Jay Thomas v. Umayal Chettiyappan, W/o. Late M. Chettiyappan
2025-07-02
P.KRISHNA KUMAR, SATHISH NINAN
body2025
DigiLaw.ai
JUDGMENT : Sathish Ninan, J. The suit for recovery of unpaid sale consideration was dismissed by the trial court. The plaintiff is in appeal. 2. Late K.T.Thomas, the original plaintiff, had entered into Ext.A1 agreement for sale dated 23.11.1987 with Late Chettiyappan, the predecessor of defendants 1 to 6 in respect of the plaint schedule property. The property is a plantation. The property was agreed to be sold for a consideration of Rs. 132 lakhs with the liabilities. It was the term of the agreement that, if on ascertainment of the liabilities it was found to exceed the sale consideration, the purchaser had the option to rescind the contract. On the date of Ext.A1, an amount of Rs. 75,000/- was paid as earnest money. There were subsisting liabilities to the 8 th defendant Bank, under the Agriculture Income Tax Act and also as dues to labourers. 3. In the meanwhile, revenue recovery proceedings were initiated against the property for recovery of the agriculture income tax dues. The proceedings were challenged by the original plaintiff before this Court. As per Ext.A18 judgment in W.A. 1009/1988 this Court set aside the assessment and directed fresh assessment to be made. The matter was carried to the Apex Court. On the strength of Ext.A1 agreement, Chettiyappan got himself impleaded in the said proceedings. Before the Apex Court Chettiyappan undertook to pay the dues to the Government which was stated to be approximately Rs. 33 lakhs. As per Ext.A3 order, the Apex Court permitted Chettiyappan to deposit the said amount towards the liability of the original plaintiff and the Collector was directed to handover possession of the property to Chettiyappan. 4. In the meanwhile, further advances were made by Chettiyappan to the original plaintiff making the total advance sale consideration at Rs. 16 lakhs. As was required by Chettiyappan the original plaintiff gave his property at Bangalore as security for the advance amount. So also he executed power of attorney in favour of Chettiyappan empowering sale of the property. 5. In the year 1991, on the strength of the power of attorney, Chettiyappan executed sale deeds (37 in number) conveying the property to himself. In the year 1993, on coming to know about the sale deeds, the original plaintiff executed cancellation deeds purporting to cancel the sale deeds. After the death of Chettiyappan, his legal heirs viz.
5. In the year 1991, on the strength of the power of attorney, Chettiyappan executed sale deeds (37 in number) conveying the property to himself. In the year 1993, on coming to know about the sale deeds, the original plaintiff executed cancellation deeds purporting to cancel the sale deeds. After the death of Chettiyappan, his legal heirs viz. defendants 1 to 6 conveyed the property to the 7 th defendant. 6. According to the plaintiffs, out of the total sale consideration, only an amount of Rs. 16 lakhs was paid. The suit is filed for recovery of the balance sale consideration charged on the property. 7. The defendants contended that the total sale consideration agreed under Ext.A1 was Rs. 1,32,00,000/- which included the liabilities and encumbrances over the property. The liabilities were cleared from out of the sale consideration. The claim that only Rs. 16 lakhs was paid towards sale consideration was denied. It was contended that no further amounts are due under the sale deeds. The first defendant raised a counter claim for recovery of the excess amounts, over and above the sale consideration, that Chettiyappan had to pay for discharge of the liabilities. 8. The trial court found that the total sale consideration fixed under Ext.A1 agreement included the liabilities. It was also found that Chettiyappan had discharged the liabilities over the property and that after execution of the sale deeds no further amounts remained to be paid to the plaintiff towards sale consideration. The counter claim was not pursued by the first defendant who had raised the same. Accordingly the suit and the counter claim were dismissed. 9. We have heard the learned counsel on either side. 10. The points that arise for determinations are: - (i) In the suit for recovery of unpaid sale consideration, is the plaintiff entitled to rely on the quantum of consideration mentioned in Ext.A1 agreement for sale entered into between the parties preceding the execution of the sale deed to prove that the sale consideration is more than that mentioned in the sale deed? (ii) Does the transaction under Ext.A1 agreement, in law, represent a sale “subject to encumbrance” or “free of encumbrance”? (iii) Does the evidence on record establish the plaintiffs claim for unpaid sale consideration? 11. The suit is filed for recovery of unpaid sale consideration. The plaintiff accepts the sale.
(ii) Does the transaction under Ext.A1 agreement, in law, represent a sale “subject to encumbrance” or “free of encumbrance”? (iii) Does the evidence on record establish the plaintiffs claim for unpaid sale consideration? 11. The suit is filed for recovery of unpaid sale consideration. The plaintiff accepts the sale. However, to prove the consideration under the sale deeds, the deeds/copies were not produced. On the other hand, they relied on the recital in Ext.A1 sale agreement with regard to the consideration. Copies of the sale deeds (37 in number) are produced before this Court along with a petition under Order XLI Rule 27 of the Code of Civil Procedure. It is the contention of the plaintiffs that the actual consideration for sale is as mentioned in Ext.A1 agreement and that the consideration mentioned in the sale deeds are much lower and not correct. In Vasu Bhaskaran v. Parukutty Amma & Anr. ( 2012 (1) KHC 285 ), a Division Bench of this Court has after referring to the precedents on the point held that the parties to the sale deed cannot, in the light of Section 92 of the Evidence Act contend that the actual value is higher than or at variance from that mentioned in the sale deed. Therefore, the very claim of the plaintiff based on the value as mentioned in Ext.A1 agreement for sale is unsustainable. 12. Now we proceed to consider the claim of the plaintiff as one for unpaid sale consideration based on the quantum of consideration mentioned in the sale deeds executed pursuant to Ext.A1. According to the plaintiff, out of the total sale consideration, only an amount of Rs.16 lakhs has been paid. The sale was “subject to the liabilities” over the property; meaning that, the purchaser was to bear the liabilities in addition to the sale consideration. To substantiate the contention, the learned counsel for the appellant relied on Joseph v. Joseph ( 1972 KLT 829 ) and Joy Varghese and Another v. Ulahanan alias John and Another ( 2008 (4) KHC 331 ) . Referring to Section 55 (4)(b) and 55 (5) (b) of the Transfer of Property Act , with regard to the rights and liabilities of the vendor and the vendee regarding the encumbrance over the property, the court held :- “.....
Referring to Section 55 (4)(b) and 55 (5) (b) of the Transfer of Property Act , with regard to the rights and liabilities of the vendor and the vendee regarding the encumbrance over the property, the court held :- “..... In the one case, the vendor is liable to pay only the interest on the encumbrance till the date of the sale and the vendee becomes liable to pay the principal due on the encumbrances as well as the interest thereon accruing after the sale. In the other case, the duty of discharging all encumbrances existing on the property on the date of the sale is laid on the seller who receives the full value of the property as its price. It may be that instead of the vendor himself paying the amount he may reserve a portion of the purchase money with the vendee for payment to the creditor. The vendee in that case would only be an agent who has undertaken the obligation to pay the amount on behalf of the vendor. …..” Therein the question was, to whom the benefit of reduction in the amount of encumbrance would inure when unpaid purchase price is reserved with the vendee for discharge of the encumbrance. The court held that in such a case where instead of clearing the encumbrance by himself, the vendor has left the money in the hands of the vendee for clearing off the liabilities, the vendee is only an agent of the vendor and if the vendee is able to bring down the liability then such benefit would go the vendor. Similar is the view expressed in Joy Varghese's case (supra) 13. According to the appellant, the sale consideration fixed in Ext.A1 was in addition to the liabilities over the property. The purchaser was to pay the sale consideration and also to pay off the liabilities. If the sale was free of liabilities, then the purchaser gets the property encumbrance-free for the promised price, with the liability to discharge the encumbrance being on the vendor. Ext.A1 agreement specifically states that the sale is subject to the liabilities. Hence the plaintiff is entitled to the entire sale consideration without regard to the liabilities over the property which were cleared by Chettiyappan, it is argued. 14.
Ext.A1 agreement specifically states that the sale is subject to the liabilities. Hence the plaintiff is entitled to the entire sale consideration without regard to the liabilities over the property which were cleared by Chettiyappan, it is argued. 14. On a reading of Ext.A1 agreement in its entirety and the conduct of the parties, we are unable to agree with the above contention. Ext.A1 agreement specifically recites the ‘price of the property’ as Rs. 1,32,00,000/-. It has been recited in Ext.A1 that the property is subjected to various liabilities. The vendor was to provide all the details of the liabilities. It was also provided that if the quantum of liabilities was found to exceed the sale consideration of Rs. 1,32,00,000/- it was open for the purchaser to rescind the agreement. The agreement also stipulates that “the said estate shall be sold free from encumbrances”. Though the total sale consideration fixed under Ext.A1 is Rs. 1,32,00,000/-, noticeably, the only amount paid to the vendor as on the date of Ext.A1 is Rs. 75,000/- which is only a minuscule of the total. Notably, the parties were aware that the liabilities over the property were huge and even the parties were apprehensive if it would be more than the sale consideration. The purchaser was given an option to rescind the contract if on calculating the liabilities it was found that the liabilities exceed the sale consideration fixed. Ext.A1 further provided that the sale shall be free from liabilities. The above factors sufficiently indicate that from out of the purchase price the vendee was to pay off the liabilities and the balance amount if any only goes to the vendor. 15. The above is evident from the further conduct of the parties. After execution of Ext.A1, the plaintiff obtained further amounts from Chettiyappan totaling to Rs. 16 lakhs. For the further advances Chettiyappan required the plaintiff to furnish security. Accordingly, the property of the plaintiff situated at Bangalore was given as security. A power of attorney was executed in favour of Chettiyappan for sale of the property. If it was intended that it was the liability of the purchaser Chettiyappan to wipe off the encumbrance over the property in addition to the sale consideration fixed, then there is no reason why for the advance amount of Rs. 16 lakhs received by the original plaintiff he was required to furnish security.
If it was intended that it was the liability of the purchaser Chettiyappan to wipe off the encumbrance over the property in addition to the sale consideration fixed, then there is no reason why for the advance amount of Rs. 16 lakhs received by the original plaintiff he was required to furnish security. All the above give no room for doubt that the sale was free of encumbrances; in other words the liabilities over the property were to be paid off from the total consideration fixed and was not in addition to the sale consideration. 16. Having held as above, it needs to be considered whether there is unpaid sale consideration due to the plaintiffs. The sale deeds recite that the consideration have been discharged in the manner as indicated in the deeds; substantial portions have been paid to clear off the liabilities. Some of the payments are recited to have been paid to the plaintiff through Bank(Rs. 19 lakhs), the details of which have also been specified in the sale deeds. Ext.B4 certificate from the Agricultural Income Tax department, Exts.B6 to B9 communication from the Employees Provident Fund Department, Ext.B11 series and Ext.B12 documents relating to settlement of gratuity of the workers of the estate etc. are documents constituting sufficient evidence of the clearance of liabilities over the property. PW1 has admitted the existence of the liabilities under the heads. He Though the learned counsel for theappellant vehemently raised arguments challenging the genuineness of the receipts regarding payment of gratuity, contending that the persons named in some of the receipts are not the workers in the estate, PW1 deposed that he had not even seen the receipts The totalsale consideration under the sale deeds is 73 lakhs. Out of the same, as noted above, Rs. 19 lakhs is paid to the vendor. The liabilities cleared by Chettiyappan is much more than that. The sale consideration under the sale deeds have thus been duly discharged. Therefore, the plaintiff was unable to prove that any part of the consideration remain unpaid, to be recovered from the defendants. We concur with the trial court in having held so. The points are thus answered against the appellants. 17. Incidentally we also consider it appropriate to notice that the original plaintiff had in the year 1993 executed cancellations purporting to cancel the sale deeds.
We concur with the trial court in having held so. The points are thus answered against the appellants. 17. Incidentally we also consider it appropriate to notice that the original plaintiff had in the year 1993 executed cancellations purporting to cancel the sale deeds. He never choose to file a suit to set aside the sale deeds. The present suit has been filed 8 years after the cancellation. 18. We do not find any merit in the appeal. Appeal fails and is dismissed. No costs.