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1936 Supreme(SC) 24
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD THANKERTON, SIR SHADI LAL, AND SIR GEORGE RANKIN.
RAJAH KOCHARLAKOTA VENKATA JAGANNATHA RAO GARU, ZAMINDAR OF POLAVARAM - Appellant
Versus
MAHARAJAH RAVU VENKATA KUMARA MAHIPATI SURYA RAO BAHADUR, ZAMINDAR GARU OF PITTAPUR, - Respondents
On appeal from the High Court at Madras.
Decided On : April 28, 1936.
Solicitors for appellants: Hy. S. L. Polak & Co.
Solicitors for respondent, the Maharajah of Pittapur: Douglas Grant & Dold.
A transfer of property for a price is a sale under Section 54 of the Transfer of Property Act, regardless of additional covenants. The seller maintains a statutory charge under Section 55(4)(b) for unpaid purchase money, enforceable by sale of the property.
Headnote:(A) Transfer of Property Act, 1882 - Sections 54 and 55(4)(b) - Sale - Vendor's Lien - A transfer of ownership in exchange for a price is a sale - The inclusion of a covenant by the transferee to abstain from raising objections to an auction sale does not change the character of the transaction from a sale - A seller is entitled to a charge upon the property in the hands of the purchaser for the amount of the purchase money and interest thereon.
(B) Transfer of Property Act, 1882 - Section 100 - Civil Procedure Code - Order XXXIV, Rule 15 - A charge for unpaid purchase money can be enforced by a sale of the property in the same manner as a simple mortgage.
(C) Liability of Minor - A person who was a minor at the time of the transaction cannot be held personally responsible for the payment of the debt; the liability is limited to the property charged.
Facts of the case:
A creditor purchased mortgaged property at an auction. By a court-sanctioned compromise, the creditor agreed to re-convey a specific portion of the property to the minor son of the original debtor for a specified sum. The purchase price remained unpaid. The creditor subsequently sued the defendant, who had attained majority, to recover the money, alleging a vendor's lien on the property. The High Court had previously held that the transfer was not a sale and treated the debt as unsecured, directing it to be realized from the general assets of the defendant.
Findings of Court:
The transaction constituted a sale as it was made for a definite sum of money and intended by both parties to be a sale. Consequently, the seller is entitled to a charge on the property for the unpaid purchase price. However, since the defendant was a minor at the time of the transaction, he cannot be held personally liable, and the debt cannot be recovered from his general assets.
Issues: Whether the transaction whereby the property became the property of the defendant amounted to a sale, thereby creating a vendor's lien or charge in favour of the transferor under the Transfer of Property Act.
Ratio Decidendi: A transaction described as a sale and conducted for a definite sum of money is a sale under Section 54 of the Transfer of Property Act, even if it contains additional stipulations or covenants. Under Section 55(4)(b) of the same Act, the seller is entitled to a statutory charge upon the property for the unpaid purchase money and interest, which can be enforced via sale of the property.
Result: Appeals allowed pro tanto; the plaintiff is entitled to a decree for the sale of the property to recover the debt and interest.
Legal Category Hierarchy
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property law
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transfer of property
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sale
- vendor's lien
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mortgages
- simple mortgage
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sale
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transfer of property
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civil procedure
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execution of decrees
- auction sales
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execution of decrees
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law of minors
- liability of minors
Judgement
Consolidated Cross-Appeals (No. 30 of 1932, and No. 98 of 1933) from a decree of the High Court (May 1, 1930) varying a decree of the Court of the Government Agent, East Godaveri (July 6, 1925).
The plaintiff, who had obtained a decree against the defendant for more than four lakhs of rupees in respect of money lent on the security of certain property, brought the mortgaged property to sale by auction and himself purchased it. The balance of the purchase price, after deducting the sum due to the plaintiff, was claimed by the puisne mortgagees. By arrangement with the defendant, who was then a minor, and his guardian, it was arranged that the plaintiff should re-convey to the minor for Rs. 139,986 (a sum equal to the above mentioned balance of the purchase price) a certain village, part of the property which he (the plaintiff) had bought by auction, in consideration of the sons not taking any proceedings to set aside the auction sale. It was agreed that the minors guardian should pay the Rs. 139,986, and the compromise transaction was duly sanctioned by the Court as beneficial to the minor. Nothing having been paid under that arrangement, the plaintiff sued the minor, who had attained majority, to recover the money, alleging that he had a vendors lien on the village in question for the unpaid purchase price.
The question in this appeal was whether the transaction whereby the village became the property of the defendant did or did not amount to a sale.
The facts appear from the judgment of the Judicial Committee.
The trial judge granted the plaintiff a decree for sale of the village.
On appeal the High Court (Beasley C.J. and Curgenven J.) held that the transfer of the village was not a sale which would create a lien in favour of the plaintiff; but treating the debt as unsecured they directed that it should be realized from the " general assets of the defendant. The appeal is reported at ( 1931) I. L. R. 54 M. 163.
1936. Jan. 30, 31. Sidney Smith for the appellant.
De Gruyther K.C., Subba Row and Sastri for the respondents.
[Reference was made to Waghela Rajsanji v. Shekh Masludin (( 1887) L. R. 14 I.A. 89.), Ramajogayya v. Jagannadhan (( 1918) I. L. R. 42 M. 185, 187.), Hunooman-persaud Panday v.
2 Law. Rep. 63 Ind. App. 304 ( 1935- 1936) Rajah Kocharlakota v. Maharajah Ravu Venkata
84
Musummat Babooee Munraj Koonweree (( 1856) 6 Moo. I. A. 393.), Turner v. Edgell (( 1837) 6 L.
J. Eq. (n. s.) 201.), Kedar Nath Shaha v. Emperor (( 1903) I. L. R. 30 C. 921.), Madam Pillai v. Badrakali Ammal (( 1922) I. L. R. 45 M. 612.), Bhawani Kumar v. Mathura Prasad Singh (( 1912) L.
R. 39 I. A. 228.), and Ariyaputhira v. Muthukomaraswami (( 1912) I. L. R. 37 M. 423.).]
April 28. The judgment of their Lordships was delivered by
SIR SHADI LAL. The circumstances which led to the action giving rise to these consolidated appeals, brought by both the parties, may be shortly stated. One Krishna Rao, the late Zamindar of Polavaram in the Madras Presidency, borrowed, on different dates, from the Maharajah of Pittapur (to be described hereinafter as the plaintiff) large sums of money; and secured the payment thereof by executing three successive mortgages of his estate in favour of the creditor. The last of these mortgages was granted on October 22, 1913, as a security for a loan of more than three lakhs of rupees; and it was on the strength of this mortgage that the plaintiff instituted, after the death of the mortgagor, a suit for the recovery of the debt, impleading as defendant the mortgagors widow. She subsequently adopted a minor boy, Jagannatha Rao, as a son to her deceased husband, and the adopted son was then added as a defendant (to be referred to hereinafter as the defendant). The suit resulted in a decree for more than four lakhs of rupees, to be realized by the sale of the mortgaged property. The decree-holder brought the property to sale, and on October 28, 1920, he himself purchased it, with the leave of the Court, for
