KRISHNASWAMI MUDALIAR Vs. VIJIARAGHAVA PILLAI

JUDGEMENT

(1.) This is an appeal from the judgment of the learned District Judge of North Arcot dismissing the suit against defendants 2 and 3 in reversal of the decree of the District Munsif of Arni. On 22nd September, 1928, the plaintiff sold certain properties of his to the first defendant for a sum of Rs. 1,000. Rs. 500 was paid in cash and for the balance of Rs. 500 a promissory note was executed by the first defendant in favour of the plaintiff which carried interest at 1 per cent, per mensem. The first defendant committed default in the payment of the said money and this action has been brought for the recovery of Rs. 620 being the principal and interest due in respect of the said promissory note up to the date of the suit. The plaintiff also prayed for a sale of the said properties on the ground that he had a statutory charge for the payment of the said sum of money under Section 55(4) (b) of the Transfer of Property Act. Defendants 2 and 3 have been impleaded as parties to the suit as they purchased the properties from the first defendant by sale deeds dated 17 November, 1930 and 11 August, 1930, respectively. The first defendant did not resist the plaintiff's claim but defendants 2 and 3 pleaded that they are bona fide purchasers without notice of the existence of any such charge and further that the plaintiff had also waived the charge by taking the promissory note above referred to. The learned District Munsif found that defendants 2 and 3 who are the sons-in-law of the first defendant were fully aware of the nonpayment of the balance of the purchase money of Rs. 500, that the plaintiff by taking the promissory note for the said amount did not lose the charge given to him by statute and the fact that the plaintiff received a payment of Rs. 60 towards the interest on the amount of the promissory note could not be taken as a circumstance from which waiver of any such charge could be inferred. The learned District Judge was of the opinion that the recital in the sale deed showed that the entire consideration had been paid partly in cash and partly by the execution of the suit promissory note. He was also of the opinion that as the whole of the purchase money was paid there was no statutory charge in the case. He summed up his conclusion thus: I am of opinion, after careful consideration, from the language used in the sale deed itself, from the evidence of the plaintiff himself on the point and from the other circumstances, that the intention of the parties in this case was that the execution of the promissory note was to be treated as equivalent to payment of the purchase money pro tanto and that the promissory note was not taken merely as a collateral security.

(2.) The question is, is the conclusion of the learned District Judge correct? The sale was for a sum of Rs. 1,000 and the receipt of the consideration is expressed thus: For my business I have received Rs. 8C0 by way of cash and by way of bond and the amount which I have agreed to receive before the Sub- Registrar is Rs. 200.

(3.) It is plain therefore from these recitals that the consideration for the deed is a sum of money. The evidence of the plaintiff does not carry the matter further except establishing the fact that what was received in cash out of the sum of Rs. 800 was only Rs. 300 and for the balance of Rs. 500 a promissory note was taken and the bond referred to in the promissory note for Rs. 500 which carried interest at one per cent, per mensem. With reference to the other circumstances referred to by the learned Judge, Mr. Krishna Rao for the defendants 2 and 3 stated that the only circumstance in the case was the receipt of the payment of interest of Rs. 60 under the promissory note and there were no other circumstances in the case. Therefore on these admitted facts the question arises whether the plaintiff has no statutory charge for the sum of Rs. 500 covered by the said suit promissory note, and if he had a charge, whether he could be said to have waived it. As pointed out by their Lordships of the Privy Council in Webb V/s. Macpherson (1903) 13 M.L.J. 389 : L.R. 30 I.A. 238 : I.L.R. Cal. 57 (P.C.), the statutory charge conferred by Section 55(4)(b) of the Transfer of Property Act differs from the vendor's lien under the English Law and that in order to exclude the charge given by the statute, the Court has to find something either express contract or at least something from which it is a necessary implication that there is such a contract. Their Lordships further pointed out that the charge would not be excluded by any contract, covenants, or agreement with respect to the purchase money. It will be seen that under Section 55(4)(b) of the Transfer of Property Act the charge subsists in every case where the amount of the purchase money remains unpaid either for the whole or for the part remaining unpaid. What is necessary therefore is payment in fact or what in law would constitute such a payment. With reference to a vendor's lien under the English Law it was held that the mere fact that the consideration was stated in the deed as having been received and the receipt of the vendor endorsed on it would not, as between a vendor and vendee and anybody claiming under the latter with notice of non-payment, amount to an abandonment of the vendor's lien vide the observations of Lord Eldon in Mackreth V/s. Symmons (1808) 15 Ves. Jun. 329 at 337 : 33 E.R. 778, and the taking of a bill or a promissory note was held not to discharge such a lien. Vide Grant V/s. Mills (1813) 13 R.R. 101. The same rule will apply to the case of a statutory charge. A bill or note is always taken as a conditional payment; the law recognises it as a payment, but if a bill or note is dishonoured, the obligation to pay the amount covered by it would remain and is never put an end to. Lord Redesdale in Hughes V/s. Kearney 1 Sch. And Lef. 132 : 9 R.R. 30 at 33, puts the position thus: Suppose bills given as part of the purchase money, and suppose them drawn on an insolvent house, shall the acceptance of such bills discharge the vendor's lien? They are taken, not as a security, but as a mode of payment.