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2006 Supreme(Ker) 786

Judges : THOTTATHIL B.RADHAKRISHNAN
Jayan Kuttichakku - Appellant
Versus
Common Man Chitties & Loans (P) Ltd. - Respondent
Case No : E.F.A. Nos. 37 & 38 of 2001
Decided On : 12/04/2006
Advocates Appeared :
For the Appellant: K.G. Balasubramanian, Advocate. For the Respondent: K.V. Sadananda Prabhu & K.N. Chandrababu, Advocates.

Headnote:

Transfer of Property Act, 1882 - Section 100 - Appellant's grandfather, and his legal representatives were defendants in various suits - The decree against them in O.S. led to sale certificate in favour of the decree holder in that case - Appellant got assignment of property - On the strength of such title, he filed claim petitions in the course of execution of two other decrees against his grandfather's estate and heirs - The court below dismissed those claims holding that the decree holder in O.S. took sale certificate with the encumbrances noticed therein, which were the liabilities in about 18 suits in different courts, including the suits from which these appeals arise and therefore, he and the claim petitioner, his transferee, are bound by those encumbrances - Hence, these appeals were preferred - Held, A charge created in terms of S.100 of the T.P. Act is an encumbrance - It cannot be enforced against the charged property, while in the hands of a transferee for consideration and without notice of charge - Appeals dismissed.

Judgment :-

Thottathil B. Radhakrishnan, J.

The appellant's grandfather, Kuttichakku Agasthy and his legal representatives were defendants in various suits. The decree against them in O.S.No.521/1991 of the Irinjalakuda Munsiff’s Court led to Ext.A2 sale certificate in favour of the decree holder in that case. By Ext.A1, the appellant got assignment of Ext.A2 property. On the strength of such title, he filed claim petitions in the course of execution of two other decrees against his grandfather's estate and heirs. The court below dismissed those claims holding that the decree holder in O.S.No.521/I991 took Ext.A2 sale certificate with the encumbrances noticed therein as Malayalam (Badhyatha Edakkudi), which were the liabilities in about I8 suits in different courts, including the suits from which these appeals arise and therefore, he and the claim petitioner, his transferee under Ext.A1, are bound by those encumbrances. Hence, these appeals.

2. In support of these appeals, it is argued that what subsisted in the suits enlisted in Ext. A2 were only attachments and therefore not encumbrances and would not, in law, affect Ext.A2 sale. Citing the decision of this Court in Iyyunni v. Anto (1994 (1) KLT 583), it is contended that an attachment does not create any title and it is not an encumbrance or a charge on the property, The decision of this Court in Kunjikavu Amma v. Janaki Amma & Ors. (1957 KLT 392) is relied on to argue that court sales are not free from encumbrances and the purchaser gets the property with all the defects in the judgment debtors title and that, therefore, if encumbrances subject to which the property is sold turn out to be invalid, the benefit goes exclusively to the purchaser. It is thus canvassed that there were only attachments in favour of the decree holders in the different suits and the reference in Ext.A2, to such debts, is of no consequence.

3. Per contra, it is argued on behalf of the decree-holder that the entries in Ext. A2 regarding the different suits were, made at the instance of and obviously, with the knowledge of the legal representatives of Agasthy and the decree holder - auction purchaser in that suit, has consciously taken that court sale with the said terms, thereby, resulting in the creation of a charge. It is further urged that the court sale resulting in Ext. A2 sale certificate dated 30.11.1999, followed by Ext. A1 sale, within an year, on 11.7.2000, in favour of the appellant, then a student, who is none other than a grandson of Agasthy, is a mechanization of the appellant's father and the other heirs of Agasthy, in collusion with the decree holder - auction purchaser in Ext. A2, to defeat the interest of the other creditors, which fraud deserves to be denounced by the courts of justice.

4. S.100 of the Transfer of Property Act ("TP Act", for short) provides that where immovable property of one person is made security for the payment of money to another, and the transaction does not amount to a mortgage, the latter person is said to have a charge on the property. A charge is enforceable against the property over which charge is created. This is explicit from S.100 itself, which provides that all provisions which apply to a simple mortgage shall, so far as may be, apply to a charge and that no charge shall be enforced against any property in the hands of a person to whom the property over which a charge is created, has been transferred for consideration, and without notice of the charge, unless such enforcement is otherwise expressly provided by any law for the time being in force.

5. "Encumbrance" and "incumbrance" are the same. That term is not defined in the T.P. Act. Encumbrance is a legal claim on an estate (see Chamber’s Twentieth Century Dictionary). Where the statute under consideration did not define the term "incumbrance", the Apex Court in National Textile Corporation v. State of Maharashtra, (1977) 3 SCC 4, referred to Wharton's Law lexicon to notice "incumbrance" as a claim,

















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