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Narain Das v. Musammat Dhania
Judgment Summary — Banerji, J. (with Walsh, J., concurring)
Source text: single opinion provided. The summary adheres strictly to facts and reasoning stated in that opinion.
Factual and Procedural Background
The suit was brought by Suraj Bhan, a minor, through his guardian and next friend, for possession of a house. The plaint alleged that Musammat Radha and Musammat Jeoni (now deceased), jointly with the defendant, sold the house to the plaintiff "through his father and guardian Narain Das" by a sale-deed dated 1 April 1912. The plaint alleged that Rs. 51 was paid as earnest money, the vendors refused to have the sale-deed registered but the plaintiff caused it to be registered, that the vendors (Radha and Jeoni) are dead, and that the defendant is in possession and has refused to accept the balance of the consideration money and has withheld possession. The plaintiff alleged readiness and willingness to pay the balance and prayed that it be paid to the defendant and for delivery of possession.
The defendant denied the execution of the sale-deed in her written statement and pleaded that even if the deed was executed by Radha and Jeoni she was not bound by it and that it was invalid.
The lower courts treated the suit as one for specific performance of a contract and dismissed it on the preliminary ground that a minor cannot enter into a contract and therefore could not purchase the property. The District Judge relied on the Privy Council decision in Mir Sarwarjan v. Fakhruddin Mahomed Chowdhuri. The plaintiff appealed.
Legal Issues Presented
- Whether the suit is properly characterised as one for specific performance of a contract or as a suit founded on title arising from an executed sale-deed (i.e., a suit for possession based on ownership under the sale-deed).
- Whether the minority of the plaintiff affects his capacity to acquire and hold immovable property or to maintain a suit for possession based on a sale-deed executed in his favour.
- Whether non-payment (or partial payment) of the purchase-money prevents vesting of title in the purchaser under an executed sale-deed and whether it entitles the vendor to retain possession in enforcement of a lien for unpaid purchase-money.
- Whether, on the pleadings, the plaintiff has a cause of action against the defendant for possession.
Arguments of the Parties
Plaintiff's (Suraj Bhan, by guardian) Case
- A sale-deed dated 1 April 1912 was executed in favour of the plaintiff (through his father and guardian Narain Das) and was registered by the plaintiff.
- Earnest money of Rs. 51 had been paid; the plaintiff was ready and willing to pay the balance of the consideration and had repeatedly offered it but the defendant refused to accept it and withheld possession.
- The sale-deed vested title in the plaintiff, and the suit is one for possession on the strength of ownership under that deed rather than a suit for specific performance.
Defendant's Arguments
- The defendant denied execution of the sale-deed.
- Even if Radha and Jeoni executed a sale-deed, the defendant contended she was not bound by it and that it was invalid.
- The defendant (and the courts below following her argument) maintained the suit was for specific performance and that a minor cannot enter into a contract; therefore the plaintiff could not maintain the suit.
- The defendant argued that a large part of the consideration remained unpaid and that this entitled her to retain possession in enforcement of her lien and that, because the plaintiff was a minor, his promise to pay was void so she could not sue for the balance.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Mir Sarwarjan v. Fakhruddin Mahomed Chowdhuri (Privy Council) | Held that a suit on behalf of a minor for specific performance of a contract to sell could not be specifically performed. | The court noted the lower court relied on this decision but held it had no bearing on the present case because the present suit is not one for specific performance but is founded on title under an executed sale-deed. |
| Mohori Bibee v. Dharmodas Ghose (Privy Council) | Held that a contract entered into by a minor is void and cannot be enforced against the minor. | The court observed this case addresses enforcement of a contract against a minor and held it did not apply to the present suit, which is not a suit to enforce a contract against a minor. |
| Shib Lal v. Bhagwan Das | Authority for the proposition that where a registered sale-deed has been executed title vests in the purchaser even if purchase money has not been paid. | The court cited this case (together with Baijnath Singh v. Paltu) to support that an executed and (where required) registered sale-deed vests ownership in the purchaser notwithstanding non-payment of the purchase-money; hence the remedy is for possession, not specific performance. |
| Baijnath Singh v. Paltu | Same principle as Shib Lal: title vests on execution/registration of a sale-deed even if purchase price unpaid. | Used together with Shib Lal to show that non-payment of consideration does not prevent transfer of ownership where a sale-deed has been executed and registered. |
| Velayutha Chetty v. Govindasawmi Naiken (Madras High Court) | Held that the vendor's lien under section 55 of the Transfer of Property Act is non-possessory: vendor may retain title deeds and has a charge for unpaid purchase-money but cannot retain possession against the vendee. | The court relied on this authority to conclude that non-payment of the purchase-money does not entitle the vendor to retain possession and that the lien is non-possessory, consistent with English law. |
| Ulfat Rai v. Gauri Shankar (This Court) | Held there is nothing in the Transfer of Property Act making a minor incapable of being the transferee of immovable property. | The court relied on this precedent to support the proposition that a minor can acquire and hold property and therefore can be a transferee under a sale-deed. |
| Munni Kunwar v. Madan Gopal (Calcutta High Court cited) | Expressed the view that a minor is not disqualified from being a transferee of property. | The court cited it among authorities affirming a minor's competency to acquire and hold property. |
| Bahaluddin v. Rajaqat Husain (Calcutta High Court) | Expressed the view that a minor may acquire and hold property. | Cited as part of the "mass of authority" supporting that a minor can acquire and hold property. |
| Raghunath Bakhsh v. Haji Sheikh Mahomed (Judicial Commissioner of Oudh) | Expressed similar view that a minor can acquire and hold property. | Also cited in support of the position that minority does not preclude acquisition and holding of immovable property. |
| Navakotti Narayana Chetty v. Logalinga Chetty (Madras High Court) | Held the contrary view that a minor could not be the transferee of immovable property. | The court respectfully disagreed with this authority and observed that the decision was not followed by the Madras High Court in the later case of Muniya Konan v. Perumal Konan. |
| Muniya Konan v. Perumal Konan (Madras High Court) | Later Madras decision that did not adopt the contrary view in Navakotti Narayana Chetty; observed that property may be purchased and held as trustee for a minor and that no contractual obligations are undertaken by the minor in such a case. | The court relied on this reasoning to indicate that a purchase made by a guardian or another for a minor can leave personal obligations on the contracting party (not the minor), supporting the plaintiff's position where the purchase was made through his father and guardian. |
Court's Reasoning and Analysis
The court's analysis proceeded in logical stages, applying statutory text and cited authorities to the pleaded facts:
- Characterisation of the suit: The court held that the lower courts erred in treating the suit as one for specific performance. The opinion distinguishes a mere contract to sell (which, under section 54 of the Transfer of Property Act, does not create any interest in the property) from an executed sale-deed. Where only a contract to sell exists, the purchaser's remedy is a suit for specific performance. But where an executed sale-deed (and, for tangible immovable property above the statutory value, registration) exists, the title vests in the purchaser and the appropriate remedy is a suit for possession based on ownership.
- Effect of non-payment of consideration: The court examined section 55 of the Transfer of Property Act and the cited case-law (Shib Lal; Baijnath Singh). It concluded that an executed and registered sale-deed vests title in the purchaser even if the purchase-money has not been paid in full. The seller's remedies under section 55 include withholding title-deeds and a charge on the property for unpaid purchase-money, but these do not amount to a right to retain possession against the purchaser. The Madras decision in Velayutha Chetty, holding the lien to be non-possessory, was accepted as consonant with English law.
- Effect of the plaintiff's minority: The Transfer of Property Act does not declare a minor incompetent to purchase property. The court reviewed a line of authorities (including Ulfat Rai v. Gauri Shankar, Munni Kunwar, Bahaluddin, Raghunath Bakhsh) supporting the view that a minor can acquire and hold property. The courts observed that Mohori Bibee and Mir Sarwarjan (Privy Council decisions) did not decide that a minor could not be a transferee of property; rather, they addressed enforcement of contracts against minors and specific performance on behalf of minors respectively. The court therefore concluded minority did not bar the plaintiff from acquiring title under the sale-deed nor from maintaining a suit for possession based on that title.
- Interaction of minority and unpaid purchase-money: The court addressed the respondent's contention that because the plaintiff was a minor his contract to pay was void and the vendor could retain possession to enforce a lien. The court reiterated that non-payment does not prevent vesting of title under an executed and registered sale-deed and accepted that, equitably, a decree for possession should be subject to a condition requiring payment of the balance. The plaint alleged, and relied on a receipt for earnest money, indicating that the purchase was made by the plaintiff's father and guardian (Narain Das) who had undertaken to pay the balance; thus, if the receipt was genuine, the guardian (who contracted with the vendor) would be liable, removing the bar suggested by the defendant.
- Cause of action: The court rejected the lower appellate court's finding that the plaintiff had no cause of action. Paragraph 4 of the plaint alleged that the defendant was in possession of the house claimed; that paragraph was admitted by the defendant in her written statement. On that basis the court held there was a clear cause of action against the defendant.
Holding and Implications
Holding:
The court's dispositive rulings — expressed in the opinion of Banerji, J., and concurred in by Walsh, J. — were:
APPEAL ALLOWED; the decrees of the courts below are set aside and the cause is remanded to the court of first instance for trial on the merits.
Costs: Costs here and hitherto were ordered to be costs in the cause.
Implications (direct effects stated in the opinion)
- The suit is to be tried on its merits as a suit for possession founded on the title acquired by the plaintiff under the sale-deed, not as a suit for specific performance.
- The court held that a minor is competent to purchase and hold immovable property; if the sale-deed relied upon by the plaintiff is genuine, he has acquired title and is entitled to maintain a suit for possession.
- Non-payment of the purchase-money does not prevent the vesting of title under an executed (and where required, registered) sale-deed; the vendor's remedies are limited to withholding title-deeds and a charge for unpaid purchase-money, not retaining possession against the purchaser. Equity requires any decree for possession to be subject to payment of the balance of purchase-money.
- No broader binding precedent beyond the reasoning in this opinion is expressly claimed; the direct effect is to permit the plaintiff to proceed to trial on the merits and to require the lower court to determine factual issues (including genuineness of documents and the question of payment) in evidence.
Banerji, J.:— This appeal arises in a suit brought by Suraj Bhan, a minor, through his guardian and next friend, for possession of a house. It is stated in the plaint that Musammat Radha was the owner of the house and jointly with the defendant and Musammat Jeoni, now deceased, sold it to the plaintiff “through his father and guardian Narain Das under a sale-deed, dated the 1st of April 1912; that out of the amount of consideration for the sale they received Rs. 51 as earnest money; that they refused to have the sale-deed registered, but the plaintiff got it compulsorily registered; that Musammat Radha and Jeoni are dead and the defendant is in possession of the house; that the plaintiff repeatedly asked the defendant to receive the balance of consideration money, but the latter refused to take it and has withheld possession. It is further alleged in the plaint that the plaintiff is ready and willing to pay the balance of consideration and it is prayed that it be caused to be paid to the defendant.
The defendant, in her written statement, denied the execution of the sale-deed and pleaded that even if it was executed by Musammats Radha and Jeoni, she was not bound by it, that it was invalid and that no relief could be granted to the plaintiff on the basis of it.
The courts below have not tried the case on the merits. They have treated the suit as one for specific performance of a contract and have held that a minor being incapable of entering into a contract could not purchase property and that the plaintiff is, therefore, not entitled to maintain the suit. On this preliminary ground they dismissed the suit. The learned District Judge relies on the decision of their Lordships of the Privy Council in Mir Sarwarjan v. Fakhruddin Mahomed Chowdhuri. In the argument before us the case of Mohori Bibee v. Dharmodas Ghose, also decided by their Lordships, has been referred to on behalf of the respondent. In our judgement neither of these rulings has any bearing on the present case. In the case last mentioned the suit was brought against a minor to enforce a contract entered into by him. It was held that such a contract was void and could not be enforced. The former was a suit on behalf of a minor for specific performance of a contract to sell. It was held that such a contract could not be specifically performed. The suit before us is not a suit to enforce a contract against a minor and it is not a suit for specific performance of a contract. The court below is, in our opinion, wrong in holding that this is a suit for specific performance. The suit is not based on a contract; but is founded on the title acquired by the plaintiff under the sale-deed executed in his favour. The sale is referred to as evidence of his title. Where a contract has been made for sale of immovable property and that contract has not been completed by the execution of a sale-deed, no title in the property is vested in the purchaser until the execution of the sale-deed. This is provided in section 54 of the Transfer of Property Act in the following terms:—“A contract for the sale of immovable 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.” In the case of a transaction which has not advanced beyond the stage of a contract to sell, the remedy is a suit for specific performance of the contract. Where, however, a sale-deed has been executed and, in the case of tangible immovable property of the value of one hundred rupees and upwards, registered, the title to the property vests in, and the ownership of it passes to, the purchaser. And as held in Shib Lal v. Bhagwan Das and Baijnath Singh v. Paltu, this will be so even if the purchase money has not been paid. In such a case the remedy is not a suit for specific performance, but one for possession on the strength of the ownership acquired by virtue of the sale-deed. The present suit is a suit of this last description and not one for specific performance. A sale has been defined in section 54 of the Transfer of Property Act as “a transfer of ownership in exchange for a price paid or promised and part paid and part promised.” Pre-payment of price is not a condition precedent to the transfer of ownership and a transaction is none the less, a sale if the price hag not been paid in whole or in part. By section 55, sub-section (1)(f) of the same Act, it is provided that a seller is bound, or being so required, to give the buyer possession of the property sold. If the whale of the purchase money has not been paid the seller is entitled-, under sub-section (3) of the same section, to withhold documents of title. He is also entitled, under sub-section (4), clause (b), to a charge for unpaid purchase money “upon the property in the hands of the buyer.” This last clause assumes that the ownership of the property has passed to the buyer. It was held by the Madras High Court in Velayutha Chetty v. Govindasawmi Naiken, that the “lien of the unpaid vendor of land under section 55 of the Transfer of Property Act is non-possessory. He has only a right to retain the title deeds and to a charge for the unpaid purchase-money, but he cannot retain possession of the property sold against the vendee.” As pointed out by the learned Judges, this view is also in consonance with the English law on the subject. (See Fisher on Mortgages, 6th Edition, § 505). It is thus clear that non-payment of consideration does not prevent the transfer of ownership to the buyer and does not entitle the seller to retain and withhold possession. No doubt, on equitable principles, the court will not make a decree for possession in favour of the purchaser without attaching to it a condition directing payment of the purchase money. This was done in the two cases: decided by this Court to which we have referred above. But non-payment of the purchase money is, as shown above, immaterial, so far as the question of the vesting of title is concerned. In the present case it was alleged on behalf of the plaintiff that he was always ready and willing to pay the balance of purchase-money but that the defendant had refused to take it. It cannot, therefore, be said that non-payment of the purchase-money vitiates the title acquired under the sale-deed.
The next question to be considered is whether the fact of the minority of the plaintiff affects his right to maintain this suit. The Transfer of Property Act does not declare a minor to be incompetent to purchase property, and we have not been referred to any other statutory enactment which disqualifies him from doing so. On the contrary there is a mass of authority in favour of the view that a minor can acquire and hold property. The purchase of property by a minor through his guardian is very common in this country. It was held by this Court in Ulfat Rai v. Gauri Shankar that there is “nothing in the Transfer of Property Act which makes a minor incapable of being the transferee of immovable property.” The same view was held by the learned Chief Justice and Rafiq, J., in the recent case of Munni Kunwar v. Madan Gopal. The Calcutta High Court in Bahaluddin v. Rajaqat Husain and the Judicial Commissioner of Oudh in Raghunath Bakhsh v. Haji Sheikh Mahomed expressed the same opinion. The only decision to the contrary is that of the Madras High Court in Navakotti Narayana Chetty v. Logalinga Chetty. With great respect we are unable to agree with the learned Judges who decided that case. It is to be observed that the view taken in this case was not adopted by that Court in the later case of Muniya Konan v. Perumal Konan. In Mohori Bibee v. Dharmodas Ghose and Mir Sarwarjan v. Fakhruddin Mahomed Chowdhuri their Lordships of the Privy Council did not decide that a minor could not purchase property, and we do not understand the effect of those rulings to be to declare him disqualified.
It was strenuously argued on behalf of the respondent that, although the fact of the purchaser in this case being a minor might not have precluded him from maintaining the suit, the circumstance that a great part of the consideration remained unpaid made a difference, that the seller was entitled to retain possession in enforcement of her lien for unpaid purchase money and that she could not sue the plaintiff for the balance of the purchase money, the contract by him to pay it being void by reason of his minority. As we have already pointed out, non-payment of consideration does not prevent a purchaser from acquiring title under his purchase and it is immaterial whether he is a minor or of full age. We have also shown above that the seller's lien for unpaid purchase-money does not entitle him to retain possession of the property sold. We have also pointed out that under the rulings of this Court the decree for possession in a case like this must be subject to the condition that the balance of the purchase-money, should be paid by the plaintiff. There would, therefore, be no occasion for the defendant to sue for the purchase-money. Furthermore, the plaintiff's case is that he offered the purchase-money and has always been and still is ready to pay it. If, therefore, he was competent to purchase, the fact of non-payment of the purchase-money, under the circumstances alleged, cannot in law or equity deprive him of the right he has acquired in the property. Moreover the allegation in the plaint is that the purchase was made through the father and guardian of the plaintiff, and in the receipt for earnest money granted by the vendors, which has been produced by the plaintiff, it is stated that the purchase was made by Narain Das (the plaintiffs father and guardian) and that he would pay the balance of price. If this document is genuine the purchase was made by the plaintiff's father for him and he would be liable for the purchase-money. No question of non-payment of such money therefore arises. In Muniya Konan v. Perumal Konan two learned Judges of the Madras High Court observed that “it cannot be denied that a person may purchase property and hold it as trustee for a minor. There is no reason why he should not create a trust by purchasing it in the name of the minor. No contractual obligations are undertaken by the minor in such a case. Any personal obligations arising as between the vendor and the vendee would have to be discharged by the party contracting with the vendor. These remarks are applicable to the circumstances of this case. It cannot be said that the vendor would be in a worse position than the vendee and would be without remedy for the realization of the purchase-money.
For the reasons stated above we hold that the present suit is not one for the specific performance of a contract and no question of mutuality arises; that a minor is competent to purchase property; and chat if the sale-deed relied upon by the plaintiff is genuine he has by virtue of it acquired a title to the property sold and is entitled to maintain the suit.
Another ground on which the lower appellate court has decided against the plaintiff is that he has no cause of action against the defendant. This ground is wholly untenable. It is alleged in the 4th paragraph of the plaint that the defendant is in possession of the house claimed and this paragraph is admitted by the defendant in her written statement. There is, therefore, a clear cause of action against the defendant.
We, therefore, allow the appeal, not aside the decrees of the courts below and remand the case to the court of first instance for trial on the merits. Costs here and hitherto will be costs in the cause.
Walsh, J.:— I agree with the judgement that has been delivered by my brother Mr. Justice Banerji. Throughout the argument in Court it seemed to me that the contention on behalf of the respondent was right. It was not until my attention was drawn to section 55 of the Transfer of Property Ait, that I could see an answer to what I regarded as the unassailable position taken up by the respondent and affirmed by the judgement in the court below. But looking at section 55 and particularly sub-section (3) and sub-section (4)(b), it is quite clear that provision is there made for a non-possessory lien in favour of the vendor; that is to say, by one part of the section, where there has been a failure to pay the whole of the purchase money, he is apparently entitled to withhold the documents of title, and further, where the title to the property has passed to the buyer, he has a charge upon the property for the unpaid purchase-money in the hands of the buyer. That is inconsistent with his withholding possession. Apart from that section, it seemed to me in the particular circumstances of this transaction, that the vendor was in rightful possession, and the vendor being in rightful possession, the purchaser could not obtain possession. Having regard to section 55, lam now satisfied that view is fallacious and some trouble might have been saved if attention had been drawn to the section during the argument. It is another illustration of the importance of paying attention to the language of the Code. So long as you keep to the Code, you may make a false step but you are not likely to take the wrong road. The result in this particular case and in all such cases, is obviously to inflict what might be described as injustice upon the vendor, because it is clear that a minor, under such circumstances as these, would have, and the minor in this particular case had, twelve years within which to exercise his option as to whether he would take possession or not, and during that time the vendor, who would be unable to sue for the purchase-money would remain in possession of another person's property with certain obligations resting upon him, uncertain as to whether the transaction would ever be completed or not. There are possibly two answers to that. It may be said that a purchaser from a minor must take his chance, inasmuch as the law has set its face against minor entering into any obligations at all. Secondly, it may be presumed to be a somewhat rare occurrence that for a period of no less than two years there should be a purchaser who did not want the property and a vendor who did not want his money. There is probably something behind this case which further investigation will elucidate, and under the circumstances I am not sorry that the result of our decision is that the case goes down to the court of first instance for evidence to be taken on the merits and for the true facts to be investigated, I agree in the order passed.
Appeal allowed and cause remanded.
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