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Dhanikachala Pillai Vs. A. Raghava Reddiar and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai High Court
Decided On
Case NumberSecond Appeal No. 1092 of 1959
Judge
Reported inAIR1962Mad423
ActsTransfer of Property Act - Sections 55
AppellantDhanikachala Pillai
RespondentA. Raghava Reddiar and anr.
Cases ReferredIn Somu Achari v. Singara Achari
Excerpt:
.....- section 55 of transfer of property act - mere execution of promissory note does not extinguish vendor's lien - it has to be established that there was contract by which vendor agreed to give up his lien - as per section 55 lien available so long as amount of purchase money remains unpaid - same not extinguished by execution of promissory note or even by obtaining decree on promissory note. - - an appeal preferred by the plaintiff was also unsuccessful. 400 on two different dates and endorsed the payments on the promissory note and that when he wanted to make the third payment and discharge the promissory note the plaintiff was putting off producing the promissory note. it is unnecessary to canvass the correctness of that decision because the learned judges did not down any..........he filed a suit for recovery of a sum of rs. 1242/- with future interest and costs charged on the suit property. the suit was dismissed by the learned district munsif of vellore. an appeal preferred by the plaintiff was also unsuccessful. hence this second appeal.(2) the plaintiff sold the suit property to the first defendant and to one namadeva reddiar under ex. b-1 dated 7-6-1951 for rs. 3000. out of that sum rs. 2000 was paid in cash and for the balance of rs. 1000 defendants 1 and 2 executed a promissory note in favour of the plaintiff. according to the plaintiff, the suit promissory note was lost and he brought the suit against the defendants an the original cause of action and prayed for a charge decree against the property. the first defendant contended that he paid two amounts.....
Judgment:

(1)The plaintiff is the appellant. He filed a suit for recovery of a sum of Rs. 1242/- with future interest and costs charged on the suit property. The suit was dismissed by the learned District Munsif of Vellore. An appeal preferred by the plaintiff was also unsuccessful. Hence this second appeal.

(2) The plaintiff sold the suit property to the first defendant and to one Namadeva Reddiar under Ex. B-1 dated 7-6-1951 for Rs. 3000. Out of that sum Rs. 2000 was paid in cash and for the balance of Rs. 1000 defendants 1 and 2 executed a promissory note in favour of the plaintiff. According to the plaintiff, the suit promissory note was lost and he brought the suit against the defendants an the original cause of action and prayed for a charge decree against the property. The first defendant contended that he paid two amounts of Rs. 500/- and Rs. 400 on two different dates and endorsed the payments on the promissory note and that when he wanted to make the third payment and discharge the promissory note the plaintiff was putting off producing the promissory note. The first defendant also pleaded that the moment the plaintiff received the promissory note the original transaction was closed and a fresh contract arose and that the first and second defendants were only sureties for the payment of Rs. 1000 and that the plaintiff could not enforce the vendor's lien. The defendants also claimed that they were agriculturists and that the suit fled was premature.

When the suit was tried on the first occasion, the trial Court held that the promissory note had been lost, that the plea of discharge was not true, that the defendants were agriculturists, that the suit was filed on the vendor's lien but the vendor's lien in favour of the plaintiff did not exist and therefore dismissed the suit. On appeal the parties agreed for setting aside the decree of the lower Court and for remanding the suit for fresh disposal on three issues only, viz., (1) whether the plaintiff was entitled to sue on the debt in question, (2) whether by the execution of the note, the lien was not available in law, as having been abandoned, and (3) whether in this suit based on the debt and not on the note, the plaintiff was entitled to relief against the second defendant. By consent the findings on other issues were to stand, and he binding on the parties in the trial Court. On remand the trial Court found that the promissory note had been executed not merely as a collateral security but in full discharge of the balance of the sale consideration for the suit sale and held that the plaintiff was not entitled to sue an the debt in question as on account of the execution of the suit promissory note, the vendor's lien was not available to him in law.

(3) On appeal the lower appellate Court considered four questions (1) whether the suit is premature; (2) whether the suit as framed is maintainable, and (3) whether the plaintiff entitled to sue on the original cause of action; and (4) whether the plaintiff is entitled to any relief. The lower appellate Court found that the suit was premature and not maintainable. On the question whether the plaintiff was entitled to Sue on the original cause of action the lower appellate Court found that the note was not a collateral security but was meant to be an independent contract and therefore the plaintiff ought to have sued on the lost. Promissory note and could not fall back upon the vendor's lien.

(4) The learned counsel for the appellant contended that at the time when the suit was remanded by the lower appellate Court the issues whether the suit was premature and whether it was maintainable were not remanded to the trial Court. On the other hand, the parties accepted that the finding of the trial Court would be binding on them. According to the learned counsel, the defendants are not entitled to agitate that the suit was premature or that, it was not maintainable. I find the order of remand was confined only to three issues and questions whether the suit was premature or incompetent were not open as between the parties and therefore the defendants cannot be heard to question that the suit was, premature Or incompetent.

(5) Tile learned counsel for the appellant contended that the fact that a promissory note was executed towards consideration will not have the effect of taking away the vendor's lion and that though the promissory note was executed the plaintiff was entitled to base his claim on the vendor's lien. Section 55 of the Transfer of Property Act provides that in the absence of a contract to the contrary, the seller is entitled where the ownership of the property has passed to the buyer before payment of the whole of the purchase money, to a charge upon the property in the hands of the buyer for the amount of the purchase money or any part thereof remaining unpaid, and for interest on such amount. This section provides that the seller is entitled to the payment of the purchase money and to a charge upon the property in the hands Of the buyer for the amount of the purchase money remaining unpaid. The statutory vendor's statutory vendor's lien is available unless there is a contract to the contrary. The vendor's charge is not lost by a mere personal contract to defer payment of a portion of the purchase money or to take the purchase money by installments. It is not lost by any contract, covenant or agreement with respect to the purchase money which is not inconsistent with the continuance of the charge. The mere taking of a promissory note from the purchaser for the purchase money does not extinguish the lien.

In Kampiah Pillai v. T. R. Hari Rao, 21 MLJ 849, a Bench of this High Court held that the fact that a purchaser gives a promissory note would ipse facto deprive the vendor of his lien and the question is really one of intention whether the vendor intended to forego his lien or not. In the case before their Lordships the plaintiff had the vendor's lien in the property in the hands of the second defendant, the purchaser The plaintiff accepted a promissory note for a portion of the purchase money from the first defendant. It was contended that as the plaintiff accepted a promissory note from the first defendant it should he held that the plaintiff had lost his vendor's lien. This proposition was not accepted by the Bench.

(6) In Vellayappa Chettiar v. Narayanan Chettiar, 1913 MWN 826 another Bench of S High Court held that where a vendor, in consideration of the price due to him under a deed of sale, accepts a hundi or promissory note given to him some days before the sale it cannot be said that he took them as security for the unpaid purchase money and where the acceptance of the 'hundi' or promissory note was made before the date of sale it cannot be said that he took them as security for the debt, and gave up his right to lien for unpaid purchase money.

(7) In Krishnaswami Mudaliar v. Vijayaraghava pillai, : AIR1939Mad590 , this question was dealt with elaborately by Venkataramana Rao, J. The learned Judge after dealing with the case law on the subject referred to the decision in Krishnaswami v. Subramania Ganapatigal, 35 M LJ 304: AIR 1918 Mad 82. The decision in 35 MLJ 304: AIR 1918 Mad 82 was relied on by Mr. N. R. Raghavachariar the learned counsel for the respondents. Dealing with that case Venkataramana Rao, J., has observed as follows:

'It is unnecessary to canvass the correctness of that decision because the learned judges did not down any principle of law which is in conflict with the well accepted principles governing this branch of law because they themselves recognized that where a vendor takes a promissory note from a vendee, it does not necessarily follow that he has given up the statutory lien aria even when a promissory note is given by a third person that fact raises no presumption that the lien has been abandoned.'

In Somu Achari v. Singara Achari : AIR1945Mad407 , Somayya, J., has held that neither the execution of the promissory note nor the filing of a suit thereon and obtaining of a decree, could put an end to that charge.

(8) The above decisions clearly establish that the mere execution of the promissory note will not extinguish the vendor's lien. It has to he established that There was contract by which the vendor agreed to give up his lien. According to section 55 of the Transfer of Property Act the lien is available so long as the amount of purchase money remains unpaid. It is not extinguished by the execution of a promissory note or even by obtaining a decree on the promissory note. Mr. N. R. Raghavachariar fairly conceded that he could. not question the correctness of the decisions quoted above that the execution of a promissory note by itself would not extinguish the vendor's lien. But he contended that the sale was in favour of the first defendant and Namadev. For the balance of the purchase money remaining unpaid the promissory note was not executed by the vendees, first defendant and Namadev but by the first defendant and a stranger who is now impleaded in the suit as the 2nd defendant. The sale deed also recites that the entire consideration was paid.

The learned counsel also relied on an admission by the plaintiff in his evidence in the following words:

'After the sale and before this suit I knew full well the 2nd defendant is not one of my vendees. It is no doubt true that by the execution of the bond for Rs. 1000/- the entire consideration for the sale has been paid. In future it was for the bond to be sued upon as a negotiable instrument.'

Mr. N. R. Raghavachariar contended that the fact that, though the sale deed was in favour of the first defendant and Namadev, the first defendant and a stranger to the sale deed have executed the promissory note extinguishes the vendor's lien. This circumstance, the learned counsel con-tended along with the admission of the plaintiff that the entire consideration has been paid and that he could sue on the bond clearly establishes that the plaintiff accepted to take the promissory note is a substitute for the vendor's lien and this amounts to a contract to the contrary as contemplated under section 55 of the Transfer of Property Act. I am unable to accept this contention. The fact that a third party has executed a promissory note will not have the effect of extinguishing tile vendor's lien has been laid down In 211 MLJ 849. The admission of the plaintiff relied on by the counsel can only be taken to mean that the plaintiff was entitled to sue on the bond as well and this also will not have the effect of extinguishing the vendor's lien.

(9) The learned counsel contended that if only the plaintiff was enforcing his vendor's lien he would have filed a suit against the first defendant and Namadev, and that the fact he had omitted Namadev proves that the suit was only on a promissory note. I perused the plaint and it is very clear that the suit is based on the vendor's lien and there is a prayer for a charge on the suit property. Mr. N. R. Raghavachariar also contended that as the sale deed was in favour of the first defendant and Namadev, Narnadev is a necessary party and the suit should he dismissed for not impleading the necessary party. it is true that Namadev is a necessary party and ought to have been impleaded in the suit But this objection was not taken in any of the Courts below and I am not inclined to allow this question to be raised at this stage to enable the first defendant to evade liability of payment of money which the first defendant is bound to pay. In the circumstances I refuse permission to the learned counsel to raise this question at this stage. The 2nd defendant not being a party to the promissory note he is not liable in a suit on the vendor's lien. So a decree can be passed against the first defendant alone. As the property in the hands of the buyer is subject to a charge for the purchase money, a charge will be created for the decree amount on the suit property. In the result the second appeal is allowed with costs throughout. No leave.

(10) Appeal allowed.


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