Case: S. Nazeer Ahmed Vs. State Bank Of Mysore

Defendant No. 1, the appellant, borrowed a sum of Rs.1,10,000/- from the plaintiff Bank for the purchase of a bus. He secured repayment of that loan by hypothecating the bus and further by equitably mortgaging two items of immovable properties. The Bank first filed O.S. No. 131 of 1984 for recovery of the money due. The said suit was decreed. The Bank, in execution, sought to proceed against the hypothecated bus. The bus could not be traced and the money could not be recovered. The Bank tried to proceed against the mortgaged properties in execution. The appellant resisted by pointing out that there was no decree on the mortgage and the bank could, if at all, only attach the properties and could not sell it straightaway. That objection was upheld. The Bank thereupon instituted the present suit, O.S. No. 35 of 1993, for enforcement of the equitable mortgage. The appellant resisted the suit by pleading that the suit was barred by Order II Rule 2 of the Code of Civil Procedure, that the transaction of loan stood satisfied by a tripartite arrangement and transfer of the vehicle to one Fernandes, that there was no valid equitable mortgage created and no amount could be recovered from him based on it and that the suit was barred by limitation.The trial court held that the suit was not hit by Order II Rule 2 of the Code. It also held that the appellant has not proved that the loan transaction has come to an end by the claim being satisfied. But, it dismissed the suit holding that the suit was barred by limitation. It also held that there was no creation of a valid equitable mortgage since the memorandum in that behalf was not registered. The Bank filed an appeal in the High Court. The High Court held that the memorandum did not require registration and that a valid and enforceable equitable mortgage was created. The suit was held to be in time. It held that the suit was hit by Order II Rule 2 of the Code. But, since the appellant had not challenged the finding of the trial court that the suit was not hit by Order II Rule 2 of the Code by filing a memorandum of cross objections, the plea in that behalf could not be and need not be upheld. It purported to invoke Order XLI Rule 33 of the Code to grant the Bank a decree against the appellant though it refused a decree to the Bank against the guarantor. It did not disturb the finding of the trial court on the tripartite arrangement set up by the appellant based on the alleged transfer of the vehicle.Being aggrieved by the decree, the appellant approached this Court with the Petition for Special Leave to Appeal.

Reasoning: There is no need to have recourse to Order XLI Rule 33 of the Code, in a case where the suit of the plaintiff has been dismissed and the plaintiff has come up in appeal claiming a decree as prayed for by him in the suit. Then, it will be a question of entertaining the appeal considering the relevant questions and granting the plaintiff the relief he had sought for if he is found entitled to it. In the case on hand therefore there was no occasion for applying Order XLI Rule 33 of the Code. If the view of the High Court was that the suit was barred by Order II Rule 2 of the Code, it is difficult to see how it could have resorted to Order XLI Rule 33 of the Code to grant a decree to the plaintiff in such a suit. In that case, a decree has to be declined. That part of the reasoning of the High Court is therefore unsustainable.