T. Sivanna and Another vs Venkatekrishna Murthy and Another

The question in this case relates to the construction of a clause in a compromise decree. The compromise provides that the 1st and 2nd

defendants should pay to the plaintiffs a sum of Rs. 13,000. Then comes the clause in question ''until the said amount of Rs. 13,000 is paid the

items 17, 18, 19, 20, 21 these immovables of A schedule should not be dealt with by the 1st and 2nd defendants in any manner''. The question

raised is whether this clause creates a charge on the property which the 1st and 2nd defendants agreed not to alienate till the payment of the debt.

It is true as contended by Mr. Seshaghiri Aiyar that no particular form of words is needed to create a change, provided the language of the

instrument manifests an intention that certain particular property should be made security for the debt, that is, that an interest in the property should

be created in favour of the creditor to secure due payment of the debt. The promise contained in the compromise not to alienate the property to

third persons with the payment of the plaintiff''s debt is only a covenant not to create any interest in it in favour of others. There is no expression of

an intention to create an interest in the plaintiffs'' favor. It is quite possible that a debtor, if he is unwilling to create any charge over his property,

may enter into covenant not to charge it in favor of others while declining to create a charge in favor of a particular creditor. Rajkumar Ram Gopal

Narayan Singh v. Ram Dutt Chowdhury (1870) 5 Ben.L.R. 264 was cited on behalf of the respondents, but the language in the instrument

construed there was stronger than that of the compromise here. The Court laid special stress on a clause providing that any alienation made by the

debtor should be regarded as nominal and intended to defraud the creditor. The case was distinguished on this-ground in Gunoo Singh v. Letafut

Hussain ILR (1877) Cal 336 where a mere covenant not to alienate was regarded as insufficient to create a charge. We must hold that the decree

did not create a charge on the properties sought to be attached by the decree holder; and that the application for attachment should be allowed.

We set aside the order of the Lower Court and remand the petition for disposal according to law. Costs will abide the result.