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The Eastern Mortgage and Agency Co., Ltd. and ors. Vs. Moulvi Mohammad Fazlul Karim and anr. - Court Judgment

LegalCrystal Citation
CourtKolkata
Decided On
Judge
Reported in90Ind.Cas.851
AppellantThe Eastern Mortgage and Agency Co., Ltd. and ors.
RespondentMoulvi Mohammad Fazlul Karim and anr.
Cases ReferredJoliffe v. Baker
Excerpt:
transfer of property act (iv of 1882), section 55 - contract act (ix of 1872), section 69--vendor and purchaser--covenant against encumbrances, operation of--suit based on breach of covenant, when maintainable--rent due for period prior to sale--purchaser, whether liable--payment made by purchaser--suit to recover the amount paid, whether maintainable--receiver, position of--payment made by receiver, whether payment by owner. - hugh walmsley, j.1. this appeal is preferred by the second and fourth defendants, that is the eastern mortgage and agency company limited, (1902) the new company and mr. tweedie. the other defendants were the old company and its liquidator: against them, the suit was dismissed, and they are not parties to the appeal. there was a fifth defendant, mr. a.m. parukh added pro farma on account of a financial arrangement between him and the plaintiff.2. the plaintiff is moulvi muhammad fazlul karim: he bought from the defendant company on december 1919 the company's interest in an estate called haturia. the purchase price was rs. 3,20,000. it was also agreed that a sum of rs. 30,000, should be paid to mr. tweedie, the company's manager as brokerage. there is no dispute about the payment of these.....
Judgment:

Hugh Walmsley, J.

1. This appeal is preferred by the second and fourth defendants, that is the Eastern Mortgage and Agency Company Limited, (1902) the new Company and Mr. Tweedie. The other defendants were the old Company and its Liquidator: against them, the suit was dismissed, and they are not parties to the appeal. There was a fifth defendant, Mr. A.M. Parukh added pro farma on account of a financial arrangement between him and the plaintiff.

2. The plaintiff is Moulvi Muhammad Fazlul Karim: he bought from the defendant Company on December 1919 the Company's interest in an estate called Haturia. The purchase price was Rs. 3,20,000. It was also agreed that a sum of Rs. 30,000, should be paid to Mr. Tweedie, the Company's Manager as brokerage. There is no dispute about the payment of these sums. It is also agreed that a further sum of Rs. 10,000 was paid, but the parties differ as to the reason for this payment. The defendants assert that the back rents were not included in the transaction, and that as the result of a discussion and an account it was arranged that for a further payment of Rs. 10,000 the plaintiff was to have an assignment of the back rents coupled with an obligation to pay rents due to the superior landlord. The plaintiff, on the other hand maintains that this sum of Rs. 10,000 was exacted by Mr. Tweedie as additional brokerage, and that so far from there being such an arrangement as the defendants describe it was always intended that his purchase should include the back rents, and it was never suggested that he should accept liability for rent due to the head landlord.

3. Mr. Tweedie was not only Manager of the Company, but he was also Receiver of the Haturia Estate. He was appointed Receiver in a mortgage suit of 1911, instituted by the Company, it was in the subsequent execution sale that the Company acquired its interest in Haturia. Before that suit was disposed of a partition suit was instituted and Mr. Tweedie was continued as Receiver in that suit, and his possession as Receiver went on until May 1922 that is until long after the institution of the present suit. In his capacity as Receiver he paid the rents due on account of the whole estate to the superior landlord for the period prior to sale and he entered those payments in his Receivership accounts. The substance of the plaintiff's case is that rents due to the superior landlord up to the date of the conveyance should have been paid by the defendant Company, to the extent of their interest, and that by including the whole of the payments in the Receivership accounts, the Receiver has reduced the profits of the plaintiff. Stated in this form the plaintiffs grievance is intelligible, and it at once occurs to the mind that he may be entitled to recover under the provisions of Section 69 of the Contract Act.

4. The plaint, however, does not proceed upon such simple lines. The main plank is that there was fraudulent misrepresentation on the part of Mr. Tweedie, the fraudulent misrepresentation consisting of a representation that 'the properties were free of encumbrances, and that rents and cess due to superior landlords for the properties sold up to the date of the deed of sale were fully paid up.' It was only in a secondary manner that the plaint referred to the aspect which I have just mentioned. No emphasis was laid upon it, with the result that no issue was raised dealing specifically with the applicability of Section 69 of the Contract Act, and the learned Judge was not asked to find that the provisions of that section are applicable.

5. In the trial the plea of fraudulent misrepresentation was pressed, and a second argument was advanced based on the words of the conveyance, 'and that free from all encumbrances whatsoever.'

6. It was urged that rents due to the superior landlords for the period before sale were encumbrances, and that, therefore, by the terms of the conveyance the Company ought to have paid them. Incidentally much time was spent on investigating the reasons for the further payment of Rs. 10,000.

7. The learned Judge rejected the plea of fraudulent misrepresentation, but he accepted the other argument, and found that Mr. Tweedie ought to have paid the back rents due to the superior landlord out of the money he held as Manager of the Company and not out of the money he held as a Receiver. On this finding he directed a commission to issue for examining the accounts submitted by Mr. Tweedie as Receiver, and determining how much had been paid out of the plaintiff's share in the estate on account of rent and cess due to the superior landlord at the date of sale.

8. For the appellant it is contended that the suit is not maintainable. In view of the Judge's finding, with which I agree, that there was no evidence to show that Mr. Tweedie represented that rents to the head landlord had been paid in full, I need not say anything about that part of the matter. The learned Judge thinks that there could be an action on the covenant, and this view is based on the words 'and that free from all encumbrances whatsoever.' There I think he is wrong: these words come in the' clause that provides for peaceful enjoyment: they are words of art, occurring in an English conveyance expressed in English and they have a well defined meaning. In Platt's Law of Covenants, there is a passage referred to with approval in the case of Nottidge v. Dering (1909) 2 Ch. 647 at p. 656 : 101 L.T. 491. It ends with these words:

In order to justify legal proceedings on this covenant against encumbrances it is requisite that an actual interruption, claim or demand be made on the purchaser: some hindrance or prevention of enjoyment proved: for, the chance alone of his being disturbed, and his liability to satisfy claimants, or in other words the mere existence of outstanding encumbrances, unless they prevent entry and enjoyment as in the case of a prior unexpired lease, will not constitute an immediate breach.

9. In my opinion, therefore, the plaintiff can not succeed on the ground that there has been a breach of covenant.

10. There remains the question whether the suit can proceed as a suit based on the provisions of Section 69 of the Contract Act. The words of that section are: 'A person who is interested in the payment of money which another is bound by law to pay and who, therefore, pays it, is entitled to be re-imbursed by the other.' It appears to me that the ninth paragraph of the plaint refers to this section. It employs the very terms used in the section and states facts which suggest that the equitable principle underlying the section is applicable. Stated in simple language the plaintiff's contention is this: That Mr. Tweedie as Receiver used his money to pay the Company's debts and, therefore, he ought to be allowed to recover that money from the Company. The justice of his claim seems obvious, and I think that all the requirements of the section are proved, that is to say if plaintiff's version of the facts is correct. It is said that the proper place to press this claim was in the suit in which Mr. Tweedie was appointed Receiver. It seems doubtful, however, whether in that suit the Court would have been able to deal with the matter. In any event, I do not think the existence of an alternative method of relief is any bar to this suit.

11. I think, therefore, that the suit can proceed as based on the provisions of Section 69 of the Contract Act, but that will be against the Company only. As against Mr. Tweedie there is no cause of action even if a suit could be brought against him without the leave of the Court.

12. The question of fact that is left for consideration is whether, the plaintiff accepted liability for rents due to the head landlords. In spite of an elaborate conveyance prepared after much discussion in the offices of the Solicitors for the parties, the Court plunged into a mass of oral evidence as to the terms of the contract. In my opinion the evidence was inadmissible. On the terms of the deed read with the provisions of the Transfer of Property Act it is clear that the plaintiff was not liable for rent prior to the date of sale.

13. Assuming, however, that the evidence was properly admitted, 1 do not think that it leads to a different result. The changes made in the drafts and the correspondence make it clear that the plaintiff did not accept liability. It is idle to discuss the oral evidence, for the defendant's own Solicitor says that the property was to be sold free of liabilities. He is a most unsatisfactory witness and the share he took in the transaction creates suspicion but he must have known what he meant by that answer. I find, therefore, that it was for the Company to pay the rents to the head landlord for the period prior to sale. As a matter of fact they were paid by the Receiver. There must, therefore, be a commission issued as directed by the learned Judge.

14. Accordingly I would dismiss the appeal so far as the Company is concerned, and allow it so far as Mr. Tweedie is concerned. The Company must pay the costs of the respondents in this appeal. Mr. Tweedie will bear his own costs in both Courts.

Mukerji, J.

15. The action out of which this appeal arises was commenced by the respondent Moulvi Fazlul Karim for the recovery of money. His case shortly stated was this: The defendant No. 1 the Eastern Mortgage and Agency Company Limited were mortgagees of 12-annas share of the Haturia Estate and they instituted a suit for enforcement of their mortgage. During the continuance of that suit, a partition suit was instituted in respect of the 16-annas of the estate. The defendant No. 4 Mr. T.C. Tweedie was appointed Receiver in the mortgage suit in respect of the 12-annas of the estate involved therein and thereafter also in the partition suit in respect of the entire estate. In the mortgage suit the mortgaged properties were purchased by the decree-holder, namely, the Eastern Mortgage and Agency Company Limited. The said Company then went into liquidation, and its assets and liabilities were taken over by the defendant No. 2 the Eastern Mortgage and Agency Company (1902) Limited. The defendant No. 3 Mr. Anchincloss was appointed Liquidator. The defendant No. 4 Mr. T.C. Tweedie was also the constituted Attorney of the old Company, the new Company and the Liquidator. By a conveyance dated the 12th December 1919 executed by the defendant No. 4 on behalf of the old Company, the new Company, the Liquidator and the Receiver 'the right, title and interest of the old Company and of the new Company' in the said purchased properties, 'however acquired and all arrears of rent due from tenants, and all moneys due from tenants and other persons having dealing with the old Company in connection with the said properties on decrees, bonds, khatas balance of accounts or otherwise' and also the decree in the mortgage suit together with the securities therefor and the benefits thereof, were purchased by the appellant for a consideration of Rs. 3, 20,000. On the same day the plaintiff sold a half-share of the aforesaid properties to the defendant No. 5 Mr. A.M. Paruk. The plaintiff's allegation in the plaint was that the defendants. Nos. 1 to 4 by their constituted Attorney the defendant No. 4 represented to the plaintiff that the properties were free of encumbrances and that the rents and cesses due to the superior landlords for the properties sold up to the date of sale were fully paid up, and on the faith of that representation he was induced to purchase the properties for the consideration stated above. He stated in the plaint that the said representation was false, and he subsequently came to know that at the date of the sale a sum of Rs. 9,900 was due to the superior landlords as arrears of rent and that the said sum was subsequently paid out of the funds of the estate of the plaintiff and the defendant No. 5. He stated further that the defendants Nos. 1 to 4 were bound to pay the said amounts out of their own funds. The plaintiff, therefore, prayed to be re-imbursed in respect of the said amount of Rs. 9,900 or so much of it or such further amount, as might be found to have been so paid. The cause of action was laid at Barisal as being the place where the defendant No. 4 worked for gain and where the said money was paid on various dates between the 12th December 1919 and September 1920.

16. The defendants Nos. 2 and 4 contended, inter alia, that the suit was not maintainable in the form in which it was instituted; that there was no cause of action; that the defendants or any of them were not liable to the plaintiff for his claim or any part of it; that the defendant No. 4 did not represent to the plaintiff that all rents and cesses of the properties conveyed which were due to the superior landlords had been fully paid up; and that the plaintiff purchased the properties with full knowledge of the liabilities for arrears of rent due to the superior landlords.

17. The defendant No. 5 contended that he had purchased a half of the properties from the plaintiff and the latter had mortgaged the other half to him under an English mortgage end that he was entitled to the whole amount of claim.

18. The learned Subordinate Judge has passed a preliminary decree for accounts in favour of the plaintiff and has ordered that a commission do issue to examine the accounts of the Receiver, the defendant No. 4 (who has been removed but not discharged from Receivership) and determine the amount due to the superior landlords on account of arrears of rent and cesses at the date of the sale and which had been paid from the plaintiff's share of the estate purchased by him and that the plaintiff would get a decree for the said amount together with interest at 6 per cent. per annum, and further that as regards the decretal amount, which would be realized, the plaintiff would get a half and the remaining half would remain in deposit for the benefit of the defendant No. 5.

19. The defendant No. 2, namely, the new Company and the defendant No. 4 Mr. T.C. Tweedie have preferred this appeal. The contentions put forward on behalf of the appellants substantially are the following: Firstly, that the suit was not maintainable as it had not been established that there was a breach of any of the covenants embodied in the contract between the parties and that if the defendant No. 4 in his capacity as Receiver made the payments the proper course for the plaintiff was to object to his accounts in the suit in which he had been appointed Receiver or to sue him as Receiver with the requisite permission of the Court and not to sue him either as the constituted Attorney of the Company or of the Liquidator or in his personal capacity as has been done in the present suit, Secondly, that upon the finding of the learned Subordinate Judge to the effect that the plaintiff had failed to prove that the defendant No. 4 had made any false representation such as was alleged in the plaint the suit should have been altogether dismissed or at any rate should have been dismissed as against the defendant No. 4. Thirdly, that the plaintiff by his purchase took over the liability to pay off the arrears of rent due to the superior landlords and, therefore, the plaintiff is not entitled to recover. And lastly, that the plaintiff has failed to establish his claim as against the defendant No. 2, the new Company.

20. As regards the first of the aforesaid contentions, namely, that relating to the maintainability of the suit in the form in which it has been brought, the question must be dealt with on the footing of the case as presented by the plaintiff and on the assumption that the allegations are correct.

21. Now, the law is well-settled that where the purchaser discovers defects in the property before conveyance he can either rescind the contract or successfully oppose a suit for specific performance [Reeve v. Berridge (1888) 20 Q.B.D. 523 : 57 L.J.Q.B. 265 : 58 L.T. 836 : 36 W.R. 517 : 52 J.P. 549 and Caballero v. Henty (1874) 9 Ch. 447 : 43 L.J. Ch. 635 : 30 L.T. 314 : 22 W.R. 446] but if the purchaser discovers material defects after the conveyance he must make out a case of fraud in order to set aside a sale [Brownlie v. Campbell (1880) 5 A.C. 925 at p. 949.] The present suit is one commenced after the execution of the conveyance and is not one for cancellation of the sale. Is it a suit for recovery of damages for breach of covenant? The appellant's contention is that it is a suit of that nature, and that as there has been no breach, it is not maintainable, regard being had to the principle laid down in the case of Joliffe v. Baker (1883) 11 Q.B.D. 255 : 52 L.J.Q.B. 609 : 48 L.T. 966 : 32 W.R. 59 : 47 J.P. 678. It is true that the heading of the plaint describes the suit as a 'suit for recovery of money against a fraudulent seller of immoveable properties'. The allegations made in the plaint are that there was a misrepresentation, that no arrears of rent were due to the superior landlords, that the plaintiff subsequently came to know that there were such arrears and that the said arrears were paid out of the income of the properties, that is to say out of the moneys which were in the hands of the defendant No. 4, the Receiver; and inasmuch as the Company was bound to pay, the plaintiff sought to be re-imbursed for the payments made. The suit, in my opinion, is not one for damages consequent on a breach of any covenant. Learned Counsel for the appellants has been at great pains to show us that it is such a suit, and he has urged that the covenant as to encumbrance which is the only relevant covenant in this connection has not in fact been broken, for there has been no disturbance or interruption of the plaintiff's quiet possession or enjoyment of the properties. The covenant in question runs in these words: 'To have and to hold the said zemindaries, lands, hereditaments, and premises hereby granted expressed so to be unto and to the use of the said purchaser his heirs and assigns for ever and the old Company and the new Company do and each of them doth hereby for themselves itself their and its assigns and representatives covenant with the said purchaser, his heirs, executors, administrators, representatives and assigns that notwithstanding any act, deed or thing by the old Company or the new Company or their agents done or executed or knowingly suffered to the contrary the old Company and new Company are lawfully and absolutely seized and possessed of or otherwise well and sufficiently entitled to the zemindaries, lands, hereditaments and premises hereby granted or expressed so to be and every part thereof for a perfect and indefeasible estate and that notwithstanding any such act, deed or thing whatsoever as aforesaid the old Company and the new Company have good right to grant the said zemindaries, lands, hereditaments and premises hereby granted or expressed so to be unto and to the use of the said purchaser his heirs and assigns in manner aforesaid and the said purchaser his heirs and assigns shall and may at all times hereafter peaceably and quietly possess and enjoy the said zemindaries, lands, hereditaments and premises and receive the rents and profits thereof without any lawful eviction, interruption, claim or demand whatsoever from or by the old Company or new Company or any person or persons lawfully or equitably claiming from under or in trust for them and that free from all encumbrances whatsoever made or suffered by the old Company or the new Company or any person or persons lawfully or equitably claiming as aforesaid'. It is quite clear that the covenant against encumbrances is not an independent covenant, but is prefaced by the words 'and that' and follows the covenant, for quiet enjoyment. I am unable to agree in the view propounded on behalf of the plaintiff that the word 'that' which precedes the expression 'free from encumbrances' relates to the word 'estate' and that the covenant means to guarantee that the estate was free from encumbrances. The mere existence of an encumbrance does not give a right to sue under this covenant [Nottidge v. Derring (1909) 2 Ch. 647 at p. 656 : 101 L.T. 491, also Nottidge v. Derring (1910) 1 Ch. 297 : 79 L.J. Ch. 439 : 102 L.T. 145 and In re Martin, Ex parte Dixon (1912) 106 L.T. 381.] In an action on a covenant of this description the plaintiff must allege the facts constituting the disturbance and that the disturbance was lawful, with sufficient particularity to show the breach of covenant [Foster v. Pierson (1792) 4 T.R. 617 : 100 E.R. 1207.] In the present case no such disturbance was alleged; and, in fact, so far as can be made out from the evidence the payments were made without even a claim or demand made by or on behalf of the superior landlords. Were it possible to hold that the present suit was one for damages for breach of the covenant I would have unhesitatingly held that it did not lie; but I do not find any indication in the pleadings that it is a suit of that character.

22. The precise character of the suit, notwithstanding the inartistic form of the plaint, to my mind, is essentially that of a suit to recover money under Section 69 of the Indian Contract Act. The plaint says in so many words that it is a suit for recovery of money and it can very well be gathered from the plaint taken as a whole and also from the statement therein of the cause of action that the claim is not one for damages but for money actually paid. Section 69 of the Indian Contract Act runs thus: 'A person who is interested in the payment of money which another is bound by law to pay, and who, therefore, pays it, is entitled to be re-imbursed by the other'. In a suit under this section it is essential that there should be, firstly, a person who is bound by law to make a certain payment, secondly, another person who is interested in such payment being made, and thirdly, a payment by such last mentioned person. If these circumstances exist, the fiction of an implied request from the defendant to the plaintiff to make the payment may be properly imported into the case so as to bring it within the section and thus the right to re-imbursement is created. A debt for money paid arises where a person has paid money for another under circumstances and upon occasions which make it just and equitable that it should be re-paid, a debt or promise to pay is then implied in law, without any actual agreement to that effect. Sir Frederick Pollock in his book on the Indian Contract Act expressed an opinion that Section 69 of the Act lays down in one respect a wider rule than appears to be supported by any English authority, and that the words 'interested in the payment of money which another is bound by law to pay' might include the apprehension of any kind of loss or inconvenience or at any rate of any detriment capable of being assessed in money, while that was not enough in the common law, to found a claim to re-imbursement by the person interested if he makes the payment himself. This view has been judicially adopted by Stanley, C.J., in the case of Tulsha Kumar v. Jogeshwar Prasad 28 A. 563 : A.W.N. (1906) 114 : 3 A.L.J. 372 and by the Madras High Court in case of Subramania Iyer v. Vengappa Reddi 4 Ind. Cas. 1083 : 33 M. 232 : 19 M.L.J. 750 and by this Court in the case of Pankhabati Chaudhurani v. Nonihal Singh 21 Ind. Cas. 207 : 18 C.W.N. 778 : 19 C.L.J. 72. It can hardly be disputed that arrears of rent which form the first charge on an estate under a. 65 of the Bengal Tenancy Act and for which the estate is liable to be sold, if not paid, reasonably creates such an apprehension. It makes no difference that a decree has not yet been obtained for a suit may be instituted at any moment and the loss, and inconvenience consequent on the institution of a suit are manifest. In paras. 8 and 9 of the plaint the fact of such payments and the circumstances thereof were specifically alleged and the wording of the latter paragraph closely follows the language of Section 69 of the Indian Contract Act. The defendants in their written statement did not state that the payments were made otherwise than in the ordinary course. If the plaintiff's allegation is true and, as I have said before, we must proceed for the purposes of this question on the assumption that it is true--then the Company was bound in the absence of a contract to the contrary to pay the rent accrued due in respect of the property upto the date of sale. Under Section 55 of the Transfer of Property Act the liability to pay the arrears was with the Company. There can, therefore, be no doubt whatsoever that the first two out of the three conditions enumerated above are present in the case. I am not at all pressed by the authority of the decision in the case of Dost (Muhammad v. Sanjad Ahmed 6 A. 67; A.W.N. (1883) 210 : 3 Ind. Deo. (N.S.) 640 upon which reliance was placed on behalf of the appellants as the judgment gives no reason beyond stating that no relations existed between the vendor and the vendee from which any obligation of the character mentioned in Sections 69 and 70 of the Act could be implied as attaching to the vendor, and also because the Transfer of Property Act evidently had not come into operation on the date of the suit in that case. In fact the Allahabad High Court has held in a later case, namely, that of Kishan Lal v. Megh Singh A.W.N. (1901) 37 that after the passing of the Transfer of Property Act, that decision cannot be regarded as good. The other condition, as I have stated, is that the payment should have been made by the plaintiff. Here in the present case the defendant No. 4 as Receiver paid the monies out of the funds of the plaintiff's estate in his hands. It is not disputed that such payments were made, and it is not alleged on behalf of the defendants that they were made otherwise than in the ordinary course, but it is urged that the payments were made by the Receiver and not the plaintiff himself and, therefore, the plaintiff cannot claim to be reimbursed.

23. The nature of the office of a Receiver is simply this, that he is an impartial person appointed by the Court to collect and receive pending the proceedings the rents, issues and profits of land or personal estate or other things in question which it does not seem reasonable to the Court that either party should collect or receive. The object sought by the appointment of a Receiver is the safeguarding of property for the benefit of those entitled to it. His possession is on behalf and for the benefit of all the parties to the suit in which he is appointed, and is the possession of all the said parties according to their title. The property in his hands is in custodia legis for the person who can make a title to it. The title of the real owner is in no way affected either in theory or principle by his appointment. He collects and receives the rents, issues and profits not upon his own title but upon the title of some persons, parties to the action. One of the main incidents of his duties is to preserve and protect the property which is put into his possession and from this it necessarily follows that where a Receiver is appointed in respect of lease-holds, upon him devolves the performance of the obligations imposed by the possession of land and consequently he must out of the sub-rents discharge the head rents payable in respect of the lease-holds. It is contended, however, that Mr. Tweedie when he made the payment was an officer of the Court and was not an agent of the plaintiff and that, therefore, the plaintiff cannot claim to be re-imbursed in respect of payments made by Mr. Tweedie. It is urged that Receiver is aptly described as the hand of the Court and is not the representative or agent of the party or parties but of the Court. This proposition is certainly correct in the sense that he acts in the interest of neither plaintiff nor defendant but for the common benefit of all parties interested. It is also correct in the sense that as the representative of the Court he is subject to its orders and accountable to such persons and in such manner as the Court may direct. It is not, however, a proposition which can be accepted as universally correct under all circumstances; its correctness or otherwise would depend upon the nature of the cause in which and the party on whose behalf he is appointed and also on the nature of the transaction which he enters into.

24. In the case of Premlall Mallick v. Sumbhoonath Roy 52 C. 960 : 11 Ind. Deo. (N.S.) 637 which is one of the cases relied upon by the appellant on this point, this Court relying upon the observations of the Master of the Rolls in Bertrand v. Davies (1862) 31 Beav. 429 : 54 E.R. 1204 : 32 L.J. Ch. 41 : 9 Jur. (N.S.) 34 : 7 L.T. 372 : 11 W.R. 48 : 135 R.R. 504 observed that where a Receiver or Manager is appointed by Court in a suit properly constituted he should be considered as appointed on behalf of all persons interested in the property, and he is entitled to his ordinary commission and allowance, and also to a lien on the estate, as against all persons interested in it for the balance, whatever it may be, that shall be found to be due on taking his accounts. In the case of Administrator-General of Bengal v. Prem Lall Mullick 22 C. 1011 : 2 I.A. 203 : 5 M.L.J. 157 : 6 Sar. P.C.J. 660 : 11 Ind. Deo. (N.S.) 672 (P.C.)., where a Receiver had been appointed to hold and administer the estate of a testator, it was held that he was merely the officer of the Court and the estate must for all legal purposes be considered as being in manibus curice. In the case of Orr v. Muthia Chetti 17 M. 501 : 6 Ind. Dec. (N.S.) 347, where a Receiver was appointed at the instance of an attaching creditor in respect of the properties of a judgment-debtor and misappropriated monies that came to his hands, and the question arose as to whether the payment by the judgment-debtor to the Receiver operated as a valid discharge of the judgment-debtor Muttusami Ayyar, J., held that the Receiver was an officer or representative of the Court and subject to its orders, and could not be considered as the judgment-creditor's agent. In an appeal preferred against the aforesaid decision Muthia Chetti v. Orr 20 M. 224 : 7 Ind. Dec. (N.S.) 160. Shephard, J., held that a Receiver appointed to collect monies is not an agent of either party, he is an officer of the Court deputed to collect and hold monies in accordance with the order of the Court. In the case of Harihar Mukherjee v. Jaharuddin Mandal 62 Ind. Cas. 768 : 26 C.W.N. 992, the owners of an estate had instituted a suit for accounts against a Tehsildar appointed by a Receiver who had been in charge of the estate under an order of the Court but had since been discharged, it was held that such a suit can only be sustained on proof of a fiduciary relation between the parties and the Receiver is not a representative of the parties but an officer of the Court. In the case of Bolhm v. Goodall (1911)1 Ch. 155 : 80 L.J. Ch. 86 : 103 L.T. 717: 55 S J. 108 : 27 T.L.K. 106, the position of the Receiver and Manager of a partnership business in an action brought by one partner against his co-partner for the dissolution of the partnership and winding up of partnership affairs was considered with reference to his right to be indemnified by the party who put the Court in motion for his appointment and it was held that he was not an agent for that party. In the case of In re Flowers & Co. (1897) 1 Q.B. 14 : 65 L.J.Q.B. 679 : 75 L.T. 306 : 45 W.R. 118, it was held that service of notice on such a Receiver was not service on the partners as he was not the agent of the partners. In the case of Burt, Boulton & Hayward v. Bull (1895) 1 Q.B. 276 which was debenture-holders' action, it was held that the Receiver appointed therein is not the agent of the Company. On the other hand in books on Receivers there are cases cited to show as to how far a Receiver is an agent for the Court or for the party or parties entitled to the estate where he is treated as an agent for the Company or debenture-holders in an action for winding up, or for the mortgagor or the mortgagee or in other cases. In the case of Wilkinson v. Gangadhar Sirkar 6 B.L.R. 486 which is the leading case on Receivers in this country, Phear, J., explained the true position of a Receiver appointed by the Court in these words: 'The Receiver in a suit is nothing more than the hand of the Court for the purpose of holding the property of the litigants whenever it is necessary that it should be kept in the grasp of the Court, in order to preserve the subject-matter of the suit pendenti lite and the possession of the Receiver is simply the possession of the Court. He has no personal rights in the property, nor can he take any steps with regard to it, without the sanction of the Court. If it is necessary for him to take action of any sort, he should be put in motion by the Court on the application of the parties to the suit; and whatever he rightly does with regard to the property, he does simply as agent of the owners of the property.' That was a case in which a Receiver had entered into a contract to sell some property. In the case of Poresh Nath Mookerjee v. Omerto Nauth Mitter 17 C. 614 : 8 Ind. Dee. (N. s.) 949 in which case a Receiver appointed in a partition suit had created a charge on the estate for the purpose of raising money on the security of the entire estate for paying the rents due on the estate and a suit was instituted for a declaration that the indenture executed by the Receiver under the authority of the Court's order created a valid charge, two questions arose first whether the parties were bound by the indenture so executed by the Receiver and second, whether an application should not have been made in the suit in which the Receiver had been appointed instead of a separate suit being instituted. Trevelyan, J., whose judgment is reported at pages 615 Pages of 17 C.--[Ed.] and 616 Pages of 17 C.--[Ed.] quoted with approval the dictum of Phear, J., cited above and held that the principle applied just as much with regard to the parties to the suit who opposed the Receiver's appointment or who objected to his receiving particular powers as if did to the parties at whose instance he was appointed or set in motion and that being so the ordinary law of principal and agent applied. It was also held that the fact that the plaintiff may have a remedy in the suit in which the Receiver was appointed did not exclude his remedy in the suit separately instituted. This decision was affirmed on appeal and it was pointed by the Court of Appeal that having regard to the conditions under which the estates are held in this country, one of which is that they are liable to be sold if the rents and revenue due upon them are not paid, it was apparent that the power to take the estate out of the hands of the owners and to place it in the hands of a Receiver with powers to do what is necessary for its protection must include a power to raise money to pay rent or revenue whenever it is necessary to do so. Applying these principles to the present case it follows as a matter of course that the payment by the Receiver of, the rents justly due out of the funds in his hands is equivalent in law to a payment made by the owner himself.

25. In my opinion, then, all the conditions requisite to bring the suit within the provisions of Section 69 of the Indian Contract Act are present and the suit is accordingly maintainable. It is not a suit instituted against the defendant No. 4 asking for any relief as against him in his capacity as a Receiver and, therefore, no sanction of the Court is necessary for its institution. It cannot be doubted that a person who is prejudiced by the conduct of a Receiver appointed in an action ought not, without the leave of the Court, to commence an action against him for adequate reliefs; more ordinarily would his remedy lie in an application to the Court in the course of the action itself. But, if an application had been made in the partition suit by the present plaintiff to hold the Receiver accountable for the monies paid by him as alleged, the Court would in all probability have found itself unable to decide the question of his accountability in such a proceeding, inasmuch as it involved a determination of the rights and liabilities between the Companies on the one hand and the plaintiff on the other--a matter entirely outside the scope of the suit in which the Receiver had been appointed. Where the accountability of a Receiver depends upon debatable questions not easy to be dealt with at the passing of the Receiver's accounts the Court often declines to go into the matter in such proceedings. As an instance of this class of cases may be quoted the case of Coomar Sattya Sankar Ghosal v. Ranee Golapmonee Bebee 5 C.W.N. 223. The Court dealing with the suit for partition would have passed the accounts on the view that the arrears were justly due by the estate and the Receiver was justified in paying them off out of the monies in his hands. This objection, therefore, in my opinion, is not well-founded and the suit as framed was clearly maintainable.

26. The appellants' next objection relates to the maintainability of the suit as against all the defendants, and particularly as against the defendant No. 4 upon the finding of the Subordinate Judge that the misrepresentation charged in the plaint had not been substantiated. On the other hand it has been contended on behalf of the plaintiff that it should have been held that the allegation of misrepresentation was established upon the evidence adduced in the case. Reference was made on his behalf in this connection to the evidence of the plaintiff himself and his own affidavit which is an annexure to the written statement of the defendant No. 5. The evidence on this point is not at all convincing and I must hold agreeing with the learned Subordinate Judge that there is no reliable evidence to prove that the defendant No. 4 made any such representation. The suit however, does not seem to me to be based on such misrepresentation. The heading merely describes the alleged character of the sellers and the allegation of misrepresentation is a statement of an alleged fact on which the cause of action does not rest. From this finding it legitimately follows that if the present suit is treated as one under Section 69 of the Indian Contract Act, there is no cause of action as against Mr. Tweedie, the defendant No. 4 and whatever may be liabilities of the defendant No. 2, the new Company, there can be no decree against the defendant No. 4 in the present suit.

27. The next contention on behalf of the appellants is to the effect that the liability to pay the arrears of rent was taken over by the plaintiff by his purchase. I have already observed that the plaintiff's case put forward in his plaint was that there was a representation made to him by the defendant No. 4 that there were no arrears due has not been established; it is also clear upon the circumstances of the case, the plaintiff's wife being one of the co-sharers in the superior interest that it is not very likely that the plaintiff would not know that there were arrears. These findings, however, are not sufficient to dispose of the question. It must be decided upon the terms of the document, and perhaps also upon the evidence that there is on the record as to the circumstances connected with the transaction and as to the intention of the contracting parties,--I say perhaps, as I am very doubtful if in the face of the document Ex. 1, embodying the terms of the contract between the parties any evidence is at all admissible for the purpose of proving the agreement that is setup on behalf of the defendants. Such evidence may, if at all, be admissible under the second proviso to Section 92 of the Indian Evidence Act; and in view of the highly formal nature of the document which evidences the transaction--a document which was executed after a good deal of correspondence between two firms of Solicitors who were acting for the parties, in the course of which the terms were threshed out in all their details and which was drawn up after the drafts were several times corrected and finally approved--I should not be prepared to hold that the evidence is admissible in the present case. Learned Counsel appearing for the appellants concedes that it is difficult to say that it is admissible and his only justification for relying upon the evidence, as he says, is that the plaintiff also has sought to travel beyond the covenants embodied in the document. He contends on the authority of the case of Joliffe v. Baker (1883) 11 Q.B.D. 255 : 52 L.J.Q.B. 609 : 48 L.T. 966 : 32 W.R. 59 : 47 J.P. 678 that if a purchaser after completion of the contract and execution of the conveyance seeks to recover compensation from the vendor, for false representation made by the latter, such compensation cannot be recovered unless there was fraud or the breach of some contract or warranty contained in the conveyance. In my opinion, the principle is not applicable to the present suit, which is not a suit for compensation based upon breach of a covenant, but as I have already said, a suit for recovery of money actually paid on behalf of the plaintiff and out of the plaintiff's estate, which, it is alleged the respondents were bound to pay. The plaintiff, therefore, in my judgment, is not seeking to go beyond the covenants in any view of the matter. I am, therefore, of opinion that as there is no dispute that the conveyance does not purport to deal with the liability to pay the arrears, the ordinary law applies and the vendors were liable to pay them up to the date of the sale.

28. I should not, however, rest my judgment on this ground alone, as extrinsic evidence has been adduced on both sides, and evidently without any objection. A good deal of dust has arisen over the controversy as to why it was that the consideration-money was increased from 3 lacs 20 thousand to 3 lacs 30 thousand and yet ultimately the former sum was mentioned in the document and not the latter or in other words as to what did this extra amount of 10 thousand represent and to whom did it go. On plaintiff's behalf it is urged that it was paid so that the back rents due from tenants might be assigned over to the purchaser. On behalf of the defendants it was contended that it represented the rents due from tenants less the amounts of arrears due to the landlords and so the liability to pay the latter was taken over by the purchaser. A most unsavoury part of the evidence was that given by the Solicitor Mr. Watkins and that afforded by the entries in his books. There is a want of candour running through the evidence of this gentleman and the explanation offered by him, if it is any explanation at all, of the entries in his books which purport to ear-mark this extra amount of 10 thousand as brokerage, is, to say the least unworthy of his position as an officer of the Court, which he is and in which capacity he acted. I propose to say nothing further in this matter as, in my opinion, it has very little bearing on the question that we have got to determine. Suffice it to say that I am unable to accept the story of Mr. Tweedie and his witness Abinash Chandra Mittra that the extra 10 thousand represented the difference between the arrears due from tenants and the arrears of rent due to the landlords. The correspondence especially the letters Ex. 10 and Ex. 16 and the evidence of the Solicitor Mr. J.N. Basu which is perfectly clear and fair leave no doubt in my mind that no liabilities were taken over by the purchaser and the purchase was made on a bare contract of sale and that the conveyance was executed on the terms mentioned in the conveyance itself and there was no arrangement or agreement entered into between the parties varying the ordinary incidents of law relating to the rights and liabilities as between a vendor and a purchaser. I am also fortified in this conclusion by the circumstance that in one of the drafts Messrs. Watkins & Co., expressly put in a clause as to the taking over of the liability by the purchaser, but it was not embodied in the document in the form that it ultimately took. There is some evidence that the vendors had been negotiating in the past for the sale of the properties on the footing of the liabilities in respect of the arrears of rent being taken over by the purchaser as for instance the evidence of D.W. No. 1, Babu Ramesh Chandra Sarkar, and some documentary evidence as well in the shape of correspondence. This evidence, however, does not go far enough to show that the plaintiff's purchase was on that footing. The positive evidence given by Mr. Tweedie and of D.W. No. 2, Abinash, as to a statement showing arrears of rent due from the tenants of the estate and the arrears due to the landlords having been given to the plaintiff about six months before the sale may or may not be true; but that does not, in the face of the matters to which I have already referred, lead to the conclusion that the liability did in fact pass to the plaintiff by the sale.

29. The last argument is that the plaintiff has failed to prove that the defendant No. 2 the new Company took over the liabilities of the old Company in the matter of the payment of the arrears. This objection in the form in which it is urged before us does not appear to have been taken in the written statement. In the written statement there is only a general statement that the new Company is not legally liable for the amount claimed or for any amount whatever. It would seem that they never disputed the position that whatever rights and liabilities attached to the old Company passed to the new Company and consequently no issues were raised on this point. In the conveyance to which, as I have already stated, the new Company was a party executant, it was declared that the new Company was incorporated with a view to take over the assets and liabilities of the old Company, and that both the Companies were lawfully and absolutely seised and possessed of or otherwise well and sufficiently entitled to the zemindaries, lands, hereditaments and premises. The whole case has been fought out in the Court below on the footing that the rights and liabilities of the two Companies were identical. If that was not the fact it was for the new Company to plead the same or at any rate to prove the same as it was a matter within their special knowledge. In none of the forty-four grounds taken by the appellants in their memorandum of appeal has this objection been indicated, and it would be unreasonable to require the plaintiff to produce evidence of a fact which was to all intents and purposes one of the admitted features of the case.

30. I am accordingly of opinion that the appeal fails except in so far as it is on behalf of the defendant No. 4. I, therefore, agree with my learned brother in holding that the decree passed by the Court below as against the said defendant should be set aside, and the suit in so far as it is against him must be dismissed. The appeal in so far as it is on behalf of the defendant No. 2 should be dismissed with costs. The defendant No. 4 must bear his own costs in both Courts.


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