Judgement

KAPUR, J. - The sole question at issue in this appeal is whether a pre-emptor has a right to recover the purchase price from the original vendor in case he is deprived of the property pre-empted by a person asserting title paramount or by parsons who had a right to challenge the sale by virtue of their rights under Hindu law.

2. To place the controversy in its true setting it is necessary to briefly state the facts. Gobind Sarup, defendant 1, on 15th June 1942, sold some land to Tara Singh defendant 2 for Rs.7, 500 who in his turn sold a part of the property to his wife Sm. Swarn Kaur defendant 3. On 1st July 1943, Dogar Mal the present plaintiff successfully pre-empted the sale on payment of the purchase price, i.e. Rs.7, 500. On a date which is not clear on the record the sons of Gobind Sarup sued for possession of the land sold on the ground that the property belonged to the joint Hindu family of which their father was the manager and the sale was without consideration and necessity. On 5th December 1945, this suit was decreed and the pre-emptor was dispossessed. The present suit was filed on 18th May 1946 by Dogar Mal for recovery of Rs.7500 plus interest thereon making a total of Rs.7694. It may perhaps be necessary at this stage to give the relevant portion of the plaint and the written statement in order to discover what exactly were the points on which the parties were fighting in the Court of the learned Subordinate Judge. In his plaint the plaintiff alleges:

Para 1. "Gobind Sarup defendant 1 was owner of the land measuring 97 kanals 2 marlas "

Para 2.

"Gobind Sarup defendant 1 sold the land entered in para 1 under a registered deed dated 15th June 1942 with proportionate share in irrigation from the well known as Pardwala to Tara Singh defendant 2 for Rs.7,500 and received the consideration money in cash. He made an agreement that he would be liable for return of the sale money if his representatives and heirs filed any suit or in case any sort of dispute was set up. The original sale-deed is attached to the other file and a copy thereof is attached."

3. I need not refer to paras 3,4 and 5 because all that is alleged in these paragraphs is that a suit was brought by the sons of Gobind Sarup who obtained a decree for possession without payment of any consideration money and got possession thereof.

4. In pars 6 it is alleged that

"Rajindar Paul, etc., sons of defendant 1 form a joint Hindu family with defendant 1. Defendant 1 took personal advantage from the said sale, that is, he performed the marriage of his own daughter. He purchased other property also. In this way, he also benefited the joint Hindu family. At any rate, the amount of sale was not spent on any evil deeds. On the contrary it was spent for benefit of the family of defendant 1. Defendant 1 got the suit filed out of enmity. He is liable for return of the sale money according to the condition laid down in the sale-deeds. Besides the aforesaid condition, he is liable for return of the sale money according to law, custom and justice."

5. To this Gobind Sarup defendant 1 replied admitting the correctness of para. 1 and denying any knowledge about the condition laid down in the sale-deed as alleged by the plaintiff. He also pleaded that the conditions entered in the sale-deed were a mere personal covenant to indemnify Tara Singh which the plaintiff cannot enforce in any way "according to law" and for this reason his suit is liable to be dismissed. He has no right to sue nor can his suit proceed according to law.

6. In reply to para. 6 the defendant stated:

"The Hindu family of Rajindar Paul etc., is joint with me defendant 1. The remaining allegations set forth in the said para are wrong. Neither the joint Hindu family derived any advantage from the sale of the land nor I got any suit filed by my sons. The plaintiff has no right to get refund of any amount nor has he locus standi to sue as stated in para 2. As alleged by himself the plaintiff has no right to sue."

7. In a statement before issues, Mr. Daulat Ram, advocate for defendant 1, further clarified his position and stated:

"As there is no privity of contract between the plaintiff and defendant 1 hence the suit is not maintainable. In any case the plaintiff is not entitled to interest by way of damages. The contract to indemnify defendant 1 in the sale-deed, copy of which is Ex.P-1, is personal and cannot enure for the benefit of any transferee from defendant 1 .."

8. Upon this the learned Subordinate Judge framed three issues which are:

1. Whether the plaintiff can enforce the indemnity clause which is contained in the sale-deed copy of which is Ex.P-1 and to which the plaintiff is not a pasty?

2. Whether the plaintiff is entitled to any interest by way of damages and at what rate?

3. Relief.

9. The parties proceeded to trial and only two witnesses were produced of whom P.W.2 is the plaintiff himself and he deposes to nothing more than what is stated in this plaint. During the course of the trial, the case proceeded only on the footing that the only point to be decided was whether under the clause which has been described as an indemnity clause the plaintiff could or could not recover damages. From the perusal of the judgment of the learned Subordinate Judge, it is quite clear that at no stage was the point of there being a breach of the implied covenant of title by the vendor ever raised. The case proceeded solely, as I have said before, on the question whether the pre-emptor could or could not take advantage of the clause of indemnity contained in the deed of sale. The view of the learned Subordinate Judge was that this clause was a personal covenant and could not be taken advantage of by she pre-emptor and upon that footing his suit was dismissed, and against this decree the plaintiff has come up in appeal.

10. Mr. Mahajan has argued in the first instance that these was breach of implied covenant of title by the vendor on the basis of which he could sue for the return of purchase price and that the express covenant of indemnity contained in the deed of sale could enure for his benefit also and that it was not merely a personal covenant.

11. With regard to the first point, learned advocate sought to take advantage of S.55(a), Transfer of Property Act. His contention is that this section is a rule of equity and therefore he has a person who steps into the shoes of the vendee can take advantage of this rule. In support of his contention, he has cited several cases and he says that in spite of the fact that he is a transferee in invitum he is entitled to take advantage of it.

12. As against this, the learned advocate for the defendant respondent has urged that the plaintiff came to Court definitely on the allegation of abreach of the express covenant and he cannot now be allowed to shift his ground and that in his plaint no defect of title was alleged. On the other hand, it was definitely alleged that the defendant Gobind Sarup was the owner of the land and that he had sold the property for the benefit of the family but out of enmity the defendant had this suit brought by his sons. In my opinion, there is a great deal of force in the argument of the respondents learned advocate.

13. Reading the plaint as a whole, my opinion is that the suit is based not on a breach of implied covenant of title but merely on the breach of the express covenant contained in the deed of sale. This is also clear from the fact that even the issue framed only deals with the plaintiffs right to enforce the indemnity clause in the deed of sale. The learned advocate for the respondent also submitted that had the plaintiff based his claim on equitable grounds he would have been able to show that there were no equities in his favour. He has relied on a case reported as M.M.R.M. Chettiar Firm v. S.R.M.S.L. Chettiar Firm, AIR (28) 1941 P.C.47: (195 I.C. 9). There the plaintiff had relied on a contractual charge and had not raised in his pleadings the statutory charge under S.55 (6)(b), Transfer of Property Act, and their Lordships of the Privy Council held that the plea of S.55(6)(b) had rightly been disallowed under the circumstances of that case. The facts of that case are not very much dissimilar to the facts of the present case and relying on this I would hold that it is not open to the plaintiff to take advantage of S.65(2), Transfer of Property Act even if that were held to be rule of equity.

14. The next question to be decided is even if the plaint and the grounds of appeal were to be read in the manner that the learned advocate for the appellant would like us to read is S.55(2) a rule of justice, equity and good conscience, and therefore, enforceable by a person who has taken a transfer in invitum? I say that even if the rule is an equitable one as is claimed by the plaintiff, it is not open to al transferee to take advantage of it.As was held in Dorab Ali V. Abdul Aziz, 5 I.A. 116: (3 Cal. 806 P.C.) the sale by private contract has to be distinguished from a sale in invitum. In my opinion, therefore, equities which are available to a transferee where a privity of estate exists are not open to a person who takes the property by the aid of a Court of law after obtaining a decree or in execution of a decree.

15. The learned advocate for the appellant relied on the following cases: Hari Singh v. Jagat Singh, 120 I.C. 163: (31 P.L.R. 482), is a Lahore judgment which no doubt is a case of preemption, but there the observations of the learned Judge are nothing more than obiter.

16. In Abdul v. Kisan, 136 I.C. 879: (AIR (18) 1931 Nag. 166) which is a judgment of a Nagpur Judicial Commissioner, S.55 (2) was applied in a pre-emption suit. The learned Judicial Commissioner there observed:

"It is urged for the respondents that the Transfer of Property Act does not apply to pre-emption sales on the strength of a passage found at page 21, Vol.1 Gours Law of Property, wherein it is said that the provisions of Transfer of Property Act do not apply to a transfer in invitum as for example transfers in execution of a decree, sales under insolvency, pre-emption, etc. It appears to me that these observations are true in so far as the formalities provided for in the Transfer of Property Act are concerned.

And relying on a judgment of the Allahabad High Court in Hanwant Rai v. Chandi Prasad, 51 ALL. 651: (AIR (16) 1929 ALL. 293) the learned Judge held that the implied covenant of S.55 (2), Transfer of Property Act runs with the land and is therefore available to the pre-emptor. The learned Judge neither considered the preamble to the Transfer of Property Act nor S.2 (d) nor did he discuss whether S.55(2) is or is not a rule of equity which would imply a covenant which runs with the land.

17. Hanuwant Rai v. Chandi Prasad, 51 ALL. 651: (AIR (16) 1929 ALL. 293) also does not in terms discuss how S.55 (2) applies. All it says is that under that section there is always an implied covenant as to title and this covenant runs with the land. As a matter of fact, the real point in that case was whether express contract of the nature given in that case did or did not enure for the benefit of the preemptor, and the point of S.55(2), Transfer of Property Act did not really arise. In Mahomed Sidiq v. Mahomed Null, AIR (17)1930 ALL. 771: (52 ALL. 604) the existence of such a right under S.55 (2), Transfer of Property Act was not disputed.

18. Subbaraya Reddiar V. Rajagopala Reddiar, 38 Mad. 887: (AIR (2) 1915 Mad. 708) was a case under the Limitation Act and there are certain observations which do support the contention of the learned advocate for the appellant, but I do not think that there also the question was discussed from the point of view whether or not this is a rule of equity which would be available to a transferee in invitum.

19. Bapu Sivaji v. Kashiram Hanmantrao, 119 I.C. 659: (AIR (16) 1929 Bom. 361) was a case of a subsequent transferee and therefore would not be relevant.

20. In order to meet the argument that the Transfer of Property Act applies to transfers by act of parties, as is stated in the preamble and in order to meet the bar contained in S.2(d), Transfer of Property Act which says that the transfers by operation of law or by, or in execution of, a decree or order of a Court of competent jurisdiction are not affected by the Act, the learned advocate for the appellant relied on several cases which decided that certain provisions of the Act would be applicable to transfers in invitum in spite of S.2(d). They may be summarized as follows: Chattsumal v. Majidan, (AIR (21) 1934 Lah. 460) and 15 Lah. 849: Akramunnissa v. Mustafa Unnissa, 51 ALL. 595: (AIR (16) 1929 ALL. 238) are cases under S.58, Transfer of Property Act, which is a rule based on the statute of Elizabaeth and had been applied even to the moffusil by their Lordships of the Privy Council in Abdul Hye v. Mir. Mahmed, 11 I.A. 10: (10 Cal. 616 P.C.). Vema Rangiah Chetty v. Vajaravelu Mudaliar, 41 Mad. 370: (AIR (5) 1918 Mad. 557) and Shivaprasad Singh v. Prayagkumari Debee, 61 Cal. 711: (AIR (22) 1935 Cal. 39) are cases which deal with apportionment of rents under S.36, Transfer of Property Act. K.Y.Chettyar firm v. Jamila Bibi, 7 Rang. 734: (AIR (17) 1930 Rang. 132) and Sukhdeo Prasad v. Jamna, 23 ALL. 60: (1900 A.W.N. 199) are cases under S.52, Transfer of Property Act dealing with lis pendens which is a rule applicable independently of S.52. Promotho Nath v. Kali Prasana, 28 Cal. 744, was a case under S.11. In none of these cases was it held that if the sections, which were being applied in those cases, were not rules based merely on justice, equity and good conscience they may be applicable to transfer in invitum.

21. In order to determine this point it is necessary to see whether or not the rule contained in S.55 (2), Transfer of Property Act is or is not a rule of justice, equity and good conscience and implies acovenant which runs with the land or is a technical rule which is available to transactions in provinces where the Transfer of Property Act applies. The section runs as follows:

"The seller shall be deemed to contract with the buyer that the interest which the seller professes to transfer to the buyer subsists and that he has power to transfer the same. The benefit of the contract mentioned in this rule shall be annexed to, and shall go with, the interest of the transferee as such, and may be enforced by every person in whom, that interest is for the whole or any part thereof from time to time vested."

22. If I may say so this rule goes beyond the rule of English Law. This section would apply even though a person had knowledge of the defect in title.

23. In English Law whenever a covenant runs with the land it can be enforced not only by the covenantee and his representatives but by the alienees who claim by privity of estate.

24. Dealing with the sale of land under the covenant of title in Vol.29, of Hailshams Edition of Halsburys Laws of England at page 454 in para. 661 it is stated:

"After the property has been conveyed and the purchaser has accepted the conveyance and taken possession, the vendor becomes absolutely entitled to the purchase money. The purchaser cannot on the ground of adverse claims, recover money which has been paid or detain money unpaid."

25. In Note q on the same page it is stated that in such circumstances the purchaser can neither recover purchase money paid nor detain purchase money unpaid, and reliance is placed on Sugden in Vendors and Purchasers, 14th Edn.

26. As is stated in Dart on Vendor and Purchaser at page 673,

"a vendors conveyances for title are generally limited to the acts of himself, his ancestors, devisors, granters or donors and person claiming by, through, under or in trust for him or them respectively and this is so with the implied statutory covenant."

And later on, it is stated at page 681 that in the case of an executed contract however, where, for example, a property has been conveyed and the purchase money paid, a misrepresentation is no ground for setting aside the transaction, unless such misrepresentation would be only sufficient to afford ground in Equity for rescission of an executory contract, but also is deceitful in contemplation of a Court of law or as Lord Selborne stated, unless there is fraud or misrepresentation amounting to fraud". These passages show quite clearly that the rule enacted in S.55 (2), Transfer of Property Act, goes far beyond the ordinary rule of English law and the fact that a defect of title in spite of being known to a vendee and which is successfully taken advantage of by a person having a title paramount would entitle such vendee to recover the purchase price is more a technical rule than a rule based merely on justice, equity and good conscience.

27. For the reasons stated above, it is in my opinion not open to a person who becomes a transferee in invitum by enforcing a title paramount or pre emptive to take advantage of that section. As I have stated above, I am further of the opinion that the right laid down in S.55(2) Transfer of Property Act, does not run with the land in places where the Transfer of Property Act is not in force and therefore the plaintiff in this case cannot take advantage of it.

28. If the suit is based on the express covenant contained in the sale-deed as indeed it is, the question is whether that covenant is available to the plaintiff and he can sue on the basis of that covenant, The covenant in the sale-deed is in the following words:

"If from to day onwards, I, my representatives or heirs file any sort of suit the same shall be false, and in case there is any dispute over ownership I will be liable for the return of the sale money."

29. The learned Subordinate Judge found that this covenant was a personal covenant which could not enure for the benefit of the pre-emptor. In my opinion, the learned Judge has correctly come to this conclusion. It is possible that had a transaction of sale taken place between the present plaintiff and defendant 1, defendant 1 may not have been prepared to put in this covenant for the advantage of the pre-emptor. In Sandhe Khan v. Bhane, 141 P.R. 1907: (57 P.L.R. 1908) where the clause seems to have been similar and where the Courts below had come to the conclusion that the pre-emptor stood in the shoes of the vendee and that therefore the condition as to the payment of any loss that might accrue to the vendee on account of lack of title applied equally in favour of the pre-emptor, and the question which was to be decided in that case was whether the condition in the original deed of sale in which the vendor mortgages his title in the land solely to the original vendee and he agrees to compensate him if disturbed is one which enures for the benefit of the pre-emptor who succeeds in obtaining a decree for possession by pre-emption, it was held by a Division Bench of the Punjab Chief Court consisting of Robertson and Shah Din, JJ.,

"that a pre-emptor has no right to the advantage of any purely personal covenant by the vendor in favour of the vendee, which is a thing quite separable from the sale of immovable property. The pre-emptor is neither the representative of the vendor, nor the assignee of the vendee, nor has he any right of pre-emption over any personal covenant. He must take over the whole bargain as regards the immovable property in so far as his rights to pre-empt extend, and they do not extend to personal covenants such as that of indemnity included in the original sale-deed in this case."

The correctness of this case was doubted by Shadi Lal, J. (as he then was) in Bishen Singh v. Mt. Bishni, 103 P.R. 1919: (AIR (6) 1919 Lah. 232) at p.276 and those observations, if I may say with respect, were merely obiter.

30. There was a similar covenant in the case reported as Banti v. Mandu, 9 Lah. 659: (AIR (15) 1928 Lah. 357). There the covenant with the vendee was that if the area of land belonging to the vendor sold was found to be less than the area covenanted to be sold then he (the vendor) would make good the deficiency of any such area to the vendee out of other land belonging to him. In essence there is no difference between that covenant and the covenant in the present case, because in the present case the vendor has covenanted to return the purchase price in certain contingencies, whereas in the other case the compensation was put in the form of land. It was held in the case that the covenant to indemnify the vendee either by cash compensation or by delivery of the other property of the vendor was not enforceable at the instance of the pre-emptor. Although it was accepted, as indeed it had to be, that pre-emption was a right of substitution yet this right was limited in certain respects, and this limitation was stated by Jai Lal, J. to be as follows:

"While the pre-emptor may be entitled to enforce the covenants running with the land he is not entitled to the same right with regard to a covenant of indemnity which is deemed to be a personal covenant. Another way to put the same proposition is this. A pre-emptor when instituting a suit to pre-empt the land asserts that the vendor had good title to the land sold by him but that he the pre-emptor, had a prior right to purchase it as compared with the vendee. The very nature of the suit for pre-emption, therefore, implies that there is no doubt as to the title of the vendor in the land described in the sale-deed, while in a suit for compensation, as in this case, a contrary assertion has to be made by the plaintiff, Such a situation is not permitted by law."

Even though I may not go as far as the learned Judge has gone with regard to the covenants running with the land I most respectfully agree with regard to the other observations made by the learned Judge. In my opinion, when a pre-emptor brings a suit for pre-emption he must ex-necessitate accept the title of the vendor and it is really on that basis that he claims his superior right of purchase and indeed it has been held in Mt. Sahodra Bibi v. Bugeshri Singh, 37 ALL. 529: ( AIR (2) 1915 ALL. 154), that a pre-emptor cannot challenge the title of the vendor which be purports to sell. This right as is well-known, is available to a vendee by private treaty. When he brings a suit for damages for defect in title he has to allege the defect in title and thus his pleading is something opposite to what he has to plead to successfully pre-empt a sale.

31. It was held in Natesa Varmian v. Gopalaswamy Mudaliar, 51 Mad. 688: (AIR (15) 1928 Mad. 894) that a covenant for indemnity is not one which runs with the land and is not therefore available for the benefit of an auction- purchaser or his transferee.

32. A covenant for indemnity is not a covenant running with the land and therefore if a transfer is in invitum it does not pass to the transferee. A covenant running with the land is one which concerns the thing demised, and a covenant for title does, in this sense, touch the property demised, while a covenant for indemnity is just so remote as not to touch it. Sheppards Touchstone "On Common Assurances" at page 161 says as follows:

"And these are some of them said to be inherent, i.e., such as are conversant about the land (and knit to the estate in the land;) as that the thing demised shall be quietly enjoyed And some of them are said to be collateral or not so immediately concerned the thing granted as .. to give other security to perform the covenant."

To the same effect are the observations of Parke B. in Doughty v. Bowman, 1848-11 Q.B. 444: (17 L.J.Q.B. 111)

"Again if the covenant declared upon presents an alternative, it is merely a covenant to indemnify. Is then ad idem with a covenant for quiet enjoyment, assuming that that covenant would pass? It is not It must be considered as an undertaking to perform or, in default of performance, to indemnify; and there from it cannot pass with the reversion."

33. I may also observe that the Transfer of Property Act does mention such covenants the benefit of which shall be annexed to and go with the interest of the transferee. There is no such mention of a covenant of indemnity.

34. I am, therefore, of the opinion that the learned Subordinate Judge has come to a correct conclusion and the decree passed by him must be affirmed. In the result, this appeal fails and is dismissed, but taking into consideration the facts of this case I would leave the parties to bear their own costs throughout.

35. HARNAM SINGH, J. - I concur in the order proposed. I have no doubt that the suit instituted by Dogar Mal plaintiff-appellant based as it was on a breach of the express covenant contained in the deed of sale and not upon an implied covenant of title did not attract the application of the principle contained in S.55(2), Transfer of Property Act and that the plaintiff-appellant had no right to the advantage of the personal covenant contained in the sale-deed in favour of the vendee. On the first point, I think that the principle of M.M.R.M. Chettiar Firm v. S.R.M.S.L. Chettiar Firm, AIR (28) 1941 P.C. 47: (195 I.C. 9) is applicable to the facts of this case and on the second point following the rule laid down in Sandhe Khan v. Bhana, 141 P.R. 1907: (57 P.L.R. 1908). I hold that the right of pre-emption does not extend to personal covenants such as that of indemnity included in the original sale-deed, Ex.P.I.

36. Considering, however, that a decision on the other points discussed in the order proposed is not necessary in this case I would reserve my opinion on those points.

Appeal dismissed.