Monday, 23 December 2019

Whether judgment debtor can claim exemption as per S 60(1)(c) of CPC in respect of property over which charge has been created by compromise decree?

According to the learned counsel for the appellant, she is a labourer occupying the land and building shown in the decree, as her sole shelter and source of means and therefore under S. 60(1)(c) of the Code, those assets are to be exempted from sale. On the other hand, according to the learned counsel for respondents 1 and 2, plea for exemption under S. 60(1)(c) does not accrue to the appellant having regard to the nature of decree in execution of which the property in question was sold. The argument is that the compromise decree passed on 11.02.2012 created a charge in the property and therefore, sale was not hit by S. 60(1)(c) of the Code.

11. We perused the decree and the terms of compromise incorporated therewith. The decree shows that the suit was instituted for specific performance of a contract for sale and the 2nd respondent later relinquished his claim for specific performance upon the promise made by the defendant that he would refund ` 75,000/- within six months of the date of compromise with 6% interest per annum. It was also agreed by the deceased Mylan that in case of default of payment of the amount as agreed, there shall be a charge in the plaint scheduled property. There is no dispute that the property brought for sale and confirmed in the execution proceedings was the same property over which charge was created as per compromise. Therefore the question that arises for consideration is whether exemption provided in S. 60(1)(c) of the Code can be claimed by the appellant in respect of the property over which charge has been created by a compromise decree.

12. Section 60(1)(c) of the Code enumerates the properties which are liable to attachment and sale in execution of a decree whereas proviso thereto categorises properties which are exempt from attachment or sale. On assimilation of the entire scheme of the provisions and also the object for which the exemption is enacted, it is very difficult to assume that a judgment debtor who suffers a money decree which creates a charge over his property can claim the benefit of exemption under S. 60(1)(c).

13. The nature of decree charging payment of money in the property of a defendant in a suit for money is such that the right of the holder of decree to recover money from the property by sale is determined at the time of passing the decree. Therefore the objection to attachability or saleability of property bearing charge cannot be said to be a matter arising before a court executing the decree. This is notwithstanding the fact that there is no need for the holder of such a charged decree to seek attachment of property which is already subject to charge since charge always runs with the land irrespective of subsequent transfers. In any view of the matter, a debtor after having created by his own consent a charge in his property cannot be allowed to turn round and contend later that the property is immune from attachment or sale as if he is entitled to exemption under S. 60(1)(c) of the Code. If he is allowed to approbate and reprobate, it will only defeat the very purpose of a decree creating charge in the property. There is nothing in law to indicate that S. 100 of the Transfer of Property Act 1882 (for short 'the T.P. Act') which makes provision for creating charge in the property by act of parties or decree is subservient to S. 60 of the Code. Where a decree orders payment of money and charges it on the immovable property on default, law permits the holder to realise money by sale of property in execution of that decree. This position of law is clear from Order XXXIV Rule 15(2) of C.P.C.

[(2) Where a decree orders payment of money and charges it on immovable property on default of payment, the amount may be realised by sale of that property in execution of that decree.]

IN THE HIGH COURT OF KERALA

F.A.O. No. 210 of 2018

Decided On: 28.06.2019

 Ammini  Vs. Vibeesh

Hon'ble Judges/Coram:
A. Hariprasad and T.V. Anilkumar, JJ.

Citation: AIR 2019 kerala 146


1. Appellant who is the Additional Second Judgment debtor in E.P. No. 174/2014 in O.S. No. 37/2010 challenges the order of the Additional Sub-Court, North Paravur, dismissing E.A. No. 454/2016 filed by her under Order XXI Rule 90 of the Code of Civil Procedure, 1908 (herein after referred to as 'the Code'), for setting aside the sale conducted on 20.07.2015 which was later confirmed by the court in favour of the first respondent, the auction purchaser.

2. Appellant is the widow of one Mylan. Respondents 3 to 5 are the children of Mylan. The 2nd respondent instituted against Mylan, O.S. No. 37/2010 before the Additional Sub-Court, North Paravur and obtained a decree for money on compromise on 11.02.2012. Mylan, the sole defendant in the suit later died on 28.11.2013. Alleging that a sum of ` 95,437/- was outstanding, 2nd respondent decree holder filed E.P against the appellant and respondents 3 to 5 for realization of money by sale of their property measuring four cents of land comprised in Sy. No. 417/4 of Chengamanad Village which was formerly owned by deceased Mylan. It was sold in execution of compromise decree on 20.07.2015 in court auction in favour of the 1st respondent.

3. Appellant challenged the sale dated 20.07.2015 as illegal and sought it to be set aside for various reasons by filing E.A. No. 454/2016, which the contesting respondents 1 and 2 seriously opposed. The court below after holding necessary inquiry and hearing the parties dismissed E.A. No. 454/2016 by impugned order dated 09.11.2018.

4. The contentions raised by the appellant in support of her plea for setting aside the sale are:

(1) Sale was conducted without giving notice required to be given under Order 21 Rule 66 of the Code.

(2) In fact, the liability of deceased-original defendant had been discharged even prior to his death but the same was suppressed in the execution proceedings.

(3) The property auctioned was undervalued and consequently more portion of land than what was actually necessary was sold in favour of the auction purchaser.

(4) Since the property was already settled in her name by the original defendant, it was never liable to be proceeded for sale.

(5) She is a labourer within the meaning of S. 60(1)(c) of the Code occupying the land and building for her shelter and therefore her assets are exempt from attachment and sale in execution of decree.

5. All these contentions were examined by the court below in the light of the evidence brought on record. On the side of the appellant, she was examined as PW 1 and Exhibits A1 and A2 were marked. The contesting respondents 1 and 2 did not adduce any evidence.

6. The plea that the original judgment debtor had already discharged the debt before his death was held to be not established by any evidence. We also find that no convincing evidence was adduced in support of the contention that Mylan had discharged his debt by payment of money or other means. There is no ground to interfere with this finding of the court below which is based on appreciation of facts and evidence. In fact, no serious challenge was also made before us in this appeal against the above findings of the court below.

7. With respect to the contention that notices under Order XXI Rule 66 were not served on appellant and other judgment debtors, we find that the court below rightly found that there was due service of notice but the judgment debtors failed to raise any valid objection before the execution court. Since the finding is based on the records available before the court below, we do not find any ground to interfere with this finding also. The learned counsel for the appellant did not seriously challenge this finding also during the course of arguments.

8. The main two contentions raised by the appellant relate to (1) claim for exemption based on S. 60(1)(c) of the Code and (2) complaint of non-observance of mandatory requirement under Order 21 Rule 64 of the Code limiting sale to such portion of property as is sufficient to satisfy the decree.

9. The court below took the view that the appellant cannot claim benefit of exemption under S. 60(1)(c) since law considers the exemption to be a personal right available only to the original judgment debtor. After death of the original debtor, she cannot avail the benefit either as an assignee or a legal heir. In this respect the Single Judge's decision of this Court in Parvathy Antherjanam v. Indian Bank (MANU/KE/0038/1996 : 1996 (1) KLT 319) was also relied on. Besides this, her plea that property was settled by Mylan exclusively in her name was also not believed for want of any evidence. The court below further found that despite sufficient opportunity having been availed, judgment-debtors failed to raise any valid objection to Order 21 Rule 66 notice and therefore sale could not be set aside on a ground which they failed to take at the appropriate point of time.

10. According to the learned counsel for the appellant, she is a labourer occupying the land and building shown in the decree, as her sole shelter and source of means and therefore under S. 60(1)(c) of the Code, those assets are to be exempted from sale. On the other hand, according to the learned counsel for respondents 1 and 2, plea for exemption under S. 60(1)(c) does not accrue to the appellant having regard to the nature of decree in execution of which the property in question was sold. The argument is that the compromise decree passed on 11.02.2012 created a charge in the property and therefore, sale was not hit by S. 60(1)(c) of the Code.

11. We perused the decree and the terms of compromise incorporated therewith. The decree shows that the suit was instituted for specific performance of a contract for sale and the 2nd respondent later relinquished his claim for specific performance upon the promise made by the defendant that he would refund ` 75,000/- within six months of the date of compromise with 6% interest per annum. It was also agreed by the deceased Mylan that in case of default of payment of the amount as agreed, there shall be a charge in the plaint scheduled property. There is no dispute that the property brought for sale and confirmed in the execution proceedings was the same property over which charge was created as per compromise. Therefore the question that arises for consideration is whether exemption provided in S. 60(1)(c) of the Code can be claimed by the appellant in respect of the property over which charge has been created by a compromise decree.

12. Section 60(1)(c) of the Code enumerates the properties which are liable to attachment and sale in execution of a decree whereas proviso thereto categorises properties which are exempt from attachment or sale. On assimilation of the entire scheme of the provisions and also the object for which the exemption is enacted, it is very difficult to assume that a judgment debtor who suffers a money decree which creates a charge over his property can claim the benefit of exemption under S. 60(1)(c).

13. The nature of decree charging payment of money in the property of a defendant in a suit for money is such that the right of the holder of decree to recover money from the property by sale is determined at the time of passing the decree. Therefore the objection to attachability or saleability of property bearing charge cannot be said to be a matter arising before a court executing the decree. This is notwithstanding the fact that there is no need for the holder of such a charged decree to seek attachment of property which is already subject to charge since charge always runs with the land irrespective of subsequent transfers. In any view of the matter, a debtor after having created by his own consent a charge in his property cannot be allowed to turn round and contend later that the property is immune from attachment or sale as if he is entitled to exemption under S. 60(1)(c) of the Code. If he is allowed to approbate and reprobate, it will only defeat the very purpose of a decree creating charge in the property. There is nothing in law to indicate that S. 100 of the Transfer of Property Act 1882 (for short 'the T.P. Act') which makes provision for creating charge in the property by act of parties or decree is subservient to S. 60 of the Code. Where a decree orders payment of money and charges it on the immovable property on default, law permits the holder to realise money by sale of property in execution of that decree. This position of law is clear from Order XXXIV Rule 15(2) of C.P.C.

[(2) Where a decree orders payment of money and charges it on immovable property on default of payment, the amount may be realised by sale of that property in execution of that decree.]
14. Analogous is the law with respect to a decree passed for enforcement of mortgage by sale of the property. This is clear from Order 34 Rule 15(1) which provides that all provisions contained in Order 34 which apply to a simple mortgage shall, so far as may be, apply to a mortgage by deposit of title deeds within the meaning of S. 58 and to a charge within the meaning of S. 100 of the T.P Act. The court passing a mortgage decree for sale under Order 34 determines the right of the holder of decree for sale of the property at the time of passing the decree itself. However, a simple or an ordinary decree for money is altogether different from a charged decree or a decree for sale of a mortgaged property. Unlike in the case of a decree for sale or charged decree, right of a decree holder to bring the property of a judgment debtor to sale in execution of a simple or ordinary money decree accrues him to only at the stage of execution and never before. Therefore, any valid objection to attachability or saleability of property in execution of an ordinary or simple decree for money could be raised at the stage of execution by the judgment debtor claiming exemption under S. 60(1)(c) of the Code.

15. A Division Bench of this Court in Lakshmi v. State Bank of Travancore (MANU/KE/0078/1988 : 1987 (1) KLT 789 : 1987 KHC 230) while considering the objection raised by the mortgagor/judgment debtor to sale of property in execution of a decree for mortgage money held that exemption claimed by him against the mortgagee under S. 60(1)(c) to save his property from sale was not sustainable. It was held that law keeps a decree for realisation of mortgage money by sale of property completely out of the purview of S. 60 of the Code. The relevant portion of the decision is extracted below:-

"(5). Division Bench observed that sale under a mortgage decree, strictly speaking, is not a sale in execution of the decree; it is a sale provided in the document of mortgage and what takes place after the decree is a satisfaction of the decree and that the proviso cannot apply to mortgage decrees where there is no need for attachment. The heading of the section and sub-section uses the expression 'attachment and sale'. Under the provisions of the CPC there can be a sale without attachment. Attachment is uncalled for in the case of sale of property in execution of mortgage decree. That is because by act of parties and operation of the provisions of the Transfer of Property Act property is subject to a charge. The charge could be enforced straight away by sale. S. 60(1) is in relation to attachment and sale of property. Sub-s. (1) clarifies what property could be the subject of attachment and sale, i.e., sale in pursuance of attachment by court. Proviso to sub-s. (1) can only operate in the area intended to be covered by sub-s. (1). Subs. (1) does not apply to cases of sale without attachment. Equally so proviso also cannot apply to cases of sale without attachment. Sub-s. (1) as well as the proviso apply only to cases of sale following attachment. Another Division Bench of this Court also considered this question in this manner in Rahima Beevi v. Kerala Financial Corporation (MANU/KE/0030/1987 : 1986 KLT 539). We respectfully agree with the view taken by the two Division Benches of this Court:

(6). Learned counsel for the appellants would contend that those decisions were pronounced without reference to the effect of sub-s. 1(A) of S. 60, introduced by amendment in 1976. Sub-s. 1(A) states that notwithstanding anything contained in any other law for the time being in force, an agreement by which a person agrees to waive the benefit of any exemption under this section shall be void. Learned counsel would have it that execution of mortgage in regard to residential houses by a worker would amount to waiver of the exemption provided in the proviso to S. 60(1) and such waiver is void. Sub-s. 1(A) could not have been considered by the earlier Division Bench because the amendment came only later. Latter Division Bench did not advert to sub-s. 1(A), but the decision turned on the view taken by the court that an order passed under the provisions of the Kerala Financial Corporation Act 1951 did not amount to a decree and therefore it was not a case of execution of a decree. In that view the court held that S. 60 itself would not apply except for the procedural aspect. The question as posed by the appellants in this case was not urged before the court.

(7). It is not possible to treat execution of a mortgage governed by the provisions of the Transfer of Property Act as a waiver contemplated under sub-s. (1A) of S. 60 of the Code. The question of waiver would arise only in the context of attachment and sale in execution of a decree. The provision was introduced because of difference of opinion among various High Courts as to whether the benefit of exemption under S. 60(1) could be waived by judgment-debtors. It was to protect the interest of the beneficiaries of the exemption under proviso to sub-s. (1) that sub-s. (1A) was enacted by making it clear that there could be no waiver in the eyes of law. Exemption under the proviso is from the liability of the property from 'attachment and sale' under sub-s. (1); that waiver must be of exemption of property from attachment and sale. We have indicated that sub-s. (1) and the proviso would only operate in relation to money decrees and not decrees in enforcement of mortgages. If sub-s. (1) and the proviso cannot apply in the case of mortgage decrees, equally sub-s. (1A) will not apply in the case of mortgage decrees. That is because the declaration of attachability and saleability of property in sub-s. (1), exemption from such attachment or sale in the proviso and the embargo on waiver can operate only in the same field, that is, decrees other than mortgage decrees.

(8). Mortgage, as we have indicated, is a transaction covered by the Transfer of Property Act. Any person having any interest in the immovable property can subject the property to mortgage, subject only to the limitations if any, under the provisions of the Transfer of Property Act or in other Acts governing the field. A person having a house of his own has certainly a right to create a mortgage on that property. That right is not taken away by the provisions of the Transfer of Property Act or of any other statute. That right cannot be said to have been taken away by the provisions of S. 60 of the Code either. If the right is not taken away, it is open to him to create a mortgage, which must necessarily give rise to a right of sale either through court or even otherwise. We do not think that right is sought to be taken away by introducing sub-s. (1A) of S. 60 of the Code. Execution of a mortgage in relation to residential house by persons falling under the exempted category would not amount to waiver as contemplated in sub-section (1A) of S. 60. We therefore hold that the house compound of the appellants is liable to be sold in execution of mortgage decree".

16. In our view, the same principles apply to a decree for money creating charge in the property of the judgment debtor. In the present case, since there is charge created in the property of the original judgment debtor, none of the judgment debtors is entitled to claim exemption under S. 60(1)(c) of the Code.

17. The court below failed to notice the precise nature of decree and also understand that the law keeps a compromise decree creating charge in the property completely out of the scope and ambit of S. 60 of the Code. However, it found the appellant to be not eligible to claim exemption on other grounds. It was of the view that what the original judgment-debtor could have perhaps claimed before death cannot be claimed by his assignee or successor in interest since the alleged right to exemption provided by S. 60(1)(c) of the Code is personal in nature. The decision relied on by court in support of this position reported in Parvathy Antherjanam (supra), was contended to be not laying down a sound law. In this respect, he relied on a decision in Badri Chandan v. Raja Indrajit Pertab Bahadur Saheb (MANU/UP/0347/1932 : AIR 1932 All. 508), which took the view that the benefit of exemption could be claimed even by an heir provided the claimant satisfied all the prerequisites contained in S. 60(1)(c) of the Code. We are not inclined to examine the correctness of law laid down in Parvathy Antherjanam' case (supra) having regard to the fact that decree put in execution in the present case is a charged decree and consequently S. 60(1) is totally out of question.

18. The argument advanced by the learned counsel for the appellant that property was undervalued, according to us, was rightly rejected. There is nothing in evidence to suggest that property sold was in excess of portion of land required for satisfying the decree. There is nothing wrong in the finding of the court below that the appellant and her children accepted notices of sale but failed to raise any valid objection.

19. Strictly speaking, the appellant or any of the judgment debtors were disentitled under law to raise an objection before the execution court that property was undervalued and the mandatory requirement under Order 21 Rule 64 of the Code limiting the sale of the property only to requisite portion thereof was overlooked. This is because the charged decree in question never showed that it did limit the sale to any portion of property. When the decree ordered realisation of money by sale of property, the executing court should honour and execute the decree as it stands. It is supposed to act within the direction given in the decree. The executing court has no power to adopt its own wisdom or course and confine sale to a portion of the property soliciting power under Order 21 Rule 64 of the Code in the absence of liberty given by the decree limiting sale to a portion of property. Charged decree is akin to a mortgage decree governed by the provisions in Order 34 of the Code as is clear from Order 34 Rule 15(1). While considering the question whether execution court has power to confine sale of the property only to a portion of land in the absence of provision for such a limitation made in the decree for sale of mortgaged property, this Court in Dhanalakshmi Bank Ltd. v. Divakaran (MANU/KE/0946/1999 : 2000 (2) KLT 231 : 2000 KHC 346) held that once power of directing sale of whole property is exercised by the court which passes the decree, the executing court has no power to go behind the direction in the decree and consider whether anything less than what is directed by the decree could be done. Despite the legal position being as above also, the court below fixed ` 4,00,100/- as upset price as the reasonable amount and rightly went ahead with the sale of the whole property. In view of the discussion of facts and law as above, we hold that there is no sufficient ground to interfere with the impugned order passed by the Additional Sub Court, Paravur in E.A. No. 454/16.

In the result F.A.O. No. 210/2018 fails and it is dismissed.


Print Page

No comments:

Post a comment