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Bhattiprole Hanumantha Rao Vs. Kodrakota Sitharamayya and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai
Decided On
Reported inAIR1939Mad106; (1939)2MLJ195
AppellantBhattiprole Hanumantha Rao
RespondentKodrakota Sitharamayya and ors.
Cases ReferredVaikuntarama Filial v. Athimoolam Chettiar
Excerpt:
- - that discretion is of course not to be arbitrary but sound and reasonable and guided by well-settled judicial principles. but once it is found that the requirements of the section are satisfied and there exist circumstances which call for the exercise of the discretion, the court is bound to afford relief without being hampered by reference to the limitations which surround the corresponding rule of equity as administered elsewhere. but it is clear that in this country we have a statutory right to impose conditions by section 41 of the specific relief act, and that right is clearly recognised in mohori bibee v......that though such may be the effect of the section, it must be deemed merely to embody the familiar rule of equity that he who seeks equity must do equity but limited and circumscribed by the qualification laid down thurstan v. nottingham permanent benefit building society (1902) 1 ch. 1 . namely:that a court of equity cannot say that it is equitable to compel a person to pay any moneys in respect of a transaction which, as against that person, the legislature has declared to be void.6. so qualified, the rule would seem to preclude courts from granting compensation in all cases of void transactions, for we cannot see any difference in principle or reason, between transactions void by statute and those void under the general law. an argument of the kind proves too much, runs counter to the.....
Judgment:

Krishnaswami Aiyangar, J.

1. This appeal arises out of a suit by the appellant to set aside a number of sale deeds executed by him during his minority and to recover the properties sold together with mesne profits. The defendants 1, 2, 4 and 5 were the purchasers under different sale deeds, all of which have been set aside by the trial Court. But the decree for possession has been made conditional on the appellant refunding to the several purchasers the amounts of the consideration received from them. The first defendant died after the institution of the suit and his legal representatives are defendants 10 and 11. The main object of the appeal is to get rid of the condition imposed on the appellant to repay the purchase moneys.

2. The Subordinate Judge has found that the appellant was a minor when he executed the several deeds of sale, that he did not make any misrepresentation as to his age. He has not found that any of the purchasers except the fourth defendant had knowledge that the appellant was a minor when the sales were made. As regards the fourth defendant, however, he came to the conclusion that he must have known of the appellant's minority at the time of the sale in his favour. These findings of fact have not been challenged in appeal.

3. The learned Judge has held that the appellant was not estopped from pleading that the sales were void, a point concluded by authority and very properly not questioned before us. It was however urged on behalf of the appellant that the learned Judge was in error in imposing the condition referred to above, as neither Section 65 of the Indian Contract Act nor Section 41 of the Specific Relief Act justifies it. It is unnecessary for us, in this appeal to consider the scope of Section 65 of the Contract Act, as the first respondent's advocate has not chosen to support the judgment by reference to that section but took his stand on Section 41 of the Specific Relief Act, which according to him is sufficient to justify the conclusion of the trial Court. This argument has found favour with the Subordinate Judge, and we also are of opinion that it is sound.

4. Section 41 runs as follows:

On adjudging the cancellation of instrument, the Court may require the party to whom such relief is granted to make any compensation to the other which justice may require.

5. Read in the light of Section 39 which authorises the cancellation of a written instrument, whether void or voidable, Section 41 cannot be understood as limited in its operation to void instruments only, and accordingly it was conceded before us that that section is applicable to both classes of instruments. What is however urged is that though such may be the effect of the section, it must be deemed merely to embody the familiar rule of equity that he who seeks equity must do equity but limited and circumscribed by the qualification laid down Thurstan v. Nottingham Permanent Benefit Building Society (1902) 1 Ch. 1 . namely:

That a Court of Equity cannot say that it is equitable to compel a person to pay any moneys in respect of a transaction which, as against that person, the legislature has declared to be void.

6. So qualified, the rule would seem to preclude Courts from granting compensation in all cases of void transactions, for we cannot see any difference in principle or reason, between transactions void by statute and those void under the general law. An argument of the kind proves too much, runs counter to the concession made earlier by the appellant's counsel and is, in our opinion, against the plain intendment of the section and must accordingly be rejected. In our judgment the statutory discretion vested in the Courts of this country by Section 41 is of wider amplitude than the corresponding rule of equity administered in England, where there is no such statutory counterpart. That discretion is of course not to be arbitrary but sound and reasonable and guided by well-settled judicial principles. But once it is found that the requirements of the section are satisfied and there exist circumstances which call for the exercise of the discretion, the Court is bound to afford relief without being hampered by reference to the limitations which surround the corresponding rule of equity as administered elsewhere. We think we are bound to give effect to the plain words of the section and are not at liberty to import into it, considerations derived from the English or any other system of jurisprudence. It is scarcely necessary to add that the exercise of such a power is not to invent a new head of equity, but merely to act in obedience to a statutory injunction. The view here expressed is, we think, supported by a decision of a Bench of this Court in Mallacheruvu Raghavayya v. Mallacheruvu Subbayya (1917) 7 L.W. 124. where the facts were almost on all fours with those found in the present case. Coutts-Trotter, J., as he then was, expressed himself in favour of a wider interpretation of the section. After referring to the English decisions he said:

But it is clear that in this country we have a statutory right to impose conditions by Section 41 of the Specific Relief Act, and that right is clearly recognised in Mohori Bibee v. Dharmodas Ghose . I regard this as a proper course for exercising that discretion and make it a condition that the plaintiffs shall repay. before recovering possession of the property.

8. The passage in the judgment of the Privy Council in the above case to which the learned Judge apparently alluded is obviously the one at the top of page 549:

Another enactment relied upon as a reason why the mortgage money should be returned, is Section 41 of the Specific Relief Act (I of 1877) which is as follows.

9. After setting out the terms of the section their Lordships proceed:

Section 38 provides in similar terms for a case of rescission of a contract. These sections no doubt do give a discretion to the Court, but the Court of first instance and subsequently the appellate Court, in the exercise of such discretion, came to the conclusion that under the circumstances of this case justice did not require them to order the return by the respondent of money advanced to him with full knowledge of his infancy, and their Lordships see no reason for interfering with the discretion so exercised.

10. The italics are ours and the italicised portion points unmistakably to the correctness of the wider interpretation of this section. The appellant's Counsel repeated before us an argument presented before the learned Judges who decided the case in Mallacheruvu Raghavayya v. Mallacheruvu Subbayya (1917) 7 L.W. 124. and rejected by them after full consideration. That argument is that in the very next passage their Lordships equated the principle enacted in the section to the rule of equity in England to Which reference has been made. The passage is this:

It was also contended that one who seeks equity must do equity. But this is the last point over again and does not require further notice, except by referring to a recent decision of the Court of Appeal in Thurstan v. Nottingham Permanent Benefit Building Society (1902) 1 Ch. 1 : (1903) A.C. 6 .

11. To appeal to the limited rule of equity after the refusal of remedy under the ampler rule of the statute may not inappropriately perhaps be described as an attempt to argue the same point over again. However that may be we find that the point has been directly dealt with and answered in the judgment of Seshagiri Aiyar, J., in the same case. He said at page 129:

The learned Vakil for the appellant contended that this succeeding paragraph' (the reference is to the second paragraph at page 549 in Mohori Bibee v. Dharmodas Ghose . referred to above), 'must be taken to have given the final answer to the contention as to compensation. I do not think so. In any opinion, the two paragraphs are consistent with each other. In the second paragraph their Lordships must be taken to have held that if the matter rested purely on principles of equity, they would not be prepared to order compensation as that claim was negatived under similar circumstances by the House of Lords in Nottingham Permanent Benefit Building Society v. Thurstan (1903) A.C. 6. Their Lordships should not be taken to have held that the statutory rule contained in Section 41 of the Specific Relief Act should not be given effect to as it only contained a rule of equity. The net import of the two paragraphs is to declare that the statutory discretion as to compensation does exist and can be exercised by the Courts, but that if relief is claimed on general equitable grounds apart from the statute, such a claim is inadmissible as that would be opposed to the principles laid down by the House of Lords.

12. We are in substantial agreement with this view of the judgment of the Privy Council the more so as we find that it is in consonance with our understanding of what we regard as the plain language of the section. The decision in Mallacheruvu Raghavayya v. Mallacheruvu Subbayya (1917) 7 L.W. 124. has not only not been challenged since, but has been cited in several subsequent cases without dissent. See Rahima Bee v. Mannan Bee : AIR1936Mad140 ., Abdul Majid v. Ramisa Bibis : AIR1931Mad468 and Guruswamy Pantulu v. Lall Khajanchee (1919) 10 L.W. 225. We must therefore repel the plea for the narrower interpretation of the section contended for by the appellant. Before finally leaving this subject, we must also notice a further submission on behalf of the appellant that the decision in Mallacheruvu Raghavayya v. Mallacheruvu Subbayya (1917) 7 L.W. 124. is in conflict with an earlier Bench decision of this Court in Vaikuntarama Pillai v. Athimoolam Chettiar : AIR1914Mad641(2) . and that the latter must be followed in preference to the former or that the conflict must be resolved by a reference to a Full Bench. It is to be observed that the ruling in Vaikuntarama Pillai v. Aihimoolam Chettiar : AIR1914Mad641(2) . was cited and relied upon in Mallacheruvu Raghavayya v. Mallacheruvu Subbayya (1917) 7 L.W. 124., but was held to be either inapplicable, distinguishable or untenable. It is enough to point out that the question of repayment did not arise for direct decision in Vaikuntarama Pillai v. Athimoolam Chettiar : AIR1914Mad641(2) ., but arose only incidentally for the purpose of deciding whether the plaintiff an assignee of a mortgage by a minor could be regarded as fulfilling the character of a creditor so that he might sue under Section 53 of the Transfer of Property Act to set aside a subsequent settlement by the mortgagor. Secondly, Section 41 is not referred to at all in the judgment, much less its language considered for a comparison of the statutory rule with the pure rule of equity of the English Law. We do not therefore feel obliged to follow the one course or the other suggested by the appellant.

13. Holding as we do that the learned Subordinate Judge had power under Section 41 of the Specific Relief Act to order a refund of the consideration received by the appellant, it still remains for us to consider whether the power was properly exercised on the facts found in the present case. It is settled law that where the alienee chose to advance the money to a minor with knowledge of the minority, it would be improper to order a refund. It is equally settled that where an innocent purchaser or alienee was induced to part with money to a minor by a misrepresentation as to his age, an order for refund would be made almost as a matter of course. Where, however, there is neither knowledge of minority on the part of the alienee, nor misrepresentation on the part of the minor the answer is not quite so easy. Cases of this type have been somewhat rare, for, our attention has not been drawn to any of the decisions than those in Mallacheruvu Raghavayya v. Mallacheruvu Subbayya (1917) 7 L.W. 124 and Vaikuntarama Pillai v. Athimoolam Chettiar : AIR1914Mad641(2) . The appellant's argument is that no order for refund could be made against a minor except when the money was paid to him as result of a fraud practised upon or a fraudulent misrepresentation made to, the person who was thereby induced to part with the money. There are no doubt dicta in Vaikuntarama Pillai v. Athimoolam Chettiar : AIR1914Mad641(2) , which seem to lend colour to such an argument, but we must on this point again be guided by the clear pronouncement contained in the later case.

14. Reference may finally be made to an argument of the respondent's advocate that the observations in Vaikuntarama Filial v. Athimoolam Chettiar : AIR1914Mad641(2) are explicable on the footing that the minor in that case was a defendant. According to him, Section 41 is framed so as to afford relief only in a case where the minor himself as plaintiff seeks the assistance of the Court and the section is inapplicable if he happens to be merely a defendant in a suit by the person who dealt with him when he was a minor. On the soundness of this argument, it is unnecessary to express a final opinion as in this case the minor has come into Court as plaintiff seeking the assistance of the Court as such. When the question arises, it would be a matter for consideration whether such a marked difference in the substantive rights of parties could have been intended to be based on the accident of the claimant being a plaintiff or defendant and whether there is not implicit in the language of the section a rule of wider significance affording under proper circumstances relief to a purchaser or alienee irrespective of his being a plaintiff or defendant.

15. We are therefore of opinion that the learned Judge in the Court below was right in invoking the provisions of Section 41 of the Specific Relief Act for imposing the condition inserted in the decree, except as against the fourth defendant who is the third respondent in the appeal. The Subordinate Judge has found that he must have known of the appellant's minority when he took the sale. Nobody has appeared on his behalf to challenge the correctness of this finding which we must therefore accept. By reason of this finding he is disentitled to claim a refund and we do not understand why in spite of it, the Subordinate Judge has directed a refund to him also, along with the other defendants mentioned in the decree. The decree must be modified by omitting the fourth defendant from among the persons for whose benefit the condition for repayment has been inserted. As against him there will be decree for recovery of possession together with mesne profits from the date when he took possession till the date of the recovery of possession. The appeal is dismissed with the costs of the first respondent and as against all other respondents except the fourth. As against the third respondent the appeal is allowed and the condition for repayment so far as he is concerned will be deleted. He will pay the costs of the appellant here and in the Court below on the value of the claim against him and bear his own costs throughout. The Subordinate Judge will now make the enquiry regarding the mesne profits payable by the fourth defendant who is the third respondent here.

16. The memo. of objections is not pressed. Dismissed. No costs.


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