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Nursing Dass Kothari Vs. Chuttoolall Misser - Court Judgment

LegalCrystal Citation
CourtKolkata
Decided On
Judge
Reported inAIR1923Cal641,74Ind.Cas.996
AppellantNursing Dass Kothari
RespondentChuttoolall Misser
Excerpt:
transfer of property act (iv of 1882), section 55(1)(a) - contract aft (ix of 1872), section 20--vendor and purchaser--duty of vendor to disclose material defect--constructive notice of defect--mistake--matter of fact essential to agreement--calcutta improvement act (v of 1911),section 63 notice issued under. - .....and on that occasion it fetched one lakh and six thousand rupees we were informed that at this sale the notice, which had been published by the improvement trust board, was referred to.5. the learned judge ca me to the conclusion that, under the provisions of section 63 of the calcutta improvement act, nothing more had been done than to prepare 9 plan of a proposed public street and to publish the requisite notices, and possibly to apply to the local government for sanction, but as to that no information had been forthcoming nor would it a sect the matter, and that the result was that ft the time of the sale by auction the land sold was subject to no disabilities or burden or restrictions on the owner's use, whatever might be the most appropriate expression. the learned judge further.....
Judgment:

Lancelot Sanderson, C.J.

1. This is on appeal from the judgment f my learned brother Mr. Justice Buckland, who dismissed the suit of the plaintiff with cost.

2. The suit was brought for the purpose of obtaining a declaration that a certain agreement for the purchase of the land and premises No. 43, Burtolla Street Calcutta, is void and inoperative and to recover a sum of Rs. 36,000 with interest which the plaintiff had deposited as part payment of the purchase price.

3. The date of the agreement in question was the 29th of November 1919. The defendant was a Receiver appointed in a certain suit by this Court, and he sold by auction the property in pursuance of an order of the Court. The plaintiff was the highest bidder, and purchased the property for Rs. 1,41,000 and made a deposit, as I have already said, of Rs. 36,000, Subsequently, the plaintiff discovered that a notice had been published tinder Section 63, Sub-section (2), of the Calcutta Improvement Act which affected these premises. That notice had been published on the 18th of December 1918, and objections to matters contained in the notice had to be put in by the 31st of March 1919, so that, if it is material for the consideration of this case, it is to be noted, that the time for making objections had expired before the date of the sale to the plaintiff. So mention of this notice was made in the sale notification. The facts relating to this matter are to be deduced from the memorandum which was agreed to by the parties in the Trial Court. It is as follows:

With reference to the question of knowledge it is stated by Mr. Mitter on behalf of the plaintiff that he does not impute personal knowledge to the defendant and accepts the defendant's denial in regard thereto until after the contract was entered into. He, however, imputes to him prior constructive notice of the intended acquisition by reason of the public notification and by reason of-the fact that particular notice had been, served on the Official Receiver who preceded him as a Receiver. Mr. Das on behalf of the defendant similarly says that he does not impute personal knowledge to the plaintiff and accepts the actual with regard thereto, but he relies upon the constructive notice of the intended acquisition afforded by the public notification. Mr. Das also admits that the property, which formed: the subject matter of the notice, was about 1 half the property in suit and was not an insignificant amount.

4. The defend was not the first Receive in this matter. It appears that the Official Receiver had been appointed Receiver, and the defendant was appointed as a Receiver to succeed tie Official Receiver and the learned Judge in his judgment stated. It has, however, been admitted by the defendant's Counsel that the defendant found a copy of this notice among other papers which he received after the sale from the Official Receiver whom he succeeded in the Receivership of this estate.' So, it is clear, that the defendant himself did not know of this notice until after the sale of November 1919. This plaintiff refused to complete the purchase. The result was, that the Receiver put up the property for sale again, and on that occasion it fetched one lakh and six thousand rupees We were informed that at this sale the notice, which had been published by the Improvement Trust Board, was referred to.

5. The learned Judge ca me to the conclusion that, under the provisions of Section 63 of the Calcutta Improvement Act, nothing more had been done than to prepare 9 plan of a proposed public street and to publish the requisite notices, and possibly to apply to the local Government for sanction, but as to that no information had been forthcoming nor would it a Sect the matter, and that the result was that ft the time of the sale by auction the land sold was subject to no disabilities or burden or restrictions on the owner's use, whatever might be the most appropriate expression. The learned Judge further said that he did not think that, in such circumstances, it was the duty of the defendant to disclose the existence of a notice which in fact might not and did not in law, as a necessary consequence, result in detriment to the purchaser of property by curtailing his right as owner.

6. The learned Counsel on behalf of the plaintiff urged, in the first place, that a possible result of the notice, which had been published by the Improvement Trust, was that he If the premises might be taken by the Improvement Trust for the purposes of the Act. It is not necessary for me to go through the provisions of Section 63 in detail. It is sufficient for me to say that it seems to me on the facts of this case that the position may be stated as follows: proceedings had been put in train by the Improvement Trust which, if brought to completion, might result in a restriction being placed upon the use of the property by the purchaser and that that restriction might apply to no less than half the property which was admitted in the above mentioned note to be 'not an insignificant amount.

7. The learned Counsel for the appellant argued, in the first place, that such a liability constituted a material defect in the property within Section 55(1)(a) of the Transfer of Property Act. The section runs as follows: 'The seller is bound to disclose to the buyer any material defect in the property of which the seller is, and the buyer is not ware, and which the buyer could not with ordinary care discover.' The learned Counsel argued, further, that the seller, i.e., the defendant, must be taken to have been aware of the material defect in the property, and consequently it was his duty to disclose it to the plaintiff, the buyer.

8. In my judgment, the learned Counsel cannot bring the plaintiff's case within that section. It is admitted that at the' time of this sale the defendant was not in fact aware of the notice, constituting the alleged defect it may be so called in the property. The learned Counsel, however, said that inasmuch as the defendant's predecessor, the Official Receiver, had express notice of the proceedings instituted by the Improvement Trust, the defendant also must be taken to have had notice of such proceedings and he referred to the definition of 'notice' in Section 3 of the Transfer of Property Act. I am not prepared to accept that argument. In the first place, I do not understand how the seller can be called upon to disclose that of which he is not aware and, in the second place, when I look at the last sentence of Section 55, I find this provision. An omission to make such disclosures as are mentioned in this section, paragraph (1) Clause (a) and paragraph (5) Clause (a), is fraudulent. Consequently if the seller does not disclose to his buyer any material defect in the property of which he is aware and of which the buyer is not aware und which he Could not discover with ordinary care, the omission is declared by the provisions of the section' to be fraudulent: consequently, in my judgment, have, inbreeded to the facts of this case and to, the fact that the defendant had no knowledge of the notice fit the time of the sale, the plaintiff's case does not come within that section. It is not, therefore, necessary for me on this appeal to consider for to decide whether the facts 4o which I have referred, constitute a material defect in the property. The first point, therefore, upon which the learned Counsel for the appellant relied, fails.

9. The second ground upon which the learned Counsel for the appellant relied was, that the case comes within Section 20 of the Indian Contract Act. That was considered by the learned Judge, and he came to, the conclusion that the alleged defect, in. the property was not essential to the agreement for the reasons which I have already mentioned and which were the basis of his judgment. It is necessary, therefore, for me to consider this question,

10. It appears to me that the notice issued by the Improvement Trust and the liability to restriction upon the use of this remises to which I have already referred, consequent upon the proceedings initiated by the Improvement Trust, may be said to be 'a matter of fact essential to the agreement,' The learned Advocate-General argued that it did not follow that, because proceedings under Section 63 had been initiated by the Improvement Trust, any further steps to carry out Street Improvements would be taken. That is true on the other hand, the converge is equally true, and the proceedings under Section 63 having been initiated, the Improvement Trust might eventually carry out Street Improvements which would affect the premises. That essential matter of fact was unknown both to the plaintiff and the defendant at the time of the plaintiff's purchase; consequently, by reason of the provisions of Section 20 of the Contract Act, the agreement is void. The words of the section are where both the parties to an agreement are under, a mistake as to a matter of fact essential to the agreement the agreement is void.' For these reasons and on the above mentioned ground, I am of opinion that the plaintiff is entitled to the declaration for which he asked, namely, that the agreement is void, and he is further entitled to a decree for the return of the deposit of Rs. 36,000.

11. The result is that the appeal is allowed, the learned Judge's judgment and decree are set aside. A declaration will be made? that the agreement is void and there will be a decree in favour of the plaintiff for rupees thirty-six thousand.

12. The defendant must pay the costs of the plaintiff in this Court and in the Trial Court.

Richardson, J.

13. I agree. It is common ground that neither party knew of the defect consisting in the liability created by the notice in the Gazette, An attempt was, made by the learned Advocate General by a close examination of the provisions of Section 63 of the Calcutta Improvement Act. as amended by Act III of 1915, to minimise the liability to which the property is subject. He said that every house in Calcutta is subject to a possibility that it may be acquired under the Improvement Act for the purposes of the Act, and that the notice issued by the Board of Trustees under Section 63 stating that a plan had been made of a proposed public street. which would pass through this particular house carried the liability of the house to be acquired under the Act very little further. There were other stages to be gone through and the premises could not be acquired until the proposed public street had first become a projected public street and had then found its way into an improvement Scheme sanctioned by the local Government under Section 48 of the Act. But, in my opinion, the notice in the Gazette did crystallize the general liability to which this property, in common with other properties in Calcutta, is subject in such a way as to entitle the buyer to say that he would not be getting a property of the description which at the time of the sale he thought he was getting. He would be getting of property which he might not be able to keep and instead of which he might in the result be entitled merely to a sum of money by way of compensation. Where Section 20 of the Contract Act's in question it may net always be easy to say whether a mistake has been mad< as to a matter of fact 'essential to the agreement.' In my opinion, however, the present case falls within the section, and with great respect to the learned Judge, I am of opinion that this appeal should be allowed.


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