Civil P.C. 1908 – S. 64 - Mere execution of a loan application during continuance of the attachment would neither amount to a transfer nor a delivery of interest in the property.
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IN
THE HIGH COURT OF KERALA AT ERNAKULAM
C.K.ABDUL
REHIM & T.V.ANILKUMAR, JJ.
O.P.(FC)No.290
of 2018
Dated
this the 7th day of January 2019
AGAINST
THE ORDER DATED 21.3.2018 IN E.A.No.298/2017 IN E.P.No. 2 of 2016 IN I.A.No.
1896/2013 IN OP 862/2013 ON THE FILES OF FAMILY COURT, THRISSUR
PETITIONER
:
NAHALA
BY
ADV. SRI.L.RAJESH NARAYAN
RESPONDENTS:
ADISH
AND 3 OTHERS
5
THRISSUR SERVICE CO-OPERATIVE BANK LTD NO. 1097 THIRUVAMBADI P.O,
PATTURAIKKAL,THRISSUR-680 022.REP. BY ITS SECRETARY.
BY
ADVS. SRI.A.D.RAVINDRA PRASAD SRI.BENOJ C AUGUSTIN SMT.P.PARVATHY SMT.SURYA P
SHAJI SRI.RAFEEK. V.K. SRI.SAIJO HASSAN SRI.U.M.HASSAN SRI.VISHNU BHUVANENDRAN
THIS
OP (FAMILY COURT) HAVING BEEN FINALLY HEARD ON 23.11.2018 THE COURT ON
07.01.2019, PASSED THE FOLLOWING:
J U
D G M E N T
T.V.
ANILKUMAR, J.
A claim
petition filed by the Thrissur Service Co-operative Society Ltd. 1097
Thiruvambady (hereinafter called as claim petitioner) under Order XXI Rule 58
of the CPC in E.P. No.2/2016 was allowed by the Family Court, Thrissur by its
order dated 21.3.2018. By the impugned order, the court upheld the charge
claimed in the property by the Society and the decree holder was permitted to
bring the property for sale subject only to the mortgage right held by it. The
decree holder being the sole person aggrieved by the order, challenges the same
in this O.P. invoking the powers of this Court under Article 227 of the
Constitution of India.
2. The decree holder in
O.P.862/2013 obtained a compromise decree on 15.6.2015, creating charge over
1.17 ares of land in survey No.222/5 B in Koorkanchery village, owned by third
respondent under partition deed No.4533/2010 dated 1.12.2010. This property
stands described as (C) schedule in the O.P. One of the terms agreed upon in
the compromise decree by the parties is that, the respondents will be at
liberty to encumber the property for raising funds for the purpose of satisfying
the claim of the decree holder. With this object in mind, the attachment of the
property effected before judgment on 7.6.2013, was lifted, subsequently on
27.7.2015. When the respondents in the O.P. failed to discharge their liability
the decree holder filed E.P.No.2/2016 for realisation of an amount of Rs.13,68,360/-
with interest from the judgment debtors and also applied for sale of the
property based on the charged decree passed on 15.6.2015. It is in this
context, the claim petitioner filed E.A. 298/2017 claiming first charge on the
property and opposed the proposed sale in the execution proceedings.
3. The claim petitioner
contended that the judgment debtors 2 and 3 had availed loans on various
occasions mortgaging the property in its favour. There were transactions
creating charge in the property even before institution of the Original
Petition and also after lifting of attachment. The decree holder, who is the
first respondent in the E.A.298/2017, opposed the claim petition. The judgment
debtors, who are the parties to the compromise decree, did not choose to contest
the claim petition for their own reasons.
4. The court below conducted an
enquiry into the claim and after examining the documents on record, accepted
the case of the claim petitioner that it had acquired first charge on the
property. No oral evidence was adduced by any of the parties. On the side of
the claim petitioner, Exts.A1 to A14 were marked. On the side of the decree holder,
no evidence was tendered.
5. Contention of the decree
holder that the charge created by the compromise decree on 15.6.2015 will
prevail over the mortgage interest in favour of the claim petitioner, was not
accepted by the lower court. By allowing the claim petition the court made it
clear that, the proposed sale of the property in execution of compromise decree
shall be subject only to the charge in favour of the Society.
6. Heard both sides.
7. Neither the decree holder nor
the other respondents in the claim petition dispute that, even before
institution of O.P.862/2013 there were various transactions of mortgage created
with respect to the property in question in favour of the claim petitioner, by
judgment debtors 2 and 3, in connection with availing of loans from the Society.
The petition 'C' schedule property was attached before the judgment in the
O.P., on 7.6.2013. The documents produced by the claim petitioner would show
that the earliest mortgage created by judgment debtors 2 and 3 in respect of
the property was on 3.6.2011 for a sum of Rs.3 lakhs and the said loan
transaction was closed on 24.1.2012, before the institution of the O.P itself.
Before closure of the above said loan, another mortgage was created a few days
ago on 16.1.2012 for a sum of Rs.10 lakhs in respect of the same property. This
mortgage continued to be in force on the date of filing of the Original
Petition and it has not been redeemed or brought to an end hither to.
8. Since prior interest in favour
of the claim petitioner was created by virtue of the mortgage, the attachment
effected on 7.6.2013 cannot invalidate the earlier charge. Order XXXVIII Rule
10 of the CPC makes it very clear that, any attachment before judgment shall
not affect rights existing prior to the attachment and also of persons not
parties to the proceeding before the court. The decree holder also does not
dispute that there was a prior charge created in favour of the claim petitioner
on 7.6.2013, when the property was attached in the Original Petition. Thus, it
goes without saying that, the property has always been subject to continuing
charge in favour of the claim petitioner right from 16.1.2012.
9. There are subsequent
mortgages executed by judgment debtors 2 and 3 in favour of the Society, on
19.2.2014 for a sum of Rs.3 lakhs and on 23.4.2014 for another amount of Rs.3
lakhs. The decree holder does not deny these two transactions also. Her contention
is that those transactions do not create any charge in the property and are
void under Section 64 of the CPC. The said provision of law invalidates the
transfer and delivery of interest in the property effected in contravention of
subsisting order of attachment. This contention did not find favour with the
lower court. There were also three more transactions creating mortgage in
favour of the Society after the attachment was lifted. On 3.10.2015, a mortgage
was created for a sum of Rs.13 lakhs. On 16.11.2015 and 15.12.2015 also there
were two more mortgages executed by judgment debtors 2 and 3 for a sum of
Rs.50,000/- and Rs.80,000/-, respectively. Existence of these transactions is
not in dispute.
10. The decree holder's
contention in this respect is that, those are transactions which came into
existence after the compromise decree passed on 15.6.2015, creating charge on
the property. Consequently, the subsequent mortgages would take effect only
subject to the charged decree, is the contention. The claim petitioner, it is contended,
cannot acquire first charge in the property depriving the decree holder's right
to bring the property to sale, is the argument.
11. What Section 64 of CPC
invalidates is transfer or delivery of interest in the property after
attachment while the order is in force. In the case of a mortgage created prior
to the attachment for securing payment of future debt or discharge of a loan
transaction, it is by all means a prior interest saved by Order XXXVIII Rule 10
of the CPC. Section 64 cannot come into play in such a situation and render the
creation of charge void. Mere execution of a loan application during continuance
of the attachment would neither amount to a transfer nor a delivery of interest
in the property. Execution of continuing guarantee bonds in connection with
availment of subsequent loans also will not be hit by Section 64 of the CPC,
since the property had been given as security much before the order of
attachment as proved by documents on record. On 19.2.2014 and 23.4.2014, there were,
in fact no transfer of the property or interests therein. Only continuing
guarantee bonds were executed in favour of the claim petitioner in connection
with the loans availed on the said dates. The execution of continuing guarantee
bonds on these dates will have retrospective operation from Ext.A6 mortgage
date viz., 16.1.2012 when the property was offered as security for the future
debts also.
12. Ext.A6 Gehan/mortgage
hypothecation deed dated 16.1.2012 shows that, the property was offered as
security resulting in creation of charge much before the attachment was ordered
by the Family court. Ext.A6 further discloses that mortgage was intended not
only for due repayment of the loan already availed on the date, but also for
all future advances with the Society as per the terms and conditions in the
loan sanctioning order. In other words, the charge created with respect to the
property as on 16.1.2012 continued to be in force all through out, whenever the
loans were subsequently availed by the borrowers. The position continued to be
the same even after the attachment was ordered to be lifted and when it ceased
on 29.7.2015. It is in evidence that the original title deed deposited with the
claim petitioner has not been hitherto released to the third judgment debtor,
even though the earliest loan availed for Rs.3 lakh was closed as early as on
24.1.2012. Therefore, the contention of the decree holder that the mortgages
created during subsistence of attachment are void under Section 64 of the CPC,
cannot be accepted.
13. Section 36 A of the Kerala
Co-operative Societies Act 1969, creates special charge on movable or immovable
property of the borrower, in favour of the Society, on the borrower executing
Gehan which has all the characteristic features of a mortgage under provisions
of the Transfer of Property Act. When Section 36 A provides for a special
charge, it is obvious that a charge created by a decree cannot prevail over
Gahan/mortgage hypothecation. In short, the charge created by mortgages
executed on 3.10.2015, 16.11.2015 and 15.12.2015, by all means prevails over
the charge created by the compromise decree of the court. In any view of the
matter, under no circumstances, neither the attachment effected by the court
nor the charged decree passed by it can defeat the charge created by the mortgages
executed by judgment debtors 2 and 3 in favour of the claim petitioner.
14. The claim petitioner has a
contention that it is entitled to realise a total amount of Rs.17,82,012/- with
interest from the borrowers. We are not concerned with the correctness of the
amount claimed nor is it relevant also for our consideration in this
proceeding. The legal position in view of what we have discussed in detail
above is that, the claim petitioner is entitled to first charge over the
property and has every right to recover the arrears of debt by proceeding
against the property. The decree holder in execution of the compromise decree can
apply for sale of property subject only to the first charge in favour of the
claim petitioner and without affecting its right. The lower court has made this
position clear in the impugned order. The view taken by the lower court cannot
be said to be illegal or perverse and we do not find any reasons to interfere
with the same.
Confirming
the impugned order passed by the Family court, Thrissur, we dismiss Original
Petition.