Prema vs Nanje Gowda & Ors

17. In Venkata Reddy v. Pethi Reddy (supra), the Constitution Bench was called upon to consider the question as to what meaning should be given to the expression `final decision' occurring in the first proviso to Section 28A of the Provincial Insolvency Act, 1920. The facts of that case were that Venkata Reddy, the father of the appellants, was adjudicated an insolvent by the Sub-Court, Salem in I.P. No. 73 of 1935. At that time only appellants Nos.1 and 2 were born while the third appellant was born later. The father's one-third share was put up for auction by the Official Receiver and was purchased by one Karuppan Pillai for Rs 80/-. The Official Receiver then put up for auction the two-third share belonging to appellant Nos.1 and 2 on 27.7.1936 which was purchased by the same person for Rs 341/-. He sold the entire property to the respondent Pethi Reddy on 25.5.1939 for Rs 300/-. The appellants instituted a suit on 1.2.1943 for the partition of the joint family property to which suit they made Pethi Reddy a party and claimed thereunder two-third share in the property purchased by him. In that suit, it 19 was contended on behalf of the respondent that on their father's insolvency the share of the appellants in the joint family property also vested in the Official Receiver and that he had the power to sell it. The contention was negatived by the trial Court which passed preliminary decree for partition in favour of the appellants. The decree was affirmed in appeal by the District Judge and eventually by the High Court in second appeal, except with a slight variation regarding the amount of mesne profits. On 18.1.1946, the appellants made an application for a final decree which was granted ex parte on 17.8.1946. However, the decree was set aside at the instance of the respondent. By relying upon Section 28A of the Provincial Insolvency Act, it was contended by the respondent that the appellants were not entitled to the allotment of their two-third share in the property purchased by him inasmuch as that share had vested in the Official Receiver. The District Munsiff rejected the contention of the respondent and restored the ex parte decree. The appeal preferred by the respondent was dismissed by Principal Subordinate Judge, Salem. However, the second appeal filed by him was allowed by the High Court and the application filed by the appellants for passing final decree was dismissed. The Constitution Bench referred to Section 28A of the Provincial Insolvency Act, which was as under:

18. In Gyarsi Bai v. Dhansukh Lal (supra), the three-Judge Bench considered the nature of the preliminary and final decrees in a mortgage suit and the question whether the mortgagor is entitled to raise the plea in the 22 final decree proceedings which he did not raise during the pendency of the suit up to the stage of preliminary decree. The facts of the case, as contained in the judgment, were that the plaint-schedule properties originally belonged to one Noor Mohammad, his wife and son. On 14.9.1936, they mortgaged the said properties with possession to B.F. Marfatia for a sum Rs. 25,000. On 22.2.1938, the said mortgagors executed a simple mortgage in respect of the same properties to one Novat Mal for Rs. 5000. On 21.12.1942, Radha Kishan, Har Prasad and Pokhi Ram acquired the equity of redemption in the said properties in an auction-sale held in execution of a money decree against the mortgagors. On 14.2.1950 and 13.3.1950, Seth Girdhari Lal, the husband of appellant No.1 herein, purchased the mortgagee rights of Novat Mal and Marfatia respectively. On 1.5.1950, Girdhari Lal was put in possession of the mortgaged properties. On 22.7.1950, respondent Nos.9 to 11 purchased the equity of redemption of the mortgaged properties from Radha Kishan, Har Prasad and Pokhi Ram. On 10.8.1950, Girdhari Lal instituted Civil Suit No. 739 of 1950 in the Court of the Senior Subordinate Judge, Ajmer, for enforcing the said two mortgages. In the suit, he claimed Rs. 48,919-12-6 as the amount due to him under the said two mortgages. On 25.4.1953, the Senior Subordinate Judge, Ajmer, gave a preliminary decree in the suit for the recovery of a sum of Rs. 34,003-1-6 with proportionate costs and future interest; he disallowed interest from 14.9.1936 to 13.3.1950, 23 on the mortgage of Rs. 25,000. The plaintiff-mortgagee preferred an appeal, being Civil Appeal No.71 of 1953 to the Judicial Commissioner, Ajmer, against the said decree insofar as it disallowed interest to him. The defendants preferred cross-objections in respect of that part of the decree awarding costs against them. On 25.7.1953, the defendants filed an application under Order XXXIV Rule 5(1) of the CPC, seeking permission to deposit the decretal amount in court and praying that possession of the properties may be directed to be delivered to them and also for directing the decree-holder to render accounts of the profits of the mortgaged properties received by him. On 29.7.1953, the respondents deposited Rs. 35,155-2-6 in the trial Court. On 17.8.1953, the decree-holder filed objections to the said deposit on the ground that it was much less than the decretal amount. On 27.8.1953, the trial Court made an order permitting the decree-holder to withdraw the said amount with the reservation that the question as to what was due under the decree would be decided later. On 25.8.1954, both the appeal of the decree-holder and the cross-objections of the defendants were dismissed. On 7.12.1954, the defendants filed an application in the trial Court for the determination of the amount due under the decree and for directing the decree-holder to render accounts of all the realizations from the mortgaged properties. On 14.3.1955, this Court granted special leave to the decree-holder for preferring an appeal against the judgment of the Judicial 24 Commissioner dismissing Civil Appeal No. 71 of 1953. On 15.2.1956, the trial Court dismissed the application filed by the defendants for directions on the ground that the mortgage deed had merged in the preliminary decree and that the said decree contained no directions to the plaintiff to render accounts. On 29.2.1956, the defendants applied to the Judicial Commissioner, Ajmer under Section 152 of the CPC for amending the preliminary decree by including therein a direction against the plaintiff for rendition of account in respect of the profits received by him from the mortgaged properties. On 12.4.1956, the Judicial Commissioner dismissed the said application. On 25.4.1956, the defendants filed a revision petition against the order of the trial Court dated 15.2.1956, in the Court of the Judicial Commissioner, Ajmer. By judgment dated 16.12.1960, this Court modified the preliminary decree and directed the trial Court to pass a fresh final decree. Thereafter, the High Court allowed the revision filed by the defendants and remanded the case to the trial Court with a direction to take into account the receipts from the mortgaged properties and expenses properly incurred for management thereof and to determine what sum remained to be paid to the mortgagees taking into account the judgment of this Court. On appeal, this Court referred to Section 76(h) of the Transfer of Property Act and held that if the mortgagor does not raise a particular plea at the stage of preliminary decree, he would be debarred on the principle of res 25 judicata from raising the same at a later stage and then proceeded to observe:

(emphasis supplied)

21. In the result, the appeal is allowed. The impugned judgment as also the order passed by the trial Court are set aside. As a sequel to this, the application filed by the appellant under Sections 151, 152 and 153 CPC is allowed in terms of the prayer made. If the final decree has not been passed so far, then the trial Court shall do so within six months from the date of production/receipt of the copy of this judgment. If the final decree has already been passed, then the trial Court shall amend the same in terms of 27 this judgment and give effect to the right acquired by the appellant under Section 6A of the Karnataka Act No.23 of 1994. The parties are left to bear their own costs.

..............J. [K.S. Panicker Radhakrishnan] New Delhi 10th May, 2011.