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2023 Supreme(Online)(KER) 40444
HIGH COURT OF KERALA
Not stated, J
THE FEDERAL BANK LTD. – Appellant
Versus
MANIYOTH CHANDRAN – Respondent
E.A.No. 168 of 2004 in E.P.No 97 of 2003 in O.S.No.18 of 2001
For the Appellants/Petitioners: Adv. Mohan Jacob George
For the Respondents: Adv. R. Surendran
A claim under Order 21 Rule 58 of CPC is not maintainable in execution of a mortgage decree if there was no prior attachment of the property in question.
Headnote:(A) Code of Civil Procedure - Order 21 Rule 58 - Dispute over property attachment in execution proceedings - Claim petition found not maintainable as there was no property attachment, highlighting statutory pre-conditions for such claims. (Paras 8, 9, 12, 13, 19, 20)
(B) Transfer of Property Act - Section 55(6)(b) - Nature of mortgage and priority of claims - The mortgage created by the 2nd respondent was determined to be a sham transaction, thereby not binding on the purchasers in court sale. (Paras 4, 19, 20)
Facts of the case:
The appellant Bank challenged the execution court's order under Order 21 Rule 58 CPC, which allowed a claim petition for property initially mortgaged but purchased by the first claim petitioner at a court sale. (Para 7)
Findings of Court:
The execution court's decision was reversed on the basis that the claim under Order 21 Rule 58 is maintainable only in cases of attachment, which was absent. (Paras 10, 20)
Issues: Whether a claim under Order 21 Rule 58 can be entertained in the execution of a mortgage decree without preceding attachment. (Para 10)
Ratio Decidendi: The court upheld that without an attachment, a claim petition under Order 21 Rule 58 CPC is not maintainable, reaffirming the statutory requirement of attachment for such claims. (Paras 10, 19, 20)
Result: Appeal allowed; Execution Court's order set aside.
| Table of Content |
|---|
| 1. factual background of property ownership and claims. (Para 1 , 2 , 3 , 4 , 5) |
| 2. final conclusion on the appeal and its disposition. (Para 7) |
| 3. arguments presented by the parties regarding mortgage and claims. (Para 8 , 9 , 10 , 11) |
| 4. court's observations on applicability of order 21 rule 58 cpc. (Para 12 , 13 , 14 , 15 , 16 , 18 , 19 , 20) |
| 5. ratio decidendi regarding enforcement of mortgage decree. (Para 17) |
JUDGMENT
(Dated this the 6th day of November 2023)
The appellant was the first respondent in E.A.No. 168 of 2004 in E.P.No 97 of 2003 in O.S.No.18 of 2001 on the files of Subordinate Judge’s court, Thalassery. Respondent Nos.1 and 2 were the claim petitioners, and respondent Nos.3 and 4 were respondent Nos.2 and 3 therein.
The first respondent filed the execution application under Order 21 Rule 58 of CPC.
2. The brief facts of the case of the claim petitioner are as follows:
The petition schedule property originally belonged to K. V. Narayani, mother of the 2nd respondent. She agreed to sell the property to the first claim petitioner for a valid consideration, and an agreement for sale was executed on 9.11.1993. A sum of Rs.2,50,000/- was paid as advance to Smt.K.V. Narayani by the 1st claim petitioner on 9.11.1993. When Narayani failed to receive the balance consideration and execute the sale deed, a lawyer notice was issued on 17.3.1997, and a suit, as O.S. No.124 of 1997 has been filed before the Additional Subordinate Judge’s Court, Thalassery, for specific performance of contract. After receiving the said lawyer’s notice, Narayani fraudulently executed an assignment deed on 11.6.1997 with respect to the petition schedule property in favour of her son K.V. Rajeendrababu, who is the 2nd respondent. So, the claim petitioner was constrained to implead the said K.V. Rajeendrababu as 2nd supplemental defendant in O.S. No.124 of 1997, which was decreed on 10.2.2000 for return of the advance amount with interest. While disposing the suit, the court had categorically entered into a finding that the sale deed executed by K.V.Narayani in favour of K.V. Rajeendrababu is only a sham and nominal one without any consideration.
3. When the defendants in O.S.No.124 of 1997 failed to pay the decreed amount in E.P. No.150 of 2000, the property was put for sale, and the 1st claim petitioner purchased the property in court sale on 23.10.2001. Thereafter, the property was delivered on 27.9.2002, and he sold the property to the 2nd claim petitioner on 17.9.2003.
4. During the pendency of O.S. No.124 of 1997, the 2nd defendant in the suit mortgaged the property to the 1st respondent, Federal Bank Ltd., Thalassery, on 22.4.1999. The appellant/1st respondent filed O.S. No.18 of 2001 against respondent Nos.2 and 3 and obtained a decree. E.P. No.97 of 2003 was filed to realise the amount by the sale of the petition schedule property. Under Section 55 (6)(b) of the Transfer of Property Act , the money advanced as per the sale agreement is a charge on the property agreed to be sold. It is only after six years from 9.11.1993, a mortgage is created by the 2nd respondent on the basis of a sham and nominal document. So the mortgage executed by the 2nd respondent in favour of the 1st respondent is not binding on the petition schedule property. The 1st respondent bank is not entitled to proceed against the property which the 1st claim petitioner has purchased in court sale for the realisation of the amount advanced by him on 9.11.1993. The 2nd claim petitioner mortgaged the property to ICICI bank and availed a housing loan. The original title deeds of the properties are with the ICICI bank. The bank colluded with the 2nd respondent to get back the property lost by the 2nd respondent and his mother, Narayani. The right of the claim petitioners is not lost by the fraudulent creation of a mortgage by the 2nd respondent in favour of the 1st respondent. The claim petitioners came to know about the execution proceedings on 5.3.2004 when a sale pr
