THE HONOURABLE SRI JUSTICE M.S.RAMACHANDRA RAO
AND
THE HONOURABLE SRI JUSTICE T. AMARNATH GOUD
Civil Miscellaneous Appeal No.274 of 2021
JUDGMENT : (Per Hon'ble Sri Justice M.S. Ramachandra Rao)
This Civil Miscellaneous Appeal is filed by appellant
challenging order dt.20.11.2020 passed in Interlocutory Application
No.362 of 2020 in Original Suit No.31 of 2020 on the file of XII
Additional District Judge, at Vikarabad, Ranga Reddy District.
2. The appellant herein is not a party to the said suit.
3. The 2nd respondent herein is sole defendant in the above suit.
4. In the above suit, the 1st respondent sought a decree for a sum of Rs.2,28,09,293/- against person and properties of 2nd respondent and future interest at the rate of 2% per mensum from the date of suit till the date of actual payment or realization. The case of 1st respondent in the suit :
5. The 1st respondent is the owner of Acs.5.09 gts. comprising Sy.Nos.111 and 112 of Mokila Village, Ranga Reddy District having purchased the same under a registered sale deed dt.23.03.2005 bearing Document Nos.1796, 1977 and 1798.
6. She appointed her husband as her General Power of Attorney Holder by executing a Document Bearing No.1464 of 2017.
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7. She alleged that the 2nd respondent approached her husband on 03.12.2018 and induced him to sell Acs.2.13 gts. out of the Acs.5.07 gts. by offering Rs.10 crores as sale consideration which the 2nd respondent had no intention to pay; without realizing this ulterior motive of 2nd respondent, the husband of 1st respondent herein orally agreed for the said sale for the said amount; that the 2nd respondent offered Rs.2 crores towards Earnest Money Deposit and issued four cheques in December, 2018 for Rs.50 lakhs each, drawn on M/s. Axis Bank, Srinagar Colony Branch, Srinagar Colony, Hyderabad - 500
073.
8. According to her, the 2nd respondent requested her husband not to encash them stating that within three (03) months funds would be arranged and she would get the Sale Deed executed and registered. She contended that the 2nd respondent approached her husband and informed that he had identified other buyers for portions of the said extent of Acs.2.13 gts., and the 1st respondent should register the respective portions in favour of the said nominees; and that the husband of 1st respondent accepted the same as they needed funds for purpose of their daughter acquiring citizenship of United States of America. They opened a Bank Account on 01.01.2019 in Andhra Bank, Apollo Hospital Branch, Jubilee Hills, Hyderabad and the details of the Bank Account were furnished to 2nd respondent and the 2nd respondent transferred Rs.113 lakhs online on 14.01.2019; that thereafter, the husband of 1st respondent was asked to come to the ::3:: MSR,J & TA,J cma_274_2021 Office of the Sub-Registrar, Shankarpally on 11.02.2019 for getting the sale deeds executed and registered with a false promise that the entire amount of sale consideration would be paid simultaneously on the same day and believing the same, her husband went to the said Office.
9. She further pleaded that her husband noticed that thirteen (13) Sale Deeds were prepared with respect to Acs.2.13 gts., of which two Sale Deeds were to be executed in favour of 2nd respondent, and the rest eleven Sale Deeds in favour of his nominees in portions; that the sale consideration of Rs.264.79 lakhs was mentioned in the two Sale Deeds in favour of 1st respondent which was to be paid by online transfer of Rs.64.79 lakhs and by four post-dated cheques of Rs.2.00 crores; that her husband protested to the issuance of the post dated cheques and initially protested to proceed with the sale transactions and execution of the two Sale Deeds, but her husband was compelled to execute and register two Sale Deeds along with other 11 Sale Deeds being Document Nos.1499 to 1511 of 2019.
10. She alleged that with respect to the Sale Deeds Document Nos.1510 and 1511 of 2019, the 2nd respondent transferred on 11.02.2019 Rs.50 lakhs and Rs.14.79 lakhs to the 1st respondent's account in the Andhra Bank, Jubilee Hills Branch, through RTGS , and for the balance amount of Rs.2 crores he issued four cheques of Rs.50 lakhs each, and the cheque issued previously in December, 2018 towards E.M.D. were returned to the 2nd respondent.
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11. She further alleged that her husband presented one cheque on 27.03.2019 and it was encashed on 28.03.2019 and the full consideration with respect to Sale Deed Document No.1511 of 2019 was cleared leaving the amount of Rs.1.5 crores due under the Sale Deed bearing Document No.1510 of 2019.
12. She then stated that her husband deposited the other three cheques given by 2nd respondent on 30.03.2019, but they were returned on 03.04.2019 with the reason 'signature on the said three cheques differed', and this indicated the pre-existing ulterior motive of 2nd respondent to forge signatures on the cheque to see that they were dishonoured.
13. According to 1st respondent, the 2nd respondent issued another cheque drawn on Axis Bank on 07.09.2019 for Rs.50 lakhs, but even that cheque got dishonoured on 09.09.2019 with the very same reason.
14. She further alleged that the 2nd respondent did not pay the amount of Rs.1.5 crores representing 75% of the sale consideration of the sale transaction under the Sale Deed bearing Document No.1510 of 2019 dt.11.02.2019, but her husband came to know that the 2nd respondent entered into several transactions with respect to the very same land and also received sale consideration, but did not pay the 1st respondent. She also stated that her husband lodged a Criminal complaint dt.16.10.2020 against the 2nd respondent and a Crime ::5:: MSR,J & TA,J cma_274_2021 No.163 of 2020 under Section 420 of Indian Penal Code was registered with the Central Crime Station, Hyderabad.
15. She thus filed the above suit for the above reliefs invoking Order XXXVII of the Civil Procedure Code, 1908. Interlocutory Application No.362 of 2020
16. Along with the suit, the 1st respondent also filed Interlocutory Application No.362 of 2020 in which she impleaded the appellant herein and claimed relief under Order XXXV Rules 5 and 6 of Civil Procedure Code, 1908.
17. She also filed two third-party affidavits in support of her plea in the said application that the 2nd respondent cannot be allowed to sell the plots in the suit schedule property as it would cause irreparable injury, and that the 2nd respondent was trying to leave the jurisdiction of the Court.
18. In the said application, it is stated that that 2nd respondent had entered into a Development Agreement - cum - Irrevocable General Power of Attorney with the appellant vide Document No.6469 of 2019 dt.12.06.2019 in respect of land registered under the registered Sale Deed bearing Document No.1510 dt.11.02.2019 and handed over possession to the appellant-Developer for development of the same on the basis of sharing of the plots / apartments; that appellant and 2nd respondent also entered into Supplementary Agreement dt.12.12.2019 vide Document No.1231 of 2019 to share the apartments in the ratio ::6:: MSR,J & TA,J cma_274_2021 of 40:60 and they started alienating the apartments to third parties along with undivided interest in the land.
19. She contended that the 2nd respondent had already alienated some of the apartments which fell to his share and would alienate the other apartments also and that he should be restrained from taking further steps in that regard.
20. It was also stated that the appellant being Power of Attorney Holder for the 2nd respondent would also alienate flats of the 2nd respondent and also its own share under the Supplementary Agreement dt.12.12.2019 in order to defeat the claim of 1st respondent and so the appellant is only impleaded in the Interlocutory Application No.362 of 2020. A prayer was made to pass a conditional order of attachment before judgment directing 2nd respondent to furnish security for the suit amount of Rs.2,28,09,293/- within stipulated time. The docket order dt.20.11.2020
21. A Cryptic Docket Order dt.20.11.2020 was passed by the Court below noting the contentions of 1st respondent in brief and referring to the two third-party affidavits filed by her in support of her pleading and it was observed that it was a fit case of ordering conditional attachment of the suit schedule property. After noting that the appellant was no other than the Developer of the schedule properties having obtained Development Agreement from the 2nd respondent, the Court below called upon the 2nd respondent to furnish security for ::7:: MSR,J & TA,J cma_274_2021 the suit amount of Rs.2,28,09,293/- to the satisfaction of the Court within (72) hours from the time of service of notice by it, and passed a conditional attachment order.
The present CMA
22. Challenging the same, the present Appeal is filed. Other events which happened from December,2020 till date in the Court below Interlocutory Application No.407 of 2020
23. Immediately after receipt of notice, the 2nd respondent filed Interlocutory Application No.407 of 2020, invoking Order XXXVII Rule 6(2) to re-call and withdraw the attachment order passed on 30.11.2020 while mentioning that under the Sale Deed bearing Document No.1510 dt.11.02.2019, an extent of Acs.0.20 gts. in Survey No.112 was sold to him. He pleaded that there was some civil litigation in O.S.No.28 of 2019 pending before the Senior Civil Judge, Vikarabad, Ranga Reddy District, and the existence of this litigation was suppressed by the 1st respondent and her husband. It is alleged that the 2nd respondent requested the 1st respondent and her husband to clear the litigation, but they did not take any steps in that regard. Interlocutory Application No.386 of 2020
24. He also sated that he had filed Interlocutory Application No.386 of 2020 seeking leave to defend on 07.12.2020 in and the ::8:: MSR,J & TA,J cma_274_2021 Court allow the said application and re-call / withdraw the attachment order passed in Interlocutory Application No.362 of 2020. Interlocutory Application Nos.412 and 413 of 2020
25. After seeing the stand taken in those two applications, the 1st respondent / plaintiff filed on 29.12.2020 Interlocutory Application No.413 of 2020 for amendment of the plaint on 29.12.2020 including relief of cancellation of the Sale Deed No.1510 of 2019 and the consequential documents. She also filed Interlocutory Application No.412 of 2020 to implead the parties who would be affected by the proposed leave of cancellation of the Sale Deeds. Interlocutory Application No.34 of 2021
26. On 12.01.2021, the 1st respondent filed Interlocutory Application No.34 of 2021 under Order XXXIX Rules 1 and 2 of Civil Procedure Code, 1908 for an injunction as the interim relief of attachment was ancillary and incidental to the main relief of cancellation of the Sale Deed.
Interlocutory Application No.142 of 2021
27. The 1st respondent then filed Interlocutory Application No.142 of 2021 on 22.01.2021 seeking a direction to consider and dispose of Interlocutory Application Nos.413 and 412 of 2020 first, and then consider and dispose of other Interlocutory Application Nos.362 of 2020 and 34 of 2021.
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28. It appears that Interlocutory Application No.142 of 2021 was heard on some dates in February and March, 2021, but no orders were passed in Interlocutory Application No.142 of 2021. Civil Revision Petition No.449 of 2021
29. So, the 1st respondent filed on 16.03.2021 Civil Revision Petition No.449 of 2021 aggrieved by the non-disposal by the Court below of Interlocutory Application No.142 of 2021. On 18.03.2021, the High Court granted stay in all the Interlocutory Applications except Interlocutory Application No.413 of 2020 and 412 of 2020.
30. As a consequence of this order the Court below was prevented from disposing off I.A.No.386 of 2020 filed by 2nd respondent seeking leave to defend and I.A.No.407/2020 under Or.38 R.6 CPC to raise attachment before judgement.
Civil Revision Petition No.545 of 2021
31. Alleging that there was an order passed in Interlocutory Application No.142 of 2021 on 12.03.2021 though the 'A' register did not reflect it, the 1st respondent filed Civil Revision Petition No.545 of 2021 and obtained stay of proceedings in the suit. Transfer C.M.P.No.82 of 2021
32. A Transfer C.M.P.No.82 of 2021 was also filed seeking transfer of the suit by making certain allegations against the Presiding Officer of the Court below.
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The consideration by the Court:
33. Heard Sri T.Bala Mohan Reddy, counsel for the appellant and Sri M. Ravindranath Reddy, Counsel for the 1st respondent
34. The gist of the case of the 1st respondent/plaintiff is that sale deed Doc.No.1510 of 2019 dt.11.2.2019 was got executed by the husband/GPA holder of the 1st respondent/plaintiff by the 2nd respondent without paying the full consideration mentioned therein. Her plea is that by using deceit and making false promises, they made him execute the said sale deed. It is however admitted that Rs.50 lakhs was paid out of total sale consideration of Rs.2 Crores but 3 post dated cheques for balance sale consideration of Rs.1.5 Crores (3 x Rs.50,00,000/-) were dishonoured. So the suit was filed as a summary suit under Or.XXXVII CPC for recovery of the said amount with interest.
35. There is no averment in the plaint that parties intended that title transfer is dependent on the payment of full consideration. It is not even the case of the 1st respondent/plaintiff there is such a recital in the sale deed Doc.No.1510 of 2019 dt.11.2.2019.
36. The following legal position as explained Kaliaperumal v. Rajagopal1, is well settled:
"16. Sale is defined as being a transfer of ownership for a price.
In a sale there is an absolute transfer of all rights in the properties sold. No rights are left in the transferor. The price is fixed by the 1 (2009) 4 SCC 193 ::11:: MSR,J & TA,J cma_274_2021 contract antecedent to the conveyance. Price is the essence of a contract of sale. There is only one mode of transfer by sale in regard to immovable property of the value of Rs 100 or more and that is by a registered instrument.
17. It is now well settled that payment of entire price is not a condition precedent for completion of the sale by passing of title, as Section 54 of the Transfer of Property Act, 1882 ("the Act", for short) defines "sale" as "a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised". If the intention of parties was that title should pass on execution and registration, title would pass to the purchaser even if the sale price or part thereof is not paid. In the event of non-payment of price (or balance price as the case may be) thereafter, the remedy of the vendor is only to sue for the balance price. He cannot avoid the sale. He is, however, entitled to a charge upon the property for the unpaid part of the sale price where the ownership of the property has passed to the buyer before payment of the entire price, under Section 55(4)(b) of the Act.
18. Normally, ownership and title to the property will pass to the purchaser on registration of the sale deed with effect from the date of execution of the sale deed. But this is not an invariable rule, as the true test of passing of property is the intention of parties. Though registration is prima facie proof of an intention to transfer the property, it is not proof of operative transfer if payment of consideration (price) is a condition precedent for passing of the property.
19. The answer to the question whether the parties intended that transfer of the ownership should be merely by execution and registration of the deed or whether they intended the transfer of the property to take place, only after receipt of the entire consideration, would depend on the intention of the parties. Such intention is primarily to be gathered and determined from the recitals of the sale deed. When the recitals are insufficient or ambiguous the surrounding circumstances and conduct of parties can be looked into for ascertaining the intention, subject to the limitations placed by Section 92 of the Evidence Act."( emphasis supplied) ::12:: MSR,J & TA,J cma_274_2021
37. So payment of entire price is not a condition precedent for completion of the sale by passing of title; if the intention of parties was that title should pass on execution and registration, title would pass to the purchaser even if the sale price or part thereof is not paid; and in the event of non-payment of price (or balance price as the case may be) thereafter, the remedy of the vendor is only to sue for the balance price. He cannot avoid the sale. He is, however, entitled to a charge upon the property for the unpaid part of the sale price where the ownership of the property has passed to the buyer before payment of the entire price, under Section 55(4)(b) of the Act.
38. This legal position is not disputed by the counsel for the 1st respondent.
39. Sec.100 of the Transfer of Property Act,1882 deals with concept of "Charge" and states:
" 100. Charges.--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. Nothing in this section applies to the charge of a trustee on the trust property for expenses properly incurred in the execution of his trust, and, save as otherwise expressly provided by any law for the time being in force, no charge shall be enforced against any property in the hands of a person to whom such property has been transferred for consideration and without notice of the charge."( emphasis supplied) ::13:: MSR,J & TA,J cma_274_2021
40. In Gajraj Jain v. State of Bihar2, the Supreme Court explained that there is a difference between a charge and a mortgage. In the case of a charge under Section 100 of the TP Act, there is no transfer of interest in the property. A charge is not a jus in rem. It is jus ad rem. It creates a right of payment out of the property/fund charged with the debt or out of proceeds of the realisation of such property. A charge as defined under Section 100 of the TP Act may be enforced by sale.
41. Assuming that the case of the 1st respondent is true, since she is protected by the charge for the allegedly unpaid purchase money under Sec.100 of the Transfer of Property Act, 1882 conferring on her a right of payment out of proceeds of the realization of the property charged, there is no need for her to also seek attachment before judgment as well and cripple the appellant's rights and interests in the property.
42. Also from the sequence of events narrated above, the following facts are apparent:
(a) Though admittedly there is pleading in Interlocutory Application No.362 of 2020 that there was a Development Agreement - cum - Irrevocable General Power of Attorney entered into by 2nd respondent with the appellant on 12.06.2019, and that the 1st respondent was aware of the substantial interest of the appellant in the subject property as on 16.11.2020, when 2 (2004) 7 SCC 151, at page 161 ::14:: MSR,J & TA,J cma_274_2021 the suit was filed in the Court of the XII Additional District Judge, Vikarabad by her and yet she did not implead her as a party to the suit. This aspect does not appear to have been noticed by the Court below in the impugned order.
(b) When the 2nd respondent filed Interlocutory Application No.386 of 2020 under Order XXXVII Rule 3(5) on 09.12.2020 seeking leave to defend, and also filed on 23.12.2020 Interlocutory Application No.407 of 2020 under Order XXXVIII Rules 6 and 2 of Civil Procedure Code, 1908 for recalling the order of attachment, the 1st respondent, without proceeding further and allowing the lower Court to decide those applications, dragged on the matter till to-day ( for 8 months) by filing Interlocutory Application Nos.412 of 2020, 413 of 2020, 142 of 2021, Civil Revision Petition No.449 of 2021, Civil Revision Petition No.545 of 2021 and Tr.C.M.P.No.82 of 2021 (which was filed on 01.04.2021), thus successfully preventing the Court below from deciding Interlocutory Application No.386 of 2020 ( seeking leave to defend) and Interlocutory Application No. 407 of 2020 ( to raise attachment) from December, 2020 till date, i.e., for a period of eight (08) months; and
(d) when substantial rights by way of a Development Agreement - cum - Irrevocable General Power of Attorney were created in favour of the appellant vide Document No.6469 ::15:: MSR,J & TA,J cma_274_2021 of 2019 dt.12.06.2019 (followed by Supplementary Agreements dt.12.06.2019 and 12.12.2019) which was known to 1st respondent, suit was filed on 16.11.2020, i.e., after 1 ½ years had elapsed and the property had already been developed by the appellant. It is admitted that certain apartments built were also sold by both the appellant and the 2nd respondent.
43. The question is whether an ex parte conditional attachment could have at all been granted in favour of the 1st respondent who had filed the suit with delay after allowing the property to be developed by the appellant.
44. In Raman Tech & Process Engg. Co. vs. Solanki Traders3, the Supreme Court held that that the power under Order XXXVIII of Civil Procedure Code, 1908 is an ad hoc and extraordinary power and such power should not be exercised mechanically or merely for the asking; that a plaintiff should show prima facie that his claim is bona fide and valid and also satisfy the Court that the defendant is about to erect or dispose of the whole or part of his property with the intention of obstructing or delaying the execution of any decree that may be passed against him, before power is exercised under Order XXXVIII Rule 5 of Civil Procedure Code, 1908. It held that it should be used sparingly and strictly in accordance with the Rule.
It further held that the purpose of Order XXXVIII Rule 5 is not to convert an unsecured debt into a secured debt and any attempt by a 3 (2008) 2 S.C.C. 302 ::16:: MSR,J & TA,J cma_274_2021 plaintiff to utilize the provisions of Order XXXVIII Rule 5 as a leverage for coercing the defendant to settle the suit claim should be discouraged.
It reminded that there were instances where claims which were doubtful and bloated were realized by unscrupulous plaintiff by obtaining orders of attachment before judgment and forcing the defendants for out-of-Court settlements under threat of attachment.
It further observed that merely having a just or valid claim or prima facie case will not entitle the plaintiff to an order of attachment before judgment unless he also establishes that the defendant is admitting to remove or dispose of his assets with the intention of defeating a decree that may be passed.
45. Assuming the case of 1st respondent in the present Appeal is true, for the sake of argument, it could be said that she has a claim to recover the balance sale consideration. She undoubtedly has a charge upon the property for the unpaid part of the sale price where the ownership of the property has passed to the buyer before payment of the entire price, under Section 55(4)(b) of the Act.
46. But, merely on these grounds, the 1st respondent cannot be permitted to affect the rights of appellant, who had obtained a Development Agreement - cum - General Power of Attorney 1 ½ years before the filing of the suit, prima facie.
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47. Therefore, in our opinion, it was not a fit case for the Court below to have exercised its discretion and made an order of conditional attachment before judgment.
48. Though the counsel for 1st respondent sought to contend that already arguments in the Interlocutory Applications filed by appellant i.e., Interlocutory Application Nos.386 of 2020 and 407 of 2020 have been heard and there is no necessity for this Court to entertain this Appeal, the fact remains that the 1st respondent had obtained an order in Civil Revision Petition No.449 of 2021 staying all further proceedings in all the pending interlocutory applications including the above applications except Interlocutory Application Nos.413 and 412 of 2020 on 26.07.2021. He has thus prevented the lower Court from deciding the Interlocutory Application Nos.386 of 2020 and 407 of 2020.
49. In view of this conduct and the legal position explained supra, the Civil Miscellaneous Appeal is allowed; and the order dt.20.11.2020 passed in Interlocutory Application No.362 of 2020 in Original Suit No.31 of 2020 on the file of XII Additional District Judge, at Vikarabad, Ranga Reddy District is set aside. No order as to costs.
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50. As a sequel, miscellaneous petitions pending if any in this Appeal, shall stand closed.
__________________________________ JUSTICE M.S.RAMACHANDRA RAO _____________________________ JUSTICE T. AMARNATH GOUD Date: 17.08.2021 Ndr