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Case Number

Second Appeal No. 259 of 1953

Attorney(S)

S.C.Das
G.K.Mishra

Judges

Hon'ble Mr. Justice Souri Prasad Mohapatra
Hon'ble Mr. Justice Gopal Chandra Das

Acts

SECTION 54 TRANSFER OF PROPERTY ACT
Section 54: Sale

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Smart Summary

Structured Summary of the Opinion (Mohapatra, J.)

Factual and Procedural Background

This is the plaintiffs' second appeal against the reversing judgment of the lower appellate Court arising out of a suit for declaration of title and for confirmation of possession in respect of a disputed portion of land measuring 0.42 acre (out of total 0.66 acre) appertaining to Plot No. 901.

Principal facts as stated in the opinion (only as recorded in the text):

Luxmidhar Mohanty was the ancestral owner; he had three sons: Chakradhar (died a bachelor prior to the final publication of the Current Settlement record-of-rights), Dinabandhu (defendant No. 1) and Krupasindhu (deceased husband of Kshetramoni, defendant No. 4).
Luxmidhar died prior to 1930; his widow died on 21 January 1949. Krupasindhu died in 1940 leaving behind his widow Kshetramoni. The suit property stood in the name of Krupasindhu in the current settlement record-of-rights.
Krupasindhu mortgaged the disputed property in favour of the father of plaintiffs 2 and 3 by a mortgage transaction (Ext. A) dated 19 June 1933.
After Krupasindhu's death, his widow Kshetramoni executed a sale-deed (Ext. B) dated 31 January 1941 in favour of plaintiff No. 1 (the deity, represented by plaintiffs 2 and 3) in respect of 0.44 acre which included the disputed 0.42 acre; this sale was said to satisfy the prior mortgage.
Dinabandhu (defendant No. 1) executed a Kantkabala/Kabala (variously referred to as Ext. G / Ext. C in the opinion) in favour of third parties (initially Jogendra Mohanty, later executed in favour of the deity represented by Punananda Das) during proceedings in a prior Title Suit No. 143 of 1941. It was alleged the Kabala was executed so that plaintiff No. 2 (a defendant in that earlier suit) would not contest and Dinabandhu could obtain an ex parte decree.
On 1 July 1942 Dinabandhu obtained an ex parte decree in Title Suit No. 143 of 1941 (Ext. 13). Subsequently Punananda's widow and son executed a sale-deed (Ext. 2) dated 28 June 1944 transferring the interest to the present plaintiffs.
The lower courts found that the Kabala executed by Dinabandhu (referred to in parts of the opinion as Ext. C) was a colourable transaction in some statements, while the learned Munsif had earlier held that the Kabala (Ex. C) was a real transaction and had been acted upon to convey title to Punananda and then to the plaintiffs via Ext. 2.
The lower appellate Court dismissed the plaintiffs' suit on the ground that the consideration for Ext. C (forbearance by plaintiff No. 2 to contest a suit) could not be treated as a 'price' under section 54 of the Transfer of Property Act and therefore Ext. C did not constitute a sale.

Legal Issues Presented

Whether Ext. C (the Kabala executed in favour of the deity / Punananda) is a valid transaction conveying title as a "sale" within the meaning of section 54 of the Transfer of Property Act when no cash consideration passed or was intended to pass and the sole consideration alleged was forbearance by plaintiff No. 2 to contest a prior Title Suit.
Whether the concept of "price" in section 54 is sufficiently broad to include the promise not to contest a suit (forbearance), or whether "price" is confined to money (including money payable in future or satisfaction of debts) as held in the precedents cited.

Arguments of the Parties

Appellants' Arguments (as recorded in the opinion)

Mr. S.C. Das, appearing on behalf of the appellants, submitted that the suit would stand or fall by Ext. C, the Kabala executed in favour of the deity represented by Punananda.
It was accepted (for purposes of the argument) that no cash consideration passed under Ext. C and that the transaction was executed during the pendency of Title Suit No. 143 of 1941.
The appellants' position (as put by their counsel) was that the consideration for Ext. C was forbearance by plaintiff No. 2 to contest the previous suit, and that on that basis Dinabandhu obtained an ex parte decree in the earlier suit.
Both the Courts below had found Ext. C to be a genuine and bona fide transaction (a factual finding relied upon by the appellants).

Defendants' / Other Parties' Arguments (as recorded in the opinion)

The main defence advanced (as recorded) was that Krupasindhu had been adopted away from the family; consequently Dinabandhu (defendant No. 1) was the sole surviving member entitled to the properties.
It was argued that the Kantkabala (Ext. A) dated 19 June 1933 was a valid transaction and that the decree obtained by Dinabandhu in Title Suit No. 143 of 1941 was final and declared defendant No. 1's rights.
The defendants contended that the Kabala (Ext. C) in favour of Punananda was a colourable transaction which was never intended to be acted upon.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Madan Pillai v. Badrakali Ammal, AIR 1922 Mad 311 (Full Bench)	Held that the word "price" in Section 54 means money (money already due or payable in future may qualify) and that a transfer not made in exchange for money consideration (e.g. compromise of a family dispute) would not be a sale.	The Court relied on this Full Bench decision to support the view that "price" connotes money and is not comprehensive enough to include every kind of valuable consideration such as forbearance to contest a suit.
Venkata Jagannatha Rao v. Venkata Kumara Mahipati Surya Rao, AIR 1931 Mad 140 (Madras H.C.)	Held (in the Madras High Court decision) that a transfer where part of the consideration was forbearance to take proceedings to set aside a court sale could not be a sale under S.54.	The opinion records this decision and notes that it emphasized the part of the consideration consisting of forbearance; however the Madras decision was later set aside on appeal to the Privy Council.
Venkata Jagannatha Rao v. Venkata Kumara Mahipati Surya Rao, AIR 1936 PC 204 (Privy Council)	The Privy Council considered whether the transaction amounted to a sale and held that where a definite sum of money is the real consideration described as a sale, incidental covenants (including a promise to abstain from proceedings) do not change the character of the transaction as a sale.	The Court in the present opinion records that the Privy Council set aside the Madras High Court decision on the basis that the real consideration was a definite sum of money; the opinion also notes that this did not affect the principle in Madan Pillai.
Arumugham v. Subramaniam, AIR 1937 Mad 882 (Full Bench)	A Full Bench decision which explained and reaffirmed the earlier Full Bench view (Madan Pillai) and clarified the law in the context of whether non-monetary considerations could qualify as 'price' under S.54.	The Court cited this Full Bench decision as confirming the earlier Full Bench view and as a subsequent authoritative exposition supporting the narrow meaning of "price".
State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd, AIR 1958 S.C. 560	The Supreme Court's observations that to constitute a sale there must be (i) agreement to transfer title supported by money consideration, (ii) capacity to contract, and (iii) transfer of property — and that if consideration is not money but other valuable consideration it may be barter/exchange but not a sale.	The opinion relied on these Supreme Court observations to emphasize that a sale requires money consideration and that non-money valuable consideration (such as forbearance) does not constitute "price" sufficient for a sale under S.54.

Court's Reasoning and Analysis

The Court's step-by-step analysis (as recorded in the opinion) is as follows:

The Court framed the central question as whether Ext. C constitutes a "sale" under section 54 of the Transfer of Property Act when no cash consideration passed or was intended to pass and the only consideration was forbearance by plaintiff No. 2 to contest a prior Title Suit.
The Court quoted the statutory definition of "sale" from section 54: "'Sale' is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised."
It examined the meaning of the word "price" by reference to authority. The Full Bench of the Madras High Court in Madan Pillai (AIR 1922 Mad 311) was cited as holding that "price" means money (including money due or payable in future) and that transfers not made in exchange for money consideration (e.g., a family compromise) would not be sales under S.54.
The Court then considered decisions where that position was contested. It reviewed the Madras Bench decision in Venkata Jagannatha Rao (AIR 1931 Mad 140), which emphasized that part of the consideration being forbearance to take proceedings made the transaction not a sale; and it noted that on appeal the Privy Council (AIR 1936 PC 204) set aside that Madras decision on the basis that the real consideration was a definite sum of money, and therefore the Privy Council treated the transaction as a sale.
The opinion observed that the Privy Council's decision did not dissent from the principle in the Madan Pillai Full Bench decision. The Court further relied on Arumugham v. Subramaniam (AIR 1937 Mad 882 Full Bench) as a Full Bench reaffirmation of the narrow meaning of "price".
The Supreme Court's observations in State of Madras v. Gannon Dunkerley & Co. (AIR 1958 S.C. 560) were cited to restate that a sale requires an agreement to transfer title supported by money consideration and that non-money valuable consideration would amount to exchange or barter but not a sale.
Applying these authorities to the facts found by the courts below (accepted findings that no cash consideration passed and that the only consideration was forbearance not to contest a suit), the Court concluded that the consideration relied upon (forbearance) does not fall within the meaning of "price" as required by section 54 and therefore Ext. C does not meet the statutory definition of a sale.
Because the plaintiffs' case rested solely on Ext. C as a transaction of sale, the Court held that the plaintiffs' claim based on Ext. C could not succeed. Accordingly, the Court affirmed the lower appellate Court's dismissal of the plaintiffs' suit.

Holding and Implications

Holding: The judgment and decree of the lower appellate Court are affirmed and the appeal is dismissed with costs. In the language used in the opinion: "In conclusion, the judgment and decree of the lower appellate Court are affirmed. The appeal therefore fails and is dismissed with costs."

Immediate consequences and implications (as recorded in the opinion):

The plaintiffs' second appeal fails; the dismissal of their suit by the lower appellate Court is upheld.
The Court's decision rests on application of existing authorities about the meaning of "price" in section 54 and the necessity of money consideration for a transaction to qualify as a "sale". The opinion does not purport to lay down a new principle of law distinct from the precedents it applies.

Additional procedural notes recorded in the opinion: Das, J. agreed with the judgment (para 17). The opinion concludes with "Appeal dismissed" (para 18).

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Mahima Byasadeba Gadi v. Dinabandhu Mohanty

Mohapatra, J.:— This is a plaintiffs' second appeal against the reversing judgment of the lower appellate Court arising out of a suit for declaration of title on the basis of a purchase of the disputed land with an area 0.42 acre out of the total acreage of 0.66 appertaining to Plot no. 901 and for confirmation of possession. The plaintiffs' version is that Luxmidhar Mohanty was the original ancestor of the parties to whom the property belonged. Luxmidhar had three sons: Chakradhar, who died a bachelor prior to the final publication of the Current Settlement record-of-rights, Dinabandhu (defendant No. 1) and Krupasindhu, the deceased husband of Kshetramoni (defendant no. 4). Luxmidhar died prior to 1930, and his widow died on 21st January 1949. Krupasindhu however had died in the year 1940 leaving behind him his widow Kshetramoni. Defendants 2 and 3 are the transferees from defendant no. 1, Dinabandhu, son of Lukmidhar. The suit property stood in the name of Krupasindhu in the current settlement record-of-rights.

2. The plaintiffs' version that defendant no. 1 was adopted away to another family has been negatived by both the Courts below and for the rest of the judgment it is to be that defendant no. 1 is the son of Luxmidhar.

3. Krupasindhu mortgaged the property in dispute in favour of the father of plaintiffs 2 and 3 on the basis of a mortgage transaction (Ext. A) dated 19th June 1933. After the death of Krupasindhu, the plaintiffs' version is, his widow Kshetramoni, however, sold 0.44 acre of land including the disputed land, which is 0.42 acre by virtue of a sale-deed (Ext. B) dated 31st January 1941 in favour of plaintiff no. 1, the deity. This transaction of sale was in satisfaction of the previous mortgage executed by Krupasindhu in favour of the father of plaintiffs 2 and 3. Plaintiff no. 1, the deity, is represented by the other two plaintiffs. Dinabandhu, defendant no. 1, according to the plaintiffs' version, was away from the family and when he came back, in assertion of his rights to the family he executed a Kantkabala (Ext. G) on 20th January 1941 in favour of one Jogendra Mohanty in respect of the suit land along with other lands. This transaction is a fictitious one and was never meant to be acted upon. Thereafter defendant no. 1, to prove his title in respect of the disputed property along with other properties of Luxmidhar, brought Title Suit no. 143 of 1941 as against the present plaintiff no. 2 and six other defendants (Kshetramoni and her transferees).

4. The significant facts necessary for the purpose of appreciating the point arising before us are that it was agreed between Dinabandhu, the present defendant no. 1 who was plaintiff in T.S No. 143/1941, and plaintiff no. 2 (in the present suit) who was contesting the suit as defendant no. 4, that a Kabala was to be executed in respect of 0.42 acre of land, that is, the disputed land, so that plaintiff no. 2 would not contest the suit and Dinabandhu would conveniently get an ex-parte decree.

5. Accordingly Dinabandhu executed a Kabala (Ext. G) in favour of the deity (present plaintiff no. 1) represented by one Punananda Das, very close relative of the present plaintiffs 2 and 3, on 20th June 1942. Eventually on 1st July 1942 Dinabandhu not an ex parte decree in T.S No. 143 of 1941. The ex parte decree stands as final decree. Punananda died and thereafter his widow and son (present defendants 4 and 5 respectively) executed a sale-deed (Ext. 2) in favour of plaintiff no. 1, the deity, represented by plaintiffs 2 and 3 on 28th June 1944.

6. The main defence was that Krupasindhu was adopted away from the family, and as such Dinabandhu (defendant no. 1) was the sole surviving ??? of the family owning the properties. The Kantkabala (Ext. A) dated 19th June 1933 was a valid transaction and further that the decree obtained by Dinabandhu in the previous Title Suit No. 143 of 1941 is final declaring the rights of defendant no. 1, and the Kabala (Ext. C) in favour of Punananda is a colourable transaction which was never acted upon.

7. It is to be noted that the accepted position is that Krupasindhu had been adopted away to some other family. Chakradhar died a bachelor and the present defendant no. 1 was the sole surviving member of the family. It has been found by the Courts below that the Kantkabala (Ext. C) executed by Dinabandhu is a colourable transaction. The learned Munsif gave a decree in favour of the plaintiffs holding that the Kabala (Ex. C) executed by defendant no. 1 in favour of Punananda was a real transaction and was acted upon; and that the Kabala was valid in law to convey title in favour of Punananda whose interest was conveyed by virtue of Kabala (Ext. 2) executed by the widow and son of Punananda in favour of the present plaintiffs.

8. Mr. S.C Das, appearing on behalf of the appellants, asserts that the suit will stand or fall by Ext. C, the Kabala executed in favour of the deity represented by Punananda. The accepted position is that in fact no cash consideration passed under the transaction. This transaction was executed during the pendency of Title Suit No. 143 of 1941 and this was executed for the consideration that the present plaintiff no. 2 (who was a defendant in the previous suit) would not contest. It is further the admitted position that on the basis of this agreement Dinabandhu, the present defendant no. 1, as plaintiff in the previous Title Suit, got an ex parte decree (Ext. 13) as against all the defendants. The Kabala (Ext. C) has been found to be a genuine and bona fide transaction and the above position has been found by both the Courts below. The lower appellate Court, however, has dismissed the plaintiffs' suit on the ground that the alleged consideration cannot be deemed to be a ‘price’ to bring the transaction as one of sale under section 54 of the Transfer of Property Act.

9. The simple question that arises for our determination is whether Ext. C is a valid transaction to convey title as a transaction of sale as contemplated under section 54 of the Transfer of Property Act on the accepted findings that no cash consideration passed or was intended to pass under the transaction, but the only consideration was forbearance on the part of the present plaintiff no. 2 to contest the previous Title Suit, or, in other words, whether this consideration can be taken to be ‘price’ as contemplated under section 54 of the Transfer of Property Act.

10. It is worthwhile to quote here the definition of “sale” in Section 54: “‘Sale’ is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised”. The question is whether the word ‘price’ as used in S. 54 is comprehensive enough to include “such consideration as not to contest a suit”, or would confine only to mean ‘money’. The position has been clarified by very high authorities, and we will refer to the leading Full Bench decision of the Madras High Court reported in Madan Pillai v. Badrakali Ammal, AIR 1922 Mad 311. It is observed in the judgment:

“S. 54 relates to sales, a sale being defined ‘as a transfer of ownership in exchange for price paid or promised.’ In this case one has to consider whether there was a price paid or promised by the transferee. Now ‘price’ has a well defined meaning. It means money, but not necessarily money handed ever in current coin at the time but includes money which might be already due, or might be payable in the future”.

It is further observed:

“A transfer not made in exchange for a money consideration e.g a transfer made in pursuance of a compromise of a family dispute, would not be a sale, and might be altogether outside the provisions of the Act. There being, in view, no price paid or promised in this case, the transaction was not a sale.” Coutts-Trotter, J. in his usual inimitable language expressed as follows:

“I think the word price was put into the section to connote something different and something more limited, that is, money.”

His Lordship was, therefore, definitely of the opinion that the word price was not comprehensive as to include any kind of valuable consideration.

11. The above decision stands as good law; but it would be necessary for us to refer to a few other decisions where the position was controverted and this decision was also questioned. We will next come to a Bench decision of the Madras High Court reported in Venkata Jagannatha Rao v. Venkata Kumara Mahipati Surya Rao, AIR 1931 Mad 140. There the consideration for transfer was not only a sum of Rs. 1,39,986/1/0 but also for forbearance on the one side to take proceedings to set aside a Court sale. Their Lordships of the Madras High Court, relying upon the principle enunciated in the Full Bench decision of AIR 1922 Mad. 311, held that this could not be a sale:

“From Ext. B, the compromise petition it is obvious that the payment by the Rajah of Polvaram of Rs. 1,39,986/1/0 was only part of the consideration for the transfer to him of the property in question, because it is there stated that it is out of regard for defendant 6's family, and in consideration of his not taking any proceedings to set aside the sale, that the transfer is made. It is conceded that the value of the property is more than 3 lakhs of rupees and therefore the price agreed to be paid for it is less than half of its real value.”

Their Lordships emphasised on that part of the consideration which was for not taking steps to contest the Court sale. Therefore it was decided that the transaction could not be termed to be a case of sale. An appeal was taken against this decision before their Lordships of the Privy Council and this decision was set aside. The decision of their Lordships of the Privy Council is reported in Venkata Jagannatha Rao v. Venkata Kumara Mahipati Surya Rao, AIR 1936 PC 204. Their Lordships observed:

“The question which their Lordshins have to determine is whether the transaction of 29th November 1920, whereby the village in question became the property of the defendant, did or did not amount to a sale.”

xxxxxx

“It is however argued that the consideration for the transaction consisted of two parts, viz., a sum of money and a promise by the transferee to abstain from raising objection to the auction-sale of the mortgaged property; while sale as defined by section 54 of the Transfer of Property Act, 4 of 1882, is a transfer of ownership in exchange for price. Now, the transfer was made apparently for a definite sum of money, and was described as a sale. It is true that the deed of compromise mentions also the promise in question, but apart from the fact that this promise was valueless, there is hardly any instrument of sale which does not contain some stipulations by the parties; and if the addition of a covenant by the transferee would change its real character, it would be difficult to find a transaction which could be held to be a sale.”

In the opinion of their Lordships of the Privy Council therefore the real consideration under the transaction was a definite sum of Rs. 1,39,986/1/0 and on that basis the conclusion was that the transaction was a sale and therefore their Lordships of the Privy Council set aside the decision reported in AIR 1931 Mad. 140. It cannot therefore, be suggested for a moment that the principle laid down in the Full Bench decision of the Madias High Court reported in AIR 1922 Mad. 311 was in any way touched or dissented from by their Lordships of the Privy Council.

12. The matter is fully clarified by another Full Bench decision of the same High Court reported in Arumugham v. Subramaniam, AIR 1937 Mad 882 (FB). The matter has been explained in the judgment of Varadachariar, J. to the effect that their Lordships of the Privy Council rather confirmed the view of the previous Full Bench of the Madras High Court and the previous Full Bench decision was reaffirmed. This position has been followed in subsequent decisions of other High Courts also.

13. We may also refer to the observations made by their Lordships of the Supreme Court reported in State Of Madras v. Gannon Dunkerley & Co., (Madras) Ltd, AIR 1958 S.C 560. The observations made by their Lordships in paragraph 16 of the report are in connexion with the definition of ‘sale’ as “the exchange of property for a price involving the transfer of ownership of the thing sold from the seller to the buyer.” Their Lordships observed:

“Thus, according to the law both of England and of India, in order to constitute a sale it is necessary that there should be an agreement between the parties for the purpose of transferring title to goods which of course presupposed capacity to contract, that it must be supported by money consideration, and that as a result of the transaction property must actually pass in the goods. Unless all these elements are present, there can be no sale. Thus, if merely title to lie goods passes but not as a result of any contract between the parties, express or implied, there is no sale. So also if the consideration for the transfer was not money but other valuable consideration, it may then be exchange or barter but not a sale. And if under the contract of sale, title to the goods has not passed, then there is an agreement to sell and not a completed sale.”

14. It is to be made clear that the word ‘price’ is comprehensive enough to include not only cash consideration but also satisfaction of the outstanding debts including dower debts. But there is no case where such a consideration as not to contest a suit has been taken to be a price as contemplated under section 54 of the Transfer of Property Act. We are therefore, definitely of the view that the transaction Ext. C which is relied upon by the plaintiffs as the basis of their case as a transaction of sale does not satisfy the conditions of sale as defined in section 54 of the Transfer of Property Act, and as such, the transaction is not valid to convey title as a sale. As the plaintiffs rely upon the Transaction Ext. C as a sale and sale only, the suit has been rightly dismissed by the lower appellate Court.

15. In conclusion, the judgment and decree of the lower appellate Court are affirmed.

16. The appeal therefore fails and is dismissed with costs.

17. Das, J.:— I agree.

LB/K.S.B

18. Appeal dismissed.

Mahima Byasadeba Gadi v. Dinabandhu Mohanty

Structured Summary of the Opinion (Mohapatra, J.)

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellants' Arguments (as recorded in the opinion)

Defendants' / Other Parties' Arguments (as recorded in the opinion)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Mahima Byasadeba Gadi v. Dinabandhu Mohanty

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