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Misrilal Raidani Vs. Netaichand Nandi - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtKolkata
Decided On
Reported inAIR1934Cal372,150Ind.Cas.389
AppellantMisrilal Raidani
RespondentNetaichand Nandi
Excerpt:
- .....it was stated in the agreement that, subject to the approval of title to the premises by the purchaser's solicitors, messrs. g.c. chunder and co., these premises were to be purchased by netaichand nandi provided it was shown that the fee simple in possession was free from encumbrances, for a sum of rs. 73,000. on the date of the agreement a sum of rs. 1,001 was paid by way of earnest and in part payment of the purchase money to the vendor and the vendor agreed to deliver or cause to be delivered all the title-deeds of the said premises to the purchaser's solicitors within seven days from the date of the agreement and the sale and purchase was to be completed within six weeks from the date of delivery of the title-deeds. the vendor agreed that sufficient time before the date fixed.....
Judgment:

C.C. Ghose, Ag. C.J.

1. This is an appeal against a decision of Roy, J., in the circumstances stated below: On 21st April 1931 the present appellant Misrilal Raidani entered into an agreement with one Netaichand Nandi for the sale to the latter of Premises No. 6, Temple Street, in the town of Calcutta. The agreement was reduced into writing and is printed on p. 5 of the paper-book. It was stated in the agreement that, subject to the approval of title to the premises by the purchaser's Solicitors, Messrs. G.C. Chunder and Co., these premises were to be purchased by Netaichand Nandi provided it was shown that the fee simple in possession was free from encumbrances, for a sum of Rs. 73,000. On the date of the agreement a sum of Rs. 1,001 was paid by way of earnest and in part payment of the purchase money to the vendor and the vendor agreed to deliver or cause to be delivered all the title-deeds of the said premises to the purchaser's Solicitors within seven days from the date of the agreement and the sale and purchase was to be completed within six weeks from the date of delivery of the title-deeds. The vendor agreed that sufficient time before the date fixed for completion to make out a good title to the premises to be sold to the reasonable requisitions of the purchaser's Solicitors was to be had. The agreement further provided that in case the title was not approved of by the purchaser's Solicitors the vendor should, on demand, refund to the purchaser the earnest money and should also pay his costs of and incidental to the investigation of title; such costs however were not to exceed Rs. 80 in aggregate.

2. What happened was this: The property to be sold was apparently in possession of the Governors of the Mayo Hospital. The property in question was sold to the present appellant Misrilal Raidani on 30th September 1918 by means of a regular conveyance from the Governors of the Mayo Hospital. On 28th April 1931 Messrs. G.C. Chunder and Co., sent certain requisitions to the vendor: (1) as to the authority of the Governors of the Mayo Hospital to convey the property as they did in September 1918 to Misrilal Raidani; (2) as to a certain mortgage of the premises in question with the Allahabad Bank ; and (3) as to whether it was necessary that the members of the family of Misrilal Raidani-the family being one governed by the Mitakshara School of Hindu Law -should join, and about certain other matters. The vendor's Solicitor was Mr. Hem Chunder De and a copy of this letter containing the requisitions was sent to Mr. De on 30th April 1931. Mr. De was not in a position to answer the requisitions and he wrote in to say that he was communicating with Messrs. Sanderson and Co., who were the Solicitors of the Governors of the Mayo Hospital and that as soon as he got the necessary information he would communicate again. Nothing apparently was done in the matter of answering the requisitions between 13th May 1931 and 2nd June 1931. On this last mentioned date Mr. De purported to answer Messrs. G.C. Chunder and Co's., requisitions. On 8th June 1931 Messrs. G.C. Chunder and Co., took up this position that the Governors of the Mayo Hospital were not in a position to sell without express authority and that such authority must be shown by the vendor's Solicitor. The letter of 8th June is an important one and it will be found printed on p. 105 of the paper-book. In course of their letter Messrs. G.C. Chunder and Co., observed as follows:

The Governors of the Hospital were in the position of Trustees of a Public Charitable Trust and, in the absence of an express authority to sell, they cannot by their own resolution invoke such authority. Unless such authority is satisfactorily proved 'we shall not be in a position to accept the title.'

3. This letter was replied to on the next day and the only point that was made-in that letter was that the Governors-were satisfied that they did not require-any sanction of the Government for the sale by them of property in their possession or as belonging to the Mayo Hospital. On 22nd June Mr. De-the Solicitor on behalf of the vendor-wrote to say that the property in question, namely, Premises No. 6, Temple Street, vested in the Governors of the Mayo Hospital with right of disposal and as such the sanction of the Local Government was unnecessary. It may be mentioned in passing that no one has raised any question of the necessity of sanction of the Local Government up to the present point. Mr. De went on to add: ''Had it not been so, it would have been extremely unlikely that responsible personages like the 'Metropolitan of Calcutta, the Chief Justice and Judges o the High Court and others would have participated in the sale.' The only comment that is necessary on this statement is that it was an entirely fortuitous circumstance that the Trustees of the Mayo Hospital happened to be, among others, the Metropolitan of Calcutta (obviously a mistake for the Metropolitan of India) and the Chief Justice of this Court; but, in my opinion, no comfort whatsoever could be derived by the vendor from the circumstance that among the Trustees were men of distinction like those referred to above. Messrs. G.C. Chunder and Co., replied to this letter on 25th June and they pointed out, rightly enough, that the mere fact that personages like the Metropolitan, the Chief Justice and other Judges had participated in the sale was no proof of title of the Governors of the Hospital to sell the property in the absence of authority conferred on them by the original trust or by an order of Court. This letter provoked a reply from Mr. De which is printed on p. 113 of the paper-book. Apparently nothing came out of the correspondence and finally on 2nd July 1931 Messrs. G.C. Chunder and Co. intimated that their client-the purchaser-was not prepared to accept the title and in the circumstances the title was rejected. The title having been rejected there was some further correspondence on the demand of Messrs. G.C. Chunder and Co. that their client, the purchaser, should get back the amount of the earnest money which he had paid-a request which was not complied with; and finally on 5th January 1932 the present suit was filed by the purchaser asking for a refund of the earnest money which has been paid.

4. At the trial before Roy, J., the Solicitor Mr. Deb who had charge of this business in the firm of Messrs. G. C. Chunder and Co. gave evidence and was cross-examined at considerable length by Mr. S.C. Roy. The trend of the cross-examination, as far as one can make out, was that the reasonable requisitions of the Solicitors had been met and that the Solicitors in rejecting the title on 2nd July 1931 had not acted in a reasonable and legal manner; in other words the suggestion was that the rejection by the Solicitors on 2nd July 1931 was unreasonable and capricious and that inasmuch as it had been made clear to them that there was no trust deed forthcoming, and as the purchaser was not prepared in the circumstances to accept the vendor's statement, nothing could be done and that the purchaser should have been content with the long possession of the Governors of the Mayo Hospital of the property in question. As a matter of fact, a small point was sought to be raised, namely, whether having regard to the fact that the conveyance in favour of the vendor was so far back as 1918, the purchaser should not have been content with accepting the possessory title of the vendor for this fairly long period from 1918 to 1931. It may be mentioned in passing that the possessory title of the vendor was not referred to in so many words in the correspondence until after the institution of the present suit.

5. In addition to the evidence of the solicitor Mr. Deb, there was also the evidence of the Resident Medical Officer Dr. Dutt of the Mayo Hospital; but he was not able, as far as one can gather from his evidence, to show that there was a trust deed in existence requiring observance thereof by the Governors of the Mayo Hospital. Another point which was sought to be made out from the evidence of the Resident Medical Officer was that the exigencies of the Hospital required that this property should be sold and accordingly a resolution was adopted by the Governors who approved of the sale to the present vendor in 1918. In addition to this oral evidence a large mass of documentary evidence was produced showing how the property in question came to be acquired by the Governors of the Mayo Hospital. It is true that the acquisition was so far back as 1825 and that a patta from the Government was obtained in 1844.

6. The conveyance in favour of the vendor dated some time in 1918 was produced and in this state of the record it was contended in the Court below, as it has been contended before us that the circumstances uuder which the solicitors came to reject the title to the premises in question showed that they acted in an unreasonable, non-legal and capricious manner. Roy, J., has come to certain definite findings of fact and one of the findings of fact which is to be found on p. 81 of the paper book is that in his opinion the solicitors for the purchaser had acted in a bona fide manner, i.e., had not acted mala fide and had not acted in a capricious or arbitrary manner in rejecting the title which they did on 2nd July 1931. Mr. S.C. Roy has contended that the present Bench was in the same position as the learned Judge in the Court below was and that if we found on an examination of the facts that the solicitors had acted capriciously in rejecting the title, as they did on 2nd July 1931, the finding of the fact arrived at by the learned Judge of the Court below would not stand in our way of reversing his judgment if we thought fit to do so. To a certain extent Mr. Roy's contention may be accepted; that is to say, he is entitled to ask us to canvass the whole question for ourselves and to require us to be satisfied that the rejection by the solicitors was not unreasonable. We have accordingly gone through the entire record; we have scanned and scrutinized the correspondence from April 1931 to 2nd July 1931 and also the later correspondence even after the institution of the suit and we have perused the deposition of the solicitor Mr. Deb and such portions of the evidence of the Resident Medical Officer to which our attention has been drawn; but we are bound to say that on an independent examination of the entire record our conclusion is the same as that of Roy, J. In our opinion there was ample time between April and 2nd July 1931,for the vendor to take such steps as he might have been minded to satisfy the solicitors of the purchaser that a good and marketable title could be made out and that all the reasonable requisitions of the solicitors could be met. Nothing in this direction was done; and, as far as one can see, the solicitor for the vendor was engaged in prolonging the correspondence unnecessarily and without attending to the realities of the situation.

7. From the very start the question of all other questions which attracted the attention of the solicitors for the purchaser was whether the Governors of the Mayo Hospital had the 'necessary authority or power to sell and, if so to what was that power to be traced. No answer apparently was Sought to be given; nor was it suggested at any time between the relevant dates that an attempt was going to be made to satisfy even a fastidious solicitor for the purchaser that there was in reality no defect whatsoever in the title of the premises and that the defect, if any, was remediable and was going to be remedied by means of an application and an order thereon to and from this Court. Nothing was done and, in the end, the solicitors found it incumbent upon themselves to state that in the circumstances which had obtained they could not advise their client to accept the title and that therefore their client must reject the title.

8. It is said by Mr. Roy that the Governors as trustees of this Charitable Institution had authority to sell the premises if they thought that such a course was rendered necessary by reason of what is described in the books as provident administration of the charity. 'Under certain circumstances trustees have the power to sell property in their possession for provident administration' of a particular charity; but it is settled law that the purchaser takes the property subject to the obligation of showing that the sale was beneficial to the charity and justified by the circumstances. If the purchaser's solicitors could advise the purchaser to take the property, the purchaser would have taken the property subject to the obligation of showing that the sale was beneficial to the charity and justified by the circumstances. One is entitled to ask whether the purchaser's solicitors could, in view of the duty which they owed to their client, advise the purchaser to take on himself the obligation or onus of satisfying that this sale was beneficial to the charity and justified by the circumstances. No conscientious solicitor worth his salt would have taken upon himself the duty of advising his client to take such property with such an onerous obligation resting on the purchaser. In that state of circumstances, speaking for myself, I have no hesitation in saying that the solicitors in the present case were abundantly justified in advising their client not to take upon himself the obligation referred to above and to 'content himself by rejecting the title.

9. It is really unnecessary to go into the matter further and at greater length because I am satisfied from an examination of the material documents produced in this case, and on the relevant correspondence that the reasonable requisition of the solicitors not having been met there was no other course open to them but to advise their client to reject the title. My conclusion therefore is that the solicitors have not acted capriciously or unreasonably or, to quote Mr. Roy's words, in a non-legal manner, and therefore in my view the purchaser was in the circumstances which had happened entitled to ask for a refund of the earnest money. The result therefore is that in my opinion the judgment of Mr. Roy must be affirmed and the appeal which had and has no merits whatsoever must be dismissed with costs. In assessing the costs of this appeal fees to two counsel on behalf of the respondent will be allowed.

Costello, J.

10. I agree that this appeal must be dismissed. I think the learned Judge in the Court below was right in coming to the conclusion as he did that the Solicitors for the purchaser acted reasonably and bona fide and that therefore the plaintiff was entitled to demand and obtain refund of the earnest money and the amount provided in the agreement for sale to be paid as costs incidental to the investigation of the title. To my mind it is quite clear that in the circumstances of this case no competent and careful Solicitor would have done otherwise then advise the purchaser that the title to these premises, No. 6, Temple Street, was not a satisfactory one and that on the ground that it had not been established that the Governors of the Mayo Hospital had proper authority to sell the land, as they did, in the year 1918 to the present appellant Misrilal Raidani. The position appears to have been this. The Mayo Hospital was established more then a century ago, that is to say in the year 1792. It was then established under the title of the 'The Native Hospital.' It is said by Mr. Roy that it had been ascertained from Messrs. Sanderson and Co., the Solicitors to the Hospital, that it is governed by a governing body the members of which were and are elected from time to time by the subscribers to the fund of the Institution subject to the approval of the Governor-General in Council. The name of the Institution was changed in the year 1872 to that of 'Mayo Native Hospital' and it is now known simply as the 'Mayo Hospital.' But there is DO record that any trust Was formally established by a deed or otherwise, and it is perfectly plain that no scheme was ever drawn up by any properly constituted authority. The position of the Governors seems to be to a large extent regulated by certain 'rules' which provide for the management of the Institution and the election of the Governors in the way I have mentioned.

11. It is to be noted that there is no statutory enactment in this country dealing with Charitable Trusts. Therefore in order to ascertain what the position is it is necessary to have reference to the law as it was in England prior to the various Statutes specially enacted for the control and direction of Charitable Trusts. In England the law has been brought right up to date, if I may use the expression, in the Settled Land Act of 1925. By Section 29 of that Act it is provided that, for the purpose of that section, all land vested in Trustees for Charitable purposes shall be deemed settled land, and the Trustees are to have the powers conferred by the Act on a tenant for life and on the Trustees of a Settlement. That provision of course is for a very limited purpose and outside that the position is that unless they are acting under other statutory provisions, authority or under the authority of the Chancery Division or a scheme legally established or with the approval of the Charity Commissioners, Charity Trustees are prohibited from selling or charging any portion of their charity lands. It follows, I think, that in this country, as there is no enactment dealing with this matter and as there is no authority in India corresponding to the Charity Commission in England, the authority of Charity Trustees to sell charity lands must be conferred upon them by virtue of relevant provisions in a scheme legally established under sanction of the Court or else by an order obtaining from the Court in the exercise of jurisdiction of a nature analogous to the jurisdiction of the Courts of Chancery in England.

12. Mr. Roy relied on the case of In re: Mason's Orphanage and London and North Western Railway Co. (1896) 1 Ch. 596 The head note of that case runs as follows: A deed founding a 'Charity, and fully enrolled under 9 Geo. II C. 36, is not' a scheme legally established 'within Section 29, Charitable Trust' Amendment Act, 1855, and the Trustees in whom the lands of the charity are vested cannot sell such lands under a power of sale contained in the deed, otherwise then with the authority of 'Parliament or of the Court or with the approval of the Charity Commissioners.' That case therefore, so far from being of any assistance to the appellant in the present instance, operates to my mind in a contrary sense, because it shows that even if there had been a trust deed in existence that deed of itself might not have been sufficient to authorize the Trustees of the Hospital to dispose of any portion of the land held by them as such Trustees. In order to have the necessary power to dispose of such property it would appear from this very case that there should either be a 'scheme' containing a provision authorizing the Trustees to sell, mortgage or otherwise deal with the trust property or else they should come to Court and ask the Court to exercise its chancery jurisdiction and give sanction for a particular sale. In my opinion, unless there is either a 'scheme' which in this country would have' to be framed under the authority of the Court or sanction is obtained from the Court for a particular sale, the position then is as stated by my Lord the Acting Chief Justice. To use the words of Sterling, J. in the case just referred to 'even when no express power of sale existed, a sale might be made' of the charity estate, provided it were in accordance with a provident administration of the estate for the benefit of the charity; but the purchaser took subject to the obligation of showing that the sale was beneficial to the charity and justified 'by the circumstances.' The matter is dealt with in Dart on Vendors and Purchasers as follows:

There is no positive law that property belonging to a charity should be absolutely inalienable, but when the dealing is with the Trustees on their own authority, the onus is thrown on the alienee and those claiming under him of showing that the sale was beneficial to the Charity: and, unless this can be done, the transaction will be set aside.

13. It follows that in the present instance in the absence of a properly constituted Scheme sanctioned by the Court and in the absence of an application to the Court for a sanction ad-hoc , the position of the purchaser would be as indicated by the passage I have just quoted. Therefore no competent attorney would be likely to allow his client as a purchaser to put himself into the position of having to take the risk that at some time or other he might be called upon to show the purchase made by him was beneficial to the charity whose trustees were the vendors to him. It is not surprising therefore, and indeed it was-in my opinion reasonable and proper, that the Solicitors for the purchaser, should, by the letter of 2nd July 1931 finally have declined to proceed to the completion of the sale, especially bearing in mind that although by their letter of 25th June 1931 they suggested to the vendor that he should put himself in order by applying to the Court, the vendor declined or at any rate neglected to take any such course. The judgment of the learned Judge in the Court of first instance therefore is in my opinion, correct.


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