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1976 DIGILAW 235 (KER)

HARIFFA BEEVI v. MADHAVAN

1976-11-05

K.BASKARAN, T.CHANDRASEKHARA MENON

body1976
Judgment :- 1. The respondent (plaintiff-decree holder) had, in a suit on the foot of a promissory note, attached an item of immovable property belonging to the judgment-debtor, who, while the suit was pending and the attachment was subsisting, executed a sale deed dated 6th February 1970 in respect of the property in favour one Dr. Ramala Beevi, from whom, subsequently, the appellants are said to have purchased it under a sale deed dated 16th February 1973. The suit was decreed on 9th November 1970. In the execution that followed, the appellants filed an application for stay of the proceedings under S.3 of the Kerala Debtors (Temporary Relief) Act, 1975, (Act 30 of 1975), for short the Act. The application having been dismissed by the court below, this appeal has arisen. S.3 of the Act, Explanation omitted, reads as follows: "3. Bar of suits and applications and other proceedings. No suit for recovery of a debt shall be instituted, no application for execution of a decree in respect of a debt shall be made and no appeal, revision petition or application for review against any decree or order in any such suit or application shall be presented or made in any civil or revenue court before the expiry of one year from the commencement of this Act or such longer period as may be specified by the Government by notification in the Gazette; and all such suits, applications, appeals and petitions instituted, made or presented before such commencement and pending at such commencement shall stand stayed for the said period". A preliminary objection to the maintainability of the appeal was raised by the counsel for the respondent who contended, inter alia, that the appellants had no locus standi to file the application for stay of the proceedings under S.3 of the Act, as, according to him, the appellants are not debtors within the meaning of the term "debtor" as defined under S.2(5) of the Act which reads as follows: "(5) 'debtor' means any person who has an interest, other than as a simple mortgagee, in any agricultural land in the State of Kerala from whom any debt is due and includes " S. 2(4) of the Act defines "debt" as follows. "(4) 'debt' means any liability in cash or kind, whether secured or unsecured, due from or incurred by a debtor on or before the commencement of this Act, whether payable under a contract, or under a decree or order of any court, or otherwise, but does not include (b) any liability for which a charge is provided under sub-clause (b) of clause (4) of S.55 of the Transfer of Property Act 1882; or" 2. Sri P. C. Chacko the counsel for the appellants, in support of his argument, cited the decision of the Division Bench of the Madras High Court tendered by Varadachariar and Abdur Rahman, JJ. in Perianna Goundan v. Sellappa Goundan and others AIR 1939 Madras 186, quoted with approval by the Supreme Court in Nageswara sawmi v. Viswasundara AIR. 1953 SC 370 and followed by a Division Bench of this Court in Rahima Beevi v. The Court Liquidator (The Millions Bank Ltd., Alleppey) 1957 KLT. 809. The facts of the case decided by the Division Bench of the Madras High Court were as follow:- A mortgage was executed in the year 1929. The mortgagor who was an agriculturist sold to A the equity of redemption in a portion of the mortgage property in 1930. In 1933, B who was also an agriculturist purchased the same from A. In a suit upon the mortgage, instituted in 1934, the mortgage claimed to bring to sale the properties purchased by B. Subsequently B applied for relief under the Act. The Division Beach held that B was entitled to get relief under S.8 of the Madras Agriculturists Relief Act as the liability sought to be enforced was based on the original mortgage of 1929 and that his purchase in 1933 was not the basis of any new liability Speaking for the Bench Varadachariar, J. observed as follows: "The only ground on which the petitioner's right to relief under the Act is challenged is that the liability of the petitioner is not a'debt' within the meaning of S.3 (3) of the Act. The learned counsel for the petitioner con ends that this definition should be understood as limited to cases where a person is personally liable. We are unable to read the definition in this limited sense. The learned counsel for the petitioner con ends that this definition should be understood as limited to cases where a person is personally liable. We are unable to read the definition in this limited sense. There are no words in the definition clause justifying any such restriction; the clause speak of 'any liability' and the word 'due' does not necessarily imply that it must be recoverable by imprisonment of the debtor. The inappropriateness of restri-ting it in the sense contended for will be realized when it is remembered that even by the time this Act was contemplated, imprisonment for debt has, to a great extent, been abolished by Act 21 of 1936. It could not therefore have been the intention of the Legislature to limit the relief under the Act to cases where a person was personally liable. Its avowed purpose was to enable agriculturists to retain their property and prevent such property passing into the hands of creditors or execution purchasers. Again, according to the contention of the plaintiff's learned counsel it will only be the person who actually contracts the debt that will be entitled to claim relief under the Act and not his heir-at-law or legal representative because the latter will ordinarily be under no personal liability " It may be noted that B was an assignee of the equity of redemption and the plaintiff's claim was to bring the property purchased by B as part of the mortgage security. It was not denied by the plaintiff that B was an agriculturist within the meaning of the Act; nor was it denied that the mortgagor was an agriculturist. The only ground on which B's right to relief under the Act was challenged was that the liability of B was not within the meaning of S.3 (3) of the Act. The contention of the counsel for the decree-holder was that the definition should be understood as limited to cases where a person was personally liable. The observations made by Varadachariar, J has to be appreciated and understood in the background of these facts and the contentions that arose in that case. There is an ocean of difference between the position of the purchaser of equity of redemption before the institution of the suit on the one hand, and that of a purchaser of a property under attachment during the pendency of the suit on the other. 3. There is an ocean of difference between the position of the purchaser of equity of redemption before the institution of the suit on the one hand, and that of a purchaser of a property under attachment during the pendency of the suit on the other. 3. The counsel for the appellants also referred to the ruling given by a Division Bench of this Court in lyappu Varghese v. Palai Central Bank Ltd. 1959 KLT. 955. In that case, the 3rd defendant in the suit who claimed benefit of the Agriculturists' Debt Relief Act (Act 31 of 1958) was a person who had purchased the property long prior to the institution of the suit, though the purchase was subsequent to the creation of the charge in favour of the plaintiff Bank. Sankaran, C. J., who spoke for the Bench, had no hesitation in holding that the debt being a prior charge on the property, the plaintiff could enforce toe charge against the property, and in that view of the matter the 3rd defendant also was a debtor within the definition as given in Act 31 of 1958. It was also observed in that decision that the liability of the property of which the 3rd defendant had become the purchaser was sufficient to attract the definition of the term'debtor'. 4. Considerable emphasis was laid by the counsel for the appellants on the observations contained in Para.3 of the decision of a single judge of this Court in Muhammed Kutty v. Mohammed Kunju Musaliar 1972 KLT. 543 to meet the argument of the counsel for the respondent that in view of the provisions contained in S.52 of the Transfer of Property Act and S.64 of the Code of Civil Procedure the appellants have no locus standi to apply for the stay of the proceedings. From the head-note, and the statement of facts contained at the beginning of Para.3 of the judgment (1972 KLT. From the head-note, and the statement of facts contained at the beginning of Para.3 of the judgment (1972 KLT. 543) it is clear that the decision rendered in that case was in the light of the definition of the term ' debtor' under S.2 (4) (fff) of the Kerala Agriculturists Debt Relief Act (Act 31 of 1958), incorporated by S.2 (4) of the Amendment Act, 1960 (Act 2 of 1961), which reads as follows : 'Melpattomdar', 'mortgagee', 'debtor' and 'creditor' shall include the heirs, legal representatives and assigns of the melpattomdar, mortgagee, debtor and creditor respectively: Provided that in the case of a debtor such heirs, legal representatives and assigns are also agriculturists." The definition of the term 'debtor' in S.2 (5) of the Act, which has to be applied to the facts of the present case, does not include the assigns of the debtor, the intention of the Legislature evidently being to confine the ambit of the term to debtors as defined in the definition clause of the Act, without extending it to persons who might, otherwise, claim through them. It is not as though the Legislature was not aware of the significance and consequence that would naturally follow from the omission to include in the definition the assigns of the debtor. It might even be that because of the temporary nature of the enactment the Legislature was not in favour of describing the term 'debtor' in wide terms; the Legislature was in favour of giving a restricted meaning to the term'debtor' so that the application of the provision might be confined to the class of persons whom the Legislature wanted to benefit. 5. On the question of locus standi of the appellants to file the application we are, in agreement with the argument of the counsel for the respondent. An attaching creditor obtains by attachment a right to have the attached property kept in custodia legis for the satisfaction of his debt, and by any sub-sequeut dealings with that property the judgment-debtor and any person on whom the attachment was binding at the time it was effected, cannot be allowed to defeat that right. An attaching creditor obtains by attachment a right to have the attached property kept in custodia legis for the satisfaction of his debt, and by any sub-sequeut dealings with that property the judgment-debtor and any person on whom the attachment was binding at the time it was effected, cannot be allowed to defeat that right. (Krishnan and others v Travancore Bank Ltd. and others (AIR 1956 T. C. 34 D. B ) S.64 of the Code of Civil Procedure provides that where an attachment has been made, any private transfer or delivery of the property attached or of any interest therein and any payment to the judgment-debtor of any debt, dividend or other monies contrary to such attachment, shall be void as against all claims enforceable under the attachment. The purchase alleged to have been made by the appellants as also the purchase alleged to have been made by their assignor from the judgment-debtor when the attachment was in force, being a void transaction as against all claims enforceable under the attachment, it cannot be used as a shield against the respondent's right to execute and realise the decree amount by bringing the property under attachment to sale. The alleged interest in the property claimed by the appellants is something which by the operation of law need not be recognised by the respondent-decree-holder and the court also is not bound to give effect to it as against the respondent. We have no doubt in our mind that the Legislature has not intended to confer benefit under S.3 of the Act on a person, who, as a speculative venture, purchased a property remaining in custodia legis in violation of the clear provisions of S.64 of the Code of Civil Procedure. The position of the appellants vis-a-vis the respondent is not that of debtors and creditor. For the reasons stated above, with due respect to the learned judge who decided the case in Mohammad Kutty v. Mohammad Kunju Musaliar 1972 KLT 543, we are constrained to observe that the ruling given therein in regard to the right of the purchaser of the property under attachment to claim the benefit of 'debtor' does not lay down the correct position of law. 6. Counsel for the appellants then drew our attention to the ruling of the Full Bench of the Travancore-Cochin High Court in Korah Punnen v. Parameswara Kurup Vasudeva Kurup 1955 KLT. 924. 6. Counsel for the appellants then drew our attention to the ruling of the Full Bench of the Travancore-Cochin High Court in Korah Punnen v. Parameswara Kurup Vasudeva Kurup 1955 KLT. 924. What came up for consideration before the Full Bench in that case could be gathered from the following extract from the order of reference passed by the Division Bench: "The questions of law raised in this appeal are of great importance and far-reaching consequences. The decree that is sought to be enforced against the appellants is based on a compromise entered into between the defendants and the plaintiffs in O. S. No. 191 of 1123 on the file of the District Munsiff's Court at Kottayam. In execution the defendants claimed the benefits of the Travancore - Cochin Buildings (Lease and Rent Control) 0.1950. The decree-holders maintained that the undertakings embodied in the compromise petition amount to a waiver by these tenants of the benefits which they could have availed of under the Rent Control Order and that, therefore, they cannot now invoke the aid of that Order..." In Para.29 of the judgment at pages 942-943 of the Full Bench decision Vithayathil, J., who spoke for the Bench which comprised Koshi, C. J, and Varadaraja Iyengar, J., also, there is the following observation: "We no not think that the Travancore-Cochin Buildings (Lease and Rent Control) Order, 1950, was intended to deal with private rights only. The circumstances under which it happened to be issued and the provisions thereof go to show that it was intended to have 'a more extensive operation'. The order was issued under the Travancore-Cochin Public Safety Measures Act Government thought that it was necessary in the interests of public safety and welfare to control the letting of buildings and their rent in certain areas of the State, particularly towns and industrial centres. Public interest demanded that owners of houses in towns and other thickly populated places should not be allowed to evict tenants as they liked or demand unreasonable rent. It will be a matter of grave public concern if a large number of people living in those areas are evicted from their dwellings and are rendered homeless or if it becomes impossible for people to get dwelling houses in those areas on reasonable rent Such a situation is likely to affect public peace and welfare of the State as a whole. An enactment intended to avert such a situation cannot be said to be a private piece of legislation meant merely to confer certain benefits on a limited class of people. It will be an enactment based on public policy for achieving a public purpose. The object of such an enactment cannot be achieved if parties are allowed to contract out of it. The provisions of the Buildings (Lease and Rent Control) Order make it clear that it was the intention of the law-making authority that land-lords and tenants should not be allowed to defeat the object of the enactment by agreeing to contract out of it" The argument of the counsel is that there is a public purpose intended to be served by the Act, and part of it is to prevent the sale of the property belonging to a debtor for the realisation of amounts due to a creditor. This argument, as we have already noticed, ignores the truth that there did not exist any debtor-creditor relationship between the appellants and the respondent. The salutary provision of S.64 of the Code of Civil Procedure is based on sound public policy of protecting the interests of a creditor (plaintiff) from the contingency of the debtor (defendant) removing the property brought under attachment for satisfaction of the decree that might be passed in the suit, beyond the reach of the decree-holder and the court. That object of the provision in the Code could not be achieved if parties bound by it are allowed to contract out of it. By executing the sale deed dated 6th February 1970 what the judgment-debtor attempted to achieve was to defeat the right guaranteed to the respondent-decree-holder by law. In our view, provisions contained in the Act are not intended to defeat the provisions of S.64 of the Code of Civil Procedure. S.8 of the Act provides: "The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in the Code of Civil Procedure, 1908 (Central Act 5 of 1908), or in any other law for the time being in force, or in any custom, usage or contract or in any decree or order of a court or other authority." Counsel for the appellants was not able to substantiate that the provisions of S.64 of CPC. were in anyway inconsistent with any of the provisions contained in the Act, inasmuchas there exists no debtor-creditor relationship between the appellants and the respondent; the appellants were not made parties to the suit or to the execution proceedings, nor has the respondent obtained a decree enforceable against the appellants. The appellants seek to invoke S. 3 of the Act on the pretext that they are debtors inasmuch as they are the purchasers of the property that was being brought to sale, though there was no debtor-creditor relationship between them and no relief is sought against them; however, they seem to forget that they deprive no valid title to the property inasmuch as the transfer in favour of their assignor herself by the judgment-debtor was a void transaction as against the claim enforceable under the decree by virtue of the provisions contained in S.64 of the C. P. C. The provisions of S.8 of the Act are intended to remove the obstacles h the way of implementation of the provisions of the Act, but not to do away with the effect of the salutory provisions like those contained in S.64 of the CPC, which are in no way inconsistent with the provisions of the Act None of the provisions in the Act appears to lay down, even to suggest, that a transaction which is void under the provisions of the Code of Civil Procedure, or of any other law for the time being in force, shall be deemed to he valid for the purpose of the Act; and therefore the plea of inconsistency between the provisions of the Act and those of S.64 of the CPC. is based on an erroneous assumption of law. There is therefore no question of the provisions of the Act overriding the provisions of S.64 of the CPC. 7. The learned Subordinate Judge has in Para.3 of the order under appeal observed that the appellants did not prove that they were entitled to the benefits of Act 30 of 1975 Ext. A-1, copy of the judgment in O.S. No. 94 of 1969, would go to show that the suit promissory note was executed for the balance consideration of sale and also for the loan advanced; and Ext A-2 copy of a petition in OP. A-1, copy of the judgment in O.S. No. 94 of 1969, would go to show that the suit promissory note was executed for the balance consideration of sale and also for the loan advanced; and Ext A-2 copy of a petition in OP. (D. R) No. 23 of 1975 would show that the assessee therein was paying income tax, and therefore under the provisions of the Act he was not entitled to the benefits of the Act Counsel for the appellants submitted that when the balance sale price takes the form of consideration for a promissory note, it loses the character of balance of sale price, and therefore there was no bar against the appellants from claiming the benefits of the Act. We do not agree with this proposition of law put forward by the counsel. It is well settled that the balance of sale price would retain its character for the purpose of Debt Relief Act even when it is embodied in a promissory note as the consideration for it. On the question of payment of income tax, the counsel submitted that reference to it in Ext. A-2 was to the 2nd defendant who was the judgment-debtor, and that it has no bearing on the appellants. He also pointed out that there are factual mistakes in the statement of facts in the order under appeal inasmuch as it has been stated the application far stay was filed by the 2nd defendant judgment-debtor which obviously is wrong. We agree that there is some amount of confusion noticeable in the statement of facts in the order under appeal as to the person who applied for stay, and also regarding the person on whom Ext. A-2 has bearing. However, inasmuch as we have already found that the appellants have no locus standi to move for the stay of the proceedings, in which no relief is claimed against them, and in view of S.64 of the Code of Civil Procedure the title alleged to have been obtained by the appellants over the property sought to be sold is void against all claims enforceable under attachment obtained by the respondent-decree-holder, the conclusion reached by the court below has only to be confirmed. In the light of the foregoing discussion we find no merit in the appeal, and it is dismissed. However, in the circumstances of the case, we make no order as to costs. In the light of the foregoing discussion we find no merit in the appeal, and it is dismissed. However, in the circumstances of the case, we make no order as to costs. Dismissed.