1. On the 14th October, 19-10, the fourth defendant, on behalf of his minor son, executed a sale deed, Ex. B, in favour of the father of the plaintiff, with regard to a one-fourth share of a Mokhasa village. The consideration was Rs. 27,3O2 ; and the reason for the sale was said to be that the land was situate some distance from the place where the minor and his father were living and so it was impossible to enjoy the land at a profit. As the plaintiff's., father had hesitated to purchase a minor's property, the maternal grandfather of the minor, the then Maharajah of Venkatagiri, executed an indemnity bond on the 25th August, 1910, in favour of the plaintiff's father, the terms of which will be considered in detail later. He agreed that if the minor failed to execute a ratification kararnama and the purchaser was disturbed in his enjoyment and he sustained loss thereby and if he delivered the property to the Maharajah of Venkatagiri, he would pay him the Rs, 27,302 paid for the one-fourth share in the village. He also agreed upon, receiving a proper account, to indemnify the plaintiff's father against any sum that he might have to pay as a result of any suit for mesne profits that the minor might bring against him, The sale deed was registered on the 14th February, 1911. The Maharajah of Venkataigiri lived for four years after the minor attained his majority, and during that time the son did not dispute the alienation made by his father. In 1922, however, he filed O.S. No. 3 of 1922 in the Court of the Subordinate Judge of Bezwada against the present plaintiff and his brother (the plaintiff's father being then dead) for possession of this property and for mesne profits, on the ground that the alienation was not binding on him and that in any event the transaction was void because there had been fraud on the registration law, a small plot of land having been included in the sale deed in order to give jurisdiction to the Sub-Registrar of Samalkot, whereas the suit land lay within the jurisdiction of the Sub-Registrar of Tiruvur. As the legal representatives of the late Maharajah of Venkatagiri (the father of the present defendants 1 to 3) and the fourth defendant were interested in the result of the litigation, they were added as parties. The father of defendants 1 to 3 filed a written statement raising various contentions, one of which was that the plaintiff had not fulfilled the condition in the indemnity bond that the land should be delivered to him. The Subordinate Judge decreed the suit on the 20th September, 1924, on the ground that although the suit was barred by limitation if it be regarded as one to set aside an alienation by a guardian, the plaintiff was entitled to succeed, because there had been a fraud on the registration law and that the sale was therefore void ab initio. The matter was taken in appeal to the High Court, where it was held, on a consideration of the facts and the law on the subject, that there had been no fraud on the registration law and that the parties had intended that the small plot of land included in the sale deed should be conveyed also. The fourth defendant's son then appealed to the Privy Council and succeeded there, with the result that the decree of the High Court was set aside and the decree of the Subordinate Judge restored. There was delivery of the property in December, 1937, and on the 14th February, 1938, full satisfaction was recorded, the plaintiff having by then paid the fourth defendant's son, the mesne profits decreed, together with costs. On the 30th January, 1939;-the plaintiff, to whose share fell the suit dept in a partition with his brother, brought the present suit for Rs. 53,737-5-10, being the consideration for the sale deed, together with mesne profits and costs paid to the fourth defendant's son. The learned Subordinate Judge held that in view of the fact that the plaintiff had failed to restore possession to defendants 1 to 3 before the decree was passed, the terms of the first part of the indemnity bond had not been fulfilled and that he was not therefore entitled to receive from them the consideration for the sale. He however held that the second part of the indemnity bond, which related to the profits and costs, could be enforced, and accordingly gave a decree for the plaintiff against defendants 1 to 3 for Rs. 24,660-11-9. He found that the fourth defendant had received the consideration and that he was therefore bound under Section 65 of the Contract Act to refund to the plaintff the consideration, together with interest, from the date of Suit. Defendants 1 to 3 have filed A.S. No. 260 of 1941 against the decree passed against them for Rs. 24,660-11-9 and in that appeal the plaintiff has filed a memorandum of cross-objections for the balance of his claim, contending that he, had fulfilled the terms of the indemnity bond and that therefore the Court should have decreed to him the whole of the suit claim. The fourth defendant has filed A.S. No. 267 of 1941, contending that he cannot be made liable for the act of his son.
2. The first argument adduced on behalf of the defendants 1 to 3 is that the indemnity bond does not contemplate the contingency of the sale being found to be not binding on the minor because of a fraud on the registration law. The relevant-portion'of the bond is as follows:
I hereby agree that if, soon after the minor ceases to be a minor and becomes a major, a ratification kararnama is not caused to be executed and delivered to you, and if, for any reason, without consenting to the said sale, the minor Inuganti Venkatarama Rao Garu raises disputes, and loss is sustained by you thereby, and if you deliver possession to me of the one-fourth share in the said Somavaram village.... I myself shall, as soon as the same are passed to me without having anything to do with the minor or his natural father and guardian, Inuganti Sooryaprakasa Rao Garu, and without raising any objection, refund the sum of Rs. 27,302... which you shall have given towards the sale consideration, and that, if, as regards the past profits for the said share, the minor should file a suit against you and obtain a decree, I myself shall, after you transfer to me all the accounts that you may obtain in connection with the said past profits for taking steps against the said minor, in respect of the losses that may be sustained by you thereby, pay the decree amount relating to the said past profits.
3. It is no doubt true that the parties did not contemplate the possibility of some other item of property being included which would render the registration of no effect; but that would be no answer to a claim on the indemnity bond if the wording of that bond was such as to make the Maharajah of Venkatagiri liable. It will be seen that in the passage set out above, the Maharajah of Venkatagiri undertakes to indemnify the plaintiff's father if for any reason, without accepting the sale, the minor Inuganti Venkatarama Rao Garu raises disputes.
4. It is further contended that the contract is unenforceable because of a variation in the contract, the variation being that a square yard of vacant site in Vundoor village was included in the sale deed. In the first place, this plot was not in fact conveyed. It was included, as was held by the Privy Council, merely for the purpose of giving jurisdiction to the Samalkot Sub-Registrar, and it was not intended by the parties that the title to that small plot should pass. Secondly, although it is not denied that any departure by a creditor from his contract with a surety without the surety's consent, which is obviously and without enquiry quite unsubstantial, would discharge a surety from liability, yet, even assuming that the Manarajah's position is analogous to that of a surety, the inclusion of a square yard of a vacant site worth but a very few rupees is most unsubstantial when compared with the main property transferred, which was of the value of Rs. 27,302. Thirdly, if a person undertakes to indemnify another against any loss resulting from a purchase of A property and the other purchases B property as wall as A property, he would not be entitled to be indemnified against any loss that might result from the purchase of B property; but there is no reason why he should lose his right to be indemnified for any loss that might result from the purchase of A property
5. Another ground on which the defendants 1 to 3 seek to escape liability is by pointing out that one of the terms of the indemnity bond is that the plaintiff's father should deliver the land to the Maharajah of Venkatagiri, and that it was only after it had been delivered that he would have had a right to indemnification. That argument was accepted by the learned Subordinate Judge with regard to the claim against defendants 1 to 3 for the return of the purchase money; but the learned Subordinate Judge points out that the second part of the indemnity bond is independent of the conditions in the passage set out above. With regard to mesne profits, the only conditions are that the minor should file a suit and obtain a decree and that the accounts showing what profits have been realised should be given to the Maharajah. Those conditions have been fulfilled. There was an enquiry in the suit as to the quantum of mesne profits; and the plaintiff is merely asking that the amount ascertained and paid to the minor should be repaid to him by defendants 1 to 3.
6. A minor ground of appeal is with regard to costs. The learned advocate for the defendants 1 to 3 argues that although the indemnification bond purports to indemnify against payment of mesne profits to the minor, it says nothing about costs. Liability to pay costs arises however out of Section 125 of the Contract Act and is therefore an implied term of all contracts of indemnity.
7. The main ground of attack by defendants 1 to 3 against the judgment of the lower Court is that the learned Subordinate Judge was wrong in holding that defendants 1 to 3 were liable, in view of the negligence of the plaintiff's father in not having secured a valid sale deed properly registered. It is very doubtful whether a person to be indemnified against any contingency is under any obligation or duty to see that the document out of which the contract of indemnity arises is executed or registered in such a way as to render it unassailable; but whatever may be his duty when the indemnifier could not or did not take any part in the transaction out of which the contract of indemnity arose, there can be no such duty when the indemnifier or his representative was present in person when the transaction took place and raised no objection to it. The evidence of P.W. 1, which has not been refuted, is that at the time of the registration, one Kuppayya, a gumastha of the Maharajah of Venkatagiri, was present. Whether an representative of the Maharajah of Venkatagiri was present at the time of the execution of the contract of sale on the 14th October, 1910, is immaterial; because the act which rendered the contract of sale void was the registration at Samalkot instead of at Tiruvur. Moreover, the duty of the plaintiff's father was only to take reasonable care to avoid defects which could be reasonably foreseen. There can be no doubt that in 1910 (the year of the sale) very few persons thought that the inclusion of a plot of land in order to give jurisdiction to a particular Sub-Registrar was a fraud on the registration law, even though it was not intended by the parties that that plot should be transferred. Harendralal Boy Chowdhuri v. Haridas Debi came rather as a surprise even in legal circles here; and it could not reasonably be expected, therefore, that a layman, before this judgment was pronounced in 1914, would know that such an act was a fraud on the registration law and nullified the contract. The general feeling was that the purpose of registration was to authenticate a document and that if that were done, it would be of little consequence where the document was registered. We are therefore unable to agree, even if we assume that the plaintiff's father was under a duty to the Maharajah of Venkatagiri to exercise reasonable care, despite the fact that his agent was present at the registration, that the plaintiff's father did not exercise such care as one might reasonably expect from a person in his position.
8. Another reason for holding against the appellari'ts on this ground is that it was not raised in their written statement, nor was any issue framed. The learned pleader for the defendants 1 to 3 in the lower Court undoubtedly raised the point in argument, and presumably the learned pleader for the plaintiff replied ; but if the question had been raised in the pleadings and in the issues, evidence could have been adduced By the parties in more detail as to the circumstances which led them to include this additional item, as to what was in their minds at the time, and as to what advice, if any, they had had as to the effect of the introduction of such a clause. For this reason alone the plea of defendants 1 to 3 on this point should not be heard.
9. For the above reasons we find no cause to disagree with the learned Subordinate Judge in holding the defendants 1 to 3 liable for mesne profits and costs.
10. Appeal No. 260 of 1941 is therefore dismissed with the costs of the plaintiff.
11. The Memorandum of cross-objections of the plaintiff relates to the consideration for the sale, which was disallowed by the learned Subordinate Judge on the ground that the plaintiff had not given possession to the Maharajah of Venkatagiri, There can be no doubt that delivery of the fend to the Maharajah of Venkatagiri was a pre-requisite of the liability of the Maharajah of Venkatagiri to refund the purchase money, but the learned Subordinate Judge seems to read more into the indemnity bond than we are able to find. He says:
The surrender of possession to the Maharajah contemplated by the parties, as almost a condition precedent to the payment of Rs. 27,302 must therefore be taken to be at a time when probably Venkatarama Rao (the fourth defendant's son), had not obtained a recognition of his rights in a Court of law and must obviously refer to a stage when, by reason of the influence and control which the late Maharajah had over Venkatarama Rao, he had, or thought he had, opportunities to bring pressure upon him to desist from the steps he was taking. What the parties apparently contem-plated was that the father of plaintiff should be paid back what he had paid by way of sale price on his giving back the land the moment a dispute was raised by Venkatarama Rao.
12. The learned Subordinate Judge came to this conclusion, not by reason of any evidence to that effect, but on the terms of the bond itself. The bond does show that the execution of a ratification kararnama was contemplated as soon as the minor attained majority; but the other conditions relating to disputes raised by the minor, loss to be sustained, and delivery back to the Maharajah of Venkatagiri, are not governed by the word 'soon,' which refers only to the ratification kararnama. We also think that if one reads the bond as a whole, a suit for possession and mesne profits against the plaintiff's father was contemplated. Moreover, there is no evidence at all that there was any dispute prior to the filing of the suit; and the only person who could contest the suit was the plaintiff; and he was defending the suit not only in his own interests but in the interests of the fourth defendant and of the defendants 1 to 3. The Maharajah of Venkatagiri had undoubted influence with his grandson, the minor; and it is significant that as long as the Maharajah lived and for sometime afterwards the minor took no steps to repudiate the sale. He presumably brought his suit in 1932, because the father of defendants 1 to 3 did not possess the influence over him that his father did. In his written statement filed in O. S. No. 3 of 1922, there was no contention that the delivery should have been before the suit or even before the decree. The third defendant, who was managing the family affairs, said in his written statement,
This defendant states that the document alleged to have been executed by his father and relied on by the first defendant provides that this defendant is liable to make good the consideration only on the first defendant (the present plaintiff) putting this defendant in possession of the properties.
13. He did not say that the present plaintiff was not thereafter at liberty to give possession. The plaintiff offered to put the father of defendants 1 to 3 in possession as soon as the Subordinate Judge had decided the suit against him, though he added that in the event of his being successful in the High Court he would demand possession back again : and he again offered to put the father of defendants 1 to 3 into possession when he knew what the decision of the Privy Council was to be. It is argued that any possession that the plaintiff could give after the decree was passed would not be 'effective' possession and that what was contemplated in the indemnity bond was 'effective' possession. The father of defendants 1 to 3 could not however in any event have had effective possession if there was any substance in any dispute that the minor might raise. Even the Maharajah could not have retained, the land if the ex-minor had had a right to demand it. That was particularly so when the dispute arose only with the filing of the suit. Any possession that the plaintiff may have given to the father of defendants 1 to 3 during the pendency of the suit in the trial Court would not have put defendants 1 to 3 into any more effective possession than if it had been given after the decree. If the father of defendants 1 to 3 were in any position to exercise any influence or control over the fourth defendant's son, he could have exercised it just as effectively whether he obtained possession during the suit or afterwards. We consider that although the plaintiff could have offered to return the property a little earlier than he did, he did comply with the terms of the indemnity bond as far as lay within his power and that he is therefore entitled to be reimbursed of the sum paid by him as consideration for the sale, which the Maharajah of Venkatagiri had promised to pay upon the fulfilling of the conditions in the indemnity bond.
14. We therefore allow the Memorandum of cross-objections with costs in both Courts and decree the suit against the defendant's 1 to 3 for the full suit amount.
15. Appeal No. 267 of 1941.--The learned Advocate-General has been at some pains to satisfy us that when an alienation made by a guardian on behalf of a minor is set aside, no liability is thereby cast on the guardian, in the absence of an express covenant by him to make good any loss that may result from a repudiation of the contract by the minor. The ground however on which the plaintiff seeks to make the fourth defendant liable is that he received the consideration and that under Section 65 of the Contract Act he is liable to refund any advantage that accrued to him as a result of the transaction which was subsequently declared void. There can be no doubt that the receipt of money is an advantage to the person who receives it; but the learned Advocate-General argues that as, according to the evidence of P.W. 1, he handed on the money to the Maharajah of Venkatagiri, he did not receive any advantage from the passing of the money. If the fourth defendant either utilised the money himself for the advantage of the minor or handed it on to the Maharajah of Venkatagiri, who utilised the money for the advantage of the minor he would not be liable, but if that was not the case, then fee fourth defendant could not be heard to say that he received no advantage because, almost immediately, he gave up that advantage by passing on the money to the Maharajah of Venkatagiri. There is no evidence that the fourth defendant gave the money to the Maharajah of Venkatagiri to be used for the benefit of the minor, and it is idle to speculate, in the absence of evidence, on the purpose for which he gave the money to the Maharajah, We do not know whether it was given to him with absolute discretion to use it as he pleased, or whether the money was paid conditionally or whether the money was merely kept with the Maharajah of Venkatagiri and could be recalled by the fourth defendant whenever he chose, or whether the fourth defendant paid over the money for his own purposes. There is some evidence of a vague nature that the minor was then living with the Maharajah of Venkatagiri; because the fourth defendant had married a second wife ; but that would not indicate that the Maharajah of Venkatagiri, whom one would expect to have been able and willing to maintain the boy, needed the large sum of Rs. 27,000 odd for some unknown but necessary purpose. We do not think that the fact that the indemnity bond was executed by the Maharajah of Venkatagiri is an indication that he received the money either for his own purposes or for some purpose beneficial to the minor. It is true that the finding in the case which went to the Privy Council that the minor did not receive any benefit is not binding between two defendants, but there is no reason at all to think on the evidence in this case that the money was so used. Even though the Maharajah may have been looking after the boy, there is no evidence that he became the guardian de facto of his property. In the absence of evidence to the contrary, we must presume that the fourth defendant continued to look after the boy's property.
16. The learned advocate for the fourth defendant argues that if this matter is to be decided on the question as to the disposal of the money, his client should be examined.
* * * * * *
17. [His Lordship proceeded to deal with the evidence and concluded.'
18. We are not therefore prepared to accede to the fourth defendant's request to examine himself now.
19. In the absence of a finding that the money was given to the Maharajah for the minor's benefit, we consider that the fourth defendant would be liable to refund the money that he had received from the plaintiff's father. It has been argued that the onus lay on the plaintiff to prove that the fourth defendant had received the benefit. That may be so; but the circumstance that the fourth defendant received the money and has not asserted at any time that he used it for the minor's benefit (he does not even now pretend that he did) would shift the onus on to him to prove that he received no advantage from the money that was given to him. The fact that he passed the money on to the Maharajah of Venkatagiri would not absolve him from liability. His contention that he was a mere name-lender and that the transaction of sale was really between the plaintiff's father and the late Maharajah of Venkatagiri has not been proved.
20. The second point taken by the fourth defendant is that in view of the fact that the plaintiff's father committed a fraud on the registration law, the plaintiff is not entitled to rely on his fraud and claim the money back again. In fact, as we have already stated, there was no fraud. All the parties acted in perfect good faith, not believing that what they did was wrong, either ethically or legally. The learned advocate for the fourth defendant quotes Venkataswami v. Veiikatasubbayya (1931) 63 M.L.J. 77 : I.L.R. Mad. 507 as a case in which fraud on the registration law was regarded in the same light as any other fraud. There, the learned Judges were considering a case in which the plaintiff was seeking to avoid his own contract by alleging that he and the defendant had committed a fraud on the registration law, and thereby seeking to recover possession from the defendant. The learned Judges held that he was not entitled to plead his own fraud as a ground for the recovery of the property. It is said that in this case, too, the0 plaintiff relies on his own fraud and is in fact, asking for the return of the purchase money from the fourth defendant on the ground that his purchase from that defendant is void on account of a fraud on the registration law. That however is not the ground of the plaintiff's claim. He at no time said that he was not entitled to possession because he had committed a fraud on the registration law. His case has always been the reverse. He has come to Court seeking the return of the purchase money, because as a result of the Privy Council decision he has been compelled to give back possession of the property to the fourth defendant's son.
21. Another ground of appeal urged on behalf of the fourth defendant is one of limitation. It is argued that the agreement was discovered to be void when the fourth defendant's son filed O.S. No. 3 of 1922 on the file of the Subordinate Judge of Bezwada. We cannot accept that contention. An allegation is not the same thing as a discovery. If the transaction was obviously void and all that was needed was that some person should draw the attention of the plaintiff to the plain fact which invalidated the contract, then it might be said that the discovery was made when the defect was pointed out; but such was certainly not the case here. It is true that the Subordinate Judge found that some of the contentions of the fourth defendant were justified, but that would not conclude the matter. The High Court held that the contract was valid. If the dispute had not been taken to the Privy Council and the judgment of the High Court had been final, could it have been said that there was a void contract, that the plaintiff had discovered it to be void on the 4th December, 1921, when the fourth defendant's son filed his suit? In view of the difference of opinion possible on the point raised in the suit, it cannot be said that the invalidity of the sale had been discovered until the highest Tribunal had adjudicated on the matter and given a finding that was final and conclusive between the parties.
22. In connection with this question of limitation, it has been suggested that the proper article of the Limitation Act to apply is Article 62 'for money payable by the defendant to the plaintiff for money received by the defendant for the plaintiff's use.' It is difficult to see how, at the time the money was given to the fourth defendant, it was paid to him for the plaintiff's use. The Article which has been generally applied to cases of this nature is Article 97:
For money paid upon an existing consideration which afterwards fails.
23. That is the proper article to apply with regard to voidable transactions is not disputed ; but it is urged that it cannot properly be applied to cases where the contract was void ab initio. On the face of it, there is nothing in the wording of Article 97 which would enable any distinction to be drawn between a void transaction and a voidable one. It is permissible to speak of consideration for a contract even when under law it is void. There are several sections of the Contract Act--of which Sections 24,30 and 36 maybe mentioned as examples--of agreements with consideration which for one reason or another are void- If there was consideration for the original contract, then that consideration continued as long as one party was in enjoyment of the money and the other of the land. It was only when the plaintiff was dispossessed in December, 1937, that consideration failed. The learned advocate for the fourth defendant relies on Hanuman Kamat v. Hanuman Mandur and Juscurn Boid v. Pirthichand Lal Chowdhury as indicating that in the case of void contracts consideration fails on the date of the contract. Those decisions of the Privy Council have always been interpreted by this Court as having reference to void contracts in which possession was not given. None of the decisions quoted before us has actually dealt with a void contract in which possession had been given. Hanuman Kamat v. Hanuman Mandur was explained in Narasingh Shivbaksh v. Pachu Rambakas I.L.R. (1913) 37 Bom. 538 and its application limited to void contracts in which possession was not given. The same may be said of Sankara Variar v. Ummer : (1922)43MLJ721 in which Subbarayan v. Rajqgopalan I.L.R.(1915) Mad. 887 a judgment of Seshagiri Ayyar, J., was referred to with approval. In this last case, Seshagiri Ayyar, J., classifies this type of case under three heads:
(a) Where from the inception the vendor had no title to convey and the vendee had not been put in possession of the property ; (4) where the sale is (only voidable on the objection of third parties and possession is taken under the voidable sale ; and (c) where though the title is known to be imperfect, the contract is in part carried out by giving possession of the properties.' It is under the third classification that the present case falls, and with regard to that class the learned Judge said, 'In the third class of cases also it is said that the cause of action will arise only on the disturbance of possession.' Although, therefore, there is no direct authority in support of the lower Court's finding that the suit may be filed within three years of dispossession, the reasoning in Subbaraya v. Rajagopala I.L.R.(1915) Mad. 887 Sankara Variar v. Ummer : (1922)43MLJ721 and Narasingh Shivbaksh v. Pachu Rambakas I.L.R.(1913) 37 Bom. 538 would apply equally to void transactions in which possession had passed as to voidable transactions. The decree of the Privy Council was on the 31s' January, 1936, and the plaintiff was dispossessed in December, 1937. As the suit was filed on the 30th January, 1939, it is within time.
24. It has been pointed out that the plaintiff asked for relief against the fourth defendant only in the alternative, in case he was not given relief against defendants 1 to 3. This point would have been irrelevant if the memorandum of cross-objections to A.S. No. 260 of 1941 had been dismissed. In view of our finding in A.S. No. 260 of 1941, the whole of the decree amount will be recoverable from defendants 1 to 3. If, therefore, the fourth defendant is made liable only in the alternative, nothing will now be due from him ; and the appeal has therefore to be allowed. As, however, the appellant has failed on all the principal points raised by him in his appeal and has succeeded only because of the plaintiff's success in A.S. No. 260 of 1941 the appellant must pay the costs of the respondent in this appeal.