S.A.No.134 of 2003 (G)

# IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT:- THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN MONDAY, THE 1ST DAY OF OCTOBER 2012/9TH ASWINA 1934 ## **S.A.No.134 of 2003 (G)** ------------------------------------------ [AGAINST THE DECREE AND JUDGMENT IN A.S.NO.146 OF 2001 DATED 14.08.2002 OF THE COURT OF THE ADDITIONAL DISTRICT JUDGE, N.PARAVUR] [AGAINST THE ORDER IN E.A.NO.50/2000 IN E.P.NO.297/1999 IN O.S.NO.688/1991 DATED 18.06.2001 OF THE COURT OF THE ADDITIONAL SUB JUDGE, NORTH PARAVUR]. --------------- ## **APPELLANT** /1ST RESPONDENT IN A.S./1ST RESPONDENT IN E.A.:- -------------------------------------------------------------------------------------- VENUGOPALAN, S/O. KAMALAKSHY AMMA, PEEDIYEKKAPARAMBIL, POOMANGALAM VILLAGE, MUKUNDAPURAM TALUK, THRISSUR DISTRICT (PLAINTIFF). BY ADV. SRI.V.KRISHNA MENON. ## **RESPONDENTS/** APPELLANT & 2ND RESPONDENT/CLAIM PETITIONER & 2ND RESPONDENT:- ----------------------------------------------------------------------------------------------------------------------- 1. ANILKUMAR, S/O. CHUDUKATTUNKAL PADMANABHAN, OCEAN GUEST HOUSE, FORT KOCHI, PARAVUTHARA MURI, PARAVUR TALUK, NORTH PARUR. 2. M.V.JAMES, S/O. VARGHESE, MARAKKASSERY, OACHANTHAURUTHU KARA, ELAMKUNNAPUZHA, ERNAKULAM DIST. (DEFENDANT). R1 BY ADV. SRI.DINESH R.SHENOY. R2 BY ADV. SRI.C.C.THOMAS (SENIOR ADVOCATE). ## BY ADV. SRI.B.JAYAPARAKASH THIS SECOND APPEAL HAVING BEEN FINALLY HEARD ON 01-10-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:- K. Vinod Chandran, J - - - - - - - -- - - - - - - - - - - S.A.No.134 of 2003 - - - - - - - - - - - - - - - - - - - Dated this the 1[st] day of October, 2012 ## **JUDGMENT** The plaintiff/decree holder/purchaser in Court auction is the appellant herein. The decree holder/purchaser in Court auction challenges the order of the first appellate Court reversing the order of the execution Court and granting redelivery of the property. The contesting respondent is the 1[st] respondent, who was a stranger to the suit and who claims to have purchased the property which was the subject matter of the suit, from the 2[nd] respondent herein, who was the defendant/judgment debtor. 2. The substantial questions of law arising from the order of the first appellate Court are reframed as follows, with consent from both counsel:- - i. Whether the Court below erred in completely ignoring the charge created under Section 55(6)(b) of the Transfer of Property Act, 1882 (hereinafter referred to as “T.P. Act”) and committed an illegality in directing redelivery of the property. - ii. Ought not the Court below have found that the charge under Section 55(6)(b) of the T.P.Act survives against persons who purchased the property without notice of such S.A.No.134 of 2003 - 2 - charge and a plaintiff claiming such charge can validly proceed against such property at the hands of the purchaser, even without a charge being created under the decree? iii. On facts, has not the first appellate Court committed a grave error in setting aside the sale and ordering redelivery of the property reversing the findings by the execution Court that fraud vitiated the purchase made by the second respondent? 3. The facts necessary for the disposal of the above appeal are as follows: The appellant herein filed a suit for recovery of advance money paid in pursuance of an agreement for sale, entered into between the plaintiff and the defendant, the latter of whom is the 2[nd] respondent herein. The sale agreement was for sale of 16.24 cents of property at the rate of Rs.9,000/- per cent, to be paid within a period of six months from 3.4.1989. It is contended that on the defendant taking no steps for conveying the said property, the plaintiff issued a lawyer's notice dated 28.9.1989. The plaintiff then waited for two years, and of course within the limitation period, approached the civil Court with O.S.No.688 of 1991 on 20.11.1991. The defendant appeared and contended that the properties were S.A.No.134 of 2003 - 3 - sold and also produced a copy of the sale deed dated 17.6.1992, which was marked in evidence as Exhibit B1. A decree was passed on 22.3.1993 which, the learned counsel for the respondent points out, did not create a charge on the property. The learned counsel for the appellant, however, would submit that there was no requirement for such a charge, since the statutory charge under Section 55(6)(b) would come into effect from the moment the advance amount is paid and subsists as long as it is found that the intending purchaser had not defaulted. 4. After the decree, execution was filed as E.P.No.418/1994 and then E.P.No.297/1999. It is not clear as to the proceedings that were taken in the two respective execution petitions. Suffice it to say that the judgment debtor appeared in the execution Court and made some payments towards the decree amount. Subsequently, he having failed to turn up, the Court brought the property to sale, and the decree holder, with leave of Court, purchased it on 3.4.1999. The sale was confirmed on 7.6.1999 and the sale certificate issued on 4.9.1999. The property was also delivered on 22.1.2000. It was then the first respondent herein, who had purchased the property from the 2[nd] respondent/ defendant, came to know of such sale. S.A.No.134 of 2003 - 4 - 5. The 1[st] respondent then filed a claim petition before the execution Court , claiming _inter alia_ that he had no notice with respect to the earlier agreement and with respect to the sale of property by the Court. The 1[st] respondent also contended that about 3.479 cents of property he purchased from a third party also has been included in the properties delivered on execution, to the appellant/decree holder. The execution Court, however, found that the transaction between the 1[st] respondent and the 2[nd] respondent was vitiated by fraud and hit by Section 53 of the T.P.Act. The claim petition was rejected. The 1[st] respondent was in the first appellate Court, challenging the said rejection of his claim. The appellant herein filed a Cross Objection, contending that even without notice Section 55(6)(b) of the T.P.Act provides him with the right to proceed against the property and the third party purchaser cannot seek annulment of a sale only for the reason of absence of notice. Section 55(6)(b) takes within its fold and applies the charge with equal rigour on those purchasers with notice or without notice. 6. The learned counsel for the appellant relies on the judgment of this Court reported in _**Meppallipoyil Ibrayi v. Poolakkandiyil Pokkan,**_ AIR 1990 Kerala 169. In the said case, the facts were almost similar; but at the execution stage two persons S.A.No.134 of 2003 - 5 - came forward with a claim contending that they purchased the property from a third party who purchased the same from the defendant. They pleaded that they were _bona fide_ purchasers and had no notice of the charge under Section 55(6)(b) and, hence, the said property could not be proceeded with. This Court found that charge on the property under Section 55(6)(b) is enforceable not only against the seller but all persons claiming under him; with notice or without notice. The said decision refers to two earlier decisions of this Court reported in _**Ayyakutty Chettiar v. Imbichiamine Bi**_ , 1962 KLT 728, and _**Madhava Kammathi v. Gopala Pai**_ , 1965 KLT 877. Both the decisions held that Section 55 (6)(b) creates a charge on the property as soon as the advance amount is paid and would apply to any third parties who obtained conveyance of the property from the intending seller in the earlier agreement, whether such third party had notice or not; about the earlier agreement or charge created thereon. 7. Rather slight confusion is created with respect to the notice referred to in all these decisions. It cannot, for a moment, be disputed that merely because a person purchases a property _bona fide_ and without any notice of an earlier agreement and payment of advance money thereon; charge under Section 55(6)(b) would not S.A.No.134 of 2003 - 6 - apply. The charge created on payment of such advance money goes with the property and any valid conveyance effected would be subject to such charge. Looking at _**Ayyakutty Chettiar**_ (supra), it is discernible that the charge was found to be enforceable against all persons claiming under the seller, whether they have notice of the charge or not. That notice or the lack of it is not the bone of contention herein. Though the appellant would contend that no such notice at any stage need be issued, the 1[st] respondent would harp on the lack of notice at the execution stage before sale. Obviously, the 1[st] respondent was in ownership and possession of the said properties. So much was evident at the stage of the suit, wherein a specific contention with reference to the sale was made in the written statement and the sale deed too produced and marked in evidence. It would be noticing that contention that no charge was created in the decree. The execution Court proceeded with the decree, wherein realization of the amount paid as advance with interest was ordered. In the course of execution, the property was brought to sale; which was purchased by the decree holder. The decree holder, at no point of time, brought to the notice of the Court that there was subsisting a third party interest in the property. The judgment debtor having paid some instalments, eventually failed to S.A.No.134 of 2003 - 7 - turn up in Court. It was in this context that the sale was conducted. This is a case in which the act of Court has prejudiced a third party. The Court was not at all aware of the third party interest. The decree holder and the judgment debtor both of whom were aware of it, never apprised the Court of this. It was in this circumstance that no notice was issued and the sale was proceeded with, without the 1[st] respondent being informed of the same. 8. What exactly is the charge created by Section 56(6)(b) that can be enforced against the property? The appellant had paid amounts as advance, pursuant to a sale agreement and had been before Court claiming recovery of the same. The appellant did not have a prayer for specific performance. The Court below decreed the recovery of amounts, more specifically Rs.12,000/- with 12% interest till date of decree and thereafter at 6%. The agreement for sale itself was with respect to 16.24 cents of land at the rate of Rs.9,000/-, coming to around Rs.1,50,000/-. What has been achieved by the decree holder is getting possession and ownership of the properties by payment of advance money alone. The sale agreement also, it has to be noticed, is of the year 1989, while the actual sale took place in the year 2000. The execution Court also did not consider as to whether the sale of a portion of the property S.A.No.134 of 2003 - 8 - would have sufficed to satisfy the decree. 9. The learned counsel for the respondent places reliance on two decisions of the Hon'ble Supreme Court in _**Ambatti Narasayya v. M.Subba Rao,**_ AIR 1990 SC 119, and _**Lal Chand v. Addl. District Judge,**_ 1997 (2) KLT SN 8 (Case No.6). In _**Ambatti Narasayya 's case**_ ( _supra_ ), the Supreme Court held that when the property is large and the decree that is to be satisfied is small, the Court must bring only that much portion of the property to sale, which would be sufficient to satisfy the decree. This exercise was held to be not just a discretion, but an obligation imposed on the Court . It was also held that sale held without examining this aspect and not in conformity with this requirement would be illegal and without jurisdiction. _**Lal Chand**_ ( _supra_ ), on facts, is more apposite to the facts of this case, in so much as the finding of the Hon'ble Supreme Court that land in excess of area under sale agreement put up for sale and purchased by the decree holder resulted in the decree holder overreaching his original agreement; having earlier failed to enforce it. The Supreme Court in the said decision also held that the non-consideration of whether the sale of a portion of the property would satisfy the decree, vitiated the sale. 10. In the present case also a definite overreach is very S.A.No.134 of 2003 - 9 - evident, in so far as the decree holder having failed to enforce the sale agreement by even a suit for specific performance; contended himself with the suit for return of advance money and eventually was successful in getting possession of the properties for such advance money paid. 11. However, the charge created under Section 55(6)(b) of the T.P.Act cannot be ignored and this Court cannot shut its eyes to such claim for enforcement of the decree against the property. If the decree holder had been fair and had impleaded the present owner of the property, which fact he was aware even during the pendency of the suit, the 1[st] respondent would have had the opportunity to satisfy the decree debt. The 1[st] respondent, for a moment, cannot be said to be not liable towards such charge. Rather the possession and ownership of the subject property would be subject to charge, but he necessarily should have an opportunity to satisfy the same. 12. In view of the discussion above, it has to be held that Section 55(6)(b) of the T.P.Act would operate with full rigour on payment of advance money and if the failure was not of the intending purchaser. This charge would apply with equal force on third parties who purchased the properties with or without notice of S.A.No.134 of 2003 - 10 - such charge. The question of law dealt with by the first appellate Court without any discussion thereon has to be held to be erroneous. The charge would operate on the subject property and the ownership and possession of the 1[st] respondent would be subject to such charge. The questions of law raised as (i) and (ii) are answered in favour of the appellant and against the respondents. However, on the question whether the sale itself is vitiated, this Court has to hold, on the strength of binding precedents of the Supreme Court referred above, that the sale is vitiated. The third question of law is answered in favour of the 1[st] respondent. This, however, cannot at all mean that the appellant/decree holder is left with no remedies. 13. In the circumstances, the questions of law framed in the above appeal are answered as above and the matter is remanded to the execution Court confirming the order of the first appellate Court, but, however, modifying it to the effect that the charge on the property created under Section 55(6)(b) would subsist. The remand is for the limited purpose of giving an opportunity to the 1[st] respondent to satisfy the decree and for the Court to effect redelivery, if the decree debt and the costs thereon are satisfied. The parties shall appear before the execution Court on S.A.No.134 of 2003 - 11 - 2.11.2012. In the nature of the remand order passed as also the fact that there is no appearance on behalf of the 2[nd] respondent, the execution Court need not serve any fresh notice on the 2[nd] respondent. The appellant and the 1[st] respondent shall file their respective statements showing the amounts due as on 30.11.2012 to satisfy the decree after giving credit to the payments already received by the appellant herein. In the absence of any statement by the appellant, the 1[st] respondent shall be free to deposit the entire decree amount with interest and costs as decided by the Court below within 30.11.2012 and in such circumstance or in the circumstance of the amounts as per the statement filed by the appellant having been satisfied, the execution Court shall take steps for redelivery of the property to the 1[st] respondent herein. The execution Court shall also see to it that the costs incurred by the appellant are realized from the 1[st] respondent. The questions of law are answered as above and the appeal is allowed in part. Sd/- K.Vinod Chandran Judge. vku/- (true copy)