High Court · 2007

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 3.4.2007CORAM:THE HONOURABLE MR.JUSTICE C.NAGAPPANSecond Appeal No.651 of 1996Nanjappa GounderS/o.Karuppa GounderKongarpalayam,Vaniputhur Village,Gobichettipalayam. .. Appellant-Vs-1.N.SubramaniamS/o.Nallasami ChettiarTeacher, Cusba Gobichettipalayam,Gobi, Periyar District.2.MakaliammalW/o.G.K.Chenniappan3.Minor SudhaD/o.G.K.Chenniappan4.Minor KavithaD/o.G.K.Chenniappan5.Minor Jagadeesh(Minors 3 to 5 are representedby mother and guardian R2).(Respondents 2 to 5 reside at5, Rayar Extension,Gobi Town, Periyar District). .. Respondents Second appeal is filed against the judgment and decree, dated31.1.1996, passed in A.S.No.105 of 1991 on the file ofSubordinate Judge, Gobichettipalayam reversing the judgment anddecree, dated 18.12.1990, made in O.S.No.682 of 1985 on the fileof Additional District Munsif, Gobichettipalayam. https://hcservices.ecourts.gov.in/hcservices/ For appellant : Mrs.Hema Sampath Senior Counsel for M/s.R.Subramanian, R.Meenal. For respondents : Mr.K.Doraisami Senior Counsel for M/s.Muthumani Doraisami, K.Balasubramanian, Nissar Ahamed. for Respondents 2 to 5. No appearance for R1.JUDGMENTThis Second Appeal is preferred against the judgment anddecree, dated 31.1.1996, passed in A.S.No.105 of 1991 on the fileof Subordinate Judge, Gobichettipalayam reversing the judgment anddecree, dated 18.12.1990, made in O.S.No.682 of 1985 on the fileof Additional District Munsif, Gobichettipalayam. The plaintiffis the appellant herein. 2.The appellant filed the suit seeking for a decree declaringhis title to the suit properties and for permanent injunctionrestraining the defendants from interfering with his possession andenjoyment of the suit properties. The case of the plaintiff is that he entered into anagreement of sale with the second defendant on 25.8.1978 topurchase the suit properties and took possession of the same on thesame date and the second defendant executed a sale deed on29.11.1978 and completed the contract and the sale relates back tothe date of agreement since the plaintiff was put in possession onthe said date. It is further stated by the plaintiff that thefirst defendant appears to have brought the suit properties forsale in execution of the decree he obtained against the seconddefendant and the plaintiff was not aware of any attachment overthe suit properties and the attachment said to have been made isnot binding on the plaintiff since he is a bonafide purchaser forvalue and the auction sale in favour of the third defendant is notvalid in law. The plaintiff has further stated that he filed aclaim application in the Execution Petition and the ExecutionPetition itself was dismissed for default and the Executing Courthas no legal authority to restore it and the order of restorationwithout notice to the real owner is bad in law and it is notbinding on the plaintiff and the second defendant has no subsisting https://hcservices.ecourts.gov.in/hcservices/ title on the date of attachment also and the third defendant cannotclaim any better title to the suit properties and the plaintiff isin possession of the suit properties and the defendants 1 and 3 areattempting to interfere with his possession and hence the suit isfiled.3. The defendants 1 and 3 filed a common written statementdenying the plaint averments and stated that the first defendantgave a loan of Rs.3,500/- to the second defendant on 25.9.1977 andno amount was forthcoming and hence the first defendant filed thesuit in O.S.No.1462 of 1978 on 16.9.1978 against thesecond defendant and obtained an order of attachment beforejudgment of the suit properties on the same day in I.A.No.3041 of1978 and the attachment was made absolute on 23.11.1978 and thesuit itself was decreed on 30.11.1978. It is further stated inthe written statement that the execution proceedings were takenagainst the second defendant in E.P.R.No.176 of 1979 and the suitproperties were sold in public auction on 30.7.1980 to the thirddefendant and the sale was duly confirmed on 22.1.1983 and the salecertificate was also issued and the plaintiff was fully aware ofall these proceedings and the third defendant applied for deliveryof the suit properties and the possession was handed over to thethird defendant by the Court on 23.12.1983 and the same was dulyconfirmed in E.A.No.1364 of 1983 on 1.4.1984 and the thirddefendant is in possession and enjoyment of the suit propertieseversince then. According to defendants 1 and 3, the plaintiff filed aclaim petition in E.A.No.638 of 1980 in E.P.R.No.176 of 1979 andthe same was dismissed on 29.7.1982 and the order has become finaland the plaintiff has no right to file the present suit seeking fordeclaration of his title. It is further stated in the writtenstatement that the sale agreement putforth by the plaintiffprescribed a period of three months from 25.8.1979 and it had cometo an end on 25.11.1978 and there was no separate valid agreementunder law extending the period and there was no subsisting validagreement on 29.11.1978 and the second defendant was having titleand possession of the suit properties on the date of attachment andthe sale in favour of the plaintiff by the second defendantsubsequent to the date of attachment will not vitiate the Courtsale in favour of the third defendant and the plaintiff is not abonafide purchaser for value and he is not in possession of thesuit properties.4. During the pendency of the suit, the second defendant diedand the suit stood abated as against him. The Trial Court, onconsideration of oral and documentary evidence, held that the firstdefendant knew about the registered sale agreement entered into bythe plaintiff with the second defendant at the time of filing his https://hcservices.ecourts.gov.in/hcservices/ petition seeking for attachment of the suit properties beforejudgment in his suit and the sale in favour of the plaintiff is inpursuance of agreement for sale, which was before the attachmentand hence the purchase made by the plaintiff prevails against theattachment and the suit is maintainable and the plaintiff is inpossession of the suit properties and granted decree as prayed forwith costs. Aggrieved by the judgment and decree, the defendants1 and 3 preferred appeal to the Sub-Court, Gobichettipalayam andduring the pendency of the appeal, third defendant died and hislegal representatives have been added as appellant Nos.3 to 6.The appellate Court held that the attachment of the suit propertiesis valid and the sale agreement was not in force on the date ofattachment and hence the attachment will bind the plaintiff andprevail over his purchase and the sale in favour of the plaintiffafter attachment is void as per Section 64 of Civil Procedure Codeand the possession of the plaintiff is unlawful and the suit isnot maintainable and allowed the appeal and dismissed the suit.Challenging the same, the present second appeal is preferred.For the sake of convenience, in this Judgment, the parties arereferred to as arrayed in the suit.5. In this Second Appeal, the following substantial questionsof law are framed for consideration:1. Whether the lower appellate Court has erred inoverlooking that the agreement for sale would prevailover attachment as the contractual obligation arisingfrom the sale agreement would override the rights ofthe attaching creditor.2. Whether in law the lower appellate Court wasnot wrong in finding that the suit was notmaintainable.6. Mrs.Hema Sampath, the learned Senior Counsel appearing forthe appellant contended that though the purchase of the suitproperties was made by the plaintiff subsequent to the attachment,the agreement in pursuance of which the purchase made was priorto the attachment and hence the purchase shall prevail over theattachment and this Court, in a number of decisions, heldthat the purchaser of an antecedent agreement getsgood title despite attachment and this view has beenapproved by the Supreme Court in the decision inVANNARAKKAL KALLALATHIL SREEDHARAN v. CHANDRAMAATH BALAKRISHNAN ANDANR. (JT 1990 (1) S.C. 390).7. Per contra, Mr.K.Doraisami, the learned Senior Counselappearing for the respondents contended that a sale in pursuance ofa pre-attachment agreement is a private alienation of property andmust be regarded as void against the claim of the attaching https://hcservices.ecourts.gov.in/hcservices/ creditor as provided under Section 64 of Civil Procedure Code andfurther submitted that the Supreme Court in a subsequentdecision in JANGLI AND OTHERS v. BHAGWATI (SMT) AND OTHERS((1995) 6 Supreme Court Cases 140) has observed that someobservations made in Vannarakkal Kallalathil Sreedharan case(cited supra) need to be clarified and shall be considered in anappropriate case and hence the law laid down in VannarakkalKallalathil Sreedharan case, cannot be the correct legal positionon this aspect.8. It is not in dispute that the suit properties belonged tothe second defendant. Ex.A2 is the registered sale agreemententered by the plaintiff with the second defendant with respect tothe suit properties on 25.8.1978 and the time stipulated thereinwas three months. The first defendant filed the suit for recoveryof money on a pronote against the second defendant on 16.9.1978 andobtained an order of ad interim attachment before judgment of thesuit properties on the same day and that attachment was madeabsolute on 23.11.1978. Exs.A22 and A23 are endorsements, dated23.11.1978, made by second defendant and his wife in Ex.A2 saleagreement extending the time till 30.11.1978 and the defendants 1and 3 raised a doubt as to the genuineness of the endorsementswhich was repelled by the trial Court and found acceptance beforethe lower appellate Court. There is no need to discuss furtheron this point since the time was not the essence of contract andthe sale itself took place on 29.11.1978. The first defendant inhis oral testimony as DW.1 has stated that he heard about theregistered sale agreement entered into by the plaintiff with thesecond defendant and immediately he filed the suit and obtained anorder of attachment before judgment of the suit properties.9. Venkatasubba Rao, J., a learned single Judge of this Court,in the decision in PAPARAJU VEERARAGHAVAYYA v. KILLARU KAMALA DEVIAND OTHERS (A.I.R. 1935 Madras 193), laid down that where apurchase is subsequent to the attachment, but the agreement inpursuance of which the purchase is made, is prior to theattachment, the purchase prevails against the attachment.10. A Division Bench of this Court concurred with the abovereasoning of the learned Judge in the decision in VEERAPPA THEVARAND OTHERS v. C.S.VENKATARAMA AIYAR AND OTHERS (A.I.R. 1935 Madras872) and held that an agreement to sell creates an obligation toconvey the property and a latter attachment will not override theconveyance made in performance of that obligation.11. Following the above decision, another Division Bench ofthis Court, in the subsequent decision in ANGU PILLAI AND OTHERS v.M.S.M.KASIVISWANATHAN CHETTIAR AND OTHERS (AIR 1974 MADRAS 16),held that an attaching decree-holder attaches not the physical https://hcservices.ecourts.gov.in/hcservices/ property but only the right of the judgment-debtor in the propertyand as recognised in Section 40 of the Transfer of Property Act,the right of the judgment-debtor in the property is, on the date ofthe attachment of the property qualified by the obligation incurredby him under the earlier contract to sell and the attachingcreditor cannot claim to ignore that obligation and proceed tobring the property to sale as if it remained the absolute propertyof the judgment-debtor.12. The Supreme Court referred to all the above threedecisions of this Court and accepted the line of reasoning that thepurchaser of an antecedent agreement gets good title despiteattachment in its decision in VANNARAKKAL KALLALATHIL SREEDHARAN v.CHANDRAMAATH BALAKRISHNAN AND ANR. (JT 1990 (1) S.C.390).For better appreciation, the law laid down is extracted below:"9. In our opinion, the view taken by theHigh Courts of Madras, Bombay, Calcutta andTravancore-Cochin in the aforesaid cases appearsto be reasonable and could be accepted as correct.The agreement for sale indeed creates anobligation attached to the ownership of propertyand since the attaching creditor is entitled toattach only the right, title and interest of thejudgment-debtor, the attachment cannot be freefrom the obligations incurred under the contractfor sale. Sec. 64 CPC no doubt was intended toprotect the attaching creditor but if thesubsequent conveyance is in pursuance of theagreement for sale which was before theattachment, the contractual obligation arisingtherefrom must be allowed to prevail over therights of the attaching creditor. The rights ofthe attaching creditor shall not be allowed tooverride the contractual obligation arising froman antecedent agreement for sale of the attachedproperty. The attaching creditor cannot ignorethat obligation and proceed to bring the propertyto sale as if it remained the absolute property ofthe judgment-debtor. We cannot, therefore, agreewith the view taken by the Punjab and Haryana HighCourt in Mohinder Singh's case (AIR 1971 Pb. &Haryana 381). 13. The contention of the learned Senior Counsel for therespondents that the above view cannot be taken as a correct legalposition on account of observation made by the Supreme Court in thesubsequent decision in JANGLI AND OTHERS v. BHAGWATI (SMT) ANDOTHERS ((1995) 6 Supreme Court Cases 140), is devoid of merit. Thequestion that arose for consideration in the subsequent case was as https://hcservices.ecourts.gov.in/hcservices/ to whether the appellant being a derivative title holder, canchallenge the money decree, because of or independently of, pre-emption decree and the Apex Court held that he is bound by thedecree as judgment-debtor and cannot seek any declaration of hisindependent title thereof. After having decided so, in theconcluding paragraph, the Supreme Court observed thus: " 6. In this view, it is not necessary for usto go into the controversy whether someobservations made in Vannarakkal KallalathilSreedharan v. Chandramaath Balakrishnan need tobe clarified and correct legal position stated,which would be considered in an appropriatecase."14. The Supreme Court did not consider the law laid down inthe decision in Vannarakkal Kallalathil Sreedharan case (supra)and has left it open to be considered in an appropriate case.Meanwhile, the Parliament has given its legislative approval to theview taken by the supreme Court in VANNARAKKAL KALLALATHILSREEDHARAN case by inserting clause (2) to Section 64 of CivilProcedure Code, under Act 22 of 2002, which came into effect from1.7.2002. The present Section 64 C.P.C. reads thus: "64. Private alienation of property afterattachment to be void.- (1) Where an attachmenthas been made, any private transfer or deliveryof the property attached or of any interesttherein and any payment to the judgment-debtor ofany debt, dividend or other moneys contrary tosuch attachment, shall be void as against allclaims enforceable under the attachment. (2) Nothing in this section shall apply toany private transfer or delivery of the propertyattached or of any interest therein, made inpursuance of any contract for such transfer ordelivery entered into and registered before theattachment."Though this amendment may not enure to thebenefit of the plaintiff, the law declared by the ApexCourt in the decision in VANNARAKKAL KALLALATHILSREEDHARAN v. CHANDRAMAATH BALAKRISHNAN AND ANR. (JT 1990 (1) S.C.390) squarely applies to the facts of the present case and therights of the first defendant as attaching creditor shall not beallowed to override the contractual obligation arising from anantecedent agreement for sale of the attached property and thefirst substantial question of law is answered in favour of theappellant. https://hcservices.ecourts.gov.in/hcservices/

15. The finding of the lower appellate Court is that theattachment would prevail over the agreement for sale and it will bebinding on the plaintiff and the suit filed without a prayer forsetting aside the attachment is not maintainable. As alreadyseen, the contractual obligation arising from an antecedentagreement for sale of the attached property shall prevail over therights of the attaching creditor and the suit is maintainable.Hence the above finding of the lower appellate Court is erroneousin law and the second substantial question of law is answered infavour of the appellant.16. In view of the conclusions reached, the judgment anddecree of the lower appellate Court are liable to be set aside andthe judgment of the trial Court has to be restored and theplaintiff is entitled to the relief of declaration of his title tothe suit properties. Moreover, both the Courts have concurrentlyfound that the plaintiff is in possession of the suit propertiesand hence the plaintiff is also entitled for the relief ofpermanent injunction.17. In the result, the second appeal is allowed and thejudgment and decree of the lower appellate Court are set aside andthe suit is decreed as prayed for with costs throughout.vksSd/Asst.Registrar/true copy/Sub Asst.RegistrarTo1. The Subordinate Judge, Gobichettipalayam (with records)2. The Additional District Munsif, Gobichettipalayam.3.The Section Officer, V.R.Section, High Court, Madras.+ 1 cc to Mr. R. Subramanian, Advocate SR No. 21190+ 1 cc to Mrs. Muthumani Dorasami, Advocate SR No. 21112AKM(CO)SR/9.5.2007 Judgment inS.A.No.651 of 1996