Judgement
This revision petition is filed against the order of the Principal Junior Civil Judge, Ananthapur in E.P. 99/95 in O.S. No. 46/92.
2. The revision petitioner is the decree-holder in O.S. No. 46 of 1992. He filed E.P. No. 99 of 1995 for realization of the decretal amount through attachment and sale of the schedule property. At the time of filing the suit, the decree-holder filed I.A. No. 194 of 1992 and attachment before judgment was ordered on 5-3-1992 under Order 38, Rule 5, CPC. Subsequent to the decree, he filed E.P. 99 of 1995 in O.S. No. 46 of 1992 for attachment and sale of the schedule property. The judgment debtors (J.Drs.) resisted the execution petition contending that the schedule house was conveyed in favour of Tarimala Nabi Sab by way of a registered sale deed by the Principal Senior Civil Judge, Ananthapur as per the orders in E.P. 119 of 1992 in O.S. No. 56 of 1992 dated 7-8-1993 and possession was also delivered on same day. The purchaser, Sri Tarimala Nabi Sab was inducted into possession of the schedule house prior to the date of attachment. Since the J.Drs. are no more owners of the property, the E.P. cannot be maintained, therefore, it is liable to be dismissed.
3. The purchaser of the property by name Tarimala Nabi Sab was added as one of the respondents in that E.P. and he filed a counter stating that the schedule house was sold to him on 15-6-1990 by the judgment debtors under an agreement of sale and as the J.Drs. failed to execute the sale deed, he filed O.S. No. 56 of 1992 on the file of the Sub-Court, Ananthapur and it was decreed in his favour directing the J.Drs. to execute the sale deed. Since the J.Drs. failed to execute the sale deed, he filed E.P. 119 of 1992 and got the sale deed executed by the Court on 7-8-1993. He further contended that as he had no knowledge about the attachment of the property and as the purchase of the property was to the knowledge of the decree-holder, the E.P. is liable to be dismissed with costs.
4. The decree-holder filed E.A. No. 223 of 1993 in E.P. No. 119 of 1992 in O.S. No. 56 of 1992 under Sections 64 and 151, CPC contending that as he obtained attachment before judgment on 5-3-1992 in O.S. No. 56 of 1992, it prevails over the sale, therefore, E.P. No. 119 of 1992 is liable to be dismissed. But, the decree-holder not pressed the E.A. 223 of 1993 on the ground that the property was already conveyed to T. Nabi Sab by the Court in the E.P. proceedings.
5. The lower Court conducted an enquiry by receiving oral and documentary evidence from both parties and ultimately held that as the schedule property was conveyed to Tarimala Nabi Sab through a sale deed executed by the Principal Sub-Court, Ananthapur in a decree for specific performance granted in pursuance of an agreement of sale, dated 15-6-1990, the E.P. schedule property cannot be brought to sale.
6. The decree-holder, being aggrieved by the order of the lower Court, dated 26-10-1999 preferred this revision petition questioning its validity and legality.
7. The learned counsel for the revision petitioner decree holder contended that since there was attachment before judgment with effect from 5-3-1992, the subsequent sale deed will not have any priority over the attachment. Therefore, the property is liable to be sold for recovery of the amount covered by the decree in O.S. 46 of 1992.
8. In the light of the contention of the revision petitioner, the points for consideration are :
(1) Whether the agreement of sale is true and valid?
(2) Whether the agreement of sale prevails over the attachment made subsequent to the agreement of sale?
Point No. 1 :
9. The J. Drs. contended that they executed an agreement of sale in favour of Tarimala Nabi Sab on 15-6-1990 and in pursuance of a decree for specific performance in O.S. 56 of 1992 the Principal Sub-Court, Ananthapur executed a registered sale deed on 7-8-1993 in favour of Tarimala Nabi Sab and as the attachment was subsequent to the date of agreement of sale, it will not have any effect. The agreement of sale was accepted by the Court and the suit was decreed in pursuance of the said document in favour of Tarimala Nabi Sab. The decree of the said Court became final and the sale deed was also executed by the said Court in favour of Tarimala Nabi Sab. Therefore, there is no need to probe into the genuineness or otherwise of the agreement of sale in this matter.
Point No. 2 :
10. The agreement of sale was executed on 15-6-1990. The attachment before judgment was obtained on 5-3-1992. The registration of the sale deed was made on 7-8-1993. Though the sale deed was executed subsequent to the date of attachment before judgment, the agreement of sale was prior to the date of attachment. Before referring to the legal position I wish to refer to the relevant provisions of the Code.
11. Order 38, Rule 10, CPC reads as follows :
"Attachment before judgment shall not affect the rights, existing prior to the attachment of persons not parties to the suit, nor any person holding a decree against the defendant from applying for the sale of the property under attachment in execution of such decree."
12. This provision makes it clear that the attachment before judgment shall not affect the rights existing prior to attachment of persons not parties to the suit.
13. Section 64, CPC which prohibits private alienation of property after attachment reads as follows :
"64. Private alienation of property after attachment to be void :
(1) Where an attachment has been made, any private transfer or delivery of the property attached or of any interest therein and any payment to the judgment-debtor of any debt, dividend or other moneys contrary to such attachment, shall be void as against all claims enforceable under the attachment.
(2) Nothing in this section shall apply to any private transfer or delivery of the property attached or of any interest therein, made in pursuance of any contract for such transfer or delivery entered into and registered before the attachment.
Explanation : For the purposes of this section, claims enforceable under an attachment include claims for the rateable distribution of assets."
14. The Supreme Court in Hamda Ammal v. Avadiappa Pathar, (1991) 1 SCC 715 clarified the point whether the agreement of sale entered into between the parties prevails over the attachment made subsequent to the agreement of sale.
15. In the above decision the Supreme Court while considering the scope of Order 38, Rules 5 and 10 and Section 64, CPC held that the sale-deed executed prior to attachment before judgment can be registered subsequently and it will prevail over the attachment. The Court further held that a transaction of sale having already taken place even prior to the institution of the suit cannot be said to have been made with the intention to obstruct or delay the execution of any decree. Order 38, Rule 10 also makes it clear that the attachment before judgment shall not affect the rights, existing prior to the attachment, of persons not parties to the suit. The Court also held that when the property belonged to the judgment debtors and when the sale-deed had already been executed by them prior to the attachment before judgment and only registration remains, then neither the attachment before judgment nor a subsequent attachment or Court sale of the property would confer any title by preventing the relation back. The fact that the document of sale had not been registered only after the attachment makes no difference. Even an unregistered document can be received as evidence for purposes mentioned in the proviso to Section 49 of the Registration Act. The contention that till registration, the execution of the sale-deed does not confer any rights whatsoever on the vendee cannot be accepted.
16. In S. Noordeen v. V. S. Thiru Venkita Reddiar, (1996) 3 SCC 289 : (AIR 1996 SC 1293) the Supreme Court held as follows :
The attachment before the judgment is an encumbrance preventing the owner of the property to create encumbrance, sale or create charge thereon. Attachment before judgment does not create any right, title or interest, but it disables the judgment-debtor to create any encumbrances on the property.
17. In Narayanan Nair Ramakrishna Nair v. Zacharia Kuriakose, AIR 1991 Kerala 152 a single Bench of the Kerala High Court held that a judgment made after a contract for specific performance does not affect a prior agreement to sell and attachment could only fasten the debtors right to the unpaid purchase money.
18. In D. V. Narsimharao v. P. Ramayyamma, (1987) 1 Andh LT 718 a single Bench of this Court presided over by Justice K. Ramaswamy, as he then was, considered the scope of Section 64, Order 38, Rule 10, CPC and Sections 40 and 54 of the Transfer of Property Act and held that a contract for sale of property prevails over subsequent attachment of the same property before judgment. It was clarified by the Court that though the agreement for sale does not create any right, title or interest in the property under Section 54 of the Transfer of Property Act, it creates an interest in the property by operation of second paragraph of Section 40 of the Transfer of Property Act and this right prevails by operation of Order 38, Rule 10, CPC. Therefore, the rigour imposed under section 64 of the code does not prevail and the attachment before judgment does not prevail over the contract for sale. The learned Judge considered this aspect at length by quoting certain paragraph of Mullas Book on Transfer of Property Act, 1882, Fifth Edition and also the case law relating to this point.
19. In the case covered by the above decision, the first respondent contended that the third respondent entered into an agreement of sale on 25-2-1975 to sell the attached property to them for a valuable consideration of Rs. 35,000/- and a sum of Rs. 20,000/- was paid under a Demand Draft drawn on the State Bank of India and the balance amount was paid by discharging the debts of third respondent and cash payments from time to time and the time for execution of the sale-deed was extended up to 31-3-1978. The first respondent purchased stamps for registration of the documents on 20-12-1977 and two separate sale-deeds were executed in favour of respondents 1 and 2 on the same day and were registered on 4-1-1978, therefore, the first respondent contended that he has title to the property on the date when the attachment before judgment was made.
20. The petitioner resisted the contentions of respondents 1 and 2, but the Court did not accept the contentions of the petitioner. The single Bench after taking into consideration the provisions of the Code of Civil Procedure, Transfer of Property Act and the legal position held that the agreement of sale, which was executed prior to the date of attachment, prevails over the attachment.
21. Section 40 of the Transfer of Property Act, 1882 reads thus :
"Where, for the more beneficial enjoyment of his own immovable property, a third person has independently of any interest in the immovable property of another or of any easement thereon a right to restrain the enjoyment in a particular manner of the latter where a third person is entitled to the benefit of an obligation arising out of contract and annexed to the ownership of immovable property, but not amounting to an interest therein or easement thereon, such right or obligation may be enforced against a transferee with notice thereof or a gratuitous transferee of the property affected thereby but not against a transferee for consideration and without notice of the right or obligation, nor against such property in his hands."
22. In paragraph No. 10 at page 199 of the Mullas Transfer of Property Act, 1882, Fifth Edition, it is mentioned thus :
"There is a conflict of decisions as to whether the obligation annexed by this section to the ownership of property by a contract of sale will prevail against claims enforceable under an attachment. If after a creditor C has attached As property, A sells it to B, the conveyance to B will be subject to the claims of C enforceable under the attachment. This is because under Section 64 of the Code of Civil Procedure any private transfer by A after the attachment will be void as against such claims. But, if the subsequent conveyance was in pursuance of an agreement of sale which was before the attachment will the claims of C enforceable under the attachment be subject to the obligation created by the contract of sale to B?"
23. In the said book, the learned author noticed conflicting views of the Calcutta and Madras High Court and commented as follows :
"The Madras High Court has taken the same view on the ground that if a creditor attaches property which is subject to a particular obligation, he should not be able to override it. In the case of an attachment before judgment this is so expressly provided by Order 38, Rule 10 of the Code. Again if after the attachment the vendee filed a suit for specific performance of the contract and the Court endorsed execution of a conveyance, it is clear that such conveyance would not be a private transfer subject to the provisions of Section 64 of the Civil Procedure Code."
24. In Veeraraghavayya v. Kamala Devi, AIR 1935 Madras 193, the Madras High Court considered the effect of attachment of property and subsequent sale in pursuance of the contract and held thus
"Where a purchase is subsequent to the attachment, but the agreement in pursuance of which the purchase is made, is prior to attachment, the purchase prevails against the attachment."
25. The Madras High Court took the same view in Rebala Venkata Reddi v. Yellappa Chetti, AIR 1917 Madras 4.
26. In Diravyam Pillai v. Veeranan Ambalam, (1939) 2 Mad LJ 822 : (AIR 1939 Madras 702) Varadachariar, J. as he then was, at page 831 (of Mad LJ) : (at p. 706 of AIR) held as follows :
"The question is not whether any interest has passed under the contract to sell. The attaching decree-holder attaches not the physical property, but only the rights of the judgment-debtor in the property."
27. This view was followed by Wardsworth, J. in Athinarayana v. Subramania, AIR 1942 Mad 67 wherein the learned Judge has held thus :
"Though a contract to sell does not having regard to the terms of Sec. 54 of the Act; create any interest in or charge on the property, it does give rise to an obligation which limits the right of the judgment-debtor and the attachment of the right, title and interest of the judgment-debtor is subject to any such limitation by which the judgment debtor was bound. Therefore, where subsequent to a contract to sell certain property, is attached in execution of a decree, the attachment does not prevail over the pre-existing contract to sell even though the attachment creditor has no notice of the contract to sell. The right of the judgment-debtor in the property is on the date of the attachment qualified by the obligation incurred by him under the earlier contract to sell and the attaching creditor cannot claim to ignore that obligation and proceed to bring the property to sale as if it remained the absolute property of the judgment-debtor."
28. K. Ramaswamy, J. while agreeing with the views of the Madras High Court and by expressing that the learned Judge is bound by the ratio laid down by the Madras High Court held that though the agreement of sale does not create any right, title or interest in the property under S. 64 of the Code of Civil Procedure, it creates an interest in the property by operation of second paragraph of S. 40 of the Transfer of Property Act, 1882 and this right prevails by operation of Order 38, Rule 10, C. P. C., therefore, the rigour imposed under S. 64 does not prevail. The agreement of sale is not thereby void and the attachment does not prevail over the contract for sale.
29. In the case on hand, the agreement of sale was executed on 15-6-1990 and the attachment before judgment was ordered on 5-3-1992. Though the sale-deed executed by the Court on 7-8-1993 was subsequent to the date of attachment, the agreement of sale, which was executed prior to the date of attachment, prevails over the attachment. In the light of the above legal position, I have no hesitation to hold that the agreement of sale prevails over the attachment before judgment; therefore, the schedule property cannot be brought to sale. The lower Court rightly concluded that the agreement of sale prevails over the attachment before judgment. There are no grounds to interfere with the order of the lower Court.
30. In the result, the revision petition is dismissed. The impugned order of the lower Court is confirmed. No order as to costs.
Petition dismissed.
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