Punjab And Sindh Bank vs Ch. Daljit Singh And Ors.
2003 Latest Caselaw 696 Del

ORDER

Manmohan Sarin, J.

1. By this common judgment, applications, moved by the plaintiffs, namely, IA. 12101/91 in S. No. 2247/85, IA. 12105/91 in S. No. 2248/85, IA. 12106/91 in S. No. 2249/85 and IA. 12162/91 in S. No. 2251/85, under Order XXXIV, Rules 5 and 6 CPC, for passing of the final decree, pursuant to the preliminary decree for mortgage passed on 26-9-1988, are being decided. This judgment would also decide applications, moved by the defendants, under Order XXXIX, Rules 1 and 2, namely, IA. 2763/96 in S. No. 2247/85, IA. 2764/96 in S. No. 2248/85, IA. 2765/96 in S. No. 2249/85 and IA. 2766/96 in S. No. 2251/ 85, seeking to restrain the plaintiff from proceeding with the application for passing of the final decree for sale of the properties mortgaged with the plaintiff-Bank. The applications are being decided by this common judgment, since apart from the common plaintiff, defendants Nos. 2 and 3, are the common guarantors, namely. Dr. Bajrang Singh and Mr. Krishan Bihari Rohtagi. The objection sought to be raised against the passing of the final decree are also based on common facts and grounds.

2. Before dealing with the legal grounds of objections sought to be raised in the applications, under decision, for facility of reference, the facts of individual suits relevant for the decision are given below :

Suit No. 2247/85

This is a mortgage suit for recovery of Rs. 3,04,300.74 (Rupees three lacs four thousand three hundred and paise seventy four only) by sale of mortgaged properties and the hypothecated vehicles. A preliminary mortgage decree was passed on 26-9-1988, together with cost and future interest at 17.5 per cent per annum. Defendant No. 1 had approached the plaintiff-Bank for a term loan of Rs. 2,30,000/- for purchase of two new-Matador four wheelers. Defendant Nos. 2 & 3 offered and executed personal guarantees. Defendant No. 3 in addition mortgaged his properties in favor of the plain-tiff-Bank to secure the loan. The said properties had been mortgaged by defendant No. 3 to secure the loan advanced not only to defendant No. 1 but to several others, who are the borrowers in similar connected suits, filed by the plaintiff-Bank. Defendants did not file the written statement in the suit despite opportunities and costs being imposed. Hence the, suit was decreed under Order VIII, Rule 10, CPC. A preliminary mortgage decree was passed on 26-9-1988, directing the defendants/judgment debtors to make the payment within six months, failing which the plaintiff was entitled to apply for final decree. The defendants failed to make the payment. Hence plaintiff filed I.A. No. 12101/1991 for passing of the final decree.

Notice of IA. 12101/91 was issued to the defendants. Defendant No. 1 expired and the plaintiff did not take steps to bring the legal representatives on record. Accordingly, name of defendant No. 1 was directed to be deleted from the array of the parties. Defendant No. 2 is the son of defendant No. 1 and is already on record. He had been appearing in person. It is claimed that he is also a general power of attorney holder of defendant No. 3, who had been served through affixation.

Objections sought to be raised by defendants are primarily based on the directions given by Justice Ranganath Mishra Commission vide Order dated 2-4-1986, wherein the plaintiff-Bank was directed to apply for insurance claim for the vehicles of riot victims including defendants/borrowers and pursue the same with National Insurance Company and give adjustment as admissible further to finance riot victims for purchase of new vehicles. Reliance is also placed on the orders passed in CW. No. 2262/88 wherein the plaintiff-Bank was directed not to realize any money from the petitioner and family members that is the defendants herein till it applies and gets insurance claim in terms of Justice Ranganath Mishra Commission's recommendations. These aspects and other common objections are being dealt with separately.'

Suit No. 2248/85

This is a suit for recovery of Rs. 1,52,600.11 (Rupees one lakh fifty two thousand six hundred and paise eleven only), in which a preliminary mortgage decree was passed on 26-9-1988, with future interest at 17.5 per cent per annum on the defendants' failure to file written statement. Defendant No. 2, Dr. Bajrang Singh and defendant No. 3, Krishan Bihari Rohtagi are the guarantors. Additionally, defendant No. 3 without possession had mortgaged his properties to secure the loan advanced to Mrs. Gian Kaur, defendant No. 4 herein and others. The loan had been utilized by defendant No. 1 for purchase of a Matador bearing Engine No. 233986, Chassis No. 3FD240575 from Delhi Automobiles Ltd. The Matador was registered with the registering authority as serial No. DEP4825 with the charge of the Bank registered with the registering authorities. Defendant No. 1 had failed to make the payment of the loan amount in 36 Installments inclusive of interest, insurance charges etc. culminating in the filing of the present suit in which the preliminary mortgaged decree was passed under Order 8, Rule 10, CPC, as stated above.

Upon default in payment of the preliminary decree for mortgage, plaintiff has moved IA No. 12105/91 for passing of the final decree for the sale of mortgaged property. Defendant No. 2 moved application IA. 2764/ 96, seeking a restraint on the plaintiff from proceeding with the application for passing of the final order, relying on the directions given by Justice Ranganathan Mishra Commission to the plaintiff-Bank, regarding pursuing the insurance claim in respect of vehicles burnt in riots and not to effect recovery till appropriate relief by the plaintiff-Bank, as per the Reserve Bank of India guidelines is given. The claim is based on the ground of the defendant No. 1 being, a 1984 riot victim, whose vehicle was damaged and burnt.

It may be noted that Dr. Bajrang Singh, defendant No. 2, has been heard at length in support of his submissions. His request during submission to lead evidence in support of IA. 2764/96 of being riot victims was declined. Sufficient opportunity had been granted to the defendants, including defendant No. 2 to file written statement and produce the documents as required. At a subsequent" stage, Mr. D.S. Dalal, who was appearing for defendant No. 1, sought time to file reply When Dr. Bajrang Singh had argued the matter. It may be noted that earlier adjournments had been sought and impression given to the Court was that arguments in the matter were to be addressed by Dr. Bajrang Singh Dalal. Be it may, sufficient opportunity had been granted to all the defendants to argue the matter or file written submissions. I.A. No. 2764/1996 had been moved under Order XXXIX, Rules 1 and 2, CPC by defendant No. 2 seeking a restraint on the plaintiff from proceeding with the application for obtaining a final decree. This application contained the oral submissions made at length by Dr. Bajrang Singh. Defendant No. 2-applicant also contended that there were admissions by the plaintiff with regard to their knowledge of vehicles belonging to defendant and hypothecated with the Bank, having been burnt in riots and lying in the police station. Dr. Bajrang Singh prayed that the submissions made in this application be treated as a further synopsis. The Court directed that the legal submissions made in the application No. 2764/96 be considered for the purposes of deciding the application for passing of the final decree. The Court, considering the above had declined to issue notice of the application. Defendant No. 2 thereupon preferred an appeal before the Division Bench against an order dated 21-3-1996, declining to issue notice. The said appeal was dismissed vide order dated 31-10-1996 by the Division Bench. The matter had been adjourned as defendant No. 1 claimed to have filed FAO (OS) No. 428/ 96, wherein the records of the suit had been called for. This appeal is also stated to have been dismissed by the Division Bench on 15-7-1998. Hence, there was now no impediment on deciding the application of the plaintiff for passing of the final decree.

Suit No. 2249/85

Plaintiff-Bank had instituted this mortgage suit for recovery of Rs. 1,53,515.94 against defendant No. 1, Rattan Singh to whom the loan had been granted. Defendant No. 2, Dr. Bajrang Singh and defendant No. 3 were granrantors. Defendant No. 3, Mr. Krishan Bihari Rohtagi, apart from being guarantor, had mortgaged his properties without possession, to secure the loans.

Plaintiff-Bank granted a term loan of Rs. 89,000/- to defendant No. 1 for the purchase of Matador bearing Engine No. 234682 Chasis No. 3FT-240735. The Matador, after the body been built, was hypothecated with the plaintiff-Bank, Defendant No. 1 was required to repay the loan in 36 monthly in-stalments before 30th October, 1982. In the event of failure to do so, defendants Nos. 2 and 3 were jointly and severally liable as guarantors. Upon the failure of defendants to make the payment, plaintiff instituted the present suit in December, 1985. Defendants failed to file the written statement as a consequence thereof a preliminary mortgage decree was passed on 26-9-1988 for recovery of Rs. 1,53,515.94 with costs and future interest at the rate of 17.5% per annum with the stipulation that the defendants shall pay the entire decretal amount within six months, failing which the plaintiff shall be entitled to apply for the mortgage decree. As noticed earlier, defendants have raised similar objections as in Suit Nos. 2247/1985 and 2248/1985 to the final decree being passed and have also filed application bearing No. 2765/96, seeking a restraint on the plaintiff from proceeding with the petition for passing of a final decree. These aspects and other common objections are being dealt with separately.

Suit No. 2251/85

Plaintiff-Bank had instituted the above mortgage suit for recovery of Rs. 1,53,400.80 (Rupees one lac fifty three thousand four hundred and paise eighty only). Defendant No. 1, Smt. Sudershan Sharma is stated to have obtained a loan of Rs. 1,15,000/- for the purchase of a new Matador to run the same at Delhi during the Asiad Games. Defendants Nos. 2 and 3, namely, Dr. Bajrang Singh and Mr. Krishan Bihari Rohtagi respectively, had given the personal guarantees. Defendant No. 3 had additionally mortgaged his properties situated in Delhi without possession to secure the loan to defendant No. 1 and others. Defendants having defaulted in payment of the loan, plaintiff instituted the present suit in December, 1985. Despite repeated demands between December, 1985 to March, 1987, defendants could not be served by ordinary means. Hence substituted service was ordered on 31-3-1997. The citation was duly published in the "Statesman" and the matter was posted before the Court for passing ex parte decree on 4-11-1987, when defendant No. 2 appeared in person and counsel appeared for defendants 1 and 2 and time was given for filing of the written statement. Repeated opportunities were given for filing of the written statement on 11-1-1988, 25-1-1988 and 11-2-1988. Upon the failure of the defendants to file the written statement, the Court imposed costs on 29-4-1988 and gave last opportunity. An application moved for reduction of cost was also dismissed. Upon failure of the defendants to file written statement the suit was decreed under Order VIII, Rule 10, CPC on 26-9-1988.

3. A preliminary mortgage decree for recovery of Rs. 1,53,400.80 together with cost and interest at 17.5 per cent per annum was passed. Defendants were also required to make the payment within six months and in default plaintiff was entitled to move the Court for passing of the final decree. Plaintiff has moved the Application No. 12162/ 91 for passing of the final decree. Defendants have raised similar objection to the final decree being passed as in the other connected suits and have also filed application bearing No. 2766/96, seeking a restraint on the plaintiff from proceeding with the petition for passing of a final decree. These aspects and other common objections are being dealt with separately.

4. Let us now consider the submissions made on behalf of defendant No. 2, which had also been adopted by counsel for defendant No. 1 in the suits also. It would be seen in the four suits defendant No. 2 Dr. Bajrang Singh Dalal and defendant No. 3 Krishan Behari Rohtagi are common defendants being guarantors. Defendant No. 1 in all the suits is the borrower. The borrowers in the four suits were different. However, the loans were secured by a single registered mortgage deed executed by defendant No. 3 which covered loan of all the borrowers. The defendants while seeking reduction in the cost imposed had claimed that the primary responsibility for repayment rested on Dr. Bajrang Singh, defendant No. 2 in all cases as the bank had sanctioned it as a group loan, treating it to be a project of Dr. Bajrang Singh.

5. The case of defendant No. 2 is that in the aftermath of assassination of late Prime Minister Mrs. Indira Gandhi, riots broke out in Delhi and defendant No. 2 had given shelter to numerous families and organized a Sikh Relief Camp in Subzi Mandi, Delhi. The riots affected families were brought by defendant No. 2 in the vehicles, which were hypothecated in the present cases and other cases. In retaliation, it is claimed that the mob damaged the property of the defendant, which was looted and burnt. It is claimed that defendant No. 2 had petitioned to Justice Rangnath Mishra Commission for relief for the damages suffered by the families and for their rehabilitation. During the course of proceedings, the Chairman of the plaintiff had appeared before the Justice Rangnath Mishra Commission and stated that similar relief would be given to the defendants as had been given to other riot victims. Further, that the Bank would apply and lodge insurance claims in respect of the defendant's vehicles. It is contended that the Bank further agreed to finance the purchase of new vehicles and for their rehabilitation. During the proceedings, it was disclosed before the Commission that the Vehicles had been insured with National Insurance Company and the Secretary of the Commission wrote on 31-10-1986, advising the plaintiff to file claims with the insurance company. In the said letter dated 31-10-1986, plaintiff-Bank was advised that since the Bank had insured the vehicles and was in possession of all the details, future correspondence should be carried on directly with the insurance company by the Bank. Further, the insurance claim amount were to be deposited by the plaintiff-bank in the loan account. Plaintiff was advised that in view of this, it was desirable that no recovery be made till the adjustment of the claims. Reliance was also placed on an order passed in Civil Writ No. 2262/1988 titled Bajrang Singh v. Union of India decided on 20-2-1989 by the Division Bench of this Court. Plaintiff Bank was respondent No. 17 in the writ petition. Dr. Bajrang Singh placed reliance on the following extract of order dated 20-2-1989 :

"Respondent No. 17 is directed not to realize any amount from the petitioner and his family members till it applies and gets insurance claim in terms of Justice Mishra Commission recommendations."

6. The thrust of submission of Dr. Bajrang Singh is that defendant No. 1 and riot victims are entitled to relief from the Bank as per the Reserve Bank of India guidelines. Moreover, the Bank is to pursue the claim for insurance in respect of the damaged vehicles and adjustment of the claim is to be given. Not only this further relief in terms of fresh loans for rehabilitation is to be given. In these circumstances, it is contended that the Bank cannot proceed and seek a final decree, as it would go against the very spirit and intent of the directions given in the above judicial proceedings and before the Justice Ranganath Mishra Commission. Counsel also claimed that apart from the suits, which were decreed by common judgment of Justice Jagdish Chandra dated 26-9-1988, other suits were pending and no material proceedings had taken place pending the implementation by the Bank of the directions to give reliefs in terms of RBI guidelines and pursuing the insurance claims. From time to time certain directions were given in writ proceedings with regard to filing of report by the SHO in respect of damage to the vehicles, which were the subject matter of the suits. Reports were called from SHO with regard to the damaged buses which were lying in the police station. Ultimately some suits are stated to have been transferred to the District Courts. In these circumstances, it is claimed that the application for passing final decree cannot be entertained and the said proceedings deserve to be stayed till plaintiff implements the directions for giving relief to riot affected victims and pursue the insurance claim.

7. Mr. K.L. Malhotra refutes the submissions made by Dr. Bajrang Singh Dalal. Mr. P.K. Aggarwal and Mr. D.S. Dalal on behalf of the defendants. It is urged firstly that Writ No. 2262/1988 was directly concerned with the allotment of DDA Janta Flats to (sic) 793 to riot victims of Sikh Relief Camps and it did not deal with the case of the plaintiff bank as such. Mr. Malhotra submits that the said case was concerned with the allotments of DDA Janta Flats to 793 riot victims of Sikh Relief Camps and did not have any direct bearing with the plaintiffs case. It is also claimed that another suit being Suit No. 207/1985 titled Punjab and Sind Bank v. Smt. Sukh Devi and others has already been decreed in favor of the plaintiff wherein similar objections were raised. Mr. Malhotra also contended that the pleas sought to be raised by the defendants regarding non-entertainment of the application for passing of a final decree cannot be legally raised in these proceedings.

8. I find considerable merit in the submissions of the plaintiff's counsel Mr. K.L. Malhotra. Once the preliminary decree has been passed, the question which the Court is to consider is whether the preliminary decree has been satisfied or any amount towards the decree has been paid. It is not the case of any of the defendants that any amount has been paid towards the satisfaction of the preliminary mortgaged decrees or any amount has been received in settlement of the insurance claims by the plaintiff Bank for which credit has not been given. The manager of the plaintiff Bank clarified and stated on 14-7-2003 that no amount by way of settlement of any insurance claim has been received by the plaintiff Bank in respect of the above suits.

9. Vide judgment dated 26-9-1988, a preliminary decree had been passed in favor of the plaintiff. The defendants including Dr. Bajrang Singh were directed to pay the decreed amount within six months, failing which the Bank was entitled to move for passing of a final decree. The Court while considering an application for passing of a final decree cannot go behind the preliminary decree and cannot re-open the questions which stood determined or concluded at that time and by passing of the preliminary decree. In the instant cases, it is not the defendants' case that there has been any challenge to the preliminary decree. Mr. P. K. Aggarwal submitted that negotiations are going on for an overall settlement of all the cases with the Bank. No application for compromise or settlement has been filed on the basis of which decision on these applications can be deferred. It is open to the parties to reach a settlement even during execution proceedings and accept the settlement amount in satisfaction of the decree. Accordingly, the pendency of the negotiations cannot come in the way of disposal of the present applications for passing of final decree.

10. Reliance in this case may be usefully made to the judgment of this Court in Punjab and Sind Bank v. Manjit Singh, . In the cited case, a preliminary decree had been passed under Order XXXIV, Rule 4, CPC giving time of six months to the defendants to pay the decretal amount failing which the plaintiff was entitled to apply for a final decree for sale of the mortgaged property. The defendants had defaulted in the payment of the decreed amount. The case of defendant No. 1 was that he was not informed about the passing of the preliminary decree and, as such, or final decree could be passed against defendant No. 1. Further, that the Judge had relied on the evidence of the plaintiff Bank recorded in the absence of the defendants. When they had been proceeded ex parte, the ex parte decree had been set aside, it was urged that preliminary decree itself was void ab initio. The Court dismissed the objections holding as under :

"5. I have given my thoughtful consideration to the submissions made by the learned counsel for the parties. As held by the Allahabad High Court in the case of Kalloo (supra) and Ram Ugrah (supra), the Court at the time of passing the final decree has no power to go behind the preliminary decree in which the rights and liabilities of the parties had been determined and while taking action under Order 34, Rule (sic) the Court is not empowered to reopen the question which has already been determined by the Court at the time of preliminary decree. In view of this well settled law, I am not inclined to go behind the preliminary decree passed by this Court on 7th August, 1990."

11. I am in respectful agreement with the above view, which has been taken. Accordingly, the Court while considering the application for passing of the final decree, cannot reopen the question of determination of liability as adjudicated in the preliminary decree. Secondly, more importantly the nature of the pleas and objections sought to be raised cannot be raised in the proceedings to oppose the passing of the final decree. The pleas as are sought to be raised relate to directions given in writ petitions concerning riot victims and opinion expressed by Commission of enquiry advising the Bank not to enforce recoveries till insurance claims are settled. These inherently are in the nature of and concern pleas as may be sought to be raised against enforcement and execution of decree, if admissible as objections under Order 47, CPC in execution proceedings.

12. In view of the foregoing discussion I allow applications IA 12101/91 in S. No. 2247/85, IA 12105/91 in S. No. 2248/85, IA 12106/91 in S. No. 2249/85 and IA. 12162/91 in S. No. 2251/85, under Order XXXIV Rules 5 and 6 CPC, praying for passing of the final decree for sale in the suits and dismiss the applications under Order XXXIX Rules 1 and 2, namely, IA. 2763/96 in S.No. 2247/85, IA. 2764/96 in S.No. 2248/85, IA. 2765/96 in S.No.

2249/85 and IA.2766/96 in S.No. 2251/85, as being not maintainable at this stage. A final decree is passed in suit Nos. 2247/ 1985, 2248/1985, 2249/1985 and 2251/ 1985 with costs and future interest at 7.5% per annum till realization and decree sheets be prepared by the Registry in terms of Order XXXIV Rule 5, CPC, Form 6 Appendix 'D' of Civil Procedure Code based on the preliminary mortgage decree as passed in each of the suits.