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  • provisions of the Bhagdari and Narwadari Act, Bombay Act V[5] of 1862.
  • Art. 62, Limitation Act. However, the provisions of the Limitation Act
  • lands.30. Section 20, cl. (2), N.W Provinces Tenancy Act, II[2] of 1901,
  • provisions of S. 40, proviso 3, Bombay Court of Wards Act, I[1]
  • article of the Limitation Act applicable must be Art. 116.
  • provisions of S. 40, proviso 3, Bombay Court of Wards Act,
  • Act (N.W Provinces Act, II[2] of 1901)
  • Arts. 115 and 116, Limitation Act,
  • provisions of S. 24, Contract Act,
  • S. 40, Bombay Court of Wards Act.
  • Provinces Tenancy Act, 1901,
  • BOMBAY COURT OF WARDS ACT
  • Art. 116, Limitation Act,
  • S. 65, Contract Act.
  • S. 55, cl. (2), T.P Act,
  • S. 55(2), T.P Act
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Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Judges
Acts
  • provisions of the Bhagdari and Narwadari Act, Bombay Act V[5] of 1862.
  • Art. 62, Limitation Act. However, the provisions of the Limitation Act
  • lands.30. Section 20, cl. (2), N.W Provinces Tenancy Act, II[2] of 1901,
  • provisions of S. 40, proviso 3, Bombay Court of Wards Act, I[1]
  • article of the Limitation Act applicable must be Art. 116.
  • provisions of S. 40, proviso 3, Bombay Court of Wards Act,
  • Act (N.W Provinces Act, II[2] of 1901)
  • Arts. 115 and 116, Limitation Act,
  • provisions of S. 24, Contract Act,
  • S. 40, Bombay Court of Wards Act.
  • Provinces Tenancy Act, 1901,
  • BOMBAY COURT OF WARDS ACT
  • Art. 116, Limitation Act,
  • S. 65, Contract Act.
  • S. 55, cl. (2), T.P Act,
  • S. 55(2), T.P Act
Smart Summary

Concise Analytical Summary of the Opinion (Shah, J.)

Factual and Procedural Background

The Court of Wards managed the estate of Ganpatrao Sagajirao Nimbalkar from circa June 1907 until June 1917, when management was withdrawn and the estate returned to Ganpatrao. Proviso 3 to S. 40 of the Bombay Court of Wards Act prevented a person who had been a government ward from, on withdrawal of the Court's superintendence, transferring or creating any interest in his property beyond his natural life without the Collector's sanction.

Ganpatrao owned two houses (Municipal census Nos. 822 and 230) in Bhusawal (the "suit houses"). By a registered sale-deed dated 18-5-1918 he sold those houses to Onkardas (the plaintiff's brother) and Kanayalal for Rs. 1,000 and delivered possession. The deed purported to convey absolute title; neither vendor nor vendees were aware of the statutory disability under the Court of Wards Act. On partition the suit houses came to the plaintiff. Ganpatrao died 8-12-1919, and his estate passed to his son, Suryajirao (the defendant).

The defendant sued (Suit No. 1140 of 1930) for possession on the ground that the sale was void beyond Ganpatrao's lifetime; the trial Court dismissed the defendant's suit, the District Court reversed, and this Court in Second Appeal No. 874/33 (9-3-1936) confirmed the District Court. The defendant executed that decree and obtained possession in August 1936.

The plaintiff then filed Suit No. 318 of 1939 claiming Rs. 8,600 as damages for breach of covenants for title and quiet enjoyment (value of houses Rs. 2,000; Rs. 1,000 litigation costs; Rs. 600 mesne profits). The defendant pleaded that Ganpatrao had only a life interest and was incompetent to dispose beyond his life, and also pleaded limitation and res judicata.

The trial Court awarded damages to the plaintiff (Rs. 2,600). On appeal the Assistant Judge held there was no breach of the covenant; this Court in S.A. No. 833 of 1942 held there had been a breach as far as Ganpatrao was concerned but remanded to decide whether the defendant (his son) was bound by the covenant, and other issues (limitation, res judicata, relief). The District Judge later held the defendant was not bound by the covenant and dismissed the plaintiff's suit. The present appeal challenges that dismissal.

Legal Issues Presented

  1. Whether the covenant for title and quiet enjoyment in the registered sale-deed is enforceable against the defendant (the son and successor of Ganpatrao) when the vendor was disqualified under proviso 3 to S. 40 of the Bombay Court of Wards Act from disposing of property beyond his life without Collector's sanction.
  2. Whether the plaintiff's suit for damages for breach of the covenant is barred by limitation (which article of the Limitation Act applies and when the period begins to run).
  3. Whether the plaintiff's claim is barred by res judicata in view of earlier litigation (Suit No. 1140 of 1930 and subsequent proceedings).
  4. What relief (if any) the plaintiff is entitled to, and the quantum of damages.

Arguments of the Parties

Pleadings and Defendant's Arguments (as presented by Mr. Kotwal)

  • The vendor (Ganpatrao) had only a life interest and was incompetent to dispose of the suit houses beyond his natural lifetime; accordingly the sale was void beyond his life and the covenant could not be enforced against successors.
  • The suit is barred by limitation.
  • Specifically two contentions as to enforceability of the covenant:
    • (a) The covenant for quiet enjoyment came to an end on Ganpatrao's death when the sale-deed itself became void.
    • (b) The covenant undertaking quiet enjoyment "from generation to generation" amounted to an agreement to do what the Bombay Court of Wards Act prohibited (i.e., create an interest beyond the vendor's life), so the agreement was void and unenforceable and damages could not be recovered for its breach.
  • As to limitation, Mr. Kotwal urged the period began either on Ganpatrao's death (8-12-1919), on the date mesne profits were awarded in Suit No. 1140 of 1930, or from the date Suit No. 1140 of 1930 was instituted (arguing the plaintiff must by then have discovered defect of title).

Plaintiff's Position and Legal Contentions (as found in the plaint and the Court's statement)

  • The sale-deed (a registered deed) contained express words and also gave rise to an implied covenant of title and quiet enjoyment under S. 55(2) of the Transfer of Property Act; the plaintiff sued for damages for breach of those covenants.
  • The proper article of limitation applicable to the plaintiff's claim for damages under a registered contract is Article 116 of the Limitation Act (six years for compensation for breach of a contract in writing and registered), and limitation should be ascertained from the reliefs actually claimed, not from speculative alternative reliefs the plaintiff might have sought.
  • On the plaintiff's pleaded case, the cause of action for damages for breach of covenant of quiet enjoyment arises on the date of actual dispossession; while title may have terminated on Ganpatrao's death, there is no breach until possession is disturbed.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court in this Opinion
Krishnaji Sakharam v. Kashim (44 Bom. 500; A.I.R. (7) 1920 Bom. 48) Construction of a covenant in a mortgage deed—held that the obligation to pay arose only during mortgagor's lifetime; limitation began at mortgagor's death for that covenant. The Court distinguished it as not laying down a general proposition; in Krishnaji the covenant was construed to be limited to the mortgagor's life, unlike the present covenant which was not so limited.
Subbaroya v. Rajagopala (38 Mad. 887; A.I.R. (2) 1915 Mad. 708) Classification of vendee suits for compensation for breach of quiet enjoyment into three classes and the corresponding starting point of limitation. The Court relied on the classification and adopted the view that where possession was given (third class) the cause of action arises on disturbance of possession; applied to hold limitation runs from dispossession.
Kashirao v. Zabu (A.I.R. (19) 1932 Nag. 5; 28 N.L.R. 31 F.B.) Full Bench: in registered-deed cases where vendee was put in possession and sale void ab initio as against rightful owner, limitation runs from dispossession, not from date of sale. The Court cited and followed this Full Bench view to support the proposition that limitation begins on actual dispossession.
Jhamman Singh v. Ratan Lal (A.I.R. (36) 1949 All. 480) Support for the rule that limitation begins on dispossession in suits for damages for breach of covenant of title when vendee was put in possession. The Court noted that the Allahabad High Court follows the same approach and used it to reinforce its conclusion on limitation.
Ahsan Ali Khan v. Suraj Narain (17 Luck. 289; A.I.R. (29) 1942 Oudh 82) Consistent judicial support for the principle regarding commencement of limitation from dispossession. Referenced as following the same rule; used to show consensus among courts.
Ratanbai v. Ghasiram (33 Bom. L.R. 1092; A.I.R. (19) 1932 Bom. 36) Accepted Subbaroya classification and held limitation commences from dispossession in analogous situations. Cited to show that the Bombay Court had earlier accepted the classification and the dispossession rule.
Narsing Shivbakas v. Pachu Rambakas (37 Bom. 538; 20 I.C. 254) Limitation for refund of purchase money governed by Art. 97—period commences from dispossession. Used to support the proposition that, for certain reliefs, limitation runs from dispossession.
Moti Chand v. Ikram Ullah Khan (44 I.A. 54; A.I.R. (3) 1916 P.C. 59) Deed held invalid because contrary to the regional Tenancy Act (policy against transfer of sir lands); damages for breach held not recoverable. The Court distinguished Moti Chand as concerned with a public-policy prohibition on alienation by tenure (not a personal disqualification) and therefore inapplicable to the Court of Wards facts.
Bai Diwali v. Umedbhai Bhulabhai (40 Bom. 614; A.I.R. (3) 1916 Bom. 318) Mortgage contrary to Bhagdari/Narwadari Act was void ab initio; covenant to pay mortgage money held unenforceable because consideration unlawful. The Court held the principle inapplicable because that case concerned a transaction void ab initio due to tenure restrictions, whereas the present sale was valid for the vendor's lifetime and failed beyond it by reason of a personal disability.
Nisar Ahmad Khan v. Raja Mohan Manucha (67 I.A. 431; A.I.R. (27) 1940 P.C. 204) Deed executed without required Collector's permission held null and void as to the transfer, but the personal covenant to pay was enforceable; paragraph in Sch. III, Civil P.C. analogous to proviso 3 to S.40 Bombay Court of Wards Act. The Court relied on this Privy Council authority to hold that a personal incapacity prescribed by statute does not necessarily render a personal covenant unenforceable; applied to support recoverability of damages for breach of covenant here.
Raja Mohan Manucha v. Manzoor Ahmad Khan (70 I.A. 1; A.I.R. (30) 1943 P.C. 29) Related Privy Council decision on same execution context confirming that incapacity to affect property is not necessarily a general incapacity to contract; restitution under S.65 Contract Act may be available. Used to support the conclusion that statutory incapacity under Court of Wards Act does not bar enforcement of a personal covenant for payment or, analogously, damages for breach of quiet enjoyment.
Har Prasad v. Sheo Gobind (44 All. 486; A.I.R. (9) 1912 All. 134); Murlidhar v. Pem Raj (22 All. 205); Bikham Singh v. Har Prasad (19 All. 35) Earlier All. decisions, factually aligned with Moti Chand / Privy Council reasoning concerning invalidity arising from tenure-based prohibitions. Cited by Mr. Kotwal; the Court observed these followings of Motichand are not applicable to the present facts and therefore not persuasive here.

Court's Reasoning and Analysis

The Court proceeded by addressing the two principal lines of attack advanced for the defendant: (1) limitation, and (2) unenforceability of the covenant because the sale was void beyond the vendor's life under proviso 3 to S. 40, Bombay Court of Wards Act.

On the nature of the covenant and its enforceability:

  • The sale-deed, being registered, gave rise both to express covenants and to an implied covenant of title and quiet enjoyment under S. 55(2) of the Transfer of Property Act.
  • The Court rejected the submission that the covenant terminated automatically on the vendor's death (i.e., when the title ceased). The Court reasoned that a covenant of quiet enjoyment secures undisturbed possession; it is not necessarily a personal covenant limited to the vendor's life unless the deed so provides. It would be anomalous for the covenant to be extinguished at the precise moment when protection is most needed.
  • The Court distinguished public-policy and tenure-based prohibitions (where statutory policy renders a transaction void and unenforceable — e.g., Moti Chand and Bai Diwali) from a statutory personal disqualification on the vendor. The Court of Wards Act imposes a personal incapacity to create interests beyond life without Collector sanction but does not declare contracts generally void; thus the vendor's personal incapacity did not automatically prevent enforcement of a personal covenant to compensate the vendee for breach.
  • The Court relied on Privy Council authorities (Nisar Ahmad Khan; Raja Mohan Manucha) holding that, even where a transfer is void for lack of required official permission, a personal covenant can remain enforceable. By parity, proviso 3 to S. 40 does not render a covenant to guarantee quiet enjoyment unenforceable.

On limitation:

  • The Court held the plaintiff's cause of action for damages under the registered covenant falls prima facie under Article 116 of the Limitation Act (six years for compensation for breach of a contract in writing and registered), and the relevant period cannot be determined by conjecture about alternate reliefs the plaintiff might have sought.
  • The Court adopted the view (from Subbaroya and Kashirao Full Bench and other authorities) that where a vendee has been placed in possession, the cause of action for damages for breach of covenant of quiet enjoyment arises on actual disturbance or dispossession. Hence the limitation period commences on dispossession, not at the date of sale or at the vendor's death.
  • The Court rejected Mr. Kotwal's alternative suggestions that limitation began on the vendor's death (8-12-1919), on the date mesne profits were awarded in Suit No. 1140 of 1930, or on the institution of Suit No. 1140 of 1930. The Court explained that the awarding of mesne profits reflected the premise that the plaintiff's title had terminated earlier and that mesne profits had their own rules under the Limitation Act; they did not supply a new commencement date for a damages cause of action under Art. 116. Similarly, mere possibility that the rightful owner might sue in future does not constitute a present breach.

Other points:

  • The Court systematically distinguished decisions that dealt with tenure-based prohibitions (where contracts were void as contrary to public policy) from cases dealing with personal statutory incapacities. It concluded that the principle in the tenure cases (e.g., Moti Chand, Bai Diwali) does not apply to the personal-disability situation under the Court of Wards Act.
  • On the specific question whether successors (the defendant) are bound by the covenant, the Court found the District Judge's conclusion that the defendant was not bound must be set aside (i.e., the covenant is enforceable against those claiming under the vendor), and that the appellate Judge had erred in holding otherwise.

Holding and Implications

Holding:

The appeal is allowed. The decree of the lower appellate Court is set aside. The Court held that the plaintiff's suit for damages for breach of the covenants of title and quiet enjoyment is maintainable and was within time; the covenant is not unenforceable merely because the vendor was disqualified under proviso 3 to S. 40, Bombay Court of Wards Act from creating an interest beyond his life. The matter is remanded to the District Court for determination of the issue of damages.

Direct consequences and procedural orders:

  • Case remanded. The District Court is to hear and dispose of the issue as to damages according to law.
  • There will be no order as to costs of this appeal. Costs of the lower appellate Court and the trial Court will abide the result of the proceedings in the District Court.

Broader implications: The opinion does not purport to overrule the distinction between tenure-based statutory prohibitions (which may render agreements void as contrary to public policy) and personal statutory incapacities (which do not necessarily render personal covenants unenforceable). The Court's decision applies these principles to hold that damages for breach of covenant of title and quiet enjoyment can be recovered where the defect arises from a vendor's personal statutory disqualification under the Court of Wards Act. The opinion does not announce any other general rule beyond its holdings in the present factual context.

    Gulabchand Daulatram v. Suryajirao Ganpatrao

    Shah, J.:— This is an appeal against a decree of the District Court at Jalgaon in App. No. 316 of 1940 reversing the decree of the Civil Judge, Junior Division, at Bhusawal in suit No. 218 of 1939. The facts of the case must be stated in detail in order to appreciate the contentions raised.

    2. The Court of Wards assumed the management of the estate of one Ganpatrao Sagajirao Nimbalkar sometime in Jane 1907. The estate remained in the management of the Court of Wards till June 1917. The management was then withdrawn, and the estate was re-entrusted to Ganpatrao. By reason of the provisions of S. 40, proviso 3, Bombay Court of Wards Act, I[1] of 1905, no land-holder, who has been made a Government ward in pursuance of S. 9(1) of the Act, is competent on the withdrawal of the superintendence of the Court of Wards to transfer or create any charge on or interest in his property or any part thereof beyond the term of his natural life, except with the previous sanction of the Collector. Ganpatrao owned among other properties two houses, Municipal census Nos. 822 and 230, at Bhusawal, which will hereafter be referred to as the suit houses. By a sale-deed dated 18-5-1918, Ganpatrao sold the suit houses to the plaintiff's brother, Onkardas Daulatram, and his cousin, Kanayalal Vithaldas, for Rs. 1,000, and delivered possession to them. Under the sale deed Ganpatrao purported to convey an absolute interest in the property to the vendees. It does not appear that either the vendor or the vendees were aware of the statutory disability imposed on Ganpatrao by reason of Proviso 3 to S. 40, Bombay Court of Wards Act. The transaction appears to have been open and honest, and the invalidity of it beyond the lifetime of Ganpatrao was not present to the mind either of Ganpatrao or of the vendees. At a partition which took place between the plaintiff, Onkardas and Kanayalal, the suit houses fell to the share of the plaintiff. Ganpatrao died on 8-12-1919, and his property devolved upon his son Suryajirao, who will hereafter be referred to as the defendant. The defendant filed Suit No. 1140 of 1930 in the Court of the Subordinate Judge at Bhusawal against the plaintiff for possession of the suit houses on the ground that the sale of the said houses was void beyond the lifetime of Ganpatrao, and Ganpatrao having died, he the defendant was entitled to obtain possession of the suit houses. The trial Court dismissed the suit. In appeal the District Court at Jalgaon reversed the decree and passed a decree for possession of the suit houses and for mesne profits. In second Appeal no. 874/33 this Court confirmed the decree of the District Court on 9-3-1936. The defendant executed the decree and obtained possession of the suit houses sometime in August 1936. The plaintiff there, after filed the suit from which this appeal arises, being Suit no. 318 of 1939, against the defendant claiming Rs. 8,600 as damages for breach of the covenant for title and quiet enjoyment. He claimed that the suit houses were worth Rs. 2,000, and that he had spent Rs. 1,000 for the litigation and Rs. 600 were paid by him by way of mesne profits to the defendant.

    3. The defendant by his written statement contended that Ganpatrao did not sell anything more than his life interest in the property, and that he was incompetent to dispose of the suit houses beyond his natural lifetime. He further contended that the claim was barred by the law of limitation and was also barred as res judicata, and in any case the plaintiff was not entitled to any damages.

    4. The trial Court held that the sale deed purported to convey an absolute interest, and that the plaintiff's claim was neither barred as res judicata nor by limitation, and the plaintiff was entitled to damages amounting to Rs. 2,600. In appeal the learned Assistant Judge at Jalgaon, who heard the appeal, held tbat there was no breach of the covenant of title and quiet enjoyment. He observed:

    “… the sale as such came to an end on the death of Ganpatrao and the purpose of the covenant was fulfilled, when there was no hitch or hindrance to quiet enjoyment during the lifetime of Ganpatrao. There was, therefore, no breach of the covenant.”

    5. The learned Judge did not record any finding on either of the two remaining issues as to limitation and the extent of damages, but on his finding on the issue as to breach of the covenant reversed the decree of the trial Court and dismissed the suit. In S.A no. 833 of 1942, Divatia J. who heard the appeal, was of the opinion that the sale deed incorporated a covenant of title and quiet enjoyment, and that so far as Ganpatrao was concerned there had been a breach of the same. In view, however, of the fact that the question, whether Ganpatrao's son, the defendant, was bound by the covenant had not been adjudicated upon, Divatia J. reversed the decree of the District Court and remanded the appeal for hearing to the District Court on the issues, (1) whether the defendant was bound by the covenant entered into by his father, (2) whether the claim was barred by limitation, (3) whether the claim was barred as res judicata, and (4) what relief the plaintiff was entitled to get.

    6. The appeal was thereafter heard by the District Judge at Jalgaon. He was of the opinion that the defendant was not bound by the covenant entered into by Ganpatrao and that the suit was not barred by limitation or as res judicata. On the view that the covenant of title and quiet enjoyment did not bind the defendant, the learned District Judge reversed the decree of the trial Court and ordered that the plaintiff's suit be dismissed. The present appeal has been filed against the decree of the learned District Judge and has been placed before this Division Bench in view of the importance of the questions of law involved.

    7. Now, before proceeding to discuss the questions which arise in the appeal, it must be observed that this Court in S.A no. 874 of 1933 held that the alienation by Ganpatrao was void beyond his lifetime. Further in S.A No. 833 of 1942 it was held by this Court that there was a breach of the covenant in the sale deed relating to title and quiet enjoyment, and that an action could lie on that breach.

    8. Mr. Kotwal on behalf of the defendant has argued two points in this appeal. He submits that the suit is barred by limitation and that the covenant of title and quiet enjoyment in the sale deed was not enforceable as it was void beyond the lifetime of Ganpatrao. The argument of the learned advocate on the second point was twofold, (a) that the covenant for quiet enjoyment came to an end on the death of Ganpatrao when the sale deed itself became void and (b) that the covenant for quiet enjoyment to allow the transferee to remain in possession from generation to generation without obstruction amounted to an agreement to do what was prohibited by the Bombay Court of Wards Act, and hence the agreement was void and unenforceable and damages could not be recovered for failing to carry out that covenant.

    9. Now the suit filed by the plaintiff is one for damages for breach of a contract in writing registered. The relevant words in the sale deed are:

    “you should enjoy the said property from generation to generation. I have no right, title or interest left over the said property. Should my kinsmen and heir put forward any claim over the said property, all that is null and void.”

    10. Under S. 55(2), T.P Act there is an implied covenant of title. In the present case the plaintiff was entitled to rely upon a covenant of title and quiet enjoyment arising by implication of law under S. 55, cl. (2), T.P Act, as well as by the express words of the sale deed.

    11. If on the allegation that the covenant of title and quiet enjoyment was broken, the plaintiff claims damages, the suit prima facie falls under Art. 116, Limitation Act, as the covenant is contained in a sale-deed, which is duly registered. Mr. Kotwal, however, urged that the plaintiff should have prayed for a refund of the purchase money on the footing that the consideration for the sale failed on the death of Ganpatrao, and he contended that was the only relief which the plaintiff was entitled to; and if a claim for refund of the purchase money had been made, the claim of the plaintiff would necessarily be barred by Art. 62, Limitation Act. However, the provisions of the Limitation Act applicable to a suit can only be ascertained on the allegations made in the plaint and the reliefs prayed for and not by speculating as to what relief the plaintiff should have prayed for. If the plaintiff prays for a relief to which he is not entitled, the Court may reject his claim, but the Court has no jurisdiction to find out what relief he should have claimed and then apply the provisions of the limitation act by reference to the relief which the plaintiff should have claimed but has not claimed.

    12. On the plaint claiming damages as framed by plaintiff the article of the Limitation Act applicable must be Art. 116. The period of limitation applicable to a suit for damages for breach of the covenant cannot be decided by speculating as to what additional or alternative relief the plaintiff should have prayed for on those covenants. By the combined operation of Arts. 115 and 116, Limitation Act, a period of six years is provided for a suit for compensation for breach of a contract in writing and registered, and the period of limitation commences to run when the contract is broken or (where there are successive breaches) when the breach in respect of which the suit is instituted occurs.

    13. Mr. Kotwal further urged that even on the view that Art. 116 applied, the plaintiff's suit was barred by limitation. He submitted that the period of limitation commenced to run from the date on which Ganpatrao died on 8-12-1919, or from the date on which mesne profits were awarded by the Court in Suit No. 1140 of 1930, or in any case from the date of institution of Suit no. 1140 of 1930 by the defendant. He urged that the title of the plaintiff came to an end on the death of Ganpatrao and that his possession thereafter was wrongful; and, even if the plaintiff was not disturbed in his possession, his possession could not be said to be in pursuance of or in recognition of a title. Now the whole argument of Mr. Kotwal proceeds upon the assumption that the covenant of title and the covenant of quiet enjoyment are broken when the title to the property terminates by reason of the absence of authority of the vendor either initial or supervening to transfer what he has purported to transfer. In my opinion there is no justification for this assumption. So long as the transferee remains in peaceful possession of the property there is no breach of the covenant. The possibility of a person, who has since the date of the sale acquired title to the property, initiating steps to obtain possession of the property cannot amount to a breach of the covenant. If the argument of the learned advocate is accepted, it would lead to the startling result that a right to file a suit for damages for breach of a covenant of title and quiet enjoyment would arise before any injury is suffered by the vendee, and in several cases the right to sue for damages may even become barred even before the person in whom the title so vested takes any steps to enforce his rights. The learned advocate was unable to cite any authority for the proposition that a mere possibility of an action being initiated in future by a person having or claiming a right to property constitutes a breach of the covenant of quiet enjoyment.

    14. Mr. Kotwal suggested, however, that the case in Krishnaji Sakharam v. Kashim, 44 Bom. 500 : (A.I.R (7) 1920 Bom. 48) supported his submission. That was a case in which certain watan lands were mortgaged with possession in the year 1893 for a period of 12 years by the watandar. The mortgage deed contained a covenant:

    “If there be any hindrance to the continuance of the land, I shall pay the said sum together with interest thereon at the rate of one per cent per annum out of my other estate and personally in the year in which the hindrance may arise.”

    15. The mortgagor died in the year 1901, and his son recovered possession of the lands in the year 1914 on the ground that the mortgage was void under S. 5, Watan Act. The mortgagee thereupon filed a suit to recover the mortgage amount with interest. It was held that the claim was barred by limitation. The Court held that the suit for mortgage money was barred as it was not filed within six years after the expiry of the period of the mortgage. The Court also construed the covenant in the deed to mean that the mortgagor should pay the amount if any hindrance was caused to the mortgagee's possession during the mortgagor's lifetime. The time for paying the purchase money commenced to run, according to the learned Judges who decided that case, as from the death of the mortgagor and not from the date of the subsequent dispossession. Now Krishnaji's case, (44 Bom. 500 : A.I.R (7) 1920 Bom. 48) obviously does not lay down any general proposition. On the construction of the covenant in the mortgage deed, it was held that the absence of hindrance that was guaranteed by the mortgagor was only during the lifetime of the mortgagor. That case can have no application to the facts of the present case.

    16. The contention that the period of limitation commenced to run from the date on which the mesne profits were awarded is entirely futile. The decree passed by the Court in suit No. 1140 of 1930 for possession and mesne profits was passed on the footing that the title of the plaintiff having terminated in 1920, his possession since then must be regarded as unlawful. Mesne profits were, however, awarded for a period of three years before suit, not because there was any particular sanctity in that period but because mesne profits for a period longer than three years before the suit could not be awarded by reason of the provisions of the limitation act. For reasons mentioned for rejecting the contention that the period of limitation began to run from the date of Ganpatrao's death, this contention also must fail.

    17. The contention that the period of limitation commenced to run from the date on which Suit No. 1140 of 1930 was filed on the ground that at the latest on that date the plaintiff must be deemed to have discovered that he had no title is equally without substance. If in order that there should be disturbance in the covenant of quiet enjoyment there should be some physical obstruction to the possession of the vendee or that he must be deprived of his possession, the argument that the period commenced to run from the date of the suit when the plaintiff was informed about the defect of his title cannot have any weight. In our view the period of limitation in a suit for damages for the breach of covenant of quiet enjoyment commences to run from the date of the actual dispossession, and the suit having been filed within six years from the date of actual dispossession is within time.

    18. In Subbaroya v. Rajagopala, 38 Mad. 887 : (A.I.R (2) 1915 Mad. 708), Seshagiri Ayyar J. classified suits for compensation filed by the vendees on the ground of breach of covenant for quiet enjoyment as follows (p. 888):

    “These cases can roughly speaking be classified under three heads: (a) where from the inception the vendor had no title to convey and the vendee has not been put in possession of the property; (b) where the sale is only voidable on the objection of third parties and possession is taken under the voidable sale; and (c) where though the title is known to be imperfect, the contract is in part carried out by giving possession of the properties. In the first class of cases, the starting point of limitation will be the date of the sale …… In the second class of cases the cause of action can arise only when it is found that there is no good title. …… In the third class of cases also it is said that the cause of action will arise only on the disturbance of possession.”

    19. With reference to the facts of that case Seshagiri Ayyar J. observed (p. 890):

    “The case before me, properly speaking comes under the second class. If the widow Guanammal did not recover possession, the plaintiff would never have been disturbed. The sale was not void ab initio. It was only voidable if Guanammal chose to avoid it. Even if this view is not correct, I am prepared to hold that this case comes under the third class of cases where under an invalid contract possession had been given; until that possession is interfered with, the purchaser is not bound to ask for the return of his purchase money on the possible ground that at some future time his sale may be impeached. I therefore hold that the cause of action for this suit arose when under the decree obtained by Guanammal, the possession of the plaintiff was disturbed.”

    20. The observations made by Seshagiri Ayyar J. would apply with equal force to the facts of the present case.

    21. The principle laid down in the Madras case was approved of in a decision of the Judicial Commissioner's Court at Nagpur in Kashirao v. Zabu, A.I.R (19) 1932 Nag. 5 : (28 N.L.R 31 F.B). A Full Bench of that Court held (p. 5):

    “In a suit, for damages for breach of covenant of title contained in a registered deed, in a case in which the vendee has been put in possession of the property by the vendor and the sale is void ab initio as against the rightful owner, the limitation begins to run not from the date of the sale but from the time the vendee is dispossessed by the rightful owner.”

    22. In that case it was observed (p. 8):

    “In both the voidable and void sales if the vendor places the vendee in possession of the property sold the principal object of the sale, that is possession and enjoyment of property is secured to the vendee and therefore until these are disturbed by the rightful owner it could not legally be said that there is a breach of contract within the meaning of Art. 116, Limitation Act……In both the cases where possession is delivered to the vendee, the sale, for all practical purposes, remains good until it is avoided by the rightful owner. The cause of action to claim damages for breach of contract cannot arise in either voidable or void sales to a vendee, if he is placed in possession of the property sold, before he is evicted by the rightful owner for the very obvious reason that he, in fact, suffers no damages till then.”

    23. The view taken by the Madras and Nagpur Courts is followed by the Allahabad High Court in Jhamman Singh v. Ratan Lal, A.I.R (36) 1949 ALL. 480 : (1950 A.L.J 17) and by the Oudh Court in Ahsan Ali Khan v. Suraj Narain, 17 Luck. 289 : (A.I.R (29) 1942 Oudh 82).

    24. In Ratanbai v. Ghasiram, 33 Bom. L.R 1092 : (A.I.R (19) 1932 Bom. 36), Patkar J. accepted the classification made by Seshagiri Ayyar J. in Subbaroya v. Rajagopala, 38 Mad. 887 : (A.I.R (2) 1915 Mad. 708). That was a case in which a suit for compensation for breach of covenant to indemnify against loss of possession by action which it was apprehended may be taken by a person interested to avoid a transfer was held to be governed by Art. 116, Limitation Act, and the period commenced to run from the date of dispossession. Patkar J. followed an earlier decision of this Court in Narsing Shivbakas v. Pachu Rambakas, 37 Bom. 538 : (20 I.C 254), wherein a suit for refund of purchase money governed by Art. 97 filed against a vendor, who, in the belief that he was entitled to certain property, had sold the property to the plaintiff, and subsequently the plaintiff was dispossessed of the property by the real owner, the period of limitation was held to commence to run from the date of dispossession.

    25. Now, it is true that the title of the plaintiff to the property terminated on the death of Ganpatrao, but if in the case of a suit filed for compensation for breach of a covenant for quiet enjoyment under a sale, which was void or voidable, the period of limitation commences to run from the date of dispossession, it is difficult to appreciate any ground on which a different rule should apply to a case in which compensation for breach of a covenant for quiet enjoyment is claimed where the sale was good until a certain event happened, and on the happening of that event, the sale became void.

    26. In my view, the consensus of judicial opinion is consistent with the essential nature of the covenant of title and quiet enjoyment. A covenant for title and quiet enjoyment involves a right to undisturbed possession and this covenant remains effective so long as the vendee is in quiet enjoyment or possession. The covenant becomes enforceable in case there is obstruction or dispossession and cannot obviously be broken on the date either of the sale or the happening of the future event, which terminates the title of the vendee. A breach of the covenant can occur only on the disturbance of the vendee's possession. So long as the vendee remains in possession, he suffers no loss which would sustain an action for damages for breach of the covenant. In my view, therefore, the lower Courts were right in holding that the suit was within time.

    27. It is difficult to appreciate the argument that the covenant for quiet enjoyment came to an end as the title which the vendor purported to transfer came to an end. The covenant was obviously not a personal covenant, and was not expressly or impliedly limited in its duration to the lifetime of the vendor; and it would indeed be a startling result of the incident of the covenant, if it was to be extinguished precisely at the moment when the necessity for the protection afforded by it arises.

    28. Nor is there any substance in the argument that when the title of the plaintiff came to an end by reason of the death of Ganpatrao the covenant for quiet enjoyment thereafter most be deemed to be granted for an unlawful consideration and hence void. The Bombay Court of Wards Act imposes a disqualification upon the rights of a person whose estate has passed under the superintendence of the Court of Wards and which has since been withdrawn. Without the previous sanction of the Collector such a parson is not entitled to dispose of his property beyond his natural lifetime. The Bombay Court of Wards Act, however, does not impose a general incapacity upon such a person to contract with regard to his property. Nor is a contract with regard to property declared void by the Act. The Legislature has for preventing imprudent holders of land provided that even after the withdrawal of the superintendence of the Court of Wards the proprietor is disqualified without the sanction of the Collector from transferring the property so as to convey an interest which would extend beyond his natural lifetime. If an owner of property which is made non-transferable by statute, agrees to transfer that property in a manner intended to circumvent the provision of the statute, the agreement is void in law and unenforceable, and damages cannot be awarded for breach of such an agreement. But, if a person purports to convey what he has no authority to convey and agrees to guarantee quiet enjoyment to the vendee, the vendor or the person claiming under him cannot avoid an obligation to pay damages for breach of the covenant on the ground that the vendor had either no interest or had a limited interest, which has since the date of the sale ceased. The vendor cannot escape from his obligation when he guarantees to a vendee that he has title to the property which he disposed of and ultimately it is found that either he had no title or that his interest was not as extensive as he purported to convey. In such a case the fact that the conveyance is void to the extent to which it exceeds the authority of the vendor by reason of the absence of title in him or by reason of a personal disqualification imposed upon him does not affect the liability of the vendor or persons claiming under him to compensate the vendee for breach of the covenant of title and quiet enjoyment.

    29. In Moti Chand v. Ikram Ullah Khan, 44 I.A 54 : (A.I.R (3) 1916 P.C 59), the headnote states:

    “The proprietors of a mahal, within the meaning of the North-Western Provinces Tenancy Act, 1901, executed a deed by which they sold the mahal together with the sir lands in their occupation, and agreed to execute a deed relinquishing the latter; in default of giving the purchaser possession of the sir lands they agreed to pay him Rs. 16 per bigha damages:

    Held, that the agreement was invalid as being contrary to the policy of the above-mentioned Act, and that the damages were not recoverable upon a failure to give possession of the sir lands.”

    30. Section 20, cl. (2), N.W Provinces Tenancy Act, II[2] of 1901, provides that the interest of an ex-proprietary tenant, an occupancy tenant, or a non-occupancy tenant is not transferable otherwise than by a voluntary transfer between persons in favour of whom, as co-sharers in tenancy such right originally arose, or who have become by succession co-sharers therein. It was found in Moti Chand's case, 44 I.A 54 : (A.I.R (3) 1916 P.C 59), that the execution of the deed of relinquishment was merely a step towards giving effect to an agreement for relinquishment contained in the sale deed, and therefore was an attempt to do something which was prevented by law. The High Court at Allahabad held that the transaction as to the sir lands, whether it was to be regarded as an attempted sale of ex proprietary rights or an agreement to relinquish those rights when they should arise, was unlawful, and consequently decided that the claim for damages for breach of the agreement could not be maintained. Their Lordships of the Privy Council approved of this decision, and stated that the policy of the Act (N.W Provinces Act, II[2] of 1901) was to secure and preserve rights of occupancy whether the proprietor desired it or not and notwithstanding an agreement to the contrary entered into between him and the transferee and observed (p. 58):

    “The policy of the Act is not defeated by any ingenious devices, arrangements or agreements between a vendor and a vendee for the relinquishment by the vendor of his sir lands which he had cultivated continuously for twelve years at the date of the transfer, for a reduction of purchase-money on the vendor's failing or refusing to relinquish such lands, or for the vendor being liable to a suit for breach of contract on his failing or refusing to relinquish such lands. All such devices, arrangements and agreements are in contravention of the policy of the Act and are contrary to law and are illegal and void, and cannot be enforced by the vendee in any civil Court or in any Court of Revenue.”

    31. This case, relied upon by Mr. Kotwal, cannot, govern the facts of the present case. It is obvious that on grounds of public policy sir lands were by tenure non-transferable, except to certain persons, and an agreement which intended to defeat the statutory provisions which prohibited that transfer was void and could not be enforced, and damages could not be awarded for failure to carry out the agreement. The restrictions imposed by the Court of Wards Act in the present case are not a part of the tenure of the land but are imposed personally against the holder. The Act contains no general restrictions on the right to contract with regard to the estate and the covenant of quiet enjoyment cannot be regarded as an attempt to defeat the policy of the law.

    32. Mr. Kotwal also referred us to a decision of this Court in Bai Diwali v. Umedbhai Bhulabhai, 40 Bom. 614 : (A.I.R (3) 1916 Bom. 318). That was a suit in which an unrecognized sub-division of a bhag was mortgaged with possession contrary to the provisions of the Bhagdari and Narwadari Act, Bombay Act V[5] of 1862. The mortgage deed also contained a covenant to pay the mortgage money after the period of the mortgage. The interest of the mortgagee under the mortgage was sold in execution of a money decree and was purchased at a court auction by the plaintiff. The purchaser filed a suit to recover the amount due on the mortgage. It was held that the consideration for the mortgage being unlawful by reason of the provisions of S. 24, Contract Act, the contract failed ab initio, and the agreement contained in the mortgage deed to pay the mortgage debt was void and unenforceable. The principle of that case is, in my opinion, inapplicable to the present case for several reasons. The transaction of sale in the present case was not void ab initio. It was good for the lifetime of the vendor. The vendor having no right to convey the property beyond his lifetime by reason of a personal disqualification the title sought to be created beyond his lifetime failed. It did not fail by reason of any incident of the tenure of the land but by reason of a personal disability. In Bai Diwali's case, 40 Bom. 614 : (A.I.R (3) 1916 Bom. 318) the mortgage was void ab initio, and it was void because of the statutory prohibition against alienations of unrecognized portions of bhag lands apart from the bhag. The observation that because

    “the consideration or part of the consideration being unlawful the mortgage deed was void, and the agreement contained in the mortgage to pay the mortgage, debt was void”

    cannot be accepted as a correct statement of the law without limitations, in view of the pronouncement of the Privy Council in Nisar Ahmad Khan v. Raja Mohan Manucha, 67 I.A 431 : (A.I.R (27) 1940 P.C 204).

    33. In Nisar Ahmad Khan v. Raja Mohan Manucha, 67 I.A 431 : (A.I.R (27) 1940 P.C 204), a deed of mortgage was executed in the course of execution proceedings pending before the Collector, when he was entitled to exercise or perform the powers or duties under paras. 1 to 10 of Sch. III, Civil P.C was held null and void as it was executed without the Collector's permission, but the covenant to pay the mortgage money was held enforceable. The provisions of sch. III, para. 11, Civil P.C, as a result of which the mortgagor in Babu Nisar Ahmad's case, 67 I.A 431 : (A.I.R (27) 1940 P.C 204) was held incompetent to mortgage the property, are in pari materia with proviso 3 to S. 40, Bombay Court of Wards Act. The provisions contained in the Civil Procedure Code and in the Court of Wards Act impose a personal disqualification upon a holder of the land to deal with the property. If a covenant to pay the mortgage money under a deed of mortgage which is held to be void as being contrary to the provisions of sch. III, para. 11, is enforceable, there is no ground for holding that damages for breach of covenant for quiet enjoyment entered into by a vendor who sells property and the sale contravenes the provisions of S. 40, proviso 3, Bombay Court of Wards Act, cannot be recovered.

    34. Raja Mohan Manucha v. Manzoor Ahmad Khan, 70 I.A 1 : (A.I.R (30) 1943 P.C 29) was a case which arose from the same execution proceedings out of which the case in Nisar Ahmad Khan v. Raja Mohan Manucha, 67 I.A 431 : (A.I.R (27) 1940 P.C 204) arose. In Raja Mohan Manucha v. Manzoor Ahmad Khan, (70 I.A 1 : A.I.R (30) 1943 P.C 29), there was a mortgage executed by a person whose property was in the management of the Collector under Sch. III, para 11, Civil P.C When the mortgagee filed a suit to recover the mortgage money by sale of the mortgaged property and by enforcement of the personal covenant to pay the money, the mortgagor contended that the mortgage was void having been made in circumstances which brought into operation the provisions of Para 11 of Sch. III, Civil P.C The right to recover the mortgage money under the personal covenant had become unenforceable by reason of the expiry of the period of limitation. Consequently, before the Privy Council the mortgagee formally abandoned his claim, both on the mortgage as well as the personal covenant, and claimed to recover the loan advanced by way of restitution under S. 65, Contract Act. Their Lordships held that the mortgagee could recover the amount advanced under S. 65, Contract Act, as it could be said that the security was discovered to be void in the special circumstances of the case after the suit was instituted. At p. 10 their Lordships observed:

    “The principle underlying S. 65 is that a right to restitution may arise out of the failure of a contract though the right be not itself a matter of contractual obligation. If it be settled law that the incapacity imposed on a judgment debtor by Para 11 of Sch. 3 is an incapacity to affect his property and not a general incapacity to contract it follows that a covenant to repay is not made void by the mere operation of the paragraph.”

    35. In view of the imposition of an incapacity to dispose of property their Lordships held that the mortgagee was entiled to abandon the mortgage security as well as the covenant to repay and was entitled to claim the money advanced under S. 65, Contract Act. The observations of their Lordships of the Privy Council support the view that the plaintiff is entitled to recover damages relying upon a contract where the provisions which impose an incapacity upon the vendor Ganpatrao did not seek to render either the contract void or to impose a general incapacity upon him to enter into contracts with regard to his property.

    36. It is unnecessary to consider in detail the other cases cited by Mr. Kotwal, Har prasad v. Sheo Gobind, 44 ALL. 486 : (A.I.R (9) 1922 ALL. 134), Murlidhar v. Pem Raj, 22 ALL. 205 : (1900 A.W.N 10) and Bikham Singh v. Har Prasad, 19 ALL. 35 : (1896 A.W.N 167). The case in Har Prasad v. Sheo Gobind, 44 ALL. 486 : (A.I.R (9) 1912 ALL. 134), merely follows the case in Murlidhar v. Pem Raj, 22 ALL. 205 : (1900 A.W.N 10). The facts of the case in Murlidhar v. Pem Raj, (22 ALL 205 : 1900 A.W.N 10) and Bikham Singh v. Har Prasad, 19 ALL. 35 : (1896 A.W.N 167), appear to be precisely the same as the facts in Motichand v. Ikram, Ullah Khan, 44 ALL 54 : (A.I.R (3) 1916 P.C 59). The considerations relied upon by their Lordships of the Privy Council in that case are as pointed out earlier plainly not applicable to the facts of the present case.

    37. Both the contentions raised by Mr. Kotwal therefore, fail, and it must be held that the view taken by the learned appellate Judge that the covenant was not enforceable against the defendant in a suit for damages filed by the plaintiff must be set aside. The learned appellate Judge unfortunately has not dealt with the question as to what damages the plaintiff is entitled to if his suit is held maintainable. We are, therefore, compelled to remand this case to the District Court again for hearing and disposal on the issue as to damages.

    38. The appeal will, therefore, be allowed, the decree of the lower appellate Court set aside and the case remanded to the lower appellate Court to be dealt with according to law on the issue as to damages.

    39. There will be no order as to costs of this appeal. Costs of the lower Court and the trial Court will abide the result of the appeal in the District Court.

    V.R.B
    Case remanded.
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    Gulabchand Daulatram v. Suryajirao Ganpatrao
    (Feb 10, 1950)