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M.S. Padmanabha Iyer Vs. Devadass Sylus and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai High Court
Decided On
Reported in(1970)2MLJ520
AppellantM.S. Padmanabha Iyer
RespondentDevadass Sylus and anr.
Cases ReferredIn Dip Harain Singh v. Nageshwar Prasad
Excerpt:
- .....the principles laid down in the transfer of property act in respect of the covenants for the sale of property are applicable to the facts of the present case inasmuch as the transfer of property act was not in force on 4th may, 1949, when exhibit a-1 came into being. except the district of kanyakumari, the other parts of the state had the benefit of the transfer of property act on the date of exhibit a-1. in other words, mr. t.r. mani, the learned counsel for the appellant stated that the law as applied in travancore in respect of immovable property was the rule of caveat emptor and therefore there was no warranty of title. the learned counsel further stated that the transfer of property act was extended to this part of the country after 1956 and therefore the transfer of property.....
Judgment:

P.R. Gokulakrishnan, J.

1. The first defendant is the appellant in this Court. The suit was for the recovery of Rs. 2,318-5 nP.due from the first defendant. The case of the plaintiff was that the first defendant represented to the grandfather of the plaintiff that he was entitled to suit item 1 and the othi right in item 2 to the extent of Rs. 784-94 nP. on the foot of a Court sale in his favour in O.S. No. 902 of 1105 on the file of the District Munsif of Nagercoil and he executed a sale deed of the properties in favour of the grandfather of the plaintiff and the second defendant on 29th September, 1124 corresponding to 4th May, 1949 for Rs. 2,000. He received Rs. 2,000 and gave possession of the two items to Devadasan, the grandfather of the plaintiff and the second defendant. Subsequently O.S. No. 839 of 1951 was filed in District Munsif's Court, Nagercoil, against Devadasan by one Subbiah Mooppanar who claimed title to the two items independently of the judgment-debtor in O.S. No. 902 of 1105. The suit was decreed in favour of Subbian Mooppanar and the appeal preferred by Devadasan against the decree in A.S. No. 866 of 1957 was dismissed. During the pendency of the suit, Devadasan assigned the othi right in item 2 to one Jayalakshmi Ammal and handed over possession. The plaintiff got a gift from Devadasan on 25th February, 1955 of item 1. The decree-holder in A.S. No. 866 of 1957 got delivery of items 1 and 2 on 1st June, 1960, from the present plaintiff and the second defendant added as the legal representatives of Devadasan who had died on 4th December, 1959. After he got delivery, the purchaser assigned the mortgage right in item 2 in favour of Jayalakshmi Ammal and she filed O.S. No. 520 of 1950 against the present plaintiff and the second defendant as the legal representatives of Devadasan for the recovery of Rs. 794-94 nP. on the ground that she was ousted from possession by virtue of O. S. No. 839 of 1951 and that he was entitled to compensation. The suit was decreed with costs against the assets of Devadasan on 3rd January, 1962, and execution proceedings were being taken against the separate properties of the plaintiff. The consideration for the sale deed in favour of Devadasan executed by the first defendant had completely failed and the first defendant was liable to compensate Devadasan for the failure of consideration and for loss and damage caused on account of the breach of contract and warranty of title with six per cent interest from 1st June, 1960.

2. The first defendant contended that there was no representation in respect of the title made by him to Devadasan and that at that time the rule of caveat emptor applied. The plaintiff was put to proof of the assignment of the othi in favour of Jayalakshmi Ammal, gift of item 1 to the plaintiff and delivery of the property from the plaintiff. There was no failure of consideration and there was no cause of action against the first defendant. There was no breach of contract or warranty of title. He was not a party to O.S. No. 839 of 1951. If full evidence had been given in that suit, it would not have been decided against Devadasan. The gift in favour of the plaintiff was a sham one and there was no acceptance of the same. It was an alienation in fraud of creditors. The rights of the plaintiffs, if any, had been lost by adverse possession even before the delivery in O.S. No. 902 of 1105. The plaintiff, being transferee of only one of the items, could not claim the whole amount as damages. Unless the decree amount in O.S. No. 530 of 1960 had been paid, no claim for damages could be preferred.

3. The second defendant contended that the plaintiff did not get the sole right over item 1 and he was not entitled to a decree for the further amount. The second defendant was entitled to half the plaint claim.

4. The learned District Munsif found that the consideration for the sale deed of 22nd September, 1924, had wholly failed but that there was no breach of contract or warranty of title. He found that the plaintiff would not be entitled to the entire amount claimed but only Rs. 1,600 and the second defendant would be entitled to Rs. 400.

5. In the appeal, the lower appellate Court took up for consideration as to whether the legal representatives of Devadasan are entitled to claim the purchase money paid under Exhibit A-1. Finally, the lower appellate Court found that the plaintiff is entitled to Rs. 1,200 in respect of item 1, and the plaintiff and the second defendant are entitled to Rs. 800 in respect of item 2 in Exhibit A-1. Thus, the appeal preferred first by the defendant was dismissed and the appeal preferred by the plaintiff as against the disallowance of Rs. 400 in the decree of the trial Court was allowed.

6. Against the judgment and decree of the lower appellate Court, the first defendant has come forward with the present second appeal.

7. The question to be decided in this second appeal is as to whether the principles laid down in the Transfer of Property Act in respect of the covenants for the sale of property are applicable to the facts of the present case inasmuch as the Transfer of Property Act was not in force on 4th May, 1949, when Exhibit A-1 came into being. Except the district of Kanyakumari, the other parts of the State had the benefit of the Transfer of Property Act on the date of Exhibit A-1. In other words, Mr. T.R. Mani, the learned Counsel for the appellant stated that the law as applied in Travancore in respect of immovable property was the rule of caveat emptor and therefore there was no warranty of title. The learned Counsel further stated that the Transfer of Property Act was extended to this part of the country after 1956 and therefore the Transfer of Property Act would not apply to the facts of this case.

8. In this connection, Mr. T.R. Mani, learned Counsel for the appellant, cited the decision in Narayan Krishnan v. Kunjan Krishnan Vol. 1 T.L.R. 1. The facts in the above decision are more or less similar to the facts of the present case. In the above decision, the plaintiff was an auction-purchaser in execution of a decree obtained by the defendant against a third party. After purchase, a fourth party sued the plaintiff alleging that the property was his, and not that of the judgment-debtor and got a decree. The plaintiff then sued the defendant to recover the purchase money. The defendant, among other things contended that there was no fraud on his part and that the plaintiff was not entitled to the purchase money as there was no agreement on defendant's part to refund the purchase money if the title failed. The Munsif gave judgment in favour of the plaintiff, but the Zilla Court on appeal reversed the same. On special appeal to the High Court, the plaintiff argued that when the title given by the vendor fails, the purchaser is in natural justice, entitled to the money from the person who brings about the sale. The High Court held that in the absence of a covenant to the effect that the vendor will refund to the purchaser the money, if that title proves defective, the purchaser cannot maintain a suit against the vendor. In Sirkar v. Narayanan Krishnan 1 T.L.R. 68, single Judge of the Travancore High Court has held that:

A vendee of immovable property, of which he has been dispossessed by a third party cannot sue his vendor for the purchase money, in the absence of a covenant for title, unless fraud or misrepresentation be brought home to the vendor.

9. In Achuthan v. Sosa 2 T.L.J. 151, a Full Bench of the Travancore High Court has held that:

In the absence of a covenant for title, the vendees must be taken to have contracted for, and accepted, only such title as the vendor had in the properties sold and nothing more, and that the vendees have no valid defence to the present suit.

10. In the above Full Bench decision, the Travancore High Court has elaborately discussed all the case laws including the decision in Gajapathi v. Alagia (1886) I.L.R. 9 Mad. 89, and has come to the conclusion that:

(1) That before the enactment of the Conveyancing Act of 1881 in England and the Transfer of Property Act in British India, the rule of caveat emptor applied in regard to sale, where the vendor had acted bona fide and has not been guilty of fraud or misrepresentation and has given no covenant for title in the sale deed.

(2) That the implied covenants imported into sales by the Transfer of Property Act, 1882, Section 55, Clause (2) paragraph (1) seem to be absolute and go beyond the implied covenants under the English enactment.

(3) That so far as this State is concerned the weight of authority is in favour of the position that the rule of caveat emptor is applicable to sales, the law being the same as that which existed in England and India before the introduction of the statutory provisions above referred to; and

(4) That consequently no absolute or qualified covenant for title can be ipso facto imported into or implied in a sale deed executed in this State.

11. After propounding the above said four principles, the Chief Justice, in that Full Bench decision, held that:

Applying the above conclusions to the present case, it seems to me clear that under Exhibit-1 sale-deed, the vendees must be taken to have contracted for and did accept only such title as the vendor had in the properties sold and nothing more and that in the absence of a covenant for title in Exhibit-1, the defendants-vendees have no valid defence to the present suit.

12. Agreeing with the conclusions arrived at by the Chief Justice, Sesha Aiyar, J., concluded his opinion by stating that:

I have stated enough to show that the rule embodied in Section 55, Clause (ii) of the Transfer of Property Act has not been recorded as a rule of universal equity in other jurisdictions; and in the view, therefore entertained by this Court, that in the absence of express warranty, no covenant for title can be implied in sales, and that where there is no express warranty of title, and in the absence of fraud or misrepresentation, the purchaser in the case of executed sales cannot be relieved against the consequences of the sale, cannot be pronounced to be un-sound or inequitable. The appellant has not, as pointed out in the order of reference, rested his defence on fraud or misrepresentation and if there is no implied warranty in his favour, his appeal must fail. For these reasons, I agree with the learned Chief Justice in dismissing this second appeal with costs.

13. The next case cited by Mr. T.R. Mani is Chidambarathanu Kolappan v. Kuttalam Pillai Arumukhom Pillai 14 T.L.J. 432. This is also a Full Bench decision of the Travancore High Court. In the above said case, following the decision in Achuthan v. Sosa 2 T.L.J. 151, it has been held that the Court is not able to find any limitation that the rule applies only when the consideration has failed in part only. Another case cited by Mr. T.R. Mani, is Gourikutty Amma v. Aiyappan Pillai 22 T.L.J. 299, and in this decision it has been held that ' under the law in this State the vendee cannot seek relief on the basis of any implied covenant for title and in the absence of express covenant, he must be presumed to have intended to take what title the vendor had and nothing more.' The next case cited by Mr. T.R. Mani, learned Counsel for the appellant is Velu Asari v. Chathaiyan Asari 27 T.L.J. 561, wherein it has been held that:.so far as this State was concerned the weight of authority was in favour of the position that the rules of caveat emptor was applicable to sales, the law being the same as that which existed in England before the Conveyancing Act of 1881 and in India before the Transfer of Property Act, 1882 and that consequently no absolute or qualified covenant for title could be ipso facto imported into or implied in sale deeds executed in this State.

14. The next case cited by Mr. T.R. Mani, learned Counsel for the appellant, is Avira v. Ramakrishna Pillai (1945) T.L.R. 615, wherein it has been held that:

The principle of caveat emptor applies to sales in Travancore and no absolute or qualified covenant for title can be imported in a sale deed. Unless the error is due to a fraudulent misrepresentation by the vendor, or amounts to a breach of warranty contained in the sale deed the vendee cannot claim any compensation.

15. The decision in Ananthanarayana Iyer v. Subramania Nadar (1946) T.L.R. 861, is also to the same effect as stated above. In Ouseph Varkkey v. Ouseph Chacko A.I.R. 1953 T.C. 236, though the Court has accepted that the principle of caveat emptor only applies, it granted the refund of the sale price for item No. 2 in that case on the ground that there was fraudulent misrepresentation by the vendor and as such the principle of caveat emptor cannot apply.

16. The next case cited by Mr. T.R. Mani, learned Counsel for the appellant, is Md. Abdullah v. N. Krishnan : AIR1958Ker322 . In this Bench decision, in has been stated that:

As far as Travancore was concerned the rule of caveat emptor was applicable to sales of immovable property when the vendor had acted bona fide and had not been guilty of fraud or misrepresentation and had given no covenant for title in the sale deed. The law was the same as that which existed before the enactment of the Conveyancing Act of 1881 in England and of the Transfer of Property Act in British India. Consequently no absolute or qualified covenant for title could be ipso facto imported into or implied in a sale deed executed in the State. In the absence therefore of a covenant for title, it was only when the seller knew that the representation that he made in the sale deed was false and on the strength of that representation he received consideration for the document that the principle of caveat emptor did not apply.

17. In the above decision, the learned Judges of the Kerala High Court have held on the facts of the particular case that:

The representation as to title made by the vendors, was made recklessly or with gross negligence and they could not escape the charge of fraudulent misrepresentation and the vendees would be entitled to claim consequential remedy by way of damages.

18. Then Mr. T.R. Mani, learned Counsel for the appellant submitted that in the present case, only old law will prevail and at that time the Transfer of Property Act was not extended to this part of the State wherein the case arose. I do not think, it is necessary to go into that question since there is no dispute as regards the fact only old law will apply to the present case and not the Transfer of Property Act. Hence it is not necessary to quote those decisions and the States Re-organisation Act cited by Mr. T.R. Mani for the said proposition. It is sufficient for the purpose of the present case to quote Section 2 and Sub-section (c) of the Transfer of Property Act. The section reads as follows:

Section 2.--In the territories to which the Act extends for the time being the enactments specified in the schedule hereto annexed shall be repealed to the extent therein mentioned. But nothing herein contained shall be deemed to affect:

(a) ...

(b) ...

(c) any right or liability arising out of a legal relation constituted before this Act comes into force or any relief in respect of any such liability.

19. Mr. Balasubramanian, learned Counsel for the respondent, was not able to put forth any case against the decisions cited by Mr. T.R. Mani, learned Counsel for the appellant. In fact Mr. Balasubramanian has to accept that the law that prevailed at the time when the transaction involved in the suit took place was that enunciated in the decisions cited by Mr. T.R. Mani. But Mr. Balasubramanian argued that in the absence of positive law, we have to apply the principles of good conscience and equity and that strict doctrine of English Law relating to the real property should not be applied. For the said purposes, Mr. Balasubramanian relies upon the decisions in Gajapathi v. Alagia I.L.R.(1886) Mad. 89, Dorab Ally Khan v. Abdool Azeez (1877-78) 5 I.A. 116, Krishna Shelly v. Gilbert Pinto I.L.R.(1919) Mad. 654 : 36 M.L.J. 367, and Nandeo Lokman Lodhi v. Narmadabai : [1953]4SCR1009 .

20. As far as the decision in Gajapathi v. Alagia I.L.R 9 Mad. 89, is concerned, a Bench of the Travancore High Court has discussed the same elaborately in Achuthan v. Sosa 2 T.L.J. 151. After elaborately discussing the said case, the Travancore High Court has come to the conclusion that as far as the transaction in that part of the State is concerned, the principle of caveat emptor will only apply. Further in Gajapathi v. Alagia I.L.R 9 Mad. 89, it has been held that the transaction was fraudulent one and as such, the conclusion was different. As far as the decision in Dorab Ally Khan v. Abdool Azeez (1877-78) 5 I.A. 116. is concerned, it is a case where the sheriff sold the property outside his jurisdiction and hence there was a total failure of consideration. In that case it was held that the purchase money has to be returned to the purchaser of the property. Hence the facts in the present case. As far as the decision in Krishna Shetty v. Gilbert Pinto I.L.R.(1919) Mad. 654 : 36 M.L.J. 367, is concerned, I do not think that the same will apply to the facts of the present case.

21. In Kanshi Ram v. Jaimal Singh 75 I.C. 563 : A.I.R. 1923 Lah. 590, the Lahore High Court has applied the principles of cavear emptor and held on the facts of that particular case that there was total failure of consideration and that the principles evolved in Section 55 (2) of the Transfer of Property Act alone will be applicable. As far as the present case is concerned, I do not think that there is total failure of consideration and hence the said decisions cited by Mr. Balasubramanian, learned Counsel for the respondents cannot apply to the facts of the present case. In Exhibit A-1, sale deed, executed by Padmanabha Iyer in favour of P. Devadasan Nadar, I do not find any covenant indemnifying the purchaser nor any misrepresentation or fraud in executing the sale deed. Whatever right, the vendor got through the Court sale, the vendor has conveyed it to the purchaser. The purchaser, as a matter of fact, took all that the vendor purchased in the Court auction and hence it cannot be said that there was failure of consideration in the present case. Nor can we say that there was any misrepresentation or fraud on the part of the vendor under Exhibit A-1. The catena of decisions cited by Mr. T.R. Mani, learned Counsel for the appellant, accepts that in that part of the State, the principle of caveat emptor was in vogue. Once that position is accepted and when it is found that the principle of caveat emptor was in vogue for generations together in that part of the State, it is futile on the part of the learned Counsel for the respondents to invoke the principles of equity and good conscience for arriving at a different conclusion than what was in vogue in that part of the State.

22. To counteract this argument, Mr. T.R. Mani, the learned Counsel for the appellant, cited the decision in Dula Singh v. Bala Singh A.I.R. 1925 Lah. 92. The facts of the case in the above decision are as follows. One D purchased a house from one B who had purchased the same at an involuntary sale. Subsequently one K got a decree that half of the house belonged to K. D thus having been deprived of that half sued B for the recovery of the price which he had already paid to B. The Lahore High Court held that:

As T.P. Act is not in force in the Punjab, its provisions in deciding points of equity are applied by the Punjab Courts as useful guides but there is no obligation on the Courts to so use the Act as if every particular detail of it was the law of the province. The question whether the broad principle contained in Section 55 (2) is to be applied to a particular case depends upon the facts of that case. D knew exactly what he was buying, i.e., property purchased by B at a forced sale. He must have known that B was conveying merely what he had acquired at the auction and that he D was to stand in the shoes of B as purchaser in an involuntary sale. Therefore equity did not demand that the Court should presume B to have covenanted for title.

23. The facts in the present case are the same as the facts reported in Dula Singh v. Bala Singh A.I.R. 1925 Lah. 92 Hence it can be safely held that as far as the present case is concerned, the principle of caveat emptor alone will apply.

24. I am not convinced with the argument of Mr. Balasubrarnanian, the learned Counsel for the respondents, to the effect that the sale includes a contract and hence it is to be construed that the agreement for sale is subsisting even after the completion of conveyance. On that basis, Mr. Balasubramanian argues that there is a failure of consideration inasmuch as the agreement to sell is still subsisting and there is failure to convey the property. It is clear from the facts of the present case that it has passed the stage of the agreement to sell and the complete conveyance has been made in respect of the property. I have already discussed as to the nature of the sale deed Exhibit A-1, and hence it cannot be construed that the vendor in Exhibit A-1 has covenanted to indemnify the purchaser from any loss. It is pure and simple that at the time when the purchaser got the property under Exhibit A-1, he got it with open eyes and the principle of caveat emptor alone was applicable at that time. In Dip Harain Singh v. Nageshwar Prasad : AIR1930All1 , the Full Bench of the Allahabad High Court has definitely stated that

there is a clear distinction between a contract which still remains to be performed and specific performance of which may be sought, and a conveyance by which title to property has actually passed.

25. Finally, Mr. Balasubramanian argues in respect of the assignment of the usufructuary mortgage and states that this sale stands on a different footing. He states that it is an assignment of a debt. From the discussions I have stated above, I do not think that it is different from the other part of the case wherein it has been clearly stated that only the principles of caveat emptor apply.

26. After considering the facts of the present case and also the principles enunciated in the decisions cited by the learned Counsel for the appellant, I am fully convinced that it is a clear case wherein the principle of caveat emptor has to be applied. In these circumstances, the present second appeal is allowed and the suit filed by the plaintiff is dismissed. In the circumstances of the case there will be no order as to costs. No leave.


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