Sunkari Sitayya v. Mudargaddi Sanyasi

The plaintiff in execution of a money decree against the 1st defendant attached certain lands and house and house site as belonging to his judgment-debtor. That was on the 15th December, 1918. Previous to this, on the 15th May, 1916, there was a contract between the 1st defendant and the 2nd defendant to sell the same property to the 2nd defendant. After the attachment, the 2nd defendant put in a claim petition which was allowed. The plaintiff thereupon brought this suit to set aside the order upon the claim petition, and it has been decreed by the first Court and confirmed in appeal by the District Judge. After the attachment had been made, the 2nd defendant brought a suit for specific performance and got an order for sale from the Court and delivery of possession. The question raised in the second issue is whether the 1st defendant had any subsisting interest in the property which was attached, in other words, whether the attachment can prevail against the 2nd defendant's decree by which he got possession of the land in pursuance of the contract for sale. The courts below held that the contract for sale did not create any title in the 2nd defendant and following the decision in Kurri Veerareddi v. Kurri Bapireddi, they set aside the order on the claim petition and declared, that the properties were liable for attachment. The decision in Kurri Veerareddi v. Kurri Bapireddi is based on the last sentence of Sect. 54, Transfer of Property Act: “It (a contract for the sale of immoveable property) does not of itself create any interest in or charge on such property.” These words are capable of being understood in more senses than one. One implication therefrom is that such contracts do not require registration. This decision has recently been overruled by a decision of the Full Bench in Vizagapatam Sugar Development Co. v. Muthurama Reddy. The principle governing the present case has been stated in Venkata Reddy v. Yellappa Chetty, where the learned judges point out that in English law a judgment-creditor has no right as against a transferee of property in pursuance of a contract entered into before the attachment. They say that it does not seem to be sound sense that when a creditor attaches property which is subject to a particular obligation, he should be able to override it. This case has been referred to with approval in Chamiyappa Tharagan v. Rama Iyer. It is obvious that the plaintiff could by no manner of means attach a greater interest than what his judgment-debtor possessed at the date of attachment. The plaintiff cannot even lay claim to the rights of a bona fide purchaser without notice of prior obligations attached to the land purchased (Sect. 53, Transfer of Property Act) as in this case there has been no sale in open market. Sect. 64 of the Civil Procedure Code lays down that where an attachment has been made, any private transfer or delivery of the property attached is void, as against all claims enforceable under the attachment. The 2nd defendant's title does not rest upon a private transfer but upon a decree of Court based on the contract to sell and is comparable to the case of a decree based upon an award which we held in Kasi Viswanatham Chettiar v. Ramaswami Athitha Nadar, which was followed in Narayana Aiyar v. Biyari Bibi, should prevail over a purchase under an attachment prior to the award.

The plaintiff in this suit was not a party to the suit for specific performance and it is open to him to impugn that decree as being based on fraud or collusion. His proper course would be to file a suit under Sect. 53 of the Transfer of Property Act to have the transfer avoided as being intended to defeat or delay creditors. In his plaint he has not put his case quite on that ground. But he has alleged that the contract of sale was invalid as being executed with the evil intention of avoiding the plaintiff's debts, and the first issue in the suit raises the question whether the decree for specific performance was obtained fraudulently. As the Courts below have not decided this issue and have disposed of the question erroneously upon the preliminary point arising out of the second issue, their decrees must be set aside and suit remanded to the District Munsif's Court for disposal upon the first and other issues as yet undecided. Costs of the Second Appeal and costs in the Courts below will be costs in the cause and abide the result. The Court fee in Second Appeal may be refunded.

C. K.Suit remanded.