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2006(1) Supreme 604
Supreme Court of India
(From Kerala High Court)
Arijit Pasayat and Tarun Chatterjee, JJ.
Philomina Jose —Appellant
versus
Federal Bank Ltd. & Ors. —Respondents
Civil Appeal Nos. 1488-1489 of 2000
With
Civil Appeal Nos. 1490-91/2000
Decided on 2-2-2006
Counsel for the Parties :
For the Appellants : P. Krishnamoorthy, Sr. Advocate, and T.G. Narayanan Nair, Advocate.
For the Respondents : T.L.V. Iyer, Sr. Advocate, Abhay Kumar, Subramonium Prasad, Gopal Krishan and E.M.S. Anam, Advocates.
Held : High Court has held that by the passing of the decree for sale, the 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 Sheo 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. Shripal Balwant 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. (Paras 9 and 10)
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 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 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 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 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 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 sub-section (2) of Section 97. (See Ganpat Giri v. IInd Additional District Judge, Balia and Ors. (AIR 1986 SC 589). That being so, till 20.11.1990, the Kerala amendment was not effective from 1.2.1977. (Paras 12 to 14)
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. (Para 16)
Judgment
Arijit Pasayat, J.—Challenge in these appeals is to the judgment of a Division Bench of the Kerala High Court. The Civil Revision petitions 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.
2. Factual position, which is practically undisputed need to be noted in brief.
3. 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(1) of the Code of Civil Procedure (Amendment) Act, 1976 (Act 104 of 1976) (in short the ‘Amendment Act’) which came into force on 1.2.1977.
4. 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 was in force in the State of Kerala.
5. The prayer for redemption in terms of Order 34 Rule 5 of the Code as made by the judgment debtors was rejected.
6. The High Court held that the petitions under Order 34 Rule 5 were not maintainable on two grounds namely.
(1) 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 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.
7. Learned counsel for the appellants submitted that the High Court’s view is clearly untenable. First, the Kerala amendment became non-est because of the Amendment Act. Secondly, the view expressed by the Patna High Court was not approved by this Court.
8. 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 was just by way of clarification that it was effective till the amendment.
9. High Court has held that by the passing of the decree for sale, the 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 Sheo Narayan’s case (supra).
10. 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. Shripal Balwant 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 :
“12. It is thus manifestly clear that the right of redemption will be extinguished (1) 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 extinguished. The decree that is referred to in the proviso to Section 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,
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