Appeals Nos 988 and 989 of 1964
Appeals from the judgment and decree dated February 16 1961 of the Patna High Court in Appeal from Original Decree No 390 of 1953
D Goburdhun for the appellants in CA No 899 of 1964
section C Agarwal and R K Garg for the appellants in CA No 989 of 1964
D N Mukherjee and section Mustafi for respondent No 1 in both the appeals
The Judgment of the Court was delivered by Bachawat J
One Harbans Narain Singh was the proprietor of villages Seha and Dhobaha and other villages
He created several encumbrances over these villages including a mortgage 127 dated February 10 1886 in favour of Basanti Bibi two mortgages dated September 9 1907 and February 5 1910 in favour of Harprasad Das and a mortgage dated August 2 1911 in favour of defendant No I Ramanandan Lal
On June 23 1915 Harbans Narain sold the villages to Mahabir Missir subject to the above mortgages
Mahabir Missir redeemed the mortgages in favour of Basanti Bibi and Harprasad Das and became subrogated to their rights
Ramanandan Lal instituted a suit to enforce his mortgage obtained a final decree for sale put the decree into execution at the execution sale purchased villages Seha and Dhobaha and obtained possession of the villages in 1919 and 1920
In 1924 Mahabir instituted suit No 17 of 1924 to enforce his mortgage lien praying for ratable contribution of his dues in respect of villages Seha and Dhobaha from Ramanandan Lal and obtained a final decree on August 22 1931
Mahabir died leaving his son Kashinath as his legal representative
Kashinath put the decree in suit No 17 of 1924 into execution
On July 13 1934 Ramanandan Lal paid the decreetal dues in respect of village Seha
On November 4 1935 village Dhobaha was sold in execution of the decree in suit No 17 of 1924 and was purchased by Kashinath
In June 1934 Ramanandan Lal through his constituted attorney Munshi Sheobaran Lal granted five leases in respect of the suit lands in the village to defendants 2 to 7
At the time when the leases were created Ramanandan Lal was the mortgagor in possession of the suit lands over which Kashinath had a mortgage lien
One of the questions in issue in these appeals is whether the leases were binding on Kashinath
It appears that Kashinath obtained a money decree against Ramatahal Pandey husband of defendant No 3 and in execution of the money decree attached the suit lands
Defendants 2 to 7 filed claim petitions objecting to the attachment under 021 r 58 CPC
The claim petitions were allowed and the lands were released from attachment by orders of the executing court dated November 20 1942 and February 26 1944
The executing court found that the leases were genuine
Kashinath did not file any suit under 021 r 63 CPC
One of the questions in these appeals is whether the orders passed in the claim proceedings under 021 r 58 precluded Kashinath from setting up his claim in the present suit
On June 11 1946 Kashinath instituted the suit out of which these appeals arise against Ramanandan Lal and the lessees for recovery of possession of the suit lands and mesne profits alleging that the leases were collusive transactions and were otherwise not binding on him
The defendants contested the suit
In the meantime in other proceedings it was declared that Mahabir was a benamidar for Shri Thakur Taraknathji and the deity was the real owner of the villages
In view of this adjudication Kashinath lost 128 all interest in the present suit
By order dated August 25 1952 the deity was added as a coplaintiff in the suit
The subordinate Judge Arrah held that the leases were genuine were granted by Ramanandan Lal in due course of management and were binding on the plaintiffs
On this finding he dismissed the suit
The deity preferred an appeal to the High Court of Patna
The High Court allowed the appeal and decreed the suit
It held that the leases were sham transactions were made in contravention of section 65A of the Transfer of Property Act and were not binding upon the plaintiffs
Before the High Court it was contended on behalf of the defendants that the plaintiffs were precluded from challenging the leases in view of the orders passed against Kashinath in the proceedings under 0 21 r 58 CPC but the High Court rejected this contention
Defendants Nos 2 6 and 7 and the widow of defendant No 5 have filed C A No 988 of 1964 and defendants 1 and 4 have filed C A No 989 of 1964 under certificates granted by the High Court The appellants contend that as Kashinath did not file any suit under O 21 r 63 CPC the adverse orders passed against him in the proceedings under O 21 r 58 CPC operated as res judicata and lie and the deity who now stands in his shoes were precluded from alleging that the leases were not binding on them
We think that this contention should be rejected
In view of the orders passed against Kashinath in the claim proceedings and his failure to institute suits under O 21 r 63 CPC Kashinath was precluded from claiming that he had the right to attach the suit lands in execution of his money decree but he was not precluded from claiming that he had the right to sell the lands in execution of his mortgage decree
Rules 58 to 62 of Order 21 CPC provide for a summary investigation of the claims and objections to the attachment of any property attached in execution of a decree
The issue in the proceeding is whether such property is liable to such attachment
If the claim is allowed the property is released from attachment r 60
If the claim is disallowed the attachment continues r 61
If the property is subject to mortgage or charge in favour of some person not in possession the attachment may be continued subject to such mortgage or charge r 62
The party against whom an order is made in the claim proceeding may institute a suit to establish the right which he claims to the property in dispute but subject to the result of such suit if any the order is conclusive r 63
If no suit is brought under r 63 within the prescribed period of limitation the order in the claim proceeding is conclusive on the question whether the property was or was not liable to attachment and sale in execution of the particular decree
But the order is not conclusive for all purposes see Kandai Narasimhachariar vs Raghava Padayachi 129 and others
A claim proceeding under r 58 is not a suit or a proceeding analogous to a suit
An order in the claim proceeding does not operate as res judicata
It is because of rule 63 that the order becomes conclusive
The effect of r 63 is that unless a suit is brought as provided by the rule the party against whom the order in the claim proceeding is made or any person claiming through him cannot re agitate in any other suit or proceeding against the other party or any person claiming through him the question whether the property was or was no liable to attachment and sale in execution of the decree out of which the claim proceeding arose but the bar of rule 63 extends no further
In support of the contention that the orders in the claim proceedings operated as res indicate counsel for the appellant relied on several decisions
In Subbier vs Moideen Pitchai2 the decree holder in execution of a money decree attached a debt alleged to be due to the judgment debtor
The garnishee objected to the attachment on the ground that the debt was not due to the judgment debtor it had been assigned and he had premised to pay to the assignee and the amount of the debt was Rs 300 and not Rs 350
The objection was disallowed
The attached debt was sold in execution of the decree and was purchased by the decree holder
The decree holder purchaser then sued to recover the debt
As the garnishee did not file a suit under 0 21 r 63 the order passed against him in the claim proceeding became conclusive and he was precluded from re agitating his objections in the suit
In the course of his judgment Schwabe C J referred to section 11 of the Code of Civil Procedure and his observations give some support to the contention of the appellants in the present case that the order in the proceeding under r 58 operates as Yes judicata
But we cannot agree with those observations
The order in the summary proceeding under r 58 does not operate as res judicata
The reason why the garnishee could not reagitate his objections was that in view of r 63 he was precluded from asserting that the decree holder was entitled to attach and sell the particular debt on the footing that it was due to the judgment debtor
In Sarju Prasad Missir and others vs Maksudan Choudhuri and others3 one Lalji Lal obtained a decree for sale of the property mortgaged to him
In execution of the decree Lalji Lal attached the property
One Karoal Narian Choudhary filed a petition objecting to the attachment By an order dated September 14 1886 passed under section 278 CPC of 1992 corresponding to 0
21 58 CPC of 1908
file executing court directed that the property should not be sold under the decree obtained by Lalji Lal
Sarju Prasad an assignee of the decree executed the decree at the execution sale purchased the property and subse 1 ILR 2 AIR 1923 Mad
3 AIR 1922 PC 341
130 quently instituted a suit against the heir of Kamal Narain for recovery of possession of the property
The Privy Council held that the order dated September 14 1886 became final and binding upon Lalji Lal and all persons claiming title under him
Sir John Edge observed  The petition of objection was a petition which the Subordinate Judge had to consider and dispose of and any party to that proceeding who was dissatisfied with the order which the Subordinate Judge might make could have appealed from it
Lalji Lal was a party to that proceeding and he did not appeal and the order became final and binding upon Lalji Lal and upon those who claim title under him
 The observation that the party dissatisfied with the order made under section 278 of the Code of Civil Procedure 1882 could have appealed from the order seems to have been made per incuriam
It seems that no appeal lay from such an order
The reason why Lalji Lal was precluded from contending that the property was liable to be attached and sold in execution of the decree obtained by him was that in the absence of a suit under section 283 of CPC of 1882 he and Sarju Prasad claiming title under him could not subsequently contend that the property was liable to be sold in execution of the decree
In the two cases discussed above the adverse orders in the claim proceeding became conclusive on the question whether the property was liable to attachment and sale in execution of the particular decree then sought to be executed
Equally in the absence of any suit under O 21 r 63 CPC the adverse orders passed against Kashinath conclusively decided that the suit lands were not liable to be sold in execution of the money decree obtained by him against Ramtahal Pandey
But those orders were not conclusive on the question whether the lands were liable to be sold in execution of the mortgage decree obtained by Kashinath against Ramanandan Lal
On the merits the question is whether the leases granted by Ramanandan La
while he was the mortgagor in possession of the suit lands were binding on the mortgagee Kashinath
The High Court held that the leases were in contravention of section 65A of the 
Section 65A was inserted in the by section 30 of the Transfer of Property Amendment Act 1929 which came into force on April 1 1930 Section 63 of the Transfer of Property Amendment Act 1929 provided that nothing in the provisions of section 30 of the amending Act would be deemed if any to affect the terms or incidents of any of property made or effected before the 1st day of April 1930
Now Kashinath was entitled to the rights of the mortgagees under the mortgages dated February 10 131 1886 September 9 1907 February 5 1910
All these mort gages were executed before April 1 1930 and nothing in section 65A affected their incidents
The power of the lessor to make leases binding on the mortgagee  was an incident of the mortgages and was not affected by section 65A
The validity of the leases granted by the mortgagor in June 1934 must be determined with reference to the law as it stood before the enactment of section 65A
In Madan Mohan Singh vs Raj Kishori Kumari1 Mookerjee J held that a mortgagor in possession may grant a lease conformable to usage in the ordinary course of management for instance lie may create a tenancy from year to year in the case of agricultural lands or from month to month in the case of houses
But he is not competent to grant a lease on unusual terms or to alter the character of the land or to authorise its use in a manner or for a purpose different from the mode in which he himself had used before he granted the mortgage
This view of the law as it stood before the enactment of section 65A was approved in Raja Kamakshya Narayan Singh Bahadur vs Chohan Ram and Another2 and this court held that the question whether the mortgagor in possession has power to lease the mortgaged property must be determined with reference to the authority of the mortgagor as the bailiff or agent for the mortgagee to deal with the property in the usual course of management
In Gobinda Chandra Saha and others vs Sasadhar Mandal3 B K Mukherjea J pointed out that normally a permanent lease with rent fixed in perpetuity is not sanctioned by the ordinary course of management
He observed The mortgagor might be within his rights to create a lease which is from month to month or from year to year as the case might be but he cannot grant a permanent lease with a rent fixed in perpetuity
This amounts to an alienation of his right to increase the rent in future and is as good as the sale of the property itself
This is not sanctioned by the ordinary course of management as has been mentioned above nor is it warranted by the previous user of this particular property In the present case defendants 2 7 were lessees under five leases granted by the mortgagor in June 1934
All these defendants claimed to be Permanent lessees with rent fixed in perpetuity
Four of the leases were granted by registered pattas
In respect of four leases the mortgagor received nazrana or premium
All the leases were created after the property was advertised for sale in execution of the mortgage decree
The High Court has found 1  92
2 118
3 AIR1947Cal7375
132 that the leases were created by the mortgagor in bad faith with a view to cause loss to the mortgagee decree holder
The leases were not in the ordinary course of management of the mortgagor as the agent or bailiff of the mortgagee and were not binding on the mortgagee
On behalf of the appellants it was argued that the leases might not be binding on Kashinath while he was the mortgagee but after he purchased the property he ceased to be a mortgagee and he could not thereafter assert that the leases were not binding on him
This novel argument is ingenious but unsound
An auction purchaser at a sale held in execution of a mortgage decree buys not only the interest of the mortgagor but also the interest of the mortgagee
If the lease does not bind the mortgagee it does not equally bind the auction purchaser
It is interesting to notice that in Rust vs Goodale1 Harman J held that the right of the mortgagee to treat a tenant of the mortgagor as a trespasser was a right which passed on sale or foreclosure to his assignee
A lease granted by the mortgagor out of the ordinary course of management though not binding on the mortgagee is binding as between the mortgagor and the lessee
Such a lessee acquires an interest in the right of redemption and is entitled to redeem
If such a lease is created before the institution of a suit relating to the mortgage the lessee must be joined as a party lo the suit under 0 34 r 1 CPC otherwise he will not be bound by the decree passed in the suit and will continue to retain his right of redemption
But in view of section 52 of the  if the mortgagor grants such a lease during the pendency of a suit for sale by the mortgagee the lessee is bound by the result of the litigation
If the property is sold in execution of the decree passed in the suit the lessee cannot resist a claim for possession by the auction purchaser
The lessee could apply for being joined as a party to the suit and ask for an opportunity to redeem the property
But if he allows the property to be sold in execution of the mortgage decree and they have now lost the present case the lessees allowed the suit lands to be sold in execution of the mortgage decree and they have now lost the right of redemption
They cannot resist the claim of the auction purchaser of recovery of possession of the lands
If a mortgagor in possession of the mortgaged property exe cutes a lease of the property in the ordinary course of management as the agent or bailiff of the mortgagee during the pendency of a suit by the mortgagee to enforce the mortgage a question may arise whether such a lease is in the eye of the law a lease granted by the mortgagee through his agent and therefore binding on him
But in the present case that question does not arise 1 4243 133 as the leases were not granted by the mortgagor in the ordinary course of management as the bailiff or agent of the mortgagee
The High Court held that the leases were sham transactions
We do not think it necessary to decide this question
Even assuming that the leases were not sham transactions they were not binding on Kashinath and the deity
The High Court rightly decreed the suit
The appeals are dismissed with costs
There will be one hearing fee
Y P Appeals dismissed


Summary:
The owner of certain properties over which K had a mortgage granted leases to certain persons
The lands were sold in execution of the mortgage decree of K and were purchased by K at the auction The lessees allowed the property to be sold and did not apply for being joined as parties
K obtained a money decree against one of the lessees and in execution attached the lands
The lessees filed claim peti tions objecting to the attachment under 021 r 28 CPC
The claim petitions were allowed and the executing court found that the leases were genuine
K did not file any suit under O21 r 63 CPC
But later K filed a suit against the mortgagor and the lessees for recovery of possession of the lands alleging that the leases were collusive transactions and were otherwise not binding on him
The trial court dismissed the suit holding that leases were genuine but the High Court decreed the suit holding that the leases were sham transactions and made in contravention of section 65A of the Transfer of Property Act
In appeal to this Court the appellants contended that i as K did not file any suit under Order 21 r 63 CPC the adverse Orders passed against him in the proceedings under 021 r 58 CPC operated as res judicata and he was precluded from alleging that the leases were not binding on him and ii the leases granted by the mortgagor were binding on K HELD In view of the orders passed against K in the claim proceedings and his failure to institute suits under 021 r 63 CPC K was precluded from claiming that he had the right to attach the suit lands in execution of his money decree but he was not precluded from claiming that he had the right to sell the lands in execution of his mortgage decree
128 E A claim proceeding tinder 021 r 58 CPC is not a suit or a proceeding analogous to a suit
An order in the claim proceeding does not operate as res judicata
It is because of 021 r 63 that the order becomes conclusive
The effect of r 63 is that unless a suit is brought provided by the rule the party against whom the order in the claim proceeding is made or any person claiming through him cannot reagitate in any other suit or proceeding against the other party or any person claiming through him the question whether the property was or no liable to attachment and sale in execution of the decree out of which the claim proceeding arose but the bar of rule 63 extends no further
129 A C Kandadai Narasimhachariar vs Raghava Pedayachi  Ors ILR  approved
126 Subbier vs Moideen Pitchai AIR 1923 Mad
562 and Sarju Prasad Missir and Ors
vs Maksudan Choudhuri  Ors
AIR  referred to
ii The validity of the leases granted by the mortgagor was not affected by section 65A of the Transfer of Property Act as the leases were granted before the enactment of section 65A 131 A B The leases were not in the ordinary course of management of the mortgagor as the agent or bailiff of the mortgagee and were not binding of the mortgagee
132 A B A lease granted by the mortgagor out of the ordinary course of management though not binding on the mortgagee is binding as between the mortgagor and the lessee
Such a lessee acquires an interest in the right of redemption and is entitled to redeem
If such a lease is created before the institution of a suit relating to the mortgage the lessee must be joined as a party to the suit under 034 r 1
CPC otherwise he will not be bound by the decree passed in the suit and will continue to retain his right of redemption
But in view of section 52 of the Transfer of Property Act if the mortgagor grants such a lease during the pendency of a suit for sale by the mortgagee the lessee is bound by the result of the litigation
If the property is sold in execution of the decree passed in the suit the lessee cannot resist a claim for possession by the auction purchaser
The lessee could apply for being joined as a party to the suit and ask for an opportunity to redeem the property
But if he allows the property to be sold in execution of the decree
 he loses his right of redemption
In the present case the lessees allowed the suit lands to be sold in execution of the mortgage decree and they have now lost the right of redemption
They can of resist the claim of the auction purchaser for recovery of possession of the lands
132 D G Raja Kamakshya Narayan Singh Bahadur vs Chohan Ram and Anr   followed
Madan Mohan Singh vs Raj Kishori Kumari   92 Gobinda Chandra Saha  Ors
vs Sasadhar Mandal AIR 1947 Cal
73 75 and Rust vs Goodale  42 and 43 referred to