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High Court Of Delhi
BHARAT FINANCE COMPANY - Appellant
Versus
SKRIMATI SHAKUNTALA DEVL - Respondent
Election 6 of 1973
Decided On : 03/25/1975
ATTACHMENT - SALE OF PROPERTY - EFFECT OF ATTACHMENT ON AGREEMENT TO SELL - RIGHTS OF PURCHASER AND ATTACHING CREDITOR - TRANSFER OF PROPERTY ACT, 1882, SECTIONS 40, 54, 55(4)(B) - CODE OF CIVIL PROCEDURE, 1908, SECTIONS 64, O. 21 R. 58, O. 38 R. 10 - SPECIFIC RELIEF ACT, 1963, SECTION 19(B).
Fact of the Case:
Shakuntala Devi entered into an agreement to purchase a property from Kapur on November 26, 1968, and paid Rs. 10,000 as part consideration. On August 5, 1970, Bharat Finance Co., a creditor of Kapur, obtained a decree and attached the property on January 20, 1971. Shakuntala Devi filed a suit for specific performance on January 10, 1971, and filed objections to the attachment under O. 21 R. 58, CPC, on February 13, 1971. The suit was decreed on April 24, 1972, and the objections were allowed on October 23, 1972, lifting the attachment. The sale deed was executed in favor of Shakuntala Devi on May 9, 1973, and the remaining Rs. 5,000 was paid.
Finding of the Court:
The court held that the attachment did not nullify the agreement to sell or invalidate the subsequent sale, as the agreement was prior to the attachment and the sale was in fulfillment of the obligation to which the judgment debtor was already subject. The court also held that the attaching creditor was entitled to the unpaid purchase money, which was Rs. 5,000 in this case.
Issues: 1. What is the effect of attachment of property on an agreement to sell dated prior to the attachment? 2. What is the effect of attachment on the unpaid balance of the purchase price?
Ratio Decidendi: 1. An attachment of property does not nullify an agreement to sell entered into prior to the attachment, and a subsequent sale in pursuance of the agreement prevails against the attachment. 2. The attaching creditor is entitled to the unpaid purchase money, which is the amount remaining to be paid by the purchaser at the time of the attachment.
Final Decision: The appeal by the attaching creditor was dismissed, and the parties were left to bear their own costs.
( 1 ) THIS is an illustrative case. It brings out clearly the rights of a prospective purchaser of immovable property against an attaching creditor who attaches that very property before it is conveyed to the purchaser in performance of a contract of sale.
( 2 ) THE undisputed facts are these. There is a property bearing No. J-2/7, Krishan Nagar, Delhi-31. One V. P. Kapoor was the owner of this property. He entered into an agreement of sale with Shakuntala Devi. Shakuntala Devi was a tenant in this property. The agreement was entered into on November 26, 1968. It provided that Kapur will sell this propperty to Shakuntala Devi for Rs. 15. 000. 00. Shakuntala Devi paid Rs. 10,000. 00 there and then. The balance was to be paid at the time of the registration of the sale deed. Shakuntala Devi was already in possession of the property as a tenant, as I have said.
( 3 ) ON August 5, 1970, Bharat Finance Co. a creditor of Kapur obtained decree for Rs. 17,700. 00 and costs against Kapur. The judgment creditor took out execution of the decree. On January 20, 1971, this very house was atched by the judgment creditor.
( 4 ) ON January 10,1971, in pursuance of the contract of sale Shakuntala Devi instituted a suit for specific performance against Kapur. On January 20, 1971, the judgment-creditor levied attachment. On February 13, 1971, Shakuntala Devi filed objections under O. 21 r. 58, Code of Civil Procedure alleging that the property could not be attached and sold in execution of the decree for two reasons : firstly, because she had entred into an agreement of purchase with Kapur which was anterior to attachment and secondly, because she had filed a suit for specific performance which was pending in that very court.
( 5 ) ON April 24, 1972, Shakuntala Devi s suit for specific performance was decreed. Thereafter the executing court decided the objections of Shakuntala Devi to the attachment of the property. On October 23, 1972, her objections were allowed and the attachment was lifted. Bharat Finance Co. the judgement creditors now appeal to this court.
( 6 ) WHAT happened later is of considerable importance. In pursuance of the decree of specific performance the heirs of Kapur who had by that time died executed the sale deed in favour of Shakuntala Devi. On May 9. 1973, the sale deed was registered by the sub-registrar. On the date of the registration of the sale deed Shkuntala Devi paid the remaining amount of Rs. 5,000. 00 to the heirs of Kapoor.
( 7 ) THE counsel for the appellant submits that the judgment-debtor, had no power to transfer the property to Shakuntala Devi after the same had been attached in execution of the decree. The sale, it is said, is void. The property should be put to sale, it is urged.
( 8 ) TWO principal questions arise in this appeal. One is : What is the effect of attachment of the property on the agreement to sell dated November 26, 1968 ? The other question is : What is the effect of attachment on the unpaid balance which was admittedly Rs. 5000. 00. I will consider these two questions separately-
( 9 ) ON the first question it is clear that the agreement to sell was entered into on November 26, 1968. It is a registered document. Rs. 10. 000. 00 were paid under it being part consideration of the sale. Rs. 5000. 00 remained to be paid. Attachment was levied on January 20, 1971. The property was conveyed on May 9, 1973, in pursuance of the decree of specific performance passed on April 24, 1972. Will the attachment nullify the agreement to sell ? Will it invalidate the subsequent sale ? What is the precise effect of attachment on the property ? This is the question to be determined.
( 10 ) SECTION 64 of the Code of Civil Procedure ( the Code") deals with attachment. In so far as it is material it reads :
"where an attachment has been made any private transfer or delivery of the property attached or of any interest therein and any payment to the judgment-debtor of any debt, dividend or
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