Karnataka High Court
Sha Champalal Oswal vs Peralu Achanna And Another on 19 November, 1997
Equivalent citations: ILR1997KAR3434, 1998(1)KARLJ365
Author: Mohamed Anwar
Bench: Mohamed Anwar
ORDER
1. Heard the arguments of learned Counsel on both sides.
2. Civil Revision Petition No. 3903 of 1994 arises from the Execution Case No. 341 of 1989 taken out by respondent 1-Decree-Holder (hereinafter referred to as the 'DHr') to execute the money decree dated 29-9-1987 in his favour, passed in O.S. No. 95 of 1986 by the Court below. Respondent 2-N. Parameshwarappa was the only defendant in the said suit. The two petitioners herein named Sha Champalal Oswal and Chaganraj Oswal were JDrs 2 and 3 in the said Execution Case No. 341 of 1989 by respondent 1.
Civil Revision Petition No. 3902 of 1994 has arisen out of execution proceeding in Ex. Case No. 433 of 1989 on the file of the Court below wherein its money decree dated 29-9-1987 passed in O.S. No. 96 of 1986 in favour of R-1 ('DHr' for short) is put to execution against respondent 2 and the petitioners, who are JDr Nos. 2 and 3 respectively, in that execution proceedings.
3. Both the said O.S. Nos. 96 of 1986 and 95 of 1986 were filed by respective DHrs (who is respective respondent 1 herein) against common defendant, N. Parameswarappa, who is respondent 2 in both these revisions, for recovery of certain amounts. The said suits were decreed against defendant (R-2) by the Trial Court on the basis of compromise between the parties, creating charge for respective decretal amounts on the northern half portion of the building property of the defendant bearing old No. 201/1 - new No. 246/1, which is fully described in the respective decrees and costs of Rs. 1,099/-. O.S. No. 96 of 1996, was decreed for Rs. 11,728-50 with costs of Rs. 1,092-50. The decretal amounts were made payable by the defendant in instalments with single default clause, failing which the whole of the decretal amount was made recoverable by the DHrs through sale of the said property.
4. Admittedly, defendant failed to pay any amount to the respective plaintiffs in discharge of his liability under the said compromise decrees.
It is also an undisputed fact that whole of the said building property was mortgaged by the defendant to petitioners under registered usufructuary mortgage deed dated 24-7-1986 as security for the debt of Rs. 1,50,000/- and that after passing of the said compromise decrees both dated 29-8-1987, the said property was purchased by the petitioners from defendant on 4-6-1988 under Ex. P-3 registered sale deed for Rs. 1,90,000/-. Hence, Execution Nos. 341 and 433 of 1989 filed by the respective respondent 1 DHr in the Court below against respondent 2 and petitioners arraigning them as JDr Nos. 1 and 3 seeking recovery of the decretal amounts by sale of the said property on which charge was created under the said decrees.
5. On entering appearance in both Execution Nos. 341 and 433 of 1989 petitioners filed their statements of objections resisting execution proceedings against the said property on the ground that they were bona fide purchasers thereof for valuable consideration and without notice of the said charge, and, therefore, the same is not enforceable against them by virtue of the proviso to Section 100 of the Transfer of Property Act (the T.P. Act' for short).
6. The Executing Court then proceeded to hold an enquiry and recorded common evidence of both parties in both execution proceedings. Petitioner 2, who was JDr No. 3, got himself examined as P.W. 1 and produced documents at Ex. P-1 to P-10 in his evidence. Decree-holder also deposed as R.W. 1 and the documents Ex. R-1 to R-3 were exhibited and marked in his evidence. The material documentary evidence so brought on record by the parties and referred to as such in the impugned order comprises: Ex. P-1 said usufructuary mortgage deed dated 21-7-1986, Ex. P-3 said sale deed dated 4-6-1988; Ex. P-8 encumberance certificate for the period from 1-4-1988 to 16-8-1992, Ex. R-2 dated 3-12-1987 encumberance certificate for the period from 1-4-1980 to 2-12-1987 with respect to property in question.
7. Ex. P-8 certificate was produced by P.W.I as corroboration to his oral evidence that despite enquiry in the office of Sub-Registrar they could not get information of charge on the property, since no such entry finds place in Ex. P-8; and it was then the property was purchased by them from defendant on 4-6-1988 under Ex. P-3 sale deed. But, in cross-examination P.W. 1 has admitted that Ex.P-8 was not personally obtained by him and that he did not visit the office of the concerned Sub-Registrar and make any personal search of the relevant registers and records to know about any encumberance of the property in favour of any third party, and he further stated that Ex. P-8 was obtained by a clerk of their shop named Veerabhadrappa. That Veerabhadrappa has been witheld from examination by petitioners at the trial in the Court below.
8. On assessment of the aforementioned material evidence the learned Judge of the Executing Court reached his conclusions that a charge was duly created on the northern half portion of the said property of the defendant under the said consent decrees, both dated 29-8-1987, which were duly registered with the concerned Sub-Registrar, as borne out by the relevant entries in Ex. R-2 and that petitioners wilfully abstained from making proper search of the relevant record of the office of the Sub-Registrar and manoeuvred to get incorrect and incomplete Ex. P-4 and Ex. P-8 certificates and, therefore, by virtue of Section 3 of the T.P. Act their purchase of the said property from defendant subsequently on 4-6-1988 was with the knowledge of the said charge on the property, and, as such, it was not protected by second part of Section 100 of the T.P. Act. Thus the petitioners' said objections were rejected by its order dated 8-7-1994 holding that the decree-holders are entitled to recover the decretal amounts by sale of the said property. That order now stands challenged by the petitioners in both these revisions.
9. Mr. Jagadeesh Mundargi, learned Counsel for petitioners, argued vehemently attacking the legality of the order under revision on the following grounds:
(i) That the said consent decrees creating charge on the property in question are not the documents whose registration was compulsory under the Registration Act, 1908 ('the Act' for short) inasmuch as they do not create, declare, assign, limit or extinguish any right, title or interest in respect of the said immoveable property and, therefore, their registration does not amount to constructive notice under Section 3 of the T.P. Act.
(ii) That the petitioners are the bona fide purchasers of the said property for valuable consideration under Ex. P-3 registered sale deed dated 4-6-1988 and, therefore, their right of ownership of the property acquired is protected from the effect of the said charge on the said property.
(iii) That petitioners having made search of the relevant register and records in the office of the Sub-Registrar and they having obtained Ex. P-8 encumberance certificate containing particulars of the encumberance on the said property which did not disclose creation of charge on the said property by the said compromise decrees, they cannot be saddled with the constructive notice thereof under Section 3 of the T.P. Act.
10. To support his above contentions reliance was placed by Sri Mundargi on the following decisions:
1. Bhoop Singh v Ram Singh Major and Others.
2. Abdul Ghaffar v Ishtiaq Ali and Others.
3. S. Noordeen v U.S. Thiru Venkita Reddiar and Others.
4. Asharfi Devi and Others v Prem Chand and Others.
5. Hirachand Himatlal Marwari v Kashinath Thakurji Jadhav.
6. The Ahmedabad Municipal Corporation v Haji Abdul Gafur Haji Hussenbhai.
7. Goswami Maheshpuri v Ramchandra Sitaramji.
8. Jagadeesa v Bavanambal Ammal.
11. Mr. B.P. Holla, learned Sr. Counsel, appearing for decree-holder distinguishing all the above authorities listed for the petitioners, advanced his argument supporting the impugned order of the Executing Court. His principal contentions were that the said compromise decrees dated 29-9-1987 passed by the Trial Court creating a charge on the said property are compulsorily registrable documents under Section 17 of the Registration Act and as such by virtue of the definition of notice under Section 3 of the T.P. Act, their registration in the office of the concerned Sub-Registrar was sufficient notice thereof to the petitioners and, therefore, their purchase of the property was subject to said charge under the said decrees. Elaborating, he maintained that subsequent purchase of the property on 4-6-1988 under Ex. P-3 sale deed by the petitioners is hit by first part of Section 100 of the T.P. Act and that the same is not saved by the second Part thereof. Referring to the material evidence on record his further submission was that as borne out by Ex. R-2 encumberance certificate dated 3-12-1987; and the registration certificate under Section 60 of the Act found on certified copies of the said decrees, the same clearly bears out that the petitioners willfully abstained from acquiring knowledge of the registration of the said decrees from the office of Sub-Registrar before purchasing the property under Ex. P-3, and, therefore, they cannot claim the benefit of Part II of Section 100 of the T.P. Act. To substantiate his contentions he sought to draw support from the aforesaid Supreme Court decision in Bhoop Singh's case, supra, Dattatreya Shankar Mote and others v Anand Chintaman Datar and Others and AIR 1939 Nag. 132. Reliance was also placed by him on the authority in M.L. Abdul Jabbar Sahib v Venkata Sastri , for the proposition that a non-testamentary instrument creating a charge on an immoveable property of the value of Rs. 100/- or upwards is compulsorily registrable under Section 17(1)(b) of the Registration Act.
12. The material question, therefore, which calls for determination is:
Whether or not the impugned order of the Court below is a valid and legally correct order in view of the rival contentions canvassed by both sides?
13. There is no dispute that the said compromise decrees both dated 29-9-1987 are the money decrees passed in O.S. Nos. 95 of 1986 and 96 of 1986 in favour of respective R-1 decree-holders, and against R-2 JDr-defendant, passed on the basis of compromise between the parties, creating a charge on the property in question belonging to the latter. Both the said decrees were duly registered by the concerned Sub-Registrar on 11-11-1987. This fact stands satisfactorily proved by production of the certified copies of the said decrees containing the certificate of registration under Section 60 of the Act.
14. The material point which is decisive in character is the legal effect of Section 100 of the T.P. Act, which defines 'charge' on immoveable property and envisages the effect of the charge on a subsequent transaction in relation to the charged property. Section 100 reads:
"Section 100. Where immovable 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 a charge".
The scope of Section 100 was considered by Supreme Court in D.S. Mote's case, supra. The Supreme Court held :
"A compromise decree not being the result of a decision by the Court but an acceptance by the Court of something to which the parties have agreed if it created a charge on an immovable property, and was duly registered, as indeed it was in this case, amounts to the creation of a security by act of parties within the meaning of Section 100 of the Act".
It has further laid down:
"A subsequent mortgage with notice of a prior charge takes the mortgage subject to the charge".
Therefore, the legal position which becomes clear from the above authoritative pronouncements of Supreme Court on Section 100 of the T.P. Act that the vested right of any transfer of immoveable property acquired by any lawful transferee thereof would be subject to prior charge created on it either by act of parties or operation of law, unless the transferee is shown to have acquired the same for consideration and without notice of the charge. As such the decision in Abdul Ghaffar's case, supra, cited by Mr. Mundargi to support the contrary view is of no avail. In the instant case, there is no dispute that the property was purchased by the petitioners under Ex. P-3 valid registered sale deed dated 4-6-1988 and that it was purchased subsequent to the compromise decrees dated 11-11-1987 creating charge on the said property for realisation of the decretal amounts thereunder. Therefore, the petitioner could avoid legal effect of the said charge on the property only when and if they establish satisfactorily that the same was purchased by them without notice of the charge.
15. The term 'notice' is defined by Section 3 of the Act as follows:
"a person is said to have notice" of a fact when he actually knows that fact, or when, but for wilful abstention from an inquiry or search which he ought to have made, or gross negligence, he would have known it".
Explanation 1 thereto reads:
"Where any transaction relating to immoveable property is required by law to be and has been effected by a registered instrument any person acquiring such property or any part of, or share or interest in, such property shall be deemed to have notice of such instrument as from the date of registration.....".
This explanation declares that if a particular transaction with respect to immoveable property is required by law to be registered and has been effected by a registered instrument then any person subsequently acquiring such property or any interest therein shall be deemed to have 'notice' of such instrument as from the date of its registration. In other words, by this statutory fiction registration of compulsorily registrable instrument under the Registration Act effecting transfer of property is by itself sufficient notice of such transaction to any person who thereafter acquires any right or interest whatsoever in that property, although in reality such a transferee may not be having actual notice of that prior registration of such document. Thus the registration of compulsorily registrable instrument creates the doctrine of constructive notice in law. This presumption of constructive notice could be successfully dislodged by him only when he satisfactorily proves that despite his honest enquiry and search of relevant registration records in the office of concerned Sub-Registrar he could not come across the entries therein disclosing the fact of prior registration of a document creating any charge on or encumbering the particular property in favour of any third person in any manner whatsoever. But for this doctrine to come into play the legal requirements stipulated in proviso to Explanation 1 must be shown to have been duly complied with. These requirements are that a compulsorily registrable instrument effecting conveyance of a right or interest in immoveable property from transferor to the transferee must be registered by the Registering Authority strictly in the manner prescribed by the Indian Registration Act, 1908; and the relevant entries thereof are duly entered or filed in accordance with Sections 51 and 55 of the Act (D.S. Mote's case, supra). Then alone that registration operates in law as a notice to the subsequent transferee and presumption of implied or constructive notice could be drawn against him.
16. Therefore, what is to be seen now is whether the said compromise decrees creating charge on the said immoveable property were required to be registered compulsorily under Section 17 of the Act; and, if so, whether their registration done by the Sub-Registrar was strictly in accordance with the relevant provisions of the Registration Act.
17. Mr. Mundargi maintained that the said compromise decrees did not require compulsory registration under the Registration Act.
18. The material provision for the purpose under the Registration Act, Section 17(1) read with clause (vi) of sub-section (2) thereof. They read:
"17.(1) The following documents shall be registered, if the property to which they relate is situate in a district in which, and if they have been executed on or after the date on which, Act No. XVI of 1864, or the Indian Registration Act, 1866, or the Indian Registration Act, 1871, or the Indian Registration Act, 1877, or this Act came or comes into force, namely.-
(a)................
(b)................
(c)................
(d)................
(e)...............
(2) Nothing in clauses (b) and (c) of sub-section (1) applies to.-
(i)................
(ii)...............
(iii)..............
(iv)...............
(v)................
(vi) any decree or order of a Court except a decree or order expressed to be made on a compromise and comprising immoveable property other than that which is the subject-matter of the suit or proceeding; or ....."
Interpreting these relevant provisions, Supreme Court in Bhoop Singh's case, supra, has laid down:
"It would, therefore, be the duty of the Court to examine in each case whether the parties have pre-existing right to the immoveable property, or whether under the order or decree of the Court one party having right, title or interest therein agreed or suffered to extinguish the same and created right, title or interest in praesenti in immoveable property of the value of Rs. 100/- or upwards in favour of other party for the first time, either by compromise or pretended consent. If latter be the position, the document is compulsorily registerable". (para 17) In its subsequent decision in S. Noordeen's case, supra, the Court was seized of the legal aspect that, 'when attachment of the properties has been made before judgment they become part of the civil proceedings in the suit. Thereby they become part of the decree. The question is whether such a decree is compulsorily registrable'. While affirming the legal position propounded in Bhoop Singh's, case, supra, the Supreme Court proceeded to distinguish the factual position of that case and observed:
"In that case there was no pre-existing right between the parties but a right was sought to be created for the first time under the compromise".
The authority in case of Noordeen, supra, therefore, does not support the contention of Mr. Mundargi that a compromise decrees such as the one in hand creating charge on the immoveable property did not require compulsory registration in law. On the other hand the law laid down on this point by Supreme Court in Abdul Jabbar's case, supra, leaves no room to doubt that when a charge of immoveable property is created by an instrument such instrument must be registeed unless the amount secured is less than Rs. 100/-. In that case of Abdul Jabbar, supra, Supreme Court has laid down:
"If a non-testamentary instrument creates a charge of the value of Rs. 100/- or upwards, the documents must be registered under Section 17(1)(b) of the Registration Act. But there is no provision of law which requires that an instrument creating the charges must be attested by witnesses".
Therefore, the authorities relied on by Mr. Mundargi, learned Counsel for petitioners, in support of his submission to the contrary do not hold the field any longer as any such proposition is no longer a good law in the light of the afore-stated law laid down by the Supreme Court.
19. As already stated, registration of an instrument under Section 17(1) of the Registration Act to operate as a constructive notice contemplated under Section 3 of the T.P. Act to the subsequent transferee, it must be shown that its registration was done strictly in the manner prescribed by the Registration Act and that the registered document was entered or filed, as the case may be, in the books kept under Section 51 of the Act, and that the particulars of the transaction under the registered deed were correctly entered in the indexes kept under Section 55. In the instant case sufficient evidence has been brought on record by the decree-holder's side satisfactorily establishing the fact of due registration of the said decrees in the office of the concerned Sub-Registrar on 11-11-1987. The undisputed certificate of registration under Section 60 of the Act made by the Registrar endorsing this fact on the said registered decrees together with indisputable relevant entries made in Ex. R-2 covering the period 1-4-1980 to 8-12-1987, indicating therein the particulars of registration of the said decrees at Sl. Nos. 5 and 6 is the convincing evidence brought on record in proof of the said fact. Sub-section (2) of Section 60 makes the said certificate of registration prima fade sufficient proof of the document having been duly registered in the manner provided by the Act. In addition, the presumption that the official act of the registration of the said decrees was regularly performed by the concerned Registrar is also available under Section 114(e) of the Evidence Act. In that view of the proved facts, the burden was heavy on the petitioners to establish that before the said property was purchased by them on 4-6-1988 a thorough search of the relevant register 'Book 1' maintained under Section 51, and of indexes 1 and II maintained under Section 55 of the Act was though made by them they could not come across the relevant entries therein relating to the registration of the said compromise decrees and, therefore, they had no notice of the charge created on the property thereunder.
20. In order to discharge this burden all that is stated by P.W. 1 (petitioner) in his examination-in-chief before the Court below is that Ex. P-4 and P-8 encumberance certificates were obtained from the Registrar's office which did not contain any entry pertaining to registration of the decrees and creation of the charge on the property by them. In fact in Ex. P-4 and P-8 the entries relating to the registration of the said decrees are not mentioned. Both these documents are held by the Court below, of course justifiably, as documents of highly suspect character in the light of believable, oral and documentary positive evidence bearing on the point brought on record from the decree-holders' side. Furthermore, there is the clear evidence of P.W. 1 elicited in his cross-examination that neither of the petitioners had personally visited the office of the Sub-Registrar and did inspect the entries in the relevant register and records viz., Indexes I and II. It is also their contradictory case that Ex. P-4 and P-8 certificates were brought and given to them by one Veerabhadrappa who was working in the shop of one Uttam Chand Mohanlal of Davangere. P.W. 1 has further stated that he does not know how that Veerabhadrappa obtained Ex. P-4 and P-8 from the office of the Sub-Registrar. So, the said Veerabhadrappa was the most competent witness to speak to the circumstances in which and the purpose for which Ex. P-4 and Ex. P-8 were taken by him and to the reason for non-inclusion therein of the entries pertaining to the charge on the property under the said decrees. So, he was a material witness for the petitioners' case. Curiously he is not examined by them for no good reason at all. Therefore, his non-examination also leads to an adverse inference against authenticity of Ex. P-4 and P-8. Thus, there is total lack of positive evidence from petitioners' side establishing that despite honest and careful enquiry and search made by them of the relevant entries in the aforesaid relevant records in the office of the Sub-Registrar they could not find therein the entries pertaining to the registration of the compromise decrees and the entries relating to creation of charge on the said property. On the other hand, the proved circumstances unerringly indicate that the petitioners had wilfully abstained from making any such enquiry or search and gaining knowledge of the registration of the said compromise decrees and creation of charge by them on the said property. Therefore, in that view of the matter, the learned Judge of the Court below has justifiably held that the petitioners cannot be stated to have purchased the property without notice of the said charge thereon and, as such, their subsequent acquisition of ownership of the property under Ex. P-3 is subject to the charge created under the said decrees and that the exemption from the effect of charge envisaged in Part II of Section 100 of T.P. Act is not available to them.
21. But the charge on the property under the said decrees being created subsequent to the said mortgage dated 24-7-1986 effected in petitioners' favour by the defendant, the charge will be subject to that petitioners' right to debt secured thereunder. The total amount payable to the respective decree-holders by the first JDr (defendant) under the said decrees being well within the difference of the said mortgage debt of Rs. 1,50,000/- and the sale consideration of Rs. 1,90,000/- under Ex. P-3 the same will be recoverable by execution of the decree against the said property. Therefore, no fault could be found with the order of the Court below. Both these revisions are thus devoid of merit.
22. For the reasons aforesaid, the petitions are dismissed.