& Another Vs. M. Subramanian & Others  Insc 1021 (9 October 2007)
Sinha & Harjit Singh Bedi
out of S.L.P. (Civil) No. 17549 of 2006] S.B. SINHA, J :
short but interesting question in regard to interpretation of Order XXI, Rule
92(4) of the Code of Civil Procedure, 1908 (for short, CPC) is involved in
3. R. Venugopal
(since deceased), original defendant No.3, was the owner of the suit property
consisting of 8 cents and 116 sq. ft. of land situated within the Coimbatore
Municipal Corporation (for short, the Municipality). He transferred his
right, title and interest therein by reason of a registered deed of sale in favour
of one Sakunthala, the original plaintiff no. 1 in the suit and mother of
Respondent Nos. 1 and 2 herein. It is, however, not in dispute that the factum
of sale was not intimated to the authorities of the Municipality either by the
vendor or by the vendee thereof.
vendees name was not mutated in the records of the Municipality.
property tax in respect of premises in question had not been paid for the
period from 01.04.1970 to 31.03.1973. The property tax for two quarters, thus,
was to be paid by Venugopal whereas the rest was to be paid by the vendee. The
matter relating to payment of property tax is governed by the Tamil Nadu
District Municipalities Act (Tamil Nadu Act V of 1920) (for the sake of
brevity, hereinafter called and referred to as the 1920 Act).
a view to enforce a statutory charge as laid down in the 1920 Act, the
Municipality filed a suit, which was marked as O.S. No. 986 of 1973. Sakunthala
was not a party therein. Venugopal although entered his appearance in the suit
but at the subsequent stages, did not appear. Yet again he did not inform the
court about the fact that he had sold the property in favour of Sakunthala. He
allegedly sent an information to Sakunthala in regard thereto, but admittedly,
the latter was sent at a wrong address.
said suit was decreed in 1978. The Municipality filed an application for
execution of the said decree, which was marked as E.P. No. 2620 of 1978. The
property in question was put up on auction sale, the upset price wherefor was
fixed at Rs.20,000/- by an order dated 19.03.1979.
as allegedly no buyer was available, an application for reduction of upset
price was filed being E.A. No. 284 of 1979 for bringing it down from
Rs.20,000/- to Rs. 5,000/-. It was, however, directed to be reduced to Rs.
10,000/-, but therefor no notice was issued to the judgment debtor, as is
required in terms of Order XXI, Rule 66 CPC. Yet again without any other order
being passed for further reduction of the upset price, the suit property was
sold on auction for a sum of Rs.8,010/- in favour of one Manickam, original
defendant no. 1, on 06.08.1979.
will be appropriate to place on record that although at one point of time there
existed a dispute as to whether the said Manickam was the wife of Venugopal or
not, it stands accepted that a relationship of husband and wife had been
existing by and between them. The said auction sale was not only confirmed by
an order dated 11.10.1979, but a sale certificate was also issued on or about
04.12.1979. An application for withdrawal of the said auction amount was filed
by the Municipality, which had been allowed and a cheque was directed to be
issued in its favour. The said order was complied with on 20.02.1981.
allegedly sold the said property in favour of one M/s Ramans for a sum of Rs.41,066/-
by a registered deed of sale dated 22.08.1981. Having learnt that the property
in question had been sold in auction, Sakunthala filed a suit for declaration
and possession, against her vendor, his mother and wife on or about 27.08.1981.
The plaintiff then allegedly had no knowledge in regard to the sale of the said
property in favour of one M/s Ramans. In her written statement, defendant no. 1
denied that she was the wife of the judgment-debtor and disclosed that she had
sold the property during the pendency of the said suit. M/s Ramans despite
knowledge of the pendency of the suit sold the said property in favour of the
appellants herein. M/s Ramans and the appellants herein thereafter on an
application made in that behalf were impleaded as defendants in the said suit.
Indisputably, in their written statement, the appellants raised a plea that the
Municipality was a necessary party. The said suit was decreed by a judgment and
decree dated 19.12.1996. An appeal thereagainst preferred by the appellants has
been dismissed by a judgment and order dated 12.01.1999. A Second Appeal
preferred by the appellants has also been dismissed.
principal contentions raised in this appeal by Mr. K.V. Viswanathan, leaned
counsel for the appellants are :
view of the mandatory provisions contained in sub-rule (4) of Rule 92 of Order
XXI CPC, the decree-holder was a necessary party and in its absence the
judgment and decree passed by the courts below are nullities.
In terms of Order I, Rule 9 CPC, non-impleadment of a necessary party would
render a suit not maintainable.
having questioned the title of Venugopal as on the date of holding of the
auction, in terms of the aforementioned provision, she was bound to implead the
Municipality as a party defendant in the suit.
The finding of commission of fraud as alleged by the plaintiff either on the
part of the Municipality or on the part of the appellants and his predecessors,
would not render the auction sale void.
the Municipality been impleaded as a party, it could have shown that no fraud
had been committed on the court in the matter of holding of the auction.
The plaintiff having not examined herself, and only an auditor having been
examined on her behalf, an adverse inference should have been drawn in that
regard by the courts below.
K. Parasaran, learned Senior Counsel appearing on behalf of the respondents, on
the other hand, would submit:
specific plea of fraud having been raised on the part of the auction purchaser,
who was wife of the judgment-debtor and the defendant in the suit, and a
finding of fact in that behalf having been arrived at by the trial court as
also by the appellate court, the Municipality can not be said to be a necessary
The plaintiffs-respondents had rightly been held to have not raised any
contention in regard to commission of fraud on the part of the Municipality, as
has been held by the learned Trial Judge as also the Appellate Court, it was
not a necessary party to the suit.
The suit as framed did not attract the provisions of Order XXI, Rule 92 CPC, as
a decree passed in favour of the judgment-debtor Venugopal was a mortgage
decree, as contemplated under Order XXXIV, Rule 1 CPC vis-`-vis the Transfer of
Order XXI, Rule 92, in any event, must be given a contextual meaning.
The principle of caveat emptor will be applicable in this case.
Appellants being purchasers pendent lite are bound by the decree passed by the
learned Trial Judge.
The position of the judgment-debtor Venugopal being that of a
trustee, as envisaged under Section 88 of the Indian Trusts Act, 1882 it was
obligatory on his part to protect the interest of Sakunthala.
85 and 88 of the 1920 Act, which are relevant for the purpose of adjudication
of this case, read as under :
85. Property tax a first charge on property. The property tax on buildings and
lands shall, subject to the prior payment of land revenue, if any, due to the
Government thereon, be a first charge upon the said buildings or lands and upon
the movable property, if any, found within or upon the same and belonging to
the person liable to such tax. 88. Obligation of transferor and transferee
to give notice of transfer.
Whenever the title of any person primarily liable to the payment of property
tax on any premises to or over such premises is transferred, the person whose
title is transferred, and the person to whom the same shall be transferred
shall within three months after the execution of the instrument of transfer or
after its registration if it be registered or after the transfer is effected,
if no instrument be executed, give notice of such transfer to the Executive
the event of death of any person primarily liable as aforesaid the person to
whom the title of the deceased shall be transferred, as heir or otherwise shall
give written notice of such transfer to the executive authority within one year
from the death of the deceased.
The notice to be given under this section shall be in such form as the
executive authority may direct and the transferee or the person to whom the
title passes, as the case may be, shall, if so required, be bound to produce
before the executive authority any documents evidencing the transfer or
Every person who makes a transfer as aforesaid without giving such notice to
the executive authority shall in addition to any other liability which he
incurs through such neglect, continue liable for the payment of property tax
assessed on the premises transferred until he gives notice or until the
transfer shall have been recorded in the municipal registers but nothing in
this section shall be held to affect
liability of the transferee for the payment of the said tax, or
prior claim of the municipal council under section 85. Fraud :
Relationship between Venugopal and Manickam is not dispute. A contention has,
however, been raised by the respondents themselves that Sakunthala was a
national of Malaysian origin. Venugopal and Manickam, as noticed hereinbefore,
denied and disputed their relationship of husband and wife. Despite such a
stand taken at least before the High Court, the same was given up. Keeping that
aspect in view we may notice the findings of the learned Trial Judge :
sale deed Ex.A.1 has been suppressed and an ex- parte decree has been obtained
in that suit. It is a fraudulent act of VenugopalThe suit property has been
brought in auction in E.P. No. 2620 of 1978 suppressing the already existing
sale in favour of the plaintiff Sakuntala. This Court therefore, considers that
such an act is unjust and fraudulent. The First Appellate Court also found
as under :
is also clear that the 3rd respondent did not inform the plaintiffs/appellants
that for the arrears of property tax in respect of the property sold to them, a
decree has been obtained and that the 3rd respondent did not appear in court
and inform the Court that he had sold the property to the plaintiffs and hence
the plaintiffs also should be impleaded as parties to the suit. D.W.1, the 5th
respondent examined on the side of the respondents, has stated in his evidence
that on 2.8.1978 Venugopal appeared in Court in the case filed by the
Corporation, that Venugopal had means to pay the arrears of tax of Rs. 406/-
and that even after the decree in the said suit, Venugopal did not pay the
arrears of property tax of Rs. 406/-. It is therefore, clear that the 3rd
respondent has acted fraudulently by not paying the arrears of tax even after
the sale in favour of the plaintiffs, though he had means to pay and the
plaintiffs were also not informed about the sameEven when the property was
brought for auction, the 3rd respondent did not contest it.Though the property
tax arrears is a small amount of Rs. 406/-, he has not chosen to pay the
same. It was further found :
3rd respondent in his written statement has stated that the 1st respondent is
not his wife, that the 1st respondent in the written statement has stated that
the 3rd respondent is not her husband and that she is not marriedThe fraudulent
conduct is very clear from their statement in their written statement that the
1st respondent is not the wife of the 3rd respondent. There is no doubt that
Corporation has filed a suit for recovery of a small amount of Rs. 406.76
towards arrears of property tax and obtained a decree, which was followed by
execution proceedings, which was also not contested, that wantonly allowing all
the proceedings to go on, the 3rd respondent, through his wife, fraudulently
took the property in auction for Rs.8,010/- The Court held :
3rd respondent in his written statement has stated that though it is not
necessary for him to inform anything about the proceedings to anybody regarding
the auction sale, he informed the plaintiff by registered post and that under
those circumstances there is no chance to say that he acted fraudulently. It
was stated by the learned counsel for the appellants that on the side of the
respondents, in support of the above, Ex. B.1 has been filed. A perusal of Ex.
B.1 shows that the registered post has been returned stating that there is no
above registered psot, the address found is M. Sakunthala, wife of Muthyya Chettiar,
Thisoolpadam, Thirupathur Post, Ramanathapuram District. But it is clear from
the plaint documents that the place of plaintiff Sakunthala is Siruoodalpatti
village, Tirupathur Taluk, Sivaganga District. There is no doubt that the 3rd
respondent want only sent the registered post giving a false address, got it
returned and filing it into Court is clearly a continuation of his fraudulent
Although not very relevant, but we may notice that the vendor had never paid
the arrears of property tax to the Municipality. He had other properties and
the quantum of tax for which the suit was filed was only Rs.406.76. A further
finding of fact had been arrived at that despite knowledge, no notice was sent
to Sakunthala at her known address i.e. Sirukoodalpatti Village which was the address disclosed in
the sale deed, but sent to another address. In the suit only the registered
cover had been filed but the contents thereof had not been disclosed. It was
obligatory on the part of the appellant to bring the office copy of the said
notice on the record.
basis of the aforementioned findings, the courts below had arrived at a
conclusion that Venugopal had not been acting bona fide and an attempt had been
made to create evidence to cover up his fraud.
Section 55(1)(g) of the Transfer of Property Act, 1882 envisages payment of
taxes in respect of the property by the vendor up to the date of sale. The
liability of the vendee to pay the property tax arises only from the date of
sale. However, Sections 85 and 88 of the 1920 Act provide that in the event,
the factum of sale is not communicated, the liability of the vendor shall
continue. Consequently a statutory charge is created on the property.
person having an interest in the property, therefore, might have a right of
redemption. A suit for realisation of the dues in respect of a property in
respect whereof a statutory charge is created, a suit could also be filed by
the Municipality, apart from taking recourse to the procedure provided for realisation
of the said dues as land revenue.
decree passed in terms of Order XXXIV, Rule 1 CPC is somewhat different from a
decree passed in an ordinary money suit. If in terms of the provisions of the
statute, plaintiffs-respondents are found to be liable to pay the property tax,
at an appropriate stage, they can redeem the charge. The plaintiffs-respondents
did not claim any relief against the Municipality. Its right, title and
interest over the property having regard to the statutory charge thereover has
not been denied or disputed. It is also not a case where fraud was alleged to
have been committed by the Municipality either in conspiracy with the
judgment-debtor Venugopal or otherwise. What was contended was that having
regard to the fact that upset price was brought down without following the
procedure as contained in Order XXI, Rule 66 CPC, an irregularity or fraud was practised
in the context of the conduct of the auction sale. Irregularity committed in
conducting the auction sale and commission of fraud either on court or on a
party to the suit stand completely on different footings.
Mr. Viswanathans contention that in effect and substance the plaint
contained allegation of fraud on Municipality, in our opinion, cannot be
accepted. As is well-known, the pleadings must be read in their entirety for
the purpose of proper construction thereof. What had been alleged in the plaint
is the commission of fraud by Venugopal. His conduct throughout the proceedings
has been taken into consideration by the courts below; viz., despite
transferring the property he did not intimate thereabout to the Municipality.
Even when the suit was filed, he did not make any attempt to raise a plea which
was expected of any reasonable and prudent man that he ceased to be liable to
pay the property tax as he had already transferred the property. The purported
intimation given to the plaintiffs was also found to be an act of fraud on his
part inasmuch as the purported notice to the plaintiff had deliberately been
sent at a wrong address. The contents of the notice had also not been brought
on record. Despite having sufficient means he voluntarily suffered an ex parte
decree. He never objected to reduction of upset price. He despite the fact did
not contest the suit, participated in the auction sale and purchased the
property in the name of his wife. Not only that the auction purchaser sold the
property to a third party, who again despite the knowledge of pendency of the
suit transferred the property in favour of the appellants.
effect of commission of such fraud either on court on or a party is no longer res
integra. [See S.P. Chengalvaraya Naidu (Dead) by Lrs. v. Jagannath (Dead) by L.Rs.
and Others [(1994) 1 SCC 1], Ram Chandra Singh v. Savitri Devi [(2003) 8 SCC
319] and Tulsi and Others v. Chandrika Prasad and Others [(2006) 8 SCC 322].
A.V. Papayya Sastry and Others v. Govt. of A.P. and Others [(2007) 4 SCC 221],
it was held :
Now, it is well settled principle of law that if any judgment or order is
obtained by fraud, it cannot be said to be a judgment or order in law. Before
three centuries, Chief Justice Edward Coke proclaimed :
avoids all judicial acts, ecclesiastical or temporal.
is thus settled proposition of law that a judgment, decree or order obtained by
playing fraud on the Court, Tribunal or Authority is a nullity and non est in
the eye of law. Such a judgment, decree or order --by the first Court or by the final Court-- has to be
treated as nullity by every Court, superior or inferior. It can be challenged
in any Court, at any time, in appeal, revision, writ or even in collateral
proceedings. Non-impleadment of the Municipality in a suit :
Keeping in view the principles of law, we may notice the effect of non-impleadment
of the Municipality, as envisaged under Order XXI, Rule 92(4) & Rule 92(5)
CPC, which reads as under :
Sale when to become absolute or be set
Where a third party challenges the judgment- debtors title by filing a
suit against the auction- purchaser, the decree-holder and the judgment-debtor
shall be necessary parties to the suit.
the suit referred to in sub-rule (4) is decreed, the Court shall direct the
decree-holder to refund the money to the auction-purchaser, and where such an
order is passed the execution proceeding in which the sale had been held shall,
unless the Court otherwise directs, be revived at the stage at which the sale
The purported allegations of the fraud on the Municipality in the plaint reads
as under :
The property originally proclaimed for sale at Rs. 20,000/-. The upset price
was allowed to be reduced on application without notice being issued to other
entire execution is not only fraud but also irregular, illegal and void. XI
The property originally proclaimed for sale at Rs. 20,000. Due to
irregularities in the procedure and want of proper publication and publicity
the sale did not take place and there were series of application to reduce and
upset price and the property ultimately sold on the upset price fixed at Rs.
8000/- The findings of the Trial Court on the said issue are as under :
A-9 is the copy of the interim application filed in the execution petition no.
2620 of 1978 by the corporation. That application has been filed to reduce the
upset price from Rs. 20,000/- to 5,000/-. Further it has been stated in that
petition that reduction of upset price is prayed for on account of the fact
that the house constructed in the suit property is in a dilapidated condition.
For the purpose of reduction of price, false details have been furnished.With
the intention of suppressing the real facts from the eyes of the court, it has
been stated that there is a building in the suit property in a dilapidated
conditionFurther in that application it is stated that 12 years have lapsed
after the judgment in OS No. 986/73. But the judgment has been delivered in
1973. Execution petition has been filed in 1978, 5 years after the judgment.
While so, it is clear that the said application contains allegations against
may be true that an observation had been made that the Municipality did so at
the instance of Venugopal, but there was no warrant for the following finding :.
notice has been given to the respondents in the petition filed for reduction of
upset price. Because of these defects in brining the property for auction in
the execution petition, it is clear that that there are legal flaws. It
was also found :
was argued on the side of the defendants that since Coimbatore Corporation has
not been made a party to this suit, this suit has to be dismissed. This suit
has been filed for the relief of declaration that the suit property absolutely
belongs to the plaintiff on the basis of Ex. A..1. For deciding the right with
regard to the suit property, Corporation is not a necessary party. The powers
to decide as to which property belongs to whom has not been granted to the
Corporation. Only a power to collect property tax is vested with the
Corporation. The Court therefore holds that in the suit filed to decide as to
whether the suit property belongs to the plaintiff or the defendants, the
Corporation is an unnecessary party. It is not necessary to implead Corporation
as a party to decide the disputes arising between the individuals. Further in
the suit and in the execution proceedings by the Corporation, Plaintiff Sakunthala
is not a party. While so, this Court holds that it is not necessary to add
Corporation as a party to the suit. The Corporation has also not sent any
notice at any time stating that the suit property did not belong to the
plaintiffs. Hence this Court holds that so far as this case is concerned, the
Corporation need not be impleaded as a party. Hence this issue is answered
against the defendants. Such findings had been affirmed by the Appellate
Court, stating :
perusal of the above shows that the Corporation need not be impleaded as a
party nor any case to be filed to set aside the auction proceedings and this
will not affect the plaintiffs case in any way.
the above, it is clear that the 3rd respondent has executed Ex. A.1 sale deed
in favour of the first plaintiff for valid consideration, which has not been
denied by the 3rd respondent, that the 1st respondent became entitled to the
property so purchased later under the court auction sale, which has been held
to be invalid under law, this court hold that the first plaintiff is entitled
to a declaration that the suit property purchased under Ex.A.1 belongs to the
first plaintiff and after her plaintiffs 2 and 3 are entitled to the suit
have noticed hereinbefore that a suit filed in terms of Order XXXIV, Rule 1 CPC
stands on a different footing. Non-joinder of a property party in terms of
Order I, Rule 9 would not render a suit not maintainable. We are, however, not
oblivious of the purport and object in amendment of Order XXI, Rule 92 CPC. The
Law Commission in its 54th Report recommended :
Whatever be the correct view on the existing language, it appears to us that
something should be done to improve the position. No doubt, to permit the
auction-purchaser to sue for refund from the decree- holder, is to add to the
troubles of the decree-holder, and thus to delay execution. But that seems to
be the only possible alternative. As between the decree-holder and the
auction-purchaser, if some one has to suffer, the former should suffer.
not be feasible for the court to inquire into the title of the judgment-debtor
(at the time of the proclamation), in an elaborate manner; but that does not
answer the basic question, namely, when a sale held by a Court and culminating
in a certificate issued by the court is held to be a nullity for want of title,
by reason of a defect discovered after expiry of the period for making
objections under rule 91 etc., is it justice to dispose of the purchasers
grievance by saying that the purchaser purchased the property at his peril? The
decree-holder should re-imburse him for the loss suffered by him, because it is
the decree-holder at whose instance the sale was held. The abstract principle
that there is no warranty at court sales fails to yield a just result in this
auction-purchaser should have a right to sue the decree-holder. Where a third
party challenges the judgment-debtors title by filing a suit against the
auction-purchaser the decree-holder and judgment-debtor should be necessary
parties, and in that suit the court shall direct the decree-holder to refund the
money to the auction-purchaser.
such a decree is passed, the original execution proceedings shall be revived at
the stage where the sale was ordered, unless the court otherwise directs. This
provision is necessary to avoid complications as to limitation. Recommendation
21.49. We, therefore, recommend that the following sub-rules should be
added to Order 21, rule 92 :-
Where a third party challenges the judgment- debtors title by filing a
suit against the auction- purchaser, the decree-holder and the judgment- debtor
shall be necessary parties to the suit;
the suit referred to in sub-rule 5 is decreed, the court shall, direct the
decree-holder to refund the money to the auction-purchaser, and, where such an
order is passed, the execution proceedings in which the sale had been held
shall, unless the court otherwise directs, be revived at the stage at which the
sale was ordered.
The Statement of Objects and Reasons also lead to the same inference, wherein
it was, inter alia, stated :
92 is being amended to provide that where a third party challenges the
judgment-debtors title by filing a suit against the auction-purchaser, the
decree holder and the judgment-debtor should be necessary parties to that suit
and if the suit is decreed, the Court shall direct the decree-holder to refund
the money to the auction-purchaser. With a view to avoiding complications with
regard to limitation, the rule further provides that where a decree is passed
in favour of such third party, the original execution proceeding will become
revived at the stage where the sale was ordered unless the Court otherwise
is true the purpose of impleadment of a necessary party is to see as to whether
without it no order can be made effectively. If an effective order can be made,
the suit will not be defeated. A decree which is passed in terms of Order XXI,
Rule 92(4) does not take into consideration the effect of a statutory charge on
a property, vis-`-vis the statutory right of any persons having interest in the
property to redeem or sell the same at any point of time. When a fraud is practised
on a court, the same is rendered a nullity. In a case of nullity, even the
principles of natural justice are not required to be complied with. [Kendriya Vidyalaya
Sangathan and Others v. Ajay Kumar Das and Others (2002) 4 SCC 503 & A. Umarani
v. Registrar, Cooperative societies and Others (2004) 7 SCC 112- para 65].
Once it is held that by reason of commission of a fraud, a decree is rendered
to be void rendering all subsequent proceedings taken pursuant thereto also
nullity, in our opinion, it would be wholly inequitable to confer a benefit on
a party, who is a beneficiary thereunder. The decisions rendered in Udit Narain
Singh Malpaharia v. Additional Member, Board of Revenue, Bihar [(1963) Supp. 1
SCR 676] and Profulla Chrone Requitte and Others v. Satya Chorone Requitte
[(1979) 3 SCC 409] whereupon reliance has been placed by Mr. Viswanathan, may
not have any application in a case of this nature in view of the fact that the
principal question which, in our opinion, would be more pertinent is as to
whether even in a situation of this nature, the discretionary jurisdiction
under Article 136 of the Constitution of India should be invoked particularly
when the party raising the said question has been impleaded as a party.
would assume that the courts below proceeded on a wrong premise that Order XXI,
Rule 92(4) is not attracted, but the question as regards fraud committed by the
judgment-debtor has been gone into a great details. We are satisfied that the
findings arrived at by the learned Trial Judge and affirmed by the First
Appellate Court also by the High Court are equitable. It is in a situation of
this nature, we are of the opinion that this Court in exercise of its
jurisdiction under Article 142 of the Constitution of India can pass an
appropriate order with a view to do complete justice to the parties. [Chandra
Singh v. State of Rajasthan & Another (2003) 6 SCC 545 Oriental Insurance
Co. Ltd. v. Brij Mohan & Ors. -2007
(7) SCALE 753 - para 14].
the Appellants bound by the decree ?
this case the appellants as also the aforementioned M/s Ramans purchased the
property pendente lite. They would be deemed to have notice of the sale made by
Venugopal in favour of the plaintiff-respondents.
3 of the Transfer of Property Act provides that a person is said to have notice
of the fact when he actually knows that fact, where any transaction relating to
immovable property is required by law to be and has been effected by a
registered instrument. [See Lachhman Dass v. Jagat Ram & Others 2007 (3)
SCALE 349]. They have purchased the property with notice, apart from the fact
that the transfer made in their favour was hit by Section 52 of the Transfer of
Property Act. The decree obtained by the Municipality had been passed under
Order XXXIV CPC. Respondents had a subsisting right of redemption. Order XXXIV,
Rule 15 CPC provides that all the provisions contained therein shall, as far as
may be, apply to a mortgage by deposit of title-deeds within the meaning of
Section 58, and to a charge within the meaning of Section 100 of the Transfer
of Property Act.
charge created under Section 85 of the 1920 Act would be one covered by Section
100 of the Transfer of Property Act. Section 100 of the Transfer of Property
Act reads as under :
100 Charges Where immoveable property of one person is by act of parties or
operation of law made security for the payment of money to another, and the transaction
does not amount to a mortgage, the latter person is said to have a charge on
the property; and all the provisions hereinbefore contained which apply to a
simple mortgage shall, so far as may be, apply to such charge.
in this section applies to the charge of a trustee on the trust-property for
expenses properly incurred in the execution of his trust, and, save as
otherwise expressly provided by any law for the time being in force, no charge
shall be enforced against any property in the hands of a person to whom such
property has been transferred for consideration and without notice of the
Mangru Mahto & Others v. Shri Thakur Taraknathji Tarakeshwar Math &
Others [1967 (3) SCR 125], this Court held :
lease granted by the mortgagor, out of the ordinary course of management,
though not binding on the mortgagee, is binding as between the mortgagor and
the lessee. Such a lessee acquires an interest in the right of redemption and
is entitled to redeem. If such a lease is created before the institution of a
suit relating to the mortgage, the lessee must be joined as a party to the suit
under Order 34 Rule 1 CPC; otherwise he will not be bound by the decree passed
in the suit and will continue to retain his right of redemption. But in view of
Section 52 of the Transfer of Property Act, if the mortgagor grants such a
lease during the pendency of a suit for sale by the mortgagee, the lessee is
bound by the result of the litigation. If the property is sold in execution of
the decree passed in the suit, the lessee cannot resist a claim for possession
by the auction-purchaser. The lessee could apply for being joined as a party to
the suit and ask for an opportunity to redeem the property. But if he allows
the property to be sold in execution of the mortgage decree and they have now
lost the present case, the lessees allowed the suit lands to be sold in
execution of the mortgage decree and they have now lost the right of
redemption. They cannot resist the claim of the auction purchaser of recovery
of possession of the lands.
Materials have been brought on record to show that a preliminary decree and a
final decree in terms of Order XXXIV have been passed. The learned Trial Judge
also found so. It is also appropriate to notice the following findings of the
learned Trial Judge in regard to issuance of the two encumbrances certificates
A.17 is the encumbrance certificate. Thiru E. Ayyasami filed an application and
obtained that encumbrance certificate. That encumbrance certificate has been
issued on 28.6.1983 from the office of the Sub Registrar. In that the sale deed
dated 12.11.70 in favour of the plaintiff is shown. Similarly in that
encumbrance certificate, the sale deed dated 4.12.79 in respect of the suit
property and another sale deed dated 22.8.81 in favour of Manickam find a
place. Ex. A. 18 is the questionnaire regarding family card. In that it is
mentioned that Manickam is the wife of Venugopal. But in the written statement
filed by the defendant it is stated that Manickam is not the wife of Venugopal.
Ex. A. 16 is the voters list issued to the family of Venugopal. In that
document also it is stated that Manickam is the wife of Venugopal. Ex. A. 20 is
the copy of the complaint filed in the criminal Court in STC No. 2119/94. That
complaint has been filed by advocate Thiru N. Sundaravadivelu and advocate Thiru
document has been fled to show that the defendants Venugopal and Manickam
together engaged those two lawyers and were conducting the case.
Ex. B. 4 is the encumbrance certificate obtained on the application by Thiru
James. That certificate has been issued on 24.7.80 by the Sub Registrars
Office. In that the sale in favour of Sakunthala do not find a place. But in
Ex. A. 17 the encumbrance certificate obtained on 28.6.1983, the sale deed in favour
of the plaintiff Sakunthala has been mentioned. In an encumbrance certificate
issued three years before Ex. B4 encumbrance certificate was issued, the sale
deed in favour of the plaintiff Sakunthala finds a place. In an encumbrance
certificate obtained thereafter that sale does not find a place. Hence it is
clear that because of the arrangements made by the defendant Venugopal, the
sale in favour of the plaintiff Sakunthala does not find a place there.
Similarly Ex. B. 5 is the encumbrance certificate obtained by Thiru M.P. Ramakrishnan
on his application issued by the office of the Sub Registrar on 26.4.84
containing no encumbrance.
it is clear that the matters contained in that encumbrance certificate are
false. Ex. B. 6 is the encumbrance certificate obtained by Mr. M.P. Ramakrishnan
on 12.4.84. In that, the sale dated 22.8.1981 in favour of Manickam finds a
is clear that the encumbrance certificates marked on the side of the defendants
contained details contrary to truth. This court therefore hold that those
encumbrance certificates have been issued only in connivance with Venugopal.
This Court hold that by selling the property to 5th defendant to get more
profit, the sale in favour of Sakunthala in the encumbrance certificate was
Appellants and their predecessors, therefore, are also guilty of suppressio veri.
Ordinarily a statute shall prevail over the common law principle. However, in a
case of this nature, in the event of any conflicting interest, this Court in
exercise of its equity jurisdiction under Article 142 of the Constitution of
India is to weigh the effect of a fraud and the consequence of non-impleadment
of a necessary party. We would hold that the scale of justice weighs in favour
of the person who is a victim of fraud and, thus, we should not refuse any
relief in his favour, only because he might have been wrongly advised. The
purport and object for which Order XXI, Rule 92(5) was enacted furthermore
would be better subserved if it is directed that the respondents shall pay the
amount which the Court paid to the Municipality out of the amount of auction.
have noticed hereinbefore that one of the objects sought to be achieved in
amending Order XXI, Rule 92 was to do complete justice to the parties so as to
enable the auction purchaser to get back the amount from the decree-holder and
revive the execution proceedings so that the decree-holder may proceed against
the judgment-debtor for realisation of the decretal amount. In this case, the
plaintiffs-respondents had not claimed any relief against the Municipality. The
Municipalitys right to realise the amount of property tax together with
interest, if any, is not in dispute. Although the liability of Venugopal in
terms of the 1920 Act to pay the property tax continued, it has been accepted
at the Bar that the plaintiffs-respondents was also liable to pay the amount of
property tax after the date of sale. In a case of this nature, therefore, the
plaintiffs-respondents can be directed to pay the amount of property tax by way
of redemption of mortgage in favour of the Municipality.
any amount is available with the court out of the amount received from the
auction sale, the same may be paid to the appellants. Appellants would also be
otherwise entitled to file an appropriate suit as against Manickam and others.
We, therefore, are of the opinion that subject to the terms aforementioned, the
appellants should not be granted any relief.
For the views we have taken, it is not necessary for us to go into the other
contentions raised by the learned counsel for the parties. We, therefore,
direct the plaintiffs-respondents to deposit the amount paid to the
Municipality out of the auction amount by the order of the executing court
within six months from date and on such payment, the appeal shall stand
dismissed. However, in the facts and circumstances of the case, there shall be
no order as to costs.