* THE HON’BLE SRI JUSTICE V.V.S.RAO CIVIL REVISION PETITION Nos.3948 and 4230 of 2010 %Dated:29.12.2010 Between: Y.Rama Mohan Reddy. …Petitioner and Dommalapati Gaja Lakshmi, And others. …Respondents ! Counsel for the Petitioner: Sri M.N.Narasimha Reddy. ^Counsel for the Respondents: Sri R.Radha Krishna Reddy <Gist: >Head Note: ?Citations: THE HON’BLE SRI JUSTICE V.V.S.RAO CIVIL REVISION PETITION Nos.3948 and 4230 of 2010 Dated:29.12.2010 Between: Y.Rama Mohan Reddy. …Petitioner and Dommalapati Gaja Lakshmi, And others. …Respondents THE HON’BLE SRI JUSTICE V.V.S.RAO CIVIL REVISION PETITION Nos.3948 and 4230 of 2010 COMMON ORDER: These two civil revision petitions filed under Section 115 of the Code of Civil Procedure, 1908 (CPC), can be conveniently disposed of by a common order. They arise out of a common order dated 17.08.2007 in two execution petitions passed by the Court of the Senior Civil Judge, Madanapalle. The parties are referred to by their status in C.R.P.No.3948 of 2010. Except the first respondent – Gaja Lakshmi, respondent Nos.2 and 3 remained ex parte in spite of service of notices. The dispute in fact is between the petitioner, Y.Rama Mohan Reddy, and first respondent Gaja Lakshmi in relation to a house situated at Madanapalle. A two storeyed cement concrete building situated at Madanapalle bearing door No.IV-1-4-2, plot No.103/c in survey Nos.207, 201-1 (Paiki), situated at Bandameeda Kammapalle, Marpuri Street, Madanapalle town (hereafter called, petition schedule house), was originally owned by one Reddemma (respondent No.2). She borrowed some amounts from one Reddeppa Setty and Gaja Lakshmi. She also borrowed some money from the petitioner by duly executing a registered mortgage deed on 29.02.1996. The three borrowers filed the suits for recovery of the money. At different points of time there are decrees and execution petitions. The details of these are as follows. i) O.S.No.353 of 1997 on the file of the Court of the Principal Junior Civil Judge, Madanapalle, was filed by Reddeppa Setty against Reddemma. The plaintiff therein obtained an order of attachment before judgment of the suit schedule house. The suit was decreed on 31.08.1999. Reddeppa Setty filed O.E.P.No.25 of 1999 and the suit schedule house was sold in execution of decree for an amount of Rs.2,18,2000. The Court confirmed the sale on 27.03.2003 in favour of auction purchaser one Y.Bayya Reddy, S/o.Reddappa. After adjusting towards decretal amount, an amount of Rs.1,20,567/- remained with the Court. ii) O.S.No.97 of 1999 was filed by Gaja Lakshmi against Reddemma for recovery of Rs.3,40,000/-. Allegedly she also obtained attachment before judgment. The suit was decreed and the plaintiff took out O.E.P.No.52 of 2001 for attachment of balance amount in O.E.P.No.25 of 1999. By that time, the amount available was Rs.1,80,000/-. iii) The petitioner Y.Rama Mohan Reddy filed O.S.No.17 of 2000 against Reddemma for recovery of mortgage amount. The suit was decreed on 11.10.2001 and he took out O.E.P.No.57 of 2001 for attachment of the balance amount in O.E.P.No.25 of 1999. The two execution petitions, being O.E.P.Nos.52 and 57 of 2001, filed by Gaja Lakshmi and Y.Rama Mohan Reddy respectively were coming up for enquiry before the Court of Senior Civil Judge, Madanapalle. In the O.E.P filed by the petitioner as noticed supra, he sought attachment under Order XXI Rule 52 of CPC of an amount of Rs.1,80,000/- out of the sale proceeds deposited in O.E.P.No.25 of 1999 in O.S.No.353 of 1997. By an order dated 01.04.2005 the same was rejected holding that as the sale was conducted subject to mortgage, the petitioner is not entitled to withdraw the amount. Aggrieved by the same, he filed C.R.P.No.3515 of 2005. By an order dated 03.02.2006 this Court allowed the revision and remitted the matter to the Court below. In the meanwhile, Gaja Lakshmi – first respondent herein, filed E.A.No.99 of 2006 in O.E.P.No.57 of 2001 under Section 94(e) read with Section 151 of CPC seeking permission to participate in the execution petition as objector. The same was dismissed on 21.04.2006. She filed revision, being C.R.P.No.4394 of 2006, which was dismissed observing that the lower Court may dispose of both the execution petitions. In obedience thereto the Court below passed the impugned order dismissing the petitioner’s O.E.P and allowing the O.E.P filed by the first respondent. The Counsel for the petitioner submits that there was no attachment before judgment in O.S.No.97 of 1999 filed by the first respondent herein and, therefore, her right to the balance amount in O.E.P.No.25 of 1999 cannot stultify the right of the petitioner. Being the secured creditor under the registered mortgage deed, the petitioner is entitled to the balance of the sale consideration available with the Junior Civil Judge, Madanapalle. He contends that merely because the schedule house was sold subject to mortgage, the same does not have the effect of defeating the rights of the mortgagee. Per contra, Counsel for the first respondent submits that in the auction conducted by the Court of the Junior Civil Judge in O.E.P.No.25 of 1999 the petitioner’s father Y.Bayya Reddy alone was the auction purchaser. Without proceeding against the auction purchaser who purchased the property subject to mortgage, the petitioner cannot be permitted to seek a share in the balance of amount. He relies on proviso (a) to Section 73(1) of CPC to sustain the impugned order. The only point, in the background as above, that falls for consideration is whether the petitioner having obtained a mortgage deed in O.S.No.17 of 2000 is entitled to rateable distribution of the money held by the Court of the Senior Civil Judge, Madanapalle, along with the first respondent – Gaja Lakshmi. Section 73 of CPC reads as under. 73. Proceeds of execution-sale to be rateably distributed among decree-holders – (1) Where assets are held by Court and more persons than one have, before the receipt of such assets, made application to the Court for the execution of decree for the payment of money passed against the same judgment-debtor and have not obtained satisfaction thereof, the assets, after deducting the costs of realization, shall be rateably distributed among all such persons: Provided as follows:- (a) where any property is sold subject to a mortgage or charge, the mortgagee or incumbrancer shall not be entitled to share in any surplus arising from such sale; (b) where any property liable to be sold in execution of a decree is subject to a mortgage or charge, the Court may, with the consent of the mortgagee or incumbrancer, order that the property be sold free from the mortgage or charge, giving to the mortgagee or incumbrancer the same interest in the proceeds of the sale as he had in the property sold; (c) where any immovable property is sold in execution of a decree ordering its sale for the discharge of an incumbrance thereon, the proceeds of the sale shall be applied - first, in defraying the expenses of the sale; secondly, in discharging the amount due under the decree; thirdly, in discharging the interest and principal moneys due on subsequent incumbrances (if any); and fourthly, rateably among the holders of decrees for the payment of money against the judgment-debtor, who have, prior to the sale of the property, applied to the Court which passed the decree ordering such sale for execution of such decrees, and have not obtained satisfaction thereof. (2) Where all or any of the assets liable to be rateably distributed under this section are paid to a person not entitled to receive the same, any person so entitled may sue such person to compel him to refund the assets. (3) Nothing in this section affects any right of the Government. A plain reading of subsection (1) shows that all persons who obtained decrees against the same judgment debtor, may file applications to the Court which holds the assets of such judgment debtor and seek rateable distribution of the assets. This is, however, subject to the provisos (a), (b) and (c). The proviso (a) to subsection (1) of Section 73 of CPC disqualifies mortgagee from claiming any rateable distribution if the property of the judgment debtor is sold subject to such mortgage. The scope of this proviso has been elucidated in CPC by Justice C.K.Thakker in the following passage. Proviso (a) to sub-section (1) of Section 73 enacts that where a property sold in execution of a money decree is subject to a mortgage or charge, the mortgagee or encumbrancer will not be entitled to share in the sale proceeds (Jagat v. Dhundhey (1883) 5 All 566; Mithu v. Kishan (1890) 12 All 546). The reason is that the mortgagee is really not affected by sale of the property inasmuch as he retains his right to proceed against the property mortgaged to him. When a property sold in execution of a decree is subject to mortgage, the auction-purchaser buys the rights of the mortgagor judgment-debtor, and the mortgagee can enforce them against the auction-purchaser (Ibid.; see also Shew Seik v. Sumasundram (1906) 3 LBR 258). But if a mortgagee holds a money decree against the judgment- debtor, he is not debarred from claiming benefit under this section (Radhe Kishan v. Bikramjit Singh AIR 1919 Oudh 351). In other words, where the decree-holder and the mortgagee happen to be one and the same, proviso (a) has no application (Gauriambal v. Ramnathan AIR 1930 Mad 138). A right under clause (a) is a personal right of the mortgagee and he can waive it (Fakker v. Chukkerdharee (1870) 14 Suth WR 209; Fateh Ali v. Gregory 6 WR 13). (emphasis supplied) Therefore, the petitioner who is a mortgagee in respect of the petition schedule house is barred from seeking attachment of the amount of Rs.1,80,000/- under Order XXI Rule 52 of CPC as he has no right to rateable distribution of the assets with the Court of Junior Civil Judge. Further, a perusal of Rules 12, 13 and 14 of Order XXXIV of CPC shows that when the property is subject to prior mortgage, the Court may with the consent of the prior mortgagee direct the sale and the sale proceeds thereof shall be applied first to meet all expenses of sale; secondly, for payment of money due to the prior mortgagee on account of prior mortgage; thirdly, for payment of interest due on amount of mortgagee; fourthly, for payment of principal money due on the account of mortgagee; and lastly, the residue, if any, shall be paid to any person proved to be interested in the property. This abundantly makes clear that the remedy of the petitioner is to proceed against the mortgaged property and he has no right to attach the money to the credit of O.E.P No.25 of 1999 in O.S.No.353 of 1997 on the file of the Court of the Junior Civil Judge, Madanapalle. There is no dispute that when the Court of Junior Civil Judge ordered auction of the petition schedule house, the petitioner’s father became successful bidder and the said Court issued sale certificate dated 02.07.2001. Presumably, for this reason the petitioner does not like to proceed against the petition schedule house for executing the mortgage decree for a sum of Rs.1,90,493/-. He wants to have the best of both the worlds. This cannot be permitted. The enforcement of mortgage by filing a suit for recovery of money and/or rateable distribution of assets available with the Court under Section 73 of CPC are remedies in the realm of equity. A person who seeks equity must also do equity. The petitioner’s claim appears to be not bona fide, and the Court cannot come to the rescue of such person in view of the clear prohibition in law. These two Civil Revision Petitions are devoid of any merit, and are accordingly dismissed with costs. _________________ (V.V.S.RAO, J) .12.2010 Note: LR copy to be marked. B/o. vs