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Raja Ram and ors. Vs. Chheda and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtAllahabad
Decided On
Reported inAIR1949All555
AppellantRaja Ram and ors.
RespondentChheda and anr.
Excerpt:
- - 36,000 the price for which the village was being sold, would hold good, but if the profits were reduced the vendors would have to refund the decrease in the profits at the rate of 5 annas per cent. this suit was, therefore, well within time and should have been decreed. parties to pay and receive costs in accordance with success and failure......village was sold by them to one lala makkhan lal. at the time when the sale deed was executed, the settlement proceedings were in progress and it was anticipated that there would be some change in the amount of the land revenue payable to the government which would affect the profits realisable by the zamindar. along with the sale deed an agreement was executed on the same date, 15th october 1925, between the vendors and the vendee, and this agreement provided that if as a result of the settlement the profits remained at rs. 1,500, rs. 36,000 the price for which the village was being sold, would hold good, but if the profits were reduced the vendors would have to refund the decrease in the profits at the rate of 5 annas per cent. per mensem out of the sale consideration of rs. 35,000,.....
Judgment:

Malik, C.J.

1. Village Salahpur, pargana Daranagar, district Bijnor, belonged to four brothers, Ram Chander Mal, Ishwari Prasad, Chhote Lal and Jwala Prasad. On 15th October 1925, the village was sold by them to one Lala Makkhan Lal. At the time when the sale deed was executed, the settlement proceedings were in progress and it was anticipated that there would be some change in the amount of the land revenue payable to the Government which would affect the profits realisable by the zamindar. Along with the sale deed an agreement was executed on the same date, 15th October 1925, between the vendors and the vendee, and this agreement provided that if as a result of the settlement the profits remained at Rs. 1,500, Rs. 36,000 the price for which the village was being sold, would hold good, but if the profits were reduced the vendors would have to refund the decrease in the profits at the rate of 5 annas per cent. per mensem out of the sale consideration of Rs. 35,000, and if the profits were increased, the vendee will have to pay the extra amount over and above the Rs. 35,000 calculated at the same rate of 5 annas per cent. per mensem. The settlement proceedings lasted for several years and terminated in 1344 Fasli. The lower Court has held that this was some time towards the end of May 1937. The revised land revenue was payable from 1345 Fasli, that is, 1st July 1937. As a result of the revision in the land' revenue, the profits of the village increased and the vendors became, therefore, liable to claim an extra amount over and above the sum of Rs. 35,000 that they had already received.

2. We are not concerned with Ram Chander Mal, Chhote Lal and Jwala Prasad and their descendants. This suit was brought by the son and grand-son of Ishwari Prasad, Ishwari Prasad being dead, for their One-fourth share of the excess amount of the sale consideration. The amount claimed by them was Rs. 6,000 out of which Rs. 3640 was claimed as the principal and the rest, Rs. 2,360 as interest. The plaintiffs had alleged that as a result of the revision in the land revenue the profits had exceeded the sum of Rs. 1,500 and Rs. 14,560 was the excess amount of the sale consideration payable to the vendors out of which the plaintiffs were entitled to a one-fourth share.

3. Chheda Lal defendant alone contested the suit and he raised several pleas. He pleaded that the suit was time barred. He also urged that as Raja Ram had applied under the En-cumbered Estates Act and had not proved his claim in the Encumbered Estates Act proceedings, he had no right to claim the amount from the defendants. It was further alleged that the amount claimed by the plaintiffs was excessive and the plaintiffs were entitled to a much lesser amount.

4. Various pleas raised by the parties have been considered by the lower Court and that Court came to the conclusion that Raja Ram's claim was barred under Section 7 read with Section 11, Encumbered Estates Act. The lower Court was also of the opinion that the plaintiffs' suit for the realisation of their money was barred by limitation and the correct amount payable to the plaintiffs was Rs. 1,128-5-4 with interest at 5 annas per cent. per mensem from 1st May 1937 to 5th July 1943, that is, Rs. 261 8-0. In view, however, of its finding that the suit was barred by limitation the lower Court dismissed the suit.

5. The plaintiffs have filed this appeal. On behalf of the plaintiffs, it is urged that the amount claimed was a part of the unpaid purchase money and it was, therefore, claimable within twelve years of the date when the cause of action arose. As a matter of fact, the relief claimed in the plaint was by enforcement of the charge. Learned Counsel, Mr. Shanti Bhushan, has urged that the decision of the lower Court under Sections 7 and 11, Encumbered Estates Act was wrong and also that the plaintiffs were entitled to claim the whole amount.

6. Raja Ram, plaintiff, had filed an application in the Encumbered Estates Act proceedings. This application was filed on 7th July 1936, At the time when the claim was filed, the settlement proceedings were still in operation. The learned Judge has held that Raja Ram was bound to show this item of property, the claim for the excess amount, in the list of properties owned by him and if he has not done so, he can not claim that property now. We must say that there appears to be some confusion of thought. Section 7, Encumbered Estates Act is not applicable at all. Under Section 7 if there is a debt due from the landlord applicant then all proceedings connected with that debt must remain stayed, and now a Full Bench of this Court has held that not only the proceedings against the landlord but also proceedings by him must be stayed, but this only applies to a debt due from the landlord applicant and it is only in respect of that debt that the proceedings have to remain stayed. The amount claimed in this case was a debt due to Raja Ram, the landlord applicant, and not a debt due from him, and Section 7, therefore, had no application. If a landlord applicant has not included some item of property in the list of properties given by him, it is open to a creditor or to a claimant against the landlord applicant to object under Section 11 and have that property included. If no claim is brought and the landlord applicant is not made to disclose the item of property, we find no provision in the Encumbered Estates Act by which he automatically ceases to have any claim to it. Raja Ram in the Encumbered Estates Act proceedings, we are informed, had shown this claim in the list of his properties, but as on that date the claim was not ascertained and was not ascertainable it was not included in the list of properties by the learned Special Judge. We do not see how in the absence of any decision by the Special Judge between the defendants and Raja Ram that the money was not due, Raja Ram could lose his claim to the money as against the defendants. We are, therefore, of the opinion that the provisions of Sections 7 and 11, Encumbered Estates Act do not, in any way, affect Raja Ram's claim.

7. Coming to the question of limitation it appears to us that both parties were aware of the fact that settlement proceedings- were in progress and both parties knew on the date of the sale that as a result of the settlement there will be a change in the amount of profits recoverable from the property and they, therefore, fixed a tentative price and agreed that they would either increase or decrease it in accordance with the result of the settlement. If as a result of the settlement proceedings the income had gone down below Rs. 1,500 the vendors would have to return a part of the sale consideration. If, on the other hand, as a result of the settlement the profits had increased, as they did in fact do, the vendee was liable to pay extra amount towards the sale price of the property. To our minds, both the documents must be read together; they were executed on the same date and the excess amount payable or the amount refundable were both parts of the sale consideration.

8. Under Section 55, Sub-section (4) (b), T. P. Act, where the ownership of the property has passed to the buyer before payment of the whole of the purchase money, the seller is entitled to a charge upon the property in the hands of the buyer for the amount of the purchase money, or any part thereof remaining unpaid, and for interest on such amount or part. The amount now claimed must, to our minds, be deemed to be a part of the sale consideration. The parties intended it to be so and the mere fact that two documents were executed in place of one cannot lead to the conclusion that the agreement had nothing to do with the sale-deed. The amount claimed being a part of the purchase money it must be deemed to be a charge on the property sold. Section 100, T. P. Act (Iv [4] of 1882) provides that where immovable property of one person is by operation of law made security for the payment of money to another, and the transaction does not amount to a mortgage, the latter person is said to have a charge on the property. There is no question of mortgage here in this case, and in view of the provisions of Section 55, Sub-section (4) (b) of the Act it must be held that a charge was. created by operation of law. This suit was, therefore, well within time and should have been decreed.

9. Learned Counsel for the appellants has urged that as in the agreement no mention was made of the collection charges and it was only the land revenue that was to be deducted from the gross rents realised, the lower Court should not have deducted the collection charges before ascertaining the profits. We do not think there is any force in this contention. The profits must mean net gain after incurring all expenditure. The expenditure included the land revenue, the cesses and also collection charges. The decision of the lower Court, therefore, that only rupees 1,128-5-4 was due, as the plaintiffs' share, is correct. The plaintiffs are entitled to interest in accordance with the decision of the lower Court from 1st May 1937 to 5th July 1943, that is to a sum of Rs. 261-8-0.

10. For the reasons given above, we set aside the decree of the lower Court and decree the plaintiffs' suit for Rs. 1,889-13-4 with pendente lite and future interest at 3 1/4 per cent. The amount would be a charge on the property sold and would be realisable by the sale of such property. The rest of the claim is dismissed. Parties to pay and receive costs in accordance with success and failure.


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