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1962 Supreme(Mad) 286

MADRAS HIGH COURT
S. RAMACHANDRA IYER
Rukkumani Ammal (died)
Versus
Kamachi Ammal
A.A.A.O. No. 129 of 1960
Decided On : 21 September, 1962

Advocates Appeared:
R. Gopalaswami Iyengar, for Appellants; S. Sitarama Iyer and S. Rajaraman, for Respondent.

A mortgage created by a debtor during the time when Act V of 1954 was in force is valid as between the parties and the validity of the alienation should directly arise for consideration in a suit or proceeding with respect to the alienation.

Headnote:

MORTGAGE - VALIDITY - ACT V OF 1954, S. 6 - PRESUMPTION OF INTENT TO DEFEAT OR DELAY CREDITORS - REBUTTABLE - ALIENATION VALID AS BETWEEN PARTIES - BURDEN ON DEBTOR TO PROVE NO INTENT TO DEFEAT OR DELAY CREDITORS - VALIDITY OF ALIENATION TO BE DIRECTLY RAISED IN SUIT OR PROCEEDING - MORTGAGE SALE VALID UNTIL PROPERLY SET ASIDE.

Fact of the Case:

A mortgage was created by a debtor during the time when Act V of 1954 was in force, which prohibited the transfer of immovable property by a debtor entitled to the benefit of the Act. The mortgagee instituted a suit on the basis of the mortgage and obtained a decree. The property was sold in execution of the mortgage decree and the respondent became the purchaser. The appellant, who had purchased the property in execution of a simple money decree against the same debtor, obstructed the delivery of possession to the respondent.

Finding of the Court:

The court held that the mortgage was valid as between the parties and that the appellant, as a representative of the judgment debtor, could not contest its validity. The court also held that the presumption of intent to defeat or delay creditors under Section 6 of Act V of 1954 was rebuttable and that the burden was on the debtor to prove that the alienation was not made with such intent. Since the appellant had not attacked the validity of the mortgage in any legal proceeding, the court held that the mortgage sale in favor of the respondent was valid until properly set aside.

Issues: 1. Whether the mortgage created during the time when Act V of 1954 was in force was invalid. 2. Whether the appellant, as a representative of the judgment debtor, could contest the validity of the mortgage. 3. Whether the presumption of intent to defeat or delay creditors under Section 6 of Act V of 1954 was rebuttable.

Ratio Decidendi: 1. Section 6 of Act V of 1954 only creates a rebuttable presumption of intent to defeat or delay creditors in the case of an alienation by an agriculturist debtor during the period when the Act was in force. 2. The validity of an alienation made by an agriculturist debtor during the currency of the Act is valid as between the parties to it. 3. The burden is on the debtor to prove that the alienation was not made with a view to defeat or delay the creditors. 4. The validity of the alienation should directly arise for consideration in a suit or proceeding with respect to the alienation.

Final Decision: The appeal was dismissed and the order of the lower appellate court was upheld.

Judgement

JUDGMENT :- This appeal arises out of an obstruction offered by the appellant at the time of delivery to the respondent of certain property, in execution of a mortgage decree. The appellant is a Court auction purchaser; that purchase was in execution of a simple money decree against the debtor. The latter, an agriculturist entitled to the benefit of Act V of 1954 was indebted to a creditor under a promissory note of the year 1950. No suit could be filed against an agriculturist debtor during the time when Act V of 1954 and the Ordinance which preceded were in force. The prohibition contained in those two enactments was in force from 6-12-1953 to 1-7-1955. The legislation also provided safeguards to the creditor who was prevented from filing a suit for recovery of his dues. Sec. 6 which is one of these provisions says :

"Effect of transfer of immovable property by debtor :- Every transfer of immovable property by a debtor entitled to the benefit of S. 3 or S. 4, made after the commencement of the Ordinance and before the 1st of March 1955, shall, in any suit or other proceeding, with respect to such transfer, be presumed, until the contrary is proved, to have been made with intent to defeat or delay the creditors of the transferor."

The creditor filed a suit, S. C. No. 296 of 1955, immediately after the expiry of that Act, obtained a decree, and, in execution of the same, brought the property which forms the subject matter of this appeal, to sale. The appellant as said earlier, became the purchaser. That was on 21-7-1958. The appellant also obtained possession of the property.

2. The debtor did not, however, conform to the terms of Sec. 6, which I have extracted above. He created a mortgage over the property on 21-7-1954, during the time when the said Act was in force. The mortgagee instituted O. S. No. 5 of 1957 on the basis of the mortgage and obtained a decree. The decree was duly put in execution, and, in the sale that was held on 31-7-1958 the respondent a third party became the purchaser. It will be noticed that the sale under the mortgage decree took place about a week after the sale in execution of the small cause simple money decree referred to above.

3. Two matters have to be noticed now. (1) The mortgage was created by the debtor before the execution proceedings under the simple money decree in S.C.S. No. 296 of 1955 were started. The mortgage was, however, contrary to the prohibition contained in S. 6 of Act V of 1954. (2) The purchase by the appellant under the simple money decree was subsequent to the institution of the mortgage suit, which was made on 4-1-1957. Normally, the Court-sale in favour of the appellant will not avail against the purchaser under the mortgage decree both by reason of the tact that the title of the latter will go back to the date of the mortgage and also on the principle of lis pendens.

4. When the respondent sought delivery of possession of the property, obstruction was offered by the appellant. The application was, however, dismissed by the trial Court. On appeal by the respondent, the learned District Judge of Tiruchirapalli, allowed the appeal and directed the removal of obstruction. In this second appeal against the order of the learned District Judge, two points have been urged : (1) that no appeal lay to the lower appellate Court as the matter was one that came under O. 21, Rr. 95 and 97, and not under S. 47 C.P.C. and (2) that the mortgage created at a time when Act V of 1954 was in force, was invalid, and that therefore the respondent could derive no title by virtue of his purchase under a decree passed on that mortgage.

5. There is no substance in the first point. The appellant, as the purchaser in execution of a money decree, will be a representative of the judgment debtor. The respondent, on the other hand, as the purchaser of the same property in execution of a mortgage decree against the same debtor will combine in himself not merely his interests but that of the mortgagee







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