Sayu Mohammed Abdulla v. Neelakantan Krishnan And Others

Varadaraja Iyengar, J.:— This appeal is by the plaintiffs and it arises out of a suit instituted by them as vendees of immovable property against the vendor for damages for fraudulent misrepresentation as to title to the property sold and also for enforcement of a covenant; of indemnity contained in the sale deed.

2. The property in question which is scheduled as item 1 to the plaint is a garden land 78 cents in extent in Edava Pakuthy in Chirayinkil Taluk. Along with other properties it was the subject-matter of a partition suit O.S 705 of 1105 on the file of the Attingal Munsiff's Court, among the members of an Ezhava tarwad, who are represented in this suit as defendants 1 to 34. Defendants 29 to 34 who were the plaintiffs in that suit, claimed the property to be common tarwad property and as such available for partition while the 1st defendant set up the exclusive title of his sakha comprising the defendants 1 to 3. According to the 1st defendant it was an acquisition of Kurumpa Nachi whom he put forward as the sister of the grand-mother of his mother and had devolved in due course of succession on his sakha alone. Pending that suit O.S 705, the first defendant, his mother Chirutha Kali and uncle Raman Sankaran sold the property under Ext. B sale deed dated 4-5-1105 to Navoor Pathummal, deceased and she was accordingly made the 32nd defendant in that suit. The issue as to title which so arose in O.S 705 was disposed of by the trial court in favour of the common tarwad. Vide Ext. I judgment Sated 29-7-1110. The District Judge in appeal held to the contrary and in favour of the 1st defendant's sakha but in second appeal, S.A 176 of 1114 the High Court restored the decision of the Munsiff. Vide Ext. II, judgment dated 8-4-1119. By the final decree in the partition suit, 6-⅜ cents alone of item 1 was allotted towards the share of the vendors under Ext. B and directions were given for the rest of the item from Navoor Pathummal. The plaint averred that Ext. B sale was taken in the name of Navoor Pathummal for and on behalf of the Muslim Marumakkathayam tarwad of the plaintiffs 1 and 2 and defendants 35 to 46 to which she belonged and that she was persuaded to purchase the property under Ext. B by false and fraudulent misrepresentation as to tide made by the vendors.

3. The plaint went on to say that as a result of the ultimate decision in the partition suit, item 1 except to the extent of 6-⅜ cents was in danger at being lost to the plaintiffs tarwad and that the defendants 1 to 34 were therefore bound to answer for all the plaintiffs' loss of the balance of item 11 as estimated on the basis of the total sale price of Rs. 3,900 and the value of improvements of Rs. 1,500 and also charged an such balance.

4. The cause of action for the suit was claimed to arise on 8-4-1109 the date of Ext. II judgment and on 20-9-1122 the date of the plaintiffs knowledge about the initiation by the defendants 29 to 34 of delivery proceedings in execution of the final decree in the partition suit. It may be added that delivery of the balance of item 1 actually took place in or about August 1954 during the pendency of this suit but no amendment of the plaint was sought for on that account. Item 2 was scheduled to the plaint, as having been acquired by the 1st defendant with the help of the sale consideration under Ext. B and liable, in consequence, to answer the plaint claim. The suit was laid on 10-6-1950 corresponding to 27-10-1125.

5. The suit was resisted by the defendants 1, and 29 to 34 by separate written statements. The 1st defendant mainly contended that Ext. B sale deed was executed in the bona fide belief of the vendors as to their title and there was really no fraudulent misrepresentation by them in the matter as alleged. He denied that the warranty of title and the covenant for indemnity as contained in Ext. B furnished any or sufficient cause of action for the plaintiffs' claim for damages, as sued for.

6. He further pleaded that the suit having been filed more than six years after the date of Ext. I judgment of the Munsiff in O.S 705 declaring absence of title in the vendors, was barred by limitation. He also disclaimed the liability of item 2 to any extent. Defendants 29 to 34 besides reiterating the contentions raised by the 1st defendant repudiated the liability of the balance of item 1 in their hands for the damages claimed or at all. They further denied that the plaintiffs had effected any improvements in the property.

7. The court below found that there was no absolute guarantee as to title made by the vendors in Ext. B sale and further that to the extent they had affirmed therein the origin of their title, they were only acting under a bona fide belief. The court below therefore absolved the vendors of any fraudulent misrepresentation in the matter of the execution of Ext. B. It also found that the clause as to indemnity contained in Ext. B did not cover a loss of title or possession as it actually developed under Exts. I and II judgments.

8. In the light of this conclusion the court below found it unnecessary to decide the quantum of damages incurred by the plaintiffs as a result of Ext. B falling through to major extent. The court below nevertheless found that the plaintiffs were entitled to the value of the improvements to the extent of Rs. 1073-9-0 which, it found were effected by them in the balance of item 1 in the hands of the defendants 29 to 34 and granted decree to the plaintiffs as so limited. On the question of limitation, the court upheld the defence contention that the plaintiffs had only six years from the date of Ext. I judgment and the suit was therefore barred. In the result, the court below dismissed the suit and hence this appeal.

9. The first question that arises for consideration therefore is whether the vendors under Ext. B sale were guilty of fraudulent misrepresentation as regards their tide, as alleged. This aspect of fraud was important from the point of view of the law as settled in the erstwhile Travancore State by the leading Full Bench case in Atchuthan Atchuthan v. Itticheria, Soasa, 37 Trav. LR 209 (A). There it was held that as far as Travancore was concerned the rule of caveat emptor was applicable to sales of immovable property when the vendor had acted bona fide and had not been guilty of fraud or misrepresentation and had given no covenant for title in the sale deed.

10. The law was the same as that which existed before the enactment of the Conveyancing Act of 1881 in England and of the Transfer of Property Act in British India. Consequently no absolute or qualified covenant for title could be ipso facto imported into or implied in a sale deed executed in the State. In the absence therefore of a covenant for title, it was only when the seller knew that the representation that he made in the sale deed was false and on the strength of that representation he received consideration for the document that the principle of caveat emptor did not apply. See ‘Ouseph Varkey v. Ouseph Chacko, AIR 1953 Trav. Co. 236 (B). Now, the affirmation contained in Ext. B sale deed was to the effect that Kurumpa Nachi was the acquirer of the property under cadjan sale dated 3-2-1020, the cadjan being registered as No. 1737 of 1019 and that, on her death, the property had devolved on her heirs, the vendors, and they were in possession and had obtained patta accordingly. The vernacular expression was as follows: (Original in Malayalam is omitted—Ed.).

11. The cadjan sale deed referred to above was produced as Ext. XI in O.S 705 but very, serious contest arose as to whether it was at all genuine. The Munsiff in Ext. I judgment discarded it as fabricated, on the grounds that there was no Kurumpa Nachi as ancestress in the 1st defendant's sakha and the cadjan concerned was not even a registered one. In the first appeal before the District Court the 1st defendant's sakha no doubt succeeded, but on what ground, is not clear, because the judgment of that court has not been produced. Anyhow, it got worst ultimately in the second appeal court, though not on the basis that Kurumpa Nachi was fictitious.

12. The assertion therefore in Ext. B that the property belonged to the vendors, thereby implying that they could convey good title thereto, cannot but be false to the knowledge of the vendors. They were in fact foisting the property on an innocent Muslim lady and that after the controversy as to its partibility as common tarwad property had already started. They may not have represented in to many words that they had the fullest rights (original in Malayalam omitted-Ed.) in the property; they may have stoutly asserted their exclusive title during the partition litigation but these, to our mind, can hardly suffice the test as regards their bona fides. Section 18 of the Indian Contract Act defined misrepresentation so as to mean and include:

“The positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true.”

13. The High Court of Calcutta had held:

“that an assertion cannot be said to be ‘warranted’ for the present purpose where it is based upon mere hearsay”. See Mohun Lall v. Sri. Gungaji Cotton Mills Co., 4 Cal WN 369 (C).

14. That is to say, the person making the representation, should entertain the belief as to truth, not merely having some reasonable ground but founded on the best information that is available. This decision may have gone further than what the framers of the Act intended. But there can be no doubt in this case that the representation as to title made by the vendors was made recklessly or with gross negligence, as to come within the more liberal rule laid down by the House of Lords in Derry v. Peek, (1889) 14 AC 337 (D). They cannot then escape the charge of fraud levelled against them. We hold therefore that the plaintiffs have established the case of fraudulent misrepresentation with which they started and are entitled to claim consequential remedy by way of damages.

15. The next question is as to the scope of the covenant of indemnity contained in the sale deed. It provided in effect that the vendors made themselves responsible to the vendee whenever any difficulty occurred in connection with the sale deed or the vendee suffered loss of consideration, or other damages whether on account of the affirmations of the vendors turning out to be untrue or for other cause. Then the extent of liability was fixed as to take in, besides the consideration under the sale deed and the improvements effected by the vendee in the property, all other amounts lost. The vernacular expression ran as follows: (Original in Malayalam omitted—Ed.).

16. The learned Munsiff thought that it was only in case the representations made by the vendors regarding their interest in the property and embodied in the document were found to be not correct or true that the warranty came into operation and that the use of the expression “for other cause” (Original in Malayalam omitted—Ed.) was quite immaterial. And because he found that the affirmations of the vendors in the sale deed were correct and true he concluded that there was no breach of warranty in the case.

17. We have already held that those affirmations were false and fraudulent and afforded sufficient cause of action to the vendee to sustain a suit for damages for loss occasioned by the deceit. Apart however from that, the vendees in our judgment can rely on the covenant of indemnity “for loss incurred for other cause” for recouping their loss of title and possession as a result of the final decree in O.S 705. It was rather a narrow construction adopted by the Munsiff when he said that the inclusion of the expression “for other cause” was of no significance in the contest.

18. We now pass on to the question of limitation. The court below dealt with this question as consequential on its prior finding that Ext. B contained no covenant to indemnify against loss of possession. There was according to it only a breach of covenant of title, if at all and not certainly a breach of covenant for quiet enjoyment and it followed that the plaintiffs had only 6 years from the date of Ext. I judgment; if however, a cause of action on breach of an express covenant for quiet enjoyment could also be relied upon, the period of limitation would have commenced to run from the date of actual dispossession. See Gulabchand v. Suryajirao, AIR 1950 Bom. 401 (E). Supporting this view of the lower Court, learned Counsel for the respondents referred first to the classification adopted by Seshagiri Iyer, J., in Subbaraya v. Rajogopala, ILR 38 Mad 887 : (AIR 1915 Mad 708) (F), of the cases regarding the date in which the cause of action arose in suits under Article 116 of the Limitation Act, viz.,

“(1) where from the inception the vendor has no title to convey and the vendee was not put in possession of the property,

(2) where the sale is only voidable on the objection of the third parties and possession is taken by the vendee under the voidable sale, and

(3) where though the title is known to be imperfect the contract is in part carried out by giving possession of the property to the vendee”,

and said this case came within the second of the categories above mentioned. Here though normally the date of dispossession of the vendee at the instance of the third party having superior title will be the starting point because then alone the damnification occurred, still because the title of the third party was put forward and agitated in a court of law and the vendee was also a party to the suit, the date of the decree of the first court which upholds the title of the third party would be the starting point.

19. The date of the appellate court's decree confirming that of the trial court did not then count. See Chuni Lal v. Hari Chand, AIR 1934 Lah. 305 (2) (G), where the vendee of a house sued the vendor for refund of the purchase price on the ground that the title of the vendor had been declared defective by a judicial decision and affirmed in appeal to the High Court, the limitation for the suit was held to commence from the decision of the High Court affirming the decision of the trial court.

20. On the other side learned counsel for the plaintiffs-appellants suggested that appropriate category so far as this case was concerned, for purpose of Article 116, was the third rather than the second. So much so limitation will start only from the date on which the vendee is dispossessed by the rightful owner and he referred to the decisions in Kashi Rao v. Zabu, AIR 1932 Nag 5 (FB) (H) and Saraswatibai v. Madhukar, AIR 1950 Nag. 229 (I). But he said that in view to the express covenant of indemnity which according to him was contained in Ext. B sale, the appropriate Article for the case was Article 116, read with Article 83.

21. In our judgment it is unnecessary to decide what among the three categories will be appropriate if Article 116 of the Limitation Act alone applies. For as contended by learned counsel for the appellants, the Article applicable is Article 116 read with Article 83 in the light of the express covenant of indemnity, which we have found Ext. B contained and so viewed, limitation will run only from the date of disturbance. It is enough for us to refer to the recent decision of this Court in Kunhi Pillai Thampatty v. Kunhikavu Thampan, 1956 Ker LT 302 (J), where it was held after full discussion:

“In a suit for damages for breach of contract of indemnity, express or implied, in writing registered, the period of limitation is governed by Article 83 of the Limitation Act read with Article 116, or in other words, the plaintiff will have a period of six years from the date when he is actually damnified and not merely three years from that date.”

22. The plaintiffs here were dispossessed in execution of the decree in O.S 705 only after the filing of the suit. It would therefore appear that limitation has not commenced to run even at the date of suit. The only question then would be whether it is open to the plaintiffs to get the benefit of a cause of action which arose subsequent to the institution of the suit. The plaintiffs no doubt had not applied for amendment of the suit on this account. But that in our judgment was only a technical omission.

23. For, it is always competent to the court to take, the happening of subsequent events into account in passing appropriate orders in order to do justice to the parties. It is a principle which courts have often accepted for the purpose of saving expense and avoiding circuity of action. See Balakrishna Kammath v. Ganesha Pai, 1954 Ker LT 87 : (AIR 1954 Trav-Co. 209) (FB) (K), where the observations of Mukerjee, J., are extracted:

“Ordinarily the decree in a suit should accord with the rights of the parties as they stand at the date of its institution. But this principle is not of universal application, and in a long series of decisions which will be found reviewed in the case of Rai Charan Mandal v. Biswa Nath Mandal, 20 Cal LJ 107 : (AIR 1915 Cal 103) (L), the doctrine has been recognised that there are cases where it is incumbent upon a Court of Justice to take notice of events which have happened since the institution of the suit and to mould its decree according to the circumstances as they stand at the time the decree is made. This principle will be applied where it is shown that the original relief claimed has, by reason of the subsequent change of circumstances, become inappropriate, or that it is necessary to have the decision of the Court on the altered circumstances to order to shorten litigation or to do complete justice between the parties.”

24. We therefore hold that the suit viewed as one for damages in enforcement of the contract of indemnity contained in the sale deed is not in any way barred.

25. As the court below did not fix the quantum of damages in view to its conclusion that the suit was not maintainable and also was barred we have necessarily to send the case back to the court below for disposing of the rest of the issues. We therefore remit the case back to the court below for disposal on the merits in due course and in the light of the observations contained above. In the circumstances, the plaintiffs will get one-half their costs incurred so far from the 1st defendant and his sakha properties and suffer the rest. The direction of the lower court that the plaintiffs will pay the costs of defendants 29 to 33 will stand. But those defendants will suffer their costs of this court.

26. Taking up lastly the objection memorandum filed on behalf of the defendants 29 to 34, it attacks the grant of decree in favour of the plaintiffs for improvement value to the extent of Rs. 1073-9-0 and charged on the balance of plaint item 1 excluding 6-⅜ cents in plaintiffs' possession. Mr. M.P Ramakrishna Pillai, learned counsel appearing for these defendants-respondents, referred to the commissioner's report, Ext. III taken in O.S 705 on 18-7-1106 which made it clear that no appreciable improvements had been effected upon the property. That commissioner's report was taken just about a year after the execution of Ext. B. But apart altogether from the question as to whether any improvements were really effected or otherwise, we find that the plaintiffs gave up during the course of the final arguments in the court below, all reliefs by way of charge or otherwise against the plaint property other than the said 6-⅜ cents. The decretal portion granting improvement value as against the plaint property excepting 6 and odd cents in plaintiffs' possession must therefore be an obvious mistake. We direct that this portion will be deleted from the decree to be prepared by this court. The memorandum of objections will thus stand allowed but without costs except to the extent of the court-fees levied thereon which will be refunded to the objector's counsel.

G.M.J

27. Order accordingly.