IMPORTANT POINTS
1. The suit to enforce the equitable mortgage is not hit by Order II Rule 2 of the Code of Civil Procedure in view of the earlier suit for recovery of the mid term loan, especially in the context of Order XXXIV Rule 14 of the Code.
2. Order II Rule 2 of the Code of Civil Procedure is directed to securing an exhaustion of the relief in respect of a cause of action and not to the inclusion in one and the same of action of different causes of action, even though they may arise from the same transactions.

Headnote:Civil Procedure Code, 1908—Order II Rule 2; Order XXXIV Rules 14, 15; Order XLI Rules 22, 33—Bar of Order II Rule 2—Scope of plea based on Order II Rule 2 of the Code when two causes of action are different, though they might have been parts of the same transaction—Appellant borrowed a sum of Rs. 1,10,000/- from the plaintiff bank for purchase of a bus—He secured repayment of that loan by hypothecating the bus and further by equitably mortgaging two items of immovable properties—Bank filed suit for recovery of money due which was decreed—Bank in execution sought to proceed against the hypothecated bus and then against the mortgaged properties—Objection filed that as there was no decree on the mortgage, bank could only attach the properties and could not see it straightaway—Objection upheld—Bank filed another suit for enforcement of equitable mortgage—Plea of bar of second suit by Order II Rule 2—Trial Court held that the suit was not hit by O. II R. 2 of the Code but dismissed the suit on ground of limitation—In appeal, High Court held that a valid and enforceable equitable mortgage was created but further held that the suit was hit by O. II R. 2 —However, suit was decreed holding that appellant had not challenged finding of trial Court by filing a memorandum of cross objections—Whether the suit on equitable mortgage is barred by Order II Rule 2 of the Code—(No)—Whether High Court was justified in granting the Bank a decree against appellant by relying on Order XLI Rule 33 of the Code—(No)—Whether High Court was correct in granting the Bank a decree in the suit—(Yes)—There was no occasion for applying Order XLI Rule 33 of the Code where suit of plaintiff had been dismissed and plaintiff had come up in appeal claiming decree as prayed for by him in the suit.
       Held : The High Court, in our view, was clearly in error in holding that the appellant not having filed a memorandum of cross-objections in terms of Order XLI Rule 22 of the Code, could not challenge the finding of the trial court that the suit was not barred by Order II Rule 2 of the Code. The respondent in an appeal is entitled to support the decree of the trial court even by challenging any of the findings that might have been rendered by the trial court against himself. For supporting the decree passed by the trial court, it is not necessary for a respondent in the appeal, to file a memorandum of cross-objections challenging a particular finding that is rendered by the trial court against him when the ultimate decree itself is in his favour. A memorandum of cross-objections is needed only if the respondent claims any relief which had been negatived to him by the trial court and in addition to what he has already been given by the decree under challenge. We have therefore no hesitation in accepting the submission of the learned counsel for the appellant that the High Court was in error in proceeding on the basis that the appellant not having filed a memorandum of cross-objections, was not entitled to canvass the correctness of the finding on the bar of Order II Rule 2 rendered by the trial court. (Para 7)
       This is a case where the suit filed by the plaintiff Bank had been dismissed by the trial court. The plaintiff Bank had come up in appeal. It was entitled to challenge all the findings rendered against it by the trial court and seek a decree as prayed for in the plaint, from the appellate court. Once it is found entitled to a decree on the basis of the reasoning of the appellate court, the suit could be decreed by reversing the appropriate findings of the trial court on which the dismissal of the suit was based. For this, no recourse to Order XLI Rule 33 is necessary. Order XLI Rule 33 enables the appellate court to pass any decree that ought to have been passed by the trial court or grant any further decree as the case may require and the power could be exercised notwithstanding that the appeal was only against a part of the decree and could even be exercised in favour of the respondents, though the respondents might not have filed any appeal or objection against what has been decreed. 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.(Para 8)
       Now, we come to the merit of the contention of the appellant that the present suit is hit by Order II Rule 2 of the Code in view of the fact that the plaintiff omitted to claim relief based on the mortgage, in the earlier suit O.S. No. 131 of 1984. Obviously, the burden to establish this plea was on the appellant. The appellant has not even cared to produce the plaint in the earlier suit to show what exactly was the cause of action put in suit by the Bank in that suit.(Para 9)
       What Order II Rule 2 insists upon is the inclusion of the whole of the claim which the plaintiff is entitled to make in respect of the cause of action put in suit. We must notice at this stage that in respect of a suit in enforcement of a mortgage, the bar under Order II Rule 2 has been kept out by Order XXXIV Rule 14 of the Code. Rule 15 of Order XXXIV makes the rules of Order XXXIV applicable to a mortgage by deposit of title deeds.(Para 10)
       It is clear from sub-rule (1) of Rule 14 of Order XXXIV of the Code that notwithstanding anything contained in Order II Rule 2 of the Code, a suit for sale in enforcement of the mortgage can be filed by the plaintiff Bank and in fact that is the only remedy available to the Bank to enforce the mortgage since it would not be entitled to bring the mortgaged property to sale without instituting such a suit. Be it noted, that Rule 14 has been enacted for the protection of the mortgagor. In the context of Rule 14 of Order 34 of the Code, it is difficult to uphold a plea based on Order II Rule 2. If the appellant wanted to show that the causes of action were identical in the two suits, it was necessary for the appellant to have marked in evidence the earlier plaint and make out that there was a relinquishment of a relief by the plaintiff, without the leave of the court. Even then, the effect of Rule 14 will remain to be considered.(Para 11)
       Applying the test so laid down, it is not possible to come to the conclusion that the suit to enforce the equitable mortgage is hit by Order II Rule 2 of the Code in view of the earlier suit for recovery of the mid term loan, especially in the context of Order XXXIV Rule 14 of the Code. The two causes of action are different, though they might have been parts of the same transaction. Even otherwise, Order XXXIV rule 14 read with rule 15 removes the bar if any that may be attracted by virtue of Order II Rule 2 of the Code.(Para 14)

JUDGMENT

P.K. Balasubramanyan, J.—Leave granted.

2. 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.

3. 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.

4. Being aggrieved by the decree, the appellant approached this Court with the Petition for Special Leave to Appeal. This Court while issuing notice, confined the appeal to two questions. They were:

1)Why the second suit would not be hit by Order 2 Rule 2, C.P.C.?; and

2)In view of the finding arrived at vide para 19 of the judgment (Annexure P-2), why defendant No.1 should not have been held to have been discharged from the liability?

5. We do not think it necessary to broaden the scope of challenge in this appeal in the light of the findings entered and in the circumstances of the case. We are therefore inclined only to examine the two questions posed by this Court at the stage of issuing notice in the Petition for Special Leave to Appeal.

6. We will first consider whether the suit is barred by Order II Rule 2 of the Code. Whereas the trial court held that the suit on the equitable mortgage filed by the Bank was not barred by Order II Rule 2 of the Code especially in the context of Order XXXIV Rules 14 and 15 of the Code, the High Court was inclined to the view that the suit was barred, though it did not accede to the prayer of the appellant to dismiss the suit as being hit by Order II Rule 2 of the Code. The High Court seems to have been of the view that since the Bank in the prior suit omitted to sue on the equitable mortgage without the leave of the court, the present suit was barred. But it proceeded to rely on Order XLI Rul

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2007 Supreme(SC) 45

Cases Referred (3)