In Re: Kintadu Dalapadu and Others

Sundara Aiyar, J.—In this case, the plaintiff obtained an agreement from the 2nd defendant, who was the owner of certain property, on the

29th April 1908 for the sale of the property to him. The 2nd defendant executed a mortgage document in favour of the 1st defendant, which was

registered on the 2nd May 1908. The lower Appellate Court has found that it was not executed on the date it bears, namely, in January 1908, but

subsequent to the agreement in plaintiff''s favour. The plaintiff obtained a sale-deed from the 2nd defendant of the property on the 10th May 1908.

The present suit is for a declaration that the mortgage executed in favour of the 1st defendant by the 2nd cannot affect the plaintiff''s rights under

the sale, it having been executed in order to defraud the plaintiff. The lower Appellate Court, reversing the finding of the Munsif, has found that the

plaintiff''s contention was made out that no consideration was paid by the 1st defendant for the mortgage and that he and 2nd defendant conspired

and brought about the document subsequent to the agreement in plaintiff''s favour with a view to defraud him by making the property liable for the

mortgage debt. The District Judge granted the declaration asked for by the plaintiff. It is contended in second appeal that as the plaintiff had only a

right in personam against the second defendant on the date that the mortgage-bond to 1st defendant was registered, namely 2nd May 1908, and as

2nd defendant admitted the receipt of consideration for the mortgage and the validity of he mortgage-bond, the plaintiff, who subsequently

obtained a sale-deed on the 10th May 1908, could not claim a declaration that the mortgage was not binding on the property. This argument, in

my opinion, is untenable. By virtue of the agreement obtained by the plaintiff from the 2nd defendant on the 29th April 1908, he became entitled to

a conveyance of the property from the 2nd defendant, which would prevail over the right of any one who took a transfer from him subsequent to

the date of the agreement. The would, for instance, have been entitled to specific performance of the agreement to sell against any subsequent

transferee from the 2nd defendant, except a bona fide transferee for value without notice of the plaintiff''s rights under his contract. There can be no

doubt that an actual conveyance obtained by the plaintiff in pursuance of a contract would also entitle him to priority over every subsequent

transferee from the 2nd defendant, except a bona fide transferee for value. Although the mortgage might be valid as between the 1st and 2nd

defendants, the plaintiff was entitled to priority as he had an agreement for sale prior to the mortgage and the District Judge was right in granting

him a declaration that his rights under his conveyance are unaffected by the mortgage in 1st defendant''s favour

It is further argued that wife onus of proof on the question whether the mortgage-deed was intended to defraud the plaintiff has been wrongly

thrown on the 1st defendant. The question of onus is quite immaterial as all the evidence on record has been considered by the District Judge and

he has come to the conclusion, on the whole evidence, that the mortgage-bond was the result of a fraudulent conspiracy between the 1st and 2nd

defendant. I reject this second appeal.