Varghese vs Palai Central Bank Ltd.

Sankaran, C.J.—The 3rd defendant has come up in appeal against the lower court''s order summarily dismissing the application filed by himself along with others, for relief under Act XXXI of 1958 (Kerala). The lower court has taken the view that this defendant is only a subsequent encumbrancer and not debtor as defined in Act XXXI of 1958. The suit property was purchased by the 3rd defendant long prior to the institution of the present suit. No doubt, the purchase was, subsequent to the creation of the charge in favour of the plaintiff-bank. All the same, the 3rd defendant had become the owner of the property by virtue of the sale in his favour. The present debt being a prior charge on the property, the plaintiff could enfore the charge against the property. In this view of the matter, the 3rd defendant is also a debtor within the definition as given in Act XXXI of 1958. The liability of the property of which he has become the purchaser, is sufficient to attract that definition. This position is explained in 1957 KLT 809. The principle laid down in that case was not properly understood by the lower court and the result was that the court took the view that the present case is distinguishable from that case. Really there is no such distinction possible. Thus the view taken by the lower court cannot be upheld as correct. The appeal has therefore to be allowed and the order of the lower court set aside. But that does not mean that the 3rd defendant''s petition can be straightway allowed. Several other objections raised by the court decree-holder have yet to be considered and decided. One such objection is that the 3rd defendant is not an agriculturist as defined in the Act. This objection has to be considered and decided on its merits. Other relevant objections raised by the decree-holder have also to be considered and decided before passing final orders on the 3rd defendant''s application. For this purpose the case has to be remanded to the lower court. In the result, the order of the lower court, as it stands, is set aside and the case is remanded to the lower court for fresh disposal of the 3rd defendant''s application in accordance with law and in the light of the observations made above. We make no order for the costs of this appeal.