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PETITIONER: S. NOORDEEN

       Vs.

RESPONDENT: S. THIRU VENKITA REDDIAR & ORS.

DATE OF JUDGMENT:       07/02/1996

BENCH: RAMASWAMY, K. BENCH: RAMASWAMY, K. HANSARIA B.L. (J)

CITATION:  1996 AIR 1293            1996 SCC  (3) 289  JT 1996 (2)   447        1996 SCALE  (2)323

ACT:

HEADNOTE:

JUDGMENT:                        O R D E R      This appeal by special leave arises from the order of the  learned single  Judge of the Kerela High  Court made on  June 24, 1977 in CRP No.3375/76. The facts are fairly not  in dispute.  O.S. No.95/53 was filed in the court of  the Sub-ordinate  Judge at  Quilon  by  Patai Central Bank  Ltd. to recover the amounts due from D.J. Gonzago,  the  second  respondent.  Certain  properties appended   to the Schedule to the plaint and also items 1 to  7 of  the petition  were attached before judgment under Order  38 Rule 6, Civil Procedure Code, 1908 [for short the  ’Code’ ].  On Apri1  3, 1954,  a  compromise decree was  made empowering  the decree  holder to have the scheduled  properties including item Nos. 1 to 7 of the  additional  properties  mentioned  above.  In  the meanwhile,  the   bank  went   into  liquidation.   The liquidator  brought  those  properties  to  sale.  With permission of the court those properties were purchased by the  decree-holder in execution on June 26, 1969 and the sale  was  confirmed.  On  April  25,  1974,  these properties, the  subject matter in this case, were sold by the liquidator to the first respordent-Thiru Venkita Reddiar.      The  appellant   S.Noordeen,  plaintiff   in  O.S. No.3B/60 on  the file  of the  court of the Subordinate Judge, Quilon  filed a  suit against  D.J. Gonzago  for recovery of  the money  claim. On  March 28,  1961, the money decree  was passed.  The properties covered under items 1 to 7 of the petitior, were sold in execution of the decree  in O.S.  No.95/53 after  due attachment  on January 13,  1969. The  sale was confirmed on September 13, 1974. The appellant, therefore, filed E.A. No.57/75 to declare  that the  sale  of  properties  of  the  in execution of the decree in O.S.95/53 at items 1 to 7 of the compromise  decree was  not valid  and it  does not

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bind him.  That was  upheld by  the executing Court and the District  Court in CMA. Thus the respondent came to file CRP  in the  High Court.  The High  Court has held that though  items 1 to 7 were not part of the schedule mentioned properties, they became subject matter of the proceedings in O.S.No.95/53 in which compromise decree, ultimately passed  on 3.4.1954,  properties were  under attachwent from  1953. Therefore,  they became  part of the suit  properties.  Consequentially,  they  are  not required to  be  compulsorily  registered.  The  decree thereby is  not liable  to be  annulled. The  appellant does not  get any  valid right  to the properties since they have already been sold.      Shri Sudhakaran, learned ccunsel for the appellant contended that in view of the fact that items 1 to 7 of the compromise decree dated 3.4.54 were not the subject matter of  O.S. No.95/53  for recovery  of the debt due fron Gonzago,  the decree was required to be registered under Section  17(1) of  the Registration Act, 1908 for short, the  ’Act’] which  was not  done. Therefore, the right,  title   and  interest  of  the  judgment-debtor Gonzago  was   not  divested.   The  appellant   having purchased the  property and  having got  the properties registered in  the Court sale, he got better title. The view of the High Court, therefore, was wrong in law. We find no force in the contention.      It is  necessary to  clear  the  factual  position which is  not faily  in dispute.  There was  attachment before judgment  in O.S. No. 95/53 subsisting till June 26, 1969,  the date  on which  the property  items were sold in  execution and  the liquidator  had become  the purchaser from  the Court  sale. The  sale thereof  was confirmed. The  entire sale  consists of  items of  the Schedule and  items 1 to 7 mentioned in the petition in addition to  the Schedule.  It is seen that there was a compromise betweent  the Bank  and the Judgment-debtor. Pursuant thereto,  the decree  was passed  on April  3, 1954 comprising of all the properties.      The question,  therefore, emerges  :  whether  the decree  passed   under  the  compromise  would  attract exception engrafted  in clause  (vi) of sub-section (2) of Section  17 of  the Act?  The attachment  before the judgment is  an encumbrance preventing the owner of the property to  create encumbrance,  sale or create charge thereon. Attachment before judgment does not create any right, title or interest, but it disables the judgment- debtor to  create any  encumbrances  on  the  property. Ultimately, when  decree is  passed, the property forms part of the decree so as to enable the decree-holder to proceed  with  against  the  property  to  realise  the decree-debt, The  question is:  whether the  properties which are  not part  of the  schedule mentioned  in the suit will  nonetheless be the part of the decree? It is not mandatory  that the property should be specifically mentioned, it  is so  only in  a  mortgage  suit  under relevant clauses  of Order  34 of  the Code. The decree holder is  entitled  to  proceed  against  those  items mentioned in the petition. The decree would be executed as provided  in other  mode of  the  decree.  In  other words, attached  properties are  also liable to be sold as integral  part of the decree. The properties, though do not  form part  of the  Schedule, would  also become part of the decree.      It is  seen that  in addition to the schedules, by way of separate application, items 1 to 7 had also been

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attached under  Order 38  Rule 6  of the  Code. In  the compromise,  the   judgment-debtor  agreed  that  these properties would  be proceeded with in execution of the decree. Thus,  the properties mentioned in the Schedule as well as the properties mentioned separately as items 1 to 7 became integral, part of the decree.      The question  is: whether  proceedings under Order 38 Rule 6 of the Code is part of the civil proceedings? It is seen that when an application under Order 38 Rule 1 is  made for attachment before judgment, as envisaged in clauses  (i), (ii), (iii) and (iv), if the defendant furnishes security, then the need to make an attachment of the  properties does not arise. On his failure to do so, Rule  6 gives  power to  the court  to  attach  the properties before  judgment where  no cause is shown or security is  not furnished. Then mode of attachment has been provided in Rule 7. It says that "(s)ave otherwise expressly provided, the attachment shall be made in the manner provided  for  the  attachment  of  property  in execution of a decree." Rule 8 provides adjudication of claim  to   property  attached   before  judgment.  The procedure has  been provided for attachment under Order 21 Rule 38 and adjudication under Order 21 Rule 528.      Section 141  of  the  Code  provides  that  "(t)he procedure provided  therein in regard to suits shal1 be followed, as  far as  it can be made applicable, in all proceedings in  any Court  of civil  jurisdiction". The Explanation amplifies  the doubt  that  the  expression "proceedings" includes  proceedings under  Order 9, but does not  include any  proceeding under  Article 226 of the Constitution".  It would  thus be  clear  that  the proceedings envisaged  for adjudication  under Order 38 Rule  B  read  with  Order  21  Rule  58,  is  a  civil proceeding. When  attachment of the properties has been made before the 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 registerable?  This Court  in Bhoop  Sinqh vs. Ram  Singh Major  [(1995) 5  SCC 709  = AIR 1996 SC 196] has  considered the  question whether a compromise decree is  compulsorily  registerable.  In  that  case, there was  no  pre-existing  right  to  the  properties between the  parties, but  a right  was  sought  to  be created for  the first  time under  the compromise. The High  Court   had  taken  the  view  that  it  was  not compulsorily registerable  instrument under  Section 17 of the  Act.  This  Court  considered  elaborately  the circumstances in  which clause  (vi) of sub-section (2) of Section  17 would  come  into  play  and  stated  in paragraph 18 thus :           "The legal position qua clause      (vi), on the basis of the aofresaid      discussion, be  summarised as below      :           [1] Compromise  decree if bona      fide,  in   the  sense   that   the      compromise  is   not  a  device  to      obviate payment  of stamp  duty and      frustrate  the   law  relating   to      registration,  would   not  require      registration.   In    a    converse      situation,   it    would    require      registration.           [2] If  the compromise  decree

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    were to  create for  the first time      right,   title   or   interest   in      immovable property  of the value of      Rs. 100 or upwards in favour of any      party to  the suit  the  decree  or      order would require registration.           [3] If  the decree were not to      attract any  of the clauses of sub-      section [1]  of Section  17, a  was      the position  in the aforsaid Privy      Council and  this Court’s cases, it      is apparent  that the  decree would      not require registration.           [4] If  the decree were not to      embody the  terms of compromise, as      was the  position in  Lahore  case,      benefit   from    the   terms    of      compromise cannot  be derived, even      if a  suit were  to be  disposed of      because  of   the   compromise   in      question.           [5] If the property dealt with      by the  decree be not the "subject-      matter of  the suit or proceeding",      clause  [vi]   of  sub-section  [2]      would not  operate, because  of the      amendment of  this clause by Act 21      of 1929,  which has  its origin  in      the aforesaid decision of the Privy      Council,  according  to  which  the      original  clause  would  have  been      attracted,  even   if  it  were  to      encompass property not litigated."      It would  be seen  that if  the decree were not to embody the terms of the compromise, as was the position in other  cases, the benefit in terms of the compromise cannot be derived even if a suit were to be disposed of because of  the compromise in question. If the property dealt with  by the  decree is not "subjectmatter of the suit or  proceeding", then  clause (vi)  of sub-section (2) would  not operate because of the amendment of this clause by  Act 21  of 1929, which has its origin in the aforesaid decision  of the  Privy Council, according to which the  original clause  would have  been  attracted even if it were to encompass property not litigated.      Section  17(1)   of  the  Act  provides  that  the document shall  be registered  if the property in which they  retate   is  an  instrument  or  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 rupee and upwards, to or in immovable property. Sub-section  (2)   gives  exception.   It  says   that:      "Nothing in  clauses (b) and (c) of      sub-section (1) applies to-      x     x     x     x     x     x   x      <vi) any decree or order of a Court      except a  decree or order expressed      to be  made  on  a  compromise  and      comprising immovable property other      than that  which  is  the  subject-      matter of the suit or proceeding."      Here we  are concerned  with the  question whether item 1  to 7 properties brought to sale in execution of

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decree in  O.S. No.95/53  are a part of decree or order of the court, relating to the subjectmatter of the suit or proceeding.  We have  already held that items 1 to 7 of   the   properties   mentioned   in   the   separate application,  which  was  the  subject  matter  of  the attachment before the judgment, have become part of the decree  and   also  the  order  of  the  court  in  the proceedings under  Order 38  Rule 6  of CPC. Therefore, the decree, though passed on compromise, formed part of the decree and order of the court in court proceedings. The immovable properties whose sale is impugned are not properties other than the subject matter of the suit or proceedings. Therefore,  the view  of the High Court is correct in law.      It is  seen, as  referred to by the learned single Judge, the  Madras High  Court and the Patna High Court had taken  the same view in Rambas vs. Jagarnath Prasad [AIR 1960  Patna 179],  M.P. Reddiar  vs. A. Ammal [AIR 1971 Madras  182],  Govindaswami  vs.  Rasu  [AIR  1935 Madras 232]  and C.M.  Pillai  vs.  H.S.S.S.S.  Kadhiri Thaikal [AIR  1974 Madras 199]. Contra views were taken in Chhotibai  Daulatram vs. Mansukhlal Jasrai [AIR 1941 Bombay 1] and Ganeshlal vs. Ramgopal [AIR 1955 Raj.17]. In Chhotibai’s  case (Bombay High Court), it was a case of simple  money decree  and the  properties  were  not attached  before   judgment,  but  they  were  sold  in execution of  the decree  on compromise.  The sale  was sought to  be impugned on the ground that they were not registered.   Therefore,   they   were   held   to   be compulsorily  registerable,  by  operation  of  Section 17(1) of  the Act. Section 17(2)(vi) was not attracted. The learned  Judge had  proceeded with  on the  premise that this  exception would  apply to  other proceedings under special  laws but  not to  the civil proceedings. The view  taken by the Bombay High Court is not correct in law.  The Rajasthan  High Court  had merely followed the view  of the  Bombay High Court without any further reasons. Accordingly,  we hold  that the  view  of  the Bombay High Court as well as that of the Rajasthan High Court are not correct in law.      The appeal is accordingly dismissed. No costs.