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2005 DIGILAW 593 (KAR)

LALITHA KARIAPPA RAI v. SANJEEVL

2005-09-13

H.G.RAMESH

body2005
( 1 ) THIS appeal is by the appellants in FDP. No. 5/90 arising out of O. S. No. 122/89 and also being aggrieved by the judgment and decree passed by the learned civil Judge Sr. Dn. , Puttur, in R. A. No. 79/ 91. The appellants had filed O. S. No. 122/ 89 before the Principal Munsiff Puttur, against the respondents to enforce charge on the B schedule property by way of sale of b schedule property and to recover a sum of Rs. 16,842/- as annunity for the period from 1982 to 1987 and for future interest and cost of the suit. ( 2 ) ACCORDING to the plaintiffs, partition deed dated 5-9-1949 was effected in the family of Seethu Hengsu, Subbakke, Kunhappa rai and Chennamma and B schedule properties along with other properties were allotted to the share of Kunhappa Rai who settled the same in favour of the first defendant and on subsequent partition, property now vests with the defendants. As per the 1949 partition, allottees of B schedule properties were liable to pay annuity of 20 muras of rice to the Branch of Seethu Hengsu mother-in-law of the plaintiff No. 1 payable on charge of B schedule properties on or before 12 of April every year. In the subsequent partition in the family of Seethu hengsu made on 18-7-1968 the above rights stood allotted to the share of Seethu Hengsu and as such, she was exclusively entitled to collect owelty on charge of B schedule plot. Sethu Hengsu left a Will behind her dated 5-2-1981 in favour of Kariappa Rai. the husband of the first plaintiff and thereafter, she died on 6-5-1984. In view of the Will executed by late Seethu Hengsu in favour of kariappa Rai, he was absolutely entitled to recover annuity from the allottees of B schedule property. On the death of Kariappa rai on 6-11-84, plaintiffs filed a suit for recovery of annunities and the suit was contested by the defendants. In the written statement, they have denied the claim of the plaintiffs. It is stated that the suit property vested in the Government and occupancy rights were conferred on the occupants and rights of the plaitiffs stood discharged and plaintiffs, had no more existing right on the charge of the claim over the property. In the written statement, they have denied the claim of the plaintiffs. It is stated that the suit property vested in the Government and occupancy rights were conferred on the occupants and rights of the plaitiffs stood discharged and plaintiffs, had no more existing right on the charge of the claim over the property. Further, it is stated that in view of the land allotted to the defendants due to operation of law, plaintiffs lost their rights and also there was reduction to the extent of land allotted to the share of the defendants. Further, it is stated that suit in O. S. No. 18/1981 filed before the date of grant of occupancy rights, plaintiffs were not entitled to claim on the basis of the decree passed in O. S. No. 18/1981. Further contending that suit is barred by limitation, it was resisted. Based on the pleadings as many as 15 issues were raised. After the evidence was let in and after hearing the parties, the trial Court decreed the suit with costs and thereby directed the defendants to pay a sum of Rs. 16,848/- with interest of Rs. 8442/- from the suit till payment and created a charge on the B Schedule properties excluding lands on which occupancy rights were conferred as per Ex. P. 11. Being aggrieved by the same, appeal was preferred. After the preliminary decree was passed by the Munsiff Puttur, on 16-10-1989, the FDP proceedings were initiated in FDP. No. 5/90. The FDP proceedings were filed by the plaintiffs. In FDP No. 68/86 arising out of O. S. No. 18/1981 suit property was sold in the Court auction, wherein, one balakrishna Rai purchased the suit property on 30-3-1988. Later said Balakrishna rai got himself impleaded in FDP No. 5/90 which were filed by the plaintiffs, as 9th respondent. Respondents 1 to 7 in FDP. No. 5/90 remained ex parte and respondent No. 6 however was dead. 9th respondent who was the auction-purchaser contested the fdp proceedings. According to him, he was not aware of O. S. No. 122/89 filed and he was not a party to it and was not aware of the preliminary decree drawn therein. He stated that before the said suit was filed, he had purchased the schedule properties in court auction on 30-3-1988 for a sum of rs. 30,000/- and the same was confirmed on 1-7-1988. He stated that before the said suit was filed, he had purchased the schedule properties in court auction on 30-3-1988 for a sum of rs. 30,000/- and the same was confirmed on 1-7-1988. Although the appellants were fully aware of the facts, they suppressed the same and filed a suit in O. S. No. 122/89 against the respondents 1 to 8. Out of the aforesaid properties, land measuring 2 acres 90 cents went to the tenants. Respondent balakrishna Rai further contended that he was in possession and enjoyment of the same to the extent of 8 acres 81 cents and also that petition is bad for non-joinder of tenants and accordingly sought for dismissal. After enquiry in the fdp proceedings, the trial court dismissed the petition filed by the plaintiffs. Regular appeal in 79/ 91 was referred before civil (sic) who has dis- missed the appeal. Being aggrieved by the same, this appeal has been filed raising several substantial questions of law. ( 3 ) AT the time of admission, on 30-1-2003, one of the substantial question of law raised was "whether the respondent is a bona fide purchaser for value without notice in a Court auction and the charge created on the property is binding on him?" ( 4 ) HEARD the learned counsel for the respective parties. ( 5 ) IT is the submission of the learned counsel for the appellants that by virtue of will in favour of Kariappa Rai by Seethu hengsu wherein, she bequeathed her right of annuity on B schedule property, plaintiffs/appellants being the legal heirs of kariappa Rai are entitled to enforce the same as charge on the B schedule property in the partition held in the year 1949 and also in the subsequent partition there was a charge created on the B schedule property to pay 20 muras of rice on or before 12th of April every year and the same was payable to seethu Hengsu who bequeathed the same to Kariappa Rai. Annuity that accrued every year was enforceable for payment. Further in O. S. No. 8/81 there was also a decree in favour of the plaintiffs. Similarly another suit was filed by the plaintiffs for the recovery/enforcement of annuity for subsequent period that is from 1984 to 1987 in O. S. No. 122/89 much prior to the sale of the property in the execution of FDP. Further in O. S. No. 8/81 there was also a decree in favour of the plaintiffs. Similarly another suit was filed by the plaintiffs for the recovery/enforcement of annuity for subsequent period that is from 1984 to 1987 in O. S. No. 122/89 much prior to the sale of the property in the execution of FDP. No. 68/86, as such the property that was purchased by the respondent was subject to lis pendens. O. S. No. 122/88 was filed on 18- 12-1987 which was listed on 1 -1 -1988 much prior to the sale in the Court auction. in favour of the respondent. So in execution proceedings arising out of O. S. No. 18/81 b schedule property was purchased by the respondent in Court auction which is dated 30-3-1988 and was confirmed on 1-7-1988, as such, the property that is being subsequently sold in Court auction and decree passed in O. S. No. 122/88 is enforceable against the auction-purchaser as the same is purchased during the pendency of O. S. No. 122/88 in respect of enforcement of charge on annuity for the period from 1984 to 1987 and that came to be decreed in favour of the plaintiffs. It is also submitted that in support of the contention property purchased by auction-purchaser cannot be free from any defects. Whatever he pur- chased is subject to charge in the form of annuity that was avaialble to the plaintiffs. Accordingly in support of his argument, learned counsel relied on ruling reported in air 1925 Allahabad 60 in the case of mahadeo Prasad v. Anandi Lal to contend that as per Section 100 of the Transfer of property Act charge not amounting to mortgage acts against the purchaser without notice. He also relied upon the following rulings in support of his arguments : 1. AIR 1925 Allahabad 60, 2. 1967 (2) SCR 18, 3. AIR 1940 Calcutta 60, 4. AIR 1988 Karnataka 59, 5. AIR 1962 Bombay 191, ( 6 ) AIR 1975 Punjab and Haryana 205, ( 7 ) AIR 1959 Bombay 475 and ( 8 ) AIR (35) 1948 Oudh 147. ( 9 ) AIR 1957 SC 577 . 6. AIR 1925 Allahabad 60, 2. 1967 (2) SCR 18, 3. AIR 1940 Calcutta 60, 4. AIR 1988 Karnataka 59, 5. AIR 1962 Bombay 191, ( 6 ) AIR 1975 Punjab and Haryana 205, ( 7 ) AIR 1959 Bombay 475 and ( 8 ) AIR (35) 1948 Oudh 147. ( 9 ) AIR 1957 SC 577 . 6. Per contra, learne'd counsel for the respondents contended that the respondent is a bonafide purchaser in the Court acution and he was not made known in the proclamation notice as to the existence of charge by the decree-holder and property purchased is free from encumbrances and he being the purchaser in a Court auction without notice is not liable for any such charge for having not notified the respondent about the existent of charge on the property although the decree-holder is the same, now he cannot enforce the same against the respondent and further submitted that this respondent was neither a party to the original suit nor in the appeal filed. Later the respondent himself got impleaded and contested the FDP, as such the decree does not bind the respondent muchless, the respondent was not aware of the existence of charge on the suit property which was purchased by him in the Court auction. In support of the arguments, learned counsel relied upon the rulings reported in AIR 1965 SC 835 in case of Laxmidevi v. Mukand Kanwar ruling of Apex Court reported in 2005 (2) SCC 500 : ( AIR 2005 SC 1008 ) : AIR 1948 Madras 120 and AIR 1973 SC 2593 . Learned counsel further submitted that both the Courts below have held concurrently on facts that the respondent is a purchaser in Court auction without notice and earlier charge if any will not bind the respondent as it is without notice. Also it is submitted that no substantial question of law arises for consideration. 7. Having heard the learned counsel for the parties, 1 proceed to consider the ratio in the decision cited by them before entering into the substantial question of law raised. In the decision reported in AIR 1925 allahabad 60, the Division Bench of the allahabad High Court held that as per Section 100 of Transfer of Property Act charge not amounting to mortgage operates against the purchaser without notice. In the decision reported in AIR 1925 allahabad 60, the Division Bench of the allahabad High Court held that as per Section 100 of Transfer of Property Act charge not amounting to mortgage operates against the purchaser without notice. It is stated further that position of a charge holder under the Transfer of Property Act is stronger than that of a person holding a merely equitable charge under the english law. The general rule is that where the owner of the property creates successive rights by different transactions entered into at different times, the rights will, in the absence of special circumstances take effect in order of priority. On the other hand Section 40 of the Act lays down that right arising out of a contract and not amounting to an interest or an easement cannot be enforced against the transferee for value without notice. But where the right to a charge on immovable property was not a merely contractual right but was an obligation embodied in a decree, and where the purchaser was an execution purchaser, the court in that case held that he bought the interest of the judgment-debtor as it stood on the date of the decree and that the charge was available against him. In the decision reported in 1967 (2) SCR 18 referring to section 52 of the Transfer of Property Act, the Apex Court in the case of Samarendra nath Sinha v. S. Krishna Kumar Naghas held that principle of Us pendens applies even to involuntary alienations like Court sales. It is further held that the respondent having purchased the mortgaged property while the appeal against the preliminary decree in respect of the property was pending in the High court, the doctrine of lis pendens must apply to his purchase and he was therefore bound by the result of the suit. 8. In the decision reported in AIR 1940 gal 60 in the case of Jnanendra Nath Roy v. Sashi Mukhi Debya W/o Purna Chandra roy, it is held as follows : "general principle is that at a mortgage sale, auction-purchaser takes the security free of the mortgage may apply in the case of a single charge because by reason of the sale all dues on the charge would usually be liquidated either by the sale proceeds or by means of personal decree under Order 34, Rule 6, Code of Civil Procedure. In the case of a recurring charge however, even although the charged property might be sold in execution of a decree for arrears payable in respect of future payments would ordinarily remain after the sale and would not be extinguished by the sale of the charged property in satisfaction of a decree for arrears which might have already accrued. In such a case the charge will not be extinguished by the sale and, as a charge is attached to the property charged, the auction purchaser would ordinarily get the purchased property subject to the charge". 9. In the decision reported in AIR 1988 kant 59 in the case of M/s. Chitalia Bros. v. The South Indian Bank. Trichur, it is held that auction-purchaser who purchsed the property in Court auction in a suit for enforcing the right under the equitable mortgage during the pendency of the mortgage suit, property sold in execution of a money decree filed by another person auction-purchaser who purchased the property was bound by the decree passed in the pending suit. It is further held that there is no warranty of title in Court auction sales and so by giving up the decree-holder as defendant the right of the plaintiff to seek decree against the auction-purchaser in the suit filed by him is not lost. ( 10 ) IN the decision reported in AIR 1962 bom 191 , the Bombay High Court has held in execution of a decree obtained on foot of puisne mortgage takes place during the pendency of the suit on the prior mortgage, it is affected by the rule of lis pendens so as to make the purchaser's right subject to the result of the prior mortgage suit. In another decision reported in AIR 1975 Punj and Har 205 in the case of Sardar Hart Bachan Singh v. Major S. Har Bhajan Singh, it is held that rule of lis pendens contained in Section 52 is based not on the doctrine of notice, but on expendiency. The effect of this rule is not to annul the transfer but only to render it subservient to the rights of the parties to the litigation. The effect of this rule is not to annul the transfer but only to render it subservient to the rights of the parties to the litigation. According to this rule of lis pendens, whosoever purchases a property during the pendency of a suit is held bound by the judgment that may be made against the person from whom he derived his title even though such a purchaser was not a party to the action or had no notice of the pending litigation. In another decision reported in AIR 1970 SC 1717 in case of kedarnath Lal (dead) by his L. Rs. v. Sheonarain, it is held that Section 52 of the transfer of Property Act strictly speaking does not apply to involuntary alienations such as Court sales but it is well established that the principle of lis pendens applies to such alienations. Of course, this principle has been laid down ever in the decision reported in AIR 1967 SC 1440 in case of samarendra Nath Sinha v. Krishna Kumar nag. Even in this decision it is held that section 52 of the Transfer of Property Act does not strictly speaking apply to involuntary alienations like Court sales but principles of lis pendens applies to such alienations. ( 11 ) IN case of T. S. Swaminatha Odayar v. Official Receiver of West Tanjore, AIR 1957 sc 577 while dealing with a similar case, the Apex Court has held : while effecting a partition of a joint family properties it would not be possible to devide the properties by metes and bounds there being of necessity an allocation of properties of unequal values amongst the members of the joint family. . . . . . . . . A lien or a charge may be created in express terms by the provisions of the partition decree itself. There would thus be the creation of a legal charge in favour of the member to whom such owelty is awarded. If no such charge is created in express terms, even so the lien may exist because it is implied by the very terms of the partition in the absence of an express provision in that behalf. . . . . . . . A lien or a charge created in favour of a member in regard to such owelty obtains precedence over an encumbrance. . . . . . . . A lien or a charge created in favour of a member in regard to such owelty obtains precedence over an encumbrance. ( 12 ) IN the decision reported in AIR 1975 punj and Har 205 in the case of Sardar Hari bachan Singh v. Major S. Har Bhajan Singh, referring to Section 52 of the Transfer of property Act, the Division Bench of the said court has held that the rule of lis pendens contained in Section 52 is based not on the doctrine of notice, but on expediency. The effect of this rule is not to annul the transfer but only to render it subservient to the rights of the parties to the litigaion. According to this rule of lis pendens, whosoever purchases a property during the pendency of a suit is held bound by the judgment that may be made against the person from whom he derived his title even though such a purchaser was not a party to the action or had no notice of the pending litigation. . . . . . . . . . He purchases the property subject to the result of the litigation, which will be binding on him whether he is a party to the case or not. Further, referring to the Full Bench decision reported in AIR 1965 Punj 415, it has held that 'the alienee pendente lite is not a necessary party to the suit'. ( 13 ) IN the case of Gajadhar Prasad v. Babu Bhakta Ratan, AIR 1973 SC 2593 relied upon by the respondents' counsel, referring to Order 21, Rule 66, CPC regarding sale proclamation, the Apex Court has held that 'mere mention by the execution Court in the sale proclamation, of the valuation of properties (say it to be attached) as stated by the decree- holder, without assigning any reason for the non-mention of the valuation as put by the judgment-debtor was material irregularity when the judgment-debtor suffered substantial injury by the sale. . . . . . . . . . In para 19, referring to the facts and circumstances of the case, it has held that the cumulative effect of all the features of the case mentioned above is that there was material irregularity in the conduct of the execution sale of the two bungalows'. . . . . . . . . . In para 19, referring to the facts and circumstances of the case, it has held that the cumulative effect of all the features of the case mentioned above is that there was material irregularity in the conduct of the execution sale of the two bungalows'. In paras 15 and 16, it is held that O. 21, R. 66 (2) (e) requires the Court to state only the facts. It considers material for a purchaser to Judge the value and nature of the property. . . . . . . The Court has only to decide what are these material particulars in each case. . . . . . . . that the duty to consider what particular should be inserted in the sale proclamation and how sale ought to be conducted should be performed judicially and reasonably. ( 14 ) IN the decision in Govindaraju v. Mariamman, (2005) 2 SCC 500 : ( AIR 2005 sc 1008 ), relied upon by the respondents' counsel, the Apex Court has observed that the scope of exercise of jurisdiction of High court under Section 100, CPC is limited to the substantial question of law framed at the time of admission or additional substantial questions of law framed at a later date. ( 15 ) IN the case of Laxmi Devi v. Mukand kanwar, AIR 1965 SC 834 , the Supreme court has held : the positive provision contained in S. 2 (d) must prevail over the definition of transfer of property prescribed by S. 5. No doubt, the purpose of the definition is to indicate the class of transfer to which the provisions of the Transfer of Property Act are intended to be applied, but a definition of this kind cannot override the clear and positive direction contained in the specific words used by S. 2 (d ). The result of the saving clause enacted by S. 2 (d) is to emphasise the fact that the provisions of S. 57 and those contained in Chapter IV must apply to transfer by operation of law. Such a positive provisions cannot be made to yield to what may appear to be the effect of the definition prescribed by S. 5 and so, notwithstanding the definition prescribed by S. 5, the latter part of S. 100 must be deemed to include auction sales. Such a positive provisions cannot be made to yield to what may appear to be the effect of the definition prescribed by S. 5 and so, notwithstanding the definition prescribed by S. 5, the latter part of S. 100 must be deemed to include auction sales. ( 16 ) IN this context it may be apt to quote sections 5 and 2 (d) of the Transfer of Property Act. Section 5 defines 'transfer of property' as an act by which a living person conveys property, in present or in future, to one or more other living persons or to himself and one or more other living persons'. ( 17 ) SECTION 2 (d) of the Transfer of Property Act provides that- save as provided by section 57 and Chapter IV of this Act, any transfer by operation of law or by, or in execution of, a decree or order of a Court of competent jurisdiction. ( 18 ) IN the decision cited supra, the Supreme Court has held that the provision of section 2 (d) prevails over definition in Section 5 and the provisions of Section 57 and chapter IV applies to transfer by operation of law. It is further observed that if there is any irregularity in not proclaiming charge, the charge becomes unenforceable by virtue of Section 100 of the Transfer of Property Act. Section 100 of the Transfer of Property act reads: section 100 - Charges : Where immovable property of one person is by act of parties or operation of law made security for the payment of money to another, and the transaction does not amount to a mortgage, the latter person is said to have a charge on the property; and all the provisions herein before contained which apply to a simple mortgage shall, so far as may be, apply to such charge. Nothing in this section applies to the charge of a trustee on the trust property for expenses properly incurred in the execution of his trust, and 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. ( 19 ) IT is the argument of the counsel for respondent that Clause (2) of Section 100 applies to the case on hand and as such, the respondent ought to have been intimated of the charge created. As such, such decree is not binding on him. ( 20 ) LEARNED counsel for the appellants has referred to the word 'notice' as provided under Section 3 of the Transfer of Property act and argued that a person is said to have notice of a fact when he actually knows that fact, or when, but for wilfull abstention from an enquiry or search which he ought to have made, or gross negligence, he would have known it and the respondent by impleading himself to the circumstances, was aware of the earlier charge created and as such, it is binding on him. In the decision cited supra ( AIR 1965 SC 834 ) by the respondents' counsel, it was case where there was no notice to the party and in the facts and circumstances of that case the four Judges Bench of the apex Court held that if there is any alienation by way of auction sale without notifying the charge as per Order 21, Rule 66, cpc, it will be binding on the auction-purchaser and also that no substantial loss is caused to charge-holder as is held therein having regard to the nature of charge. ( 21 ) IN the instant case, the Court below dismissed the final decree proceedings against which appeal was preferred before the first appellate Court which has also dismissed the final decree proceedings although the decree is passed in favour of the plaintiff. The basis for such dismissal of the final decree proceedings was that the respondents did not have notice of the fact of the charge or the pendency of proceedings in the subsequent suit filed. Stating that the respondent is a bona fide purchaser without notice of the charge, it has observed that section 52 of the Transfer of Property Act or order 21, Rule 90, CPC does not come into play. Stating that the respondent is a bona fide purchaser without notice of the charge, it has observed that section 52 of the Transfer of Property Act or order 21, Rule 90, CPC does not come into play. Even the appellate Court is of the view that there was no way left to the respondent to know whether the property has been free of all encumbrances and it was for the petitioners to disclose the charge on the properties and having suppressed it throughout, they cannot blame the respondents on the principle of caveat emptor and it has no application at all as the defect is letent and was within the knowledge of the petitioners themselves. ( 22 ) IN the decision reported in AIR 1967 sc 1440 cited supra, the Apex Court has held that the purchaser pendente lite is bound by the doctrine of lis pendens on the principle that since the result must bind the party to it so must it bind the person deriving right, title and interest from or through him. What is being further held that it is true that Section 52 strictly speaking, does not apply to involuntary alienations but it is well established that the principle of lis pendens applies to such alienation. ( 23 ) IN the case on hand although the purchase of the property by the respondents in the Court auction could not be declared as invalid and since he had no notice of the fact, by virtue of the ratio laid down in the case of Laxmi Devi cited supra, but by virtue of Section 52 of the Transfer of Property act, the auction purchaser purchases the property subject to the result of litigaion and it will be binding on him whether he is a party to the case or not. Might be the petitioner had filed a suit carier and in the subsequent suit he has not made a mention of it in the proclamation notice regarding the charge. But, as per Section 3 of the Transfer of Property Act, when there was said to be a charge on the property by way of annuity in favour of the testator of the plaintiffs and that is being continued and that was said to be a registered one, it has to be held that respondents had notice of it. But, as per Section 3 of the Transfer of Property Act, when there was said to be a charge on the property by way of annuity in favour of the testator of the plaintiffs and that is being continued and that was said to be a registered one, it has to be held that respondents had notice of it. Even otherwise, as per Section 52 of the said Act, the purchase of the property by the respondent in the auction purchase will not have the effect of annulling the transfer but, such purchase will be rendered subservient to the right of the parties to the litigation. Thus, the subsequent judgment and the original decree in OS 122/1989 wherein annuity for the period 1984-1987 has been ordered and a decree has been passed by the trial Court holding that plaintiffs are entitled for a sum of Rs. 16,842/- with interest of Rs. 8,442/- from the date of suit till payment. The purchase of property by the respondent in Court auction has not become void or voidable but the charge remains on that property in view of the fact that there is a decree passed by the Munsiff Court in OS 122/1989 filed on 12-8-1987 and registered on 1-1-1988 regarding enforcement of the annuity in respect of the suit property for recovery of annuity for a period of three years. The right of the respondents if any was subject to the same as per Section 52 of the Transfer of property Act. Since the purchase of the property by the respondent is on 30-3-1988 which was confirmd on 1-7-1988 it is much subsequent to the filing of the second suit by the plaintiffs. The purchase of the property if any by the respondent would be subject to the payment of decretal amount as per the decree passed in OS 122/1989. ( 24 ) FOR the foregoing reasons, while answering the substantial quetion of law raised in favour of the appellants, the finding of both the Courts below have to be reversed. In the result, the appeal is allowed in part. The judgment and decree passed by the lower appellate Court and the order passed by the trial Court in the final decree proceedings are set aside. The suit of the plaintiffs is allowed and plaintiff is entitled to recover the decretal amount from the respondents. In the result, the appeal is allowed in part. The judgment and decree passed by the lower appellate Court and the order passed by the trial Court in the final decree proceedings are set aside. The suit of the plaintiffs is allowed and plaintiff is entitled to recover the decretal amount from the respondents. Parties to bear their own costs in this case. Appeal partly allowed. --- *** --- .