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1936 Supreme(SC) 69
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD ROCHE, SIR SHADI LAL, AND SIR GEORGE RANKIN.
HAZARI RAM MARWARI - Appellant
Versus
RAI BAHADUR BANSIDHAR DHANDHANIA - Respondents
On appeal from the High Court at Patna.
Decided On : Dec. 16. 1936.
Solicitors for appellants: W. W. Box & Co.
Solicitors for respondents Nos. 1 to 16: Hy. S. L. Polak & Co.
A mortgage decree can be set-off against a money decree under Order XXI, Rule 20 of the Code of Civil Procedure to avoid circuity of proceedings, regardless of whether both decrees are mortgage decrees or if there are additional parties to the decrees.
Headnote:(A) Code of Civil Procedure, 1908 - Order XXI, Rules 18, 19 and 20 - Execution of cross-decrees - Set-off - Rule 20 allows decrees for sale in enforcement of a mortgage or charge to be treated as money decrees for the purpose of set-off under Rule 18 - There is no requirement that both decrees must be mortgage decrees for a set-off to be permissible - The rule is intended to avoid circuity of proceedings and settle conflicts regarding whether a mortgage decree constitutes a "money decree."
(B) Order XXI, Rule 18 - Parties to decrees - Where a decree-holder in one suit is the judgment-debtor in another, and the other decree is held by multiple persons including the first decree-holder, set-off may be allowed if the parties seeking it apply for it - Refusing such set-off would be an excessive technicality if it avoids circuity of proceedings and no other obstructing judgment-debts exist.
Facts of the case:
Assignees of a money decree for mesne profits sought to execute the same against certain judgment-debtors. The judgment-debtors had previously obtained a final mortgage decree for sale against the original decree-holders. An application was filed under Order XXI, Rule 18 and 20 of the Code of Civil Procedure to treat the two as cross-decrees and allow a set-off of the amounts due under both decrees.
Findings of Court:
The court found that the general character of the two decrees did not preclude set-off. It held that Rule 20 does not restrict set-off only to cases where both decrees are mortgage decrees. Furthermore, the presence of additional decree-holders or judgment-debtors does not necessarily obstruct a set-off if the parties involved request it to avoid circuity of proceedings.
Issues: Whether a mortgage decree can be set-off against a money decree under Order XXI, Rule 20 of the Code of Civil Procedure, and whether the presence of additional parties to the decrees prevents such a set-off.
Ratio Decidendi: The principle underlying Rules 18 to 20 is the avoidance of circuity of proceedings. Rule 20 clarifies that mortgage decrees are treated as money decrees for set-off purposes. Technicalities regarding the identity of all parties should not prevent set-off if the parties seeking it are aligned and the result is to avoid unnecessary litigation.
Result: Appeal dismissed with costs.
Legal Category Hierarchy
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practice and procedure
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execution of decrees
- set-off of cross-decrees
- mortgage decrees
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execution of decrees
Judgement
Appeal (No. 82 of 1935) from a decree of the High Court (February 6, 1933) reversing a decree of the Subordinate Judge of Godda (April 11, 1931).
Certain persons, who may be compendiously referred to as the Barhams, obtained a money decree for Rs.81,398 in the High Court at Patna on January 15, 1924, against the 3rd, 12th and 13th respondents. The appellants purchased the decree on November 12, 1925, and, after getting their names substituted on the Record, sought to execute the decree on February 17, 1926, against the judgment-debtors above mentioned in the Court of the Subordinate Judge of Godda.
The respondents 1 to 16 were persons or represented persons who had on December 18, 1925, obtained a final mortgage decree in the Court of the Additional Subordinate Judge of Bhagalpur against the Barhams (the mortgagors) and certain other persons (who were represented by the respondents 17 to 36). The latter had been joined as having an interest in the mortgage security. The decree directed the sale of the mortgaged property in order that the respondents 1 to 16 should be paid a sum of Rs.86,612.
On September 19, 1928, the respondents 1 to 16 filed an application in the execution proceedings of February 17, 1926, above mentioned, claiming in effect under the provisions of s. 47 and Order xxi., r. 18, of the Code of Civil Procedure, that the two decrees should be treated as cross-decrees, that the decree purchased by the appellants should be treated as satisfied, and that the decree of the respondents 1 to 16 should be executed to the extent of the difference between the amounts of the two decrees.
The facts appear from the judgment of the Judicial Committee.
Rules 18, 19 and 20 of Order xxi. of the Code of Civil Procedure are as follows —
" 18. (1.) Where applications are made to a Court for the execution of cross-decrees in separate suits for the payment of two sums of money passed between the same parties and capable of execution at the same time by such Court, then—
(a) if the two sums are equal, satisfaction shall be entered upon both decrees ; and
(b) if the two sums are unequal, execution may be taken out only by the holder of the decree for the larger sum and for so much only as remains after deducting the smaller sum, and satisfaction for the smaller sum shall be entered on the decree for the larger sum as well as satisfaction on the decree for the smaller sum.
(2.) This rule shall be deemed to apply where either party is an assignee of one of the decrees and as well in respect of judgment-debts due by the original assignor as in respect of judgment-debts due by the assignee himself.
(3.) This rule shall not be deemed to apply unless—
(a) The decree-holder in one of the suits in which the decrees have been made is the judgment-debtor in the other and each party fills the same character in both suits ; and (b) the sums due under the decrees are definite.
(4.) The holder of a decree passed against several persons jointly and severally may treat it as a cross-decree in relation to a decree passed against him singly in favour of one or more of such persons."
Illustrations.
(b) A and B, co-plaintiffs, obtain a decree for Rs.1000 against C, and C obtains a decree for Rs.1000 against B. C cannot treat his decree as a cross-decree under this rule.
(a) if the two sums are equal, satisfaction for both shall be entered upon the decree ; and
(b) if the two sums are unequal, execution may be taken out only by the party entitled to the larger sum and for so much only as remains after deducting the smaller sum, and satisfaction for the smaller sum shall be entered upon the decree."
" 19. Where application is made to a Court for the execution of a decree under which two parties are entitled to recover sums of money from each other, then—
" 20. The provisions contained in rules 18 and 19 shall apply to decrees for sale in enforcement of a mortgage or charge."
The Subordinate Judge held that the two decrees could not be treated as
