Meenachil Panchayat vs Sivasankara Marar on 27 March, 2003

Kerala High Court

Equivalent citations: 2003 (2) KLT 914

Author: S Sankarasubban

Bench: J L Gupta, S Sankarasubban, K Joseph

JUDGMENT

S. Sankarasubban, J.

1. Both these Civil Revision Petitions are referred to this Full Bench by a Division Bench of this Court. In both these cases, Petitioners were defendants in their respective suits. The suits were decreed. They filed appeals before the Appellate Court and sought stay of further proceedings in execution. The Appellate Court granted stay on condition that the petitioners give sufficient security to the satisfaction of the lower court. The petitioners thereafter executed bonds as per Appendix G in Form No. 2. The bonds were produced before the Court alongwith affidavits. But the Court below refused to accept the security bonds on the ground that the bonds were not registered. It is against the above orders that these Civil Revision Petitions have been filed.

2. The contention of the petitioners is that the execution of the bonds is part of the judicial proceedings and that they are not liable to be registered. According to them, the bonds were executed in favour of the court and not any particular person. Under Section 17(2)(vi) of the Registration Act, 1908, the decrees and orders of the court are exempted from registration. On the other hand, learned counsel for the respondents submitted that the bond clearly states that it creates a mortgage and hence the deed is liable to be registered.

3. A Full Bench of this Court considered the question whether a bond executed as per the provisions under Order 41 Rule 5 of CPC is liable to be registered, in the decision reported in R.M. Palat v. P.A. Nedungadi, 1958 KLT 635 corresponding to AIR 1958 Kerala 377. The Bench held that since the mortgage is executed in favour of the Court, it is liable to be registered under Sections 4 and 49 of the Transfer of Property Act and Section 17 of the Registration Act. It is pertinent to note that the Full Bench did not consider the applicability of Section 17(2)(vi) of the Registration Act. In paragraph 19 of the above decision; the Full Bench held as follows:

"In view of our conclusion that the security bond should be in Form No. 3 of Appendix G and that such a bond requires registration as a result of Sections 4 and 59 of the Transfer of Property Act, 1882 and Section 49 of the Indian Registration Act, 1908, quite apart from Section 17 of the latter Act - we consider it unnecessary to deal with the controversy and express our views on the true scope and ambit of Section 17 of the Indian Registration Act, 1908".

4. Thus the applicability of Section 17 of the Registration Act was not considered by the Full Bench. Learned counsel for the petitioners urged that the liability is created only by the order passed and hence, Section 17(2)(vi) of the Registration Act applies in this case. If Section 17(2)(vi) of the Registration Act applies to the facts of the case, it is not necessary to get the bonds registered. For that we have to find out as to whether it is the order that creates the liability or the bond that creates a liability. There is a cleavage of opinion on this aspect.

5. Section 17(1) of the Registration Act deals with various documents, which are liable to be registered. Section 17(2)(vi) of the Registration Act states that nothing in Clauses (b) and (c) of Section 17(1) applies to any decree or order of a court except a decree or order expressed to be made on a compromise and comprising immovable property other than that which is the subject matter of the suit or proceeding. Thus, even if a property of the value of above 100 is involved it is not liable to be registered.

6. Some of the High Courts have taken the view that it is the order which creates liability whereas some other High Courts have taken the opposite view holding that it is the document that creates liability and hence, it is liable to be registered. In Jayappa Lokappa Narsinganawar v. Shivangouda Dyamangouda, AIR 1928 Bombay 42, the Bombay High Court held as follows: A security bond, being a part of judicial proceedings and incorporated with it, the provisions of Section 17, Registration Act, do not apply to it, as proper judicial proceedings whether consisting of pleadings filed by the parties or of orders made by the Court, do not require registration. In that decision, it is further held as follows: Order 21, Rule 34, Civil P.C., provides for the registration of documents executed by the Court, but no direction is to be found as to the registration of documents in the form prescribed by Appendix G, No. 2, as appropriate for the purpose of Order 41, Rule 5, or indeed in any other case. The argument as inconvenient is certainly very strong here. It would be most inconvenient in practice if the Judges were bound to register a variety of documents such as this". In B. Rama Bhatta v. B. Kodandarama Bhatta and Ors., AIR 1963 Mysore 332, this question came up for consideration. The Mysore High Court held as follows: "Undoubtedly, the security bond in dispute falls within the ambit of Section 17(1)(b) of the Registration Act. The question is whether it is exempted from registration in view of Section 17(2)(vi). The petitioner contends that it is and the contesting respondents assert that it is not. Section 17(2)(vi) says that nothing in Clauses (b) and (c) of Sub-section (1) applies to any decree or order of a Court except a decree or order expressed to be made on a compromise and comprising immovable property other than that which is the subject matter of the suit or proceeding. Can a security bond executed in favour of a Court, when accepted by the Court despite the fact that it is not registered be said to be an "Order" within the meaning of that word in Section 17(2)(vi)? The decisions that have answered that question in the affirmative have taken their inspiration from the decision of the Judicial-Committee in Bindesri Naik v. Ganga Saran Sahu, ILR 20 All. 171 (PC) wherein it was held that Section 17 of the Registration Act does not apply to proper judicial proceedings whether consisting of pleadings filled by the parties or orders made by the Court. These observations undoubtedly support the contention of the petitioner". The Bench considered the contrary finding also and opined that it is the order that creates a liability and hence the bond need not be registered. The matter came up for consideration before the Himachal Pradesh High Court in Union of India and Anr. v. Rejkumar Rajindera Singh and Anr., AIR 1975 Himachal Pradesh 25. Pathak C.J., speaking for the Full Bench held as follows:

"It is not the execution of the bond which effects the transfer of rights in the property described therein so as to make it available for the satisfaction of the decree which might be passed by the appellate court, but it is the order of the Court accepting the bond which creates those rights. The bond does not become operative so long as it is not accepted by the Court, and that would be so even if the bond has been duly registered immediately after its execution.

Accordingly, as it is the order of the Court accepting the bond which makes it foil within the provisions of Sub-section (2)(vi) of Section 17 of the Registration Act. The bond will thus be excluded from the necessity of registration required by Section 17(1)".

7. The Travancore-Cochin High Court had occasion to consider a similar question in the decision reported, in Subramania Nadar Arumughaperumal Nadar v. Esakkimadan Nadar Dwarapandia Nadar, 1953 KLT 387. The Court was considering the effect of Section 10(2)(v)of the Travancore Registration Act. Section 10(2)(v) is corresponding to Section 17(2)(vi) of the Indian Registration Act. The Court observed thus: "It is the order of the Court that makes the bond effectual and operative. The order accepting the bond means that the terms of the bond are incorporated in the court's order and treated as part of the order itself. What is sought to be enforced is not security bond as such, but the order of the Court incorporating in it the terms of the bond. Hence it comes clearly within the exemption provided for in Section 10, Clause 2(v) and is not compulsorily registerable". A Division Bench of this Court had also occasion to consider a similar question in the decision reported in Kathiru Kunju Bulkoose Begum v. Ebrahim Salt Khadeeja Bai, 1975 KLT 693. There, the court was not considering the bond executed under Order 41, Rule 5, but the security bond furnished for lifting an attachment under Order 38, Rules 5 and 6. In that context, the Division Bench found that the bond is not registerable, Krishna Iyer, J. considered a similar question in Thankamma v. Parameswaran Achari, 1971 KLR 440 and held that bond executed under Order 38 Rule 5 need not be registered.

8. Thus, we find that the above decisions have taken the view that it is the order which is operative and not the bond. There are decisions, which have taken contrary view. One of those decisions is Purra Pentaiah v. Madam Pandya, AIR 1980 Andhra Pradesh 290. In that decision, it is held as follows: "Where a security bond is executed for stay of execution of decree, pending appeal, in respect of suit property of value exceeding Rs. 100, the same is required to the registered, in view of the provisions of Sections 17 and 49 of the Registration Act and Sections 59 and 4 of the Transfer of Property Act. The security bonds or mortgages contemplated by Order 41, Rule 5, Appendix "G", Form No. 2 are not exempted from the operation of the above provisions and are, therefore, governed by them". The Court took the view that it is the bond that creates liability. The Madras High Court took the same view. In Western Press Pvt. Ltd. Mumbai v. The Custodian and Ors., AIR 2001 SC 450, the Supreme Court held that the undertaking given to the Court need not be registered.

9. According to us, it is the order of the Court which creates liability. The terms of bond are incorporated in the order and hence liability is created not by mere execution of the bond. We further find that the general practice in the lower courts has been not to register such bonds. Learned counsel for the respondents argued that if the bond is not registered, it may create trouble for the decree holders as the property may be alienated without disclosing the security being given to the Civil Court. We think, this can be avoided by directing the subordinate courts to communicate the orders passed in such cases to the respective Sub Registry Offices at the expense of the decree holders.

10. In the light of the above, both the Civil Revision Petitions are allowed. The orders passed by the lower court are set aside. The Court is directed to reconsider the matter and pass appropriate orders.