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  • R.N Misra
  • B.K Ray, JJ.
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  • R.N Misra
  • B.K Ray, JJ.
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Smart Summary

Structured Summary of the Opinion (R.N. Misra, J.)

Factual and Procedural Background

Plaintiffs (plaintiff No.1 being father of the others) appealed against a judgment and decree of the Additional Subordinate Judge, Berhampur, which dismissed their suit for a declaration of title as occupancy tenants under the State Government.

The suit (filed 11-3-1967) concerned certain lands alleged to be Darmilla Paik Service Inam lands of the Surangi Estate, said to have been abolished under the Orissa Estates Abolition Act (the "Abolition Act"). Ancestors of defendants 1–7 were raiyats under the Estate and had occupancy rights; the Zamindars had created Inams in favour of defendants' ancestors for rendition of personal service (malevaram), with nominal quit rent (kathubadi). The Inam-holders enjoyed both Kudivaram and Malevaram rights, but the service was reportedly discontinued around 1908.

Plaintiffs acquired purported title to certain tenancy rights (Kudivaram) by two sale deeds and four lease deeds from defendants and their ancestors (Exts. 1–6) and went into possession. After vesting of the estate under the Abolition Act, defendants applied for settlement and the Collector settled the lands with the defendants; plaintiffs' applications were rejected. Following settlement, defendants asserted title and demanded rajbhag from the plaintiffs. Plaintiffs sought a declaration of occupancy rights against defendants.

Defendants filed written statements. They contended (inter alia) that the Inam was a Paik service Inam (malevaram and kudivaram) and that no raiyati right could accrue under the relevant legal provisions (including reference to Section 3(16) of the Madras Estates Land Act of 1908). They maintained that the transfers to plaintiffs were void and that the suit was barred under Section 39 of the Abolition Act and by provisions of the Orissa Land Reforms Act. The trial Judge found the alienations under Exts. 1–6 genuine and for consideration, but held the suit barred under Section 39 and dismissed it. The present appeal challenges that result.

The trial Judge's factual findings and a detailed chart of the six transfers (Exts. 1–6) appear in the record and were accepted as correct by counsel for the defendants at the hearing of the appeal.

Legal Issues Presented

  1. Whether Section 43 of the Transfer of Property Act applies so that a transferee (plaintiff) may, at his option, have the transfer operate on any interest the transferor subsequently acquires while the contract subsists (i.e., whether after-acquired title acquired by defendants binds to the prior transfers to plaintiffs).
  2. Whether the suit is barred by Section 39 of the Orissa Estates Abolition Act (as argued by defendants) such that no relief is admissible in the civil court.
  3. Whether the form of the suit is maintainable in the face of provisions of the Orissa Land Reforms Act (notably the contention invoking Section 67) raised by defendants.

Arguments of the Parties

Plaintiffs' Arguments (as presented on appeal)

  • Counsel for plaintiffs conceded that the defendants acquired valid title by settlement under the Abolition Act and that plaintiffs' applications as ex-intermediaries were misconceived.
  • The sole substantive contention on appeal was that because the transfers (Exts. 1–6) were genuine and for consideration, the transferors who subsequently acquired title were bound under Section 43 of the Transfer of Property Act, and therefore the title subsequently acquired should be treated as passing to the plaintiffs (i.e., the option in Section 43 should operate in plaintiffs' favour for those transfers where Section 43 is applicable).

Defendants' Arguments

  • Defendants pleaded that the Inam was a Paik service Inam (malevaram and kudivaram) and that service continued until abolition, such that no raiyati right could accrue (reference to Section 3(16) of the Madras Estates Land Act of 1908 was made).
  • Accordingly, sales and permanent leases executed in favour of plaintiffs were void. The Collector properly rejected plaintiffs' settlement claims and settled the lands with the defendants under the Abolition Act.
  • Defendants contended that the suit was barred by Section 39 of the Abolition Act and that the civil court had no jurisdiction in view of provisions of the Orissa Land Reforms Act (including an argument invoking Section 67).
  • Defendants 9 and 10 advanced substantially the same contentions in their written statement.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Chota Bahira Saheba v. Puma Chander Chaudhuri, AIR 1915 Cal 751 (Division Bench of Calcutta High Court) Articulates the scope of Section 43 of the Transfer of Property Act: where a person represents he is authorized to transfer property and transfers for consideration, the transferee's equity may attach to any interest the transferor subsequently acquires; when the transferor acquires such property it becomes bound and the transferor becomes trustee for the assignee; the equitable interest so acquired is not available against a purchaser for value without notice. The Court applied the dictum to distinguish transactions where the transferor never became owner (in which case Section 43 does not operate in favour of the transferee) from transactions where the transferor later became a settlee (in which case Section 43 does operate). Using this principle, the Court held Section 43 inapplicable to Exts. 3, 5 and 6 and applicable to Exts. 1, 2 and 4.
Trevivan v. Lawrence, (1704) 1 Salk 276 (referred to in the Calcutta decision) Historically discussed the question whether the remedy against the seller could be enforced against the heir; the Calcutta decision noted that Sir Edward Sugden doubted liability of an heir, but later commentary (Bigelow) supported binding the heir as a privy who takes without value. Cited within the Calcutta decision's reasoning to support the principle that persons claiming under the transferor (other than bona fide purchasers for value without notice) may be bound by the transferee's equity once the transferor acquires title.

Court's Reasoning and Analysis

  1. The court first noted the text of Section 43 of the Transfer of Property Act, which allows a transferee, where a person fraudulently or erroneously represents that he is authorised to transfer immovable property and transfers for consideration, to have the transfer operate on any interest the transferor may subsequently acquire while the contract subsists (subject to protection of bona fide transferees for consideration without notice).
  2. The court accepted as established that (a) transfers in Exts. 1–6 were entered into by persons representing they were authorised to transfer the property, and (b) each transfer was for consideration (the particulars and consideration for each Ext. are recorded in the court's chart and accepted by defendant's counsel).
  3. The Court examined authority in Chota Bahira Saheba v. Puma Chander Chaudhuri (AIR 1915 Cal 751) which set out the successive steps of reasoning for application of Section 43: (i) a contract by X to assign property to be acquired binds X personally until the property is acquired; (ii) when X acquires the property within the contract's scope it becomes bound and X is trustee for the assignee; (iii) the assignee thereby acquires an equitable interest which is not enforceable against a purchaser for value without notice.
  4. Applying that principle to the facts of the present case, the court distinguished between two categories of transactions:
    • Transactions (Exts. 3, 5 and 6) where the person who executed the transfer never subsequently became the owner/settlee of the land. In these cases, the settlement under the Abolition Act was obtained by other persons in their own right (not as heirs of the transferor). Therefore Section 43 could not operate to bind the subsequently acquired title in favour of the plaintiffs for these transactions.
    • Transactions (Exts. 1, 2 and 4) where the transferors were themselves the settlees (i.e., they became entitled under settlement). In these cases Section 43 directly applies because the transferor later acquired the estate, thus the transferee's equitable interest attached to the after-acquired title.
  5. The court rejected the broader submission that the suit was barred by Section 67 of the Orissa Land Reforms Act (as contended by defendants' counsel), explaining that this was not a landlord-tenant suit; plaintiffs sought a direct declaration of occupancy right under the State created by the transfers and therefore the contention did not render the suit unmaintainable on that ground.
  6. On the mixed application of statutory principle (Section 43) and the cited precedent, the court concluded that Section 43 applied to certain transfers and not to others, producing a split result.

Holding and Implications

APPEAL PARTLY ALLOWED.

Holding:

  • The appeal is allowed in part. Plaintiffs' suit is decreed in respect of the plaint schedule items numbered 3, 4, 6 and 7, which correspond to Exts. 1, 2 and 4 respectively (transactions where the transferors later became settlees and Section 43 applies).
  • The suit is dismissed in respect of items 1, 2 and 5 (transactions covered by Exts. 3, 5 and 6), and the trial court's decree in respect of those three items is confirmed (because Section 43 does not apply where the transferor never became owner/settlee).
  • Plaintiffs are entitled to a decree giving them occupancy right under the State of Orissa in respect of the following parcels as found in the judgment:
    • 1.53 acres under Ext. 1;
    • 2.43 acres under Ext. 2; and
    • 1.07 acres under Ext. 4.
  • Parties are directed to bear their respective costs of the litigation throughout.

Implications:

  • The decision has a case-specific application of Section 43 of the Transfer of Property Act: it confirms that Section 43 will bind after-acquired title to prior transfers only in circumstances where the transferor subsequently acquires the estate in his own right (so that the transferee's equitable interest can attach), and will not apply where the settlement or subsequent title vests in someone else in their own right.
  • No broader new legal principle beyond the applied authority was announced; the judgment applies existing statutory text and controlling precedent to the particular factual matrix of the six transfers in suit.

End of summary based exclusively on the provided opinion.

Show full summary ...

    Anand Padhan And Others v. Dhuba Mohanty And Others

    R.N Misra, J.:— Plaintiffs, plaintiff No. 1 being the father of the remaining plaintiffs, have carried this appeal against the judgement and decree of the learned Additional Subordinate Judge of Berhampur dismissing their suit for declaration of title as occupancy tenants under the State Government.

    2. They filed the suit on 11-3-1967 alleging that the disputed property was Darmilla Paik Service Inam lands of the Surangi Estate and the same has been abolished under the provisions of the Orissa Estates Abolition Act (hereinafter referred to as the ‘Abolition Act’). Ancestors of defendants 1 to 7 were raiyats under the Estate with occupancy right over the disputed property. With respect to malevaram right of the disputed lands, the Zamindars of Surangi created Inams in favour of the defendants' ancestors for rendition of personal service. Nominal quit rent (Kathubadi) had, however, been fixed. The Inam-holders i.e predecessors of defendants were thus enjoying the Kudivaram as also the Malevaram rights in the disputed property. The service was, however, discontinued around 1908. Plaintiffs obtained two sale deeds and four lease deeds from the defendants and their ancestors in respect of the Kudivaram right in regard to different portions of the disputed property details whereof would be indicated later and got into possession thereof. After the vesting of the estate, defendants applied for settlement of the lands with them under the Abolition Act. Under wrong advice, plaintiffs had also made similar applications. The Collector under the Abolition Act rejected the claim advanced by the plaintiffs and settled the lands with the defendants. After the settlement of the property with the defendants, they started claiming title to the property and demanded Rajbhag from the plaintiffs treating them as Bbagchasis. Plaintiffs, therefore, claimed the declaration in the manner indicated. Defendants 1 to 8 excepting defendant No. 5 filed a joint written statement while defendants 9 and 10 filed another written statement. The legal representatives of defendant No. 5 have adopted the written statement of the main group of defendants. They have accepted the allegation of alienations, but maintained that the Inam was of both Malevaram and Kudivaram for rendition of service to the Zamindar. Service continued to be rendered till the abolition of the Estate and the land being Paik Service Inam Jagir, no raiyati right could accrue therein in view of the provisions of Section 3(16) of the Madras Estates Land Act of 1908. The sales and transfers through permanent leases in favour of the first plaintiff, therefore, were void. The Collector under the Abolition Act had rightly negatived plaintiff's claim for settlement. The suit was barred under Section 39 of the Abolition Act and the Civil Court would have no jurisdiction to entertain the suit in view of the provisions of the Orissa Land Reforms Act. Defendants 9 and 10 in their written statement pleaded almost in the same manner.

    3. The learned trial Judge framed several issues and came to hold that the alienations under Exts. 1 to 6 - Exts. 1 to 4 being lease deeds and Exts. 5 and 6 being sale deeds - were genuine and for consideration. But the transfers under Exts. 1, 3, 5 and 6 were not binding on defendants while those under Exts. 2 and 4 were valid and binding on defendants 4 and 6 and their ancestors but in view of the provisions of Section 39 of the Abolition Act, the suit was barred and no relief was admissible. He negatived the applicability of Section 43 of the Transfer of Property Act and accordingly dismissed the suit.

    4. Mr. Ramdas for the plaintiffs does not dispute acquisition of valid title by the defendants pursuant to settlement of the disputed lands with them by the Collector under the Abolition Act. He concedes that the applications made by the plaintiffs on the footing that they were the ex-intermediaries were misconceived and no such application is tenable. The only argument he advances is that on the finding that the transactions were genuine and for consideration, the transferor's thereof having acquired title subsequent to the alienations, were bound under Section 43 of the Transfer of Property Act and such title as was created in favour of the plaintiffs should have been accepted by the trial Court. We are thus called upon to deal with the applicability of Section 43 of the Transfer of Property Act. Mr. Pal for the defendants-respondents does not seriously contend that the suit would be barred under Section 39 of the Abolition Act. In fact, the title created under the Abolition Act by virtue of settlement with the defendants is not at all disputed. It is on the footing of acquisition of title that the claim under Section 43 of the Transfer of Property Act is advanced. Mr. Pal has contended that the suit in the form laid was not maintainable in view of Section 67 of the Orissa Land Reforms Act. We do not agree with Mr. Pal's submission in view of the fact that this is not a suit between a landlord and tenant and plaintiffs have not contended that defendants are their landlords. On the other hand, they have claimed for declaration of the rights created in their favour under the alienations and on that footing their claim is for declaration of occupancy right directly under the State Government. It may be reiterated here that the subject-matter of the alienations under Exts. 1 to 6 was the tenancy right representing Kudivaram and not the Malevaram interest which was the service Inam.

    5. Before we proceed to deal with Section 43 of the Transfer of Property Act, it is appropriate to furnish details of the transfers. For convenience, we have reduced the particulars into form of a chart:—

    SI. No. Khata/Survey Number Extent of land Manner of acquisition of title Vendor/Transferor Consideration/Premium Settle under the Abolition Act. 1 2 3 4 5 6 7 1. 45/34 2.08 Sale deed Arjuno Mohanty (father of D-I). Rs. 300/- Defdt. No. 1. (Ext. 5) 25-5-1926 2. 38/38 3.23 Sale deed A. Lokhan Patro Rs. 600/- Defdt. No. 2 (Ext. 6) 11-4-1927 3. 33/116 118/1 118/2 1.53 Regd. Patta Defendant No. 3 and others. Rs. 300/- Defdt. No. 3 (Ext. 1) 19-5-1943 4. 61/45/1 45/2 47 2.34 Regd. Patta Bhikari Dalei (predecessor-in-interest of defdts. 5(a) to 5(e)). Rs. 500/- Bhikari Dalei. (Ext. 2) 19-5-1943 5. 68/28 1.01 Regd. Patta Loka Rout (father of Defdt. No. 6). Rs. 280/- Defdt. No. 6 (Ext. 3) 28-3-1944 6. 36/26/2 39 1.07 Permanent Lease Deed Defendant No. 7. Rs. 360/- Defdt. No. 7 (Ext. 4) 28-3-1944

    6. Mr. Pal appearing for the defendants has accepted the correctness of the materials indicated above.

    7. Section 43 of the Transfer of Property Act provides:—

    “Where a person fraudulently or erroneously represents that he is authorized to transfer certain immoveable property and professes to transfer such property for consideration, such transfer shall, at the option of the transferee, operate on any interest which the, transferor may acquire in such property at any time during which the contract of transfer subsists.

    Nothing in this Section shall impair the right of transferees in good faith for consideration without notice of the existence of the said option.”

    8. Defendants have pleaded that they had no right to alienate the property by the time the alienations were made. It has been conceded that they have now acquired good title following the settlement of the properties with them by the Collector under the Abolition Act. A reference to the terms of Exts. 1 to 6 would clearly indicate that the transferors therein had entered into the transactions by representing that they were authorised to transfer the property. Each of the transfers is for consideration as indicated above.

    9. A Division Bench of the Calcutta High Court in the case of Chota Bahira Saheba v. Puma Chander Chaudhuri, AIR 1915 Cal 751 consisting of Sir Asutosh Mookerjee and Beachcroft, JJ. quoted in the judgement the provision of Section 43 of the Transfer of Property Act and after discussing the scope of the provision observed:—

    “The contract could have been enforced against the seller and yet it was doubted whether the remedy was available against the heir although Sir Edward Sugden did not share the doubt : See Trevivan v. Lawrence, (1704) 1 Salk 276. The distinction for which Sir Edward Sugden could see no good reason may be regarded as unsound on principle for as Bigelow observes (Estoppel Edn. 6 pp. 459 and 479) the heir of the transferor in such a case is rightly bound by the same estoppel as the transferor himself because he takes without value and no injustice is done to him; he is bound as a privy because he gets the estate without cost and it is right therefore that he should stand in the situation of his ancestor. The true rule may accordingly be taken to be that if the transferor himself has once become entitled to a valid estate in the land the transferee's equity would attach upon it in the hands of all persons claiming under the transferor otherwise than for a legal interest by purchase for value without notice :………… To avoid misapplication of this principle it is useful to bear in mind the successive steps of the process of reasoning by which the result is reached; first a contract by X for valuable consideration to assign property to be acquired by him whether it is expressed as a contract or whether it takes the form of an immediate assignment merely binds X personally until the property comes into existence; secondly when X acquires property which comes within the scope of the contract that property is bound; X becomes a trustee of it for the assignee who acquires an equitable interest therein; and it is not necessary that any fresh act should be done by X to perfect such equitable interest of the assignee; thirdly, the interest acquired by assignee in after-acquired property when it is acquired is an equitable interest; as such it is not available against a purchaser for value without notice of a legal interest in the property.”

    10. Applying this dictum, we find that the alienations under Exts. 3, 5 and 6 would not be covered by Section 43 of the Transfer of Property Act. The transferor under Ext. 3 was Loka Raut while the application under Chap. II of the Abolition Act was made by defendant No. 6 and the land was ultimately settled with him. The vendor under Ext. 5 was Arjuno Mohanty, father of defendant No. 1. The claim under Chap. II of the Abolition Act was made by defendant No. 1 and he obtained settlement with him. The sale under Ext. 6 was by Laxman Patra, father of defendant No. 2. The claim under Chap. II of the Abolition Act was by the daughter (defendant No. 2) and the settlement has been with her. In respect of these transactions, following the principle indicated in the Calcutta case, Section 43 of the Transfer of Property Act would not have application, because the transferor never became owner of the property and the settlement has been obtained by the parties noted above in their own right and not as heirs of the persons who are bound by contracts. So far as the other three transactions are concerned, i.e transactions under Exts. 1, 2 and 4, the transferors are the settlees and, therefore, Section 43 of the Transfer of Property Act has direct application.

    11. We would accordingly allow the appeal in part. Plaintiffs' suit is decreed in regard to items 3, 4, 6 and 7 of the plaint schedule which are covered by Exts. 1, 2 and 4 respectively.

    12. Their suit in regard to items 1, 2 and 5, namely transactions covered by Exts. 3, 5 and 6 is dismissed and the decree of the trial court in regard to those three items is confirmed. The appeal is accordingly allowed in part and plaintiffs shall have a decree giving them occupancy right under the State of Orissa in regard to 1.53 acres under Ext. 1, 2.43 acres under Ext. 2 and 1.07 acres under Ext. 4. Parties are directed to bear their respective costs of the litigation throughout.

    13. B.K Ray, J.:— I agree.

    14. Appeal partly allowed.

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    Comments

    Anand Padhan And Others v. Dhuba Mohanty And Others
    (Aug 11, 1978)