1. The solitary question that arises for decision in this revision petition is whether the security bond tendered by the petitioner and respondents 3 to 7 herein, in O.S. No. 7 of 1957 in the Court of the learned District Judge, Shimoga, in pursuance of the Order of this Court in I. A. No. I, in R.F.A. No. 77 of 1962 on the file of this Court, requires to be registered under Section 17(1) of the Indian Registration Act. The Court below has come to the conclusion that the same requires to be registered. The petitioner has come up in revision against that order. This matter originally came up before our learned brother Hombe Gowda, J., sitting singly. His Lordship referred the matter to a Division Bench as there is sharp cleavage of judicial opinion.
The question of law referred to us for decision is not free from difficulty. As mentioned by Hombe Gowda, J. on that question the judicial opinion is sharply divided. Further, unless we are thoroughly convinced that the view taken by the Bombay High Court in Jayappa Lokappa v. Shivangouda Dyamangouda AIR 1928 Bom 42 is clearly wrong, it would be inappropriate to disturb a well settled position in law and thereby render invalid numerous unregistered security bonds that must have been executed in various Courts in the 'Bombay area' of the Mysore State following the decision of the Bombay High Court referred to above. It is not correct to proceed on the basis that questions of law can be divorced from facts of life and can or should be treated as mere subjects for mental exercise without regard to the consequences that may ensue as a result of the decision rendered.
2. Due to divergence of judicial opinion, naturally the practice followed in any particular subordinate Court depended on the interpretation given by the High Court to which it was subordinate. The present Mysore State comprises areas that have come from live different States. These areas before the States Reorganisation in 1956 were subject to the jurisdiction of four different High Courts. If we accept the view that security bonds executed in pursuance of orders under Rule 5 or 6 of Order 41 C. P. C. require to be registered, then those security bonds that have not been registered and which cannot be registered now will have to be held as invalid. But, on the other hand, if it is reasonably possible to hold that those security bonds do not require registration, then our decision will not have any adverse effect on the security bonds executed uptill now. It is true that this approach of ours is essentially a practical approach and however beneficial that approach may be the same cannot be adopted if law on the point is clear and unambiguous. Bearing in mind this background we shall now proceed to pronounce on the point in controversy.
3. Undoubtedly, the security bond in dispute falls within the ambit of Section 17(1)(b) of the Registration Act. The question is whether it is exempted from registration in view of Section 17(2)(vi). The petitioner contends that it is and the contesting respondents assert that it is not. Section 17(2)(vi) says that nothing in Clauses (b) and (c) of Sub-section (1) applies to any decree or order of a Court except a decree or order expressed to be made on a compromise and comprising immovable property other than that which is the subject-matter of the suit or proceeding. Can a security bond executed in favour of a Court, when accepted by the Court despite the fact that it is not registered be said to be an 'Order' within the meaning of that word in Section 17(2)(vi) The decisions that have answered that question in the affirmative have taken their inspiration from the decision of the Judicial Committee in Bindesri Naik v. Ganga Saran Sahu, ILR 20 All 171 (PC) wherein it was held that Section 17 of the Registration Act (Act III of 1877) does not apply to proper judicial proceedings whether consisting of pleadings filed by the parties or orders made by the Court. These observations undoubtedly support the contention of the petitioner. Again the Judicial Committee observed in Pranal Annee v. Lakshmi Annee, ILR 22 Mad 508 (PC):
'The razinamah was not registered in accordance with the Act of 1877; but the objection founded upon its non-registration does not in their Lordships' opinion, apply to its stipulations and provisions in so far as those were incorporated with and given effect to by, the order made upon it by the subordinate Judge in the suit of 1895. The razinamah, in so far as it was submitted to and was acted upon judicially by the learned Judge was in itself a step of judicial procedure not requiring registration...............,,....'
The above decision was quoted with approval by the Judicial Committee in Hemanta Kumari Debi v. Midnapur Zamindari Co. AIR 1919 PC 79. Though the effect of the above quoted decisions to the extent they cover compromise decrees comprising immoveable property other than that which is the subject matter of the suit or proceeding is taken away in view of the amendment of Section 17(2)(vi) in 1929, they still appear to hold good in other respects.
4. Now we shall proceed to consider the decisions of the High Courts in India, which were brought to our notice at the hearing of this petition.
5. We shall first take up the decisions which take the view that the security bonds executed in favour of Courts need not be registered. A Bench of the Bombay High Court in AIR 1928 Bom 42 held that a security bond, being a part of judicial proceedings and incorporated with it, the provisions of Section 17 of the Registration Act, do not apply to it, as proper judicial proceedings whether consisting of pleadings hide by the parties or of orders made by the Court, do not require registration. The learned Judges thought that that conclusion cannot be avoided in view of the decisions of the Judicial Committee in ILR 20 All 171 (PC); ILR 22 Mad 508 (PC) and AIR 1919 PC 79. Their Lordships dissented from the view taken by the Madras High Court in Nagaruru Sambayya v. Tangatur Subbayya, ILR 31 Mad 330.
Then we have the Pull Bench decision of the Lahore High Court in Kasturi Lal v. Goverdhan Das AIR 1934 Lah 138 (FB), wherein the Full Bench overruling an earlier decision given by Martineau, J. ana differing from the decision of the Madras High Court in ILR 31 Mad 330, but following the decisions of the Judicial Committee referred to earlier and agreeing with the decision of the Bombay High Court in AIR 1928 Bom 42 held that a security bond executed in accordance with an order passed under Order 41, Rules 5 and 6 staying execution of a decree pending decision of the appeal, whereby the surety hypothecated his immovable property for satisfaction of such decree as might be passed by the appellate Court, and which was duly accepted by the Court and execution stayed accordingly, does not require registration as it is a step in judicial proceeding and the decree-holders can move the Court to realise the decretal amount from the immovable property of the surety mentioned in the bond, even though it had not been registered. The Bombay view commended itself to the Nagpur High Court in Dadoo Balaji Korku v. Kanhailal Dhanaram. AIR 1947 Nag 26 to the High Court of Punjab in Basant Lal Khacheru Ram v. Jagdish Parsbad Kishan Chand and the Madhya Pradesh High Court in Hajijiwakhan v. Gulabchand Harakchand : AIR1961MP2 .
6. For the contrary view the leading authority cited is the decision of the Madras High Court in ILR 31 Mad 330. In that case, their Lordships held that a security bond executed in that case in pursuance of an order of the Court under Order 41, Rule 6, amounted to a mortgage within the meaning of Section 58 of the Transfer of Property Act and, not being registered, was invalid under Section 59 of the Transfer of Property Act and did not affect the property. It further held therein that the bond was compulsorily registrable under Section 17 of the Indian Registration Act. In the view of their Lordships, the words 'security accepted' merely showed that the Court thought the security was sufficient. The Court was of the view that the bond does not derive its validity from those words, and it cannot therefore be brought within Section 17(2) of the Registration Act. The Court opined that the view taken by them is not inconsistent with the decisions of the Judicial Committee in ILR 22 Mad 508 (PC) and ILR 20 All 171 (PC). But it is not made clear therein, how the Court was able to come to the conclusion that tendering of security bond was not a step of judicial procedure.
7. A Division Bench of the Rangoon High Court held in A. S. P. S. S. Chettyar Firm v. Lloyds Bank AIR 1935 Rang 168 that a security bond executed by the judgment-debtor pursuant to the decree is not exempt from registration and the Court by merely approving the substance of it, cannot or purport to convert it into operative, valid and admissible document of title. Page, C. J. who delivered the judgment of the Bench did not agree with, the view taken in AIR 1928 Bom 42 and AIR 1934 Lah 138 (FB). He observed that the decisions of the Judicial Committee referred to earlier do not support the view taken by the Bombay and the Lahore High Courts. Quite clearly the learned Judges in the Rangoon case were for placing a narrow interpretation on the decisions of the Judicial Committee.
8. Courts in India before 26-1-1950 were bound by the ratio of any decision rendered by the Judicial Committee. The decision in ILR 20 All 171 (PC) was rendered as early as on 8-12-1897. Several of the High Courts in India have followed the ratio of that decision. Therefore, it is not proper now to get round that decision whatever view one might take about the correctness of that decision.
9. The view taken by the Rangoon High Court in the above case was accepted as correct by the Kerala High Court in R.M. Palat v. P. A. Nadungadi : AIR1958Ker377 (FB) by the Assam High Court in Rivers Steam Navigation Co., Ltd. v. Jalim Mulla AIR 1957 Assam 157 by the Allahabad High Court in Bishnath Sahu v. Prayag Din : AIR1958All820 by the Patna High Court in Chiranjilal Agarwala v. Chittaranjan Mukherjee : AIR1960Pat305 and by the Calcutta High Court in Kasemali v. Ajoyendu Paul : AIR1956Cal375 .
10. If we are to be merely guided by the language of Section 17(2)(vi) of the Registration Act, there is much to be said in favour of the view that a security bond which creates a charge not mortgage as observed by the Madras High Court in ILR 31 Mad 330 over immoveable property is required by Section 17(1) of the Registration Act to be registered, and the same does not fall within the scope of the expression 'order' found in Section 17(2)(vi) and consequently not exempted from registration. But, as mentioned earlier, we are not writing on a clean slate and it is neither desirable nor proper to ignore what has happened in the past. Nor are we in a position to say that the decisions that have taken the view on the reported authority by ILR 20 All 171 (PC) that a security bond executed in favour of a Court is a step of judicial procedure and therefore exempt front registration have proceeded on an incorrect reading of the decision in question.
11. Courts should hesitate to disturb a view of the law which had been accepted as correct by several High Courts and transactions entered into on that basis. If it is otherwise, interests of innocent parties will be injured.
12. There is a basis for the grievance of the decree-holder that if the security bond given is not registered the possibility of the property given as security being sold and purchased by a bona fide purchaser for value without notice of the security cannot be overlooked and if that happens his rights may be defeated. But that is a matter for the Legislature to consider.
13. For the reasons mentioned above, the petition is allowed and the order of the Court below directing that the security bond given should be registered is set aside.
14. In the circumstances of the case, there wild be no order as to costs.