*THE HONOURABLE SRI JUSTICE N.R.L.NAGESWARA RAO + APPEAL SUIT NO.116 OF 2001 % -02-2011 # Gummuluru sansyasinaidu and others ….Appellants Vs. $ State Bank of India, rep. by the Manager, Narsipatnam …. Respondent ! Counsel for the Appellants : Sri Srinivas Emani Counsel for the Respondent: None appeared <Gist : >Head Note: ? Cases referred: 1. 1995(3) ALT 132 (D.B) 2. AIR 1964 A.P 297 3. AIR 1957 RAJASTHAN 321 4. 1985 K.L.T.84 5. AIR 1959 ORISSA 122 THE HON’BLE SRI JUSTICE N.R.L.NAGESWARA RAO A.S.NO.116 OF 2001 JUDGMENT: The defendants in O.S.No.40 of 1999 on the file of the court of Senior Civil Judge, Narsipatnam are the appellants herein. The suit was filed for a preliminary decree for recovery of Rs.1,78,484/- being the amount due under the loan transaction. According to the case of the plaintiff, the defendant Nos.1 and 2 availed the loan of Rs.35,000/- for poultry business and executed a registered mortgage bond on 30-03-1983 and the amount is payable in 60 instalments commencing from 7th month from the date of execution of the mortgage deed. The 3rd defendant executed a deed of guarantee. As the defendants failed to pay the amount, the plaintiff filed a suit O.S.No.8 of 1985 and a preliminary decree was passed on 25-09-1987 giving three (3) months time for redemption. Thereafter, the plaintiff filed I.A.No.45 of 1994 for passing of the final decree and to condone the delay. The said petition was dismissed on 17-10-1995 holding that the petition is not maintainable. Since there is no final decree, the relationship between the mortgagor and mortgagee subsists and therefore the plaintiff is entitled to institute the suit. The defendants are failed to pay the money and hence the suit was filed for recovery of the said amount. The defendants contended that when the earlier application for final decree was dismissed, it amounts to a finality of the rights of the parties, the suit is barred by time under Order II Rule.2 CPC. It was further pleaded in view of the order in I.A.No.45 of 1994 which was dismissed on merits, the plaintiff-bank is debarred from instituting the present suit. As there is no cause of action the earlier dismissal of the final decree petition operates res judicata; the suit debt has abated; the interest claimed is excessive and untenable. Therefore, the defendants pleaded for a dismissal of the suit. On the basis of the pleadings the following issues have been framed for trial:- 1. Whether the suit is hit by the bar Under Order II, Rule 2 of CPC? 2. Whether the order passed in I.A.45/94 in O.S.8/85 operates as resjudicata and estopped in this suit? 3. Whether the interest claimed is usurious and excessive? 4. Whether the suit is barred by limitation? 5. Whether there is no cause of action for this suit and the one mentioned is not correct? 6. Whether there is no subsisting debt and the account copy is not correct? 7. Whether the suit is not maintainable under law? 8. Whether the plaintiff is entitled to recover the suit amount from the defendants as prayed for? 9. To what relief? On behalf of the plaintiff, PW.1 was examined and marked EXs.A-1 to A- 3. On behalf of the defendants, DW.1 was examined and marked Exs.B-1 to B-5. After considering the evidence on record, the learned Senior Civil Judge has decreed the suit of the plaintiff and aggrieved by the said judgment, the present appeal is filed. The points that arise for consideration are:- 1. Whether the second suit on the basis of the mortgage is maintainable? 2. Whether the suit is barred under the principles of res judicata or the principle under Order II Rule 2 CPC? 3. Whether the judgment and decree passed by the learned Senior Civil Judge is legal and sustainable? 4. To what relief? POINTS:- Sofar as the facts in this case are concerned, there is no dispute that a registered mortgage deed was executed on 30-03-1983 which is marked as Ex.A-1 and it is also not in dispute that the amount is payable in 60 instalments. Therefore, the lower court has considered the period of limitation as starting from the completition of the period fixed for 60th instalment and held that the money has become payable from 31-03-1988 and the suit being filed on 04-03-1997 is within time. Sofar as this finding of the lower court is concerned, it is not seriously disputed by the counsel for the appellant that the suit on the basis of the mortgage is not time barred. The fact is that earlier O.S.No.8 of 1985 was filed and the suit was decreed and thereafter the application to pass a final decree was sought to be filed and as there was a delay I.A.No.45 of 1994 was filed and the delay condonation petition was dismissed and therefore no final decree was passed. The point for consideration in this appeal is as to whether the second suit on the basis of the same cause of action is not maintainable. The lower court found that such plea is not open. The learned counsel for the appellant relied on a decision reported in Smt.Kolluri Kusuma Kumari Vs. Grandhi Surya Bhagawan([1]) referring to the application of Order II Rule2 CPC. Before considering the contention of the counsel for the appellant, it has to be made clear that the law is well settled that till the mortgage debt is discharged and the rights are determined by the parties or the decree of the court and if the transaction is within period of limitation any number of suits can be filed. The lower court has relied upon a decision reported in Bogam Papamma and another Vs. K. Lakshmamma([2]) where under the Apex Court held as under:- “Till the passing of a final decree upon a mortgage bond the relationship of mortgagor and mortgagee between the parties subsists, and so long as that relationship subsists, it is open to the mortgagee to file a suit on the basis of the mortgage and obtain a decree. Therefore, where after, the preliminary decree was passed, the decree debt was transferred by the mortgagee and the transferee applied for continuing the proceedings and for passing of a final decree but both the applications were dismissed and therefore the transferee brought a fresh suit on the foot of the mortgage, Held that as no final decree had been passed the relationship of mortgagor and mortgagee subsisted, and the assignee who stepped in the shoes of the original mortgagee, was entitled to file a fresh suit for the recovery of the mortgage amount.” The learned counsel for the appellant contends the facts in this case are quite different since already a final decree application was sought to be filed and it was dismissed as being time barred and therefore the second suit is not maintainable since the relief for enforcement of the mortgage has merged with the decree of the court in O.S.No.8 of 1985. In fact this aspect was not considered in the lower court. In order to answer this submission of the learned counsel for the appellant, it is useful to refer to a decision reported in Ambalal Jasraj Vs. Ambalal Badarmal and others ([3]) whereunder the Supreme Court held as under:- “Section 60 and its proviso contain a general principle of law applicable to mortgages in this country and they are not technical provisions which should be held to be applicable as a matter of statute only. That principle is this. The right to redeem is an incident of a subsisting mortgage and is inseparable from it so that the right is co-extensive with the mortgage itself. Again, this right subsists until it is properly and effectively extinguished —and the extinguishment of the right of redemption can only take place either by act of the parties concerned or by a proper decree of the court. But unless such extinguishment does not take place, the right of redemption is not exhausted. It follows that such a right may then be established by another suit(provided of course it is filed within sixty years limitation prescribed by the Limitation Act), though a decree of redemption may have been obtained in an earlier suit and might have remained unexecuted or become barred by lapse of time. If this principle is accepted as correctly applicable to redemption in this country, then the same result follows even in those places where the Transfer of Property Act may not be in force as such, but where its principles may be in force. The comparatively subordinate considerations of a procedural law, namely, that a second suit is barred by the principles of res judicata or that the mortgage has become merged in a decree and is, therefore, not available as the foundation of a second suit must necessarily give way to the paramount consideration that so long as the right to redeem is not extinguished effectively either by act of parties or by an order of the Court, the right to redeem must receive it natural and full play. Therefore, by virtue of this principle, even if the execution petition is not filed or if it is time barred, still the second suit is maintainable. In fact, it is to be noted that the rights of the mortgagor and mortgagee are co-extensive with regard to redemption or for foreclosure and the principles does not differ. Another decision reported in N.T.Varkey Vs. State Bank of Travancore ([4]) which directly answers the scope of Section 11 CPC and Order II Rule 2 CPC, whereunder in the above decision it was held as under:- “Where the liability under the mortgage deed has not been discharged, the fact that an earlier decree was obtained would not preclude the morgagee/mortgagor from instituting a second suit for the relief. The position, nevertheless, could not be any the different where the suit is for the recovery of the mortgage amount inasmuch as the larger question is whether the cause of action survives in a case where a decree on the basis of the same hypothecation deed was obtained by the mortgagor/mortgagee, but the fruit of the decree had not been realised by him (the plaintiff-decree holder)” It is also useful to refer to another decision reported in Somanath Pradhan and others Vs. Sanno Govindo Misra and others ([5]) which has considered several authorities and held as under:- “Unless there is an order for foreclosure or a decree for sale, the mortgage will, in the eye of law, subsist. Once the mortgage is in subsistence, the right of redemption is not extinguished. If the right of redemption is not extinguished, successive suits for enforcing that right can be filed. The right of redemption on the part of the mortgagor and the right to foreclosure on the part of the mortgagee are co-extensive. The right to redeem can only be destroyed as provided under Section 60 of the Transfer of Property Act, that is, by the act of parties or by a decree of court.” Therefore, in view of the above said principles of law, the contention raised by the counsel for the appellant cannot be accepted and the suit is not barred either on the principles of res judicata or under order II Rule 2 CPC since the rights under mortgage are not extinguished and the suit is within time. Accordingly, the points are answered. In the result, the Appeal Suit is dismissed. No order as to costs. _______________________ N.R.L.NAGESWARA RAO,J 22-02-2011 L.R.Copy to be marked: Yes (B/O) TSNR [1] 1995(3) ALT 132 (D.B) [2] AIR 1964 A.P 297 [3] Air 1957 RAJASTHAN 321 [4] 1985 K.L.T.84 [5] AIR 1959 ORISSA 122