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1920 Supreme(SC) 15
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
VISCOUNT CAVE, LORD MOULTON, SIR JOHN EDGE, AND MR. AMBER ALI.
RAMATHAI VADIVELU MUDALIAR - Appellant
Versus
PERIA MANICKA MUDALIAR - Respondents
On Appeal from The High Court at Madras.
Decided On : Feb. 29. 1920.
Solicitors for appellant:Barrow, Rogers & Nevill. Solicitors for respondents: T. L. Wilson & Co.
Section 66 of the Code of Civil Procedure bars suits claiming a court-certified purchase was made on behalf of the plaintiff, but this bar does not apply to agreements to convey the property entered into subsequent to the purchase.
Headnote:(A) Code of Civil Procedure - Section 66 - Suit against purchaser - Purchase on behalf of another - Bar on suits - The object of the section is to prevent benami purchases at execution sales. While the distinction between a purchase on behalf of another and a purchase coupled with an undertaking to convey to another at the price of purchase is narrow, a suit based on an agreement entered into subsequent to a court-certified purchase is not affected by the bar under this section.
(B) Specific Performance - Agreement to convey - Subsequent agreements - Where a purchaser at a court auction enters into subsequent agreements, such as a panchayat award or a compromise in a legal proceeding, to convey the property to other parties, such agreements are enforceable and not barred by the statutory restrictions on benami claims.
Facts of the case:
An original owner's property was subject to multiple mortgages. To satisfy debts, the property was conveyed to several vendees. Later, first mortgagees enforced their mortgage, leading to a court auction. To protect their interests, the vendees entered into an oral agreement with three persons, including the appellant, that the latter would bid for the property at auction, with the vendees providing financial assistance. The purchasers agreed to convey the property back to the vendees upon payment of the purchase price. The appellant purchased a significant portion of the land. Subsequent to the sale, a panchayat award and a compromise in a separate suit further affirmed the appellant's obligation to convey the property. The appellant later refused to execute the conveyance, leading to suits for specific performance.
Findings of Court:
The court upheld the finding that the appellant had entered into the agreement and received the financial contribution. It determined that the subsequent agreements made after the auction sale were valid and enforceable, as they were not covered by the bar under Section 66 of the Code of Civil Procedure.
Issues: Whether a suit for specific performance of an agreement to convey property purchased at a court auction is barred by Section 66 of the Code of Civil Procedure, particularly when subsequent agreements to convey were entered into after the purchase was certified.
Ratio Decidendi: Section 66 of the Code of Civil Procedure bars suits on the ground that a purchase was made on behalf of the plaintiff to prevent benami transactions. However, this statutory bar does not extend to agreements entered into after the purchase has been certified by the court. Because the appellant entered into subsequent agreements via a panchayat award and a court compromise to convey the property, these obligations are independent of the original purchase arrangement and are therefore enforceable.
Result: Appeals dismissed with costs.
Legal Category Hierarchy
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practice and procedure
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civil procedure
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court auctions
- section 66 cpc
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court auctions
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civil procedure
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property law
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transfer of property
- specific performance
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transfer of property
Judgement
Consolidated appeals from a judgment and two decrees of the High Court (April 10, 1916) reversing two judgments and decrees of the Subordinate Judge of Chingleput.
Two suits were brought by the respective respondents against the appellant, each claiming specific performance of an agreement to convey certain immovable property. The circumstances giving rise to the suits, and the effect of the judgments below appear from the judgment of their Lordships.
1920. Feb. 2. Dube for the appellant. The suits were barred by s. 66, sub-s. 1; they were brought on the ground that the purchase was "made on behalf of the plaintiffs," within the meaning of that section Kishan Lal v. Garuruddhwaja Prasad Singh (( 1899) I. L. R. 21 A. 238.) ; Ganga Baksh v. Rudar Singh (( 1900) I. L. R. 22 A. 434.) ; Suraj Narain v. Ratan Lal . (( 1917) L. R. 44 I. A. 201, 211.) There is no valid distinction between a suit brought upon the ground that the property was bought on behalf of the plaintiff, and one based on an agreement that the purchaser shall convey to the plaintiff.
2 Law. Rep. 47 Ind. App. 108 ( 1919- 1920) Ramathai Vadivelu Mudaliar V. Peria Manicka Mudaliar
The agreement gives rise to no interest, equitable or otherwise, in the property Transfer of Property Act (IV. of 1882), s. 54.
Kenworthy Brown and Palat for the respondents. Sect. 66, sub-s. 1, does not apply since it was found as a fact that the respondents agreed to convey the property. The object of the sub-section, which is in the same terms as s. 317 of the Civil Procedure Code, 1882, was to prevent benami purchases at execution gales Ganga Sahai v. Kesri . (( 1915) L. R. 42 I. A. 177, 182.) The claim in the suits was not based on a benami purchase ; the agreement was that the purchaser should buy for himself, and that he should afterwards convey to the appellant and others. Further, the evidence shows that in 1907, after the certified purchase, there was a fresh agreement to convey the property. That agreement, in any case, was not one to which 8. 66, sub-s. 1, could apply Venkatappa v. Jalayya. (I. L. R. 42 M. 615 (F. B.).)
Dube replied.
Feb. 20. The judgment of their Lordships was delivered by
VISCOUNT CAVE. These are consolidated appeals from two decrees of the High Court of Judicature at Madras reversing two decrees of the Subordinate Judge of Chingleput, and giving judgment in both suits for the plaintiffs. The following statement of the facts is founded upon the findings of the High Court, which, for reasons which will hereafter appear, their Lordships accept as correct.
One Sundarammal was the owner of certain lands in the village of Kovur and elsewhere in the Chingleput district, subject to a mortgage for Rs. 25,000 and interest and to a second mortgage for Rs. 9500 and interest, and had incurred other debts. In the year 1902 the second mortgagees brought a suit to enforce their mortgage, obtained a decree for the sale of the mortgaged property, and themselves purchased it at the auction at a low price. Thereupon Sundarammal, in order to get this sale set aside under s. 310a of the Code of Civil Procedure and to provide for her other debts, entered into an agreement with four persons named Murugappa, Kandasami, Munisami and Ponnambala, for the sale of the whole property to them at the price of Rs. 65,000, being a sum sufficient to pay off the mortgage and other debts and to provide a small balance for the vendor. These persons were friends of Sundarammal, and it was understood that they should dispose of the lands piecemeal and, after paying out of the proceeds of sale the mortgage and other debts of Sundarammal and any money due to themselves, should pay over to her any balance which might remain. The property was accordingly conveyed to the four persons above named (who will be referred to as "the vendees ") on August 10, 1902 ; and on August 15, 1902, they paid into Court a sum of Rs. 15,598, being a sum sufficient to satisfy the second mortgagees, and got the s
