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P.G. Munnuswami Reddi Vs. P.R. Panduranga Chetty - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAndhra Pradesh High Court
Decided On
Case NumberSecond Appeal No. 147 of 1976
Judge
Reported inAIR1978AP47
ActsCode of Civil Procedure (CPC), 1908 - Sections 64 and 94 - Order 21, Rules 62, 66 and 94
AppellantP.G. Munnuswami Reddi
RespondentP.R. Panduranga Chetty
Appellant AdvocateR. Venugopal Reddy, Adv.
Respondent AdvocateN. Ramamohan Rao, Adv.
Excerpt:
.....62.66 and 94 of code of civil procedure, 1908 - in recovery proceedings initiated by respondent suit property was attached - appellant was purchaser of property in court auction and claimed right over it - respondent contended that property was subject to impugned mortgage deed - sale certificate showed that sale was subject to mortgage deeds which were prior to date of attachment - no reference of impugned mortgage was made in sale certificate - respondent further contended that no notice was given to mortgagee under impugned mortgage deed under order 21 rule 62 - said provision does not speak of mortgage created subsequent to attachment - question of notice did not arise - appeal accordingly allowed. - - an auction purchaser gets title to the property free of any encumbrance or..........the learned counsel for the appellant mainly contended that the 3rd defendant purchased the suit property in a court sale and the sale certificate issued by the court did not state that the sale is subject to the mortgage dated 22-3-1966 but it was only subject to two mortgages dated 6-5-1965 prior to the attachment and therefore the learned principal district munsif rightly decreed the suit as against the 1st and 2nd defendants but dismissed it against the 3rd defendant. but the lower appellate court erred in law in decreeing the suit against the 3rd defendant also.3. to appreciate the above contention, it is necessary to note a few relevant facts of the case. one p. kannaiah reddy filed o.s. 169/65 in the court of the principal dist. munsif, chittoor against the 1st defendant to.....
Judgment:

1. This second appeal is filed by the 3rd defendant on O.S. No. 131 of 1970 against the judgment and decree passed by the District Judge, Chittoor in A.S. No. 140/72 allowing the appeal and decreeing the suit against the 3rd defendant also along with defendants 1 and 2 by setting aside the judgment and decree passed by the principal Dist.Munsif Chittor in the said suit, who dismissed the suit against the 3rd defendant.

2. The learned counsel for the appellant mainly contended that the 3rd defendant purchased the suit property in a court sale and the sale certificate issued by the Court did not state that the sale is subject to the mortgage dated 22-3-1966 but it was only subject to two mortgages dated 6-5-1965 prior to the attachment and therefore the learned Principal District Munsif rightly decreed the suit as against the 1st and 2nd defendants but dismissed it against the 3rd defendant. But the lower appellate court erred in law in decreeing the suit against the 3rd defendant also.

3. To appreciate the above contention, it is necessary to note a few relevant facts of the case. One P. Kannaiah Reddy filed O.S. 169/65 in the court of the Principal Dist. Munsif, Chittoor against the 1st defendant to recover a certain amount due under a promissory note dated 5-1-1965 and obtained an attachment before judgment in I.A. 895/65 on 26-9-1965 in respect of the plaint schedule property of the 1st defendant. The said attachment was also made absolute. The suit was decreed and subsequently in execution of the decree the property was purchased by the 3rd defendant in a court auction held on 5-1-1970. The sale was confirmed and a sale certificate was issued and possession was delivered to the 3rd defendant. The present suit was filed for recovery of Rs.4,031.25 ps due under a mortgage deed executed on 22-3-1966 in respect of the plaint schedule house. The interest was claimed at 15% per anum. The defendants did not pay the amount. It was alleged that the 3rd defendant is a purchaser of the equity of redemption in execution of the decree obtained by P. Kannaiah Reddy in E.P. No. 200/69 in O.S. No. 169/65 on the file of the Principal District Munsif's Court Chittoor and hence the present suit was filed.

4. The 3rd defendant alleged that the suit mortgage deed was executed by the 1st and 2nd defendants in favour of the plaintiff when the property was under attachment. The mortgage, even if true, is void and unenforceable and therefore the suit is liable to be dismissed.

5. After recording the evidence, on the basis of the material available the trial court held that the 1st and 2nd defendants mortgaged the suit property in favour of the plaintiff and received the amount mentioned in the deed. It was also held that the 3rd defendant is a purchaser of the equity of reemption in court auction sale held in E.P. No. 200/69 in O.S. 169/65 on the file of the Principal Dist. Muncsif Court, Chittoor. It further held that the hypotheca was attached on 26-9-1965 prior to the execution of the suit mortgage deed and that the property was sold free of this mortgage to the 3rd defendant. It also held that the plaintiff is entitled for a personal decree against defendants 1 and 2 as he is not able to realise the suit amount by sale of hypotheca. The trial court was of the view that if an appeal is filed against the raising of attachment and if it is allowed by restoring the attachment it relates back to the date of original attachment. In the instant case, the trial court raised the attachment in I.A. No. 895/65 and the order of attachment was made absolute. The trial Court was of the view that when the attachment was first made, that will render invalid any alienation made in the interium period. In the result, it dismissed the suit as against the 3rd defendant but decreed the suit for money against the 1st and 2nd defendants.

6. The point framed by the appellate Court for consideration is whether the appellate- 3rd defendant is bound by Ex. A1. The appellate Court was also of the view that when once C.M.A. 7/66 was allowed the attachment before attachment effected in I.A. No. 895/65 in O.S. 169/65 was revived and restored, i.e. the attachment must be deemed to be in force on the date of Ex. A-1 . But the learned Judge further held that under section 64 of the Civil procedure Code, all the alienation made after attachment has been effected are not invalidated and do not become void. On the other hand the provisions of Section 64 C.P.C. lay down that where an attachment has been made, any private transfer of the attached property contrary to such attachment shall be void as against all claims enforceable under the attachment. Thus the effect of execution of Ex. A-1 after the attachment order was only to make the alienation evidenced by Ex.A-1 subject to the rights to be enforced against the 1st defendant in O.S. No. 169/65. The learned Judge also held that the property as brought to sale notwithstanding Ex.A-1 and purchased by the appellant-3rd defendant in court auction. According to the learned Judge, the appellant purchased in the court auction only the equity of redemption which the first defendant in the suit had in the suit property. It was further held that Ex. B.6 sale proclamation showed that the property was brought to sale subject to the two mortgages executed prior to the date of attachment and also there is an entry relating to Ex.A-1 describing it as nominal. Therefore, the learned Judge was of the view that it was not for P.Kannaiah Reddy, the decree-holder to state that Ex.A-1 was nominal or a genuine transaction. Further he observed that no notice under O. 21 R. 62 C.P.C. was issued to the decree-holder-plaintiff directing him to show cause why the properties should not be sold free of the encumbrance evidenced by Ex..A-1. Therefore the learned Judge held that in the absence of any notice it is not open for the 3rd defendant to contend that he purchased the property in court sale free of encumbrances evidenced by Ex.A-1 and that the decree-holder-plaintiff cannot enforce Ex.A-1 against the suit property. Thus he held that the trial court was wrong in dismissing the suit against the 3rd defendant. Hence he decreed the suit against the 3rd defendant also.

7. The learned counsel for the appellant submitted that when once the court held that there was an attachment at the time when Ex.A-1 was executed by defendants 1 and 2 , the real point for consideration is whether such a transaction under Ex.A-1 is valid and enforceable. But this was not considered by the learned Judge though the trial Court took that aspect into consideration and held that the alienation during the attachment is invalid and therefore, cannot be enforced. The learned counsel for the appellant referred to Srinivasa Aiyangar v. Vellayan Ambalam AIR 1926 Mad 966, wherein a Bench of the Madras High Court consisting of Devadoss and Waller, JJ. Held thus ( at pp. 966-967 )

' When the property is sold in Court auction what is sold is the right title and interest of the judgment-debtor as it is on the date of the sale, and any private alienation or transfer pending the attachment is void against all claims enforceable under the attachment. Under S. 64 of the Civil P.C. an auction purchaser gets title to the property free of any encumbrance or any title created by the judgment-debtor after the property was on the date of the attachment to the prejudice of the attaching creditor cannot avail against the judgment-creditor as well as the auction - purchaser. The auction- purchaser gets it free from any encumbrance or any burden that might have been created by the judgment-debtor after the date of the attachment'.

The Bench in this connection also referred to Dinendrenath Sannyal v. Ramcomer Choe (1880) 8 Ind App 65 (PC), wherein Sir Barnes Peacock in delivering the judgent of their Lordships of the Privy Council observed :

'Under (a private sale) the purchaser derives title through the vendor and cannot acquire a better title than that of the vendor. Under (a sale in execution of a decree) the purchaser not withstanding he acquires merely the right, title and interest of the judgment-debtor, acquires that title by operation of law adversely to the judgment-debtor and freed from all alienations or incumbrances effected by him subsequent to the attachment of the property sold in execution.'

The same principle was also laid down in Girijanath Roy v. Upendra Nath Pal (1913) 20 Ind cas 241 (Cal) in which it was held thus :

'If the mortgaged property was under attachment in execution of a decree when the mortgage was executed, the mortgage would be inoperative under S. 276 of the Civil P. C. Of 1882 against the execution purchaser, although the decree-holder was not prejudicially affected by the mortgage.'

This was further made clear in Subba Reddi v. Jaya Ramayya, AIR 1923 Mad 659, in which it was held that a person who has purchased a property during attachment cannot apply to set aside the court auction sale as the conveyance to him is void gainst the claims enforceable under the attachment. The principles of these decisions is that any private transaction or any title created by the judgement-debtor pending the attachment cannot in any way affect the right of the attaching creditor to have the property sold and delivered free of the title created by the judgment-debtor. The provisions of Section 64 C. P. C. Are clear in its terms that no one gets a title from a judgment-debtor pending attachment against the attaching creditor or the execution purchaser. Thus the rights of the attaching creditor as well as the execution purchaser are protected as against an alienation pending attachment of the property. Thus the transactions entered into by the judgment-debtor during the pendency of the attachment are of no consequence either against the attaching creditor or the execution purchaser. Even in Annapurna Patrani, : AIR1950Mad740 , it was held by a Bench of the Madras High Court that the appellate order restoring attachment would relate back to the date when the attachment was first made and would render invalid any alienation in the interim period. The learned counsel for the appellant also relied on M/s. Supreme General Films Exchange Ltd. V. Brijnath Singhji Deo, : [1976]1SCR237 , in which the Supreme Court, dealing with a lease executed during the attachment held that such lease of the theatre in question was struck with the doctrine of lis pendens in those circumstances.

8. There is no doubt that when Ex. A-1 was executed the attachment was subsisting and in view of the principle laid down by the above authorities the same could neither affect the right of the decree-holder nor that of the auction purchaser in execution.

9. The appellate court was of the view that when Ex.A-1 was referred to Ex.B.6 it must be deemed that the auction purchaser had notice of the same and he purchased the property subject to that encumbrance also. It was stated in Ex.B.6 that it was a nominal one. To test whether Ex. A-1 is binding on the purchaser or not it is not the entry in Ex.B.6, the sale proclamation that is conclusive but it is the sale certificate that was issued in consequence of the sale held by the Court. Ex.B.1 is a sale certificate which reads as under.

' This is to certify that P.C. Munuswami Reddy has been declared the auction purchaser at a sale by public auction held on the 5th day of January 1970, of the immoveable property described hereunder, in execution of the decree in this suit and that the sale has been duly confirmed by this court on the 10th day of February 1970. Sale price Rs. 900/- subject to mortgages dated 6-5-65 and 14-7-65.

Given under my hand and the seal of this Court this the 10th day of February, 1970, being the date of confirmation of sale.

Sd/- xxx

Prl. Dist Munsif.'

This certificate which is conclusive shows that the sale is subject to two mortgages which are prior to the date of attachment and there is no reference to Ex.A-1 which was entered in the sale proclamation as nominal and of which no Cognizance was taken either at the time of auction or while confirming the sale and issuing the said certificate. Under O.21 R 94 C.P.C. if the sale becomes absolute, a sale certificate will be issued to the purchaser of the immoveable property has become absolute, the Court will grant a certificate specifying the property sold and the name of the person who at the time of sale is declared to be the auction purchaser and such certificate shall bear the date on which the sale became absolute. Thus, this also makes it clear that the sale held by the Court is not subject to the third mortgage under Ex.A-1 created during the attachment. The learned counsel for the respondent conversely contended that the provisions of S.64 C.P.C. protect the interest of only the decree-holder but not the auction-purchaser.

10. In view of the above discussion, the submission made by the learned counsel for the respondent is untenable.

11. The other minor ground taken by the lower appellate court is that no notice was given to the mortgagee under Ex.A-1 under O.21 R.62 C.P.C. read as under:-

' Where the Court is satisfied that the property is subject to a mortgage or charge in favour of some person not in possession, and thinks fit to continue the attachment it may do so, subject to such mortgage or charge'.

The language employed in the said provisions is so clear that there is no ambiguity left in it. At the time of attachment when there is any mortgage or charge, it is in the discretion of the court to continue the attachment subject to the said mortgage or charge. It does not speak of charge or mortgage created subsequent to attachment. Therefore , the question of issue of a notice to a mortgage in whose favour the property is mortgaged subsequent to the attachment does not arise. No notice is contemplated under Section 64 C.P.C. Hence the provisions under O.21 R.62 C.P.C. are not applicable.

12. For the above reasons, the judgment of the lower court is unsustainable. In the result, the appeal is allowed and the judgment and decree of the learned District Judge are set aside and the judgment and decree of the principal District Munsif are restored. In the circumstances, the parties will bear their own costs in this appeal

13. Appeal allowed


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