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PETITIONER: VANNARAKKAL KALLALATHIL SREEDHARAN

       Vs.

RESPONDENT: CHANDRAMAATH BALAKRISHNAN AND ANR.

DATE OF JUDGMENT06/03/1990

BENCH: SHETTY, K.J. (J) BENCH: SHETTY, K.J. (J) SAHAI, R.M. (J)

CITATION:  1990 SCR  (1) 832        1990 SCC  (3) 291  JT 1990 (1)   390        1990 SCALE  (1)519

ACT:     Code  of  Civil  Procedure, 1908: S.  64,  or  38,  Rule 10--Conveyance in pursuance of antecedent agreement for sale of attached property--Whether passes good title.

HEADNOTE:     The  land in dispute was agreed to be sold in favour  of the  appellant  under an agreement.  Subsequently,  a  third party  in execution of a decree got the  property  attached. The  sale deed was executed thereafter. A question arose  as to  the validity of the sale. The High Court held  that  the sale would be subject to attachment. Allowing the appeal by special leave, the Court,     HELD:  The  agreement  for sale  creates  an  obligation attached  to  the ownership of the property.  The  attaching creditor  is  entitled to attach only the right,  title  and interest of the judgment debtor. Hence, if an agreement  for sale  is  entered  into before  attachment,  the  attachment cannot  be  free from the obligation so  incurred,  and  the attaching  creditor will not get any right higher  than  the judgment debtor had on the date of the attachment. He cannot ignore that obligation and proceed to bring the property  to sale as if it remained the absolute property of the judgment debtor. [835C, 834F, 835E]     Accordingly, though s. 64 CPC is intended to protect the attaching  creditor, but if the subsequent conveyance is  in pursuance  of an agreement for sale which was  entered  into before  the attachment, the contractual  obligation  arising therefrom must be allowed to prevail over the rights of  the attaching  creditor.  The rights of the  attaching  creditor shall not be allowed to override the contractual  obligation arising  from the antecedent agreement for sale of  the  at- tached property. [835D-E]     Paparaju Veeraraghavayya v. Killaru Kamala Devi &  Ors., AIR 1935 Mad. 193; Veerappa Thevar & Ors. v.C.S. Venkataram- ma  Aiyar  & Ors., AIR 1935 Mad. 872; Angu  Pillai  v.M.S.M. Kasiviswanathan  Chettiar,  AIR 1974 Mad. 16;  Puma  Chandra Basak  v. Daulat Ali Mollah, AIR 1973 Cal. 432; Rango  Rama- chandra v. Gurlingappa 833 Chinnappa,  AIR 1941 Bom. 198; Yashvant Shankar  Dunakhe  v. Prayarji  Nurji Tamboli, AIR 1943 Bom. 145  and  Kochuponchi

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Varughese  v. Quseph Lonan, AIR 1952 Travancore-Cochin  467, approved.     Mohinder  Singh & Anr. v. Nanak Singh & Anr.,  AIR  1971 Pb. & Haryana 381, overruled.     The  sale in the instant case would not thus be  subject to  the attachment. The purchaser would get good  title  de- spite attachment. [833F, 834D]

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeal No. 1349  of 1990     From  the  Judgment  and Order dated  18.8.1988  of  the Kerala High Court in E.S.A. No. 23 of 1987. S. Padmanabhan and R.N. Keshwani for the appellant. The Judgment of the Court was delivered by K. JAGANNATHA SHETTY, J. Special leave granted.     An  extent  of 80-cents of land which is in  dispute  in this appeal was agreed to be sold in favour of the appellant under  an agreement dated October 9, 1978. Before  the  sale deed  was executed, a third party in execution of  a  decree got  the  property attached on November 16, 1978.  The  sale deed  was  executed on November 23, 1978. The  question  is: Does the sale prevail over the attachment?     The  High Court of Kerala in the judgment  under  appeal has held that the sale would be subject to attachment.  This appears from the following observation: "The sale deed was executed at a time when the property  was already  under attachment. It is true that even  before  af- fecting attachment there was an agreement for sale by Saroj- ini Ramakrishnan in favour of the appellant. But the  agree- ment for sale will not create any interest in the  property. The fact that Ext. A-12 Sale deed was executed on the  basis of  an  agreement executed before the  attachment  will  not place  the appellant in any better position. He  could  take the   80  cents  under  Ext.  A-12  only  subject   to   the attachment." 834     The correctness of the view taken by the High Court  has been called into question in this appeal.     We  may  first draw attention to some  of  the  relevant statutory provisions bearing on the question. Order 38  Rule 10  of the Code of Civil Procedure provides that  attachment before  judgment shall not affect the rights existing  prior to the attachment of persons not parties to the suit.  Under Section  40  of the Transfer of Property  Act,  a  purchaser under a contract of sale of land is entitled to the  benefit of  an obligation arising out of that contract and  it  pro- vides  that  that  obligation may  be  enforced  inter  alia against  a transferee with notice. Section 91 of the  Trusts Act also recognises this principle that the transferee  with notice of an existing contract of which specific performance can  be enforced must hold the property for the  benefit  of the party to the contract. These are equitable rights though not  amounting to interest in immovable property within  the meaning of Section 54 of the Transfer of Property Act  which declares that a contract of sale does not create an interest in the property. On this line of reasoning it has been  held by the Madras High Court that the purchaser of an antecedent agreement  gets good title despite attachment. See  Paparaju Veeraraghavayya v. Killaru Kamala Devi & Ors., AIR 1935 Mad. 193,  Veerappa  Thevar & Ors. v.C.S.  Venkataramma  Aiyar  & Ors., AIR 1935 Mad. 872 and Angu Pillai v.M.S.M.  Kasiviswa- nathan Chettiar, AIR 1974 Mad. 16.

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   There  is  a useful parallel from the  decision  of  the Calcutta  High  Court in Purna Chandra Basak v.  Daulat  Ali Mollah,  AIR 1973 Cal. 432 wherein it was observed that  the attaching creditor attaches only the right, title and inter- est of the debtor and attachment cannot confer upon him  any higher  right  than the judgment-debtor had at the  date  of attachment.     Hence,  if under a contract of sale entered into  before attachment, the conveyance after attachment in pursuance  of the contract passes on good title inspite of the attachment. To  the  same effect are the decisions of  the  Bombay  High Court  in  Rango Ramachandra v. Gurlingappa  Chinnappa,  AIR 1941 Bom. 198 and Yashvant Shankar Dunakhe v. Prayarji Nurji Tamboli,  AIR 1943 Bom. 145. The High Court  of  Travancore- Cochin  in Kochuponchi Varughese v. Quseph Lonan,  AIR  1952 Travancore-Cochin 467 has also adopted the same reasoning. The Punjab & Haryana High Court however, has taken a con- 835 trary  view  in Mohinder Singh and Anr. v. Nanak  Singh  and Anr.,  AIR 1971 Pb. & Haryana 381. It has been held  that  a sale in pursuance of a pre-attachment agreement is a private afienation of property and must be regarded as void  against the  claim  ot the attaching creditor. In  support  of  this proposition,  Section 64 of the Code of Civil Procedure  was relied  upon which according to the High Court was  intended to  protect the attaching creditor against  private  aliena- tion. This was also the observation of the Lahore High Court in Buta Ram & Ors. v. Sayyed Mohammad, AIR 1935 Lahore 71.     In  our  opinion, the view taken by the High  Courts  of Madras, Bombay, Calcutta and Travancore-Cochin in the afore- said cases appears to be reasonable and could be accepted as correct. The agreement for sale indeed creates an obligation attached to the ownership of property and since the  attach- ing creditor is entitled to attach only the right, title and interest  of the judgment-debtor, the attachment  cannot  be free  from the obligations incurred under the  contract  for sale.  Sec.  64  CPC no doubt was intended  to  protect  the attaching  creditor, but if the subsequent conveyance is  in pursuance  of  an agreement for sale which  was  before  the attachment,  the  contractual obligation  arising  therefrom must be allowed to prevail over the rights of the  attaching creditor. The rights of the attaching creditor shall not  be allowed to override the contractual obligation arising  from an  antecedent agreement for sale of the attached  property. The  attaching  creditor cannot ignore that  obligation  and proceed to bring the property to sale as if it remained  the absolute property of the judgment-debtor. We cannot,  there- fore,  agree with the view taken by the Punjab  and  Haryana High  Court in Mohinder Singh’s case AIR 1971 Pb. &  Haryana 381.   In  the conclusion that we have reached, this appeal  must beallowed and is accordingly allowed. The order of the  High Court is reversed and that of the trial court is restored. In  the  circumstances of the case, we make no order  as  to costs. P.S.S.                                                Appeal allowed. 836