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  • Section 55(2) of the Transfer Property Act.7.
  • Section 55(2) of the Transfer Property Act,
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  • Section 55(2) of the Transfer Property Act.7.
  • Section 55(2) of the Transfer Property Act,
Smart Summary

Factual and Procedural Background

This appeal arises from a suit brought by the plaintiff-respondent seeking damages for breach of a covenant alleged to be express and, alternatively, contained in a sale-deed dated 22nd March 1912. The sale-deed, executed by the defendant-appellant in favor of the plaintiff-respondent, conveyed certain house property for a sum of Rs. 2,000. The trial court dismissed the plaintiff's suit, but the lower appellate court reversed that decision and decreed the plaintiff's claim for a smaller amount than originally claimed.

The sale-deed recited that the vendor had placed the vendee in possession of the entire property, which included property previously subject to a deed of gift in favor of a third party, Jwala Prasad, later annulled by the vendor. The deed contained a clause providing that if the property or any part thereof went out of the vendee's possession due to transfer or incumbrance by the vendee or any claimant under law, custom, or Shastra, the vendee had the right to recover the consideration money along with damages and costs from the property or other assets of the vendor.

Both parties instituted proceedings regarding possession of the disputed property but were unsuccessful, leading to the present suit for recovery of a proportionate amount of the consideration paid. The defendant's defense was that no warranty of title was given and that the plaintiff was not entitled to recover any part of the consideration. The trial court dismissed the suit, but the appellate court granted relief based on an implied warranty of title under Section 55(2) of the Transfer of Property Act.

Legal Issues Presented

  1. Whether the express covenant in the sale-deed excludes the implied warranty of title under Section 55(2) of the Transfer of Property Act.
  2. Whether the plaintiff-respondent is limited to rescinding the sale transaction and recovering the consideration only upon restoration of the property, or if damages can be claimed for breach of the implied warranty of title.

Arguments of the Parties

Defendant-Appellant's Arguments

  • The implied covenant of title under Section 55(2) of the Transfer of Property Act is excluded by the express covenant contained in the sale-deed.
  • The plaintiff-respondent must rescind the sale transaction as provided in the covenant, restoring to the vendor the portion of the property in possession, and then claim refund of the consideration.
  • The express covenant entitles the vendee only to recover the whole consideration through sale of the property, implying annulment of the sale, and thus precludes claiming damages under the implied warranty of title.

Plaintiff-Respondent's Position (as interpreted by the Court)

  • The covenant in the sale-deed is an enabling clause that benefits the vendee and confers rights in addition to those provided by law.
  • There is nothing in the sale-deed excluding the implied warranty of title under Section 55(2) of the Transfer of Property Act.
  • The plaintiff is entitled to damages for breach of the implied warranty of title and is not limited to rescission of the contract.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court analyzed the express covenant in the sale-deed alongside the implied warranty of title under Section 55(2) of the Transfer of Property Act. The court found that the express covenant was intended as an additional remedy for the vendee and did not exclude the implied warranty of title. The covenant allowed the vendee to recover the consideration money and damages if dispossessed, but this did not limit the plaintiff's remedies exclusively to rescission of the contract. The court held that the plaintiff was entitled to damages for breach of the implied warranty of title, as recognized by the lower appellate court, which awarded a proportionate part of the price corresponding to the value of the unrecovered property. The court noted no challenge to the amount of damages awarded and dismissed the appeal accordingly.

Holding and Implications

Appeal dismissed.

The court upheld the lower appellate court's decision that the plaintiff-respondent is entitled to damages for breach of the implied warranty of title under Section 55(2) of the Transfer of Property Act, alongside the express covenant. The direct effect is that the plaintiff may recover a proportionate part of the consideration paid for the property not recoverable in possession. No new precedent was established beyond affirming the coexistence of express and implied remedies in such a sale-deed context.

    Mt. Nanhi v. Mt. Ketki

    Niamatullah, J.:— This is an appeal by the defendant and arises out of a suit brought by the plaintiff-respondent for damages for breach of a covenant, alleged to be express and, in the alternative, said to be in a sale-deed dated 22nd March 1912, executed by the defendant appellant in favour of the plaintiff-respondent for a sum of Rs. 2,000 conveying certain house property. The Court of first instance dismissed the suit. The lower appellate Court has decreed the plaintiffs' claim to a smaller amount than that claimed by the plaintiff.

    2. The deed recites that the vendor has placed the vendee in possession of the entirs vended property and that part of the property was the subject of a deed of gift in favour of one Jwala Prasad, but that the vendor subsequently cancelled it by executing a deed of annulment.

    3. The implication of these recitals is that the vendor is the absolute owner of the property in spite of the infructuous deed of gift referred to. One of the clauses of the sale-deed provided that

    “if, God forbid, the whole of the property transferred, or any portion thereof, goes out of the possession of the vendee on account of any transfer or incumbrance, etc., by her, or by her ancestors, or by any person who claims to be the owner of the property, on the basis of any law, custom or Shastra, the vendee shall have a right to recover his consideration money along with damages and costs from the property transferred or from other moveable or immovable property of hers.”

    4. The vendee was resisted in taking possession of the property to which the deed of gift and the deed of annulment, already referred to, related. The vendee and the vendor both instituted proceedings for recovery of the property covered by them; but they were unsuccessful. Thereupon, the plaintiff-respondent brought the present suit for recovery of a proportionate amount of the consideration paid under the sale-deed.

    5. The defence was that no warranty of title was given by the vendor to the vendee and that the plaintiff was not entitle to recover a proportionate part of the consideration paid under the sale-deed. There were other defences also, which it is not necessary to mention for the purposes of this appeal.

    6. The Court of first instance dismissed the plaintiff's claim, as already stated, holding that the covenant contained in the sale-deed did not entitle the plaintiff to a proportionate amount of the consideration. The lower appellate Court has taken a contrary view on that question and has held, in-addition, that there is an implied warranty of title under Section 55(2) of the Transfer Property Act.

    7. The learned counsel for the defendant-appellant argues, (1) that the implied covenant of title in terms of Section 55(2) of the Transfer Property Act, is excluded by the express covenant, contained in the deed and relied on by the plaintiff, and (2) that the plaintiff-respondent is bound to have the sale transaction rescinded, as provided in the covenant. According to this contention the only remedy which the plaintiff-respondent has under the covenant referred to is to restore to the vendor so much of the vended property as came into his possession under the sale-deed and then claim refund of the consideration of the sale-deed. The express covenant undoubtedly entitles the vendee, on being dispossessed from part of the property sold, to recover the whole of the consideration, and the fact that he can do some by sale of the vended property clearly indicates that the vendee should treat such property as belonging to the vendor. Such a procedure clearly implies annulment of the sale. It is contended that the warranty of title and the vendee's remedy in case of a breach thereof being thus provided for, he cannot avail of the implied warranty under Section 55(2) of the Transfer Property Act, or claim damages on its breach. We are of opinion that the covenant in question is enabling clause, intended for the benefit of the vendee, and confers a right, which he would not otherwise possess, and which he can exercise in addition to in right which the law gives him. There is nothing in the sale-deed which excludes an implied warranty of title, contemplated by Section 55(2) of the Transfer Property Act, nor is there anything in the sale-deed which limits the plaintiff's remedy to the rescission of the contract referred to in the covenant in question. In this view, the plain tiff-respondent is entitled to damages for breach of the implied warranty of title. As a measure of such damages, the lower appellate Court has decreed to him a proportionate part of the price, having regard to the value of the property which the plaintiff could not recover and the value of the property in his possession. No question has been raised as regards the amount of damages awarded by the lower appellate Court being excessive. The result is that the appeal fails and is dismissed with costs.

    P.N/R.K

    8. Appeal dismissed.

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    Mt. Nanhi v. Mt. Ketki
    (Nov 3, 1931)