Murat Singh vs Pheku Singh

(After giving the facts as stated above their Lordships proceeded as follows:) It is contended in second appeal in the first place that no charge was created, and reference was made to the decisions in Madho Misser v. Sidh Binaik Upadhya [1887] 14 Cal. 687 and Harjas Rai v. Naurang [1906] 3 A.L.J. 220. In these cases it was held, on the construction of the documents with which they were concerned, that no charge had been created; but it was observed that Section 100, T.P. Act speaks of something which operates as a charge upon land immediately it is executed and that the documents in question did not create a charge at the time, but merely the possibility of a charge ultimately arising on the land. Those decisions have been considered by this Court in Nand Lal v. Dharamdeo Singh AIR 1925 Pat 288 where the opinion of Coutts-Trotter, J., in Imbiohi Vs. Achampat Avukoya Haji and Others, , was quoted with approval where he observed that if the cases above mentioned were supposed to enunciate the proposition that whenever you have a charge to secure a liability which will arise only, if at all, in the future, that cannot be a present charge within the meaning of the Transfer of Property Act, he refused to follow them. The deed dealt with in Nand Lal v. Dharamdeo Singh AIR 1925 Pat 288 in this Court was similar to the present except that it contained a hypothecation clause and amounted to a mortgage; but that makes no difference for the present purpose. In that case it was held that there was a present charge to meet a future contingency which is also the case in the deed now under consideration. The effect of the deed in the present case is to create a usufructuary mortgage of certain lands in lieu of interest on the debt, and also a charge on the property of the mortgagor for the principal sum which may be enforced if the creditor is dispossessed of the lands. This is not a mere possibility of a charge A present charge on existing property is created, though it can only be enforced on the happening of a contingency. There is nothing in Section 100, T.P. Act, to exclude such an instrument from the definition of a charge.

The second argument advanced is that the defendants third party had no right to assign their interest under the deed of 1888 which, after the Collectorate partition, was a mere right to sue for damages. This argument is without substance. This is not a suit for damages but is a suit for a sum of money advanced, with interest, to be realized out of property charged with the debt. There is nothing in Section 6, T.P. Act, which bars the transfer of such a right.

The third and last argument is that as the defendants first party are bona fide purchasers at an auction sale for value without notice of the charge, the charge cannot be enforced against them.

There appears to be a conflict of opinion in India as to whether a charge can be enforced against a bona fide purchaser for value without notice. In Kishun Lal v. Ganga Ram [1890] 13 All. 28 Mahmood, J., expreseed the opinion, obiter, at p, 46 that a charge could not prevail against a bona fide transferee for value without notice. In Royzuddi Sheikh v. Kali Nath Mukherjee [1906] 33 Cal. 985 Mukherjee, J., referred to this dictum and repeated it, saying that a charge can be enforced against a transferee only if it can be shown that he has taken with notice of the charge. Assuming that this proposition is correct in so far as it relieves the property from the charge in the hands of a purchaser without notice a further question would arise whether the burden of proof is not wrongly thrown in the proposition as stated. The question is more fully dealt with in Akshoy Kumar Banerji v. Corporation of Calcutta [1915] 42 Cal. 625 --a case of a statutory charge. There Mukherji, J., speaking of the owner of the property subject to the charge, said:

The owner was not in the position of a mortgagor, who has in him nothing beyond the equity of redemption and can consequently convey to the transferee no larger interest in the property. From this principle, the conclusion is inevitable that the charge cannot be enforced against the property in the hands of a bona fide purchaser for value without notice; in other words, where a mortgagee can follow the mortgaged property in the hands of a transferee from the mortgagor, a charge can be enforced against the transferee, only if he has taken with notice of the charge.

and he refers to the two preceding decisions.

The opposite view is taken in Mt. Maina v. Mt. Bachchi [1906] 28 All. 655 where Richards, J., expressed the opinion that there is nothing in the Transfer of Property Act to justify any distinction being drawn between the enforceability of mortgages and charges in this respect and that it is much too broad a proposition to state that in all cases where by acts of parties or operation of law immovable property of one person is made security for payment of money to another, and the transaction does not amount to a mortgage, the security will not be enforced even against such transferees. It may be mentioned that this decision is referred to by Mukherji, J., in Akshoy Kumar Banerjee v. Corporation of Calcutta [1915] 42 Cal. 625 but the point of the reference is not clear.

It is, however, not necessary to decide this question because the argument may be disposed of on the point of onus. The defendants did not plead that they were bona fide purchasers for value without notice and no issue was raised on this point, which was merely taken in argument in the appellate Court.

In Attorney-General v. Biphosphated Guano Co. [1879] 11 Ch. D. 327 the Court of appeal said that the defence of a purchase without notice is one which ought to be specifically alleged as well as proved by those who rely upon it, and the Court was of opinion that the objection was well founded, that the trial Judge was not justified in deciding the case upon want of notice to persons as regards whom the fact of notice was not put in issue. This decision was followed by Farwell, L.J. in Wilkes v. Spooner [1911] 2 K.B. 473. Both decisions are referred to and relied upon by Mukherji, J., in Akshoy Kumar Bannerji v. Corporation of Calcutta [1915] 42 Cal. 625 where he held that if the defendants wished to avail themselves of the defence that they were purchasers for value without notice, they should have pleaded it. It is sufficient on this part of the case to say that, without deciding the question whether a charge is or is not available against a bona fide purchaser for value without notice, the argument is not open to the appellants because this defence was not taken and the issue was not raised.

The appeal is dismissed with costs.