KARAM SINGH Vs. GUR DAYAL SINGH

JUDGEMENT

(1.) This appeal arises out of a suit in which the plaintiffs seek to recover a sum of Rs. 476 principal and Rs. 83 interest, in all Rs. 559, against all the defendants, and in default, that certain property should be sold. The facts of the case were somewhat complicated, but for the purpose of the questions of law which we have to decide it is not necessary to go with great detail into them. On the 28th of August, 1908, the plaintiffs sold certain property to Gur Dayal. This property was sold in consideration of Rs. 250. In the detail of consideration it is stated that the vendor has received Rs. 90 in cash and that he has left Rs. 160 for payment to certain creditors of the vendor. We may mention that the nature of the debt which was to be paid was a simple contract debt and not a mortgage debt. As a matter of fact the purchaser did not pay the creditors of the vendor. His alleged reason for not doing so was that he did not get possession of part of the property sold, and there certainly was a dispute about the matter. The vendor s title was by no means perfect. On the 1st of April, 1909, Gur Dayal sold the property (together with other property) to one Kundan. Kundan on the 27th of April, of 1909, resold the property to Jiwan Singh and Kapur Singh, the defendants 5 and 6. It will thus appear that neither Gur Dayal nor Kundan have any longer any interest in the property. The plaintiffs allege, that in consequence of the failure of Gur Dayal to pay Rs. 160 left in his hand, a suit was brought against them by the creditors and a decree was obtained against them and the appellants had to pay Rs. 390. Their present claim is made up of this sum together with interest and costs. The contention in favour of the plaintiffs is that under Section 55, Clause (4), of the Transfer of Property Act they have a charge against the property and that the property in the hands of defendants 5 and 6 is liable to be sold. The court of first instance gave the plaintiffs a decree, but only for Rs. 160 together with interest at 6 per cent. The lower appellate court thought that the plaintiffs were entitled to the full amount which they had to pay to satisfy the decree and made its decree accordingly. It seems difficult to understand how, under any circumstances, the property in the hands of defendants 5 and 6 could have been made liable for anything more than the amount of the Rs. 160 together with interest thereon. Section 55, Clause (4), of the Transfer of Property Act provides that the seller is entitled where the ownership of the property has passed to the buyer before payment of the whole of the purchase-money to a charge upon the property in the hands of the buyer for the amount of the purchase-money or any part thereof remaining unpaid and for interest on such amount or part. Apart from authority, it seems difficult to treat the words "in the hands of the buyer" as mere surplusage. A vendor s charge for unpaid purchase-money is obviously one which in all cases ought to (and in most cases would) be promptly enforced. The broad contention of the plaintiffs is that the charge can be enforced against all subsequent transferees quite irrespective of notice. If this contention be correct every purchaser of immovable property buys with the possibility of there being a charge on the property in respect of every previous transfer; which would mean that no purchaser is safe and the door would be opened to any amount of fraudulent claims. The respondents rely on the case of Webb v. Macpherson (1903) I.L.R. 31 Calc. 57. The facts in that case were very peculiar and very different from the facts in the present case. By an indenture, dated July 17th, 1892, one Lloyd conveyed certain property to one Tucker. The consideration was Rs. 81,210, of which Rs. 30,000 was paid in cash and the balance of Rs. 51,210 was to be secured by the formal undertaking of the purchaser. The indenture recited that this "formal undertaking" had been executed by the purchaser. The money was not paid, and Lloyd was allowed to retake possession. Macpherson subsequently purchased three-fourths of the property and it was from Lloyd that Macpherson got possession. Macpherson thus purchased the property with express notice that Lloyd had not been paid. Their Lordships no doubt held that Lloyd s executors had a charge on the whole property including the portion sold to Macpherson. In this connection it must be borne in mind that the meaning of the words "in the hands of the buyer" in Section 55, sub-Section 4, of the Transfer of Property Act were not considered. The case may fairly be said to be an authority for the proposition that, notwithstanding the words "in the hands of the buyer," the seller can enforce the charge mentioned in Section 55, sub-Section 4, against the property in the hands of a subsequent purchaser who has notice of the fact that the purchase- money in the first transfer, or some part of it, has not been paid. This would be in accordance with the general principles of equity, though it is going outside the provisions of Section 55, Clause 4, where their Lordships say we are to look to see the nature of the right. To hold, however, that the charge can be enforced against subsequent purchasers without notice would mean that the court should treat the words "in the hands of the buyer" as superfluous and meaningless and would in our opinion be extending the decision in Webb v. Macpherson (1903) I.L.R. 31 Calc. 57 in a manner never intended by their Lordships. In our opinion the charge mentioned in Section 55 (4) cannot be enforced against subsequent transferees for value without notice.

(2.) It is next contended that the subsequent purchasers in the present case had "notice." This contention is based on the following line of argument: In the sale- deed of 1903, it is mentioned that Es. 160 had been left in the hands of the purchaser for payment to the creditor of the vendor, therefore it was the duty of Kundan who made the purchase on the 1st of April, 1909, to enquire if his vendor had fulfilled his contract and paid the creditor. Again it was equally the duty of defendants 5 and 6, when the third transfer was made, to examine the transfer to his vendor and having done so to ascertain if the Rs. 160 had been paid. It is said that not having made these inquiries the defendants had constructive notice (see Section 3, Clause (c), Transfer of Property Act). In our opinion it cannot be said, in the circumstances of the present case, that the transferees in 1909 "wilfully abstained from an inquiry or search which they ought to hare made." In our opinion defendants 5 and 6 did not have notice of the alleged charge. We have already mentioned that in the present case the plaintiffs contention is based on the fact that it appears from the deed of transfer that Rs. 160 was left with the buyer for payment to a creditor of the seller. In Webb v. Macpherson, at page 73 of the report, their Lordships say: "There is no doubt, both on principle and authority, that a conveyance or sale in consideration of a covenant to pay a sum of money in the future is different from a sale in consideration of money which the purchaser covenants to pay. The distinction may seem fine, but if is a real distinction, and it is one which, if made out, might have had the effect which the High Court have given to it." Their Lordships then go to deal with the particular terms of the conveyance in the case before them. There is a marked distinction between the terms of that conveyance and the present. It would appear in this case that the agreement was to pay, not the vendor, but the creditor of the vendor. In Webb v. Macpherson the agreement was to pay Lloyd (the vendor) himself. In this case it was only when the buyer neglected to pay the creditor and the creditor got a decree against the seller that the latter brought or was entitled to bring the present suit. In Abdulla Beary v. Mammali Beary (1910) I.L.R. 33 Mad. 446, which was a case very like the present, and in which Webb v. Macpherson was cited, the Madras High Court held that the vendor had no charge on the ground that the consideration undischarged by the buyer was an agreement to pay the creditor and not unpaid purchase-money.

(3.) In the case of Meghraj Vaish v. Abdullah Khan (1914) 12 A.L.J. 1034, Mr. Justice Sundar Lal considered that the case of Webb v. Macpherson applied and he further considered that there had been a finding of fact by the lower courts (binding on him in second appeal) that the subsequent transferee had notice.