Bank of Bihar Ltd. vs Omitave Chattarji and Another

Harries, C.J.—This is a plaintiff''s appeal from concurrent decrees of the Courts below dismissing the suit for enforcement of a certain charge. The facts of the case can be shortly stated as follows: The plaintiff Bank appointed Ashutosh Chattarji, the father of the contesting defendant, as manager of their Gaya Branch. Ashutosh Chattarji, before he took up his duties, executed on 19th July 1918, a document which is merely described as an indenture. The document opens with a recital in these words:

Whereas the said Babu Ashutosh Chattarji agreed that on being appointed manager of the Bank of Bihar, Gaya Branch, on a salary of seventy five (Rs. 75) per mensem he, the said Babu Ashutosh Chattarji, would furnish security to the aforesaid Bank of Bihar, Ltd., amounting to the value of Rs. 4000 (Rupees four thousand) for the due and proper discharge of his duties and whereas the said post of manager of Bank of Bihar, Ltd., Gaya Branch, on a salary of Rs. 75 (seventy-five) has been conferred on him.

Then follows:

This indenture witnesseth that in pursuance of the aforesaid agreement and in consideration of the said post of manager....the said Babu Ashutosh Chattarji doth hereby grant, convey and transfer unto the said Bank of Bihar, Ltd., or its successor in-office his house named ''Kirk view''....valued at Rs. 4000 (rupees four thousand) and all the estate, right, title and interest of the said Babu Ashutosh Chattarji...in the said house and every part thereof. To have and to hold as security for the said post of manager....provided always that in the event of the removal of the said Babu Ashutosh Chattarji from the poet of manager, Bank of Bihar, Ltd., Gaya, by resignation, dismissal, death or otherwise, the said Bank of Bihar, Ltd., Patna, or its successors in-office shall reconvey the kebala of the aforesaid house unto and to the use and possession of the said Babu Ashutosh Chattarji�.

The document was registered, and Ashutosh Chattarji took up the post of manager. On 15th May 1924, Ashutosh Chattarji was discharged, and in the year 1926 the plaintiff Bank brought a suit against him in the Court of the Subordinate Judge for accounts and for amounts due in respect of losses suffered by the plaintiff Bank through the conduct of Ashutosh Chattarji. The litigation had a somewhat long history, but eventually, on 23rd February 1930, an award was made in favour of the plaintiff Bank by Babu Rajendra Prasad for Rs. 4500 with future interest at six per cent, per annum. The dispute had during its course been referred to Babu Rajendra Prasad as the sole arbitrator.

On 21st March 1931, this award was filed in Court and a decree passed in its terms. The plaintiff Bank realized various sums from time to time and in the year 1934, Ashutosh Chatterji died. The present suit was filed on 25th February 1936, against the defendants who were the sons of Ashutosh Chattarji. The claim was for Rs. 4864-6-6, being the balance due on the decretal amount, and the plaintiff claimed that this amount should be realized out of the house, which it was said was charged by the document of 19th July 1918, to which I have already made reference.

The defendants resisted the suit on a number of grounds: but it is only necessary to consider two of them in this appeal. It was said that the document created neither a mortgage nor a charge and further that the suit was barred by reason of the provisions of Order 2, Rule 2, Civil P.C. Both the lower Courts came to the conclusion that the document did not create a simple mortgage: but neither Court appears to have considered whether the document created a charge. Further, both the Courts were of opinion that the suit was barred by reason of Order 2, Rule 2, and accordingly dismissed the plaintiff''s claim in its entirety. Mr. Rai Gurusaran Prasad on behalf of the appellants has argued, in the first place, that the document of 19th July 1918, clearly creates a charge. He is prepared to concede for the purposes of his argument that the document does not create a simple mortgage, and it is therefore unnecessary to consider that aspect any further. A "charge" is defined in Section 100, T.P. Act, in these terms:

Where immovable property of one person is by act of parties or operation of law made security for the payment of money to another, and the transaction does not amount to a mortgage, the latter person is said to have a charge on the property, and all the provisions hereinbefore contained which apply to a simple mortgage shall so far as may be, apply to such charge.

On behalf of the appellant, it is said that this house belonging to Ashutosh Chattarji was by act of parties made security for the payment of money to the Bank. It was made security for the payment of any sum which might become due from Ashutosh Chattarji to the Bank by reason of his failure to discharge his duties in a due and proper manner. Mr. B.C. De, on the other hand, has argued that the document does-not create a charge, because the property is not made security for the payment of money to the Bank.

The document is not very happily drafted, but when it is read as a whole, it is in my view clear that the intention of the parties was that the house in question, should be held by the Bank as security for any amount up to Rs. 4000, which might become due from Ashutosh Chattarji to the Bank by reason of his misconduct or failure to discharge his duty. The opening recital, in my view, makes it clear that such was the intention. In the recital it is said that Ashutosh Chatterji agreed that he would furnish security to the value of Rs. 4000 for the due and proper discharge of his-duties. In the body of the document he-then conveys and transfers to the Bank the house named, "Kirk View" which the Bank was to have and to hold as security for the said post of manager. In other words, they were to have and to hold the house as security for the due performance by Ashutosh Chattarji of his duties as manager. The concluding portion of the document does, raise difficulties, because there is a provision that in the event of the removal of Ashutosh Chattarji from the post of manager by resignation, dismissal, death or otherwise, the bank shall reconvey the kebala of the aforesaid house unto and to the use and possession of the said Babu Ashutosh Chattarji.

It has been urged that no security could have been contemplated because the bank were bound to return the kebala to Ashutosh Chattarji the moment he was dismissed. If Ashutosh Chattarji had been dishonest, dismissal would have inevitably followed on such dishonesty being discovered. If this document is read literally, the moment dismissal occurred as a result of dishonesty, the bank were bound to surrender their security to the dismissed servant. In my view such a meaning cannot be given to this provision, and it must be read in the light of the earlier provisions. In my view what the document as a whole means is that the house was to be held by the Bank as security for any sum which might become due from the manager to the Bank as the result of misconduct, neglect or such like. If, on the other hand, no sum was due from the manager to the Bank, the former would be entitled to the return of his security the moment he left their employ. The document cannot mean that the manager would be entitled to the return of the security when he had been dismissed for dishonesty or such like.

Though, as I have said, the document is not very artistically worded, it does, in my view, make the house "Kirk View" a security for the payment of money to the Bank and accordingly does create a charge in favour of the Bank. Neither of the Courts below has considered this aspect of the case. It appears to have been argued before them that the document constituted a simple mortgage, and the Courts below came to the conclusion that as it was not a simple mortgage the claim was bound to fail. It is however clear that the plaintiff''s claim can succeed even if the document does fall short of a simple mortgage provided it amounts to a charge.

Both the Courts below were also of opinion that the suit was barred by reason of the provisions of Order 2, Rule 2, Civil P.C. The Courts came to the conclusion that assuming the document created a security, the plaintiff should have sought to enforce the security when it instituted proceedings in the first place. The Courts came to the conclusion that as the plaintiff had failed to ask for the enforcement of its security in the proceedings which culminated in the money decree, he could not bring subsequent proceedings for such enforcement. If however this document created a charge, Order 2, Rule 2, could not, in my view, bar the suit. It is expressly provided by Order 34, Rule 14, that:

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, and he may institute such suit notwithstanding anything contained in Order 2, Rule 2.

Order 34, Rule 15, provides that all provisions contained in Order 34 which apply to a simple mortgage shall, so far as may be, apply to a charge within the meaning of Section 100, T.P. Act, 1882. By reason of the provisions of Order 34, Rule 14, a simple mortgagee may obtain a money decree in respect of the sum secured by the mortgage. If he does, he may subsequently bring a subsequent suit to realize the amount of his decree by sale of the mortgaged property, and Order 2, Rule 2, is expressly stated to be no bar to such a suit. By reason of Order 34, Rule 15, the same provisions apply to a charge. A charge may bring a suit to recover the money charged on immovable property and may subsequently bring a suit to bring that immovable property to sale in satisfaction of his decree. Neither a mortgagee nor a charge can, on obtaining a money decree, execute that decree against the mortgaged or charged property.

They must, by a subsequent suit, bring the mortgaged or the charged property to sale. Order 34, Br. 14 and 15, are an exception to the general rule laid down in Order 2, Rule 2. Both the lower Courts have omitted to consider the effect of Order 34, Rules 14 and 15. Mr. Rai Gurusaran Prasad has contended that the plaintiff Bank could, in the first place, institute a suit to recover the amount of money, which was a charge on the property, and later bring a suit for sale of the property to satisfy that amount. Mr. B.C. De, on behalf of the respondents, has conceded that in certain circumstances a chargee may bring, first, a money suit and then a suit for sale of the property; but he has urged that the chargee can only do so where the liability to pay the money and the security is created by the same document.

He has contended that if the document in question in this case created a charge, it did not create the personal liability of Ashutosh Chattarji. Mr. De has stated that that liability was the creature of the common liability and had nothing whatsoever to do with the document. Accordingly he has argued that as the personal liability and the liability of the property were not created by the same document, the plaintiff was bound to ask for sale in the first suit. Mr. De has stressed that Order 34, Rule 14, only applies where a mortgagee or chargee has obtained a decree for the payment of money in satisfaction of a claim arising under a mortgage. He says that the decree must be in respect of a olaim oreated by the mortgage or charge. The words however are "obtained a decree for the payment of money in satisfaction of a claim arising under the mortgage."

When the plaintiff sued Ashutosh Chatterji in the earlier suit and obtained a decree for only Rs. 4000, it certainly obtained a decree for the payment of money in satisfaction of a claim arising under the charge. The property was charged with the payment of money due from Ashutosh Chattarji to the Bank by reason of the former''s misconduct or neglect. It was in respect of that money that a decree was obtained, and in my view, it was clearly a decree for the payment of money in satisfaction of a claim arising under the charge. If that money had been paid, the charge would clearly have been extinguished. In my judgment the provisions of Order 34, Rule 14 and 15, clearly apply to this case, and the plaintiff Bank was entitled to bring a suit for money in the first place and subsequently to bring a suit for enforcement of the charge.

Mr. De in support of his argument has relied upon a number of cases, and I will refer to the most important of them. In Braja Sunder Deb v. Sarat Kumari AIR 1916 Pat 252, it was held that where a decree had been obtained to the effect that the plaintiff was to get maintenance at a certain rate and that the allowance decreed would be a charge on certain properties named, the properties could be brought to sale in execution of the decree and there was no need for a suit for sale. Mr. De relies upon this case as authority for his contention that after the plaintiff obtained the money decree his remedy was execution of that decree against the house in question or any other property of Ashutosh Chattarji. There is a great difference between the facts of the case now before the Court and the case in Braja Sunder Deb v. Sarat Kumari AIR 1916 Pat 252. In the latter case, there was no charge created before the decree was obtained.

There was merely a liability for maintenance. The decree however fixed that liability and created the charge, and what the Court held was that it was unnecessary to bring a subsequent suit to enforce that charge as it was the creature of the decree itself. Such a charge, the Court held, could be enforced in execution of the decree. The learned Judges pointed out that where a charge is created by the decree itself the case is not within Order 34, Rule 14 or Rule 15. The wording of those rules suggests that there is a charge in existence before the money decree is obtained. The case in Braja Sunder Deb v. Sarat Kumari AIR 1916 Pat 252, therefore can be of no assistance whatsoever to the respondents in this case.

Another case relied upon by Mr. De was the case in Hari Sankar Rai Vs. Musammat Tapai Kuer, . This case followed the earlier case in Braja Sunder Deb v. Sarat Kumari AIR 1916 Pat 252 to which. I have made reference. Here again the Court held that a declaratory decree creating a charge for maintenance could be executed without a separate suit and the decree-holder could bring the properties charged to sale through the agency of the execution Court without first having resort to a suit under the provisions of Section 67, T.P. Act. This case is of no assistance to Mr. De because it only applies to charges created by a decree itself and has no application to cases where a charge is created before the decree is obtained.

In my view as there was a charge in this case to secure moneys due from Ashutosh Chattarji to the Bank, the Bank could, in the first place, sue to recover those moneys and on failure to obtain satisfaction, could bring a subsequent suit to enforce their charge. The Courts below were, in my view wrong in dismissing the plaintiff''s claim, which in my judgment should have been, decreed to the extent of Rs. 4000 which is the limit stated in the deed of security.

I would, therefore, allow this appeal, set aside the decrees of the lower Courts and decree the plaintiff''s claim to the extent of Rs. 4000. Let a preliminary decree be drawn up in the ordinary form of a charge decree allowing three months for payment. The preliminary decree will be for the payment of Rs. 4000 and no interest or costs will be added to that sum. The plaintiff Bank is entitled to costs in this Court and in the Courts below, but such costs are not to be added to the Rs. 4000 and are not to-be charged on any property.

Dhavle, J.

I agree.