PHILOMINA JOSE A

FEDERAL BANK LTD. AND ORS.

FEBRUARY 2, 2006

[ARIJJT PASAYAT AND TARUN CHATTERJEE, JJ.] B

Code of Civil Procedure, I 908:

Order 34 Rule 5-Sale decree-Right of redemption-Availability of- Denial on the ground that on passing of sale decree, mortgage debt merged C into the decree and substitution of Order 34 by Kera/a amendment-Held: Right of redemption of mortgage is a substantive right of mortgagor which accrues to him to be exercised under Order 34 Rule 5 when the decree was passed-It cannot be taken away by the amendment of order 34 which was made only after the decree-Such right is available till confirmation of sale in D pursuance to the decree-There was no final decree, thus denial of redemption + not correct-Order 2 I Rule 92.

Section 33-Decree-Passing of-Incorporation of all clauses mentioned

'i in the provisions under which decree is passed-Held: Not necessary-While \ interpreting such decree, it must be read as if all the provisions therein are E incorporated in the decree.

Sale decrees were passed in 1989 and 1985 respectively. At that time Code of Civil Procedure was in force in the State of Kerala. In year 1974, order 34 was amended so far as State of Kerala is concerned. The Code of Civil Procedure (Amendment) Act, 1976 came into force on 1.2.1977 and by F virtue of section 97(1) of the Code, order 34 as it existed before 1.2.1977 stood repealed. Order 34 was incorporated in the Code with effect from 20.11.1990.

Judgment debtors prayed for redemption in terms of Order 34 Rule 5 of the Code. High Cllurt dismissed the petitions holding that by passing of the decree for sale, the mortgage debt merged into the decree and thereafter right to G redemption is not available and that by the time the applications were filed, the Code as amended by substituting Order XXXIV did not contain a similar

provision with effect from 20.11.1990.

Allowing the appeals, the Court 1 H

A HELD:t.I. The right of the mortgagor to redeem the property is available to him till the confirmation of the sale in pursuance to the decree.

Right of redemption of a mortgage is a substantive right of mortgagor which has accrued to him to be exercised under Order 34 Rule 5 of the Code of Civil Procedure, 1908 when the decree was passed which cannot be taken away by the amendment of order 34 of the Code which was made only after the B decree passed in this case. An application under Order 34 Rule 5 is maintainable until the final determination of proceedings to set aside the sale under Order 34 either by way of appeal or revision. (6-F; 7-F-GI

Shea Narain Sah v. Mt. Deolchan Kuer, AIR (1943) Patna 208, C disapproved.

Mhadagonda Ramgonda Patil and Ors. v. Shripal Ba/want Rainade & Ors., (1988] 3 sec 298, relied on.

Mangan/al v. Mis. Jaiswal Industries Neemach & Ors., [1989) 4 SCC 344, D New Kenilworth Hotel (P) ltd. v. Ashoka Industries Ltd & Ors., (1995) I SCC

161, S. Sivaprakasam v B. V. Muniraj & Ors., (19971 9 SCC 636, U. Nilan v.

Kannayyan (Dead) Through Lrs., 11999) 8 SCC 511, Kharaiti Lal v. Raminder Kaur & Ors., (2000) 3 SCC 664 and V.K Palaniappa Chettiar (Dead) by LRs v.

U. Ramaswamy Grounder & Anr., (2001] 4 SCC 413, relied on.

E 1.2. The decrees in the case were passed at a time when the Code was in force in the State of Kerala and the amendment in 1974 so far as the State of Kerala is concerned was not operative. Composite decrees were passed in both under order XXXIV Rule 4 and 5 together. Those were the provisions in regard to enforcement of mortgages, and whatever may be the wording of

thdecree, they shall be deemed to be passed under Order 34 Rule 5 as it F stood at the time of the passing of the decree. It Is not necessary that all the clauses mentioned in the provisions unde1 which the decree is passed should be incorporated in the decree. While interpreting such a decree, it must be read as if all the provisions therein are incorporated in the decree. The Court may not at the time of passing of the decree, be aware as to which contingency G will happen in future. Each of the decrees was under Order XXXIV Rule 5 of the Code as it stood before 20.11.1990. [6-G, H; 7-A-BJ

1.3. The effect of Section 97(1) of the Amendment Act is that all the local amendments made to any of the provisions of the Code either by a State Legislature or by a High Court which were inconsistent with the Code as H amended by the Amendment Act stood repealed irrespective of the fact

PHILOMINA JOSE v. FEDERAL BANK LTD. [PASA Y AT, J.] 3

'fwhether the corresponding provision of the Code had been amended or A modified by the Amendment Act and that as subject only to what was found in sub-section (2) of Section 97. That being so, till 20.11.1990, the Kerala amendment was not effective from 1.2.1977. [7-C-D[

Ganpat Giri v. llnd Additional District Judge, Bafia and Ors., AIR (1986) SC 589, relied on.

Chittoori Subbanna v. Kudappa Subbanna, AIR (1965) SC 1325, referred to.

I 1.4. In the present appeals, the applications were filed before the proceedings for setting aside the sale were pending before the executing court c

or in appeal. No order has been passed by the Court confirming the sale as required under Order 21 Rule 92. As there is no final decree, the impugned judgment of High Court rejecting the prayer of redemption is indefensible and is set aside. [8-A, C, DJ

CIVIL APPELLATE JURISDICTION; Civil Appeal Nos. 1488-I489 D

) of 2000.

From the Judgment and Order dated 2.6.1997 of the Kerala High Court in C.M.~. No. 35311995 and C.R.P. No. 2340 of 1995.

WITH E

Civil Appeal Nos. 1490-91 of 2000.

P. Krishnamoorthy and T.G. Narayanan Nair for the Appellants.

T.L.V. Iyer, Abhay Kumar, Subramonium Prasad, Gopal Krishan and F

... i E.M.S. Anam for the Respondents .

The Judgment of the Court was delivered by

ARIJIT PASA Y AT, J. Challenge in these appeals is to the judgment of a Division Bench of the Kerala High Court. The Civil Revision petitions G in proceedings under Order 34 Rule 5 of the Code of Civil Procedure, 1908 .. , (in short the 'Code') were dismissed by a common judgment dated 2.6.1997 .

Factual position, which is practically undisputed need to be noted in brief.

A The decrees for sale in the above cases were passed on 8.2.1989 and

30.7.1985 respectively. At the time of passing the decrees in the case, amendments as applicable to the State of Kerala were in force. The amendment stood repealed by virtue of Section 97( I) of the Code of Civil Procedure (Amendment) Act, 1976 (Act I 04 of 1976) (in short the 'Amendment Act') which came into force on 1.2.1977.

By an amendment effected under Section 122 of the Code, by the High Court of Kerala, Order 34 of the Code as existed before 1.2.1977 was incorporated in the Code with effect from 20.11.1990. It is thus clear that on the dates when decrees were passed in the case, the Civil Procedure Code C was in force in the State of Kerala.

The prayer for redemption in terms of Order 34 Rule 5 of the Code as made by the judgment debtors was rejected.

The High Court held that the petitions under Order 34 Rule 5 were not D maintainable on two grounds namely.

(I) Under Section 60 of the Transfer of Property Act, 1882 (in short the 'Act') right to redemption continues to inhere in a mortgage only until it is extinguished by act of parties or by a decree of Court. By the passing of a decree, the mortgage security merges E in the decree and is replaced by the security of the order of sale.

Accordingly the right of redemption is extinguished by the final decree under Order 34 Rule 5(3) of Code. Reliance was placed on a decision of the Patna High Court in Sheo Narain Sah v. Mt.

Deolchan Kuer, AIR (1943) Patna 208.

(2) Though a right under Order 34 Rule 5 was available under the

Code, after the substitution of Order XXXIV by the Kerala amendment there is no such right available to the Mortgagor.

Learned counsel for the appellants submitted that the High Court's view is clearly untenable. First, the Kerala amendment became non-est because G of the Amendment Act. Secondly, the view expressed by the Patna High

Court was not approved by this Court.

Learned counsel for the respondents on the other hand submitted that it was commonly believed that the Kerala amendment introduced on 15.1.1974 was in force at all times and the fresh amendment done in November, 1990 H was just by way of clarification that it was effective till the amendment.

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PHILOMINAJOSEv. FEDERAL BANK LTD. [PASAYAT, J.] 5

High Court has held that by the passing of the decree for sale, the A mortgage debt is merged into the decree and thereafter right to redemption is not available. In taking that view, the High Court has relied on the decision of the Patna High Court in Shea Narayan 's case (supra).

The view taken by the Patna High Court was held to be not the correct view as observed by this Court in Mhadagonda Ramgonda Patil and Ors. v. B Shripal Ba/want Rainade & Ors., (1988] 3 SCC 298. It was held that unless and until a decree of order debarring the mortgagor from redeeming the property is passed under Sub Rule 3(a) of Rule 8 of Order XXXIV the right of redemption is available. It was inter alia held as follows:

':r ..

"12. It is thus manifestly clear that the right of redemption will be C extinguished (I) by the act of the parties or (2) by the decree of a court. We are not concerned with the question of extinguishment of the right of redemption by the act of the parties. The question is whether by the preliminary decree or final decree passed in the earlier is extinguished. The decree that is referred to in the proviso to Section D 60 of the Transfer of Property Act is a final decree in a suit for foreclosure, as provided in sub-rule (2) of Rule 3 of Order 34 and a final decree in a redemption suit as provided in Order 34, Rule 8(3)(a) of the Code of Civil Procedure. Sub-rule (2) of Rule 3, inter aiia, provides that where payment in accordance with sub-rule (I) has not been made, the court shall, on an application made by the plaintiff in E this behalf, pass a final decree declaring that the defendant and all persons claiming through or under him are debarred from all right to redeem the mortgaged property and also, if necessary, ordering the defendant to put the plaintiff in possession of the property. Thus, in a final decree in a suit for foreclosure, on the failure of the defendant F to pay all amounts due, the extinguishment of the right of redemption has to be specifically declared. Again, in a final decree in a suit for redemption of mortgage by conditional sale or for redemption of an anomalous mortgage, the extinguishment of the right of redemption has to be specifically declared, as provided in clause (a) of sub-rule

(3) of Rule 8 of Order 34 of the Code of Civil Procedure. These are G the two circumstances-(1) a final decree in a suit for foreclosure under Order 34, Rule 3(2); and (2) a final decree in a suit for redemption under Order 34, Rule 8(3)(a) of the Code of Civil Procedure-when the right of redemption is extinguished.

B. In the instant case, the earlier suit was not a suit for foreclosure H

nor was either of the mortgages, a mortgage by conditional sale or an anomalous mortgage and, accordingly, there was no declaration in the final decree passed in the earlier suit for redemption that the respondents would be debarred from all right to redeem the mortgaged property. Rule 5(1) of Order 34 expressly recognized the right of the mortgagor to redeem the mortgage at any time before the confirmation of a sale made in pursuance of a final decree passed in a suit for sale.

Similarly, Rule 8(1) of Order 34 permits the mortgagor to redeem the mortgaged property before the confirmation of the sale held in pursuance of a final decree in a redemption suit, unless such final decree debars the mortgagor from all right to redeem the mortgaged property which, as noticed earlier, is provided for in sub-rule (3)(a) of Rule 8 of Order 34 relating to a mortgage by conditional sale or an anomalous mortgage. Thus, the provisions of Order 34 have laid down in clear terms the circumstances when the right of redemption of the mortgagor would stand extinguished. It is also clear that in a suit for redemption, a mortgage other than a mortgage by conditional sale or an anomalous mortgage, the mortgagor has a right of redemption even after the sale has taken place pursuant to the final decree, but before the confirmation of such sale. In view of these provisions, the question of merger of mortgage-debt in the decretaldebt does not at all arise. We are, therefore, of the view that the E decision in Shea Narain case in so far as it lays down the merger of the mortgage-debt in the decretal debt and the consequent extinguishment of the right of redemption of the mortgagor after the passing of the final decree in a suit for redemption is erroneous."

As there is no such final decree in this case, the right of the mortgagor F to redeem the property is available to him till the confirmation of the sale in pursuance to the decree.

The High Court further held that the right of redemption provided for under Order XXXIV Rule 5 is not available to the appellants in view of the fact that by the time the applications were filed, the Code as amended by G substituting Order XXXIV do not contain a similar provision with effect from 20.11.1990.

This view is also not correct. The decrees in the case were passed at a • time when the Code was in force in the State of Kerala and the amendment in 1974 so far as the State of Kerala is concerned was not operative. Composite H decrees were passed in both under order XXXIV Rule 4 an_d 5 together.

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PHILOMINA JOSE v. FEDERAL BANK LTD. [PASAYAT. J.) 7

Those were the provisions in regard to enforcement of mortgages, and whatever A may b~ the wording of the decree, they shall be deemed to be passed under Order XXXIV Rule 5 as it stood at the time of the passing of the decree. It is not necessary that all the clauses mentioned in the provisions under which the decree is passed should be incorporated in the decree. While interpreting such a decree, it must be read as if all the provisions therein are incorporated B in the decree. The Court may not at the time of passing of the decree, be aware as to which contingency will happen in future. Each of the decrees was under Order XXXIV Rule 5 of the Code as it stood before 20.11.1990.

The effect of Section 97( 1) of the Amendment Act is that all the local amendments made to any of the provisions of the Code either by a State C Legislature or by a High Court which were inconsistent with the Code as amended by the Amendment Act stood repealed irrespective of the fact whether the corresponding provision of the Code had been amended or modified by the Amendment Act and that was subject only to what was found in subsection (2) of Section 97. (See Ganpat Giri v. /Ind Additional District Judge, D Bafia and Ors., AIR (1986) SC 589. That being so, till 20.11.1990, the Kerala amendment was not effective from 1.2.1977.

While considering a case interpreting Order XX Rule 12 of the Code in Chittoori Subbanna v. Kudappa Subbanna, AIR (1965) SC 1325 this Court laid down the principles to be followed in interpreting such decrees E when the decree has not specifically mentioned all the clauses in the provision under which the decree is passed.

Right of redemption of a mortgage is a substantive right of Mortgagor which has accrued to him to be exercised under Order XXXIV Rule 5 of the Code when the decree was passed which cannot be taken away by the amendment of order XXXIV of the Code which was made only after the decree in this case.

An application under Order XXXIV Rule 5 is maintainable until the final determination of proceedings to set aside the sale under Order XXXIV G either by way of appeal or revision. (See Mangan/al v. Mis. Jaiswal Industries Neemach & Ors., [1989] 4 SCC 344, New Kenilworth Hotel (P) Ltd. v .

Ashoka Industries Ltd. & Ors., [1995] I SCC 161, S. Sivaprakasam v. B.V.

Muniraj & Ors., [1997] 9 SCC 636, U. Nilan v. Kannayyan (Dead) Through Lrs, [1999] 8 SCC 511, Kharaiti Lal v. Raminder Kaur & Ors., [2000] 3 SCC 664 and V.K. Palaniappa Chettiar (Dead) by LRs v .. U. Ramaswamy H Grounder & Anr., [2001] 4 SCC 413).

A In the present appeals, the applications were filed before the proceedings for setting aside the sale were pending before the executing court or in appeal. In C.A. 1488-89 of 2000 proceedings under order XXI Rule 90 were pending and they were"tinally decided in C.M.A 353 of 1995 by order dated 2.6.1997, along with the main order.

B In C.A. No.1490-91 of 2000 proceedings under Order 21 Rule 89 to set aside the sale was finally decided only by the order dated 2.6.1997 in C.M.A.

18 of 1993 and the application under Order 34 Rule 5 was filed earlier.

C It is also seen that no order has been passed by the Court confirming the sale as required under Order 21 Rule 92.

Above being the position, th~ impugned judgment of the High Court is indefensible and is set aside. Appeals are allowed. Costs made easy.

D N.J.

Appeals allowed.

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