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Mahadeo Prasad Vs. Anandi Lal and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad
Decided On
Judge
Reported inAIR1925All60; 92Ind.Cas.348
AppellantMahadeo Prasad
RespondentAnandi Lal and ors.
Excerpt:
transfer of property act (iv of 1882), sections 40, 100 - charge created by decree--enforcement against transferee for value without notice. - - on the findings of the district judge it must be held that there was sufficient to put the original defendant, sham lal, on enquiry, and that, if he had made any enquiry, he could not have failed to learn the true state of the case......was ultra vires, and it has not been relied on in argument in this court.5. in execution of this decree kalyan chand's interest in the houses was attached and brought to sale and was ultimately purchased by sham lal on 22nd march, 1919. sham lal got possession of the property on 27th march, 1920. he subsequently sold his rights to the appellant, mahadeo prasad. the latter was added as a defendant after the institution of the suit. the question for decision is whether sham lal's purchase was or was not subject of the charge created by the decree of 13th juno, 1918, in shoo nath's case, the benefit of which has now passed to the plaintiff.6. according to the definition in section 3 of the transfer of property act, a person is said to have notice of a fact not only been he actually knows.....
Judgment:

1. The question of law which is raised in this appeal is whether a charge which does not amount to a mortgage can be enforced against a transferee for value without notice of the charge. The Court below, relying on the decision in Maina v. Bachchi (1906) 28 All. 655 has held that it can. The appellant contests this proposition. The plaintiff-respondent supports it, but in addition contends that on the finding of fact of the Court below the question does not really arise. He relies also on the fact that the appellant's title was acquired at9 execution sale and not by private conveyance.

2. The property in dispute consists of a m half share in three houses Nos. 29, 45 and 66, situated in the city of Allahabad. The m plaintiff, Anandi Lai, was at the institution of the suit the holder of a decree for Rs. 704-9-0 against first defendant, Sham Lal, and seeks to enforce by the sale of these houses. The houses originally belonged to the plaintiff and his cousin, Kalyan Chand, in equal shares. One Sheo Nath obtained a decree against Kalyan Chand and attached his half share in the houses before judgment on 5th February, 1918.

3. The suit was finally decreed on 13th June, 1918 on the basis of a compromise which provided that the amount decreed in favour of Shoo Nath should constitute a charge on the property already under attachment. As an additional precaution the decree was registered. The rights of the decree-holder were purchased by the plaintiff Anandi Lal, who proceeded to put the decree in execution. The houses were put up to sale and purchased by one Badri Prasad, but the sale was set aside on the application of Sham Lal, and the plaintiff has in consequence brought the present suit to establish his right to have the half share in the houses attached and sold under his decree.

4. The claim of the appellant arises out of proceedings taken by Bulaki another creditor of Kalyan Chand, who brought a suit, No. 189 of 1918, against the latter and obtained a decree on 30th April, 1918. Before judgment Bulaki got an injunction, on 21st January, 1918, from the Small Cause Court restraining the judgment debtor from transferring the property. It is said by the learned District Judge that the issue of this injunction was ultra vires, and it has not been relied on in argument in this Court.

5. In execution of this decree Kalyan Chand's interest in the houses was attached and brought to sale and was ultimately purchased by Sham Lal on 22nd March, 1919. Sham Lal got possession of the property on 27th March, 1920. He subsequently sold his rights to the appellant, Mahadeo Prasad. The latter was added as a defendant after the institution of the suit. The question for decision is whether Sham Lal's purchase was or was not subject of the charge created by the decree of 13th Juno, 1918, in Shoo Nath's case, the benefit of which has now passed to the plaintiff.

6. According to the definition in Section 3 of the Transfer of Property Act, a person is said to have notice of a fact not only been he actually knows it but when he could have been aware of it but for wilful abstention from such inquiry or search as he ought to have made. Now in this case the purchaser, Sham Lal, knew that a previous suit had been filed against Kalyan Chand for he had actually been summoned as a witness in that suit. He was summoned for the very day on which the compromise decree was passed. As he professes not to know whether lie attended the Court or not (a fact which ho could not possibly have forgotten), the probability is that be really was there. In any case ho knew enough to make it incumbent on him to ascertain before buying the property, what had happened in the previous suit and whether the creditor having got decree had taken any stops against the property which would affect the title of a subsequent purchaser.

7. This is substantially what the District Judge finds, though, he has put his finding in the somewhat indefinite form that the facts 'strongly suggest' that Sham Lal knew more about the proceedings in the former case than he is now prepared to admit. The learned Judge further points out that the decree-holder, by registering his decree, had done everything possible to give notice to any one who might contemplate buying the decree. On the findings of the District Judge it must be held that there was sufficient to put the original defendant, Sham Lal, on enquiry, and that, if he had made any enquiry, he could not have failed to learn the true state of the case. He must, therefore, be held to have notice of the plaintiff's charge within the meaning of the definition in Section 3 of the Act.

8. This really concludes the case. But we may say that we are not disposed to differ from Sir Henry Richards view, in Maina v. Bachchi (1906) 28 All. 655, that the position of a charge-holder, under the Transfer of Property Act, is stronger than that of a person holding a merely equitable charge under English law, and that though there may be cases in which a mere equitable claim will not be enforced against bona fide transferees for value without notice, yet

It is much too broad a proposition to state that in all cases where by act of parties or operation of law, immovable property of one person is made security for payment of money to another and the transaction does not amount to a mortgage, the security will not be enforced even against such transferees.

9. The general rule is that whore the owner of property creates successive rights by different transactions entered into at different times, the rights will, in the absence of special circumstances, take effect in order of priority.

10. On the other hand, Section 40 of the Transfer of Property Act lays down that a right arising out of contract and not amounting to an interest or an easement, cannot be enforced against a transferee for value without notice. In this case the right was not a merely contractual right but an obligation embodied in a decree. It is also to be remembered that Sham Lal was an execution purchaser who bought the interest of the judgment-debtor as it stood on the date of the decree.

11. There are two Calcutta judgments, Royzuddi Sheik v. Kali Nath Mookerjee [1906] 33 Cal. 985 and Akhoy Kumar Banarjee v. Corporation of Calcutta [1914] 42 Cal. 625 both delivered by Mr. Justice Mookerjee, which lay down in general terms that a charge cannot be enforced against a transferee for value without notice. But in neither of these cases did the decision actually turn on this question. In the earlier case the document relied on as creating a charge was held to be invalid and in the later case the later transferee was found to have had notice of the charge.

12. For the reasons given, we dismiss the appeal with costs including in this Court-fees on the higher scale.


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