1. Before dealing with the question referred to us, we think it necessary to make a reservation about two of the cases noticed in the order of reference, viz., Sambasiva Aiyar v. Thirumalai Ramanuja Thathachariar (1918) 37 M.L.J. 356 and Singa Raja v. Pethu Raja (1918) I.L.R. 42 Mad. 61 : 35 M.L.J. 579. These decisions are there accepted as 'binding authority' but their correctness has been assailed before us in another reference which (though part heard) has to be adjourned. As we have come to the conclusion that the present question must be answered in the affirmative even on the assumption that Sambasiva Aiyar v. Thirumalai Ramanuja Thathachariar (1918) 37 M.L.J. 356 and Singa Raja v. Pethu Raja (1918) I.L.R. 42 Mad. 61 : 35 M.L.J. 579, have been correctly decided, we proceed to answer the reference on that assumption; but we do not wish to be understood as accepting their correctness.
2. The order of reference states it is Mr. Patanjali Sastri's argument that if according to Sambasiva Aiyar v. Thirumalai Ramanuja Thathachariar (1918) 37 M.L.J. 356 an agreement or adjustment entered into before the passing of the preliminary decree in a mortgage suit cannot be pleaded in bar of execution of the final decree unless certified or recorded under Order 21, Rule 2, Civil Procedure Code, it must afortiori be the case that an uncertified agreement or adjustment entered into after the final decree cannot be so-pleaded. In one sense this contention may be correct but when it is sought to be applied in connection with proceedings under Order 34, Rule 6, Civil Procedure Code the argument involves a misreading of those decisions. We may observe in passing that the second defendant, who is the only party who has appealed, relies on an agreement alleged to have been entered into in November, 1928, and not on an arrangement of February, 1932, (as assumed in the order of reference).
3. In view of the course taken in the argument before us, we are obliged to draw pointed attention to what may seem elementary. A mortgagee's suit for sale may comprise two reliefs, one by way of sale of the properties mortgaged and the other by way of a personal decree against the mortgagor for what may remain due after the mortgaged properties have been sold. Though the plaint prays for both the reliefs, the Court is in the first instance expected to deal only with the relief by way of sale. The preliminary decree contains a declaration of the amount due on foot of the mortgage and contains directions as to what is to happen (1) if the defendant pays the amount into Court and (2) if the payment is not so made; but both the directions relate only to the property-mortgaged. The plaintiff's right to the other relief is not tried either at this stage or even at the stage of the final decree; so that, the final decree under Order 34, Rule 5, Civil Procedure Code, cannot be said to involve any 'adjudication' as to this part of the suit and much less to have 'completely disposed' of it. (See definition of 'decree' in the Civil Procedure Code).
4. After ascertainment of the deficiency arising on the sale of the mortgaged properties, the Court (under Order 34, Rule 6) takes up this portion of the plaint claim, tries the question whether the balance is legally recoverable 'otherwise than out of the property sold' and passes a decree. Whether called a 'supplemental' decree or by any other name, this is the only decree on this part of the claim in the plaint.
5. The terms of Order 21, Rule 2, Civil Procedure Code must be understood in the light of the scheme of the Code above set forth and with due regard to the scope of Order 23, Rule 3. If the stage after the sale of the hypotheca and before the passing of the decree under Order 34, Rule 6, is a stage when one part of the plaintiff's claim, viz., that relating to the personal decree, is awaiting adjudication, it must prima facie be open to the parties to settle it between themselves and have a compromise decree in respect of it passed under Order 23, Rule 3. In such a case, it is this compromise decree that will be the decree for further execution. There is no justification for saying that such a course is precluded by Rule 4 of Order 23. Comparing the terms of Order 23, Rule 3, with Order 21, Rule 2, one difference is noteworthy; under the former the Court may, not merely order the agreement, compromise or satisfaction to be recorded, but also pass a decree in accordance therewith, whereas under Order 21, Rule 2, the Court can only record the adjustment. A Court acting under Order 21, Rule 2, cannot pass a fresh executable decree on the agreement of parties, but further proceedings, if any, in execution, as for instance, when part satisfaction has been recorded, can only take place on foot of the original decree. It will thus be clear that a settlement between the parties fixing the liability of the defendant under the ' personal relief' claim can appropriately be dealt with only under Order 23, Rule 3, and not under Order 21, Rule 2.
6. Again, the third clause of Order 21, Rule 2, provides that 'a payment or adjustment which has not been certified or recorded shall not be recognised by any Court executing the decree'. These words can relate only to an adjustment of the decree 'under execution' and not to an agreement in respect of a claim which remains to be investigated by the Court - as is the position in respect of the 'personal liability' before a decree is passed under Order 34, Rule 6. Ex hypothesi the stage contemplated by Order 34, Rule 6, is reached only after the 'final decree for sale' has been completely executed or for special reasons, the rights under that decree have been given up. There is no longer a decree under execution, cf. Puma Chandra Mandal v. Radha Nath Dass (1906) I.L.R. 33 Cal. 867 at 873.
7. The decision in Sambasiva Aiyar v. Thirumalai Ramanuja Thathachariar (1918) 37 M.L.J. 356, related to an agreement that the decree even as one directing sale of the mortgaged properties should not be executed. It need scarcely be pointed out that such an agreement directly affects the operation of the 'final decree' and does not relate to a claim which remains to be adjudicated on. The decision in Singa Raja v. Pethu Raja (1918) I.L.R. 42 Mad. 61 : 35 M.L.J. 579 has no bearing on the question now under consideration, as it turned on the language of Order 34, Rule 5, to the effect that unless the amount mentioned in the preliminary decree is paid into Court a final decree for sale must follow. It says nothing as to what is to happen after a decree, for sale thus passed has been executed.
8. It is stated in the order of reference as conceded before the Division Bench that 'the application for a personal decree is not one in execution' but it was suggested before us that this observation must have been made on account of some misapprehension. The learned Advocate who appeared before us on behalf of the respondent contended that an application under Order 34, Rule 6 is (quite as much as an application under Section 90 of the Transfer of Property Act) 'an application for execution of the mortgage decree' and in support of this argument he relied on the observations of Bashyam Aiyangar. J., in Mallikarjunadu Setti v. Lingamurthi Pantulu etc. (1902) I.L.R. 25 Mad. 244 : 12 M.L.J. 279 (F.B.) and of Straight, J., in Durga Dai v. Bhagwat Prasad (1891) I.L.R. 13 All. 356. As to the Allahabad case, it is sufficient to say that it was a case of a composite decree where the personal decree as well as the decree for sale had been incorporated in the same decree. Further, the basis of that decision as well as of the Full Bench decision in Oudh Behari Lal v. Nageshar Lal (1890) I.L.R. 13 All. 279 has been criticised by Stanley, C.J. in Sham Sunder v. Muhammad Ihtisham Ali (1905) I.L.R. 27 All. 501 at p. 506 (F.B.) and it has necessitated subtle distinctions being drawn between an application 'in execution' and one 'for execution' of the decree for sale. cf. Ram Sarup v. Ghaurani (1899) I.L.R. 21 All. 453 and comment thereon in Puma Chandra Mandel v. Radha Nath Dass (1906) I.L.R. 33 Cal. 867. Even the Allahabad High Court no longer sticks to the view pronounced in the two cases in Oudh Behari Lal v. Nageshar Lal (1890) I.L.R. 13 All. 279, Durga Dai v. Bhagwat Prasad (1891) I.L.R. 13 All. 356 Babu Lal v. Ragunandan (1930) I.L.R. 52 All. 839 and Muhammad Iltifat Husain v. Alim-un-nissa (1918) I.L.R. 40 All. 551.
9. The observations of Bashyam Aiyangar, J., in Mallikarjunadu Setti v. Lingamurthi Pantulu etc. (1902) I.L.R. 25 Mad. 244 : 12 M.L.J. 279 (F.B.) were obiter and were not necessary even for the purpose of sustaining the view of the majority in that case that an application under Section 89 of the Transfer of Property Act was one for execution of the decree passed under Section 88. We may however point out that White, C.J. and Moore, J., were not prepared to concur even in that view. Bhashyam Aiyangar, J., himself observes on p. 288 that the decree under Section 90 is 'virtually a decree in a suit in the form of an application, - which application is made in pursuance of a prayer in the plaint' and he speaks of of this decree as a fresh or supplemental decree. The earlier observation of the learned Judge is attributable to his view that according to the true scheme of the Civil Procedure Code there could be only one decree in a suit and no such thing as a preliminary decree distinct from a final decree was contemplated. Davies, J., also proceeded on the same assumption and he could not reconcile himself to the idea 'that one part of the decree is final and that another part is not' See Mallikarjunadu Setti v. Lingamurthi Pantulu etc. (1902) I.L.R. 25 Mad. 244 : 12 M.L.J. 279 (F.B.). It is sufficient to say that these assumptions can no longer hold good under the Civil Procedure Code of 1908, which not only provides for the passing of a preliminary decree and afterwards of a final decree but also recognises that a decree may be partly preliminary and partly final. The foregoing observations of Bhashyam Aiyangar, J., were dissented from in Thirumalai Kadirvelusami Naicker v. The Eastern Development Corporation Ltd. (1917) 33 M.L.J. 382. See also observations in Ramanathan Chetty v. Alagappa Chetty (1929) I.L.R. 53 Mad. 378, 382 to 384 : 59 M.L.J. 102. On this basis there can be no justification for saying that further proceedings taken on the basis of so much of the decree as is preliminary must be deemed to be taken in execution of that part of the decree which is final cf. Rama Venkatasubba Aiyar v. Shanmukam Pillai (1913) 21 I.c. 530 and Bulkee Bee v. Kaka Hajee Muhammad Ummar Sahib (1925) 50 M.L.J. 39.
10. It was next said that the application under Order 34, Rule 6 must be deemed to be one in execution in so far as it is made in pursuance of liberty reserved in the preliminary decree. This again rests on a misapprehension as to the effect of the liberty clause. It involves no adjudication as to the right to a personal decree for the balance. It is intended merely to make it clear that no inference should be drawn from the omission to deal with it in the preliminary decree or the final decree for sale. This is made clear by the decisions which hold that even in the absence of such a reservation in the preliminary decree the mortgagee will not be precluded from applying for a personal decree under Order 34, Rule 6. See Rai Saheb Sundermull v. John Carapiet Galstaun (1931) 62 M.L.J. 170 (P.C.) and Govindaswami Koundan v. Kandaswami Koundan (1927) 50 M.L.J. 489. As we respectfully concur in the reasoning in Pell v. Gregory (1925) I.L.R. 52 Cal. 828 (F.B.) we need not repeat it here. On pages 860 and 861 Mukerji, J., refers to the clause in the preliminary decree reserving liberty to apply and rightly points out that no argument could be founded on it.
11. An observation of the Judicial Committee in Banku Behari Chatterjee v. Naraindas Dutt (1927) L.R. 54 I.A. 129 : I.L.R. 54 Cal. 500 : 505 : 52 M.L.J. 565 (P.C.) must be referred to here. Their Lordships say 'His right to a personal decree accrued along with his other rights, when the final decree was made'. The decree in that case was a composite one (see the purport of the decree set out in Narain Dass Dutt v. Banku Behari Chattopadhya (1924) 78 I.C. 1001 at 1003; see also Swaminatha Odayar v. Thagarajaswami Odayar (1925) I.L.R. 50 Mad. 5 : 52 M.L.J. 256 and notes of Indian Cases in Banku Behari Chatterjee v. Naraindas Dutt (1928) 54 M.L.J. (N.I.C.) 1 and remarks in Mitra's Limitation Act, 6th Edn. p. 2120). The observation even as it stands does not necessarily imply that the right to a personal decree is one derived from the decree for sale or to be obtained in enforcement of it.
12. In Hafiz Abdul Rashid v. Lala Mul Chand (1928) I.L.R. 4 Luck. 237 the concluding observations at p. 240, are perhaps capable of being read as suggesting that proceedings under Order 34, Rule 6, work out the decree for sale already passed; if that is what the learned Judge intended, we are with all respect unable to agree in that view.
13. Our answer to the question referred is that so long as a decree has not been passed under Order 34. Rule 6. it is open to the Court under Order 23, Rule 3, to deal with any arrangement alleged to have been entered into between the parties in respect of the claim of the mortgagee to recover the balance due to him from the defendant, otherwise than out of the property sold or to be sold under the decree for sale and it makes no difference for this purpose whether or not liberty is reserved to the mortgagee in the preliminary or final decree for sale, to make an application under Order 34. Rule 6. In view however of the general terms in which the question referred to us has been framed, we would add that where the arrangement alleged relates not only to the personal liability but also to the liability of the properties directed by the final decree to be sold, other considerations may arise, as for instance, whether the two parts of the agreement are severable.
14. Similarly, different considerations may arise where as sometimes happens though irregularly cf. Jeuna Baku v. Parameshwar Narayan Mahtha (1918) I.L.R. 47 Cal. 370 : 36 M.L.J. 215 (P.C.) and Balakrishna Pal v. Jagannath Marwari (1932) I.L.R. 59 Cal. 1314 a composite decree has once for all been passed awarding a personal decree in respect of such deficiency as may arise on the sale of the hypotheca.