 16th January,

1964 the notice referred to above Was directed by the Court. Consequently even if the order directing notice is to be taken as constituting the

admission of the petition, which Was done after demanding security, once security had been demanded earlier to the admission of the petition, the

subsequent admission does not take away the jurisdiction of the Court : to test the security permitted to be furnished already. It is relevant to refer

to the observations of this Court in Venkata Lingamma v. Rajagopala Venkata Narasimha C.M.A. Nos. 86 and 92 of 1959, to the following

effect:

It is clear therefore to us that in issuing notice the Court did not intend to deprive itself of the power of deciding whether the security to be

eventually furnished by the petitioner Was adequate or not, and When it was found that the security Was not adequate, the Court Was entitled

under Rule 90 as now amended to dismiss the application without any further consideration on its merits.

Therefore I am of the view that on the facts of this case the contention of Mr. Ramanathan that by virtue of the order, dated 16th January,

1964 the learned Subordinate Judge had denied to himself the right to insist on the compliance With his order, dated 14th November, 1963 is not

tenable. However, in view of my conclusion that the order dated 14th November, 1963 dismissing the application of the appellant to dispense with

security is erroneous, this appeal succeeds and has to be allowed, with the result that the learned Subordinate Judge will have to dispose of the

application of the appellant for setting aside the sale on merits. There Will be no order as to costs.