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CaseIQ

Mohit Narain Jha v. Thakan Jha

Patna High Court

Apr 16, 1925

Judgment

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Comprehensive Summary of the Provided Opinion

Factual and Procedural Background

The matter arises from execution proceedings on a decree in which an assignee of the original decree-holder sought to execute the decree. The appellant challenged the assignee's right to execute on two principal grounds: (1) that the assignee was a "farzidar" (a sham/agent) for one of the judgment-debtors, Kamalnath Jha, and therefore not entitled to execute the decree; and (2) that the sale proclamation should note that the properties were subject to the appellant's lease (a notification the appellant had previously sought in an earlier execution proceeding).

Procedurally, a Subordinate Judge had earlier considered these issues and made findings: he rejected the contention that the assignee was a farzidar, and he held that the present application to notify the lease in the sale proclamation was barred by res judicata based on an order dated 26th August 1922 in a previous execution case. The appellant appealed those rulings. The opinion records consideration of the evidence, the operation of Order XXI, rule 66 of the Civil Procedure Code (relating to particulars in a sale proclamation and summary enquiries), and the interpretation of an "ekrarnama" (a written agreement forming part of the mortgage terms) executed in relation to the mortgage given by Babu Shibnath Jha in favour of Mussammat Debdhira Dai.

Legal Issues Presented

Whether the assignee was a farzidar for one of the judgment-debtors (Kamalnath Jha) and therefore not entitled to execute the decree.
Whether the appellant's application to have his lease notified in the sale proclamation was barred by res judicata by reason of the previous execution order dated 26th August 1922.
Whether the Subordinate Judge's refusal to notify the lease in the sale proclamation was an appealable order or, alternatively, an interlocutory order under Order XXI, rule 66 (and therefore not appealable).
How the "ekrarnama" (agreement) must be interpreted: whether it was a personal covenant benefiting Mussammat Debdhira Dai alone, or whether it enured to the benefit of her heirs, assignees and legal representatives (i.e., whether the covenant ran with the land and could be enforced by successors).
Whether section 6, clause (d) of the Transfer of Property Act (which disallows transfer of interests restricted in enjoyment to the owner personally) invalidates the assignment insofar as it purports to transfer the benefit of the ekrarnama.

Arguments of the Parties

Appellant's Arguments

The assignee was a farzidar for Kamalnath Jha (a judgment-debtor), and therefore not entitled to execute the decree.
The evidence presented on behalf of the assignee was insufficient to show that he was a real purchaser; the appellant asserted that it was for him to prove conclusively that the assignment was farzi.
The ekrarnama was a personal agreement entered into with Mussammat Debdhira Dai, and its terms (including the use of the word "herself") demonstrate an intention that only Mussammat Debdhira Dai personally — not her heirs, assignees or representatives — could take advantage of it.
The covenant in the ekrarnama did not run with the land (it applied only to the specific mauzas the mortgagee might purchase), and therefore the assignment of rights under the ekrarnama was invalid under section 6, clause (d) of the Transfer of Property Act.

Respondent's Arguments

The order of the Subordinate Judge refusing to notify the lease in the sale proclamation was in substance an order under Order XXI, rule 66 of the Civil Procedure Code (i.e., an interlocutory order governing particulars in the sale proclamation), and if so, that order is not appealable — rendering this portion of the present appeal incompetent.
Implicitly, the respondent maintained that the assignee was entitled to execute the decree (and the Subordinate Judge's finding that the assignee was not shown to be a farzidar should be sustained).

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court's analysis proceeds in distinct strands corresponding to the principal issues raised on appeal.

1. The farzi (farzidar) allegation:

The Subordinate Judge had considered the evidence and concluded that the assignee's farzi character (i.e., being an ostensible purchaser who was actually acting for a judgment-debtor) had not been satisfactorily established. On reviewing the evidence placed before the appellate court, Kulwant Sahay, J. agreed with that conclusion: the appellant had not proved the assignment to be a sham, and the court found the evidence on behalf of the assignee insufficient to prove farzi character. Accordingly, the court upheld the Subordinate Judge on this point.

2. Res judicata and the previous execution order (Order XXI, rule 66):

The court analyzed the nature of orders made under Order XXI, rule 66 of the Civil Procedure Code (which governs the particulars to be stated in a sale proclamation and permits the court, where necessary, to hold a summary enquiry to determine those particulars). The opinion reasons that an order under rule 66 is an interlocutory order resulting from a summary enquiry and is not a final order. Because res judicata operates only where there is a final adjudication of the question, the court held that the prior order dated 26th August 1922 — being an interlocutory determination under rule 66 — could not operate as res judicata to bar the appellant from raising the question again in a subsequent proceeding.

The court further observed that the objection in the previous proceeding was that the lease had expired in 1328 Fs and therefore need not be notified; in the present case the appellant's objection related to the present decree-holder's entitlement to the benefit of the ekrarnama (a personal agreement, the appellant argued). The court emphasized that reasons given for a final order do not themselves constitute a bar under res judicata; only the final order does. The opinion notes that a subsequent proceeding between the heirs of the original lessor and the lessee had determined that the lease did not expire in 1328 but in 1335 — and although the present decree-holder or predecessor was not party to that later proceeding, the court held that the lessee could still raise that question before the present decree-holder. On this analysis, the Subordinate Judge was incorrect to conclude that the present application was barred by res judicata.

3. Appealability (Order XXI, rule 66 v. section 47):

The court then considered the respondent's contention that if the Subordinate Judge's earlier order is properly characterized as an order under Order XXI, rule 66 (and not as an order under section 47), then the corresponding portion of the present order (which refuses to notify the lease in the sale proclamation) is itself an order under rule 66 and therefore not appealable. The opinion accepts this contention: the portion of the Subordinate Judge's order disallowing notification of the lease is essentially an order under Order XXI, rule 66 and is not appealable. Consequently, although the appellate court thought the Subordinate Judge was wrong on the res judicata point, it held that the appellant cannot appeal against that portion of the order because no appeal lies from an order under rule 66.

4. Interpretation of the ekrarnama:

The court examined the ekrarnama and the circumstances of its execution. It noted that the ekrarnama's terms had been settled before the mortgage was executed, even though the written ekrarnama was executed after the mortgage bond. There is a recital that the lessor (Babu Shibnath Jha) needed money and that the money-lender (Mussammat Debdhira Dai) was concerned that if she had to buy or obtain kabala of the mortgaged properties after non-payment up to 1328 Fs, she would be put to loss if the lessee continued to hold possession after 1328. The ekrarnama, executed at the money-lender's request, formed part of the terms of the mortgage.

Considering the language of the instrument and the surrounding circumstances, the court concluded that the parties intended the ekrarnama to benefit not only Mussammat Debdhira Dai personally but also her heirs, assignees and legal representatives. The court rejected the appellant's contention that the use of the word "herself" restricted benefit to Mussammat Debdhira Dai personally; the judge explained that "herself" was intended to distinguish the case where the mortgagee became the purchaser (and would thus be entitled to possession) from the case where a third party bought at auction (in which case the lessee would not be obliged to give up possession).

The court also addressed the appellant's argument that the covenant did not run with the land because it provided that the covenant to relinquish possession would apply only to the specific mauzas the mortgagee purchased. The court found no force in this argument: that clause merely clarified that the mortgagee would benefit only as to the specific mouzas she bought, and did not indicate that the covenant was personal only and incapable of passing to heirs or assignees.

5. Transfer of Property Act, section 6(d):

The appellant invoked section 6, clause (d) of the Transfer of Property Act (the provision that an interest in property restricted in enjoyment to the owner personally cannot be transferred). The court held that section 6(d) would render the assignment invalid only if the covenant in the ekrarnama were indeed a personal agreement in favour of Mussammat Debdhira Dai alone. Having found that the covenant was not personal but intended to benefit heirs and assignees, the court concluded that section 6(d) has no application in the present case.

6. Conclusion on reasoning:

Balancing these strands of analysis, the court concluded: (a) the Subordinate Judge was correct to hold that the assignee was not proved to be a farzidar (so the assignee may execute the decree); (b) the Subordinate Judge erred in holding the present application to be barred by res judicata, because the earlier order was interlocutory under Order XXI, rule 66; but (c) the order refusing to notify the lease is itself a rule 66 order and therefore not appealable, rendering this part of the appeal incompetent. Finally, the court found that the ekrarnama's covenant enured to the benefit of the mortgagee and her heirs/assignees and was not a mere personal covenant to which section 6(d) would apply.

Holding and Implications

APPEAL DISMISSED.

Direct effect on the parties:

The court dismissed the appeal on the merits insofar as the appellant challenged the alleged farzi character of the assignment — the Subordinate Judge's finding that the assignee was not proved to be a farzidar was upheld.
The appeal was also dismissed insofar as it sought to challenge the Subordinate Judge's refusal to notify the appellant's lease in the sale proclamation, because that portion of the order is an order under Order XXI, rule 66 and is not appealable; consequently the appeal is incompetent as to that part.
The court held that the ekrarnama was intended to benefit the mortgagee and her heirs, assignees and legal representatives; it was not a purely personal covenant limited to Mussammat Debdhira Dai.
The appellant was ordered to pay the costs of the appeal.

The opinion does not frame or announce any broader legal precedent beyond the application of the cited provisions of the Civil Procedure Code and the Transfer of Property Act to the facts of this case. It does not state that it is establishing a novel rule of law; its rulings are directed to the resolution of the parties' disputes in this appeal.

Judges: Kulwant Sahay, J. (opinion), Mullick, J. (agreed), Ross, J. (agreed). Final order: "Appeal dismissed" (costs to appellant).

Show all summary ...

Kulwant Sahay, J.:— (after stating the facts set out above, proceeded as follows): The first point taken by the learned Counsel for the appellant is that the assignee was a farzidar for Kamalnath Jha, one of the judgment-debtors, and, therefore, he was not entitled, to execute the decree. The learned Subordinate Judge has discussed the evidence and has come to the conclusion that it has not been satisfactorily established that the assignee was a farzidar for Kamalnath Jha. On a consideration of the evidence which has been placed before us, I am of opinion that the learned Subordinate Judge was right in his conclusion on this point.

The learned Counsel has referred to the evidence on behalf of the assignee, and has argued that this evidence is not sufficient to show that he was a real, purchaser, but it was for the appellant to prove conclusively that the assignee was a farzidar for the judgment-debtor. The evidence on his behalf is not at all satisfactory to prove the farzi character of the assignment; and this ground of the appellant must fail.

The second ground taken by the learned Counsel for the appellant is that the Subordinate Judge was wrong in holding that the present application in so far as it asked a note to be made in the sale proclamation about the properties being subject to the appellant's lease was barred by res judicata. This contention appears to be sound. The application made by the present appellant in the previous execution, case was that his lease might be notified in the sale proclamation. Now this was an application in connection with the drawing up of the sale proclamation as provided by Order XXI, rule 66, of the Civil Procedure Code. The Court executing the decree is required to state certain particulars in the sale proclamation and in order to state those particulars it is sometimes necessary that the Court should hold a summary enquiry. The sale proclamation has to be drawn up under Order XXI, rule 66, of the Code after notice to the decree-holder and the judgment-debtor, and both parties are entitled to apply to the Court asking it to state such particulars in the sale proclamation as they think proper. When there is a difference between the decree-holder and the judgment-debtor as regards any of the particulars to be stated in the sale proclamation, the Court has to make a summary enquiry and pass orders after such enquiry. One of the particulars to be stated in the sale proclamation is as regards the encumbrance to which the property sought to be sold is liable. Another particular to be stated therein, as provided by clause (e), sub-rule (2), rule 66, is everything which the Court considers material for a purchaser to know in order to judge of the nature and value of the property. Under this head the matter, which is usually enquired into by the Court, is as regards the valuation of the property and evidence is generally given under clause (4) of the rule in order to enable the Court to state those particulars. It has been held that the order of the Court determining any of the particulars to be stated in the sale proclamation under Order XXI, rule 66, is not a final order and the parties are at liberty to reopen the same question in a subsequent proceeding such as a proceeding relating to setting aside the sale under Order XXI, rule 90, of the Code of Civil Procedure. The order of the Court in the previous execution case of the original decree-holder, dated the 26th of August, 1922, was therefore not a final order but an interlocutory order after a summary enquiry; and it cannot be held that such an order would operate as res judicata in a subsequent proceeding. Moreover the objection taken on the previous occasion was that the lease had expired in 1328 Fs. and was not subsistent at the time the previous execution was taken out. The objection in the present case is that the present decree-holder, who is the assignee of the original decree-holder, is not entitled to the benefit of the ekrarnama which was a personal agreement with the original mortgagee-decree-holder. No doubt there was a summary decision in the previous execution case that the lease had expired in 1328, but that was only a reason given for disallowing the prayer of the judgment-debtor to notify the lease in the sale proclamation. It is the final order which operates as a bar in cases where the principle of res judicata is applicable. The reasons given for the final order cannot operate as a bar. In a subsequent proceeding between the heirs of the original lessor and the lessee it has been determined by this Court that the lease did not expire in 1328, but would expire in 1335. No doubt the present decree-holder or his predecessor was not a party to the proceeding in which that decision was come to, but am of opinion that it is still open to the lessee, the present appellant, to raise that question in the presence of the present decree-holder. I am therefore opinion that the learned Subordinate Judge was wrong in holding that the present application of the appellant was barred by res judicata.

It has, however, been contended by the learned Vakil for the respondent that if the order in the previous execution case be held merely to be an order under Order XXI, rule 66, of the Code and not an order under section 47, then the present order under appeal, so far as it disallows the appellant's prayer to notify the lease in the sale proclamation, is also an order under Order XXI, rule 66, of the Code and is therefore not appealable. This objection of the respondent appears to be sound. The order of the learned Subordinate Judge, in so far as it refuses to notify the lease in the sale proclamation, is really an order under Order XXI, rule 66, and is therefore not appealable; and the present appeal, in so far as this part of the order is concerned, is incompetent.

The question, however, as regards the interpretation of the ekrarnama was raised in the Court below and decided by it. It has also been raised before us and has been fully argued on both sides. I think it therefore desirable to express my opinion as regards the interpretation thereof. It has been contended on behalf of the appellant that the agreement contained in the ekrarnama was an agreement entered into with the mortgagee Mussammat Debdhira Dai personally, and her heirs or representatives are not entitled to take the benefit thereof. Reference is made to the terms of the ekrarnama and to the absence of any expression showing that it was the intention of the parties that the heirs or representatives of the original mortgagee could enforce the terms of the ekrarnama. I have read the ekrarnama carefully and I have considered the circumstances under which it was executed; and I am of opinion that the intention of the parties was that not only the mortgagee Mussammat Debdhira Dai personally was to take advantage of the terms thereof, but that her heirs and assignees and legal representatives were also entitled to the benefit thereof. It is to be noted that the terms of this ekrarnama were settled before the mortgage was executed although the actual execution of the ekrarnama took place after the execution of the mortgage bond. There is a recital in the ekrarnama that the lessor Babu Shibnath Jha was in need of money but the money-lender raised the objection that in the event of non-payment of the debt up till 1328 if she (the mahajan) be under the necessity of getting a kabala executed in respect of the mortgaged property or of purchasing at an auction-sale any of the mauzas held in lease by the lessee she would be put to loss if the lessee continued to hold possession after 1328. The ekrarnama was therefore executed at the request of Babu Shibnath Jha for the satisfaction of the mahajan, the money-lender. It was a part of the terms of the mortgage and to my mind it seems clear that the mortgage was executed with the stipulation that in case the mortgagee purchased the property the lessee would give up possession after 1328. I see no reason to hold that this was a personal agreement to enure for the benefit of Mussammat Debdhira Dai personally and not of her heirs and representatives. It had the effect of enlarging the security and must be taken to be for the benefit of the mortgagee and her heirs and representatives.

Stress is laid by the learned Counsel for the appellant on the expression contained in the ekrarnama to the effect that if the said mahajan herself purchased any of the leasehold properties then the lessee would give up possession after 1328; and it is contended that the expression “herself” shows that it was intended that Mussammat Debdhira Dai alone could take advantage of this ekrarnama. In my opinion this contention is not sound. What was intended to be expressed was that if the mortgagee purchased then the lessee would give up possession; if an outsider or a third person purchased, then the lessee would not give up possession. What was contemplated was the case of the mortgagee becoming the auction-purchaser in contradistinction to a third person purchasing the property.

It is next argued that there was no intention that this covenant should run with the land; and it is pointed out that it was stipulated in the ekrarnama that if the mortgagee purchased one, two or all the three mauzas and obtained delivery of possession thereof, the condition as regards relinquishment by the lessee shall hold good in respect of the one, two or three mauzas which the mortgagee might purchase and not of the other mauza or mauzas which she might not purchase. I am unable to see any force in this contention. This term in the ekrarnama is in no way in conflict with the previous terms thereof and does not show that the covenant was not to run with the land. It only emphasizes the fact that no one except the mortgagee was to get the benefit of the agreement; and that if the mortgagee purchased only one or two out of the three leasehold properties, then she would be entitled to take possession of only that one or those two properties. Reference has been made by the learned Counsel for the appellant to section 6, clause (d), of the Transfer of Property Act which provides that an interest in property restricted in its enjoyment to the owner personally cannot be transferred by him; and it is argued that the assignment, in so far as the terms of the ekrarnama are concerned, is bad in law. This would be so only if it be held that the covenant in the ekrarnama was a personal agreement with Mussammat Debdhira Dai. Once it is found that it was not a personal covenant, section 6, clause (d), of the Transfer of Property Act can have no application to the present case.

I am therefore of opinion that the learned Subordinate Judge was right in holding that the covenant in the ekrarnama was for the benefit of the decree-holder, whoever he might be, at the time of the execution of the decree. I would, however, dismiss this appeal in so far as the question of the farzi character of the assignment is concerned against the appellant on the merits, and in so far as the appellant's application to notify the lease in the sale proclamation is concerned, on the ground that no appeal lies against this portion of the order. The appellant ought to pay the costs of this appeal.

Mullick, J.:— I agree.

Ross, J.:— I agree that the appeal so far as it questions the right of the respondent to execute the decree on the ground that he is a farzidar of one of the judgment-debtors should be dismissed; and I also agree that no appeal lies against the decision of the Subordinate Judge refusing to notify the appellant's lease in the sale proclamation. The appeal should therefore be dismissed with costs.

S.A.K

Appeal dismissed.