Case: M. L. Abdul Jabhar Sahib Vs. H. V. Venkata Sastri &amp; Sons &amp; Ors

may be, apply to such charge. The second part does not address itself to the question of creation of a charge. It does not attract the provisions of Section 59 relating to the creation of a mortgage.15. With regard to the applicability of the provisions relating to a simple mortgage, the second part of the first paragraph makes no distinction between a charge created by act of parties and a charge by operation of law. Now a charge by operation of law is not made by a signed, registered and attested instrument. Obviously, the second part has not the effect of attracting the provisions of Section 59 to such a charge. Likewise the Legislature could not have intended that the second part would attract the provisions of Section 59 to a charge created by act of parties. Had this been the intention of the Legislature the second part would have been differently worded.16. If a charge can be made by a registered instrument only in accordance with Section 59, the subsequent transferee will always have notice of the charge in view of Section 3 under which registration of the instrument operates as such a notice. But the basic assumption of the doctrine of notice enunciated in the second paragraph is that there may be cases where the subsequent transferee may not have notice of the charge. The plain implication of this paragraph is that a charge can be made without any writing.17. If a non-testamentary instrument creates a charge of the value of Rs. 100 or upwards, the document must be registered under Section 17 (1) (b) of the Indian Registration Act. But there is no provision of law which requires that an instrument creating the charge must be attested by witnesses.18. Before Section 100 was amended by Act 20 of 1929 it was well settled that the Section did not prescribe any particular mode of creating a charge. The amendment substituted the words "all the provisions hereinbefore contained which apply to a simple mortgage shall, so far as may be, apply to such charge," for the words "all the provisions hereinbefore contained as to a mortgagor shall, so far as may be, apply to the owner of such property and the provisions of Sections 81 and 82 shall, so far as may be, apply to the person having such charge." The object of the amendment was to make it clear that the rights and liabilities of the parties in case of a charge shall, so far as may be, the same as the rights and liabilities of the parties to a simple mortgage. The amendment was not intended to prescribe any particular mode for the creation of a charge. We find that the Nagpur High Court came to a similar conclusion in Bapurao v. Narayan, ILR (1949) Nag 802 at pp. 819-822 = (AIR 1950 Nag l17 at pp. 124-125).It follows that the security bond was not required to be attested by witnesses. It was duly registered and was valid and operative.19. As to the third question, we find that the decree dated March 19, 1954 declared that the security bond in respect of the immovable properties would enure for the benefit of the appellant as a charge for the decretal amount. This relief was granted on the oral prayer of the plaintiffs. We are unable to agree with the High Court that in view of the omission to amend the plaint by adding a prayer for enforcement of the charge,the decree should be construed as containing merely a recital of the fact that a security bond had been executed. In our opinion, the decree on its true construction declared that the security bond created a charge over the properties in favour of the plaintiffs for payment of the decretal amount and gave them the liberty to apply for sale of the properties for the discharge of the incumbrance. Pursuant to the decree the properties were sold and the assets are now held by the Court. The omission to ask for an amendment of the plaint was an irregularity, but that does not affect the construction of the decree.20. It was suggested that the decree was invalid as the High Court had no territorial jurisdiction under clause 12 of its Letters Patent to pass a decree for sale of properties outside the local limits of its ordinary original jurisdiction. For the purpose of these appeals, it is sufficient to say that the respondents cannot raise this question in the present proceedings. If the decree is invalid and the sale is illegal on this ground, the respondents cannot maintain their applications for rateable distribution of the assets. They can ask for division of the sale proceeds only on the assumption that the properties were lawfully sold.It is therefore unnecessary to decide whether the objection as to the territorial jurisdiction of the High Court has been waived by the judgmentdebtor and cannot now be agitated by him and persons claiming through him, having regard to the decisions in Hiralal Patni v. Kali Nath, 1962-2 SCR 747 at pp. 751-2 = (AIR 1962 SC 199 at pp. 200-201), Bahrein Petroleum Co., Ltd. v. P. J. Pappu, (1966) 1 SCR 461 at pp. 462-3 = (AIR 1966 SC 634 at pp. 635-636), Zamindar of Ettiyapuram v. Chidambaram Chetty, ILR 43 Mad 675 = (AIR 1920 Mad 1019) (FB).21. As to the 4th question we find that the immovable properties have been sold in execution of a decree ordering sale for the discharge of the encumbrance thereon in favour of the appellant.Section 73 (1), proviso (c) therefore applies and the proceeds of sale after defraying the expenses of the sale must be applied in the first instance in discharging the amount due to the appellant. Only the balance left after discharging this amount can be distributed amongst the respondents.It follows that the High Court was in error in holding that the respondents were entitled to rateable distribution of the assets along with the appellant.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]11. The evidence does not show that the registering officer D. W. Kittoo put his signature on the document with the intention of attesting it. Nor is it proved that he signed the document in the presence of the executant. In these circumstances he cannot be regarded as an attesting witness, see Surendra Bahadur v. Behari Singh 1939-2 Mad LJ 762 = (AIR 1939 PC 117 ). Likewise the identifying witnesses Senkaranarayana and Kaki Abdul Aziz put their signatures, on the document to authenticate the fact that they had identified the executant. It isHigh Court accepted this contention following its earlier decisions in Viswanadhan v. M.S. Menon, ILR (1939) Mad 199 = (AIR 1939 Mad 202  ) and Shiva Rao v. Shanmughasundaraswami, ILR (1940) Mad 306 = (AIR 1940 Mad 140  ) and held that the security bond was invalid , as it was attested by one witness only. We are unable to agree with this opinion. Section 100 is in theseimmovable property of one person is by act of parties or operation of law 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; and all the provisions hereinbefore contained which apply to a simple mortgage shall, so far as may be, apply to such charge.Nothing in this Section applies to the charge of a trustee on the trust property for expenses property incurred in the execution of his trust, and save as otherwise expressly provided by any law for the time being in force, no charge shall be enforced against any property in the hands of a person to whom such property has been transferred for consideration and without notice of the charge.The first paragraph consists of two parts. The first part concerns the creation of a charge over immovable property. A charge may be made by act of parties or by operation of law. No restriction is put on the manner in which a charge can be made. Where such a charge has been created the second part comes into play. It provides that all the provisions hereinbefore contained which apply to a simple mortgage shall, so far as, may be, apply to such charge. The second part does not address itself to the question of creation of a charge. It does not attract the provisions of Section 59 relating to the creation of a mortgage.16. If a charge can be made by a registered instrument only in accordance with Section 59, the subsequent transferee will always have notice of the charge in view of Section 3 under which registration of the instrument operates as such a notice. But the basic assumption of the doctrine of notice enunciated in the second paragraph is that there may be cases where the subsequent transferee may not have notice of the charge. The plain implication of this paragraph is that a charge can be made without any writing.17. If a non-testamentary instrument creates a charge of the value of Rs. 100 or upwards, the document must be registered under Section 17 (1) (b) of the Indian Registration Act. But there is no provision of law which requires that an instrument creating the charge must be attested by witnesses.18. Before Section 100 was amended by Act 20 of 1929 it was well settled that the Section did not prescribe any particular mode of creating a charge. The amendment substituted the words "all the provisions hereinbefore contained which apply to a simple mortgage shall, so far as may be, apply to such charge," for the words "all the provisions hereinbefore contained as to a mortgagor shall, so far as may be, apply to the owner of such property and the provisions of Sections 81 and 82 shall, so far as may be, apply to the person having such charge." The object of the amendment was to make it clear that the rights and liabilities of the parties in case of a charge shall, so far as may be, the same as the rights and liabilities of the parties to a simple mortgage. The amendment was not intended to prescribe any particular mode for the creation of a charge. We find that the Nagpur High Court came to a similar conclusion in Bapurao v. Narayan, ILR (1949) Nag 802 at pp. 819-822 = (AIR 1950 Nag l17 at pp. 124-125).It follows that the security bond was not required to be attested by witnesses. It was duly registered and was valid and operative.If a charge can be made by a registered instrument only in accordance with Section 59, the subsequent transferee will always have notice of the charge in view of Section 3 under which registration of the instrument operates as such a notice. But the basic assumption of the doctrine of notice enunciated in the second paragraph is that there may be cases where the subsequent transferee may not have notice of the charge. The plain implication of this paragraph is that a charge can be made without any writing.17. If a non-testamentary instrument creates a charge of the value of Rs. 100 or upwards, the document must be registered under Section 17 (1) (b) of the Indian Registration Act. But there is no provision of law which requires that an instrument creating the charge must be attested by witnesses.18. Before Section 100 was amended by Act 20 of 1929 it was well settled that the Section did not prescribe any particular mode of creating a charge. The amendment substituted the words "all the provisions hereinbefore contained which apply to a simple mortgage shall, so far as may be, apply to such charge," for the words "all the provisions hereinbefore contained as to a mortgagor shall, so far as may be, apply to the owner of such property and the provisions of Sections 81 and 82 shall, so far as may be, apply to the person having such charge." The object of the amendment was to make it clear that the rights and liabilities of the parties in case of a charge shall, so far as may be, the same as the rights and liabilities of the parties to a simple mortgage. The amendment was not intended to prescribe any particular mode for the creation of a charge. We find that the Nagpur High Court came to a similar conclusion in Bapurao v. Narayan, ILR (1949) Nag 802 at pp. 819-822 = (AIR 1950 Nag l17 at pp. 124-125).It follows that the security bond was not required to be attested by witnesses. It was duly registered and was valid and operative.As to the 4th question we find that the immovable properties have been sold in execution of a decree ordering sale for the discharge of the encumbrance thereon in favour of the appellant.Section 73 (1), proviso (c) therefore applies and the proceeds of sale after defraying the expenses of the sale must be applied in the first instance in discharging the amount due to the appellant. Only the balance left after discharging this amount can be distributed amongst the respondents.It follows that the High Court was in error in holding that the respondents were entitled to rateable distribution of the assets along with the appellant.As to the third question, we find that the decree dated March 19, 1954 declared that the security bond in respect of the immovable properties would enure for the benefit of the appellant as a charge for the decretal amount. This relief was granted on the oral prayer of the plaintiffs. We are unable to agree with the High Court that in view of the omission to amend the plaint by adding a prayer for enforcement of the charge,the decree should be construed as containing merely a recital of the fact that a security bond had been executed. In our opinion, the decree on its true construction declared that the security bond created a charge over the properties in favour of the plaintiffs for payment of the decretal amount and gave them the liberty to apply for sale of the properties for the discharge of the incumbrance. Pursuant to the decree the properties were sold and the assets are now held by the Court. The omission to ask for an amendment of the plaint was an irregularity, but that does not affect the construction of the decree.20. It was suggested that the decree was invalid as the High Court had no territorial jurisdiction under clause 12 of its Letters Patent to pass a decree for sale of properties outside the local limits of its ordinary original jurisdiction. For the purpose of these appeals, it is sufficient to say that the respondents cannot raise this question in the present proceedings. If the decree is invalid and the sale is illegal on this ground, the respondents cannot maintain their applications for rateable distribution of the assets. They can ask for division of the sale proceeds only on the assumption that the properties were lawfully sold.It is therefore unnecessary to decide whether the objection as to the territorial jurisdiction of the High Court has been waived by the judgmentdebtor and cannot now be agitated by him and persons claiming through him, having regard to the decisions in Hiralal Patni v. Kali Nath,SCR 747 at pp.= (AIR 1962 SC 199   at pp.Bahrein Petroleum Co., Ltd. v. P. J. Pappu, (1966) 1 SCR 461     at pp.= (AIR 1966 SC 634   at pp.Zamindar of Ettiyapuram v. Chidambaram Chetty, ILR 43 Mad 675   = (AIR 1920 Mad 1019) (FB).21.As to the 4th question we find that the immovable properties have been sold in execution of a decree ordering sale for the discharge of the encumbrance thereon in favour of the appellant.Section 73 (1), proviso (c) therefore applies and the proceeds of sale after defraying the expenses of the sale must be applied in the first instance in discharging the amount due to the appellant. Only the balance left after discharging this amount can be distributed amongst the respondents.It follows that the High Court was in error in holding that the respondents were entitled to rateable distribution of the assets along with the appellant.