1. The facts material to this second appeal are as follows.
2. In 1918, three darkhasts based on money decrees were filed against two brothers, Bapuji Ramchandra and Bhikaji Ramchandra Patil, by (1) the Zendes, (2) Mategaonkar, and (3) Damodar, respectively. Out of these parties the Zendes had obtained attachment before judgment on the three suit survey numbers and some others and Damodar got an attachment in execution on the three suit survey numbers and one another. On March 22, 1919, the Zendes' darkhast was transferred to the Collector and the darkhasts of Mategaonkar and Damodar were kept pending with the Court for rateable distribution of assets. Eventually March 4, 1932, was fixed by the Collector for the sale of the judgment-debtor's property. But on March 3, 1922, the Zendes and Mategaonkar presented a joint application to the Court which, after referring to the darkhast, says : 'In the said darkhast the plaintiff and the defendant have come to a settlement that upon the property of the defendant which has been attached, a charge should be created for the amount due to plaintiff and award be made through panch. Therefore, both parties should be given permission to obtain an award' In fact, however, the award had been made the day before and it was filed along with the application. The order of the Court below on the application began : 'The terms of the compromise which has resulted in the award which is filed today do not appear to be unreasonable'. Then after stating why the terms were reasonable the order concludes : 'I therefore allow the parties to mortgage the properties.' The terms of the award were that instalments were fixed for the payment of the decretal debts, that the Patils' property was mortgaged for their satisfaction, and that right to possession was given to the decree-holders in case the instalments were not paid on the due dates, On the face of it, this application was a certification of an adjustment under Order XXI, Rule 2, and as I understand the Sub-Judge's order he so regarded it. It was, however, for some reason which is not apparent, treated as an application under paragraph 20 of Schedule II to the Code of Civil Procedure and was numbered as a suit, and a formal decree embodying the award was drawn up. After this the Zendes' darkhast and Mategaonkar's darkhast were struck off and Damodar's darkhast was sent to the Collector for execution against four survey numbers which had been attached. The Collector issued the usual general notice asking for claims against the attached property and Mategaonkar and the Zendes preferred their claims. In the patrak of immovable property sold by the Collector in execution of the civil darkhasts these claims are noted, and the reserve price fixed by the Collectai was fixed with reference to them. In the sale proclamation, however, the charge is mentioned and the value of the property is not stated. At the sale Damodar himself bid and bought the three suit properties for Rs. 240 although the ponchos' valuation as shown in the patrka is Rs. 4,000 and the Collector's valuation is Rs. 1,719.
2. Then in 1925, the Patils having failed to pay instalments, the Zendes and Mategaonkar attempted to get possession of the suit and other survey numbers in accordance with the award decree, and filed a darkhast for that purpose. The trial Court held that the award decree was invalid and dismissed the darkhast. But on appeal the District Court allowed the darkhast and awarded possession. On a reference to this Court it was held that as regards the suit survey numbers the question did not fall within the scope of Section 47 of the Civil Procedure Code, as Damodar who was in possession was not a representative of the judgment-debtor, that as against Damodar the Zendes' application must be regarded as an application under Order XXI, Rule 97, that no appeal lay to the District Court and that the Zendes and Mategaonkar if they were not satisfied with the trial Court's rejection of their claim against Damodar, must proceed by way of a separate suit. The Zendes and Mategaonkar therefore filed the suit out of which this appeal has arisen, joining as defendants the Patils and Damodar.
3. Damodar who alone contested this suit contended, firstly, that the award decree was void under Section 64 of the Civil Procedure Code which prohibits a private transfer of property under attachment, and further that the mortgage was incompetent under paragraph 11 of the third schedule to the Civil Procedure Code which renders any alienation of property by the judgment-debtor incompetent as long as the darkhast is in the hands of the Collector. He further contended that the award was collusive and fraudulent. The trial Court found in his favour on all these points and dismissed the suit. The lower appellate Court, however, took a different view. It held that there was no evidence of fraud and collusion, that the award having been made under a decree of the Court, was not a 'private transfer' within the meaning of Section 64, and that as the award terminated proceedings before the Collector, it was not incompetent under paragraph 11 of Schedule III. The Court also held that Damodar was aware of the Zendes' and Mategaonkar's charge when he purchased the suit survey numbers, and having got them on that account at a very low price, he was estopped from questioning the validity of the charge.
4. I will deal with the question of Section 64 of the Civil Procedure Code. The lower Court relies on Narayana Ayyar v. Biyari Bivi I.L.R. (1921) Mad. 103. In that case the Court upheld an award embodied in a decree made during an attachment and remarked that it was not proved that 'the reference to arbitration was collusive and the whole proceedings a device to invest a private arrangement between the parties with the appearance of a public adjudication.' This case follows an earlier ruling of the Allahabad High Court, Qurbm Ali v. Ashraf Ali I.L.R. (1882) All. 219. We have further been referred to the ruling of the Privy Council in Mohammad Afzal Khan v. Abdul Rahman (1932) L.R. 59 IndAp 405 : S.C. 35 Bom. L.R. 1. In that case certain property belonging to a joint family had been attached under a decree against one of the coparceners. While the attachment was in force the coparceners went to arbitration for a partition. In the partition made by the arbitrators, which was later made a decree of Court, the attached survey numbers went to the share of another coparcener. It was held that the partition decree was not void under Section 64 of the Civil Procedure Code.
5. Mr. Desai seeks to distinguish these cases on the ground that in all of them there was a genuine arbitration and award while in the present case there was no arbitration at all, but merely a private arrangement between the parties drawn up in the form of an award. On the facts we think that this distinction may justifiably be drawn. The application itself says : 'The plaintiff and the defendant have come to a settlement that upon the property of the defendant which has been attached, a charge should be created.' This certainly does not suggest that anything was left for the ponchos to decide. Further, plaintiff No. 1, Ramchandra Zende, states in his evidence, 'Settlement was arrived at in the form of an award', which can only be interpreted to mean that the award was not a genuine one. Mr. Kane for respondents suggests that the parties settled between themselves that the property should be charged and left it to the pmchas to settle the details of the amounts and dates of the instalments. If this is correct, then the charge on the Patils' property which it is now sought to enforce was an act of the parties themselves and not of the arbitrators.
6. The next question is whether this distinction takes the present case out of the rule in the cases to which I have referred. In my opinion it does. It seems to me that the meaning of a 'private transfer' in Section 64 is a transfer which is brought about solely by the act of parties and not as a result of any judicial decision. The wording of the judgment in Narayma Ayyar v. Biyari Bivi rather suggests that the learned Judges considered that a device to invest a private arrangement between the parties with the appearance of a public adjudication was in itself a collusive, though not necessarily a fraudulent, transaction and this is the meaning that has been given to 'collusive' as used in Section 52 of the Transfer? of Property Act. (See Mulla's Transfer of Property Act, 2nd edn., p. 222, where the learned author says : 'A collusive suit is not a real suit at all, not a battle, but a sham fight'. He then quotes several cases in support of this definition). If this is so, then the present transaction was undoubtedly collusive. In the cases cited there was apparently a genuine reference and a genuine award, at any rate, it was never argued that the transaction was collusive. I therefore think this case may fairly be distinguished from the cases cited on this ground. In my view, the transaction by which the Patils' property was charged for the decrees of Mategaonkar and the Zendes was essentially a private transaction and was void under Section 64 of the Code of Civil Procedure owing to the prior attachment of Damodar.
7. We, therefore, allow the appeal set aside the decree of the lower appellate Court and restore the decree of the trial Court. The appellant's costs in this Court and the lower appellate Court must be borne by the original plaintiffs.
8. As we are differing from the Court of first appeal, I wish to add a very few words with reference to the Privy Council case, Mohammad Ajzal Khan v. Abdul Rahman (1932) L.R. 59 IndAp 405 : 35 Bom. L.R.1, on which the learned advocate for the respondents mainly relied. The facts there were that a partition decree relating to the properties of a joint family was made after a reference to arbitration without the intervention of the Court. The award was filed in Court and a decree was passed thereon. It was held by their Lordships that the transfer of property made under this decree was not a 'private transfer' within the meaning of Section 64 so as to make it void as against claims enforceable under an attachment obtained by a mortgagee of an undivided share in the family properties. In this case it is evident, I think, that it was a genuine arbitration and the transfer of property which took place was not by the voluntary act of the parties but in invites. In the course of his judgment Sir Dinshah Mulla made this observation (p. 412) :
.if the party against whom the decree is passed fails to transfer the property as required by the decree, the transfer may be enforced by proceedings in execution, and this is what actually happened in the present case. The third respondent did not deliver possession to the first and second respondents of the properties allotted to them under the decree until after execution had been taken out against him. Such a transfer cannot be said to be a private transfer within the meaning of Section 64, because the initial step which led eventually to the decree was not a suit for partition but an agreement to refer the question of partition to arbitration.
9. I do not think, however, that their Lordships intended to lay down that the mere fact that, if the transfer is disputed, it can be enforced by proceedings in execution, will prevent it being a private transfer. Obviously an ordinary sale or mortgage can be enforced by Court proceedings if the vendor or the. mortgagor disputes the transaction. In every case, I think, the Court must look at the substance of the transaction. If in reality there has been a transfer by the private act of the parties, it does not cease to be a private transfer by being given the appearance of a public adjudication. I agree with my learned brother that in the present case the transfer was essentially a private one and the Court was merely asked to give its permission to it.
10. There has been a certain amount of arguments before us on the point of estoppel. The Court of first appeal held that the appellant is estopped from questioning the validity of the charge created by the award decree because according to its finding the charge was specifically kept by the Mamlatdar and the appellant purchased the property with knowledge thereof. I think that the nature of the proceedings held before the Mamlatdar does suggest that Damodar must have been aware of the charges claimed by the Zendes and Mategaonkar, even though for some unexplained reason they were not mentioned in the sale proclamation. The appellant did not go into the witness-box to support his contention that he was ignorant of these claims. But assuming that he knew of them, that fact cannot in my opinion prevent him from contesting the validity of the claims. This was not a case in which the Court, after being satisfied of the existence of a charge, sells only the judgment-debtor's right subject to the charge. All that happened was that the appellant purchased the property with notice of the charges and subject to such risks as this notice might involve. There is, therefore, no question of estoppel, and Mr. Kane in dealing with this point did not suggest that there could be. He argued that the appellant should be taken to have waived his right to object. I think, however, that there is no substance in that argument either. What it comes to is this : it is argued that the appellant should have objected to the fact that the sale proclamation and the sale certificate granted to him did not contain any mention of the charges in favour of the Zendes and Mategaonkar. But obviously there is no reason whatever why he should have objected, his case being that the charges were invalid and not binding upon him. I agree that the appeal should be allowed.