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1948 DIGILAW 102 (CAL)

Chandra Nath Dawn v. Sreemutty Hem Nalini Dassi

1948-05-14

body1948
JUDGMENT Mukherjee, J. - This appeal is on behalf of the Defendant and it arises out of a suit commenced by the Plaintiff for declaration of her title by purchase, at a mortgage sale, to a 12 annas share of the property in suit which is premises No. 283/284. Upper Chitpur Road, free from any incumbrance or charge claimed by the Defendant in respect of the same and for a further declaration that the decree obtained by the Defendant in Suit No. 1707 of 1938 was not binding on her. To appreciate the points in controversy between the parties it would be necessary to narrate certain earlier facts. The premises in dispute along with other properties belonged to one Amritlal Dawn, the grand-father of the Defendant. Amritalal died, leaving behind him his wife Hemangini and five sons, to wit Haridhone, Sankarlal, Prandhone, Jibandhone and Jatadhari. In 1921 a suit was instituted by Prandhone in the Original Side of this Court for partition of the properties, movable and immovable, belonging to Amritalal which devolved upon his sons after his death. Sankarlal, the second son of Amritalal, was dead at that time and the Defendants in the suit were Hemangini, the widow of Amritalal, Haridhone, Jibandhone and Jatadhari, the three surviving sons, and Monimohan, the son and heir of Sankarlal. On August 20, 1923, a consent decree was made in that suit and Mr. B. K. Ghose, a Barrister of this Court, was appointed an arbitrator for the purpose of taking accounts and dividing the assets of the estate amongst the several parties. The properties dealt with by Mr. B. K. Ghose consisted, first of all, of certain businesses; in the second place, there were immovable properties in respect of which there were disputes between the parties inasmuch as they were claimed to be the sole property of the three brothers, Jatadhari, Jibandhone and Haridhone, to the exclusion of Prandhone and Monimohan. In the third place, there were properties which were admitted to he joint. With the consent of parties Mr. B. K. Ghose made a partial award in regard to the businesses and disputed properties on May 23, 1945. The net result of this award was that Prandhone and Monimohan gave up their claims to these businesses and other items of disputed properties in consideration of a sum of Rs. With the consent of parties Mr. B. K. Ghose made a partial award in regard to the businesses and disputed properties on May 23, 1945. The net result of this award was that Prandhone and Monimohan gave up their claims to these businesses and other items of disputed properties in consideration of a sum of Rs. 32,000 (thirty-two thousand rupees) being paid to each one of them by Jibandhone, Jatadhari and Haridhone and these properties were divided exclusively amongst these three brothers. By clause 8 of this award these payments were made a charge on the properties to be allotted to Haridhone, Jibandhone and Jatadhari and the Plaintiff and Monimohan were declared entitled to realise these sums by execution of the decree made in the suit. On July 8, 1925, this partial award was confirmed by the Court. On August 17, 1925, the final award was made which allotted the admitted joint properties to the several parties and the property in suit, namely, 12 annas share of premises No. 283/284, Upper Chitpur Road was allotted, with other properties, to Jatadhari. On December 10, 1927, a decree was passed on this final award. 2. On April 1, 1936, Jatadhari borrowed a sum of Rs. 4,000 from the present Plaintiff Hem Nalini Dasi in whose favour a promissory note was executed on that date. As a security for this loan Jatadhari deposited with the Plaintiff the title deeds in respect to 3/4ths share of premises No. 283/284, Upper Chitpur Road. On the same security a further advance of Rs. 2,000 was taken by Jatadhari from the Plaintiff on November 17, 1937. On January 4, 1939, the Plaintiff instituted a suit to recover money due on this equitable mortgage and obtained a preliminary decree on May 19, 1939. The decree was made final on January 15, 1940, and in execution of the same the mortgaged premises were put up to sale and purchased by the mortgagee. The sale was confirmed on May 6, 1941, and thereafter the purchaser took possession. In the meantime Monimohan, who was entitled to get a sum of Rs. 32,000 (thirty-two thousand rupees) from Jatadhari, Haridhone and Jibandhone, under the terms of the partial award and to whom after certain payments a considerable sum was still due, took out execution for realisation of the amount due to. In the meantime Monimohan, who was entitled to get a sum of Rs. 32,000 (thirty-two thousand rupees) from Jatadhari, Haridhone and Jibandhone, under the terms of the partial award and to whom after certain payments a considerable sum was still due, took out execution for realisation of the amount due to. him and on May 12, 1936, got an order for sale in respect of premises No. 262, Upper Chitpur Road which was allotted to Haridhone and which was one of the properties charged for payment of this amount. On April 10, 1937, Haridhone had to pay the whole amount fur the purpose of averting a sale of his property although 2/3rds of this amount was due by his other two co-sharers. On August 25, 1938, Haridhone filed a suit against the heirs of Jatadhari and Jibandhone (being Suit No. 1707 of 1938) claiming by way of contribution a sum of Rs. 18,182 paid by him in excess of his share and prayed for an order of sale as subrogee of the rights of Monimohan in regard to the properties of Jibandhone and Jatadhari which were charged with the payment of this money. A final decree was passed on March 11, 1941, and in execution of this decree Jatadhari's 3/4ths share in premises No. 283/284, Upper Chitpur Road was advertised for sale. Upon this the present suit was filed by Hem Nalini for establishment of her title to this property by purchase in the mortgage sale and for a declaration that this property was not subject to a charge which Haridhone was seeking to enforce. Her case in substance was that she was a bond fide purchaser for value without notice and not bound by the decree in Suit No. 1707 of 1938 or any proceedings therein. Haridhone, the original Defendant, died pending the hearing of the suit and his son and heir Chandra Nath was substituted as the Defendant in his place. 3. The Defendant in his written statement denied that the Plaintiff was a purchaser without notice and asserted that the charge was enforcible by him against the property in the hands of the Plaintiff. 4. At the time of the trial the contentions between the parties centred round three points:-- (1) Whether the Defendant was at all entitled to a charge on the property in suit on the principle of subrogation as laid down in sec. 4. At the time of the trial the contentions between the parties centred round three points:-- (1) Whether the Defendant was at all entitled to a charge on the property in suit on the principle of subrogation as laid down in sec. 92 of the Transfer of Property Act; (2) Whether the Plaintiff was a purchaser for value without notice and as such was not affected by the charge; and (3) Whether the charge which was created by a decree of Court could be enforced against the Plaintiff even if she was a purchaser without notice. 5. Ormond, J., decided the first point in favour of the Defendant but the other two were decided against him and it was held that the Plaintiff had no notice, either actual or constructive, of the charge which could not be enforced against her; and the fact that the charge was created by a decree did not make any difference. It is against this judgment that the present appeal has been preferred. 6. Mr. Atul Chandra Gupta who appeared for the Defendant Appellant has put forward three contentions in support of the appeal. He has contended in the first place, that as the charge was created in the partition proceeding and was embodied in a decree it could be enforced against the property in the hands of the Plaintiff even though she was a bona fide purchaser to value without notice. His second contention is that the Plaintiff had constructive notice of the charge. Lastly, he has argued that the charge is binding on the Plaintiff under the doctrine of his pendens. 7. The first point undoubtedly raises a question of some importance in regard to which there is conflict of judicial opinion, A charge is defined in sec. 100 of the Transfer of Property Act and it arises when a right of payment out of a specific property is created by act of parties or operation of law without transfer of an interest in the property itself, as happens in the case of a mortgage. The second paragraph of sec. 100 of the Transfer of Property Act and it arises when a right of payment out of a specific property is created by act of parties or operation of law without transfer of an interest in the property itself, as happens in the case of a mortgage. The second paragraph of sec. 100 of the Transfer of Property Act lays down that " save as otherwise expressly provided by any law for the time being in force, no charge shall be enforced against any property in the hands of a person to whom such property has been transferred for consideration and without notice of the charge." This provision which was added by the Amending Act of 1929 did not obviously effect any change in the law but merely indicated what the law already was. There is a body of judicial decisions which have taken the view that in order to enforce a charge which is created by a decree it is quite immaterial whether the persons who subsequently acquired the property had notice of the charge or not. The leading decision, so far as this Court is concerned, is to be found in Kuloda Prasad v. Jageswar I. L. R. 27 Cal. 194 (1899). In this case there was a decree made in a maintenance suit brought by a Hindu widow by which certain immovable property was charged with the maintenance of the widow. The predecessor of the Plaintiffs subsequently took a mortgage of the property from the Defendant against whom the decree was passed and the question was whether the Plaintiff was bound by the charge. It was held by the learned Judges that the Plaintiff was bound in the same way as the mortgagor was. The question of notice was therefore, considered to be immaterial although it was found as a fact that the Plaintiffs could not be said to be transferees without notice. The same view was taken in some of the other High Courts and Chief Courts in India and reference may be made, amongst others, to the decisions in Maina v. Bachchi I. L. R. 28 All. 655 (1906), Bhoje Mahadev v. Gangabai I. L. R. 37 Bom. 621 (1913), Mahadeo Prasad v. Anandilal I. L. R. 47 All. 90 (1924), Choudhury Fateh Ali v. Gobardhan I. L. R. 5 Luck. 172 F. B. (1929) and AIR 1938 129 (Nagpur) . 8. 655 (1906), Bhoje Mahadev v. Gangabai I. L. R. 37 Bom. 621 (1913), Mahadeo Prasad v. Anandilal I. L. R. 47 All. 90 (1924), Choudhury Fateh Ali v. Gobardhan I. L. R. 5 Luck. 172 F. B. (1929) and AIR 1938 129 (Nagpur) . 8. Mullah in his commentary on the Transfer of Property Act, (2nd Edition), remarked that these decisions were not correct as they proceeded on the wrong view that the effect of a charge was similar to that of a mortgage, in that it places a limitation on the ownership of a property. Since then the Madras, Bombay and Patna High Courts have definitely held that even when a particular right is charged on specific immovable property by a decree of Court, such right cannot be enforced against a subsequent transferee for valuable consideration and without notice of the charge. [Vide Rustamali v. Aftab Huseni Khan A. I. R. (1948) Bom. 414, Sheo Narain Sahu and Others Vs. Lakhan Sahu and Others, AIR 1945 Patna 434 and Venkatachala v. M. R. Rajagopal Naidu A. I. R. (1946) Mad. 551]. 9. A subsequent Full Bench of the Chief Court of Oudh has reversed the earlier Full Bench decision mentioned above [vide Mussammat Indrani v. Babu Maharaj Narain I. L. R. 13 Luck. 101 (F.B.) (1936)] and the Nagpur Chief Court also went back upon its previous decisions and took the view that a charge created by a decree could not bind a transferee if he was a transferee for value without notice [vide Goswami Mahespuri v. Ram Chandra (11)]. In this Court, however, a Division Bench has reiterated the earlier view and held that when a charge is created by a decree the question of notice does not at all arise and a subsequent purchaser will be bound by the charge irrespective of whether he received any notice or not [see Hemlata Debi v. Bhowani Charan Roy 39 C. W. N. 725 (1934)]. 10. The question undoubtedly requires careful examination. I am quite willing to accept as sound the proposition of law that there is no difference in principle between a charge created by a decree and one created by contract. In either case the charge is not a transfer of an interest in the immovably property. 10. The question undoubtedly requires careful examination. I am quite willing to accept as sound the proposition of law that there is no difference in principle between a charge created by a decree and one created by contract. In either case the charge is not a transfer of an interest in the immovably property. But at the same time it seems to me that the Transfer of Property Act does not affect other branches of law and other laws have been expressly saved by the provision of the second paragraph of sec. 100 of the Transfer of Property Act. A charge created by. and embodied in, a decree could not certainly bind a purchaser without notice of the charge on the ground that the charge creates an interest in the property. But a judgment not only creates rights, it works as an estoppel as well and the law of estoppel by judgment is not certainly affected by any provision of the Transfer of Property Act. The judgment binds by estoppel not only the parties but also the privies thereto and a person claiming a property which was the subject-matter of the suit through the judgment-debtor can certainly be regarded as a privy to the judgment and hence bound by it. The decree-holder can enforce the judgment or decree against the judgment-(11) AIR 1944 1 (Nagpur) debtor and anybody claiming through him, and the law of estoppel would prevent the latter from pleading that the judgment was not binding on him. In this way we think that it is possible to take the view that a charge created by a decree, though it does not differ in any way from other charges, can be enforced against a transferee of the judgment-debtor by way of enforcing the judgment itself and the latter being a privy to the judgment cannot be heard to say that he is not bound by it. This was the view taken by the Nagpur Chief Court in AIR 1938 129 (Nagpur) and on principle we think this view is sound and can be invoked in support of the pronouncement of our Court referred to above where the learned Judges without discussing any principle of law proceeded merely on the authority of previous decisions many of which have been overruled since then. To this extent I can say I am in entire agreement with the contention put forward by Mr. Gupta. This principle, however, can be applied only when the charge can he enforced by enforcement of the judgment itself, for, otherwise no question of estoppel would at all arise. This, I think, is the real difficulty that stands in the way of the Appellant in the present case. The decree in the partition suit which created the charge has been satisfied in full and no longer exists. The Defendant in the suit is not seeking to execute a decree or to enforce it against a person who was a party or privy thereto nor is he capable of doing so. He wants to enforce a charge which, he says, has accrued in his favour by operation of the law of subrogation and it is only as a charge and not as a judgment that he wants to enforce it against the present Plaintiff. In these circumstances, we think that the law of estoppel cannot be called into aid by the Appellant and the matter not being one of enforcing a judgment no question as to whether the Plaintiff was a privy to the judgment at all arises. Where the law of estoppel cannot operate the provision of sec. 100 of the Transfer of Property Act must be held to be applicable without any limitation whatsoever and the Plaintiff will succeed in proving her case if she can satisfy the Court that she had ho notice of the charge either actual or constructive. The first contention of Mr. Gupta must, therefore, fail. 11. For the same reason we think the third ground urged by Mr. Gupta cannot succeed. We may take it that the transfer by way of mortgage in favour of the Plaintiff was made at a time when the partition suit was still pending. Under the doctrine of lis pendens the Plaintiff can be held to be bound by the decree or order made in the partition suit but there is no question as to the enforcement of the decree or order made in the partition suit, for the decree admittedly has been extinguished by full satisfaction. Under the doctrine of lis pendens the Plaintiff can be held to be bound by the decree or order made in the partition suit but there is no question as to the enforcement of the decree or order made in the partition suit, for the decree admittedly has been extinguished by full satisfaction. It cannot be argued, and in fact has not been argued, that the Plaintiff is in any way bound by the result of the suit instituted by Haridhone to which she was not made a party. 12. The only question, therefore, that requires consideration is whether the Plaintiff had any notice, either actual or constructive, of the charge. Now, the charge in this case was created, as said above, by the partial award which dealt with the businesses and certain disputed items of property and imposed the charge for payment of moneys payable to Monimohan and Prandhone over all properties that might be allotted to Jibandhone, Haridhone and Jatadhari. The property in suit was an undisputed item and it was allotted to Jatadhari by the final award and the final award did not mention the charge either expressly or even by reference. What was deposited by Jatadhari with the Plaintiffs at the time when they borrowed the money from the latter as a document of title of the property mortgaged was the final award. It cannot be said that for the purpose of making out title to the property which was the subject-matter of mortgage an inspection of the partial award was necessary or even relevant. The partial award did not deal with this property at all and as said above the final award did not mention the charge in any manner. In these circumstances we are unable to agree with Mr. Gupta that it was incumbent upon the Plaintiff or his legal advisers to investigate whether any charge was created by the partial award referred to above. There was nothing in the final award which could put her on enquiry in regard to this matter and we cannot say that there was any act of willful abstention or gross negligence on her part which would affect her with constructive notice of the contents of the partial award. The partial award was admittedly not a registered document. 13. There was nothing in the final award which could put her on enquiry in regard to this matter and we cannot say that there was any act of willful abstention or gross negligence on her part which would affect her with constructive notice of the contents of the partial award. The partial award was admittedly not a registered document. 13. The result, therefore, is that we agree with Ormond, J., in holding that the Plaintiff was a purchaser for value without notice and consequently the charge could not be enforced against her. 14. In the view we have taken it is not necessary to consider the further point raised on behalf of the Respondent that the Defendant was not entitled to claim subrogation under sec. 92 of the Transfer of Property Act. The result is that the appeal is dismissed with costs. Certified for two Counsel. Harries, C.J. I agree.