Case: Nagubai Ammal &amp; Others Vs. B. Shama Rao &amp; Others

Privy Council in Kala Chand Banerjee v. Jagannath Marwari, 1927 PC 108 (AIR V14) (G), that when in execution of a mortgage decree properties are sold without notice to the Official Receiver in whom the equity of redemption had vested prior to the sale, such sale would not be binding on him. But here, it is not the Official Receiver, who impeaches the sale as bad. In fact, he was a party to O. S. No. 8 of 1933-34 and would be bound by the sale in execution of the decree therein, under which the plaintiff claims. It is the purchaser pendente lite in the charge suit, O. S. No. 100 of 1919-20, that now attacks the sale held on 2-8-1928 as null and void. Is he entitled to do so? Counsel for the respondent has invited our attention to the decision in Wood v. Surr, (1954) 19 Beav 551(H). There, the mortgagor filed a suit for redemption in 1838. A preliminary decree for accounts was passed in 1843 and pursuant thereto, a final decree was made in 1848 declaring the amount payable, and time for payment was given till 1849. The amount not having been paid, the mortgage became foreclosed. During the pendency of these proceedings, the mortgagor was adjudicated bankrupt in 1844, but the Official Assignee, in whom the equity of redemption had vested, was not impleaded in the mortgage action. In 1841, the mortgagor had created a further mortgage in favour of one Mrs. Cuppage, and she was not made a party in the redemption suit. After the foreclosure of the mortgage in 1849, one Mr. Wood claiming in the rights of Mrs. Cuppage instituted an action to redeem the mortgage. The question was whether being transferee pendente lite he was bound by the foreclosure proceedings. The contention on his behalf was that as the official assignee was not a party to those proceedings, there had been no proper foreclosure, and that the whole matter was at large. In negativing this contention, Sir John Romily, M. R. observed:"There can be no question but that the suit (Daviss suit) was defective by reason of no notice having been taken of the insolvency. The proceeding having gone exactly as if no insolvency had taken place, the subsequent proceedings would, in my opinion, be wholly inoperative against the assignee-in-insolvency and if he thought fit to contest the validity of the decree of foreclosure against Davis, it could not be held to be binding on such assignee. But that does not conclude the question, which really is, whether the plaintiff who, but for this, would in truth have been bound, can take advantage of this objection.I am of opinion that although the suit was undoubtedly defective, by reason of this insolvency, the assignee alone could take advantage of this defect. It is obvious that Davis himself could not take advantage of it, or if from any subsequent cause, or any subsequent circumstance, the insolvency or bankruptcy had been superseded or annulled, he could not have said that the foreclosure was not absolute against him".These observations directly cover the point now in controversy, and they embody a principle adopted in the law of this country as to the effect of a sale in execution of a decree passed in a defectively constituted mortgage suit. Such a sale, it has been held, does not affect the rights of redemption of persons interested in the equity of redemption, who have not been impleaded as parties to the action as they should have been under O. 34, R. 1, Civil P. C. but that it is valid and effective as against parties to the action. This rule has been affirmed even when the person in whom the equity of redemption has vested is the Official Receiver, and he had not been made a party to the proceedings resulting in sale.Vide Inamullah Khan v. Shambhu Dayal, 1931 All 159 (AIR V18) (I) and Subbaiah Goundan v. Ramasami Goundan, 1954 Mad 604 (AIR V41) (J). We should accordingly hold that even assuming that the equity of redemption in the suit properties vested in the Official Receiver on the adjudication of Keshavananda, his nonjoinder in the execution proceedings did not render the purchase by Devamma a nullity, and that under the sale she acquired a good and impeccable title, subject to any right which the Official Receiver might elect to exercise, and it is not open to attack by the transferee pendente lite under the deed dated 30-1-1920 and his representatives, the present appellants.In the result, we agree with the courts below that the title of the appellants has been extinguished under S. 52, T. P. Act, by the court sale dated 2-8-1928.27. It must be mentioned that the appellants also pleaded that the suit was barred by limitation under Art. 142 on the ground that the plaintiff and his predecessors had not been in possession within 12 years of the suit, and that further the defendant had acquired title by adverse possession commencing from 1920. The learned District Judge, found on both the issues in favour of the plaintiff, and though the correctness of these findings was attacked in the grounds of appeal to the High Court, there is no discussion of the question in the judgment of the learned Judges, and we must take it that the point has been abandoned by the appellants. We accordingly declined to hear them on this question. We may add that the question of limitation cannot really arise on the facts of this case, inasmuch as the possession which is claimed to be adverse is stated to have commenced in 1920, and it is well settled that such possession cannot affect the right of a prior mortgagee to bring the properties, to sale, and adverse possession against the purchaser under that sale cannot commence prior to the date of that sale, and the present suit was instituted on 8-1-1945 within 12 years of the sale, which took place in 1936.

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

Explanation:
0[ds]If it is, it is not in dispute that it becomes avoided by the purchase by Devamma on 2-8-1928. If it is not, it is equally indisputable that the appellants as purchasers of the equity of redemption from Keshvananda have a right to redeem the mortgage dated 1-9-1918, and not having been impleaded in O. S. No. 8 of 1933-34 are not bound either by the decree passed therein or by the sale in execution thereof.9. On this question, as the plaint in O. S. No. 100 of 1919-20 praying for a charge was presented on 6-6-1919, the sale to Dr. Nanjunda Rao subsequent thereto on 30-1-1920 would prima facie fall within the mischief of S. 52 T. P. Act, and would be hit by the purchase by Devamma on 2-8-1928 in execution of the charge decree.1. We see no substance in the contention that the plea of lis pendents is not open to the plaintiff on the ground that it had not been raised in the pleadings. It is true that neither the plaint nor the reply statement of the plaintiff contains any averment that the sale is affected by the rule of lis pendens. Nor is there any issue specifically directed to thatif the plaintiff meant by the above allegations to raise the plea of lis pendens, he has not expressed himself with sufficient clearness for the defendants to know his mind and if the matter had rested there, there would be much to be said in favour of the appellants contention. But it does not restare satisfied that the defendants went to trial with full knowledge that the question of lis pendens was in issue, had ample opportunity to adduce their evidence thereon, and fully availed themselves of the same, and that in the circumstances, the absence of a specific pleading on the question was a mere irregularity, which resulted in no prejudice totrue scope of this rule is that evidence let in on issues on which the parties actually went to trial should not be made the foundation for decision of another and different issue, which was not present to the minds of the parties and on which they had no opportunity of adducing evidence. But that rule has no application to a case where parties go to trial with knowledge that a particular question is in issue, though no specific issue has been framed thereon, and adduce evidence relatingapart from that, the statements of the plaintiff in his plaint in O. S. No. 92 of 1938-39 considered purely as admissions, do not carry the matter beyond the point to which the statements made by Abdul Huq and his legal representatives in the prior proceedings takethe present case, there is no question of estoppel, as the title of Dr. Nanjunda Rao arose under a purchase which was long prior to the admissions made in 1932 and in the subsequenthas been already pointed out that the tenor of the statements made by Abdul Huq, his legal representatives and the plaintiff was to suggest that the proceedings in O. S. No. 100 of 1919-20 were fraudulent and not collusive in character. Those statements would not, in our opinion, be sufficient, without more, to sustain a finding that the proceedings were collusive.19. But assuming that they are sufficient to shift the burden on to the plaintiff of proving that the decree and sale in O. S. No. 100 of 1919-20 were not collusive, the evidence adduced by him is, in our opinion, ample to discharge that burden. He has filed Exhibit J series, which gave a complete picture of the proceedings in O. S. No. 100 ofthe partition deed, Ex K, it will be remembered, the brothers agreed to pay a monthly maintenance of Rs. 8 each to their step-mother, Chellammal. This, however, was not charged on the family properties. With reference to their stepsisters, Srikantamma and Devamma, the provision was simply that the brothers should protect them. It will also be remembered that under the partition Keshavananda and Brahmananda each got two vacant sites in full quit of theirappears from Ex J-10, para 2, that the two brothers were contemplating the disposal of their plots, in which case the claim of Chellammal and the stepsisters to maintenance would be defeated. It became accordingly necessary for them to safeguard their rights, and for that purpose, to file suits for maintenance and claim a charge therefor on the family properties. That the apprehensions of Chellammal were will-founded is established by the fact that the two brothers entered into agreements for the sale of their vacant sites to Dr. Nanjunda Rao on 20-10-1919, and sale deeds were actually executed pursuant thereto on 30-1-1920. There cannot be any doubt, therefore, that the suits were bonawas open to the defendants to have further cross-examined him about the materials, which led him to change his opinion, but they chose not to pursue the matter. Bot the courts below have, on a careful consideration of the record, come to the conclusion that the proceedings in O. S. No. 100 of 1919-20 were not collusive, and we do not see sufficient grounds for disturbing that finding, which must beis difficult to say on these facts that the allegation of the plaintiff that the proceedings in O. S. No. 100 of 1919-20 were collusive was either the foundation of his claim, or that he obtained any benefit under the decree on thatas that judgment was no inter parties, the findings therein are inadmissible in this litigation, and, moreover, there having been an appeal against that judgment, the findings in Ex E lost their finality, and when the parties settled their claim by granting to Garudachar another property in substitution, they ceased to possess any force even interis immaterial that the present appellants were not partiesis clear from the above observations that the maxim that a person cannot approbate and reprobate is only one application of the doctrine of election, and that its operation must be confined to reliefs claimed in respect of the same transaction and to the persons who are partiesplaintiff obtained no advantage against the appellants by pleading in O. S. No. 92 of 1938-39 that the proceedings in O. S. No. 100 of 1919-20 were collusive; nor did they acting on those pleadings acquire rights to the suit properties. Nor is there any question of election, because they only relief which the plaintiff claimed in O. S. No. 92 of 1938-39 and which he now claims is that he is entitled to the suit properties. Only, the ground on which that relief is claimed is different and, it is true, inconsistent. But the principle of election does not forbid, it, and there being no question of estoppel, the plea that the proceedings in O. S. No. 100 of 1919-20 are not collusive is open to theobvious answer to this contention is that the properties which were sold on 2-8-1928 did not vest in the Official Receiver on the making of the order of adjudication on 19-2-1926, as they had been transferred by the mortgagor, long prior to the presentation of Insolvency Case No. 4 of 1925-26 under the very sale deed dated 30-1-1920, which forms the root of the appellants, title.That sale was no doubt pendente lite, but the effect of S. 52 is not to wipe it out altogether but to subordinate it on the rights based on the decree in thebetween the parties to the transaction, however, it was perfectly valid, and operated to vest the title of the transferor in the transferee. Under S. 28 (2) of the Insolvency Act, what vests in the Official Receiver is only the property of the insolvent, and as the suit properties had ceased to be his properties by reason of the sale deed dated 30-1-1920, they did not vest in the Official Receiver, and the sale held on 2-8-1928 is not liable to be attacked on the ground that he had not been impleaded as a partycontention gives no effect to the words "so as to affect the rights of any other party thereto under any decree or order which may be made therein", which make it clear that the transfer is good except to the extent that it might conflict with rights decreed under the decree or order. It is in this view that transfers pendente lite have been held to be valid and operative as between the partieswill be inconsistent to hold that the sale deed dated 30-1-1920 is effective to convey the title to the properties to Dr. Nanjunda Rao, and that, at the same time, it was Keshavananda who must be deemed to possess that title. We are, therefore, unable to accede to the contention of the appellants that a transferor pendente lite must, for purposes of S. 52, be treated as still retaining title to theobservations directly cover the point now in controversy, and they embody a principle adopted in the law of this country as to the effect of a sale in execution of a decree passed in a defectively constituted mortgage suit. Such a sale, it has been held, does not affect the rights of redemption of persons interested in the equity of redemption, who have not been impleaded as parties to the action as they should have been under O. 34, R. 1, Civil P. C. but that it is valid and effective as against parties to the action. This rule has been affirmed even when the person in whom the equity of redemption has vested is the Official Receiver, and he had not been made a party to the proceedings resulting inshould accordingly hold that even assuming that the equity of redemption in the suit properties vested in the Official Receiver on the adjudication of Keshavananda, his nonjoinder in the execution proceedings did not render the purchase by Devamma a nullity, and that under the sale she acquired a good and impeccable title, subject to any right which the Official Receiver might elect to exercise, and it is not open to attack by the transferee pendente lite under the deed dated 30-1-1920 and his representatives, the present appellants.In the result, we agree with the courts below that the title of the appellants has been extinguished under S. 52, T. P. Act, by the court sale dated 2-8-1928.27. It must be mentioned that the appellants also pleaded that the suit was barred by limitation under Art. 142 on the ground that the plaintiff and his predecessors had not been in possession within 12 years of the suit, and that further the defendant had acquired title by adverse possession commencing from 1920. The learned District Judge, found on both the issues in favour of the plaintiff, and though the correctness of these findings was attacked in the grounds of appeal to the High Court, there is no discussion of the question in the judgment of the learned Judges, and we must take it that the point has been abandoned by theaccordingly declined to hear them on this question. We may add that the question of limitation cannot really arise on the facts of this case, inasmuch as the possession which is claimed to be adverse is stated to have commenced in 1920, and it is well settled that such possession cannot affect the right of a prior mortgagee to bring the properties, to sale, and adverse possession against the purchaser under that sale cannot commence prior to the date of that sale, and the present suit was instituted on 8-1-1945 within 12 years of the sale, which took place inthey were so or not is essentially a question of fact, and both the courts before have concurred in answering it in the negative. It is contended for the appellants that this finding is the result of an error into which the learned Judges of the High Court fell as to the incidence of burden of proof; and it should not therefore be accepted.