SHANTI DEVI Vs. PT AMAH NATH SHASTARI

JUDGEMENT

(1.) THIS second appeal arises out of a suit for the recovery of Rs.3,990/- with pendentelite and future interest on the allegation that the aforesaid amount is a charge on the suit property. The plaintiff has claimed a preliminary decree under Order 34 rule 4 as a prelude to a final decree for sale of the said property for the rea lisation of the said amount. THIS has been done under Order 34 rule 4 read with rule 15 C.P.C. In the alternative, the plaintiff has claimed a relief that a decree be passed against the defendants Nos. 1 and 2 for the said sum of Rs.3,990/- with pendentelite and future interest and the said amount should be treated as a charge on the sum of Rs. 11,400|- which was alleged to have remained in the hands) of the defendant No. 3 as unpaid purchase money. The plaintiff prayed, for the enforcement of the said charge on the unpaid purchase money by the sale of the property in the suit. The facts in brief are these: The plaintiff-respondent No. 1, Pt. Amarnath Shastri, who died during the pendency of the second ap peal and whose legal representatives were brought on record, enter ed into a registered agreement dated January 18, 1951 with the pro-forma defendants-respondents Nos. 2 and 3 and their mother, Smt. Brijrani Devi, for purchasing house No. 1/ 11-12, situated in Mohalla Lahauri Tola, Varanasi City. As acknowledged in the said agree ment, a sum of Rs.3,000/- was paid as earnest money by the would-be purchaser to the would-be sellers. The balance amount was to be paid at the time of the execution of the sale deed, The sale was to be effected within one month of the decision of suit No. 152 of 1948 which was pending between one Mst. Durga Dei and the aforesaid would-be sellers in respect of the property in suit It was also ag reed that the possession of the entire house, including the one room which was then in possession of Durga Dei, would be delivered to the would-be purchaser at the time of the execution of the sale deed. It was also stipulated between the parties that in case the trial court decided the aforesaid suit No. 152 of 1948 in favour of Smt. Durga Dei and against the aforesaid would-be sellers, then it would be open to the aforesaid would-be purchaser either to get back his ear nest money or to wait till the decision of the High Court in the said litigation. Further, it was stipulated that in case the would-be purchaser failed to get the sale deed executed in his favour within the aforesaid period of one month from the decision of the trial court in the said suit, No. 152 of 1948, then his earnest money paid to the would-be sellers was to stand forfeited. The plaintiff alleged that he had been throughout willing to carry out the terms of the said agreement but the would-be sellers committed a breach of the terms of the agreement and did not execute a sale deed in his favour in terms of the agreement. Moreover, the litigation between Durga Dei and the would-be sellers was said to be pending in the High Court and Durga Del was said to be in continued occupation of a part of the said property. Further allegation was that the defen dants Nos. 1 and 2 who remained the sole owners of the property after the death of their mother, Smt. Brijrani Devi, sold the said property to the defendant No. 3, Smt. Shanti Devi, on May 23, 1956 and the latter in her turn sold the property in favour of the defen dant No. 4, Smt. Kashi Bai during the pendency of the instant suit in the trial court. These transactions were said to be in breach of the aforesaid agreement dated January 18, 1951. On the basis of the said allegations the plaintiff claimed the aforesaid reliefs. No written statement was filed by the defendant No. 1 but the other three defendants Nos. 2, 3, and 4 filed their separate written statements. The defendants Nos. 3 and 4 claimed that they were purchasers in good faith for valuable consideration and without notice of the alleged agreement dated January 18, 1951. The factum of the said agreement was disputed. It was also alleged that subse quent to the execution of the sale deed in her favour on May 23, 1956 the defendant No. 3, Shanti Devi, had paid the balance sum of the sale consideration amounting to Rs.11,400/- to the sellers and there fore there was no unpaid sale consideration in her hand." It was alleged that the plaintiff himself was in breach of the agreement dated January 8, 1951 inasmuch as he did not get the sale executed within one month of the decision of suit No. 152 of 1948. The suit was decided on April 23, 1953 and, therefore, the sale deed should have been obtained by the plaintiff by May 23. 1953. However, the plaintiff failed to get the sale deed executed within the said date and therefore, he was not entitled to claim back the earnest amount which stood forfeited in terms of the alleged agreement dated Janu ary 18, 1951. The said suit was said to be barred by time and it was denied that the plaintiff's claim constituted a charge on the suit pro perty and the plaintiff was not entitled to get any mortgage decree as claimed by him. Certain other pleas were taken which are not necessary to be noticed in this appeal inasmuch as the learned coun sel for the parties have not raised the same before me. The trial court framed the necessary issues and tried the suit. It held that a breach of the said agreement dated January 18, 1951 was committed by the defendants Nos. 1 and 2 not by the plaintiff. The trial court also held that the defendant No. 3, Shanti Devi, had paid the balance amount Rs.11,400/- to the sellers subsequent to the sale deed in her favour on May 23, 1959 and thus there was no un paid sale consideration lying in her hands when the suit was institut ed. The said court also held that the plaintiff's claim did not consti tute a charge on the property which was sold by the defendants Nos. 1 and 2 to the defendant No. 3 and which the "defendant No. 3. during the pendency of the suit, sold in favour of the defendant No. 4. The suit was held within time. The plaintiff was, however, not en titled to any interest on the earnest amount of Rs.3,000/- paid by him to the defendants Nos. 1 and 2 and their mother, Smt. Brijrani under the agreement dated January 18, 1951. With these findings the trial court decreed the suit for Rs.3,000/;- against the defendants Nos. 1 and 2 alone. The suit was dismissed against the defendants Nos. 3 and 4. 4. The plaintiff felt aggrieved and took out an appeal to the lower appellate court. The said court allowed the appeal and modified the trial court's decree. The suit was decreed for all the reliefs claimed by the plaintiff is the plaint. The defendants Nos. 3 and 4 have now come up in the instant appeal and in support of the same I have heard Shri G.P. Bhargava, learned counsel for the appellants. In opposition, Shri Rajendra Kumar, learned counsel for the plaintiff respondent has made his submission. Shri Bhargava again raised a contention that the suit was time-barred as it was not filed within three years from the date of the accrual of the cause of action, if any, to the plaintiff. It was con tended that in terms of the agreement the sale deed should have been got executed by the plaintiff by May 23, 1953 and, therefore, the suit should have been filed within three years of the said date which was the date on which the cause of action, if any, might be said to have accrued to the plaintiff. The suit, however, was instituted on July 23, 1956- In my opinion, this contention has no merit. The plaintiff has prayed for a mortgage decree on the allegation that the amount of his claim constituted a charge on the property in suit. Article 62 of the new Limitation Act, 1963 has replaced Article 132 of the old. Limitation Act, 1908. The new Article prescribes a period of 12 years from the date when the money sued for becomes due. The new Article is applicable to a suit which seeks to enforce a mortgage or a charge on the immovable property. The old Article 132 refer red only to a charge upon immovable property but the Privy Coun cil in its decision in Vasudeo Mudaliar v. Srinivas pillai I.L.R. 30 Mad. 436=34 Indian Appeals 186 had interpreted the said Article as also applicable to a suit for enforcing a mortgage also. The instant suit was instituted in 1956 and, there fore, the old Article 132 governed the case. However, there is no difference in the period of limitation prescribed by the old Article and by the corresponding one in the new Limitation Act. The period of limitation was, and continues to be, 12 years from the date when the money sued for becomes due. In case, it is held that the plaintiff in entitled to a charge of his claim on the property in suit then obviously the period of limitation available to him would be 12 years and not three years as contended for by the learned counsel for the appellants. As I am going to hold that the plaintiff is en titled to such a charge on the suit property, therefore, the plaintiff's suit cannot be held to be barred by time. The second contention raised by Shri Bhargava is that the lower appellate court was wrong in holding that the plaintiff was entitled to a charge in respect of his claim over the suit property in terms of Section 55 (6) (b) of the Transfer of Property Act. It was ar gued that the said provision is not applicable to a mere agreement to sell but applies only to a completed sale. Reliance was placed on Deep Chand v. Sajjad Ali Khan A.I.R. 1951 All. 93 (F.B.) paras 116, 128 and 135 in this connection. It was then argued that, in any case, even if the said provision is held to be applicable to agreements of sale, still, it had to be established that the plaintiff had not improperly declined to accept delivery of the suit property and it was contended that the plaintiff had failed to do so in the facts of the instant case. In any case, he had failed to establish that he had ever asked for delivery of the property from the defendant No. 3 and that the same had been refused to him by the said defendant. Shri Rajendra Kumar, learned counsel for the plaintiff-respondent, rebutted the said contention and claimed that Section 55 (6) (b) was applicable to agreements of sale and that in the facts of the present case, the plaintiff had clearly established, that he had not improperly declined to accept delivery of the pro perty and the said finding was recorded by both the courts below and was a finding of fact. He, therefore, claimed that his client was rightly held entitled to a mortgage decree by the lower appellate court. Learned counsel placed reliance on Rabindra Nath v. Har-endra Kumar A.I.R. 1956 Cal. 462, Saraswatibai v. Kishinchand A.I.R. 1942 Sind 120 and Balvanta v. tfira I.L.R. 23 Bom. 56. Shri G.P. Bhargava, learned counsel for the appel lants, pointed that Rabindra Nath v. Harendra Kumar A.I.R. 1956 Cal. 462. had been differed from by a Division Bench of the Gujrat High Court in a de cision Abdul Satar v. Manila A.I.R. 1970 Guj. 12, Section 55(6) (b) runs as under; "In the absence of a contract to the contrary the buyer and the seller of immovable property respectively are subject to the liabilities, and have the rights, mentioned in the rules next fol lowing, or such of them as are applicable to the property sold: (6) The buyer is entitled: - (a)........................ (b) Unless he has improperly declined to accept delivery of the property, to a charge on the property, as against the seller and all persons claiming under him, to the extent of the seller's interest in the property, for the amount of any purchase money properly paid by the buyer in anticipation of the delivery and for interest on such amount; when he properly declines to accept the delivery, also for the earnest (if any) and for the costs if any awarded to him of a suit to compel specific performance of the contract or to obtain a decree for its rescission." In my opinion, Deep Chand v. Sajjad Ali Khan A.I.R. 1951 All. 93 (F.B.) paras 116, 128 and 135 is not at tracted to the present controversy. We are concerned with the in terpretation of Section 55(6) (b) whereas the Full Bench in the re ported case was concerned with the interpretation of Section 55(2) of the Transfer of Property Act. The Full Bench, however, held that 'the language of Section 55 (2) is applicable both to a conveyance as well as to a contract of sale.' If it were permissible to draw an inference from implication then, in my opinion this Full Bench lends support to the contention of Shri Rajendra Kumar that Sec tion 55 (6) (b) applies both to conveyance as well as to an agreement of sale. In Rabindra Nath v. Harendra Kumar a learned Judge of the said Court laid down as follows: "The language of Section 54, T.P. Act emphasises that 'of itself a contract for sale does not create any interest or charge on the property. But where there is a part payment of the pur chase price or payment of what is called the earnest money, the provisions of Section 55 (6) (b), Transfer of Property Act would be attracted and it will be treated as though the ownership of the property had passed and there is a charge for part of the purchase money paid." In Saraswatibai v. Kishinchand A.I.R. 1942 Sind 120 it was laid down as fol lows: "The charge in favour of the buyer under Section 55(6) (b) in respect of earnest money comes into existence at the time the earnest money is paid." In Valvant v. Bira I.L.R. 23 Bom. 56 it was observed as under: "So, too, with regard to his claim to a charge on the property for the Rs.742, if he proves that they came from his- pocket, the authorities are numerous as showing that from the moment part of the purchase- money is paid, the purchaser has a lien upon the property to that extent, which lien can only be lost to him by reason of his falling to carry out his side of the contract." In Abdul Satar v. Manilal A.I.R. 170 Guj. 12 a Division Bench differed from the aforementioned Calcutta view. It held that it was bound by the law laid down in Balvant v. Bira I.L.R. 23 Bom. 56 and a passage was extracted from the judgment in the said case. The passage is reproduced be low: "Assuming that under Section 55 of the Transfer of Property Act the applicant as against his vendor has a lien or charge upon the subject-matter of his purchase for the earnest that has paid, and that a person holding a simple lien over immovable property is pro tan to the owner of such property within the meaning of Section 310-A the inclination of our opinion is to the contrary view we cannot think that the applicant can be said to be owner of even the interest over which his lien extends. The lien or charge which the section gives him. Is at the most, a contingent lien which will only become absolute if he is ready and willing to perform his contract when the time for performance arrives or if he properly declines to perform it." The Division in Abdul Satar v. Manilal A.I.R. 170 Guj. 12 observed: "Apart from the fed, that the decision would bind this Court the same having been prior to May 1, 1960 we agree with the view expressed there in and with respect, we are unable to ag ree with the view expressed by a Single Judge of the High Court of Calcutta in Rabindra Nath v. Harindra Kumar A.I.R. 1956 Cal. 462, relied up on by Mr. Oza for the appellant." In the earlier part of the judgment the Bench observed: - "Section 55(6) (b) on the other hand provides for an equitable remedy by making an express provision in respect of purchase money or the earnest money as the case may be. In other words, it creates a statutory charge and not a charge or interest which can be said to have been created by the act of parties. Not only that, but any such charge under" Section 55 (6) (b) of the Act again depends upon certain contingencies. It does not create an absolute charge as such. That charge arises provided it is shown that the buyer has not improperly declined to accept deli very of the property." It seems to me that the Gujarat High Court has not laid down that Section 55 (6) (b) does not apply to agreements of sale. It has only held that there is no absolute charge created by such an agree ment but the charge is contingent and arises only when it is proved that the purchaser 'is ready and willing to perform his contract when the time for performance arrives, or if he properly declines to per form it". Indeed, it seems to me that there is no decision which has ever laid down that Section 55 (6) (b) is not applicable to agreements of sale. In my view, looking to the phraseology which has been used in the said provision it can apply only to agreements of sale and not to completed sale. In this connection attention may be drawn to Note 1 to Section 55 in Chitaley's Commentary on the Transfer of Property Act, 4th Edn., 1S69. The first para of the above Note reads as under: "THIS section deals with the rights and liabilities of the buyer and the seller of immovable property. Some of these rights and liabilities refer to a stage after the contract for sale is entered into and before the completion thereof by the execution of the conveyance; some refer to a stage after the completion of the contract by the execution of conveyance and some refer to both. In other words this section deals with the rights and liabilities of the parties to a contract for sale as well as those of the par ties to a completed conveyance." Again, in Note 20 to the said section in the said Commentary it has been observed: "Buyer's charge-Paragraph 6 clause (b)--THIS clause enacts that, if before the title passes to the buyer, the latter has paid purchase-money or earnest-money, he has a charge on the sel ler's interest in the property for the amount of the purchase-money, etc., provided he has not improperly declined to accept delivery of the property. It follows the English law, that a pur chaser has got a lien for the money paid by him on the vendor's interest when the contract goes on." For these comments the commentator has placed reliance on A.I.R. 1968 Mad. 142, A.I.R. 1965 Patna 404, A.I.R, 1959 Kerala 389, A.I.R. 1953 Bom. 145, A.I R. 194.1 Lahore 407 (F.B.), A.I.R. 1938 Rang. 367, A.I.R. 1637 Bom. 142, A.I.R. 1937 Mad. 714, A.I.R. 1931 Mad. 592 and some other cases and on Halsbury, Laws of England, Volume XIX, pages 16 and 17. It, therefore, seems to me that Shri Bhar-gava's contention that contracts of sale are not covered by this pro vision is not tenable. Now, coming to the facts of the instant case, both the courts below have recorded a clear finding that the plaintiff was not in fault at all but the fault was that of the defendants Nos. 1 and 2. The finding of both the courts below is that the plaintiff was ever ready and willing to perform his part of the contract and to purchase the property but the defendants Nos. 1 and 2 wrongfully and in breach of the contract sold the same in favour of the defendant No. 3 and the latter during the pendency of the suit sold the property to the defendant No. 4. These findings may not be pure findings of fact in all circumstances, but in the facts of the instant case, they undoubt edly must be held to be findings of fact based on evidence on record, I do not find any substance in the learned counsel for the appellant's contention that the plaintiff did not ask for delivery from the defen dant No. 3. It is obvious that the contract of the plaintiff was with the defendants Nos. 1 and 2 and there was no privacy of contract between the plaintiff and the defendant No. 3. It was not for the plaintiff to ask for the delivery of the property from the defendant No. 3. He had asked the defendants Nos. 1 and 2 to perform their part of the contract but they did not do so and sold the property in fav our of the defendant No. 3. It should be observed that the question on notice is absolutely irrelevant so far as Section 55(6) (b) is con cerned. Whether the defendant No. 3 had or had no notice of the earlier agreement between the plaintiff and defendants Nos. 1 and 2 is absolutely of no consequence in so far as the said provision is con cerned. THIS position has been made clear by the deletion of the words 'on the notice of the payment' by the Transfer of Property (Amendment) Act, 1929. In the language of the said provision it seems that it has to be established by the defendants that the plain tiff improperly declined to accept delivery of the property. It was for the defendants to have shown that they were willing to give deli very of the property to the plaintiff but the latter refused to accept such delivery. There is nothing to suggest that the defendants, in cluding defendants Nos. 3 and 4, ever expressed their willingness to give delivery of the property to the plaintiff and the latter refused, to accept the same. Indeed, the way the suit has been resisted by the defendants, including the defendants Nos. 3 and 4, it seems that a conclusion to the contrary can be fairly drawn. All the defen dants, including the defendants Nos. 3 and 4, refused to give delivery of the property to the plaintiff denying his right to claim the same on the basis of his agreement dated January 18, 1951. I therefore, reject the second contention raised by the learned counsel for the appellants. Coming to the third and the last contention raised on behalf of the appellants, it has been contended by Shri Bhargava that no in terest should have been decreed by the lower appellate court. In this connection he has drawn my attention to the difference between purchase money and earnest in Section 55 (6) (b). I have already reproduced the said provision and learned counsel has emphasised that whereas the charge over the property is in respect of the pur chase money with interest thereon, so far as earnest is concerned there is no mention of any interest on the earnest amount. Shri Bhargava placed reliance on Shankarji v. Ratilal A.I.R. 1956 Bom. 443 where it has been laid down as follows: "Clause (b) of Section 55(6) consists of two parts. The first deals for the return of the purchase money properly paid by the buyer together with interest on such amount. Therefore, in terest is to be paid upon the amount of the purchase money. The other part consists of the return of the earnest and it provides, that the earnest should be returned to the purchaser together with costs, but makes no mention of the payment of interest. THIS shows that, whereas interest may be paid upon the purchase price, interest is not be paid on the amount of the earnest." It seems to me that this contention is correct. The plaintiff was, therefore, not entitled to the sum of Rs.990/-which he claimed as; interest on the earnest money till the date of the suit. However,, there is no good reason why the plaintiff should not get an interest pendentelite which he has claimed in the suit. In my opinion, in terest @ 6% per annum should be awarded in favour of the plaintiff, respondent No. 1 during the pendency of the suit and for future till the amount is realised by him. Shri G.P. Bhargava referred to my discretion under Section 34, C.P.C. In my opinion, in the circum stances of this case, there is no good reason why the court's discre tion should be exercised against the plaintiff-respondent No. 1 and. in favour of the defendants-appellants. The lower appellate court was clearly wrong in passing the decree in the manner in which it did. It decreed the suit for all the reliefs claimed. Obviously this was absolutely erroneous. The plaintiff had claimed two reliefs in the alternative and surely both could not be decreed. The judgment and decree of the lower appellate court is, there fore, modified. A preliminary decree is passed in favour of the plaintiff-respondent No. 1 against the defendants-appellants and the defendant- respondents Nos. 2 and 3 under Order 34, rule 4 read with rule 15, C.P.C. for a sum of Rs.3,000/-with pendentelite and future interest @ 6% per annum with costs throughout. The defendants-appellants and the defendants-respondents Nos. 2 and 3 shall have six months' time from the date of the decree to pay the decretal amount in court. The defendants-appellants and the defendants-respondents Nos,2 and 3 shall also thereafter pay such amount as may be adjudged due in respect of subsequent costs, charges and ex penses as provided in rule 10 together with subsequent interest on such sum respectively as provided in rule 11. It is further direct ed that in case the payment of the amount declared due under the preliminary decree is not made within the period of six months as laid down above, the plaintiff-respondent No. 1 shall be entitled to apply for a final decree directing that the mortgage property in suit, namely, house No. D1/11-12 situated in Mohalla Lahauri Tola, Varanasi or a sufficient part thereof be sold and the proceeds of the sale (after deduction therefrom all the expenses of the sale) be paid into court and applied in payment of what has been found or declared or under the preliminary decree to be due to the plaintiff together with such amount as may have been adjudged due in respect of sub sequent costs, charges, expenses and interest and the balance, if any, be paid to the defendants or other persons entitled to receive the same. The office is directed to prepare the decree in terms of Order 34, rule 4, C.P.C. in the light of the aforesaid directions.