Telangana High Court

Mohammed Mahmood vs Margadarshi Chit Fund Pvt. Ltd. on 5 August, 2024

Author: G.Radha Rani

Bench: G.Radha Rani

      THE HONOURABLE DR.JUSTICE G.RADHA RANI

                     APPEAL SUIT No.152 of 2024


JUDGMENT:

This Appeal Suit is filed by the appellants - respondents - D.Hrs.

aggrieved by the order in E.A.No.197 of 2019 in E.P.No.163 of 2016 on the file

of the II Additional District Judge, Rangareddy District at L.B.Nagar in Dispute

No.346 of 2012 dated 17.11.2020.

2. The brief facts of the case are that the respondent No.1 - Chit Fund

Company filed an arbitration case being Dispute No.346 of 2012 before the

Deputy Registrar of Chits / Arbitrator, Rangareddy District (West) seeking to

recover an amount of Rs.16,41,060/- against respondents 2 to 6 herein. After

hearing the matter, an award was passed by the Deputy Registrar of Chits /

Arbitrator on 24.08.2013. Pending the above Dispute No.346 of 2012 before

the Deputy Registrar, the respondent No.1 filed an application being I.A.No.78

of 2013 seeking attachment of the EP schedule property and the same was

allowed by attaching the immovable property of the respondent No.4 -

J.Dr.No.3 herein. Subsequently, for execution of the award passed in Dispute

No.346 of 2012, the respondent No.1 herein filed an Execution Petition being

E.P.No.163 of 2016 seeking sale of EP schedule property, which was already

attached in I.A.No.78 of 2013 before the learned Arbitrator - Deputy Registrar

Dr.GRR, J as_152_2024

of Rangareddy District (West). At the stage of proclamation, the petitioners -

appellants herein filed a claim petition being E.A.No.197 of 2019 in E.P.No.163

of 2016 claiming the EP schedule property. After hearing the matter,

E.A.No.197 of 2019 was dismissed by the II Additional District Judge,

Rangareddy District by order dated 17.11.2023. Challenging the said order, the

present appeal is preferred by the petitioners - appellants herein.

3. Heard Sri Vedula Srinivas, learned Senior Counsel representing

Ms.Vedula Chitralekha, learned counsel for the appellants on record and

Sri P.Durga Prasad, the learned Senior Counsel for the respondent No.1.

4. Learned Senior Counsel for the appellants submitted that the father of the

claim petitioners 1 and 2 late Raj Mohammed was the pattedar and possessor of

the land in Survey No.334 admeasuring Ac.1-13 guntas and some other

ancestral lands of Gunthapally Village, Hayathnagar Mandal, Rangareddy

District. The claim petitioners 1 and 2 and their brother late Akther Pasha, who

was the husband of claim petitioner No.3 and father of claim petitioner No.4

(J.Dr.No.3) had requested their father to give land in Survey No.334

admeasuring Ac.1-13 guntas for constructing poultry farm. Their father out of

natural love and affection orally gifted the above land to his sons on 10.01.2004

and delivered possession of the above land to them. Subsequently on

15.06.2004, he executed a memorandum of oral gift in token of the earlier oral

Dr.GRR, J as_152_2024

gift. The claim petitioners 1 and 2 and their brother late Akther Pasha took

possession of the above land and constructed poultry farm on some area and the

remaining area was being used for agricultural purposes. They were running

poultry farm in the above land. The donor being the father of the claim

petitioners 1 and 2, therefore, they had not taken any steps for mutation and still

the name of their father was continuing in the revenue records. In the last week

of February, 2017, the claim petitioners came to know that an area of Ac.1-00

guntas out of Ac.1-13 guntas in Survey No.334 was under attachment by the

Court in E.P.No.163 of 2016 and in the schedule of EP, the Ac-1-00 guntas land

in the above Survey Number was shown as property for attachment and sale.

The claim petitioners obtained EC from the office of Sub-Registrar, Abdullapur

on 25.02.2017 and came to know that their father executed a registered gift deed

document No.296 of 2010 dated 02.03.2010 in favor of J.Dr.No.3. The claim

petitioners surprised by knowing the said fact enquired with their father about

the execution of the gift deed. Then, their father informed that J.Dr.No.3 few

years back had informed him that he want to take loan from the bank for doing

business and for that purpose, he had to execute a document to show to the bank

authorities and by misrepresenting the facts got the gift deed executed in his

name. The claim petitioners further contended that the said gift deed was void,

illegal and not binding on them, as the land in entire Survey No.334 was gifted

by late Raj Mohammed to his sons and they were in possession and running a

Dr.GRR, J as_152_2024

poultry farm. They further submitted that the possession was never handed over

to J.Dr.No.3 by late Raj Mohammed. J.Dr.No.3 had no right to emburden any

piece of Survey No.334 in any manner and the decree holder (for short "D.Hr.")

had no right to get, attach and sell the land. As such, the claim petitioners

knowing the illegal execution of the gift deed in favor of J.Dr.No.3 by his

grandfather filed suit for declaration to declare that the registered gift deed was

void, illegal and not binding on the claim petitioners vide O.S.No.399 of 2017

on the file of the learned I Additional Senior Civil Judge, Rangareddy District

and the same was decreed on 05.03.2019 declaring the registered gift deed

document No.296 of 2010 dated 02.03.2010 as null and void.

4.1. He further submitted that the property mentioned in the EP schedule

belonged to the claim petitioners, which was not liable for attachment. The

decree holder with an intention to realize the amount under pressure tactics filed

the EP against the property belonging to the petitioners. As already the

registered gift deed document No.296 of 2010 dated 02.03.2010 had been

cancelled and the J.Dr.No.3 had no concern of any kind with the said land, the

claim petitioners filed E.A.No.197 of 2019. But the said petition was dismissed

by the learned II Additional District Judge, Rangareddy District at L.B.Nagar.

He further contended that the learned II Additional District Judge, Rangareddy

District erred in saying that no objection was raised by the claim petitioners at

Dr.GRR, J as_152_2024

the time of attachment of the property on 25.02.2017 and erred in saying that no

steps were taken by the claim petitioners till the attachment of the property.

4.2. He further submitted that merely because O.S.No.399 of 2017 was

instituted subsequent to the attachment order in E.P.No.163 of 2016, the court

could not ignore the judgment in O.S.No.399 of 2017 and continue to proceed

with the sale of the attached property. The court failed to see that even an ex-

parte decree was a valid decree and the decree in O.S.No.399 of 2017 could not

be ignored by the court. The court erred in presuming that J.Dr.No.3 had

deliberately allowed the decree to be passed in O.S.No.399 of 2017. The court

erred in saying that as D.Hr. was not a party to O.S.No.399 of 2017, hence, the

decree passed there in subsequent to the attachment was collusive in nature and

J.Dr.No.3 would not cease to be the owner of the EP schedule property. The

court failed to adhere to the procedure prescribed under Order XXI Rule 58 of

CPC in adjudicating the claim petition filed there under. The order of the court

below was unsustainable.

4.3. He further submitted that no evidence was adduced by the D.Hr. to show

that it was a collusive decree and the respondent No.4 - J.Dr.No.3 was in

possession of the property. The possession as on the date of attachment was

material. No finding was given by the learned II Additional District Judge on

the said aspect and relied upon the Full Bench judgment of the High Court of

Dr.GRR, J as_152_2024

Andhra Pradesh in Gurram Seetharam Reddy v. Smt. Gunti Yashoda and

another 1 and of the High Court of Bombay in Dudharam Janardan

Chimurkar v. Balaji Raghobaji Band and another2 and another judgment of

the High Court of Bombay in Ganpati Ram Bhande and Others v. Baliram

Raghunath Jadhav and Others 3 on the scope of inquiry under Order XXI

Rule 58 of CPC, wherein it was held that the inquiry under Order XXI Rule 58

of CPC should necessarily be of a summary nature and the objection should be

decided principally on the basis of possession. He also relied upon the

judgment of the High Court of Madras in S.Praveen Bohra v. Joint-I Sub-

Registrar4 in W.P.No.36079 of 2015 and the judgment of the High Court of

Kerala in V.S.Thiru Venkita Reddiar v. S.Noordeen and Others 5 in

C.R.P.No.3375 of 2016 and of the High Court of Bombay in Ovation

International (India) Private Limited and Others v. Adverts (Private)

Limited and Others 6 on the aspect that an attachment would not make the

creditor as a secured creditor.

5. Learned Senior Counsel for the respondent No.1 on the other hand

contended that respondent No.2 herein was a subscriber of respondent No.1 -

Chit Fund Company and the respondent No.2 auctioned the chit and received

AIR 2005 AP 95 (FB)

AIR 1971 Bombay 94

AIR 1974 Bombay 155

(2016) 3 MLJ 562

AIR 1978 Ker 11

(1969) 2 Comp LJ 214 (Bombay)

Dr.GRR, J as_152_2024

the prize amount and entered into agreement with respondent No.1. The

respondents 3 to 6 were the guarantors. Subsequently, in default of monthly

installments, the respondent No.1 company filed a Dispute No.346 of 2012

against the respondents 2 to 6 herein seeking to recover an amount of

Rs.16,41,060/-. After giving an opportunity to both the parties, the Deputy

Registrar of Chits / Arbitration passed an award dated 24.08.2013 directing

respondents 2 to 6 herein to pay an amount of Rs.16,41,060/- with interest

@ 18 % per annum on the principal amount of Rs.13.92,330/- from the date of

Dispute till the date of realization along with costs of Rs.37,405/- jointly and

severally. Subsequently for execution of the said award, the respondent No.1

filed E.P.163 of 2016 for sale of the EP schedule property which belonged to

respondent No.4 herein, who was respondent No.3 in the EP. The EP was

coming up for proclamation of sale of EP schedule property. The petitioners

herein filed E.A.No.197 of 2019 claiming the EP schedule property on the

ground that EP schedule property admeasuring Ac.1-13 guntas in Survey

No.334 of Gunthapally Village, Hayathnagar Mandal belonged to the

petitioners and that it was their exclusive property and that the gift deed

executed by the grandfather of respondent No.4 in favor of the respondent No.4

was not valid. The petitioners also stated that they had filed civil suit vide

O.S.No.399 of 2017 against respondent No.4 herein for declaration that the

registered gift deed dated 02.03.2010 executed in favor of respondent No.4 was

Dr.GRR, J as_152_2024

illegal and not binding on them and that the said suit was decreed on

05.03.2019.

6. He further submitted in collusion with respondent No.4 herein, the

petitioners filed the above suit against respondent No.4 and obtained ex-parte

decree intending to grab the EP schedule property. Moreover, the award has

been passed in Dispute No.346 of 2012 on 24.08.2013 and pending the Dispute,

the EP schedule property was under attachment. After the award was passed by

the learned Arbitrator, the EP was filed before the Executing Court. In the said

EP also, there was attachment of the EP schedule property. Pending the said

EP, the petitioners herein colluded with respondent No.4 and filed O.S.No.399

of 2017 seeking declaration that the registered gift deed executed in favor of

respondent No.4, which was the subject of the EP schedule property as invalid

by playing fraud and misrepresentation before the court below and obtained ex-

parte decree by suppressing the factum of passing of award by the Arbitrator as

well as the attachment of the property including the pendency of the Execution

Petition.

7. He further submitted that the judgment and decree passed in O.S.No.399

of 2017 was not binding on respondent No.1 as the respondent No.1 herein was

not a party in the above suit. The court below had passed a well considered

order by dismissing the claim petition in E.A.No.197 of 2019 and prayed to

Dr.GRR, J as_152_2024

vacate the interim order dated 03.05.2024 passed in I.A.No.1 of 2024 and to

dismiss the main appeal with exemplary costs.

8. As seen from the contentions of the learned counsel for the appellants, the

EP schedule property was orally gifted to the claim petitioners 1 and 2 and their

deceased brother on 10.01.2004 and possession was delivered to them and they

constructed a poultry farm and subsequently a memorandum of oral gift was

also executed. As rightly pointed out by the learned II Additional District

Judge, Rangareddy District, the claim petitioners failed to file the memorandum

of oral gift or any documentary evidence showing delivery of possession and

existence of the poultry farm in the name of the claim petitioners 1 and 2 and

their deceased brother. PW.1 also admitted in his cross-examination that no

documents were filed to show that he was in possession of the EP schedule

property since the year 2004 onwards. As per respondent No.4 - J.Dr.No.3, a

registered gift deed was executed in respect of EP schedule property by his

grandfather in his favor on 02.03.2010. The attachment of the schedule

property took place on 24.08.2013 in I.A.No.78 of 2013 in Dispute No.346 of

2012 and subsequently it was attached on 12.05.2016 in E.P.No.163 of 2016.

But no steps were taken by the claim petitioners seeking cancellation of the

registered gift deed till 09.03.2017, subsequent to the attachment. The same

would clearly show that O.S.No.399 of 2017 was filed by the claim petitioners

seeking cancellation of the registered gift deed in favor of J.Dr.No.3 as null and

Dr.GRR, J as_152_2024

void only subsequent to the attachment. The J.Dr.No.3, shown as defendant

No.1 in O.S.No.399 of 2017, allowed the decree to be passed ex-parte. It shows

the collusion between the parties. The suit schedule property was under

attachment since 24.08.2013. During the pendency of Dispute in 346 of 2012 as

well as during the pendency of E.P.No.163 of 2016, no objection was taken by

the claim petitioners herein at the time of attachment of the property to show

that they were in possession of the property. Under Order XXI Rule 59 of CPC,

the claimants or objectors must adduce evidence to show that by the date of

attachment, they had some interest or that they were in possession of the

property attached. The property was mutated in their names only after obtaining

the ex-parte decree in O.S.No.399 of 2017 dated 05.03.2019 after cancellation

of the gift settlement deed in favor of J.Dr.No.3. The pattedar passbooks were

obtained by the claim petitioners only in the year 2019 subsequent to the said

judgment and decree. As such, the claim petitioners were not in possession of

the property at the time of attachment and obtained the pattedar passbooks in

their names subsequent to obtaining the ex-parte decree in their favor on

05.03.2019. They failed to state before the concerned I Additional Senior Civil

Judge, Rangareddy District about the attachment of the suit schedule property

by the date of filing the suit in the year 2017, which amounts to suppression of

material facts. The respondent No.1 - D.Hr. is not made as a party to the said

Dr.GRR, J as_152_2024

suit. Thus, the decree obtained behind his back is not binding on respondent

No.1.

9. The High Court of Bombay in Ganpati Ram Bhande and Others v.

Baliram Raghunath Jadhav and Others (cited supra), with regard to the

scope of inquiry under Order XXI Rule 58 of CPC, held that:

"22. It is substantially clear that on a proper construction of these Rules the question to be decided is whether on the date of the attachment it was the judgment-debtor who was in possession or it was the objector who was in possession and further when the Court comes to a finding that the property was in the possession of the objector, then the Court must proceed further to find whether that possession of the objector was on his own account for himself or as trustee or on account of the judgment-debtor. It requires to be emphasized that the direction of the investigation, which the Court has to carry out, points to possession being the criteria. It is, of course, possible that in the course of such an investigation as to who is in possession of the property subjected to attachment, the question of some legal right or interest or title may also arise and if such legal right affects the determination of the question as to who is the real person in possession in fact or in law, then such a legal right or interest will naturally have to be taken into account. But it is also settled law that complicated questions as to title are not to be

Dr.GRR, J as_152_2024

gone into under the summary procedure of the investigation under Order XXI, Rule 58."

10. Thus, the question to be decided is as to who was in possession of the

property as on the date of the attachment, but not as on the date of passing the

order.

11. As no documentary evidence was filed by the claimants to show that they

were in possession of the property by the date of attachment of the property in

the year 2013, this Court does not find any error or illegality in the order of the

learned II Additional District Judge, Rangareddy District in E.A.No.197 of 2019

in E.P.No.163 of 2016 dated 17.11.2023.

12. The High Court of Bombay in Ovation International (India) Private

Limited and Others v. Adverts (Private) Limited and Others (cited supra)

also stated that:

"The law on the point is well established and needs no elaborate discussion. It is thus summarized in Mulla on the Code of Civil Procedure, 13th edition, page 318:

"Attachment creates no charge or lien upon the attached property. It only confers a right on the decree-holder to have the attached property kept in custodia legis for being dealt with by the court in accordance with law. It

Dr.GRR, J as_152_2024

merely prevents and avoids private alienations; it does not confer any title on the attaching creditors. There is nothing in any of the provisions of the Code which in terms makes the attaching creditor a secured creditor or creates any charge or lien in his favour over the property attached. But an attaching creditor acquires, by virtue of the attachment, a right to have the attached property kept in custodia legis for the satisfaction of his debt, and an unlawful interference with that right constitutes an actionable wrong."

13. When the property was in custodia legis of the Court under attachment,

the claim petitioners suppressing the said fact obtaining an ex-parte decree in

collusion with J.Dr.No.3 would not give them any right over the property.

14. As observed by the Full Bench of this Court in Gurram Seetharam

Reddy v. Smt.Gunti Yashoda and another (cited supra), all questions,

including those relating to right, title or interest in the attached property, are

required to be decided by the same Court and not by separate suit. When the

property is under attachment, the claimants who were claiming their right, title

or interest over the attached property, need to file necessary petition only before

Dr.GRR, J as_152_2024

the Executing Court and not before some other Court. As such, the said

judgment and decree obtained by the claim petitioners in O.S.No.399 of 2017