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Citation Codes
Equivalent Citations
citation codes
Case Number
Judges
  • Mushtaq Ahmad, J.
Acts
  • Article 116 and not Article 62 of the Limitation Act.9.
  • Article 116 and not Article 62 of the Limitation Act.
  • Section 4 of the U.P Encumbered Estates Act,
  • Section 7 of the Encumbered Estates Act.
  • Article 116 of the Limitation Act.
  • Article 97 of the Limitation Act,
  • Article 62 of the Limitation Act,
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Judges
  • Mushtaq Ahmad, J.
Acts
  • Article 116 and not Article 62 of the Limitation Act.9.
  • Article 116 and not Article 62 of the Limitation Act.
  • Section 4 of the U.P Encumbered Estates Act,
  • Section 7 of the Encumbered Estates Act.
  • Article 116 of the Limitation Act.
  • Article 97 of the Limitation Act,
  • Article 62 of the Limitation Act,
See more information ...
Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

This appeal arises from a suit by plaintiffs (vendees) for recovery of Rs. 630 (claimed as damages) against the defendant (vendor). Relevant procedural and factual events, as set out in the opinion, are:

  • 16 April 1936: Defendant applied under Section 4 of the U.P. Encumbered Estates Act.
  • 21 April 1936: Proceedings were forwarded to the Special Judge under an order of the Collector.
  • 9 June 1936: Defendant executed a sale-deed in favour of the plaintiffs in respect of part of the property subject to the Encumbered Estates proceedings.
  • The vendees (plaintiffs) claimed the property under Section 11 of the Act; their claim was rejected because the sale-deed had been executed after the Collector had passed an order under Section 6 and was therefore declared absolutely void.
  • After executing the sale-deed the vendees entered into possession and obtained mutation, but following the Special Judge's order declaring the deed void the vendor retook possession and restored his name in the revenue papers.
  • 1 June 1942: Plaintiffs filed the present suit for recovery of Rs. 630 as damages (based on an indemnity clause in the sale-deed).
  • Trial Court: Held the suit barred by limitation and dismissed it.
  • Lower Appellate Court: Held plaintiffs were entitled to a money decree under the indemnity clause in the registered sale-deed, applied Article 116 of the Limitation Act, and decreed Rs. 641-4-0.
  • This appeal is by the defendant against that appellate decision.

Legal Issues Presented

  1. Whether the suit by the vendees for recovery of damages under an indemnity clause in the sale-deed is barred by limitation.
  2. If limitation is in issue, which article of the Limitation Act applies: Article 116 (six years for actions on registered documents or for compensation for breach of contract) or Article 62 (three years for money had and received), or alternatively Article 97 (as argued by counsel) — i.e., whether Article 116 can apply where the underlying sale-deed is void ab initio.

Arguments of the Parties

Defendant-Appellant's Arguments

  • Article 116 of the Limitation Act applies only where the contract of transfer is valid; it cannot apply where the contract is void ab initio (as the sale-deed here was, being in violation of Section 7 of the Encumbered Estates Act).
  • Article 97 of the Limitation Act is not applicable because the amount claimed was not paid to the vendor "upon an existing consideration, which afterwards fails"; that article, the appellant contended, applies only where the contract was initially valid.
  • The proper article, the appellant urged, is Article 62 (suit for money had and received by the defendant for the plaintiff's use), and therefore the suit is time-barred since it was brought more than three years after the money had been received.

Plaintiffs-Respondents' Position (as reflected in the pleadings and appellate findings)

  • The suit is not for refund of the purchase price but for recovery of Rs. 650 (approximately) as damages incurred because the plaintiffs lost the property; the claim is founded on an indemnity clause in the registered sale-deed under which the vendor personally undertook to compensate the vendees in case they lost possession.
  • The indemnity clause was embodied in a registered sale-deed; on this basis the lower appellate Court held Article 116 applied and that the suit was within time.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court in this Opinion
Hansraj Gupta v. Dehra Dun Musoorie Electric Tramway Co. Ltd., A.I.R (20) 1933 P.C. 63 (54 All. 1067) That in the case of a void contract, the fact of its being void is deemed to be discovered on the date of the contract. Used to acknowledge that where a suit seeks refund of purchase price because the contract is void, discovery of the voidness is at date of contract; distinguished from the present claim for indemnity.
Sana Ullah v. Jai Narain Singh, 1942 A.L.J. 390 (A.I.R. (29) 1942 All. 409) Same proposition as Hansraj Gupta: void contract is deemed discovered at date of contract. Referred to as confirming the principle on discovery of voidness; court distinguished such cases from the present indemnity claim.
Zea Uddin Ahmad Khan v. Akbar Ali, A.I.R. (19) 1932 All. 358 (136 I.C. 829) Where vendor sold property he was not owner and a subsequent judgment held the sale absolutely void, Article 116 applied to a claim for compensation. Cited as an authority that Article 116 can govern claims for compensation even where transfer is absolutely void.
Collector of Mirzapur v. Dawan Singh, 30 All. 400 (5 A.L.J. 486) A case of void transfer where Article 116 was applied; described as a suit "in substance a suit for compensation for breach of contract" governed by Article 116. Relied upon (via Zea Uddin case) to support the proposition that Article 116 applies to suits for compensation based on contractual obligation even though the underlying transfer was void.
Ode Ram v. Chhida Singh, A.I.R. (31) 1944 All. 276 (I.L.R. (1944) All. 674) Claim for damages because lessee did not obtain possession under a void lease; covenant separable and independent from the void document; Article 116 applied. Used to support the view that a covenant to repay/indemnify is separable and, being in a registered document, Article 116 applies and the suit could be within six years.
Shahu Avadesh Kumar v. S. Zaltual Husnain, A.I.R. (31) 1944 All. 243 (I.L.R. (1944) All. 612) Held that where transferee was dispossessed later, the six-year period under Article 116 begins from date of dispossession (not from date of illegal transfer). Cited for a related limitation point (period starting on dispossession); court noted the point but observed it was not needed here as the suit was within six years from the sale-deed.
Babu Nisar Ahmad Khan v. Balm Baja Mohan Manuoha, A.I.R. (27) 1940 P.C. 204 (I.L.R. (1940) Kar. P.C. 419) If claim is based on covenant to indemnify transferee in case of dispossession, Article 116 applies. Invoked to show consistent Judicial Committee authority that indemnity claims are governed by Article 116.
Ram Raghubir Lal v. United Refineries (Burma) Ltd., A.I.R. (20) 1933 P.C. 143 (11 Bang. 186) Authority supporting that indemnity/covenant based claims fall under Article 116. Referred to as confirming the position that Article 116 governs indemnity claims even when transfer is void.
Ratanbai v. Ghasiran Gangabisan Wani, 65 Bom. 565 (A.I.R. (19) 1932 Bom. 36) High Court decision adopting view that indemnity claims are governed by Article 116. Cited as one of the High Court authorities taking the same approach.
Kashirao v. Zabu, A.I.R. (19) 1932 Nag. 5 (28 N.L.R. 31 F.B.) Full Bench decision aligning with Article 116 for indemnity/compensation claims arising from void transfers. Cited among decisions supporting Article 116's applicability.
Udairaj Singh v. Barn Udit Tewari, A.I.R. (11) 1924 Oudh 147 (77 I.C. 340) Oudh Chief Court decision supporting the same rule (Article 116 for indemnity claims notwithstanding void transfers). Included in the list of consistent authorities favoring Article 116.
Ahsan Ali Khan v. Suraj Naraiih, A.I.R. (29) 1942 Oudh 82 (17 Luck 289) Reviewed earlier cases and affirmed that indemnity claims arising from void transfers are governed by Article 116, not Article 62. Cited as a recent review confirming that Article 116 applies in cases of void transfer where the transferee claims compensation under an indemnity clause.

Court's Reasoning and Analysis

The court's analysis proceeded in the following steps (as set out in the opinion):

  1. Characterisation of the suit: The court emphasised that the suit before it was not for recovery of the purchase money but for recovery of damages (about Rs. 650) sustained by the plaintiffs because they lost the property. The plaintiffs' pleadings (paras. 7, 9 and 12) expressly relied on an indemnity recital in the sale-deed under which the vendor personally undertook to compensate the vendees and created a charge on his properties for satisfaction of such claims.
  2. Distinction of legal categories: The court explained that whether Article 116 or Article 62 applies depends entirely on the nature of the suit. If the suit were for refund of the purchase price because the contract was void, Article 62 (money had and received) would be appropriate. But where the suit is for enforcement of an indemnity contained in a registered deed, Article 116 is the proper provision.
  3. Applicability of Article 116 despite voidness of deed: The court held that Article 116 may be invoked by a vendee even where the sale-deed is absolutely void ab initio because the claimant is suing to enforce an independent indemnity covenant in the deed. The opinion expressly states that this legal position holds "even in cases in which the sale deed was from its very inception a void document" and that the only condition is that the suit is for enforcement of the indemnity clause.
  4. Reliance on authorities: The court reviewed several precedents (including Zea Uddin Ahmad Khan v. Akbar Ali, Collector of Mirzapur v. Dawan Singh, Ode Ram v. Chhida Singh and others) which support the proposition that Article 116 applies to compensation claims founded on indemnity or covenant in registered instruments, even where the transfer itself was void. The opinion drew on these authorities to confirm that the lower appellate Court was correct.
  5. Ancillary point on period commencement: The court noted a decision (Shahu Avadesh Kumar v. S. Zaltual Husnain) holding that where a transferee has been in possession and later dispossessed, the six-year period under Article 116 begins from date of dispossession. The court observed that this point did not arise in the present case because the suit was filed within six years from the date of the sale-deed.
  6. Conclusion on limitation and decree: The court agreed with the lower appellate Court that Article 116 applied to the present claim. It also accepted the appellate court's approach in allowing interest from the date the vendees were in possession to a certain date and affirmed the decree for Rs. 641-4-0.

Holding and Implications

Holding: The appeal is dismissed. The court held that the lower appellate Court was correct in applying Article 116 of the Limitation Act to the plaintiffs' suit for damages founded on the indemnity clause in the registered sale-deed, and that the suit was within time. The decree for Rs. 641-4-0 as awarded by the lower appellate Court was upheld. The appeal is dismissed with costs and leave to appeal under the Letters Patent was refused.

Implications:

  • The direct consequence is that the plaintiffs' judgment and decree in the lower appellate Court (granting Rs. 641-4-0) stands; the defendant's appeal is dismissed and the defendant must bear the costs as ordered.
  • The court's opinion confirms the principle (as supported by cited authorities) that a registered deed's independent covenant or indemnity can give rise to a claim governed by Article 116 even when the underlying transfer is void ab initio. The opinion does not purport to establish a novel principle beyond the authorities it reviews; it applies existing precedents to the facts and upholds the appellate decision.

This summary is strictly limited to and based exclusively on the information contained in the provided opinion.

Show full summary ...

    Jhamman Singh v. Ratan Lal

    1. This is a defendant's appeal arising out of a suit for recovery of Rs. 630 as damages (not for refund of sale-consideration as urged by the learned counsel for the appellant) in the following circumstances.

    2. On 16th April, 1936, the defendant-appellant applied under Section 4 of the U.P Encumbered Estates Act, after which, on 21st April 1936, the proceedings were forwarded to the Special Judge under an order of the Collector. Later, on 9th June, 1936, the defendant executed a sale-deed in favour of the plaintiffs-respondents in respect of a part of the property which became the subject of the proceedings under the said Act. On the basis of this deed, the vendees (respondents) laid a claim to the property purchased by them under Section 11 of the Act. This claim was rejected on the ground that the sale-deed having been executed after the Collector had passed an order under Section 6 of the Act was absolutely void. It may be mentioned that after the sale-deed, the vendees had entered into possession of the property and even got their names mutated, but that after the order of the Special Judge declaring the sale-deed as void, the defendant, vendor had again taken possession over the property and got his name restored in the revenue papers. On 1st June 1942, the present suit was filed by the plaintiffs-vendees for the relief I have already mentioned. The only question argued before me was whether this suit was barred by limitation. The trial Court held that it was so barred and dismissed it. The lower appellate Court took the view that the plaintiffs were entitled to a simple money decree on the basis of the indemnity clause in the sale-deed which authorised them to claim compensation from the vendor in case they lost possession over the property. In that view, it held that the claim was within time under Article 116 of the Limitation Act, and decreed the same for Rs. 641-4.

    3. Learned counsel for the defendant appellant argued that Article 116 applied only in cases in which the contract of transfer was valid and not where it was void ab initio, as in the present case. The contraot was admitted to be void ab initio in the present case, inasmuch as the sale-deed had been executed in violation of the imperative prohibition enjoined by Section 7 of the Encumbered Estates Act. Learned counsel further argued that Article 97 of the Limitation Act, had also no application, as it could not be said that the amount claimed had been paid to the vendor-defendant “upon an existing consideration, which afterwards fails”. This article, according to his contention, would apply only in cases where there was an existing consideration which would be only if the contract was initially valid. He, however, urged that the article applicable to the case was Article 62 of the Limitation Act, the suit being one for recovery of money had and received by the defendant for the plaintiff's use and that, therefore, it was time barred, having been brought more than three years after the money had been so received.

    4. Having considered the matter carefully, I have come to the conclusion that this contention is wrong. It must be remembered that the suit giving rise to this appeal was not for recovery of the purchase money at all. It was for recovery of Rs. 650 as damages incurred by the plaintiffs on account of the plaintiffs having lost the property and they being entitled to recover the same by enforcement of an indemnity clause in the sale-deed. The pleadings in paras. 7, 9 and 12 leave no doubt that this was the nature and basis of their claim. They referred expressly to a recital in the sale-deed which itself was to the effect that in case the vendees were put to any loss on account of any claim made by the vendor or anyone else or on account of any other cause, the vendor would be personally liable to compensate the vendees, who would also be entitled to recover their loss from the property of the vendor.

    5. The lower appellate Court on these pleadings in the plaint held that the suit, was within time under Article 116 of the Limitation Act, the indemnity clause being embodied in the sale-deed which was a registered document. The question whether Article 116, as held by the lower appellate Court, or Article 62, as contended for by the learned counsel for the appellant, would apply depends entirely on the nature of the suit. If the suit were only for recovery of the purchase price on the ground that the contract had been discovered as void, surely the proper article applicable would have been Article 62, as it would have been obviously a case of a suit for money had and received by the defendant for the plaintiff's use. It may also be conceded that in the case of a void contract, the fact of the contract being void would be deemed to be discovered on the date of the contract. This was pointed out by their Lordships of the Judicial Committee in Hansraj Gupta v. Dehra Dun Musoorie Electric Tramway Co. Ltd., A.I.R (20) 1933 P.C 63 : (54 ALL. 1067) and by this Court in Sana Ullah v. Jai Narain Singh, 1942 A.L.J 390 : (A.I.R (29) 1942 ALL. 409). But where the suit is not for refund of the purchase price, as it is not in the present case, and it is for recovery of damages suffered by the vendee on account of his having lost the property and the deed of sale is a registered document, the proper article to be applied is Article 116 of the Limitation Act. In such a case, the claim would always be on the basis of the indemnity clause in the sale deed, namely that, if the vendee lost the property or was dispossessed from it by the venlor, the latter would compensate the former personally. In the present case, as I have already mentioned, such an undertaking was given by the vendor who, further, created a charge both on the property in suit and on other properties of his in favour of the vendees for the satisfaction of such claim as the latter might have in case they lost the property. It may be mentioned at once that this would be the legal position even in cases in which the sale deed was from its very inception a void document, either by reason of its having purported to transfer property which was not transferable or by reason of its having been in violation of any other statutory prohibition. This would mean that Article 116 could be invoked by a vendee even in cases where the sale-deed was I absolutely void, the only condition being that he I is suing for the enforcement of the indemnity clause contained in the deed, as the vendees have done in the present case. In Zea Uddin Ahmad Khan v. Akbar Ali, A.I.R (19) 1932 ALL. 358 : (136 I.C 829), it was found that the vendor had sold property of which he was not the owner and which as a result of a subsequent litigation, was held to have belonged to a third party, so that the sale was absolutely void. There was a claim for compensation against the vendee and it was held that the article applicable was Article 116 of the Limitation Act. Their Lordships, in support of that view, relied on a previous judgment of this Court in the Collector of Mirzapur v. Dawan Singh, 30 ALL. 400 : (5 A.L.J 486). This latter was also a case of a void transfer and yet Stanley C.J and Banerji, J. in applying Article 116 of the Limitation Act, observed that:

    “This was, in one opinion, a suit which was governed by Article 116 of Sch. XI, being in substance a suit for compensation for breach of contract, namely, the contract to deliver possession and pay the amount secured by the bond in case of default of delivering possession.”

    6. The same was the position taken in the case of Ode Ram v. Ckhida Singh, A.I.R (31) 1944 ALL. 276 : (I.L.R (1944) ALL. 674), which was a case of a claim made for damages on account of the lessee not obtaining possession under a void transaction of lease. The article held applicable is Article 116 and not Article 62 of the Limitation Act. Ismail and Malik, JJ. in that case remarked that:

    “To our mind, the covenant as regards repayment in this case is entirely separable from the mortgage and can be treated as independent of it. The plaintiff has right to base his claim on the agreement and as it is registered document Article 116 of the Limitation Act, will apply and the suit having been filed within six years it should be deemed to have been filed within time.”

    7. There is a Single Judge decision of this Court in Shahu Avadesh Kumar v. S. Zaltual Husnain, A.I.R (31) 1944 ALL. 243 : (I.L.R (1944) ALL. 612), which in fact went a step further. There it was held that where a transferee had been in possession of a property for some time, but dispossessed later, the period of six years under Article 116 of the Limitation Act, which was the article applicable would begin not from the date of the illegal transfer but from the date of the transferee's dispossession. Of course, this particular question does not arise in the present case as the suit was within six years from the date of the sale-deed dated 9th June, 1936.

    8. Their Lordships of the Judicial Committee in Babu Nisar Ahmad Khan v. Balm Baja Mohan Manuoha, A.I.R (27) 1940 P.C 204 : (I.L.R (1940) Kar. P.C 419), also held that if the claim was based on a covenant to indemnify the transferee in case of his dispossession, Article 116 only would apply. The same position is confirmed by a previous decision of their Lordships in Ram Raghubir Lal v. United Refineries (Burma) Ltd., A.I.R (20) 1933 P.C 143 : (11 Bang. 186). The Bombay High Court in Ratanbai v. Ghasiran Gangabisan Wani, 65 Bom. 565 : (A.I.R (19) 1932 Bom. 36), the Nagpur Chief Court in the Full Bench decision in Kashirao v. Zabu, A.I.R (19) 1932 Nag. 5 : (28 N.L.R 31 F.B) and also the Oudh Chief Court in Udairaj Singh v. Barn Udit Tewari, A.I.R (11) 1924 Oudh 147 : (77 I.C 340), took the same view. These cases were all reviewed in a recent decision of the Oudh Chief Court in Ahsan Ali Khan v. Suraj Naraiih, A.I.R (29) 1942 Oudh 82 : (17 Luck 289), where also it was affirmed that in the case of a void transfer, a claim by the transferee for compensation against the transferor in respect of the damage suffered by him in consequence of his dispossession from the leased property on the basis of an indemnity clause in deed was governed by Article 116 and not Article 62 of the Limitation Act.

    9. The lower appellate Court was, in my Opinion, therefore, right in applying this Article 116 to the present case and holding that the suit was within time.

    10. The vendees having been found to have remained in possession to a certain date, they were allowed interest on the amount actually paid by them to the vendor only from that date and thus they were granted a decree for Rs. 641-4-0. With this view, I am unable to find any fault. I hold that the learned Judge same to a Eight conclusion on the question of limitation involved in this case.

    11. I, therefore, dismiss this appeal with costs. Leave to appeal under the Letters Patent is refused.

    12. Appeal dismissed.

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    Comments

    Jhamman Singh v. Ratan Lal
    (Mar 30, 1949)