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Case Summary — Opinion of Reuben, J. (Mukharji, J. concurring)

Factual and Procedural Background

This appeal was brought by Defendant No. 1 against the dismissal of his defence in a suit by the plaintiffs for: (i) declaration of a zarpeshgi right in certain property, (ii) recovery of possession of that property, and (iii) mesne profits. The property originally belonged to Defendants Nos. 3–7, who executed a zarpeshgi in favour of Defendant No. 8 on 12 April 1924. The plaintiffs claim title under an assignment (Exhibit 3) executed by Defendant No. 8 in their favour on 3 March 1938 for Rs. 10,000.

The appellant (Defendant No. 1) challenged the assignment on the ground that the zarpeshgi interest had been attached in Money Suit No. 26 of 1935, instituted by the appellant’s father against Defendant No. 8, and that as a result title had vested in the appellant by a civil court sale in 1940 executed under the decree in suit No. 26 of 1935. The courts below rejected the appellant’s defence on the basis that the attachment was ineffective because the zarpeshgi interest was immovable property but the attachment had been effected as if it were movable property.

Legal Issues Presented

  1. Whether the zarpeshgi interest is movable or immovable property.
  2. If the zarpeshgi interest is immovable property, whether the attachment effected in Money Suit No. 26 of 1935 complied with the statutory requirements for attachment of immovable property.
  3. Whether, under the assignment executed by Defendant No. 8, title (or at least an effective title) passed to the plaintiffs despite the purported attachment and custody of the zarpeshgi deed by the court.

Arguments of the Parties

Appellant's Arguments (as advanced by Mr. Kailash Rai)

  • The zarpeshgi interest is movable property.
  • Even if the zarpeshgi interest is immovable, the attachment was substantially compliant with the law and therefore effective.
  • Under the assignment executed by Defendant No. 8, either no title or only an imperfect title passed to the plaintiffs (because the zarpeshgi deed had been attached and was in the custody of the court at the time of assignment).
  • A related contention: the zarpeshgi deed was allegedly the "custodian of the right" and, being in court custody, prevented the zarpeshgidar from transferring the interest.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Paresnath Singha (Full Bench) Majority view that a mortgagee's interest is immovable property (interpreting "immovable" to include rights arising out of land). The court followed the majority Full Bench view and accepted that an interest arising out of land (such as a mortgagee's interest) is immovable property; this decision supports holding the zarpeshgi interest to be immovable.
Jang Bahadur Authority cited to support that a mortgagee's interest is immovable property (comes within "benefits to arise out of land"). Used as supporting authority for classifying interests arising from land as immovable property; relied upon along with Paresnath Singha.
Imperial Bank of India Reported remarks (Rankin, C.J. and Ghose, J.) supportive of the view that mortgagee's interest is immovable property. Referenced as additional judicial support for treating a mortgagee's interest as immovable property.
Fadu Jhala Case concerning whether a right of fishery is immovable under the Specific Relief Act (used by Rampini, J. in dissent). The court treated that decision as context-specific to the Specific Relief Act and not persuasive on the present question under the General Clauses Act; thus it was distinguished from the present matter.
Debendra Kumar Reported holding that a simple mortgagee's interest is not immovable property (as stated by Rampini, J.). The court distinguished the case because it dealt with a simple mortgage; the present case involved issues where the court preferred the majority Full Bench view and did not follow Debendra Kumar.
Sakhiuddin (Richardson, J.) Reasoning that legislative treatment of "actionable claims" (and the 1900 amendment excluding debts secured by mortgage from actionable claims) indicates such debts were regarded as immovable property. The court invoked Richardson, J.'s line of reasoning as additional support that mortgage-secured debts/interests are to be treated as immovable property under the General Clauses Act.
Sri Raja Papamma Rao Observation that in a simple mortgage "there is no transfer of ownership" (contextual remark in that case). The court distinguished that remark on its facts and context (possession given under a decree and questions about restitution) and therefore did not regard it as authoritative for the present question.

Court's Reasoning and Analysis

The court's analysis proceeded in a structured three-part approach, addressing in turn each principal point advanced by Mr. Kailash Rai.

1. Characterisation of the zarpeshgi interest (movable or immovable)

The court began with the statutory definitions in the General Clauses Act, 1897: section 3(25) (immovable property includes land and "benefits to arise out of land") and section 3(34) (movable property is everything except immovable property). From those definitions the court reasoned that immovable property is not confined to the physical land but also includes immaterial rights arising out of land; ownership of land comprises the sum total of rights arising from the land.

The court then applied this principle to the interest in question. Noting that the Transfer of Property Act defines a mortgage as the transfer of an interest in specific immovable property (section 53), the court observed that a mortgagee's interest consists of some of the rights that together constitute immovable property, and therefore in the absence of contrary reasons such an interest should be classed as immovable. The court relied on several judicial authorities supporting this view and rejected the contrary statements of Rampini, J. (which related to the Specific Relief Act and were held to arise from that statute's particular context). The court also distinguished authorities said to be contrary (e.g., Debendra Kumar) on their facts (simple mortgage) and preferred the majority Full Bench approach.

The court additionally relied on Richardson, J.'s reasoning in Sakhiuddin: the legislative change removing debts secured by mortgage from the definition of "actionable claim" suggests the legislature regarded such mortgage-secured debts as immovable property rather than movable (which would have permitted oral transfer under the prior law). On this basis the court concluded that the zarpeshgi interest was immovable property and decided the first point against the appellant.

2. Validity of the attachment

The court addressed the attachment question by reference to the Civil Procedure Code. Order XXXVIII, rule 7 directs that attachment under that Order is to be made in the manner provided for attachment in execution of a decree; therefore Order XXI, rule 54 governs attachments of immovable property.

The court explained that the first essential requirement of a legal attachment under Order XXI, rule 54 is an order prohibiting the judgment-debtor from transferring or charging the specified property and restraining third persons from taking any benefit from such transfer (Form 24 of Appendix E embodies such an order). In the present case the order of attachment that was published on the suit land was in Form 5 of Appendix F (a direction to the bailiff to call upon the defendant to furnish security or appear and show cause, and to attach and keep the property in custody). That Form 5 publication did not contain the mandatory prohibition language of Form 24 and therefore did not satisfy the first requisite of Order XXI, rule 54.

The court concluded that because the attachment was effected by the wrong form and omitted the required prohibitory order, the attachment was invalid.

3. Effect of the zarpeshgi deed being in court custody on transferability

The appellant argued that because the zarpeshgi deed was attached and in the custody of the court, the deed (being the "custodian of the right") prevented the zarpeshgidar from transferring the interest. The court rejected this novel contention for lack of authority.

The court observed that the legal rule requiring production of the original document (section 91, Evidence Act) is a rule of evidence premised on the "best evidence" principle; it governs proof of the agreement but does not equate the instrument with the substantive interest itself. If the interest was vested in the zarpeshgidar and was transferable (a fact not denied), the mere lack of physical possession of the instrument does not prevent the transfer of the interest. Thus, the court found no impediment to transfer arising from the deed's custody by the court.

Holding and Implications

Core Ruling: Appeal dismissed.

The court decided all three points raised by the appellant against him and dismissed the appeal with costs. Concretely, the court held that:

  • The zarpeshgi interest in question was immovable property.
  • The attachment purportedly affecting that interest did not comply with the requirements of Order XXI, rule 54 (because the wrong form was used and the mandatory prohibitory order was not given), and therefore the attachment was invalid.
  • The custody of the zarpeshgi deed by the court did not prevent the transfer of the zarpeshgi interest under the assignment; the rule in section 91 of the Evidence Act relates to proof and does not transform the instrument into the substantive interest.

Direct effect on the parties: the appellant's challenge to the plaintiffs' title based on the alleged attachment and sale failed; the appeal was dismissed with costs. The opinion does not announce that it establishes any novel legal principle beyond application and preference for established authorities; no broader new precedent was declared in the judgment.

Judge Mukharji concurred in the judgment. (K.D. — "Appeal dismissed.")

    Harihar v. Vindhyachal

    Reuben, J.:— This is an appeal by Defendant no. 1. It arises out of a suit for the declaration of the zarpeshgi right of the plaintiffs in certain property, for the recovery of possession over it and for mesne profits.

    The property originally belonged to Defendants 3 to 7, who executed a zarpeshgi in favour of Defendant no. 8 on 12th April, 1924. The Plaintiffs base their title on a deed of assignment Exhibit 3 in their favour executed by Defendant no. 8 on 3rd March, 1938, for a consideration of Rs. 10,000. The appellant challenges the passing of title under the assignment, on the ground that at the time of the assignment the zarpeshgi interest was attached in Money Suit no. 26 of 1935 brought by the father of the appellant against Defendant no. 8. The appellant claims the title as vested in himself by virtue of a civil court sale in the year 1940 in execution of the decree in suit no. 26 of 1935. The defence was rejected by the Courts below on the finding that the zarpeshgi interest was not effectively attached so as to prevent the passing of interest by the assignment, the ground being that the interest is immovable property and the attachment was made as of movable property.

    Mr. Kailash Rai has urged three points:—

    1. That the zarpeshgi interest is movable property;

    2. That, even if it is immovable, the requirements of the law for the attachment of immovable property have been substantially complied with; and

    3. That, under the assignment, no title, or at most an imperfect title, passed.

    In the Civil Procedure Code there is no definition of “immovable property”, and “movable property” is defined in inclusive terms as including growing crops. Therefore, in the absence of anything repugnant in the Code, the meaning to be assigned to these terms must be ascertained with reference to the General Clauses Act, 1897, the relevant provisions of which are:

    Section 3, clause (25)—

    “Immovable property shall include land, benefits to arise cut of land, and things attached to the earth, or permanently fastened to anything attached to the earth;” and

    Section 3, clause (34)—

    “Movable property shall mean property of every description, except immovable property”.

    These definitions divide all property into two distinct classes, immovable property as to which we are given only an inventory of things that it includes, and movable property, which is every form of property which is not immovable property. This definition of immovable property, even though it is not complete and exhaustive, makes it clear that immovable property is not merely land, that is to say something physical, but includes immaterial rights arising out of land. It is in this sense that the ownership of land is said to constitute immovable property, and it consists of the sum total of rights arising out of the land.

    Now, under the law, it is permissible to the owner of land to part with his rights either in whole or in part. One way in which he may part with his rights in part is by mortgage, and section 53 of the Transfer of Property Act defines a mortgage as “the transfer of an interest in specific immovable property”. So the interest of a mortgagee is made up of some of the rights, the whole of which rights go to make up the immovable property. In the absence of any reason to the contrary we are justified in taking it that the interest of the mortgagee is the same in character as that of the owner of the property, that is to say it is immovable property. This is a view that has commended itself to several eminent judges [Maclean, C.J, in Paresnath Singh, Mukharji and King, JJ., in Jang Bahadur, Rankin, C.J, and Ghose, J. in Imperial Bank of India].

    A contrary view was taken by Rampini, J. in the case of Paresnath Singh who, at page 18, observed that a mortgagee is “only the owner of an interest in immovable property, which is a different thing from immovable property”. Much reliance was placed by Mr. Kailash Rai on this remark and he urged that the other judges of the Full Bench did not take notice of the decision in Fadu Jhala referred to by Rampini, J. That, case, however, was concerned with the question whether a right of fishery is immovable property within the meaning of the Specific Relief Act, an Act which raised entirely different considerations. This is clear for instance from the judgment of Petheram, C.J in that case, where he concedes that a right of fishing is immovable property within the definition of the term in the General Clauses Act but points out that the whole of section 9 of the Specific Relief Act is repugnant to the idea that immovable property in that section includes an incorporeal right of this kind belonging to some one other than the owner of the land. This appears also from the judgment of O'Kinealy, J. which is particularly referred by Rampini, J. His Lordship observed that the Specific Relief Act “did not cover all kinds of property, movable and immovable, but only such as were capable of being taken possession of, and of which possession could be delivered.” The distinction drawn by His Lordship, therefore, between immovable property and an interest in immovable property is no authority for holding that an interest in immovable property cannot be itself immovable property. With due respect to Rampini, J., I would suggest that the difference, apart from special considerations arising out of the context of the Act under consideration, is one of degree and not of kind.

    Mr. Kailash Rai has also relied on the case of Debendra Kumar, another case referred to by Rampini, J. but not by the other members of the Full Bench. In that case their Lordships, without discussing their reasons for it, held that a simple mortgagee's interest is not immovable property. The case is distinguishable, because here we are concerned with the interest of an usufructuary mortgagee and their Lordships, in coming to their finding stressed that they were dealing with a simple mortgage; but the reason which I have given above for holding a mortgagee's interest to be immovable property applies with equal force to a simple mortgage, and I prefer to follow the decision of the majority of the Full Bench in Paresnath Singha's case.

    Another reason given in reported decisions for holding a mortgagee's interest to be immovable property is that it comes within the term ‘benefits to arise out of land’, occurring in the definition in the General Clauses Act, [Paresnath Singha's case, Jang Bahadur's case]. In view of what I have said above it is not necessary to rely on this ground, the correctness of which was challenged by Rampini, J.

    [Paresnath Singha's case], whose opinion is supported by the remarks of Rankin, C.J and Ghose, J. [Imperial Bank of India].

    Richardson, J. in Sakhiuddin, suggests another line of reasoning which supports my view that a mortgagee's interest is immovable property. As the Transfer of Property Act was originally enacted, an “actionable claim” included a debt secured by a mortgage, and under section 130 an actionable claim could only be transferred by an instrument in writing. Now, by an amendment of the year 1900, a debt secured by a mortgage is not an actionable claim. If it was movable property, the effect of the change would be that it could be transferred orally. His Lordship observed:—

    “…………………it can hardly be supposed that debts secured by mortgages of immovable property were excluded from the definition of actionable claims in order, that they might pass by word of mouth without any writing. The inference would seem to be that the legislature regarded such debts as immovable property within the definition in section 3(25) of the General Clauses Act of 1897.”

    Mr. Kailash Rai has also referred to a passage in Sri Raja Papamma Rao where their Lordships of the Judicial Committee observed that in a simple mortgage “there is no transfer of ownership”. This remark has to be understood in the light of the facts of that case, which have nothing whatever in common with the case before us. There, a suit brought by a simple mortgagee to enforce his mortgage had resulted in a decree putting him in possession of the property mortgaged. Then, a suit was brought by the successors-in-interest of the mortgagor for the restitution of the property on the plea that the mortgage debt had been satisfied. The question which arose was the nature of the possession which was given to the mortgagee under the earlier decree, whether it was in the nature of a foreclosure preventing the mortgagor from suing to recover possession. This decision was therefore rightly distinguished in Paresnath Singha's case.

    Upon the above grounds, I would decide the first point against the appellant and would hold that the interest in question was immovable property.

    This brings me to the second point. The attachment was one under Order XXXVIII of the Civil Procedure Code Rule 7 of this Order provides that subject to express provision to the contrary, attachment shall be made in the manner provided for the attachment of the property in execution of a decree. In this case, therefore, attachment should have been made as provided in Order XXI, rule 54. The order of attachment in the present case was issued in Form 5 of Appendix F to the Code. Mr. Kailash Rai urges that the Courts below erred in holding that the attachment was bad because this form was used instead of Form 24 of Appendix E, and he argues that the service of this defective warrant was in fact sufficient to comply with the requirements of Order XXI, rule 54.

    Turning to Order XXI, rule 54, the first essential of a legal attachment is

    “an order prohibiting the judgment-debtor from transferring or charging the property in any way, and nil persons from faking any benefit from such transfer or charge”.

    This is exactly what the Form 24 of Appendix E is, an order addressed to the judgment-debtor directing that he is

    “hereby prohibited and restrained until the further order of this Court, from transferring or charging the property specified in the schedule hereunto annexed, by sale, gift, or otherwise, and that all persons be, and that they are, hereby prohibited from receiving the same by purchase, gift or otherwise.”

    The order that was published, however, was in Form 5, Appendix F, that is to say a direction to the Bailiff of the Court to call on the defendant to furnish security to produce certain property or the value thereof sufficient to satisfy any decree that might be passed against him, or to appear and show cause why he should not furnish such security; and further to attach the said property and keep the same under safe and secure custody until the further order of the Court. It was this order that, according to the evidence in the case, was published on the suit land by beat of drum. Obviously, the first requisite of Order 21, rule 54 was not complied with, and there was no valid attachment.

    For his third contention, Mr. Kailash Rai relies on the fact that, at the time of the assignment, the zarpeshgi deed had been attached, and was in the custody of the Court. He contends that the zarpeshgi deed was not merely the instrument by which the zarpeshgi interest was created but it was, also “the custodian of the right”, and therefore in the absence of the document the zarpeshgidar could not transfer the interest. He is unable to cite any authority for this novel proposition. He seeks to support his contention by a reference to the fact that there is a prohibition in law against proving the zarpeshgi interest except by a production of the original zarpeshgi deed. This is merely a rule of evidence embodied in section 91 of the Evidence Act, and proceeds on the principle that, where an agreement has been reduced to writing, the Court will insist on the production of this document as being the best proof of the agreement, unless circumstances exist making it necessary or reasonable to accept secondary evidence. This does not mean that the interests arising out of the agreement somehow become identified with the instrument itself, and it is only as evidence of the agreement that section 91 of the Evidence Act deals with it. If the interest itself was vested in the zarpeshgidar and it was a transferable interest, neither of which fact is denied, no impediment to his transferring that interest can arise out of his not having in his possession the instrument by which the interest was created;

    On the above grounds I would decide all the three points against the appellant, and dismiss the appeal with costs.

    Mukharji, J.:— I agree.

    K.D
    Appeal dismissed.

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    Harihar v. Vindhyachal
    (Jan 5, 1948)