Legal Provisions of Order XXXIV of Code of Civil Procedure, 1908 (C.P.C.), India – Appeals by Indigent Persons

All persons having an interest either in the mortgage-security or in the right of redemption shall be joined as parties to any suit relating to the mortgage; but a puisne mortgagee may sue for foreclosure or for sale without making the prior mortgagee a party to the suit: and a prior mortgagee need not be joined in a suit to redeem a subsequent mortgage. (Order XXXIV, Rule 1). The object of this rule is that all claims affecting the equity of redemption may be disposed of in one and the same suit.

A co-mortgagor is a necessary party to a redemption suit, but a plea of his non-joinder, if not specifically raised in the written statement or at the trial, cannot be raised for the first time in appeal, when it is not established that he has a subsisting interest.

A person having paramount title is not a necessary party in a mortgage suit and need not be impleaded. But where persons setting up adverse title of the mortgagor are impleaded without objection and an issue is framed as regards their rights for decision on the merits and the issue is decided, it cannot be said that the court either went beyond its jurisdiction or did anything which was so improper or illegal that the court of appeal must, even in the absence of any prejudice, interfere. The rule is more a rule of convenience and prejudice than a rule affecting the jurisdiction of the court.

On unrebutted evidence of the plaintiffs the trial court decreed the suit for possession by redemption by holding that original mortgagor has not been heard of for the last about 20 years and, therefore, he would be presumed to be dead and the plaintiffs being his legal heirs had a right to file the suit for redemption.

The first appeal by the defendant-mortgagee was dismissed. Defendant for the first time claimed in second appeal that compromise decree for specific performance of sale was passed against the original mortgagor. On evidence it was found that the compromise decree was found by fraud and misrepresentation. The judgment of trial court was upheld as a realistic and reasonable view of the matter.

Grant of prohibitory injunction proper:

Grant of prohibitory injunction in favour of plaintiff though not in actual possession was proper, when the plaintiff was actual owner and defendant had failed to prove title by adverse possession.

Injunction against co-possesser in title suit could not be granted:

Where plaintiff and defendant were members of same family. Status of partition fifty years back was not in dispute. Property had been jointly recorded during consolidation operation. Entry in consolidation records had not excluded possession of defendants with respect to suit plot. Held, that in case of joint possession, parties were to maintain that -status quo, hence, order of refusal of injunction against defendants was proper.

Temporary injunction—Order modified by conditions:

Where there was grant of unconditional order in favour of new contractor ignoring huge investments made by old contractor to operate mine under existing agreement, held that it was not proper. Order was modified by imposing conditions.

Vacation of status quo not proper:

Where suit for declaration and permanent injunction restraining defendants from raising any construction on suit land was filed. Prayer for grant of temporary injunction was made. Trial Court had granted status quo after proper appreciation of all relevant aspects. Held, that vacation of order by appellate Court was not proper due to the fact that there was possibility of defendant altering nature of suit property during pendency. As such, order of Trial Court regarding status quo was upheld.

Injunction—Equitable relief:

Where ex parte order was issued directing parties to maintain status quo in respect of suit land. Petition by respondent alleging violation of interim order was pending. Held, that appellant was not entitled to equitable relief till allegation against them were adjudicated.

Plaintiff not entitled to injunction against defendant to restrain it from withdrawing money:

Where suit for recovery of loan was filed against company. Plaintiff’s case was that defendant company had approached it for loan through its Directors. Articles of Association of defendant-company had prohibited borrowing by company. Defendant-company had not approached plaintiff-company for loan.

The said Directors of defendant-company who were actually controlling affairs of Plaintiff-company had in collusion with plaintiff-company arranged whole transaction i.e., routing of money. Money entered into bank account of defendant-company not for its benefit but only to create some evidence. Held, that plaintiff was not entitled to injunction against defendant to restrain it from withdrawing money.

Mere plea of justification by defendants not sufficient for denial of interim relief:

Where interim relief was sought against defendants from making defamatory statements against company. Mere plea of justification was taken by defendants. It was not sufficient for denial of interim relief. Apart from taking plea of justification, defendants had to show that statements were made bona fide and in public interest. As such, rejection of application for injunction without ascertaining whether statements were made bona fide and in larger public interest was liable to be set aside.

Foreclosure suit: Preliminary Decree:

In a suit for foreclosure, if the plaintiff succeeds, the court shall pass a preliminary decree: (a) ordering that an account be taken of what was due to the plaintiff at the date of such decree for principal and interest on the mortgage, the costs of the suit awarded to him and other costs, charges and expenses properly incurred by him, (b) declaring the amount so due at that date, and (c) directing that, if the defendant pays into court the amount so found, or declared due on a date fixed by the court within six months from the date on which such amount is declared, the plaintiff shall deliver up to the defendant all documents in his possession or power relating to the mortgaged property, and shall, if required, retransfer the property to the defendant at his (defendant’s) cost free from the mortgage and from all incumbrances created by the plaintiff. If the payment is not made on or before the date so fixed the plaintiff shall be entitled to apply for a final decree debarring the defendant from all right to redeem the property. (Order XXXIV, Rule 2).

Final Decree:

Where the payment is made by the defendant on or before the date so fixed, the court shall on application made by the defendant, pass a final decree ordering the plaintiff to deliver up the documents referred to in the preliminary decree and if necessary ordering him to retransfer at the cost of the defendant the mortgaged property and also, if necessary, ordering him to put the defendant in possession of the property.

Where the payment has not been made by the defendant on or before the date so fixed the court shall, on application made by the plaintiff, 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. On the passing of a final decree all liabilities of the defendant in respect of the mortgage shall be discharged. (Order XXXIV, Rule 3).

Suit for sale: Preliminary decree:

In a suit for sale if the plaintiff succeeds, the court shall pass a preliminary decree ordering that an account be taken of what was due to the plaintiff at the date of the said deer declaring the amount so due at that date and directing that if the amount found due is paid on or before the date mentioned in the decree, the property be retransferred back to the mortgagor and that if the amount is not paid the property be sold.

If the amount is not paid as directed the plaintiff is at liberty to apply for a final decree directing that the mortgaged property of a sufficient part thereof be sold, and the proceeds of the sale, after deduction there from of the expenses of the sale, be paid into court and applied in payment of what has been found or declared under or by the preliminary decree due to the plaintiff. (Order XXXIV, Rule 4).

Final Decree:

Where on or before the day fixed or at any time before the confirmation of a sale made in pursuance of a final decree the defendant makes payment into court of all amounts due from him, the court shall, on application made by the defendant, pass a final decree or if such decree has been passed, on order ordering the plaintiff to deliver up the documents referred to in the preliminary decree and, if necessary, ordering him to transfer the mortgaged property and, also, if necessary, ordering him to put the defendant in possession of the property.

Where, however, payment has not been made, the court shall on application made by the plaintiff pass a final decree directing that the mortgaged property or a sufficient part thereof be sold. Where the net proceeds of any sale are found insufficient to pay the amount due to the plaintiff the court, on application by him, may, if the balance is legally recoverable from the defendant otherwise than out of the property sold, pass a decree for such balance. (Order XXXV, Rules 5 and 6).

Setting aside of Execution sale:

Under Order XXXIV, Rule 5 of the Code, judgment-debtor is required to make deposit of all amounts due in Court on any time before confirmation of sale is made in pursuance of a final decree.

Redemption: Preliminary decree:

In a suit for redemption if the plaintiff succeeds, the court shall pass a preliminary decree ordering that an account be taken of what was due to the defendant at the date of such decree for principal and interest on the mortgage, the costs of the suit, if any awarded to him and other costs properly incurred by him in respect of his mortgage security together with interest thereon; or declaring the amount so due at that date and directing that, if the plaintiff pays into court the amount so found or declared due on or before such date as the court may fix within six months from the date on which the court confirms and countersigns the account or from the date on which the amount is declared in court, the defendant shall deliver up to the plaintiff all documents in his possession relating to the mortgaged property and shall, if so required, retransfer the property to the plaintiff at his cost free from the mortgage and from all incumbrances created by the defendant and that if payment of the amount found due under the preliminary decree is not made on or before the date so fixed, the defendant shall be entitled to apply for a final decree that the mortgaged property be sold or that the plaintiff be debarred from all right to redeem the property, depending upon the nature of the mortgage. (Order XXXIV, Rule 7).

Final Decree:

Where before a final decree debarring the plaintiff from all right to redeem the mortgaged property has been passed or before the confirmation of a sale held in pursuance of a final decree the plaintiff makes payment into court of the money due, the court shall, on application made by the plaintiff, pass a final decree or, if such decree has been passed, an order ordering the defendant to deliver up the documents and, if necessary, ordering him to transfer at the cost of the plaintiff the mortgaged property and, also, if necessary, ordering him to put the plaintiff in possession of the property.

Where, however, the payment has not been made, the court shall, on application made by the defendant, pass a final decree in the case of a mortgage by conditional sale or an anomalous mortgage declaring that the plaintiff is debarred from all right to redeem the mortgaged property and in the case of any other mortgage, not being a usufructuary mortgage, that the mortgaged property be sold and the proceeds of the sale be paid into court and applied in payment of what is found due to the defendant. (Order XXXIV, Rule 8).

In the case of usufructuary mortgage clause (a) of sub-rule (3) of Rule 8 expressly excludes the right to the mortgagee to apply for foreclosure or sale or redemption. Necessary consequence is that so long as the right subsists, though there is delay in compliance of the condition imposed in the preliminary decree, the right of redemption to the mortgagor is not lost. It will be barred on expiry of the period of limitation prescribed under the Limitation Act.

In the case of preliminary decree for redemption of usufructuary mortgage, no limitation begins to run until deposit is made though there is a conditional preliminary decree and default was committed by the mortgagor for compliance thereof. In the case of usufructuary mortgage, the plaintiff need not make any application for extension of time fixed in the preliminary decree.

The mortgagee defendant has no right to make an application to foreclose the right of the plaintiff or sale of hypotheca declaring that the plaintiff has been debarred from making payment in court or to proceed further.

At any time before passing of final decree or confirmation of the sale held in pursuance of the final decree the plaintiff usufructuary mortgagor has been given right to make payment of the redemption money due under preliminary decree and the subsequent liability incurred thereon.

The outer limit for making such payment is passing of the final decree or confirmation of the sale made in furtherance thereof. The outer limit for a usufructuary mortgagor for making payment of the amount due under the preliminary decree thereby is passing of the decree or the date of confirmation of the sale.

The provisions of S. 21-A of Banking Regulations Act (1949) are not intended to override Order XXXIV, Rule 11 of the C.P.C. or alter provisions of C.P.C. It is the discretion of court to fix the rate of interest for period during pendency of mortgage suits in court. The continuance or fettering of that the mortgaged property be sold or that the plaintiff be debarred from all right to redeem the property, depending upon the nature of the mortgage. (Order XXXIV, Rule 7).

Final Decree:

Where before a final decree debarring the plaintiff from all right to redeem the mortgaged property has been passed or before the confirmation of a sale held in pursuance of a final decree the plaintiff makes payment into court of the money due, the court shall, on application made by the plaintiff, pass a final decree or, if such decree has been passed, an order ordering the defendant to deliver up the documents and, if necessary, ordering him to transfer at the cost of the plaintiff the mortgaged property and, also, if necessary, ordering him to put the plaintiff in possession of the property.

Where, however, the payment has not been made, the court shall, on application made by the defendant, pass a final decree in the case of a mortgage by conditional sale or an anomalous mortgage declaring that the plaintiff is debarred from all right to redeem the mortgaged property and in the case of any other mortgage, not being a usufructuary mortgage, that the mortgaged property be sold and the proceeds of the sale be paid into court and applied in payment of what is found due to the defendant. (Order XXXIV, Rule 8).

In the case of usufructuary mortgage clause (a) of sub-rule (3) of Rule 8 expressly excludes the right to the mortgagee to apply for foreclosure or sale or redemption. Necessary consequence is that so long as the right subsists, though there is delay in compliance of the condition imposed in the preliminary decree, the right of redemption to the mortgagor is not lost. It will be barred on expiry of the period of limitation prescribed under the Limitation Act.

In the case of preliminary decree for redemption of usufructuary mortgage, no limitation begins to run until deposit is made though there is a conditional preliminary decree and default was committed by the mortgagor for compliance thereof. In the case of usufructuary mortgage, the plaintiff need not make any application for extension of time fixed in the preliminary decree.

The mortgagee defendant has no right to make an application to foreclose the right of the plaintiff or sale of hypotheca declaring that the plaintiff has been debarred from making payment in court or to proceed further. At any time before passing of final decree or confirmation of the sale held in pursuance of the final decree the plaintiff usufructuary mortgagor has been given right to make payment of the redemption money due under preliminary decree and the subsequent liability incurred thereon.

The outer limit for making such payment is passing of the final decree or confirmation of the sale made in furtherance thereof. The outer limit for a usufructuary mortgagor for making payment of the amount due under the preliminary decree thereby is passing of the decree or the date of confirmation of the sale.1

The provisions of S. 21-A of Banking Regulations Act (1949) are not intended to override Order XXXIV, Rule 11 of the C.P.C. or alter provisions of C.P.C. It is the discretion of court to fix the rate of interest for period during pendency of mortgage suits in court.

The continuance or fettering of such discretion are the matters of policy of legislature and Parliament may legislate in this regard in accordance with the provisions of the constitution. With regard to mortgage suits special provisions of Order XXXIV, Rule 11 are only applicable and not Section 34, C.P.C.

It is proper to grant interest at the rate of 6% from the date of suit in mortgage suits for recovery of bank loan.

Sale of property subject to prior mortgage:

Where any property the sale of which is directed is subject to a prior mortgage, the court may, with the consent of the prior mortgagee, direct that the property be sold free from the same, giving to such prior mortgagee the same interest in the proceeds of the sale as he had in the property sold. (Order XXXIV, Rule 12).

Application of proceeds:

Such proceeds shall be brought into court and applied as follows : first, in payment of all expenses incident to the sale; secondly, in payment of the amount due to the prior mortgagee on account of the prior mortgage; thirdly, in payment of all interest due on account of the mortgage in consequence whereof the sale was directed; fourthly, in payment of the principal money due on account of the mortgage; and, lastly, the residue, if any, shall be paid to the persons proving themselves to be interested in the property sold according to their respective interests therein or upon their joint receipt. (Order XXXIV, Rule 13).

Suit for sale of mortgaged property:

Where a mortgagee has obtained a decree for the payment of money in satisfaction of a claim arising under the mortgage, he shall not be entitled to bring the mortgaged property to sale otherwise than by instituting a suit for sale in enforcement of the mortgage. (Order XXXIV, Rule 14).