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Champalal and anr. Vs. Roopa and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtRajasthan High Court
Decided On
Case NumberSecond Appeal No. 178 of 1956
Judge
Reported inAIR1963Raj38
ActsTransfer of Property Act, 1882 - Sections 55(1)
AppellantChampalal and anr.
RespondentRoopa and ors.
Appellant Advocate Shrikishen Mal, Adv.
Respondent Advocate Hukam Chand Jain, Adv.
DispositionAppeal partly allowed
Cases ReferredOuseph Varkkey v. Ouseph Chacko
Excerpt:
.....had knowledge of the sale to khuma which had been made some time in 1947 at the time the sale-deed of 1951 had been executed in their favour by defendants nos. (4) the defendants had failed to disclose to the plaintiffs that the house in question had already been sold by their father mukna to khuma. 7. the further question which then arises for consideration is whether on these facts, the plaintiffs' suit must necessarily fail because of the supposed defect in the frame of their suit, which, according to learned counsel for the contesting defendants, lies in the fact that they should have brought a suit, which they did not, for a rescission of the sale-deed, and that until they did so, the present suit for refund of the purchase money was not maintainable. in second appeal, the..........the tune of rs. 2300/- and that defendants respondents nos. 1 and 2 had also executed a registered sale-deed with respect to the house in question in their favour on the 13th august, 1951. their case, however, was that they were not put in possession of this house, and they later discovered that a sale-deed with respect to this house had already been executed presumably by mukna, father of the said defendants in favour of one khuma on the 28th december, 1947, and the latter was in possession of ft. the plaintiffs had also received two notices exs. 5 and 6 on the 7th september, 1951, and 8th december, 1951, respectively from khuma in which it had been stated that the house in question had been purchased by him on the 28th december, 1947, and that he was in possession of the same, and,.....
Judgment:

I.N. Modi, J.

1. This is a civil regular second appeal by the plaintiffs Nathmal and others against the judgment and decree of the District Judge, Pali, dated the 8th May, 1956, in a suit for recovery of purchase price and damages, the appellant Nathmal having died during the pendency of this appeal, his name was ordered to be struck off the record, & no application for substitution was apparently made as his son Champalal and his grandson Bhanwarlal stood already impleaded as appellants in the memorandum of appeal.

2. The material facts out of which this appeal arises may be briefly stated as follows. There were money dealings between the plaintiffs and defendants Nos. 1 and 2 Koopa and Chatra (and their father Mukna) and In connection with these the former had filed two suits being No. 384 of 1950 and 328 of 1950 for the recovery of Rs. 3730/-and Rs. 2200/-respectively In the court of the Civil Judge Sojat and had filed a third suit for the recovery of Rs. 500/- in the court of the Munsiff Sojat.

The plaintiffs' case was that on Sawan Vadi 13 smt. 2008, all the suits were compromised (Vide EX. 1) for a total sum of Rs. 5000/- and in part payment thereof these defendants had inter alia agreed to sell a house belonging to them, the boundaries whereof are mentioned in paragraph one of the plaint, for a sum of Rs. 2700/- The plaintiffs' case further was that defendants Nos. 3 to 8 stood sureties for the aforesaid defendants to the extent of Rs. 4200/-. in view of this agreement, all the three suits mentioned above were withdrawn by the plaintiffs.

It is further admitted by them that they had received repayment to the tune of Rs. 2300/- and that defendants respondents Nos. 1 and 2 had also executed a registered sale-deed with respect to the house in question in their favour on the 13th August, 1951. Their case, however, was that they were not put in possession of this House, and they later discovered that a sale-deed with respect to this house had already been executed presumably by MuKna, father of the said defendants in favour of one Khuma on the 28th December, 1947, and the latter was in possession of ft.

The plaintiffs had also received two notices Exs. 5 and 6 on the 7th September, 1951, and 8th December, 1951, respectively from Khuma in which it had been stated that the house in question had been purchased by him on the 28th December, 1947, and that he was in possession of the same, and, therefore, the plaintiffs had no right to purchase the same from defendants Nos. 1 and 2. The plaintiffs also gave a notice Ex. 7 to defendants Nos. 3 to 8 the sureties on the 23rd May; 1953, in which they called upon the latter either to give possession or to pay the sum of Rs, 2700/- which had been adjusted in neu of the price of the house in question. The sureties declined to pay. Consequently, the plaintiffs brought the present suit on the 20th January, 1954, against all the defendants for recovery of the sum of Rs. 2700/- as also a further sum of Rs. 800/- as damages.

3. Defendants Rawat, Bherusingh and Bhmamchandadmitted the plaintiffs' claim. Defendants Chimna and Magga respectively paid Rs. 1000/- and Rs. 200/- to the plaintiffs during the pendency of the suit. It is worthy of notice that defendant Chimna is the father-in-law of defendant No. 1 Roopa. Defendant No. 7 Sheoji allowed the suit to proceed ex parte against himself. Defendants Nos. 1 and 2 stoutly resisted the suit. Briefly put, theif contentions were :

'(1) that the document Ex. 1 had been obtained from them by the plaintiffs under undue influence, to wit, it they did not execute it, the plaintiffs would see that they (defendans Nos. 1 and 2) were sent to civil jail;

(2) that one Lalchand had obtained a decree against their father Mukna and it was in order to defeat the execution of that decree that they had executed the sale-deed in favour of the plaintiffs with respect to the house to question and got it registered;

(3) that the plaintiffs knew that the house in question had already been sold by their father Mukna to Khuma and that they had obtained the sale-deed with respect to It with full knowledge of the previous sale;

(4) that the plaintiffs had been put En possession of the house in question by these defendants and Knuma had turned them out of it and consequently they were not responsible for the refund of the purchase price; and finally,

(5) that the plaintiffs' suit was not maintainable inasmuch as the earlier suits had been withdrawn by the plaintiffs without the permission of the court, the underlying assumption under this contention being that the present suit was brought for the same cause of action on which the earlier suit had been brought.'

4. The learned Civil Judge who tried this suit dismiss ed it. The principal reasons which weighed with the learned Judge for the dismissal of the suit were (1) that the plaintiffs were fully aware of the earlier sale which had been made by Mukna, father of defendants Nos. 1 and 2 in favour of Khuma; and (2) that the suit as it was brought by the plaintiffs was not maintainable inasmuch as it was based on the agreement to sell Ex. 1 and had not been brought on the basis of the sale-deed which had already been executed by the said defendants in favour of the plaintiffs.

On the question of undue influence, it may be pointed out that the finding of the learned Civil Judge was in favour of the plaintiffs. As regards possession, the finding of the court was that the plaintiffs had been given actual possession of the house after the sale-deed had been executed in their favour though the plaintiffs were subsequently dispossessed of it.

5. The plaintiffs then went in appeal to the District Judge, Pali. The finding on the question of undue influence was not challenged in appeal. As regards the question whether the plaintiffs had knowledge of the earlier sale In favour of Khuma, the learned District Judge disagreed with the finding of the trial court and held that the plaintiffs had no knowledge of that sale. The learned District Judge also found that the plaintiffs had been put in actual possession of the house after the sale deed had been executed in their favour by defendants respondents Nos. 1 and 2.

The learned District Judge also found that there was a fraudulent concealment of the want of title by the atoresaid defendants within the meaning of section 55(1)(a) of the Transfer of Property Act, and that this breach furnished a valid cause of action to the plaintiffs vendees to avoid the sale and sue for return of the purchase moneyand that the circumstance that the plaintiffs, had been put in possession of the suit house by the defendants and were later driven out of it by Khuma made no difference to that position.

Thereafter, however, the learned Judge went on to hold that after the agreement to sell, a regular sale-deed had been executed by defendants Nos. 1 and 2 in favour of the plaintiffs and the same had been duly registered, and, therefore, the plaintiffs should have based their claim on the last mentioned document which passed title to them and that as they did not do so, this constituted a fatal defect in the frame of their suit, and, therefore, the plaintiffs could not but be non-suited. Aggrieved by this judgment and decree, the plaintiffs have now come up in second appeal to this Court.

6. Now, the facts found by the courts below and which are not open to any further challenge in this second appeal may be summarised as follows:

(1) The defendants had failed to prove that the document Ex. 1 had been obtained from them by the plaintiffs by undue influence.

(2) The defendants had also failed to prove that the plaintiffs had knowledge of the sale to Khuma which had been made some time in 1947 at the time the sale-deed of 1951 had been executed in their favour by defendants Nos. 1 and 2.

(3) The plaintiffs had been put in possession of the house in question by the defendants after the aforesaid sale-deed had been executed but had been dispossessed of it later by Khuma, the prior purchaser.

(4) The defendants had failed to disclose to the plaintiffs that the house in question had already been sold by their father Mukna to Khuma. That being so, the former were guilty of a breach of Clause (a) of Sub-section (1) of section 55 of the Transfer of Property Act.

7. The further question which then arises for consideration is whether on these facts, the plaintiffs' suit must necessarily fail because of the supposed defect in the frame of their suit, which, according to learned counsel for the contesting defendants, lies in the fact that they should have brought a suit, which they did not, for a rescission of the sale-deed, and that until they did so, the present suit for refund of the purchase money was not maintainable. Reliance Is placed by learned counsel in support of his objection on Allahdino v. Udhoomal, AIR 1942 Sind 81, This was a suit brought by a vendee on the footing that the vendor's title being defective, he was entitled to return of the consideration money paid by him under the sale-deed. The defendant objected to the frame of the suit. The trial court held that the suit was in proper form and, that there was misrepresentation as to title by the defendant to the plaintiff and, therefore, the plaintiff was entitled to return of the whole of the purchase money.

In appeal, the learned Assistant Judge held that there was no Substance in the allegation of the plaintiff regarding the defect of the defendant's title and he further held that the sale-deed was not void ab initio, as the purchaser had purchased the property with open eyes and as the title conveyed was valid and saleable, and consequently he allowed the appeal and dismissed the suit.

In second appeal, the learned Judges of the and Chief Court held that the appeal must fail on the ground that the relief sought by the suit was not one which could be granted in the suit as it was filed. They further observed that the defendant had title to at least part of the property and that the, plaintiff had also obtained possessionof at least part of the same. They were also of the opinion that the conveyance to the plaintiff was not a nullity which the plaintiff could ignore, and then proceeded to conclude that the plaintiff's remedy was a suit for rescission of the sale-deed and' for return of the price paid under section 38 of the Specific Relief Act, and that it was not open to the plaintiff to ask for return of the price before the conveyance was rescinded.

A prayer was made to the learned Judges that the suit should be allowed to be amended as one for rescission of the conveyance but this they declined to do on the ground that it had been found by the lower appellate court that he had made the purchase with open eyes and that the suit had been brought after 51/2 years had elapsed of the sale having been made in favour of the plaintiff. The learned Judges, therefore, held that the defect of non-disclosure under section 55(1)(a) of the Transfer of Property Act had not been established in the case and that even it the form of the suit could be allowed to be changed, it should still fail.

A prayer in the alternative that the suit should be considered as one for damages for breach of warranty was also made; but this was rejected on the ground that there was no material on the record on which damages could be assessed. I have carefully examined the facts and the ratio decidendi of this case and have no hesitation in saying that it is entirely distinguishable. One salient difference is that while the court below has found that defendants Nos. 1 and 2 have been guilty of non-disclosure of a material defect in title under section 55(1)(a) of the Transfer of Property Act in the present case, quite the opposite finding had been returned in the case cited by the final court of fact. With all respect, therefore, the grounds on which the dismissal of the suit was upheld by the learned Judges of the Chief Court appear to me to be in the nature of obiter dicta.

In any view of the case it is not possible to take it as an authority for the view 1hat a suit for return of purchase money for breach of warranty of title cannot be brought in law, or, further, damages occasioned to the plaintiff in such a suit cannot as well be claimed therein All that the learned Judges said in disposing of the prayer made to them in this connection was that there was no evidence before them from which damages could be assessed and that a further difficulty in that connection arose because the defendant was held to have undisputed and Indisputable title with respect to a part of the land and possession with respect to it had also been given and the plaintiff would not be allowed to ask for a refund of the entire purchase money. I am, therefore, clearly of opinion that the decision in Allahdino's case, AIR 1942 Sind Si (supra), cannot govern the case before me.

8. My attention has next been drawn to Udho Dass v. Mehr Bakhsh, 'AIR 1933 Lah 262. In this case it has been held that

'when defect in vendor's title is discovered after the execution of a conveyance and there has been no 'fraud', the vendee cannot avoid the sale, but his remedy lies merely in a suit for damages.'

This case also cannot furnish any help to the contesting respondents on the facts found in the instant case. As already stated, it has been found by the final court of fact below that the said defendants were guilty of nondisclosure of their lack of title within the meaning of section 55(1)(a) of the Transfer of Property Act. Then the last portion of section 55 is enough, in my opinion, to holdthat such a failure must be held to be fraudulent. This reads as follows:

'An omission to make such disclosures as are mentioned in this section, Paragraph (1) Clause (a), and Para-graph (5), Clause (a) is fraudulent.'

In this state of the law, where a seller has failed to disclose a material defect in his title with respect to the property sold by him to the buyer, and of that defect the seller is aware and the buyer is not and which the buyer could not with ordinary care discover, such non-disclosure cannot but be fraudulent; and in such a case it seems to me that it would be going too far to hold that a suit for return of the purchase money should not be held to be maintainable.

That such a suit does lie was held in Md. Siddiq v. Li Kan Shoo, AIR 1925 Rang 372. It was held in this case that the omission by the vendor to disclose the defect in his title which was known to him but was not known to the vendee or could not have been known to him by ordinary care, gave him a good cause of action to ignore the sale and sue for return of the purchase money.

The decision in Mt. Nanhi v. Mt. Ketki, AIR 1932 All 224, is in the same direction. In this case, the sale-deed recited that the vendor had placed the vendee in possession of the entire property and that part of the property was the subject of a deed of gift, but that the vendor had subsequently annulled the same. It was further recited in the sale-deed that if the whole of the property transferred or any portion thereof went out of the possession of the vendee on account of any act done by her or by her ancestors, the vendee shall have a right to recover the consideration money along with damages and costs. The vendee was resisted when he wanted to take possession of the property to which the deed of gift and the deed of annulment related and he failed in his suit to recover the property from the donee.

Thereafter the vendee brought a suit for recovery of the proportionate amount of the consideration paid under the sale-deed. It was contended on behalf of the defendant that the implied covenant of title in terms of section 55(2) of the Transfer of Property Act was excluded by the express covenant contained in the deed and that the plaintiff was bound to have the sale transaction rescinded as provided in the covenant, and, therefore, the only remedy which the plaintiff had was to restore to the vendor so much of the vended property as came into his possession under the sale-deed and then claim refund of the consideration therefor.

In other words, it was contended that the warranty of title and the vendee's remedy in case of a breach thereof having been provided for in the sale-deed itself, the vendor could not avail himself of the implied warranty under section 55(2) of the Transfer of Property Act or claim damages on its breach. This contention was repelled, and it was held by the learned Judges that there was nothing in the sale-deed which excluded an implied warranty of title contemplated by Section 55(2) of the Transfer of Property 'Act, nor was there anything in the sale-deed which limited the plaintiff's remedy to the rescission of the contract referred to in the covenant in question.

The learned Judges, therefore, concluded that the plaintiff was entitled to damages for breach of the implied warranty of title. With respect, I entirely agree with the principle faid down in this case and may perhaps add that the observations which have been made with referenceto Sub-section (2) of section 55 fully apply to Clause (a) of Sub-section (1) also.

9. In Nand Ram v. Purshotam Das, AIR 1933 All 203, the vendor had purchased certain property from a widow and daughter of the last male-holder. On the death of both of them, the reversioners of the last male-holder brought a suit for possession of the property. That sun was decreed. Thereupon the vendee filed a suit against his vendor for the return of the sale consideration and the costs incurred in the litigation with the reversioners. Although the decision in AIR 1932 All 224 (supra), was not referred to, the same view was adopted, and it was held that the plaintiff was entitled to a decree for refund of the sale price with interest at the rate allowed by the trial court.

10. Again in Ouseph Varkkey v. Ouseph Chacko, Am1953 Trav-Co 236, it was held that where the seller knewthat the representation that he made in the sale deedwas false and on the strength of that representation hereceived consideration for the document, it was a case offraudulent misrepresentation and the principle of 'caveat emptor' could not apply, and, therefore, the purchaser was entitled to a decree against the seller for the return of thepurchase money. ]

11. From a review of the case law which I have made above, the principle which seems to me to emerge is as follows. Where a seller is guilty of a failure to disclose a material defect in the property sold by him to the buyer and the former is aware of such defect and the latter is not or of which defect the latter could not beaware with ordinary care, then such an omission or failure on the part of the seller must be held to be fraudulent and where in such a case the buyer stands deprived of the possession of the property sold to him, then it is open to him to bring a suit against the seller for return of the purchase money which the buyer has paid to the seller, and it further seems to me that he may also claim interest by way of damages on such purchase money. This remedy is in dependent of a suit for rescission of the sale-deed; which 3 buyer may also bring if he so chooses, and in such a case he may also sue for damages, it may be that it would be safer in the class of case like the present for the purchaser to sue for the rescission of the sale-deed also, but it seems to me that it would be going too tan to lay down as an absolute rule of law that a suit for return of the purchase money on breach of warranty of title would be incapable of being maintained in law without suing for the cancellation of the sale-deed. I hold accordingly.

12. Applying the aforesaid principle to the present case, I have no hesitation in coming to the conclusion that it was open to the plaintiffs, on the facts that have been found by the learned District Judge as a final court of tact, and which have been set out above, to bring a suit for the refund of the purchase money of the house which had been sold to them by the defendants Nos. 1 and 2 but of the possession of which they stand deprived by Khuma. This purchase price, according to Ex. 1, was clearly Rs. 2700/- and defendants Nos. 1 and 2 must be held bound in law to refund it to the plaintiffs. Out of this amount, however, defendants Nos. 3 and 5 have already paid between themselves Rs. 1200/- to the plaintiffs. Consequently, the plaintiffs can get a refund at this date bt the balance of the money, namely Rs. 1500/-. The last-mentioned defendants have not been made parties to this appeal and therefore for the amount found to be due above, namely, Rs. 1500/-, respondents Nos. 3 to 6 among thesureties shall in addition to defendants respondents Nos. 1 and 2 be liable to pay it to the plaintiffs appellants.

13. The only other question which remains to decide is whether the plaintiffs appellants are entitled to any damages claimed by them. I am of opinion that they are not, because no material has been brought on the record to prove the damages. I may also add that the plaintiffs cannot also be held entitled to interest because they dm not claim any interest from the date of the sale to the date of the suit in their plaint. Nevertheless, I am clearly of opinion that the plaintiffs should get pendente lite and future interest at the rate of 4 per cent, per annum on Us. 1500/-, the sum which has been found due to the plaintiffs from the defendants respondents. I hold accordingly. I need scarcely add that in view of the conclusion to which have- come above, the sale-deed executed by defendants respondents Nos. 1 and 2 in favour of the plaintiffs appellants with respect to the house in suit can have no effect hereafter.

14. The result is that I partly allow this appeat, setaside the judgments and decrees of the two courts belowand decree the plaintiffs' suit for Rs. 1500/- against allthe defendants respondents together with pending andfuture interest on that sum at the rate of four per cent,per annum simple from the date of the suit to the dateof realisation. The plaintiffs shall have their proportionatecosts throughout from defendants respondents Nos. 1and 2.


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