Sri Datla Venkata Suryanarayana Jagapati Raju Bahadur Garu and Another vs Sri Rajah Inuganti Venkataraja Gopala Surya Rao Bahadur Garu and Others

The question in appeal is whether the respondents (defendants Nos. 2 to 8) decree-holders in Original Suit No. 69 of 1902 are entitled to

rateable distribution along with the plaintiffs who obtained a decree against the same judgment-debtor, the 1st defendant in Original Suits Nos. 57

and 58 of 1904. The plaintiffs, after having obtained the decree, sold the properties of the 1st defendant in execution thereof on the 3rd August

1906. One-fourth of the sale-proceeds was then paid into Court and the balance was deposited in Court on the 17th August 1906. The

defendants Nos. 2 to 8 obtained their decree on the 9th March 1903 against the 1st defendant who was the 2nd defendant in that suit and also

some other parties. Whether it is a money decree or not so far as the 1st defendant is concerned, is one of the questions in dispute. On the 13th

August 1906, they made an application u/s 90 of the Transfer of Property Act for a personal decree and on the 17th of the same month they

obtained a decree by consent, which, undoubtedly, is a personal decree against the 1st defendant. On the same date, they made an application

(Exhibit C) for rateable distribution. It will be observed that this was the same date on which the balance of the sale-proceeds was paid into Court

by the purchaser of the properties in execution of the plaintiff''s decree in Original Suits Nos. 57 and 58 of 1904. The plaintiffs dispute the right of

the respondents to claim rateable distribution. The Subordinate Judge held that under the decree in Order Suit No. 69 of 1902, dated the 9th

March 1903, the respondents were not entitled to any rateable distribution as it was not a money decree; but he was of opinion that the decree

which was passed on the 17th August 1906 was not collusive and, therefore, illegal as contended for by the appellants and that the respondents

were, therefore, entitled to rateable distribution under that decree. With reference to another argument that was advanced on behalf of the

appellants that, as the purchase-money was realised on the 17th August and the respondents obtained their consent decree only on the same day,

it cannot be said that they had made an application ""before the realization of the sale-proceeds"" which is necessary to entitle them to rateable

distribution u/s 295 of the Civil Procedure Code, the Subordinate Judge held that, as a matter of fact, the decree was passed and the application

was made before the realization and that, therefore, the respondents were not disentitled to rateable distribution on that ground. In appeal, the

same contentions have been mainly pressed upon us on behalf of the appellants.

It was contended before us that the decree passed on the 9th March 1903 in Original Suit No. 69 was not a personal decree. That suit was

brought by the respondents Nos. 2 to 8 against the 1st defendant, Surya Rao, who was the 2nd defendant in that suit, and also against one

Venkatrama Ravanim Garu, the 1st defendant therein, and his minor sons who were defendants Nos. 3 and 4 in that suit, on a mortgage bond

executed by the 1st defendant therein and the father of Surya Rao the present 1st defendant. The plaintiffs prayed for a decree directing the

defendants Nos. 1 to 4 to pay the amount due to them into Court, and in default, for the sale of the mortgaged property subject to the claims of

certain prior mortgagees; for payment by the 1st defendant therein of the balance due after such sale and for the recovery of such balance by the

sale of the other family properties of defendants Nos. 1, 3 and 4 and the family properties of the 2nd defendant, Surya Rao, the present 1st

defendant (See Exhibit II). The decree directed the 1st defendant therein to pay to the plaintiffs the amount claimed above Rs. 90,000 with interest

thereon within a certain date Then after the usual directions for the sale of the property in default of payment etc., there followed this important

direction ""that the defendants Nos. 2 to 4 be exempted from personal liability to the decree and that their shares in the mortgage property be

answerable."" (See Exhibit A). The question that was argued at great length in this case was whether this was a personal decree or not; and both

sides relied upon the Full Bench case in Vaidhinadasamy Aiyar v. Somasundaram Pillai 15 M.L.J. 126. In that case, it was held that every decree

by virtue of which money is payable is to that extent a decree for money."" The decree in the case before the Full Bench contained an order for the

sale of the mortgaged property and also an order for the recovery personally from the judgment-debtor what might remain undischarged after the

sale of the mortgaged property. There were similar directions in the other cases decided by this Court referred therein, viz., Kommachi Kather v.

Pakker 7 M.L.J. 66 and Abdulla Sahib v. Doctor Oosman Sahib 28 M.k 224. This is the usual form of decree passed in mortgage suits in this

Presidency and as all these decrees contain a direction for the payment of the money, though the mortgaged properties are first to be sold and it is

only for the un-discharged balance that the judgment-debtor is to be personally liable, such decrees are decrees for money according to this Full

Bench decision. In a later case, however Krishna v. Venkatapathi Chetti (sic)18 there was only a decree for the recovery of the money by the sale

of the mortgaged property. There was no order for payment of money nor was there any order that the balance may be recovered personally or

from the other properties of the debtor; and yet it was held on the strength of the Full Bench decision that it was a money decree. It may be

reasonably doubted whether the Full Bench decision goes the length.

The decree in the case of Krishnan v. Venkatapathi Chetti (sic)18 may be a decree for money according to the Full Bench decision to the extent

it may be discharged by the sale-proceeds of the property sold. As for the balance that might be due, if there is no decree at all directing the

defendant to pay the money, there can scarcely be said to be a money decree. However, in the decree in Original Suit No. 69 passed on the 6th

March 1903, there is no direction that the 2nd defendant, Surya Row, should pay any money at all. On the other hand, his share in the mortgaged

property is alone declared to be answerable. This might make it a personal decree according to the decision of Krishnan v. Venkatapathi Chetti

(sic)18 to the extent of the sale-proceeds that may be realized by the mortgaged property, but in this case it is admitted by the respondents in their

petition (D) for a decree u/s 90, Transfer of Property Act, that the mortgaged property is worthless, that it is encumbered to much more than its

market-value and that when they attempted to get the property sold in Court auction there was no bid at all. Mr. Srinivasa Aiyangar also relies

upon the provision in the decree that the 2nd defendant is exempted from personal liability to show that it cannot be construed as a personal

decree. The contention appears to be right. There can scarcely be said to be a money decree in the face of such a provision. We confirm the

finding of the Subordinate Judge on this point.

The next question is whether the defendants respondents Nos. 2 to 8 are not entitled to rateable distribution under the decree as modified on the

17th August 1906. Various objections are taken to this decree. It is, however, necessary to consider only one of them. As already pointed out, the

decree originally passed on the 9th March exempted the defendants Nos. 2 to 4 from any personal liability. This amounts to a decision that they

were not liable. Their properties, therefore, could not have been attached and sold in execution of that decree. The matter is res judicata. See

Abbakke v. Krishnayya 5 M.L.T. 246.

The respondents, however, made an application on the 13th August 1906 for a decree to be passed u/s 90 of the Transfer of Property Act.

They further alleged that sums due to certain prior mortgages amounted to seven lakhs of rupees which was more than the value of the mortgaged

property and prayed for a decree directing the decree amount to be recovered from the 1st defendant personally and from the family properties of

defendants Nos. 2 to 4. On this application, the following decree was passed by consent: ""This Court doth order and decree that the plaintiffs do

recover from the 1st defendant personally and from the family of defendants Nos. 1 and 2 Rs. 85,709-12-6 etc."" It appears that the respondent''s

application for a decree u/s 90 presented on the 13th August was first posted to the 22nd August for hearing (See Exhibit E) and that petitions

were presented by both parties on the 17th consenting to a decree being passed as prayed for (See Exhibits E and F). It is admitted by the

defendant, one of the decree-holders in Original Suit No. 69, as plaintiff''s first witness, that an agreement was entered into between himself and

Surya Rao, the judgment-debtor in that suit, that he should consent to such a decree being passed against him and if the decree-holder were on

account of such decrees awarded any amount for his share in the rateable distribution of assets, he should divide it with, the judgment-debtor; the

decree-holder was to take two-thirds and Surya Rao, one-third and it was on this understanding that the judgment-debtor agreed to the decree

being ""converted"" into a money decree (See the deposition of the 2nd defendant). There was, therefore, undoubtedly a corrupt bargain between

the parties. The judgment-debtor consents to a decree being passed against him for a consideration to be received by him consisting of a share of

the money which the decree-holder would in that event receive out of the sale-proceeds to the detriment of the present plaintiffs. If the judgment-

debtor had not consented to that, the decree-holder, the 2nd defendant, would not have realized anything and the plaintiffs (appellants) would have

realized the entire sale proceeds. Thus according to the terms of the decree which was passed on the 9th March, the plaintiffs therein were not

afterwards entitled to get a decree for money against the judgment debtor in that suit; the decree for money subsequently passed was, no doubt,

one obtained in collusion; the plaintiffs (appellants) were clearly entitled to prove that it was so obtained as they are prejudiced thereby.

We hold, accordingly, that the respondents were not entitled to claim any rateable distribution under this decree and they are directed to pay to

the plaintiffs the amount received by them Rs. 7,984-14-9 with future interest at 6 per cent.

The appellants are entitled to their costs throughout.