Devarapalli Vankata Narasimharao vs Pilla Ramayyamma and Others

K. Ramaswamy, J.—The petitioner is the plaintiff. He filed O.S. No. 226 of 1977 for the recovery of the suit claim and also an I.A. under Order 38 Rule 5 CPC for attachment before judgment on December 29, 1977. On the same day attachment before judgment was ordered. The first and second defendants filed an application to raise the attachment. The trial Court raised the attachment. Thus this revision petition.

The first respondent contends that the 3rd respondent entered into an agreement of sale on February 25, 1975 to sell the attached property to them for a valuable consideration Rs. 35,000/ - and a sum of Rs. 20,000/ - was paid under a demand draft drawn on the State Bank of India and the balance amount was paid by discharging the debts of third respondent and cash payments from time to time and the time for execution of the sale deed was extended upto March 31, 1978. The first respondent purchased stamps for registration of the documents on December 20, 1977 and two separate sale deeds were executed in favour of the respondents 1 and 2 on the same day and they were registered on January 4, 1978. Therefore the first respondent has title and interest to the property on the date when the attachment before judgment was made. The 3rd respondent is divested of her title. Accordingly the attachment does not bind the first respondent.

The petitioner has resisted the contentions stating that this is a fraudulent transaction brought into being to defeat his claims with a view to avoid the decree. The trial court had not accepted the contentions of the petitioner.

Suryanarayanarao, the Learned Counsel for the petitioner contends that though the registration dates back to the date of the execution of the document, the registration is not complete until the document is copied in the books of registration by the Registrar of Assurances. Till then, the title is not extinguished. By which date there is already an attachment subsisting and the first respondent does not acquire right, title or interest in the property. Therefore, the attachment before judgment prevails over the later registration of the documents. Thereby the necessary conclusion is that the document has been executed fraudulently with a view to defeat and delay the right of the petitioner to have his decree executed against the property of the 3rd respondent, the real owner of the property. In support of his contention, the Learned Counsel relied upon Ram Saran Lall and Others Vs. Mst. Domini Kuer and Others, . I am unable to agree. u/s 64 CPC where an attachment has been made; any private transfer or delivery of the property attached or of any interest therein and any payment to the judgment-debtor of any debt, dividend or other moneys contrary to such attachment, shall be void as against all claims enforceable under the attachment. Yet this right will be subject to the interest acquired u/s 40 of the Transfer of Property Act, which postulates this.

Where, for the more beneficial enjoyment of his own immovable property, a third person has independently of any interest in the immovable property of another or of any easement thereon a right To restrain the enjoyment in a particular manner of the latter where a third person is entitled to the benefit of an obligation arising out of contract and annexed to the ownership of immovable property, but not amounting to an interest therein or easement thereon, such right or obligation may be enforced against a transferee with notice thereof or a gratuitous transferee of the property affected thereby but not against a transferee for consideration and without notice of the right or obligation, nor against such property in his hands.

In the Mulla on the Transfer of Property Act, 1882, Fifth Edition, Para 10 at Page 199, it is stated thus:

There is a conflict of decisions as to whether the obligation annexed by this section to the ownership of property by a contract of sale will prevail against claims enforceable under an attachment. If after a creditor C has attached A''s property, A sells it to B, the conveyance to B will be subject to the claims of C enforceable under the attachment. This is because u/s 64 of the CPC any private transfer by A after the attachment will be void as against such claims, but if the subsequent conveyance was in pursuance of an agreement of sale which was before the attachment will the claims of C enforceable under the attachment be subject to the obligation created by the contract of sale to B?

The learned author has noticed conflicting views of the Calcutta High Court and the Madras High Court and he says:

The Madras High Court has taken the same view on the ground that if a creditor attaches property which is subject to a particular obligation he should not be able to override it. In the case of an attachment before judgment this is so expressly provided by Order 38, Rule 10 of the Code. Again if after the attachment the vendee filed a suit for specific performance of the contract and the court endorsed execution of a conveyance, it is clear that such conveyance would not be a private transfer subject to the provisions of Section 64 of the Civil Procedure Code.

Order 38, Rule 10, CPC postulates thus:

Attachment before judgment shall not affect the rights, existing prior. to the attachment of persons not parties to the suit, nor any person holding a decree against the defendant from applying for the sale of the property under attachment in execution of such decree.

In Paparaju Veeraraghavayya Vs. Kilaru Kamala Devi and Others, Venkatasubba Rao, J. was called upon to consider the effect of the attachment of the property and the subsequent sale in pursuance of the contract. It was held thus:

Where a purchase is subsequent to the attachment but the agreement in pursuance of which the purchase is made, is prior to attachment, the purchase prevails against the attachment.

The same is the view taken in Rebala Venkata Reddi v. Yellappa Chetti AIR 1917 Mad 4. In Diravyam Pillai and Another Vs. Veeranan Ambalam and Others, Varadachariar, J. as he then was at page 831 held thus:

The question is not whether any interest has passed under the contract to sell. The attaching decree-holder attaches not the physical property but only the rights of the judgment debtor in the property.

This view was followed by Wordsworth, J. in Athinarayana Konar and Another Vs. V. Subramania Aiyar, where the learned Judge has held thus:

Though a contract to sell does not having regard to the terms of Section 54 of the Act; create any interest in or charge on the property, it does give rise to an obligation which limits the right of the judgment debtor and the attachment of the right, title and interest of the judgment-debtor is subject to any such limitation by which the judgment debtor was bound. Therefore, where subsequent to a contract to sell certain property, it is attached in execution of a decree, the attachment does not prevail over the pre-existing contract to sell even though the attachment creditor has no notice of the contract to sell the right of the judgment-debtor in the property is on the date of the attachment qualified by the obligation incurred by him under the earlier contract to sell and the attaching creditor cannot claim to ignore that obligation and proceed to bring the property to sale as if it remained the absolute property of the judgment debtor.

I respectfully agree with the above view and needs no reiteration. I am bound by the above ratio laid down by the Madras High Court. Thus I hold that though the agreement for sale does not create any right, title of interest in the property u/s 54 of the Transfer of Property Act, but it creates an interest in the property by operation of 2nd paragraph of Section 40 of the Transfer of Property Act, and this right prevails by operation of Order 38 Rule 10 CPC. Therefore, the rigour imposed u/s 64 of the Code does not prevail. The agreement of sale thereby is not void and the attachment before judgment does not prevail over the contract for sale.

Though the Learned Counsel for the petitioner has contended that the agreement is a fraudulent one brought into existence to defeat the claims of the petitioner in the suit. I am unable to agree. The agreement of sale dated February 25, 1975 expressly recites that a sum of Rs. 20,000/ - was paid under a demand draft drawn on a bank. Therefore, long prior to the date of the suit there is an agreement of sale and under which a substantial portion of the consideration was passed under a demand draft. Subsequently the time for completion of the contract was extended from time to time. On December 20, 1977, in fact, stamps were purchased and execution was also made. No doubt though it was registered on January 4, 1978, now by operation of Section 64 of the Registration Act, the registration dates back to the date of the execution of the document. Though their Lordships of the Supreme Court held in Ram Saran v. Domini Kuer (1 supra) which is relied upon by the Learned Counsel for the petitioner, that the title in the property is not extinguished by mere registration of the document until the sale deed is recorded in the books of registration maintained by the Registrar of Assurances, since the registration dates back to the date of execution of the sale deed, a right is created in favour of the bonafide purchaser for value without notice of the encumbrances created in favour of the third parties and, therefore, the ratio in the said judgment is inapplicable to the facts in this case. Accordingly, I hold that the attachment does not impinge the rights of the 1st respondent under the registered sale deed. The lower court has not committed any error of jurisdiction of material irregularity in the exercise of jurisdiction in raising the attachment warranting interference in the revision.

The revision petition is accordingly dismissed. No costs.