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R.M. Palat Vs. P.A. Nedungadi - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKerala High Court
Decided On
Case NumberC.R.P. No. 158 of 1958
Judge
Reported inAIR1958Ker377
ActsCode of Civil Procedure (CPC) , 1908 - Order 41, Rule 5 - Order 48, Rule 3; Transfer of Property Act, 1882 - Sections 4 and 59; Registration Act, 1908 - Sections 17 and 49
AppellantR.M. Palat
RespondentP.A. Nedungadi
Appellant Advocate T. Chandrasekhara Menon, Adv.
Respondent Advocate V. Balakrishna Eradi, Adv.
Cases ReferredIn Bindesri Naik v. Ganga Saran Sahu
Excerpt:
.....order of subordinate judge - security bond filed by appellants not in accordance with prescribed form - security bond should be in prescribed form and requires registration as result of sections 4 and 59 of act of 1982 and section 49 of act of 1908 - petitioner to file registered security bond in prescribed form. - - 10,448-4-0, the principal and interest due on a promissory note executed by the 2nd defendant to the 1st and endorsed by him to the plaintiff. it is unfortunate that sufficient attention is not said to this aspect, and the omission to adopt and use the correct form often results in inconvenience and hardship to parties, both seeking to enforce the bonds as well as those who will be liable under them. ganga saran sahu, ilr 20 all 171 (pc) (k) their lordships observed..........singh, air 1919 pc 55 (b) :'the new code of civil procedure, that of 1908, provides a special form of security bond to be given during the pendency of an appeal (appendix g, no. 3). the form shows that it is intended to be given to someone and not to be a mere undertaking to the court. whether that someone should be the other party or an officer of the court is not made clear; but with this form in use it is not likely that the difficulty which surrounds the present case will arise in future';and held :'in this view, the form in which the security bond has been executed in the present case does not seem to be correct. the security bond should be addressed to some officer of the court, such as the sheristadar or some other responsible officer'.8. the specification of the person to.....
Judgment:

M.S. Menon, J.

1. The petitioner was the 1st defendant in O. S. No. 16 of 1955 of the Court of the Subordinate Judge of Ottapalam. The suit was to recover a sum of Rs. 10,448-4-0, the principal and interest due on a promissory note executed by the 2nd defendant to the 1st and endorsed by him to the plaintiff.

2. The suit was decreed with costs as prayed for, And the 1st defendant filed before this Court A. S. No. 172 of 1957. The appeal is still pending disposal.

3. The 1st defendant also filed C. M. P. No, 987 of 1957 and prayed 'that the decree of the Subordinate Judge of Ottapalam in O. S. 16 of 1955 in the file of that Court be stayed pending disposal of the above appeal'. The order on the C. M. P. was .

'Stay allowed only on proper security being furnished to the satisfaction of the lower Court within a reasonable time to be fixed by that Court'.

4. Subsequently the petitioner filed an unregistered security bond dated 23-12-1957. The Subordinate Judge held that a registered bond was necessary and by an order dated 1-2-1958 directed the petitioner to file such a bond within ten days from that date. A registered bond was not produced and the Subordinate Judge ordered as follows on 12-2-1958:

'Registered bond not produced. Security not accepted. Petition dismissed in view of my order dated 1-2-1958'.

5. The petitioner then filed this petition challenging the correctness of the decision of the Subordinate Judge to the effect that a registered bond was necessary. He also filed C. M. P. No. 589 of 1958 and obtained a stay of further proceedings in the Court below.

6. The security bond filed by the petitioner is not in accordance with the form given in the Code of Civil Procedure, 1908 -- Form No. 3 of Appendix G -- an essential difference being the omission in the bond of any reference to the person to whom the security is given. Rule 3 of Order XLVIII of the Code provides :

'The forms given in the appendices, with such variation as the circumstances of each case may require, shall be used for the purposes therein mentioned'.

and we see no reason why a security bond not in accordance with Form No. 3 of Appendix G should be accepted in this case.

7. In Akshay Zemindari Ltd. v. Rama Nath, ILR (1937) 1 Cal 375 (A) a security bond which did not specify the person in whose favour it was given came up for consideration. The Court said :

'The bond is not at all in proper form, havingregard to what has been observed by their Lordships of the Judicial Committee with reference to security bonds under Order XLI, Rules 5 and 6 of the Code of Civil Procedure';

quoted the following passage from Raj Raghubar Singh v. Jai Indra Bahadur Singh, AIR 1919 PC 55 (B) :

'The new Code of Civil Procedure, that of 1908, provides a special form of security bond to be given during the pendency of an appeal (Appendix G, No. 3). The form shows that it is intended to be given to someone and not to be a mere undertaking to the Court. Whether that someone should be the other party or an officer of the Court is not made clear; but with this form in use it is not likely that the difficulty which surrounds the present case will arise in future';

and held :

'In this view, the form in which the security bond has been executed in the present case does not seem to be correct. The security bond should be addressed to some officer of the Court, such as the Sheristadar or some other responsible officer'.

8. The specification of the person to whom the security bond is given is essential for the creation of a mortgage and the omission to do so will naturally lead to complications. The Privy Council dealt with the matter as follows in AIR 1919 PC 55 (B) :

'Their Lordships have to examine whether in this case there is any mortgagee, any person to whom the security was given. Now no person is mentioned in the instrument. It recites the decree that the widow has been ordered to furnish security, and then, the declarants furnish security by hypothecating their property';

and :

'It is suggested that they are bound to the Court. But the Court is not a juridical person. It cannot be sued. It cannot take property, and as it cannot take property it cannot assign it''.

9. A similar instrument came up for consideration in Mehdi Ali Khan v. Chunni Lal, AIR 1929 All 834 (C). The Court said :

'We agree with the Court below that in view of the pronouncement of their Lordships of the Privy Council in AIR 1919 PC 55 (B) the security bond in question does not amount to a mortgage-deed';

'As observed by their Lordships in the case referred to above at p. 59 there is in this instrument no person mentioned to whom the security is given. They undertook liability to the Court, but the Court is not a juridical person and it can neither sue not take property nor assign it';

and:

'The learned Subordinate Judge has thought that if it is not a mortgage it must amount to acharge. It is impossible to accept this view. If the document is not a mortgage for want of any mention of a specific person in whose favour it is made it equally does not create a charge'.

To the same effect is Mahomed Razak v. Ram Ratan Tcwary, AIR 1936 Rangoon 303 (D).

10. Mulla's statement in his Transfer of Property Act, Fourth Edition, p, 575 :

'A security bond to the Court will not operate as a mortgage as the Court is not a juridical person; and for the same reason it will not create a charge under this section (Section 100)'

is based on AIR 1919 P. C. 55 (B) and AIR 1929 All 834 (C).

11. In Kambham Ramamurthi v. S. Tirupati-raju AIR 1949 Mad 152 (E) the court had todeal with a security bond which was not in conformity with the form prescribed under the Guardians and Wards Act, 1890. Their Lordships said :

'We wish to point out that it is a matter of regret that in spite of the clear pronouncement of the Judicial Committee in AIR 1919 PC 55 (B) so early as 1919 and in spite of the forms contained in the Civil Rules of Practice relating to bonds to be 'executed by the guardians under the Guardians and Wards Act, security bonds should continue to be taken not in favour of the presiding officer or any other officer of Court but in a form in which the bonds cannot be said to be executed in favour of anybody unless by implication they must be deemed to have been executed in favour of the Court, which, as has been pointed out by the Privy Council, is not a juridical person capable of assigning such bonds. It is unfortunate that sufficient attention is not said to this aspect, and the omission to adopt and use the correct form often results in inconvenience and hardship to parties, both seeking to enforce the bonds as well as those who will be liable under them. In future, no security bond should he accepted by any Court unless it is executed in favour of a person be he the presiding officer of the Court or the chief ministerial officer of the Court'.

It is understood that a copy of the paragraph extracted above was forwarded to all the courts of the Madras State on 26-5-1948.

12. Section 4 of the Transfer of Property Act, 1882, provides :

'Sections 54, paragraphs 2 and 3, 59, 107, and 123 shall be read as supplemental to the Indian Registration Act, 1908'

and the first paragraph of Section 59 :

'Where the principal money secured is one hundred rupees or upwards, a mortgage other than a mortgage by deposit of title-deeds can be effected only by a registered instrument signed by the mortgagor and attested by at least two witnesses'.

Section 49 of the Indian Registration Act, 1908, is in the following terms :

'No document required by Section 17 'or by any provision of the Transfer of Property Act, 1882', to he registered shall...

(a) affect any immovable property comprised therein, or

(b) confer any power to adopt; or

(c) be received as evidence of any transaction affecting such property or conferring such power, unless it has been registered'.

The words underlined (here in ' ') were inserted by Act XXI of 19-29, and they make it clear that all documents of which the registration is compulsory under the Transfer of Property Act, 1882, 'fall within the scope of Section 49 and if not registered do not affect the immoveable property comprised therein and arc not receivable as evidence of any transaction affecting the property'.

(Mulla's Indian Registration Act, Fifth Edition, p. 183)

13. There can be no doubt that a security, bond executed in Form No. 3 of Appendix G creates a mortgage and that in view of Sections 4 and 59 of the Transfer of Property Act, 1882, and Section 49 of the Indian Registration Act, 1908 -- quite apart from Section 17 of the latter Act -- such a bond has to be registered 'where the principal money secured) is one hundred rupees or upwards' in order to 'affect any immoveable property comprised therein'.

14. Sub-section 1 (a) of Section 17 directs the compulsory registration of 'instruments of gift of immoveable property' and Sub-section 1(b) of :

'other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property.'

Sub-section (2) (vi) of Section 17 provides that nothing in Clause (b) of Sub-section (1) shall apply 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'.

15. As to whether a security bond under Order XLI, Rule 5 or 6, of the Code of Civil Procedure, 1908, requires registration or not has been a subject of controversy in the High Courts of India. The High Courts of Bombay, Jayappa Lokappa v. Shivangouda Dyamangouda, AIR 1928 Bom 42 (F); Cochin, (24 Coehin 564) (G); Lahore, Kasturi Lal v. Govcrdhan Dass, AIR 1954 Lah. 138 (H); Nagpur, Dadoo Balaji v. Kanhaialal Dhanaram, AIR 1917 Nag 26 (I); and Travancorc-Cochin, Subra-mania Nadar v. Esakkimadan Nadar, AIR 1953 Trav-Co 364 (J); have held that such security bonds need not be registered and the High Court of Allahabad. Badlu Singh v. Pauthu Singlu AIR 1923 All 270 (K); Assam, Rivers Steam Navigation Co. Ltd. v. Jalim Mulla, (S) AIR 1957 Assam 157 (L); Calcutta, Kasemali v. Ajoyendu Paul, (S) AIR 1956 Cal 375 (M); Madras, Nagarum Sambayya v. Tanga-tur Subbayya, ILR 31 Mad 330 (N); Patna, Gauri Shankar v. Baldeo Sahujee. AIR 1953 Pat 210 (O); and Rangoon, A.S.P.S.S. Chettyar Firm v. Lloyds Bank, AIR 1935 Rang 168 (P); have taken the view that such bonds do require registration under Section 17 of the Indian Registration Act, 1908.

16. Mulla's comment on this controversy is that 'the Bombay view is believed to be correct.' (Indian Registration Act, Fifth Edition, p. 102)

17. In AIR 1935 Rang 168 (P) Page, C. J., agreed with the observation of Martincau, J., in Lahore Spinning and Weaving Mills Co. Ltd. v. Uttarn Chana AIR 1919 Lah 8 (CO :

'A security bond requuires no order of this Court to render it effectual. The Court's acceptance of the bond given by the judgment-debtors merely indicates, as has been pointed out by the Madras High Court in ILR 31 Mad 330 (N), that the Court considers the security sufficient, and does not give validity to the bond. Nor can the bond be treated as a part of the order of the Court directing execution to be stayed on the judgment-debtors furnishing security. It was executed in compliance with or in consequence of, that order and is something distinct from the order itself'

and disagreed with the observation of Tek Chand, J., in AIR 1934 Lah 138 (H):

'It is not the execution of the bond which effects the transfer of rights in the immoveable propetty described therein, but it is the order of the Court accepting the bond which creates these rights'.

The judgment deals with the observation of Tek Chand, J., as follows :

'But with all due deference I do not so appraise the legal position. As I apprehend the matter all that the Court does in such circumstances is to intimate that the property tendered as security is deemed to be sufficient; in other words, it approves the substance not the form of the security the execution of the bond being the mode and the bond the form in which the security is subsequently furnished I cannot persuade myself that in such circumstances the execution of the bond is an act of the Court or 'a step of judicial procedure,' or that the Court merely by approving the substance of the security tendered can, or purports to convert instruments such as the security bonds under consideration, which by law are incapable of affecting the title to immoveable property into operative, valid and admissible documents of title'.

18. In Bindesri Naik v. Ganga Saran Sahu, ILR 20 All 171 (PC) (K) their Lordships observed that they are satisfied that the provisions of Section 17 of the Registration Act of 1877 'do not apply to proper judicial proceedings, whether consisting of pleadings filed by the parties or of orders made by the Court'. The comment in Sapru's Encyclopaedia of the General Acts and Code of India, Volume 9, p. 300 is :

'the terms of the section are too explicit to countenance any such view'.

19. In view of our conclusion that the security bond should be in Form No. 3 of Appendix G and that such a bond requires registration as a result of Sections 4 and 59 of the Transfer of Property Act, 1882, and Section 49 of the Indian Registration Act, 1908 quite apart from Section 17 of the latter Act -- we consider it unnecessary to deal with the controversy and express our views on the true scope and ambit of Section 17 of the Indian Registration Act, 1908.

20. In the light of what is stated above the rejection of the security bond filed by the petitioner by the Subordinate Judge of Ottapalam stands, am! the only direction we need make is that the petitioner will have a month's time from this date to file a registered security bond in conformity with Form No. 3 of Appendix G to the Code of Civil Procedure, 1908, mortgaging the item of property already approved by the court below. Judgment accordingly.

21. The petition is disposed of as above. The petitioner will pay the costs of the respondent.


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