Smt H T Leelavathi Vs Sri Ramegowda

THIS RSA IS FILED UNDER SECTION 100 OF CPC AGAINST THE JUDGEMENT & DECREE DTD 20.11.2012 PASSED IN R.A.NO.146/2012 ON THE FILE OF ADDITIONAL DISTRICT JUDGE AND PRESIDING OFFICER, FAST TRACK COURT, HASSAN, ALLOWING THE APPEAL AND SETTING ASIDE THE JUDGEMENT AND DECREE DTD 27.09.2010 PASSED IN OS.NO.129/1999 ON THE FILE OF III ADDITIONAL CIVIL JUDGE AND JMFC, HASSAN.

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THIS APPEAL, COMING ON FOR FINAL HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE ANANT RAMANATH HEGDE

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ORAL JUDGMENT

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This Second Appeal is arising from the divergent finding. This appeal is by the plaintiff. Initially, the suit was decreed.

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The defendant filed an appeal before First Appellate Court in R.A. No.146/2012 on the file of District Judge, Hassan. Said appeal is allowed. Consequently, the suit is dismissed.

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Hence, the plaintiff is before this Court assailing the judgment and decree rendered in First Appeal referred to above dismissing the suit in O.S. No.129/1999 on the file of III Additional Civil Judge, Hassan.

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HC-KAR

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Admittedly, one Honne Gowda was the owner of

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properties bearing Survey No.50/1, 50/2 and 51 of Lakshmisagar village, Taluk Hassan. The properties were mortgaged as a security for the loan, in favour of Primary Land Development Bank.

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Appellant claims to have purchased the property

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on 29.08.1980 from the said Honne Gowda for a valuable consideration of Rs.25,000/-.

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The properties measured 9 acres. It is noticed

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from the said sale deed that the purchaser has to clear the loan amount due to the Primary Land Development Bank.

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In the year 1984, the Primary Land Development Bank initiated recovery proceedings against the borrower. And in the said proceedings, the purchaser was not a party and award was passed against the borrower. Despite the award, the loan amount was not repaid.

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The Primary Land Development Bank initiated recovery proceedings by auctioning the properties

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HC-KAR

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mortgaged. On 05.06.1986, the auction was conducted and respondent No.1 before this Court emerged as a successful bidder in respect of Survey No.51.

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The appellant-borrower filed a suit in O.S. No.135/1986 (which is later re-numbered as O.S. No.146/1986) for declaration and injunction against first respondent who purchased the property in the auction held on 05.06.1986. Said suit was initially decreed. Auction/ Purchaser filed an appeal in R.A. No.143/2012 and said appeal was allowed. Consequently, the suit in O.S. No.138/1991 was dismissed. Then, the plaintiff-borrower of the said suit filed an appeal in R.S.A. No.360/2013 and said appeal is dismissed on 29.01.2020. The judgment rendered by this Court in R.S.A. No.360/2013 has attained finality.

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It is also relevant to notice that in the meantime, the bank had initiated one more recovery proceeding against borrower.

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On 18.05.1992, an Arbitrator passed an order directing the appellant to pay the loan amount. Appellant

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HC-KAR

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claims that she offered to repay the loan amount pursuant to the award and the bank refused to accept the loan amount Then, the appellant filed a suit in O.S. No.129/1999 for redemption of mortgage on the premise that the bank has refused to accept the loan amount.

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On 20.12.2007, the earlier suit in O.S. No.138/1991 was decreed and as noticed by this Court, the appeal against the said judgment and decree in R.A. No.143/2012 (Old R.A.22/2008) was allowed and judgment in O.S. No.138/1991 (Old No.146/1986) was set-aside.

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On 27.09.2010, the suit in O.S. No.129/1999 seeking redemption of mortgage was decreed and the present respondent No.1-auction/purchaser filed R.A. No.69/2010 which was later renumbered as R.A. No.146/2012 and First Appellate Court allowed R.A. No.146/2012.

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It is also relevant to notice that earlier R.A. No.143/2012 was also decided along with R.A. No.146/2012 and both the appeals were allowed.

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HC-KAR

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Hence, aggrieved by the aforementioned

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judgment and decree in R.A. No.146/2012, the present second appeal is filed.

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This appeal is admitted on 29.01.2020 to answer the following substantial questions of law:-

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"(i) Whether a derivative title holder from a mortgagor is entitled to marshal and redeem the property mortgaged with the Co-operative Bank by bringing an action before the Civil Court notwithstanding the ouster of jurisdiction of the Civil Court under Section 118 of the Karnataka Co-operative Societies Act, 1959?

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(ii) Whether the machinery constituted under the Karnataka Co-operative Societies Act, 1959 permit the redemption of a mortgage or whether redemption of a mortgage is within the exclusive jurisdiction of the Civil Court?"

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Since, the First Appellate Court has also held that

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the second suit is hit by Order II Rule 2 of Code of Civil Procedure, and suit is dismissed on that count this Court is of

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the view that following substantial question of law is required

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to be framed:-

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(iii) "Whether the First Appellate Court is justified in holding that the second suit is hit by Order II Rule 2 of the Code of Civil Procedure."

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This Court has considered the contentions raised at the bar and perused the records.

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It is relevant to notice that initially the plaintiff filed a suit in O.S. No.146/1986 on coming to know that the property in question is auctioned pursuant to an award obtained by the lending bank. Said suit is later renumbered as O.S. No.138/1991. The said suit was initially decreed and an appeal is filed by the auction purchaser in R.A. No.143/2012.

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The appeal was allowed and the suit was dismissed and this Court dismissed R.S.A. No.360/2013 arising from the aforementioned judgment and decree in O.S. No.138/1991 and R.A. No.143/2012. While dismissing the said R.S.A. No.360/2013, this Court has observed that

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HC-KAR

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the plaintiff has a right of redemption under Section 60 of the Transfer of Property Act, 1882 ('Act, 1882')

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Referring to the said judgment and also referring to Section 60 of the Act, 1882 the learned counsel for the appellant would submit that the right of redemption is still available to the plaintiff as such, she is justified in filing O.S. No.129/1999 seeking redemption of mortgage. He would further submit that the Trial Court rightly granted the decree for redemption of mortgage as the plaintiff had stepped into the shoes of the borrower as she purchased the property under the sale deed dated 29.08.1980 which stipulated that the purchaser has to repay the loan amount due to the bank.

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Learned counsel would further submit that First Appellate Court is not justified in allowing the appeal and dismissing the suit by holding that the suit is hit by Order II Rule 2 of the Code of Civil Procedure.

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It is his submission that the cause of action to file a suit in O.S. No.146/1986 is different from the cause of action to file a suit in O.S. No.129/1999. He would also

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submit that Section 118 of the Karnataka Co-operative Societies Act, 1959 (Act, 1959 ) is not a bar to file a suit as the auction purchaser is not a member of the Co-operative Society or the PLD Bank against which the plaintiff has filed a suit.

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It is his contention that the bar would apply only in a situation where the dispute is covered under Section 70 of the Act, 1959 and since the auction/purchaser is not a member of the Primary Land Development Bank, the suit is maintainable.

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Learned counsel for the appellant would submit that the Court had the jurisdiction to try the suit in view of Section 60 of the Act, 1882 and also in view of the fact that the auction/purchaser is not a member of the Co-operative Society and the suit could not have been dismissed on the plea of lack of jurisdiction.

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Learned counsel for the appellant would submit that First Appellate Court ought to have considered the appeal on merits and should have considered his claim for

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HC-KAR

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redemption of mortgage and Appellate Court erred in holding that the Trial Court had no jurisdiction to entertain the suit.

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Learned counsel for the respondent would submit that the award which was passed in favour of the lending bank in the year 1986 is not questioned and pursuant to the award, the auction was conducted and the contesting respondent being a third party purchaser in the auction acquired the property as he had emerged as the successful bidder. It is his submission that a sale certificate has been duly issued on 30.12.1986 and he has acquired valid title and possession over the property. It is his further submission that First Appellate Court is justified in holding that the suit is hit by Order II Rule 2 of the Code of Civil Procedure as the plaintiff had the cause of action to challenge the award which is passed earlier and having not obtained the leave of the Court under Order II Rule 2 of the Code of Civil Procedure, the plaintiff is precluded from filing the second suit.

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It is also urged that the Trial Court had no jurisdiction and First Appellate Court is also justified in

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HC-KAR

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holding that the Trial Court had no jurisdiction to entertain a suit which in fact has set aside a validly passed Award under Section 70 of the Act, 1959.

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The Court has considered the contentions and perused the records.

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The admitted factual position is; there was a sale deed on 29.08.1980 in favour of the appellant. The recital in the undisputed sale deed itself makes it clear that the present appellant-the purchaser was required to repay the loan amount payable to the Primary Development Bank which is the loan advanced to the appellant's vendor. The appellant thus purchased the property having a clear knowledge that she is required to repay the loan amount though the sale deed was executed in the year 1980, the loan amount which is required to be paid by the purchaser/appellant was not paid for about 5 years.

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This being the position, the bank/lender initiated recovery proceedings and obtained an award under Section

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HC-KAR

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70 of the Act, 1959. Despite the award, the borrower did not repay the loan amount.

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The appellant/purchaser contends that she is not a party to the proceedings and she is not bound by the award. Since the loan amount was not repaid by the borrower/judgment debtor, the award was put into execution and in the execution proceedings, the contesting respondent participated and emerged as the successful bidder and he purchased the property. Subsequently, the sale certificate is issued.

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In this background suit in O.S. No.146/1986 is filed claiming that the plaintiff/appellant should not be dispossessed on the premise that she has purchased the property under the registered sale deed dated 29.08.1980. The said suit initially decreed, was later dismissed.

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On an appeal filed by the auction purchaser this Court in R.S.A. No.360/2013 dismissed the appeal holding that the suit is not maintainable and the remedy if any for the appellant is to seek redemption of mortgage. It is also

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HC-KAR

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relevant to notice that by the time the appeal was dismissed, the suit for redemption was already filed in O.S. No.129/1999.

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Now the question is whether the suit for redemption of mortgage could have been initiated by the plaintiff who has not questioned the award which was passed earlier in favour of the lending bank and which was put into execution and when the property was sold and the entire amount payable to the bank was recovered.

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Section 60 of the Act, 1882 which deals with redemption of mortgage reads as under:

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"60. Right of mortgagor to redeem.— At

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any time after the principal money has become due, the mortgagor has a right, on payment or tender, at a proper time and place, of the mortgage-money, to require the mortgagee (a) to deliver to the mortgagor the mortgage-deed and all documents relating to the mortgaged property which are in the possession or power of the mortgagee, (b) where the mortgagee is in possession of the mortgaged property, to deliver

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possession thereof to the mortgagor, and (c) at the cost of the mortgagor either to re-transfer the mortgaged property to him or to such third person as he may direct, or to execute and (where the mortgage has been effected by a registered instrument) to have registered an acknowledgement in writing that any right in derogation of his interest transferred to the mortgagee has been extinguished:

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Provided that the right conferred by this section has not been extinguished by act of the parties or by decree of a Court.

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The right conferred by this section is called a right to redeem and a suit to enforce it is called a suit for redemption.

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Nothing in this section shall be deemed to render invalid any provision to the effect that, if the time fixed for payment of the principal money has been allowed to pass or no such time has been fixed, the mortgagee shall be entitled to reasonable notice before payment or tender of such money.

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Redemption of portion of mortgaged property.—Nothing in this section shall entitle a person interested in a share only of the mortgaged

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HC-KAR

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property to redeem his own share only, on payment of a proportionate part of the amount remaining due on the mortgage, except only where a mortgagee, or, if there are more mortgagees than one, all such mortgagees, has or have acquired, in whole or in part, the share of a mortgagor."

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The proviso to Section 60 of the Act, 1882 is relevant. Said proviso in unmistakable terms reveals that right of redemption of mortgage is available provided, the same is not extinguished by the decree of Court. Though the expression “award” is not specified in the Transfer of Property Act, 1882, the award passed by the Arbitrator under the Karnataka Co-operative Societies Act, 1959 has to be equated with decree referred to in the Transfer of Property Act, 1882.

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This being the position, this Court is of the view that since there is an award which was put into execution and the property being sold to recover the dues, the amount was not due to the lending bank and the liability was completely discharged.

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HC-KAR

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The present appellant/purchaser having stepped into the shoes of the borrower is also bound by section 60 of the Act, 1882. Thus, the right which was not available to the vendor is not available to the purchaser/appellant.

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The proviso to Section 60 of the Act of Transfer of Property prohibits the appellant from instituting a suit for redemption of mortgage after the mortgage amount is fully recovered and the liabilities fully discharged. Under these circumstances, this Court is of the view that the suit for redemption of mortgage could not have been initiated after the amount was discharged.

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As far as the finding of First Appellate Court that the Trial Court has no jurisdiction to decide the suit is concerned, this Court is of the view that the said finding is erroneous. The reason is simple. The suit is not hit by Section 118 of Act,1959 as the purchaser is not a member of the Cooperative Society. When one of the parties is not a member of the Cooperative Society, the suit is certainly maintainable and the jurisdiction of Civil Court is not ousted.

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HC-KAR

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As far as finding on Order II Rule 2 of Code of Civil Procedure, as held by First Appellate Court, this Court is of the view that the plaintiff had an occasion to file a comprehensive suit to incorporate all the reliefs which are necessary to safeguard her right. However, that was not done. The plaintiff had only filed a suit for declaration of ownership and injunction without making any reference to the auction sale without questioning the auction sale in favour of the purchaser when she filed the suit in 1986. The plaintiff had the cause of action to challenge the auction sale. Thus this Court is of the view that the second suit is also hit by Order II Rule 2 of the Code of Civil Procedure.

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It is also noticed that plaintiff/appellant has not filed a suit questioning the auction sale in favour of the purchaser. Second suit is filed for redemption of mortgage. And if it is decreed it amounts to setting aside the auction sale in favour of the auction/purchaser.

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Thus, the substantial question of law No.(i) is answered holding that the suit filed before the Civil Court is

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maintainable as the auction purchaser is not a member in the Cooperative Society.

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The substantial question of law No.(ii) does not arise for consideration in view of the finding on substantial question of law No.(i). The additional substantial question of law is answered in favour of the respondent.

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For the aforementioned reasons, this Court does not find any reason to interfere with the final outcome of the judgment.

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For the reasons assigned by this Court the decree dismissing the suit is affirmed which are different from the reasons assigned by First Appellate Court.

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Accordingly, the Regular Second Appeal is

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dismissed.

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Sd/(ANANT RAMANATH HEGDE) JUDGE

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CHS

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List No.: 1 Sl No.: 20

Smt H T Leelavathi v. Sri Ramegowda

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Smt H T Leelavathi v. Sri Ramegowda

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