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1909 DIGILAW 17 (SC)

MUSAMMAT IZZAT-UN-NISSA BEGAM v. KUNWAR PERTAB SINGH

1909-07-30

LORD COLLINS, LORD DUNEDIN, LORD MACNAGHTEN, SIR ANDREW SCOBLE, SIR ARTHUR WILSON

body1909
Judgement Appeal from a decree of the High Court (July 4, 1904) reversing by a majority a decree of the Subordinate Judge of Bareilly (April 1, 1902). The predecessor of the appellants as decree-holder in a mortgage suit bought in 1894 most of the villages comprised in her mortgage, subject to two prior mortgages held by the same persons for Rs. 10,000 and Rs. 20,000 respectively. In 1898 and 1899 suits on those mortgages were dismissed on the ground of their invalidity. (See ( 1892) L. R. 19 Ind. Ap. 196.) The appellants thus became un-incumbered owners thereof, their predecessor having died in 1897. On July 8, 1901, Rajah Inayat Singh, the then representative of the owner and mortgagor of the villages, sued the appellants, claiming that the amounts calculated as due under the two invalid mortgages with interest, amounting altogether to Rs. 1,61,776, were due to him as unpaid vendors purchase-money. The appellants pleaded, amongst other things, that their predecessor had become by her purchase absolute owner, that there had been no contract with the plaintiffs predecessors, and Law Rep. 36 Ind. App. 203 ( 1908- 1909) Musammat Izzat-Un-Nissa Begam V. Kunwar Pertab Singh 99 that the fact of the property having been sold subject to specified incumbrances would not entitle the plaintiff to claim the moneys represented thereby from the auction purchaser. The Sub ordinate Judge dismissed the suit. He said the plaintiff "claims the principal and interest of the aforesaid two prior mortgages proclaimed at the time of sale on the ground that the amount claimed by him should be considered as part of the purchase-money which the purchaser undertook to pay to the incumbrances and which he had not had to pay because the said prior mortgages were subsequently held to be invalid." Ho considered that the plaintiff had suffered a great hardship, but that there was no remedy in law or equity for it. In appeal Stanley C.J. and Burkitt J. differed in opinion, and it was reheard before three judges, namely, themselves and Blair J. The Chief Justice and Blair J. reversed the decision. The mortgagee decree-holder had got leave to bid on the express representation that the two mortgages were subsisting mortgages and on no other ground. In appeal Stanley C.J. and Burkitt J. differed in opinion, and it was reheard before three judges, namely, themselves and Blair J. The Chief Justice and Blair J. reversed the decision. The mortgagee decree-holder had got leave to bid on the express representation that the two mortgages were subsisting mortgages and on no other ground. The Court subsequently overruled an objection to the sale for inadequacy of price on the ground that having regard to the incumbrances the price was fair and reasonable. Consequently the purchaser was estopped from denying the truth of her representations and from claiming to be relieved from a liability which she expressly undertook when she purchased. Burkitt J. held that the amount of the invalid incumbrances was not part of the purchase-money ; and that the purchaser decree-holder did not by her representation, which was true in fact, that the property was subject to two mortgages incur any liability to pay the amount of them, whether valid or invalid. She took the risk of having to pay and was subsequently exonerated therefrom. With regard to estoppel she did not by any act of hers or her agent induce any person to change his position injuriously to himself. In the result a decree was given to the mortgagor plaintiffs for such proportionate part of their claim as might fairly be attributable to the villages purchased by the mortgagee decree-holder, Intizam Begam. This would necessitate the taking of an account as to the respective values of the villages comprised in the two mortgages so as to ascertain the proportion of the debts which was properly attributable to the villages purchased by Intizam Begam. The suit was remanded to the Lower Court under s. 562, C. C. P., to be disposed of on the merits. De Gruyther, K.C., and W. A. Raikes, for the appellants, contended that there was no question of estoppel in this case. Their predecessor bought the right, title, and interest of the judgment debtors, and after the purchase was completed and the transaction was at an end they were bound to make good all valid incumbrances and entitled to all advantages which might accrue to the property. The vendors interest in the property was extinguished and it was immaterial to him whether the incumbrances were enforced against the purchaser or declared to be invalid. The vendors interest in the property was extinguished and it was immaterial to him whether the incumbrances were enforced against the purchaser or declared to be invalid. Reference was made to Shamsunder Lal v. Achchan Kunwar (( 1898) L. R. 25 Ind. Ap. 183.), Birjmohun Thakoor v. Rai Umanath Chowdhry(( 1892) L. R. 19 Ind. Ap. 154.), Lala Amarnath Sah v. Achan Kuar (( 1892) L. R. 19 Ind. Ap. 196.), C. C. P., ss. 235, 237, 287, 294, 306, 312, and 316, and Transfer of Property Act (IV. of 1882), s. 8. The respondents did not appear. The judgment of their Lordships was delivered by LORD MACNAGHTEN. In a suit commenced in 1887 in the Court of the Subordinate Judge of Bareilly, Intizam Begam obtained the usual mortgage decree for the sale of nine Law Rep. 36 Ind. App. 203 ( 1908- 1909) Musammat Izzat-Un-Nissa Begam V. Kunwar Pertab Singh 100 villages hypothecated to her as security for an advance of Rs. 30,000. This decree was affirmed by the High Court on February 25, 1889. In June, 1889, an order was made for the sale of these nine villages. The usual proclamation was issued. It stated that the property was subject to two prior mortgages for Rs. 10,000 and Rs. 20,000 respectively. At the auction sale Intizam Begam, having got permission to bid, bought all the villages but one for Rs. 64,000. The remaining village was also sold, but not to her. At the time of the sale the position of the prior mortgages, which had been duly registered, was this Both mortgages had been granted to, and were then held by, the same persons. No steps had been taken to enforce the first mortgage, which purported to comprise thirteen villages, including all those in mortgage to Intizam Begam. In respect of the second mortgage, which included one of the villages mortgaged to Intizam Begam, the usual mortgage decree had been obtained in the Court of the Subordinate Judge of Bareilly on June 9, 1892. So matters stood at the date of the auction sale, which was held on April 20, 1894. But on January 15, 1895, the decree of June 9, 1892, was reversed by the High Court; and the order of the High Court was ultimately affirmed by this Board on July 27, 1898. In the meantime a suit was brought to enforce the first mortgage. But on January 15, 1895, the decree of June 9, 1892, was reversed by the High Court; and the order of the High Court was ultimately affirmed by this Board on July 27, 1898. In the meantime a suit was brought to enforce the first mortgage. That suit was dismissed by the Subordinate Judge, following the decision of the High Court in the case of the second mortgage ; and the decree of the Subordinate Judge was affirmed by the High Court on May 3, 1899. The appellants as successors in title of Intizam Begam, who had died in 1897, thus became the un-incumbered owners of the property which she had bought at the auction sale in April, 1894, as subject to the two prior mortgages. In this state of things the representative of the judgment debtors, whose property had been sold in execution of the decree affirmed in February, 1889, instituted the present suit. In his plaint, dated July 8, 1901, the plaintiff alleged that the real purchase-money of the property sold at the auction sale of April, 1894, was the amount paid by the purchaser on completion of the sale, together with the amount due on the prior mortgages, and that, inasmuch as the property had been exonerated from all liability in respect of those prior mortgages, the sums due on the footing thereof, amounting in the aggregate to Rs. 1,61,776.11.0, were now due to him as unpaid vendor. The claim was for payment on that footing, a lien on the nine villages for the amount due, and a sale in the event of non payment. This singular claim seems to have perplexed both the judge of first instance and the High Court on appeal. The judge of first instance, having heard, as he said, a long and learned argument and a number of English and Indian authorities, came to the conclusion that the case was " unique of its kind," and that there was no authority, English or Indian, on the question. "Not a single authority," he said, "has been cited to shew that the rule of equity relating to unpaid vendors lien applies to the case of an involuntary sale," and, on principles which he had already explained, he thought it would not be equitable to apply that rule to the case before him. "Not a single authority," he said, "has been cited to shew that the rule of equity relating to unpaid vendors lien applies to the case of an involuntary sale," and, on principles which he had already explained, he thought it would not be equitable to apply that rule to the case before him. So the suit was dismissed, but no costs were allowed to the defendants. Law Rep. 36 Ind. App. 203 ( 1908- 1909) Musammat Izzat-Un-Nissa Begam V. Kunwar Pertab Singh 101 On appeal the decision of the Subordinate Judge was reversed. The appeal was heard, in the first instance, before the Chief Justice and Burkitt J. The learned judges differed. Then Blair J. was called in. He concurred with the Chief Justice. All the judges treated the question as one of novelty and considerable difficulty. The learned Chief Justice thought that the case might be looked at from two points of view. It might be contended that the appellants predecessor in title, having represented to the Court that the property was subject to two mortgages, and having got liberty to bid upon that representation, was " estopped from denying the truth of the representation and must make it good to the best of her ability, that is, must pay to trine judgment debtor the amount of the incumbrances represented by her to be subsisting." The other view, he said, was that the purchaser only acquired the interest which the Court purported to sell, "and so having purchased from the Court property expressly stated to be subject to specified incumbrances cannot hold the property without making good the amount of those incumbrances." The amount of incumbrances which the Court was led to believe were existing incumbrances, and subject to which the sale was expressly made, must, he thought, be paid by the defendants to the plaintiff, and he was also of opinion that the plaintiff was entitled to a lien on the property in respect of that amount. Judgment was given in favour of the plaintiff, but the case was remitted to the Subordinate Judge to inquire and ascertain the due proportion of the mortgage money intended to be secured by the mortgages declared invalid which was properly attributable to the villages bought by Intizam Begam. Burkitt J. dissented. Judgment was given in favour of the plaintiff, but the case was remitted to the Subordinate Judge to inquire and ascertain the due proportion of the mortgage money intended to be secured by the mortgages declared invalid which was properly attributable to the villages bought by Intizam Begam. Burkitt J. dissented. On a review of the relevant sections in the Civil Procedure Code, he thought it plain that the amount of the invalid incumbrances formed no part of the purchase-money. He thought, too, that the preparation of the list of incumbrances mentioned in the proclamation of sale was not the act of the parties, but the act of the Court. And he failed to see why, " in a suit like the present," the representatives of the purchaser should be compelled to discharge them. The auction purchaser made a lucky purchase. But she and her representatives were " not liable to be deprived of the fruits of her bargain at least in a suit framed like the present suit." With the Utmost respect to the learned judges of the High Court, their Lordships are unable to discover any difficulty in the case. It seems to depend on a very simple rule. On the sale of property subject to incumbrances the vendor gets the price of his interest, whatever it may be, whether the price be settled by private bargain or determined by public competition, together with an indemnity against the incumbrances affecting the land. The contract of indemnity may be express or implied. If the purchaser covenants with the vendor to pay the incumbrances, it is still nothing more than a contract of indemnity. The purchaser takes the property subject to the burthen attached to it. If the incumbrances turn out to be invalid, the vendor has nothing to complain of. He has got what he bargained for. His indemnity is complete. He cannot pick up the burthen of which the land is relieved and seize it as his own property. The notion that after the completion of the purchase the purchaser is in some way a trustee for the vendor of the amount by which the existence, or supposed existence, of incumbrances has led to a diminution of the price, and liable, therefore, to account to the vendor for anything that remains of that amount after the incumbrances are satisfied or disposed of, is without foundation. After the purchase is completed, the vendor has no claim to participate in any benefit which the purchaser may derive from his purchase. It would be pedantry to refer at length to authorities. But their Lordships, under the circumstances, may perhaps be excused for mentioning Tweddel v. Tweddel ((1787) 2 Bro. C. C. 151.), Butler v. Butler ((1800) 5 Ves. 534 e.), and Waring v. Ward. ((1802) 7 Ves. 332, 336.) There is nothing in the circumstances of the case to raise an estoppel against the appellants. Their Lordships will humbly advise His Majesty that the order of the High Court ought to be reversed Law Rep. 36 Ind. App. 203 ( 1908- 1909) Musammat Izzat-Un-Nissa Begam V. Kunwar Pertab Singh 102 with costs, and the judgment of the Subordinate Judge of Bareilly restored, but with costs against the respondents. The respondents will pay the costs of the appeal.