Holding

A compromise decree that incorporates properties attached before judgment is part of the civil proceeding and, being the subject‑matter of the suit, is exempt from compulsory registration under Section 17(2)(vi) of the Registration Act.

Summary

The appellant S. Noordeen challenged the validity of a sale of properties that had been attached before judgment in a suit (O.S. No. 95/53) to recover a debt from D.J. Gonzaga. The properties, including items 1‑7 attached under Order 38 Rule 6 of the CPC, were incorporated in a compromise decree dated 3 April 1954 and later sold by the liquidator to the respondent V.S. Thiruvenkita Reddiar. Noordeen argued that the compromise decree should be compulsorily registered under Section 17(1) of the Registration Act, 1908, and that its failure to be so registered rendered the sale invalid. The High Court held that the attached properties became part of the decree and, being the subject‑matter of the civil proceeding, fell within the exception of Section 17(2)(vi), so registration was not required. The Supreme Court affirmed this view, holding that attachment before judgment makes the properties part of the civil suit and decree, and therefore the decree is not compulsorily registerable. The appeal was dismissed.

Issues considered

Whether a compromise decree that includes properties attached before judgment, which are not expressly part of the original suit's schedule, is exempt from compulsory registration under Section 17(2)(vi) of the Registration Act, 1908.
Whether attachment before judgment brings the attached properties within the civil proceedings and makes them part of the decree.

Legislation cited

Code of Civil Procedure, 1908s. Order 21 Rule 58, s. Order 38 Rule 6, s. Order 38 Rule 8, s. Section 141
Registration Act, 1908s. 17(1), s. 17(2)(vi)

Subjects

Compromise decreeCompulsory registrationSection 17 Registration ActAttachment before judgmentCivil ProcedureDecree executionImmovable property

Judgment

S. NOORDEE'N A
v.
V.S. THIRU VENKITA REDDIAR AND ORS.

FEBRUARY 7, 1996
___,
(K. RAMASWAMY AND B.L. HANSARIA, JJ.) B

Registration Act, 1908 :

S s. 17 ( 1), 17( 2 ~ompromise decree-Whether compulsorily
registerable-Such a decree though passed on compromise, fonned part of the C
decree and order of the Court in Court proceedings-The immovable proper~
ties whose sale is impugned in the instant case are not properties other than
the subject matter of the suit or proceedings-Therefore they are not required
to be compulsorily registered.

Code of Civil Procedure, 1908 : D
Order 38 Rule 8 r/w Order 21 Rule 58-l'roceedings unde-,......./feld: A
civil proceedings-When attachment of the properties has been made before
the judgment, they become part of the civil proceedings in the suit-Thereby
they become part of the decree.
E
Bhoop Singh v. Ram Singh Major, [1995] 5 SCC 709, relied on.

Ramdas v. Jagamath Prasad, AIR (1960) Patna 179; M.P. Reddiar v•.
A. Ammal, AIR (1971) Madras 182; Govindaswami v. Rasu, AIR (1935)
Madras 232 and C.M. Pillai v. H.S.S.S.S. Kadhiri Thaika4 AIR (1974) p
Madras 199, approved.
\ Chhotibai Daulatram v:Mansukhlallasraj, AIR (1941) Bombay 1 and
Ganesh/al v. Ramgopa4 AIR (1955) Raj. 17, disapproved.

CIVIL APPELLATE JURISDICTION: Civil .Appeal No. 779 of G
1978.

From the Judgment and Order dated 24.6.77 of the Kerala High
Court in C.R.P. No. 3375 of 1976-1.

N. Sudhakaran for the Appellant. H
·261
262 SUPREME COURTREPORTS [1996] 2 S.C.R.

A M.P. Vinod for the Respondents.

The following Order of the Court was delivered : -
This appeal by special leave arises from the order of the learned
B single Judge of the Kerala High Court made on June 24, 1977 in CRP No.
3375/76. The facts are fairly not in dispute. O.S. No. 95/53 was filed in the
court of the Sub-ordinate Judge at Quilon by Palai Central Bank Ltd. to
recover the amounts due from D.J. Gonzago, the second respondent.
Certain properties appended to the Schedule to the plaint. and also items
1 to 7 of the petition were attached before judgment under Order 38 Rule
C 6, Civil Procedure· Code, 1908 [for short the 'Code']. On April 3, 1954, a
compromise decree was made empowering the decree holder to have the
scheduled properties including item Nos. 1to7 of the additional properties
mentioned above. In the meanwhile, the bank went into liquidation. The
liquidator brought those properties to sale. With permission of the court
D those properties were purchased by the decree-holder in execution on June
· 26, 1969 and the sale was confirmed. On April 25, 1974, these properties,
the subject matter in this case, were sold by the liquidator to the first
respondent-Thiru Venkita Reddiar.

The appellant S. Noordeen, plaintiff in O.S. No. 38/60 on the file of
E the court of the Subordinate Judge, Quilon filed a suit against D.J. Gon-
zaga for recovery of the money claim. On March 28, 1961, the money
decree was passed. The properties covered under items 1 to 7 of the
petition were sold iri execution of the decree in O.S. No. 95/53 after due
attachment on January 13, 1969. The sale was confirmed on September 13,
F 1974. The appellant, therefore, filed E.A. No. 57/7' to declare that the sale
of properties in execution of the decree in O.S. 95/53 at items 1 to 7 of the .
compromise decree was not valid and it does not bind him. That was
upheld by the executing Court and the District Court in CMA. Thus the 1

respondent came to file CRP in the High Court. The High Court has held
that though items 1 to 7 were not part of the mentioned in schedule
G properties they became subject matter of the proceedings in O.S. No. 95/53
in which compromise decree, ultimately passed on 3.4.1954, properties
were under attachment from 1953. Therefore, they became part of the suit
properties. Consequentially. they are not required to be compulsorily
registered. The decree thereby is not liable to be annulled. The appellant
H does not get any valid right to the properties since they have already been
.,. I

S. NOORDEENv. V.S. THIRUVENKITAREDDIAR 263

sold. A

Shri Sudhakaran, learned counsel for the appellant contended that
in view of the fact that items 1 to 7 of the compromise decree dated 3.4.54
were not the subject matter of O.S. No. 95/53 for recovery of the debt due
from Gonzaga, the decree was required to be registered under Section B
17(1) of the Registration Act, 1908 [for short, the 'Act'] which was not
done. Therefore, the right, title and interest of the judgment-debtor Gon-
zaga was not divested. The appellant having purchased the property and
having got the properties registered in the Court sale, he got better title.
The view of the High Court, therefore, was wrong in law. We find no force
in the contention. C

It is necessary to clear the factual position which is not fairly in
dispute. There was attachment before judgment in O.S. No. 95/53 subsist-
ing till June 26, 1969, the date on which the property items were sold in
execution and the liquidator had become the purchaser from the Court D
I sale. The sale thereof was confirmed. The entire sale consists of items of
the Schedule and items 1 to 7 mentioned in the petition in addition to the
Schedule. It is seen that there was a compromise between the Bank and
..::_ ... / the judgment-debtor. Pursuant thereto, the decree was passed on April 3,
1954 comprising of all the properties.
E
The question, therefore, emerges: whether the decree passed under
the compromise would attract exception engrafted in clause (vi) of sub-sec-
tion (2) of Section 17 or the main part in clause (vi) of sub-section (2) of
Section 17 of the Act? The attachment before the judgment is an en-
cumbrance preventing the owner of the property to create encumbrance, F
sale or create charge thereon. Attachment before judgment does not create
any right, title or interest, but it disables the judgment-debtor to create any
encumbrances on the property. Ultimately, when decree is passed, the
property forms part of the decree so as to enable the decree- holder to
proceed with against the property to realise the decree-debt. The question
is: whether the properties which are not part of the schedule mentioned in G
the suit will nonetheless be the part of the decree? It is not mandatory that
thf property should be specifically mentioned; it is so only in a mortgage
suit under relevant clauses of Order 34 of the Code. The decree holder is
entitled to proceed against those items mentioned in the petition. The
decree would be executed as provided in other mode of the decree. In H
264 SUPREME COURT REPORTS [1996) 2 S.C.R.

A other words, attached properties are also liable to be sold as integral part
of the decree. The properties, though do not form part of the Schedule,
would also become part of the decree.

It ·is seen that in addition to the schedules, by way of separate
application, items 1 to 7 had also been attached under Order 38 Rule 6 of
B the Code. In the compromise, the judgment-debtor agreed that these
properties would be proceeded with in execution of the decree. Thus, the
properties mentioned in the Schedule as well as the properties mentioned
separately as items 1 to 7 became integral part of the decree.

C The question is : whether proceedings under Order 38 Rule 6 of the
Code is part of the civil proceedings? It is seen that ~hen an application
under Order 38 Rule 1 is made for attachment before judgment, as
envisaged in clauses (i), (ii), (iii) and (iv), if the defendant furnishes
security, then the need to make an attachment of the properties does not
arise. On his failure to do so, Rule 6 gives power to the court to attach the
D properties before judgment where no cause is shown or security is not
furnished. Then· mode of attachment has been provided in Rule 7. It says
that "(s)ave otherwise expressly provided, the attachment shall be made in
the manner provided for the attachment of property in execution of a
decree." Rule 8 provides adjudication of claim to property attached before
E judgment. The procedure has. been provided for attachment under Order
21 Rule 38 and adjudication under Order 21 Rule 58.

Section 141 of the Code provides that "(t)he procedure provided
therein in regard to suits shall be followed, as far as it can be made
applicable, in all proceedings in any Court of civil jurisdicti~n". The Ex-
p planation amplifies the doubt that the expression "proceedings" includes
proceedings under Order 9, but does not include any proceeding under
Article 226 of the Constituion". It would thus be clear that the proceedings
envisaged for adjudication under Order 38 Rule 8 read with Order 21 Rule
58, is a civil proceeding..When attachment of the properties has been made
G before the judgment, they become part of the civil proceedings in the suit.
Thereby they become part of the decree.

The question is : whether such a decree is compulsorily registerable?
This Court in Bhoop Singh v. Ram Singh Major, [1995) 5 SCC 709=AIR
1996 SC 196] has considered the question whether a compromise decree
H is compulsorily registerable. In that case, there was no pre-existing right to
S. NOORDEEN v. V.S. TIHRUVENKITAREDDIAR 265

the properties between the parties, but a right was sought to be created for A
the first time under the compromise. The High Court had taken the view
that it was not compulsorily registerable instrument under Section 17 of
the Act. This Court considered elaborately the circumstances in which
clause (vi) of sub-section (2) of Section 17 would come into play and stated
in paragraph 18 thus :
B
"The legal position qua clause (vi), on the basis of the aforesaid
discussion, be summarised as below:

(1) Compromise decree if bona fide, in the sense that the
compromise is not a device to obviate payment of stamp duty and C
frustrate the law relating to registration, would not require registra-
tion. In a converse situation, it would require registration.

(2) If the compromise decree were to create for the first time
right, title or interest in immovable property of the value of Rs.100
or upwards in favour of any party to the suit the decree or order D
would require registration.

(3) If the decree were not to attract any of the clauses of
sub-section (1) of Section 17, as was the position in the aforesaid
Privy Council and this Court's cases, it is apparent that the decree
would not require registration. E
(4) If the decree were not to embody the terms of compromise,
as was the position in Lahore case, benefit from the terms of
compromise cannot be derived, even if a suit were to be disposed
of because of the compromise in question.
F
(5) If the property dealt with by the decree be not the "subject-
matter of the suit or proceeding", clause (vi) of sub-section (2)
would not operate, because of the amendment of this clause by-
Act 21 of 1929, which has its origin in the aforesaid decision of
the Privy Council, according to which the original clause would G
have been attracted, even. if it were to encompass property not
litigated."

It would be seen that if the decree were not to embody the terms of
the compromise, as was the position in other cases, the benefit in terms of
the compromise cannot be derived even if a suit were to be disposed of H
266 SUPREME COURT REPORTS [1996] 2 S.C.R.

A because of the compromise in question. If the property dealt with by the
decree is not "subject-matter of the suit or proceeding", then clause (vi) of
sub-section (2) would not operate because of the amendment of this clause
by Act 21of1929,.which has its origin in the aforesaid decision of the Privy
Council, according to which the original clause would have been attracted
even if it were to encompass property not litigated.
B
Section 17(1) of the Act provides that the document shall be
registered if the property in which they relate is an instrument or non-tes-
tamentary instruments which purport or operate to create, declare, assign,
limit or extinguish, whether in present or in further, any right, title or
C interest, whether vested or contingent, of the value of one hundred rupee
and upwards, to or in immovable property. Sub-section (2) gives exception.
It says that :

"Nothing in clauses (b) and (c) of sub-section (1) applies to-

D xx xx xx xx xx xx

(vi) 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."
E
Here we are concerned with the question whether items 1 to 7 of the
properties brought to sale in execution of decree in O.S. No. 95/53 are a
part of decree or order of the court, relating to the subject-matter of the
suit or proceeding. We have already held that items 1 to 7 of the properties
F mentioned in the separate application, which was the subject matter of the
attachment before the judgment, have become part of the decree and also
the order of the court in the proceedings under Order 38 Rule 6 of CPC.
Therefore, the decree, though passed on compromise, formed part of the
decree and order of the court in court proceedings. The immovable
G properties whose sale is impugned are not properties other than the subject
matter of the suit or proceedings. Ther.efore, the view of the High Court
is correct in law.

It is seen, as referred to by the learned single Judge, the Madras High
Court and the Patna High Court had taken the same view in Ramdas v.
H Jagarnath Prasad, AIR (1960) Patna 179; M.P. Reddiar v. A. Amma4 AIR
S. NOORDEENv. V.S. THIRUVENKITAREDDIAR 267

(1971) Madras 182; Govindaswami v. Rasu, AIR (1935) Madras 232 and A
C.M. Pillai v. H.S.S.S.S. Kadhiri Thaikal, AIR (1974) Madras 199. Contra
views were taken in Chlwtibai Daulatram v. Mansukhlal Jasraj, AIR (1941)
Bombay 1 and Ganesh/al v. Ramgopal, AIR (1955) Raj. 17. In Chootibai's
case (Bombay High Court), it was a case of simple money decree and the
properties were not attached before judgment, but they were sold in B
execution of the decree on compromise. The sale was sought to be im-
pugned on the ground that they were not registered. Therefore, they were
held to be compulsorily registerable, by operation of Section 17(1) of the
Act. Section 17(2)(vi) was not attracted. The learned Judge had proceeded
with on the premise that this exception would apply to other proceedings
under special laws but not to the civil proceedings. The view taken by the C
Bombay High Court is not correct in law. The Rajasthan High Court had
merely followed the view of the Bombay High Court without any further
reasons. Accordingly, we hold that the view of the Bombay high Court as
well as that of the Rajasthan High Court are not correct in law.

The appeal is accordingly dismissed. No costs. D
G .N. Appeal dismissed.