Arumukhaperumal Nadar v. Dwarapandya Nadar — 1952 DIGILAW 66 (KER)

Judgment :- 1. The question raised in this appeal is as to which of the two rival sales in respect of the equity of redemption of the suit property has to prevail. The property originally belonged to one Ponnayya Nadar who had mortgaged it in favour of one Perumal Nadar under Ext. VIII dated 22-5-1103. Perumal Nadar assigned his mortgage right in favour of one Devianayagam Nadar under Ext. VI dated 10-4-1106. While the property was thus outstanding on mortgage, the decree in O. S. No. 1520 of 1107 on the file of the Nagercoil District Munsiff's Court was obtained by one Arumugham Pillai against Ponnayya Nadar for recovery of a certain sum of money due to the former from the latter. In execution of that decree, Ponnayya Nadar was arrested and brought before Court. At that stage himself and the decree-holder entered into a compromise by which the latter agreed to the judgment-debtor being released from custody on his giving security for the decree amount. Accordingly Ponnayya Nadar executed a bond in favour of the Court on 30-11-1108 securing the equity of redemption of the property covered by the mortgage deed Ext. VIII, for the due payment of the decree-debt in O. S. No. 1520/1107. Ext. D is copy of that bond wherein Ponnayya Nadar had expressly agreed that the amount due from him under the decree may be realised by the sale of the secured property, in execution of the decree. On 31-11-1108 the Court passed an order accepting the security bond and releasing Ponnayya Nadar from arrest as agreed to by the decree-holder. Subsequently on 4-6-1110 Ponnayya Nadar executed a hypothecation bond, copy of which is Ext. V, in favour of the present defendants 1 and 2 wherein the equity of redemption of the suit property was also included. These defendants sued on that bond and obtained the decree in O. S. No, 705/1111 and in execution of it brought to sale such equity of redemption and they themselves purchased it on 5-12-1114. This sale was followed by a formal delivery of possession also through Court. Ext III is copy of the sale certificate and Ext. II is copy of the delivery kychit in favour of defendants 1 and 2. On the strength of such sale and delivery, they obtained a release of the mortgage Ext. VIII from Deivanayagam Nadar. Ext. This sale was followed by a formal delivery of possession also through Court. Ext III is copy of the sale certificate and Ext. II is copy of the delivery kychit in favour of defendants 1 and 2. On the strength of such sale and delivery, they obtained a release of the mortgage Ext. VIII from Deivanayagam Nadar. Ext. VII is copy of the release deed dated 4-9-1116 executed by Deivanayagam Nadar. Since Ponnayya Nadar failed to discharge the decree-debt in O. S. No. 1520/1107, the security bond Ext. D was enforced against him in execution of that decree by the present plaintiff who had taken an assignment of that decree. The equity of redemption of the suit property was thus sold in Court auction and was purchased by the present plaintiff on 4-11-1119. Ext. A is the sale certificate in his favour. The right purchased by him under Ext. A was delivered over to him through Court on 16-12-1119 and Ext. B is copy of the delivery report. On the strength of Exts. A and B the plaintiff instituted the present suit for redemption of the mortgage Ext. VIII and for recovery of the property from the defendants. The defendants resisted the suit and contended that they have acquired title to the property by virtue of the court sale Ext. III in their favour and that they are not liable to surrender possession of the property. They further contended that the security bond Ext. D not having been registered did not create any charge on the suit property and that therefore the court sale evidenced by Ext. A is invalid and inoperative. The trial Court upheld these contentions and dismissed the suit. The lower appellate Court came to a different conclusion and held that the security bond Ext. D did not require registration for creating a valid charge on the property and that therefore the court sale Ext. A in favour of the present plaintiff is valid and has to prevail over the sale in favour of defendants 1 and 2. The suit was accordingly remanded to the trial Court for fresh disposal after a due consideration of the other questions involved in the suit. The defendants have therefore preferred this appeal, challenging the correctness of the view taken by the lower appellate court regarding the validity of Exts. D and A. 2. The suit was accordingly remanded to the trial Court for fresh disposal after a due consideration of the other questions involved in the suit. The defendants have therefore preferred this appeal, challenging the correctness of the view taken by the lower appellate court regarding the validity of Exts. D and A. 2. The first point urged on behalf of the appellant is that the security bond Ext. D not having been registered as required by the provisions of the Registration Act, it was unenforceable as against the immovable property dealt with in it and that therefore the proceedings conducted on the basis of Ext. D are all invalid and inoperative. These proceedings were conducted at a time when the Travancore Registration Act, Act II of 1087 was in force. The property dealt with under Ext. D is also immovable property situated in the former State of Travancore. The question whether Ext. D required registration or not, has to be decided with reference to the relevant provisions of the Travancore Registration Act. 3. The different classes of documents, the registration of which has been made obligatory, have been enumerated in clause 1 of section 10 of the Act (this section corresponds to section 17 of the Indian Registration Act). The exceptions to this rule are specified in clause 2 of the same section. Under Sub-clause (v) of clause 2 of section 10, decrees or orders of Court and awards are expressly exempted from the rule regarding compulsory registration. The corresponding provision in the Indian Registration Act is the one contained in sub-clause (vi) of clause 2 of section 17. Until that clause was amended in its present form in the year 1929, decrees and orders of court and awards were in general exempted from compulsory registration under the Indian Act also. In considering the effect of such a general exemption in favour of decrees and orders of Court, it was ruled by the judicial Committee of the Privy Council in Hemanta Kumari Debi v. Midnapur Zemindari (I. L. R.47 Calcutta 485) that there was no justification in limiting the scope of the exemption to decrees and orders of court relating to properties directly involved in the particular suit. The decree which had come up for consideration in that case was passed on a compromise petition which had been filed by the parties. The decree which had come up for consideration in that case was passed on a compromise petition which had been filed by the parties. The compromise dealt with certain items of immovable properties which were not really involved in the suit. All the same the terms of the compromise were accepted by the Court and a decree incorporating those terms was passed. It was held that even such a decree was exempted from registration by virtue of the exemption granted by sub-clause (vi) of clause 2 of section 17 of the Indian Registration Act as it then stood. To the same effect is the decision of the Madras High Court in Poorvanayi Ayissa v. Kundrom Choken (I.L.R.43 Madras 688). The question whether a security bond executed in favour of a Court and accepted by the court and incorporated in the order accepting the same is not similarly exempted from registration, directly arose for the consideration of the Bombay High Court in Jayappa v. Shivangooda (A.I. R. 1928 Bombay 42). It was ruled in that case that a security bond, being part of judicial proceedings and incorporated with it, is exempted from registration. In Kasturi Lal v. Goverdhan Das (A.I.R.1934 Lahore 138) also the same question arose for consideration and it was ruled therein that a security bond executed in favour of the court and accepted by it formed part of the order or proceedings of the Court and as much was exempted from registration under hub-clause (vi) of clause 2 of section 17 of the Indian Registration Act. 4. The position regarding the security bond Ext. D in the present case has to be examined in the light of the principles enunciated in the cases cited above. As already stated, the bond Ext. D was in favour of the Court. The mere execution of such a bond, no matter whether it is registered or unregistered, does not render it effectual and operative. It amounts only to a tender of security which may or may not be accepted by the court. It is open to the court to reject the security on the ground of insufficiency or for some other sufficient reason. Where the court chooses not to accept the security bond, it would remain an ineffective tender and would not be operative or enforceable. It is open to the court to reject the security on the ground of insufficiency or for some other sufficient reason. Where the court chooses not to accept the security bond, it would remain an ineffective tender and would not be operative or enforceable. All the rights and liabilities will arise under the bond only after the Court passes an order accepting the bond. It is really the order of the Court that makes the bond effectual and operative. The order accepting the bond means that the terms of the bond are incorporated in the court's order and treated as part of the order itself. Thereafter the undertakings in the bond will have the force and effect of directions by the court. In this view of the matter it is clear that what is sought to be enforced is not the security bond as such, but is really the order of the Court incorporating in it the terms of the bond. Such an order was passed on the bond Ext. D in the present case and as such it came clearly within the exemption provided for in section 10 clause 2 sub-clause (v) of the Travancore Registration Act. It follows therefore that there is no force in the contention that Ext. D had to be registered so as to render it valid and effective as against the immovable property dealt with in it. 5. Another contention urged on behalf of the appellant is that the non-compliance with the direction contained in Section 15 of the Travancore Registration Act has rendered the bond Ext. D ineffectual and inoperative as against the immovable property comprised in it. Section 15 of the Travancore Registration Act directs that "when any civil Court shall, by a decree or order, create, declare, transfer, limit or extinguish any right, title or interest of any person to or in any immovable property situate in any part of Travancore, such Court shall cause a memorandum of the said decree or order to be sent to the Sub-Registrar" within whose sub-division the whole or any portion of the property is situate and such memorandum shall describe the property in the manner required by section 14 and that the memorandum so received shall be filed in Book 1 maintained in the Sub-Registrar's Office. The question is whether the failure to send such a memorandum to Sub-Registar's Office in respect of the older of the court passed on Ext. D has rendered the order invalid or inoperative. There is no such provision in section 15 or in any of the other sections of the Registration Act. In fact there is nothing in the Act to indicate as to what would be the consequence of the non-compliance with the direction contained in Section 15. In spite of such non-compliance the decree and order referred to in the section which are otherwise valid and operative would continue to be so. They would not cease to be decrees or orders passed by the civil courts, merely because the memorandum as contemplated by section 15 is not sent to the Sub-Registrar's office. It is as decrees and orders of the civil court that they gain their force and validity. The provision contained in section 10 clause 2 sub-clause (v) of the Act exempting such decrees and orders affecting immovable property from the rule regarding compulsory registration, cannot be deemed to have been nullified or taken away by section 15. Section 42 of the Act lays down that no document, the registration of which has been made obligatory by section 10, shall affect any immovable property comprised therein or be received as evidence of any transaction affecting such property unless the document has been registered. It is obvious that this provision does not apply to decrees or orders of court affecting immovable property. It is also significant to note that section 42 is not made to govern decrees or orders in respect of which no memorandum as contemplated by section 15 has been sent to the Sub-Registrar's Office. It has therefore to be taken that decrees and orders of civil courts will be valid at d effective as against the immovable property comprised therein even if no memorandum as required by section 15 in respect of such decrees and orders has been forwarded to the Sub-Registrar's Office. The effect of sections 10,15 and 42 has been consistently construed in this manner by the erstwhile Travancore High Court in the rulings reported in Narayanan v. Poothathan Avel (1 T.L.J. 265), Chidambara Iyen v. Krishna Iyen (10 T.L.J. 22), Abraham v. Chacko (28 T.L.J. 1229) and Mani v. Narayani Iyer (30 T.L.J. 690). The effect of sections 10,15 and 42 has been consistently construed in this manner by the erstwhile Travancore High Court in the rulings reported in Narayanan v. Poothathan Avel (1 T.L.J. 265), Chidambara Iyen v. Krishna Iyen (10 T.L.J. 22), Abraham v. Chacko (28 T.L.J. 1229) and Mani v. Narayani Iyer (30 T.L.J. 690). We are in respectful agreement with the view taken in these cases. Thus the objection urged on behalf of the appellant on the basis of section 15 of the Travancore Registration Act also fails. 6. The next point urged on behalf of the appellant is that the security bond Ext. D could have been enforced only in a fresh suit with the present defendants, who had taken the subsequent hypothecation bond Ext. V in respect of the same property, also on record and not in execution of the decree in O. S. No. 1520/1107 in the course of which the bond had been executed. We are clear that this contention also is unsustainable. The bond was executed as security for the due performance of the decree in O.S. No. 1520/1107. Even if such a bond had been executed by a third party as surety for the judgment-debtor, the security could be enforced in execution of the same decree as provided for in section 109 of the Travancore Code of Civil Procedure corresponding to section 145 of the Indian Code. So far as the bond Ext. D is concerned, it was not necessary to invoke the aid of that section. This bond was executed not by any surety, but by the judgment-debtor himself in O. S. No. 1520/1107 at a time when the decree was being enforced against his person. The liability under such a bond executed by the judgment-debtor is a matter relating to the execution, discharge or satisfaction of the decree and as such coming directly under section 47 of the Code. It is a matter arising between the decree-holder and the judgment-debtor. It was therefore perfectly competent for the execution court to enforce the liability that was created under the bond Ext. D as accepted by that court. Defendants 1 and 2 who had taken the subsequent hypothecation bond Ext. V, from the judgment-debtor, were not entitled in law to any notice of the proceedings in execution based on the order on Ext. D as accepted by that court. Defendants 1 and 2 who had taken the subsequent hypothecation bond Ext. V, from the judgment-debtor, were not entitled in law to any notice of the proceedings in execution based on the order on Ext. D. The rights acquired by these defendants were clearly affected by the rule of lis pendens. The 'lis' contemplated by section 52 of the Transfer of Property Act commenced in the present case from the moment of the acceptance of the security bond Ext. D by an order of the Court by which the decree debt in O. S. No. 1520/1107 was made a charge on the immovable property covered by the bond. To attract section 52, it is not necessary that the immovable property in question must have been involved in the suit from its very commencement. It is enough if any right to the immovable property concerned is directly and specifically in question in any suit or proceeding in a court having jurisdiction to deal with the "subject-matter. The suit or the proceeding should not be collusive. Where these conditions are satisfied, the property involved in the suit cannot be transferred or otherwise dealt with by any party to the suit or proceeding so as to affect the rights of any other party thereto under any order or decree which may be made therein, except under the authority of the court and on such terms as it may impose. So far as the suit O. S. No. 1520/1107 is concerned, it commenced as a simple suit for money in which no property was involved. The decree was also a simple money decree. But during the pendency of the proceedings in execution the right to the immovable property covered by the bond Ext. D was brought in by the execution of the security bond Ext. D followed by the court's order accepting the same. The effect of the order accepting the bond Ext. D was to convert the decree which was till then a simple money decree into a decree charged on the immovable property covered by Ext. D. Such a charge was created on the agreement of parties and by an order of the execution court passed as a step towards the execution, discharge and satisfaction of the decree. From the time of the passing of that order, the right to the immovable property covered by Ext. D. Such a charge was created on the agreement of parties and by an order of the execution court passed as a step towards the execution, discharge and satisfaction of the decree. From the time of the passing of that order, the right to the immovable property covered by Ext. D was directly and specifically in question in the proceedings in the execution. The Us commenced on that date and it continued until such proceedings terminated with the satisfaction of the claim under the decree and order. If defendants 1 and 2 had taken the hypothecation bond Ext. V in respect of this property at any time prior to the date of the court's order accepting the security bond Ext. D, their rights under it would not have been affected by the rule of lis pendens. But as a matter of fact it is seen that they took the hypothecation bond only long after the court's order accepting the bond Ext. D was passed in the proceedings in execution in O. S. No. 1520/1107. The result is that their rights under Ext. V were subject to the result of the proceedings based on the court's order accepting the security bond Ext. D. The ruling in Jagannatha v. Ramachandra (A. I. R. 1936 Madras 589) is in support of this view. It was ruled in that case that in order to attract section 52 of the Transfer of Property Act, it is not necessary that the immovable property in question should have been included in the suit at its very commencement, but that it is enough if at any subsequent stage of the litigation the property is brought under the control and jurisdiction of the court so that from that time onwards it will be property directly and specifically in question in the suit. Applying this principle to the facts of the present case, it is clear that the hypothecation bond Ext. V taken by defendants 1 and 2 was clearly affected by the rule of lis pendens. The proceedings in execution of the decree in O. S. No 1520/1107 could be validly conducted on the strength of the order accepting the security bond Ext. D and it was not necessary that notice of such proceedings should have been given to these defendants. It follows therefore that such proceedings which terminated in the issue of the sale certificate Ext. D and it was not necessary that notice of such proceedings should have been given to these defendants. It follows therefore that such proceedings which terminated in the issue of the sale certificate Ext. A followed by the delivery kychit Ext. B, in favour of the present plaintiff are all perfectly legal and valid. The plaintiff has thus become the owner of the equity of redemption of the suit property and his rights are not in any way affected by the proceedings based on the hypothecation bond Ext. V. The finding of the lower appellate Court to this effect is therefore upheld. 7. Since the other questions involved in the suit have not been considered and decided, the order remanding the case to the trial Court for fresh disposal of the suit after a due consideration of those questions also, was justified and we see no reason to interfere with that remand order. 8. In the result this appeal is dismissed with costs. Dismissed.