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High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE S. RAJESWARAN
N. Ramakrishnan & Another
Versus
S.K. Hussain & Others
A.Nos.4636 and 4637 of 2010 in C.S.No.902 of 2009
Decided On : 28-09-2010
Attachment - Validity of Sale Agreement - AIR 1935 MAD 872, AIR 1973 ALL 455, AIR 1983 MAD 217, AIR 2004 AP 377 - The court considered the validity of a sale agreement entered into prior to the attachment order and referred to legal principles established in various cases to determine that the sale agreement prevailed over the attachment, leading to the raising of the attachment order.
Fact of the Case:
The plaintiff filed a suit for a judgment and decree against the defendant. An application was filed seeking attachment before judgment of the property specified in the suit schedule. The defendant failed to furnish security, leading to an order of attachment. Subsequently, an impleaded party filed an application to raise the attachment, claiming a valid sale agreement with the defendant prior to the attachment order.
Finding of the Court:
The court found that the sale agreement entered into prior to the attachment order was valid and prevailed over the attachment, leading to the raising of the attachment order in respect of the property described in the schedule.
Issues: Validity of the sale agreement in relation to the attachment order.
Ratio Decidendi: The court relied on legal principles established in various cases to determine that a sale agreement entered into prior to the attachment order prevails over the attachment, leading to the raising of the attachment order.
Final Decision: The court allowed the application and raised the attachment order in respect of the property described in the schedule.
Based on the provided legal document, the key points are as follows:
The court examined the validity of a sale agreement executed prior to the attachment order and determined that the sale agreement takes precedence over the attachment, resulting in the order being raised in respect of the property (!) (!) .
The case involved a dispute over whether a sale agreement entered into before the attachment could be upheld despite the attachment order passed later. The court emphasized that an agreement to sell creates an obligation to convey and that a subsequent attachment does not override this prior agreement (!) (!) .
The court clarified that attachment before judgment only affects the rights of the debtor at the time of attachment and does not necessarily invalidate a sale agreement entered into prior to the attachment, especially if the sale was completed and registered before the attachment order (!) (!) .
It was established that a sale agreement executed prior to an attachment remains valid and enforceable against the attached property, and the subsequent sale deed, if executed pursuant to that agreement, also retains its validity, even if registered after the attachment order (!) (!) .
The court highlighted that the timing of the sale agreement relative to the attachment order is critical. An agreement made before the attachment will generally prevail over the attachment, provided the sale was duly registered and the sale consideration was received prior to the attachment (!) (!) .
The court concluded that, in this case, the sale agreement was executed on 25.11.2009, which was prior to the attachment order dated 09.03.2010. Consequently, the sale agreement and the subsequent sale deed are valid, and the attachment order in respect of the first property should be lifted (!) (!) .
As a result, the court allowed the application to raise the attachment order concerning the first item of the property, affirming the priority of the prior sale agreement over the attachment (!) .
These points summarize the court's reasoning and decision, emphasizing the importance of the timing of agreements and the legal principles that uphold the validity of prior sale agreements over subsequent attachment orders.
S. RAJESWARAN, J.
A.No.4637 of 2010 has been filed by the applicant/plaintiff in C.S.No.902 of 2009 to suspend the order in A.No.5332 of 2009 in C.S.No.902 of 2009 dated 9.3.2010 in respect of the property in Item No.1.
2. For the sake of convenience, the parties are referred to as per their rankings in the suit.
3. The plaintiff filed C.S.No.902 of 2009 for a Judgement and decree against the defendant directing the defendant to pay the plaintiff a sum of Rs.75,40,000/- with 24% interest and subsequent interest on the principal amount of Rs.44,00,000/- from the date of the plaint till the date of realisation of the amount.
4. Along with the suit, an application No.5332 of 2009 was filed by the plaintiff under Order 38 Rule 5 CPC seeking a direction, directing the defendant to furnish security to the suit claim amount, failing which , an order of attachment before Judgment of the property specified in the suit schedule. In the schedule, two properties were mentioned and the first item is a residential flat No. 1 and 2 in the Ground floor of the building known as Asian Flat situated at Parthasarathypuram Main Road, T.Nagar, Chennai-17. The second item of the property is a vacant house site situated on the southern side of the Redhills Road, Kolathur Village, Chennai-99.
5. Notice was ordered in A.No.5332 of 2009 and the same was returned as unserved.
So, substituted service through publication was ordered and the same was effected on 6.1 2010. Even then, there was no representation for the defendant. Therefore, this Court on 20.10.2009 directed the defendant to furnish security for the suit amount of Rs.75,40,000/- on or before 30.10.2009. But, the defendant did not furnish security and therefore, this Court on 9.3.2010 passed an order of attachment of the suit schedule property.
6. Thereafter, A.No.4012 of 2010 has been filed by one Vallepalli Seetharama Mohan Rao, a power agent of one Sashikant Vallepalli to implead the latter ie., Sashikant Vallepalli. It is stated by the power agent that his principal entered into a sale agreement on 25.11.2009 which was duly registered as Document No.2299/09 on the file of the Sub Registrar, T.Nagar. He paid the entire amount and therefore, a sale deed was executed on 19.7.2010. When the sale deed was presented for registration, on 21.7.2010, the Sub Registrar, T.Nagar returned the sale deed stating that the plaintiff has obtained an interim injunction restraining the defendant not to sell or create any type of encumbrance of Item No.1 of the schedule mentioned property. Thereafter, he came to know that the injunction order was passed by this Court on 9.3.2010, but, he entered into a contract with the defendant on 10.11.2009 itself. Therefore, he pleaded that he should be impleaded in A.No.5332 of 2009.
7. This Court on 28.7.2010, allowed A.No.4012 of 2010 and the impleading applicant in A.No.4012 of 2010 was impleaded in A.No.5332 of 2009.
8. The impleaded party thereafter filed A.No.4636 of 2010 and A.No.4637 of 2010 for the aforesaid reliefs.
9. Heard the learned counsel for the impleaded party and the learned counsel for the plaintiff. I have also gone through the entire documents available on record.
10. The main contention of the impleaded party is that he entered into a registered sale agreement with the defendant on 25.11.2009 and pursuant to that agreement, a sale deed was executed on 19.7.2010. Therefore, the sale deed executed on the basis of the sale agreement dated 25.11.2009 is very much valid. He pointed out that only on 9.3.2010, the order of attachment was passed. Therefore, this will not vitiated the sale agreement entered into between the parties on 25.11.2009 and therefore, insofar as the first item of the suit property is concerned, the same is to be raised from attachment.
11. Per contra, the argument advanced on behalf of the plaintiff is that both the defendant and the impleaded party are close associates and they colluded together to defeat the righ
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