Amar Chand vs Ramesh Chand and Others

Chet Ram Thakur, J.—This appeal is directed against the decision of the learned single Judge, who accepted the appeal of Shri Ramesh Chand Plaintiff against the judgment and decree of the District Judge: setting aside the judgment and decree of the trial Court in a suit under Order 21, Rule 63 of the CPC instituted in the following circumstances.

Amar Chand Defendant had previously fied a suit against one Dittu Ram for dissolution of partnership and rendition of accounts. In that suit Amar Chand got certain amounts due to Dittu Ram from the Assistant Engineer, Jubbal Sub-Division attached. A temporary injunction was also issued to Dittu Ram restraining him from withdrawing the amounts. Dittu Ram, however, on an application made by him was allowed to withdraw those amounts subject to his furnishing bonds of two sureties to the extent of Rs. 10,000 each to the satisfaction of the Court. He accordingly filed bonds of two sureties, namely, Khazani Devi and Ram Saran. The attached amounts were, therefore, released and withdrawn. Khazani Devi died and Shri Parma Nand furnished a fresh surety bond Exhibit DA on 19th August, 1960. Parma Nand undertook to pay the decretal amount to the extent of Rs. 10,000 in case a decree was awarded in favour of Amar Chand. His statement was also recorded on 23rd August, 1960, by the Court. Parma Nand had made a statement before the Court that till the decision of the suit he would not alienate his immovable property and a note to that effect was also put on the bond and the bond was accepted. A preliminary decree was passed in favour of Amar Chand against Dittu Ram on 31st August, 1961, and a final decree for recovery of Rs. 16,516.70 was passed against Dittu Ram on 31st March, 1962.

On 22nd May, 1962, after the decree was passed, Parma Nand sold the suit land measuring 28 bighas 2 biswas in village Nehra in favour of Ramesh Chand, present Plaintiff for Rs. 4,500. Shri Amar Chand took out execution proceedings in his decree obtained on 31st March, 1962, and he got the suit land attached for his claim against Parma Nand surety for payment of Rs. 10,000. Objections under Order 21, Rule 68 of the CPC filed by Ramesh Chand were dismissed by the executing Court on 4th June, 1964, hence Ramesh Chand filed a suit out of which the present appeal has arisen. In the suit it was pleaded that he was the owner in possession of the land and the same was not liable to attachment or sale in execution of the decree obtained by Amar Chand against Dittu Ram. According to the Plaintiff he was a bona fide purchaser of the land for consideration and he accordingly sought a declaratory decree in his favour.

The suit was contested by Amar Chand Defendant contending that the sale by Parma Nand Defendant No. 3 in favour of the Plaintiff was fictitious and had been made with a view to defeat and delay the claim of Defendant No. 1. It was also denied that the Plaintiff was a bona fide purchaser of the land for consideration.

The trial Court found that the Plaintiff was a bona fide purchaser and that the transfer was not made with the intention to defeat or delay the execution of the decree that was passed in favour of Amar Chand Defendant. It was further held that the property was not liable to attachment and sale in lieu of any claim that Amar Chand Defendant may have against Parma Nand Defendant. The suit, therefore, was decreed.

On appeal by Amar Chand Defendant No. 1, the learned District Judge upheld the finding of the trial Court to the effect that the Plaintiff was a bona fide purchaser of the suit property for consideration. However, on the other point that the sale had been made with a view to defeat and delay the claim of Amar Chand the finding was reversed. According to the learned District Judge, the sale had been made with the intention to defeat and delay the claim of Amar Chand and he eventually accepted the appeal and set aside the judgment and decree of the trial Court.

The learned single Judge held that the Plaintiff was a bona fide purchaser of the property in dispute for consideration and that his rights in the land cannot be affected and it cannot be attached and sold in execution of the decree obtained by Defendant No. 1 against Defendant No. 2, and he consequently accepted the appeal, set aside the judgment and decree of the lower appellate Court and restored that of the trial Court.

The first point urged by the learned Counsel for the appellant is that Shri Parma Nand had expressly bound himself that till the decision of the case he would not transfer his land in village Nehra, and that there was an order passed by the Court on the statement made by Shri Parma Nand that he would not alienate the property till the decision of the suit. Shri Parma Nand sold the property on 22nd March, 1962, before the decision or during the pendency of the appeal. Therefore, according to him, the transaction was clearly hit by the principle of lis pendens. It is urged that the conveyance of the property by Shri Parma Nand was subservient to the right of the appellant to recover his amount of the decree. The learned Counsel in support of his arguments has relied on a number of authorities. Before I refer to the authorities cited at the Bar, 1 would quote Section 52 of the Transfer of Property Act which embodies the principle of lis pendens. The section is to the following effect:

52. During the pendency in any Court having authority ''within the limits of India excluding the State established beyond such limits'' by the Central Government of any **suit or proceeding which is not collusive and in which any right to immovable property is directly and specifically in question, the property cannot be transferred or otherwise dealt with by any party to the suit or proceeding so as to ailed the rights of any other party thereto under any decree or order which may be made therein, except under the authority of the Court and on such terms as it may impose.

Explanation.--For the purposes of this section, the pendency of a suit or proceeding shall be deemed to commence from the date of the presentation of the plaint or the institution of the proceeding in a Court of competent jurisdiction, and to continue until the suit or proceeding has been disposed of by a final decree or order and complete satisfaction or discharge of such decree or order has been obtained, or has become unobtainable by-reason of the expiration of any period of limitation prescribed for the execution thereof by any law for the time being in force.

The essentials of this section, therefore, are that-

(i) There must be pendency of a suit or proceeding.

(ii) The litigation must be pending in a competent Court.

(iii) The suit or proceeding must not be collusive.

(iv) A right to immovable property must be in dispute.

(v) A right to immovable property must be directly and specifically in question.

(vi) The property in dispute must be transferred or otherwise dealt with by any party to the litigation.

(vii) The alienation must affect the rights of the other party.

The facts of the present case would reveal that Shri Amar Chand had filed a suit No. 88/1 of 1959 against one Dittu Ram for recovery of some money claim and in that suit Shri Parma Nand had stood surety for Dittu Ram for the payment of any decretal amount that may be passed in favour of Shri Amur Chand to the extent of Rs. 10,000. Therefore, from these facts it is apparent that there was no right to immovable property in dispute between the parties to that suit nor the right to the immovable property in question was directly and specifically in question nor the property in question was transferred by Shri Dittu Ram but it was transferred by Parma Nand who stood surety to the extent of Rs. 10,000. Therefore, in my opinion, the provisions of Section 52 of the Transfer of Property Act cannot be attracted to the facts of the present case.

The first authority relied on by the appellant''s learned Counsel is Nagubai Ammal and Others Vs. B. Shama Rao and Others, This authority, in my opinion, has got no application to the facts of the present case. In that suit it was the property itself which was directly and specifically in dispute. The second authority cited is Jiban Krishna Mukherjee and Another Vs. New Beerbhum Coal Co. Ltd. and Another, This authority also will not assist the appellant because in this case it was the question of the interpretation of the security bond and it was held that "where there is any doubt about the true construction of the security bond, the bond must be considered in the light of the order directing the security to be given."

The further authorities are Kedar Nath Lal and Another Vs. Ganesh Ram and Others, , and Moti Chand and Another Vs. British India Corporation Ltd. and Others In both these authorities the property which was alienated was directly and specifically in question in the suits themselves and, therefore, it was held that those alienations were hit by the doctrine of lis pendens, whereas the facts of the case in hand are quite distinguishable. The other authority is K. Jagannatha Kone Vs. Ramachandra Naidu and Others, In this authority it was covenanted that he will not in any way alienate the property except with the orders of the Court. The point in the case in hand, according to Exhibit DA, is that the surety agreed to make the payment of Rs. 10,000 in case of a decree being passed against Dittu Ram. He had also agreed not to transfer his property till the decision of the suit. There was no list of the property on which a charge was created, but it was only stated that he would not alienate his entire property which was of the value of Rs. 25,000. In his statement (copy Exhibit DA) he had also agreed not to sell his movable and the immovable properties till the decision of the suit. It is, therefore, quite obvious that the surety did not transfer the property during the pendency of the suit, but he alienated the property only after the termination of the suit. The decree was passed as is obvious on 31st March, 1962, and he alienated the property on the 22nd May, 1962. Therefore, in view of the circumstances the authorities, referred to above, will not apply to the facts of this case Saila Bala Dassi Vs. Sm. Nirmala Sundari Dassi and Another, is also not applicable inasmuch as in that case the property which was alienated during the pendency of the suit was also directly and specifically in question in suit between the parties Raj Raghubar Singh and Anr. v. Jai Indra Bahadur Singh AIR 1919 P.C. 55 , has also got no relevancy to the facts of the present case. In this case it was held that the liability of the surety continues up to the ultimate decision of the Courts and that the surety charging his property as security is not a party within Section 47 of the Code. The further authority Dutt maharaj v. Sukur Mohommed also states that the broad purpose of Section 52 is to maintain the status quo unaffected by the act of any party to the litigation pending its determination. Hence this authority is also distinguishable, inasmuch as Shri Parma Nand was not a party to the litigation nor the property was directly involved. In Thakur Bakhsh Singh and Ors. v. Subedar Abhaidat Singh and Anr. AIR 1935 Oudh 462 , it was that very property which was directly involved in the suit regarding which a fresh lease had been executed by the landlord during the course of the proceedings on an application made by the tenant under Order 21, Rule 100 for restoration of the possession. In Basappa Budappa Halavalad Vs. Bhimangowda Shiddangowda Patil, also the property was directly involved in the case which was transferred during the pendency of the suit. The further authority Gurushantappa Sangappa Hoskeri Vs. Gurava Madivallappa, is also distinguishable inasmuch as in that case the surety had mortgaged the property mentioned therein as security for his liability. The debtors defaulted and the creditor sought to execute against the surety''s property, u/s 145 of the Civil Procedure Code. So, it was in these circumstances that it was held that where under a bond of surety ship the surety of a judgment-debtor mortgages his property as security for his liability, on default by the judgment-debtor to pay, the decree-holder can enforce the security against the property u/s 145 without following the procedure provided for by Order 34, Rule 14. In so far as the authority Fuzludeen Khan v. Fakir Mahomed Khan ILR 5 Cal 337, is concerned the same has also got no application inasmuch as it had been held therein that where property under the value of Rs. 100 is purchased by two innocent purchasers, the one by a registered and the other by an unregistered deed, and there is no fraud shown, or other circumstances which in equity would protect the unregistered purchaser against the registered, the title of the latter shall prevail.

Now I will deal with the authorities relied upon by the learned Counsel for the Respondent on the applicability of the doctrine of lis pendens. The first authority is Jaynal Abedin and Others Vs. Hyder Ali Khan Pani, In this case it had been held that-

To make lis pendens a notice to a purchaser of an estate, the question in the action must relate specifically to the estate and not merely to the money secured on it.

In Shanmughasundaram Pillai v. Parvathi Ammal and Anr. AIR 1945 Mad 454, also it had been held that-

For the doctrine of lis pendens to apply, the right to specific immovable property must be directly in issue and the transfer must be by any other party thereto. The doctrine is not applicable in favour of a third party. Where the only point which arose for decision in the suit was whether a deed of settlement was true or false it cannot be said that any right to immovable property was in question and therefore Section 52 cannot apply. Nor can it be invoked by a person who was not a party to the suit.

AIR 1943 354 (Oudh) also lays down that-

The essence of the doctrine of lis pendens is that the property in question should form the subject-matter of the dispute. Where the property is never the subject of a contest nor is the charge on it, and the only dispute is about a sum of money and the parties eventually agree upon a mode of satisfaction which is never in contest and never a dispute the doctrine does not apply.

Darbari Ram and Anr. v. Ghulam Farid Fazal Karim and Ors. AIR 1930 Lah 858, is a case where a temporary injunction restraining alienation of a house pending decision of a suit was issued and the property was sold by the Defendant against whom the injunction was issued and in that it was held that-

A temporary injunction restraining alienation of a house pending decision of a suit for recovery of money does not render a sale void as against a bona fide purchaser for valuable consideration without notice of any fraud or collusion on the part of the vendor even though it might have been made in defiance of the restraining order.

In the light of these authorities it is obviousthat in order to attract the doctrine of lis pendens it is necessary that the property must be directly and specifically in question in suit and the parties to the litigation must be the same and this doctrine does not apply to a third party. The terms of the surety bond also have got to be seen. The surety bond in the present case executed by Shri Parma Nand was for the satisfaction of a decree to the extent of Rs. 10,000. It would be obvious that he alienated the property only after the suit had been decreed. It is also further not disputed that if any charge, like the one in the present case, was created on the property of the value of Rs. 100 or more than necessarily the bond had to be registered and in the absence of the same it could not be held admissible. In support of this I may also cite Khoo Sain Ban v. Tan Guat Tean and Ors. AIR 1929 P.C. 141, which states that-

Where a document purporting to create an equitable charge was compulsorily registrable and was not registered no charge can be created by it.

To the similar effect is Chiranjilal Agarwala Vs. Chittaranjan Mukherjee, which states that where a security bond undertaking not to alienate property has been executed a charge is created on the property and as such the document is compulsorily registrable. In the absence of any registration the document, Exhibit DA, which is the very basis of the decree-holder''s claim for attachment of the property in execution of his decree cannot be looked into as being unregistered and inadmissible in law.

The second point urged was that this transfer had been effected by Shri Parma Nand in order to delay and defeat the claim of the decree-holder and as such this alienation was hit by Section 53 of the Transfer of Property Act and reliance for this is placed on two authorities by the counsel for the appellant. The first is Bachan Singh Harnam Singh v. Banarsi Dass Hari Ram and Anr. AIR 1961 Pun 361 , and the other is C. C. Abdul Shukoor Saheb Vs. Arji Papa Rao and Others, The former authority says that in the case of a fraudulent transfer made with the object of defeating or delaying the creditors, the burden lies on the creditors who assail the transaction and when the creditors have established facts which show the prima facie intention of the debtor to defeat or delay the creditors, it is then for the debtor to meet the case made out and to explain the facts. In the latter authority also it is said that where fraud on the part of the transferor is established by the terms of paragraph (i) of Section 53(1) being satisfied, the burden of proving that the transferee fell within the exception is upon him and in order to succeed he must establish that he was not a party to the design of the transferor and that he did not share the intention with which the transfer had been effected but that he took the sale honestly believing that the transfer was in the ordinary and normal course of business. The principle enunciated in these authorities cannot be disputed, but the fact remains that the transfer made by Shri Parma Nand was held by the learned single Judge agreeing with the findings of the trial Court not to be made with the intention to defeat and delay the claim of the creditor and this is a finding of fact which cannot be assailed in this Letters Patent Appeal.

Further, the learned Counsel for appellant had also relied on Firm Mukat Behari Lal Tejpal v. Khushi Ram and Ors. AIR 1935 Lah 21 wherein the question was whether the decretal amount is to be taken as referring to the amount of the decree passed by the trial Court or whatever amount is awarded in the decree against the Defendant in the course of the appellate proceedings, and it was held therein after considering the terms of surety bond that there was nothing in the bond itself to limit the period during which the liability of the surety was to continue and there was no particular reason to read into the bond any term which it does not contain. This authority, therefore, will also not apply to the present case.

The conclusion, therefore, is that the doctrine of lis pendens is not applicable to the facts of the present case inasmuch as Shri Parma Nand was not a party to the previous litigation nor the property sought to be attached in the execution of the decree by the decree-holder was directly and specifically involved in the suit between the parties. Further, the property was not alienated by Shri Parma Nand during the pendency of the suit rather he sold the same after the suit had been decreed. The document which purports to create a charge on the property was unregistered. Since it was a charge for an amount exceeding Rs. 100, therefore, u/s 17 of the Indian Registration Act, it was compulsorily registrable and having not been registered, it was not admissible in evidence and the appellant could not found his case on an inadmissible document. Further, the provisions of Section 53 of the Transfer of Property Act have not been violated as has been held by the learned single Judge agreeing with the finding of the trial Court that the transfer was not made with the intention to defeat and delay the claim of the creditor.

In the light of the above, I therefore, agree with the findings arrived at by the learned single Judge, and dismiss this appeal with costs.

R.S. Pathak, C.J.

I agree.