Charge over immovable property can arise without two attesting witnesses, and the charge-holder has priority in sale proceeds.

A charge over immovable property may be created by act of parties without the mortgage formalities requiring two attesting witnesses, because attestation is not a statutory for a charge under the Transfer of Property Act. The security bond was therefore valid despite attestation by only one witness, and the decree was construed as creating and enforcing a charge with authority to sell the properties on default. In execution, the charge-holder had priority to the sale proceeds under Section 73(1) proviso (c) CPC, so unsecured decree-holders were not entitled to rateable distribution ahead of that charge.

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Issues: (i) whether the security bond was attested by two witnesses; (ii) if not, whether the bond was invalid for want of two attesting witnesses; (iii) whether the decree created a charge over the properties and authorised their sale for discharge of that charge; and (iv) whether the respondents were entitled to rateable distribution of the sale proceeds.

Issue (i): whether the security bond was attested by two witnesses.

Analysis: A valid attestation under Section 3 of the Transfer of Property Act requires that two or more witnesses have seen execution or received acknowledgment from the executant and have signed the instrument in the executant's presence with the intention of attesting. A signature made only in the capacity of registering officer or identifying witness does not satisfy this requirement unless animo attestandi is shown. The evidence did not establish that the Sub-Registrar or the identifying witnesses signed as attesting witnesses.

Conclusion: The bond was attested by only one witness.

Issue (ii): if not, whether the bond was invalid for want of two attesting witnesses.

Analysis: Section 100 of the Transfer of Property Act governs the creation and incidents of a charge, but it does not prescribe any mode of creation requiring attestation by two witnesses. Where immovable property is made security by act of parties and the transaction does not amount to a mortgage, the law recognises a charge without importing the formal requirements of Section 59 for a mortgage. Registration may be necessary where the instrument falls within the Registration Act, but attestation is not a statutory condition for the creation of a charge.

Conclusion: The security bond was valid and operative despite attestation by one witness only.

Issue (iii): whether the decree created a charge over the properties and authorised their sale for discharge of that charge.

Analysis: The decree expressly declared that the security bond would enure to the benefit of the decree-holder as a charge for the decretal amount and further permitted application for sale of the properties on default. On its true construction, the decree was not a mere recital of the bond but an operative adjudication recognising and enforcing the charge.

Conclusion: The decree created a charge and authorised sale of the properties for discharging it.

Issue (iv): whether the respondents were entitled to rateable distribution of the sale proceeds.

Analysis: The properties were sold in execution of a decree directing sale for discharge of the charge in favour of the appellant. Under Section 73(1) proviso (c) of the Code of Civil Procedure, 1908, the sale proceeds must first satisfy the decree-holder secured by the charge, and only the balance, if any, can be distributed among other decree-holders. Simple money creditors cannot claim rateable distribution ahead of the charge-holder in such circumstances.

Conclusion: The respondents were not entitled to rateable distribution ahead of the appellant.

Final Conclusion: The appeal succeeded, the High Court's appellate orders were set aside, and the orders of the learned Single Judge were restored, with the appellant retaining priority over the sale proceeds as charge-holder.

Ratio Decidendi: A charge over immovable property may be created by act of parties without the statutory requirement of two attesting witnesses, and where property is sold in execution of a decree enforcing such charge, the charge-holder has prior entitlement to the proceeds over unsecured decree-holders.

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