THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Second Appeal No.260 of 2010 (Dated : 10-12-2010) Between: P.Shekar Reddy S/o Hanmanth Reddy R/o Janampet village, Addakal Mandal, Mahabubnagar District. …Appellant A n d Pendyala Balraj and others …Respondents THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Second Appeal No.260 of 2010 JUDGMENT: This Second Appeal is directed against the judgment and decree dated 06.10.2009 passed in A.S.No.1 of 2008 on the file of the I Additional District Judge, Mahabubnagar whereby and whereunder, the learned Additional District Judge confirmed the order of dismissal of the claim petition filed by the appellant under Order 21 Rule 58 read with Section 151 CPC in E.A.No.130 of 2004 in E.P.No.72 of 1999 on the file of the Senior Civil Judge, at Mahabubnagar. 2. Brief facts of the case leading to filing of the Second Appeal by the appellant/claimant are:- Pendyala Balraj-1st respondent is the owner of house bearing No.2-44 admeasuring 152 square yards situated at Janampet village, Addakal Mandal, Mahabubnagar District. He mortgaged the house property in favour of the Manager, State Bank of India, Mahabubnagar Branch as a security for the loan availed by him. He failed to pay the loan amount. Thereupon, the Manager, State Bank of India, Mahabubnagar Branch filed O.S.No.79 of 1997 and obtained a preliminary decree dated 30.7.1998 and thereafter a final decree. The Manager, State Bank of India, Mahabubnagar Branch-2nd respondent filed E.P.No.72 of 1999 for sale of the mortgaged property. The appellant filed E.A.No.130 of 2004 under Order 21 Rule 58 read with Section 151 CPC claiming that he purchased the house bearing No.2-44 from Pendyala Balraj under an agreement of sale dated 2.2.1992 for a sum of Rs.75,000/- and paid Rs.65,000/- as advance on the date of the agreement. As Pendyala Balraj-1st respondent failed to execute the registered sale deed, he filed O.S.No.69 of 2001 and obtained a decree on 08.1.2004. He filed E.P. for execution of the decree granted in O.S.No.69 of 2001. A registered sale deed came to be executed by the Court on behalf of the 1st respondent and thereby, he became the absolute owner of the house. The house purchased by him under an agreement of sale dated 2.2.1992 is not liable for sale for realization of the amount due under the decree. The Manager, State Bank of India-Decree holder contested the claim petition by filing counter. It is stated in the counter that the agreement of sale dated 2.2.1992 is concocted to defeat the claim of the decree holder and therefore, the claim petition is liable to be dismissed. 3. On behalf of the claimant, he got himself examined as Pw-1 and on behalf of the decree holder-2nd respondent, one witness was examined as Rw-1. The Judgment debtor, who suffered decree in O.S.No.69 of 2001, remained ex parte. He did not choose to contest the claim petition. 4. The learned Junior Civil Judge, on considering the evidence brought on record and on hearing the counsel appearing for the parties, came to the conclusion that the agreement of sale pressed into service by the claimant does not confer any absolute rights in favour of the claimant and it will no way hamper the rights of the secured creditor-Decree Holder in bringing the mortgaged property for sale for realization of the decretal debt and with these observations, the learned Senior Civil Judge dismissed the claim petition by order dated 14.9.2007. I deem it appropriate to refer the relevant portion of the order, which reads as hereunder: - “ It may be noted that the agreement said to have been obtained by the petitioner herein is not filed before this Court. Even if it is to be believed that the same was appreciated by the Court while passing decree in O.S.No.69 of 2001, the mortgage of the petition schedule property in favour of respondent No.2 herein was even prior to the filing of the sad suit and decreeing of the said suit. The petitioner herein failed to choose to cause production of the documents that have been filed and marked by the claim petitioner in OS No.69 of 2001. It is admitted by Pw.1 in the course of cross examination that he did not enquire in the bank or in the village as to no encumbrances over the petition house that was purchased by him. The witness also added that as he was financially sound he did not enquire. So also it is deposed by the petitioner that he did not issue any paper publication before entering into the agreement and he had not even verified the title deeds of his vendors. On the other hand the contention of the respondent No.2 is that the respondent No.1 had created an equitable mortgage of the petition schedule property in favour of the bank by depositing the title deeds. Law recognises absolute rights in favour of the mortgagor in respect of mortgaged property as against any other transaction that have got lesser value in the eye of law. It is a settled law that mere agreement of sale does not confer absolute rights in favour of the agreement holder. It is significant to note that the said agreement of sale was not seen by this Court to appreciate whether the same was a registered one and the conditions stipulated therein to appreciate the same. Even to consider the ex parte decree that was passed in O.S.No.69 of 201, in the view of the fact that the said decree was subsequent to the decree that was passed in favour of the respondent No.2 in respect of the petition schedule property. The petitioner herein and the respondent No.1 are private individuals whereas the respondent No.2 is public undertaking being the bank, which is free from attributing any collusive or malafide activities. In the absence of any convincing circumstances or in the absence of any recognizable legal rights that are established by the petitioner herein, the probabilities of obtaining collusive transactions on the part of the private individuals in order to defeat the interest of public body cannot be ruled out. Even otherwise the mortgaged of property by respondnet No.1 in favour of respondent No.2 will prevail over and above the agreement that was obtained by the petitioner from respondent No.1 in respect of the same property. Since it is admitted by the petitioner himself that he did not verify the title deeds of his vendor and he did not issue any paper publication nor did he enquire in the bank or in the village with regard to any encumbrances over the property purchased by him shows his lack of due diligence to enter into the sale transaction in respect of the petition schedule property. The transaction between the petitioner and respondent No.1 are not legalized over and above the transactions that were effected between respondent No.1 and 2. Therefore, as contended by the respondent No.2, it will have first charge over the suit schedule property as against the claims of the petitioner herein. Viewed from any angle the claim of the petitioner cannot be considered, as against the existing legal and recognizable rights of the respondent No.2 over the petition schedule property.” 5. The claimant filed appeal before the I Additional District Judge, Mahabubnagar assailing the order dated14.9.2007 passed in E.A.No.130 of 2004 in E.P.No.72 of 1999. The lower appellate Court, on reappraisal of the evidence brought on record and on hearing the counsel appearing for the parties, did not find any valid ground to interfere with the order passed by the trial Court and thereby, proceeded to dismiss the appeal, by judgment dated 06.10.2009. Hence, this Second Appeal. 6. Heard learned counsel appearing for the appellant –claimant and learned counsel appearing for the 2nd respondent-Decree Holder. 7. Learned counsel appearing for the appellant-claimant submits that the agreement of sale dated 2.2.1992 is much prior to the decree-holder -2nd respondent initiating proceedings for realization of the mortgaged debt and therefore, the appellant is a bona fide purchaser and in which case, his claim deserves to be allowed. In support of his submission, reliance has been placed on the judgments of this Court in Adinarayana v. S.Gafoor Sab[1] and Madhavarapu Haranadhababa[2]. 8. In Adinarayana’s case ( 1 supra), the issue involved was whether the agreement of sale prevails over the attachment before the judgment. Undisputed acts in the cited judgment are judgment debtors executed an agreement of sale in favour of Tarimala Nabi Sab on 15.06.1990 and in pursuance of the decree for specific performance in O.S.No.56 of 1992, the Principal Sub- Court, Anantapur, executed a registered sale deed on 07.08.1993 in favour of Tarimala Nabi Sab and the attachment was obtained subsequent to the date of agreement of sale, more precisely, the attachment before judgment was effected on 05.03.1992 and registration of the sale was made on 07.8.1993. Basing on this undisputed facts, learned Single Judge of this Court held that the agreement of sale prevails over the attachment before judgment and therefore, the schedule property cannot be brought to sale. 9. In Madhavarapu Haranadhababa’s case (2nd supra), the plaint schedule property was attached on 14.01.1981. The said attachment was after execution of a registered sale deed by the judgment debtor in favour of the claimant on 24.07.1980 conveying the said property to the claimant. 10. Coming to the facts of the case on hand, the appellant/claimant claimed to have purchased the property under an agreement of sale dated 2.2.1992. This fact has been seriously disputed by the decree holder. The appellant/claimant neither produced the agreement of sale nor adduced any evidence to show that he verified the encumbrance over the property and purchased the same. Instead, there is a specific admission made by the claimant that he did not verify the encumbrance over the property. He did not even claim to have seen the original document relating to the property covered under the agreement of sale. The trial Court as well as the lower appellate Court considered the material brought on record in right perspective and came to the conclusion that the agreement of sale has been pressed into service to avoid the decreetal debt based on mortgage. There is no substantial question of law involved in this appeal warranting admission. 11. Accordingly, the Second Appeal is dismissed at the admission stage. No order as to costs. _____________________ B.SESHASAYANA REDDY, J Dt.10-12-2010 RAR THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Second Appeal No.260 of 2010 (Dated : 10-12-2010) [1] 2004-ALT-2-780 [2] 2004-ALT-1-655