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Nathan Lal and ors. Vs. Durga Das - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAllahabad
Decided On
Reported inAIR1931All62
AppellantNathan Lal and ors.
RespondentDurga Das
Excerpt:
.....of the interest in the property subject thereto and arises from the circumstance that certain property, move-able or immovable, or any interest in such property, is indicated with certainty as the fund out of which a certain claim is to be met or satisfied, the fund so indicated being the security for the claim. where the intention of the parties concerned was to indicate in unambiguous language that a definite fund should be employed for the discharge of a particular debt or claim and there is no ambiguity either as to the amount of the debt or the amount of the claim out of which the debt has to be satisfied, the transaction amounts to a charge. we are clearly of opinion that no plea of set-off was put forward or was intended to be advanced. all that the defendant contended was..........rs. 1,969 for the government revenue every year, and the balance of rs. 2,031 was payable to nand kishore and mt. janki kuar in equal shares. on or about the time when the lease was executed nand kishore borrowed rs. 2,500 from the lessee, but left that amount with him for payment to one mangal sen, in whose favour he had executed a promissory note for rs. 2,100.2. under the terms of the lease rs. 1,015-8-0 was payable to mt. janki kuar. as regards his share of the rent, nand kishore entered into the following arrangement with the lessee. it was agreed upon that out of the rent due to nand kishore, i. e., rs. 1,015-8-0 annually, the lessee would be entitled to deduct rs. 500 per year with interest on the amount of rs. 2,500 advanced by him to nand kishore at the rate of one rupee.....
Judgment:

Sen, J.

1. Mt. Janki Kuer and Nand Kishore were the proprietors of 'khata khawat' No. 1 of mahal Baqimanda, Mauza Muhiuddinpur Buklana, in equal moieties. On 8th August 1923, they executed a lease in favour of L. Durga Das for a term of five years, i. e., from 1331 P. to 1335 F. The rent agreed to be paid by the lessee , to the lessors was Rs. 4,000. It was stipulated that out of the said sum of Rs. 4,000 the lessee was to deposit in the Government Treasury Rs. 1,969 for the Government revenue every year, and the balance of Rs. 2,031 was payable to Nand Kishore and Mt. Janki Kuar in equal shares. On or about the time when the lease was executed Nand Kishore borrowed Rs. 2,500 from the lessee, but left that amount with him for payment to one Mangal Sen, in whose favour he had executed a promissory note for Rs. 2,100.

2. Under the terms of the lease Rs. 1,015-8-0 was payable to Mt. Janki Kuar. As regards his share of the rent, Nand Kishore entered into the following arrangement with the lessee. It was agreed upon that out of the rent due to Nand Kishore, i. e., Rs. 1,015-8-0 annually, the lessee would be entitled to deduct Rs. 500 per year with interest on the amount of Rs. 2,500 advanced by him to Nand Kishore at the rate of one rupee per cent per mensem. One Niadar Mal held a simple money decree against Nand Kishore, in execution of which he got the interest of Nand Kishore in the leased property attached; and eventually the said property was purchased by the plaintiffs on 21st May 1924. The present suit was instituted under Section 102, Agra Tenancy Act, for recovery of Rs. 1,100 principal and interest for l332 F, being the share of rent due to Nand Kishore for that year. They claimed Rs. 1,015-8-0 principal and Rs. 84-8-0 interest.

3. The suit was contested on the ground that the plaintiffs, as the transferees of the interest of Nand Kishore, were bound by the terms of the lease and that they were not entitled to recover the whole of Nand Kishore's share of rent for 1332 F. but only so much of it as was payable to him after the deduction stipulated for in the lease. In brief, the defendant contended that, according to the terms of the lease, the lessee was entitled to deduct Rs. 500 together with Rs. 240, being interest on Rs. 2,000, which was then due out of the sum advanced to the lessor at the time of the lease.

4. The Court of first instance overruled this contention and decreed the plaintiffs' claim in its entirety. The judgment proceeds upon the ground that the stipulation referred to above was of the nature and character of a personal covenant and did not constitute a charge on the property leased. The stipulation in question therefore was personally enforceable against Nand Kishore but could not be enforced against his transferees. The lower appellate Court has taken a different view. It held that the plaintiffs, as the transferees of Nand Kishore, must be taken to take the property purchased by them subject to the conditions which bound the property at the time of the auction sale.

5. The principle question which arises in the case is as to whether a charge has been created upon the property by the lease, dated 8th August 1923. The answer to this question depends upon the construction of the lease. The covenant contained therein that the lessee should appropriate to himself a portion of the rent payable by him towards the satisfaction of a debt due to him is a material term in the lease and, as such, is as much binding on the successors-in-interest of the lessor as upon the lessor himself. It is clear it was not open to the lessor to sue the lessee for recovery of the entire rent for 1332 F. in defiance of this provision. It is equally clear that no suit for ejectment was maintainable against the lessee for non-payment of that sum. A charge does not involve the transfer of the interest in the property subject thereto and arises from the circumstance that certain property, move-able or immovable, or any interest in such property, is indicated with certainty as the fund out of which a certain claim is to be met or satisfied, the fund so indicated being the security for the claim. In Ex-parte Wills [1790] 2 Cox. C.C. 233, the facts were these: A, having borrowed money of B, by way of security made a lease of certain lands to C and assigned rent received on that lease to 73, but did not convey to him any further interest in the land. It was held that the transaction amounted to a mortgage. The principle enunciated herein is applicable to the facts of this case, the position of a charge holder being analogous to that of a simple mortgagee. In Cradock v. Scottish Provident Institution [1893] 63 L.J. Ch. 15, it was held by Romer, J., that

an equitable charge upon land may be created by an instrument in writing which showed the intention of the parties that a security should be created, although it contained no general words of charge.

6. The facts which gave rise to this decision are instructive:

A father, upon the marriage of his daughter, executed a deed whereby he covenanted to pay his daughter an annuity, and for the purpose of securing annuity appointed a receiver of the rents and profits of lands to which he had an estate for life with a direction to apply the moneys received as specified in the deed.

7. It was held that the deed created a charge upon the father's life estate in the lands.

8. In order to constitute a charge it is not necessary to employ any technical terms; where the intention of the parties concerned was to indicate in unambiguous language that a definite fund should be employed for the discharge of a particular debt or claim and there is no ambiguity either as to the amount of the debt or the amount of the claim out of which the debt has to be satisfied, the transaction amounts to a charge. Under Section 100, T. P. Act, a charge is no more than a security upon property; but it is not to be confounded with a mortgage, because there is no transfer of an interest in; immovable property.

9. It has been argued by Dr. Katju that the plaintiffs-appellants are the transferees of immovable property under the auction purchase, and having regard to the provisions of Section 8, T. P. Act, they must be taken to have acquired the entire interest in the immovable property in utter disregard of any charge that might have been created upon the property. Section 8, T. P. Act, does not in terms apply to involuntary transfers; but the principle laid down therein may be extended to such transfers. The language of Section 8 however does not support his contention and is, in fact, against it, because all that it provides is that a transfer of property passes to the transferee all the interests which the transferor is then capable of transferring. If then, on the date of auction purchase, the property was subject to a charge or burden, the transferee is not clothed with a higher interest in the property than what the transferor was capable of passing.

10. It has further been contended that, assuming that a charge was created upon the property under the lease dated 8th August 1923, the charge in question could not be enforced against him, because he was a transferee without notice. This plea does not arise from the pleadings. Upon a true construction of the lease, a charge was created in favour of the lessee. The said charge being contained in a registered instrument, the auction-purchasers must be deemed to have purchased the property with constructive notice of the existence of the charge. We are therefore of opinion that the contention put forward is without any force, being opposed to principle and unsupported by authority.

11. It is next contended that the plea put forward by the defendant vendee upon the terms of the lease as regards the payment of the debt due to him amounts to a plea of set-off and, as such, it offends against Section 193, Clause C, Agra Tenancy Act. The argument proceeds on the assumption that the defendant pleaded a set-off in this case. We are clearly of opinion that no plea of set-off was put forward or was intended to be advanced. All that the defendant contended was that part of the claim had already been satisfied by reason of the stipulation contained in the lease, A plea of payment is not a plea of set-off, and the two matters are not to be confounded. These were the only points argued in this appeal. They are without force. We dismiss this appeal with costs, which will include counsel's fees in this Court on the higher scale.


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