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2011 DIGILAW 171 (CHH)

SADURAM v. TIKESHWAR

2011-04-29

N.K.AGARWAL

body2011
JUDGMENT 1. Instant plaintiff's second appeal arises against the judgment and decree dated 6-4-1988 passed by the 1st Additional District Judge to the court of District Judge, Raigarh in civil Appeal No. 89-A/ 1979. 2. Facts of the case in brief are as under: Plaintiff filed a suit for specific performance of contract of sale of one acre of land out of Khasra No. 292/2 situated in village Lailunga. According to plaintiff, he entered into agreement of sale with regard to suit land on 24-1-1972 with the defendants for a consideration of Rs. 3100/-. He paid Rs. 1500/- as earnest money to defendant No.1 i.e. Karta of the family of defendants, who executed agreement of sale in plaintiff's favour with the consent of other defendants. As per agreement, the balance consideration amount was payable at the time of execution of sale deed. Defendants agreed to execute sale deed in plaintiff's favour within 2 days. Defendants were in need of money to meet their house hold expenses, for that necessity, the defendant No.1 has executed agreement of sale as a Karta of the family in presence and with the consent of other defendants. ii. On defendants' refusal to execute sale deed, panchayat was convened. Before panchayat, defendants did not appear. Therefore, plaintiff was compelled to file the present suit seeking relief of specific performance of contract of sale and in the alternative, refund of earnest money with interest at the rate of 24% per annum from the date of agreement. III. The suit was hotly contested by the defendants by filing separate written statement. Defendant No. 1 denied execution of sale deed and receipt of earnest money. Other defendants denied existence of agreement as well as its execution in their presence, with their consent and for legal necessity of the joint Hindu family. 3. Learned trial Court decreed the suit finding inter alia: defendant No.1 executed agreement of sale for a consideration of Rs. 3100/- in plaintiff's favour on 24-1-1972 after receiving Rs. 1500/- as earnest money in presence and with the consent of other defendants, however observed, in case of failure of defendants to execute sale deed, plaintiff will be entitled only for refund of earnest money of Rs. 1500/- without interest and will not be entitled for getting sale deed, executed through court. 4. Plaintiff preferred first appeal for modification of the decree. Defendants have also preferred appeal. 1500/- without interest and will not be entitled for getting sale deed, executed through court. 4. Plaintiff preferred first appeal for modification of the decree. Defendants have also preferred appeal. Earlier defendants' appeal was dismissed as time barred. In second appeal, delay in filing first appeal was condoned and the matter was remitted to the first appellate court for decision on merit. Thereafter both the appeals have been heard. Learned first appellate court on re-appreciation of entire material and evidence on record dismissed plaintiff's appeal, allowed defendants' appeal holding the sale agreement was executed by defendant No. 1 without any legal necessity, plaintiff also failed to prove, defendant No. I entered into agreement of sale as manager of the family. However, decreed plaintiff's suit granting relief of refund of earnest money with interest at the rate of 6% per annum from the date of appellate decree. 5. Instant second appeal was admitted for hearing by this Court on 2810-1988 on the following substantial questions of law:- i Whether the respondents were estopped from raising the plea of legal necessity in view of their consent to the execution of the agreement for sale of the land in suit to the plaintiff/appellant as held by the trial Court ? ii. Whether in the event of decree for refund of the amount of consideration, the plaintiff/appellant is entitled for interest from the date of agreement and not from the date of decree of the lower appellate court ? 6. Shri Sanjay S. Agrawal, learned counsel for the plaintiff would submit, agreement of sale (Ex. P-l) has been executed by defendant No. 1 as a Karta of joint Hindu family with the consent and in presence of other defendants. The sale deed was to be executed with the signature of all the defendants immediately after two days of execution of agreement of sale. Therefore, plaintiff's right is protected under Section 41 of the Transfer of Property Act, 1882. He placed his reliance in cases of Mahanta Bhagaban Das Vs. Biswaswar Nath Saha and others and Syed Abdul Khader Vs. Rami Redd). 7. On the other hand Shri Parag Kotecha, learned counsel appearing for the defendants would submit, learned first appellate court has passed the judgment and decree on proper appreciating of law and fact and no substantial question of law arises for determination of this Court in the instant appeal. Rami Redd). 7. On the other hand Shri Parag Kotecha, learned counsel appearing for the defendants would submit, learned first appellate court has passed the judgment and decree on proper appreciating of law and fact and no substantial question of law arises for determination of this Court in the instant appeal. The appeal deserves to be dismissed. 8. I have heard learned counsel for both the parties and perused the record of both the courts below. 9. Section 41 of the Transfer of Property Act, 1882 reads thus :- "41. Transfer by ostensible owner - Where, with the consent, express or implied, of the persons interested in immovable property, a person is the ostensible owner of such property and transfers the same for consideration, the transfer shall not be voidable on the ground that the transferor was not authorized to make it: Provided that the transferee, after taking reasonable care to ascertain that the transferor had power to make the transfer, has acted in good faith." 10. A bare penasal of the above provision would reveal following conditions are necessary for the application of this section (i) the transferor is the ostensible owner; (ii) he is so by the consent, express or implied, of the real owner; (iii) the transfer is for consideration; and (iv) the transferee has acted in good faith, taking reasonable care to ascertain that the transferor had power to transfer. If anyone of these elements is wanting, the transferee is not entitled to the benefit of the section. 11. An ostensible owner is one who has all indicia of ownership without being the real owner. It must be shown that with the consent of the true owner, the ostensible owner was able to represent himself as the owner of the property to the purchaser for value without notice. 12. Supreme Court in case of Kashmir Singh and others Vs. Panchayat Samiti, Ferozpur and other; has held: Under section 41 of the Transfer of Property Act, transfer made by an ostensible owner with the consent, express or implied of the real owner is protected provided that the transferee after taking reasonable care to ascertain that the transferor had the power to make transfer had acted in good faith. 13. In case of Sesumal M Saha Vs. 13. In case of Sesumal M Saha Vs. Syed Abduf it has been held, in every case, where a transferee for valuable consideration seeks protection under Section 41 of the Transfer of Property Act, the transferee must show that the real owner had permitted the apparent owner either by express words, consent or conduct to transfer the property in favour of the transferee. In other words, it must be shown that with the consent of the true owner, the ostensible owner was able to represent himself as the owner of the property to the purchaser for value without notice. The above view taken by Kamataka High Court has been approved by the Supreme Court in case of Crystal Developers Vs. Asha Lata Ghosh (smt) (dead) through Lrs. and others. 14. In the case of Gurbaksh Singh Vs. Nikka Singh6 it has been held that Section 41 is an exception to the general rule that a person cannot confer a better title than what he has. Being an exception the onus is on the transferee to show that the transferor was the ostensible owner of the property and that the transferee had after taking reasonable care to ascertain that the transferor had power to transfer, acted in good faith. 15. In case of Sha Karamshi Vershi Vs. Sha Ratanshi Nanshi and another', it has been held that an ostensible owner is one who has got indicia of ownership title, possession or entries in records made to show ownership. 16. In case of Motimul Sowear Vs. Visalakshi ammal and others it has been held there are two conditions to be fulfilled before the benefit of Section 41 of the Act could be invoked by a transferee. Transferee must first prove that transferor was ostensible owner of the property, and that such ostensible owner was holding the property with the consent express or implied of the real owner. 17. The Supreme Court in Syed Abdul Khade (supra) reiterated the principle underlying section 41 of the Act and held in para 20 of its judgment as under: "The next contention is that even if Ext. 17. The Supreme Court in Syed Abdul Khade (supra) reiterated the principle underlying section 41 of the Act and held in para 20 of its judgment as under: "The next contention is that even if Ext. P-l confers authority on defendant 34 to sell land, the authority so conferred on defendant 34 was to act on his own and not at the behest of an outsider or as a rubber stamp of someone and that in this case evidence clearly shows that it was Kazim Yar Jung, the father of the plaintiff who entered into an agreement, Ext. 0-18 dated 14th February 1949, with defendant no.1 for sale of land and the agent defendant 34 merely rubber-stamped the sale and executed the sale deed and that such a sale is not binding on the plaintiff. At first blush the argument is really attractive but it does not stand scrutiny. Land involved in the dispute was granted by the Nizam when the father of the plaintiff was a Minister in the Nizam's Government Patta evidencing the grant was taken in favour of the plaintiff who was then a minor. The father of the plaintiff really believed that he was the owner of the land and in fact on October 20 1949 he wrote to Tahsildar, Medak; that his son was a benamidar and that the lands may, therefore, be transferred in his name. Thus, the father of the plaintiff acted as if he was the owner of the land but when a contention on behalf of the respondents that the plaintiff was a benamidar would be presently examined, it would be painted out that the plaintiff was the real owner and was not a benamidar. That is the true legal position. The fact, however, remains that the father of the plaintiff who must be a man of considerable influence being a Minister in the Government of Nizam, must have acted as if he was the owner of the land. Undoubtedly, the agreement Ext.D-18 for sale of land was entered into between the father of the plaintiff and defendant no. 1 and pursuant to this agreement defendant no. 34 executed a sale deed in favour of defendant no. 31, but it may be noticed that the agreement Ext. 0-'18 was entered into two months prior to the grant of Power of Attorney, Ext. 1 and pursuant to this agreement defendant no. 34 executed a sale deed in favour of defendant no. 31, but it may be noticed that the agreement Ext. 0-'18 was entered into two months prior to the grant of Power of Attorney, Ext. P-l. There is, however, evidence to show that the agreement for sale of land and the sale deed were taken in the presence of and to the knowledge and with the full acquiescence of the plaintiff. Witness Kishta Reddy, O.W. 2 has stated in his evidence that defendant 1 Rami Reddy paid the consideration for purchase of land pursuant to agreement Ext. 0-18 to plaintiff in his own presence. He has further stated that Kazim Yar lung, Plaintiff's father and daughter of Kazim Yar lung and both of his sons including the plaintiff were present when the amount of consideration was paid. This witness's presence at the time of payment of consideration cannot be disputed because receipt Ext. 0-16' which evidences payment of consideration for the sale of land to defendant No. I though signed and passed by Kazim Yar Jung, the father pf the plaintiff, was attested by him. This evidence which has remained un controverted would show that the consideration for sale of land in favour of defendant 1 pursuant to agreement of sale Ext. D18 was paid to the plaintiff in the presence of this witness and plaintiff .accepted the same though the receipt Ext. 0-16 was passed by the father of the plaintiff. A feeble attempt was made to explain this inconvenient evidence by saying that in agreement Ext. 0-18 lands are not especially described by setting out the Survey Numbers or the Khata Numbers and as in that very village plaintiff's father had also his lands, the plaintiff may have as well remained under the impression that the father had sold his own lands and, therefore, could not raise any objection about the sale. This explanation cannot be swallowed for the obvious reason that there was no reason for the plaintiff to accept the consideration or the consideration being put in his hands if his land was not being sold. This explanation cannot be swallowed for the obvious reason that there was no reason for the plaintiff to accept the consideration or the consideration being put in his hands if his land was not being sold. Even if the father of the plaintiff could be said to be an ostensible owner of the land and he purported to sell the land, the plaintiff, the real owner as he claimed to be had acquiesced in the same and accepted the consideration and in this background he would be estopped from challenging the title which was transferred pursuant to the sale. In the back-drop of these circumstances the principle enunciated in section 41 of the Transfer of Property Act would come to the rescue of the transferee. Section 41 of the Transfer of Property Act provides that where, with the consent, express or implied, of the person interested in immovable property, a person is the ostensible owner of such property and transfers the same for consideration, the transfer shall not be voidable on the ground that the transferor was not authorized to make it. Section 41 codifies what was once treated as a principle in equity which the Judicial Committee had recognised in Ram- coomar v. Macqueen (1872) II Bengal L.R. 46 (PC) wherein the Judicial Committee observed as under: "It is a principle of natural equity which must be universally applicable that, where one man allows another to hold himself out as the owner of an estate and a third person purchases it, for value, from the apparent owner in the belief that he is the real owner, the man who so allows the other to hold himself out shall not be permitted to recover upon his secret title, unless he can overthrow that of the purchaser by showing either that he had direct notice, or something which amounts to constructive notice, of the real title; or that there existed circumstances which ought to have put him upon an inquiry that, if prosecuted would have led to a discovery of it." 18. In case of Mahanta Bhagban Das) (supra), the High Court of Calcutta has held as under: "That principle however relates to a case where one stands by and acquiesces is something that is being done by another, and if in consequence of such acquiescence some injury is caused to some third party, it is provided by that section that it is not open to the person so acquiescing to say that what was done by that other person was not authorized by him." 19. By applying the ratio of law laid down by Supreme Court and various High Courts in cases referred to hereinabove, in order to attract Section 41 of Transfer of Property Act, it is not enough to prove only consent or presence of defendants, it was necessary for the plaintiff to prove (i) the defendant No. 1 is the ostensible owner; (ii) he is so by the consent, express or implied, of the real owner; (iii) he has acted in good faith, taking reasonable care to ascertain that the transferor had power to transfer because if anyone of these elements is wanting, the plaintiff will not be entitled to the benefit of the section. 20. Indisputable the agreement of sale deed 24-1-1972 was executed by defendant No. 1 showing himself sole owner of the suit property. Fact, the suit property is joint property of the defendants, also recorded jointly in the name of defendants in revenue papers, was well within the knowledge of the plaintiff before entering into alleged agreement of sale with the defendant No.1, the amount of earnest money was paid to defendant No.1. The language of the agreement of sale is clear, as per the agreement of sale, it was executed by defendant No. 1 in order to meet his personal needs and the sale deed was to be executed by him after receiving balance consideration. From the above agreement, it cannot be inferred that the agreement was executed by defendant No.1 either as a Manager of the family or on behalf of the defendants. As per plaintiff’s case, the sale deed has to be executed by all the defendants and not by defendant No. 1 as its ostensible owner with the consent of the other defendants i.e. its real owners. As per plaintiff’s case, the sale deed has to be executed by all the defendants and not by defendant No. 1 as its ostensible owner with the consent of the other defendants i.e. its real owners. As per agreement, plaintiff entered into agreement of sale with the defendant No. 1 with the open eyes and with the understanding that the defendant No. 1 is the sole owner of the property and sale deed has to be executed by defendant No. 1 and not by all, even time of execution of sale deed is not mentioned in the agreement. In view of above facts, it cannot be said that plaintiff successfully discharged his burden to prove defendant No.1 as ostensible owner of the suit property and to prove all other necessary ingredients of Section 41 of the Act in order to seek protection of above provision. Therefore, the first substantial question of law formulated is answered against the plaintiff. 21. Coming to the next substantial question of law, indisputably, the amount of earnest money has been deposited by the plaintiff with defendant No. 1 on 24-1-1972 i.e. at the time of execution of agreement of sale. Once it is held plaintiff is not entitled for specific performance of contract and is entitled for refund of earnest money then in the opinion of this Court, the plaintiff is entitled for refund of amount of earnest money along with interest at the rate of 6% per annum from the date of deposit i.e. the date of execution of agreement of sale under Section 4 of the Interest Act, 1978. Second substantial question of law is answered according in plaintiff's favour. 22. Accordingly, the appeal is allowed in part. The plaintiff is entitled for refund of earnest money i.e. Rs. 1500/- along with interest at the rate of 6% per annum from the date of agreement i.e. 24-1-1972 till its payment. So far as relief of specific performance of contract is concerned, plaintiff's appeal is dismissed. 23. Parties shall bear their own costs. 24. Decree be drawn accordingly. Appeal Partly Allowed.