THE HONOURABLE SRI JUSTICE GODA RAGHURAM Second Appeal No.305 of 2009 01-10-2010 Between: N.Appayamma wife of Peda Bode Reddy ..Appellant Vs. Nimma Jagn son of Suraiah …Respondent. THE HONOURABLE SRI JUSTICE GODA RAGHURAM Second Appeal No.305 of 2009 ORAL JUDGMENT Heard Sri Nimmagadda Satyanarayana, the learned counsel for the appellant and Sri N.Sriram Murthy, the learned counsel for the respondent. The Second Appeal is directed against the judgment and decree dated 07-03-2008 in A.S.No.28 of 2006 by the Senior Civil Judge, Chirala allowing the appeal of the respondent herein and setting aside the judgment and decree dated 27-08-2003 in O.S.No.530 of 1998 on the file of the Court of Principal Junior Civil Judge, Chirala. The appellant herein is the plaintiff in the suit. The appellant filed the suit O.S.No.530 of 1998 for recovery of Rs.61,120/- due under a mortgage deed claiming that the defendant, for the purpose of business development and construction of a house borrowed Rs.30,000/- on 19-08-1994, undertaking to repay the amount with interest @ 24% per annum and as a security for the said loan created a registered mortgage deed in favour of the plaintiff on 19-08- 1994. The plaint also averred that the defendant handed over the link documents with respect to the suit schedule property and that despite repeated demands failed to pay the amount due under the mortgage even after issuance of a legal notice. In the written statement the defendant denied borrowing the amount, executing the alleged mortgage deed on 19.08.1994 and asserted that the plaintiff and her brother played fraud and obtained some documents at Sub-Registrar’s Office by misrepresentation. The defendant also specifically pleaded that he had no right to alienate the property covered under the suit document; that being a landless poor person the properties were assigned to him by the Government. On the basis of the pleadings, the trial court framed an additional issue - whether the mortgaged property is exempted from the mortgage and is invalid and contrary to law. The trial court in decreeing the suit held on the additional issue that the defendant is not the original assignee as he himself stated in the written statement that he purchased the suit schedule property from the original assignee. The defendant had pleaded that the plaint schedule land is assigned land, belongs to the Government and he purchased the suit schedule property as a landless poor person being a bona fide purchaser for a valuable consideration. Without any evidence on record as to whether the suit schedule property is Government land; whether if Government land, it is assigned land; whether if assigned land, the deed of assignment contains a condition prohibiting alienation of the land to be treated as assigned land in view of the definition of “assigned land” in Section 2(1) of A.P. Assigned Lands (Prohibition of Transfers) Act, 1977 (for short “ Act 9 of 1977); whether the defendant is a landless poor person entitled to retain the land even if the properties were assigned land and he had purchased the property contrary to substantive provisions of Act 9 of 1977; and whether purchase of the property by him is in good faith and for a valuable consideration, the trial court merely going by the pleadings in the written statement proceeded to assume that though the land is assigned land, defendant being a landless poor person who purchased the property on good faith and for valuable consideration, is the lawful owner of the property and after having rightly rejected the other defences with regard to the fraudulent nature of the mortgage deed and non-passing of the consideration, passed a preliminary decree in favour of the plaintiff and against the defendant. Aggrieved by the judgment dated 27-08-2003, the defendant/respondent preferred A.S.No.28 of 2006. The lower appellate court by the judgment under appeal allowed the appeal reversing the judgment and decree of the trial court and dismissed the suit. The only issue considered by the lower appellate court was as regards applicability of the provisions of Act 9 of 1977. The reasons recorded by the lower appellate court for coming to the conclusion that the property is not liable to be sold for realization of the mortgage debt are; (a) that the plaintiff in cross examination categorically admitted that the suit schedule property and other sites in the vicinity belong to the Government and are assigned lands; (b) that the trial court even though referred to the vital admissions by the plaintiff had brushed aside the admissions holding that the defendant could not take advantage of the admissions in the oral evidence of the plaintiff but must prove that the suit schedule properties are Government lands and were assigned lands by establishing the same through documentary evidence; that this was an erroneous approach and the trial court ought to have drawn an adverse inference from the failure of the defendant to establish the burden that the lands are assigned lands and therefore are not alienable; (c) that during the pendency of the appeal, the appellant filed a certificate issued by the Tahsildar, Chirala which was marked by consent as Ex.B-1 wherein the Tahsildar certified that the land in question in plot No.2 of an extent of Ac.0.03 cents was assigned land, which was assigned in favour of one Patnam Namasivaiah son of Laxmaiah vide Chirala Tahsildar’s D.K.No.02/1388, dated 10-10-1978; that as is apparent from Ex.A-1 (the suit mortgage deed) the alleged vendor of the defendant is Pullaiah and Padvala Issac and not the original assignee Patnam Namasivaiah and therefore the defendant must have purchased the land from the purchasers of assigned land; that the property in item No.2 of the plaint schedule as per the certificate of the Tahsildar produced in the appeal is Government land as per the village records; (d) that once it is established that the provisions of the Act 9 of 1977 apply neither mortgage nor sale of the mortgaged assigned lands is permissible and could be enforced, being transactions contrary to law and public policy; and (e) that once defendant on the strength of the admissions by the plaintiff and by filing Ex.B-1 had established the fact that the plaint schedule property is an assigned property by the Government, the burden is on the plaintiff to establish that the purchase by the defendant of this land would fall outside the purview of the Act 9 of 1977 in view of the defendant being a landless poor person having purchased the property bona fide for adequate consideration and therefore coming within the exemption of Section 3(5) of the Act 9 of 1977. On the above reasoning the appeal was allowed as already stated. It is contended by Sri Nimmagadda Satyanarayana, the learned counsel for the appellant that the lower appellate court committed a serious error in placing reliance exclusively on Ex.B-1 without any proof and without any evidence as to whether the land is assigned land, the deed of assignment contains a clause as to prohibition of alienation; or if the land was sold notwithstanding such a condition of prohibition of alienation, the purchaser was exempted from the consequences of the invalidity of such transaction under Section 3(5) of the Act 9 of 1977; and whether in the circumstances the subsequent purchase by the defendant from the earlier purchasers of this property from the original assignee was valid. All these aspects were ignored merely on the basis of vague pleadings and on submission of a document at the appellate stage without recording any evidence, the appeal was allowed. Sri Satyanarayana would also rely on the provisions of Order XLI Rule 27 CPC which enjoins that the parties to an appeal shall not be entitled to produce additional evidence, whether oral or documentary, in the Appellate Court unless the court from whose decree the appeal is preferred has refused to admit evidence which ought to have been admitted, or the party seeking to produce additional evidence, establishes that notwithstanding the exercise of due diligence, such evidence was not within his knowledge or could not, after the exercise of due diligence, be produced by him at the time when the decree appealed against was passed, or the Appellate court requires any document to be produced or any witnesses to be examined to enable it to pronounce judgment, or for any other substantial cause. It is also contended that the appellate court did not record reasons for the admission of Ex.B-1 and merely proceeded to adjudicate upon the appellate issues on the basis of Ex.B-1 having been marked by consent. It would appear from the text and tenor of the judgments of the trial court and the lower appellate court that the plaintiff admitted to foreknowledge of the incapacity of the property to be mortgaged; that the schedule property belongs to the Government and constituted assigned lands. It is the specific case of the defendant that the lands are assigned lands. There was also some evidence on record to show that the defendant was not the first purchaser from the original assignee and that the property was earlier purchased by his vendors from the original assignee Patnam Namasivaiah. Unfortunately, despite an additional issue having been framed by the trial court as to whether the mortgage was valid in view of the provisions of Act 9 of 1977, the trial court failed to exercise a pro active role and went along with the indisciplined processing of the case by the counsel for the plaintiff and the defendant. The provisions of Act 9 of 1977 constitute legislative mandate which spell out a public policy of inalienability of assigned lands in the context “assigned lands” as defined under Section 2(1) of the said Act. It was the duty of the Court to ensure that the legislative policy and declaration of invalidity of alienation of assigned lands was effectuated notwithstanding the lax and ambiguous pleadings and indisciplined marshalling of evidence by the plaintiff and the defendant. The court cannot be a silent spectator to a macabre and irrelevant forensic exercise by respective litigants and their counsel. As an instrument executing a sovereign function of governance, namely the judicial function, the court is entitled to and obligated as well to execute its function by taking a proactive role and directing the course of litigation, in appropriate cases where public policy issues are involved. Having regard to the admitted context qua the pleadings of the respective parties that the property in question is Government land and was assigned, the trial court should have taken necessary steps if necessary by impleading the State to ensure ascertainment of the truth of the matter. Unfortunately, the trial court did not do so. Before the lower appellate court the defendant/appellant produced Ex.B-1 which is a certificate issued by the Tahsildar that the property in question is assigned land assigning to one P.Namassivaiah and that the other property is Ac.0.69 cents in Sy.No.693/4 of Chirala Revenue village is Government land as per the revenue records. Whether the land is assigned land within the meaning of the expression as defined in Act 9 of 1977; whether the purchase of that land by the defendant’s vendor is saved under the provisions of the Act 9 of 1977; and whether the defendant has valid title to the property are all integral aspects that fall for consideration within the additional issue framed by the trial court i.e., as to whether the land is assigned land and therefore the mortgage itself is invalid. The lower appellate court also failed to consider whether if the mortgage fails on account of the prohibition of such mortgage under the provisions of Act 9 of 1977, a personal decree could be passed against the defendant or grant of such a relief was barred by limitation. Non-consideration of these vital aspects by the lower appellate court affecting the public policy of the State as enjoined by the provisions of the Act constitutes a substantial error of law warranting interference in this Second Appeal. Accordingly and on the above premises, the judgment and decree dated 07-03-2008 in A.S.No.28 of 2006 of the learned Senior Civil Judge, Chirala is set aside and the appeal is restored and directed to be heard and determined afresh after framing appropriate points for appellate consideration, including as to whether the suit schedule property covered by Ex.A-1 is assigned land; whether the defendant has valid title to the said land under the provisions of Act 9 of 1977 and whether a personal decree against the defendant could be passed, in accordance with law. For the purpose of ascertaining and pronouncing upon these issues, it shall be legitimate for the lower appellate Court to remand the matter to the trial court for recording of evidence on the relevant issues or aspects as the case may be. The Second Appeal is allowed as above after hearing the learned counsel for both parties. No order as to costs. ________________ GODA RAGHURAM,J 1st OCTOBER 2010 TSNR