1. This is a Letters Patent appeal from a judgment of Mr. Justice Kania who, disagreeing with both the lower Courts, dismissed a suit brought by the appellants to recover the price of land sold by them to defendant No. 1 by sale of the land.
2. The appellants were the owners of a field survey No. 493 and some other lands which were in the possession of mortgagees under a mortgage of 1868. On August 29, 1916, they executed a sale deed, exhibit 26, in favour of defendant No. 1. The material terms of this document, which was registered, are as follows:--
Land thus bounded, along, with the trees, shrubs etc., thereon and along with all their component parts, has been sold for the said sum of Rs. 3,000. You should therefore take into your possession all the mortgaged lands from the creditors, either by mutual consent, or through Court and out of them you should keep in your possession the land sold and described above and pay assessment and should make a vahiwat permanently and without any trouble, from generation to generation including sons and grandsons. No right, title or interest has been left therein in us or in our heirs and executors, etc. You should take the remaining mortgaged lands from the possession of the creditors as indicated above and give them into our possession. If the sum that is found due to the creditors after taking accounts is less than the purchase amount, you should pay the balance to us. You have no right over that sum. If perhaps the sum found due to the creditors after taking accounts is more, we shall re-pay that out of the other mortgaged properties. You are not to be burdened with that. If it becomes necessary to file a suit in Court for the redemption of the lands from the said creditors we shall render every possible assistance in that matter and will join in the suit. You should incur the costs of the suit and should deduct the same from the sale price to be paid to us. The consideration is as under:--
After deducting the sum that will have to be paid to the creditors after taking accounts and the costs of the suit if a suit is required to be filed for the purpose of redeeming the lands, from the sum of Rs. 3,000, you should pay the balance found due to us and should hand over the remaining mortgaged lands to us. If the costs exceed the amount, we shall pay the excess. We have sold you absolutely the land as described above, for the consideration of Rs. 3,000 without any oral and written terms of any kind whatsoever.
3. Stated briefly, the effect of this was that the plaintiffs sold their equity of redemption in survey No. 493 to defendant No. 1 for Rs. 3,000, but this sum was to be spent in redeeming the mortgage on that field and the other lands and only the balance if any remaining after doing this and after deducting the cost of litigation was to be paid to the plaintiffs. The plaintiffs agreed to pay any excess over Rs. 3,000. The other mortgaged lands were to be handed over to them.
4. On the following day, August 30, the parties entered into an agreement which was reduced to writing. That is exhibit A. The material portion of this document is:--
We have yesterday (date August 29, 1916) executed a sale deed in your favour for Rs. 3,000 in respect of the land, survey No. 493 of Saswad. In that there is a term in the deed that after paying whatever is found due to the creditor after taking accounts, the balance is to be paid to us. But you are not to pay us at all the balance that will be left over. Only that you are to keep with yourself permanently the land that has been sold to you and you are to give us the remaining mortgaged lands that will be freed from the mortgage.
You are only to pay off the encumbrance in favour of the creditor and the land is to remain with you as sold absolutely for that and your labour.
5. According to this writing then the plaintiffs gave up their claim to any balance there might be after paying off the mortgagees, and defendant No. 1 on the other hand apparently became liable to redeem the mortgage whatever it cost. This document was not registered.
6. Defendant No. 1 duly filed a redemption suit No. 16 of 1917 and in September, 1920, he obtained a decree for redemption without any payment being required to be made to the mortgagees, The decree was confirmed in appeal in September, 1921. There were some review proceedings which ended in March, 1924, but they left the decree as it was.
7. In July, 1932, the plaintiffs sued defendant No. 1, his brothers and subsequent purchaser of part of the property to recover Rs. 4,999 by sale of survey No. 493. This amount was made up of Rs. 3,000, the purchase price under exhibit 26, plus Rs. 2,760 interest from the date of the appellate Court's decree in the redemption suit, less Rs. 240 allowed to defendant No. 1 for expenses of the litigation, less Rs. 521 which were remitted. This suit was obviously based on the vendors' charge for unpaid purchase money under Section 55(4)(b) of the Transfer of Property Act.
8. The trial Court held that exhibit A was inadmissible in evidence. Defendant No. 1 was allowed Rs. 500 for the expenses of the litigation and the plaintiffs were given a decree for Rs. 3,746. The decree was confirmed in appeal by the Assistant Judge. I may say that both the lower Courts relied very largely on Section 92 of the Indian Evidence Act, but that has nothing to do with the case, exhibit A not being an oral agreement.
9. There was a second appeal which was heard by Mr. Justice Kania. The principal points argued before him in support of the lower Courts' finding were that there was a statutory charge in favour of the vendors under Section 55(4)(b) and that the effect of the second document exhibit A was to extinguish that charge, so that the document required registration. In the alternative it was contended that the second document purported to alter the consideration for the first. This alternative is really the same point in a different form. The cases in which it has been held that an unregistered writing cannot alter the terms of a registered instrument all turned on the point that the unregistered writing in question affected immoveable property and therefore itself required registration. Substantially there is only one point in the appeal viz. whether exhibit A is compulsorily registrable under Section 17(1)(b) of the Indian Registration Act, and that depends on whether the sale deed gave the plaintiffs a charge under Section 55(4)(b) of the Transfer of Property Act, and whether, if so, exhibit A operated to extinguish that charge.
10. Mr. Justice Kania says in one place that no interest in immoveable property was created in respect of the balance, if any, payable to the plaintiffs. But I gather that what he really meant was that the value of the interest was not Rs. 100 or over and therefore even if exhibit A extinguished that interest it did not require registration. He says:--
It does not appear on the face of the document what amount if any would be payable to the vendors for the balance. Indeed the document contemplates the contingency of the sum of Rs. 3,000 not being sufficient to satisfy the claims of the mortgagees and the costs to be incurred in litigation. It was therefore provided that if any amount in excess was to be spent the vendors would pay the same. Under these circumstances, I am unable to consider that the property was under a statutory charge of over Rs. 100.
11. But, with deference, we think it is incorrect to make the money value of the statutory charge under Section 55(4)(b) depend on the probability or otherwise of the charge being required. There must always be more or less uncertainty as to the extent to which, if at all, it may be necessary to rely upon the charge. What the statute says is that where the ownership of the property has passed to the buyer before payment of the whole of the purchase money, the buyer has a charge upon the property for the amount of the purchase money remaining unpaid. When the ownership passes at once, the money value of the charge at the date of the sale deed must, we think, foe the amount of the purchase money remaining unpaid at that date, neither more nor less. It may be pointed out that the charge is not excluded by the fact that the buyer is to pay the money to a creditor of the seller: Sivasubramania Ayyar v. Subramania Ayyar (1916) I.L.R. 39 Mad. 997 and Naima Khatun v. Sardar Basant Singh (1933) I.L.R. 56 All. 766
12. It has also been held by Mr. Justice Kania that even if a charge is created by the sale deed in favour of the plaintiffs it was not extinguished by their agreeing that the balance if any was not to be paid to them. This agreement he thought did not affect immoveable property. He has also observed that a promisee has a right at any time to give up the performance of any part of the promise. This was in answer to the argument that exhibit A altered the consideration for the sale deed, but, as already pointed out, that seems to be merely a part of the same point. No doubt the promisee may give up part of the consideration if he wishes. He cannot be compelled to take the whole of his pound of flesh. But the question here is not whether he can give it up but whether he can be forced to give it up. That depends in the present case on whether plaintiffs are bound by the agreement exhibit A. To make them bound it is necessary to prove the agreement and it cannot be proved if it is compulsorily registrable. If the plaintiffs are really entitled to the charge which they are seeking to enforce and became entitled to it on the date of the sale deed, the agreement to relinquish their claim to a possible balance had the effect of depriving them of the right which they had to the land as security, and we think it could hardly be disputed in that case that exhibit A would operate to extinguish their right and would be compulsorily registrable under Section 17(1)(b) of the Indian Registration Act.
13. In our opinion, however, there is a simple answer to the plaintiffs' claim and it is this. The statutory charge under Section 55(4)(b) is on the property sold. In this case the property sold was the equity of redemption in the land. That is all the plaintiffs had to sell. The agreement was, however,. that the price was to be paid on redemption and not before. So that there could be no question of any charge on the equity of redemption, there being an implied contract to the contrary. Anyhow plaintiffs are not seeking to enforce a charge on the equity of redemption; they are seeking to recover their money by sale of the land after redemption of the mortgage. It seems to us to be, to say the least of it, extremely doubtful whether the statutory provision could operate to give the plaintiffs a charge on the land after redemption. But, assuming for the sake of argument that it could, the charge would only arise when the ownership of the land passed to defendant No. 1 i.e. on redemption of the mortgage. But before that time there was a contract to the contrary embodied in exhibit A, by reason of which no charge for the balance of the price could arise, since the claim to that balance had been abandoned. On this view exhibit A did not require registration, because it did not operate to extinguish any right or interest to or in the land, plaintiffs at that time having no such right or interest. Mr. Justice Kania, therefore, was right in admitting exhibit A in evidence and as a necessary consequence dismissing the plaintiffs' suit.
14. The appeal is dismissed with costs.