Shamsundar Sales Corporation and Others vs M/s. Canara Finances (Regd)

M.P. Chandrakantharaj Urs, J.-This appeal is directed against the final decree dated 24-3-1987 drawn up in F.D.P. No. 3/86 arising out of the Original Suit No. 161/83 on the file of the Principal Civil Judge, Mysore. In the course of this order, we propose to refer to the parties by the ranks assigned to them in the trial Court.

This is a defendants'' appeal. The facts leading to this appeal may be stated briefly and they are as follows:

Plaintiff-M/s. Canara Finances advanced a sum of Rs. 2,00,000/- as loan to the first defendant Shamsundar Sales Corporation. According to the plaint allegations the defendants-1 to 10 on account of their financial exigencies and various business commitments obtained a loan accommodation of Rs. 2,00,000/-.

In that behalf by an application dated 26-4-1980 defendants-4 to 10 as partners of the first defendant firm authorised defendants 2 and 3 to borrow the said sum of Rs. 2,00,000/- from the plaintiff. The plaintiff having considered the application sanctioned the loan and on 5-5-80 defendants-2 and 3 on behalf of the 1st defendant, in the capacity as Managing Director and partner respectively of the 1st defendant received the sanctioned loan of Rs. 2,00.000/- and executed an On Demand Promissory Note dated 5-5-1980 agreeing to repay the same on demand with interest at 21% The 11th defendant, who was interested in the first defendant firm voluntarily executed the suit pronote on 5-5-80 along with defendants-2 and 3 agreeing to repay the amount with interest at 21% as earlier stated. Therefore, the 11th defendant was a joint executant to the suit Pronote and made himself liable to repay the loan along with defendants-1 to 10. Defendants as security for the loan deposited title deeds of the schedule property along with the application dated 26-4-1980 and also acknowledged having deposited the title deeds to the plaintiff by a letter dated 7-5-1980. The property to which the title deeds related was offered as security for the repayment of the loan. Defendants did not repay the loan. Therefore, the suit was presented seeking a decree for a sum of Rs. 3,03,914-25ps. constituting the principal amount advanced as well as the interest at the agreed rate from the date of loan till the date of suit. A specific prayer was for preliminary decree against defendants-1 to 10 for the aforesaid sum with current interest at 21% per annum, granting time to the defendants to pay the decreetal amount by passing a decree against the 11th defendant for the principal sum together with interest claimed and on failure of defendants-1 to 10 to pay the amount within the time stipulated, to pass a final decree for the realisation of the decretal amount by sale of schedule property and to further pass a decree if the whole amount is not realised by the sale of schedule property to proceed personally against defendants-1 to 10.

The suit was contested by the defendants. From the perusal of the judgment of the trial Court granting preliminary decree we find that written statement was filed by the 1st defendant-firm admitting the borrowing of Rs. 2,00,000/- on 5-5-1980. However, it is contended that there was a valid mortgage and plaintiff could proceed against the mortgage property by obtaining a preliminary decree. It further contended in the written statement, as the deposit of title deeds was earlier than the execution of the On Demand Promissory Note, the claim founded on the Promissory Note had been extinguished.

On such pleadings, the Court-below framed one issue only as follows:

"Whether the first defendant proves, as the deposit of title deeds was prior to the execution of Demand Promissory Note, the liability under the Promissory Note has been extinguished and the plaintiff to proceed against the properties mortgaged?"

In that circumstance, the burden was on the defendants and they had to commence leading of evidence to discharge the burden cast on them. It is further clear from the judgment resulting in the preliminary decree that the defendants went on taking time to commence the evidence from 1-5-85 apparently on the ground of reporting settlement. But no such settlement was reported till 16-10-1985. On 16-10-85 the defendant was directed to be ready on 18-11-85. On 18-11-85 defendants and their Advocates were absent. Therefore, they were directed to be ready on 29-11-85. On 29-11-85, again the defendants and their Advocates were absent. In the result, they were placed ex-parte on the last mentioned date. To prove the plaint claim PW. 1 an Accountant of the plaintiff-firm was examined. He spoke to the sanctioning of the loan in a sum of Rs. 2,00,000/- the execution of the Promissory Note as at Ex P.1 and the consideration receipt in respect of Ex.P. 1 as at Ex.P. 2. He also deposed that on 6-5-80 the defendants deposited the title deeds and confirmed the same by letter Ex.P. 3. on 7-5-80. Documents tendered as title deeds were Ex.P. 4-the sale deed, Ex.P. 5 the transfer of Khatha. Ex.P. 6 and P. 7 the two receipts, Exs.P. 8 and P. 9 the endorsements and Exs.P. 10 and P. 11 the kandayam receipts. Despite several demands the defendants failed to pay the claim.

On such evidence in support of the suit claim adduced by the plaintiff the preliminary decree came to be passed in the following terms: The suit of the plaintiff is decreed as prayed for with costs. There shall be preliminary decree to recover the decretal amount. Three months time given to the defendants. Dictated to the Stenographer, transcribed by him corrected and then pronounced in open Court this the 30th day of November, 1985.

These are matters of record and are not seriously disputed. Thereafter as defendants did not pay the decretal amount within the period specified in the preliminary decree, application was made by the plaintiff under Order 34 Rule 5(3) of the Code of Civil Procedure paying for a final decree to recover the decree amount by sale of the plaint schedule property. Notice of the application was served on the defendants and they entered appearance through a Counsel. No objections were filed by the defendants or their Counsel. In the result, the Court had apparently no choice but to pass a final decree as it has done which is the one under appeal. It has directed the sale of the property for recovering the amount decreed.

Before we deal with the contentions urged by Sri H. Subramanya Jois, we feel it necessary that certain other facts should be stated. The appeal was filed belatedly as well as by paying the limited court fee of Rs. 3,000/- pursuant to an order passed by this Court in a writ petition filed by the defendants inter alia challenging the validity of the provisions of Karnataka Court Fees and Suits Valuation Act. Therefore, the appeal was registered subject to the outcome of the writ petition. The writ petition came to be dismissed. The order of this Court in a batch of petitions upheld the validity of the provisions of the Karnataka Court Fees and Suits Valuation Act and has since been affirmed by the Supreme Court. In that circumstance, the appellants were directed to pay deficit court fee on the valuation made by them and it has since been paid. Thereafter, the matter came up for condonation of delay. At that time, we were inclined to condone the delay and examine the merits of the appeal only on the condition that appellants would pay a sum of Rs. 4,00,000/- to demonstrate the bonafides in prosecuting the appeal. They have since complied with it and therefore, we must record that a sum of Rs. 4,00,000/- has been paid as on this day towards the satisfaction of the decretal amount.

Now the preliminary decree is an ex-parte preliminary decree is not in dispute. Nevertheless Mr. Subramanya Jois contended that there was no adequate opportunity for the defendants to present their side of the case in support of the issue raised. That is to explain what they meant by extinguishment of their obligation to pay under the Promissory Note. We fail to understand the thrust of the argument in regard to lack of opportunity. We have narrated the sequence of events. The Code of Civil Procedure contemplates no other or further opportunity than what has been afforded to the defendants like any other defendant in similar position. If the opportunity prescribed by the C.P.C. is given to the party, he cannot be heard later on to complain that opportunity was not adequate. Such an argument would be a direct attack on the inadequacy of the provisions made in the C.P.C. for appropriate hearing or manner of hearing of original, suits. Therefore, such an argument is not countenanced by us and we reject it. We hold that defendants had more than adequate opportunity but failed to make use of the opportunity and they are to be blamed for it and none else.

It was next contended by Mr. H. Subramanya Jois that the Court could not have passed a preliminary decree founded on the cause of action based on a Promissory Note. He further asserted, in the result there could have been only a decree simplicitor for recovery of money borrowed under the promissory note and therefore question of proceeding to draw up a preliminary decree and then to resort to final decree proceedings under Order 34 Rule 5 did not arise at all and as such the final decree under appeal is liable to be set aside.

We fail to see how this can be argued in this Court, which is quite contrary to the stand taken in the written statement filed by the 1st defendant in the trial Court. The specific stand taken was that the deposit of title deeds was prior to the execution of the Promissory Note and therefore the plaintiff should recover the suit claim by sale of mortgaged properties, and there was no liability on the part of the defendants subsisting on the date of the suit under the suit pronote. We find from the oral evidence of PW. 1 which we have summerised earlier that the title deeds were deposited on 6-5-80 and a letter evidencing such deposit dated 7-5-80 was also delivered to the plaintiff. That evidence has not been rebutted or contradicted by any other evidence produced by the defendants as is obvious. Therefore, the question of liability or nonliability under the Pronote was a matter, which was never proved by the defendants despite the opportunities given. In that circumstances, it will not be open to the appellant-defendants to contend at this stage that the Court should have looked at the pleadings in the plaint and proceeded to pass an order notwithstanding the fact that what was admitted or deemed to have been admitted by non-traverse in the written statement in terms of Order 8 Rule 5 of C.P.C. We therefore have no hesitation having regard to the decision of this Court in the case of State of Karnataka v Hemraj Achalchand (ILR 1985(1) Kar. 951) that the preliminary decree drawn up and the order preceding it made by the Court below after due application of mind satisfies the requirements of the definition of a ''judgment'' under the Code of Civil Procedure and therefore it cannot be assailed on the ground urged by Mr. Subramanya Jois. The said judgment of our High Court stands affirmed in all material details by the decision of the Supreme Court in the case of Modula India v Kamakshya Singh Deo (AIR 1989 SC 163).

We therefore find no merit in this appeal and dismiss the same, subject to these observations that the suit schedule property shall be sold only for the balance of the amount that is due. We think it proper to make a further observation that no sale shall take place for 6 more weeks from today enabling as a last chance to the appellants-defendants to pay the balance of the decretal amount after giving deduction to Rs. 4,00,000/- paid pursuant to this Court''s earlier direction in this appeal.

Order accordingly.

ORDER

M.P. Chandrakantharaj Urs, J., made the following:

Petitioner is aggrieved by the announcement of a public auction of the site situated within the jurisdiction of Nayakanahatti Mandal Panchayat in Challakere Taluk in Chitradurga District. He has alleged that he has acquired right to use the site now proposed to be auctioned by the Mandal Panchayat as an access to his house. He, therefore, contends that the land does not belong to the Mandal Panchayat, but belongs to the Government and as such the Mandal Panchayat cannot auction the same. He also contends that the Mandal Panchayat cannot auction the land in violation of Section 62 of the Act.

Section 62 of the Act requires prior sanction of the Government before the Mandal Panchayat could dispose of its immovable properties. As the land does not belong to the Mandal Panchayat, as asserted by the petitioner. Section 62 of the Act is not attracted. If the land is auctioned, the buyer acquires no right and the petitioner cannot be said to be aggrieved thereby. If the petitioner himself is aggrieved and his right acquired in Government land is affected by the same, then he should establish the right he has acquired in a Civil Court of competent jurisdiction and seek all reliefs there.

Subject to the above observations, this petition is dismissed as ill-conceived and not maintainable as the petitioner has no locus-standi.

Writ petition dismissed.