G. Ramanujam, J.
1. The first defendant in O.S. No. 43 of 1966 on the file of the Sub-Court, Chidambaram, is the appellant. The first respondent herein, filed a suit for recovery of a sum of Rs. 12,502.25 with future interest and costs by passing a mortage decree in respect of the suit property or in the alternative by passing a money-decree against the defendants personally and a mortgage decree against the first defendant's 1/4th share in the suit property. The first respondent's case was that the first defendant as a power-of-attorney agent of his wife Kathija Bi executed the suit mortgage deed on 9th July, 1954, for Rs. 6,000, agreeing to pay it with interest at 9 per cent per annum, that no amount had in fact been paid towards the said mortgage, that Kathija Bi died in or about September, 1963, leaving her surviving husband, the first defendant, her daughters, defendants 2 to 5, her Son the 6th defendant and her mother the 7th defendant as heirs under Mohamedan Law, that the heirs had succeeded to the mortgaged property, that the 8th defendant is the subsequent purchaser of the mortgaged property that all the defendants are liable to pay the mortgage debt, that the first defendant is guilty of fraud in making a representation to the plaintiff that he had authority to borrow and to mortgage the suit property on behalf of his wife, and that therefore if the Court were to hold that the first defendant had no authority to borrow and mortgage the suit property on behalf of his wife, a personal decree for the entire amount against the first defendant and a mortgage decree as against him in respect of his 1/4th share in the suit property which he has inherited from his wife after her death may be passed. It is also contended by him that in any event he is entitled to receive the amount advanced under the mortgage deed from the first defendant under Sections 65 and 235 of the Contract Act along with interest at the contract rate.
2. The first defendant resisted the suit contending that the mortgage deed dated 9th July, 1954, for a sum of Rs. 6,000 was not supported by consideration to the extent of Rs. 3,600, that the general power-of-attorney from his wife Kathija Bi did not authorise him to borrow nor to execute any mortgage on her behalf, that therefore, the mortgage is not valid and binding on Kathija Bi and her heirs, that he did not make any representation that he had the power to borrow and execute the mortgage on behalf of Kathija Bi and as such he is not guilty of any fraud as alleged by the plaintiff, that the plaintiff was fully aware about the infirmity of the mortgage even at the time of the execution by him, and that in any event the suit is barred by time. He also contended that he being an agriculturist, is entitled to the benefits of Tamil Nadu Act IV of 1938 as he is not an income-tax assessee. He denied that the plaintiff is entitled to any interest on the amount claimed.
3. Defendants 2, 4 and 6 in their written statement adopted the defence put forward by the first defendant and in addition, they contended that the mortgage is not binding on the heirs of Kathija Bi. They also denied the truth, validity and passing of consideration in respect of the suit mortgage which according to them is a sham and nominal document.
4. The fifth defendant was represented by Court guardian and he had denied that the first defendant as the power-of-attorney agent of his wife had any power to borrow and to execute the mortgage.
5. The Court below, on a consideration of the evidence adduced on either side, held that the suit property belonged to the first defendant's wife Kathija Bi, she having purchased the same under the sale deed Exhibit A-6, dated 19th October, 1947, that, the general power-of-attorney executed by Kathija Bi in favour of her husband, the first defendant under Exhibit A-4, dated 24th October, 1951, did not empower him to borrow on her behalf on the security of the suit property, and as such the mortgage deed, Exhibit A-1, dated 9th July, 1954, cannot bind Kathija Bi and that therefore the plaintiff is not entitled to a mortgage decree in respect of the suit property. It further found that the mortgage was fully supported by consideration and that the defence case to that it is not supported by consideration to the extent of Rs. 3,600 cannot be accepted. The Court below then proceeded to consider whether the first defendant as a result of his misrepresentation that he had the requisite power to borrow and execute the mortgage on behalf of Kathija Bi having received the entire consideration under the mortgage deed is bound to make good the money he received from the plaintiff and held that the plaintiff is entitled to recover the entire amount advanced under the mortgage deed from the first defendant under Sections 65 and 235 of the Contract Act though it is not possible for the plaintiff to claim the said amount from the other heirs of Kathija Bi.
6. The Court below had also considered the question as to whether the first defendant's liability to pay back the sum advanced under the mortgage can be enforced as against his 1/4th share in the suit property which he inherited as an heir of Kathija Bi by invoking Section 43 of the Transfer of Property Act. On this question it held that the 1/4th share of the first defendant in the suit property can be proceeded against under Section 43 of the Transfer of Property Act as the first defendant had borrowed the money alleging that he had the power from his wife to borrow and execute the mortgage in respect of such borrowing which representation has since been found to be false and fraudulent.
7. On the claim of the first defendant that he is an agriculturist and as such he is entitled to the benefits of Act IV of 1938, the lower Court found that as the debt had been incurred on the security of house property, the first defendant will not be entitled to the benefits of the said Act as the debts incurred on the security of house property had been excluded from the purview of that Act. In this view the lower Court has passed a decree in favour of the plaintiff for the entire amount against the first defendant personally and also a preliminary mortgage decree for the said sum in respect of the first defendant's 1/4th share in the suit property.
8. In this appeal, the correctness of the decision of the lower Court has been questioned by the first defendant. The grounds raised by the appellant before this Court are substantially these: (1) The Court below having found that the general power under Exhibit A-4 dated 24th October, 1954, does not authorise the first defendant to execute the mortgage on behalf of the wife Kathija Bi it should have dismissed the suit as Section 43 of the Transfer of Property Act will not apply to the facts and circumstances of this case since the first defendant had at no time represented that he had any interest in the property and that his representation if any related to his authority to deal with the property as agent of Kathija Bi. (2) The lower Court having given a finding in paragraph 19 of its judgment that the suit mortgage is supported by consideration to the extent of Rs. 3,600 only erred in passing a decree for the entire amount mentioned in the mortgage deed. (3) The suit, if it is treated as a money suit, is barred by limitation, and (4) in any event the Court below should have upheld the first defendant's claim for the benefits under Act IV of 1938 and the outright rejection of the said claim on the basis that the debt has been incurred on the security of the house property cannot be sustained in view of the provisions of the said Act as amended from time to time.
9. The learned Counsel for the first respondent would, however, challenge the finding of the lower Court that the power under Exhibit A-4 did not authorise the first defendant to execute the mortgage Exhibit A-1 and urge that Exhibit A-4 clothes him with the power to execute the mortgage.
10 Hence we have to see in the first instance whether the power of attor ney Exhibit A-4 dated 24th October, 1951 authorised the first defendant to borrow and execute the mortgage in relation to the suit property as agent of Kathija Bi. A close scrutiny of Exhibit. A-4 makes it clear that it does not contain any specific power to borrow or execute any mortgage in regard to the suit property. The learned Counsel for the first respondent also concedes this. He would, however, contend that the following words:
And generally to act as my attorney in relation to premises and all other matters in which I may be interested or concerned and on my behalf to execute and do all the instruments, acts and things as fully and effectually in all respects as I could do if personally present and I hereby for myself and my heirs, executors, administrators ratify and confirm and agree to ratify and confirm whatever my said attorneys or any substitute or substitutes acting under them shall do or purport to do by virtue of these presents in Exhibit A-4 will indicate that the first defendant had been given the power to manage the property which includes the power to borrow and mortgage the property for the purpose of proper management of the property. The learned Counsel also relies on the following recitals in the document:to be my attorney for the purpose of generally managing my estate and affairs in the Indian Union.
I do not think that the said clauses can be construed as enabling the first defendant to borrow by mortgaging the property or otherwise. No doubt, the first defendant has been given the power to collect rents and other debts due to Kathija Bi and act generally in relation to the property on her behalf. But the power to collect the rents or debts due to Kathija Bi or even a power to manage the property cannot normally include a power to borrow or encumber the property unless there is a specific authorisation to that effect. As admittedly there is no clause under which the first defendant is authorised to borrow and encumber the property on behalf of Kathija Bi, the Court below is justified in holding that the first defendant is not authorised to execute the mortgage deed Exhibit A-1. Therefore, it has rightly been held by the Court below that the mortgage deed Exhibit A-1 is not binding on Kathija Bi.
11. As regards the appellant's second ground of attack as to the passing of consideration under the mortgage deed, it is seen from the Written statement of the first defendant that he admitted receipt of consideration to the extent of Rs. 2,400 and stated that the mortgage was not supported by consideration to the extent of the balance of Rs. 3,600. So the contest between the parties was as to the passing of the rest of the consideration of Rs. 3,600 and issue No. 4 relating to the question is as follows:
Is it not supported by consideration to the extent of Rs. 3,600.
This issue proceeds on the basis that the mortgage deed has been conceded to be supported by consideration to the extent of Rs. 2,400. It is in the light of this issue, the Court below has held in paragraph 19 of its judgment that the suit mortgage is supported by consideration to the extent of Rs. 3,600. In the circumstances, the learned Counsel for the appellant is not correct in his submission that the lower Court has found that the mortgage is supported by consideration to the extent of only Rs. 3,600. The finding given by the lower Court in paragraph 19 that the mortgage is supported by consideration to the extent of Rs. 3,600 read along with the written statement as well as the concerned issue will clearly mean that the mortgage is fully supported by consideration. This ground of attack has, there fore, to fall.
12. Coming to the first ground of attack based on the scope of Section 43 of the Transfer of Property Act, as already pointed out, the lower Court has held that as the first defendant had executed the mortgage by making misrepresentations that he is fully authorised to execute the mortgage, he is bound to make good those representations, now that he has succeeded to the 1/4th share in the suit property in view of the said section. The learned Counsel for the appellant would submit that Section 43 can be invoked only if representations had been made by the first defendant that he had any interest in the property sold and that no such representation having been made by him, the section is not applicable. It is also submitted by the learned Counsel that Section 43 cannot apply in cases of want of capacity and it can be applied only in cases of want of title. Section 43 of the Transfer of Property Act is as follows:
Where a person fraudulently or erroneously represents that he is authorised to transfer certain immovable property and professes to transfer such property for consideration, such transfer shall, at the option of the transferee, operate on any interest which the transferor may acquire in such property at any time during which the contract of transfer subsists. Nothing in this section shall impair the right of transferees in good faith for consideration without notice of the existence of the said option.
The said section embodies the common law doctrines of estoppel by deed and provides that if a man transfers property which does not belong to him and afterwards acquires title thereto it enables him either wholly or partially to perform his contract; the subsequently acquired estate feeds the estoppel which arises out of the transferor's covenants for title express or implied; and provides that the subsequent estate instantly passes to the transferee without any further act of the transferor, at the option of the transferee. The question is whether the said section is applicable to the facts of this case. The appellant here is found to have made representations that he had the requisite authority to mortgage the property on behalf of his wife, Kathija Bi and it is only on the basis of those representations the plaintiff had chosen to advance the sum Rs. 6,000 on the execution of the mortgage. It is true, the first defendant had not made any representation he had any title to the suit property. The fact that he executed the mortgage on behalf of his wife would clearly indicate that the first defendant did not make any representations that the property belongs to him.
13. The learned Counsel for the appellant contends that the mortgage having failed for want of capacity of the first defendant to execute the same, Section 43 cannot come into play and that it could be applied only if the mortgage had failed for want of title on the part of the first defendant's wife. In support of this contention, the learned Counsel for appellant refers to the following decisions. In Nurul Hossein v. Skeosahai Lal I.L.R.(1893) Cal. 1. the Judicial Committee has expressed the view that where a person did not represent that he was authorised to transfer any other interest than that of his principal and did not in fact profess to transfer any other interest, Section 43 of the Transfer of Property Act cannot be invoked with reference to such other interest to prevent him from claiming as the heir of the principal on whose behalf he has acted. In Jumma Masjid, Mercara v. Kodimanjandra Deviah : AIR1962SC847 . the scope of Section 43 of the Transfer of Property Act was considered. It was held:
Considering the scope of the section on its terms it clearly applies whenever a person transfers property to which he hag no title on a representation that he has a present and transferable interest therein, and acting on that representation, the transferee takes a transfer for consideration. When these conditions are satisfied, the section enacts that if the transferor subsequently acquires the property, the transferee becomes entitled to it, if the transfer has not meantime been thrown up or cancelled and is subsisting.
There is an exception in favour of transferees for consideration in good faith and without notice of the rights under the prior transfer. But apart from that, the section is absolute and unqualified in its operation. It applies to all transfers which fulfil the conditions prescribed therein, and it makes no difference in the application, whether the defect of title in the transferor arises by reason of his having no interest whatsoever in the property, or of his interest therein being that of an expectant heir
The Supreme Court also expressed the view that the plea of estoppel cannot be raised if the transfer has failed for want of capacity in the transferor as Section 43 deals with transfers which failed for want of title in the transferor and not for want of capacity in him at the time of the transfer. In Md. Naziruddin v. Govindarajulu Appah : AIR1971Mad44 . Sadasivam and Maharajan, JJ. were of the view that in order to invoke the principle of estoppel contained in Section 43 of the Transfer of Property Act, it is necessary to show that the transferor had made an erroneous or false representation in the same capacity as he had subsequently inherited the property.
14. Relying on the above decision, the learned Counsel for the appellant submits that as the representations of the first defendant admittedly did not relate to the title to the property and that whatever representations were made by the first defendant were only in his capacity as the power of attorney agent and not as an heir of Kathija Bi, Section 43 cannot be invoked to get at the property inherited by him as heir of Kathija Bi and not as her power-of-attorney agent.
15. I am not, however, inclined to accept the above contention of the learned Counsel. The observations of the Supreme Court in Jumma Masjid, Mercara v. Kodimanjandra Deviah : AIR1962SC847 . that Section 43 covers transfers which failed for want of title and not for want of capacity have been made with reference to the transfers made by minors representing that they had attained majority and, therefore, they are entitled to convey the property. There is considerable difference between a minor executing a sale deed on the false representation that he is a minor and a power-of-attorney agent executing a mortgage deed on behalf of his principal while he has no power to do so. In the case of a minor executing a transfer, the transfer fails for want of capacity and not for want of title- But in the case of a power-of-attorney agent executing a transfer when he had in fact no such power, the transfer fails for want of authority to transfer title. The mortgage deed Exhibit A-1 executed by the first defendant had failed in this case for want of authority in the first defendant to transfer title in the suit property. Section 43 has used the words 'where a person fraudulently or erroneously represents that he is authorised to transfer certain immovable property'. That means the representations should relate to the transferor's authority to transfer title in the property When a person had no power to transfer to another a particular property but erroneously represents that he had such power and purports to transfer title in that property to another, it will attract Section 43 if he subsequently acquires any interest in or title to what property. This view of mine finds support in Aisha Bibi v. Mahfuzunnissa Bibi I.L.R.(1924) All. 310. In that case a suit was filed to enforce a mortgage executed by a husband as a power of attorney agent of his wife who was the owner of the properties. The wife pleaded in that suit that the power of attorney having been taken from her without disclosing the recitals, the same was not binding on her. Since the plaintiff, failed to establish that the power of attorney was binding on the wife, the suit was dismissed. There was an appeal to the High Court and pending the said appeal the wife died and the husband as her heir succeeded to the extent of one quarter. At that stage the plaintiff invoiced the provisions of Section 43 of the Transfer of Property Act. The High Court held that the husband had been found to have actually received the competency to proceed against the property mortgaged to the extent which had come to him from his wife, in view of Section 43 even though the power of attorney failed for want of due authority from the wife, to transfer. The following passages in the judgment indicate the basis of the judgment:
We have already referred to the fact that the husband admitted the execution of this document, although his statement was that the property which was being mortgaged was not his property. That was a true statement of course at the time it was made. But we have it now that a one-fourth share in the mortgaged property has come to the husband by inheritance and we have, therefore, to deal with the question of his liability as things now stand. Mr. Iqbal Ahmad has, in this connection, relied upon the provisions of Section 43 of the Transfer of Property Act and we think that plea is well taken. It is at the option of the plaintiff under this section to seek a remedy against the property which has come into the possession of Aizaz Ali Khan, and, therefore, if there is a debt owing from Aizaz Ali Khan in respect of the mortgage deed in suit, that debt may be enforced against this one-fourth share which has now become his property.
Horwill, J. in Adhilakshmi Ammal v. Nallasivam Pillai (1944) 2 M.L.J. 109 : A.I.R. 1944 Mad. 530. had expressed that Section 43 applies when a party in possession of special knowledge makes an incorrect representation to the other party to the contract whereby the other party was induced to enter into the contract and the person making the representation gets the benefit of it.
16. It is true, in this case the plaintiff could have called for the power of attorney to verify the truth of the representation made by the first defendant that he had the power to borrow and encumber the property before entering into the transaction of mortgage; he did not however exercise proper care and caution before accepting the representations of the first defendant at their face value and acting upon such statement. But even if he had not been careful enough, the plaintiff is entitled to the benefits of Section 43. It is well established that it is no defence to the person estopped to plead that the transferee made no proper enquiry as Section 43 does not impose upon the transferee the duty of taking reasonable care. In Ganga Prasad v. Mt. Raghuvansa . it has been held that Section 43 does not impose on the transferee any duty to make proper enquiry regarding the extent of interest of the transferor in the property, transferred to him and hence the section can be applied even in cases where the transferee on a due and proper enquiry could have known the extent of interest of the transferor in the property transferred to him. Malrazh v. Bommodevara : AIR1946Mad107 . is also to the same effect.
17. On the facts of this case, I am definitely of the view that Section 43 will enable the mortgagor to proceed against the share in the mortgaged property inherited by the first defendant as the heir of Kathija Bi on whose behalf he had executed the mortgage. The first defendant's own case is that Exhibit A-4, the power of attorney does not confer any power on him to encumber the property but none the less he had executed the mortgage deed on her behalf on a misrepresentation that he had the requisite authority to transfer. Though the representation related to his authority to transfer interest in the property and not to his title to the property, the common law doctrine of equitable estoppel by deed embodied in Section 43 will apply. I have to, therefore, agree with the lower Court in this regard. Mulla in his Commentary on the Transfer of Property Act, 1932, 5th edition says at page 215:
When a person mortgages property which he has no right to mortgage and the property subsequently becomes vested in him, the mortgage will operate against him under the provisions of this section.
Regarding the third contention which relates to the question of limitation, it is true a suit to recover the mortgage money from the original mortgagor, Kathija Bi personally would be barred. But in this case a mortgage decree as against the first defendant's share in the suit property has been claimed under Section 43 of the Transfer of Property Act. Hence the suit cannot be said to be barred by limitation.
18. Even if the suit is treated as a money suit based on Section 65 and 235 of the Contract Act, it is in time. When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it in view of Section 65 of the Contract Act. In this case,' the amount advanced under the mortgage deed Ex-A-1 has admittedly been received by the first defendant and has been found to have bean utilised for his own purposes. Now that Exhibit A-1 is found to be void in that the first defendant had no authority to execute the same on behalf of Kathija Bi, the money received under the document by the first defendant has to be restored. Section 235 will also stand attracted in this case. That Section 235 provides that where a person untruly representing himself to be the authorised agent of another and thereby induces a third person to deal with him as such agent, he is liable to make good the representation to the other in respect of any loss or damage which he has incurred by so dealing. Admittedly the first defendant had no authority to encumber the property as the agent of his wife, but he has borrowed from the plaintiff on a misrepresentation that he had due authority to encumber the property. He has, therefore, to make good the amount which he got from the plaintiff on the strength of Exhibit A-1 as that is the loss or damage suffered by the plaintiff in respect of the said mortgage. The first defendant is thus liable to restore the benefit which he had under Exhibit A-1 to the plaintiff in view of Sections 65 and 235 of the Contract Act.
19. However, the question then is what is the period of limitation for filing a suit to enforce that liability. According to the learned Counsel for the respondent the provision that will apply is Article 55 of the Limitation Act of 1963 which prescribes a period of three years for recovery of compensation for breach of any contract, express or implied. But according to the learned Counsel for the appellant that provision has no application. I am of the view that the learned Counsel for the respondent is right in his submission that Article 55 of the Limitation Act of 1963 will apply. A division Bench of this Court in Vairavan v. Avicha I.L.R.(1915) Mad. 275 : 1915 25 M.L.J. 256 : 21 Ind.Cas. 65. had held that a suit against a person for breach of contract to sell the plaintiff certain goods of another on the implied representation that he had authority from his principal to sell them but in fact he had none, is one riot arising in tort or one independent of the contract but one arising out of and incident to a contract and is, therefore, governed by Article 114 of the Limitation Act of 1877 (corresponding to Section 55 of the Limitation Act of 1963). Since the mortgage Exhibit A-1 executed by the first defendant as power of attorney agent of his wife has become void for want of authority to transfer title it should be taken that there is a breach of contract to mortgage. Such a breach became known to the plaintiff only when Exhibit A-1 is found to have been executed by the first defendant without due authority. Though the limitation will normally begin from the date of breach on the facts of the case, Section 17 of the Limitation Act will come into play. According to that section where in the case of any suit a period of limitation is prescribed by the Act, a suit based on fraud of the defendant, or the knowledge of the right or title on which a suit is founded is concealed by the fraud of the defendant the period of limitation shall not begin to run until the plaintiff has discovered the fraud. Therefore, the limitation to enforce the liability of the first defendant under Section 65 and 235 of the Contract Act will commence from the date of discovery of the fraud or misrepresentation. A perusal of the plaint shows that the plaintiff proceeded on the basis that the mortgage deed is validly executed by the first defendant as power of attorney agent. It is only when the plaintiff became aware of the recitals in Exhibit A-4 when he got a copy of the power of attorney in the year 1966 he can be taken to have had knowledge about the fraud or misrepresentation made by the first defendant. I have to, therefore, reject the plea of limitation put forward by the appellant, and agree with the finding of the Court below that the suit having been filed on 8 th July, 1966 within three years from the date of knowledge of the fraud and misrepresentation, the suit is in time.
20. Further, though Exhibit A-1 has been executed by the first defendant without due authority from his wife, there is always a possibility of the document being ratified by Kathija Bi till she was alive. She died only in September, 1963. Therefore it is only after her death the plaintiff can take Exhibit A-1 as void. The suit having been filed on 8th July, 1966, before the expiry of three years from the date of death of Kathija Bi the suit should be taken to be in time.
21. Now coming to the 4th and last contention based on the applicability of the provisions of Madras Act IV of 1938, hereinafter referred to as the Act IV to the appellant, as already stated, the lower Court has held that since the debt has been secured by the mortgage of house property, the same has been excluded under Section 4 of the Act though the first defendant may own agricultural lands. The learned Counsel for the appellant contends firstly that the claim as against the appellant personally being of the nature of a simple money debt, he is entitled to claim the benefits of Act IV of 1938 as he admittedly owns agricultural lands. Secondly it is contended that even if the debt is treated as a debt secured on house property, the provisions of the Act as amended subsequent to the decision of the lower Court will take in even a debt secured by the mortgage of a house property and, therefore, as on date, the appellant cannot be denied the benefit of the provisions of the Act. Section 4 as originally enacted ran as follows:
Nothing in this Act shall affect debts and liabilities of an agriculturist falling under the following heads:
(d) Any debt contracted on the security of house property alone in a municipality cantonment or a panchayat which was a Union before the 26th August 1930.
As the house property was admittedly situated within the Port Novo Panchayat Union, the debt contracted on the security thereof stood excluded from the purview of the Act by the said section. It is in view of the above section the lower Court held that the first defendant is not entitled to the benefits of the Act. However, subsequent to the decision of the Court below, on 23rd October, 1970 Section 4 has been amended by Madras Act VIII of 1973 and the amended section does not exclude a debt contracted on the security of house property. In the absence of any exclusion of such a debt the debt as defined in Section 3 (iii) will include the same or it is wide enough to cover a debt contracted on the security of a house property as well. The amendment of Section 4 having come into force on 24th January, 1973, this Court has to take note of the amended provision while deciding the question as to whether the appellant is entitled to the benefits of the Act Though the decision of the lower Court on this question was right when it was rendered, the change brought about in the relevant statutory provision has resulted in the appellant getting the benefit of the Act though he was not so entitled to on the date of the bond. Though the first defendant owned agricultural lands, he was not entitled to the benefit of the Act because of Section 4 as it then stood. But now that a debt secured on a house property has not been excluded as a result of the amendment of Section 4, the appellant should be held to be entitled to the benefits of the Act. However, to what benefit the appellant will be entitled to under the provisions of the Act will have to be determined by the lower Court. The appeal is, therefore partly allowed and the matter is remitted to the lower Court for quantifying the amount payable by the appellant, after giving him the benefits under the provisions of the Act. There will be no order as to costs.