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2018 DIGILAW 876 (KAR)

Chiranjith Ajila v. Archana Projects

2018-08-09

VINEET KOTHARI

body2018
ORDER : VINEET KOTHARI, J. 1. The Defendant No. 2-Chiranjith Ajila, has filed this petition in this Court under Article 227 of the Constitution of India challenging two orders passed by Trial Court:- (i) The order dated 05.07.2016 passed by the learned Trial Court in O.S. No. 84/2014 allowing the application-I.A. III seeking to implead the petitioner herein as party to the suit; and (ii) The order dated 16.12.2016 rejecting the application-I.A.V filed by defendant No. 2-the present petitioner himself under Order 10 Rule 2 of CPC seeking to be deleted from the array of defendants in the present suit filed by respondent No. 1/plaintiff-M/s. Archana Projects for recovery of money of Rs. 9,40,000/- with interest from vender-Defendant No. 1-Mr. Roy Antony. 2. The learned counsel for the petitioner-Defendant No. 2-Mr. Sampath Anand Shetty, has urged before the Court that the suit filed by the plaintiff is not for specific performance but only for recovery of money from Defendant No. 1, the vender and the Defendant No. 2-the present petitioner-Mr. Chiranjith Ajila to whom the said Defendant No. 1 sold the suit property in question has no privity of contract with the plaintiff nor he has purchased such property with any encumbrance from the said Defendant No. 1 and therefore, Defendant No. 2-the present petitioner-Mr. Chiranjith Ajila was neither a necessary nor a proper party in the present suit for money recovery only and therefore, the learned Court below has erred in rejecting the application filed by Defendant No. 2 by the impugned order. Hence, the present writ petition is filed under Article 227 of Constitution of India. 3. On the other hand, the learned counsel for the respondent/plaintiff-Mr. Hence, the present writ petition is filed under Article 227 of Constitution of India. 3. On the other hand, the learned counsel for the respondent/plaintiff-Mr. K.A. Ariga, has urged before the Court relying upon the provisions of Section 55(6)(b) of the Transfer of Property Act, 1882 and the two judgments of the Hon'ble Supreme Court that even though the Agreement in question under which Defendant No. 1 had agreed to sell property in question to the plaintiff on 16.08.2013, which was cancelled by the plaintiff himself on 14.10.2014 and the suit was filed only for recovery of advance money in question paid to the vender-Defendant No. 1, but since the money in question was paid by the plaintiff as pre-paid sale price and on account of non-performance of the Agreement on the part of Defendant No. 1, the plaintiff chose to cancel the said Agreement, but the charge on the suit property remains because the plaintiff had not improperly declined to accept delivery of the property in question and therefore, the rights of the plaintiff qua the said suit property existed even against the Defendant No. 2 and such a charge on the property is protected by virtue of the said provisions of Section 55(6)(b) of the Transfer of Property Act and the following judgments of the Hon'ble Supreme Court: (1) In Delhi Development Authority v. Skipper Construction Co. (P) Ltd. ( AIR 2000 SC 2003 ), the Hon'ble Supreme Court has held that the buyer's charge under Section 55(6)(b) of the Transfer of Property Act is a statutory charge and differs from a contractual charge, which a buyer is entitled to claim and the charge on the property under Section 55(6)(b) is enforceable not only against the seller but against all the persons claiming under him. The relevant para-29 is quoted below for ready reference: "29. Those points depend upon the effect of the provisions in Sub-clause (6) of Section 55 of the Transfer of Property Act. That Section starts with the words "In the absence of a contract to the contrary, and reads thus (insofar as it is material for our purpose): "Section 55(6) (b): The buyer is entitled (a) …………. Those points depend upon the effect of the provisions in Sub-clause (6) of Section 55 of the Transfer of Property Act. That Section starts with the words "In the absence of a contract to the contrary, and reads thus (insofar as it is material for our purpose): "Section 55(6) (b): The buyer is entitled (a) …………. (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 any purchase-money property 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 rescissions." It is plain from the above provision that, 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 the 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. This charge in favour of the buyer is the converse of the seller's charge under Section 55(4)(b). The buyer's charge under the Section is a statutory charge and differs from a contractual charge which a buyer may be entitled to claim under a separate contract (Chettiar Firm v. Chettiar), AIR 1941 PC 47 . No charge is available unless the agreement is genuine. (T.N. Hardas v. Babulal, AIR 1973 SC 1363 ). As pointed out in Mulla's Commentary of Transfer of Property Act, 8th Ed. (P.411), the charge on the property under Section 55(6)(b) is enforceable not only against the seller but against all persons claiming under him. Before the amending Act of 1929, the words 'with notice of payment' occurred after the words "all the persons claiming under him". These words were omitted as they allowed a transferee without notice to escape. (P.411), the charge on the property under Section 55(6)(b) is enforceable not only against the seller but against all persons claiming under him. Before the amending Act of 1929, the words 'with notice of payment' occurred after the words "all the persons claiming under him". These words were omitted as they allowed a transferee without notice to escape. After the Amendment of 1929, notice to the purchaser has now become irrelevant." (2) In Asgar S. Patel v. Union of India ( AIR 2000 SC 2222 ), the Hon'ble Supreme Court held in para-10 as under: "10. Just as the seller has a charge on the property for unpaid price under Section 55(4)(b) of T.P. Act, the buyer has a charge for price prepaid. Thus the amount of any purchase money properly paid by the buyer in anticipation of the delivery and also the earnest where the buyer had justification for declining to accept the delivery constitutes a charge on the property forming subject-matter of sale to the extent of the seller's in the property and thus would be an encumbrance of the property. Section 269-UE(I) as amended by the Financial Act, 1993 (w.e.f. 17-11-1992) reads as under:" 4. Having heard the learned counsel for the parties, this Court is of the opinion that at this stage, neither the final rights of the parties under the said Agreement are required to be decided as the trial Court is still seized of the trial in the present case and only the question which can be looked into at this stage is whether Defendant No. 2-the present petitioner is at all a necessary or proper party, or not in the suit for recovery of advance price paid by Plaintiff-Purchaser to the Vender-Defendant No. 1-Mr. Roy Antony. 5. Section 55 of the Transfer of Property Act, which deals with the rights and liability of the Buyer and Seller, in its sub-section (6) also envisages a situation where a buyer, under an agreement to sell, who has not improperly declined to accept delivery of the property for any reason, still has a charge on the property not only against the seller, but against all the persons claiming under him, including the subsequent purchaser and that charge continues even if the property is subsequently sold, as it has been done in the present case, to a third party, like Defendant No. 2 in the present case. Therefore, continuation of Defendant No. 2, the subsequent purchaser in the trial in the present case, cannot be said to be unjustified. He cannot be said to be a stranger or a foreigner to the said trial. He buys this property, even though not being aware of the pendency of the suit in question, with the statutory charge envisaged under Section 55(6)(b) of the Transfer of Property Act as aforesaid. This position of law still would enure even if the buyer including the intending buyer cancels the Agreement and files the suit only for recovery of the prepaid sale price or advance paid for the purchase of the property in question. 6. The object of the provision seems to protect the right of the Buyer including the intending Buyer, if he is not guilty of improperly declining to accept the delivery of the property in question under the Agreement to purchase. There is no such a situation in the present case, where the plaintiff is said to have improperly declined to accept the delivery of property even though offered by Vender-Defendant No. 1 under the Sale Agreement. Therefore, rejection of the application filed by Defendant No. 2 for deleting him from the array of defendants by the Trial Court cannot be found fault with. 7. The writ petition filed by the said Defendant No. 2 being devoid of merit is liable to be dismissed and it is hereby dismissed. No costs.