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Venkatachala Pillai v. M.R Rajagopal Naidu And Another
Factual and Procedural Background
This revision petition challenges a decision on an execution application before the District Munsiff of Poonamallee. The dispute arose from a maintenance suit which resulted in a decree dated 19 March 1936, later modified on 6 July 1938 on appeal. The decree-holder assigned the decree to the first respondent in the lower Court, who caused properties to be put up for sale in execution; a sale took place on 1 September 1943. The second respondent in the lower Court (the petitioner in this revision) purchased some of the property at that sale.
On 30 March 1938 some of the same properties had been mortgaged (the opinion identifies the mortgage transaction and parties in the lower Court). The mortgagee (who filed the execution application discussed in this revision) successfully obtained an order in the lower Court setting aside the sale on the ground of irregularities. The assignee-decree-holder did not object, apparently because the mortgagee was prepared to pay the maintenance instalments due under the decree. After subsequent applications, the order setting aside the sale was reversed. The mortgagee then filed O.P. No. 15 of 1944 claiming entitlement to redeem and pay off the charge-decree so long as the sale had not been confirmed. The District Munsiff upheld that contention, and the auction-purchaser has come in revision to this Court.
Legal Issues Presented
- Whether a charge brought into existence by a decree of a competent Court falls within the phrase "by operation of law" in Section 100 of the Transfer of Property Act.
- Whether a mortgage executed after a decree had been passed — i.e., where the mortgagee takes subject to an existing charge — loses any right to redeem a prior encumbrance by reason of the doctrine of lis pendens (us pendens).
Arguments of the Parties
Petitioner's Arguments
- On the first point, the petitioner relied on Ghasiram v. Kandanbai (I.L.R. (1941) Nag. 513) for the proposition that "by operation of law" is not the same as "by decree."
- On the second point, the petitioner relied on Madhoram Sand v. Kirtya Nand Sinha ((1944) 2 M.L.J. 343 (P.C.)) and Ramaswami Pillai v. Trichinopoly Co-operative Credit Bank, Ltd. (1935) 69 M.L.J. 447 : I.L.R. 59 Mad. 101 to support the application of the us pendens doctrine or its consequences.
Mortgagee / Decree-holder's Position (as recorded)
- The mortgagee contended he was entitled to redeem and pay off the charge-decree so long as the sale had not been confirmed; in the lower Court this contention was upheld (O.P. No. 15 of 1944).
- The opinion records that the mortgagee did not dispute that he took the mortgage subject to the charge and offered to pay off the prior encumbrance pro tanto.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Ghasiram v. Kandanbai, I.L.R. (1941) Nag. 513 | Held that "by operation of law" is not the same as "by decree" (i.e., charge by decree distinct from charge by operation of law). | The Court declined to follow this view and preferred the contrary Oudh Full Bench view; the opinion states a preference for the Oudh approach rather than the Nagpur decision. |
| Abdul Ghaffar v. Ishtiaq Ali, A.I.R. 1943 Oudh 354 (Full Bench) | Held that the words "by operation of law" include a charge brought into being by a decree of a competent Court. | The Court expressly preferred this Oudh Full Bench view and held that a charge created by decree falls within "by operation of law" under Section 100 of the Transfer of Property Act. |
| Rustamall v. Afta-bhusein Khan, A.I.R. 1943 Bom. 414 | Approval of the Oudh Full Bench decision (Abdul Ghaffar v. Ishtiaq Ali). | The decision is noted as approving the Oudh view; the Court regarded this as supportive of preferring the Oudh position. |
| Madhoram Sand v. Kirtya Nand Sinha, (1944) 2 M.L.J. 343 (Privy Council) | Cited in relation to the doctrine of us pendens and rights of subsequent mortgagees. | The Court found the facts of that Privy Council decision "quite different" from the present case and said it afforded no guidance. |
| Ramaswami Pillai v. Trichinopoly Co-operative Credit Bank, Ltd., (1935) 69 M.L.J. 447 : I.L.R. 59 Mad. 101 | Dealt with a subsequent mortgagee's right to interfere where a sale had been confirmed; held that if the sale had been confirmed and transactions finished, a subsequent mortgagee seeking to redeem had lost any possible right to interfere. | The Court distinguished that case from the present facts because in Ramaswami Pillai the sale had been confirmed, whereas in the present case the sale had not been confirmed; thus the principle there did not apply here in the same way. |
Court's Reasoning and Analysis
The Court addressed the two points sequentially. On the first point (meaning of "by operation of law" in Section 100 of the Transfer of Property Act), the opinion evaluated conflicting authorities. It noted Ghasiram v. Kandanbai (Nagpur) to the contrary but preferred the Oudh Full Bench decision in Abdul Ghaffar v. Ishtiaq Ali — a view also approved by a Bombay Court in Rustamall v. Afta-bhusein Khan. The Court concluded that the phrase "by operation of law" does include a charge brought into being by a decree of a competent Court.
On the second point (effect of us pendens on a mortgage executed after a decree), the Court considered the authorities cited. It regarded the Privy Council decision in Madhoram Sand v. Kirtya Nand Sinha as factually different and not guiding. It found Ramaswami Pillai to be more similar but distinguished it because in that case the sale had been confirmed and the entire execution transaction was concluded. By contrast, in the present case the sale had not been confirmed. The opinion records that the mortgagee took the mortgage subject to the charge and offered to pay off the prior encumbrance pro tanto; the Court held that the rights of the decree-holder are protected under Section 52 of the Transfer of Property Act, and the only person who could be aggrieved is the auction-purchaser, whose remedy is limited to compensation for wasted trouble, time and money arising from the abortive auction.
Holding and Implications
DISMISSED — the revision petition is dismissed with costs.
Direct consequences (as stated in the opinion):
- The decision of the lower Court (upholding the mortgagee's claim to redeem and pay off the charge so long as the sale had not been confirmed) is affirmed.
- The Court held that a charge created by decree is covered by "by operation of law" under Section 100, and that a subsequent mortgagee who took subject to the charge and offers to pay off the prior encumbrance may do so while a sale remains unconfirmed.
- The auction-purchaser's remedy, given that the sale was not confirmed and has been set aside, is limited to compensation for trouble, time and money expended in relation to the abortive auction.
The opinion does not state any broader novel precedent beyond its application of the cited authorities and does not assert that it establishes a new principle of law separate from the authorities discussed.
1. This revision petition is against a decision in an execution application before the District Munsiff of Poonamallee. The matter arose out of a maintenance suit which resulted in a decree dated 19th March, 1936. This was modified on 6th July, 1938, on appeal. Later, the decree-holder assigned it to the first respondent, in the lower Court. He brought the properties to sale in execution and a sale took place on 1st September, 1943. The second respondent in the lower Court--the petitioner here--bought some of the property in question. On 30th March, 1938, some of the same properties had been mortgaged to the petitioner in the lower Court, the first respondent here. In the lower Court, the mortgagee finding that the decree had been executed and property brought to sale by the assignee-decree-holder had been purchased by a stranger, filed an execution application, the execution application with which we are concerned, and succeeded in setting aside the sale on the ground of certain irregularities. The assignee decree-holder offered no objection because he no doubt knew that the mortgagee-petitioner was prepared to pay the amount of the maintenance instalments due under the decree and for which it had been brought to execution. After various applications, the order setting aside the sale was reversed and the mortgagee thereupon filed O.P. No. 15 of 1944, claiming that he was entitled to redeem and pay off the charge decree so long as the sale had not been confirmed. In this contention he was upheld by the District Munsiff and the auction-purchaser comes in revision to this Court.
2. Two points were raised based on certain authorities. The first was that under Section 100 of the Transfer of Property Act a charge must be brought into existence either by act of parties or by operation of law and inasmuch as the charge here was brought into being by a decree, different considerations apply. The petitioner relied on Ghasiram v. Kandanbai I.L.R. (1941) Nag. 513 where a Bench of two judges held that "by operation of law " was not the same thing as saying" by decree." In Abdul Ghqffar v. Ishtiaq Ali A.I.R. 1943 Oudh 354 (F.B.) a Full Bench took a contrary view. A Bombay Court in Rustamall v. Afta-bhusein Khan A.I.R. 1943 Bom. 414 approved the Oudh decision in Abdul Ghqffar v. Ishtiaq Ali A.I.R. 1943 Oudh 354 (F.B.). With the greatest respect I prefer the Oudh point of view rather than that of Nagpur in Ghasiram v. Kundanbai I.L.R. (1941) Nag. 513, and I think the words " by operation of law " do include a charge brought into being by a decree of a competent Court.
3. The second point was that inasmuch as the mortgage was executed after a decree had been passed, the mortgagee by reason of the doctrine of us pendens had lost any right to redeem any prior encumbrance. The petitioner relied on two cases: Madhoram Sand v. Kirtya Nand Sinha (1944) 2 M.L.J. 343 (P.C.) a decision of the Privy Council, where the facts in my opinion are quite different and afford no guidance and Ramaswami Pillai v. Trichinopoly Co-operative Credit Bank, Ltd. (1935) 69 M.L.J. 447 : I.L.R. 59 Mad. 101 The latter case deals with facts which are more like those of the present case, but with the important difference that in that case the sale had been confirmed and whole of the transaction relating to the execution of the decree was finished. The Court there held that in such circumstances a subsequent mortgagee seeking to redeem had lost any possible right to interfere. In the present case, the mortgagee does not dispute the fact that he took the mortgage subject to the charge. His offer to pay off the prior encumbrance means that he will pro tanto pay off the decree-holder whose rights are those which are protected under Section 52 of the Transfer of Property Act. The only person that can possibly be aggrieved is the auction-purchaser, but his sale has not been confirmed and all that he can claim is that he be compensated for the trouble, time and money that he has wasted in attending to what has proved to be from his point of view an abortive auction.
4. In the result, I think that the decision of the lower Court is right and this petition should be dismissed with costs.
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