Case Note & Summary
The dispute arose from a series of transactions concerning two survey numbers in Mouza Buxar. One Ram Narain Ram mortgaged his half share in the plots to the Buxar Trading Co-operative Society in 1931. In 1933, the Society executed a registered release deed relinquishing the mortgaged plots in his favor, motivated by his representation that he needed to repay Rs. 500 to the Society, though no actual payment was made. Subsequently, the Society initiated mortgage award proceedings in 1934, leading to a preliminary mortgage award in December 1934 and a final award in May 1935, all culminating in the Society purchasing the plots in auction in 1936 and obtaining possession in 1937. Meanwhile, one Devendra Nath, who had obtained attachment before judgment of the same plots on April 23, 1934 in a money suit against Ram Narain Ram, purchased the plots in execution of his money decree on August 13, 1934. The Society and the Co-operative Bank went into liquidation in 1943, and the appellants, Kedar Nath Lal and another, purchased the right, title and interest of the Society and the Bank from the common liquidator. The appellants then filed suits for declaration of title and possession against various persons in possession, including Devendra Nath and those claiming under him. The trial court and the first appellate court dismissed the suits, holding that the release deed had extinguished the Society’s mortgage and that the appellants had no title. The High Court affirmed these decisions, leading to the present appeals. The primary legal issues were whether the release deed was binding on the Society and whether the purchase by Devendra Nath during the pendency of the mortgage award proceedings was hit by the doctrine of lis pendens under Section 52 of the Transfer of Property Act, 1882. The appellants contended that the release was void and not binding, and alternatively that the transfers were made pendente lite and therefore subject to the final decree. The respondents argued that the release was valid and that the attachment prior to the purchase exempted the transaction from the lis pendens rule. The Supreme Court first held that the release was absolute and unconditional; the non-payment of Rs. 500 did not invalidate it, and thus it was binding on the Society. However, the Court found that Ram Narain Ram did not object to the inclusion of the plots in the mortgage award, leading the Society to bona fide believe the property remained encumbered. On the lis pendens issue, the Court held that the mortgage award proceedings from April 5, 1934 to July 20, 1937 constituted a pending proceeding for a mortgage decree, not a mere money claim. Section 52 applied, and any purchase during that period was subject to the outcome. Devendra Nath’s attachment did not create title and did not prevent the operation of the doctrine. His purchase on August 13, 1934, after the commencement of the mortgage award proceeding, was hit by lis pendens, and he took subject to the final mortgage decree. As a result, the property remained that of the Society, and the appellants, as successors, acquired valid title. The Court thus allowed the appeals (except those involving transfers by non-mortgagor Sheonarain), set aside the High Court’s judgment, and decreed the suits in favor of the appellants. The Court relied on Samarendra Nath Sinha v. Krishna Kumar Nag, Moti Lal v. Karrab-ul-Din, and Gouri Dutt Maharaj v. Sukur Mohammed.
Headnote
A) Transfer of Property – Doctrine of Lis Pendens – Applicability to Mortgage Award Proceedings – Section 52, Transfer of Property Act, 1882 – Where proceedings for obtaining a mortgage award, equivalent to a mortgage decree, were pending from filing of application to final possession, any purchase of the suit property during that period is hit by the doctrine of lis pendens, and the purchaser takes subject to the result of the proceedings. Held that Devendra Nath’s purchase on August 13, 1934 was hit by lis pendens, and the property continued to be that of the Society, so the plaintiff was entitled to it. B) Transfer of Property – Release of Mortgage – Binding Effect – Release deed executed by Co-operative Society in favor of mortgagor out of motive to enable repayment but not containing condition of actual payment was binding on the Society; merely because mortgagor failed to pay the sum did not invalidate the release. Held that release was valid and binding on the Society. C) Transfer of Property – Attachment Before Judgment – Effect on Lis Pendens – Attachment before judgment does not create title but only prevents alienation; if property is acquired pendente lite, the doctrine of lis pendens still applies and the acquirer is bound by the decree. Held that attachment by Devendra Nath before his purchase did not affect application of lis pendens.
Issue of Consideration
Applicability of doctrine of lis pendens under Section 52 of Transfer of Property Act, 1882 to purchase made during pendency of mortgage award proceedings, and validity and binding effect of a release deed executed by a mortgagee co-operative society.
Final Decision
The Supreme Court dismissed four appeals (C.A. Nos. 1091-1094 of 1964) relating to transfers by Sheonarain as he was not a mortgagor. In the remaining appeals, it held that the release deed was binding on the Society, but since Ram Narain Ram did not object to the inclusion of the suit plots in the mortgage award, the Society bona fide believed the property remained mortgaged. The Court held that the mortgage award proceeding was a proceeding for a mortgage decree and not a mere money claim; therefore the doctrine of lis pendens under Section 52 of the Transfer of Property Act applied. Devendra Nath’s purchase on August 13, 1934 was made during the pendency of that proceeding and was hit by lis pendens; his prior attachment did not create any title and did not exempt the transaction from the doctrine. Consequently, the suit plots remained the property of the Society and the appellants, as purchasers from the Society’s liquidator, acquired valid title. The appeals were allowed, the judgment of the High Court was set aside, and the suits for declaration and possession were decreed in favour of the appellants.
Law Points
- Legal points not extracted
- doctrine of lis pendens
- mortgage award equivalent to mortgage decree
- release by mortgagee not invalid
- attachment before judgment does not confer title
- pendente lite purchaser bound by decree
