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Judgment
Alfred Henry Lionel Leach, C.J.—On the 7th April, 1936, the first respondent filed the suit out of which this appeal arises in the Court of
the Subordinate Judge of Ellore to recover the sum of Rs. 7,248-10-8, which he claimed to be due on a mortgage created by the second
respondent in favour of the third respondent, who had assigned his interest to him. On the 2nd March, 1931, the appellant, who was the third
defendant in the suit, obtained in proceedings before the Registrar of Co-operative Societies an award entitling him to recover Rs. 1,116-6-2 from
the second respondent. On the 18th May, 1931, the appellant attached in execution proceedings in the Court of the District Munsif of Ellore two
items of the properties covered by the'' mortgage in suit. On, the 15th December, 1932, the third respondent filed a petition asking that the District
Munsif should direct the properties attached by the appellant to be sold subject to his mortgage. On the 25th January, 1933, the District Munsif
passed this order on the third respondent''s petition:
Heard pleaders. The mortgage is said to be collusive. Its existence and decree-holder''s allegation about it will be notified at the time of the sale
which comes on on 27th February, 1933. No further order.
The attached properties were in due course put up for sale by auction and the appellant purchased the second respondent''s equity of
redemption in them. The appellant defended the mortgage suit on the ground that the first respondent had lost all interest in the two items by reason
of the fact that the suit was not filed within twelve months of the order dated the 25th January, 1933. His argument was that the petition filed by the
third respondent asking that the property be sold subject to his mortgage was a claim petition and that the order of the 25th January, 1933,
amounted to an order against him within the meaning of Order 21, Rule 63. The Subordinate Judge rejected this contention and granted the first
respondent a mortgage decree for Rs. 3,475 with interest and costs.
Order 21, Rule 58 provides that, where any claim is preferred, or any objection is made to an attachment on the gr6und that the property
attached is not liable to attachment, the Court shall proceed to investigate the claim or objection. Rule 60 deals with the circumstances in which the
Court shall release the property from attachment and Rule 61 the circumstances in which it shall disallow the claim. Rule 62 says that, where the
Court is satisfied that the property is subject to a mortgage or charge in favour of some person not in possession, and thinks fit to continue the
attachment, it may do so, subject to the mortgage or charge. Rule 63 says that where a claim or an objection is preferred, the party against whom
an order is made may institute a suit to establish the right which he claims to the property in dispute, but, subject to the result of a suit, the order
shall be conclusive. Article 11 of the Limitation Act provides that a suit to set aside an order falling within Order 21, Rule 63, shall be filed within
one year from the date of the order. If the order of the 25th January, 1933, is an order which falls within the purview of Rule 63, the suit is out of
time. The first respondent, however, contends that the order of the 25th January, 1933, is not an order against him and that therefore the, case
does not fall within Article 11 of the Limitation Act.
For the appellant great reliance is placed upon the decision of a Full Bench of this Court in Venkataratnam v. Ranganayakamma (1917) 35
M.L.J. 335 : ILR 41 Mad. 985 . In that case a Zamindarini applied for the removal of the attachment of property which was about to be sold in
execution, claiming it as her own. The District Munsif passed an order on this petition in these terms:
As this petition was filed late, this claim is ordered to be notified to the intending bidders.
A further petition was then presented and the District Munsif passed this order:
The allegations of the Zamindarini will be notified to the bidders with the remark that the Zamindarini did not take steps for her claim being
enquired into during the last ten months.
The Full Bench, which consisted of Wallis, C.J. and Oldfield and Seshagiri Aiyar, JJ., held that the second order amounted to a rejection of the
Zamindarini''s claims On the ground that it had been filed late. The Court was there considering a particular order and the decision which it gave
must be confined to the facts of that case. It is true that Seshagiri Aiyar, J., said that an order on a claim petition which expresses no final judgment
upon the right put forward, but simply directs the sale after notifying the claim, is an order against the claimant and the claimant is bound to institute
a suit under Article 11 of the Limitation Act, but that was not the decision of the Court. The decision of the Court was expressed in the concluding
words of the judgment of Wallis, C.J., which are these:
Though the order only was that the allegations of the Zamindarini would be notified to bidders, we think it amounted, and was understood to
amount, to a rejection of the claim on the ground that it was filed too late.
Both Oldfield and Seshagiri Aiyar, JJ., agreed with this statement. This decision has been read in the same way in Abdul Kadir Sahib Vs.
U.T.M. Somasundaram Chettiar, , Aisamma Vs. Moideen Kunhi Behari and Another, , Kandasami Mudaliar v. Sivagurunatha Mudaliar (1934)
41 L.W. 500, Manicka Mudali v. Abdul Karim Sahib (1935) 42 L.W. 710 and Seetaramayya v. Subramanyam (1934) 68 M.L.J. 518 : ILR 58
Mad. 936.
Before Article 11 of the Limitation Act applies, there must be an order against the applicant, whether claimant or decree-holder. If the order is
not adverse, Article 11 of the Limitation Act can have no application. The observations of Varadachariar, J., in Manicka Mudali v. Abdul Karim
Sahib (1934) 68 M.L.J. 518 : ILR 58 Mad. 936, are very much in point. After he had discussed the Full Bench decision in Venkataratnam v.
Ranganayakamma (1917) 35 M.L.J. 335 : ILR 41 Mad. 985 , the learned Judge went on to say:
Neither the learned Chief Justice nor any of the other Judges of the Full Bench suggested how a mere rule of conclusiveness as against a successful
claimant is to be evolved or implied from a previous order which merely refused to investigate the claim. It seems reasonable to conclude that the
conclusiveness even as against a defendant can arise only if an order on the merits had been passed under Rules 60, 61 and 62. Even assuming
that a dismissal may be interpreted as an implied adjudication against a claim, it will be unreasonable to regard an order like that passed on the first
occasion in the present case merely recording the petition as an implied adjudication on the merits against the claim, so as to preclude the executing
Court on a later occasion from investigating the claim on the merits.
Now, can it be said that the order of the 25th January, 1933, passed in this case is an order dismissing the third respondent''s petition or an
order prejudicial to him? It obviously cannot be construed as an order of dismissal and I am emphatically of the opinion that it is not an order
against him. The third respondent did not ask for the attachment to be removed. All that he wanted to make sure of was that his position as
mortgagee was not going to be prejudiced by the sale. Whether the property was sold expressly subject to his mortgage or whether it was sold
without reference to it would not be detrimental to him. All that the Court could confer upon the auction-purchaser was the right, title and interest
of the judgment-debtor and all that the judgment-debtor possessed at the time of the sale was the equity of redemption in the property put up for
auction. The District Munsif satisfied the third respondent by directing that the existence of the mortgage should be brought to the notice of the
bidders at the auction. As I am of the opinion that the order does not fall within the purview of Order 21, Rule 63 it follows that I do not regard it
as being within Article 11 of the Limitation Act. To hold otherwise would be to do immense injustice to the first respondent who is the assignee of
the mortgage. Each case must be decided according to its own facts. If the order is of the nature of that considered in Venkataratnam v.
Rnganayakamma (1917) 35 M.L.J. 335 : ILR 41 Mad. 985 , the Full Bench decision will be binding, but not otherwise.
I would dismiss the appeal of the first respondent with costs.
Krishnaswami Aiyangar, J.
I agree.