Mrs. Christine Pais v. K. Ugappa Shetty And Another

Defendant 2 is the appellant in the second appeal which he has preferred against the decision of II Additional Subordinate Judge of Mangalore, South Kanara. Respondent 1 was the plaintiff and respondent 2 was the tenant (deft. 1) respectively in that suit. The plaintiff's case was that he is a Receiver appointed by the Subordinate Judge's Court of South Kanara in O.S No. 275 of 1958 in respect of the estate of one Joseph P. Fernandes. Defendant 1 was a tenant under the said J.P Fernandes in respect of a portion of his estate comprising of survey No. 47 of Bolur village on payment of rental amount. According to the plaintiff, defendant 1 has obtained a registered sale deed on 23rd November 1957 in execution of the decree passed in suit, O.S 278 of 1953 filed by him against the heirs of the deceased Joseph P. Fernandes for specific performance of contract for sale of the suit schedule properties. It was alleged that defendant 2 became entitled to collect the rent and profits of the suit property from the tenant defendant 1 from the date of the execution of the sale deed, namely, 23rd November 1957. The plaintiff pleaded that he, as a receiver is entitled to collect the proportionate rent and the profits of the suit survey number, under the law from the period commencing from 1st April 1957 up to 23rd November 1957, namely, the date of the execution of the sale deed amounting to Rs. 721.47 P. The plaintiff's case was that in spite of lawyer's notice, defendant 1 failed to pay the said amount. It was further stated by him that as the suit involved apportionment of rent and profit between the plaintiff and defendant 2, defendant 2 is also made a party to the suit. On the basis of these allegations he filed a suit against, both the defendants claiming interest at the rate of 5½ per cent on the suit amount from 1st April 1958, till final payment. The sum and substance of the written statement of defendant No. 1 was: that she is a lessee under the plaintiff in respect of the estate of J.P Fernandes. She contended that defendant 2 took a lease deed from her in his favour by force in respect of the suit property. Though other contentions were also raised on behalf of defendant 1 in her statement, they are not necessary for the disposal of this appeal. In her defence, defendant 2, inter alia, denied knowledge of appointment of a receiver by the court in O.S No. 275 of 1953 in respect of the estate of J.P Fernandes. She admitted that defendant 1 was a tenant of survey No. 47 of Bolur village, and that the latter executed a lease deed in her favour on 15th December 1957. She also admitted that she has taken a sale deed on 23rd November 1957 in execution of the decree passed in O.S 278 of 1953 filed by her against the heirs of J.P Fernandes for specific performance on the basis of agreement for sale dated 30th August 1958. She contended that as per terms of the decree she deposited an amount of Rs. 16,758 in court on 22nd March 1957, and that the ownership of the suit property passed to her on that date, namely, the date of deposit of the amount on 22nd March 1957, and, therefore, she is entitled to recover the rent and profit of the suit property from defendant from the date on which she deposited the amount, and that the plaintiff is not entitled to recover the same. She further pleaded that in case the plaintiff's suit is decreed she is entitled to the deduction of the taxes paid. On the evidence adduced in the case, the trial judge decreed the plaintiff's suit, after allowing deduction in respect of the taxes as follows:

“The plaintiff do recover Rs. 712.57 P. with future interest thereon at 5½ per cent annum from the date of suit and costs of the suit from defendant 1. Both defendants to bear their costs.”

On appeal by defendant 2, the lower appellate court upheld the decision of the trial court. The lower appellate Judge was of the view that provision of Section 55(4)(a) of the Transfer of Property Act was applicable to the case, that the title and ownership passed with the execution of a registered sale deed, and that the defendant 2 was not entitled to the rental of the suit survey number from the date of the deposit of the amount in the court. On the basis of his conclusion he dismissed the appeal and confirmed the decision of the trial court. It is against the judgment and decree of the lower appellate court that the 2nd defendant has preferred this Second Appeal.

Arguments on behalf of the appellant both in the lower appellate court and before me has been that title to the suit property passed to the appellant immediately after he deposited the balance of the purchase money on 22nd March 1957, and therefore he is entitled to the rent and profit of the suit schedule property from that date.

The learned Advocate for the appellant submitted that the courts below were not right in holding that the provisions of Section 55(4)(a) are applicable to the case. He urged that the provisions of Section 55(4)(a) of the Transfer of Property Act would not apply to a case where a person entering into an agreement for sale commits a default and, thereby drags on the purchaser to a suit for specific performance in which a decree is passed, like in the instant case. He submitted that in this case, the right of the purchaser and the liability of seller depends more or less on an agreement for sale, the validity of which has been subsequently upheld by the decree for specific performance. He stressed that though the registered sale deed has been executed on 23rd November 1957, the title to the property and the right to possess the property really accrued to the 2nd defendant on 25th February 1957, the date of the decree passed in the suit for specific performance. At any rate, it accrued to defendant 2 from the date of the deposit of the purchase money Rs. 16,750 i.e, on 22nd March 1957. In support of his proposition he relied mainly on two decisions of the Calcutta High Court reported in Subodh Kumar v. Hiramoni Dasi(1) and in Jahar Lal v. Bhupendra Nath(2). He also relied on a decision of Lahore High Court in A. Tomlinson v. W.F Warding(3) and another of the Madras High Court in Subbaroyar v. Kollaya, Goundaw(4). On the other hand, it has been contended by Mr. Holla, the learned Advocate for the respondent that the provisions of the Transfer of Property Act contained in Section 55(4)(a) are not applicable to the case, and that the title to an immovable property would pass only when a proper and registered sale deed is executed. He depended upon the principle laid down by the Andhra Pradesh High Court in a decision reported in Ramalingam v. G.R Jagadanmal(5), Enyat Ullah v. Khalilullah(6), Ramakrishnayya v. Viraraghavayya(7), Janardhan Kishore Lal v. Girdhari Lal(8). Reliance also was placed by him on Section 54 of the Transfer of Property Act. He stoutly maintained that title and ownership in an immovable property is transferred by a proper conveyance, namely, registered sale deed, and urged that title and possession both flow only from the deed and not from the decree or from the date of the deposit of the purchase amount by the vendee as alleged on behalf of the appellant. In the light of the arguments advanced before me, the only point for determination is whether the title to the suit property passed on 25th February 1957, the date of the decree or on 22nd March 1957 the date of the deposit of the balance of the purchase money in the court. The argument of Mr. Vittal Rao, learned Advocate for the appellant was that the ownership in an immovable property is affected by passing of the decree itself. Relying on the decision of the Calcutta High Court in Jahar Lal v. Bhupendranath, he urged when once a decree is passed, the title of the vendee would relate back to the date of the agreement for sale on which the suit was based. He also argued, in this connection that the suit in which the appellant has obtained the decree was for specific performance. In a suit of this nature the right to possession springs from the date of the agreement for sale itself. That being so, the vendee is entitled to rents and means profits not only from the date of the decree, but even from the date of the agreement for sale. In support of this proposition, he relies on a decision in Suboth Kumar v. Hiramoni Dasi

Section 54 of the Transfer of Property Act lays down: “Sale” is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised, and Section 55(4)(a) provides: “The seller is entitled to the rents and profits of the property till the ownership thereof passes to the buyer;” The conjoint effect of Section 54 and Section 55(4)(a) of the Transfer of Property Act is that the seller is entitled to rents and profits of the property till the ownership thereof passes to the buyer and until the conveyance is executed I in favour of the buyer, he is not entitled to rent and profits. In other words, in the absence of some provisions in the sale deed to the contrary title passes with the execution and registration of the sale deed. But, the submission of Mr. Vittal Rao, the learned Advocate for the appellant was that the provision contained in the Transfer of Property Act cannot be made applicable to the present case. He constructed his argument on two grounds: Firstly, he urged that the provisions of Section 55 of the Transfer of Property Act would apply only in the absence of any contract to the contrary. According to him, the decree itself should be regarded as a contract and argued that the lower court has, therefore, erred in relying on the provision of Section 55(4)(a) of the Transfer of Property Act, without any reference to the existence of a contract to the contrary, disclosed by the case. His Second contention was that the sale deed which came into existence as per direction contained in the decree was executed by the Court in pursuance of the decree. He submitted that the contract, therefore, cannot be held to be a contract either inter-vivos or voluntary. Thus, the provisions of Section 55(4)(a) are not applicable to the case.

In order to appreciate the first contention, it would be necessary to refer to the decree Exhibit B-1. In it, it is inter alia stated:

(1) That the defendants 3 to 10 do execute and register a deed of sale at the cost of the plaintiff in pursuance of the suit agreement dated 30th August 1953 on the plaintiff depositing into court to the credit of this suit the sum of Rs. 16,750 towards the balance consideration for the sale, with notice to the said defendants;

(2) That the plaintiff do have one month's time from this date for depositing the said sum of Rs. 16,750 as mentioned in clause (1) supra;

(3) That on such deposit of the said sum of Rs. 16,750 the defendants 3 to 10 be at liberty to draw from court deposit the sum of Rs. 3,250 already deposited into court by the 1st defendant and the sum of Rs. 16,750 deposited by the plaintiff, in full quit of the purchase price due to them;

(4) That in case the defendants 3 to 10 commit default in executing and registering the sale deed mentioned above in clause 1 supra after deposit by the plaintiff the sum of Rs. 16,750 as aforesaid, the plaintiff be at liberty to have the same executed through process of court, in execution proceedings.”

It is thus clear that the decree does not contain any direction with regard to transfer of title or with regard to delivery of possession. It only contain direction with regard to the execution of the sale deed and issue of notice to the judgment-debtor after depositing the amount required. It is also not disputed before me that the sale deed contains any direction with regard to either transfer of title or passing of possession of the suit property, or any stipulation in respect of assignment of the rental amount. In view of the recital contained in the sale deed, I think that the Advocate for the respondent is right in his argument that existence of a contract to the contrary cannot be concluded on the basis of that document. Relying on a decision of the Calcutta High Court in Subodh Kumar v. Hiramoni Dasi which I will consider in detail presently) the learned Advocate for the appellant Mr. Vittal Rao contended that even if there are no directions in the decree or sale deed, the suit being a suit for specific performance, the transfer of title is also inherent by the very nature of the suit. It has been observed by His Lordship in that decision that the right to recover possession ‘springs out of the contract which is being specifically enforced and not as a result of the execution and completion of the conveyance.’ Though he conceded that the decision was with regard to possession, his argument was, just as possession is held to be essentially inherent in a suit for specific performance, likewise, title also springs out of the contract for sale. The facts of that case was that A brought a suit for specific performance of sale against the vendor and B, a purchaser from him with knowledge of the agreement of sale with A. In the plaint which was filed one of the prayers was that the contract for sale be specifically performed. The suit was decreed and the opening words of the decree were that the suit be decreed with costs. In the subsequent portion of the said decree it was stated that the defendants on getting the payment of the consideration money to execute and register a conveyance in favour of the plaintiff and the plaintiff do deposit in Court the balance of the consideration money and that the defendants do pay the costs of the suit. Having obtained that decree an application was made, in execution thereof, for possession of the property in question by the decree-holder. The execution proceedings were resisted by B who contended that the decree did not direct delivery of possession but only directed the defendants to execute a conveyance and register the same on getting the purchase-money and in the circumstance the plaintiff decree-holder cannot obtain of the property in execution of the said decree. It was held by His Lordship S.R Das Gupta who delivered the Judgment in that decision that the most important part of such a decree is that portion where the Court directs the contract to be specifically performed, and the details which follow do not in any way limit the jurisdiction of the executing Court to the particular steps which are mentioned in the decree but all other steps which ought to be taken for giving full effect to the decree for specific performance are not only within the competence of the Court, but the Court is bound to assist the party to that extent. It was further observed that under Section 55(f), T.P Act, unless there is contract to the contrary, giving delivery of possession to the buyer by the seller, is an incident of a contract for sale and when there is a decree directing the contract to be specifically performed it includes a direction upon the vendor to give delivery of possession to the purchasers. The right to recovery possession springs out of the contract which is being specifically enforced and not as a result of the execution and completion of the conveyance. Therefore, B, against whom the decree was passed was bound to give delivery of possession to the decree-holder. Mr. Holla, the learned Advocate for the respondent argued that the decision can be an authority for the proposition that in a decree for specific performance, even though it might be silent with regard to delivery of possession, delivery of possession to the buyer by the seller being itself an incident of a contract for sale, would not prevent the executing court in passing an order for delivery of possession to the decree holder. But, according to him, the principle stated in the decision should be confined to question of possession and possession only, and it cannot be extended to the title of the decree-holder to the property. There appears to be considerable force in the argument. The question of title or the question as to when the property is to pass, is a matter of contract. It, therefore, cannot be said that it springs out from the agreement for sale itself. Section 54 of the Transfer of Property Act lays down: ‘A sale is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised. Such transfer, in the case of tangible immovable property of the value of one hundred rupees and upwards, or in the case of a reversion of other intangible thing, can be made only by a registered instrument. A contract for the sale of immoveable property is a contract that a sale of such property shall take place on terms settled between the parties. It does not, of itself create any interest in or charge on such property.” It is clear from the last clause of Section 54 of the Transfer of Property Act that the contract for sale does not create any interest or charge on the property. What all it does is that it provides that the sale of property should take place on the terms settled between the parties. Therefore, the title cannot be regarded as an incident of contract for sale, because, the contract for sale does not create any interest or charge on the property. I, therefore, think that there is substance in the argument advanced on behalf of the respondent that the principle laid down in the decision referred to above cannot be extended to title and should be confined to the question of possession only.

The second contention of the learned Advocate for the appellant is that the contract is involuntary and not inter-vivos is devoid of force. The argument advanced was that as the contract of sale has been completed by the direction of the court, it cannot be regarded as inter vivos. In other words, according to the learned counsel, the sale deed which is based on contract of sale deed which came into existence by the direction of the court, and not by the judgment-debtor. Therefore, it cannot be regarded as transfer inter vivos and consequently Section 55(4)(a) is not applicable to the case. It is not possible to accede to the argument advanced. The sale deed which is executed by the court in pursuance of a decree for specific performance is a transfer by the court on behalf of the judgment-debtor, and the sale deed so executed has got all the characteristics of a transfer inter vivos. Therefore, there does not appear to be much substance in the argument advanced on behalf of the appellant.

It was then argued by Mr. Vittal Rao, the learned Advocate for the appellant that title to the property covered by the decree was transferred by the decree itself, and that the execution of the sale deed was a more formality to evidence the transfer of title by the decree. He urged that the transfer of title was effected by the decree itself, and argued that even if provision of Section 55(4)(a) is held to be applicable to the case, appellant would be entitled to the rental of the property from the date of the decree. In support of his argument he relied on decisions reported in Subodh Kumar v. Hiramoni Dasi and Jahar Lal v. Bhupendra Nath I have held above that the principle laid down in the first decision, viz., Subodh Kumar v. Hiremoni Desi cannot be extended to title and should be confined to the question of possession only. Therefore, that decision is not of much assistance to the appellant. In the latter case viz., Jahar Lal v. Bhupendra Nath it has been observed by His Lordship Mookerjee, J.:

“………. When such a suit for specific performance is ended by a final decree transferring the title, that title relates back to the date of the agreement on which the suit is based…………..”

Much emphasis was laid on this observation of Mukharjee, J. on behalf of the appellant. That case is distinguishable on facts from the present case. In my opinion, the observation made by His Lordship should be confined to the particular facts of that case, and cannot be accepted as a bare proposition of law. In a Full Bench decision of this High Court in Khaji Bi v. Mohammad Hussain. Their Lordships have refused to accept the proposition laid down in the decision in Jahar Lal v. Bhupendra Nath. Their Lordships at page 239 thus observed:

“We should also observe parenthetically that we find it difficult to accept the proposition stated in Bhupendhra Nath Basu (I.L.R 49 Cal. 495) to the effect that when a decree for specific performance is passed transferring title to the plaintiff, that title relates back to the date the agreement on which the suit is based.”

The appellant therefore cannot avail himself of the observation of Mukerjee, J. made in the above referred to Calcutta decision.

The next decision, in Dhondiba Krishnaji Patel v. Ramachandra Bhavat it must be conceded, to a certain extent supports the view which has been pressed before me by the learned Advocate for the appellant. It was held in that decision:

“………………. the transfer of the ownership of immoveable property to a vendee who has obtained a decree ordring the specific property to a vendee who has obtained a decree ordering the specific execution of a conveyance—even if the vendor is required, as he seldom is, to execute such a conveyance— ……………….. but is effected by the passing of the decree itself, coupled with the payment of the purchase-money.”

But, the obstacle in the way of the appellant is that this decision was delivered before the Transfer of Property Act came into force. Therefore, the provisions contained in Section 54 of the Tranfer of Property Act, is a hindrance to the acceptability of the principle laid down in that decision.

Now, I will consider the decision cited on behalf of the respondent. Mr. Holla, the learned Advocate for the respondent contended that possession and title flow from the sale deed and not from the decree. In support of his contention he referred to Enayat Ullah v. Khalil Ullah, Janardhan Kishore Lal v. Girdhari Lal, Ramlingam v. G.R Jagadammal, Ramakrishnayya v. Viraraghavayya. Allahabad High Court in its decision in Enayat Ullah v. Khalil Ulla laid down—(1) that a decree for specific performance only declares the right of the decree-holder to have a transfer of the property covered by the decree executed in his favour. (2) that a decree by itself does not transfer title, (3) that it, i.e, the decree, gives the right to have the deed executed and (4) that on his failure, to have the sale deed executed by the court on behalf of the judgment debtor. This is what was observed by Iqbal Ahmed, J., who spoke for the Bench at page 433:

“……………… A decree for specific performance only declares the right of the decree-holder to have a transfer of the property covered by the decree executed in his favour. The decree by itself does not transfer title. That this is so apparent from the fact that in order to get title to the property, the decree holder has to proceed in execution in accordance with the provisions of 0.21 of the Code. So long as the sale deed is not executed in favour of the decree-holder either by the defendant in the suit or by the Court the title to the property remains vested in the defendant and till the execution of the sale deed the decree-holder has no right to the possession of the property. It is only the execution of the sale deed that transfers title to the property.”

It was further observed:

“The sale deed executed by a court in pursuance of a decree for specific performance is a transfer by the Court on behalf of the judgment-debtor and it is the title of the judgment-debtor to the property that is transferred by the sale deed executed by the Court.”

In a decision of the Patna High Court reported in Janardhan Kishore Lal v. Girdhari Lel, it is observed:

“Before the document was registered, the decree-holder had no right to be put in possession of the property leased; it was only when the document was registered that he got title to the property leased, and to the possession thereof …………”

In Ramalingam v. G.R Jagadammal what was held was:

“………….. that the plaintiff was not entitled to the possession of the property or the profits thereof on the execution of the contract of sale and it was only on the execution of the sale deed that the title to the property and the right to possession vested in him. In view of Section 54 of the Transfer of Property Act there is no room for the contention that the purchaser became in equity the owner of the estate under the contract of sale and the vendor held the property in trust for him……………….. It cannot be said that the possession of the vendor was wrongful or that he was bound to account to the purchaser for profits till the sale deed was executed in favour of the plaintiff.”

These decisions, in my opinion, clearly support Mr. Holla's contention. They establish that the title to the property passes only on the execution of the sale deed. On these decisions, I have little difficulty in accepting the contention of Mr. Holla, the learned Advocate for the appellant, that the title passes with the execution and registration of the sale deed and it does not flow from the decree. The last contention advanced on behalf of the appellant was that from the time of the contract for sale of immoveable property, the vendor becomes a trustee for the property of the vendee. In support of this proposition he relied on a number of cases and contended that by the provisions contained in the Specific Relief Act relied upon by him, the respondent who is the representative of the vendor will be deemed to hold the property as a trustee for the appellant who is admittedly the vendee in the case. Mr. Holla argued that this particular point, namely, that the respondent No. 1 is the representative of the vendor, was not raised either in the court below or in the grounds of appeal filed by the appellant in this court, and submitted that no point which is not taken before the lower appellate court or in the grounds of appeal in this court, should be urged at the hearing in this Court. Alternatively, he argued that when once it is held that the provisions of law, namely, the provisions of the Transfer of Property Act are applicable to the case, there is no scope for the applicability of equitable principles or of the provisions of Sections 91 and 95 of the Indian Trusts Act, 1862, to the case. He submitted that Section 19 of the Specific Relief Act is itself a bar to their applicability. In support of his contention, he has also cited some rulings. The contention with regard to the 1st respondent being the representative of the vendors, as argued by Mr. Holla, or he being the representative of the estate of the deceased J.P Fernandes, as contended on behalf of the appellant, was not taken either before the lower appellate court or in the Memorandum of appeal filed in this court on behalf of the appellant. On the other hand, it is clear from the judgment of the lower appellate court that the only point which was argued in that court was to the effect that the title to the suit property passed immediately after the appellant deposited the balance of the purchase money in court. This is what is stated in para 6 of the judgment:

“The only point that was urged before me by the learned counsel for the appellant is that the title to suit property passed to the appellant—immediately after he deposited the balance of the purchase money into court as per the decree, i.e, on 23rd March 1957 and consequently the appellant is entitled to the rents and profits of the suit property from 23rd March 1957 onwards.”

That being so, there appears to be much substance in the argument of the learned Advocate for the respondent that the appellant should not be allowed to take up that ground when it has been specifically raised in the lower court or in the memorandum of appeal filed in this court. In view of this conclusion, it is not necessary to express any opinion with regard to the last contention advanced on behalf of the appellant and I have not considered the same.

On the reasons stated above, this appeal fails. It is, therefore, disallowed and the same is dismissed with costs.