Ramachandran Nair , J.,
This appeal is filed by the claim petitioner. The court below on 10.12.2008, dismissed the claim petition filed as I.A. No. 2102/08 in O.S.No. 259/08.
2. We heard the learned counsel for the appellant Sri. K.B. Pradeep and learned counsel for the first respondent Sri. Nagaraj Narayanan. There is no appearance for the 2nd respondent.
3. The prayer in the I.A.No. 2102/2008 in O.S.No. 259/08 is to lift the attachment with respect to the scheduled property in the attachment petition filed as I.A 1791/08 in the said suit.
4. The case of the appellants is that between the appellants and the 2nd respondent, there was an agreement for sale in March 2008, pursuant to which, they purchased the property as per Ext.A1 document dated 18.9.2008. They were put in possession of the property and have paid the tax, in support of which, Ext.A2 tax receipt has been produced. In the suit filed by the first respondent herein, the court was approached to grant a decree for specific performance, on the plea that there was an agreement for sale executed between him and the 2nd respondent herein dated 24.6.2008. The suit was filed on 3.10.2008. He sought for attachment of the schedule property under Order XXXVIII Rule 5 i.e. I.A. No. 1791/08 dated 8.11.2008.
5. The learned counsel for the appellants Sri.K.B.Pradeep submitted that the view taken by the court below is not correct. It is submitted that as on the date of filing of the suit, there was no subsisting interest in the property for the 2nd defendant/2nd respondent herein and therefore, the prayer for lifting the attachment ought to have been allowed. It is also submitted that the court has entered a finding as regards the consideration paid by the appellants which was not at all warranted as far as the issue in question is concerned. What is relevant is only to consider whether the attachment would continue or not.
6. Sri. Nagaraj Narayanan, learned counsel for the first respondent submitted that the document in favour of the 1st appellant herein can only be a sham transaction as the consideration is too low. It is further submitted by the learned counsel that the court below has considered various aspects and the procedure should have been one initiated taking into account, the procedure prescribed under Order XXI Rule 58 of Civil Procedure Code.
7. Learned counsel Sri. K.B.Pradeep in his reply to the submission by Sri. Nagaraj Narayanan, submitted that the first respondent herein did not even file any counter to the I.A filed to lift the attachment.
8. Since the appellant has set up a claim or a prayer to lift the attachment based on the prior agreement for sale and the sale deed dated 18.9.2008, the question is whether the attachment of the very same property ordered by the court, at a later point of time i.e. on 8.11.2008, will have any effect. Going by the effect of the provisions of Order XXXVIII Rule 10, the attachment before judgment shall not affect the rights of persons not parties to the suit. The issue therefore, is whether the plaintiff viz. the first respondent herein can maintain an application under Rule 5 of Order XXXVIII by making an averment that the defendant in the suit, viz. the 2nd respondent herein is about to dispose of the property, since it is shown that already the property has been disposed of by the document of Ext.A1 in favour of the appellant.
9. The legal position as regards these aspects was declared by the Apex Court in the decision reported in Vannarakkal Kallalathil Sreedharan v. Chandramaath Balakrishnan and Another (AIR 1990(3) SCC 291). That was a case where there was an agreement for sale prior to the attachment of the land. The sale deed was executed after the attachment. While explaining the legal position, the Apex Court in paragraphs 7 & 9 held as follows:
“7. Hence under a contract of sale entered into before attachment the conveyance after attachment in pursuance of the contract passes on good title in spite of the attachment. To the same effect are the decisions of the Bombay High Court in Rango Ramachandra Kulkarni v. Gurulingappa Chinnappa Muthal (AIR 1941 Bom. 198;43 BLR 206) and Yeshvant Shankar Dunakhe v. Pyaraji Nurji Tamboli (AIR 1943 Bom. 145: 45 BLR 208) The High Court of Travancore-Cochin in Kochuponchi Varughese v. Ouseph Lonan (AIR 1952 TC 467: ILR 1952 TC 201)has also adopted the same reasoning”.
“9. In our opinion, the view taken by the High Courts of Madras, Bombay, Calcutta and Travancore-Cochin in the aforesaid cases appears to be reasonable and could be accepted as correct. The agreement for sale indeed creates an obligation attached to the ownership of property and since the attaching creditor is entitled to attach only the right, title and interest of the judgment-debtor, the attachment cannot be free from the obligations incurred under the contract for sale. Section 64 CPC no doubt was intended to protect the attaching creditor, but if the subsequent conveyance is in pursuance of an agreement for sale which was before the attachment, the contractual obligation arising therefrom must be allowed to prevail over the rights of the attaching creditor. The rights of the attaching creditor shall not be allowed to override the contractual obligation arising from an antecedent agreement for sale of the attached property. The attaching creditor cannot ignore that obligation and proceed to bring the property to sale as if it remained the absolute property of the judgment debtor. We cannot, therefore, agree with the view taken by the Punjab and Haryana High Court in Mohinder Singh case.”
10. A Division Bench of this Court in the decision in Abdul Jalal v. Mariya Financiers (2002(2) KLT 107) considered a similar question and after following the decision of the Apex Court in Vannarakkal Kallalathil Sreedharan v. Chandramaath Balakrishnan and Another (AIR 1990 (3) SCC 291) it was held in para 10 as follows:-
“10. During the course of the discussions, the court relied on the decision of the Supreme Court in Ram Saran Lall & Ors. v. Mst. Domini Kuer & Ors., AIR 1961 Supreme Court 1747. In fact, this decision was strongly relied on by the respondent on the ground that the judgment was rendered by a Bench consisting of more number of Judges. But as stated, in this case viz., AIR 1961 Supreme Court 1747 what is considered is the question of pre-emption. Under the law regarding pre-emption, pr- emption can be exercised only after the sale is completed. On the question whether when a sale is complete, the court held that the sale is complete only after the registration. We are of the view that this decision does not have any relevance to the facts of the present case. As a matter of fact, in the decision reported in Vannarakkal K.Sreedharan v. Chandramaath Balakrishnan & Anr(1990) 3 Supreme Court Cases 291, a similar question arose. There, the appellant entered into a contract of sale. After that the sale deed was executed, but before the execution of the sale deed, the property was attached. Question that arose for consideration was whether since the sale deed was subsequent to the attachment the vendee can have any right for filing a claim petition. Allowing the appeal, the Supreme Court held as follows: “Under a contract of sale entered into before attachment the conveyance after attachment in pursuance of the contract passes on good title in spite of the attachment. The agreement for sale indeed creates an obligation attached to the ownership of property and since the attaching creditor is entitled to attach only the right, title and interest of the judgment debtor, the attachment cannot be free from the obligations incurred under the contract for sale. Though S.64 CPC was intended to protect the attaching creditor, but if the subsequent conveyance is in pursuance of an agreement for sale which was before the attachment, the contractual obligation arising therefrom must be allowed to prevail over the rights of the attaching creditor. The rights of the attaching creditor shall not be allowed to override the contractual obligation arising from an antecedent agreement for sale of the attached property”. Thus if a person in whose favour the agreement for sale is executed, he can avoid the attachment. Certainly a person in whose favour the sale is executed before attachment has valid claim”.
11. In the light of the above legal position, it can be seen that, as there was a conveyance executed in favour of the appellants which is prior to the date of order of attachment, the said order of attachment cannot continue. Going by the decision of the Division Bench in Abdul Jalal's case (supra), the person in whose favour the agreement for sale was executed, can avoid the attachment. Certainly, a person in whose favour a sale deed is executed before attachment, has got a valid claim.
12. Hence, it was unnecessary for the court to consider whether the consideration paid in Ext.A1 is sufficient or not. The real question is whether the attachment would subsist or continue when the appellant had placed on record Ext.A1 sale deed which was executed prior to the date of filing of the suit.
13. Sri. Nagaraj Narayanan vehementally contended for the position that in the light of Rule 8 Order XXXVIII, a procedure akin to Order XXI Rule 58 should have been adopted by the court below. As rightly submitted by the learned counsel for the appellant Sri.
K.B.Pradeep herein, there was no counter affidavit from the part of the 1st respondent to the I.A filed by appellants to lift the attachment and no other contra evidence was also adduced by him except the production of Ext.B1 and the procedure adopted by the court does not suffer from any infirmity. In that view of the matter, we reject the said contention also.
In the light of the above, we are of the opinion that the view taken by the court below is not legally correct and we set aside the order and allow the appeal and I.A.No.2102/08 will stand allowed and the attachment will stand lifted. The parties are directed to bear their costs.
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T.R.RAMACHANDRAN NAIR (JUDGE) Sd/-
P.V.ASHA (JUDGE) True copy P.A to Judge