RSA No.1935 of 1981 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. RSA No.1935 of 1981 Date of decision: 11.3.2010 Kanta Devi @ Kanta Rani ............Appellant Versus Gulab Singh and others .........Respondents CORAM: HON'BLE MR. JUSTICE ALOK SINGH -.- Present: Mr. Alok Jain, Advocate for the appellant. Ms. Vaneeta Sapra Kataria, Advocate for the respondents. --- 1. Whether Reporters of local papers may be allowed to see the judgment? Yes 2. To be referred to the Reporters or not? Yes 3. Whether the judgment should be reported in the Digest? Yes ALOK SINGH, J. 1. This is the second appeal filed by the defendant/appellant challenging the judgment and decree dated 24.12.1980 passed by the learned trial Court, thereby decreeing the suit of the plaintiffs/respondents, and further judgment and decree dated 20.5.1981 passed by the first Appellate Court/Addl. District Judge (I), Rohtak, thereby dismissing the first appeal filed by the defendant/appellant, confirming the judgment and decree passed by the learned trial Court. 2. The brief facts of the present case are that plaintiffs have filed present suit for possession of 1/4th share in the godown in RSA No.1935 of 1981 2 question, situated in Kath Mandi, Jhajjar Road, Rohtak. As per defendant/appellant, she was the owner of 1/4th share in the godown in question. Defendants through their mukhtiar Kailash Chand mortgaged with possession their 1/4th share in the Godown in question for Rs.20,000/- in favour of the plaintiffs vide mortgage deed dated 20.3.1969 and registered on 28.3.1969. It is further submitted that the interest was agreed to be paid @ Rs.1% per month; that the defendants agreed to get the mortgage redeemed within three years and nine months from the date of mortgage by payment of mortgage amount with interest, failing which the plaintiffs were given an option either to become owners of the mortgaged property by fore-closure after giving a notice of conditional sale or to realize the principal amount and interest by sale of mortgaged property; that the defendants had failed to pay the mortgaged amount with interest within the stipulated period, the plaintiffs served the defendants with a notice of fore-closure under Sections 7 and 8 of Bengal Regulation Act through the Court of learned District Judge, Rohtak; that the said notices were issued and the defendants were duly served with all the relevant documents on 31.10.1974 and 6.1.1975 respectively, and that the learned District Judge, filed the petition of notice on 13.1.1975, when the defendants were given one year’s time to make payment of the mortgage amount of Rs.20,000/- as well as interest. The case of the plaintiffs is that the defendants had failed to pay such payment within the prescribed period of one year and, consequently, the plaintiff had become owners of the suit property under the terms of the mortgage and was entitled to take possession thereof as owners; that if the plaintiffs were not held to be the owners of the property in question, the defendants were liable to pay the RSA No.1935 of 1981 3 mortgage amount and interest, which comes to Rs.32,000/- including interest of Rs.12,000/-; however, the plaintiffs are claiming Rs.25,000/- only by sale of mortgaged property. Hence, the present suit. 3. The suit was contested by the defendant/appellant and it was contended that the suit was not maintainable in the present form because there was no privity or contract between the plaintiffs and the defendants and that the plaint did not disclose any cause of action; that the plaintiffs could not claim interest @ Rs.1% per month because according to their allegations, the loan was a secured transaction, and consequently, the plaintiffs could not claim more than 71/2% per annum by way of interest; that the defendant/appellant never appointed Kailash Chand as her mukhtiar and as such the question of executing a mortgage deed for Rs.20,000/- in favour of the plaintiffs did not arise; that no such mortgage was executed by Kailash Chand nor he could execute the same on behalf of defendant/appellant nor he was authorized to execute the same on behalf of defendant/appellant and the question of payment of interest also did not arise; that when the mortgage was never created, the question of fore-closure of the mortgage did not arise; that if any proceedings were taken in that respect, the same were held behind the back of the defendant/appellant, who was not resident of Rohtak, and the same were, therefore, not binding on her; that the plaintiffs were not entitled to take possession of the suit property as owners; that the defendant had no knowledge about any credit having been given by Vijay Kumar, brother of the defendant; that the defendants were entitled to special costs under Section 35-A C.P.C. and that plaintiffs had no locus standi to file the present suit; that the name of RSA No.1935 of 1981 4 the defendant/appellant was Kanta Devi and not Kanta Bai. 4. On the pleadings of the parties the following issues were framed by the learned trial Court:- “1. Whether the defendants mortgaged without possession 1/4th share of the Godown in question in favour of the plaintiffs on 28.3.1969 for Rs.20,000/- as alleged?OPP. 2. Whether the plaintiffs are entitled to interest at the rate of rupee one per cent per mensem?OPP. 3. Whether the defendant agreed to get the mortgage redeemed within 3 years and 9 months as alleged?OPP. 4. Whether the plaintiffs served a notice of fore-closure on the defendants in the Court of learned District Judge, Rohtak, if so, to what affect?OPP. 5. Whether the defendants were given one year time to make payment of the amount, as alleged?OPP. 6. Whether the plaintiffs have become owners of the suit property and are entitled to take possession thereof as alleged?OPP. 7. Whether the plaintiffs are entitled to recover Rs.25,000/- from the defendants, as alleged?OPP. 8. Whether the suit is not maintainable in the present form, as pleaded?OPD. 9. Whether the plaint does not disclose any cause of action?OPD. 10. Whether the plaintiffs have locus-standi to file the present suit?OPP. 11. Whether the name of defendant No.1 is Smt. Kanta Devi and not Smt. Kanta Bai, if so, to what effect?OPD. 12. Whether the defendants never RSA No.1935 of 1981 5 appointed Kailash Chand as their Mukhtiar, if so, to what effect?OPD. 13. Whether the defendants are entitled to claim special costs under Section 35-A CPC? 14. Relief.” 5. Learned trial Court has held that defendants (mortgagors) had mortgaged the property in dispute without possession in favour of the plaintiffs on 28.3.1969 for Rs.20,000/-. It was further held by the learned trial Court that as per the mortgage deed (Ex.P2), mortgagors could redeem the mortgage within 3 years and 9 months w.e.f. 28.3.1969. It was further held that after the expiry of period of 3 years and 9 months, mortgagees/plaintiffs could either recover the mortgage amount alongwith interest or could get the mortgage foreclosed. It is further held by the learned trial Court that plaintiffs/mortgagees served a notice of foreclosure on the defendants (mortgagors), however, defendants (mortgagors) did not get the mortgage redeemed within a period of one year, hence, mortgage in question stood foreclosed and plaintiffs have become owners of the property in dispute and are therefore entitled to get the possession thereof. Learned trial Court decreed the suit of the plaintiffs against the defendants for joint possession of 1/4th share in the godown in question, situated in Kath Mandi, Jhajjar Road, Rohtak. 6. Feeling aggrieved from the judgment and decree, defendants preferred first appeal which was also dismissed by the first Appellate Court vide impugned judgment dated 20.5.1981, confirming the findings recorded by the learned trial Court. 7. I have heard learned Counsel for the parties and perused RSA No.1935 of 1981 6 the record. 8. With the help of learned Counsel for the parties, following substantial questions of law were formulated:- “1. As to whether mortgagees/plaintiffs are entitled to decree of declaration that he has become owner and was entitled to possession on the ground that right of redemption has come to an end by afflux of time? 2. As to whether the procedure for foreclosure shall be followed before the declaration of title in favour of the mortgagees can be granted? 9. Undisputedly, defendants (mortgagors) mortgage their 1/4th share in the property in dispute in favour of the plaintiffs (mortgagees) after taking Rs.20,000/- from the mortgagees vide mortgage deed (Ex.P2). Undisputedly, plaintiffs have claimed decree of possession or in alternate a decree of recovery of Rs.25,000/- by sale of mortgage property. In the present case, both the Courts below directly decreed the suit for recovery of possession by holding that since defendants failed to pay loan amount within the period of the notice, hence, their rights to get the property redeemed stands extinguished and plaintiffs have become owners thereof. 10. In a suit for recovery of the money on the basis of mortgage or foreclosure of the sale is governed by the provision of Order 34 C.P.C. and in a suit for foreclosure of sale, Court cannot deviate from the procedure prescribed under Order 34 C.P.C. As per Rule 2 of Order 34 C.P.C., Court has to pass preliminary decree stipulating therein the time to make payment to the defendants. 11. Rule 3 of Order 34 C.P.C. provides, if defendants before RSA No.1935 of 1981 7 the final decree, make payment into Court of the amount due from him, then Court on the application made by the defendants shall pass a final decree order that plaintiffs to deliver up the documents referred in the preliminary decree and if defendants fails to make payment within the time stipulated in the decree, then Court shall pass final decree declaring that the defendant has debarred from all rights to redeem the mortgage property on the application of the plaintiffs. 12. In the present case, above procedure has not been followed and was given go by. In view of the above, substantial questions of law framed hereinbefore are answered in favour of the defendant/appellant. 13. In view of the findings recorded hereinabove, now judgments and decrees passed by both the Courts below are liable to be modified to the extent that suit for recovery of Rs.25,000/- with simple interest @ 6% per annum from the date of suit stands decreed in favour of the plaintiffs against the defendant/appellant with the stipulation that defendant/appellant shall be at liberty to pay the amount to the plaintiffs within six months from today and having made the payment, shall be at liberty to move an application under Rule 3(1) of Order 34, seeking return of the mortgage deed and declaration that mortgage has stood redeemed. However, it is made clear, if defendant/appellant does not make payment within the above said period, it would be open to the plaintiffs to apply to Court to pass a decree declaring that right to redeem stood extinguish in accordance with law. Let preliminary decree be prepared in the light of observation made hereinabove. 14. The appeal is partly allowed to the extent hereinabove RSA No.1935 of 1981 8 mentioned with no order as to costs. (ALOK SINGH) 11th March, 2010 JUDGE ashish