TRIPURA CHARAN CHOWDHURY Vs. NIKUNJA BEHARI CHOWDHURY

JUDGEMENT

(1.) The facts giving rise to the present appeal are as follows : On 10 February 1929, the plaintiffs executed a deed of sale in respect of four plots of land in favour of the defendant, representing that all four plots were free from incumbrances. The consideration agreed upon was Rs. 1500, out of which Rs. 1067-5-3 was to be paid by the vendee to Nibaran Chaudhury, a creditor of the plaintiffs, and the balance, Rs. 432-10-9 was to be paid by the vendee to another creditor, viz. the Mahalaxmi Bank. The vendee paid Rupees 1067-5-3 to Nibaran Chaudhury in accordance with the agreement. But on 11 February 1929, that is to say on the day following the execution of the deed, he discovered that one of the four plots together with other properties of the plaintiffs had been mortgaged to the Mahalaxmi Bank. On coming to know of this mortgage, the yendee paid Rs. 300 only to the Mahalaxmi Bank, and retained the balance, Rupees 132-10-9, in his own hands. Subsequently the Mahalaxmi Bank instituted a suit on their mortgage, impleading both the plaintiffs and their vendee, the present defendant, as defendants and obtained a decree. In execution of that decree, the mortgaged property was put to sale, and that plot which had been sold to the present defendant and which was covered by the mortgage was purchased by the Bank for the sum of Rs. 21 only.

(2.) Thereafter, the plaintiffs instituted the present suit claiming from the defendant refund of Rs. 132-10-9 being the balance of the purchase money together with interest and costs. The Court of first instance came to the conclusion that both parties to the deed of sale were aware that one of the plots was subject to the mortgage in favour of the Mahalaxmi Bank, and decreed the suit for Rs. 132-10-9 and proportionate costs, rejecting plaintiffs claim for interest on the amount. The Court of Appeal below held that at the time of execution of the deed, the vendee was not aware that one of the plots was subject to a mortgage, but that the vendee came to know this fact on the day following the execution of the deed. The Court of Appeal further held that the non-disclosure of this incumbrance was unintentional, and that therefore there was no fraudulent misrepresentation of facts. The learned Subordinate Judge allowed the appeal in part, holding that the vendee was entitled in equity to deduct from the balance of the purchase money in his hands the value of the plot which was sold in execution of the Bank's mortgage decree. He accordingly decreed the suit for Rs. 111-10-9 with proportionate costs. Against that decree the vendee defendant has brought the present appeal.

(3.) It must be taken as settled that the vendee had no knowledge of the mortgage at the time of entering into the contract. In the circumstances Section 19, Contract Act, would apply and the contract was voidable at the option of the vendee, or in the alternative the vendee was entitled to insist that he should be put in the position in which he would have been if the representations made had been true. The vendee did not exercise his option of repudiating the contract, but he was entitled to insist that the vendor conveyed to him the property freed from incumbrances. Further, under Section 55(5)(b), T.P. Act, he was entitled to retain a sufficient sum out of the purchase money to pay the amount due to the person entitled under the mortgage. But the amount in his hand was not sufficient for that purpose. In fact as the mortgage debt was apparently about Rs. 4000, it is doubtful whether the whole of the consideration money would have been sufficient to pay off the incumbrances. The questions for consideration are : (1) whether in these circumstances, the vendee was entitled to retain a portion of the consideration until the vendor satisfied the mortgagee and freed the property from the incumbrance, or at least until the vendor furnished the balance of the money necessary for that purpose; and (2) when the vendor failed to satisfy the mortgagee and allowed the property to be sold in execution of the mortgage decree - thus rendering the original contract incapable of execution - whether the vendor was entitled to claim any or all of the balance of the purchase money in the hands of the vendee.