M/S Nikhila Construction And ... vs Smt. V. Aparna Reddy
2021 Latest Caselaw 2394 Tel

  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

(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

(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

(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