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Mohammad HussaIn Vs. Rahimbhai and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMadhya Pradesh High Court
Decided On
Case NumberCivil First Appeal No. 112 of 1977
Judge
Reported inAIR1978MP181
ActsCode of Civil Procedure (CPC) , 1908 - Order 41, Rule 5
AppellantMohammad Hussain
RespondentRahimbhai and ors.
Cases ReferredRegistration Act. In Raj Raghubar Singh v. Jai Indra Bahadur Singh
Excerpt:
.....only be accepted if it is registered. (3) no order for stay of execution shall be made under sub-rule (1) or sub-rule(2) unless the court making it is satisfied :(a) that substantial loss may result to the party applying for stay of execution unless the order is made :(b) that the application has been made without unreasonable delay; act as well as under the registration act. mortgaging the properties specified in the schedule hereunto annexed, and covenant that if the decree of the first court be reversed or varied by the appellate court, the plaintiff shall restore any property which may be or has been taken in execution of the said decree and shall duly acted in accordance with the decree of the appellate court and shall pay whatever may be payable by him thereunder, and if he..........which was filed on that date should be registered. it also passed an order that the earlier security bond which was accepted on 16-12-1977 should also be registered, and the court will consider these security bonds after they have been registered.2. learned counsel for the appellant contended that these security bonds having been furnished in pursuance of order 41 rule 5 of c. p. c. in view of the decisions of this court reported in dadoo balaji korku v. kanhaiyalal dhannaram (air 1947 nag 26) and hajijiwakhan v. gulabchand, (air 1961 madh pra 2) registration is not necessary as it is a step in the judicial proceedings and the bond becomes operative only when it is accepted by the court. whereas learned counsel for the respondents vehemently contended that as the bonds create a.....
Judgment:

Oza J.

1. In this case a stay order was granted by this Court on 23-9-1977 which wag further modified by this Court on 14-12-1977. According to the modified order the appellant was permitted to furnish two securities; one for Rs. 45,000/- and another of Rs. 30,000 and it was directed that the appellant shall furnish securities on or before 23-12-1977. It appears that the securities were filed by the appellant; one was furnished earlier which was verified and accepted and on 23-12-1977 the learned trial Court i. e. the 6th Additional District Judge passed an order that the security bond of Rs. 30,000/- which was filed on that date should be registered. It also passed an order that the earlier security bond which was accepted on 16-12-1977 should also be registered, and the Court will consider these security bonds after they have been registered.

2. Learned counsel for the appellant contended that these security bonds having been furnished in pursuance of Order 41 Rule 5 of C. P. C. in view of the decisions of this Court reported in Dadoo Balaji Korku v. Kanhaiyalal Dhannaram (AIR 1947 Nag 26) and Hajijiwakhan v. Gulabchand, (AIR 1961 Madh Pra 2) registration is not necessary as it is a step in the judicial proceedings and the bond becomes operative only when it is accepted by the Court. Whereas learned counsel for the respondents vehemently contended that as the bonds create a charge on immoveable property for more than Rs. 100/-it requires registration under the Transfer of Property Act as well as under the Registration Act and therefore, a bond is not a proper bond so long as it is not registered and the, Court below was right in observing that the bond can only be accepted if it is registered. He placed reliance on the decisions reported in Kasemali v. Ajoyendu Paul (AIR 1956 Cal 375), Bishnath Sahu v. Prayag Din (AIR 1958 All 820), R. M. Palat v. P. A. Nedungadi (AIR 1958 Ker 377), (FB) and Chiranjilal Agarwala v. Chittaranjan Mukherjee, (AIR 1960 Pat 305).

3. Order 41 Rule 5 of the Civil P. C. provides :--

'Order 41 Rule 5 -- Stay by appellate Court:--

(1) An appeal shall not operate as a stay of proceedings under a decree or order appealed from except so far as the Appellate Court may order, nor shall execution of a decree be stayed by reason only of an appeal having been preferred from the decree: but the Appellate Court may for sufficient cause order stay of execution of such decree.

(2) Where an application is made for stay of execution of an appealable decree before the expiration of the time allowed for appealing therefrom, the Court which passed the decree may on sufficient cause being 'shown order the execution to be stayed.

(3) No order for stay of execution shall be made under Sub-rule (1) or Sub-rule(2) unless the Court making it is satisfied :--

(a) that substantial loss may result to the party applying for stay of execution unless the order is made :--

(b) that the application has been made without unreasonable delay; and

(c) that security has been given by the applicant for the due performance of such decree or order as may ultimately be binding upon him.

(4) (Subject to the provision of sub-rule(3)) the court may make an ex parte order for stay of execution pending the hearing of the application.

(5) Notwithstanding anything contained in the foregoing sub-rules where the appellant fails to make the deposit or furnish the security specified in Sub-rule (3) of Rule 1 the Court shall not make an order staying the execution of the decree).' It could not be doubted that the security bonds furnished in this case are in accordance with Order 41 Rule 5 of the C. P. C. and a security bond under Order 41 Rule 5 C. P. C. enjoins on the surety for the performance of the decree that may be passed in appeal. Apparently, therefore the giving of a security bond is a step in judicial procedure and therefore, it could not be said that the execution of a bond affects the transfer of right in immoveable property. In AIR 1947 Nag 26 (supra) while considering this question it was observed as under :--

'A security bond under Order 41 Rule 5 Civil P. C. hypothecating the immovable property of the surety for the performance of the decree that may be passed in appeal does not require registration; ILR 15 Lah 282 : (AIR 1934 Lah 138) (FB): ILR 52 Bom 72: (AIR 1928 Bom 42). These decisions are based on (1898) ILR 20 All 171(PC). (1899) ILR 22 Mad 508 (PC) and (1920) ILR 47 Cal 85. In ILR 42 All 158 at p, 167 : (AIR 1919 PC 55 at p. 59) it is stated that the Court is not a juridical person and that a security bond executed in favour of the court hypothecating certain property is not a mortgage. In AIR 1936 Rang 303 it was held that a security bond to the Court operates neither as a mortgage nor as a charge and need not be registered under the Transfer of Property Act. The Privy Council has repeatedly laid it down as a broad general principle that documents which form part of a judicial proceeding do not require registration. Under Order 41 Rule 5, C. P. C. no stay can be granted unless the appellant furnishes security for due performance of such decree or order as may ultimately be binding on him.

The giving of security bond is a step in judicial procedure before an order for stay can be granted. The execution of a bond does not effect transfer of rights in the immoveable property described therein so as to make it available for the satisfaction of the decree that might be passed by the appellate Court, but it is an Order of the Court accepting the bond which creates these rights. The bond does not become operative unless and until it is accepted by the Court. I hold that the security bond hypothecating immovable property executed under Order 41 Rule 5 C. P. C. does not require registration either under the Registration Act or of the Transfer of Property Act.'

Reliance was placed on the decisions of Lahore and Bombay High Courts. It is, no doubt true that Calcutta, Allahabad and Kerala High Courts have taken a different view. In AIR 1961 Madh Pra 3 (supra) this question again was considered although in the context of Section 17 of the Provincial Small Cause Courts Act and the learned Judge followed the decision of the Nagpur High Court and held that a security bond in pursuance of an order does not require registration. A Division Bench of Allahabad High Court in AIR 1958 All 820 (supra) after considering the view expressed in AIR 1934 Lah 138 (FB) and also AIR 1947 Nag 26 (supra), disagreeing with this view held that a security bond under Order 41 Rule 6 C. P. C, where property more than Rs. 100/- requires registration. A similar view has been expressed in AIR 1956 Cal 375 (supra) AIR 1958 Ker 377 (FB) (supra) and AIR 1960 Pat 305 (supra). Apparently therefore, on this question there aredivergent views. This Court consistently has taken a view that a security bond under Order 41 Rule 5 of C. P. C. does not require registration as a bond is executed in favour of the Court by hypothecating certain properties. It is not a mortgage, and in our opinion, therefore, there is no reason not to follow the view taken by this Court in the cases re-referred to above. In AIR 1958 Ker 377 (FB) (supra) it has been held that because a security bond has to be in form No. 3 Appendix G where the person to whom the security bond is given, is to be specified, it creates a mortgage and therefore, it is stated that if it is of more than Rs. 100/- value, it requires registration under the T, P. Act as well as under the Registration Act. In Raj Raghubar Singh v. Jai Indra Bahadur Singh (AIR 1919 PC 55) their Lordships considered a bond under Order 41 Rule 5 C. P. C. and held:

'It is suggested that they are bound to the Court. But the Court is not juridical person. It cannot be sued. It cannot take property, and as it cannot take property it cannot assign it. It remains, therefore, that there is an unquestioned liability, and there must be some mode of enforcing it and that the only mode of enforcing it must be by the Court making an order in the suit upon an application to which the sureties are parties, that the property charged be sold unless before a day named the sureties find the money.' It is on this view expressed by their Lordships that the Bombay, Rangoon and Nagpur High Courts took the view that this bond does not amount to a mortgage or a charge and does not require registration.

4. Consequently, in our opinion the registration of the bond is not necessary. It was contended that in the present code that bond has to be in form No. 3 App. 'G' which is as under:--

'SECURITY BOND TO BE GIVENDURING THEPENDENCY OF APPEAL.

(Order 41, Rule 6)

Title

To,

This security bond on stay of execution of decree executed by witnesseth:

That the plaintiff in suit No,of 19, having sued, the defendant,in this court and a decree having beenpassed on the day of 19 infavour of the plaintiff, and the defendanthaving preferred an appeal from the said decree in the court, the said appeal is still pending.

Now the plaintiff decree-holder has applied for execution of the said decree and has been called upon to furnish security. Accordingly I, of my own freewill, stand security to the extent of Rs. mortgaging the properties specified in the Schedule hereunto annexed, and covenant that if the decree of the first Court be reversed or varied by the Appellate Court, the plaintiff shall restore any property which may be or has been taken in execution of the said decree and shall duly acted in accordance with the decree of the Appellate Court and shall pay whatever may be payable by him thereunder, and if he should fail therein then any amount so payable shall be realised from the properties hereby mortgaged, and if the proceeds of the sale of the said properties are insufficient to pay the amount due, I and my legal representatives will be personally liable to pay the balance. To this effect I execute this security bond this

day of 19 Schedule Witnessed by

1.

2. (Signed) '

But it does not appear that this indicates that the bond has to be in favour of any one except the Court and if it is in favour of the Court, the observations made by their Lordships of the Privy Council quoted above will still be applicable. It also cannot be disputed that filing of the bond being just a step in the procedure under Order 41 Rule 5 of C. P. C. and therefore, in our opinion the view taken by the Nagpur High Court in AIR 1947 Nag 26 (supra) is a view which could be taken in view of the provisions contained under Order 41 Rule 5 of the Civil P. C.

5. In our opinion, therefore, there is no need of registration of the security bond filed by the appellant in this case,


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