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Lachmi Prasad Vs. Lachmi NaraIn and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAllahabad
Decided On
Reported inAIR1928All41
AppellantLachmi Prasad
RespondentLachmi NaraIn and anr.
Excerpt:
.....section 51 applies to a transferee who makes any improvement on the property believing in good faith that he is absolutely entitled thereto. defendant 1 was, therefore, the absolute owner and must be held to have believed himself in good faith to be the owner. it makes no difference that he failed to satisfy himself at the time of the sale that it was necessary. the plaintiff's appeal must, in my opinion, fail. 425 of the purchase price was good consideration, i hold that we are bound by the findings of fact of the lower appellate court. 6. inasmuch as i have held above that the purchaser of property from a guardian or from a manager or from a hindu widow in possession of her husband's property is absolute owner until the sale is repudiated by the minor, the co-parcener or the..........section 51 applies to a transferee who makes any improvement on the property believing in good faith that he is absolutely entitled thereto. now a transfer by a father and manager of a joint hindu family is a valid transfer until it is avoided by the son. a defeasible title is not the same thing as a defective title, and section 51, transfer of property act, applies only to defective and not to defeasible transfers. at the date when the improvement was made this transfer had not been avoided. defendant 1 was, therefore, the absolute owner and must be held to have believed himself in good faith to be the owner. it makes no difference that he failed to satisfy himself at the time of the sale that it was necessary. section 65, contract act, is a guide as to the principle to be.....
Judgment:

Ashworth, J.

1. These two second appeals arise out of a suit brought by Lachmi Narain, minor, against his father, Munni Lal, defendant 2 and Ganpat Rai, purchaser of house property from the father, by a sale-deed, dated the 29th April 1927, for possession (by which must be meant joint possession with the father) of the property. The plaintiff alleged that the sale by his father was not binding on him on the ground that the father was insane at the time of execution of the deed. Alternatively he pleaded that the property being ancestral joint property his father could only sell it if the sale was necessary, and that the sale was unnecessary. The defence was that the father was never insane but competent to execute the deed, and that the sale was necessary. It is to be noted that the sale purported to be executed by the father both on his own account and also as guardian of the plaintiff.

2. Both the lower Courts have decided that the father was not incompetent on the score of his mental condition to make the transfer, and in second appeal we are bound by this finding of fact which is not impugned. The first Court found that the sale was necessary and for adequate consideration. It, therefore, dismissed the suit. In appeal the District Judge of Ghazipur set aside this finding of the first Court. It held that the sale of the house by the father was not necessary, and that of the total sale price Rs 1,350, the only consideration binding on the plaintiff was Rs. 425 due for principal and interest on a bond, dated the 24th October 1916 due by the family to one Mukund Lal. He held, however, that the defendant 1 had spent Rs. 25,000 in rebuilding the house or houses and was entitled to this sum for improvements under Section 51, Transfer of Property Act. Without giving the option to the plaintiff to recover the property by payment of the present increase in the value of the property by reason of these improvements, he assumed that the plaintiff would not or could not pay this compensation, and accordingly he, in effect, required the plaintiff to sell his interest in the property to the transferee. He held that the plaintiff's interest was the total purchase-money Rs. 1.350 minus the Rs. 425 required to pay the joint family debt existing at the time of the sale.

3. Against this decision there are cross appeals. The plaintiff in Appeal No. 1312 maintains that he should have been given a decree for possession of the property on payment of the Rs. 425 found to be valid consideration, and that no account should have been taken of the improvements. I will deal with this appeal first. I consider that in second appeal this Court is bound by the finding of the lower appellate Court that of the whole Rs. 1,350 only Rs. 425 was a debt binding on the family. The lower appellate Court has found that the circumstances were as follows:

4. The defendant 1 was anxious to acquire this property as it was situated between other properties which belonged to him. He, in vain, during the minority of the defendant 2, attempted to get a transfer from the defendant 2's mother. As soon as the defendant 2 came of age the sale was effected. The consideration of Rs. 425 for a debt due by the family to Makund Lal he found to be good consideration. The rest of the money was paid to Munnu Lal and used by him for his own purposes. The recital in the deed that Rs. 700 was paid to one Bawan Das on an I.O.U. (sarkhat) was false. This finding had no doubt some evidence to support it. In particular Bawan Dass' accounts failed to support the fact of any money being owed to him at the time by the family. As regards the liability of the plaintiff to reimburse defendant 1 for the money spent on improvements, the lower appellate Court invoked the doctrine of equitable estoppel. This plea was never set up by the defendants and was clearly unsupported by any evidence sufficient to establish equitable estoppel. The lower appellate Court, therefore, was not justified in taking the improvements into consideration on the grounds stated by it. On the other hand I consider that Section 51, Transfer of Property Act, justified the plaintiff being required to credit the defendant 1 with the present value of the improvements. Section 51 applies to a transferee who makes any improvement on the property believing in good faith that he is absolutely entitled thereto. Now a transfer by a father and manager of a joint Hindu family is a valid transfer until it is avoided by the son. A defeasible title is not the same thing as a defective title, and Section 51, Transfer of Property Act, applies only to defective and not to defeasible transfers. At the date when the improvement was made this transfer had not been avoided. Defendant 1 was, therefore, the absolute owner and must be held to have believed himself in good faith to be the owner. It makes no difference that he failed to satisfy himself at the time of the sale that it was necessary. Section 65, Contract Act, is a guide as to the principle to be invoked. When a contract becomes void, us it did in this case by the plaintiff repudiating the sale by his father, the plaintiff, as a person who has received advantage, is bound to restore that advantage or make compensation for it. The transfer only became voidable at the instance of the plaintiff. Consequently the lower Court was right in taking into consideration the plea of the defendant 2 under Section 51, Transfer of Property Act. The method in which the lower appellate Court has applied that section is not impugned by the plaintiff in his appeal. We are not, therefore, concerned with examining that method to see if it is correct. The plaintiff's appeal must, in my opinion, fail.

5. Defendant 1 also appeals. So far as his appeal calls in question the finding of the lower appellate Court that the sale by the father was not necessary, and that only Rs. 425 of the purchase price was good consideration, I hold that we are bound by the findings of fact of the lower appellate Court. In this appeal also the way in which the lower appellate Court has applied Section 51, Transfer of Property Act, is not called in question. This appellant merely says that he should not have been called on to pay anything to the plaintiff. Consequently I would dismiss his cross-appeal also.

6. Inasmuch as I have held above that the purchaser of property from a guardian or from a manager or from a Hindu widow in possession of her husband's property is absolute owner until the sale is repudiated by the minor, the co-parcener or the reversionary heir, as the case may be, the question as to the meaning of the words 'in good faith' in Section 51, Transfer of Property Act does not arise If it did, I should hold that a finding that the impugned sale could not be sustained because the purchaser had not made sufficient inquiry as to its necessity would amount to a finding that the transferee did not in good faith believe himself to be the absolute owner. It appears to me impossible to say that a transfer which is bad for want of proper inquiry by the purchaser may still be a transfer which the purchaser may believe in good faith to make him owner, unless we invoke the reasoning adopted by me above that the transferee is absolute owner until repudiation of the transfer. I would point out that the definition of 'in good faith' contained in the General Clauses Act Section 3(20) as meaning merely honestly' does not apply to Acts passed before 1897 (see Section 4). When Section 51, Transfer of Property Act, was passed the only definition of 'good faith' on the Indian statute book was that in the Indian Penal Code (S. 52), namely:

not done or believed Without due care and attention.

7. In my opinion the legislature had this meaning of 'good faith' in mind when they enacted Section 50, Transfer of Property Act. It has been contended that the expression 'in good faith' in the said Section 51 would cover failure to make proper inquiry provided that the necessity for further inquiry did not occur to the transferee. Assuming this, it is clear that the necessity did occur to the transferee in this case, because, on the finding of the lower appellate Court, he was party to a false recital in the sale-deed. For the above reasons I would dismiss both the appeals with costs.

Mukerji, J.

8. I entirely agree with my learned brother that these two appeals should be dismissed. My reasons are, however, slightly different.

9. A father sold for himself and as the guardian of his minor son a house to defendant 1, Ganpat Rai, who has since died and is represented by his minor son. The sale was made on 24th April 1917, and the present suit was instituted by the son, on 27th June 1923. The plaintiff was only six years old, and apparently was just born when the sale was effected.

10. The plaintiff's case was that the property sold was ancestral, and it was sold Without any legal necessity and for inadequate consideration. His case further was that his father was insane when he conveyed the property. The defence was that the father was capable of contracting, and sale was effected for full consideration and for legal necessity. The defence further said that the defendant had built on the site and had repaired a portion of the building sold all told at a cost of about Rs. 25,000.

11. The Court of first instance dismissed the suit, holding that the sale was made for legal necessity. It framed an issue as to whether the defendant was entitled to be compensated for any expenditure made by him over the property in dispute. It was of opinion that if the question of legal necessity and the question of the sanity of the vendor had not been decided in defendant's favour, the defendant would not have been entitled to any compensation whatsoever. The plaintiff appealed, and the learned District Judge affirmed the decision of the Court of first instance on the question of the father's sanity and on the question whether the property had been sold for its full value. The learned Judge, however, held that there was no legal necessity for the sale except as to the sum of Rs. 425. The lower appellate Court framed no issue whatsoever as to the question of compensation unless we consider that it is included in the 5th issue which ran:

Whether the defendant 1 built any house on any portion of the houses in dispute? If so, at what costs, and how does it affect the case

12. After having arrived at the conclusion that the sale was for legal necessity to the amount of Rs. 425 out of Rs. 1,350, the entire consideration, the learned Judge decreed the suit for a sum of Rs. 925 being the difference between the sale price of Rs. 1,350 and the sum of Rs. 425, the amount to the extent of which the legal necessity had been established.

13. As my learned brother has pointed out, no question of equitable estoppel was raised in the case, and if the learned Judge purported to decide the case on that basis he was wrong.

14. The question of compensation has, however, been definitely raised in this Court, and we have to see how far it is applicable.

15. The law on the point is contained in Section 51, Transfer of Property Act, which runs (omitting less important words) as follows:

When the transferee * * * * * * * * makes any improvement on the property * * * believing in good faith that he is absolutely entitled thereto, and he is subsequently evicted therefrom by any person having a better title, the transferee has a right to recover from the person causing the eviction * * * * *

16. The question is whether in this particular case the transferee Ganpat Rai, when he made the improvement, believed in good faith that he was absolutely entitled to the property. In my opinion it is always a question of fact whether a transferee believes or not that he is absolutely entitled to a property, As at present advised I am not prepared to hold that in every case of a transfer by a qualified owner, alleging circumstances which would enable him to give absolute title, the transferee should be treated as believing that he holds absolutely the property in good faith. I need not discuss the point, because, as I said, I consider that it is always a question of fact whether a particular man holds a particular belief. The difficulty in this interpretation may be this. A man loses his property because of a defect in it and yet he is supposed to believe that he is an absolute owner of it. But ex-hypothesi, the rule of law enacted under Section 51 applies to such a case. There should be two persons, one the transferee who has a defective title and a claimant who succeeds in establishing a better title. This state of thing's being accepted, we have to find out whether the man with the defective title is really a man described in Section 51.

17. The words 'in good faith' were not defined in the General Clauses Act of 1868. They are defined in the General Clauses Act of 1897, and the definition is as follows:

A thing shall be deemed to be done in good faith where it is in fact done honestly whether it is done negligently or not.

18. This definition does not apply to the Transfer of Property Act. 'Good faith' is defined in the Indian Penal Code; but in my opinion that definition too is not applicable. When a person is supposed to be guilty of an act, which would be an offence except for certain belief held by him, the law would require, and should require, that belief should be held on substantial grounds. It was for this reason that 'good faith' in the Indian Penal Code was defined as follows:

Nothing shall be deemed to have been done in good faith which is not done Without due care and attention.

19. If we import this definition into Section 51, Transfer of Property Act, we shall find that we shall make the section entirely unworkable. If a transferee, as in this case, from a Mitakshara father has taken a transfer with due care and attention, he is not at all liable to be evicted at the instance of his son. The son would be bound simply because the transferee had taken due care and given attention.

20. I, therefore, think that the words 'good faith' has a meaning which is somewhat between the two definitions quoted above. I would not be prepared to hold that a man who has been quite negligent as to investigation of title of the vendors, and has acquired the property recklessly should have the advantage given to him of the rule in Section 51, Transfer of Property Act. This, however, is only an obiter dictum. It is always dangerous to lay down a general rule in discussing a particular case.

21. I think I have indicated sufficiently what is in my mind as to the interpretation of Section 51, Transfer of Property Act.

22. The Court below has held that the transfer was made Without legal necessity except as to the sum of Rs. 425. From this it does not follow that the defendant I had no grounds for believing that he was not holding absolutely the property purchased by him. No doubt there are certain remarks of the learned Judge, which if taken literally, would imply that the defendant 1 was a party to a fraud on the infant son and was a party to concoction of evidence for the purposes of the sale. The learned Judge was not trying the question of 'belief in good faith', and I am not prepared to accept his statements as a finding of a Court of first appeal on facts relating to belief in good faith.

23. I find that the defendant 1 got the entire consideration money in cash before the Sub-Registrar. It was found that the father (the vendor) was a sane person. It was found that to the extent of Rs. 425 there was a legal necessity. The Judge is prepared to believe that some money was received by the father for his own purposes. Then there was at least a sarkhat in favour of Bawan Das. If all this be true, I do not see what justification the Court below had in saying, at one place of its judgment, that the consideration money that was paid before the Sub-Registrar was returned. This finding is absolutely inconsistent with its other findings. In the absence of any finding of fact on the question of belief in good faith' I would take it upon myself to decide on the question of fact in second appeal, and would unhesitatingly come to the conclusion that the defendant 1 had sufficient justification for holding the belief (good faith) that he was absolutely entitled to the property he had purchased. I need not point out that the lower Court has found that he spent the solid and large sum of Rs. 25,000 over additional buildings and improvements.

24. Such being my finding, the question would be whether the plaintiff should be allowed to pay for the improvement and take the entire property, or whether he should be called upon to accept the price of such interest as he possessed in the property. The plaintiff's circumstances are too poor to permit of any purchase by him of the improved property. In the circumstances the lower Court's decision was the only one possible.

25. The result is that I would dismiss the plaintiff's appeal with costs.

26. There is no substance in the defendant's appeal. It is concluded, as pointed out by my learned brother, by the finding that the sale was supported by legal necessity only to the extent of Rs. 425.

27. I would, therefore, dismiss these appeals with costs.

28. The appeals are dismissed with costs.


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