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Govinda Marar Vs. Sivarama Kurup - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtKerala High Court
Decided On
Case NumberSecond Appeal No. 493 of 1969
Judge
Reported inAIR1972Ker68
ActsTransfer of Property Act, 1882 - Sections 52 and 53
AppellantGovinda Marar
RespondentSivarama Kurup
Appellant Advocate T.P. Mathai, Adv.
Respondent Advocate C.K.S. Panicker, Adv.
Cases ReferredJadunath v. Parameswar
Excerpt:
.....purchaser in relation to that of a money decree-holder-auction..........v. lekshmi, 1950 trav-co lr 636 and it was held that:--'a court sale in execution of a money decree held subsequent to the institution of a mortgage suit is vitiated by the rule of lis pendens. this is so even if the property had been attached before the institution of the mortgage suit.'in the case on hand, however, the attachment was not placed at the time of the execution of ex-pi.5. to the same effect is a. bench decision of the kerala high court in people's co-operative bank v. avyana pillai, 1958 ker lt 925 = (air 1959 ker 133). the following observation of the learned judges in that case would repay perusal in the present case also. the learned judges held:--'it has been found by the two lower courts and also accepted by our learned brother mr. justice joseph, that the.....
Judgment:

K. Sadasivan, J.

1. The plaintiff has come up in second appeal. He sued for redemption of a usufructuary mortgage as successor-in-interest of the mortgagor. The plaint schedule property belonged to one Padmanabha Marar who had executed a mortgage deed to the defendant on 3-1-1958 for a sum of Rs. 75/-, Padmanabha Marar assigned his jenmon right to the plaintiff on 18-11-1961. The plaintiff thereupon instituted the suit on 23-3-1962. The mortgage was admitted by the defendant; but his contention was that he was already in possession of the property under a varom arrangement and even if the mortgage is redeemed the varom will survive. Padmanabha Marar had executed two promissory notes to him on the strength of which a suit, O. S. 115/61, was filed by him and decree obtained. On the 8th of November. 1961 he applied for attachment of plaint schedule property in execution of the decree. Padmanabha Marar knowing about this executed an assignment in favour of the plaintiff, who is his elder brother benami without any consideration. The document is affected by lis pendens and also invalid being one executed in fraud of creditors. The trial court held that the assignment of the equity of redemption to the plaintiff is valid and allowed redemption. On appeal the learned District Judge, however, has held that the assignment is in fraud of creditors and as such hit by the bar of Section 53(1) of the Transfer of Property Act, The suit was, therefore, held to be not maintainable, and it was accordingly dismissed.

2. In this second appeal, the point arising is whether Ex.-P1 assignment in favour of the plaintiff was a sham document intended to defeat or delay the creditors of the assignor. The two circumstances relied on by the learned appellate Judge in coming to the conclusion that Ex-Pi is a fraudulent document are: (1) that the exe-cutee is the executant's own brother: and (2) that it was executed soon after the passing of the money decree in O. S. 115/61 against the executant, P. W. 1 the assignee has sworn before court that the entire amount minus Rs. 75/- reserved for redemption of the mortgage was paid in cash under Ex-PL The amount was received by him to discharge some of his debts and also to meet the expenses in connection with his illness. This statement as it comes from the assignor's own brother cannot be taken at its face value. There is also the fact that the assignor was at the time in straitened circumstances. The finding of the courts below that the assignment is colourable has, therefore, to be upheld. Even then, it can be declared so, only to the extent of the defendant's claim. The entire transaction cannot be declared null and! void at the instance of the defendant, who is only one of the creditors and the amount due to him is what is covered by the decree in O. S. 115/61. This position is well covered by authority. Venkatarama Iyer. J. has observed in Nanjamma v. Rangappa, AIR 1954 Mad 173, that :--

'When a transfer is declared void as against creditors under Section 53 the result is not to annul it altogether, but only to render it inoperative as against creditors and that too only to the extent necessary to satisfy their claims; and subject to their claims the transaction is valid and enforceable.'

The learned Judge has, in the course of his judgment, quoted Story on 'Equity Jurisprudence' Section 371, wherein it was stated:--

'A conveyance of this sort (it has been said with great truth and force) is void only as against creditors; and then only to the extent in which it may be necessary to deal with the conveyed estate for their satisfaction. To this extent, and to this only, it is treated as if it had not been made. To every other purpose it is good. Satisfy the creditor, and the conveyance stands.' The conveyance, therefore, can be declared void and unenforceable only as against the defendant to the extent of the debt outstanding in his favour.

3. As against the above plea the defendant would urge that he has now become the full owner of the property by virtue of the court sale and delivery in his favour in O. S. 115/61 and as such the mortgage is no longer in existence, so that the suit for redemption be sustained. It is true that in execution of the money decree in O. S. 115/61 the property was brought tosale and purchased by the defendant, Symbolic delivery has also been taken by him: but by virtue of the sale and delivery. I do not think the defendant will be justified in claiming an enlarged right when once it is declared that the assignment is void if at all only to the extent of his claim. If the defendant's present plea is upheld the effect will be that nothing will be left for the plaintiff-assignee by virtue of the assignment in his favour. The defendant can claim only the amount due to him with interest thereon and cannot claim the entire property on the basis of the sale in execution of his money decree. In an analogous situation arising from proceeding in restoration of a petition under Order 21, Rule 90 dismissed for default, a Division Bench of the Madras High Court in Varadarajan v. Muthu, AIR 1953 Mad 587 relying on AIR 1946 Mad 344 and AIR 1934 All 433 observed:--

'The restoration of a petition under Order 21, Rule 90 dismissed for default would make the confirmation of sale already made ineffective. Such an order of confirmation may be treated as automatically vacated or even may be considered to be null and void.' Thus when once it is held that the creditor can challenge the assignment only to the extent of his claim, the subsequent proceedings by which he has enlarged his right will have to be declared inoperative as against the debtor.

4. The sale proceedings in O. S. 115/61 have to be looked at from a different angle which is also relevant in this connection. The point is that the sale was held when the suit, viz., the suit for redemption was pending. The sale proceedings are, therefore, vitiated by the rule of lis pendens. This position was considered by a Division Bench of the Travancore-Cochin High Court in Madachi v. Lekshmi, 1950 Trav-co LR 636 and it was held that:--

'A court sale in execution of a money decree held subsequent to the institution of a mortgage suit is vitiated by the rule of lis pendens. This is so even if the property had been attached before the institution of the mortgage suit.'

In the case on hand, however, the attachment was not placed at the time of the execution of Ex-Pi.

5. To the same effect is a. Bench Decision of the Kerala High Court in People's Co-operative Bank v. Avyana Pillai, 1958 Ker LT 925 = (AIR 1959 Ker 133). The following observation of the learned judges in that case would repay perusal in the present case also. The learned judges held:--

'It has been found by the two lower courts and also accepted by our learned brother Mr. Justice Joseph, that the delivery to the plaintiff under Ex-C was not actual delivery but only a symbolical delivery. From the dates mentioned at the beginning of the judgment it will be clear that the attachment, decree, and delivery proceedings in favour of the defendant were all during the pendency of the mortgage suit in which the plaintiff became ultimately the purchaser of the properties. That a court sale in execution of a money decree held subsequent to the institution of a mortgage suit is vitiated by the doctrine of lis pendens. is laid down in Subramania Iyer v. Vaidyanatha Iyer, 1943 Trav-Co. LR 133. To a similar effect is the decision of the Division Bench of the T. C. High Court in Madachi v. Lekshmi, 1950 Trav-Co LR 639 by Mr. Justice Koshi (as he then was) and Mr. Justice Sankaran. The learned Judges have reviewed the case law and held that it is settled law that the sale of the property involved in a mortgage suit, conducted during the pendency of that suit is affected by the doctrine of lis pendens. It is not necessary here also to multiply authorities on this point, excepting to refer also to the decision of the Privy Council in Jadunath v. Parameswar, AIR 1940 PC 11. There, their Lordships have put very clearly the position of a mortgagee-decree-holder-auction purchaser in relation to that of a money decree-holder-auction purchaser. To quote:--

'While the purchaser at an execution sale under a mere money decree gets no more than the right, title and interest of the judgment-debtor at the date of the sale the purchaser under a mortgage decree gets the right, title and interest in the mortgaged subjects which the mortgagor had at the date of the mortgage and charged thereby. Buying the mortgaged property free from incumbrances he gets, as it is sometimes put, the title both of the mortgagee and of those interested in the equity of redemption. He is not a mere successor-in-interest of the owner of the equity of redemption at the date of the sale.' We respectfully agree with these decisions and hold that the suit and other proceedings connected with the decree under which the defendant purchased the suit properties are vitiated by lis pendens as against the present plaintiff.'

It therefore, follows that the sale in execution of O. S. 115/61 was vitiated by the rule of lis pendens.

6. The result is that in supersession of the decrees of the courts below, a preliminary decree for redemption of the plaint schedule property is passed. The plaintiff will pay in addition to the mortgage amount and value of improvements found due the amount covered by the decree in O. S. 115/61 also with future interest recoverable under law. The suit will stand allowed as indicated above; the second appeal is thus allowed.


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