Full Judgment Text
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PETITIONER:
KEDAR NATH LAL & ANR.
Vs.
RESPONDENT:
GANESH RAM & ORS.
DATE OF JUDGMENT:
05/09/1969
BENCH:
HIDAYATULLAH, M. (CJ)
BENCH:
HIDAYATULLAH, M. (CJ)
SHELAT, J.M.
VAIDYIALINGAM, C.A.
CITATION:
1970 AIR 1717 1970 SCR (2) 204
1969 SCC (3) 787
CITATOR INFO :
R 1973 SC 569 (16,36)
RF 1978 SC1217 (15)
ACT:
Transfer of Property Act (4 of 1882), s. 52---Doctrine if
lis pendens-Applicability
Release by Cooperative Society of properly from
mortgage--Effect of.
HEADNOTE:
One R executed a mortgage of his share in two survey Nos.
to a Cooperative Society. On his application and in order
to enable him to repay a sum of Rs. 500/-, the Society
released the property in 1933, but R never paid the amount
to the Society. The Society filed an application for a
mortgage award on April 5, 1934 and the Assistant Registrar
made an award in the nature of a preliminary decree, on
December 16, 1934. Thereafter a final mortgage decree was
passed by the Assistant Registrar and the two survey nos.
were brought to sale and purchased by the. Society and
possession was obtained on July 20, 1937. Meanwhile, one D
obtained attachment before judgment of the two survey nos.,
as the property of R, in a suit for money against R, and, in
execution of the money decree, purchased the two survey
nos. on August 13, 1934. In 1943, the Society went into
liquidation and the liquidator sold the properties of the
Society and the appellant bought the two. survey nos. He
filed a suit for a declaration of his title and possession
of the properties in the two, survey nos. from various
persons who were in possession of the properties under R and
D. The High Court dismissed the .suit.
In appeal to this Court,
HELD: (1) The motive of the release, in 1933, of the
properties by the Society in favour of R was the payment of
Rs. 500/- by R to the Society, but it was not a condition Of
the release. Therefore, the release was binding on the
Society. [209 D--E]
(2) But R did not object to the inclusion of the items
in the mortgage award. Therefore, the Society must have
bona fide felt that the properties remained encumbered. [211
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G]
(3) The proceedings in respect of the mortgage were
pending from April 5, 1934 to July 20, 1937. The
proceedings were for obtaining a mortgage award equivalent
to a mortgage decree and not for a money decree. The fact
that they were attached before judgment in D’s suit does not
affect the application of the doctrine of lis pendens.
Attachment is only effective in preventing alienation and
does not create title to property. If in fact, the property
was. acquired pendente lite, the acquirer is bound by the
decree ultimately obtained. Therefore, D’s purchase on
August 13, 1934, was hit by the. doctrine. of lis pendens in
s. 52 of the Transfer of Property Act, 1882. Since D’s
purchase was hit by the doctrine the properties continued to
be those of the Society and hence, the appellant was
entitled to them. [210 E, G--H; 211 A--C]
205
Samarendra Nath Sinha & Anr. v. Krishna Kumar Nag,
[1967] 2 S.C.R. 18, followed.
Moti Lal v. Karrab-ul-Din & Ors. 24 I.A. 170 and Gouri
Dutt Maharaj v. Sukur Mohammed and Ors. 75 I.A. 165,
applied.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 1091-1103
of 1964.
Appeals from the judgment and decree dated April 17,
1957 of the Patna High Court In Second Appeals Nos. 1447 of
1950 etc.
C.B. Agarwala and D. Goburdhun, for the appellant (in
all the appeals).
U.P. Singh and K.C. Dua, for respondents Nos. 3 and 4
(in C.A. No. 1091 of 1964) respondent No. 3 (in C.A. No.
1092 of 1964) respondent No. 4 (in C.A. No. 1093 of 1964),
respondent No. 7 (in C.A. No.. 1094 of 1964), respondent No.
3 (in C.A. No. 1096 of 1964) respondents Nos. 4 and 5 (in
C.A. No. 1095 of 1964) and respondent No. 4 (in C.As. Nos.
1099, 1100 and 1101 of 1964).
The Judgment of the Court was delivered by
Hidayatullah, C.J. These are 13 appeals by certificate
against the common judgment in second appeal, April 17,
1957, of the High Court of Patna. The appellants are the
original plaintiffs. The appellants had filed 12 title suits
for ejectment in the court of the Second Munsif at Buxar.
Eleven suits were dismissed. It was held that the
plaintiffs had no title to suit lands. One suit was
compromised and decreed in terms of the compromise. Two
other suits--one by Kedar Nath (one of the plaintiffs in the
12 title suits) and the other by one Udholal were filed for
rent for 1335-1337 Fasli in respect of some lands comprised
in Survey No. 3385 of Mouza Buxar against the tenant Ram
Chhabi Lal. The two rent suits were heard together. Kedar
Nath was held to be the landlord and not Udholal. The suit
of the former was decreed and that of the latter dismissed.
On appeals filed by Udholal the decision was reversed.
Appeals by Kedar Nath to the High Court were dismissed on
the ground that in the title suits from which eleven appeals
were filed it was held by the High Court affirming the
decision of the courts below that Kedar Nath had no title.
Since the success of the last two appeals depended on
whether Kedar Nath had title or not it is not necessary to
refer to them at this stage. We shall deal with the other
eleven appeals first.
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in these appeals, plaintiffs and defendants 1 to 3 are
common. Plaintiffs are purchasers from the mortgagees of
the suit
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lands who had purchased the suit lands in an auction-sale in
execution of the mortgage decree. Defendants 1 to 3 were
the former owners of these suit lands and the other
defendants were either purchasers at auction-sales in
execution of money decrees against the owners or transferees
from the auction-purchasers.
The suits concern plots formed out of two Survey Nos.
3384 and 3385. It is thus that the other two suits get
connected with the title suits because in those suits the
rent of certain plots from Survey No.. 3385 was involved.
The history of the plots is as follows :--
One Laxmi Narain was the previous owner of these 2
Survey Nos. On his death his daughter’s sons Ram Narain
Ram, Sheonarain Ram and Gopal Ram inherited these Survey
Nos. alongwith other properties. The first two sons were
defendants 1 to 2 in the suits and defendant 3 is the son of
Sheonarain Ram. In 1930 the other two brothers sued Gopal
Ram for a partition. Preliminary decree was passed on April
15, 1931 and the final decree on September 10, 1932. Half
share in the property went to Gopal Ram and the other half
jointly to the other two brothers. The suit Survey Nos. came
to the share of Ram Narain Ram and Sheonarain Ram.
On April 27, 1931 Ram Narain Ram executed a mortgage of
a half share in 27 plots made in the two Survey Nos. and
some other property with Buxar Trading Co-operative Society.
On April 20, 1933, the Society released Ram Narain Ram’S
share in the 27 plots from the mortgage by a registered
release deed. On September 20, 1932 Sheonarain Ram filed a
suit for ’partition against Ram Narain Ram. The preliminary
decree was passed in May 1933, that is to say, after the
release by the Society. The two brothers divided the two
Survey Nos. half and half between them. No final decree in
this partition suit seems to have been passed.
Devendra Nath (one of the defendants) obtained
settlement of 3 k 13 d of land out of Survey No. 3384 from
Sheonarain Ram on June 10, 1933 and in execution of a money
decree against Ram Narain Ram and Sheonarain Ram purchased
on August 13, 1934 the remaining portion of Survey No. 3384
and Survey No. 3385. He obtained possession on February 27,
1935. He had obtained attachment of the two plots before
judgment, on April 23, 1934. Devendra Nath disposed of 3 k
13 d by settling them on his wife and she was one of the
defendants in the suits. Devendra Nath’s title depends on
whet.her the release by the Society was valid and binding on
the Society or not. If the release was valid and binding on
the Society, the Society could not obtain a decree in
respect of these two Survey Nos. and bring them to sale.
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This is one of the points for consideration in these
appeals. The High Court and the court below have decided
unanimously that the release was binding on the Society and
Devendra Nath obtained no title.
On April 26, 1934, that is to say, before Devendra
Nath’s purchase but after attachment by him, the Society
applied to ,.he Registrar, Co-operative Societies for a
mortgage award. In that application the surety of Ram
Narain Ram was also joined. On August 16, 1934 a money-
award was given against Ram Narain Ram and his surety. On
September 20, 1934 the money award was cancelled and a
preliminary mortgage award was passed. Admittedly the
mortgage award had the force of a mortgage decree. The
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final mortgage award was made on May 28, 1935. The award
ordered sale of all .mortgage properties including the half
share of Ram Narain Ram in survey Nos. 3384 and 3385. No
mention was made of the earlier release of the Survey Nos.
by the Society by a registered deed. In execution of the
decree the Society purchased the two Survey Nos. on February
7, 1936 and obtained possession o.n July 20, 1937.
One Dwarikanath had a money decree against the Society
and he attached the two disputed Survey Nos. and brought
them to sale. The Buxar Central Co-operative Bank purchased
the two Survey Nos. in auction-sale on February 8, 1940
obtaining possession on July 5, 1941. On March 28, 1943 the
Society and the Bank went into liquidation. The right,
title and interest of the Society and the Bank was sold by
the common Liquidator to Kedar Nath including the 27 plots
made in the two Survey Nos. Kedar Nath’s purchase was on
March 20, 1943 but he took the sale benami in the name of
Dhanesar Pandey, who was plaint. ill No. 2 in the title
suits while Kedarnath was plaintiff No. 1. The title of the
plaintiffs Kedar Nath and Dhanesar Pandey is based on this
purchase. After the release of the two Survey Nos. by the
Society, Ram Narain Ram and Sheonarain Ram, and after his
purchase, Devendra Nath, made settlement of the plots to
various persons. They are the remaining defendants in the
suits and respondents in the various appeals before us. The
High Court has given a chart of these persons and the dates
of pattas but as nothing turns upon these details it is not
necessary to mention them here.
The plaintiffs (Kedar Nath and Dhanesar Pandey) in these
title suits asked for declaration of title and possession.
Their case was that the release was void and inoperative and
not binding on the Society. Therefore, the mortgage award
and the auction-sale was binding on Ram Narain Ram and all
those who derive title
208
from him. Their next contention is that., in any event, the
transfers to the defendants were effected during the
pendency of the mortgage award proceedings and were affected
by the doctrine of lis pendens. These two grounds were not
accepted by the High Court and the courts below and it is
these two grounds which were urged before us in these
appeals. The other side seeks to avoid the effect of lis
pendens by pleading that the mortgage award was claimed mala
fide against the suit plots after their release and, in any
event, there was attachment of these plots before the
petition for the mortgage award was made.
Before we deal with these two points it may be mentioned
at once that neither ground of appeal applies to the
transfers by Sheonarain who was not a mortgagor and who was
not affected by the release deed made by the Society. Mr.
C.B. Aggarwal frankly conceded that the transfer by him
could not be assailed and must stand. He, therefore, did not
press Civil Appeals Nos. 1091, 1092, 1093 and 1094 of 1964.
These appeals are accordingly dismissed with costs.
We may first consider whether the release was binding on
the Society or not. When Ram Narain Ram mortgaged the
property to raise a loan from the Society of which he was a
member, half share in the plots belonged to him because
these plots had fallen in the preliminary decree to. the
share of his brother Sheonarain Ram and himself. That
preliminary decree was passed on April 15, 193 1. The
Society had fixed a ceiling on the amount which could be
borrowed, at Rs. 3000/-. The mortgage deed recited that the
amount borrowed was Rs. 3000/- with interest at
Actually Rs. 1890/- were given as a loan. The release deed,
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releasing the suit plots was executed in pursuance of a
resolution of the Society (Res. No. 4 dated April 4, 1933).
The release stated thus:
" ...... relinquished and released the
properties, specified below, from the debt due
to the said Ram Narain Ram, to the said
society, entered in the said mortgage bond,
in favour of Ram Narain Ram ....
The said property shall not be made liable
for any debt of the said society nor shall any
incumbrance be recovered from the said
property. The said property shall come in
possession of Ram Narain Ram. The said Ram
Narain Ram shall have right to sell the
property to keep the same in whatever ways he
likes. The said society neither has nor shall
have any objection thereto."
209
Why the release was granted by the Society was stated in the
following words:
" .... A petition was filed on behalf of
the said Ram Narain Ram in the meeting of the
members in the presence of all the members of
the society for releasing some land from the
said mortgage in order to repay the debt. of
Rs. 500/- forming part of the debt due by the
said Ram Narain Ram to the said co-operative
society which was put up before all the
members and accepted by them .... ".
It appears that Ram Narain Ram did not pay the amount of Rs.
500/- to the Society and the Society considered itself free
to include these two plots, notwithstanding the release, in
their application for an award decree. In our opinion the
release was binding on the Society. The argument. in
opposition to the binding nature of the release is that it
was conditional on payment of Rs. 500/-. This is no true.
No. doubt the motive for the release was the payment of
Rs. 500/- to the Society promised by Ram Narain Ram, but the
payment was not made a condition of the release. There was
no attempt to release this amount from Ram Narain Ram.
Therefore, the release being absolute and unconditional and
by a registered deed must be treated as binding. It is open
to the promisee to waive the performance of any part of the
contract or to release any property from the operation of a
’mortgage or charge. If he wishes his rights to continue in
the. event of some condition simultaneously imposed on the
promisor, he must see that the release is made dependent on
the performance by the promisor of his part of the
agreement. Here the Society merely released the two plots
without making the payment a condition precedent, and the
release operated.
That, however, is not the end of the matter. The
Society filed on April 5, 1934 a petit.ion for a mortgage
award before the Assistant Registrar, Co-operative
Societies. The petition is headed ’Petition for mortgage
decree’. The petition mentioned that the mortgage was made
on April 27, 1931 and that the amount secured was Rs.
3,000/- with interest at 121/2% per annum. The petition
then described the property mortgaged and it included plots
Nos. 3385 and 3384. The amount due on December 31, 1933 was
said to be Rs. 2440/3. The relief asked for was:
"We the punches therefore pray that a
decree may be passed by your honour against
the said member and he may be directed under
the decree to pay the debt, principal and
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interest, amounting to Rs. 2440/3/- within 3
months, that in case of non-payment this order
may be passed that the entire amount may be
realized by
210
auction sale of the mortgaged property and
that if the mortgaged property would not be
sufficient for the satisfaction of the entire
amount of the decree the punches of the
committee be allowed to pray for passing a
personal decree against the said member."
When the Registrar made his order he overlooked that a
mortgage award had to be pass.ed. On August 16, 1934 he
ordered that an award jointly with sureties be issued.
However, on September 2, 1934, .he corrected Iris earlier
order thus:
"S1. ’6. Read along with S1. 5. By
mistake of the 2nd Asst. simple award was
issued instead of Mortgage award. Issue
mortgage award and ask the C.B. to return the
simple award which will be cancelled here.
Sd. Syed Ozair. D.F.A.
Addl. A.R. 2-9-34."
After ’this mortgage award which had the force of a
preliminary decree, the Society on December 16, 1934
resolved that a final mortgage decree be obtained from the
Assistant Registrar, and a final decree was obtained and the
property brought to sale on February 7, 1936 and purchased
by the Society itself with the permission of the court
executing the decree. Possession was obtained on July 20,
1937. Therefore, litigation in respect of this mortgage
remained pending from April 5, 1934 to July 20, 1937. Under
Explanation to s. 52 of the Transfer of Property Act the
whole of this period denoted pendency of the proceeding for
purposes of application of the doctrine of lis pendens.
All the leases made by Devendranath were after the
proceedings commenced. Devendranath purchased the right
title and interest of Ram Narain Ram on August 13, 1934.
His acquisition was prima facie hit by the doctrine of lis
pendens. Three arguments were advanced before us to meet
this situation and we shall now deal with them seriatim.
The first argument is that there could be no lis pendens
till August 16, when the money award was issued because a
money suit for proceeding cannot lead to the application of
the doctrine of lis pendens. As a proposition of law the
argument is sound but it is wrongly grounded on fact. The
proceeding was to get a mortgage award, the equivalent of a
mortgage decree. The Court made a mistake and treated it as
a proceeding for a money decree. When the court corrected
its,order, the mortgage award related back to the petition
as made and the whole of the proceeding must be treated as
covered by the doctrine. We cannot, therefore, accede to
the suggestion that the doctrine did not apply; at any rate,
on this suggested ground.
211
The second ground of attack is that before the
proceedings commenced before the Registrar these fields had
been attached and, therefore, the doctrine of lis
pendens again cannot apply. We are unable to accept this
argument either. If the property was acquired pendente
lite, the acquirer is bound by the decree ultimately
obtained in the proceedings pending at the time of
acquisition. This result is not avoided by reason of the
earlier attachment. Attachment of property is only
effective in preventing alienation but it is not intended
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to create any title to the property. On the other hand, s.
52 places a complete embargo on the transfer of immovable
property right to which is directly and specifically in
question in a pending litigation. Therefore the attachment
was ineffective against the doctrine. Authority for this
clear position is hardly necessary but if one is desired it
will be found in Moti Lal v. Karrab-ul-Din and others(1).
Lastly it was contended that the sale was by court
auction and the doctrine of lis pendens would not apply to
such a sale. This point was considered in Samarendra Nath
Sinha and Anr. v. Krishna Kumar Nag(2) by one of us (Shelat,
J.) and it was observed as follows :--
" .... The purchaser pendente lite under
this doctrine is bound by the result of the
litigation on the principle that since the
result must bind the party to it so it must
bind the person driving his right, title and
interest from or through him. This principle
is well illustrated in Radhamadhub Holdar
v. Monohar(3) where the facts were almost
similar to those in the instant case. It is
true that section 52 strictly speaking does
not apply to involuntary alienations such as
court sales but it is well-established that
he principle of lis pendens applies to such
alienations. (See Nilkant v. Suresh
Chandra(4) and Moti Lal v. Karrab-ul-Din(1).’’
This ground also has no validity.
Lastly it was argued that if the fields were released
from the operation of the mortgage they could not be made
the, subject of a mortgage decree, and whatever was done in
the mortgage proceedings was not of any consequence. To.
this there are two answers. Firstly, the respondent before
the Registrar (Ram Narain Ram) made no objection to ,the
inclusion of the plots in the petition for a mortgage award.
Secondly, the doctrine of lis pendens applies irrespective
of the strength or weakness of the case on one side or
other. See Gouri Dutt Maharaj v. Sukur Mohammed and
Ors.(5). There is, however, one condition that
(1) 24 I.A. 170. (3) 15 I.A. 97.
(2) [1967] 2 S.C.R. 18. (4) 12 I.A. 171.
(5) 75 i.A. x65.
212
the proceedings must be bona fide. Here no doubt the
Society knew that the plots had been released from the
mortgage, but it was also clear that the release was to
enable Ram Narain Ram to dispose of some of the plots and
pay Rs. 500/- to the Society. This amount was never paid and
the Society must have bona fide felt that the plots still
remained encumbered. In fact the attitude of Ram Narain Ram
in not claiming that these plots be removed from the
mortgage award shows that he too felt that this was the true
position. In Gouri Dutt Maharaj’s(1) case referred to by us,
it was said that if the proceedings were bona fide, the
applicability of s. 52 was not avoided.
For the above reasons we are clear that the purchase
by Kedarnath was protected by the doctrine of lis pendens,
the prior transfer to the defendants notwithstanding. In
this view of the matter the judgment of the High Court
cannot be sustained. The appeals will, therefore, be
allowed. The judgment and decree of the High Court will be
set aside and the suits of the appellant will be decreed
with costs throughout. In this Court the costs will be one
set.
R.K.P.S. Appeals allowed.
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(1) 75 X.A. 165
L 1 Sup./70--6-7-70- GIPF.
213