Nagubai Ammal and Others vs B. Shama Rao and Others

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 216 of 1953

Decision Date: 26 April 1956

Coram: Syed Jaffer Imam, T.L. Venkatarama Ayyar, Das Sudhi Ranjan, Venkatarama Ayyar

In the matter of Nagubai Ammal and others versus B. Shama Rao and others, the judgment was delivered on 26 April 1956 by a bench of the Supreme Court of India comprising Justice Aiyy ar, Justice T. L. Venkatarama Das, and Chief Justice Sudhi Ranjan, with the opinion authored by Justice Syed Jaffer Imam. The case is reported in the 1956 volume of the All India Reporter at page 593 and in the Supreme Court Reports at page 451. The issues that arose concerned the doctrine of lis pendens, the scope of that doctrine in preventing the passing of title between a transferor and a transferee, the consequences of non‑joinder of the Official Receiver in an insolvency execution proceeding, and the effect of such non‑joinder on the title of a purchaser who acquired land pendente lite. The Court also examined whether a transferee, while a suit was pending, could attack an execution sale on the ground of lis pendens, the interplay of limitation and adverse possession against a purchaser in execution of a decree rooted in a prior mortgage, and the distinction between collusive and fraudulent arrangements. Further, the judgment addressed the evidentiary value of admissions, the circumstances in which the burden of proof may shift, the maxim that a person cannot both approve and reject the same transaction, and the applicability of Section 52 of the Transfer of Property Act of 1882 together with Article 142 of the Indian Limitation Act of 1908.

The appellants, who were defendants in a suit seeking a declaration of title to several building sites, contested the respondents’ claim which derived from a purchase made by the respondents from a purchaser in an execution sale of a mortgage decree originally dated 1918. The appellants relied on a counter‑claim asserting that their predecessor‑in‑interest had purchased the same lands in 1920 from one of the mortgagors, at a time when a suit for maintenance and for a declaration of a charge on the land was pending against that mortgagor. That suit concluded with a decree in 1921, and the lands were subsequently acquired by the decree‑holder in execution of the decree in 1928. The mortgagar was adjudicated an insolvent in 1926, yet the Official Receiver, to whom the mortgagar’s estate had vested, was not joined as a party to the execution proceeding. In 1933, a suit to enforce the 1918 mortgage deed was instituted, joining the Official Receiver and the purchaser who held the execution of the maintenance and charge decree, but the appellants were omitted. The decree in that suit was executed by selling the lands to a third party in 1936, and in 1938 the father of the respondent purchased the lands. Although the respondent did not specifically raise the question of lis pendens in his pleadings nor was an issue framed on that point, he introduced the issue at the very beginning of the trial in his deposition, presented relevant documents that were admitted into evidence without objection, filed his own documents, cross‑examined the respondent, and invited the Court to hold that the suit for maintenance and the charge, together with the related proceedings, were collusive to evade the operation of Section 52 of the Transfer of Property Act. The District Judge concluded that the title acquired by the appellants through the 1920 purchase was extinguished by the execution sale of the charge decree pursuant to Section 52 of the Transfer of Property Act, and accordingly decreed the suit in favour of the respondents.

The Court noted that the decision of the lower court had been affirmed by the High Court on appeal and held that the judgments of the subordinate courts were correct and therefore required affirmation. It observed that, although the respondent failed to expressly raise the issue of lis pendens in his pleadings, this omission did not surprise the appellants and amounted only to a procedural irregularity that caused no prejudice to them. In support of this view, the Court applied the authority of Rani Chandra Kunwar v. Chaudhri Narpat Singh ([1906] L.R. 34 I.A. 27) and explained that the decision in Siddik Mahomed Shah v. Mt. Saran and Others (A.I.R. 1930 P.C. 57) was inapplicable to the present facts. The Court further clarified that Section 52 of the Transfer of Property Act does not prohibit the vesting of title in a transferee when a sale is pending before a suit, but merely makes such vesting subject to the rights of other parties as determined by the suit. Consequently, a subsequent insolvency of the transferor does not transfer any title to the Official Receiver, nor does it render the execution purchaser’s title vulnerable to attack on the ground that the Receiver was not joined as a party to the execution proceeding. Even assuming that a transfer pending litigation could not convey full title and that some residual interest remained with the transferor for the Receiver to acquire, the Court held that because the lands in dispute had been sold pursuant to the execution of a charge decree, the sale at most would not be binding on the Receiver, who could seek to set it aside if he chose. However, the transferee pending litigation—or his representative—could not rely on the Receiver’s non‑joinder as a basis to challenge the sale. In reaching this conclusion, the Court applied Wood v. Surr ([1854] 19 Beav. 551) and referred to Inamullah Khan v. Shambhu Dayal (A.I.R. 1931 All. 159), Subbaiah v. Ramasami Goundan (I.L.R. [1954] Mad. 80) and Kala Chand Banerjee v. Jagannath Marwari ([1927] L.P. 54 I.A. 190). The Court observed that the matter did not give rise to any issue of limitation or adverse possession, noting the settled proposition that a claim of adverse possession cannot affect the rights of an earlier mortgagee to have the property sold, and that adverse possession against the purchaser under such a sale cannot commence before the date of the sale. Finally, the Court distinguished between collusive and fraudulent proceedings, explaining that a collusive proceeding arises from an agreement between the parties whereby both the claim and the defence are fictitious and intended to deceive third parties, whereas a fraudulent proceeding involves a genuine contest based on an untrue claim intended to injure the defendant by obtaining a court verdict through fraud. The Court further held that an admission constitutes only a piece of evidence and is not conclusive unless it operates as estoppel, which requires that the person to whom it was made have acted upon it to his detriment; the weight to be given to such an admission depends on the circumstances of each case, and the burden of proving its falsity rests on the party asserting the contrary.

In this case, the Court observed that an admission could not be shifted to its maker unless the admission was so clear and unambiguous that it became conclusive without any explanation from the maker. The Court referred to the authorities Slatterie v. Pooley ([1840] 6 M.& W. 664) and Rani Chandra Kunwari v. Choudhri Narpat Singh ([1906] L.R. 34 I.A. 27) in support of this principle. The Court further explained that the maxim “a person could not approbate and repudiate” originated in the doctrine of election and was limited to reliefs arising out of the same transaction and against the parties to that transaction. Where there was no question of election because the relief claimed, although based on different and inconsistent grounds, was essentially the same, the maxim did not apply. The Court considered and distinguished the decision in Verschures Creameries Ltd. v. Hull and Netherlands Steamship Company Ltd. ([1921] 2 K.B. 608). The judgment concerned Civil Appeal No. 216 of 1953, which was an appeal from the judgment and decree dated 8 March 1951 of the Mysore High Court in Regular Appeal No. 123 of 1947‑48, itself arising out of the decree dated 23 June 1947 of the Court of District Judge, Bangalore, in Original Suit No. 84 of 1945‑46. Counsel for the appellants were K. S. Krishnaswami Iyengar and M. S. K. Sastri, while counsel for respondent No. 1 were R. Ganapathy Iyer and K. R. Krishnaswamy. The judgment was delivered on 26 April 1956 by Justice Venkatarama Ayyar. The appeal arose out of a suit instituted by the late Krishna Rao, represented by his son and heir, the respondent, seeking a declaration of title to certain building sites situated in Bangalore, State of Mysore, and ancillary reliefs. The properties in dispute originally belonged to Munuswami, who died leaving his third wife Chellammal, three sons—Keshavananda, Madhavananda and Brabmananda—from his predeceased wives, and three minor daughters—Shankaramma, Srikantamma and Devamma. On 1 September 1918 the three brothers executed a usufructuary mortgage for Rs. 16,000 in favour of Abdul Huq over a bungalow and vacant sites, including the properties now before the Court, fixing a three‑year period for redemption. A lease‑back of the properties by the mortgagee to the mortgagors was executed on 3 September 1918 for the same three‑year term. Subsequently, on 6 September 1918 the brothers effected a partition deed (Exhibit K) which required each brother to pay Rs. 8 per month to their step‑mother Chellammal for her maintenance and stipulated that their step‑sisters should be under their protection. On 6 June 1919 Chellammal filed a plaint in forma pauperis seeking maintenance and requesting that the liability be charged on the properties specified in her plaint; this proceeding was recorded as Miscellaneous Case No. 377 of 1918‑19. Simultaneously, acting as next friend of her minor daughters Srikantamma and Devamma, she filed two further plaints in forma pauperis, recorded as Miscellaneous Cases Nos. 378 and 379 of 1918‑19, seeking maintenance and marriage expenses for the daughters and praying that the amounts decreed might

The Court recorded that the amounts claimed by the plaintiffs were to be charged on the properties listed in item 8 of Schedule A annexed to each of the three plaints. On 17 June 1920 permission to sue in forma pauperis was granted in all three cases, and the suits were entered as Suits Nos 98 to 100 of 1919‑20. The appeal before this Court concerned only one of those suits, namely the suit filed by Devamma, which had originally been Miscellaneous Case No 379 of 1918‑19 and was later registered as Suit No 100 of 1919‑20. All three suits were contested and, after trial, a decree was rendered on 12 December 1921. The decree in Suit No 100 of 1919‑20 ordered each of the defendants to pay the plaintiff a maintenance sum of Rs 6 per month until her marriage and a lump‑sum of Rs 1,500 for marriage expenses; the decree also stipulated that the payable amount would constitute a first charge on the properties identified in the schedule.

In execution of that decree, the properties now forming the subject of the present litigation were sold on 2 August 1928 and were purchased by Devamma, who was the decree‑holder. A sale certificate in her favour was issued on 21 November 1930 (Exhibit J‑5). Separate execution proceedings were also instituted concerning the decrees obtained by Chellammal, Srikantamma, and one Appalaraju; consequently, all the properties comprising the mortgage were sold to third parties. The Court further noted that the three brothers, Brahmananda, Keshavananda and Madhavananda, had each been adjudicated insolvent on their own applications—Brahmananda by an order dated 23 March 1923 in Insolvency Case No 7 of 1921‑22, and Keshavananda and Madhavananda by an order dated 19 February 1926 in Insolvency Case No 4 of 1925‑26. Evidence of D.W. 5 indicated that around that time the brothers had left the premises.

While these insolvency and execution proceedings were ongoing, Abdul Huq, the mortgagee, instituted a suit on 16 August 1921 (O.S. No 27 of 192122) against Keshavananda and his two brothers to recover arrears of rent due under the lease deed dated 3 September 1918. That suit yielded a decree on 21 October 1921, but the decree could not be realised in execution and the execution petition was finally dismissed on 22 January 1926. Abdul Huq then commenced a second suit against the mortgagors (O.S. No 86 of 1931‑32) seeking recovery of rent arrears accruing after the period covered by the earlier decree and also seeking possession of the properties on the basis of the same lease dated 3 September 1918. A decree was obtained on 22 March 1932, but possession could not be taken because the properties were occupied by third parties who claimed a right to them. Abdul Huq died on 20 March 1933. Subsequently, his legal representatives filed a suit on 30 August 1933 (O.S. No 8 of 1933‑34) to enforce their rights under the mortgage deed dated 1 September 1918. The defendants in that suit included the mortgagors Keshavananda and Madhavananda, Gururaja, son of the late Brahmananda, the Official Receiver, and the purchasers of the mortgaged properties who had acquired them in execution of the maintenance decrees and the decree of Appalaraju. Devamma appeared as the third defendant in that action, and the plaint alleged that the mortgagors had failed to pay rent as required by the lease deed, had obtained collusive decrees in the maintenance suits and other actions, and that the properties had been sold fraudulently in execution of those decrees.

In the suit the plaintiffs asserted that the mortgagors had not paid the rent that was required under the lease deed dated 3‑9‑1918, and that the mortgagors had obtained collusive decrees in maintenance suits and other proceedings. The plaintiffs further claimed that the properties had been sold fraudulently in execution of those decrees. Relying on these allegations, the plaintiffs asked the court for a decree that would grant them possession of the properties against the purchasers, including Devamma, and also sought damages of Rs 5,000. In the alternative they requested a decree ordering the sale of the mortgaged properties to recover the amount due under the mortgage. The defendants contested the suit and raised the issues of whether the sales were collusive, whether the plaintiffs were entitled to possession and damages, and, alternatively, what sums were payable on the mortgage and what relief the plaintiffs could obtain. During the trial the plaintiffs withdrew their claim for possession and damages, which made it unnecessary for the court to examine the alleged collusive nature of the maintenance decrees and the execution sales. Consequently, on 26‑9‑1935 the court issued a decree fixing the amount that the plaintiffs could recover on redemption, ordering payment of that amount on or before 26 January 1936 and, in case of default, directing the sale of the properties. In execution of that decree the properties were sold at a court auction in 1936, and the purchaser was a person named Chapman, who obtained possession through a court order dated 18‑2‑1937. On 25‑1‑1938 Chapman’s agent, Saldhana, who later became Chapman’s executor after his death, sold the building sites that are now in dispute and that formed part of the auctioned properties to Krishna Rao, the plaintiff in the present action. When Krishna Rao tried to take possession of the sites he was opposed by a man named Garudachar, who asserted title under a sale deed dated 1‑12‑1932 executed by Lokiah, the husband of Srikantamma, sister of Devamma. Krishna Rao therefore filed O.S. No. 92 of 1938‑39 in the Subordinate Judge’s court at Bangalore, seeking a declaration of his title to the suit properties and an injunction restraining Garudachar from interfering with his possession. The suit was decided on 23‑7‑1940, and Garudachar appealed the decision to the High Court. The parties subsequently entered into a compromise, and a decree (Exhibit E‑1) reflecting the terms of that compromise was passed on 18‑9‑1942. Under that decree the plaintiff’s title to the properties was recognised. After obtaining the decree Krishna Rao began construction on the sites, but he soon encountered fresh obstruction from the appellants, who claimed that they were in possession based on a title of their own.

The further dispute arose from a partition deed executed by the mortgagors on 6‑9‑1918 (Exhibit K). Under that deed Keshavananda was allocated two plots, numbered 3 and 4, which lay to the west of East Lal Bagh Road as shown in the plan (Exhibit G). Those are precisely the plots that constitute the subject matter of the present suit. On 30‑1‑1920 Keshavananda conveyed these properties to Dr Nanjunda Rao by deed of sale (Exhibit VI). On the same day Brahmananda sold plots numbered 1 and 2 to Dr Nanjunda Rao, but those particular plots are not involved in the present litigation. After the death of Dr Nanjunda Rao his sons partitioned the estate, and in that division the properties that are now in dispute were allotted to the share of one son, Raghunatha Rao. When Raghunatha Rao died in 1938 his estate passed to his widow, Nagubai, who is the first appellant. On 28‑5‑1939 Nagubai executed a trust deed that settled a half‑share of these properties on the Anjaneyaswami Temple at Karaikal; the trustees of that temple are the other appellants in this appeal. Because of the continued obstruction by those parties, Krishna Rao instituted the suit that gave rise to the present appeal, seeking a declaration of his title to the sites, an injunction restraining the defendants from interfering with his possession, or, alternatively, a decree of ejectment if the defendants were found to be in possession. The claim articulated in the plaint is straightforward: it is that Krishna Rao holds valid title to the sites and should be allowed to possess them without further disturbance.

On the same day as the sale to Dr. Nanjunda Rao, Brahmananda also sold plots numbered 1 and 2 to the same purchaser, although those particular plots do not form part of the present dispute. After the death of Dr. Nanjunda Rao, his sons divided the inherited lands by partition, and in that division the properties that are the subject of the current suit were allotted to the share of one son named Raghunatha Rao. When Raghunatha Rao died in 1938, his estate passed to his widow Nagubai, who is identified in the appeal as the first appellant. On 28‑5‑1939 Nagubai executed a trust deed that settled a moiety of the disputed properties in favor of the Anjaneyaswami Temple located at Karaikal, and the trustees of that temple constitute the remaining appellants in this appeal. Because the trustees interfered with Krishna Rao’s possession of the land, Krishna Rao filed the suit that is now before the courts, seeking a declaration that his title to the specific sites is valid and an injunction preventing the defendants from disturbing his possession, alternatively requesting a decree of ejectment should the defendants be found to be in possession. Thus the chain of conveyances and the trust settlement created the factual backdrop against which Krishna Rao seeks judicial confirmation of his ownership.

The plaintiff’s complaint advanced a straightforward proposition that the title acquired by Chapman as purchaser in execution of the decree issued on the mortgage dated 1‑9‑1918 superseded any later titles created after that date, and consequently that Dr. Nanjunda Rao and his successors, who obtained the land through the sale deed dated 30‑1‑1920, possessed no enforceable title against the plaintiff. The defendants opposed the suit on two principal grounds: first, they argued that because they were not joined as parties in the mortgage suit identified as O.S. No. 8 of 1933‑34, their right of redemption remained intact and was not affected by the decree or the subsequent sale in execution thereof; second, they contended that the action was barred by limitation since the plaintiff had not established possession within the twelve‑year period, and additionally they claimed that they had acquired title to the disputed properties by adverse possession for a period exceeding twenty years. The District Judge of Bangalore, who presided over the trial, concluded that the title of Dr. Nanjunda Rao to the suit properties derived from the sale deed dated 30‑1‑1920 was, pursuant to section 52 of the Transfer of Property Act, subject to the outcome of the maintenance suit brought by Devamma, recorded as O.S. No. 100 of 1919‑20, and therefore was extinguished by Devamma’s purchase of the property in execution of the charge decree issued in that suit. Regarding the question of limitation, the learned judge observed that the plaintiff had successfully demonstrated possession of the disputed lands within the twelve‑year statutory period, and that the defendants had failed to produce sufficient evidence establishing title through adverse possession. Consequently, the trial court entered a decree in favour of the plaintiff granting possession of the suit properties, and the defendants subsequently appealed this decision to the High Court of Mysore, which, by its judgment dated 8‑3‑1951, affirmed the findings of the district judge and held that, by operation of section 52 of the Transfer of Property Act, the title of Dr. Nanjunda Rao based on the deed dated 30‑1‑1920 terminated when.

Devamma acquired the properties in execution of the maintenance decree that had been granted to her, and although the lower court dismissed the appeal, it issued a certificate under article 133(1) of the Constitution, which brings the present appeal before this Court. Despite the fact that a complex series of legal proceedings extending over three decades forms the backdrop of the present dispute, the matter that requires determination is limited to a single issue. The Court must decide whether the sale deed dated 30‑1‑1920, relied upon by the appellants, is subject to the effect of the subsequent sale dated 2‑8‑1928 that was made in execution of the decree in O.S. No. 100 of 1919‑20, by virtue of the rule of lis pendens contained in section 52 of the Transfer of Property Act. If the 1920 deed is indeed subject to that later sale, then it is undisputed that the deed becomes void by virtue of Devamma’s purchase on 2‑8‑1928. Conversely, if the 1920 deed is not subject to the rule of lis pendens, it is equally clear that the appellants, having purchased the equity of redemption from Keshavananda, retain the right to redeem the mortgage dated 1‑9‑1918 and, because they were not impleaded in O.S. No. 8 of 1933‑34, they are not bound by the decree issued in that proceeding or by the sale executed pursuant to that decree. In examining this question, it is important to note that the plaint in O.S. No. 100 of 1919‑20, which prayed for a charge over the property, was filed on 6‑6‑1919; consequently, the subsequent sale to Dr. Nanjunda Rao on 30‑1‑1920 would, on its face, fall within the mischief that section 52 was intended to prevent, and would therefore be defeated by Devamma’s purchase on 2‑8‑1928 in execution of the charge decree.

The counsel representing the appellants, Sri K. S. Krishnaswami Ayyangar, refrained from pressing before this Court the contention that, when a plaint is presented in forma pauperis, the lis pendens does not arise until the suit is admitted and entered on the court’s register, a step that in the present case occurred on 17‑6‑1920, after the sale recorded in Exhibit VI. That argument would conflict directly with the plain language of the Explanation to section 52. The counsel did, however, concede correctly that when a suit for maintenance includes a prayer that the decree be charged upon specified immovable property, the right to that property is directly in dispute, and the lis pendens therefore commences on the date the plaint is filed, not on the later date of the decree that creates the charge. Nonetheless, the counsel advanced three specific grounds upon which he challenged the lower courts’ conclusion that the 30‑1‑1920 sale deed is defeated by section 52. First, he asserted that the issue of lis pendens was never raised in the pleadings and consequently is not available to the plaintiff. Second, he alleged that the maintenance suit, O.S. No. 100 of 1919‑20, and the subsequent sale effected in execution of the decree were collusive, thereby rendering section 52 inapplicable. Third, he maintained that Devamma’s purchase on 2‑8‑1928, made in execution of the decree in O.S. No. 160 of 1919‑20, is void and ineffective because the Official Receiver, in whose hands the estate of Keshavananda had been vested on 19‑2‑1926, was not a party to the sale proceedings.

In this matter, the Court found no merit in the argument that the plea of lis pendens could not be raised by the plaintiff because it had not been expressly pleaded. The plaint and the plaintiff’s reply statement did not contain any specific allegation that the sale was affected by the rule of lis pendens, nor was any issue framed on that point. The respondent argued that the statements in paragraph 4 of the plaint and paragraph 5 of the reply, which described Dr Nanjunda Rao as a transferee subsequent to the mortgage who could claim no right “inconsistent with or superior to those of the mortgagee and the auction‑purchaser,” were sufficiently broad to embrace the question of lis pendens, and that reference to Issue No. 3, which was of a general character, supported this view. Even assuming that the plaintiff intended to rely on those allegations to raise lis pendens, the Court noted that the plaintiff had not expressed this intention with the clarity required to put the defendants on notice, and that, had the matter rested solely on that deficiency, the appellant’s position might have been considered. However, the plaintiff did in fact raise the question of lis pendens at the very beginning of the trial on 8‑March‑1947. While giving his examination‑in‑chief, the plaintiff produced Exhibit J series, which comprised documents relating to the maintenance suits, the decrees passed in those suits, the subsequent execution proceedings, and the purchase by Devamma. This evidence was directly relevant to the lis pendens issue, and the defendants made no objection to its admission. Moreover, on 13‑March‑1947 the defendants cross‑examined the plaintiff on the alleged collusive character of the proceedings reflected in Exhibit J and filed documents to support that contention. The trial continued for almost three months, during which the defendants adduced their evidence, and the matter was finally taken up for decision on 2‑June‑1947. In the arguments before the District Judge, the defendants did not challenge the admissibility of the lis pendens plea; instead, they argued its merits and sought a finding that the proceedings were collusive so as to avoid the operation of section 52 of the Transfer of Property Act. The Court was satisfied that the defendants went to trial fully aware that the lis pendens question was in issue, were given ample opportunity to present evidence on that point, and fully utilized that opportunity. Consequently, the lack of a specific pleading on the question was regarded as a mere procedural irregularity that caused no prejudice to the defendants. The appellants, however, contended that because no formal plea of lis pendens was taken in the pleadings, evidence concerning that question could not be properly examined and no decision could be rendered based on Exhibit J. They relied on Lord Dunedin’s observation in Siddik Mahomed Shah v. Mt Saran that “no amount of evidence can be looked into upon a plea which was never put forward.” The Court explained that the true scope of that principle is that evidence on issues not actually tried should not form the basis for a decision on a different issue that the parties did not have the chance to contest. That principle does not apply where the parties proceed to trial knowing that a particular question is in dispute, even though no specific issue has been formally framed, and they adduce evidence relating to it. In such circumstances, the applicable rule is the one articulated in Rani Chandra Kunwar v. Chaudhri Narpat Singh, which permits consideration of evidence on issues that the parties knowingly addressed during the trial.

In this case the arguments were founded on Exhibit J, which was alleged to demonstrate that the sale dated 30‑1‑1920 was affected by a lis pendens. The appellants also relied on the observations of Lord Dunedin in Siddik Mahomed Shah v. Mt. Saran and others (1) that “no amount of evidence can be looked into upon a plea which was never put forward”. The proper scope of that rule, the Court explained, is that evidence admissible on issues actually tried should not be used as the basis for deciding another, different issue that was not before the parties and on which they had no opportunity to adduce evidence. However, that rule does not apply where the parties go to trial aware that a particular question is in issue, even though no specific issue was framed, and they present evidence relating to that question. The rule that governs such situations is the one laid down in Rani Chandra Kunwar v. Chaudhri Narpat Singh; Rani Chandra Kunwar v. Rajah Makund Singh (2). In that precedent the defendants, at trial, contended that the plaintiff had been given away in adoption and therefore could not inherit. No such plea appeared in the written statement, nor was any issue framed on it. Before the Privy Council the plaintiff argued that, given the pleadings, the question of adoption was not open to the defendants. Lord Atkinson, however, overruled that objection, holding that because both parties had proceeded to trial on the question of adoption and the plaintiff was not taken by surprise, the plea of adoption was open to the defendants, and the defendants succeeded on that issue. Accordingly, the present objection must be overruled. The second contention raised was that section 52 of the Transfer of Property Act does not extinguish the title of Dr Nanjunda Rao and his successors under the sale dated 30‑1‑1920, on the ground that the proceedings leading to the decree in O.S. No. 100 of 1919‑20 and the subsequent sale in execution on 2‑8‑1928 were collusive. Whether the proceedings were collusive is essentially a question of fact, and both lower courts had agreed that they were not. The appellants argued that this finding resulted from an error by the learned High Court judges concerning the burden of proof and therefore should not be accepted. They further argued that Abdul Huq, his legal representatives, and the plaintiff himself had repeatedly admitted, in judicial proceedings concerning the suit properties, that the decree and the sale in O.S. No. 100 of 1919‑20 were collusive, and that, consequently, even if the initial burden of establishing collusion lay on the defendants, it had shifted to the plaintiff.

The Court observed that the plaintiff could not succeed merely on the basis of the admissions previously mentioned, because he offered no substantive evidence to explain those admissions, and consequently his case must fail. The Court then indicated that it was necessary to scrutinise the various statements that the appellants relied upon as admissions, to determine their true meaning and the appropriate weight to be given to each. On 27‑June‑1932, Abdul Huq filed an application before the insolvency court seeking an order directing the Official Receiver to take possession of the mortgaged properties, which were then said to be occupied by a person named Lokiah. The Court noted that Lokiah had earlier been identified as the husband of Srikantamma, who was the sister of Devamma; Lokiah had married Srikantamma after the maintenance suits had been decreed and sometime before the court auction that took place in 1928. In his petition, Abdul Huq alleged that Lokiah had acted in collusion with the insolvent parties to carry out execution proceedings under O.S. No. 100 of 1919‑20 without giving notice to the Official Receiver, and that Lokiah had purchased the properties at the court auction held on 2‑August‑1928 on behalf of the decree‑holder. The decree itself was not challenged as collusive, and the petition specifically claimed in paragraph 3 that the purchase made on 2‑August‑1928 was intended to benefit Devamma. Abdul Huq’s principal complaint was that the execution proceedings and the subsequent sales were fraudulent and designed to defeat his entitlement to the rents and profits of the properties. In other words, his attack on the sale of 2‑August‑1928 was not that the transaction was fictitious or collusive, but that it was a genuine transaction conducted through fraud. The Court then explained the essential distinction between collusive and fraudulent proceedings. It quoted a definition of collusion from Wharton’s Law Lexicon, 14th edition, page 212, describing it as a secret arrangement between two persons whereby one sues the other to obtain a judicial decision for a sinister purpose. In such a collusive proceeding the claim is fictitious, the dispute is unreal, and the decree functions merely as a mask to deceive third parties. By contrast, a fraudulent proceeding involves a false claim that nevertheless secures a favourable verdict through deception on the court, with the purpose of harming the opponent; there is no underlying agreement between the parties in such a case. While collusive proceedings feature a sham contest, fraudulent suits involve a genuine and earnest contest. The Court noted that Abdul Huq’s petition did not allege the suit itself to be collusive, but rather impeached the execution proceedings as fraudulent. It should be

In the earlier petition, the District Judge issued an order on 30‑June‑1932 directing the Official Receiver to take the necessary steps and to report back; however, no further action resulted from that order. Subsequently, after Abdul Huq’s death, his legal representatives filed another petition requesting the insolvency court’s permission to institute a suit based on the mortgage dated 1‑September‑1918, with the Official Receiver named as a party. The allegations contained in this later petition mirrored those set out in Abdul Huq’s petition dated 27‑June‑1932 and did not advance the matter in any substantive way. The court ordered this petition, and on 30‑August‑1933 O.S. No. 3 of 1933‑34 was instituted. In that suit the plaintiffs sought possession of the properties on the basis of the usufructuary mortgage and, in addition, claimed damages from the defendants who were in possession, alleging that the execution proceedings that enabled the defendants to take possession were collusive and fraudulent. Up to this point the allegations merely repeated what had already been asserted in the earlier proceedings. For the first time, however, the plaint expressly claimed that the proceedings in O.S. No. 100 of 1919‑20 and the decree issued therein were collusive. These claims were presented solely as a basis for seeking damages for non‑payment of rent under the lease dated 3‑September‑1918 and for the defendants’ failure to surrender possession, implying that the suit itself was fraudulent and intended to deprive the mortgagee of the rents and profits to which he was entitled. At trial the relief for possession and damages was abandoned, the issue of the sale’s collusive character was set aside, and a decree for sale was finally granted. Those proceedings are subject to the same criticism previously applied to Abdul Huq’s petition and therefore provide no assistance to the defendants.

The discussion now turns to a proceeding in which the present plaintiff was a party. After purchasing the property, the plaintiff’s possession was obstructed by an individual named Garudachar, prompting the plaintiff to file O.S. No. 92 of 1938‑39 to establish his title against Garudachar. In the plaint filed in that suit, the plaintiff, evidently adopting the allegations previously made by Abdul Huq and his representatives, again asserted that the decree in O.S. No. 100 of 1919‑20 and the execution sale dated 2‑August‑1928 were collusive. On behalf of the appellants, it is contended that because the plaintiff obtained a decree in O.S. No. 92 of 1938‑39 based on those allegations, he may not now reverse his position and plead the opposite. That contention will be examined presently. Nevertheless, the statements made by the plaintiff in the plaint of O.S. No. 92 of 1938‑39, when considered merely as admissions, do not advance the matter beyond the point already reached in the earlier proceedings.

In considering the effect of the statements made by Abdul Huq and his legal representatives in the earlier proceedings, the Court first examined the nature and weight of such admissions. The Court observed that an admission does not automatically establish the truth of the matters asserted; it constitutes merely one piece of evidence, and the importance attached to it must be determined by the circumstances surrounding its making. An admission may be shown to be erroneous or untrue provided that the party to whom it was addressed has not relied on it to his detriment, for in such a situation estoppel could render the admission conclusive. The Court found that estoppel was not applicable in the present case because the title claimed by Dr. Nanjunda Rao arose from a purchase that took place long before the admissions made in 1932 and thereafter.

The appellants contended that these admissions at the very least shifted the burden of proof onto the plaintiff, requiring him to demonstrate that the proceedings in O.S. No. 100 of 1919‑20 were not collusive. They further argued that, since the plaintiff offered no evidence to show that the statements were made by mistake or for an ulterior purpose, the admissions should be given full effect. The appellants relied upon the well‑known observations of Baron Park in Slatterie v. Pooley (1) that “what a party himself admits to be true may reasonably be presumed to be so,” as well as upon the decisions in Rani Chandra Kunwar v. Chaudhri (1) [1840] 6 M. & W. 664, 669; 151 E.R. 579, 581 and in Rani Chandra Kunwar v. Rajah Makund Singh (1), where that proposition of law was endorsed. The Court held that no exception could be taken to this rule, but it stressed that before the rule could be applied, the opponent must have made a clear and unambiguous statement that would be conclusive unless it were explained.

The Court noted that the tenor of the statements made by Abdul Huq, his legal representatives, and the plaintiff was to allege that the proceedings in O.S. No. 100 of 1919‑20 were fraudulent and not merely collusive. In the Court’s view, those statements alone, without further support, were insufficient to sustain a finding that the proceedings were collusive. However, assuming that the statements were sufficient to shift the evidential burden onto the plaintiff to prove that the decree and the sale in O.S. No. 100 of 1919‑20 were not collusive, the Court examined the plaintiff’s evidence. The plaintiff had filed the Exhibit J series, which the Court considered to provide a complete picture of the proceedings in O.S. No. 100 of 1919‑20. The Court also recalled the terms of the partition deed set out in Exhibit K, where the brothers had agreed to pay a monthly maintenance of eight rupees each to their step‑mother, Chellammal, a charge that was not borne by the family properties. Regarding the step‑sisters, Srikantamma and Devamma, the deed merely required the brothers to protect them. The Court further remembered that under the partition the brothers Keshavananda…

Both Brahmananda and his brother each received two vacant sites, and these sites were allotted to them as a full quit of their respective shares. The record, specifically Exhibit J‑10 paragraph 2, indicates that the brothers were considering disposing of those plots; such a disposal would have defeated the claim of Chellammal and the step‑sisters to receive maintenance. Consequently, the brothers found it necessary to protect their rights, and to that end they instituted suits for maintenance and assert a charge thereon against the family properties. The apprehensions of Chellammal were shown to be well‑founded by the fact that the two brothers entered into agreements for the sale of their vacant sites to Dr Nanjunda Rao on 20‑10‑1919, and that the corresponding sale deeds were actually executed, as reported in the citation (1) [1906‑07] L.R. 34 I.A. 27, on 30‑1‑1920. From these circumstances there can be no doubt that the suits were instituted in good faith. This conclusion receives further support when the conduct of the litigation is examined. Two of the brothers contested the suit, which was adjourned on several occasions and finally heard in December 1921. During the trial a number of witnesses were examined by both sides, and the judgment recorded in Exhibit J‑6 shows that the dispute centered on the amount of maintenance payable to the plaintiffs; the contest was described as keen and even bitter.

When the plaintiffs eventually obtained decrees, they did not experience an easy realisation of the decree’s benefits. As has been observed, the difficulties of a creditor often commence after a decree is obtained, and the plaintiffs faced similar hardships. Exhibit J‑4 demonstrates that Devamma was compelled to file several applications for execution before she could finally bring the properties to sale; because the properties were heavily encumbered, she had to purchase them herself on 2‑8‑1928. The sale was subsequently confirmed on 21‑11‑1930, a sale certificate was issued as shown in Exhibit J‑5, and Devamma took possession of the properties. In summary, the claim on which the suit was based was genuine and honest, it was vigorously contested by the defendants, and prolonged execution proceedings were necessary to realise the decree’s fruits. These facts clearly indicate that the suit in O.S. No. 100 of 1919‑20 and the subsequent sale on 2‑8‑1928 were not collusive. The plaintiff also testified under cross‑examination that although he had initially believed, when filing O.S. No. 92 of 1938‑39, that the earlier proceedings were collusive, he now thought otherwise. Counsel for the appellants strongly criticised this testimony, arguing that without facts explaining why the plaintiff changed his mind, his new statement was worthless. Nevertheless, the plaintiff, along with Abdul Huq and his legal representatives, were complete strangers, and their statements regarding the alleged collusive nature of the O.S. No. 100 of 1919‑20 proceedings could only be inferred. If, based on the material then before him, the plaintiff could have thought those proceedings were collusive, there is no reason why, on the material now before him, he could not think otherwise.

The Court noted that, given the evidence presently before it, the plaintiff could not have formed any opinion contrary to the conclusion that the proceedings in O.S. No. 100 of 1919‑20 were not collusive. The defendants had the option of further cross‑examining the plaintiff about the material that had prompted him to change his view, but they chose not to pursue that line of enquiry. Both the trial court and the appellate court, after a meticulous examination of the record, had concluded that the suit in O.S. No. 100 of 1919‑20 was not a collusive proceeding. The Court found no sufficient reason to overturn that finding and therefore affirmed the lower courts’ determination that the earlier suit was genuine and not the product of collusion.

Subsequently, the Court turned to the appellants’ argument that, because of what occurred in O.S. No. 92 of 1938‑39, the plaintiff was barred from pleading in the present suit that the decree and sale in O.S. No. 100 of 1919‑20 were not collusive. The appellants contended that in his pleading in O.S. No. 92 of 1938‑39, the plaintiff had alleged collusion in the earlier suit, introduced evidence to support that allegation, succeeded in persuading the trial court to make a finding of collusion, and obtained a decree based on that finding. Consequently, they argued, the plaintiff could not now reverse his position and claim that the earlier proceedings were not collusive, invoking the principle that a person cannot both approve and reject the same fact. The Court examined the factual matrix of O.S. No. 92 of 1938‑39. In that suit, Garudachar attempted to establish title to the disputed properties on the basis of a purchase dated 1‑12‑1932 from Lokiah. The central issue was the validity of that purchase, because Lokiah had acquired the properties in execution of a money decree against Appalaraju, rendering his title subordinate to that of Devamma under the charge decree dated 2‑8‑1928. In his pleadings, the plaintiff attacked both Devamma’s and Lokiah’s purchases as fraudulent and collusive, although he did not claim title under Devamma and therefore had no need to challenge her 2‑8‑1928 purchase. The trial court, after considering the evidence, upheld the plaintiff’s title and granted a decree in his favour, recorded as Exhibit E. Garudachar appealed the decree (R.A. No. 101 of 1940‑41), but the appeal was settled by compromise, whereby the plaintiff’s title to the suit properties was confirmed and Garudachar received alternative vacant sites as satisfaction of his claim. The Court observed that, on these facts, the plaintiff’s allegation of collusion in O.S. No. 100 of 1919‑20 was neither the foundation of his claim nor a basis for any benefit obtained under the decree. Accordingly, the earlier finding of non‑collusion could not be said to have been obtained by misrepresentation, and the principle of approbation and reprobation did not bar the plaintiff from asserting that the earlier proceedings were not collusive in the present litigation.

The judgment recorded in Exhibit E had found that the proceedings in O.S. No. 100 of 1919‑20 were collusive. However, that judgment was not inter parties and therefore its findings are inadmissible in the present litigation. Moreover, because an appeal was filed against that judgment, the findings in Exhibit E lost their finality, and when the parties later settled by granting Garudachar another property in substitution, those findings ceased to have any force even inter parties. Sri Krishnaswami Ayyangar argued that the proceedings in O.S. No. 92 of 1938‑39 are being relied upon to bar the plea that the decree and sale in O.S. No. 100 of 1919‑20 are not collusive. He contended that this reliance is not founded on res judicata or estoppel but on the principle that a person cannot both approbate and reprobate, and that it is immaterial that the present appellants were not parties to those earlier proceedings. He quoted the decision in Verschures Creameries Ltd. v. Hull and Netherlands Steamship Company Ltd. and, in particular, the observations of Scrutton, L.J. at page 611. In that case an agent delivered goods to a customer contrary to the principal’s instructions; the principal then sued the purchaser for the price of the goods and obtained a decree. Having not obtained satisfaction, the principal subsequently sued the agent for negligence and breach of duty. The court held that the second action was barred because, when on the same facts a person can claim only one of two possible reliefs and, with full knowledge, elects one and obtains it, he cannot later reverse his election and claim the alternative relief. Bankes, L.J. expressed this principle thus: “Having elected to treat the delivery to him as an authorised delivery they cannot treat the same act as a misdelivery. To do so would be to approbate and reprobate the same act.” The appellants rely on Scrutton, L.J.’s observations, which state: “A plaintiff is not permitted to ‘approbate and reprobate’. The phrase is apparently borrowed from Scottish law, where it expresses the doctrine of election—that no party can accept and reject the same instrument: Ker v. Wauchope(1); Douglas‑Menzies v. Umphelby(2). The doctrine of election is not confined to instruments. A person cannot at one time declare a transaction valid and obtain an advantage that depends on its validity, and then later declare it void to obtain a different advantage. That is to approbate and reprobate the transaction.” It is clear from these observations that the maxim that a person cannot ‘approbate and reprobate’ is only one application of the doctrine of election, and

It was observed that the doctrine preventing a person from both approving and rejecting the same act is limited to the reliefs that are sought in connection with the identical transaction and to the individuals who are parties to that transaction. This principle is reflected in Halsbury’s Laws of England, volume XIII, page 454, paragraph 512, which explains that on the basis of the rule that one may not approbate and reprobate, a specific form of estoppel has emerged. This estoppel is positioned between estoppel by record and estoppel in pais and may be described as follows: once a party has taken advantage of an order—such as the receipt of costs—he cannot subsequently claim that the order is invalid in order to have it set aside, nor can he advance a case that conflicts with the basis on which the order was originally granted, especially where such a claim would prejudice persons who relied on the order. Moreover, a party may not rely on an order that was obtained through ignorance of the true facts to the detriment of third parties who have acted upon it. In the present matter, the plaintiff derived no benefit against the appellants by alleging in O.S. No. 92 of 1938‑39 that the proceedings in O.S. No. 100 of 1919‑20 were collusive; consequently, the plaintiff did not acquire any right to the suit properties by relying on those pleadings. There is likewise no issue of election, because the sole relief that the plaintiff sought in O.S. No. 92 of 1938‑39—and continues to seek—is the entitlement to the suit properties. Although the foundation for that claim differs and is inconsistent with the earlier claim, the doctrine of election does not prohibit such a differing basis, and because there is no estoppel involved, the plaintiff is entitled to argue that the proceedings in O.S. No. 100 of 1919‑20 were not collusive. Finally, it was contended that the purchase made by Devamma in execution of the decree in O.S. No. 100 of 1919‑20 was void, on the ground that the Official Receiver—who had been appointed when the estate of Keshavananda, the mortgagor, was adjudicated insolvent on 19‑2‑1926—had not been joined as a party to those proceedings. It was further argued that, therefore, the title of Dr Nanjunda Rao and his successors under the sale deed dated 30‑1‑1920 should have continued despite the court auction sale on 2‑8‑1928. The clear answer to this argument is that the properties sold on 2‑8‑1928 did not pass into the Official Receiver’s hands at the time of the adjudication order of 19‑2‑1926, because the mortgendor had transferred them long before the insolvency case (Insolvency Case No. 4 of 1925‑26) was presented, under the very sale deed dated 30‑1‑1920 that forms the foundation of the appellants’ title. Although that sale was pending litigation, the operation of section 52 does not extinguish the sale entirely but merely subordinates it to the rights that arise from the decree in the suit. Between the parties to that transaction, the sale was perfectly valid and effected the vesting of title in the transferee.

In this case, the Court observed that the sale deed dated 30‑1‑1920 was perfectly valid and operated to transfer the title from the transferor to the transferee. According to section 28(2) of the Insolvency Act, only the property of the insolvent vests in the Official Receiver. Because the properties that were the subject of the suit had ceased to be the property of Keshavananda by virtue of the sale deed dated 30‑1‑1920, those properties never vested in the Official Receiver. Consequently, the auction sale that took place on 2‑8‑1928 could not be challenged on the ground that the Official Receiver had not been made a party to the proceedings. The appellants, however, argued that section 52 contains the expression ‘pendente lite “the property cannot be transferred”’ and therefore a transfer made during the pendency of litigation should be deemed null and void, rendering Keshavananda, for purposes of lis pendens, the owner of the properties despite the earlier transfer. They further contended that the Official Receiver, who succeeded to Keshavananda’s rights, should have been impleaded in the action. The Court rejected this contention because it ignored the qualifying words in section 52 that state a transfer is ineffective ‘so as to affect the rights of any other party therein under any decree or order which may be made’. Those words indicate that a transfer remains valid unless it conflicts with rights that later arise from a decree or order. Established authorities therefore treat pendente‑lite transfers as valid and operative between the parties to the transfer. The Court noted that it would be inconsistent to hold that the sale deed of 30‑1‑1920 conveyed title to Dr. Nanjunda Rao while at the same time deeming Keshavananda to still possess that title. Accordingly, the Court could not accept the appellants’ argument that a transferor who has transferred property pendente lite must be treated as retaining title for the purposes of section 52. Assuming, arguendo, that Keshavananda retained some residual interest in the properties after the 30‑1‑1920 conveyance, and that such interest vested in the Official Receiver when the adjudication order was made on 19‑2‑1926, the Court considered the effect of that interest on the title of Devamma, who had purchased the property at the court auction conducted under her charge decree. The Privy Council in Kala Chand Banerjee v. Jagannath Marwari held that when a mortgage decree is executed and properties are sold without notice to the Official Receiver, in whose favour the equity of redemption had vested, the sale is not binding upon the Receiver. In the present case, however, it was not the Official Receiver who challenged the auction as invalid. The Official Receiver had actually been a party to O.S. No. 8 of 1933‑34 and therefore was bound by the sale effected in execution of the decree in that proceeding, which formed the basis of the plaintiff’s claim. The Court therefore identified that the present challenge to the 2‑8‑1928 auction originated not from the Receiver but from the purchaser who, during the pendency of the charge suit O.S. No. 100 of 1919‑20, now attacks the sale.

The Court examined whether the sale that occurred on 2‑8‑1928 could be declared null and void, and whether the party seeking to set it aside was entitled to that relief. The respondent’s counsel drew the Court’s attention to the decision in Wood v. Surr(2). In that earlier case, the mortgagor had instituted a suit for redemption in 1838. A preliminary decree for accounts was issued in 1843, and on the basis of that decree a final decree was rendered in 1848, which specified the amount due and granted the mortgagor time until 1849 to pay. The mortgagor failed to make payment, and consequently the mortgage was foreclosed.

During the pendency of these proceedings, the mortgagor was adjudicated bankrupt in 1844. The Official Assignee, in whom the equity of redemption had vested, was not joined as a party to the mortgage action. In 1841, the mortgagor had created a further mortgage in favour of a woman named Mrs. Cuppage, and Mrs. Cuppage was likewise not joined as a party to the redemption suit. After the foreclosure in 1849, a man identified as Mr. Wood, claiming to act on behalf of Mrs. Cuppage, filed an action to redeem the mortgage.

The issue before the Court was whether, as a transferee pendente lite, Mr. Wood was bound by the foreclosure proceedings. Mr. Wood contended that, because the official assignee had not been made a party to those proceedings, the foreclosure had been improper and the entire matter remained unsettled. Sir John Romilly, M. R., rejected this contention and observed that “there can be no question but that the suit (Davis’s suit) was defective by reason of no notice having been taken of the insolvency. The proceeding (1) [1927] L, R. 54 T.A. 190, (2) [1854] 19 Beav. 551; 52 E.R. 465, having gone on exactly as if no insolvency had taken place, the subsequent proceedings would, in my opinion, be wholly inoperative against the assignee‑in‑insolvency and if he thought fit to contest the validity of the decree of foreclosure against Davis, it could not be held to be binding on such assignee.”

Sir Romilly added that this observation did not exhaust the question. He explained that the real query was whether the plaintiff, who otherwise would have been bound by the decree, could rely on the defect. He concluded that although the suit was undeniably defective because of the insolvency, only the assignee could invoke that defect. He further stated that it was clear the original mortgagor, Davis, could not benefit from that defect, and that even if the insolvency were later superseded or annulled, Davis could not claim that the foreclosure was not absolute against him.

These observations, the Court noted, directly address the point presently in controversy. They embody a principle that has been adopted in the law of this country concerning the effect of a sale executed under a decree that arises from a mortgage suit that was defectively constituted. The Court held that such a sale does not affect the redemption rights of persons who have an interest in the equity of redemption but who were not impleaded as parties to the action as required by Order 34, Rule 1 of the Civil Procedure Code. Nonetheless, the sale remains valid and effective against parties who were properly joined in the action.

The Court observed that the rule operated as against the parties to the suit and that this principle had been confirmed even where the holder of the equity of redemption was the Official Receiver who had not been joined as a party to the proceedings that led to the sale. The Court referred to the decisions in Inamullah Khan v. Shambhu Dayal (1) and Subbaiah v. Ramasami Goundan (2) as authority for this proposition. Accordingly, the Court concluded that, assuming that the equity of redemption in the suit property had vested in the Official Receiver upon the adjudication of Keshavananda, the failure to join the Official Receiver in the execution proceedings did not make the purchase by Devamma a nullity; under the sale Devamma had obtained a clean and indefeasible title, subject only to any right that the Official Receiver might elect to exercise. The Court further held that the transferee pendente lite, acting under the deed dated 30‑1‑1920, and his representatives, the present appellants, could not attack that title.

Consequently, the Court agreed with the lower courts that the appellants’ title had been extinguished by operation of section 52 of the Transfer of Property Act as a result of the court‑ordered sale dated 2‑8‑1928. The Court noted that the appellants had also contended that the suit was barred by limitation under article 142 on the ground that the plaintiff and his predecessors had not been in possession for twelve years, and that the defendant had acquired title by adverse possession commencing in 1920. The learned District Judge had decided both issues in favour of the plaintiff. Although the correctness of those findings was challenged in the appeal before the High Court, the judgment of the learned judges contained no discussion of that point, leading the Court to infer that the appellants had abandoned the limitation argument, and therefore the Court declined to hear that issue.

The Court added that the limitation question could not arise on the facts because the alleged adverse possession was said to have begun in 1920, and it was well settled that such possession could not prejudice the right of a prior mortgagee to cause the property to be sold. Moreover, adverse possession against the purchaser under that sale could not commence before the date of the sale, which occurred in 1936, and the present suit had been filed on 8‑1‑1945, within twelve years of that sale. For these reasons, the appeal failed, and the Court dismissed it with costs.