KATHAMUTHU PILLAI Vs. SUBRAMANIAM CHETTIAR

JUDGEMENT

(1.) The plaintiff's suit is for specific performance of a contract of sale entered into with him by the 1 defendant. The District Munsif gave a decree for specific performance and the Subordinate Judge dismissed the appeal of the 1st defendant. He has preferred this second appeal.

(2.) The contention of the appellant is that the direction in the decree "that 1st defendant do draw the above amount on discharging the decree in O.S. No. 185 of 1910 of the Principal District Munsif's Court of Madura and filing a copy of the record of satisfaction" is bad in law. The argument of Mr. Rajah Aiyar is that when a decree for specific performance is given against the vendor he should not be directed to redeem any encumbrance on the property which was not disclosed to the vendee. The agreement, dated the 18 day of October, 1909, does not mention the existence of any encumbrance on the property contracted to be sold, nor is there any recital in it that there are no encumbrances on the property. The finding of the learned Subordinate Judge is that the 1 defendant did undertake to free the property from two encumbrances which were mentioned in the certificate of sale, Ex. C. The 1 defendant purchased the property in Court auction in execution of his decree in O.S. No. 141 of 1902. In the sale proclamation he stated that the encumbrances had been discharged. In Ex. C, which was drawn up by the Court, there is a recital that the encumbrances have been discharged. The finding is that the 1 defendant knew that these encumbrances had not been discharged and that he undertook to discharge them when the agreement, Ex. A, was entered into. The question is, when a vendor undertakes to discharge the encumbrances on the property, whether the Court decreeing specific performance can direct him to discharge the encumbrances before he is paid the consideration for the sale? The contention of Mr. Rajah Aiyar is that the Court should decree specific performance and if the vendee finds that there are encumbrances on the property, he should bring a suit for damages against the seller. Under Section 55, Clauses (1) & (g) of the Transfer of Property Act, a seller is bound to discharge all the encumbrances on the property then existing. If the vendee is not aware of the existence of any encumbrance on the property when the contract of sale is entered into, and he comes to know of the existence of any encumbrances he can ask the seller to discharge those encumbrances before a sale is effected, and when he sues for specific performance of the contract of sale could it be said that he is not entitled to have a direction in the decree that the seller should discharge the encumbrances on the property before he is paid the consideration for the sale? The provisions contained in Section 18(c) of the Specific Relief Act apply to this case: where the vendor professes to sell unincumbered property and if it is afterwards found that the property is mortgaged for an amount not exceeding the purchase money, the purchaser may then compel the seller to obtain a conveyance from the mortgagee, or himself pay off the encumbrances out of the unpaid purchase money. Here, on the finding of fact that the vendor undertook to discharge the encumbrances, the purchaser was. entitled to insist upon his discharging them before a conveyance is effected through Court. He is entitled to ask the Court to give a direction in the decree that the encumbrances should be discharged before the consideration for the sale is paid to him.

(3.) Considerable argument was advanced by Mr. Rajah Aiyar that the provisions of Section 55 do not apply to executory contracts; in other words, the covenants contained in Section 55 of the Transfer of Property Act apply only to completed sales and not to agreements of sales. Under Section 55 the seller is bound to do certain things. One of them is to answer to the best of his information all relevant questions which may be put to him by the buyer in respect of the property and the title thereto, and the other is to produce before the buyer on his request for examination all documents of title relating to the property which are in the seller's possession. It cannot be said that these two things should be done after the sale is effected. The covenants contained in Section 55 apply to contracts of sale as well as to completed contracts. In this connection, with great respect, I am unable to agree with the reasoning of Sadasiva Aiyar, J. in Adikesavalu Naidu V/s. Guruntha Chetty (1916) ILR 40 Mad 338: 32 MLJ 180 (FB). Abdur Rahim, J. was of opinion that the covenants contained in Section 55 apply to contracts of sale as well.