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Ranganatha Ayyangar Vs. R. Rajagopala Ayyangar and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported inAIR1933Mad181
AppellantRanganatha Ayyangar
RespondentR. Rajagopala Ayyangar and ors.
Cases ReferredImperial Bank of India v. The Bengal National Bank
Excerpt:
- - all the rights in respect of the debt-bond were clearly assigned to the plaintiffs' father and these rights will include the right of enforcing the unpaid vendor's lien existing with reference to the property. this observation regarding a promissory note was clearly an obiter dictum and was dissented from in elumalai chetty v......will be ineffectual.12. for these reasons, in my opinion, the unpaid vendor's lien under the transfer of property act is an 'interest in immovable property,' and as ex. b-1 assigns such an interest in immovable property of the value of over rs. 100 which is compulsorily registrable under the registration act, and as it has not been registered, the assignment is invalid and unenforceable against the suit property. section 8, t.p. act, no doubt says that when a debt is transferred the security therefor is also transferred as a legal incident of the transfer, but it does not prescribe the manner or method of the assignment of the security and cannot override the provisions of the registration act in cases where under that act an assignment to be valid requires registration.13. in the result.....
Judgment:

Madhavan Nair, J.

1. Defendant 2 is the appellant. Defendant 1 purchased the suit property from one Saranadha Ayyangar under Ex. A dated 5th October 1915 for a sum of Rs. 400. Towards payment of part of the consideration namely, Rs. 200, he executed a 'debt-bond,' Ex. B, dated 13th October 1915, in favour of the vendor. This bond was assigned by the vendor to the plaintiffs' father by Ex. B-l dated 20th October 1915. The suit property is admittedly worth more than Rs. 100 and the assignment deed, Ex. B, has not been registered. The suit out of which this second appeal arises was instituted by the plaintiffs to recover by sale of the suit land and from defendant 1 personally, the sum of Rs. 351-12-3 due on the 'debt-bond' executed by defendant 1 to Saranatha Ayyangar. The contesting defendant is defendant 2. He purchased the suit property from defendant 1 under Ex. 1 dated 3rd November 1921. Reversing the decree of the District Munsif which dismissed the plaintiffs' suit, the Subordinate Judge gave them a decree for the sum claimed together with interest against defendant 1 and also against the property.

2. It will be observed that under Section 55, Clause 4(b), T.P. Act, as part of the purchase-money due on the property remained unpaid by defendant 1, the vendor Saranadha Ayyangar had a charge on it in the hands of defendant 1 for the amount of this unpaid purchase-money. It is argued by the appellant that this 'charge' called the unpaid vendor's statutory lien has been assigned under Ex. B-l and as the assignment deed has not been registered under Section 17, Clause 1(b), Registration Act, the property being worth more than Rs. 100, the learned Subordinate Judge should have held that there has been no valid assignment of the 'charge' and the plaintiffs' suit should have been dismissed in so far as it asked for relief against the property. Section 17, Clause 1(b), Registration Act, makes compulsorily registrable:

instruments (other than instruments of gift) 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.

3. And by Section 49 it is declared that no instrument required by Section 17 to be registered should be received in evidence in any civil proceeding in any Court unless it had been registered. On behalf of the respondent it is argued that Ex. B-1 is a mere assignment of the simple debt due under Ex. B, that the 'vendor's lien' is not assigned thereunder and that it is a mere security which passes to the assignee under Section 8, T.P. Act, as a 'legal incident' of the transfer; and as such Ex. B-1 does not require registration. Section 8, T.P. Act, runs as follows:

Unless a different intention is expressed or necessarily implied a transfer of property passes forthwith to the transferee all the interests which the transferor is then capable of passing in the property and in the legal incidents thereof. Such incidents include... where the property is a debt or other actionable claim, the securities therefor....

4. Before dealing with the main question of law raised by the appellant, I shall first dispose of the argument of the respondent that what was conveyed under Ex. B-l was only the simple debt due under Ex. B and that the vendor's lien has not been assigned thereunder except impliedly as an incident of the transfer. The material portions of the assignment deed run as follows:

Deed of assignment executed on 20th October 1915.... I have this day assigned to you the simple debt bond for Rs. 200 executed on 13th October 1915 to me by Kuppuswami Ayyangar.... The amount including the principal and interest due thereon is Rs. 200-5-0 and I have this day received the said sum from you and have assigned to you the said debt bond. As I have, in the manner aforesaid, assigned to you all my rights in respect of the said document, I have hereby assigned the right to you to collect the said amount either amicably or through Court....

5. The terms of the document make it clear that what was transferred under it was not a simple debt of Rs. 200 alone; all the rights in respect of the debt-bond were clearly assigned to the plaintiffs' father and these rights will include the right of enforcing the unpaid vendor's lien existing with reference to the property. That the plaintiffs understood the document thus appears to be clear from para. 7 of the plaint wherein they state that their father acquired:

the entire right possessed by the said Saranadha Ayyangar to recover the balance of the sale consideration with interest on the liability of the properties covered by the said sale-deed and on the personal liability of defendant 1 according to the terms of the said debt-bond: see also para. 6 of the plaint.

6. The Subordinate Judge also came to the conclusion that the intention of the parties to Ex. B-1 was to assign the unpaid vendor's lien along with it: see para. 21 of the judgment. I have no doubt that under Ex. B-l the assignor expressly conveyed to the father of the plaintiffs the unpaid vendor's lien which existed in his favour with respect to the suit property. The question is whether the document assigned such a right when the property with respect to which the right exists is worth more than Rs. 100 in value and requires registration under Section 17, Clause 1(b), Registration Act. No authority directly bearing on the question has been brought to my notice. In Kunchithapatam Pillai v. Palamalai Pillai (1917)39 IC405, it is pointed out that the vendor's lien for unpaid purchase money can be transferred:

if the vendor executed a proper conveyance in this behalf. But until such a transfer is made, the right inheres in the vendor and in him alone.

7. The question whether the conveyance should be by a registered document or not, did not arise for consideration in that case. In Perumal Ammal v. Perumal Naicker AIR1921Mad137 it was held that in consequence of amendments made in 1900 to the Transfer of Property Act, mortgage debts have been excluded from the definition of actionable claims and can only be transferred together with the security as immovable property and therefore only by a registered instrument. The learned Judges observed that this rule is subject to the exceptions one of which is

that where the law still admits of the separate transfer of the mortgage debt as by the endorsement of a promissory note secured by deposit of title-deeds or by the attachment and sale in execution of a mortgage debt under the Civil Procedure Code, Section 8 still operates to carry the security with it,

meaning thereby that such transfers need not be by a registered instrument. This observation regarding a promissory note was clearly an obiter dictum and was dissented from in Elumalai Chetty v. Balakrishna Mudaliar AIR1922Mad344, which held

that the endorsee for value of a negotiable instrument, the amount of which had been secured by a mortgage by deposit of title-deeds, cannot claim to enforce the mortgage in the absence of a registered instrument conveying the mortgage right to him.

8. As we have not got to deal with the transfer of legal or equitable mortgage debts, but only with the transfer of a

'charge,' these decisions do not help us much in deciding the present case. The respondent relies strongly on a decision of Ramesam, J., in Sambasiva Aiyar v. Venkatarama Aiyar AIR1926Mad903 in support of his contention. In that case the facts were as follows as will appear from the head-note:

P owed plaintiff a sum of money on a promissory note. P sold some of his properties to D, the father of the defendants, and left a portion of the purchase money in D's hands with instructions to remit the same to plaintiff towards his promissory note debt. D remitted the sum to plaintiff but the latter refused to accept the amount on the ground that more was due to him. Plaintiff thereupon obtained a decree against P on the note, and in execution of that decree, he attached the debt due to P from D consisting of the unpaid purchase money with interest, and purchased it himself. Subsequently the plaintiff instituted the suit out of which the appeal arose to recover the amount from the defendants claiming also a lien upon the properties sold to D, their father. The question was whether the plaintiff was entitled to the lien claimed by him.

9. The learned Judge held that the plaintiff was entitled to the lien and that under Section 8, T.P. Act, P's lien as regards the unpaid purchase money passed to the plaintiff by virtue of the sale certificate along with the debt. In the course of his judgment, the learned Judge after pointing out the distinction between a 'mortgage' and a 'charge' made the following observations which are relied on strongly by the respondent:

If there is no transfer of immovable property, the assignment of the charge need not be made by a registered instrument, The right of the debt being an actionable claim can be transferred only by an instrument in writing under Section 130, T.P. Act. In the present case we have an instrument in writing, namely, the sale certificate issued by the Court. It is conceded by the learned vakil for the respondents that the sale certificate need not be registered with reference to the exceptions of Section 17, Registration Act. It seems to follow that the right to the charge passes along with the debt. The learned vakil for the respondents relies on a dictum in Subbaraju v. Seetharamaraju (1916) 39 Mad 283, and contends that Section 8, T.P. Act, does not apply to Court sales. The passage relied on is not quite intelligible to me. I do not see why, under Section 8, T.P. Act, the vendor's lien does not pass with the right to the money.

10. There is no doubt that some of these observations seem to help the respondent. But regard must be had to the fact that the assignment of the unpaid vendor's lien in that case was by virtue of a sale certificate which is expressly excluded from registration under exception 12, Section 17, Registration Act. The decision itself cannot therefore be applied to the present case; and the observations are mere obiter dicta; and further, there is no discussion whether the assignment by a document requires registration under Section 17, Clause 1(b), Registration Act, as the point did not obviously arise for decision in that case. In this connexion attention may be drawn to the decision of the Privy Council in Dayal Singh v. Indar Singh AIR 1926 PC 94, which I think affords considerable help in deciding the question.

11. In that case it was held assuming that the document under construction was an agreement for sale and not a conveyance, as the buyer had paid the earnest money and had been pressing for completion which the vendor refused, the document created, under Section 55, Clause 6(b), T.P. Act, 'an interest in the property' within the meaning of Section 17, Registration Act, and was accordingly compulsorily registrable. If the right which the buyer has under Section 55, Clause 6(b), T.P. Act, can be described to be an interest in the property, I think the 'lien' which the seller under Section 55(4) has, may also be described as an interest in property. If so it must follow that Ex. B-1 containing as it does an assignment of such a right in property worth more than Rs. 100 must be held to be compulsorily registrable under Section 17 Clause 1(b), Registration Act. (The decision in Sambasiva Aiyar v. Venkatarama Aiyar AIR1926Mad903 was prior to the decision of the Privy Council in Dayal Singh v. Indar Singh AIR1926PC94. Another Privy Council decision, Imperial Bank of India v. The Bengal National Bank , referred to by the appellant, may also be referred to with advantage in this connexion. In that case after pointing out that 'debt' and 'security' are separate, the Privy Council held that when both 'debt' and 'security' are transferred and the transfer of the security only fails for some reason-in that case for non-registration of the deed-the transferee can have no right or interest in the security, but the transfer 'of the debt still subsists, etc.: see head-note. This would show that the transfer in the present case, so far as it relates to the security being unregistered, will be ineffectual.

12. For these reasons, in my opinion, the unpaid vendor's lien under the Transfer of Property Act is an 'interest in immovable property,' and as Ex. B-1 assigns such an interest in immovable property of the value of over Rs. 100 which is compulsorily registrable under the Registration Act, and as it has not been registered, the assignment is invalid and unenforceable against the suit property. Section 8, T.P. Act, no doubt says that when a debt is transferred the security therefor is also transferred as a legal incident of the transfer, but it does not prescribe the manner or method of the assignment of the security and cannot override the provisions of the Registration Act in cases where under that Act an assignment to be valid requires registration.

13. In the result the decree of the lower appellate Court in so far as it relates to the suit property is set aside and the decree will be modified accordingly. The parties will pay and receive proportionate costs in this and in the lower appellate Court. The order of the first Court as regards costs will stand.


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