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  • provision of S. 6(a) of the Transfer of Property Act,
  • S. 6(a) of the Transfer of Property Act
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  • provision of S. 6(a) of the Transfer of Property Act,
  • S. 6(a) of the Transfer of Property Act
Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

On 25 June 1924 the respondents (defendants in the original suit) borrowed Rs. 550 from the appellants (plaintiffs) and executed a hypothecation debt bond hypothecating the income to be derived from scavenging work in 109 houses described in Schedule A to the plaint. The bond provided repayment within three years with interest at 2% per mensem, and monthly instalments of Rs. 17. In the event of default, the bond contained a covenant allowing the plaintiffs to get the sweeping work done in the houses and to give credit to that income; it also contained a covenant that the respondents (or their heirs) would be liable to criminal prosecution for hindering such work after discharge of the debt.

The appellants allege respondents defaulted and, after permitting the appellants to do scavenging work for 36 of the 109 houses for some time, in or about December 1931 the respondents obstructed the appellants, asserted the debt had been discharged, and themselves began doing the scavenging work. The appellants sued for a permanent injunction restraining the respondents (and their agents/servants) from doing or causing to be done the scavenging work in any of the 109 houses and for a direction to put the appellants in possession of the scavenging right. The plaint averred that the deed mortgaged a scavenging right which, under a custom among the scavenger community in Madras, was res commercium and capable of being mortgaged or sold.

The respondents denied the right to an injunction and contended the debt had been discharged; however, the written statement admitted the paragraph alleging the custom. The parties referred matters to arbitration; the arbitrator awarded Rs. 598-5-0 to the appellants on 5 January 1934. A decree based on that award was passed but set aside on revision by Burn, J., who held the arbitrator exceeded jurisdiction by granting money relief when the plaint sought only an injunction. The suit was remanded. On remand the City Civil Judge declined to grant the injunction on two grounds: (1) damages were an adequate remedy; and (2) there is no such proprietary right to scavenge and recognition of such an exclusive right would be repugnant to law. The appellants appealed against that decision.

Legal Issues Presented

  1. Whether the hypothecation (mortgage) of future income from scavenging work (an expectancy or possibility) is a valid transfer under Indian law, particularly in light of S. 6(a) of the Transfer of Property Act.
  2. Whether the claimed "right to scavenge" in the 109 houses is a legally enforceable proprietary right (a right to exclude others) that can be the subject of an injunction.
  3. Whether a customary right asserted by the appellants can support an exclusive scavenging right enforceable by injunction.
  4. Whether damages are an adequate remedy such that injunction relief should be refused even if some legal right were established.

Arguments of the Parties

Appellants' Arguments

  • The appellants contended that the learned Judge's two grounds for refusing the injunction were unsound.
  • They argued that, at least on the basis of the custom alleged in the plaint (admitted by the written statement), the right to scavenge was capable of being mortgaged and therefore should be enforced in their favour.

Respondents' Arguments

  • The respondents contended that the debt had been discharged and denied the right to an injunction claimed by the plaintiffs.
  • Implicit in the City Civil Judge's decision (and advanced in defence) was the contention that damages are an adequate remedy and that there exists no proprietary right to scavenge which a court can enforce by injunction.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Holroyd v. Marshall English equity treats assignments of future property (possibilities/expectancies) as contracts binding on conscience and binding when the subject matter comes into existence; Lord Westbury indicated this assumes cases where equity would decree specific performance. The court noted Lord Westbury's test must be applied insofar as the plaintiffs' claim seeks specific performance of a covenant; however, the court held English principles on expectancies cannot override S. 6(a) of the Transfer of Property Act in India.
Tailby v. Official Receiver Lord Macnaghten's point that doctrines relating to specific performance do not provide a universal test for equitable assignments of future property. The court relied on this distinction to explain limits of applying English equitable doctrines to assignments of future property; nonetheless the statutory provision in India (S.6(a)) governs transfers of mere possibilities.
Jagannadha Raju v. Sri Rajah Prasada Rao Authority holding that by virtue of S.6(a) of the Transfer of Property Act the English decisions on transfer of expectancies have no application to transfers of certain expectancies (example: reversion expectant on death of a Hindu widow). The court cited this decision (and the Privy Council's approval) to support the proposition that S.6(a) prohibits transfer of expectancies under Indian law, thereby rendering the hypothecation invalid.
Annada Mohan Roy v. Gour Mohan Mullick Referenced with Jagannadha Raju as part of the body of authority on non-transferability of certain expectancies under S.6(a). Used to reinforce that the English authorities on transferable expectancies do not apply in India where S.6(a) is applicable.
Ramakristna v. Ranga Authority that a court cannot grant an injunction compelling an owner to employ a particular person; if owners refuse to employ, no cause of action for compulsion arises. The court relied on this principle to hold that the plaintiffs' claimed right is not based on any definite contractual obligation on the owners and so cannot be enforced by injunctive relief compelling employment.
Raja Valad Shivapa v. Krishna Bhat Similar authority to Ramakristna v. Ranga on the limits of injunction to compel employment of a particular person. Applied to show the claimed right could not found an injunction compelling owners to employ the respondents or to sustain an exclusive right to scavenge.
Saripaka China Mahadeva Vayulu v. Muthura Suryaprakasam Decision where the court declined to recognize a claim to a hereditary professional/service right (purohit service) exclusive of others; stated that the right to exclude others from following a legitimate calling cannot be countenanced. The court cited the observations to support the proposition that individual property rights cannot arise in common callings and that exclusionary claims to such callings are not recognized.
Gourmoni Debi v. Chairman of Panihati Municipality Observation that voluntary consent of a community to employ someone or their predecessors does not confer an exclusive right; continued custom cannot create an enforceable exclusive monopoly (citing Salisbury v. Gladstone and Darcy v. Allen). The court applied these observations to conclude that the asserted custom, if enforced, would create an oppressive monopoly and is prima facie unreasonable and unenforceable.
Salisbury v. Gladstone Cited in Gourmoni Debi for the proposition that voluntary employment over time does not confer exclusive legal rights. Used indirectly (via Gourmoni Debi) to argue that the custom cannot create exclusive enforceable rights.
Darcy v. Allen Classic authority on the unlawfulness and oppressiveness of monopolies (cited in Gourmoni Debi). Invoked as part of the reasoning that recognizing the custom would create an oppressive monopoly and therefore be unreasonable.
Sadagopachariar v. A. Rama Rao Observation (Lord Macnaghten) that a custom reasonable at one time may become unreasonable at another. Applied by the court to hold that the asserted custom could not be reasonable in the present urban conditions of Madras and therefore cannot be sustained.
S. 6(a) of the Transfer of Property Act Statutory rule that "the chance of an heir apparent ... or any other mere possibility of a like nature, cannot be transferred." The court treated S.6(a) as decisive: the hypothecation of future scavenging income is an expectancy/possibility within S.6(a) and therefore the hypothecation is invalid and cannot ground relief.

Court's Reasoning and Analysis

The court proceeded in a layered analysis:

  1. Identification of subject-matter: The court first characterised what was hypothecated — the future income from scavenging work — and concluded this was a mortgage of non-existent property, i.e., an expectancy or possibility (a transfer of property to come into existence).
  2. Comparison with English law: The court acknowledged English authorities (Holroyd v. Marshall; Tailby v. Official Receiver) that permit equitable assignment of future property by treating such assignments as enforceable contracts in equity, particularly where specific performance is appropriate.
  3. Application of Indian statutory rule: The court held that under Indian law the situation is governed by S.6(a) of the Transfer of Property Act, which expressly prohibits transfer of mere possibilities or expectancies. It relied on domestic and Privy Council authority (e.g., Jagannadha Raju, Annada Mohan Roy) that English decisions on such expectancies do not apply where S.6(a) is engaged.
  4. Conclusion on hypothecation: Because the hypothecation in this case concerned future scavenging income — construed as an expectancy within S.6(a) — the hypothecation was invalid and could not form the basis of enforceable relief.
  5. Consideration of alleged "right to scavenge": The court addressed the alternative contention that what was mortgaged was a present proprietary "right to scavenge" (i.e., a right in the defendants to do scavenging work in the 109 houses and to exclude others). It observed there was no definite contract with the house-owners obliging them to employ the respondents; hence no cause of action could be founded against owners who refused to employ them and no injunction could compel employment (citing Ramakristna v. Ranga and Raja Valad Shivapa v. Krishna Bhat).
  6. Public policy and legitimate calling: The court expounded the general principle that the law will not permit restraints preventing a person from pursuing a legitimate calling unless falling within recognised exceptions (usually in trade/business in public interest). The court held scavenging was not a trade or skilled profession that would justify such an exception.
  7. Reliance on similar authorities: The court invoked Saripaka China Mahadeva Vayulu to emphasise that courts will not recognize individual property in a common calling and that exclusionary claims to such callings are not countenanced.
  8. Evaluation of custom: The court considered the plaintiffs' reliance on custom. It stated the settled principle that a custom contrary to public good and beneficial only to particular individuals is prima facie unreasonable and unenforceable. Relying on Gourmoni Debi (and authorities discussed therein), the court concluded the asserted custom would amount to an oppressive monopoly; further, a custom reasonable at an earlier time may become unreasonable later (Sadagopachariar), particularly in modern urban Madras.
  9. Final synthesis: Given (a) the statutory bar on transferring expectancies, (b) the lack of a contractual right enforceable against property owners, and (c) the unreasonableness and monopolistic effect of the custom, the court held injunctive relief unsustainable. The court agreed with the City Civil Judge that, even assuming some legal right existed, damages would be adequate and available to the plaintiffs.

Holding and Implications

HOLDING: The appeal is dismissed and the learned Judge's refusal to grant the injunction is affirmed. The plaintiffs are non-suited and the appeal is dismissed with costs.

Implications:

  • The hypothecation of future scavenging income was held to be an expectancy/possibility within the meaning of S.6(a) of the Transfer of Property Act and therefore invalid — it cannot ground equitable relief in this case.
  • The claimed exclusive "right to scavenge" was held not to be a legally enforceable proprietary right capable of sustaining an injunction because it was not appurtenant to any grant or office, not founded on enforceable contracts with property owners, and would amount to an unreasonable and oppressive monopoly if recognised as a customually exclusive right.
  • The court held that damages would be an adequate remedy even if some legal right could be shown; consequently injunctive relief was inappropriate.
  • Direct effect on the parties: the plaintiffs were non-suited and the respondents prevailed; the appeal was dismissed with costs.
  • No broader, novel legal principle was announced beyond the application of established statutory and case authorities to these facts; the decision applies existing principles (statutory prohibition under S.6(a), limits on enforcement of exclusive rights in common callings, and the public-policy scrutiny of customs) to deny the injunctive relief sought.

Appeal dismissed.

    Palapatti Raghudu And Another v. Nallagadda Erraiya And Another S

    This appeal raises an interesting question of law. The respondents, the defendants in the action out of which this appeal arises, borrowed on the 25th June 1924 from the appellants, the plaintiffs in the action, a sum of Rs. 550 and executed a bond styled a hypothecation debt bond in their (plaintiffs) favour hypothecating the income derived from the houses numbering 109 described in Schedule A to the plaint in respect of the work done by them. The parties belong to the scavenger caste and earn their livelihood by doing scavenging work. It is stipulated in the said bond that the amount borrowed should be discharged within three years with interest at two per cent per mensem. The respondents undertook to discharge the mortgage by payment of monthly instalments of Rs. 17 and in default of such payment covenanted as follows:

    “In default of payment in each month in that manner, you shall get the sweeping work done in the undermentioned houses by men through you from the month succeeding to that of default, irrespective of us, and give credit to that income. Immediately after the discharge of the debt we shall get this hypothecation deed cancelled and take back the same. If you get the work done through your men in that manner, and if, then, we or our heirs cause hindrance by preventing the doing of the undermentioned sweeping work or by saying that income should not be given, we shall be liable to criminal prosecution for breach of trust against you.”

    The case of the appellants is that the respondents committed default in making such payments and when pressed, allowed the appellants to do scavenging work for 36 out of the 109 houses for some time and in or about December 1931, alleging that the debt had been discharged, obstructed them from doing scavenging work in the said houses and began to do it themselves and hence the appellants had to institute the present action praying for a permanent injunction restraining the respondents from obstructing them by themselves doing or causing to be done the scavenging work in the 109 houses referred to in Schedule A to the plaint and also further restraining the respondents, their agents and servants from doing the scavenging work in all or any of the said 109 houses and directing them to put the appellants in possession of the scavenging right in the 109 houses. The basis of their claim is stated in paragraph 3 of the plaint wherein it is alleged that by virtue of the said deed of mortgage the respondents “mortgaged the scavenging right belonging to them in the said houses which scavenging rights are res commercium capable of being mortgaged, sold etc., amongst the scavenger community according to the custom obtaining amongst them in Madras.” It is alleged in the plaint that a large sum was due to the appellants and the respondents committed default in payment and they were entitled to possession of their scavenging rights and to a permanent injunction as prayed for. The defence is that the debt had been discharged and a denial of the right to an injunction claimed in the plaint. But the written statement admitted the allegations in paragraph 3 of the plaint which relate to the custom alleged therein. Subsequent to the filing of the written statement there was a reference to arbitration of Mr. P.R Sundaresan, an Advocate of this Court on the matters in dispute between the parties. The arbitrator delivered his award on the 5th January 1934 directing the respondents to pay Rs. 598-5-0 to the appellants. A decree was passed in accordance with the said award but on revision it was set aside by Burn, J., on the ground that the arbitrator exceeded his jurisdiction in granting a decree for money when the plaintiffs did not ask for that relief and when the only relief prayed for in the plaint was an injunction. He therefore remanded the suit for a fresh disposal and on remand the learned City Civil Judge declined to grant the injunction on two grounds: namely, (1) that damages are an adequate remedy and (2) that there is no such thing as a right to scavenge, and the recognition of any such right in any individual to the exclusion of others would be repugnant to law. It is against this decision that this appeal has been preferred.

    It is strongly contended before me that both the grounds on which the learned Judge rested his decision are unsound and that the right claimed should, at any rate, be upheld on the ground of the custom set up by the plaintiffs and not denied by the defendants. Before dealing with the tenability of this contention it is necessary to examine the basis of the plaintiffs' claim. What was sought to be hypothecated in favour of the appellants was the future income to be derived from the work of scavenging. It was thus a mortgage of non-existing property and a transfer of property to come in future. Such a property may no doubt be mortgaged but it must be property which under the law, if existing, could be the subject of a transfer. Under the English law, property of every description, even possibilities and expectancies, is assignable for value. (Vide 13 A.C 523 per Lord Macnaghten). The principle upon which such alienations are upheld under the English Law is that though they are void under the common law, under equity they are treated as contracts binding on the conscience of the assignor and binding on the subject matter of the contract when it came into existence, if it was of such a nature and so described in the deed of assignment so as to be capable of being ascertained and identified. In Holroyd v. Marshall(1) Lord Westbury indicated that the said principle assumed that the supposed contract was one of that class of which a Court of Equity would decree specific performance. In Tailby v. Official Receiver(2) Lord Macnaghten points out that the doctrines relating to the specific performance do not afford a test or measure of the rights created and Lord Westbury did not intend to lay down as a rule to guide or perplex the Court that considerations applicable to the case of specific performance are to be applied to every case of equitable assignment dealing with future property. In the present case however, the test laid down by Lord Westbury will have to be applied as the substance of the plaintiff's claim is to enforce specific performance of the covenant, that is, of the negative bargain entered into by the respondents in favour of the appellants. But the main question in this case is, is the property capable of transfer under the Indian Law? Under the Indian Statute law what in English law would be called a transfer of possibility or expectancy is prohibited. S. 6(a) of the Transfer of Property Act is absolutely clear on the matter. It states that “the chance of an heir apparent succeeding to an estate, the chance of a relation obtaining a legacy on the death of a kinsman, or any other mere possibility of a like nature, cannot be transferred.” By virtue of this provision our High Court and also the Privy Council prohibited the transfer of a reversion expectant on the death of a Hindu widow. [Vide Jagannadha Raju v. Sri Rajah Prasada Rao and Annada Mohan Roy v. Gour Mohan Mullick. In fact the Privy Council approved the dicta in Jagannadha Raju v. Sri Rajah Prasada Rao of both the learned Judges Sir John Wallis C.J, and Tyabji, J. that in view of the express provision of S. 6(a) of the Transfer of Property Act, the English decisions bearing on the matter would have no application. Therefore the principle of English law as laid down in Holroyd v. Marshall(3) or Tailby v. Official Receiver(4) cannot be applied in India to a case of transfer of expectancy or possibility though it has been applied to other cases of transfers of property to come into existence in future. In my opinion the mortgage of the income derivable in future from the scavenging work to be done by the respondents will be an expectancy or a possibility within the meaning of S. 6(a). The hypothecation in this case of the said income will therefore be invalid and no right to relief can be founded thereon.

    But it is contended that what was mortgaged was the right to scavenge and what was sought was therefore possession of such a right and not a mere possibility. The right that is claimed is a right in the defendants to do scavenging work in the 109 houses and to exclude others from doing so. The right is not based on any definite contract with the owners of the said houses by which they were bound to employ the respondents for any particular period. If the owners refused to employ them, no cause of action can be founded thereon and no injunction can be granted compelling them to employ these people: Vide Ramakristna v. Ranga(5) and Raja Valad Shivapa v. Krishna Bhat(6). The right that is claimed is therefore in substance a right to prevent a man from pursuing his legitimate calling. The general principle is that “the law will not permit anyone to restrain a person from doing what the public welfare and his own interest requires that he should do”, and any restriction which is sought to be imposed on a man pursuing his legitimate calling will always be considered to be illegal unless it is brought within any of the recognised exceptions known to law. Such exceptions have been recognised in the interests of trade or business and that too in the interest of the general public. It is not pretended that doing scavenging work is a trade or business or a profession involving skill. In Saripaka China Mahadeva Vayulu v. Muthura Suryaprakasam(7) Sadasiva Ayyar and Seshagiri Ayyar, JJ. declined to recognise a claim for the recovery of moneys said to be due to the plaintiffs from the defendant under a lease of an alleged right to do purohitam service in certain villages. The basis of the plaintiffs' claim in that case was that they were entitled to the hereditary purohitship of the said villages. In the course of the judgment Sadasiva Ayyar, J., observed as follows:

    “The right to exclude other people from following a legitimate calling or profession cannot be countenanced by Courts. There can be no individual property in any such common calling, though, of course, the following of that calling by the plaintiff as an individual can give rise to rights in him as against those who have entered into contracts and obtained benefits from the exercise of that calling by the plaintiff.”

    The right that is claimed in this case is not appurtenant to any office, a grant whereof was made by the Crown with a right of claim to do service to the exclusion of others and levy a fee for such service. Therefore, as the right that is claimed is one which the law cannot recognise, no injunction could be given in favour of plaintiffs.

    Lastly, it is contended that the claim of the plaintiffs is based on custom and therefore it is sustainable. It is a well settled principle that any custom which is contrary to public good and operates to the prejudice of the many and beneficial only to a particular individual is prima facie unreasonable and cannot be enforced by any Court of law. In dealing with the claim of a plaintiff, who was a Brahmin, to officiate as a priest at cremation ceremonies to the exclusion of other Brahmins of the class to which she belonged on the ground of customary right, Mukerjee, J., in Gourmoni Debi v. Chairman of Panihati Municipality, made the following observations:

    “The voluntary consent of the people to the employment of the plaintiff or her predecessors as cremation priests, cannot confer upon them any exclusive right, and the continuance of this state of things, even for generations, cannot confer upon her a legally enforceable right: Salisbury v. Gladstone. If we were to recognise the alleged custom as reasonable, we would have to uphold what must, in the end, turn out to be an oppressive monopoly, and the very first reason assigned in the celebrated case of monopolies Darcy v. Allen would be conclusive upon the matter, namely, that if the monopoly was sustained, the person in whose favour that monopoly was created, might charge whatever price he pleased.”

    I would respectfully apply those observations to the facts of this case and hold that the custom, if allowed, would turn out to be an oppressive monopoly and should not be allowed. Whatever may have been the origin of this custom at its commencement, having regard to the modern conditions, such a custom can never be sustainable in a Court of law. As observed by Lord Macnaghten in the course of the argument in Sadagopachariar v. A. Rama Rao the custom to claim a monopoly to pursue an occupation which is reasonable at one time may become unreasonable at another time. To my mind, the custom of the description that is now asserted could not have been reasonable even at the commencement and much less can it be held to be so in a city like Madras in the present day.

    I therefore hold that the relief of injunction is clearly unsustainable and the learned Judge was right in declining to grant the injunction. I may also observe that I fully agree with the learned Judge that damages would be an adequate remedy assuming that there was a legal enforceable right in favour of the plaintiffs; and the plaintiffs could have, if they liked, sued for recovery of the money which they deliberately omitted to do. The decision of the learned Judge in non-suiting the plaintiffs is correct and this appeal is accordingly dismissed with costs.

    Appeal dismissed.

    N.R.R

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    Comments

    Palapatti Raghudu And Another v. Nallagadda Erraiya And Another S
    (Apr 22, 1938)