JOSEPH Vs. JOSEPH

JUDGEMENT

(1.) THE question of law that arises for consideration is as to whom the benefit of reduction in the amount of encumbrance should enure in the case of unpaid purchase money which has been reserved with the vendee for discharge of the encumbrance. THE facts may first be stated. THE 1st plaintiff is the father of the 2nd plaintiff, and items 2 and 3 belonged to them jointly; item 1 belonged to the 1st plaintiff but stood in the name of a benamidar. THEse items were sold under two sale deeds, Exts. P1 and P2, to the defendant-appellant and an amount of Rs. 1,386/- was reserved under the first sale deed with the defendant for payment to a usufructuary mortgagee by name harihara Iyer. Under the second sale deed, Ext. P2, a further amount of Rs. 1,942/- was reserved with the defendant in respect of another usufructuary mortgage payable to the same Harihara Iyer. THE defendant failed to pay the amount, and Harihara Iyer filed O. S. No. 112 of 1966 against the plaintiff respondents for the amount due under the usufructuary mortgage deeds. By that time, Act 31 of 1958 had come into force and the mortgage debt was liable to be scaled down as both the plaintiffs and the defendant were agriculturists. Consequently, the creditor Harihara Iyer claimed only recovery of Rs. 1,884. 65, that being the scaled down amount payable under the provisions of Act 31 of 1958. As stated earlier, under the sale deeds, an amount of Rs, 3,328/- had been reserved with the defendant and he was liable to pay only Rs, 1,884. 65 to the creditor. THE respondents thereupon filed the present suit for recovery of the balance amount of Rs. 1443. 35 with 12% interest from the date of Exts. P1 and P2. THE defendant resisted the suit and contended that under the terms of the sale deeds, the plaintiffs would be entitled to institute a suit only if they had sustained damages by reason of the defendant not paying the amount to the creditor, that the suit was therefore not maintainable and that, in any event, the benefit of the reduction in the mortgage amount should enure to the defendant. THE trial Court dismissed the suit holding that since the plaintiffs had sustained no damages by the non-fulfilment of the conditions stipulated in the sale deeds, there was no cause of action against the defendant. In appeal, the learned District Judge of Kottayam reversed the decision of the trial Court and held that the price of the properties sold to the defendant had been fixed with reference to their full value and the properties had therefore been sold free from encumbrances. Relying on a decision of the Allahabad High Court, the district Judge held that the unpaid purchase money in the hands of the vendee enures to the benefit of the vendor and the latter is therefore entitled to recover the amount to the extent it had not been paid to the creditor. It is the correctness of this finding that has been challenged before us.

(2.) THE learned counsel for the appellant argued that the defendant purchased the properties undertaking to discharge the mortgage debt that was binding on the properties, that, thereafter, it was the duty of the defendant to pay off the mortgage debt and that, therefore, the benefit of any reduction in the amount of the encumbrance should go to the defendant and not to the vendor.

(3.) WE have also another decision of the Madras High Court reported in Panchigolla Satyanarayana Murti v. Karatam Sathiraju (AIR. 1942 mad. 525) where the same principle has been affirmed. It has been held in that decision that: "where part of the purchase money is retained by the purchaser for payment of a mortgage and if the purchaser does not have to pay the full amount thus reserved with him owing to the mortgage debt being scaled down at the instance of the mortgagors, he would be liable to return to the latter the portion of the purchase money remaining unpaid. "