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The Trichinopoly Varthaga Sangam, Limited, by Its Secretary A. Arulanandam Pillai Vs. T.N. Shanmughasundaram - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported inAIR1939Mad769; (1939)2MLJ345
AppellantThe Trichinopoly Varthaga Sangam, Limited, by Its Secretary A. Arulanandam Pillai
RespondentT.N. Shanmughasundaram
Cases ReferredMohammad Raza v. Abbas Bandi Bibi
Excerpt:
.....g shall be enjoyed in common by t. (b) it shall not be competent for any one of the said sons to sell, mortgage or otherwise alienate the houses in schedule g during chockalingam pillai's lifetime, (c) after chockalingam pillai's lifetime also the houses in schedule g should be enjoyed by the sons in common without partition and should not be let, sold or otherwise disposed of to any stranger. 1,000 (rupees thousand). the intention of all the parties to this deed being that the houses should be enjoyed by only the members of the family and their descendants and not by strangers. 6. i consider that the contention that the restriction is absolute is well founded. the appellant's answer was that the restriction on alienation was bad and sughra bibi was therefore free to dispose of her..........the lifetime of chockalingam pillai. (b) it shall not be competent for any one of the said sons to sell, mortgage or otherwise alienate the houses in schedule g during chockalingam pillai's lifetime, (c) after chockalingam pillai's lifetime also the houses in schedule g should be enjoyed by the sons in common without partition and should not be let, sold or otherwise disposed of to any stranger. if any of the sons does not want to live in the house mentioned in schedule g, he shall not be at liberty in any manner to let or lease, etc., his undivided share to a stranger to the family but shall do so only to any of his brothers or their heirs for a sum not exceeding rs. 1,000 (rupees thousand). the intention of all the parties to this deed being that the houses should be enjoyed by only.....
Judgment:

Alfred Henry Lionel Leach, C.J.

1. The appellant was the plaintiff in a suit filed in the Court of the Subordinate Judge of Trichinopoly to enforce a mortgage executed by three brothers, Nataraja, Nilamegham and Manickavachagam Pillai, sons of one Chockalingam Pillai. Chockalingam had five sons, the other two being named Chandrasekharam and Muthuvelu respectively. The family was joint until the 30th January, 1919, when Chockalingam and his sons executed a deed of partition. The deed provided that three houses (which had been used as the family residence) should be held by the members of the family as tenants in common, but no member should have the right to dispose of his share to a stranger. Chockalingam and Muthuvelu died shortly after the execution of the deed. On the 20th August, 1925, Nataraja, Nilamegham, Chandrasekharam and Manickavachagam on behalf of themselves and their respective sons executed in favour of the appellant a mortgage of the three houses to secure a loan of Rs. 6,000. This loan was repaid in part, but on the 25th October, 1928, a fresh mortgage of the property was executed to secure the sum of Rs. 5,000, Chandrasekharam did not join in the later mortgage as he was away at the time. On the 10th August, 1932, the plaintiff instituted a suit to recover what was due to him on this mortgage. Nilamegham was then dead and his son, the sole respondent in this appeal, was made a party as his legal representative.

2. At the time of the institution of the suit the respondent was still a minor and his mother was appointed to act as his guardian ad litem. She took no steps, however, to defend the suit and as the result an ex parte decree was passed against the respondent, limited of course, to his interest in the property in suit. The suit was contested by certain of the other defendants on various grounds, but it is not necessary to state them. It is sufficient to say that the issues did not embrace the question now before the Court and were all decided in favour of the plaintiff. A decree as prayed was passed against the other defendants, except Chandrasekharam and his sons, who were dismissed from the suit as they were not parties to the second mortgage. The respondent then filed an application for an order setting aside the ex parte decree. The application was granted and the respondent submitted a written statement in which he contended that his father had only a life interest in the property. At the hearing the respondent abandoned this plea, but contended that by reason of the partition deed the sons of Chockalingam had no right to effect a mortgage and therefore his interest was not charged. This contention was upheld and the respondent's interest in the property was exonerated from the mortgage. The preliminary decree was accordingly amended.

3. The plaintiff has appealed. The validity of the decision of the Subordinate Judge is challenged on two grounds. In the first place it is contended that the Subordinate Judge was wrong in holding that the partition deed operated to prevent the sons from mortgaging their interests in the property. It is said that the restriction on alienation amounts to an absolute restriction and therefore is void under Section 10 of the Transfer of Property Act. In the second place it is said that the facts did not warrant the setting aside of the ex parte decree passed against the respondent. The second contention cannot be supported because the appellant has not printed the evidence on which the Subordinate Judge based his order setting aside the ex parte decree or even the order itself. There being no materials before us from which it can be shown that the order is wrong it must stand.

4. The clause in the partition deed referring to this property-is Clause 4, which reads as follows:

(a) The three houses described in Schedule G shall be enjoyed in common by T.M. Chockalingam Pillai and his said sons as at present during the lifetime of Chockalingam Pillai. (b) It shall not be competent for any one of the said sons to sell, mortgage or otherwise alienate the houses in Schedule G during Chockalingam Pillai's lifetime, (c) After Chockalingam Pillai's lifetime also the houses in Schedule G should be enjoyed by the sons in common without partition and should not be let, sold or otherwise disposed of to any stranger. If any of the sons does not want to live in the house mentioned in Schedule G, he shall not be at liberty in any manner to let or lease, etc., his undivided share to a stranger to the family but shall do so only to any of his brothers or their heirs for a sum not exceeding Rs. 1,000 (Rupees Thousand). The intention of all the parties to this deed being that the houses should be enjoyed by only the members of the family and their descendants and not by strangers.

5. The estate here created is admittedly a tenancy in common and if the restriction on alienation amounts to an absolute restriction it cannot stand.

6. I consider that the contention that the restriction is absolute is well founded. The prohibition against alienation to strangers is not limited to the father's lifetime, but is intended to continue in perpetuity. The concluding words of the clause stating the intention of the parties places this beyond doubt. It is true that a right to sell within the family is given, but there is no obligation to buy and a maximum price which is obviously below the real value is fixed. The property was mortgaged in 1925 for Rs. 6,000, and it may be taken that the mortgagee required a substantial margin of security. It follows that it may safety be assumed that the property was worth considerably more than Rs. 6,000 at the time of the mortgage. There is no evidence to justify an inference that the property had increased in value between the date of the partition deed and the date of the mortgage and consequently the only conclusion open to the Court is that the property was worth considerably more than Rs. 6,000 at the date of the partition. Taking the value to be only Rs. 6,000 each son's share at the death of the father was worth Rs. 1,200, but in view of the amount of the first mortgage the figure of Rs. 6,000 cannot be accepted as the proper figure. On the basis of the mortgage the full value was more likely to be in the region of Rs. 9,000, which would make the share of each of the five sons worth about Rs. 1,800. At the date of the mortgage one son had died and the shares of the surviving sons had consequently increased in value. The prohibition against a cotenant selling his share for more than Rs. 1,000 would mean a sale at a great sacrifice, even if the maximum were realised, but there is the further consideration that there is no obligation to buy even at Rs. 1,000, and this puts a member of the family wishing to sell at a further disadvantage. There is ample authority that provisions such as we have here amount to an absolute restriction on alienation and therefore are void.

7. In the case of In re Rosher. Rosher v. Rosher (1884) 26 Ch. D. 801, a testator devised an estate to his son in fee subject to the proviso that if the son, his heirs or devisees, or any person claiming through or under him or them, should desire to sell the estate, or any part or parts thereof during the lifetime of the testator's wife, she should be given the option to purchase the estate at the price of 3,000 for the whole, and at a proportionate price for any part or parts thereof. The selling value of the estate at the date of the will and at the time of the testator's death was 15,000. It was held that the proviso compelling the son to sell at such an undervalue amounted to an absolute restraint on alienation during the lifetime of the widow and was consequently void. The same principle was applied by Eve, J., in In re Cockerill: Mackaness v. Percival (1929) 2 Ch. D. 131. In that case a testator, by his will, devised land subject to the proviso that if within twenty years of his death the devisee should desire to sell the land he was to give the governors of a certain school the option of purchasing it at the price of 300 an acre. The total area was about 22 acres and was worth 670 an acre. It was held that the condition amounted to a restraint on alienation and was void for repugnancy. In In re Elliot; Kelly v. Elliot (1896) 2 Ch. D. 353, a testator gave his plantations in Assam and all his other estate to the plaintiff absolutely subject to the payment of his debts, but provided that on a sale by the plaintiff of the plantations the plaintiff should pay to the testator's brother a sum of 1,000 out of proceeds of the sale and another sum of 500 to the testator's sister. Chitty, J., held that the testator had by the direction to pay these legacies imposed no obligation on the plaintiff to sell and that the direction was void for repugnancy. The testator had attempted to create an estate unknown to the law. The owner of property has, as an incident of his ownership, the right to sell and to receive the whole of the proceeds for his own benefit. By providing that the plaintiff should make the payments to his brother and sister he had created a condition which was repugnant to the estate which he had conferred. In Attwater v. Attwater (1853) 18 Beav. 330 : 52 E.R. 131, Romilly, M.R., held that where a testator left an estate to the eldest son of his niece with an injunction never to sell it out of the family, but, if it had to be sold at all, it was to be sold to one of his brothers, the restriction amounted to a total restraint on alienation and was void.

8. In Gayasi Ram v. Shahabuddin I.L.R. (1935) 57 All. 861, Sulaiman, C.J., pointed out that in order to ascertain whether there is an absolute restraint or not, the Court has to examine the effect of all the conditions and find whether for all practical purposes alienation is prohibited. The mere fact that there may be some remote contingency in which there may be a possibility of an alienation taking place would not necessarily take the case out of the prohibition contained in Section 10 of the Transfer of Property Act. In that case a house had been sold for a sum of Rs. 150 with a condition that the vendee was not to transfer, mortgage, give or sell it to any one but the vendor or his heirs. In the event of a breach of this condition the vendor (or his heirs) was to have the right to a reconveyance of the property on payment of Rs. 175. Sixteen years after the conveyance the purchaser sold the property for Rs. 1,000 and the transferee later disposed of it for Rs. 800. The sons of the original vendor sued to recover possession of the property from the ultimate purchaser on payment to him of Rs. 175. It was held that there was an absolute restraint on alienation and therefore the provision for reconveyance was void.

9. In the case before us the respondent's advocate has placed great reliance on the decision of the Judicial Committee in Mohammad Rasa v. Abbas Bandi Bibi (1932) 63 M.L.J. 180 : L.R. 59 IndAp 236 : I.L.R. 7 Luck. 257 , but when that decision is examined it cannot be regarded as an authority in support of the plea that the provisions of the partition deed in this case with regard to the family house are valid in law. The facts there were these. One Sughra Bibi brought a suit against her cousin, Afzal Husain, claiming a half share in certain immovable properties in Oudh. The litigation ended in a compromise which was embodied in a decree of the Court. Under the terms of the compromise decree the defendant, who already had a wife, was to marry the plaintiff and the properties were to be held by the two wives in equal shares, but neither was to have power to transfer her moiety to a stranger. After her marriage to the defendant, the plaintiff, in breach of the terms of the compromise decree, alienated her half share to strangers. After her death the respondent in the appeal to the Privy Council, as a legal representative of Sughra Bibi, filed a suit for the recovery of two-thirds of her share from the appellant on the ground that the deceased had no right to alienate her moiety. The appellant's answer was that the restriction on alienation was bad and Sughra Bibi was therefore free to dispose of her moiety as she pleased. The Privy Council held that the condition that the deceased was not to alienate outside the family constituted only a partial restriction on alienation and therefore did not offend against Section 10 of the Transfer of Property Act. The Board was only considering the effect of the prohibition so far as the deceased herself was concerned and the observations in the judgment went no further. In the course of the judgment reference was made to In re Macleay (1875) L.R. 20 Eq. 186 and Doe v. Pearson (1805) 6 East. 173 : 102 E.R. 1253. In the former of these cases there was a devise of an estate to a brother on condition that he should never sell it out of the family. Jessell, M.R., held that this only amounted to a partial restriction and made the following observations:

You may restrict alienation in many ways. You may restrict alienation by prohibiting a particular class of alienation, or you may restrict alienation by prohibiting it to a particular class of individuals, or you may restrict alienation by restricting it to a particular time, In all those ways you may limit it, and it appears to me that in two ways, at all events, this condition is limited. First, it is limited as to the mode of alienation, because the only prohibition is against selling. There are various modes of alienation besides sale; a person may lease, or he may mortgage, or he may settle; therefore it is a mere limited restriction on alienation in that way. Then, again, it is limited as regards class; he is never to sell it out of the family, but he may sell it to any one member of the family. It is not therefore, limited in the sense of there being only one person to buy; the will shows there were a great many members of the family when she made her will; a great many are named in it; therefore you have a class which probably was large, and was certainly not small. Then it is not, strictly speaking, limited as to time, except in this way, that it is limited to the life of the first tenant in tail; of course, if unlimited as to time, it would be void for remoteness under another rule. So that this is strictly a limited restraint on alienation.

10. In the case before us the restriction against the alienation outside the family applies to the parties to the deed and their descendants and there is the further restriction with regard to price without any obligation to buy. In the course of his judgment, Jessell, M.R., discussed at length the decision in Attwater v. Attwater (1853) 18 B. 330 : 52 E.R. 131. It is evident that he was inclined to think that the decision in Attwater v. Attwater (1853) 18 B. 330 : 52 E.R. 131 went too far, but came to the conclusion that Romily, M.R., did not intend to place a different interpretation on the law from that given by Lord Ellenborough in Doe v. Pearson (1805) 6 East. 173 : 102 E.R. 1253. There property was left to two sisters to be held by them as tenants in common, subject to the condition that if they had no issue they should have no power of alienation except to their sisters or their sisters' children. Lord Ellenborough held this condition was good. The restriction on alienation disappeared with issue and therefore was only partial restriction.

11. The facts in Mohammad Raza v. Abbas Bandi Bibi (1932) 63 M.L.J. 180 : L.R. 59 IndAp 236 : 7 Luck. 527 and the cases cited therein were very different from the facts in the present case and those authorities have no application here. I hold that the restriction imposed by the deed now under consideration amounts to an absolute restriction on alienation within the meaning of Section 10 of the Transfer of Property Act and therefore must be disregarded. Consequently the sons took the property as tenants in common without fetter, and the three brothers who executed the mortgage to the appellant acted within their powers.

12. The appeal will be allowed and the suit will be decreed against the respondent also, with costs in favour of the appellant here and below. The period allowed for redemption will be six months.

Krishnaswami Aiyangar, J.

13. I agree.

Somayya, J.

14. I agree.


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