Suresh Babu and Indulekha v. P. M. Narayani and Prabitha K.B.

## **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ## **`THE HONOURABLE MRS. JUSTICE MARY JOSEPH`** ``` MONDAY, THE 18[TH] DAY OF DECEMBER 2023 / 27TH AGRAHAYANA, 1945 ``` ## **`RFA NO. 706 OF 2013`** ``` AGAINST THE JUDGMENT AND DECREE DATED 08.07.2013 IN OS NO.1057 OF 2011 OF THE COURT OF THE II ADDITIONAL SUB JUDGE, THRISSUR ``` ## **`NAME AND ADDRESS OF APPELLANTS/DEFENDANTS 2 AND 3 IN O.S:`** - **`1 SURESH BABU, S/O. ARJUNAN, VI/296, ARAKKAL HOUSE, THAMMANAMKADAVU DESOM, THALIKULAM VILLAGE, CHAVAKKAD TALUK, THRISSUR DISTRICT-680 506.`** - **`2 INDULEKHA, W/O.SURESH BABU, VI/296, ARAKKAL HOUSE, THAMMANKADAVU DESOM, THALIKULAM VILLAGE, CHAVAKKAD TALUK, THRISSUR DISTRICT-680 506.`** ``` BY ADVS.SRI.R.LAKSHMI NARAYAN SMT.R.RANJANIE ``` ## **`NAME AND ADDRESS OF RESPONDENTS / PLAINTIFF AND 1ST`** ``` DEFENDANT IN O.S: ``` - **`1 P.M. NARAYANI, W/O. V.N.KUTTY, VALIYAVALAPPIL GURUVAYOOR, THYKKADU VILLAGE, CHAVAKKAD TALUK, C/O.V.K.PRINCY, UTTUVALLY HOUSE, KRISHNAGIRI, OPP.JERUSALEM CROSS ROAD, THALORE P.O., THRISSUR-680 306.`** - **`2 PRABITHA K.B., W/O.SHEJIMON, GNDA HOUSE NO.21, JIM JACK GARDEN, PERINGAVU ROAD, CHEROOR P.O., THRISSUR DISTRICT-680 306.`** ``` BY ADVS.R1 BY SRI.RANJITH XAVIER R2 BY SRI.SANTHOSH P.PODUVAL SMT.R.RAJITHA ``` ``` THIS REGULAR FIRST APPEAL HAVING BEEN FINALLY HEARD ON 07.07.2021, THE COURT ON 18.12.2023 DELIVERED THE FOLLOWING: ``` R.F.A. No.706 of 2013 ## -:2:- ## **MARY JOSEPH, J.** - - - - - - - - - - - - - - - - - - - - - - - - R.F.A. No. 706 of 2013 - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 18[th] day of December, 2023 ## **JUDGMENT** The appeal in question was preferred by defendants 2 and 3 in O.S.No.1057/2011 challenging the decree and judgment passed by II Additional Sub Court, Thrissur (for short ‘the trial court’) on 08.07.2013. The appellants are defendants 2 and 3 in the above Original Suit and the respondents are the plaintiff and the 1[st] defendant respectively in the Suit. The parties to this appeal will hereinafter be referred to as the plaintiff and defendants 1 to 3 in accordance with their status in the Original Suit. 2. The plaintiff entered into a sale agreement with the 1[st] defendant for sale of 5 cents of property and a residential building situated therein, comprised in Survey No.258 of Peringavu Village in Thrissur Taluk. An amount of `4,00,000/was paid in advance. It was agreed to execute the sale deed and to register it before 31.03.2010. R.F.A. No.706 of 2013 -:3:- 3. The property then was mortgaged by the 1[st] defendant with Urban Co-operative Bank, Thrissur. In the agreement it was stipulated that the 1[st] defendant should clear off the liability with the bank and get the mortgage redeemed before 31.03.2010. 1[st] defendant demanded some more amount towards advance sale consideration and `1,00,000/was paid by the plaintiff to the 1[st] defendant for clearing the loan dues towards the Bank. The plaintiff was always ready and willing to pay the balance sale consideration and get the sale deed executed before 31.03.2010. As requested by the 1[st] defendant the period for execution of sale deed as per the agreement for sale was extended till 10.05.2010. `10,00,000/- was paid by the plaintiff to the 1[st] defendant as total sale consideration. 1[st] defendant did not pay that amount to the Bank to clear off her liability and to get the plaint schedule property redeemed from the mortgage. She even failed to hand over the documents pertaining to the plaint schedule property as per the agreement for sale executed. Therefore, a lawyer notice was caused to be issued by the plaintiff to the 1[st] defendant on 06.06.2011 in her address shown in the agreement for sale. Neither the notice nor the R.F.A. No.706 of 2013 ## -:4:- acknowledgment card was returned. Later in the enquiry held, it was revealed to the plaintiff that the 1[st] defendant was residing in another address. Therefore, another lawyer notice was issued by the plaintiff to the 1[st] defendant on 16.06.2011, expressing her willingness to perform the part to be performed by her as per the agreement for sale and demanding specific performance of the contract. Admittedly the notice was received by the 1[st] defendant on 18.06.2011 and a reply notice was sent raising contentions that only `4,00,000/- was paid by the plaintiff towards advance sale consideration and `50,000/-, as brokerage with a view to purchase the plaint schedule property, that due to non-payment of the balance sale consideration, `4,50,000/- already paid was forfeited, that the 1[st] defendant was constrained in the said context to sell the plaint schedule property to a third party for a consideration of `36,25,000/- lesser than that was agreed by the terms of the agreement for sale and thus sustained a loss of `3,25,000/towards sale consideration and `25,000/-, towards brokerage. Thus, `10,00,000/- paid by the plaintiff to her as advance consideration was appropriated towards her loss. It was averred further that contentions raised by the 1[st] defendant in R.F.A. No.706 of 2013 -:5:- her reply notice are false. On enquiry made by the plaintiff it was revealed to her that the 1[st] defendant had executed sale deed No.3780/2010 in respect of the plaint schedule property at SRO, Thrissur in favour of third parties and therefore, they were also brought on record in the Original Suit as defendants 2 and 3. It was averred that the transaction entered by the 1[st] defendant with defendants 2 and 3 was a collusive one intended only to defeat the interest of the plaintiff. It was averred further that notice dated 07.07.2010 was not received by the plaintiff, that she was always ready and willing to perform her part of the contract, that it could not be performed for failure of the 1[st] defendant to clear off all the dues related to the mortgage with the Bank, that therefore, the 1[st] defendant is bound to return `10,00,000/- to the plaintiff with interest at the rate of 12% per annum and seeking the relief, the Original Suit was filed. 4. 1[st] defendant in her written statement admitted the execution of the sale agreement with the plaintiff and receipt of `10,00,000/- towards advance sale consideration. It was contended that at the relevant time when the agreement for sale was executed, eight months was fixed as the period for R.F.A. No.706 of 2013 -:6:- execution of the sale deed and for failure of the plaintiff to accumulate the money to pay the balance sale consideration and at her request, the period for execution of the sale deed was extended till 10.05.2010. It was contended furthermore that despite the enlargement of time, the plaintiff was unable to pay the balance sale consideration to facilitate the execution of the sale deed by the 1[st] defendant and that the plaintiff herself was responsible for breach of the agreement for sale. It was contended further that, though in the original agreement for sale it was agreed by the 1[st] defendant to clear off the liability created by her over the plaint schedule property with Urban Co-operative Bank, Thrissur, it was orally agreed among the plaintiff and the 1[st] defendant that the plaintiff would pay the dues to the Bank directly from the sale consideration, but suppressing that oral arrangement it is alleged by the plaintiff now that the 1[st] defendant failed to do her part as per the agreement for sale. 1[st] defendant also took a contention that notice issued by her to the plaintiff on 07.07.2010 demanding specific performance was returned unclaimed, that a sale agreement was executed by the 1[st] defendant with regard to a property situated in Vilvattam R.F.A. No.706 of 2013 ## -:7:- Village, paying `4,00,000/- as advance sale consideration and fixing the period for execution of the sale deed till 16.07.2010, that due to non-performance of her part by the plaintiff as per the terms of the agreement for sale executed with the 1[st] defendant, an agreement for sale executed by the latter with a third party was defeated and thereby she lost `4,00,000/- paid towards sale consideration and `50,000/- towards brokerage, that the 1[st] defendant was thus constrained to sell the plaint schedule property for a total consideration of `36,25,000/- and thereby suffered a loss of `3,25,000/-, being the difference in the sale consideration agreed to be paid by her to the 1[st] defendant. She also suffered a loss of `25,000/- paid as brokerage. Thus she suffered a total loss of `8,00,000/- due to non-performance of the contract by the plaintiff, and therefore `10,00,000/- paid by her to the 1[st] defendant as advance sale consideration is liable to be forfeited. Raising contentions as above, the 1[st] defendant canvassed for discarding the prayer of the plaintiff for passing a decree for specific performance and dismissing the Original Suit. 5. Defendants 2 and 3 filed written statements and contended that the plaintiff has no transaction with the 1[st] R.F.A. No.706 of 2013 ## -:8:- defendant, that the latter has no right in the plaint schedule property, that they are bonafide purchasers of the plaint schedule property from the 1[st] defendant, that the sale agreement allegedly executed by the plaintiff with the 1[st] defendant is the outcome of a collusion among them, that such an agreement was never executed, that the agreement executed was in connection with a monetary transaction, that payment was not made towards advance sale consideration as stated by the plaintiff, that the plaintiff was never interested to get the sale deed executed as per the sale agreement, that the plaint schedule property was purchased by them from the 1[st] defendant for a sale consideration of `36,25,000/-, that they have no previous acquaintance with the plaintiff and that their title and possession over the plaint schedule property cannot be disturbed by the plaintiff. Thus the Original Suit was sought to be dismissed with costs. 6. The trial court framed the following issues :- - “1. Whether there was sale agreement between the plaintiff and the 1[st] defendant as alleged? 2. Whether the plaintiff had paid advance amount to the 1[st] defendant as alleged? 3. Whether the plaintiff is entitled to the plaint claim? R.F.A. No.706 of 2013 ## -:9:- 4. Whether the plaint schedule property now held by the defendants 2 and 3 can be exempted from the charge under Section 55 (6)(b) of Transfer of Property Act? 5. Reliefs and costs?” 7. Plaintiff examined herself as PW1 and marked Exts.A1 to A8. Defendants examined DWs 1 and 2 and marked Exts.B1 to B7. 8. Issues 1 to 3 were considered together by the trial court and all answered in the affirmative. 1[st] defendant was found liable for non-clearance of dues to the Bank in relation to a mortgage of the plaint schedule property and non-execution of the assignment deed in favour of the plaintiff as per the agreement for sale executed. The trial court found the allegation of the 1[st] defendant regarding the existence of an oral agreement among herself and the plaintiff, false. It observed that if such an oral agreement was there, the plaintiff would not have paid a sum of `5,00,000/- further to the 1[st] defendant. In the observation of the trial court, if the allegation regarding existence of the oral agreement was having some merits, the 1[st] defendant could have made use of that amount for clearing off the dues of mortgage to the Bank. R.F.A. No.706 of 2013 -:10:- 9. Issue No.4 was dealt with and answered by the trial court separately. It repelled the contentions of defendants 2 and 3 that the plaint schedule property is liable to be exempted from the statutory charge under Section 55(6) (b) of the Transfer of Property Act, 1882 (for short ‘the T.P. Act’). Thus the issue was answered against defendants 2 and 3, that the charge created by them in respect of the plaint schedule property with HDFC Bank can be considered only after the statutory charge mentioned. 10. The suit was allowed and a decree was passed by the trial court for return of `11,89,000/- (inclusive of `10,00,000/-) paid by the plaintiff to the 1[st] defendant towards advance sale consideration with interest at the rate of 12% per annum from the date of filing of the Original Suit till the date of the decree and at the rate of 6% per annum from the date of the decree till the date of realisation. In case of default of the 1[st] defendant, liberty was also granted to the plaintiff to proceed to sell the plaint schedule property and to adjust the sale proceeds to the decree debt. 1[st] defendant was also held personally liable for the amount, if any, left after adjustment in the above manner. 1[st] defendant was also directed to pay the R.F.A. No.706 of 2013 ## -:11:- cost of the proceedings. Aggrieved thereby, defendants 2 and 3 have preferred the appeal on hand. 11. In the appeal on hand, the primary contention raised was that the trial court is totally erred in arriving at a finding that Ext.A1 is an agreement for sale genuinely executed among the plaintiff and the 1[st] defendant, agreeing to sell the plaint schedule property belongs to the latter. According to defendants 2 and 3, the trial court ought to have found that Ext.A1 was not intended to be treated as an agreement for sale, but only as security for a loan transaction and therefore, the charge as contemplated under Section 55(6)(b) of the T.P Act cannot be created on the plaint schedule property based on Ext.A1 agreement. 12. An argument was also advanced that though the time extended, expired on 10.05.2010, the legal notice demanding specific performance was found sent by the plaintiff to the 1[st] defendant only on 06.06.2011, i.e., after more than a year and therefore, it cannot be said that the plaintiff was ready and willing to perform her part of the contract within the time stipulated in Ext.A1 and further extended by the parties on consensus. According to him, since the relief of specific R.F.A. No.706 of 2013 ## -:12:- performance of Ext.A1 was not sought in the meantime, that itself would fortify the contention of the defendants that Ext.A1 was not executed as an agreement for sale but only as a security in a loan transaction. It was contended further on the strength of the decisions cited for reliance by the learned counsel for defendants 2 and 3 that the trial court is not justified in not framing an issue based on the claim of defendants 2 and 3 that they are bonafide purchasers of the property unknowingly of Ext.A1 and for valuable consideration. 13. In the written statement filed, the 1[st] defendant has admitted that Ext.A1 was executed on 01.08.2009 among herself and the plaintiff as an agreement for sale, agreeing thereby to sell 5 cents of property situated in Survey No.258 of Peringavu Village in Thrissur Taluk alongwith a house belongs to her and situated there, for a total sale consideration of `39,50,000/-. `4,00,000/- was admitted as paid to her by the plaintiff as advance sale consideration. The assignment deed was agreed to be executed on or before 31.03.2010. Admittedly, the said property was mortgaged by her then to Urban Co-operative Bank, Thrissur. R.F.A. No.706 of 2013 -:13:- 14. Plaintiff examined herself as PW1. Admittedly `1,00,000/- was paid by her to the 1[st] defendant on a demand made by her on 29.09.2009 towards advance sale consideration and `5,00,000/-, also towards balance sale consideration on a further demand made by the 1[st] defendant. According to her, a sum of `10,00,000/- was paid by her to the 1[st] defendant in total towards sale consideration. 15. According to the plaintiff, in spite of paying `10,00,000/- to the 1[st] defendant towards sale consideration the latter failed to redeem the plaint schedule property from Urban Co-Operative Bank, Thrissur where it was mortgaged, as agreed in Ext.A1. According to her, thus she had performed her part to get the sale deed in respect of the plaint schedule property executed in her favour as agreed in Ext.A1. 16. 1[st] defendant had admitted in the written statement filed that, Ext.A1 was executed as an agreement for sale with the plaintiff and `10,00,000/- was received in total towards sale consideration. 1[st] defendant has raised a contention that it was agreed among them orally, later to the execution of Ext.A1 that the plaintiff would pay the dues to the bank directly and the payment would be adjusted against the R.F.A. No.706 of 2013 ## -:14:- balance sale consideration payable as per Ext.A1. According to the 1[st] defendant, PW1 denied the same and stated that had there been an oral agreement to that effect, she would not have paid `5,00,000/- to the 1[st] defendant directly on 23.03.2010 towards balance sale consideration when the last date scheduled for execution of sale deed as per Ext.A1 was 31.03.2010. According to the plaintiff, evidence is not there to show that time for execution of Ext.A1 was extended at the instance of the plaintiff due to her inability to raise the balance amount payable towards sale consideration. 17. The recitals in Ext.A1 would make it clear that the last date for payment of balance sale consideration was 31.03.2010. The 1[st] defendant has admitted to have received `10,00,000/- from the plaintiff as sale consideration. According to her, time for payment of balance sale consideration was also extended till 10.05.2010, as demanded by the plaintiff. But, the plaintiff denied those and contended on the contrary. 18. Admittedly the plaint schedule property was mortgaged by the 1[st] defendant to Urban Co-operative Bank, Thrissur and she had dues to the said bank at the relevant time when Ext.A1 was executed. The stipulation in Ext.A1 was R.F.A. No.706 of 2013 ## -:15:- that the 1[st] defendant has to clear off the liability to the bank. But, the 1[st] defendant deposed that it was agreed orally among the parties that the dues to the bank shall be paid by the plaintiff and thereafter get the same adjusted towards the balance sale consideration. Plaintiff denied the oral agreement. The extent of arrears due to the bank and the time period within which that is to be cleared off are not known. 1[st] defendant who relied on the oral agreement failed to mention those aspects. The plaintiff denied that and stated, had there been any such agreement, she would not have paid `5,00,000/- towards the balance sale consideration on 23.03.2010 and the defendant would not have received it. As stipulated in Ext.A1, the 1[st] defendant has to hand over the title deeds and other documents pertaining to the plaint schedule property for perusal of the plaintiff prior to the date fixed for execution of the sale deed itself. 1[st] defendant failed to adduce evidence to establish her plea regarding the oral agreement allegedly entered among them. The 1[st] defendant failed even to mount the witness box to depose about those aspects. R.F.A. No.706 of 2013 ## -:16:- 19. In the above context, the contention of the 1[st] defendant that there was an oral agreement which says contrary to the stipulation in Ext.A1 will have to be ignored. Then the stipulation in Ext.A1 alone would prevail. Therefore, as per the stipulation in Ext.A1, the defendant has to clear off the dues towards the mortgage with the bank and to get the documents in respect of the plaint schedule property mortgaged, released in her favour. Since the defendant failed to hand over the documents pertaining to the plaint schedule property agreed to be sold as per Ext.A1 to the plaintiff on or before 31.03.2010, it can only be taken for granted that solely due to her inability to do so, the time for performance was enlarged till 10.05.2010. The defendant could have cleared off the dues to the bank with the money paid by the plaintiff to her. Therefore, further performance of the contract was defeated due to default of the defendant in paying the dues to the bank and getting the documents pertaining to the plaint schedule property released therefrom. 20. According to the 1[st] defendant, she caused a lawyer notice to be issued to the plaintiff on 07.07.2010 demanding specific performance of the contract. According to the plaintiff, R.F.A. No.706 of 2013 -:17:- the notice was not received by her. But, the 1[st] defendant has stated that it was returned unclaimed. She has also produced the unserved notice with acknowledgment card and marked that in evidence as Ext.B4 to establish her contention. 21. Defendants 2 and 3 were arrayed in the Original Suit based on the information obtained by the plaintiff in an enquiry, that the plaint schedule property was sold to them by the 1[st] defendant for a consideration of `36,25,000/-. According to the 1[st] defendant, she was constrained to sell the plaint schedule property to defendants 2 and 3 since the plaintiff failed to pay off her dues to the bank as orally agreed by her during subsistence of Ext.A1. This Court has already found from the circumstances above that the contention taken by the 1[st] defendant in that regard is devoid of any legal and factual basis. According to her, defendants 2 and 3 entered into the agreement for sale of the plaint schedule property with her knowingly of execution of Ext.A1 by her with the plaintiff and also for valuable consideration. The consideration for which conveyance of the plaint schedule property was allegedly executed by the 1[st] defendant in favour of defendants 2 and 3 was `36,25,000/- which is `3,25,000/- less than the sale R.F.A. No.706 of 2013 ## -:18:- consideration agreed as per Ext.A1 executed among herself and the plaintiff. 22. The 2[nd] and 3[rd] defendants contended in the written statement that they are bonafide purchasers of the plaint schedule property. But they have not pleaded that they are bonafide purchasers of plaint schedule property for a valuable consideration, unknowingly of execution of Ext.A1 by 1[st] defendant and the plaintiff and acceptance of `10,00,000/- as sale consideration by the 1[st] defendant from the plaintiff. Defendants have also raised a plea that the execution of Ext.A1 having not been proved, cannot be taken as a genuine document. Their only contention was that in a context where the genuineness of execution of Ext.A1 as an agreement for sale itself is in dispute, the trial court is unjustified in creating a charge in respect of the plaint schedule property in favour of the plaintiff, on its basis. 23. It is pertinent to note that Ext.A1 was claimed by plaintiff as a document executed among herself and the defendant as an agreement for sale of the plaint schedule property, for a consideration stipulated there. When execution of Ext.A1 stands admitted by the 1[st] defendant, further proof is R.F.A. No.706 of 2013 ## -:19:- not required. In that context, defendants 2 and 3 cannot be heard to contend that Ext.A1 was a bogus agreement not liable to be relied on. 24. When execution of Ext.A1 as a genuine agreement for sale is admitted by the 1[st] defendant herself, the parties thereto are bound to perform their respective parts as stipulated by the terms of it. The advance sale consideration has to be paid by the plaintiff. Then it is for the 1[st] defendant to clear off the dues of mortgage to the bank, to get back the documents and to convince the plaintiff that the plaint schedule property is free from all sort of liabilities and that tax and other dues with reference to it are also cleared off. On being convinced of the validity of the documents that the plaintiff has to perform her part of Ext.A1, i.e. paying the balance sale consideration and to get the sale deed executed in her favour. 25. The Original Suit was filed by the plaintiff for return of `10,00,000/- paid by her to the 1[st] defendant as advance sale consideration with interest at the rate of 12% per annum. It is established from the evidence that the 1[st] defendant has defaulted performance of the part remaining to be performed R.F.A. No.706 of 2013 ## -:20:- by her as per Ext.A1 by failing to pay the dues to the bank where the liability created by mortgage of plaint schedule property is subsisting and to handover the documents pertaining to the property for verification to the plaintiff to be convinced of the validity of those. It is clear from the discussion made above that the 1[st] defendant has defaulted the stipulation in Ext.A1 and thereby prevented the plaintiff from performing her part under Ext.A1. 26. The plaintiff has established that she was ready and willing to perform her part all throughout, but due to the default of the defendant, she was prevented from doing so. Instead of seeking for a decree of specific performance, she seeks for return of `10,00,000/- paid towards sale consideration and interest for it at the rate of 12% per annum. Since the execution of the sale deed as per Ext.A1 within the time agreed by the parties is established as defeated due to default of the 1[st] defendant, the plaintiff undoubtedly is entitled to receive the same. The trial court allowed the Original Suit and ordered realisation of the said amount with interest in her favour. R.F.A. No.706 of 2013 -:21:- 27. Defendants 2 and 3 have taken a contention that the trial court failed to raise an issue based on their contention that they are bonafide purchasers of plaint schedule property unknowingly of Ext.A1. According to them, the trial court ought to have raised an issue in that regard and for its failure to do so, the judgment under challenge is liable to be reversed. According to them, they being bonafide purchasers, are entitled for exemption from the statutory charge under Section 55(6)(b) of the T.P. Act. 28. Section 55 of the T.P. Act speaks about the rights and liabilities of the buyer and seller. Sub-section (6) of Section 55 is extracted hereunder: “(6) The buyer is entitled— (a) where the ownership of the property has passed to him, to the benefit of any improvement in, or increase in value of, the property, and to the rents and profits thereof; (b) unless he has improperly declined to accept delivery of the property, to a charge on the property, as against the seller and all persons claiming under him, to the extent of the seller's interest in the property, for the amount of any purchase-money properly paid by the buyer in anticipation of the delivery and for interest on such amount; and, when he properly declines to accept the delivery, also for the earnest (if any) and for the costs (if any) awarded to him of a suit to compel specific performance of the contract or to obtain a decree for its rescission.” R.F.A. No.706 of 2013 -:22:- 29. Sri.Lakshmi Narayan, the learned counsel contended on behalf of 2[nd] and 3[rd] defendants that the plaint schedule property having been purchased by them paying a reasonable consideration and unknowingly of execution of Ext.A1, having performed their part as stipulated thereunder, are bonafide purchasers, and are entitled to have the benefit of exemption under Section 55(6)(b) of the T.P. Act. According to him, the payment of consideration stands established by defendants 2 and 3 by producing the N.R.I. Housing Loan details from HDFC Bank, Kochi, marked in evidence as Ext.B7. 30. The learned counsel has also relied on **Trimbak Narayan Hardas Vs. Bahulal Motaji and Others** (AIR 1973 SC 1363) to fortify his arguments. It was contended that the factual situation in that is similar to the one on hand and the Apex Court has also held in the case that the statutory charge under Section 55(6)(b) of the T.P Act will not be applicable. The dictum of the Apex Court as contained in paragraph 13 of the judgment is extracted hereunder: “13. Plaintiff's claim to have a prior charge over defendant No. 6 arises from the claim that this agreement to sell (Ext. 49) is a genuine document. We have pointed out serious deficiencies in the evidence of the plaintiff which go to show that R.F.A. No.706 of 2013 -:23:- there must not have been a genuine transaction for sale of property. It appears from the judgment of the High Court that on inspection of the books of account it was possible to discover that these were loan transactions and that actual deductions by way of interest had been made before payment We cannot take notice of what the learned Judges found on going through the account books because they were not evidence. But even otherwise, if that finding is correct, we do not see how the document against which these loans had been made can be described as a genuine document to sell immovable property. We are not concerned to decide whether Ext.49 embodied a loan transaction. In our opinion, the transaction was not an agreement to sell immovable property; which alone would have attracted" the statutory charge under Section 55(6) (b) of the Transfer of Property Act. And if the plaintiff does not get a charge over the property, it should follow that there is no prior charge against defendant No. 6.” (Emphasis supplied) 31. **Sebastian v. Bipin** [2004 KHC 29] was a case where the additional 2[nd] defendant filed the appeal challenging a judgment creating statutory charge in respect of the property transferred in his favour and the court while dismissing the appeal, held: R.F.A. No.706 of 2013 -:24:- “There is no dispute that under S.55(6)(b) of the Act, a charge is created for the prepaid purchase money. Learned counsel contended that under S.100 of the Transfer of Property Act, which refers to the charge further states that no charge shall be enforced against the property in the hands of a person to whom such property has been transferred for consideration and without notice of the charge save as otherwise expressly provided by any law for the time being in force. Learned counsel contended that there is no law expressly providing for the liability of the appellants property. Learned counsel referred to a decision of the Supreme Court reported in The Ahmedabad Municipal Corporation of the City of Ahmedabad v. Haji Abdul Gafur Haji Hussenbhai, AIR 1971 SC 1201. According to us, the argument of the appellant cannot be accepted. S.55(6)(b) of the Transfer of Property Act itself clearly states that the charge will be binding on all persons even if it is a transfer for consideration and without notice. The decisions of this Court reported in Ayyakutty Chettiar v. Imbichiamina Bi, 1962 KLT 728, Madhava Kammathi v. Gopala Pai, 1965 KLT 877 and Ibrayi v. Pokkan, 1989 (1) KLT 581 speak with one voice that a transferee for consideration and without notice is also bound by the charge. So far as the decision reported in The Ahmedabad Municipal Corporation of the City of Ahmedabad v. Haji Abdul Gafur Haji Hussenbhai, AIR 1971 SC 1201, is concerned, the Supreme Court was considering the liability under the charge created by the Bombay Provincial Municipal Corporation Act. It was held that the Act did not expressly provide for enforcing a charge against the property which was sold for consideration and without notice. Hence, that decision can be distinguished. The Supreme Court in Delhi Development Authority v. Skipper Construction Co. (P) Ltd. and Others, 2000 (1) Supreme R.F.A. No.706 of 2013 -:25:- 105, observed as follows: It is plain from the provision of S.55(6)(b) that, in the absence of a contract to the contrary, the buyer will have a charge on the sellers interest in the property which is the subject matter of the sale agreement insofar as the purchase money and interest on such amount are concerned, unless the buyer has improperly declined to accept delivery. The charge is available against the seller and all persons claiming under him. The charge in favour of the buyer is the converse of the sellers charge under S.55(4)(b). The buyers charge under this Section is a statutory charge and differs from a contractual charge which a buyer may be entitled to claim under a separate contract. The charge on the property under S.55(6)(b) is enforceable not only against the seller but against all persons claiming under him.” (Emphasis supplied) 32. The learned counsel for the respondents relied on two more decisions. In **Madhava Kammathi Vs. Gopala Pai** [1965 KHC 233], the Single Bench of this Court held that charge under Section 55(6)(b) is available even against a bonafide transferee for value. ## 33. In **Videocon Properties Ltd. Vs. Dr. Balchandra Laboratories and Others** [2004 KHC 529 (SC)] relied on, the following dictum was laid by the Apex Court:- “XXXX It was held that the earnest money is part of the purchase price when the transaction goes forward and it is forfeited when the transaction falls through, by reasons of the fault or failure of the purchaser. This R.F.A. No.706 of 2013 -:26:- statement of law had the approval of this Court in Maula Bux vs. Union of India[AIR 1970 SC 1955]. Further, it is not the description by words used in the agreement only that would be determinative of the character of the sum but really the intention of parties and surrounding circumstances as well, that have to be looked into and what may be called an advance may really be a deposit or earnest money and what is termed as `a deposit or earnest money' may ultimately turn out to be really an advance or part of purchase price. Earnest money or deposit also, thus, serves two purposes of being part payment of the purchase money and security for the performances of the contract by the party concerned, who paid it.” 34. It was a case where agreement for sale was admittedly executed among the parties to the lis and `38,00,000/- was admittedly paid as earnest money. The agreement for sale was established as terminated by the plaintiff. In the agreement for sale, there was provision made for payment of interest at the rate of 21% per annum on the earnest money. The defendants had repaid the earnest money, but not the interest. Accordingly, it was sought to be considered by the court, whether the plaintiff is entitled to claim interest on the amount of earnest money that was refunded by the defendant. Since in the agreement for sale, a stipulation was found that the defendant is bound to pay R.F.A. No.706 of 2013 ## -:27:- interest for the earnest money, the court found the plaintiff to have a _prima facie_ case and that a charge under Section 55(6) (b) is applicable. Accordingly, his prayer for an order of injunction was allowed. 35. The learned counsel has also relied on **Ganpati Ram Bhande and Ors. Vs. Baliram Raghunath Jadhav and** **Others** (AIR 1974 Bom 155). From the portion emphasised above this Court is of the view that the dictum relied on would not help defendants 2 and 3 in any way to get the exemption sought. The Apex Court as well as the Bombay High Court in the decisions referred to above, found the document relied on as not agreement for sale, but relating to some loan transaction. In the case on hand, admittedly of the 1[st] defendant, Ext.A1 is an agreement for sale. Only defendants 2 and 3 contended it as a bogus document. Therefore, the decisions relied on by the learned counsel has no relevance in the context on hand. 36. Placing reliance on **Sebastian** supra the trial court held that the transferee for consideration and without notice is bound by the charge under Section 55(6)(b) of the T.P. Act. Accordingly, the prayer of defendants 2 and 3 to get the plaint R.F.A. No.706 of 2013 -:28:- schedule property exempted from charge was declined and a statutory charge was created on the plaint schedule property. 37. In view of the above, this Court finds every reason to hold that the plaintiff is at liberty to proceed against the plaint schedule property and to adjust the sale proceeds towards the decree debt. Thus, the exemption sought for by defendants 2 and 3 was declined by the trial court. In the view of this Court, the trial court is justified in holding so. Interference sought is totally unwarranted. Appeal fails for the reasons and is dismissed. The judgment and decree under challenge is confirmed. Sd/- **MARY JOSEPH** **JUDGE** NAB