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2018 DIGILAW 555 (KER)

Subramanian v. Vijayan

2018-07-11

A.HARIPRASAD

body2018
JUDGMENT : A. Hariprasad, J. 1. What are the essentials for claiming a charge on the seller's interest in the property under Section 55(6)(b) of the Transfer of Property Act, 1882 (in short, the T.P. Act) is the precise legal question emerging for determination. Defendants 2 to 5 in a suit for specific performance of Ext.A1 agreement, purported to have been executed between the plaintiff and 1st defendant to assign immovable property, are in appeal against the decree passed by the court below. They are discontented by the direction in the decree to create a charge on the land shown in the plaint schedule, because they had purchased it from the 1st defendant before institution of the suit. 2. Pending appeal, the 1st defendant died. His legal heirs are impleaded as additional respondents 3 to 7. 3. Heard the learned counsel for the appellants, 1st respondent and additional respondents 3 to 7. 4. Facts relevant for disposal of the case, stated briefly, are as follows: The 1st respondent (plaintiff) and 1st defendant were acquaintances. They had some financial dealings earlier. 1st defendant demanded a loan from the plaintiff for his business purpose. 1st defendant agreed to sell the plaint schedule property to the plaintiff for a total consideration of Rs.40,000/-. On 20.11.1991, the plaintiff paid Rs.20,000/- to the 1st defendant. 1st defendant agreed to pay interest for Rs.20,000/- and in default of payment of the principal amount and interest, the 1st defendant was bound to transfer the plaint schedule property to the plaintiff or his nominee. All the terms and conditions agreed to between the parties have been incorporated in Ext.A1 agreement. At the time of executing Ext.A1, the 1st defendant had handed over a copy of the deed of partition in his family and basic tax receipts to the plaintiff. 1st defendant failed to pay Rs.20,000/- with interest, as agreed. Hence, the suit is filed for specific performance of the contract. 5. Supplemental defendants 2 to 5 (who are the appellants herein) were impleaded in the suit, alleging that they purchased the property from the 1st defendant without any bonafides and with full knowledge about Ext.A1 agreement. 6. The 1st defendant filed a written statement denying the averments in the plaint. According to him, there was no agreement between the plaintiff and himself to sell the property. Virtually, he denied execution of Ext.A1. 6. The 1st defendant filed a written statement denying the averments in the plaint. According to him, there was no agreement between the plaintiff and himself to sell the property. Virtually, he denied execution of Ext.A1. He contended that he had no prior acquaintance with the plaintiff. He had taken Rs.15,000/- as loan from one Muralidharan. At that time, 1st defendant had handed over signed documents to him. He had also given signed blank stamp papers. The plaintiff must have misused the stamp papers in collusion with Muralidharan. The suit is liable to be dismissed. 7. Supplemental defendants 2 to 5 filed a written statement contending that they were not aware of any transaction between the plaintiff and 1st defendant. According to them, Ext.A1 was created by the plaintiff and 1st defendant in collusion with each other to defeat their rights in the property purchased for a valuable consideration. Since the date of purchase, they are in possession of the property. 1st defendant never intimated the appellants about Ext.A1 agreement. The plaintiff is not entitled to get reliefs against the property. 8. The trial court raised an issue regarding the right of plaintiff to get a specific performance of Ext.A1 agreement. In order to adjudicate the issue, the testimonies of PWs 1 and 2 and that of DWs 1 and 2 were considered. Exts.A1 to A3 and Ext.B1 were relied on by the court below. 9. Learned trial Judge found that Ext.A1 had been executed by the 1st defendant pursuant to a money transaction that he had with the plaintiff. The court therefore entered a finding that the 1st defendant was liable to return the amount shown in Ext.A1 with interest to the plaintiff. The trial court specifically found that the parties never intended to execute Ext.A1 as an agreement for sale. According to the finding, it was purely a loan transaction. Noticing the further fact that there is no averment in the plaint that the plaintiff was ready and willing to perform his part of the contract, the court below rejected the prayer for a specific performance of Ext.A1. The plaintiff, being satisfied with the decree for return of money with interest by creating a charge on the plaint schedule property, did not prefer any appeal. Since the appellants had purchased the property from the 1st defendant anterior to institution of the suit, they felt aggrieved. 10. The plaintiff, being satisfied with the decree for return of money with interest by creating a charge on the plaint schedule property, did not prefer any appeal. Since the appellants had purchased the property from the 1st defendant anterior to institution of the suit, they felt aggrieved. 10. Dispute in this case lies in a narrow compass. The plaintiff has not preferred any appeal against rejection of his claim for specific performance of Ext.A1 contract. Therefore, this Court is not called upon to decide on that relief. There is no dispute regarding the finding of the trial court that in the plaint no averment has been made that the plaintiff was ready and willing to perform his part of the contract during the subsistence of Ext.A1 agreement. Since it violated the mandatory provision in Section 16(c) of the Specific Relief Act, 1963, the court below is right in repelling the claim for specific performance. 11. After appreciating evidence adduced on the side of the plaintiff and defendants, the court below rightly found that the terms in Ext.A1 do not put forth an agreement for sale, but it actually amounted to creation of the rights and obligations in connection with a loan transaction. On a re-appreciation of the entire evidence, I find no reason to disagree with the reasoning of the lower court. 12. Only question remaining to be answered is whether the court below was right in finding that money to be returned by the 1st defendant to the plaintiff should be charged on the plaint schedule property by invoking Section 55(6)(b) of the T.P.Act. The relevant provision reads as follows: 55. 12. Only question remaining to be answered is whether the court below was right in finding that money to be returned by the 1st defendant to the plaintiff should be charged on the plaint schedule property by invoking Section 55(6)(b) of the T.P.Act. The relevant provision reads as follows: 55. Rights and liabilities of buyer and seller.-- In the absence of a contract to the contrary, the buyer and the seller of immoveable property respectively are subject to the liabilities, and have the rights, mentioned in the rules next following, or such of them as are applicable to the property sold:- xxx xxx xxx xxx "(6) The buyer is entitled xxx xxx xxx xxx (b) unless he has improperly declined to accept delivery of the property, to a charge on the property, as against the seller and all persons claiming under him, to the extent of the seller's interest in the property, for the amount of any purchase-money properly paid by the buyer in anticipation of the delivery and for interest on such amount; and, when he properly declines to accept the delivery, also for the earnest (if any) and for the costs (if any) awarded to him of a suit to compel specific performance of the contract or to obtain a decree for its rescission. 13. On a plain reading, the following aspects can be discerned : In the absence of a contract to the contrary, the buyer will have a charge on the seller's interest in the property, which is the subject matter of a sale agreement insofar as the purchase money and interest on such amount are concerned, unless the buyer has improperly declined to accept delivery. The charge is available against the seller and all persons claiming under him. (See Delhi Development Authority v. Skipper Construction Company Pvt. Ltd ( AIR 2000 SC 573 ). 14. The charge in favour of the buyer is converse of the seller's charge under Section 55(4)(b) of the T.P. Act. In many decisions, it has been held that the principle underlying this provision is a trite principle of justice, equity and good conscience. (See Videocon Properties Ltd v. Dr. Bhalchandra Laboratories ( AIR 2004 SC 1787 ). It arises in favour of the buyer, the moment he pays the purchase money or any part of it and cannot be subsequently lost, unless the buyer commits a default. 15. (See Videocon Properties Ltd v. Dr. Bhalchandra Laboratories ( AIR 2004 SC 1787 ). It arises in favour of the buyer, the moment he pays the purchase money or any part of it and cannot be subsequently lost, unless the buyer commits a default. 15. In order to apply the above provision, a plaintiff in a suit for specific performance of an agreement or return of advance amount paid by him must establish that there exists a genuine agreement to assign between him and the defendant. Needless to say, where the agreement for sale is invalid or void, no charge would get attached to the property. Stated precisely, in any transaction, where no buyer-seller relationship is established between the contracting parties and only a debtor-creditor relationship is established, no charge under Section 55(6)(b) of the T.P. Act can be claimed. It is essential that the jural relationship between parties to the transaction must be that of a buyer - seller. 16. In this case, on evidence, it has been found that Ext.A1 agreement amounted to a loan transaction. Therefore, the court below committed a legal mistake in invoking Section 55(6)(b) of the T.P. Act in the facts and circumstances of this case. 17. Appellants are the assignees from the 1st defendant. Admittedly, their assignment was prior to institution of the suit. It is therefore clear that they cannot be mulcted with the liability to return the advance amount received from the plaintiff by deceased 1st defendant. Hence the decree passed by the court below binding the appellants is legally unsustainable. 18. The liability that can be imposed on the legal representatives of the deceased 1st defendant, namely, respondents 3 to 7 is circumscribed by the provisions in Section 50 CPC. The provision reads thus: Legal representative – (1) Where a judgment debtor dies before the decree has been fully satisfied, the holder of the decree may apply to the Court which passed it to execute the same against the legal representative of the deceased. The provision reads thus: Legal representative – (1) Where a judgment debtor dies before the decree has been fully satisfied, the holder of the decree may apply to the Court which passed it to execute the same against the legal representative of the deceased. (2) Where the decree is executed against such legal representative, he shall be liable only to the extent of the property of the deceased which has come to his hands and has not been duly disposed of; and, for the purpose of ascertaining such liability, the Court executing the decree may, of its own motion or on the application of the decree-holder, compel such legal representative to produce such accounts as it thinks fit. 19. The above provision makes it clear that if additional respondents 3 to 7 had inherited any property from deceased 1st defendant, certainly the decree can be executed to the extent of the property of deceased 1st defendant that had come to their hands. 20. To sum up, the court below wrongly applied the statutory charge under Section 55(6)(b) of the T.P. Act on the plaint schedule property, which had been assigned to the appellants prior to the litigation. Resultantly, the appeal is allowed to the extent that the money decree passed by the trial court will not create any charge under Section 55(6)(b) of the T.P. Act on the plaint schedule property in the hands of the appellants. Rest of the decree is confirmed. Parties shall suffer their costs. All pending interlocutory applications will stand dismissed.