http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 5  

CASE NO.: Appeal (civil)  1488-1489 of 2000

PETITIONER: Philomina Jose

RESPONDENT: Federal Bank Ltd. & Ors.

DATE OF JUDGMENT: 02/02/2006

BENCH: ARIJIT PASAYAT & TARUN CHATTERJEE

JUDGMENT: J U D G M E N T WITH     CIVIL APPEAL NOS. 1490-91/2000

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.   

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

       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  The amendment stood repealed by  virtue of Section 97(1) of the Code of Civil Procedure  (Amendment) Act, 1976 (Act 104 of 1976)(in short the  ’Amendment Act’)  which came into force on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.  

       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.

       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 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).

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 5  

(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 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 was just by  way of clarification that it was effective till the amendment.  

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. 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, inter  alia, provides that where payment in  accordance with sub-rule (1) has not been  made, the court shall, on an application made  by the plaintiff in 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 to pay al 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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 5  

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 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.

13.     In the instant case, the earlier suit was  not a suit for foreclosure 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 decretal-debt does not at  all arise. We are, therefore, of the view that  the decision in Sheo 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 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 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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 5  

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.             While considering a case interpreting Order XX Rule 12 of  the Code in Chittoori Subbanna Vs. Kudappa Subbanna (AIR  1965 SC 1325) this Court laid down the principles to be  followed in interpreting such decrees 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 either by way of appeal or revision.  (See Manganlal Vs M/s. Jaiswal Industries Neemach & Ors.  1989 (4) SCC 344, New Kenilworth Hotel (P) Ltd. Vs. Ashoka  Industries Ltd. & Ors 1995 (1) SCC 161, S. Sivaprakasam Vs.  B.V. Muniraj & Ors 1997 (9) SCC 636, U. Nilan Vs. Kannayyan  (Dead) Through Lrs. 1999 (8) SCC 511, Kharaiti Lal Vs.  Raminder Kaur & Ors 2000(3) SCC 664, V.K. Palaniappa  Chettiar (Dead) by LRs Vs. U. Ramaswamy Grounder & Anr.  2001 (4) SCC 413).

       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 finally decided in C.M.A 353 of 1995 by order dated  2.6.1997, along with the main order.  

       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.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 5  

         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, the impugned judgment of the  High Court is indefensible and is set aside. Appeals are  allowed.  Costs made easy.