Skip to content


State of Gondal Vs. Govindram Seksaria - Court Judgment

LegalCrystal Citation
SubjectProperty;Contract
CourtMumbai
Decided On
Case NumberO.C.J. Appeal Nos. 16 and 19 of 1943 and Suit No. 1282 of 1939
Judge
Reported in(1944)46BOMLR822
AppellantState of Gondal
RespondentGovindram Seksaria
Excerpt:
civil procedure code (act v of 1908), section 86-crown representative-certificate-suit against ruling prince-contract-completed contract-covenants for title-nonpayment of municipal taxes by vendor-payment of taxes by intending purchaser-transfer of property act (iv of 1882), section 55(1) (g)-indian contract act (ix of 1872), section 69-city of bombay municipal act (bom. iv of 1888), section 212.; section 86 of the civil procedure code, 1908 nowhere provides that the consent mentioned therein is to be given to a particular plaintiff. what section 86(2); provides is that consent is to be given to a 'specified suit.'; defendant no. 1 was the stole holder of debentures issued by two mill companies ; and defendants nos. 2 and 3 were trustees under the deed of debenture. under a power.....leonard stone, kt., c.j.1. this is an appeal by defendant no. 1 against the judgment of mr. justice blagden dated january 15, 1943, whereby it was ordered that defendant no. 1 should pay to the plaintiffs upwards of rs. 77,000. there is also a cross-appeal by the plaintiffs against defendants nos. 2 and 3, who are trustees and against whom the learned judge dismissed the action.2. an objection as to the jurisdiction of this high court to try this action was taken in the court below, and has been raised by sir jamshedji kanga in this court also. it arises in this way. defendant no. 1 is his highness the maharaja of gondal, and under section 86 of the civil procedure code, 1908, it is not competent to sue the ruling chief of an indian state in this court, unless the consent of the crown.....
Judgment:

Leonard Stone, Kt., C.J.

1. This is an appeal by defendant No. 1 against the judgment of Mr. Justice Blagden dated January 15, 1943, whereby it was ordered that defendant No. 1 should pay to the plaintiffs upwards of Rs. 77,000. There is also a cross-appeal by the plaintiffs against defendants Nos. 2 and 3, who are trustees and against whom the learned Judge dismissed the action.

2. An objection as to the jurisdiction of this High Court to try this action was taken in the Court below, and has been raised by Sir Jamshedji Kanga in this Court also. It arises in this way. Defendant No. 1 is His Highness the Maharaja of Gondal, and under Section 86 of the Civil Procedure Code, 1908, it is not competent to sue the Ruling Chief of an Indian State in this Court, unless the consent of the Crown Representative has been first obtained. Sub-section (1) of Section 86 is as follows :-

Any such Prince or Chief, and any ambassador or envoy of a foreign State, may, in the case of the Ruling Chief of an Indian State with the consent of the Crown Representative, certified by the signature of the Political Secretary, and in any other case with the consent of the Central Government, certified by the signature of a Secretary to that Government, but not without such consent, be sued in any competent Court.

Sub-section (2) provides that such consent may be given in respect to a specified suit or to several specified suits, or with respect to all suits of any specified class or classes, and may specify, in the case of any suit or class of suits, the Court in which the Prince may be sued.

The certificate of consent obtained in this case is in this form :

Consent of the Crown Representative

CERTIFICATE.

This is to certify that in accordance with the provisions of Section 86 of the Code of Civil Procedure 1908 (Act V of 1908) the Crown Representative consents to a suit being instituted in the High Court of Judicature at Bombay, by Mr. Govindram Seksaria and the Director and Managing Agent ofSekaria Cotton Mills Limited of Bombay, against His Highness the Maharaja ofGondal, in respect of the matters specified in the copy of the plaint attached hereto.

(SD.) C. Latimer

Political Secretary.

Simla,

July 28, 1939.

The intended plaint is attached to the certificate, being in the precise form, except for the number of the suit, in which the plaint was ultimately sworn to. As appears from it, there are in fact two plaintiffs, Govindram Seksaria and the Seksaria Cotton Mills, Limited, : but it has been submitted by Sir Jamshedji Kanga for the Maharaja that as the certificate of consent was in favour of a suit by Govindram Seksaria and the director and managing agent of the company, no valid consent to the action as constituted by the personal plaintiff and the plaintiff company has been given!, and accordingly this Court has no jurisdiction. In my judgment, there is no substance in this contention. In the first place, the certificate of consent has, as I have mentioned, a copy of the then intended plaint annexed, in which the parties are correctly described. Further, when the petition is examined on which the consent was given, it discloses who the petitioners are and also that it is the petitioners who are to be the plaintiffs, namely, Govindram Seksaria and the Seksaria Cotton Mills, Limited : see paragraph 25 of the petition which is as follows :

That your petitioners desire to file a suit against inter alia the said Maharaja for recovery of the said amount in the High Court of Judicature at Bombay.' From this it is clear that the Crown Representative not only had the precise nature of the intended suit before him but also the identity of the intended plaintiffs. Section 86 nowhere provides that the consent is to be given to a particular plaintiff, what Sub-section (2) provides is that consent is to be given to ' a specified suit' In my judgment, the learned Judge in the Court below was right in holding that the requisite consent under the section had been given.

3. Turning to the main issues between the parties. The dispute arises out of a contract for sale of two cotton mills together with their plant and machinery, and concerns a substantial sum in respect of arrears of municipal taxes due at the date of the, contract in respect of the property sold. The facts are as follows : Defendants Nos. 2 and 3 are the trustees of a debenture trust deed dated October 1, 1926, and executed byCurimbhoy Mills Co., Ltd. At all material times defendant No. 1, the Maharaja, held all the issued debentures amounting in value to a sum of Rs. 20,00,000. The company having made default, the trustees on October 1, 1933, took possession of the properties comprised in the security. On March 2, 1934, the company was ordered to be wound up compulsorily, but the liquidator never attempted to interfere with the possession of the trustees.

4. In the events which had happened, the trustees had power to sell, and by Clause 7 of the trust deed they had to exercise that power, if requested so to do by a majority of the debenture-holders ; such majority being in fact the Maharaja. This clause is important in view of what happened.

5. On July 24, 1937, the trustees being still in possession, the solicitors to plaintiff No. 1 wrote to the Maharaja a letter which commenced as follows :

Our client is informed that you are the mortgagee in possession of the freehold land admeasuring about 34,856 sq. yards the buildings, machinery and plant of the Mills, known as The Currimbhoy Mill and Mahomedbhoy Mill belonging to the Currimbhoy Mills Co., Ltd., (in Liqu.) being the holder of all the first mortgage debentures issued by the said company.

Our client is further informed that as such mortgagee in possession you are willing to sell the said land, buildings, machinery and plant.

6. The letter proceeds to offer a price. Sub-paragraph (2) provides :

You are to make out a marketable title to the said premises.

7. And sub-paragraph (3) is as follows :

All rents, rates, taxes and outgoings are to be apportioned between you and our client as on the date of completion or possession as aforesaid.

8. That letter was replied to on August 5, 1937, by the Dewan, Gondal State, as follows :

1. At present the State is desirous to dispose of the Mills at price of Rs. 12,50,000 net as per terms and conditions detailed below. ' 1. The trustees for the sole debenture holder agree to transfer to the purchaser all the property and machinery lying in the same condition at present and generally described as block account of the Company and which is taken over by the trustees and given possession on their behalf to Messrs W. H. Brady & Co., Ltd.

2. The purchaser will be required to pay the full amount of sale on giving delivery of possession of the mills and he will be considered owner for all practical purposes and may deal with the property in the best way suited to him. The trustees will endeavour to transfer the property as early as possible.

3. The trustees will not pay any brokerage to any party. .

4. Any legal expenses in connection with the sale will be required to be borne by the purchaser.

This offer should not be considered firm as the market is rapidly rising day by day unless it is accepted by the State as a result of an offer in writing from you with a cheque far 10 per cent, deposit.

Your cheque No. H. T. 340535 dated July 24, 1937, on the Central Bank of India, Ltd., for Rs. 1,20,000 is returned herewith.

Thereafter upwards of three weeks elapsed, and then plaintiff No. 1 himself in a letter addressed to the Maharaja personally and dated September 1, 1937, wrote as follows :

With reference to our cheque No. H.T. 340590 dated 27th ultimo which was handed over to Mr. Asar on the same day, we are told by him that he had made inquiries into the mutter and that if we accept the price of the above Mills of Rs. 12,50,000 and also the following four terms given to us by him, the business would' be possible.

1. The trustees for the sole debenture holder agree to transfer to the purchaser all the properties and machinery lying in the same condition at present and generally described as block account of the company and which is taken over by the trustees and given possession on their behalf to Messrs. W. H. Brady & Co., Ltd., and which is mentioned in the printed list of Messrs. W. H. Brady & Co., Ltd., including all machinery in the Mills compound.

2. The purchaser will be required to pay the full amount of sale on giving delivery of possession of the Mills and he will be considered sole owner for all practical purposes and may deal with the property in the best way suited to him. The trustees must endeavour to transfer the properties to the purchaser or in the name of his nominees as early as possible.

3. The trustees will not pay any brokerage to any party.

4. Any legal expenses in connection with the sale will be required to be borne by the purchaser.

5. We hereby agree to accept the above four conditions and the pride of Rs. 12,50,000 and request Your Highness to accept our offer till September 8, 193,7, and thus lay us under your obligation.

9. It is to be noted that in submitting this offer plaintiff No. 1 recognises that it is the trustees who are to make the transfer, and that the requirement as to making out a marketable title and also as to the apportionment of rent, rates and taxes is omitted as also the stipulation about the price being ' nat.' The Dewan replied to this letter by a telegram dated September 4, 1937, in the following form :

Your letter first September very likely State may accept your offer. Are you prepared to pay full amount of Rs. 12,50,000 on Monday in National Bank of India in Hia Highness account and arrange with bank to send us telegram to the effect that cheque is realised and money credited to His Highness account. If so State may wire Brady Company to put you in possession on Monday or Tuesday. Deposit cheque will be returned to you. It is understood that all your legal expenses as well as ours will be borne by you as per condition four accepted by you and State will transfer to you all machinery in printed list of Brady Company lying in Mills compound if belonging to some other party cannot be included in sale.' Thereupon plaintiff No. I.Replied by telegram as follows :

Thanks for your telegram fourth. Your terms accepted Monday bank holiday. Depositing Rupees twelve lacs fifty thousand with National Bank crediting His Highness account Tuesday positively. It is understood that State will transfer to us all lands buildings machineries in printed list of Brady Company. Please confirm.

10. In reply a further telegram from the Dewan dated September 6, 1937, was received :

I accept your offer. All lands buildings machinery in Brady's printed list will be transferred. Please pay Rupees twelve lacs fifty thousand in His Highness account with National Bank on Tuesday and send me telegraphic intimation. National Bank also to please send me telegram. When cheque cashed money realised and Rupees twelve lacs and fifty thousand credited to His Highness account Brady will be wired to put you in immediate possession on receipt of intimation from you and National Bank.

11. It is conceded by all parties to this action that the letters and telegrams which I have read, or at any rate the letter of September 1 and the subsequent telegram, constitute a contract : but three different contentions have been advanced as to the nature of such contract and the rights and liabilities under it; and although a conveyance was eventually executed by the trustees in favour of plaintiff No. 2, the identity of the contracting parties is said to be still material in the events which havehappened, and having regard to Section 55 of the Transfer of Property Act, 1882, and Section 69 of the Indian Contract Act, 1872, to which I will presently refer.

12. The whole of the purchase price being paid, plaintiff No. 1 was let into possession on September 9, 1937. Letters then passed between the Maharaja's representatives and the solicitors to plaintiff No. 1, the purport of which is that plaintiff No. 1's solicitors were endeavouring to obtain the title deeds and effect some investigation of title, whilst the Maharaja's representatives took up the attitude that the only thing remaining to be done was to execute the conveyance. On October 7, 1937, plaintiff No. 1 received from the Collector of Taxes a letter which informed him that municipal taxes were in arrear since April 1, 1933, that is to say, since six months before, the trustees took possession, and that the arrears amounted to Rs. 1,24,092. This letter stated that the property taxes were a first charge on the properties under Section 212 of the City of Bombay Municipal Act, 1888. As a result of that startling disclosure, a triangular correspondence broke out between the Municipality and the solicitors to plaintiff No. 1 and the representatives of the Maharaja : the only noteworthy featureof which is, that the Maharaja's representatives nowhere deny liability to pay the taxes.

13. On November 29, 1987, plaintiff No. 1 contracted to sell the properties to the plaintiff company being in fact a company formed for the purpose of taking them over. This agreement, after reciting that the vendor had contracted with the trustees of the debenture-holders for the purchase of the Mills upon the terms of the correspondence annexed thereto and that the vendor had 'paid the purchase price and entered into possession on September 9, 1937, goes on to provide that the vendor should sell and the company should purchase ' with effect as on and from September 7, 1937, the said Mills.' Paragraphs 2 and 3 are as follows :-

2. The company shall without investigation or requisition accept such title as the vendor may have to the premises hereby agreed to be: sold.

3. The purchase shall be completed on such date as may be mutually arranged and thereupon possession of the premises shall as far as possible be given to the company and the vendor shall at the expense and cost of the company take all such steps as may be requisite or expedient for giving to the company the full benefit of the agreement.

14. The contract also provided by paragraph 5 that the vendor should obtain a direct conveyance of the immovable properties from the trustees in favour of the company and should join in such conveyance as the confirming party. It is to be noted that the contract is silent as to any arrears of taxes, and one of the difficulties in this appeal is, that in the Court below none of the parties adduced any oral evidence. It is not known on what date the plaintiff company took possession, or even if it did so before the execution of the conveyance. Mr. Setalvad applied during the course of his argument to adduce such evidence, but this was strenuously objected to by Sir Jamshedji Kanga on behalf of the Maharaja, and we upheld that objection. On the other hand, there is no evidence that the plaintiff company had any notice or knowledge at the date of the contract between plaintiff No. 1 and the plaintiff company of the outstanding liability for taxes and the consequential charge upon the properties. If such notice had been proved, certain consequences might have followed.

15. The triangular correspondence mentioned above continued after the contract between the two plaintiffs had been entered into ; but it does not appear whether Messrs. Kanga & Co., who seem to have been the solicitors for both the plaintiffs, wrote after November 29, 1937, on behalf of plaintiff No. 1 or on behalf of the plaintiff company. There is no change in the tenor of the letters, and neither the Municipality nor the Maharaja appear to have been informed of the contract of November 29, 1937.

16. By May, 1938, the patience of the Municipality had become exhausted, and they were refusing to connect some water supplies to the Mills. Eventually on February 23, 1939, the plaintiff company paid upwards of Rs. 78,000, being the amount to which the Municipality had agreed to reduce the outstanding claim for taxes. On March 28, 1939, a conveyance was executed by the trustees to the plaintiff company, to which plaintiff No. 1 was the confirming party. That deed was duly registered on March 28, 1939. There is no correspondence and no evidence as to what happened in the interval between the payment of the taxes and the execution of the conveyance. Nor is there any evidence that the plaintiff company has made any claim against plaintiff No. 1 or that plaintiff No. 1 has suffered any damage.

17. I will now revert to the three contentions as to the nature of the original contract.The first contention is raised by Mr. Setalvad on behalf of the plaintiffs and is that the contract is the personal contract of the Maharaja and that he was personally liable upon it. The second contention is raised by Sir Jamshedji Kanga on behalf of the Maharaja, and is, that it is the contract of the trustees and that the Maharaja was only acting as their agent : and the. third contention, which is also raised by Sir Jamshedji Kanga, is that the Maharaja contracted to procure a sale and that that sale having been procured, by a conveyance, by the trustees, he is no longer liable. The learned Judge in the Courtbelow held in favour of this latter contention ; but he held further that the Maharaja had failed to perform this obligation and consequently gave judgment against him. It is common ground that the trustees held the legal estate and that under Clause 7 of the trust deed they could be compelled by the Maharaja to exercise their power of sale ; but looking at the letter of September 1, 1937, and the subsequent telegrams it is significant that the offer is made to the! Maharaja : ' We request your Highness to accept our offer.' The telegram in reply to this is : ' Very likely State may accept your offer,' and asks whether payment will be-made into the Maharaja's bank account. In answer plaintiff No. 1 replies to the Dewan to the Maharaja : ' Your terms accepted,' and the Dewan replies : ' I accept your offer.'

18. In my judgment, the Maharaja entered into this contract on his own behalf, and not as agent for the trustees. The feet that the concurrence of the trustees to the transfer of the property was necessary appears on the face, of the contract and, in my judgment, the Maharaja could have sued and been sued upon the contract. See Brickies v. Snell [1916] 2 A.C. 599 and Hailes and Hutchinson's Contract, In re [1920] 1 Ch. 233. Although the Maharaja,, no doubt, was to procure the concurrence of the trustees as conveying parties, on the true construction of this contract it is my opinion that the Maharaja was himself contracting to sell. Apart from the sections of the Indian Acts to which I will refer, the position would be clear, namely, that as the contract is no longer executory, having been completed by conveyance, and no question of fraud or misrepresentation arising, the purchasers would have no other rights than to rely on the covenants for title.

19. I will now consider the sections of the Indian Acts which have been relied upon. Section 55 of the Transfer of Property Act, 1882, provides that in the absence of a contract to the contrary, the buyer and the seller of immoveable property respectively are subject to the liabilities, and have the rights, mentioned in the rules next following, or such of them as are applicable to the property sold :

(1) The seller is bound-

(a) to disclose to the buyer any material defect in the property or in the seller's title thereto, which the buyer could not with ordinary care discover.

Sub-paragraphs (b) and (c) refer to title deeds and investigation of title; sub-paragraph (d) to the execution of a proper conveyance; sub-paragraph (e) to the taking of due care of the property and documents between the contract of sale and the delivery of the property ; sub-paragraph (/) to giving possession to the buyer on being required by the buyer ; and sub-paragraph (g) is as follows :

To pay all public charges and rent accrued due in respect of the property up to the date of the sale, the interest one all incumbrances on such property due on such date, and except where the property is sold subject to incumbrances, to discharge all incumbrances on the property then existing.

20. Sub-clause (a) has not been pressed, and rightly so, since the most rudimentary investigation would have discovered the arrears of taxes, So far as Sub-clause (g) is concerned, the original contract was not ' the date of the sale. ' ' Sale ' is defined by Section 54 of the Transfer of Property Act as being ' a transfer of ownership. in exchange for a price paid,' and such transfer, in the case of immovable property of the value of Rs. 100 and upwards, (which is this case), can only be made by a registered instrument. It is not suggested that the original contract by the letter of September 1, 1937, and the subsequent telegrams was or is a registered instrument. Plaintiff No. 1, with whom the Maharaja contracted, has not paid anything in respect of the arrears of taxes, nor has he suffered any damage in respect thereof. The plaintiff company voluntarily paid off the arrears of taxes before the transfer to it by the conveyance of March 25, 1939. So far as the plaintiff company is concerned, there is, in my opinion, a contract to the contrary within the meaning of Section 55 to be found in the conveyance itself. Since the Mills are transferred to the plaintiff company, subject to the payment thereout of all rents, taxes, rates, dues and duties now or here-after to become payable to the Government of Bombay and the Municipality in respect thereof.

The other section is Section 69 of the Indian Contract Act, 1872, which is as follows :

A person who is interested in the payment of money which another is bound by law to pay, and who therefore pays it, is entitled to be reimbursed by the other.

21. In order for the plaintiff company to succeed under this section two elements must exist. First, the plaintiff company must on February 23, 1939, have been interested in the payment of the money, and, secondly, the person from whom reimbursement is sought must have been bound by law to pay it. There is no evidence that the plaintiff company was in possession on February 23, 1939 ; and the law of India does not recognise equitable estates, so that the plaintiff company had on the material date no equitable or other right in the property.

22. On and after the date when it paid the arrears of taxes, and before the execution of the conveyance of March 25, 1939, the plaintiff company could not have maintained any action against either the Maharaja or the trustees. The plaintiff-company's rights were against plaintiff No. 1, but at the suit of the plaintiff-company the Court could not have decreed specific performance against plaintiff No. 1, because the purchase was not to be completed until such date as should be mutually arranged, and no suggestion has been made that there was any date before conveyance when such a mutual arrangement was come to, or that any date was fixed by notice or otherwise. In my judgment, the rights of the plaintiff-company at their highest were an action for damages against plaintiff No. 1 or for rescission of the contract of November 29, 1937 and a claim for the repayment of the purchase price.

23. In my judgment, the plaintiff-company has failed to establish that at any date before conveyance it was interested in the payment of the arrears of taxes within the meaning of Section 69 of the Indian Contract Act. If that be so, it becomes unnecessary to consider whether any of the defendants were in law bound to pay the arrears. I cannot see on what grounds the Maharaja could have been made liable to pay; and the liability of the. trustees to pay depends on various sections of the City of Bombay Municipal Act, 1888, in that group of sections commencing with Section 139 ending with Section 219. The plaintiff-company would have had to establish, in the first instance, that under Section 146 the trustees were not only in possession of the premise but that the premises were unlet. Again, there is no evidence as to this. Whether the Mills were being worked, and, if so, by whom, or whether they were closed, the only light thrown upon the matter is contained in paragraph 12 of the plaint and the denial in paragraph 10 of the written statement of the Maharaja in which it is denied that his attorneys represented that the Mills had been closed from April 1, 1933.

24. Lastly, it is said that under the covenants for title in the conveyance of March 25, 1939, the trustees are liable. The contention is based upon the following covenant in the conveyance :

That they the trustees respectively have not at any time heretofore done executed Or knowingly suffered or been party or privy to any act deed or thing whereby they are prevented from granting and conveying the said land hereditaments and premises unto and to the purchaser company its successors and assigns in manner aforesaid or whereby the said land hereditaments and premises or any part thereof are is or can be in anywise incumbered.

25. And it is said that as the trustees were in possession for the greater part of the period in question, they knowingly suffered the arrears of taxes to accumulate and the consequential charge under Section 212 of the City of Bombay Municipal Act. In my judgment, this contention also is unsound, since prior to the date when the conveyance was executed the plaintiff-company had voluntarily paid off the arrears, so that on the material date no arrears or charge existed. No claim has been set out in the plaint or in the Court below or in this Court that this is a case in which subrogation could arise.

26. Accordingly, the appeal of defendant No. 1 must be allowed with costs both here and in the Court below. Such costs must include the amount which defendant No. 1 was ordered to pay in respect of the costs of the trustees.

27. The cross-appeal is dismissed, and: the plaintiffs must pay to the trustees their costs both here and in the Court below.

Kania, J.

28. The relevant facts have been stated in the judgment of the learned Chief Justice. He has also set out in extenso the correspondence which took place between plaintiff No. 1, defendant No. 1, the trustees' solicitors and the other parties' solicitors. With regard to the correspondence it should be noted that Messrs. Cragie, Blunt & Caroe started the same by saying that they represented the trustees, and plaintiff No. 1 made a request to defendant No. 1 to pay the taxes only by his letter of December 8, 1938.

29. The first point urged on behalf of the appellant in Appeal No. 16 is that the certificate granted by the Crown Representative under Section 86 of the Civil Procedure Code is not in compliance with the section, and no leave having been properly granted, the suit should fail. In the certificate the name of plaintiff No. 1 and the fact that he is the director and managing agent of the second plaintiff company are mentioned. The argument is that leave to sue is not granted to plaintiff No. 2. It was contended that plaintiff No. 1 is one of the directors and a member of the managing agents' firm, but the right to sue is in the company and one director alone has no power to file the suit. In my opinion, this argument overlooks the fact that in Section 86 it is not expressly provided that in the certificate the names of the persons who are to file the suit should be set out. If the intention of the Crown Representative has to be gathered, it is made clear by the fact that a copy of the plaint, which in fact was filed, was annexed to the certificate. This technical objection must therefore fail.

30. It was next argued that in. the petition for the certificate the petitioners had wrongfully alleged that defendant No. 1 was holdingimmoveable property in Bombay and the suit related to such property. It was contended that unless one of the three requirements mentioned in the section was proved to the satisfaction of the Court to exist, even if a certificate was granted by the Crown Representative, the Court should not consider that leave was properly granted. In my opinion, this argument is not sound. The section requires the fulfilment of one or other of the three conditions to the satisfaction of the Crown Representative. That is not a matter to be established in Court. If the Crown Representative is satisfied about the existence of one of the conditions and grants a certificate on that footing, I do not think it could be disputed in Court that the condition did not exist. In the course of his judgment the learned trial Judge has expressed a view that it is not open, to the Court to go behind the certificate. Stated in that wide form the proposition may be open to question. For illustration, if the certificate mentioned in terms that none of the three conditions was fulfilled, but because the Crown Representative considered that the particular Ruling. Chief deserved to be sued in the Bombay High Court and granted a certificate, I think it will be open to the Court to hold that the certificate was invalid, because the Legislature has provided that it must appear to the Crown Representative that one or the other of the three conditions had been fulfilled, Unless, therefore, onthe face of the certificate it appeared that the Crown Representative did not appear to be satisfied about the existence of one of the conditions, the certificate would be binding on the Court. In the present case there is nothing to show on the face of the certificate that the Crown Representative was not so satisfied. Although one ground mentioned by the petitioners in their petition may be wrong, it was open to the Crown Representative to make inquiries, and if he was satisfied that one of the conditions was fulfilled, it was open to him to grant a certificate. In the present case, therefore, the contention fails.

31. On merits, the first question which arises for consideration, is whether there was a contract of sale of the two textile Mills, and, if so, between what parties The correspondence up to September 7, 1937, is only relevant to be considered for this purpose. That correspondence exclusively is between plaintiff No. 1 and defendant No. 1 or the Dewan of defendant No. 1, who sent replies to communications addressed by plaintiff No. 1 to defendant No. 1. In my opinion, the defendants' contention contained in the written statement that defendant No. 1 acted as the agent of the trustees is unsound. The correspondence on the face of it does not show that defendant No. 1 acted as an agent of any party. It is suggested in the written statement that for the correspondence the Dewan acted as the agent of the trustees. That contention is equally unsound. The letters were written by plaintiff No. 1 to defendant No. 1 and replied to by the Dewan of defendant No. 1. I do not see what the trustees had to do with the Dewan so as to constitute him their representative. It is significant that throughout this correspondence, which deals with the sale of the Mills, except for a statement by defendant No. 1 that the trustees for the sole debenture-holder agree to transfer to the purchaser all the properties, machinery, etc., there is no reference to the trustees. The purchase price is agreed to be, and in fact paid in the personal account of the Maharaja. In fact on the instructions of the Dewan possession was given by the trustees' agents, Messrs. Brady & Co., to plaintiff No. 1. Two questions which are most relevant may, be considered in respect of this correspondence. To whom was the offer to purchase the Mills made Who acceptedthe offer to purchase To both the answer is ' the Maharaja. Therefore the contract is with him. It should be remembered also that in law there is nothing to prevent a party, having no title, to agree to sell a property. The correspondence, therefore, clearly shows that the contract of sale of the two Mills was between defendant No. 1 and plaintiff No. 1.

32. The learned trial Judge construed the contract as a contract by defendant No. 1 ' to procure a person to perform all the duties of a seller.' That case is not made out in the pleadings by any party and I am unable to find anything in this correspondence to justify that conclusion. I think it was a plain contract of sale by defendant No. 1 to plaintiff No. 1. Under the debenture trust deedthe only right of the sole debenture-holder was to compel the trustees to sell, when he required them to do so. I have already pointed out. that that was one of the terms of the contract agreed to between defendant No. 1 and plaintiff No. 1. The existence of that term does not prevent the transaction from being a contract between defendant No. 1 and plaintiff No. 1. Section 18 of the Specific Relief Act clearly shows that when a person with imperfect title agrees to sell property to another, and the title could be completed by the person agreeing to sell making another party, who is bound to convey at his instance, convey, the contract is still a contract of sale between the holder of the imperfect title and the other party. The fact, therefore, that in this case the legal estate was vested in the trustees, who were bound to convey at the instance of defendant No. 1, does not make it a contract between the trustees and plaintiff No. 1. In my opinion, on this correspondence, if plaintiff No. 1 had attempted to file a suit against the trustees for specific performance or damages, he will benon-sited. The trustees would be fully justified in saying that they had entered info no contract with plaintiff No. 1, The result, therefore, is that there is a contract of sale, as alleged by the plaintiffs in the plaint, between plaintiff No. 1 and defendant No. 1, and the contention of the defendants that defendantNo. 1 was the agent of the trustees roust fail. It was argued before us that there were admissions to the contrary in the, agreement of sale between the plaintiffs and the conveyance accepted by plaintiff No. 2. The statements in those documents made later on cannot alter the position of parties as determined from the correspondence.

33. The next question is what are the rights and liabilities of the parties under that contract? Under Section 55 of the Transfer of Property Act, in the absence of a contractthe contrary, a seller is bound under Sub-section (1), Clause (g), to pay all public charges and rent and also, unless the property was sold subject toincurmbrances, to discharge all in-cumbrances. The words ' seller ' and ' buyer ' in that section, in my opinion, are not limited to the actual parties to the conveyance. Sub-section (2),Clauses (b) and (d), may be noticed in this connection. They are appropriate only in respect of persons who have agreed to sell or buy and not conveyed the property. Clause (g) is an implied term, unless it is negatived by the terms of the contract between the parties. It only provides that when a property is agreed to be sold, the seller shall be bound to pay all public charges and allincumbrances up to the date of sale. That liability exists before completion and continues thereafter whether the existence of such charges orimcumbrances is discovered before or after completion. The obligation, unless there is a contract to the contrary, is absolute : Nathu Khan v. Burtonath Singh (1921) 24 Bom. L.R 571 and Bhagwaii v. Banarsi Das (1928) L.R. 55 I. A. 135 . Under the1 circumstances, in my opinion, defendant No, 1 was liable to pay the public charges under his contract to plaintiff No. 1. The further question is whether on the facts any relief could be given to plaintiff No. 1. He has not paid anything. What are his rights against defendant No. 1 ?. They can be only on the footing that defendant No. 1 has committed a breach of the implied term, of the contractcontained in Section 55(1)' (g). If so, what are the damages? The answer in the) present case is 'Nil,' because plaintiff No. 1 has not paid any money and has suffered no damage. Therefore, plaintiff No. 1 has no right against defendant No. 1 under Section 55(1) (g) of the Transfer of Property Act. It was argued on behalf of defendant No. 1 that the contract was ratified by defendants Nos. 2 and 3. This assumes that the original contract was made by defendant No. 1 as agent for defendants Nos. 2 and 3 without authority, and that when defendants Nos. 2 and 3 came to know of it they accepted the transaction. In sup port of this contention the statements in the agreement between the plaintiffs and the conveyance accepted by plaintiff No. 2 from defendantsNos. 2 and 3 were relied upon. In the first place this case is not pleaded in the written statements. The documents do not show that defendant No. 1 had acted as agent of defendants Nos. 2 and 3 and there is no oral evidence to support the contention. I have already found that defendant No. 1 in entering into the transaction of sale did not act as the agentof defendants Nos. 2 and 3. The learned trial Judge dismissed the suit against defendants Nos. 2 and 3 on the ground that theywere agents of defendant No. 1. That was based on the description of defendants Nos. 2 and 3 being nominees of 'defendant No. 1. Counsel for all parties appear to have protestedagainst that view of the trial Judge, but without avail. I think the learned Judge was in error, because on the pleadings it was nobody's case that defendants Nos. 2 and 3 were the agents of defendant No. 1. The word ' nominees' is used to indicate that they were nominated in the trust deed by defendant No. 1 as representing the debenture-holder.

34. It was argued before us that there was ' a contract to the contrary ' within the meaning of Section 55(1)1 (g). This argument, in my opinion, is futile, because there, is nothing in the correspondence to show that the liability of defendant No. 1 under this contract for sale excluded his liability under Section 55(1) (g) of the Transfer of Property Act. Counsel referred to two letters written in July and August, 1937, in which the word ' net' and a clause to apportion the rates and taxes, were mentioned. That is a wrong mode of approach, because those letters did not result in any contract. After the1 exchange of those first two letters the matter evidently was dropped; and re-started after three weeks with the letter of September 1. It is from that letter only that the correspondence has to be looked into to find the terms of the contract between the parties. The correspondence after September 7 does not support the contention that there was 'a contract to the contrary.' The conveyance executed by defendants Nos. 2 and 3 does not refer to Section 55(1) (g), and impliedly also I am unable to find any agreement of the nature suggested. There is, of course!, no oral evidence to support this contention. Therefore, the argument of an implied contract to the contrary must be rejected. It was contended that along with this section the Court should read a 69 of the Indian Contract Act, 1872 ; but there, again, plaintiff No. 1 cannot get any relief against defendant No. 1, because plaintiff had not paid any money. The result, therefore, is that as against defendant No. 1 plaintiff No. 1 cannot get any relief.

35. I shall next consider the case of plaintiff No. 2 against defendant No. 1. The facts; show that there was no contract between plaintiff No. 2 and defendant No. 1. Plaintiff No. 2 had a contract with plaintiff No. 1 only and had never come1 directly or indirectly in touch with defendant No. 1, There being no contract between plaintiff No. 2 and defendant No. 1, there can arise no rights under Section 55(1) (g) of the Transfer of Property Act in favour of plaintiff No. 2. As regards Section 69 of the Indian Contract Act, on which plaintiff No. 2 relies, it must be pointed out that defendant No. 1 was liable to pay under his contract with plaintiff No. 1 the arrears of municipal taxes. It is contended that because plaintiff No. 2 had entered into a contract to purchase the property from plaintiff No. 1 and paid Rs. 12,50,000 to plaintiff No. 1, plaintiff No. 2 was interested in making the payment. On behalf of the plaintiffs it was contended that the obligation to pay need not be founded on a statutory liability ; it is sufficient if it arises out of a contract. In support of that contention counsel relied on MothooranathChuttopadhya v. Kristokuma Ghose I.L.R. (1878) 4 Cal. 369. The case of plaintiff No. 2 can, therefore, succeed only on his establishing that he was interested in making the payment. I shall consider this aspect of the case later on, because it affects both defendant No. 1 and defendants Nos. 2 and 3.

36. I shall next consider the claim of plaintiff No. 1 against defendants Nos. 2 and 3. There was no contract between them to sell. Even in the conveyance plaintiff No. 1 is only a confirming party and is not a seller. He has become a confirming party by virtue of his contract with defendant No. 1. The transaction of sale, according to the conveyance, is by defendants Nos. 2 and 3 to plaintiff No. 2. Therefore, plaintiff No. 1 can have no claim based on contract or conveyance against defendants Nos. 2 and 3.

37. Plaintiff No. 2 can have no claim against defendants Nos. 2 and 3 under Section 55(1) (if) of the Transfer of Property Act on the footing of a contract. Before execution of the conveyance plaintiff No. 2 had no rights against defendants Nos. 2 and 3 at all. Such rights as came into existence must, therefore, be found in the conveyance executed by defendants) Nos. 21 and 3. According to the facts, proved on record, on the date of conveyance defendants Nos. 2 and 3 were not liable to pay any arrears of municipal taxes, as they had already been paid. Therefore, the covenant given in the conveyance does not cover the payment. On the footing that Section 55(i) (g) of the Transfer of Property Act applied to the seller and purchaser named in the conveyance also plaintiff No. 2 had no claim against defendants Nos. 2 and 3 because no arrears existed on the date of conveyance. Under the circumstances, the claim of plaintiff No. 2 against defendants Nos. 2 and 3 must rest only on Section 69 of the Indian Contract Act.

38. The position of plaintiff No. 2 under Section 69 of the Indian Contract Act therefore remains to be' considered. That company contends that defendant No. 1 was bound to pay the arrears of municipal taxes by virtue of his contract of sale with plaintiff No. 1 read with Section 55(1) (g) Of the Transfer of Property Act. Against defendants Nos. 2 and 3 plaintiff No. 2 claims that they were bound to pay the municipal taxes by reason of the fact that they were in possession of the property as legal owners and they were primarily liable to pay the taxes under the Municipal Act. In the alternative, it is contended that the1 property stood charged for the arrears of municipal taxes, and if payment was not made the same would have been sold. Those facts are relied on to establish that the defendants were bound to pay. To that extent the contentions appear to be sound.

39. The other thing plaintiff No. 2 has to prove is that they were interested in making the payment. For that they rely on the contract of sale between them and plaintiff No. 1 and the fact that Rs. 12,50,000 were paid by them to plaintiff. No. 1.,It was argued on behalf of plaintiff No. 2 that for these reasons they were interested in making the payment. The first argument was that the contract between the plaintiffs dated November 29, 1937, operated as an assignment of the outstanding contract between plaintiff No. 1 and defendant No. 1. In my opinion, that argument is or sound. By that agreement there was a contract only between plaintiff No. 1 and the 2nd plaintiff company to sell as from September 7, 1937, the properties which plaintiff No. 1 had agreed to purchase from defendant No. 1. It is true that in that contract it is mentioned that the conveyance will be taken direct. That clause in practice is ordinarily found in most contracts of sale. That does not in any way amount to an assignment of the original contract to the; 2nd plaintiff company. Clause (1) of the contract describes what was agreed to be sold and, in my opinion, does not amount to an assignment of the original contract to plaintiff No. 2. Having regard to the fact that in India a contract of sale itself does not create an interest in the immovable property agreed to be sold, the result of the transaction was that plaintiff No. 2 had only a personal contract with plaintiff No. 1 to purchase this property for Rs. 12,50,000 and in respect of which we have no evidence to show that possession was at any time transferred from plaintiff No. 1 to plaintiff No. 2.

40. Towards the close of his argument Mr. Setalvad applied for leave to lead further evidence to establish that fact. It was pointed out on behalf of the appellant in Appeal No. 16 and respondents in Appeal No; 19 that the plaintiffs had never been prevented from leading evidence, and it was not open to them to fill up the lacuna in the case by leading further evidence in the Court of Appeal. It was admitted on behalf of the plaintiffs that in the trial Court at no stage they were prevented from leading evidence, before they closed their case. Under the circumstances, there was no valid ground to grant that application and it was rejected. It was argued before us that the question whether plaintiff No. 2 was interested in making the payment was not raised in the issues raised on behalf of defendants Nos. 2 and 3, 'The contention was put forth in paragraph 15 of the plaint and covered the three defendants .without distinguishing them. An issue: disputing the interest of plaintiff No. 2 in making the payment was raised on behalf of defendant No. 1, and the written statements of the defendants severally raised the contention that the plaintiffs or either of them was not interested in making the payment. The omission to raise a specific issue by defendants Nos. 2 and 3 is a technical omission, and up to the last minute it was never contended that the respondents in Appeal No. 19 (defendants Nos. 2 and 3) were not entitled to raise that plea. I think that there is no substance in the argument. It is not suggested that because of this omission to raise the issue counsel for the plaintiffs had considered it unnecessary to lead any evidence in the trial Court, or was misled in any manner. Unless that conclusion is shown, the omission is only technical.

41. I think that the second plaintiff company has failed to prove that they were interested in making the payment. The decisions show that the party's interest in making the payment must be1 on the date of payment. In this case on February 23, 1939, when payment was made), there was neither privity of contract or estate between the second plaintiffs and any of the defendants. As the original contract of sale is not assigned to them, their rights are only against plaintiff No. 1 and nothing more. They have a right to sue plaintiff No. 1 either for specific performance or for damages. The various decisions considered under Section 69 of the! Indian Contract Act show that the party making the payment must have a contract to pay, or interest-present, future or contingent-in the property. The second plaintiffs have no such interest. An illustration will make the position clear. After payment of the municipal taxes was made on February 23, 1939, if owing to some disputes between the plaintiffs, plaintiff No. 1 obtained a conveyance from defendants Nos. 2 and 3 and the very next moment sold the property to an outsider, could the second plaintiffs proceed against the purchaser who actually obtained the conveyance In my opinion, the answer clearly would be in the negative. The second plaintiffs' claim, if any, would be only against plaintiff No. 1 and not against the purchaser. Their remedy, if at all, should therefore be limited to plaintiff No. 1, and as regards defendants Nos. 1 and 3 or defendant No. 1 the payment must be held a voluntary payment. The second plaintiffs, not having acquired any interest in the property, had also no interest in preventing it from being sold by the Municipality under the charge in their favour. It is not contended that any of the! defendants requested the second plaintiffs to make the payment. The evidence does not show that the second plaintiffs went into possession. If so, their right was only on the contract which they had entered into -with plaintiff No. 1, and their remedy must be limited to that contract. They had no right, in my opinion, to intervene in the transaction of the other parties, and if they chose to make the payment without the request of any of the defendants, the payment must be considered a voluntary payment. In the words of Sir James Colvile in Ram Tuhul Singh v. Biseswar Lall Sahoo (1875) L.R. 2 I. A. 131, 143. I am unable to find anything in this transaction which contains an express or implied obligation on the part of any of the defendants to repay the amount. Unless that could be spelt out, the case of the second plaintiffs must fail. On that ground I think that plaintiffs' claim fails.

42. The plaintiffs' suit, I agree, under the circumstances, should be dismissed with costs throughout. Separate sets of costs are allowed to defendant No. 1 and defendants Nos. 2 and 3 in the trial Court. Appeal No. 16 is allowed with costs, and Appeal No. 19 is dismissed with costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //