Ghananand Singh vs Raghunandan Prasad Singh and Another

Jwala Prasad, Ag. C.J.

In pursuance of the order passed by this Court, dated the 28th July 1926, the records of the case in the Court of the Subordinate Judge of Bhagalpur and of Monghyr have come to us. In the order of the Bhagalpur Court, dated the 23rd June 1926, which was dealt with by us in our aforesaid order it was stated that the 30th July was fixed for passing orders regarding the acceptance or otherwise of the security bond filed by the defendants and for vacating the order of injunction.

The Court has passed its order regarding the sufficiency of the security filed by the decree-holder-purchaser holding that the security is proper and sufficient and fit to be accepted. The Court also indicated that in its opinion the order of injunction issued against the decree-holder taking possession of the property should be vacated but as the entire matter was to come up before this Court the lower Court suspended the passing of the final order accepting the security and withdrawing the injunction.

It is not disputed that the promissory notes are not sufficient in amount to cover one-eighth of the entire property, that is the interest claimed by the plaintiff therein. Over and above this cash security the decree-holder has filed a bond in which he has undertaken to restore the share of the plaintiff in the event of his success in the original suit. On behalf of the plaintiff the validity and sufficiency of the security contained in the bond is disputed. It is said that the covenant to restore or reconvey the property coupled with the covenant not to encumber it or alienate it in any way so as to affect the plaintiff''s interest in the event of his success is a covenant in the nature of declaring or limiting or extinguishing the right of the decree-holder, the executant of the bond, in the property involved in the litigation in which the opposite party has claimed; an interest. Hence it is said that the, aforesaid covenant comes under Clause (1)(b) of Section 17 of the Registration Act and renders the document liable to registration. The term in the bond referred to above runs as follows:

We do hereby covenant and agree and declare that we, our heirs and executors and legal representatives are and shall be jointly and severally bound to this Court, namely the Court of the Subordinate Judge at Bhagalpur, to restore and return the said one-eighth share of the properties claimed, by the said Kumar Ghananand Singh and purchased by us the executants in execution of our mortgage-decrees and we decree-holders do hereby agree and covenant that in case of final success of Kumar Ghananand Singh the Government Promissory Notes will be available to him in the event of our not restoring the said one-eighth share unencumbered to him. And we further agree, covenant and declare that we, our heirs, legal representatives and executors shall not in the meantime sell, transfer or otherwise alienate the said one-eighth share in the said properties, the said one-eighth share, being valued at Rs. 3,20,636 in consideration of the price of the entire 16 annas fetched in the auction sales dated the 9th November 1924, and the 26th January 1925.

The gist of the aforesaid covenant is that the decree-holders-purchasers agree that they will restore and return the plaintiff''s share in the event of his success in his suit and in the event of their not restoring the said property the Government promissory notes deposited in the Court below will be available to the plaintiff. In order to carry out the covenant of restoration of the property in question the executants of the bond, agree that they would not in any way alienate or encumber the said property.

There is no immovable property hypothecated to the Court or to the plaintiff to enforce his rights under the security bond or the decree which ultimately might be passed in his favour. No immovable property has been pledged or mortgaged to enure for the benefit of the plaintiff. The bond in question is not in the approved form given in the Appendix G to the Civil P.C. by a decree-holder purchaser in obtaining possession of a property pending a dispute concerning it or by a judgment-debtor to obtain stay of execution for the purpose of enabling the decree-holder to realise his decree in execution or by an appellant in order to obtain a stay of execution during the pendency of an appeal. In all those cases the party giving the security pledges or hypothecates some immovable property for the benefit of the opposite party and when immovable property is hypothecated the security bond requires registration u/s 17 of the Registration Act.

As observed above the present bond is not in the nature of a mortgage or hypothecation bond. No property of the executants has been mortgaged or pledged in the bond in question. Therefore, the bond does not create, assign, limit or extinguish any right, title or interest whether present or future in any immovable property. The bond sets forth a personal covenant to restore the property and not to encumber it. To my mind the bond in question does not require registration and I agree with the view taken by the Court below. A number of authorities have been cited on both sides. I do not think that I can profitably enter into a close discussion of those cases. It will be sufficient to cite them for reference Ida v. Muhammad Din AIR 1925 Lah. 78; Nagaruru Sambayya v. Tangatur Subbayya [1905] 31 Mad. 330; Tokhan Singh v. Girwar Singh [1905] 32 Cal. 494; Mir Gazi v. Mia Ali [1914] 38 Bom. 703; Maung Wala v. Maung Shwe Gun AIR 1924 Rang. 57; Maung Paung v. Ma On AIR 1924 Rang. 242, Ganda Ram v. Ram Chander AIR 1924 Lah. 163 and Achutaramaraju v. Subbaraju [1902] 25 Mad. 7. To my mind the distinction referred to above between a document evidencing a personal covenant and a document of hypothecation in respect to immovable property is well recognized in those cases under different facts and circumstances.

The next contention urged on behalf of the plaintiff is that the security offered by the decree-holders is not in accordance with the order of this Court, dated the 5th December 1923. I was a party to the said order and it dealt with the different contingencies that would arise on account of the auction sale. The property might have been purchased by the decree-holder or by a third party. We considered the separate considerations with regard to the purchase by the decree-holders or the third party. In the event that has happened the decree-holders have purchased the property. Therefore, only that portion of the order which deals with such a contingency is relevant for the purposes of the present question. We directed that if the sale passed the properties to the decree-holders they, should give security to restore the property itself. There is nothing to show that we in any way limited the scope of the security to immovable property or to cash. All that we wanted was that the decree-holders should give security to restore the property itself. They have given a personal, covenant that they would restore the property itself and that they would not encumber or alienate it during the pendency of the plaintiff''s suit. This personal covenant without anything further than that would not have been sufficient in the spirit and letter of our order of the 5th December 1923.

The Court below was right in holding at one stage that the mere present covenant given by the decree-holders to restore the property was not sufficient and the Court demanded other securities. The decree-holders have as observed above furnished cash security of over Rs. 4 lakhs. The two together, namely the security bond and the cash security would, to my mind, seem to comply with our order of the 5th December 1923. Everybody knows that cash security is far better than security in property moveable or immovable. The decree-holders have to restore the property and, in certain circumstances, to indemnify the plaintiff with respect to wrongs committed to the property. Supposing that our immovable property was offered as security what guarantee is there that the immovable property would be free from any encumbrance and, that the plaintiff would be able to immediately convert that property into cash in order to recoup himself in respect of the loss or damage sustained by him on account of the wrongs committed by the decree-holders in respect of the property claimed by him?

Now as regards the actual restoration of the property the plaintiff would be entitled to it if he succeeds in the suit brought by him and has his right declared inasmuch, as the property has been purchased by the decree-holders themselves with full knowledge of the plaintiff''s claim. There might have been complications if a third party had purchased the property and in that event we would have taken into account the different considerations. The security demanded from the decree-holder is more properly a security in respect of damages done by him to the property in dispute for whether he wishes it or not the moment he loses the suit and the plaintiff''s right is declared he will have perforce to restore the property to the plaintiff. Whether he undertakes it or not, no alienation by him will avail against the plaintiff and the alienee will not purchase a safe title which will be affected by the principle of lis pendens.

The security having been now found to be sufficient by the Court below, and we agree with the view of that Court, the decree-holders are entitled to confirmation of the sale. The sale was in fact confirmed when they filed the first security in the shape of a personal covenant. The executing Court thought that the security was sufficient and confirmed the sale. The order of the Subordinate Judge of that Court confirming the sale was upheld by this Court in appeal by the judgment-debtor. Subsequently it was held that the security was not sufficient and proper and hence before the decree-holders could be allowed possession of the property sufficient security was demanded from them. That being done the right of the decree-holders is restored and the sale though confirmed in a somewhat irregular manner must be deemed to have been duly confirmed and the confirmation cannot be set aside. The decree-holder''s did not get possession of the property on account of the confirmation of the sale without sufficient and proper security, so the plaintiff was not at all prejudiced by the order confirming the sale.

According to the view expressed by me on, the previous occasion the the decree-holders cannot get possession of the property without having furnished proper and sufficient security. This having been done now there is no reasonable ground for setting aside the order of the Court confirming the sale. That order was not without jurisdiction. At best it was an order passed under a misconception that proper security in terms of the order of the High Court was furnished. The title of the decree-holders relates back to the date of the sale and becomes absolute by confirmation of it thereafter. Their right to obtain the sale certificate and delivery of possession flow from the confirmation of the sale. We do not think that we can now divert the regular channel by which the decree-holders will now be able to reap the fruits of their long-standing litigation. We, therefore, direct that the records be returned to the Court concerned and direct the Subordinate Judge to give effect to his order of the 30th July 1926, by vacating the injunction issued against the decree-holders and by further executing the decree in such a way as may be fit and proper. This order will govern all the cases and a copy of it will be sent to the Monghyr Court as well as to the Bhagalpur Court.

This disposes of all the matters pending before us to-day. In the circumstances of the case there will be no order as to costs.

Bucknill, J.

I agree.