RANA BHAGWAN DAS, J.---This appeal with the leave of the Court arises out of a judgment of a learned Division Bench of the High Court of Sindh dated 13-3-1998 whereby High Court Appeal No,16 of 1991 preferred by the appellant Bank against the judgment of learned Single Judge declining to pass a final decree in Suit No,597 of 1983 filed under Orders XXXIV and XXXVII, C.P.C. Read with Banking Companies (Recovery of Loans) Ordinance, 1979 (hereinafter referred to as the Ordinance) was upheld.
2. Relevant facts, in brief, leading to this appeal are that the appellant Bank filed a suit for recovery of Rs,11,22,262.13 against the respondents under the Ordinance. Respondents' application under Order XXXVII, Rule 3, C.P.C. For leave to defend the said suit was refused and a preliminary decree was passed on 29-1-1984. Through this decree respondents were allowed six months time to pay the decretal amount i,e, Rs,11,22,262.13 but it seems that notwithstanding default committed by the respondents no application for passing a final decree in terms of Order XXXIV, Rule 5(3), C.P.C. Was made until 3-11-1988 when such application had become out of time. Learned Single Judge of the High Court of Sindh who was seized of the matter upon hearing the parties' counsel concluded that such application being made after expiry of a period of three years from the date fixed in the preliminary decree for payment of the amount was time-barred and accordingly refused to pass the final decree. This order was unsuccessfully assailed in High Court appeal before a Division Bench obliging the appellant to invoke the jurisdiction of this Court under Article 185(3) of the Constitution.
3. At the hearing of the appeal, Mr. A.R. Akhtar, learned ASC/AOR for the appellant raised the following contentions:--
(1) That Order XXXIV, Rule 4, C.P.C. Providing for extension of time for payment of decretal amount from time to time, at any time, before a final decree for sale is passed an application for passing a final decree is not governed by the law of Limitation.
(2) That no time limit having been provided by Order XXXIV, C.P.C. For further proceedings subsequent to the passing of a preliminary decree, provisions of Article 181 of the Schedule to the Limitation Act are not attracted.
(3) That from the scheme of law under mortgage suits and procedure prescribed by law it is evident that security of mortgage once confirmed through a preliminary decree is neither released not extinguished unless a decree for redemption is made or the mortgage debt is satisfied.
(4) That in the absence of a final decree appellant's suit is still pending before the High Court and the impugned judgment being in the nature of interlocutory order question of limitation would not arise at all.
(5) That the right of redemption and right to recovery of mortgage debt are co-extensive in nature, therefore, either of such rights cannot be barred by limitation.
4. It may be observed that before the learned Single Judge in the High Court and even before the Division Bench an argument was raised to the effect that the respondents had been promising to pay the decretal amount and had in fact made payments between April, 1989 to August, 1989 but the argument was repelled, and rightly so, for the reason that such payments, if at all any, were made after the expiry of the period of limitation for passing a final decree and would thus not revive the period of limitation which had already lapsed.
5. Rule 4(1) of Order XXXIV, C.P.C. Contemplates that in a suit for sale if the plaintiff succeeds, the Court shall pass a preliminary decree to the effect mentioned in clauses (a), (b) and (c)(i) of sub- rule (1) of rule 2 and further direct that in default of the defendant paying the decretal amount as above, the plaintiff shall be entitled to apply for a final decree directing that the mortgaged property or a sufficient part thereof be sold and the proceeds of the sale be paid into Court and applied in payment of what has been found or declared under the preliminary decree due to the plaintiff, together with such amount as may have been adjudged due in respect of subsequent costs, charges, expenses and interest, and the balance, if any, be paid to the defendant or other persons entitled thereto. Sub-rule (2) of rule 4 empowers the Court to extend the time fixed for the payment of amount found due as aforesaid on good, cause shown and upon terms to be fixed by the Court from time to time before a final decree for sale is passed. Likewise, sub-rule (3) of rule 4 stipulates that in a suit for foreclosure in the case of an anomalous mortgage, if the plaintiff succeeds, the Court may at the instance of any party to the suit or of any other person interested in the mortgage-security or the right of redemption pass a like decree (in lieu of a decree for foreclosure) on such terms as it thinks fit including the deposit in Court of a reasonable sum fixed by the Court to meet the expenses of the sale and to secure the performance of the terms. On the other hand, rule 5 postulates that where, on or before the day fixed or at any time before the confirmation of a sale made in pursuance of a final decree passed under sub-rule (3) of this rule, the defendant makes payment into Court of all amounts due from him under sub-rule (1) of rule 4, the Court shall, on his application in this behalf, pass a final decree or, if such decree has been passed order the plaintiff to deliver up the documents referred to in the preliminary decree and, if necessary, order him to transfer the mortgaged property as directed in the said decree, and, also, if necessary order him to put the defendant in possession of the property. Sub-rule (3) lays down that where payment in accordance with sub-rule (1) has not been made, the Court shall, on application made by the plaintiff in this behalf pass a final decree directing that the mortgaged property or a sufficient part thereof be sold and that the proceeds of the sale be dealt with in the manner provided in sub-rule (1) of rule 4. It may be observed that the appellant's suit was decreed upon rejection of respondents' application for leave to defend vide judgment dated 20-1-1984 whereas formal decree was drawn in Form 5-A of Appendix 'D' to the Code of Civil Procedure on 29-1-1984. By this decree respondents were ordered to pay into Court within six months or on any later date up to which the time for payment may be extended by the Court the said amount of Rs,11,22,262.13 with simple interest at the rate of 14% per annum from 30-6-1983 till payment and costs of the suit. The preliminary decree directed that on such payment and on payment thereafter before such date as the Court may fix of each amount as the Court may adjudge due in respect of such costs of the suit and such costs, charges and expenses as may be payable under rule 10, together with such subsequent interest as may be payable under rule 11, Order XXXIV of the First Schedule to the Code of Civil Procedure, the plaintiff shall bring into Court all documents in his possession or power relating to the mortgaged property in the plaint mentioned and all such documents shall be delivered over to the respondents or to such person as they appoint and the plaintiff shall, if so required, reconvey or re-transfer the said property from the said mortgage and clear of and from all encumbrances crated by the plaintiff or any person claiming under him or any person under whom he claims and shall, if so required, deliver up to the respondents quiet and peaceful possession of the said property. In line with rule 5, sub-rule (3) it was further directed that in default of payment of aforesaid amount the plaintiff may apply to the Court for a final decree for the sale of the mortgaged property, and on such application being made the mortgaged property or a sufficient part thereof shall be directed to be sold, and for the purposes of such Sale the plaintiff shall produce before the Court or such officer as it appoints all documents in his possession or power relating to the mortgaged property. As pointed out earlier respondents did not pay any amount towards the decree in Court as directed in the decree whereas the appellant- Bank maintained complete silence till 3-11-1988 by which time remedy for a final decree had become barred by time.
6. Adverting to the first contention raised by the learned counsel that Order XXXIV, C.P.C. Provided for extension of time for payment of decretal amount by the judgment-debtor at the discretion of the Court subject to terms or otherwise and as no period for making application for final decree was fixed law of limitation would not be attracted, learned counsel relied upon Zubeda Bano v. S.M.
Anwar Sethi PLD 1982 Karachi 216 and Tikamdas v. Abdul Wali PLD 1968 SC 241. In this behalf learned counsel also referred to Article 148 of the Limitation Act prescribing a period of sixty years for a suit for redemption of mortgage from the date when the right to redeem or recover possession accrues. Argument advanced is devoid of any merit and is not supported by the judgments relied upon. In Zubeda Bano's case a Division Bench of the Sindh High Court interpreting Order XXXIV, Rule 5, C.P.C. Observed that the phrase "at any time" is of wide import as to include even a case in which no sale in fact has taken place in furtherance of a final decree. Learned High Court held that emphasis is that a defendant if he wishes to apply to the Court should do so before the Court confirms the sale of the mortgaged property. In our view, the discretion conferred on the Court relates to the extension of time for payment of decretal amount by the judgment-debtor after the sale and before its confirmation as well as in a case in which no sale has taken place at all. The case does not deal with the extension of limitation period for passing a final decree at the instance of a plaintiff in a suit where the defendant has not paid the amount decreed. In the second case relied upon by the learned counsel this Court was dealing with a suit for redemption of mortgage and it was observed that the right of redemption, which is an incident of a subsisting mortgage, subsists so long as the mortgage itself subsists. Such right can only be extinguished as provided by section 60 of the Transfer of Property Act and when it is alleged to have been extinguished by a decree, the decree should run strictly in accordance with the forms prescribed for the purpose.
Unless such right was extinguished a second suit for redemption will not be barred by Order IX, rule 9, C.P.C. Provided that it is brought within the period of limitation.
7. Strictly speaking question of period of limitation for making an application for a final decree in a mortgage suit for foreclosure or sale has been agitated before the superior Courts from time to time. However, it appears that though there are reported cases from the Indian jurisdiction and the Privy Council in pre-independence era there is no authoritative judgment from this Court and for that matter from any of the High Courts reported in the Law Journals. No doubt, there are cases expressing the view that an application for execution of a decree in like cases would lie within a period of three years from the date when the right to apply accrues and there may be no cavil with this proposition, the cases of instant nature seem to be a rare phenomena. Article 181 of the Schedule to the Limitation Act deals with the period of limitation for applications for which no period of limitation is provided elsewhere in this Schedule or by section 48 of the Code of Civil Procedure. Such period has been prescribed as 3 years from the date when the right to apply accrues. In our view in a mortgage suit in which the preliminary decree has been passed stipulating the period within which the defendant is directed to make payment in Court or within the time extended by the Court, in the event of the failure of the defendant to discharge his obligation under the preliminary decree, right to apply to the Court would accrue on expiry of the date prescribed in the preliminary decree or extension, if any, granted by the Conn which passed the decree. In the instant case, admittedly, preliminary decree was passed on 29-1-1984 stipulating a period of 6 months for payment of the decretal amount but the defendants made a wilful default by not complying with the terms of the decree. Period for carrying out the terms of the preliminary decree thus expired on 28-7-1984 and as no prayer for extension of time was made to the Court, period of limitation would commence from this date.
8. As we are inclined to accept the view taken by the learned High Court which is also supported by the law laid down by superior Courts from time to time and also backed by the provisions of the Code of Civil Procedure, such application could legally be filed up to 27-7-1987 but for the first time appellant made such application on 3-11-1988 with a prayer for passing a final decree which was resisted before the learned Single Judge on the premises that the objections to this application filed by the respondents amounted to acknowledgement of liability and also because they had made part payments directly to the appellant Bank after 16-4-1989. A glance at the precise but elaborate order passed by the learned Single Judge manifests that both the objections were rightly dismissed for the reasons that the objections filed by the respondents did not amount to acknowledgement of liability and even otherwise such acknowledgement had to be made before the expiry of the period of limitation. This argument was reiterated before learned members of the Division Bench but without any success. Having realised infirmity in the stand taken before the High Court learned counsel for the appellant did not press into service the said argument before this Court and rightly so.
9. Now, main thrust.Of the argument advanced by Mr. A.R. Akhtar is that since Order XXXIV, C.P.C.
Does not provide a period of limitation for an application for final decree and as a mortgagor can file a suit for redemption within a period of 60 years and such right is co-extensive with the right of the decree-holder, initiative for a final decree on the part of the appellant was not hit by residuary Article i,e, 181 of the Schedule to the Limitation Act. Learned counsel, however, was unable to develop this argument any further as there is no warrant with regard to this proposition in law. At any rate he could not elaborate his argument with the support of any decided case and left the question to the decision by this Court.
10. We are of the considered view that the right to redeem a mortgage and a right to recover the mortgage debt under a decree are different and distinct from each other. They are neither co- extensive nor co-existent as wrongly contended at the Bar. The right to recover a mortgage debt starts after the passing of a preliminary decree but on the failure of a defendant/judgment-debtor decree-holder is required to take steps for passing a preliminary decree execution whereof can be sought in law within 3 years from the date of the decree. However, if a preliminary decree is impugned in appeal before a higher forum, the period of limitation would run from the date of the Appellate Court's decree and to that extent the period would stand extended. In the instant case as observed, neither the period for payment of decretal amount was extended nor was the preliminary decree assailed before the appellate forum. Since the preliminary decree itself could not be pressed into service for execution, appellant was required to be diligent and cautious in taking timely steps for the passing of a final decree. Unfortunately, relevant officials in the appellant Bank appeared to be oblivious of their duties relating to prosecution of legal remedy and execution of decree for recovery of public money. It is because of apathy, inaction and lethargy on the part of the officials of the Bank that the remedy of the appellant became barred by law but not the right to recover the mortgage debt. It appears that after expiry of period of limitation for a final decree respondents had made some payments to the appellant Bank which were credited in the account but this circumstance by itself would not be helpful in extending the period of limitation prescribed by law.
11. Having held above we proceed to examine some decided cases from the superior Courts. In Balaram Naik v. Kanhai Bharan Mahpatra AIR 1916 Patna 282(1) it was held that an application for final decree for foreclosure or sale is an application under the Code of Civil Procedure, 1908, for it is made under Order XXXIV, rule 3 or rule 5, which expressly requires an application and is governed by Article 181 of the Limitation Act. Similar view was expressed by a Special Bench consisting of three Hon'ble Judges of Allahabad High Court in Gajadhar v. Kishen AIR 1917 Allahabad 163 to the effect that an application for a decree absolute under Order XXXIV, rule 5, C.P.C. Is an application in the suit for a final decree and not an application for execution, and is governed by Article 181 of the Limitation Act. To the same effect was the opinion expressed by a Full Bench of the Bombay High Court in Datto Atmaram v. Shankar Dattatraya ILR (1914) 38 Bombay 32. There is yet another case from the High Court of Rangoon reported as M.A.L.M. Chettyar Firm v. Maung Po AIR 1935 Rangoon 239 categorically laying down that an application for a final decree is not an application to enforce the preliminary decree. It is governed by Article 181 and not by Article 183. Allahabad High Court reiterated its view in Ram Nath v. Deokinandan Krishna AIR (34) 1947 Allahabad 83 which fully supports the view consistently taken in the matter. In an appeal from the Lahore jurisdiction in Fitzholmes v. Bank of Upper India (AIR 1927 Privy Council 25) Privy Council ruled that where there has been an appeal from a preliminary mortgage decree and the Appellate Court has not extended the time for payment the period of three years within which under Article 181 an application for a final decree under Order XXXIV, rule 5(2) must be made runs from the date of the decree of the Appellate Court.
12. At the cost of repetition it may be observed that there seems to be no reported case from the superior Courts of this country. Nevertheless there is a passing remark by way of an essential observation in a case decided by Saleem Akhtar, J., an eminent Judge (as his lordship then was in Sindh High Court) who later rose to the apex Court, in Ideal Life Insurance Company Ltd. v. Usman 1982 CLC 2191. The facts of the case were that the plaintiff had filed a suit for recovery and a preliminary decree under Order XXXIV was passed on 6-10-1971. The plaintiff did not apply for final decree under Order XXXIV, rule 5, C.P.C. And after about 9 years defendants filed two applications one for the return of title documents filed in the suit and the second for deletion of entry in the Record of Rights relating to the mortgage decree. It was contended before the High Court that as the plaintiffs had not applied for passing of a final decree and as after expiry of 8 years an application could not be made the preliminary decree was only a dead paper and could not be executed. Learned Judge, while accepting the contention remarked that it was true that the preliminary decree was not executable. However, if a remedy was barred it did not mean that the rights were also barred. In the context of prayer for return of the title documents it was observed that the entitlement to hold the documents did not flow from the preliminary decree and, therefore, even if the plaintiff was not entitled to execute the decree the mortgage will not stand merged with the preliminary decree nor will it stand completely extinguished.
13. Summarizing the net result from the above authorities and review of the case-law a legal proposition well-recognized in law appears to be that an application for passing a final decree in a mortgage suit under the provisions of Order XXXIV can be filed within 3 years from the date when the right to apply accrues to the holder of a preliminary decree. It may also be held without any hesitation that such application would be governed by residuary Article in the Limitation Act i,e, Article 181 of the Schedule to the Limitation Act. We are also inclined to the view that a preliminary decree cannot be allowed to remain on the face of the record for indefinite period since it is not capable of execution independently of a final decree which is to follow in due course of time. For these reasons we find no merit in the submission of the learned counsel and the appellant Bank should thank its own stars and its senior officials for gross negligence and neglect of prosecution on their part.
14. Before parting with this judgment we may deal with the last submission of the learned counsel when he made a feeble attempt to contend that in the absence of a final decree appellant's suit was still pending before the High Court and the impugned judgment being in the nature of interlocutory order there was hardly any question of limitation attracted in the circumstances. We are least impressed by this half-hearted argument on the part of the learned counsel who tried his best to protect the interest of the appellant. Suffice it to say, for all intents and purposes after the passing of preliminary decree suit stood finally disposed of and did not remain on the board of pending cases of Court.
15. Learned counsel relied on a case from Madras High Court reported as Ramanathan v. Alagappa (AIR 1930 Madras 528). It was a suit for dissolution of partnership and for accounts in the backdrop thereof, learned High Court observed that though the final decree is only by way of working out in detail the principles laid down in the preliminary decree, the proceedings which take place between the two decrees are in the nature of continuation of the suit for the purpose of carrying out the directions contained in the decree. In the wake of this state of affairs Madras High Court expressed the view that an application in a pending case was not governed by Article 181 and was in fact not subject to any rule of limitation.
16. Be that as it may, without commenting upon the wisdom and philosophy of the principle which found favour with the learned Judge in the Madras High Court, the rule laid down in the precedent case is not attracted in a mortgage suit which is the subject-matter of controversy. Needless to reiterate, appellant's remedy under the law might be barred but rights under the decree otherwise remain intact and mutual rights and obligations may be enforced by the parties at their sweet-will even out of Court.
17. For the aforesaid facts and reasons and subject to above observations, this appeal fails and is hereby dismissed.