Dattatraya Shanker Mote & Ors Vs. Anand Chintaman Datar & Ors [1974] INSC 195 (3 October 1974)

ACT:

Transfer of Property Act (4 of 1882) s. 100, proviso-If protection is afforded to a simple mortgagee.-Compromise decree creating charge, if covered by s. 100-Transferee for consideration if includes mortgagee--In the hands of meaning of-Lis pendens applicability,.

HEADNOTE:

The appellants filed a suit for the recovery of a money debt against the respondents. The suit was compromised and by the compromise decree three items of the respondent's property were sought to be charged. The compromise decree was presented in the Registrar's office and was noted in Book No. 1, but, due to the negligence of that office only the charge on one item of property was specifically recorded in the registers mentioned in s. 51 and the Indices mentioned in s. 55 of the Registration Act. The appellants, after realising some money by the sale of the item of property with respect to which the charge was specifically recorded in the Registrar's office, filed on execution application for the recovery of balance of money by the sale of one of the items of property with respect to which the Registrar's office had not recorded the charge. That property, in the meanwhile, was mortgaged under two simple mortgages. The mortgagee, claiming to be ignorant of the prior charge, objected to its sale in the execution proceedings initiated by the appellants; but his objection was overruled and the property was sold in execution.

The mortgagee under the two simple mortgages field a suit for recovery of the amount due to him. The suit was dismissed by the trial court on the ground that though he had no actual or constructive notice of the charge in favour of the appellants, yet, the charge had priority over the subsequent mortgages and could be enforced against the mortgagee in as much as a simple mortgage without possession, did not give the mortgagee the protection given by the amended proviso to s. 100 of the Transfer of Property Act , 1882, which provides that a charge shall not 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.

On appeals against the order arising out of the execution application of the appellants and against the judgment dismissing the mortgagee's suit, the High Court held against the appellants on the ground that the mortgage in favour of the respondent was protected under the proviso to s. 100 and was free from the charge in favour of the appellants.

In appeals to this Court, on the question of competing priorities between a charge created by the decree and the subsequent simple mortgage,

HELD (Per Curiam) : The appeals should be dismissed. [243 DF-;258 C] (Per Jaganmohan Reddy and Alagiriswami, JJ:) (1) The charge created by the terms of the decree is covered by s. 100 of the Act. A compromise decree, not being the result of a decision by the court, but an acceptance by the court of something to which the parties had agreed, if it creates a charge on immovable property and is duly registered, it amounts to the creation of security by act of parties within the meaning of s. 100 of the Act.

[232 B-C] (2) The finding of the courts below that the mortgagee had no notice actual or constructive of the prior charge created by the decree is correct. [231 E-C] (a) It was an admitted position that even on a careful inquiry the mortgagee would not have known that the property was charged in favour of the appellants, in as much as, neither the property cards nor the municipal records nor the indices contained a reference to the charge on the suit property. If the property 225 which a person wants to purchase or which is being offered to him as mortgage or security for payment of any money is shown in Index It then he would have notice of such charge or mortgage and may wish to further probe by inspecting Index I and Book 1. Merely inspecting Book or Index I will not benefit him because all he can know is that there is a decree that has been registered which would not be helpful to him. [230 H-231B, C-D] (b) The proviso to Explanation 1 to s. 3 of the Transfer of Property Act , provides that in order to amount to constructive notice it is necessary (i) that the instrument has been registered and its registration completed in the manner required by the Registration Act; (ii) the instrument has been duly entered or filed in books kept under s. 51 of the Registration Act; and (iii) the particulars regarding the transaction to which the instrument relates have been correctly entered in the indices kept under s. 55 of Registration Act. In the instant case constructive notice cannot be imputed to the mortgagee since the third condition required for the purpose was not satisfied. [231 D-F] (3) The protection in the. proviso to s. 100 does not apply to mortgages. In order to make it applicable it has to be shown that, (a) the property against which the charge is to be enforced has been transferred for consideration; (b) the transferee had no notice of the, charge, and (c) the property which is the subject-matter of the charge, is in the hands of the person to whom such property has been transferred. [236H-237B] (i) The words "transferred for consideration and without notice of the charge" have never been used for describing a mortgage whether it be a simple mortgage or mortgage with possession. This expression has always been understood to describe a sale and in antithesis to a transfer by way of gift. Throughout the Transfer of Property Act whenever a transfer of property is referred to without any qualification it is to the transfer of all the interests in the property. Thus the 'transfer of property' referred to in s. 100 is the transfer of the whole property and not a mere interest in or over the property like mortgage, lease etc.[234 F-H; 236 B-E] Under English aw, the expression 'purchaser for Value includes a mortgagee. Before the Transfer of Property Act came into force whenever any expression came up for consideration, in the absence of any specific definition under the Indian statutes, the meaning assigned in English law seemto have sometimes been applied in a general way.

The usage of any term conveying a particular meaning in English Law and which subsequently has been incorporated in the definition of statutes in England cannot, on that hypothesis, be imported as if that word has the same meaning under the Indian Law when our statute-, adopts different connotations. After the Act has come into force, if the Act intended to convey that a has an absolute title it has used the word 'buyer'. Through in the marginal note in s. 56 the word 'Purchaser' has been used, an analysis of the section shows that the legislature has used different terminology for connoting different concepts aid that it has used the word 'purchaser' as synonymous with 'buyer' and is not including the mortgagee or mortgagor or a lessee ofa lessor as in English Law. [237C. E-G; 238A-B-G] (iii)The expression 'in the hands of' in the proviso is a figurative expression and is intended to convey that a person has sufficient control over the subject matter , to enable him to do anything with it which the nature of that subject matter would permit. It is a multifaceted phrase connoting many meanings depending on the context. In the context of the saving clause in s. 100 the phrase was intended to convey and does convey that the buyer, as a transferee for consideration without notice of a charge, was in possession, including constructive possession through a tenant who has attuned to him and that the vendor had conveyed to him all his right. title and interest in the property including possession. If the intention of the Legislature was to make the proviso applicable even to a mortgage, there was no need for it to have used the words 'in the hands of a person to whom such property has been because, even if' the proviso is Teal without these words, the effect sought for would ensue. [234 D-E; 239 C-T), E-G] Arumilli Surayya v. Pinisetti Venkataramanamma and ors.

A.I.R. 1940 Mad. 701, referred to.

16-L251 Sup.CI/75 226 (4) The question of priority between a charge and a mortgage cannot be decided with reference to s. 48 of the Transfer of Property Act , because, that section deals with a case of transfers of interest in respect of the same immovable property created at different times while a charge is not a transfer of an interest in or over immovable property. In fact, the proviso to s. 100 was amended to get over the effect of certain decisions which have held that a charge was valid even against a subsequent purchaser without notice on the assumption that a charge creates an interest in property, because all provisions relating to a simple mortgage 'shall as for as may be apply to a charge'. [232 FH, 239A; 234 A-B;240 D-E] (5)But the doctrine of notice apart from the statutory provisions such as s. 53A of the. Transfer of Property Act, s. 48 of the Registration Act and s. 27 (b) of the Specific Relief Act, 1877 corresponding to s. 19 of the Specific Relief Act, 1963, is firmly embedded in the jurisprudence of this country as part of the equitable principles which courts administer in conformity with "justice, equity and good conscience". On this approach, the conclusion would be the same is if the proviso to s. 100 of the Act was applicable to mortgages also. [243 B-C] (6)However, it is no answer to say that merely because the ultimate result is the same we should read the language of s. 100 ignoring the purpose for which the amendment was made or give it an interpretation which is totally at variance with the tenor of the entire Act in order that it may conform with the ultimate result. [243 C-D] (7)Since the finding in the instant case is that the respondent did not have notice of the appellants' charge the mortgage will have a priority over the charge of the appellants. [243 D-E] (8) There is no question of the appellants being protected by the doctrine of Lis Pendents. [230 B-C] (Per Beg J :) : (1) The agreement between the parties which was embodied in the compromise decree satisfies the requirements of s. 100 of the Transfer of Property Act inasmuch as it is a charge created by the act of parties.

If the rights of a simple mortgagee, who is not in possession of the mortgaged property, are not protected by the proviso to the section, the first part of the section will confer upon the charge-holder, the same rights as a prior simple mortgagee has against a subsequent simple mortgagee even though the charge does not amount to a mortgage. [246 D-E, G] (2) There is no reason to differ from the views taken by the trial court and the High Court which preclude the existence of 'gross negligence' on the part of the respondent who had made such attempts as could be expected of a reasonable and prudent individual to find out whether the property to be mortgaged was subject to a previous charge. The failure of the respondent to learn of the prior charge on the mortgaged property could be ascribed only to the negligence of the Registrar's office for which the respondent could not be made to suffer.[248 F-G] (3) The High Court was correct in adopting the view that the respondent, as a simple mortgagee, was not outside the protection conferred by the proviso to s. 100, because he was both a bona fide transferee for consideration with simple mortgagee rights 'in hand', as well as a person who had no notice, actual or constructive, of the prior charge of the appellants.,[250 G-H] (i) Section 58 of the Transfer of Property Act defines a mortgage is the 'transfer of an interest in specific immovable property' and 'property' is indicative of every possible interest a person can have. Therefore, a simple mortgage is a transfer of property within the meaning of s.5 of the Act, and the mortgagee's rights are 'property in the hands of a person to whom such property had been transferred for consideration'. If a simple mortgage amounts to a transfer of property for the purposes of s. 100 it is immaterial that a transfer of property implies a transfer of the whole bundle of rights in the property which the transferor has for the purpose of situations dealt with by other sections. For example, s. 8 of the Act laying down the effects, incidents and implications of a transfer. em227 bodies only a rule of interpretation and was meant to govern matters not expressly provided for in deeds of transfer. It was not at all intended to govern or Jay down the meaning of 'transfer, whenever used in the Act. That has been done expressly by ss. 5 and 6. In view of the other provisions of the Act, the transferee under the proviso to s. 100 may be of even an interest in property. The words 'such property' do not stand only for 'full ownership of property'. If the transfer of an interest in property to. a mortgagee, whether simple or Usufructuary, is a transfer of property, 'such property' could only mean, in the case of a mortgagee, the interest in property which has been transferred to the mortgagee because that is also property. [249F; 253 D-E; 254 A-C. F-G] (ii) Under English Law, for the purpose of determining the priority between the owner of a legal estate and an equitable owner, a 'purchaser for value' includes a mortgagee. English equitable principle under the provision of the Transfer of Property Act, so that, although the term 'purchaser is not used in s. 100 of the Act, the proviso seems to have been meant to incorporate the doctrine of a bona fide purchaser for value. It speaks of 'a person to whom Such property has been transferred for consideration without notice of the charge', and the language used was designedly wide so as to confer the benefit of the proviso also upon persons other than purchasers of ownership rights.

[251G, 252G-253B] ((ii)) The expression 'in the hands of' could not be confined to tengible property which is actually in the physical possession of the transferee, because, property as defined in s. 6, includes both tangible and intangible property and extends to rights and interests in property.

'Possession' is only one of the meanings of the expression 'in hand' and whenever the concept of possession was intended to be conveyed, the word 'possession' had been used as for example in Explanation 11 to s. 3. In the proviso to s. 100, the Legislature deliberately employed the concept of 'property in hand' in contradistinction to 'property in the possession of' a transferee, so as to include cases where a person has a right, which is intangible property, vested in him. The right of a simple mortgagee may be capable of being spoken of as 'possessed' by the mortgagee, but the right could more appropriately be spoken of as either 'vested in the transferee', or, as property 'in the hands of the transferee'. The object of employing this terminology in the proviso seems to be to include such rights as those of a simple mortgagee.[249, G-H; 250 C-G] Observation contra in Arumilli Surayya v. Pinisetti Venkataramanamma & Ors A.I.R. 1940 Mad. 701 overruled.

(4)The appellants cannot contend that their prior rights would be protected by the principle underlying s. 48 of the Act because; (a) Apart from the qualifying words, 'so far as may be' in s. 100, one of the conditions for the applicability of s. 48 is that there must be an actual transfer of property, (b) Another condition is that the previous and the subsequently created rights cannot all exist or be exercised to their full extent together, which condition is not satisfied in tire present case. (c) The prior right of the charge bolder could only obtain priority provided other things are not unequal. (d) The conditions of priority as between the holder of a previous charge and a subsequent simple mortgage are completely covered by s. 100.

[251 B-E] (5)If the same result on the question of a priority of a simple mortgage as against a charge, of which the mortgagee has no notice, can be reached by resorting to the principle of 'equity, justice and good conscience' s. 100 itself can be read as a direct statutory recognition of the very principles, because, it contains comprehensively the requirements of equity, justice and good conscience.[254H255B] (6)A wide and liberal interpretation must be given to the proviso to extend the benefit of the amended section to mortgagees also, as bona fide transferees for value-the word 'purchaser' having been deliberately eschewed. The amendment. made to negative the view in some cases that a charge could be enforced even against a bona fide purchaser for value without notice, should be interpreted to amplify the remedy and suppress the mischief aimed at. Decisions had also been given until now, since the amendment of s. 100 in 1928, or the assumption that a simple mortgagee is also covered by the protection conferred by the amended powers, There is no reason why a new path or its meaning should now be taken. [225 D-F; 256 F-H] 228 (7) There is no question of the mortgage being struck by the doctrine of Lis Pendens. [258 A-C]

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1882-1883 of 1967.

Appeals from the _judgment and order dated the 12th November 1962 of the Bombay High Court in First Appeals Nos. 668 of 1957 and 40 of 1960.

V. S. Desai, and K. Raj Choudhry, for the appellants.

Navnit A. Shah and A. G. Ratnaparkhi, for the respondents.

The Judgment of the Court was delivered by Jaganmohan Reddy J., M. H. Beg, J. gave a separate Opinion.

JAGANMOHAN REDDY, J.-In both these appeals by certificate the question of competing priorities between a charge created by a decree and a subsequent simple mortgage has to be determined. The appellants had filed Civil Suit No. 741 of 1938 for recovery of a sum of Rs. 1,34,000/with interest from respondents 1 to 7. On March 31, 1941 a compromise decree was passed under which a charge was created for the decrements amount on three pieces of property belonging to the said respondents 1 to 7. These properties comprise a house in Shukrawar Peth and Kekakuva Mansion in Budhwar Peth both at Poona and a chawl in Kalyan. This decree was registered on April 7, 1941 but due to inadvertence the charge on the Kakakuva Mansion in Budhwar Peth at Poona was not shown in the Index of registration.

The significance of this omission will become evident when the full facts are narrated. Thereafter on June 27, 1949 the respondents 1 to 7 mortgaged the Kakakuva Mansion to the plaintiff respondent 14 for a sum of Rs. 1 lakh. The respondents created a further charge on September 13, 1949 in favour of the said plaintiff respondent 14 for Rs. 50,000/On July 7, 1951 a charge was created by a decree in favour of respondent 15 for a sum of Rs. 59,52 1 /1 1 /under an award decree. In the meantime the appellants had recovered some amounts by execution of their decree in Civil Suit No. 741 of 1938 by sale of the property at Shukrawar Peta at Poona and the chawl ,it Kalyan. In spite of these sales a large balance was still due, and in order to recover the balance of Rs. 1,57,164/appellants filed Darkhast No.32 of 1952 in the Court of the 3rd Joint Civil Judge, Senior Division ,it Poona for the sale of Kakakuva Mansion over which, as we have said earlier, there was a charge created in favour of the appellants by the decree of March 31, 1941.

Notices were issued under O.21 r.66 of the Code of Civil Procedure to respondent 14 and other respondents. The Executing Court, however, held that the; presence of plaintiff respondent 14 was not necessary for the purposes of effecting the sale on the Darkhast of the appellants and accordingly, it vacated the notices. Against the said order of the Executing Court respondent 14 filed First Appeal No.

668 of 1957 in the High Court of Bombay and he also filed on June 5, 1958 Civil' Suit No. 57 of 1968 in the Court of the Joint Judge, Senior Division at Poona for a recovery of a sum of Rs. 2,18,564/alleged to be due to him under the two mortgages dated June 27, 1949 and September 13, 1949.

229 It may be mentioned that while Suit No. 57 of 1958 was pending The property-the subject-matter of that suit-was put up for sale on the appellants' Darkhast and it was purchased by the appellants with the leave of the Court. In view of this development respondent 14 impleaded the appellants in the said Suit No. 57 of 1958 as the purchasers of the, equity of redemption. The appellants resisted the suit on the; ground that they had a prior _ in their favour and the mortgage of respondent 14 was subject to that charge. It was also contended that s. 100 of the Transfer of Property Act , 1882 (hereinafter referred to as 'the Act') regarding notice was not obligatory in respect of the interest created in favour of respondent 14. The Trial Judge by his judgment dated July. 21, 1959, while decreeing the suit of the plaintiff respondent 14 for recovery of Rs. 2,18,564./held that the appellants had a prior charge over the property and were bound by the mortgage in favour of the plaintiff respondent 14 and 15 (defendant 8 in the suit). It further held that the rights of a simple mortgagee are not, "property in the hands of" the mortgagee who could not be protected by the proviso to s. 100 of the Act.

Against the decree of the Trial Judge, respondent 14 filed First Appeal No. 40 of 1960 in the High Court of Bombay.

The two First Appeals, one arising out of the Darkhast filed by the appellants and the other arising out of the suit filed by respondent 14 were: heard together on November 12, 1962. The High Court of Bombay by its judgment modified the decree of the Trial Judge holding that as the mortgage in favour of respondent was protected under the proviso to s.

100 of the Act it is free from the, charge in favour of the appellants. It also gave priority to respondent 15 for its dues, though it had not filed any appeal. Against this judgment and decree two appeals were filed, one in respect of First Appeal No. 40 of 1960 and the other in respect of First Appeal No. 668 of 1957.

It was contended before the High Court that whatever may be the position under s. 100 of the Act, respondents Motes would still be protected by s. 52 by the doctrine of lis pendens. Overruling a preliminary objection that this point was not taken in the Trial Court, the High Court, after considering the admitted position, noticed that originally there was only a money debt due to defendants 9-13 from Datars. The appellants had filed Suit No. 741 of 1938 and practically three years thereafter at the time, of passing of the decree, a charge by agreement was created on the properties of Datars. Admittedly, the properties on which the charge was created were not the subject-matter of the, suit and no, issue was raised in that suit in respect of these properties. It was pointed out that for s. 52 to apply, two conditions have to be fulfilled, namely, (1) the suit or the proceedings must not be collusive and must be pending; and (2) the right to immoveable property was directly and specifically in question in the suit. Unless both these conditions are satisfied, no protection can be claimed. The mere fact that a specific immoveable property becomes the subject-matter of a decree subsequently by agreement of the parties will not justify a claim for protection under s. 52. If the change has been created by 230 consent of the parties it is something extraneous to the suit and accordingly no lis in fact exists in respect of that property nor can it be said that a lis had commenced at least from the date of the decree. There is no commencement at all so far as the lis is concerned which in that suit was a simple claim for money and nothing more. Apart from this, there was no Darkhast or execution application pending at the time when the simple mortgages in favour of the plaintiff we,; created in 1949. The High Court discussed several decisions in respect of the above conclusion and we are in agreement with the reasoning of the High Court.

Since before us this point was not seriously argued, we do not think that there is any need to deal with this aspect in any detail.

It may also be mentioned that the High Court, on the evidence, came to the conclusion that respondent 14 had no notice of the prior charge inasmuch as the search of the indices did not disclose that there was charge on the suit property. An attempt was made to show that the respondent 14 had feigned ignorance of the decree in favour of the appellants though his witness admitted that he had taken search of the records of the Sub-Registrar's office before he took the two mortgages. It was also contended that the plaintiff-respondent 14 had admitted that the mortgage Ext. 87 was registered in the Sub-Registrar's Office on May 17-, 1941, and is noted as No. 104'9-B in Book No. 1. Though this decree was entered in Index I ' it was not entered in Index II. From the very fact that the decree was shown in Index I and having been so registered, it is sought to be contended that the High Court had, by ignoring the above-evidence, held that respondent 14 did not have notice. It may be mentioned that the properties which are the subject-matter of the charge under the decree could only be shown under s. 21 of the Registration Act in Index 11. Unfortunately, as we have said earlier, by inadvertence the property the subject-matter of the suit-was not shown in that Index (Index II). A person who wishes to search the registers for arty prior sale, mortgage or charge would necessarily inspect Index 11, which under s. 55 (3) of the Registration Act is required to contain such particulars mentioned in s.

21 relating to every such document and memorandum as the Inspector General from time to time directs is that behalf.

Under s. 21 description of property and maps or plans have to be mentioned in all non-testamentary documents relating to immoveable property before they are accepted for registration, with further particulars as specified in subs. (2) to (4) thereof. Under s. 55(1) there are to be four Indices I to IIV. Sub-section (2) provides that Index I shall contain the names and addresses of all persons executing and of all persons claiming under every document entered or memorandum filed in Book No. 1 and Index If shall contain such particulars mentioned in s. 21 relating to every such document and memorandum as the Inspector General may from time to time direct in that behalf, Under s. 51(2) in Book I shall be entered or filed all documents or memoranda registered under ss. 17, 18 and 89 which relate to immoveable property, and are not wills. If the property which a person wants to purchase or which is being offered to him as a mortgage or security for payment of any money is shown in Index II, 23 1 then he would have notice of such charge or mortgage and may wish to further probe by inspecting Index I and Book 1.

Merely inspecting Book 1 or Index I will not benefit him because all he can know is that there is a decree that has been registered which may not be helpful. The High Court was right in not accepting the contention of the appellants that respondent 14 had notice of the decree because if in fact he had taken the trouble of going to the Sub Registrar's Office for inspection and search and to ascertain whether there was, any charge, mortgage or other encumbrance on the property in respect of which he wanted to advance such a large sum of Rs. 1,50,000/-, he would not, as a man of. prudence, have advanced the said amounts if we had in fact known that there was a prior charge on that property. In fact the High Court observed that it was an admitted position that even on a careful inquiry the plaintiff (respondent 14) would not have known that the property (Kakakuva Mansion) was charged in favour of defendants 9 to 13 (the appellants herein) inasmuch as neither the property cards, nor the Municipal Records, nor the indices contained a reference to the charge on the suit property. The Explanation in s. 3 of the Act which provides for fixing a party with constructive notice in respect of registered transactions, contains a proviso to Explanation I that in order to amount to constructive notice, it is necessary that (1) the instrument has been registered and its registration completed in the manner required by the Registration, Act and the Rules made there under, (2) the instrument has been duly entered or filed in books kept under s. 51 of the Registration Act, and (3) the particulars regarding the, transaction to which the instrument relates have been correctly entered in the indices kept under s. 55, of that Act. It further observed that though in some cases by legal fiction, constructive notice may be imputed to a party, in the case before it, it cannot be imputed to the plaintiff (respondent 14), since the third condition required for the purpose was not satisfied. We would, therefore, accept the finding of both the Courts that respondent 14 had no notice of the prior charge created by the decree.

The question which will arise, for our consideration is whether the appellants by reason of the decree creating a charge on the suit properties have a priority over the subsequent simple mortgage created in favour of respondent

14. We need not go into other niceties, as to what would be the position where a sale deed is invalid for want of registration or whether a transaction intended to be a mortgage but not reduced to writing and registered will operate as a charge, because in this case the competition is between a charge created by a decree which was registered and a subsequent mortgage without notice of a prior charge.

It is contended that the provisions contained in s. 100 of the Act that "save as otherwise 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" means and implies that where there is a charge and where the property is sold and is in possession of the purchaser for consideration, no charge so created prior to the sale can be enforced against a property in the hands of a person to whom such property has been transferred for consideration 232 and without notice of the charge. The words "save as otherwise provided" would imply that a charge can be enforced even against a purchaser without notice where a law expressly so provides.

It is further contended that a charge created by the terms of a decree is not covered by s. 100 of the Act inasmuch as it is neither a security on immoveable property created by act of parties or by operation of law. Several decisions have been referred to before us which,. in our view, have no application, because a compromise decree not being the result of a decision by the Court but an acceptance by the Court of something to which the parties have agreed if it created a charge on an immoveable property, and was duly registered, as indeed it was in this case, amounts to the creation of a security by act of parties within the meaning of s. 100 of the Act. In order to resolve the question before us it is necessary to analyse the provisions of S.100 of the Act, the text of which is given below :"Where immoveable 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." It is apparent from the provisions of the above section that a charge does not amount to a mortgage though all the provisions which apply to a simple mortgage contained in the preceding provisions shall, so far as, nay be, apply to such charge. While a charge can be created either by act of parties or operation of law, a mortgage can only be created by act of parties. A charge is thus a wider term, is it includes also a mortgage, in that every mortgage is a charge, but every charge is not a mortgage. The Legislature while defining charge in s. 100 indicated specifically that it does not amount to a mortgage. It may be incongruous and in terms even appear to be an anti-thesis to say on the one hand that a charge does not amount to a mortgage and yet apply the provisions applicable to a simple mortgage to it as if it has been equated to a simple mortgage both in respect of the nature and efficacy of the security. This misconception bad given rise to certain decisions where it was held that a charge created by a decree was enforceable against a transferee for consideration without notice, because of the fact that a charge has been erroneously assumed to have created an interest in property reducing the full ownership to a limited ownership. The declaration that "all the provisions hereinbefore contained which apply to a simple mortgage shall., so far as 2 33 may be, apply to such charge" does not have the effect of changing the nature of a charge to one of interest in property.

Order 34 r. 15 of the Code of Civil Procedure also provides for the remedy of enforcing a charge under which all the provisions of O.34 in so far as they are applicable to a simple mortgage would be applicable to a charge under s. 100 of the Act. This rule was substituted for the old r. 15 by the Transfer of Property (Amendment) Supplementary Act, 1929, which came into operation on the 1st April, 1930. The old r. 15 of O.34 was as follows :

"All the provisions contained in this Order as to the sale or redemption of mortgaged property shall, so far ,is may be, apply to property subject to a charge within the meaning section 100 of the Transfer of Property Act ,1882." The words "as to the sale or redemption of the mortgaged property" which were in the old rule, have been omitted, and instead it is now provided in general terms that the provisions applying to simple mortgages shall apply to charges. A charge-holder like a simple mortgagee has a right to bring the property charged to sale or can enforce his charge against any portion of the property charged.

here a cbarge-holder is given possession of the property as a charge-holder, he can remain in possession of it until the amount due to him is satisfied; but if the possession is not attributable to the charge, he cannot insist on retaining possession until his dues are paid.

The reason for the above provision in s. 100 of the Act, read with O.34 r.15, is merely to declare that the rights and liabilities of a charge-holder are to be that which a simple mortgagee has under the provisions of the Act in so far ,is they may be applicable. The words also far as may be" indicate that provisions which apply to simple mortgage may not be applicable to the charge. It has been held that Ss. 56, 67(2), 68(3), 73(4). 83(5) and 92(6) arc applicable to charges. On the other hand, s. 67A has been held to be applicable to charges created by act of parties and not to charges created by operation of' law on the ground that the clause "in the absence of a contract to the contrary" occurring in that section is an essential part of it and cannot be given effect to in a statutory charge. If a charge carries with it a personal liability as in the case of a seller's charge for price not paid, the charge-bolder is entitled under O.34 r-.6 of the Code of Civil Procedure to a personal decree.

The Privy Council had observed that in a suit for enforcement of a charge under s. 100 of the Act read with O.34 r. 15 Code of Civil Procedure , a decree for sale, as in a suit for a mortgagee should have been passed : See Ram Raghubir Singh Lal v. United Refineries(1). The several aspects of the application of the provisions of a simple mortgage have not been and need not be considered by us as they are not relevant for our purpose. Our object is merely to illustrate the reason for a reference in s. 100 to a simple mortgaee (1) [1933] 60 I. A. 183.

234 The question would then what is the purpose and intendment of 1929 Amendment adding the proviso to S. 100 of the Act ? There may be several views as to why this amendment was effected, but certainly one of them is to get over the effect of certain decisions of the Courts which have held that a charge was valid as against a subsequent purchaser of property without notice on the assumption that a charge created an interest in property and since its effect is similar to a simple mortgage it being first in point of time has a priority over a subsequent sale to a purchaser of property who has taken it with consideration and without notice. It is contended that even after the Amendment of 1929 since no charge can 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, the saving clause applies to a simple mortgage as well as to mortgages with possession inasmuch as in both cases property which could be transferred under s. 6 of the Act can be said to be transferred. In other words, the saving clause is not confined only to an out not out sale.

On the other hand, the submission of the appellants is that the proviso to s. 100 applies only to cases of sale for consideration where the property is in possession of the purchaser. It is only in such a case where the purchaser has bought the property without notice of the charge that the charge cannot be enforced against him. It appears to us that if the intention of the Legislature was to make the proviso applicable even to a mortgage including a simple mortgage, there was no need for it to have used the words "in the hands of a person to whom such property has been" because if the proviso is read without those words the effect sought for would nonetheless ensue. The proviso read after the deletion of the words indicated by us would read :

"Save as otherwise expressly provided by any law for the time being in force. no charge shall be enforced against any property transferred for consideration and without notice of the charge." If mortgages were sought to be included, it would look somewhat incongruous because the words "transferred for consideration and without notice of the charge" in so far as we are able to ascertain have never been used in describing a mortgage whether it be a simple mortgage or a mortgage with possession. This expression has always been understood to describe a sale, because transfer of all the rights which the transferor has can also be legally effected without consideration and voluntarily as in the case of a gift. It is in antithesis of a transfer by way of gift that the expression "transferred for consideration" as indicating a sale has been used. A done of property taking a property by way of gift even if he does so without notice of the charge cannot 'in any case claim the benefit of the proviso. If what is being dealt with in the proviso is a sale which in the case of an immoveable property of the value of Rs. 100/or upwards has to be effected by a registered document, it is not necessary for the validity of such a sale, that possession should also have been given. Where a sale has been 235 validly effected and possession has not been given, the purchaser has always the right to enforce a sale deed and obtain possession of the property.

In order to ascertain the true import of the terminology used in s. 100 of the Act, it is necessary to state clearly some of the basic concepts embodied in the Act which are beyond controversy. Section 5 defines "transfer of property" as meaning "an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself, or to himself and one or more other living persons", and "to transfer property is to perform such act. Section 6 says that property of any kind may be transferred, except as otherwise provided by the Act or by any other law for the time being in force other than those mentioned specifically in clauses (a) to (i) which cannot be transferred. Section 8 deals with the operation of transfer and says that unless a different intention is expressed or necessarily implied, a transfer of property passes forthwith to the, transferee all the interest which the transferor is then capable of passing in the property, and in the legal incidents thereof. It then narrates all such incidents having regard to the land, debt, etc. etc. Chapter III of the Act deals specifically with sales of immoveable property, the sale in s. 54 being defined as transfer of ownership in exchange for a price paid or promised or part-paid and part-promised. Mortgages are dealt with in Ch. IV where mortgage is defined in s.

58(a) as the transfer of an interest in specific immoveable property for the purpose of securing the payment of money advanced or to be advanced by way of loan. Different kinds of mortgages are also specified in that section of which clause (b) states what a simple mortgage is,. namely, "where, without delivering possession of the mortgaged property, the mortgagor binds himself personally to pay the mortgage money, and agrees, expressly or impliedly, that, in the event of his failing to pay according to his contract, the mortgagee shall have a, right to cause the mortgaged property to be sold and the proceeds of sale to be applied, so far as may be necessary, in payment of the mortgage money, the transaction is called a simple mortgage and the mortgagee a simple mortgages".

A charge on the other hand under s. 100 of the Act is neither a sale nor a mortgage because it creates no interest in or over a specific immoveable property but is only a security for the payment of money.

Leases of immoveable properties are dealt with in Ch. V of the Act, of which s. 105 defines a lease as a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money etc. etc. Chapter VI deals with exchanges of ownership in one property,; for another. It is provided by s. 118 that a transfer of property in completion of an exchange can be made only in the manner provided for the transfer of such property by sale, so that in that Election the mutual transfer which is referred to is the transfer of ownership of one thing for the ownership of another and in relation thereto the manner in which the exchange is to be completed is specified as 236 similar to the transfer of property as on a sale. In so specifying S. 118 of the Act equates the term "transfer of property" with the term "transfer of ownership". Chapters VII and VIII deal with gifts .and actionable claims which do not necessarily appertain to immovable properties alone.

It will thus be seen that throughout the Act whenever a transfer ,of property is referred to without any qualification, it is to the transfer of all the interest in the property. As already referred to, s. 8 says that "a transfer of property passes forthwith to the transferee all the interest which the transferor is then capable of passing in the property"'. Section 10 when it says "where property is transferred" refers to all the rights in the property.

Section 11 makes it still more clear when it provides that "where, on transfer of property, an interest therein is created absolutely in favour of any person" and ,contrasts the transfer of property with the creation of an interest in the property. Section 12, which refers to the property transferred, refers to the whole of the interest in the property. Section 13 refers to a transfer of property and creation of an interest therein and brings out the distinction between the phrase 'transfer of property' and 'creation of interest in the property'; so do ss. 14 and 15 Section 16 refers to the creation of an interest.

Section 17 very obviously refers to the transfer of the whole of the property when it refers to the transfer of property. So also s. 18. 'Sections 19, 20, 21, 22, 23, 24, 26, 27, 28, 31 and 33 are like ss. 11 and 13. Section 38 again clearly refers to the transfer of the A hole of the interest in a property. So do ss. 39, 40, 41. 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, and 53A. Thus it is clear that the transfer of property referred to in s. 100 of the Act is the transfer of the whole property and not a mere interest in or over the property like a mortgage, lease etc.

A careful scrutiny of the conspectus of the sections of the Act indicates clearly that the Legislature has adopted certain phraseology to connote different concepts of transfer to which we have referred above. Property is the most comprehensive of all terms inasmuch as it is indicative and descriptive of every possible interest it can have. The terms 'transfer of property', 'transfer of an interest in property', 'creation of an interest in or over property', 'transfer of a right to enjoy property' 'transfer of ownership' have been associated in the context of different sections with sale, gift, exchange, mortgage, lease etc.

etc. In the case of a sale, after the sale there is no interest left in the seller : in the case ,of a charge the transferor has a subsisting interest though limited to 'some extent by the charge-holder's right to recover the monies due 'from the specific immovable property. In a mortgage, the mortgagor 'has the equity of redemption of the mortgage left in him. In the case of a lease the lessor has the right of ownership in the property except the right of enjoyment which, has been transferred to the lease under the agreement. A gift like a sale is transfer of all the rights which a person can have in the property with this difference, namely. while the sale is for consideration, gift is voluntary and without consideration.

A reference to the Proviso to S. 100 of the Act would show that in order to make it applicable it has to be shown that (a) the property 237 against which the charge is to be enforced must have been transferred for consideration; (b) the transferee has no notice of the charge; (c) the property which is The subject matter of the charge is in the hands of the Person to whom such property has been transferred. it is, there-fore, necessary to ascertain as to what is meant by the expression "property in the hands of a person to whom such property has been transferred". There is no need and indeed it would be an incorrect approach to adopt a strained construction or to indulge in unnecessary exercise in semantics to make the proviso applicable to a simple mortgage by holding that the right a mortgage gets under a mortgage can. also be said to be in the hands of the mortgagee. In Berwick & Co. v., Price,(1) Joyce, J., began his judgment by saying : "It is well settled that a purchaser (in which term I must be understood to include a mortgagee or a transferee of a mortgage)......... From this single passage, Halsbury's Laws of England (3rd Edn.) Vol. 14, p. 539, Foot Note (p) treats the case as an authority for the expression 'purchaser to the Conveyancing Act, 1882 (1881) 44 and 45 Viet. Ch. 41, which by s. 2 (viii) defines a "purchaser", unless a contrary intention appears, to include a lessee, or mortgagee, and an intending purchaser, lessee, or mortgagee, or other person, who, "for valuable consideration, takes or deals for any property; an purchase, unless a contrary intention appears, has a meaning corresponding with that of purchaser; but sale mans only a sale properly so called".

Similarly, s. 205 (1) (xxi) of, the Law of Property Act, 1925 which brought order from chaos created by forms of action, the distinction between legal and equitable remedies and the different courts which conferred the respective remedies, defined 'purchaser' to mean "a purchaser in good faith for valuable consideration and includes a lessee, mortgagee or other person who for valuable consideration acquires an interest in property". Where the Act has intended to convey that the person who has an absolute title, it has used the word buyer. though in the marginal note to s. 56 the word 'purchaser' has been used. This merely shows that the legislature has used the word 'purchaser' as synonymous with buyer' and as not including a mortgagee or mortgagor or a lessee or lessor as in the English Act. Before the Act came into force in 1882, wherever any such expression came up for consideration, in the absence of any specific definition under the Indian Statute, the meaning assigned in the English law seems sometimes to have been applied in a general way. Se-.Bazayet Hossein v. Dooli Chand (2) where it was held that the, creditor of a deceased Mohammedan cannot follow his estate into the hands of a bona fide purchaser for value, to whom it has been alienated by the heir-at-law, whether the alienation has been made by absolute sale or by mortgage.

Though it may appear at first flush that a purchaser for value would include a mortgagee, actually what was held was that a creditor cannot follow a property alienated by heirat-law into the hands of an alienee whether the alienation is by way of an absolute sale or by mortgages The emphasis is on alienation of the, interest in immovable property and not on the word 'purchaser'.

(1) [1905] Ch. D. 639.

(2) I.L.R.4Cal.402(P.C.) The dangers inherent in relying on English cases rendered on the law of property are many, and we should be chary in allowing a particular technical meaning acquired by a word in that country to govern the interpretation of our Acts which have used that word in different ,connotations. The usage of any term conveying a particular meaning in the English law and which subsequently has been incorporated in the definition of a statute as in the case of the two statutes referred to above, cannot on that hypothesis be imported as if that word has the same meaning under the Indian law, when, as we have pointed out, ,our statute adopts different connotations. Nor would there be any justification to refer to the principles developed by the Chancellor's Court of Equity in England or the notion that equity follows the law, in their application to our law, because that would lead only to confusion. In our view, to interpret our statutory laws on the basis of the statutory provisions of England which were enacted to deal with the peculiarities of their laws is to show subservience to that law or to the legislature in that country in preference to ours, though the legislative sovereignty in India even in the British days did not make our laws subordinate to the English laws. It is much more so now long after the independence and the Constitution. This Court cannot accept such an approach, as is suggested.

We may by way of illustration refer to section 56 of the Act. it ,states : "If the owner of two or more properties mortgages them to one person and then sells one or more of the properties to another person, the buyer is, in the absence of a contract to the contrary, entitled to have the mortgage debt satisfied out of the property or properties not sold to him, so far as the same will extend, but not so as to prejudice the rights of the mortgagee or persons claiming under him or of any other person who has for consideration acquired an interest in any of the properties". A careful analysis of the above section would show that the Legislature has at one place used several words which we have underlined to convey different concepts.

The words owner, purchaser, buyer, sale have been used for connoting an absolute transfer of all the rights vested in an owner; the words mortgage, mortgagor and mortgagee are used to connote a transfer of an interest in property. That apart, even a person who has acquired an interest in property, who may be like a mortgagee, is said to acquire "an interest in property for consideration", which expression is certainly used to connote only a limited interest. This clearly indicates that the Legislature has used different terminology for connoting different concepts and would have in the proviso, if it intended to apply it to mortgages, used the appropriate language and expression.

Another indication from which the meaning, which we have ascribed, can be gathered is the use of the expression "in the hands of". This expression, and indeed the entire phraseology of the saving clause, is significant and lends itself to the construction that a charge-holder cannot enforce his charge against any property in a case where that property is "in the hands of a person to whom such property has been transferred for consideration and without notice of the charge." What then is the significance of the words "in the bands of" ? Do they mean "in the possession of" or "under the control of" ? If this is so, then a 239 simple mortgage of a property is not covered by the proviso, as the property the subject of such a mortgage is not in the possession or control of the mortgagee, or do these words mean that whatever interest in property is created that interest can be said to be in the hands of a person in whose favour that interest has been created. In Arumilli Suryya v. Pinisetti Venkataramanamma and Ors.(1) Horwill, J., observed at p. 704 : "If the appellant is treated as a simple mortgagee, he cannot by any stretch of the imagination be considered to have the property in his hands." The High Court in the judgment in appeal has disagreed with Horwill, J.'s view on the ground that if the words imply physical possession, then possession of an agent or tenant will not be included. According to the High Court the words "in the hands of" only mean the holding of the title and nothing else.

The expression "in the hands of" appears to us to be a figurative expression intended to convey that a person has sufficient control over the subject-matter to which in the context the phrase is applied so as to enable that person to do whatever he can do with it as the nature of that subjectmatter would permit. See Edwardes' Menu Company Limited v. Chudleigh.(2) 'The judgment of. Kekewich, J., was confirmed by the Court of Appeal Lindley, M. R., Chitty and Vaughan Williams, L. JJ., which is reported in the same Volume at p.64. The actual control as compared to the possibility of obtaining control seems to be implied in the term. The proverb "a bird in the hand is worth two in the bush", would, in our view, appropriately convey the meaning of the phrase. No doubt, "in the hands of" may be a multi-faceted phrase connoting many meanings, of which the meaning applicable in the context in which it is used, is the most appropriate. In the context of the saving clause, the inappropriateness of its applicability to a simple mortgage or in the setting of the entire phraseology its nonapplication to other mortgages seems to us to be clear and evident.

In the context in which the phrase "in the hands of" has been used we have no doubt that it was intended to convey and does convey that the buyer as a transferee for consideration without notice of the charge was in possession, including constructive possession through a tenant who has attuned to him and which for all intents and purposes, as far as transfer is concerned, has conveyed to him all the right, title and interest which the vendor had in the property including the possession. Before we part with this aspect, it is necessary to point out that Mulla's Indian Registration Act, 8th Edn., at p. 195, states on the basis of the decision in Chhaganlal v. Chunnilal(3) that "under section 100 of the Transfer of property Act, 1882, as amended by Act 20 of 1929 a mortage has priority over a previous charge of which the mortgagee had no notice." This decision is one rendered under s. 48 of the Indian Registration Act and not under s. 100 of the Act though the arguments advanced thereunder were noticed (see pp. 191192). It was in fact contended that s. 50 of the Amendment Act of 1929 by which the proviso was added had retrospective effect similar to s. 63 (1) A. I. R. 1940 Mad. 701.

(3) A. 1. R. 1934 Bom. 199.

(2) 14 T. L. R. 47.

24 0 of the Amendment Act, but it was repelled. Tyabji, J., at p. 192, said: "We cannot accordingly, accept the argument that we must decide this case in accordance with the amended S. 100." If the 'proviso to S. 100 of the Act does not apply to mortgages, then what is the position of a charge-holder visa-vis the subsequent mortgagee without notice of the charge.

A charge not being a transfer or a transfer of interest in property nonetheless creates a form of security in respect of immoveable property. So far as mortgage is concerned, it being a transfer of interest in property the mortgagee has always a security in the property itself. Whether the mortgage is with possession or a simple mortgage, the interest in the property enures to the mortgagee so that any subsequent mortgage or sale always preserves the rights of the mortgagee whether the subsequent dealings in the property are with or without notice. The obvious reason for this is that in a mortgage there is always an equity of redemption vested in the owner so that the subsequent mortgagees or transferees will have, it they are not careful and cautious in examining the title before entering into a transaction, only the interest which the owner has at the time of the transaction.

In so far as competing mortgagees are concerned, S. 48 of the Act gives priority to the first in point of time in whose favour transfer of an interest in respect of the same immovable property is created, if the interest which he has taken and the interest acquired subsequently by other persons cannot all exist or be exercised to their full extent together. This section speaks of a person who purports to create by transfer at different times rights in or over the same immoveable property, and since charge is not a transfer of an interest in or over the immoveable property he gets no security as against mortgagees of the same property unless he can show that the subsequent mortgagee or mortgagees had notice of the existence of his prior charge.

A reference to S. 48 of the Indian Registration Act and S. 27(b) of the Specific Relief Act would, however, be necessary to spell out the implications of the competing priorities between a charge and amortg age. Before we examine these provisions it is necessary to note that under S. 54 of the Act, it is only a transfer of interest in the tangible immoveable property of the value of Rs. 100/and upwards or of a reversion or other intangible thing that requires the transaction to be effected by a registered instrument. But in the case of a tangible immoveable property of the value of loss than Rs. 100/a registered instrument is not compulsory but only optional. A transfer of such property can be effected either by registered instrument or by delivery of the property, i.e., when the seller places the buyer or such person as he direct-, in possession of the property. Where an oral sale of property' of the value of less than Rs. 100/takes place accompanied or followed by possession a question may arise as to what would be the effect of a sale of the same property effected by a subsequent registered document ? There was a conflict of decisions under the old Registration Acts, viz., under Act 20 of 1866, Act 8 of 1871 and Act 3 of 1877, and the words "unless where the agreement or declaration has been accompanied or followed by delivery of possessions' 241 were first added by Act 8 of 1871 to give effect to the preponderant view that where possession was given under the oral agreement the registered document did not take effect against an oral agreement. The rationale underlying these cases was, as explained by Muttusami Ayyar, J., in Kannan v. Krishnan(1) is, that the protection given to oral agreement accompanied with or followed by delivery of possession is equivalent to registration. The effect of registration, it may be said, is to invest the subsequent purchaser or any person who takes an interest in that property with notice.

If notice of a prior transaction whether by delivery of possession or by registration is the basis of conferment of priority, then even in the case of a transaction which did Pot effect a transfer by delivery of possession but there were rights created in favour of the person by an oral or written agreement, then a person taking an interest in that property or who purchases that property with notice of the prior charge would take that property subject to the prior rights of which he had notice. That is why s. 53A of the Act and the amendment in s. 48 of the Registration Act recognise certain equities even where the transaction as required by law is not entered into by a registered instrument and would not, but for these provisions, amount to effecting a transfer of an interest or ownership in a specific immoveable property.

Section 48 of the Registration Act, 1908, as it now emerges after the amendment Act 21 of 1929, gives a priority to' an oral agreement or declaration relating to a moveable or immoveable property where the agreement or declaration has been accompanied or followed by delivery of possession and the same constitutes a valid transfer under any law for the time being in force. The ordinary rule of s. 48 of the Registration Act is that non-testamentary documents duly registered under the Act relating to any property whether moveable or immoveable shall take effect against an oral agreement or declaration relating to such property subject to the exception stated above. In Chhaganlal's case (supra) the decision was concerned mainly with the question whether a charge can be an oral charge, or it must, like a mortgage, be created only by a registered instrument. That was a case of an oral charge competing to have a priority over a mortgage. Tyabji, J., after referring to s. 48 of the Registration Act said at p. 191 :

"As there has been no delivery-of possession in the present case, the exception may, for the present purposes, be disregarded." This exception would, however, still leave a case where an interest in immoveable property is created without a registered instrument and without delivery of possession and that may be the case of a mortgage by deposit of title deeds as defined in s. 58 of the Act. For this purpose, the proviso to s. 48 of the Registration Act makes an exception in the case of mortgage by deposit of title deeds which neither requires delivery of possession nor constitutes notice of such a mortgage. This section does not give any indication as to what would be the position where a person taking a subsequent registered document had notice of an oral or written agreement in respect of an immoveable property (1) 1. L. R. [1890] 13 Mad. 324,330.