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  • s. 39 of the Transfer of Property Act, 1882,
  • s. 39 of the Transfer of Property Act
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  • s. 39 of the Transfer of Property Act, 1882,
  • s. 39 of the Transfer of Property Act
Smart Summary

Judgment Summary — Chagla, J.

Factual and Procedural Background

This is a vendor-purchaser originating summons arising from an agreement dated 30 April 1943 under which the defendants agreed to sell and the plaintiff to purchase an immoveable property at Lamington Road, Bombay for Rs. 1,45,000. Clauses 5 and 10 of the agreement (quoted in the opinion) place certain obligations on the vendors to make out marketable title, clear defects, obtain a court order for the sale on behalf of the minor Gangji Chapsey, and to obtain consents and executed documents from all persons interested in the premises.

The property belongs to a Hindu joint family of which Chapsey Ghella (defendant No. 1) is the karta. Relevant family members (as described in the opinion) include Chapsey's two sons, Bhawanji (defendant No. 2) and Gangji (defendant No. 3), and various female members: Panbai (Chapsey's wife), Dewkabai (Bhawanji's wife), Nirmala (a minor daughter of Bhawanji), Manibai and Umerbai (married daughters of Chapsey, not materially concerned), and Monghibai (an unmarried daughter).

An application under the Court's inherent jurisdiction was made to sanction the sale insofar as it affected the interest of the minor Gangji and to appoint Chapsey as guardian so that he could convey Gangji's interest. On 9 August 1943 the Chamber Judge (Mr. Justice Coyajee) made an order declaring that the agreement was for the benefit of the minor Gangji and appointed Chapsey as guardian of Gangji's interest in the joint family property.

The plaintiff purchaser sought clarification, by originating summons, whether female members of the joint family could, notwithstanding a sale for legal necessity, enforce a right to maintenance or a provision for marriage against the purchaser (or the property in his hands), especially where the sale consideration exceeded the joint family debts to be paid from the sale proceeds.

Legal Issues Presented

  1. Whether Hindu female members of a joint family possess a right to receive maintenance or a provision for marriage out of a specific joint family property that has been alienated (sold) for legal necessity.
  2. If such a right exists under ordinary Hindu law, whether it can be enforced against a transferee (purchaser) who has notice of that right, in light of the amended s. 39 of the Transfer of Property Act, 1882.
  3. Whether a surplus arising from sale consideration (i.e., where the purchase price exceeds the joint family debts to be paid) gives rise to a claim by female members against the purchaser or the alienated property for maintenance or marriage provision.

Arguments of the Parties

Plaintiff's Arguments

  • The plaintiff (purchaser) contended that Hindu female members have a right to maintenance and provision for marriage not only personally from male members but also against joint family property; such a right can be pursued in the hands of a transferee who purchased with notice of the claim.
  • The plaintiff further argued that because the sale consideration (Rs. 1,45,000) substantially exceeds the joint family debts to be paid (about Rs. 90,000), the surplus (approximately Rs. 50,000) or the corresponding proportionate part of the property in the hands of the purchaser may become liable to meet the female members' claims for maintenance and marriage expenses.
  • The plaintiff asked the court to clarify the position so that the purchaser (willing to buy) could avoid purchasing litigation.

Concessions and Positions Noted for Defendants / the Karta

  • It was conceded by counsel (Mr. Bhagwati) that the property is being sold for legal necessity to meet joint family debts amounting to Rs. 90,000.
  • It was conceded that the property is being sold at a fair market price and that a bona fide purchaser who is satisfied that the sale is for legal necessity is not bound to look to the application of the sale-proceeds.
  • The court notes that the purchaser in this case had notice of the female members' claimed rights.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Radhabai Gopal v. Gopal Dhondo (Court of Appeal) Held that a transferee who purchased property with notice of a wife's maintenance claim may be bound to give priority to that claim (subject to genuine debts binding on the wife); the decision turned on exceptional facts indicating a sale intended to defeat the wife's claim and fraudulent conduct by the transferee (the father). The court distinguished that decision on its facts. Chagla, J. accepted that the case involved fraudulent transactions and an intention to defeat the wife's claim, and therefore it did not establish a general rule that a female member can claim a surplus consideration or surplus portion of property from a bona fide purchaser where the sale was for legal necessity. The Radhabai decision was treated as exceptional and not controlling for the present facts.

Court's Reasoning and Analysis

The court proceeded in these analytical steps, relying strictly on the materials and law cited in the opinion:

  1. The court first identified and considered the amended s. 39 of the Transfer of Property Act, 1882, which allows a third person who has a right to receive maintenance or provision for advancement or marriage from the profits of immovable property to enforce that right against a transferee if the transferee has notice of the right or if the transfer is gratuitous; but that section does not create a substantive new right independent of pre-existing law.
  2. Therefore, the decisive inquiry was whether Hindu females in a joint family possess, under ordinary Hindu law, a right to receive maintenance or provision for marriage from a specific joint family property such that that right could be enforced against a transferee with notice.
  3. The court explained the nature of the Hindu female's right: it is not a right in rem in a specific joint family asset but a personal right to receive maintenance or a provision for marriage out of the joint family property in general. That right "is not crystallised into a charge" and does not attach to any particular item of joint family property.
  4. The court observed the established principle that debts of the Hindu (or joint family debts) take precedence over the rights of female members for maintenance or marriage provision; accordingly, joint family properties may be alienated or sold to satisfy debts, and such alienation can defeat the female members' claim in relation to the particular property sold.
  5. Because the present sale was conceded to be for legal necessity (to meet joint family debts) and was at a fair market price, the court held that once the property was alienated for legal necessity and passed out of the joint family, the female members' right to receive maintenance from that specific property terminates. The fact that the sale proceeds realized may exceed the amount necessary to pay debts was held to be irrelevant to the existence of a subsisting right against the alienated property or against the purchaser with notice.
  6. The court further relied on the well-settled proposition that a bona fide purchaser who is satisfied the sale is for legal necessity is not required to investigate or control the karta's application of the sale-proceeds; thus realization of surplus by the karta does not create a continuing charge on the alienated property in the hands of the purchaser.
  7. Having distinguished the Court of Appeal decision in Radhabai Gopal v. Gopal Dhondo on the basis that that case involved an immediate, arguably fraudulent transfer by the husband to defeat an extant decree and that the transferee acted with full knowledge and fraudulent intent, the court treated that authority as inapposite to the present facts and not establishing a general rule in favour of female claims to surplus consideration.
  8. On the facts as presented (including the concession of sale for legal necessity and that the purchaser had notice), the court concluded that the female members named in the summons could not claim maintenance or marriage provision out of the specific joint family property which was the subject of the sale.

Holding and Implications

The court held that the female members of the joint family have no right to claim maintenance or a provision for marriage out of the particular joint family property which has been alienated (sold) for legal necessity.

Direct consequences and practical implications stated in the opinion:

  • Panbai (wife of Chapsey), Dewkabai (wife of Bhawanji), and the daughters Nirmala and Monghibai do not possess enforceable rights against the property agreed to be sold; they cannot look to that property or to the purchaser for payment of maintenance or marriage provision once the property has been validly alienated for legal necessity.
  • The fact that the sale consideration exceeds the joint family debts (i.e., there may be a surplus realized by the karta) does not create a right in the female members to claim the surplus from the purchaser or to treat the alienated property as still liable to them.
  • The Court of Appeal decision in Radhabai Gopal v. Gopal Dhondo was distinguished on its special facts (fraud and an apparent intent to defeat the wife's claim); it does not compel the outcome urged by the plaintiff in this case.
  • Costs: the parties agreed that the costs of the originating summons would be costs in the sale.
  • The opinion does not announce a new broad principle overriding the established rule that debts take precedence and that sales for legal necessity extinguish the female members' right as to the specific property; the decision is a determination of the parties' dispute on the facts and law presented.

Attorneys of record noted in the opinion: for the plaintiff, Messrs Madhavji & Co.; for the defendant, Messrs Ardesir, Hormusji, Dinshaw & Co.

Signed: A.J.P.

    Pranlal Bhagwandas v. Chapsey Ghella

    Chagla, J.:—

    This is a vendor-purchaser summons. By an agreement dated April 30, 1943, between the plaintiff and the defendants, the defendants agreed to sell and the plaintiff agreed to purchase from the defendants an immoveable property belonging to the defendants situate at Lamington Road, Bombay, for a price of Rs. 1,45,000. The material clauses of the agreement, with which I am concerned in this summons, are cls. 5 and 10. Clause 5 says:

    “The vendors shall make out a marketable title to the said land hereditaments and premises agreed to be sold. The vendors shall get in all outstanding estates and clear all defects in title at their own expense including all claims by way of sale, exchange, mortgage, gift, trust, inheritance, possession, lease, lien or otherwise. The vendors shall obtain an order of the Court for sale of this property on behalf of the minor Gangji Chapsey at their own costs. Until such order is obtained the purchaser will not incur any costs for investigation of title. Such order must be obtained within two months and three months' time will run from the date of the order.”

    Clause 10 says:

    “The vendors shall get the consent of all persons interested in the premises agreed to be sold and shall get the documents duly executed by them.”

    It seems that one Ghella Ashar had two sons, Chapsey Ghella and Meghji Ghella. We are concerned only with Chapsey Ghella who is defendant No. 1 to the summons and his branch of the family. The property agreed to be sold admittedly belongs to the joint family of which Chapsey Ghella is the korto. Chapsey Ghella has two sons, Bhawanji and Gangji, defendants Nos. 2 and 3. These are the only male members of the joint family. Besides these male members, the female members of the joint family are the wife of Chapsey Ghella, Panbai; the wife of Bhawanji, Dewkabai, and a minor daughter of Bhawanji by the name of Nirmala, two married daughters of Chapsey, Manibai and Umerbai, with whom really we are not concerned, and an unmarried daughter by the name of Monghibai. Defendant No. 3 was a minor till February of this year. An application was made to the Chamber Judge, Mr. Justice Coyajee, under the inherent jurisdiction of this Court, to sanction the sale of this property as being for the benefit of the minor Gangji and for appointing his father Chapsey as guardian so that he could convey his right title and interest to the purchaser. On this application Mr. Justice Coyajee made an order on August 9, 1943, declaring that the agreement for sale was for the benefit of the minor Gangji and appointing Chapsey as the guardian of the interest of Gangji in the joint family property.

    The contention put forward by the plaintiff is that he is advised that having regard to the existing state of the law in that behalf the female members of the joint family have a right to maintenance not only from the male members personally but also out of the property in their hands, that they can pursue the property even in the hands of a stranger who had purchased it with a notice of their claim and that a bare notice of the existence of such a right is sufficient to make it a burden on the property in the hands of the transferee. It is further urged by the plaintiff that as a large surplus would remain over from the sale-proceeds after the payment of the debts which only amount to Rs. 90,000, though the female members would not be in a position to impugn the sale of the property so far as it is necessary to pay and satisfy the debts, yet nevertheless so far as the right to maintenance and marriage expenses are concerned, the surplus sale-proceeds which in this case amount to about Rs. 50,000 or the corresponding proportionate part of the property even in the hands of the purchaser may become liable to pay the burden of maintenance and marriage expenses of the female members of the family. Mr. Bhagwati has told me that his client is a willing purchaser; but he is anxious to avoid, as every purchaser is anxious to avoid, purchasing litigation, and he wants the position to be made clear on this originating summons.

    Mr. Bhagwati has drawn my attention to the amended s. 39 of the Transfer of Property Act, 1882, which provides that where a third person has a right to receive maintenance or a provision for advancement or marriage from the profits of immoveable property, and such property is transferred, the right may be enforced against the transferee, if he has notice thereof or if the transfer is gratuitous; but not against a transferee for consideration and without notice of the right, nor against such property in his hands. It will be noticed that the amending section has made a considerable alteration in the law as it stood prior to the amendment. Under the old section the persons who had the right to maintenance were only protected against a transfer of property provided such transfer was with the intention of defeating that right. Such intention is no longer necessary under the section as it stands at present. But there is no doubt that s. 39 of the Transfer of Property Act does not create any new right in favour of any person; and what I have got to determine is, before I consider the application of s. 39, what right to receive maintenance and provision for marriage Hindu females in a joint family have under the ordinary Hindu law. If they have any right, then they are entitled to enforce that right against the transferee if he has notice of their right. There is no doubt that in this case in the female members of this joint family have a right, Mr. Bhagwati's client has undoubtedly notice of such a right.

    It is conceded by Mr. Bhagwati that the joint family property at Lamington Road is being sold for legal necessity. As I have pointed out, there are joint family debts amounting to Rs. 90,000 and the property has to be sold in order to pay those debts. It is also conceded that the property is being sold at a fair market price. It is also by now a well-established principle of Hindu law that a bona fide purchaser is not bound to look to the application of sale-proceeds of a property which is sold for legal necessity. If he is satisfied—and in this case he is satisfied—that the property is being sold for legal necessity, it is no concern of his to see what the karta of the family does with the sale-proceeds when they are realized.

    It is true that the right of a Hindu female to receive maintenance and a provision for marriage is not purely a personal right but is a right to receive maintenance and a provision for marriage out of joint family properties. But it is equally true that a Hindu female has no right in any specific property belonging to the joint family. The right that she has to maintenance or to a provision for marriage expenses is a right which is not crystallised into a charge and, therefore, that right does not attach to any specific property belonging to the joint family. It is also not disputed that the right of a Hindu female to receive maintenance or a provision for marriage expenses can be defeated by joint family properties being sold or alienated for the payment of joint family debts. Debts contracted by a Hindu take precedence over the right of his wife for maintenance and of his daughter for maintenance and marriage expenses. The only difficulty, according to Mr. Bhagwati, that arises in this case is that whereas the debts to be paid for which the property is being sold are only Rs. 90,000, the amount that the karta would receive would be Rs. 1,45,000. The question, therefore, that arises is whether a Hindu female has a right or receive maintenance from a property which has been alienated for legal necessity. One has only to state the question to realize that the answer must be in the negative. Once the property is alienated for legal necessity and goes out of the joint family, the right of the Hindu female belonging to that family to receive maintenance from that property must come to an end. To my mind the fact that the sale-proceeds realized are larger than the debts to be paid is entirely an irrelevant question; once it is conceded that the property is sold for legal necessity and also it is conceded that the purchaser is not bound to look to the application of the sale-proceeds, the fact that the karta realizes more than what is necessary to pay the joint family debts does not give any right to the Hindu female to look to the property which has been alienated for her maintenance or for her marriage expenses. Therefore, in my opinion, neither Panbai nor Dewkabai would have any right of maintenance in the property which is agreed to be sold by defendant No. 1 to the plaintiff nor would Nirmala and Monghibai have any right to look to this property for their maintenance and for their provision for marriage expenses.

    My attention has been drawn to a recent decision of our Court of Appeal reported in Radhabai Gopal v. Gopal Dhondo. In that case a wife was living separately from her husband and she filed a suit against him and obtained a decree. After the decree was passed but before she could apply for the execution of that decree, her husband sold all his property to his natural father. The wife then filed a suit to recover maintenance from her husband (defendant No. 1) and sought to levy charge for her maintenance on lands sold to her husband's natural father (defendant No. 2). The father (defendant No. 2) claimed that he was a bona fide purchaser for value without notice. The Court of Appeal held that the father (defendant No. 2) having purchased the property with notice of the wife's claim was bound to give priority to her claim for maintenance except to the extent of Rs. 9,518 which represented debts of her husband (defendant No. 1) and which were binding on her. I do not think that this decision lays down that where a bona fide purchaser purchases his property for an amount which exceeds the joint family debts the female members of the joint family have any right to be paid out of the property to the extent of the difference between the purchase price and the joint family debts. The decision of Mr. Justice Divatia and Mr. Justice Lokur definitely turns on the very exceptional facts of that case. As I have pointed out, the husband (defendant No. 1) sold all his property to his natural father (defendant No. 2) immediately after a decree was passed in favour of the wife; and Mr. Justice Lokur at p. 989 of his judgment definitely holds that the object of the sales by the son to the father must have been to defeat the claim of the son's wife. Again, at p. 991 the learned Judge says that the father was fully conversant with the affairs of his son, his strained relations with his wife and her right to get her maintenance from him and with all this knowledge he purposely bought from his son his entire immovable property. Then, further on, on the same page the learned Judge says:

    “In order to defeat the plaintiff's (wife's) claim he (the father) purchased nearly twice the property by fraudulently inflating the debts of her husband (the son) The payment of the genuine debts of Rs. 9,518 cannot be questioned and it takes precedence over the plaintiff's right of maintenance. But having notice of that right, defendant No. 2 (father) fraudulently purchased the entire property for a consideration, out of which Rs. 7,982 was not needed for the payment of debts, and that amount cannot have priority over the plaintiff's right of maintenance Hence, taking an equitable view of the case, we hold that 7,982/17,000 or roughly 16/37 part of the property in suit is liable to bear the burden of the plaintiff's maintenance.”

    I might point out that in this case defendant No. 1 in the affidavit he has made on the summons states that there are other joint family properties worth about Rs. 16,000 besides the property he has agreed to sell and which is the matter of this originating summons.

    Parties have agreed that the costs of the originating summons will be costs in the sale.

    Attorneys for the plaintiff: Messrs Madhavji & Co.

    Attorneys for defendant: Messrs Ardesir, Hormusji, Dinshaw & Co.

    A.J.P
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    Comments

    Pranlal Bhagwandas v. Chapsey Ghella
    (Apr 12, 1944)