Madras High Court
H.Rahamathulla vs R.Murugaiyan on 2 February, 2010
Author: G.M.Akbar Ali
Bench: G.M.Akbar Ali
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED:02/02/2010
Coram
THE HONOURABLE MR.JUSTICE G.M.AKBAR ALI
S.A.(MD)No.947 of 2006
and
M.P.No.1 of 2009
and
M.P.Nos.1 & 2 of 2006
H.Rahamathulla .. Appellant
Vs.
1.R.Murugaiyan
2.V.Annadurai .. Respondents
PRAYER
This Second Appeal filed under Section 100 of The Civil Procedure Code
against the Judgement and decree passed in A.S.No.8 of 2004 dated 29.07.2004 on
the file of the Learned First Additional District Judge, Fast-Track, Thanjavur,
confirming the Judgment and Decree passed in O.S.No.357/1998 dated 24.07.2003 on
the file of the Learned District Munsif, Thanjavur.
!For Appellant ... Mr.R.Giridharan
^For Respondents ... Mr.R.Vijayakumar for
Mr.S.Deenadayalan for R2
:JUDGMENT
The second appeal is filed against the Judgment and Decree passed in A.S.No.8 of 2004 dated 29.07.2004 on the file of the Learned First Additional District Judge, Fast-Track, Thanjavur, confirming the Judgment and Decree passed in O.S.No.357/1998 dated 24.07.2003 on the file of the Learned District Munsif, Thanjavur. The suit O.S.No.357 of 1998 is filed for redemption of the suit property and for possession.
2.The brief facts of the case is as follows:-
The suit property is originally belonged to one Kalaiyalagan, he had usufructuarly mortgaged the property to one R.Murugaian by a registered mortgage deed dated 5.10.1989 for a sum of Rs.10,000/-and the period of mortgage is seven years.
3.The plaintiff purchased the suit property by a sale deed dated 09.3.1988. The mortgage period was over as early as 05.10.1996. Therefore, the plaintiff issued a notice to the mortgagee and also to one V.Annadurai, who was in possession of the property under an arrangement with the mortgagee. As there was no reply, the suit is filed for redemption of mortgage and for possession against the mortgagee and as well as against the person who is in possession.
4.The first defendant/mortgagee remained ex-parte. The second defendant contested the suit. According to the second defendant, by a sale agreement dated 27.02.1995, the said Kalaiyalagan agreed to sell the property to the second defendant for a sale consideration of Rs.2,87,625/- and also received an advance amount. The sale has to be executed within six months and after redemption of the usufructuary mortgage. However the said Kalaiyalagan didn't redeem the mortgage and was prolonging the sale. Meanwhile the first defendant approached the second defendant for the return of mortgage amount of Rs.10,000/- and agreed to assign the mortgage with the second defendant. Therefore, the second defendant paid a sum of Rs.10,000/- on 26.07.1995 with the consent of the original mortgagor, namely Kalaiyalagan and obtained a made over from the first defendant. He had put up a Thatched Shed and presently one Valarmathi wife of the Second defendant's brother-in-law is in possession and enjoyment of the property by running a firewood shop and also residing there. The original owner was evading sale and the second defendant was always ready and willing to perform his part of contract. The second defendant was about to file a suit for specific performance and only to defraud the agreement holder the plaintiff and the said Kalaiyalagan had created a sale deed which is a sham and nominal. Even otherwise, the possession of the second defendant is protected under section 53(a) of the Transfer of Property Act.
5.Based on the above averments, the trial court framed the necessary issues, whether the plaintiff is entitled for redemption of suit property and whether the plaintiff is entitled for possession. On considering the oral and documentary evidences, the trial court found that the second defendant was an agreement holder under a deed dated 27.2.1995 and has also taken possession under a made over deed dated 26.07.1995 and knowing fully well that the property is under some encumbrances the plaintiff has purchased the property and therefore he is not a bonafide purchaser without notice and for valuable consideration and the trial court also found the possession of the second defendant is protected under section 53(a) of the Transfer of Property Act and therefore dismissed the suit.
6.Aggrieved by the Judgment and decree of the trial court the plaintiff has preferred a appeal before the First Additional District Judge, Thanjavur in A.S.No.8 of 2004. The first appellate court have also found that the second defendant is in possession in pursuant to the sale agreement and is protected under section 53(A) of The Transfer of Property Act and had also found that the plaintiff is not a bonafide purchaser without notice and for valuable consideration and has dismissed the appeal.
7.Aggrieved by the Judgment and decree the plaintiff has preferred the present appeal on various grounds and more particularly on the ground that the the courts below have wrongly accepted a deed assignment of mortgage, an un- registered document and wrongly relied upon the same as proof of possession and has wrongly applied the principle of section 53(A) of The Transfer of Property Act. It is also submitted that the sale agreement was denied by the original owner and the courts below have compared the signature without authority and have held that the sale agreement and the endorsement therein are genuine.
8.On admission, this Court framed the following substantial questions of law for consideration.
1.Whether the Courts below are correct in coming to the conclusion that the second defendant is entitled to get the benefits available under Section 53 A of the Transfer of Property Act?
2.Whether the Courts below are correct in making comparision of the signature found in Ex.B.2?
9.The facts enumerated from the evidences are as follows:
The suit property originally belonged to one Kalaiyalagan and he had mortgaged the property to the first defendant under a registered deed dated 5.10.1989.and the mortgage is a usufructuary mortgage. The plaintiff is the adjacent land owner which was also purchased from the said Kalaiyalagan by an earlier sale in the year 1990 and 1997 under Ex.A.31 and 32. The plaintiff has purchased the suit property by a registered sale deed dated 9.3.88 (Ex.A1) from the said Kalaiyalagan. Meanwhile, the first defendant who is the mortgagee had executed Ex.B3 an unregistered document styled as usufructuary mortgage made over deed dated 26.07.1995 in favour of the second defendant. The second defendant is in possession of the property through one Valarmathi (P.W.4) who is running a firewood shop and also residing there. The said Kalaiyalagan had also executed a sale agreement dated 27.2.1995 in favour of the second defendant which is marked as Ex.B2.
10.On the basis of the sale deed dated 09.3.98 the plaintiff has filed the present suit for redemption and for possession against the mortgagee, the first defendant and also against the second defendant who is admittedly in possession. The first defendant remained ex-parte and the vendor namely Kalaiyalagan is not a party to the suit. The defence taken by the second defendant is on two grounds. Firstly, he is a sale agreement holder and secondly,he had also redeemed the mortgage with the consent of the mortgagor and is in possession therefore his possession is protected under Section 53(A) of the Transfer of Property Act.
11.Pending suit he has also filed a suit in O.S.No.18 of 2001 before the Sub Court, Thanjavur for specific performance of the sale agreement and has obtained an ex-parte decree dated 31.7.2001. Ex.B4 is a judgment and Ex.B5 is the decree.
12.Mr.R.Giridharan, the learned counsel appearing for the appellant submitted that the plaintiff has purchased the property under a registered sale deed dated 9.3.98 and the title of the property vested with the plaintiff. The learned counsel pointed out that on the date of filing of the suit for redemption,the usufructuary mortgage was in existence with the first defendant and admittedly the second defendant was in possession with some arrangement with the first defendant. The learned counsel further submitted that notice was issued calling upon the defendants to receive the mortgage amount and hand over possession, on their failure the suit was filed.
13.The learned counsel pointed out that the first defendant remained ex-parte and the second defendant for the first time disclosed a sale agreement dated 27.2.95 alleged to have executed by the original owner who had denied such execution.
14.The learned counsel pointed out that for the first time an un- registered made over dated 26.7.95 was produced which is not valid for want of registration. The learned counsel pointed out that the second defendant had filed a suit for specific performance without adding the present plaintiff as a party which is not binding. The learned counsel pointed out that both the courts below have erred in holding that the present plaintiff is not a bona fide purchaser without notice and for valuable consideration and the defendants are entitled for the protection under section 53(A) of the Transfer of Property Act.
15.Mr.R.Vijayakumar, learned counsel for the second respondent submitted that the second defendant had entered into an agreement of sale as early as 27.2.95 and the genuiness of the document cannot be disputed as the vendor namely Kalaiyalagan himself had admitted in a criminal complaint about the sale agreement which is marked as Ex.B1. The learned counsel pointed out that the plaintiff has admitted the possession of the second defendant and the possession is in pursuant to the sale agreement and as well as on the made over of the usufructuary mortgage. The learned counsel pointed out that the plaintiff who is the adjacent land owner cannot plead ignorance of the encumbrance in the suit property and therefore he is not a bona fide purchaser. The learned counsel also pointed out that the possession of the second defendant is protected under Section 53(A) of the Transfer of Property Act, as his possession is merged under the made over deed and also under the sale agreement.
16.The learned counsel for the respondent relied on the judgment reported in AIR 1978 SC 1094 (Ram Bila Ojha and others v. Bishwa Muni and others) "The Plaintiffs-prior purchasers filed a suit for specific performance. They were already in possession of the suit property in pursuance of a registered usufructuary mortgage in their favour. The subsequent purchasers raised the plea that they were bona fide purchasers without notice as the sale deed in their favour was made on the next day of executing the sale deed in favour of prior purchaser and hence they had no opportunity to know the prior transaction. Further, it was pleaded that immediately after execution of the deed they entered into possession and that the prior purchasers were never in possession.
Held, in view of the false plea taken by the subsequent purchasers that they were in possession it could not be said that they were bona fide purchaser without notice."
The learned counsel also relied upon the judgment reported in 1997 (1) MLJ 385 (Annamalai Gounder v. Chinnathambi Gounder and others) wherein it is held "The parties are also living in the same village and their residence are stated to be, in fact in the same street. In those circumstances the Courts below were right in holding that the fifth defendant was not a bona fide purchaser without notice of the original contract."
The learned counsel also relied upon the judgment reported in AIR 2000 SC 1658 (R.K.Mohammed Ubaidullah and others v.Hajee C.Abdul Wahab (D) by L.Rs. and others) wherein it is held "A person may enter the property in one capacity and having a kind of interest. But subsequently while continuing in possession of the property his capacity or interest may change. A person entering the property as tenant later may become usufructuary mortgagee or may be agreement holder to purchase the same property or may be some other interest is created in his favour subsequently. Hence with reference to subsequent purchaser it is essential that he should make an inquiry as to title or interest of the person in actual possession as on the date when sale transaction was made in his favour. The actual possession of a person itself is deemed or constructive notice of the title if any, of a person who is for the time being in actual possession thereof. A subsequent purchaser has to make inquiry as to further interest, nature of possession and title under which the person was continuing in possession on the date of purchaser of the property.
The learned counsel also relied upon the judgment reported in 2001(2) MLJ 26 SC (Hamzabi and others v. Syed Karimuddin and others) "When a mortgagor/vendee agrees to sell the mortgaged property to the mortgagee/putative vendee in possession, the mortgagee's status is subsumed or merged in his rights as a putative vendee under Sec.53-A against the transferor, provided of course the pre-conditions for the application of Sec.53- A are fulfilled."
17.On the contrary the learned counsel for the appellant relied on the judgment reported in AIR 2003 Madras page, 19 (S.Veerabadra Naicker v.Sambanda Naicker) wherein it is held "Under Section 53-A of the Transfer of Property Act, whenever a claim is raised for protection under that section, the claimant has first to establish not only an agreement in writing, on which the claim is founded, but also the other elements, required on his part for attracting the section, that is, its main part as distinguished from its proviso, viz., that either he has taken possession of the disputed property, in whole or in part, in performance of the agreement, or, if he was already in such possession, he has continued in possession in part performance of the said agreeement and has done some act in furtherance of the contract. Further, he has either performed his part of the said contract, or is willing to perform the same and it is only when these acts are established, the claimant can be said to have established his claim under Section 53-A."
The learned counsel also relied upon the judgment reported in AIR 1995 Kerala 249 (M/s.Jacobs Private Limited v. Thomas Jacob) "Section 53-A makes it clear by employing the word "then" after laying down the pre-requisites that a transferee can seek refuge under it only after satisfying the above pre-requisites. In other words, the bar envisaged in the section against enforcement of the transferor's eight can be exercised only on compliance with the postulates. The said bar is intended to be used by a transferee only as a shield and not as a award."
The learned counsel also relied upon the judgement reported in 2006(2) CTC 201 (Pattabirama Reddiar and another v. Navaneetha Sundaram) wherein this court has held "the comparison of the documents must be made only with the admitted signature that too, in the documents, which have come into existence prior to the filing of the suit"
The learned counsel also relied upon the judgment reported in 2006(3) CTC 39(Central Bank of India v. Antony Hardware Mart) wherein this court has held:
"It is settled law that the disputed signature can be compared with admitted signature, which were contemporaneous and not with the admitted signatures obtained subsequent to the date of the disputed signature."
18.Admittedly, the suit property originally belonged to one Kalaiyalagan, it is not in dispute that the suit property was mortgaged (usufructuary) to the first defendant under a registered mortgage deed. Indisputably the plaintiff has purchased the property under a registered sale deed dated 19.3.98 (Ex.A1). The second defendant had produced a sale agreement, Ex.B2 dated 27.2.95, alleged to have been executed by the said Kalaiyalagan. According to the second defendant he had paid the mortgage money to the first defendant and there is a made over under Ex.B3 dated 26.7.95. However, the possession of the second defendant is admitted.
19.The suit is for redemption of mortgage on the strength of a registered sale deed. On execution of the sale deed by the mortgagor the title of the property vested with the plaintiff. But this sale is subject to mortgage dated 5.10.89. Though the document has not been produced, the mortgage is admitted. As the purchaser of the property plaintiff has a right to redeem the mortgage. The suit was filed on 16.6.98 and on the date of filing of the suit, the title vests with the plaintiff. In the written statement the second defendant had disclosed about the sale agreement dated 27.2.95 and also had taken a defense that he had redeem the mortgage and in possession of the property and his possession is protected under Section 53-A of the Transfer of Property Act.
20.It is well settled that the title will not vests with the party, who is only a sale agreement holder. A sale agreement will not create any title in the property.
21.However, the second defendant claims that the mortgage is assigned to him by the first defendant. Therefore, the first point has to be considered is, whether there is a valid assignment of mortgage in favour of the second defendant by the first defendant.
22.Ex.B3 is an unregistered document styled as 'usufructuary mortgage made over deed'. Under this document the second defendant has paid 10,000/-, the mortgage money, to the first defendant and got the assignment. The recitals in the document would show as if the properties were further mortgaged by the first defendant to the second defendant. This deed of assignment is challenged by the appellants on the ground that it requires registration.
23.Section 17 of the Registration Act reads as follows.
"17.Documents of which registration is compulsory-(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 XVI of 1864, or the Indian Registration Act, 1866, or the Indian Registration Act, 1871, or the India Registration Act, 1877, or this Act came or comes into force, namely,-
(a) instruments of gift of immovable property;
(b) other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property;".
24.An assignment is a right created under an instrument of an immovable property and if the value of the transaction is more than 100/- rupees the instrument has to be necessarily registered under Section 17(3) of the Registration Act 1988. In AIR 1922 Madras 344 (Elumalai Chetti and another Vs. P.Balakrishnan Mudaliar) wherein this Court held as follows:
"It seems to me quite clear that a mortgage of immovable property is itself immovable property under the Transfer of Property Act, whatever the form of the mortgage may be; and the transfer of ownership of such a right falls under S.54 and will require a registered instrument ..."
25.In 1958(2)MLJ 374 (B.V.Sundararaja Iyer and others Vs. Kanakaraj) wherein Mr.P.V.Rajamannar, Chief Justice and Mr.Justice Ramachandra Iyer held that "... An instrument of mortgage of immovable property is itself and interest in immovable property and if its value is more than Rs.100/- it could be effected only by a registered document..."
Therefore, Ex.B3 being a document of assignment transferring a mortgage right in a property of a value of more than Rs.100/- , it requires registration.
26.Therefore, the second defendant cannot claim he had redeemed the mortgage and stepped into the shoes of the mortgagee. The decision relied on by the learned counsel for the respondent in 2001(2) MLJ 26, cited supra, relates to a case where the owner of a property had created an usufructuary mortgage in favour of one 'x' and later he also agreed to sell the same under a sale agreement and in that circumstances the Supreme Court held the mortgagee's status is subsumed and merged in his rights as a putative vendee against the transferee. In the present case, the second defendant is said to be an agreement holder of the suit property. The first defendant is the prior mortgagee, who was in possession of the property. Only under a registered document the mortgage can be assigned, therefore the second defendant will not become a mortgagee/putative vendee. Therefore, the possession of the second defendant is not in pursuant to the sale agreement.
27.Section 53(A) of the Transfer of Property Act is reads as follows:
"53-A. Part performance:- Where any person contracts to transfer for consideration any immovable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract;
Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof."
28.Under the above provision an agreement holder put on possession in pursuant to the sale agreement alone is entitled for the protection. The second defendant cannot claim the protection under Section 53-A of the Transfer of Property Act as he was not put on possession in pursuant to the sale agreement and the assignment under Ex.B3 is not valid and therefore, the first defendant alone is the mortgagee.
29.The next point for consideration is whether the plaintiff is a bonafide purchaser without notice and for valuable consideration. The present suit is a redemption suit by the plaintiff. The second defendant can resist the suit only if he establishes a better title to the suit property. As an agreement holder the title was not vested with him. In a suit for specific performance by an agreement holder the defence available to the subsequent purchaser is that he is the bonafide purchaser without notice and for valid consideration. But in a suit for redemption by the subsequent purchaser, the title has already vested with him and he need not to prove that he is a bona fide purchaser without notice for valid consideration. What he has purchased is only a right to redemption and if the second defendant files a suit for specific performance the subsequent purchase is oblige to plead and prove that he is a bona fide purchaser without notice and for valid consideration.
30.In my considered view the burden is not on the plaintiff to prove that he is the bona fide purchaser without notice and for valid consideration. On the contrary the burden is upon the second defendant to establish a better title in the suit property to defeat the claim of redemption. On the date of filing of the suit, the agreement holder is not vested with the title of the property. The subsequent purchaser is always at liberty to redeem the property in a redemption suit. In such a suit the subsequent purchaser need not plead or prove against the mortgagee that he is the bona fide purchaser without notice for a valuable consideration. The agreement holder can go for a suit for specific performance and the subsequent purchaser is bound to plead and prove that he is the bona fide purchaser without notice and for valid consideration.
31.The second defendant has subsequently filed a suit for specific performance only against the vendor and has obtained an ex parte decree. The present plaintiff was not a party. In a suit for specific performance the subsequent purchaser is a necessary party. It has become more necessary when the agreement holder knows that there is a rival claimant who had obtained a sale deed prior to filing of the suit for specific performance. Therefore, the subsequent development namely, obtaining an exparte decree of specific performance will no way affect the result in the suit for redemption and the date of filing of the redemption suit the second defendant merely an agreement holder and not vested with the right in the property and his possession is also not in pursuant to the sale agreement and the alleged assignment under the unregistered document is not valid.
32.Both the courts below were wrong in applying the legal principle to the facts of the case. Though it is a concurrent judgment this Court has to interfere since the legal principle has not been applied properly. The questions of law is decided accordingly and the judgment and decree of the both the courts are set aside.
33.In the result, the second appeal is allowed. A preliminary decree for redemption is passed.
am To
1.The First Additional District Court, Fast Track Court, Thanjavur.
2.The District Munsif, Thanjavur.