Saturday 28 April 2012

When lis pendese will not affect alienated property?

one acquiring interest pendente lite in a proceeding which is lit pendens is bound by the decree without regard to its form, or whether it is erroneous, and it is immaterial that the relief granted in the suit is the result of agreement or compromise, except where it is the result of fraud or collusion between the parties.
Calcutta High Court
Bharat Ramanuja Das Mohant vs Sarat Kamini Dasi And Ors. on 14 April, 1921
Equivalent citations: 66 Ind Cas 273

Bench: A Mookerjee, Buckland

1. This is an appeal by the plaintiff in a Bait to enforce a mortgage-security, executed in his favour on the 14th September 1906, by the first defendant, Raja Balabhadra Singh Deb, in respect of what is known as the Raipur Zamindary. Besides the mortgagor, 85 other persons were made parties to the suit in the Court below, on the allegation that they were subsequent encumbrancers. They filed twelve separate written statements and raised numerous questions which were embodied in fourteen issues. We are now concerned with only one set of defendants, namely, defendants Nos. 8 to 19, who have been described in these proceedings as the Rathis and the Dutts. They set up a mortgage for Rs. 75,000 executed by the first defendant in their favour on the 28th January 1908. They contended that the security held by them, though subsequent in point of time, had priority over the mortgage in suit, by the application of the doctrines of subrogation and lis pendens. The Subordinate Judge held that these defendants were entitled to the benefit of the rule of lis pendens, but that the principle of subrogation was of no avail. In this view, the Subordinate Judge has granted the plaintiff a mortgage-decree, subject to the mortgage in favour of the Bathi and the Dutt defendants to the extent of Rs. 71,000 only. On the present appeal the plaintiff has contend-ed that the rule of lis pendent is of no assistance to the defendants,- who have not only controverted this argument but have also assailed the opinion expressed by the Subordinate Judge as to the inapplicability of the principle of subrogation. To elucidate the questions in controversy, it is necessary to explain the circumstances which led up to the mortgage set up by the Bathi and the Dutt defendants.
2. The Raipur Zemindari, which is the subject-matter of both the mortgages, originally belonged to one Harihar Singh whose name appears in the fallowing genealogical table; it is alleged to have been an impartible Raj governed by the rule of primogeniture according to the custom of the country and the usage of the family.
HARIHAR SINGH. died 1849 Indra Singh, Lal Singh Mohar Singh died 1865, First wife Djjal- Balabhadra kumari, died 867, Singh. Second wife Nilkumari, died 1905. Rasik, Badhasyam,
3. Harihar Singh died in 1849, leaving three sons, Indra Singh, Lai Singh and Mohar Singh. Indra Singh, as the eldest, succeeded to the Raj, while his two brothers received maintenance. Indra Singh died in 1895, leaving him surviving his two widows and two brothers. The first widow, Ujjalkumari, died in 1867 and the second widow in 1905 after the death of both Lai Singh and Mohar Singh, On the 12th January 1906, Shortly after the death of Nilkumari, Batabhadra Singh instituted a suit (Suit No. 10 of 1908) for declaration of his title to the Raipur Zamindari and for recovery of possession thereof from various persons including the Rathis and the Dutts, who, he alleged, were wrongfully in occupation under titles created by Nilkumari. The Rathis and the Dutts resisted the claim on the allegation that they had acquired an indefeasible title, first by purchase at a sale held on the 20th January 1891 in execution of a decree, on a mortgage granted on the 22nd April 1885 to one Tarachand Pal by Nilkumari and Mohar Singh, and then again by a purchase on the 20th January 1892 in execution of a prior mortgage taken by one Kshetranath Mahapatra from the same mortgagors, The order-sheet in that suit, which has been received in evidence in this litigation, makes it abundantly clear that the suit was contentious and was actively prosecuted by both aides during many months. When the issues had bean framed, the suit was, after the usual adjournments, set down for trial on the 13th January 1908; on that date, on the application of both parties, time was allowed to them till the 17th January to compromise. On the date so fixed, it was recorded that the case had not been compromised, and the trial commenced. The hearing proceeded from day to day till the 23rd January when the case was adjourned in view of a "talk of compromise," Ultimately, on the 28th January 1903, a sulenama (petition of compromise) was filed on behalf of the plaintiff Balabhadra Singh and the Rathi and the Dutt defendants as also an added defendant Brajalal Dutt. The Court accepted the petition of compromise, but could not forthwith make a decree on the basis thereof, as there were other defendants who had not compromised The case was accordingly directed to proceed against the remaining defendants. On the 30th January, a sulenama was filed on behalf of the plaintiff and another defendant and was accepted. The trial proceeded as against the other defendants who utilised, as appears from the order of the 14th February 1908, the documents previously filed by the Rathi and the Dutt defendants. The proceedings were much prolonged and the hearing did not conclude till the 6th March 1908, when judgment was reserved. On the 31st March 1908 judgment was delivered, and the suit was decreed, partly in terms of sulenama and partly on contest." The decree thus made gave effect to the compromise embodied in the petition presented on behalf of the plaintiff and the Rathi and the Dutt defendants on the 28th January 1908. The decree recites the terms of the compromise which now require examination.
4. The purport of the compromise was that the Rathi and the Dutt defendants relinquished in favour of the plaintiff whatever interest they had assured in the Raipur Zamindari, for a consideration of Rs. 71,000 which was secured by a mortgage of the Zamindari, as the plaintiff was unable to pay the amount in cash. The petition of compromise recites that this mortgage-bond had been executed on the same date to secure a sum of Rs, 75,030, made up of the aforesaid sum of Rs. 71,000 and an additional cash payment of Rs. 4,000. There is no nom for controversy that the compromise and the mortgage constituted one entire and indivisible transaction and that when the decree of the Court, made on the 31st March 1908, give effect to the compromise, it validated the whole contract between the parties inclusive of the mortgage. To tike any other view would be to sacrifies substance to form and to disintegrate vital elements of the transaction which could not, in the contemplation of the parties, have ever been regarded as other than inseparable in character. The question thus emerges for consideration, whether the mortgage in suit, executed on the 14th September 1908 after the institution on the 12th January 1906 of Suit No. 10 of 1906 for determination of the title to the hypothecated property, is affected, by virtue of the rule of lis pendens, by the consent-decree in the title suit dated the 31st March 1908, which incorporated and gave effect to the mortgage of the 28th January 1908, The Subordinate Judge has answered this question against the plaintiff and we have now to consider whether his conclusion is well founded on principle.
5. The rule of lis pendens is enunciated in Section 52 of the Transfer of Property Act is the following terms.
During the active prosecution in any Court having authority in British India, or established beyond the limits of British India by the Governor General in Council, of a contentious suit or proceeding in which any right to immoveable property is directly and specifically in question, the property cannot be transferred or otherwise dealt with by any party to the suit or proceeding, so as to affect the rights of any other party thereto under any decree or order which may be made therein, except under the authority of the Court and on such terms as it may impose.
6. The decision of the Judicial Committee in Faiyat Husain v. Hunshi Prog Narain 34 I. A. 102 : 9 Bom. L. R. 656: 11 C. W. N. 561 : 4 A. L. J. 344 : 5 O. L. J. 565 : 17 M. L. J. 263 : 29 A. 319 (P.C), shoves that, in order to determine whether a suit is sententious within the meaning of this section, we have to consider whether it is contentious in its origin and nature. The expression "sententious suit" must then be held to be used in contradistinction to a collusive suit in which there is no contest a suit of the nature described by Lord Brougham in Bondon v. Becker (1835) 3 Cl. & F. 479 : 9 Bligh n. s.) 532 : 6 E. R. 1517.
A sentence is a judicial determination of a cause agitated between real parties, upon which a real interest has been Fettled. In order to make a sentence there must, be a real interest, a real argument, a, real prosecution, a, real defense, a real decision. Of all these requisites not one takes place in the case of a fraudulent and collusive suit; there is no Judge, but a portion invested with the ensigns of a judicial office, is misemployed in listening to a, fictitious cause proposed to him; there is do party litigating, there is no party defendant, no real interest brought into question.
7. If a suit is not collusive, it cannot ha maintained that, though originally contentious, it ceases to be contenticus because it is compromised by the act of the parties. This view is supported by the decision of a Full Bench of the Madras High Court in Annamalai Chettiar v. Malayandi Appoya Naik 29 M. 426; I. M. L. T. 145 : 16 M. L. J. 372 (F. B.), where it was ruled that the doctrine of list pending as embodied in Section 52 of the Transfer of Property Act applies to transfers effected daring the pendency of a contentious suit or proceeding, even when such suit or proceeding is subsequently compromised, and a decree it passed in pursuance of such compromise not tainted by fraud or collusion. The view was followed in the case of Mali Lal Fal v. (sic)treo Nath Mitra 3 Ind Cas. 696 : 9 C. L. J. 96 : 13 C. W. N. 226, where Doss, J., quoted with approval the following observation of Chancellor Searie of the Supreme Court of California in Partridge v. Shephard (1886) 71. Cal. 476 : 12 Pacific 480.: "We know of no good reason why a judgment entered by consent of parties, in a cause in which the Court has jurisdiction of the subject-matter and of the parties, is leas efficacious than if entered after a trial of the suit. It may be impeached like any other judicial record by evidence of a want of jurisdiction in the Court; rendering it, by showing collusion between the parties or by proof of ft and on the part of the party offering the record." The same position wan affirmed in the case of Tinoodhan Chatterije v. Trilokya Saran Sanyal 18 Ind. Cas. 177 : 17 C. W. N. 413, and had been recognised in the earlier decisions in Nadurconissa Bebee v. Aghur Ali Chowdhry 7 W. R. 103. Rai Eishen Mooker es v. Radha Madbub Holdar 21 W. R. 349, and Monohur v. Hurryhur 3 Shoms Report 23. A similar opinion was expressed by Jenkins, C. J., in Krishnappa v. Shivappa 31 B. 393 : 9 Bem. L. R. 630. As was pointed-out by Subrahmania Ayyar, J., in Annamalai Ghettiar v. Malayandi Appoya Naik (3), the generality of the words under any decree or order exade therein in Section 52 of the Transfer of Property Act, upon their fate, land co support to the argument that a consent-decree does not fall within its scope. It is well known that a judgment by consent or default is as effective as as estoppel between the parties as a judgment whereby the Court exercises its mind on a. contested ease; see South American & Mexican Co., In re (1895) 1 Ch 37 : 64 L. J. Ch. 189 : 12 R. 1 : 71 L. T. 594: 43 W. R. 131. Bellcairn (The) (1885) 10 P. D. 161 : 55 L. J. P. 3 : 5 L. T. 686 : 34 W. R. 55. Nicholas v. Asphar 21. C. 2 6 : 12 Ind. Dec. (n. s.) 810. Rajlakshmi Dasse v. Katyayani Dasee 12 Ind. Cas. 46 : 36 C. 639, and this is be, even though, as pointed cut in Wintuorth v. Bullen (1829) 9 B. & C. 340 9 L. J. (o. s.) K. B. 33 : 109 E. R. 313 : 33 R. R. 343, and in Huddersfield Banking Go. v. Litter (1895) 2 Ch. 273 : 64 L. J. Ch. 523 : 12 R. 331 : 72 L. T. 703 : 43 W. R. 567, the consent order is in essence only the order of the Court carrying out an agreement between the parties. The essence of the matter is that a decree is none-the-less a decree as defined by the Code of Civil Procedure, because it is based an a compromise, and the legal effects of the decree contemplated by Order XXIII, role 3, Civil Procedure Code, do not differ from the Segal t fleets of a decree where the suit has been fought to the end. When the Court makes a decree by consent it performs not a ministerial but a judicial function; the Court most be satisfied that the agreement or compromise is lawful, and although the Court must record the entire agreement or compromise, it can pass a decree in accordance therewith only in as far as it relates to the suit. Consequently, the fact that a decree in given in accordance with terms which have been come to between the parties does not prevent the decree from being the formal expression by the Court of an adjudication on a right claimed or a defence sat no conclusively determining the rights of the parties with regard to all or any of the matters in controversy in the suit within the moaning of the definition certain ad in Section 2 (1835) 3 Cl. & F. 479 : 9 Bligh n. s.) 532 : 6 E. R. 1517, Civil Procedure Code. Section 96 29 M. 426; I. M. L. T. 145 : 16 M. L. J. 372 (F. B.), on the other hand, makes is clear that a decree passed with the consent of parties is a decree within the moaning of the Code, It may also be maintained that, unload a compromise is collusive, the very fact that there is a compromise shown that the suit was in its origin and nature contentious, otherwise there would be nothing to compromise. In our opinion, a consent decree falls within the scope of the rule of lit pendens onunciated in Section 52 of the Transfer of Property Act. A similar view was adopted in the case of London v. Morris (1812) 2 L. J. Ch. 35 : 5 Sim 247 : 53 E. R. 329, where Shadwell, V. C., held that a decree taken pro confesso was binding on a purchaser who had entered into a contract after the filing of the bill, and this was subsequently approved by Lord Brougham, L. C. See also Windham v. Windham (1667) 2 freeman 127 : 2 Eq. Cas. Abr. 286 : 22 E. R. 1403. A similar rule has been recognised and frequently applied in the Courts of the United States, not as based on peculiarities of statutory provisions, but as founded on well-established principles of public policy, namely, that the plaintiff would be liable to be defeated by the defendant's alienation before the consent judgment or decree aid would be driven to commence his proceedings de novo, subject again to be defeated by the same, course of proceeding. On this ground it has been repeatedly ruled that one acquiring interest pendente lite in a proceeding which is lit pendens is bound by the decree without regard to its form, or whether it is erroneous, and it is immaterial that the relief granted in the suit is the result of agreement or compromise, except where it is the result of fraud or collusion between the parties, Norris v. lie (1894) 152 Ill. 190 : 43 Am. St. Rep. 233. Mcllwrath v. Hollander (1880) 75 Missouri 105 : 39 Am. Rep. 484. Cartridge v. Shephard (1886) 71. Cal. 476 : 12 Pacific 480. Turner v. Bobb (1875) 60 Missouri 342.
8. Reliance has finally been placed on behalf of the appellant upon the rule enunciated in the, following terms by Sir Richard Coach, C. J., in Kailas Chandra Ghose v. Fulchand Jahuri 8 B. L. R. 474 : 2 W. R. Sup. 523, as to the liaoility of a purchaser pendents lite: "With regard to the question of lis pendens the doctrine appears to be this, that the alience is bound by the proceedings in the once after the alienation and before he becomes a party. Then the question is by what proceedings in the suit is he bound? Is he bound by the proceedings which arise from the nature of the suit, and from the case Bet up, and the relief prayed in the bill, or is he to be bound by any order which the Court may be induced by the parties to make in the course of the suit? I can find no authority which goes to the extent of saying that, because he does not thick fit to become a party to the suit, this to be bound by any order whatever that may be made. It seems to me that he ought only to be bound by proceedings which, from the nature of the suit, and the relief prayed, he might expect would take plate and if there had been no notice in this ease, it might have been necessary for us to determine what is the precise effect of lit pendens. But this need not now be determined. Practically, there is no substantial difference between lis pendent, and having notice of the suit. He would be equally bound by them, and not more by one than by the other."
9. These observations were quoted with approval by Pentifex, J., in Kasumunnissa Bibee v Nilratna 8 C. 79 at, p. 85 : 9 C. L. R. 173 : 10 C. L. R. 113 : 4 Ind. Dec (n. s.) 51, and by Banerjee, J., in Kishory Mohun v Mahomed Muzaffar Hossein 18 C. 188: 9 Ind. Dec. (n. s.) 126 which, it may be noted, was decided on another ground on appeal to the Judicial Committee: Mahomed Mozzffer Hoissein v. Kishori Mohun Boy 22 I. A. 129 (P. C.) : 22 C. 909 : 5 M. L. J. 101 : 6 Sar. P C. J. 583 : 11 Ind. Dec. (n. s.) 602. With regard to the rule enunciated by Couch, C. J., in Kailas Chandra Ghoss v. Fulchand Jahuri 8 B. L. R. 474 : 2 W. R. Sup. 523, two points must not be overlooked. In the first place, the case was decided long before the Transfer of Property Act was placed, on the Statute Book, and it would be opposed to well recognised principles of construction of Statutes to attempt to engraft on Section 52 qualifications or restrictions of justified by its language but discoverable from pre-existing judicial pronouncements. Such an attempt would be open to emphatic condemnation; see the judgment of Lord Herschell in Bank of England v. Vagliano (1891) App. Cas. 107 at p. 145 : 64 L. T. 353 : 60 L. J. Q. B. 145 : 39 W. R. 657 : 55 J. P 676, and the judgment of the Full Bench of this Court in Uttam Chandra v. Raj Krishna 55 Ind. Cas. 157 : 47 C. 377 : 31 C. L. J. 98 : 24, C. W. N. 229, in the second place, as has been frequently pointed out, for example, in Annamalai Chettiar v. Malayandi Appaya Nath 29 M. 426; I. M. L. T. 145 : 16 M. L. J. 372 (F. B.), and Tinoodhan Chatterjee v. Trilokya Saran Sanyal 18 Ind. Cas. 177 : 17 C. W. N. 413, the rule laid down by Couch, C, J" is cot in accord with the earlier decision of this Court in Naduroonissa Bebee v. Aghur Ali Chowdhry 7 W. R. 103, and indeed a different rule was subsequently laid down by Couch, C. J., himself in the case of Raikishen Mooher ee v. Radha Madhub Holdar 21 W. R. 349, where the doctrine of lis pendens was applied to a purchase pending a suit which terminated in a consent decree.
10. But if, notwithstanding the comprehensive terms of Section 52 of the Transfer of Property Act, we adopt the restricted rule enunciated by Sir Richard Conch in Kailas Chandra Ghose v. Fulchand Jahuri (22) and embark noon an enquiry as to whether the decree made by consent was such as the plaintiff might, from the nature of the suit and the relief prayed for therein, expect would take place, the result is of no avail to him. The decree which was actually made on compromise was in essence a decree which might, even after contest, have been made in favour of the plaintiff in that suit (now the first defendant in this litigation). He sought to recover the Raipur Zamindari on the allegation that the Rathis and the Dutts were in occupation under a title in-operative against him because created by a limited owner, as Nilkumari war, with or without the concurrence of a future possible claimant, in the position of Mohar Singh. A Bu't of this description may well be regarded as a case of excessive alienation by a limited owner, and may terminate in a decree for possession in favour of the ultimate owner, subject to reconpment, partial or entire, of the advances made by the creditor. Instances of such decrees may be found in the decisions of the Judicial Committee in Moulvie Mohamed Shumsool Hooda, v. Shewukram 2 I. A. 7 : 14 B. L. R. 226 (P. C.) : 22 W. R. 409 : 3 Sar P. C. J. 405 : 3 Suth. P. C. J. 43. Deptay Commissioner of Kheri v. Khan an Singh 34 I. A (sic)7 : 9 Bom. L. R. 591 : 5 C. L. J. 344 : 11 C. W. N. 474: 4 A. L. J. 232: 2 M. L. T. 145 : 17 M. L. J. 238 : 29 A. 331 : 10 O. C. 117, and Bhagwat Dayal v. Debt Dayal 35 I A 8 : 35 C. 420 : 7 C. L. J. 335 : 12 C. W. N. 39 : 18 M. L. J. 100 : 5 A. L. J. 184 : 14 Bur. L. R. 49 : 3 M. L. T. 344 : 10 Bom;, L. R. 230 (P. C.). The substance of the matter is that the compromise decree was of the same type as the conditional decree, such as may be and is often made in suits by reversioners, where the alienation by a limited owner is set aside on equitable terms. We are of opinion, consequently, that even according to the test formulated by Sir Richard Couch, the plaintiff mast be held bound by the doctrine of lit pendens.
11. If, then, there is no escape from the conclusion that the plaintiff is bound by the rule of lit pendent enunciated in Section 52 of the Transfer of Property Act, the mortgage treated in his favour by the first defendant on the 14th September 1906, after the latter had instituted the suit for establishment of title on the 12th January 1906, must be deemed to have been affected by the consent decree made therein. That decree gave effect to the mortgage of the 28th January 1908 which was a component part of the decree even though not made enforceable thereby. This is clear from decisions of the Judicial Committee in Pretrial Anni v. Lakshmi Anni 26 I. A. 101 : 22 M. 508 : 1 Bom. L. K. 394 : 3 C. W. N. 485 : 9 M. L. J. 147 : 7 Sar. P. C. J. 516 : 8 Ind. Dec. (n. s.) 363 (P. C.), and Hemanta Kumari Debi v. Midnapore Zemindari Co. 53 Ind Cas. 534 : 46 I. A. 240 : 47 C. 485 : 31 C. L. J. 293 : 37 M. L. J. 525 : 17 A. L. J. 1117 : 24 C. W. N. 177; (1920) M. W. N. 66 : 27 M. L. T. 42 : 11 L. W. 301 : 22 Bom. L. R. 488 (P. C.). Indeed, to validate the mortgage in favour of the plaintiff, quite as much as the mortgage in favour of the Rathis and the Dutts, it was essential that the title of the mortgagor should be established, and that result was accomplished only by the consent decree of the 31st March 1908, which affirmed the agreement of the 28th January 1908, inclusive of the mortgage comprised therein as an integral component element. As between the plaintiff and his mortgagor (the first defendant) the principle of estoppel may apply and the after acquired title of the mortgagor may be made to inure to the mortgagee, but the case is otherwise as between the first defendant and the Rathis and the Dutts mortgagees. The case of a mortgage given back by the purchaser to the vendor of an estate stands upon a footing of its own. While it is true that, where money is loaned or something equivalent done, upon the security of a mortgage in fee with general warranty, the mortgagor cannot set up an after acquired estate against the unsatisfied mortgagee; it is equally true that, where the transaction is simply a purchase, with such mortgage back to secure payment of the purchase money, the rule does not apply. We are, consequently, of opinion that the Subordinate Judge has correctly held that the mortgage in suit must be postponed to the mortgage in favour of the Rathis and the Dutts. The plaintiff, it is satisfactory to find, cannot make a real grievance of this conclusion; for, as the Subordinate Judge has observed, there is overwhelming evidence that the compromise was brought about by the plaintiff himself: it was he who was the virtual plaintiff in the other suit in the cloak of Balachadra and employed his own men and money actively to prosecute the suit. The compromise which he thus brought about included the mortgage with its express recital that the charge thereunder would have priority over all other charges. The plaintiff cannot now very well complain when it transpires that this is precisely the result of the application of the rule of lit pendent.
12. In view of our decision upon the question of lit pendent, it is unnecessary to express an opinion upon the question of the applicability of the principle of subrogation, which has not received adequate consideration from the Subordinate Judge. We may add that if it were necessary to determine the question of subrogation, a fuller investigation of the relevant facts than what is contained in the judgment of the lower Court would be essential.
13. The result is, that the decree of the Subordinate Judge is affirmed and this appeal dismissed with costs. The cross-objections cannot be seriously maintained and are dismissed without costs.
Buckland, J.
14. I agree.
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