HON'BLE DR. JUSTICE K. MANMADHA RAO CIVIL MISCELLANEOUS SECOND APPEAL No.17 of 2008 JUDGMENT :
The present Appeal arises against the judgment and
decree dated 02.05.2008 in A.S.No.3 of 2006 on the file of
the Court of the Principal District Judge, Kurnool by
reversing the judgment and decree dated 30.11.2005 passed
in EA No.330 of 2005 in E.P.No.132 of 2004 on the file of
the Court of the Additional Senior Civil Judge, Kurnool.
2. For the sake of convenience, the parties will
hereinafter be referred to as arrayed in E.A.
3. The facts of the case are that the 1st respondent
herein obtained a preliminary decree against the
respondents No.2 and 3 in O.S No.218 of 2002 in the Court
of Principal Senior Civil Judge, Kurnool for recovery of about
Rs.3 lakhs under a simple mortgage deed and filed
E.P.No.132 of 2004 to realize it by way of sale of a house.
The said E.P. was dismissed stating that one Parvathamma
purchased the said property on 6.6.1994 under a registered
agreement of sale for Rs.2,25,000/- from the 2nd 2
respondent. As the vendor did not execute the sale deed,
she instituted OS No.41 of 1999 before the Court of
Principal Senior Civil Judge, Kurnool for specific
performance of the said agreement of sale and obtained a
decree thereon on 11.4.2000 and sale deed also from the
Court on 25.2.2002 and took possession of the property
also. As she ever since in continuous possession therefore,
she is the absolute owner thereof, sold it on 23.10.2022
under a registered sale deed to both the
petitioners/appellants, who have been ever since in
possession thereof and they were mutated their names in
the municipal records also. It is further stated that the
mortgage between the respondents No.1 and 2 was
subsequent to the agreement of sale of Parvathmma. So
mortgage does not create any right in favour of the 1st
respondent is collusive and created to defeat right of
Parvathamma.
4. Counter affidavit is filed by the 1st respondent
stated that if Parvathamma had really purchased the
property, she would not have waited for 2 ½ years without
taking any action to take sale deed; possession of property 3
with third party, cannot be a bar to take a sale deed by
Parvathamma, she had taken five years to institute the suit.
So her document and court proceedings between her and
the 2nd respondent are collusive. It is further stated that the
petitioners are not bonafide purchasers. Mere agreement of
sale does not extinguish right of 1st respondent acquired
under mortgage deed. An agreement of sale cannot
complete the sale. The application for the relief sought for is
not maintainable and it lies only by filing separate suit. The
1st respondent being bonafide mortgage has right over the
property. Therefore, prayed to dismiss the petition.
5. The respondents No.2 and 3 remained ex parte
before the trial Court and did not file any counter.
6. Basing on the above pleadings, the trial Court
framed the following point:
1. Whether the petitioners have got right or title over the property?
7. During enquiry, the petitioners/appellants
examined the 1st petitioner/1st appellant as PW.1 and 4
marked Exs.A1 to A.10. Contesting respondent examined
himself as RW.1 and marked Ex.R1.
8. After considering the oral and documentary
evidence available on record, the trial Court has allowed the
E.A.No.330 of 2005 in E.P.no.132 of 2004 in O.S No.218 of
2002 with costs declaring that the respondents No.2 and 3
therein have no right to mortgage the property to the
respondent No.1. E.P. is therefore dismissed vie order and
decree dated 30.11.2005. Aggrieved by the same, the
respondent No.1 has preferred A.S No.3 of 2006 before the
first appellate authority i.e., Principal District Judge,
Kurnool and the same was allowed vide judgment dated
02.05.2008 setting aside the order and decree dated
30.11.2005 in E.A No.330 of 2005 in E.P.No.132 of 2004 in
O.S No.218 of 2002 on the file of the Additional Senior Civil
Judge, Kurnool. Consequently E.A No.330 of 2005 in
E.P.No.132 of 2004 in O.S No.218 of 2002 is dismissed.
Challenging the same, the respondents No.1 and 2 in
A.S.No.3 of 2006 have preferred the present CMSA. 5
9. This Court vide order dated 25.06.2008 has
admitted the appeal in view of the substantial question of
law raised in grounds of appeal.
10. Heard Sri M.S.R. Srinivas, learned counsel
appearing for the appellants/petitioners and Sri T. Kumar
Babu, learned counsel appearing for the 1 st respondent.
11. This is a claim petition made by the third party
claiming right over the property. So Order 21 Rule 58 CPC
applies and there may not be attachment in the E.P. since
the property was already mortgaged. However, it is not a
ground to refuse the application under this rule, which
applies, to applications filed in EPs where there was
attachment. Wrong citation of provisions of law is not a
ground to dismiss or reject the application.
12. Coming to the facts, according to the appellants/
petitioners, One Parvathamma purchased the disputed
property under an agreement of sale, instituted the suit for
specific performance of the said agreement, obtained a
decree and sale deed also from the Court and sold to the
appellants petitioners under a registered sale deed dated 6
23.10.2002 and filed documents Ex.A1 to Ex.A10 in support
her contention.
13. Learned counsel for the appellants/petitioners
argued that on believing the agreement of sale-Ex.A1, the
Principal Senior Civil Judge, Kurnool passed a decree in
favour of Parvathamma. Subsequent documents i.e., Ex.A5
to Ex.A9 also shown that sale deeds in favour of
Parvathamma and appellants/petitioners were acted upon
and both the vendees have been in possession of the
property during their respective period.
14. On the other hand, learned counsel for the 1st
respondent argued that the document in favour of
Parvathamma was only agreement of sale and it does not
complete a sale. So the agreement of sale is voidable.
Section 53 of Transfer of Property Act 1882 makes transfer
of immovable property voidable at the option of the creditor
where it was intended to defeat the creditor. He further
argued that the agreement of sale is dated 06.06.1994,
whereas the mortgage deed is dated 27.5.1995. So, there is
no basis at all to believe that the agreement was intended to
defeat the creditors' right under the mortgage deed Ex.A10. 7
Hence this document cannot be declared voidable as per
Section 53 of Transfer of Property Act.
15. During hearing, learned counsel for the
appellants has relied upon a judgment of Hon'ble Supreme
Court reported in Vannarakkal Kallalathil Sreedharan
Vs Chandramaath Balakrsihnan and another1, wherein
it was held that :
"There is a useful parallel from the decision of the Calcutta High Court in Purna Chandra Basak v. Daulat Ali Mollah, AIR 1973 Cal. 432 wherein it was observed that the attaching creditor attaches only the right, title and inter- est of the debtor and attachment cannot confer upon him any higher right than the judgment-debtor had at the date of attachment.
Hence, if under a contract of sale entered into before attachment, the conveyance after attachment in pursuance of the contract passes on good title inspite of the attachment. To the same effect are the decisions of the Bombay High Court in Rango Ramachandra v. Gurlingappa Chinnappa, AIR 1941 Bom. 198 and Yashvant Shankar Dunakhe v. Prayarji Nurji Tamboli, AIR 1943 Bom. 145. The High Court of Travancore- Cochin in Kochuponchi Varughese v. Quseph Lonan, AIR 1952 Travancore- Cochin 467 has also adopted the same reasoning.
The Punjab & Haryana High Court however, has taken a contrary view in Mohinder Singh and Anr. v. Nanak Singh and Anr., AIR 1971 Pb. & Haryana 381. It has been held that a sale in pursuance of a pre-attachment agreement is a private afienation of property and must be regarded as void against the claim ot the
1 (1990) 3 Supreme Court Cases 291 8
attaching creditor. In support of this proposition, Section 64 of the Code of Civil Procedure was relied upon which according to the High Court was intended to protect the attaching creditor against private aliena- tion. This was also the observation of the Lahore High Court in Buta Ram & Ors. v. Sayyed Mohammad, AIR 1935 Lahore 71"
In another case reported in Brahmdeo Chaudhary
Versus Rishikesh Prasad Jaiswal and another2, wherein
it was held that:
"A conjoint reading of Order XXI Rules 97, 98, 99 and 101 projects the following picture:
(1) If a decree-holder is resisted or obstructed in execution of the decree for possession with the result that the decree for possession could not be executed in the normal manner by obtaining warrant for possession under Order XXI Rule 35, then the decree-holder has to move an application under Order XXI Rule 97 for removal of such obstruction and after hearing the decree-holder and the obstructionist the Court can pass appropriate orders after adjudicating upon the controversy between the parties as enjoined by Order XXI Rule 97 sub-rule (2) read with Order XXI Rule 98. It is obvious that after such adjudication if it is found that the resistance or obstruction was occasioned without just cause by the judgment-debtor or by some other person at his instigation or on his behalf then such obstruction or resistance would be removed as per Order XXI Rule 98 sub-rule (2) and the decree-holder would be permitted to be put in possession. Even in such an eventuality the order passed would be treated as a decree under Order XXI Rule 101 and no
2 (1997) 3 Supreme Court Cases 694 9
separate suit would lie against such order meaning thereby the only remedy would be to prefer an appeal before the appropriate appellate court against such deemed decree.
(2) If for any reason a stranger to the decree is already dispossessed of the suit property relating to which he claims any right, title or interest before his getting any opportunity to resist or offer obstruction on spot on account of his absence from the place or for any other valid reason then his remedy would lie in filing an application under Order XXI Rule 99, CPC claiming that his dispossession was illegal and that possession deserves to be restored to him. If such an application is allowed after adjudication then as enjoined by Order XXI Rule 98 sub-rule (1) CPC the Executing Court can direct the stranger applicant under Order XXI Rule 99 to be put in possession of the property of if his application is found to be substanceless it has to be dismissed. Such an order passed by the Executing Court disposing of the application one way or the other under Order XXI Rule 98 sub- rule (1) would be deemed to be a decree as laid down by Order XXI Rule 103 and would be appealable before appropriate appellate forum. But no separate suit would lie against such orders as clearly enjoined by Order XXI Rule 101."
In another case reported in Rajender Singh Versus
Ramdhar Singh and others3, wherein it was held that :
"It is also pertinent to note that by the Amending Act of 1976, a new sub rule was added to Rule 5 of Order XXX VIII to the effect that if an order of attachment is made without complying with the provisions of sub-rule (1) of the said rule, such attachment shall be void. Therefore, the importance is given to the mandatory conditions under Rule 5(1) of Order XXXVIII and we do not find any such similar insertion in Section 136. Therefore, the
3 (2011) 10
failure, if any, on the part of the Court which issued the attachment order in sending the attachment order and the connected papers to the District Court will not invalidate the attachment order as such. Therefore, the learned Single Judge of the High Court was not correct in holding that the attachment order passed by the Subordinate Judge, Biharsharif was invalid."
He relied upon another case reported in Ashan Devi
and antoehr Versus Phulwasi Devi and others4, wherein it
was held that:
"The question raised in that case was whether the Objector cannot claim adjudication of his claim being third party to the decree under execution until he is 'actually dispossessed'. The argument advanced was that application under Order XXI Rule 97 at the instance of Objector is not maintainable to the executing court because such application complaining 'resistance and obstruction' by the third party could be filed only by the Decree Holder under Order XXI Rule 97 of the Code. It was argued that the remedy of the third party to the executing court is only after he suffers dispossession in execution of the decree. Thereafter, he has to complain under Order XXI Rule 99 and seek adjudication of his claims and rights. This Court negatived that contention and observed thus :-
'On the contrary the statutory scheme envisaged by Order XXI Rule 97 CPC clearly guards against such a pitfall and provides a statutory remedy both to the decree-holder as well as to the obstructionist to have their respective say in the matter and to get proper adjudication before the executing court and it is that
4 (2003) 12 Supeme Court Cases 219 11
adjudication which subject to the hierarchy of appeals would remain binding between the parties to such proceedings and separate suit would be barred with a view to seeing that multiplicity of proceedings and parallel proceedings are avoided and the gamut laid down by Order XXI Rule 97 to 103 would remain a complete code and the sole remedy for the parties concerned to have their grievance once and for all finally resolved in execution proceedings themselves.' The case of Brahmdeo Chaudhary (supra) was relied by this Court in the case of Silverline Forum Pvt. Ltd.,(supra). It was held that the remedy under Order XXI Rule 99 in execution is available to a party only on his dispossession but a third party who is resisting or obstructing the execution of decree can also seek adjudication of his claims and rights by making application under Order XXI Rule 97 of the Code."
16. Learned counsel for the appellants while relying
on the above judgments submitted that the present appeal
is applicable under Order XXI Rule 97. But wrong
construing by the executive Court would not defeat legal
findings which were provided under the statutory.
Therefore, he requests this Court to pass appropriate orders.
17. Per contra, learned Government Pleader submits
that even a layman can also ask for Encumbrance
Certificate but in this case the appellants have failed to do
so. He further submits that the appellants have relied
mainly on agreement of sale and two sale deeds Ex.A1 to 12
Ex.A3. He also submits that it is not the case come under
Order XXI Rule 97, 98. It comes under Order XXI Rule 58
only.
As per Order XXI Rule 58 CPC, as under :
58. Adjudication of claims to, or objections to attachment of, property:
(1) Where any claim is preferred to, or any objection is made to the attachment of, any property attached in execution of a decree on the ground that such property is not liable to such attachment, the Court shall proceed to adjudicate upon the claim or objection in accordance with the provisions herein contained: Provided that no such claim or objection shall be entertained-
(a) where, before the claim is preferred or objection is made, the property attached has already been sold; or (b) where the Court considers that the claim or objection was designedly or unnecessarily delayed.
(2) All questions (including questions relating to right, title or interest in the property attached) arising between the parties to a proceeding or their representatives under this rule and relevant to the adjudication of the claim or objection, shall be determined by the Court dealing with the claim or objection and not by a separate suit
(3) Upon the determination of the questions referred to in sub- rule (2), the Court shall, in accordance with such determination,-
(a) allow the claim or objection and release the property from attachment either wholly or to such extent as it thinks fit; or
(b) disallow the claim or objection; or
(c) continue the attachment subject to any mortgage, charge or other interest in favour of any person; or 13
(d) pass such order as in the circumstances of the case it deems fit.
(4) Where any claim or objection has been adjudicated upon under this rule, the order made thereon shall have the same force and be subject to the same conditions as to appeal or otherwise as if it were a decree.
(5) Where a claim or an objection is preferred and the Court, under the proviso to sub-rule (1), refuses to entertain it, the party against whom such order is made may institute a suit to establish the right which he claims to the property in dispute; but, subject to the result of such suit, if any, an order so refusing to entertain the claims or objection shall be conclusive."
18. As per the principle enunciated in the cases cited
supra, an agreement of sale will not confer any title over the
property since it is only a contract of sale and the rights over
the property, which is the subject matter of the agreement
will be crystalized only when there is a regular conveyance
deed. In the instant case, till 25.2.2002 the ownership of
the petition schedule property remained with the second
respondent. Even prior to obtaining of the registered sale
deed (Ex.A3) by S.Parvathamma, the petition schedule
property was mortgaged in favour of the first respondent. 14
Whatever the property purchased by S.Parvathamma is
subject to encumbrance attached to it, i.e., mortgage in
favour of the 1st respondent/1st appellant.
19. Learned counsel for the appellants has also relied
upon a case in Areti Maramma vs State Bank of India,
secunderabad and others5 and submitted that as per the
principle enunciated in the case, decree in a mortgage suit
does not bind a person having interest in the equity of
redemption, if he was to a party to the suit and the
mortgagee will have the remedy of instituting a fresh suit
against a person so omitted if the cause of action is within
the limitation and that the defect on account of non-
compliance of Order XXXIV Rule 1 CPC which crept into the
decree cannot be cured on account of the person so omitted
to the Court at a later stage.
20. On hearing, this Court observed that, a purchaser
under a contract of sale is entitled to the benefits of
obligations arising out of the contract. Until the sale
agreement ripens into a conveyance the seller held the
property in trust for the buyer. It is common knowledge
5 2002(3) ALT 424 15
that a purchaser of property under an antecedent argument
gets title to the property notwithstanding the property
suffering attachment order of a Civil Court. If really the first
respondent obtained a mortgage the right title interest as
existing on the day of mortgage only can be mortgaged.
Further it is observed that in O.S No.41 of 1999 suit filed by
Parvathamma for enforcing the sale agreement for specific
performance was contested by the seller on many grounds
except the encumbrance created by seller in favour of the 1 st
respondent.
21. A perusal of the claim petition clearly reveals that
the appellants/petitioners are claiming the reliefs that the
respondents No.2 and 3 have no manner of right in the
petition schedule property and for dismissal of the execution
petition. The petition was cleverly drafted seeking the relief
of declaration that the respondent No.2 and 3 have no right
whatsoever in the petition schedule property. As per the
testimony of RW.1, S. Parvathamma obtained a collusive
decree in O.S No.41 of 1999 before the trial Court. The sale
deed obtained by S.Parvathamma is subject to the mortgage
rights of the 1st respondent under Ex.A10. There is no 16
specific finding in the orders of the trial Court that the
petition schedule property was attached in the suit filed by
the 1st respondent against the respondents No.2 and 3.
22. In view of the foregoing reasons and upon
perusing the entire material available on record and catena
of decisions referred to above, this Court is of the opinion
that, the first appellate Court, basing on the evidence
available on record passed the judgment and the same does
not suffer from any illegality or perversity on the face of the
record. Hence, I find no merit in the present appeal as
devoid of merits, there is no substantial question of law and
the same is liable to be dismissed.
23. Accordingly, the Civil Miscellaneous Second
Appeal is dismissed. There shall be no order as to costs.
As a sequel, all the pending miscellaneous
applications shall stand closed.
______________________________
DR. K. MANMADHA RAO, J.
Date : 01 -12-2022
Gvl
17
HON'BLE DR. JUSTICE K. MANMADHA RAO
CIVIL MISCELLANEOUS SECOND APPEAL No.17 of 2008
Date : 01 .12.2022
Gvl 18
