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Surendra Maneklal Kathia Vs. Bai Narmada Widow of Jethalal Khemchand and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty;Criminal
CourtGujarat High Court
Decided On
Case NumberCriminal Revn. Appl. No. 283 of 1962
Judge
Reported inAIR1963Guj239; 1963CriLJ369; (1963)0GLR833
ActsIndian Penal Code (IPC), 1860 - Sections 415; Transfer of Property Act, 1882 - Sections 55 and 55(2)
AppellantSurendra Maneklal Kathia
RespondentBai Narmada Widow of Jethalal Khemchand and ors.
Appellant Advocate D.K. Shah, Adv.; H.M. Choksi, Government Pleader
Respondent Advocate P.B. Desai and; Kusumben Shah, Advs.
Cases ReferredDeep Chandra v. Sajjad Ali Khan.
Excerpt:
.....at stage when there was contract to sell immovable property - legal duty on seller to disclose to buyer any facts affecting his interest and his power to transfer property to buyer - legal duty of seller to inform buyer that accused could not transfer property to buyer - that they had no power to transfer same in view of injunction order passed by civil court - held, order of discharge liable to be set aside on account of concealment of fact. - - first, that the language of section 55(2) is applicable, both to a conveyance as well as to a contract of sale, and second, even if the language applied to conveyances alone, in the very nature of things the warranty of title implied in a sale deed will be implied in a contract of sale also'.he has further observed that the language of..........courts. it was held in karachi municipality v. bhojraj, air 1915 sind 21, that no concealment of a fact is dishonest within the meaning of section 415, i. p. code, unless there is a legal obligation to disclose it. but this view was not accepted by the allahabad high court in banwarilal v. the state : air1956all341 , where the following observations are made:'the explanation to section 415 makes it clear that dishonest concealment of fact is a deception within the meaning of the section. it is to be noted that the concealment of fact that is said to be a deception is dishonest concealment and not illegal and deliberate concealment. if a statute requires a person to mention a fact and he conceals it, it is illegal, and not necessarily dishonest concealment of the fact. 'this concealment.....
Judgment:

V.B. Raju, J.

1. This revision application is directed against an order of discharge of the accused who were charged under Section 420 read with Section 34, I. P. Code. The case against them was that the four opponents, who will hereinafter be referred to as the accused, entered into an agreement for the sale of a house, although at that time there was an injunction order of a Civil Court issued to them under which they were prohibited from selling the property. It was therefore contended that the complainant was deceived, as the fact of an injunction order was concealed from the complainant by the accused and that as a result of this deception the complainant gave Rs. 8,000/- to the accused. The learned Magistrate held that the accused were not bound to disclose to the complainant that there was an injunction order of a Civil Court. He, therefore, thought that the matter was one of a civil nature and therefore discharged the accused.

2. In revision, it is contended that the order of discharge is wrong. Exception to Section 415, I. P. Code provides that a dishonest concealment of facts is a deception within the meaning of that section. On the question as to whether there can be a concealment of facts when there is no duty to speak or to disclose the facts, there has been a difference of opinion among the High Courts. It was held in Karachi Municipality v. Bhojraj, AIR 1915 Sind 21, that no concealment of a fact is dishonest within the meaning of Section 415, I. P. Code, unless there is a legal obligation to disclose it. But this view was not accepted by the Allahabad High Court in Banwarilal v. The State : AIR1956All341 , where the following observations are made:

'The explanation to Section 415 makes it clear that dishonest concealment of fact is a deception within the meaning of the section. It is to be noted that the concealment of fact that is said to be a deception is dishonest concealment and not illegal and deliberate concealment. If a statute requires a person to mention a fact and he conceals it, it is illegal, and not necessarily dishonest concealment of the fact.

'This concealment may be deliberate or conscious or may be accidental or bona fide arising out of ignorance of law. Accidental or bona fide concealment even though it is illegal, may not be said to be deception, but according to the authorities mentioned above, dishonest concealment is not deception unless it is illegal and deliberate. The language of the explanation is, however, different. It does not make deliberate and illegal concealment deception; instead it makes dishonest concealment deception.

'It may be contended that concealment of a fact is not quite the same thing as mere refraining from stating it and that something more than mere refraining from stating a fact Is required to constitute concealment. But that something need not be a statutory provision compelling exposure of the fact; any other duty, such as arising out of the circumstances in which the parties are placed and the nature of the negotiations between them, is enough. Also any act, done, or precaution taken to prevent the fact from being brought to the notice of the other party, is concealment even in the absence of a duty to state it.

X X X x 'Concealment can be dishonest even in the absence of a legal obligation to speak. Dishonesty has nothing to do with infringement of the law; it depends upon the state of mind at the time of the concealment or the intention behind it. If the intention is dishonest, the concealment is dishonest even in the absence of a duty to speak'.

3. As observed above, a concealment of a fact is not quite the same thing as mere refraining from stating it and something more than mere refraining from stating a fact is required to constitute concealment. But fact may be concealed, although there is no legal duty to mention the fact. The idea of concealment has nothing to do with the idea of legal duty to speak, A concealment of facts may be dishonest without being illegal and may be illegal without being dishonest, Section 415, I. P. Code does not deal with illegal concealment of facts but with dishonest concealment of facts. For the purpose of Section 415, I. P. Code the concealment of fact need not be illegal if it is dishonest.

4. The question, therefore, is whether there has been a concealment of fact when the accused had not mentioned to the complainant the fact that there was an injunction order of a civil court restraining them from selling the property, at the time when they entered into an agreement to sell the property. It is true that they did not sell the property but they merely agreed to sell the property. A perfected conveyance had not been executed, but there was only an agreement to sell.

5. There has been a difference of opinion among High Courts on the question whether Section 55 of the Transfer of Property Act applies to an agreement to sell immoveable property or whether it applies only to a completed conveyance. The difference of opinion amongst the various High Courts has been referred to in Deep Chandra v. Sajjad Ali Khan. : AIR1951All93 . In that case two of the learned Judges, namely, Agarwala, J. and Wanchoo J., agreed that Section 55 of the T. P. Act also applies when there is a mere contract for sale and before a conveyance has been executed. The learned Judge Agarwala has discussed the question at length and has given various reasons in support of his conclusion. He has expressed his reasons in the following words : --

'To my mind the warranty of title embodied in Section 55(2), T. P. Act, attaches to and is implicit in every contract of sale, assuming of course, there is no contract to the contrary. I arrive at this conclusion for two reasons. First, that the language of Section 55(2) is applicable, both to a conveyance as well as to a contract of sale, and second, even if the language applied to conveyances alone, in the very nature of things the warranty of title implied in a sale deed will be implied in a contract of sale also'.

He has further observed that the language of Section 55(2) of the T. P. Act refers both to a contract to sell as well as to a sale deed. I am in entire agreement with the view of Agarwala, J., because the words 'buyer' and 'seller' as used in Section 55(2), T. P. Act, do not refer merely to a person who has already purchased or sold a property but refer also to a person who intends to buy and intends to sell the property. For instance, under Section 55(1)(b), T. P. Act, the seller is bound to produce to the buyer on his request for examination all documents of title relating tothe property which are in the seller's possession or power. The examination of documents is before the execution of a conveyance and not after the conveyance. Under Section 55(1)(d), T. P. Act, the seller is bound on payment of the amount due in respect of the price to execute a proper conveyance. It is, therefore, clear that a person who executes an agreement to sell property is regarded as a seller for the purpose of this section. Clause (e) of Section 55(1), T. P. Act, also provides that the seller is bound between the date of the contract of sale and the delivery of the property, to take as much care of the property and all documents of title relating thereto which are in his possession, as an owner of ordinary prudence would take of such property and documents. It is, therefore clear that the words 'buyer' and 'seller' in Section 55(2) of the Transfer of Property Act refer also to a person who has entered into an agreement for sale of property and also to a person who has entered into a contract for the purchase of property and not merely to a person who hag purchased the property or who has sold the property. I, therefore, entirely agree with the observations of the learned Judge Agarwala, J., that in the entire Section 55, the words 'buyer' and 'seller' are used as referring to the stage when the sale deed has been executed & to the stage before the execution of the sale deed, and the words 'seller' and 'buyer' include both a person who has agreed to sell and agreed to buy, and also a person who has actually sold and who has actually bought. Although there has been a difference of opinion among the various High Courts, I am in entire agreement with the view taken by Agarwala J. For the reasons mentioned above, I hold that Section 55 of the Transfer of Property Act applies even at the stage where there is a contract to sell immoveable property as in the present case.

6. Sub-section (2) of Section 55 of the Transfer of Property Act provides that the seller shall be deemed to contract with the buyer that the interest which the seller professes to transfer to the buyer subsists and that he has power to transfer the same. It is true that Sub-section (1) of Section 55, T. P. Act applies in the absence of a contract to the contrary. In the present case, it has not been suggested that there is such a contract to the contrary. In view of the fact that Section 55, T. P. Act is subject to a contract to the contrary, there is a legal duty cast on the seller to disclose to the buyer any facts affecting his interest and, his power to transfer the property to the buyer. It was therefore the legal duty of the seller to inform the buyer that the accused could not then transfer the property to the buyer and that they had then no power to transfer the same in view of an injunction order passed by the civil Court.

7. There is, therefore, a concealment of facts in the present case, and whether the concealment of facts is dishonest or not is a matter on which it is open to both the sides to argue.

8. So far as opponent No. 4 goes, he is notthe owner of the property as he has relinquishedall his rights and interest in the property priorto the document and therefore the revision application against opponent No. 4 namely, Rikhavchand Jethalal is dismissed. So far as opponentsNos. 1 to 3 go, the discharge order is set aside,and the learned Magistrate is directed to frame acharge against them and to decide all the questionsincluding the question of dishonest intention.


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