Federal Bank Ltd. , Represented By Its Senior Manager v. Maniyoth Chandran, S/o. Chekkappi
2023-11-06
BASANT BALAJI
body2023
DigiLaw.ai
JUDGMENT : The appellant was the first respondent in E.A.No. 168 of 2004 in E.P.No 97 of 2003 in O.S.No.18 of 2001 on the files of Subordinate Judge’s court, Thalassery. Respondent Nos.1 and 2 were the claim petitioners, and respondent Nos.3 and 4 were respondent Nos.2 and 3 therein. The first respondent filed the execution application under Order 21 Rule 58 of CPC. 2. The brief facts of the case of the claim petitioner are as follows: The petition schedule property originally belonged to K. V. Narayani, mother of the 2nd respondent. She agreed to sell the property to the first claim petitioner for a valid consideration, and an agreement for sale was executed on 9.11.1993. A sum of Rs.2,50,000/-was paid as advance to Smt.K.V. Narayani by the 1st claim petitioner on 9.11.1993. When Narayani failed to receive the balance consideration and execute the sale deed, a lawyer notice was issued on 17.3.1997, and a suit, as O.S. No.124 of 1997 has been filed before the Additional Subordinate Judge’s Court, Thalassery, for specific performance of contract. After receiving the said lawyer’s notice, Narayani fraudulently executed an assignment deed on 11.6.1997 with respect to the petition schedule property in favour of her son K.V. Rajeendrababu, who is the 2nd respondent. So, the claim petitioner was constrained to implead the said K.V. Rajeendrababu as 2nd supplemental defendant in O.S. No.124 of 1997, which was decreed on 10.2.2000 for return of the advance amount with interest. While disposing the suit, the court had categorically entered into a finding that the sale deed executed by K.V.Narayani in favour of K.V. Rajeendrababu is only a sham and nominal one without any consideration. 3. When the defendants in O.S.No.124 of 1997 failed to pay the decreed amount in E.P. No.150 of 2000, the property was put for sale, and the 1st claim petitioner purchased the property in court sale on 23.10.2001. Thereafter, the property was delivered on 27.9.2002, and he sold the property to the 2nd claim petitioner on 17.9.2003. 4. During the pendency of O.S. No.124 of 1997, the 2nd defendant in the suit mortgaged the property to the 1st respondent, Federal Bank Ltd., Thalassery, on 22.4.1999. The appellant/1st respondent filed O.S. No.18 of 2001 against respondent Nos.2 and 3 and obtained a decree. E.P. No.97 of 2003 was filed to realise the amount by the sale of the petition schedule property.
The appellant/1st respondent filed O.S. No.18 of 2001 against respondent Nos.2 and 3 and obtained a decree. E.P. No.97 of 2003 was filed to realise the amount by the sale of the petition schedule property. Under Section 55(6)(b) of the Transfer of Property Act, the money advanced as per the sale agreement is a charge on the property agreed to be sold. It is only after six years from 9.11.1993, a mortgage is created by the 2nd respondent on the basis of a sham and nominal document. So the mortgage executed by the 2nd respondent in favour of the 1st respondent is not binding on the petition schedule property. The 1st respondent bank is not entitled to proceed against the property which the 1st claim petitioner has purchased in court sale for the realisation of the amount advanced by him on 9.11.1993. The 2nd claim petitioner mortgaged the property to ICICI bank and availed a housing loan. The original title deeds of the properties are with the ICICI bank. The bank colluded with the 2nd respondent to get back the property lost by the 2nd respondent and his mother, Narayani. The right of the claim petitioners is not lost by the fraudulent creation of a mortgage by the 2nd respondent in favour of the 1st respondent. The claim petitioners came to know about the execution proceedings on 5.3.2004 when a sale proclamation was affixed on the property. Therefore, the claim petitioners filed the petition to release the petition schedule property from attachment. 5. The 1st respondent/appellant Bank alone filed the counter affidavit to the claim petition, contending that the claim petition was filed in collusion with respondents Nos.2 and 3, who were judgment debtors in the suit. The petition scheduled property was mortgaged to the bank by the 2nd respondent by depositing the original title deeds on 22.4.1999 as security for a loan of Rs.3 lakhs. It was contended that the claim petition was filed to avoid the court sale by raising false and fictitious claims. At the time of availing the loan of Rs.3 lakhs, respondent Nos.2 and 3 produced all original documents with encumbrance certificate, possession certificate, tax receipt, etc. Even the original jenmom purchase certificate No.515/1976 issued by the Land Tribunal, Thalassery, in the name of K.V. Narayani, was also produced in the bank.
At the time of availing the loan of Rs.3 lakhs, respondent Nos.2 and 3 produced all original documents with encumbrance certificate, possession certificate, tax receipt, etc. Even the original jenmom purchase certificate No.515/1976 issued by the Land Tribunal, Thalassery, in the name of K.V. Narayani, was also produced in the bank. It is based on the said certificate, Narayani executed document Nos.1139/1997 in favour of her son Rajeendrababu. Therefore, prayed for the dismissal of the claim petition. 6. Ext.Nos.A1 to A8 were marked on the side of the claim petitioners and Ext.Nos.B1 to B5 were marked, and RW1 was examined on respondents & apos; side. 7. The Execution court, after evaluating the oral and documentary evidence, allowed the claim petition, and attachment in E.P. No.97 of 2003 was released in favour of the claim petitioners. Aggrieved by the order of the Execution Court in E.A. No.168 of 2004 in E.P. No.97 of 2003 in O.S. No.18 of 2001, this appeal is filed by the 1st respondent Bank. 8. Heard Adv.Mohan Jacob George for the appellant and Adv.R.Surendran for respondents 1 and 2. The counsel for the appellant contends that the petition under Order 21 Rule 58 CPC, filed by respondent Nos.1 and 2 as E.A. No.168 of 2004, is not maintainable, and the Execution Court ought to have dismissed it. His contention is that a reading of the heading of Order 21 Rule 58 CPC itself, makes clear that it relates to the adjudication of claims to or objections to attachment of property. So, the pre-condition for filing an application under Order 21 Rule 58 CPC is that there should be an attachment of any property in the execution of a decree. Being a mortgage decree, the decree obtained by the appellant is without attachment, and therefore, the petition is not maintainable. 9. The 3rd respondent had executed a mortgage on 22.04.1999 by depositing the original title deeds as security for a loan of Rs.3 lakhs. For the realisation of the said loan amount, the appellant filed O.S.No.18 of 2001, and the court decreed the suit, and for the realisation of the amount, E.P.No.97 of 2003 was filed. The petition scheduled property was brought for sale for realisaiton of the decree amount of Rs.3,29,203/-with interest. The claim petitioners filed the claim petition in collusion with respondent Nos.3 and 4 to avoid the court sale.
The petition scheduled property was brought for sale for realisaiton of the decree amount of Rs.3,29,203/-with interest. The claim petitioners filed the claim petition in collusion with respondent Nos.3 and 4 to avoid the court sale. The appellant granted a loan to respondents Nos.2 and 3 after they produced all the original documents, including the encumbrance certificate, possession certificate, tax receipt, and even the original jenmom purchase certificate No.515/1976 issued by the Land Tribunal, Thalassery. O.S.No.124 of 1997 was filed by the 1st claim petitioner for specific performance of a contract. The appellant was not a party to the said suit, so the decree in O.S.No.124 of 1997 is not binding on the appellant. When the court sale was effected, in E.P.No.150 of 2000, the property was already mortgaged by the 3rd respondent to the appellant. So, the mortgage right of the appellant subsists, and the appellant is entitled to proceed with the execution, irrespective of the decree in O.S.No.124 of 1997. 10. The counsel relied on the dictum laid down in the decisions reported in Indian Bank v. Nallam Veera Swamy [2014 SCC Online AP 1381], Kishan Gopal v. Northern Railway Employees Co-operative Credit Society Ltd., Jodhpur [MANU/RH/0264/1978], Doraisami Iyer M.S. v. Arunachalam Chettiar and others (1991 KHC 2392), T Nabi Sab v. G.Venkatesulu (2008 SCC Online AP 277), Mirthubasini v. Easwaramurthy and others (2011 SCC Online Mad 1077), Lakshmi v. State Bank of Travancore (1987 KHC 230) and Kamalakshi Amma v. Ouseph (1978 KHC 33). 11. The learned counsel for the respondents argues that in the execution of the decree in O.S. No.124 of 1997, E.P.150 of 2000 was filed against the 2nd respondent. The property was brought for sale and purchased in court sale on 23.10.2001; delivery of the property was effected on 27.09.2002. Thereafter, the first respondent sold the property to the 2nd respondent on 17.09.2003. In O.S. No.124 of 1997, the court had entered into a finding that the sale deed executed by K.V. Narayani in favour of the 3rd respondent is a sham document. Therefore, the mortgage created by the 3rd respondent in favour of the appellant cannot hold good as he did not have any valid right in the property as on the date of mortgage, i.e on 22.04.1999.
Therefore, the mortgage created by the 3rd respondent in favour of the appellant cannot hold good as he did not have any valid right in the property as on the date of mortgage, i.e on 22.04.1999. Moreover, as per Section 55(6) (b) of the Transfer of Property Act, the money advanced as per the sale agreement is a charge on the property agreed to be sold. It is after six years from the date of the sale agreement, i.e 09.11.1993, the mortgage is created on 22.04.1999. So, the mortgage executed by the 2nd respondent in favour of the appellant is not binding on the petition schedule property. The 2nd respondent, who has purchased the property from the 1st respondent, has mortgaged the property to ICICI Bank and availed a loan. The original title deeds of the properties are with the ICICI Bank. The Counsel relied on the apex Court’s judgment in Rajwinder Kaur v. Oriental Bank of Commerce [ 2018 (14) SCC 190 ] and prayed that the appeal lacks merits and that the order passed by the learned Sub Judge is legal and valid. 12. Order 21 Rule 58 of the Code of Civil Procedure reads as follows: “Adjudication of claims to, or objections to attachment of, property (1) Where any claim is preferred to, or any objection is made to the attachment of, any property attached in execution of a decree on the ground that such property is not liable to such attachment, the court shall proceed to adjudicate upon the claim or objection in accordance with the provisions herein contained: PROVIDED that no such claim or objection shall be entertained- a. where, before the claim is preferred or objection is made, the property attached has already been sold; or b. where the court considers that the claim or objection was designedly or unnecessarily delayed.” 13. A close look at the said section would make it amply clear that to attract the said order, the claim or objection has to be made to the attachment of the attached property in execution of a decree on the ground that any property is not liable for attachment. So, the first and foremost condition for making a claim under the Rule, is that the property must be the subject matter of the execution proceedings.
So, the first and foremost condition for making a claim under the Rule, is that the property must be the subject matter of the execution proceedings. The precondition for the application under Order 21 Rule 58 CPC is that there must be an attachment of any property for execution of the decree, and a claim or objection should have been made to the attachment on the ground that such property is not liable for such attachment. The scope of investigation in a claim petition is to find out whether the property in execution, as claimed by the objector or claim petitioner, is to be attached or not. The claim petitioner or the objector, as the case may be, has to establish that the property belongs to him and that he is in possession of it. The claim or objection is limited to the extent that the property claimed does not belong to the judgment debtor. 14. In Indian Bank (supra), a learned Single Judge of Andrapradesh, relying on the judgment of Mahabir Prasad Singh v. Nagendra Nath Mandal (AIR 1921 Calcutta 479), held as follows: 28. In one of the earliest cases, where the question fell for consideration was whether a claim under Order XXI Rule 58 can be laid in execution of a mortgage decree, Lancelot Sanderson, C.J., in Mahabir Prasad Singh v. Nagendra Nat Mandal, AIR 1921 Cal. 479, took the following view: “2. In my judgment, however, we are bound to discharge this Bale on the authority of the case, Deeflcolts v. Peters, 14 C. 681 : 7 Ind. Dec. (N.S.) 418. There the proceedings be way of claim were taken under Section 278 of the Code of Civil Procedure which was then in force and which corresponded to Order XXI, Rule 58 of the present Code of Civil Procedure. There the learned Judges distinctly tell that the procedure under that section was not applicable to a mortgage decree which contained a provision that the property in question should be sold. In this sate there is no doubt that the decree was what is called a mortgage decree, and contained a provision that this property should be sold. Consequently, it was not open to the executing Court to entertain and adjudicate upon a claim, which was preferred by the petitioner under Order XXI Rule 58.
In this sate there is no doubt that the decree was what is called a mortgage decree, and contained a provision that this property should be sold. Consequently, it was not open to the executing Court to entertain and adjudicate upon a claim, which was preferred by the petitioner under Order XXI Rule 58. The learned Judges in that case said as follows : “We think that proceedings by way of claim are not applicable in cases of money decrees where property of the judgment-debtor has been attached that is, where some property of the judgment-debtor is attested for the purpose of satisfying any general money claim. In that kind of claim it is clear that there should be some speedy remedy for the purpose of ascertaining whether the property claimed is the property of the judgment-debtor at all; but in a case like this, where the property has been dealt with to a solemn way by the decree of the Court, and has been declared liable to sale under the mortgage, that remedy would not be applicable.” Then they proceeded to point out that the petitioner would have other remedies. On the authority of that case, which, to my mind, covers this case, we have no option but to direct that this Rule should be discharged with costs—hearing fee, one gold mohur.” 29. The Madras High Court in MS Doraisami Iyer v. A.R. Arunachalam Chettiar (supra) and the Andhra Pradesh High Court in T. Nabi Sab v. G. Venkatesulu (supra), held that a claim petition under Order 21 Rule 58 is not maintainable in execution proceedings taken out in a mortgage decree. In M.S. Doraisami Iyer v. A.R. Arunachalam Chettiar (supra), it was held as follows:- “7…………. The application is one under Order 21 Rule 58, C.P.C. No such application can be maintained in a proceeding in execution of a mortgage decree. Rule 58 of Order 21, C.P.C. can come into play only when there is an attachment. In the case of mortgage there is no question of attachment and in this case, there was no attachment as such. Consequently, the application was not maintainable.” 15. A learned Judge of High Court of Andhra Pradesh in T. Nabi Sab (supra) held that a claim petition under Order 21 Rule 58 CPC is not maintainable in execution proceedings taken out in a mortgage decree. 16.
Consequently, the application was not maintainable.” 15. A learned Judge of High Court of Andhra Pradesh in T. Nabi Sab (supra) held that a claim petition under Order 21 Rule 58 CPC is not maintainable in execution proceedings taken out in a mortgage decree. 16. In T.Nabi Sab (supra), it was held by the learned Judge in paragraph No.3, as follows: “3. Appellant herein is the claim petitioner who filed E.A. No. 162 of 2003 in E.P. No. 51 of 2002 in 0.S. No. 169 of 1996. The said Execution Petition was filed by the 1st respondent herein against the 2nd respondent for realization of the decretal amount due in the decree passed in 0.S. No. 169 of 1996. 4. The claim of the appellant herein was dismissed by the learned Principal Senior Civil Judge, Anantapur on the ground that the petition filed under Order 21 Rule 58 CPC is not maintainable as there was no attachment of the property and the decree sought to be executed was a mortgage decree. Appeal preferred by the appellant herein in A.S. No. 15 of 2006 was also dismissed by the learned IV Additional District Judge, Ananatapur confirming the dismissal of the claim petition by the learned Principal Senior Civil Judge, Anantapur. The impugned orders of the Courts below do not call for any interference as the decree obtained by the 1st respondent against 2nd respondent was mortgage decree and the provisions of Order 21 Rule 58 CPC are not attracted." 17. The High court of Madras in Mirthubasini (supra) had an occasion to consider Order 21 Rule 58 along with Section 47 of CPC, wherein it was held as follows: 16. A perusal of the above Rule will make it very clear that under Order 21 Rule 58 any claim is preferred to the attachment of any property attached in execution shall decree on the ground that such property is not liable to such attachment, the Court shall proceed to adjudicate upon the claim or objection in accordance with the provisions contained thereon. It is also made clear in the proviso that if the property attached has already been sold or if the Court considers that the claim is designedly or unnecessarily delayed, then, no such claim shall entertained by the Court. 17.
It is also made clear in the proviso that if the property attached has already been sold or if the Court considers that the claim is designedly or unnecessarily delayed, then, no such claim shall entertained by the Court. 17. In the present case, it was not in dispute that the property was not attached in execution of the decree and in fact, the decree Itself was for the specific performance of the sale agreement. It is also not in dispute that the Sale Deed was also executed in favour of the Plaintiff/decree holder in the previous Execution proceedings. Thus, even before filing the claim petition under Order 21 Rule 58, the Sale Deed was already executed by the Execution Court in favour of the Plaintiff/decree holder. It is, therefore, no property was attached by the Execution Court and the Sale Deed itself was already executed by the Execution Court in favour of the Plaintiff/decree holder. In such circumstances, the Claim Petition filed under Order 21 Rule 58, as if there was an attachment and that was to be released is not at all maintainable and therefore, I concur with the finding of the Lower Appellate Court that the claim petition filed under Order 21 Rule 58 is not maintainable.” 18. In Kamalakshi Amma (supra), it was held by a learned Single Judge of this court that it is clear from the wording of Order 21 Rule 58 CPC that it applies only to a claim to prefer or make any objection made to attachment of any property attached in execution of a decree. In this case, admittedly, no attachment was, as a matter of fact, made. Hence, no question of invoking the Rule arises. 19. Coming to the facts of this case, it can be seen that there was a mortgage created by the 2nd defendant in favour of the appellant on 22.4.1999, and the appellant bank has filed O.S.No.18 of 2001 against respondent Nos.2 and 3 and obtained a decree. Thereafter, E.P.No.97 of 2003 was filed to realise the amount of sale of the petition scheduled property. There was indeed a suit for specific performance filed by the first claim petitioner against Narayani and the 2nd respondent as O.S.No.124 of 1997, which was decreed on 10.2.2000 directing return of advance money with interest.
Thereafter, E.P.No.97 of 2003 was filed to realise the amount of sale of the petition scheduled property. There was indeed a suit for specific performance filed by the first claim petitioner against Narayani and the 2nd respondent as O.S.No.124 of 1997, which was decreed on 10.2.2000 directing return of advance money with interest. In E.P. filed in the said suit as E.P.No.150 of 2000, the property was put on sale, and the claim petitioner purchased the property in court sale on 23.10.2001 and got delivery on 27.9.2002. Thereafter, it was sold to the 2nd claim petitioner on 17.9.2003. The mortgage created on 22.4.1999 is after the filing of O.S.No 124 of 1997. 20. The point to be noted is since the decree obtained by the appellant in O.S.No.18 of 2001 is the mortgaged decree and being so, no attachment was effected in execution proceedings, for the reason that when the mortgage is created for the first time by the 2nd respondent with the appellant, the bank becomes the secured creditor and title deeds are with the mortgagee. Therefore, there arises no question of further attachment of the property mortgaged. In case of a mortgaged decree, the decree gives the decree-holder the right to directly bring the property for sale. When we look at the wording of Order 21 Rule 58, CPC attachment of the property is a must to invoke the said rule. It is to be noted that since there is no attachment proceedings in this case in the execution of the decree, no claim or objection can be made by a 3rd party or a judgment debtor that it is not liable for such an attachment. As mentioned earlier, the pre-condition for invoking the said provision is that there must be an attachment of the property in execution of the decree, and the claim or objection should be that the said property is not liable for attachment. Admittedly, there is no attachment of the petition schedule property at any point of time in execution of the decree. Therefore, the petition filed as E.A. No.168 of 2004 in E.P. No.97 of 2003 in O.S. No.18 of 2001 by the claim petitioners, who are respondents Nos.1 and 2 in this Appeal, is not maintainable before the execution court.
Admittedly, there is no attachment of the petition schedule property at any point of time in execution of the decree. Therefore, the petition filed as E.A. No.168 of 2004 in E.P. No.97 of 2003 in O.S. No.18 of 2001 by the claim petitioners, who are respondents Nos.1 and 2 in this Appeal, is not maintainable before the execution court. Therefore, relying on the dictums laid down by various High courts mentioned above and also for the reasons stated above, I am of the firm view that this Ex.FA has to be allowed, and the order under challenge has to be set aside as not maintainable. In the result, this Ex.F.A. is allowed, setting aside the order dated 2.6.2007 in E.A.No.168 of 2004 in E.P.No.97 of 2003 in O.S.No.18 of 2001 on the files of the Subordinate Judge’s Court, Thalassery. No order as to costs.