BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 03/03/2005 CORAM THE HONOURABLE MRS. JUSTICE PRABHA SRIDEVAN Second Appeal No.130 of 1994 1. Ramasamy Raja 2. Kodandarama Raja .. Appellants (Defendants) -vs- P. Subbayya Pillai .. Respondent (Plaintiff) Prayer Appeal against the judgment and decree in A.S.No.262 of 1992 on the file of Sub-Court, Ambasamudram dated 29.11.1993 confirming the judgment and decree in O.S.No.648 of 1988 on the file of District Munsif Court, Ambasamudram dated 11.2.1992. !For Appellants ... Mr. T.V. Sivakumar for M/s. K. Chandrasekaran ^For Respondent ... Mr. G. Sridharan for Mr. T.M. Hariharan :JUDGMENT
The person who has landed the appellants and the respondent in this
litigation is not before us. The following dates are relevant. The word
“property” refers to the suit property in O.S. No.648 of 1988, from which this
second appeal has arisen.
12.03.1979 – The appellants sold the suit the “property” to one K. Subbayya (the
villain in this story).
06.04.1979 – K.Subbayya executed a pronote for a sum of Rs.50,000/- being the
unpaid sale consideration (Ex.B-2).
19.12.1979 – K.Subbayya entered into an agreement of sale of the “property” with
the respondent.
15.03.1982 – O.S.No.18 of 1982 was filed by the respondent against K.Subbayya
for specific performance of the agreement dated 19.12.1979.
05.04.1982 – O.S.No.23 of 1982 filed by the appellant for recovery of money due
under Ex.B-2.
05.04.1982 – Attachment Before Judgment of the “property” ordered in O.S. No.23
of 1982.
13.04.1982 – Attachment effected.
16.11.1982 – Ex-parte decree passed in O.S. No.23 of 1982.
04.12.1982 – Ex-parte decree in O.S. No.18 of 1982.
16.04.1985 – Court executed the sale deed in favour of respondent in execution
of decree in O.S.No.18 of 1982.
24.04.1985 – Sale deed in respect of the “property” registered.
20.12.1985 – The suit property purchased by the appellants/decree holder in
Court auction in execution of decree in O.S. No.23 of 1982.
21.12.1986 – Court auction sale is confirmed.
24.05.1986 – Property delivered to the appellants/ Court auction purchasers.
17.10.2003 – Property delivered to respondent.
The present suit, O.S.No.648 of 1988, filed by the respondent is for declaration
and injunction and alternatively, for possession. The trial court found that
only the appellants were in possession and, therefore, granted the alternate
prayer for possession.
2. In the plaint, the respondent claimed that the suit in O.S.No.23 of
1982 and all the proceedings pursuant thereto are collusive, brought about by
fraud between the appellants and the said K.Subbayya and that the possession of
the appellants is wrongful.
3. The appellants claimed that the suit O.S.No.18 of 1982 was a collusive
one brought about by fraud between the respondent and the said Subbayya and that
since the appellants had attached the property, any transfer after the
attachment was void as against the claims enforceable under the attachment as
per Section 64 C.P.C; and that the appellants alone were entitled to be in
possession. According to the appellants, their possession had been given
pursuant to the confirmation of sale and is not wrongful possession and so the
respondent is not entitled to mesne profits or any other relief.
4. The trial Court found that it is not possible to decide whether K.
Subbayya had colluded with the appellants or with the respondent. The trial
Court decreed the suit on the ground that the respondent had a valid title and
therefore, was entitled to possession.
5. The lower appellate Court did not even consider the question whether
O.S.No.18 of 1982 or O.S.No.23 of 1982 was collusive. However, it confirmed the
findings of the trial Court following the decision in Anarayanan Nair
Ramakrishnan Nair and another Vs. Zacharia Kuriakose (died) and others (AIR
1991 Kerala 151).
6. The following substantial questions of law have been raised by the
appellants :-
“a) Whether the courts below are right in not even adverting the challenge
made by the appellants that the agreement, dated 19.12.1979 and the decree
thereon are all collusive and fraudulent and is also an abuse of process of
Court and a fraud played on Court?
b) Whether the court below is right in following the decision in 1991
Kerala 152, which is easily distinguishable from 1974 Madras 16 and even if it
is not distinguishable, is the Court not bound by the decision of the Madras
High Court?
c) Are the courts below right in granting relief to the respondent
especially when all the proceedings laid by him in O.S.No.18 of 1982 were taken
when the attachment over the property was pending?”
7. Orders were reserved in this matter on 18.2.2005. However, on a
consideration of the materials before me, I felt that the matter requires to be
addressed on other aspects too. So, it was listed again today and after hearing
both the counsel, orders were pronounced.
8. More substantial questions of law arise for consideration relating to
the application of Section 55(4)(b) of the Transfer of Property Act and to
entitlement of mesne profits.
9. As regards the entitlement of mesne profits, this has not been decided
in accordance with law. It is pertinent to see what is the definition of “mesne
profits”. Mesne profits is defined as “profits which the person in wrongful
possession of such property actually received or might with ordinary diligence
have received therefrom, together with interest on such profits”.
10. Here, the possession of the appellants till the date of the decree of
the trial Court cannot be stated to be wrongful, since they were put in
possession only by the act of the Court. They purchased the property in the
Court auction. The sale was confirmed and they took delivery on 24.05.1986. The
trial Court has categorically found that it is not possible to say whether the
plaintiff had colluded with K.Subbayya and obtained an exparte decree to defeat
the rights of defendants or whether defendants have obtained a collusive decree
against K.Subbayya, who allowed the attachment order to become absolute, to
defraud the plaintiff. The Appellate Court did not advert its attention to this
aspect. Therefore, unless, there is a finding that the decree obtained by the
appellants is a void one, their possession after purchase at Court auction is
not wrongful.
11. As regards the question relating to Section 55(4)(b) of the Transfer
of Property Act (hereinafter be referred to as ‘the Act’ for short), this has
been referred to in the Appellate judgment, but no finding has been given
thereon. Since this essentially involves both issues on fact and law, it cannot
be decided in second appeal. But, a finding must be given in this regard for
proper adjudication of the matter. The question cannot be left unanswered.
12. Section 55(4)(b) of the Transfer of Property reads as follows :-
“55. In the absence of a contract to the contrary, the buyer and seller f
immovable property respectively are subject to the liabilities, and have the
rights, mentioned in the rules next following, or such of them as are applicable
to the property sold:
(1) – (3) * * *
(4) The seller is entitled –
(a) * * *
(b) where the ownership of the property has passed to buyer before payment
of the whole of the purchase money, to a charge upon the property in the hands
of the buyer, any transferee without consideration or any transferee with notice
of the non-payment, for the amount of the purchase money, or any part thereof
remaining unpaid, and for interest on such amount or part from the date on which
possession has been delivered.
(5) – (6) * * * ”
13. The following decisions are helpful :-
a) In Vidhyadhar Vs. Manikrao and another reported in (1999(3) SCC 573),
the second defendant executed a document in favour of the first defendant for a
sum of s.1,500/- and delivered possession to the latter. There was a stipulation
in the document that if the entire amount was returned to the first defendant
before a particular date, the possession of the property would be restored to
the second defendant. The property was subsequently transferred by the second
defendant to the plaintiff for a sum of Rs.5,000/-. The plaintiff claimed that
the second defendant had offered the entire amount to the first defendant, who
did not accept the amount. It was pleaded that the document executed by the
second defendant in favour of the first defendant was a mortgage by conditional
sale and therefore, the property was liable to be redeemed. The suit was filed
for redemption of the mortgage by conditional sale or for specific performance.
This was decreed by the trial Court and confirmed by the Appellate Court. The
High Court reversed it. Against that the aggrieved party went before the Supreme
Court. The Supreme Court held that the definition of “sale” under Section 54 of
the Act indicates that in order to constitute a sale, there must be a transfer
of ownership or one person to enter and though price constitutes an essential
ingredient to the transfer of sale the words “price paid or promised or part
paid and part promised” indicate that the actual payment of price at the time of
execution of sale deed is not a sine qua non to the completion of sale. The
Supreme Court also considered the right of the seller who has not been fully
paid.
b) In Rajender singh Vs Ramdhar Singh and others reported in (2001 (6) SCC
213), the Supreme Court held that the agreement of sale entered into by the
judgment debtor prior to the attachment of property in execution of a decree
would prevail over the attachment itself. That was a case almost similar to the
present one. The plaintiff filed a suit for recovery of money in Money Suit
No.13 of 1974. He obtained an order of attachment before judgment on 26.03.1994.
The attachment was effected. The defendant remained exparte. The suit was
decreed on 11.10.1974. the plaintiff sent the decree for execution. An order of
attachment was made on 25.08.1976. The property was sold through Court auction
on 19.11.1977. The decree holder himself purchased the attached property as in
the present case. The respondents filed a case on 19.11.1997 claiming that they
had purchased the properties from the judgment debtor on 27.4.1974 and that
prior to the sale deed there were agreements of sale dated 09.02.1974 and
16.12.1974. They also pleaded that the attachment was not made in accordance
with law. This plea was accepted by the High Court. The Supreme Court set aside
this finding with regard to non-compliance with the procedure relating to
attachment, and remitted the matter back to the single Judge for consideration
of the effect which the agreements have on the attachment.
c) In Vannarakkal Kallalathil Sreedharan Vs. Chandamaath Balakrishnan and
another (1990 (3) SCC 291), the Supreme Court held as follows :
“5. We may first draw attention to some of the relevant statutory
provisions bearing on the question. Order XXXVIII Rule 10 of the Code of Civil
Procedure provides that attachment before judgment shall not affect the rights
existing prior to the attachment of persons not parties to the suit. Under
Section 40 of the Transfer of Property Act, a purchaser under a contract of sale
of land is entitled to the benefit of an obligation arising out of that contract
and it provides that that obligation may be enforced inter alia against a
transferee with notice. Section 91 of the Trusts Act also recognises this
principle that the transferee with notice of an existing contract of which
specific performance can be enforced must hold the property for the benefit of
the party to the contract. These are equitable rights though not amounting to
interest in immovable property within the meaning of Section 54 of the Transfer
of Property Act which declares that a contract of sale does not create an
interest in the property. On this line of reasoning it has been held by the
Madras High Court that the purchaser of (sic unde) an antecedent agreement gets
good title despite attachment. See Paparaju Veeraraghavaya V. Killara Kamala
Devi (AIR 1935 Madras 193, Veerappa Thevar Vs. C.S.Venkatarama Aiyar (AIR 1925
Madras 872 and Angu Pilla Vs. M.S.M.Kasiiswanathan Chettiar (AIR 1974 Madras 16.
6. …
7. …
8. …
9. In our opinion, the view taken by the High Courts of Madras, Bombay,
Calcutta and Travancore-Cochin in the aforesaid cases appears to be reasonable
and could accepted as correct. The agreement for sale indeed creates an
obligation attached to the ownership of property and since the attaching
creditor is entitled to attach only the right, title and interest of the
judgment-debtor, the attachment cannot be free from the obligations incurred
under the contract for sale. Section 64, CPC no doubt was intended to protect
the attaching creditor, but if the subsequent conveyance is in pursuance of an
agreement for sale which before the attachment, the contractual obligation
arising therefrom must be allowed to prevail over the rights of the attaching
creditor. The rights of the attaching creditor shall not be allowed to override
the contractual obligation arising from an antecedent agreement for sale of the
attached property. The attaching creditor cannot ignore that obligation and
proceed to bring the property to sale as if it remained the absolute property of
the judgment-debtor. We cannot, therefore, agree with the view taken by the
Punjab and Haryana High Court in Mohinder Singh (AIR 1971 P & H 381)”.
14. The learned counsel for the appellants relied on the decision reported
in Bharat Petroleum Corporation Llimited and another Vs. N.R. Vairamani and
another 2004 (4) MLJ 147 (SC), where the Supreme Court had issued a warning
regarding placing reliance on decisions without discussing how the factual
situations fit in the instant context and quoted the following words of Lord
Denning” :-
“Each case depends on its own facts and a close similarity between one
case and another is not enough because even a single significant detail may
alter the entire aspect, in deciding such cases, one should avoid the temptation
to decide cases (as said by Cordozo) by matching the colour of one case against
the colour of another. To decide therefore, on which side of the lane a case
falls, the broad resemblance to another case is not at all decisive.”
*** *** ***
“precedent should be followed only so far as it marks the path of justice,
but you must cut the dead wood and trim off the side branches else you will find
yourself lost in thickets and branches. My plea is to keep the path to justice
clear of obstructions which could impede it.”
15. In the present case, the trial court had specifically stated that it
is not possible to come to a decision as to which suit is collusive. This aspect
was totally ignored by the Appellate Court. It merely recorded the finding of
the trial Court without saying anything more, while specifically referring to
Section 55(4)(b) of the Act.
16. In the written statement filed by the appellants, it is stated in
paragraphs 4 and 5 that the agreement which was specifically enforced, was
brought about by the respondent and the said Subbayya, with a view to defraud
the appellants. We have to see whether Section 55(4)(b) of the Act has
application to the instant case. For this, the Appellate Court will have to
decide whether the respondent is a transferee with notice, or a transferee
without consideration.
17. The learned counsel for the appellants posed the question as to how in
equity, the appellants can lose on all counts. They are unpaid sellers, who have
not been paid Rs.50,000/-. Their suit on the pronote was decreed. They have
purchased the property at a Court auction, which is taken away from them by the
decree in this suit and to compound the injury they have also been asked to pay
the mesne profits. The paragraph extracted from the judgment of the Supreme
Court shows that the lien of the unpaid seller is an equitable lien. If so, the
question whether the respondent is a transferee without notice, ought to have
been answered by the Appellate Court, as the final court of fact. This ground
has been raised in the ground of second appeal, though not framed as a
substantial question of law.
18. It is also important to note that Section 64 of the Civil Procedure
Code has undergone a change. The earlier Section 64 is retained as Section
64(1). Section 64, CPC reads thus:-
“64. Private alienation of property after attachment to be void.-
(1) Where an attachment has been made, any private transfer of delivery of
the property attached or of any interest therein and any payment to the
judgment-debtor of any debt, dividend or other moneys contrary to such
attachment, shall be void as against all claims enforceable under the
attachment.
(2) Nothing in this Section shall apply to any private transfer or
delivery of the property attached or of any interest therein, made in pursuance
of any contract for such transfer or delivery entered into and registered before
the attachment.
Explanation – For the purposes of this section, claims enforceable under
an attachment include claims for the rateable distribution of assets.”
19. If a new law speaks in a language which indicates expressly or
otherwise that it takes in pending matters, the Court of appeal must give effect
to that intention. In the decision reported in AIR 1966 SC 1423 (DAYAWATI -VS-
INDERJIT), the Supreme Court in para 10 held as follows :-
“10. … Matters of procedure are, however, different and the law affecting
procedure is always retrospective. But it does not mean that there is an
absolute rule of inviolability of substantive rights. If the new law speaks in
language, which, expressly or by clear intendment, takes in even pending
matters, the Court of trial as well as the Court of appeal must have regard to
an intention so expressed, and the Court of Appeal may give effect to such a law
even after the judgment of the Court of first instance. The distinction between
laws affecting procedure and those affecting vested rights does not matter when
the Court is invited by law to take away from a successful plaintiff, what he
has obtained under a judgment. … ”
Head Note 1 in the decision reported in AIR 1959 SC 577 (KOTTURUSWAMI -VS-
VEERAVVA) reads thus :-
“It is well settled that the appellate Court is entitled to take into
consideration any change in the law.”
20. It is worthwhile to examine the reports of the Law Commission of India
in this regard. The 27th report submitted in December 1964 is extracted
hereunder :-
“64(1). The question has been raised whether a transfer actually made
after the attachment but in pursuance of an agreement made before the attachment
is invalidated by Section 64. One view is that the Section does not apply in
such cases vide Babala Venkata Reddy Vs. Mangadu Yellappa Chetty (AIR 1917
Madras 4, 51), (Abdur Rahim and Srinivasa Ayyangar JJ), Ghuaram Vs. Parashram
(AIR 1936 Nag. 163, 165) (Pollock, J.), Yeswant Vs. Pyaraji – Attachment after
judgment (AIR 1943 Bom 145) and Ranga Ramachandra Vs. Garbingappa – Attachment
before judgment (AIR 1941 Bom 198, 200, 201).
64(2). In the draft Report which was circulated for comments an exception
was proposed to Section 64 to the effect that “Nothing in this section applies
to any private transfer or delivery of the property attached or of any interest
therein, made in execution of any contract for such transfer or delivery entered
into before the attachment”. But, after careful consideration, it has been
decided not to make any such exception. A sweeping provision of this kind might
be abused, and the practice of bringing into existence agreements which are
really executed after attachment but are ante-dated to an earlier date, might be
encouraged by such exception.
64(3). The decision as to how far such a transfer should be recognised as
valid by the Court, would seem often to depend on the equities of each case.
Some of the decisions are based on the specific provisions of Order XXXVIII,
rule 10; a few exhibit special features arising out of the passing of a decree
for specific performance. So far as other situations are concerned, the equities
of the case should, it is considered, be taken by the Court into account.”
In the 54th report submitted in February 1973, the relevant passages are
extracted hereunder:-
“1.E.48. Section 64 is as follows :
’64. Where an attachment has been made, any private transfer or delivery
of the property attached or of any interest therein and any payment to the
judgment-debtor of any debt, dividend or other monies contrary to such
attachment, shall be void as against all claims enforceable under the
attachment.
Explanation – For the purpose of this Section, claims enforceable under an
attachment include claims for the rateable distribution of assets.’
There has been a conflict of decisions on the question whether a transfer
made after attachment in pursuance of an agreement entered into before
attachment is void. The Commission in its Report on the Code (27th Report, Page
118, Note on Section 64), considered this conflict; but was not inclined to
suggest a change. It noted that in the draft Report which had been circulated to
State Governments, High courts etc.) for comments, an exception was proposed to
Section 64 to the effect that “Nothing in this Section applies to any private
transfer or delivery of the property attached or of any interest therein, made
in execution of any contract for such transfer or delivery entered into before
the attachment”. But, after careful consideration, the Commission decided not to
make any such exception. The Principal consideration which weighted with the
Commission was thus stated –
‘A sweeping provision of this kind might be abused and the practice of
bringing into existence agreements which are really executed after attachment
but are ante-dated to as earlier date, might be encouraged by such exception.’
The Commission also added –
‘The decision as to how far such a transfer should be recognised as valid
by the Court would seem often to depend on the equities of each case. Some of
the decisions are based on the specific provisions of Order 38 Rule 10; a few
exhibit special features arising out of the passing of a decree for specific
performance. So far as other alterations are concerned, the equities of the case
should, it is considered be taken by the Court into account.’
1.E.49. We have carefully considered the matter. We agree that a sweeping
provision saving every transfer made in pursuance of a pre-attachment agreement,
might lead to fictitious claims, as was noted by the previous Commission. But we
think that a provision of a limited character, applicable only where the
agreement itself is registered before the attachment, would be harmless. A
transfer in pursuance of such agreement should override the attachment, if the
agreement precedes the attachment.
Recommendation
1-K.50. We therefore, recommend that the following Exception be added
below Section 64 :
‘Exception-Nothing in this Section applies to ay private transfer or
delivery of the property attached or of any interest therein, made in execution
of any contract for such transfer or delivery entered into and registered before
the attachment’.”
21. This amendment was actually introduced only in 2002 and in the
statement of objects and reasons to the Code of Civil Procedure (Amendment Act
2002). Paragraph 3(l) reads as follows :-
“Sections 39, 64 and Rules 32 and 92 under Order 21 of the Code shall be
amended on the basis of the 54th, 139th and 144th reports of the Law Commission
of India. These amendments are clarificatory in nature”.
Therefore, Section 64(2) only clarifies what the Legislature always intended the
Section to mean.
22. It may also be worthwhile to look at the other Acts, where somewhat
similar provisions have been introduced. Section 64(2) refers to an agreement of
private transaction. Such agreements are not required to be registered. But yet
the Legislature has protected only such of those agreements which have been
registered before the attachment; from the effect of Section 64(1), which
renders void, all private transactions.
23. For example, Section 21-A of the Tamilnadu Land Reforms (Fixation of
Ceiling on land) Act is in the nature of a proviso to Section 22 of the Act. It
is well known that partition can be effected even orally and such division be
recorded later in writing. But to avail of the benefit of the proviso/protection
of Section 21-A, there has to be a registered instrument of partition,
otherwise, the authorised Officer may declare the partition to be void, if he
finds that the partition defeats any of the provisions of this Act.
24. Here the Act only protects instruments of partition which are
registered, only to ensure that the objects of the Act are not defeated.
25. Similarly, in Chapter XXC of the Income Tax Law, restrictions were
imposed on transfer of immovable property and there can be no transfer of any
immovable property exceeding Rs.5 lakhs, unless, it is preceded by an agreement
for transaction, which is reduced in writing in the form of a statement, as
provided in Section 269UA. Agreement for transaction was defined in Section
269UA, which is as follows:-
“Agreement for transfer” means an agreement, whether registered under the
Registration Act, 1908 916 of 1908), or not, for the transfer of any immovable
property.”
Therefore, though one could transfer immovable property by way of sale without
entering into an agreement, restraints were imposed with regard to transfer of
immovable property of a certain value. So, while a private agreement for
transfer may be oral, an agreement for transfer in Chapter XXC had to be reduced
in writing and in the form of a statement. There were striking distinctions
between the two with regard to the manner in which they should be signed,
verified, declare their terms, spell out his consideration etc.
26. This was introduced to “Check, Proliferation of black money in real
estate transactions and to introduce declaration of the true market value of the
immovable property in question which is the subject matter of transaction
between the parties so as to prevent evasion of taxes.
27. Therefore, documents or transactions, which did not require the
transaction to be in writing, had to be either registered or, reduced into a
statement for the purpose of obtaining the protection of a certain legal
provision. With regard to Section 64(2) of the Civil Procedure Code, it was to
protect the transaction from being rendered void on account of the attachment of
property. Therefore, while introducing Section 64(2) of the Civil Procedure
Code, the Legislature has only introduced what has been under consideration from
the time of the 27th Report. The Legislature has been conscious that agreements
can be brought about to nullify the right of the attaching decree holder and
they have finally clarified in the Amendment Act 2002 that Section 64(1) of the
Code of Civil Procedure will not apply if the agreements have been registered
before the attachment. In the instant case, while the pronote in favour of the
appellant has been registered and it has even been marked as exhibit, the
agreement based on which the specific performance suit was filed was not marked
before the trial Court. In fact, even in the pleadings, there is nothing to show
that the respondent had entered into a registered agreement before he filed a
specific performance suit. Section 64, C.P.C. refers to private alienation,
whereas in the present case, the sale deed was executed by the Court pursuant to
the decree for specific performance. In AIR 1945 MADRAS 412 (IMPERIAL BANK OF
INDIA -VS- BALASUBRAMANIA PANDIA), a Division Bench of this Court held that for
applying Section 64, C.P.C. court orders passed with consent of the parties have
no higher sanction than that of a mere private transfer. By analogy, the sale
deed executed by the Court, in execution of an exparte decree for specific
performance of an agreement also stands on the same footing as a part sale. It
is not an involuntary sale. Again, if the issue raised by the appellant, that
the suit O.S.No.18 of 1982 is a collusive one, is answered against the
respondent, then as per the decision reported in 1994 (1) SCC 1 = AIR 1994
S.C.853 (S.P. CHENGALVARAYA NAIDU -VS- JAGANNATH) the appellant must suceed. In
paragraphs 1 and 7 therein, it is held as follows :-
“1. ‘Fraud-avoids all judicial acts, ecclesiastical or temporal’ observed
Chief Justice Edward Coke of England about three centuries ago. It is the
settled proposition of law that a judgment or decree obtained by playing fraud
on the court is a nullity and non est in the eyes of law. Such a
judgment/decree – by the first court or by the highest court – has to be treated
as a nullity by every court, whether superior or inferior. It can be challenged
in any court even in collateral proceedings.”
……
“5. The principle of ‘finality of litigation’ cannot be pressed to the
extent of such an absurdity that it becomes an engine of fraud in the hands of
dishonest litigants. The courts of law are meant for imparting justice between
the parties. One who comes to the court, must come with clean hands. We are
constrained to say that more often than not, process of the court is being
abused. Property-grabbers, tax-evaders, bank-loan-dodgers and other
unscrupulous persons from all walks of life find the court process a convenient
lever to retain the illegal-gains indefinitely. We have no hesitation to say
that a person whose case is based on falsehood, has no right to approach the
court. He can be summarily thrown out at any stage of the litigation.”
28. The learned counsel for the appellants relied on the decision in
Vengalaveeran Vs. Rajendran and 4 others (1997(II) CTC 371), where the decree
holders obtained an order of attachment on 05.06.1986 and the revision
petitioner is alleged to have been purchased the property on 16.6.1986. The
attachment was effected on 17.06.1986. This Court held that the petitioner as
well as his vendor with the full knowledge of the order of attachment had
executed the deed with the object of defeating the claims of the petitioner.
29. In this case, the appellate Court did not give a finding regarding the
question whether the respondent had the knowledge of the attachment and had
purchased the property to defeat the rights of the appellants. The trial Court
took an ambivalent stand and held that it is not possible to state whether the
appellants and K.Subbayya colluded to defeat the rights of the respondent and
filed O.S.No.23 of 1982 or whether the respondent and the said K.Subbayya had
colluded to defeat the right of the appellants and filed O.S.No.18 of 1982.
30. The learned counsel for the respondent relied on Padmavathi Ammal Vs.
M.Maruthachalam Pillai and others (1966(1) MLJ 413), wherein it was held that
when several steps as required under Order 21, Rule 54(2) have been in fact
taken, a presumption can be made, as to the regularity of the steps proved to
have been taken. But the presumption does not come in, when there is no evidence
that the act has been performed and that the mere report of the amin that “I
have attached” will not be sufficient to prove that everything needful to effect
a valid attachment has been made. It was held that a property purchased after an
invalid attachment in execution of a decree would not be affected by Section 64,
CPC.
31. So, the learned counsel for the respondent submits that when in
O.S.No.23 of 1982, the trial Court had ordered attachment on the date on which
the suit was taken on file, it cannot be said to have been complied with as
contemplated under Order 38 Rule 5(4), C.P.C. and therefore, Order 38 Rule 5(5)
will come into play.
32. We must also take note of Order 21 Rule 54 of the Code of Civil
Procedure. Sub-Rule 3 of Madras amendment reads as follows :-
“Madras – (a) Substitute the following for sub-rule (2) :
(2) The order shall be proclaimed at some place on or adjacent to such
property by beat of drum or other customary mode. A copy of the order shall be
affixed on a conspicuous part of the property and on a conspicuous part of the
Court-house. Where the property is land paying revenue tot he Government a copy
of the order shall be similarly affixed in the office of the Collector of the
district where the land is situated. Where the property is situated within
Cantonment limits, the order shall be similarly affixed in the office of the
Local Cantonment Board and the Military Estates Officer concerned, and where the
property is situated within the limits of municipality,in the office of the
Municipality within the limits of which the property is situated”.
(b) Add the following as sub-rule (3) :
(3) The order of attachment shall be deemed to have been made as against
transferees without consideration from the judgment-debtor from the date of the
order of attachment, and as against all other persons from the date on which
they respectively had knowledge of the order of attachment, or the date on which
the order was duly proclaimed under sub-rule(2), whichever is earlier.”
33. In Chinnasamy Vs. Subakmul Gulecha (AIR 2003 Madras 46), it was held
that since the appellants did not examine the persons who read out the order of
attachment and effected tom tom and since the mandatory formalities had been
complied with, the sale in favour of the appellants was hit by Section 64 of the
Code of Civil Procedure and therefore, void.
34. In the above circumstances, questions of law relating to the
applicability of Section 64(2) of the Civil Procedure Code, the applicability of
Section 55(4)(b) of the Transfer of Property Act and the entitlement of mesne
profits arise for consideration. These questions must be answered before
arriving at the correct decision; and for this, factual findings are necessary.
Therefore, the judgment and decree of the appellate Court is set aside and the
matter is remanded to the lower appellate Court. The lower appellate Court
shall hear the appeal afresh after affording an opportunity to both the parties
to adduce evidence, if necessary, then decide and give findings on the following
factual issues :
i) whether the respondent had knowledge of the fact that the appellants
are unpaid sellers?
ii) Whether the agreement entered into between the respondent and
K.Subbiah is a registered one and entered into bonafide?
iii) Whether the attachment effected in O.S.No.23 of 1982 is in accordance
with law?
iv) Whether the respondent is entitled to mesne profits and if so from
what date?
v) Whether the suit O.S.No.18 of 1982 is a collusive suit?
vi) Whether the suit O.S.No.23 of 1982 is a collusive suit?
35. The second appeal is, therefore, allowed and the matter is remanded to
the lower appellate Court. The appellate Court shall decide the matter without
being influenced in any way by any of the observations made in this judgment.
No costs.
To
1. The Subodinate Judge,
Ambasamudram. (with records)
2. The District Munsif,
Ambasamudram.
3. The Record Keeper, VR Section,
Madurai Bench of Madras High Court, Madurai.