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2005 DIGILAW 754 (KER)

Musthafa v. Andrews Rep. By Mukthiar Holder Jos

2005-12-01

M.SASIDHARAN NAMBIAR, R.BHASKARAN

body2005
Judgment :- Bhaskaran, J. This appeal is filed by the claim petitioner in E.P.No.514/1998 in O.S.No.245/1984 on the file of the Sub Court, Trichur. The first respondent obtained a decree for specific performance of an agreement for sale as against the second respondent. At the time of execution of the decree the petitioner fled the present claim petition contending that he is a bona fide purchaser for value without notice of the agreement and also contending that the execution proceedings is initiated by the first respondent in collusion with the second respondent to deprive the petitioner of the plaint schedule property. The execution court rejected the claim petition and hence the petitioner has filed this appeal. 2. The suit was filed in respect of two items of properties, 29 cents in Sy.No.121/1 of Chelakkara Village and 66 cents in Sy.No.455/1 of Eranallur Village. The claim petition is only in respect of 25 cents in Sy.No.455/1. This property admittedly belonged to the second respondent. He sold the property claimed by the appellant to one Vasudevan Bhattathirippad as per document No.2632/1986 on 26-11-1986. He in turn sold that property in 1992 to one Khayarunnisa by Ext.A2 dated 25-7-1992. From Khayarunnisa the appellant purchased the property as per Ext.A1 dated 22-8-1992. Thereafter the appellant constructed a residential building having plinth area of 4000 sq.ft. spending about Rs.20 lakhs and started residence. In the meanwhile the first respondent who is said to have obtained a compromise decree in O.S.No.245/1984 filed E.P.No.36/1995. The decree was obtained on the basis of an agreement dated 11-11-1985 for sale executed by the second respondent in favour of the first respondent and a compromise decree was passed on 27-6-1985. After getting the decree, the decree holder kept quiet for about ten years and filed the execution petition only on 8-3-1995. In the execution petition the judgment debtor remained exparte. The decree holder got the document executed through court on 17-3-1998. It is to get delivery of the property on the basis of such sale deed that further E.P. was filed as E.P.No.514/1998. According to the appellant the second respondent had parted with the property as early as in 1986 and in 1992 when he purchased the property he was not aware of any decree passed by the civil court. Nothing was discernible from the encumbrance certificate obtained by him. According to the appellant the second respondent had parted with the property as early as in 1986 and in 1992 when he purchased the property he was not aware of any decree passed by the civil court. Nothing was discernible from the encumbrance certificate obtained by him. If he had known about any such agreement and decree he would not have spent Rs.20 lakhs for construction of the residential building in the property when various other plots were available for purchase. 3. The execution court found that the purchase of the property by the appellant is hit by Sec.52 of the Transfer of Property Act and he is not entitled to set up a case of bona fide purchaser for value without knowledge of the decree. In the claim petition the appellant had apart from praying for exclusion of the property from being delivered in execution of the decree also claimed as an alterative relief for payment of value of improvements to the tune of Rs.25 lakhs. According to the execution court the transfer of the property by the second respondent to Vasudevan Bhattathirippad in 1986 was without knowledge of the decree holder and to defeat him. Therefore it could not be said that these transfers were made in collusion between the decree holder and judgment debtor. The execution court found that since the purchase of the property by the appellant was hit by the principles of lis pendens a transferee cannot claim the benefit of a bona fide purchaser for valuable consideration. Therefore the appellant did not get any right in the plaint schedule property. It is also found that he is not entitled to get the value of improvements. The claim made under Sec.51 of the Transfer of Property Act was negatived on the ground that the purchase of the property by the appellant was hit by lis pendens. 4. In this appeal the learned counsel for the appellant challenged both the findings of the execution court. According to the learned counsel for the appellant though the sale of the property in favour of Vasudevan Bhattathirippad in 1986 by the defendant was after the execution of the agreement, the filing of the execution petition in 1995 was in collusion with the second respondent and the decree holder fully knew that the appellant had purchased the property and constructed the building spending large amounts. He also argued that at any rate there is no reason to deprive the appellant of the benefit of Sec.51 of the Transfer of Property Act. 5. On the basis of the above contentions the points that arise for consideration in this appeal are as follows: (i). Whether the appellant can claim exclusion of the property purchased by him from delivery in execution of the decree for specific performance? (ii). Whether the appellant is entitled to the benefit of Section 51 of the Transfer of Property Act? Point No.1: 6. On the admitted facts the transfer in favour of the appellant is after the consent decree in favour of the first respondent and before filing of the execution petition. Therefore Section 52 of the Transfer of Property Act is directly applicable. It is now well settled that a pendente lite transferee is bound by the decree even if he has no notice of the pendency of the litigation. The fact that the suit was decreed on the basis of consent is not a bar for the application of the doctrine of lis pendens. Section 52 of the Transfer of Property Act excludes the applicability of the principle of lis pendens only with regard to suits or proceedings which are collusive in nature. With regard to the filing of the suit it could not be said that it was filed in collusion with the second respondent as the purchase by the appellant or his predecessors in interest was after the execution of the agreement. The contention of the learned counsel for the appellant that such agreements are executed and decrees obtained to defraud subsequent innocent purchasers cannot be accepted in the facts of the present case. There are no materials produced to substantiate such a contention. But it may be contended that Section 52 of the Transfer of Property Act not only speaks of suits but also proceedings which may be collusive in nature. It is therefore contended that the filing of the E.P. is also proceeding which may be collusive since the same was filed after fully knowing that the appellant has constructed the building in the property spending large amounts. In this respect also there is no collusion established between the decree holder and judgment debtor. The judgment debtor remained expare. It is therefore contended that the filing of the E.P. is also proceeding which may be collusive since the same was filed after fully knowing that the appellant has constructed the building in the property spending large amounts. In this respect also there is no collusion established between the decree holder and judgment debtor. The judgment debtor remained expare. Though there is an allegation in the claim petition that the E.P. was filed in collusion between the decree holder and judgment debtor the same is not substantiated by any acceptable evidence. The mere possibility of a collusion between the judgment-debtor and decree-holder by itself is not sufficient to hold that the execution proceedings were initiated on the basis of a collusion. The judgment was ex parte in the case and the decree-holder must have waited unduly long to execute a compromise decree and that also may not be sufficient to find collusion between the judgment debtor and the decree-holder. The probability is that since the judgment-debtor has also parted with his right in favour of the predecessor-in-interest of the appellant/claim petitioner, he was not concerned about the outcome of the execution proceedings. Therefore, we do not see any reason to upset the finding of the trial court that no collusion is proved between the decree-holder and judgment-debtor in this case. Point No.2 7. This point is more important from the point of view of the parties since the appellant has invested large amount for construction of a substantial building having 4000 sq.ft. in the property. The question to be considered is whether the appellant is entitled for the benefit of S.51 of the Transfer of Property Act. To satisfy the conditions in S.51, the transferee of immovable property must have made improvement believing in good faith that he is absolutely entitled thereto and subsequently he is sought to be evicted by a person having better title and in such case the transferee has a right to require the person either to have the value of the improvement estimated and paid or to sell the interest in the property to the transferee at the then market value thereof irrespective of the value of such improvement. It is pointed out by the learned counsel for the appellant that the existence of an agreement for sale or of a decree for specific performance was not known to him as there was nothing in the encumbrance certificate about any such liability. As P.W.1, the appellant has substantiated his case that he was ignorant about any such transaction. The encumbrance certificate were also marked as Exts.A3 and A4. He has also taken out a Commission to report about the large investments he has made subsequent to the purchase of the property. Nothing has been brought out in his cross-examination about his case that he was a bona fide purchaser. The only contra evidence adduced is by RW.1 who is a power-of-attorney-holder of the 1st respondent. He has not stated anything about the knowledge of the appellant about the agreement for sale or compromise decree passed by court. More over, as power-of-attorney-holder he cannot depose about anything in the personal knowledge of the decree-holder. Therefore, it is a case where there is only evidence on the side of the appellant that he is a bona fide purchaser of the property. 8. The question still remains as to whether a bona fide purchaser of the property can ignore the previous agreement for sale and claim the benefit of S.51 after the court passes a decree for specific performance of the agreement. It is true that under S.52 of the Transfer of Property Act, no property can 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 decree or order which may be mad therein except under the authority of the court and on such terms and as it may impose. Does it mean that the operation of S.51 of the Act is totally excluded in case the conditions under S.51 are satisfied? We think not. The point was raised but not decided in Dipan Rai v. Kapil Deo (AIR 1932 Allahabad 120). The Punjab and Haryana High Court in Hari Bachan v. Har Bhajan (AIR 1975 Punjab & Haryana 205) has held that the alienee cannot claim any compensation for the improvements made by him on the property purchased during the pendency of the suit. The point was raised but not decided in Dipan Rai v. Kapil Deo (AIR 1932 Allahabad 120). The Punjab and Haryana High Court in Hari Bachan v. Har Bhajan (AIR 1975 Punjab & Haryana 205) has held that the alienee cannot claim any compensation for the improvements made by him on the property purchased during the pendency of the suit. The Punjab and Haryana High Court has held that the rule is based not on the doctrine of notice but on expediency. The effect of the rule is not to annul the transfer but only to render it subservient to the rights of the parties to the litigation. For holding so, the Punjab and Haryana High Court has referred to the Full Bench decision in Santa Singh v. Rajinder Singh (AIR 1965 Punjab 405 (FB) and Simla Banking and Industrial Company Ltd. V Firm Luddar Mal Kushi Ram (AIR 1959 Punjab 490). But on perusing the Full Bench decision, we could not find any serious discussion about the claim under S.51 of the Transfer of Property Act. In Simla Banking and Industrial Company’s case (AIR 1959 Punjab 490), also the scope of S.51 of the Transfer of Property Act is not seen discussed. The Madras High Court in Chinnakkal v. Chinnathambi (AIR 1934 Madras 703), has expressed a doubt as to whether S.51 of the Transfer of Property Act as such is applicable. But the learned single Judge of the Madras High Court allowed value of improvements to be paid to the person in possession since specific performance is an equitable remedy. 9. In fact S.51 of the Transfer of Property Act is also based on the equitable maxim “he who seeks equity must do equity”. It was endorsed by the Privy Council in Kidar Nath v. Mathmal (1913) 40 Calcutta 555) which was a case not covered by the Transfer of Property Act. Mulla on “The Transfer of Property Act”, 9th Edition, at page 362, refers to the fact that in some cases and in some text books S.51 is treated as an extension of the equitable doctrine of estoppel by acquiescence. According to the learned author, in spite of a superficial similarity, the two cases rest on totally different principles. Mulla on “The Transfer of Property Act”, 9th Edition, at page 362, refers to the fact that in some cases and in some text books S.51 is treated as an extension of the equitable doctrine of estoppel by acquiescence. According to the learned author, in spite of a superficial similarity, the two cases rest on totally different principles. Estoppel by acquiescence occurs when the person having a better title knows a fact unknown to the other person acting in violation of the right which fact he does not inform them about it, but lies by and lets them run into a trap. It is pointed out that estoppel by acquiescence looks to the conduct of the would be evictor while S.51 looks to the conduct of the person evicted. Estoppel by acquiescence does not merely put the evictor upon equitable terms but compels him to make good his representation and prevents him from eviction. Section 51 merely puts the evictor upon equitable terms as to compensation. Estoppel by acquiescence rests on the doctrine of estoppel, while S.51 rests on the maxim that he was wants equity must do equity. 10. In this case after getting a compromise decree as early as on 27-6-1985, the execution petition was filed only in 1995 after ten years. The appellant had purchased the property in 1992 and for the three years he was making constructions in the property and was residing in it. The decree-holder did not inform him about the existence of a decree or make any attempt to prevent him from making any such construction. It is after the entire construction is over and the appellant started residing in the building that the execution petition is filed. The long period available for filing such an execution petition is no reason for the decree-holder not to take necessary steps before the third party making any construction in the property. Since no contention based on estoppel by acquiescence was raised in the trial court, we do not want to discuss this aspect further. 11. The long period available for filing such an execution petition is no reason for the decree-holder not to take necessary steps before the third party making any construction in the property. Since no contention based on estoppel by acquiescence was raised in the trial court, we do not want to discuss this aspect further. 11. The execution court rejected the benefit of S.51 only for the reason that the sale in favour of the appellant is hit by S.52 and the Punjab and Haryana High Court has held in Hari Bachan’s case (AIR 1975 Punjab & Haryana 205) that such an alienee cannot claim any compensation for the improvements made by him on the property purchased during the pendency of the suit. The other decisions relied on by the trial court are Shylaja v. George Selvaraj (2003 (3) KLT SN Case No.198 page No.153) and Sebastian v. Bipin (2004 (1) KLT 159) do not relate to the claim under S.51 of the Transfer of Property Act. After considering the contentions and for the reasons stated in the preceding paragraphs we are of opinion that in appropriate cases there is no bar for giving the benefit under S.51 of the Transfer of Property Act even in cases covered by S.52 if all the conditions under S.51 are satisfied. In this case, we are further of opinion that the appellant is a person who was ignorant about the entire proceedings culminating in the compromise decree and he was a bona fide purchaser. We therefore find that the appellant is entitled to the benefit of S.51 of the Transfer of Property Act. 12. The question then arises as to the manner in which the reief is to be moulded. Under S.51, the choice is for the decree-holder to decide as to pay for the improvements made by the person in possession or to receive the value of the land. In this case, the learned counsel for the plaintiff has not offered to pay the value of the building constructed by the appellant. The fact that the appellant is residing with his family in the property also shows that it is a fit case where he should be allowed to purchase the land wherein the building is situated at the market value. The fact that the appellant is residing with his family in the property also shows that it is a fit case where he should be allowed to purchase the land wherein the building is situated at the market value. In B.S.D. Mohamandal, Kanpur v. Prem Kumar (AIR 1985 SC 1102), the Supreme Court held that in that case it was inequitable to ask transferee to pay present market value of land while enforcing the principles under S.51 of the Act. That was for the reason that the decree-holder had accepted the amounts determined by the trial court and that would amount to making a choice within the meaning of S.51 of the Transfer of Property Act. Since we find the appellant is entitled to the benefit of S.51 of the Transfer of Property Act, we direct the execution court to assess the market value of the land (excluding building) as on this date to enable the appellant to pay off the same to the decree-holder though he had already paid for the land at the time of his purchase in 1992. In the result, the appeal is allowed and the order passed by the court below is set aside and the case is remitted to the execution court to find out the present value of the land claimed by the appellant wherein he has put up a building. It is made clear that he need pay the value of the land only. The parties shall bear their costs in this appeal.