S.U.S. Davey Sons Vs. P.M. Naranaswamy and anr. - Court Judgment

Excerpt:
transfer of property act (iv of 1882) section 69--civil procedure code (v of 1908), section 64--mortgage conferred with a power of sale--subsequent attachment by a civil court--mortgagess exercising his power under section 69 of the transfer of property act--whether affected;a mortgage deed was executed by three persons in respect of certain property with a power of sale under section 69 of the transfer or property act. teh first respondent filed a suit for the recovery of certain amount against one of the mortgagors ans also obtained an order of attachment before judgment on 11th september, 1970. the suit was decreed on 5th august, 1971. in exercise of the poewr of sale under section 69 of the transfer of property act the mortgagee brought of property of sale by auction on 7th february.....1. the property bearing door no.57 sir thiagaraya road, t.nagar, madras - 17, was the subject matter of a mortgage deed dt.16th nov.1967, executed by dr.c.balasubramaniam, c. balasubramaniam and alamelu ammal. the mortgage deed contained a power of sale under s. 69 of the transfer of property act. the first respondent herein filed a suit o.s.no. 4650 of 1970 on the file of the x assistant judge, city civil court, madras, for recovery of a certain sum of money against mr.c.balasubramaniam who is the second respondent herein. pending the suit, in i.a. 13825 of 1970, the plaintiff first respondent herein obtained an order of attachment before judgment on 11th sept. 1970. the suit was decreed on 5-8-1971, and therefore, the attachment became absolute as and from that date. in exercise of the.....

Judgment:
1. The property bearing Door No.57 Sir Thiagaraya Road, T.Nagar, Madras - 17, was the subject matter of a mortgage deed dt.16th Nov.1967, executed by Dr.C.Balasubramaniam, C. Balasubramaniam and Alamelu Ammal. The mortgage deed contained a power of sale under S. 69 of the Transfer of Property Act. the first respondent herein filed a suit O.S.No. 4650 of 1970 on the file of the X Assistant Judge, City Civil Court, Madras, for recovery of a certain sum of money against Mr.C.Balasubramaniam who is the second respondent herein. Pending the suit, in I.A. 13825 of 1970, the plaintiff first respondent herein obtained an order of attachment before judgment on 11th Sept. 1970. The suit was decreed on 5-8-1971, and therefore, the attachment became absolute as and from that date. In exercise of the power of sale under S. 69 of the Transfer of Property Act, the mortgagee brought the property to sale by auction and in the auction held on 7-2-1973, the appellant as the highest bidder purchased the property. The sale deed was executed on 10-05-1973, by the mortgagee and it was registered on 10-5-1973, itself. It may be mentioned that the mortgagee was not a party to O.S.No. 4650 of 1970 or in the application for attachment before judgment. It is also not in dispute that the mortgagee was not served with the order of attachment as such. The property was proclaimed for sale in execution of the decree in O.S.4650 of 1970 in E.P.No.2473 of 1972. At that stage, the appellant purchaser filed E.A.A 5287 of 1973 on the file of the X Assistant Judge, City Civil Court, Madras, claiming to be the absolute owner of the property and praying -

"(a) That the attachment of the half share of the property No.57 Sir Thiagaraya Road, T.Nagar, Madras and more fully described in the schedule hereto and made in E.P. 2573 of 1973 in O.S.4650 of 1970 may be set aside and the property released from the attachment;

(b) the E.P. filed for bringing the half share in the property maybe dismissed;

(c) That the sale of the said property maybe postponed, pending the hearing of this petition;

(d) that the first respondent-plaintiff maybe ordered to pay the costs of this petition.

(e) that such further or other reliefs as this Hon'ble Court may deem fit and necessary in the circumstances of the case may be passed".

2. This petition was filed on 19-10-1973. The learned X Assistant Judge, City Civil Court, Madras was of the view that the mortgage cannot prevail over the attachment before judgment and that, therefore, the attachment could not be raised in respect o the half share not be raised in respect of the half share of the judgment-debtor. In that view he dismissed the application. The purchaser filed C.M.A. 230 of 1977 on the file of this court quoting the provision of law under which the appeal was filed as O. 21, R 58 (4) C.P.C.106 C.P.C. and S. 15 of the City Civil Courts Act. This appeal was disposed of by a learned single Judge. Before the learned single Judge the first respondent decree holder took a preliminary objection that the appeal was not maintainable on the ground, that the claim application should have been dealt with under R.58 of O.21 as it stood prior to its amendment by ACt 104 of 1976, which came into force on 1-2-1977, and under the provisions then existing, the order made in respect of a petition under R.58 is final and can be questioned only by way of claim suit and not an appeal against that order. Though the judgment is not very clear about the reasoning on which this preliminary objection was disposed of, the ultimate finding of the learned Judge is that the appeal was maintain that it is not possible or permissible to a mortgagee to nullify the order of attachment by selling the property attached in exercise of his pores under S 69 the Transfer of Property Act and that therefore, the sale is not binding and the interest of the judgment debtor could be proceeded against him. In that view, he dismissed the appeal. It is against this order the present appeal has been filed under Cl. 15 of Letters Patent.

3. Even in this Letters patent Appeal. Mr.Dileep Singh, learned counsel for the first respondent decree holder contended that the appeal before the learned single Judge was not maintainable and that, therefore, this Letters Patent Appeal also could not be maintained. This was on the ground, as already stated that an order in an application under Rs. 58 of O 21 as it stood prior to its amendment by Act 104 of 1976 did not provide for an appeal and that an order under that provision was final subject only to a right of suit which has to be filed within a period of one year from the date of the order. Section 97(2)(q) of Act 104 R. 58, as substituted by S. 72 of the Act shall not apply to or affect 'any attachment subsisting immediately before the commencement of the said S. 72 or any suit instituted before such commencement under R. 63 aforesaid to establish right to attached property or session or any proceeding to set aside the sale of any immovable property and every such attachment, suit or proceeding shall be continued as if the said S 72 had not come into force '. In this case, we have already seen that though the claim petition was filed on 19-10-1973. It was dismissed on 25-2-1977 subsequent to the substitution of R. 58 which came into force on 1-2-1977. The substituted Rs. 5894) expressly provided a right of appeal against any order adjudicating the claim made under that provision. The question for consideration, therefore would be whether the provisions of R. 58 (4) are applicable or the provisions as they existed prior to the substitution were applicable.

4. In this case, technically the appellant did not question the attachment made in E. A. No.13825 of 1970 and there was no separate order of attachment made in E.P. 2573 of 1973. The attachment made during the pendency of the suit continued t be in force in view of the suit having been decreed. Therefore, though the attachment was continued, in view of the supervening sale by the mortgagee in exercise of his power under Section 69 of the Transfer of Property Act, the property could not be proceeded against further by way of sale in execution of the decree obtained against one of the mortgagors. It is on that ground there was a prayer in the Execution Application that the Execution petition may be dismissed. Specifically, as stated already, no relief has been asked for to set aside the attachment made before jugment. The attachment which is referred to in the first part of the prayer is stated to have been made in E.P.2573 of 1973 in O.S. 4650 of 1970. There is no separate order as already stated, except that the original order continued even during the execution proceedings. In fact, though we may in certain circumstances give a wider import to the word "attachment' in Rule 58, in the context of that provision we have to restrict the meaning of the word attachment to an attachment made during the execution proceedings and not to one made during the pendency of the suit. Further, it was also not necessary for the appellant to have prayed for raising of the attachment because, the attachment will have effect only against the party in the proceedings and that too in so far as the interest o the judgment debtors is concerned. Since the mortgagee does not claim under the mortgagor when he purported to exercise his power under Section 69 of the Transfer Property Act and sells the equity of redemption he could not be said to be bound by the attachment as such. This point will be more elaborately considered with reference to the decision when we deal with it on merits. Suffice it to say at this stage that it was not necessary for a mortgagee with a power of sale to have the attachment raised and therefore, the saving provision in Section 97(q) of the Act 104 of 1976 does not apply. The application filed by the appellant herein, therefore, should be treated as one for dismissing the execution petition on the ground that the property belonged to him and could not be proceeded against for recovery of the debt due from the judgment debtor. That would be a claim preferred to any property attached on the ground that such property is not liable to such attachment and that could be dealt with under the new Rule 58 of Order 21. Civil P.C. If that were so, clearly an appeal is maintainable under Rule 58 (4) of Order 21, C.P.C.

5. It was then contended by the learned counsel for the first respondent decree holder that under Sec 64, Civil P.C. where an attachment has been made, any private transfer or delivery of the property attached or of any interest therein contrary to such attachment shall be void as against all claims enforceable under the attachment. Learned counsel further contended that the words 'private transfer' would include all transfers whether by the mortgagors or by any body of the property attached and the only transfer which is saved is one that comes by reason of operation of law.

6. When an attachment is effected the person against whom the order is made is prohibited and restrained from transferring or charging the property. The order of attachment is issued against the judgment debtor and in respect of all his interest in the immovable property. In this case, the actual order of attachment made is not produced. But it is presumed that it is in the same form as contained in form 24 of Appendix E to the Civil P.C. That only is directed against the defendant or the judgment debtor and the word 'defendant or judgment debtor' would not include a mortgagee with power of sale. We are specifically referring to this because, we have already stated in the earlier part of the judgment that no notice of attachment was specifically issued to the mortgagee nor does the order of attachment as such include a mortgagee with a power of sale, under Section 69 of the Transfer of Property Act. In the light of these provisions, therefore, we are of the view that the word 'private transfer' occuring in Section 64, Civil P.C. would only mean a transfer by the person against whom the attachment was made or prohibitory order was issued in respect of the immovable property or whose interest (including his legal representative) is attached but would not include a sale or transfer made by a mortgagee with a power of sale. In fact, Order 38, Rule 10, Civil P.C. also states that attachment before judgment shall not affect the rights of persons not parties to the suit nor bar any person holding a decree against the defendant form applying for the sale of the property under attachment in execution of such decree.

7. Mr.Dolia, learned counsel for the appellant, contended that in a sale under Section 69 of the Transfer of Property Act by a mortgagee, the purchaser acquires title to the property free from all enumbrances subject only to the provisions contained in Section 69(4) of the Transfer of Property Act, and that the attachment does not preclude the mortgagee form being the property to sale. The Supreme Court had occasion to consider the right of the mortgagee under Section 69 of the Transfer of Property Act in the decision reported in Narandas v. S.A.Kamtam, . The Supreme Court pointed out

"It is erroneous to suggest that the mortgagee is acting as the agent of the mortgagor in selling the property. The mortgagor, exercises his right under a different claim. The mortgagee's right s different from the mortgagor's. the mortgagee exercises his right under a totally superior claim which is not under the mortgagor, but against him.

In other words, the sale is against the mortgagor's wishes. Rights and interests of the mortgagor and the mortgagee in the regard to sale are conflicting. (The emphasis is ours)".

In fact, Section 69 is one of these rare instances where a person, who is not the owner of the property, could convey the right, title and interest of a third party mortgagor. The mortgagee gets a power to sell the mortgagor's interest in the property along with his interest and while exercising such power of sale, as observed by the Supreme Court he is not acting under the mortgagor or as an agent of the mortgagor. The attachment order will have therefore no effect on the power of sale exercised by the mortgagee.

8. The Privy Council in the decision reported in Rajah Mimtaz Ali Khan, (1880) ILR 5 Cal 198 at p. 211, held with reference to a sale under Section 69 of the Transfer of Property Act thus -

"The effect of a sale under a power of sale is to destroy the equity of redemption in the land and to constitute the mortgagee exercising the power a trustee of the surplus proceeds after satisfying his own charge, first for the subsequent incumbrances, and ultimately for the mortgagor. The estate, if purchased by a stranger passes into his hands free of all the incumbrances."

Thus, the purchaser though did not derive title under or through the mortgagee, acquires a larger estate free from all incumbrances. In the suit filed by the first respondent he could have dealt with only the mortgagor's right and he could not have dealt with the mortgagee's right who is neither a party to the suit nor was he in any way indebted to the plaintiff. We are, therefore, of the view that the sale held in exercise of the power under Sec. 69 of the Transfer of Property Act is not affected by the attachment made and the purchaser in gets absolute title free from all incumbrances. The execution, therefore, could not be proceeded against even to the extent of the interest of the judgment debtor in the property, which is mentioned above. Accordingly, this appeal is allowed the judgments and decrees of the court below and the learned single Judge are set aside and the execution application E.A. 5287 of 1973 is allowed. There will be no order as to costs.

9. With reference to Art 134(A) of the Constitution of India, learned counsel for the first respondent decree holder made an oral application for leave to appeal to the Supreme Court. We are not satisfied that the proposed appeal to the Supreme Court involves any substantial question of law of general importance, which, in our opinion, needs to be decided by the Supreme Court. Accordingly this request is rejected.

10. Appeal allowed.