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Rahimtulla Lowji Damani Vs. the Official Assignee of Bombay - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtMumbai
Decided On
Case Number O.C.J. Appeal No. 31 of 1934 and Insolvency No. 58 of 1933
Judge
Reported inAIR1935Bom340; (1935)37BOMLR440; 157Ind.Cas.1062
AppellantRahimtulla Lowji Damani
RespondentThe Official Assignee of Bombay
DispositionAppeal allowed
Excerpt:
.....55(1) (d) - official assignee-sale of insolvent's property-purchaser from official assignee-sale by purchaser- conveyance by official assignee direct to sub-purchaser.;a purchaser from the official assignee of the right, title and interest of as insolvent in immoveable property has ordinarily a right to demand from the official assignee a conveyance of the property either in his own name or in the name of his nominee to whom he has meanwhile sold the property. - - 2. the law on the subject in england is, i think, clearly established. munshi to tell us what risk will be incurred by the official assignee if he executes this conveyance in the name of the sub-purchaser rather than of the purchaser, and we are not satisfied that any such risk exists. it is well established in england..........9 provided that on payment of the full purchase money the purchaser should be entitled to a proper conveyance, such conveyance to be prepared by and at the expense of the purchaser, who was to bear all the expenses connected therewith. the present appellant was the highest bidder at the auction, and he signed a contract agreeing to buy on the terms of the conditions of sale, and the sale to him was confirmed by the official assignee on october 12, 1933. after the date of the sale the appellant entered into a sub-contract to re-sell the property at a slightly enhanced figure to a sub-purchaser, and he required the official assignee to execute a conveyance in favour of the sub-purchaser. a draft conveyance was sent to the official assignee, which is expressed to be made between the.....
Judgment:

John Beaumont, Kt., C.J.

1. This is an appeal against an order of Mr. Justice Kania made in insolvency. It raises a short point on which it is surprising to find that there is no direct authority. The Official Assignee in the insolvency of certain persons had vested in him a mortgage dated July 30, 1930, and on September 21, 1933, he put up for sale by auction the right, title and interest of the insolvents under that mortgage. The sale was made subject to certain particulars and conditions of sale, which are on the record. Those conditions provided that the highest bidder should be declared the purchaser, but the sale was to be subject to confirmation by the Official Assignee, who had the right to refuse to confirm the sale without assigning any reason therefor. Then condition 9 provided that on payment of the full purchase money the purchaser should be entitled to a proper conveyance, such conveyance to be prepared by and at the expense of the purchaser, who was to bear all the expenses connected therewith. The present appellant was the highest bidder at the auction, and he signed a contract agreeing to buy on the terms of the conditions of sale, and the sale to him was confirmed by the Official Assignee on October 12, 1933. After the date of the sale the appellant entered into a sub-contract to re-sell the property at a slightly enhanced figure to a sub-purchaser, and he required the Official Assignee to execute a conveyance in favour of the sub-purchaser. A draft conveyance was sent to the Official Assignee, which is expressed to be made between the Official Assignee as vendor of the first part, the original purchaser of the second part, and the sub-purchaser of the third part. The Official Assignee refused to execute that draft or any other draft which did not provide for the assignment of the property to the original purchaser. He took the point that he was not bound under the contract to convey the property to any sub-purchaser. Mr. Justice Kania upheld that injection on the part of the Official Assignee, and from his decision this appeal is brought. The Official Assignee having adopted the attitude that he is not bound to execute any conveyance except one in favour of the original purchaser, we are not concerned to consider the exact terms of the draft conveyance submitted. The Official Assignee is, upon any view of the matter, entitled to insist that the conveyance is to be a proper one, and contain all necessary provisions to bind any sub-purchaser by the conditions of the original sale. The short point we have to consider is whether the learned Judge was right in saying that the Official Assignee is not bound to execute a conveyance in favour of a nominee of the purchaser.

2. The law on the subject in England is, I think, clearly established. The learned Judge in his judgment says that there is a dearth of direct authority, but so far as my own experience goes, I think that nobody at the English bar would question the general proposition that a purchaser is entitled to a proper conveyance in the name of himself or a nominee. That principle applies in the ordinary case, such as we have to deal with here, in which no obligation is placed on the purchaser under the conveyance. Where the purchaser has to perform obligations, or to indemnify the vendor against liabilities, his solvency is a matter of materiality to the vendor and different considerations apply, but where, as here, the property is to be conveyed out and out to the purchaser on payment of the purchase money, it is a matter of no particular consequence to the vendor whether the purchaser is solvent or not. The learned Judge was of the view that the English rule does not apply in India, primarily because under English law the purchaser takes an equitable interest in the property under the contract and before the conveyance, whereas in India under 3. 54 of the Transfer of Property Act the contract passes no interest in the property. In my view that distinction between English and Indian law is immaterial for the present purpose. The right of a purchaser in England to require the conveyance to be made in his own name or in that of a nominee does not depend on his equitable interest under the contract; it depends on :he terms of the contract. I have no doubt that the terms of the contract could negative that right, and the equitable interest which the purchaser takes would not override any express provision in the contract. In India the rights )f the vendor are governed by Section 55 of the Transfer of Property Act, and sub-cl. (1) (d) of that section provides that the seller is bound, on payment or ender of the amount due in respect of the price, to execute a proper conveyance )f the property 'when the buyer tenders it to him for execution at a proper time and place. The obligation under that sub-section is merely to execute proper conveyance, the section being silent as to the person in whose favour hat conveyance is to be executed. But, I think, the words 'proper conveyance' must be used in the sense in which they would be understood in English law as meaning a proper conveyance in favour of the purchaser or as he shall direct. It is said, however, that in this case the contract is a, special contract which overrides the general rights which the parties would have under an open contract. We have been referred in detail to all the clauses of the contract embodied in the conditions of sale, and to my mind, none of them impose upon the purchaser any obligation which will endure beyond the date of the conveyance, and the only relevant condition is condition 9, which provides that the purchaser shall be entitled to a proper conveyance, the expression 'proper conveyance' being the same as that used in the Transfer of Property Act. Mr. Munshi relies on the fact that under that condition it is the purchaser who is entitled to a proper conveyance. That, of course, must be so, because the purchaser is the only party to the contract other than the vendor, It is the purchaser who is entitled to a proper conveyance, but the question is whether the proper conveyance must necessarily be only in his name. In my opinion, there is nothing in this contract to entitle the vendor to insist that he is not bound to execute any conveyance except in the name of the purchaser. We are told that it has been the invariable practice in the Official Assignee's office not to execute a conveyance to anybody except the immediate purchaser. We have pressed Mr. Munshi to tell us what risk will be incurred by the Official Assignee if he executes this conveyance in the name of the sub-purchaser rather than of the purchaser, and we are not satisfied that any such risk exists. It is clear that if the conveyance were made in the name of the original purchaser, he could, five minutes later, re-convey the property to the sub-purchaser, and what advantage that course, in preference to a direct conveyance to the sub-purchaser, would confer upon the Official Assignee I do not know. The obvious disadvantage from the point of view of the purchaser is that the double conveyance subjects him to double stamp duty, and prevents him taking advantage of the provisions of Section 28 (3) of the Indian Stamp Act. It seems to me that it would be a considerable hardship if purchasers from the Official Assignee are to be deprived in all cases, irrespective of any benefit: which may accrue to the Official Assignee, of the advantages of that section. In my opinion, the Official Assignee is bound in this case to execute a proper conveyance to the purchaser or his nominee, and we must so direct. The appeal must be allowed, and respondent must pay appellant's costs here and in the Court below.

Rangnekar, J.

3. I agree. The short question which arises in this appeal is one relating to the right of the purchaser under a contract of sale of immoveable property to call upon the vendor to execute a conveyance either in his favour or as he shall direct. The insolvents in this case' were mortgagees of certain property, and after the adjudication order the Official Assignee sold their right, title and interest under the mortgage by auction. The appellant was declared to be the highest bidder. Thereafter the appellant executed an agreement as provided by the particulars and conditions of sale subject to which the auction was held. Some time thereafter the sale was confirmed by the Official Assignee. In the meanwhile the appellant sold the rights which he had purchased to a sub-purchaser. The appellant then called upon, the Official Assignee to execute the conveyance which he sent to him to which he and the sub-purchaser were parties, but the Official Assignee peremptorily declined to execute any conveyance in favour of the sub-purchaser. The appellant then appealed to Mr. Justice Kania as the Commissioner in insolvency, but the appeal was dismissed by the learned Judge. The learned Judge held, first, that the law in this country differs from that in England. As far as I can see, the learned Judge has not exhaustively dealt with this point, because in his opinion the matter was capable of being disposed of on a shorter ground. The learned Judge then held that in this case there was a special contract between the Official Assignee and the purchaser, having regard to the conditions of sale subject to which the auction was held, which therefore excluded the operation of the Transfer of Property Act, and that under this special contract the purchaser was not entitled to call upon the Official Assignee to execute a conveyance in favour of his nominee, and in the result dismissed the appeal. It is from that decision that the present appeal is preferred.

4. The first question, then, is whether the law in this respect in this country differs from that in England. It is well established in England that a purchaser can always demand a conveyance from the vendor not only in his favour, but in favour of any person as he would direct, and the vendor cannot refuse to execute a conveyance in favour of the nominee of the purchaser. I do not propose to refer to the authorities but the position is put by Halsbury at p. 419 of Vol.. XXV of the Laws of England in this wise ;-

When the purchaser has disposed of the land before the completion of the contract, it is usual, for the purpose of saving the expense of a second conveyance and double stamp duty, to take the assurance direct to the second purchaser.

This, of course, is subject to certain exceptions such as, for instance, where there is a personal covenant by which the purchaser is bound. In this case there is no such covenant included in the conditions of sale subject to which the sale was held. Section 55, Sub-section (1) (d), of the Transfer of Property Act, provides that the seller is bound, on payment or tender of the amount due in respect of the price, to execute a proper conveyance of the property when the buyer tenders it to him for execution at a proper time and place. There is nothing, as far as I can see, in the terms of this section which would affect the right of the purchaser to demand a proper conveyance of the property either in his favour or in favour of his nominee. It is said, however, and the learned Judge seems to have made a point of it, that in this country the position is different, because under a contract of sale relating to immoveable property the purchaser does not get any equitable interest in the land. That, no doubt, follows from Section 54, which provides that a contract for the sale of immoveable property does not of itself create any interest in or charge on such property. On the other hand, so far as the English law is concerned, upon the making of an enforceable contract for sale of immoveable property the purchaser becomes the owner of the land in equity. But I am unable to see how this distinction on this point affects the question which arises in this appeal, because it is clear that in this country, as in England, either party to such a contract may dispose of the benefit of the contract in favour of another person, and such disposition may be either by way of assignment or by a sale or in any other way. I think, therefore, that there is nothing in the Transfer of Property Act which puts the law on this point on a different footing from that in England.

5. The question then is whether there is ''anything inthe particular contract in this case which would prevent the purchaser from calling upon the Official Assignee to execute a conveyance in favour of his sub-purchaser. I do not think it necessary to refer to all the conditions which have been discussed in the course of argument. As far as I can see, the only material condition which is stressed by the respondent is condition 9. But all that it says is that the purchaser shall be entitled to a proper conveyance upon payment of the full purchase money in the manner laid down in the other conditions. It is difficult to see what distinction there is between this condition and Section 55, Sub-section (1) (d). All that the clause says is that it is the right of the purchaser to get a proper conveyance subject to the other conditions of the contract. It is not suggested that anybody other than the purchaser is claiming a proper conveyance from the Official Assignee. The only question is whether that conveyance should be in favour of the purchaser or his nominee. Therefore, I think, this particular condition does not affect the right which a purchaser has, as has been fairly conceded by Mr. Munshi, under the Transfer of Property Act, to call upon the vendor to execute a conveyance in favour of his nominee.

6. The third point which seems to have impressed the learned Judge is that it may be unfair to the Official Assignee to insist upon his recognising a sub-purchaser of a purchaser at an auction sale held by him. We asked Mr. Munshi how the position of the Official Assignee will be prejudiced if he departed from what, we are told, is a long-standing practice in his office to refuse to execute a conveyance in favour of the nominee of a purchaser. But Mr. Munshi has been unable to offer any satisfactory explanation in this respect. On the other hand to recognize this so-called practice would be to deprive a purchaser and his nominee of the benefit of the provisions of Section 28 (3) of the Indian Stamp Act. I think, therefore, the appeal must be allowed.

7. I do not wish to express any opinion on the question whether the conveyance actually tendered to the Official Assignee by the purchaser to which the nominee was also a party is proper within the meaning of the Act or the conditions. That certainly would be a question which the Official Assignee will have to consider.


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