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Rights Of Buyer Created In Property Before Attachment By The Court Vis À Vis Sections 64, 47 And Order XXI, Rule 58 CPC, 1908

Section 64(1) of the Code of Civil Procedure, 1908 (the CPC) provides that any private transfer or delivery of the property attached contrary to the attachment by the Court shall be void as against all claims enforceable under the attachment.

However sub-section (2) of the very same section 64 of the CPC provides that nothing in such section 64 of the CPC shall apply to any private transfer or delivery of the property, made in pursuance of any contract for such transfer or delivery entered into and registered before the attachment.

The question is will the agreement to sell executed before the attachment order be valid even if the sale deed is executed after the attachment of the property or to put it otherwise will such sale deed prevail over attachment?

The above question was settled by the Hon'ble Supreme Court in the case of Vannarakkal Kallalathil Sreedharan vs Chandramaath Balakrishnan and Anr. (1990) 3 SCC 291. In such case, a certain portion of land was agreed to be sold under an agreement dated 09.10.1978. Before the sale deed could be executed, the property was attached on 16.11.1978 in an execution filed by a third party.

Thereafter, the sale deed was executed on 23.11.1978. The question of validity of such sale deed executed on 23.11.1978 i.e. after the attachment of the property on 16.11.1978, reached the Hon'ble Supreme Court. Relying on the statutory provision of Order XXXVIII Rule 10, CPC, the Hon'ble Supreme Court held that attachment before judgement shall not affect the rights of the persons, existing prior to the attachment, who were not parties to the suit.

The Hon'ble Supreme Court upheld the judgements of the Hon'ble Madras High Court in Paparaju Veeraraghavayya vs Killaru Kamala Devi, AIR 1935 Mad 193; Veerappa Thevar vs C.S. Venkataram Aiyar, AIR 1935 Mad 872 and Angu Pillai vs M.S.M. Kasiviswanathan Chettiar, AIR 1974 Mad 16 and of the Hon'ble Calcutta High Court in the case of Purna Chandra Basak vs Daulat Ali Mollah, AIR 1973 Cal 432 wherein it was held that the attaching creditor only attaches the right, title and interest of the debtor and attachment cannot confer upon him any higher right than the judgement-debtor had at the time of attachment.

The Hon'ble Supreme Court, therefore, interpreted such factual scenario (where the agreement to sale was executed prior to the attachment) vis � vis section 64 of the CPC to the effect that if subsequent conveyance (sale deed) was in pursuance of an agreement for sale which was executed before the attachment, the contractual obligation arising therefrom must be allowed to prevail over the rights of the attaching creditor.

With such observation, the Hon'ble Supreme Court upheld the sale deed executed after the attachment of the property as it was in pursuance of an agreement to sell which was executed prior to the attachment of the property.

Following the decision of the Hon'ble Supreme Court in V.K. Sreedharan (supra), the Hon'ble Karnataka High Court in the cases of Linga Bhatta @ Thammaiah and Ors. vs M/s. Saravana Enterprises and Anr., ILR 2003 Kar 648 and Sri D.L. Sridhar vs Sri. C.R. Chandramohan and Anr., ILR 2008 Kar 591 has also held that the buyer perfects its title when the agreement to sale or registered sale deed was executed prior to the order of attachment passed by the Court.

Also, as in terms of Order XXI, Rule 58, CPC read with section 47, CPC, the Executing Courts have to decide the claim and objections pertaining to the attachment of the property in respect of the satisfaction of the decree, the Hon'ble Supreme Court in the case of Kancherla Lakshminarayana vs Mattaparthi Syamala and Ors. (2008) 14 SCC 258, after following V.K. Sreedharan (supra) and Purna Chandra Basak (supra), has held that the objections were maintainable even after the property was sold in auction.

However, the Hon'ble High Court of Delhi, while dismissing the objections qua the attachment of the property has rightly held in the case of Punjab National Bank vs Orkids and Ors., 2000 (53) DRJ 231 that the equitable mortgage, created in favour of the Bank, before the execution of the agreement to sell, shall prevail over such agreement to sell and therefore, the decree holder (Bank) in such matter was entitled to get the property auctioned in furtherance of the attachment in order to satisfy the decree in its favour.

Lastly, the Single Judge of the Hon'ble Orissa High Court in the case of S. Appa Rao vs Umakanta Tripathy and Ors., 1977 SCC OnLine Ori 43, while following Purna Chandra Basak (supra), has also held that the Judgement Debtor's rights cannot be higher than the right of the buyer.

In this case, the property was attached in the execution proceedings on 03.07.1969. Some third person made an application under Order XXI, Rule, 58, CPC seeking release of certain portion of the attached property as such third person was having a decree of specific performance dated 27.09.1975 in terms of an agreement to sell dated 15.08.1968 (which was prior to the attachment order dated 03.07.1969). The right of such third person in terms of the decree dated 27.09.1975 was, therefore, upheld.

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