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Jado Prasad And Others v. Jamuna Prasad Singh And Others

Patna High Court
Nov 23, 1945
Smart Summary (Beta)

Structured Summary of the Opinion (Meredith, J.)

Factual and Procedural Background

This appeal arises from a suit for damages and compensation for breach of contract brought by Jamuna Prasad (the plaintiff-respondent) and initially by other family members, against the defendants (appellants). The parties belonged to a Dayabhag family that had separated into branches. On 15 July 1921, most branches (except Singhesar Prasad's) mortgaged about 23 bighas of land for Rs. 1,200 to Purandar Prasad (defendant 3rd party). On 7 October 1923, all five branches sold about 25 bighas to the appellants for Rs. 3,500. By the kebala/execution of the sale a sum of Rs. 1,560 (principal and interest then due) was left with the vendees to pay off the earlier mortgage.

The vendee(s) did not pay off the mortgage; as a result, a suit on the mortgage led to a decree and sale, and Purandar purchased the mortgaged property and obtained delivery of possession on 14 September 1937. About 11 bighas of the mortgaged property had been included in the property sold to the appellants, but approximately 14 bighas (specified in Schedule IV to the plaint) were not included and were thereby lost to the plaintiff's family. The plaintiff claimed compensation for that loss.

The suit proceeded before the Subordinate Judge, who found in part for the plaintiff, awarding compensation for half the plaintiff's share of the remaining 14 bighas (subject to certain exclusions) and making a valuation. The present appeal by the appellants challenges aspects of that decree. Meredith, J. delivers the principal opinion; Ray, J. agrees.

Legal Issues Presented

  1. Whether, having contracted to have Rs. 1,560 applied by the vendees to redeem an existing mortgage, the vendees (appellants) were entitled to withhold payment or refuse to redeem because of alleged defects of title in respect of a part share (Pratima Kumari's share) that was not transferred to them or was subsequently lost.
  2. Whether Section 55(2) of the Transfer of Property Act (read with Sections 51 and 54 of the Indian Contract Act) applied so as to allow the appellants to treat the contract as frustrated or to withhold performance.
  3. Whether the plaintiff was entitled to compensation for losses under Section 73 of the Contract Act and, if so, the correct measure of compensation (including whether compensation could be granted for lands already sold by the plaintiff or previously received purchase money for).
  4. What parts of the plaintiff's claim (if any) should be disallowed because they relate to lands for which the plaintiff had already received purchase money or whose recovery was otherwise not actual loss at the time of suit.

Arguments of the Parties

Appellants' Arguments (as presented in the opinion)

  • The vendors had not carried out the terms of the sale contract: although Kumode Kumari executed the sale deed, Pratima Kumari did not join and her one-tenth share was under attachment; that share was sold in execution and therefore the appellants did not receive full title to all portions of the vended property.
  • Because of the foregoing defects of title (e.g., loss of Pratima's share by execution sale and other transfers), the appellants claimed they were entitled to refrain from carrying out their obligation to redeem the mortgage (i.e., to pay off the mortgage debt).
  • They relied on Section 55(2) of the Transfer of Property Act read with Sections 51 and 54 of the Contract Act (as argued by their counsel Mr. Sarju Prasad) to support a contention that the vendee's obligation was excused or conditional because the vendors could not transfer certain interests.
  • As an additional defence, the appellants asserted that certain portions of the mortgaged property (plots Nos. 1036 and 692) had already been lost by the plaintiff's family prior to Purandar's decree either by sale, mortgage, or because the landlord had stepped in due to non-transferability of occupancy holdings.

Plaintiff-Respondent's Position (as presented in the opinion)

  • Jamuna Prasad claimed compensation for his share of the lost property—specifically, compensation in respect of half the lost property (one-fourth as his own right and one-fourth as reversioner of Benarsi Prasad).
  • The plaintiff relied on the terms of the sale deed (kebala) which expressly made the vendors jointly responsible for defects of title and provided for payment of mesne profits and damages by the vendors (their persons and other properties) if the vendee was dispossessed due to vendor acts.
  • The plaintiff relied on Section 73 of the Contract Act for recovery of damages for breach of contract.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

Meredith, J. conducts a step-by-step analysis grounded in the written sale contract (kebala), the evidence of payments and possession, and statutory provisions raised by counsel.

  1. Factual inferences on appellants' conduct:
    • The judge found the appellants' stated reason for withholding payment — that vendors failed to give good title to a small portion — to be untrue. The appellants had themselves caused the loss of about 11 bighas by failing to redeem the mortgage. It was improbable they would permit so much to be lost over a one-bigha defect.
    • Payments by the appellants towards interest were irregular and small (first payment in 1928, further small payments in 1930 and 1934), indicating inability to raise funds rather than a contractual withholding tied to vendor breach. The court infers appellants were in default prior to December 1928 and continued thereafter.
  2. On Section 55(2) of the Transfer of Property Act and Sections 51 & 54 of the Contract Act:
    • Section 55(2) (as relied on) does not apply because the sale deed contains express contractual provisions contrary to that section: the vendors expressly undertook joint responsibility for any defect of title discovered later and provided for mesne profits/damages to be paid by them. Where the contract provides for a remedy, the statutory presumption cannot be invoked to defeat that agreed contractual remedy.
    • Section 51 (reciprocal promises to be simultaneously performed) is inapplicable — the contract did not consist of reciprocal simultaneous promises; the vendee's obligation to pay off the mortgage was independent and due immediately or in the near future, and the vendors had placed the vendees in possession in accordance with the contract.
    • Section 54 (reciprocal promises dependent on each other's performance) likewise did not apply — the contract did not make the mortgage payment contingent upon some subsequent vendor performance. The Rs. 1,560 entrusted to the vendees was the vendors' money to be applied to redeem the mortgage; the vendees had a contractual duty to apply it irrespective of later contingencies.
  3. On the indivisibility of the mortgage obligation:
    • The court reasons the mortgage could not be split; redemption had to be attempted for the entire mortgage, not proportionally left unpaid because a small part of the vended property had not been delivered. Even a failure to be put in possession of a small proportion would not entitle the vendees either in equity or by the contract to refuse to redeem the entire mortgage or to leave unpaid an amount proportionate to the undelivered portion.
  4. Remedy under Section 73 of the Contract Act:
    • The judge holds the suit is properly governed by Section 73 (compensation for loss when a contract has been broken). That provision entitles the aggrieved party to compensation for losses naturally arising from the breach or as known likely results when the contract was made.
    • The learned Subordinate Judge was correct in principle to grant compensation for losses caused by the defendants' breach, but erred in allowing compensation in respect of lands which had been sold by the plaintiff or his predecessor prior to 14 September 1937 and for which purchase money had already been paid. Such sales already extinguished loss insofar as the plaintiff had received full purchase money; any subsequent contingent liability to repay purchase money to vendees, if it arises, is not an actual loss at present and cannot be recovered under Section 73 until actual damage occurs.
  5. Measure of compensation for other categories:
    • For lands subject to sudbharna deeds (the court describes these as leaving the plaintiff only an equity of redemption), the plaintiff's recoverable loss is limited to the value of the equity of redemption. The Subordinate Judge must ascertain that value and work out the compensation accordingly, taking evidence if necessary.
  6. Relief and directions to the court below:
    • The appellate court directs the Subordinate Judge to prepare a fresh decree consistent with these conclusions: (a) disallow compensation for lands covered by the kebalas/exhibits B, C and D (i.e., lands already sold for which purchase price was received); (b) assess compensation for sudbharna lands only on the basis of the plaintiff's equity of redemption value; and (c) prepare a fresh decree with costs proportionate to success.
    • On costs of the appeal, since appellants succeeded only to a minor extent, the appellants should pay the respondents' costs of the appeal; the overall decree should carry costs proportionate to success as directed.

Holding and Implications

Core Ruling: APPEAL PARTLY ALLOWED.

Consequences and immediate effects on the parties (as directed by the court):

  • The plaintiff is not entitled to compensation in respect of the lands covered by the kebalas identified as Exhibits B, C and D (i.e., lands which the plaintiff or his predecessor had already sold and for which purchase money had been received).
  • For the portions of the property conveyed under sudbharna deeds (where the plaintiff retained only an equity of redemption), the plaintiff's compensation is limited to the value of his share of the equity of redemption; the Subordinate Judge must compute that value (taking evidence if necessary) and enter a fresh decree accordingly.
  • The Subordinate Judge is directed to prepare a fresh decree on these lines and to apportion costs in proportion to success. The appellants are to pay the respondents' costs of the appeal (because the appeal succeeded only to a very limited extent).
  • The court held that the appellants were not justified in withholding redemption of the mortgage on the grounds relied upon; the contractual remedies and Section 73 govern recovery of damages, not the alternate relief sought by the appellants.

No suggestion is made in the opinion that a new legal precedent has been established; the decision applies existing statutory provisions and the express terms of the contract between the parties to the facts before the court.

Appeal partly allowed. (Meredith, J.; Ray, J. concurred.)
Show all summary ...

Meredith, J.:— This is an appeal by the defendants 1st party, and arises out of a decision in a suit for damages and compensation for breach of contract. The plaintiff-respondent, Jamuna Prasad, and his four brothers Singhesar Prasad, Benarsi Prasad, Bhagwat Prasad and Lachhmi Prasad were members of a Dayabhag family and separate. The descendants of Singhesar Prasad are defendants 2nd party. Benarsi Prasad died in 1930, leaving only a widow Sukhni, who also died before the suit. Bhagwat Prasad also died, leaving only two widows, Kumode Kumari and Pratima Kumari.

2. On 15th July 1921, all the branches of the family except Singhesar Prasad's, mortgaged 23 bighas and odd of land for a sum of Rs. 1200 to the defendant 3rd party Purandar Prasad. Subsequently, on 7th October 1923, all five branches of the family sold about 25 bighas of land for a sum of Rupees 3500 to the appellants. Under the terms of the kebala a sum of Rs. 1560, the amount then due as principal and interest, was left with the vendee to pay off the above mortgage. The mortgage debt, however, was never paid off by vendee—with the result that a suit was brought upon the mortgage which resulted in a decree and sale. Purander bought the mortgaged property, and on 14th September 1937, obtained delivery of possession. Out of the mortgaged property about 11 bighas was included in the property sold to the appellants, but 14 bighas and odd specified in Sch. IV to the plaint was not so included. The result, therefore, was that as a result of the failure of the defendants 1st party to carry out the terms of the contract the plaintiff's family was dispossessed of this 14 bighas of land. For this loss compensation was claimed.

3. The suit was originally filed not only by Jamuna Prasad but also by the sons of Lachhmi Prasad, and by Kumode Kumari one of the widows of Bhagwat Prasad, all as paupers. Jamuna Prasad, however, was alone found to be a pauper, so Kumode Kumari and the sons of Lachhmi Prasad were removed from the category of plaintiff. Jamuna Prasad claimed compensation, in respect of half the lost property, one-fourth of his own right and one-fourth as reversioner of Benarsi Prasad.

4. The defence, so far as now material, was, first, that the vendors had not themselves carried out the terms of the contract. Kumode Kumari had executed the sale deed, but nothing was said to the vendees about the existence of Pratima Kumari and she had not joined therein. The vendors purported to transfer the entire share of Bhag wat. In fact, however, at the time one-tenth share of Pratima Kumari was under attachment in execution of a money decree at the instance of one Babu Nand Kishore Lal. As a result the share of Pratima was subsequently sold by auction and passed out of the possession of the appellants. In the written statement it was merely asserted that these properties on being sold on auction were purchased by one Santlal Missir, a farzidar of Bhola Nath Singh, as a result of which several of the properties purchased by defendant 1 under the deed of sale went out of his possession and remained in the possession of the auction purchaser, and subsequently in possession of the purchaser from the auction-purchaser, no further details being given. Defendant 1, who alone gave evidence for the appellants, was little more definite. He started by saying he had not got possession over the share of Pratima. He went on to say that Babuji purchased the share of Pratima in execution of the decree of Nand Kishore, and that Mosahib Lal, father of Medni, purchased Pratima's share in the said land in that execution. Subsequently, Medni filed a partition suit against him, and took the share of Pratima. In cross-examination he stated that he could not say of which plot Medni dispossessed him. He could not state its boundaries. He was dispossessed of 1¼ bighas. He had not seen the dakhaldehani. In support of this case, however, documents were filed; Ex. E a writ of delivery of possession of the year 1926 in favour of Santlal Missir against Mt. Pratima Kumari and Kumode Kumari in respect of one-tenth share of Pratima Kumari out of 17 bighas and odd occupancy nalcdi gora jot land lying in mauza Bhawanandpur Tauzi No. 801, covers more of the kewala plots but there is also Ex. G judgment in a Title Suit No. 101 of 1931 whereby Medni Prasad and Baleshwar Prasad were allowed partition against the appellants in the one-tenth share of Mt. Pratima Kumari said to have been purchased by Medni Prasad in the farzi name of Baleshwar Prasad, on 26th April 1927, who had got into possession thereof by virtue of dahhaldehani on 13th December 1928, jointly with the defendants Jado Prasad, etc., (the appellants) who were the purchasers of the remaining share. This judgment is dated 31st August 1932. There is nothing to show if and when a separate patti was carved out in accordance with the direction of the judgment, but there had been a claim for mesne profits and it was ordered that the amount of compensation for mesne profits would be ascertained in a separate proceeding on application being made thereafter. Exhibit H is a decree in Suit No. 101 of 1931, dated 18th January 1936, which shows that the claim related to one-tenth share in Khasra Nos. 128, 78 and 49 comprising in all 11 bighas 13 kathas 17 dhurs which land was transferred under the sale deed (Ex. 2) of 1923, as appears from the schedule thereto. It appears from ihia decree that the case was compromised for a sum of Rs. 50 presumably on account of the claim for mesne profits, and the decree was merely one awarding that sum to the plaintiff. Thus, what was established was apparently that the transferee of Pragma's one-tenth share of 11 bighas and odd of the vended property got joint possession thereof with the appellants on 13th December 1928. It is to be seen that the very same land was amongst the properties mortgaged to Purander Prasad in 1921 binder the mortgage bond (Ex. 1).

5. In these circumstances the appellants claimed that they were entitled to refrain from carrying out their part of the bargain, and so did not redeem the mortgaged property. I may here note that what the appellants did do appears from the endorsements upon the mortgage bond (Ex 1). They paid nothing until 1928 when the sum of Rs. 1000 was paid by defendant 1 Jado Prasad. In 1930 three further payments were made of m. 50, Rs. 125 and Rs. 160. In 1934 a final payment of Rs. 80 was made, all these payments being marked towards interest.

6. The appellants took the further defence that the plaintiff's family had not been dis-possessed from certain portions of the mortgaged property by reason of Purander's decree, but had previously lost those portions either by sale or mortgage, or in the case of two plots as the landlord stepped in on account of the transfer of non-transferable raiyati holdings.

7. The learned Subordinate Judge accepted the defendants' case with regard to the last mentioned plots, Nos. 1036 and 692, as the appellants in their capacity of landlords had got possession over those plots by an ejectment suit on the ground of non-transferability of occupancy holdings. He held, the plaintiff entitled to compensation for his half share of the value of the remainder of the 14 bighas and odd. He observed that with regard to the land sold by the plaintiff or other members of his family there had been stipulations in the kebalas that in the event of the vendees being dispossessed subsequently the vendors would have to refund the purchase money, and with regard to certain properties which had been mortgaged the plaintiff and his family still held the equity of redemption. He assessed the value of the lands at Rs. 200 per bigha, considerably less than the value placed upon them by the plaintiff. He, therefore, decreed the suit in part with proportionate costs, disallowing interest for the period prior to the institution of the suit.

8. There has been no cross-appeal, so we are not concerned with the lands in respect of which the claim has been disallowed or the valuation of the lands. Mr. Sarju Prasad for the appellants has argued upon the two defences which I have set out.

9. Before I deal with his argument, I wish to emphasise one thing. The reason put forward by the appellants for their failure to pay off the mortgage dues is certainly untrue. By that failure the appellants themselves lost about 11 bighas of the vended property. It is impossible to suppose that they would allow all this property to “go out of their hands, merely because their vendors had failed to give them a good title to one bigha and odd. Moreover, the understanding between the parties was plainly that the Rs. 1560 left with the vendees should be paid off at once, because otherwise as interest was mounting up it would be insufficient for the purpose. Yet the appellants paid nothing until 1928, when the sum payable had become very much larger, and also they went on paying small sums, though never sufficient, up to the year 1934, years after December 1928, the date of Medni Prasad's dahhaldehani. The inference from these circumstances can only be that the real reason for failure to pay was that the appellants could not raise the money, and was independent of any breach of contract on the part of their vendors. It is also clear that any claim by the appellants with respect to the share of Pratima in the vended properties could only be in respect of the years 1929 to 1937, since prior to the former date they were in enjoyment of those properties, and subsequently to the latter date they had independently lost all interest irrespective of any claim by Medni Prasad.

10. Turning now to Mr. Sarju Prasad's arguments: upon the first point, he relies upon Section 55(2) of the Transfer of Property Act, read with Sections 51 and 54 of the Contract Act. Section 55(2) provides that in the absence of a contract with the buyer the interest which the seller professes to transfer to the buyer subsists, and that he has power to transfer the same. It is unnecessary to consider whether under this provision the plaintiff Jamuna Prasad would be deemed to make any such contract with the buyer in regard to the interest of Pratima, who was separate from him though that may be doubted—because S. 55(2) has no application to the present case, there being a contract to the contrary. In the sale deed (Ex. 2) the vendors in the clearest terms make themselves jointly responsible for any defect of title subsequently discovered. They say:

“The vended property is free and clear from all flaws and incumbrances. Save and except the debts mentioned above, there is no other debt against the said vended property. If, on the contrary, any kind of debt is found to exist against the vended property, the responsibility for the repayment thereof shall rest with the persons and other properties of us, the executants, our heirs and representatives.”

11. The sale deed also itself provides in express terms the remedy for anything of the kind:

“If by the act of us, the executants, or our heirs and representatives, or on any accounts, the vendee is dispossessed of the vended property, in that case, we the executants, our heirs and representatives shall pay the mesne profits and damages from our other properties respectively.”

12. There is a further stipulation in the sale deed that with regard to the 11 bighas and odd of quaimi jot land the vendee was to enter into possession only in the year 1935 Fasli (1928) on account of its being transferred under a sadhua patwa deed, and we find from the evidence of defendant 1 that some land, which he describes as 8 to 9 bighas, was at the time of his purchase under sadhua patwa of the Manjaul Factory. The land, he says, was released by the factory 5 or 6 years after his kebala, and he got possession over it. He says that he did not know this fact when he took his kebala, which is of course false, as the whole thing is set out in the kebala itself. Thus under the kebala, the appellants were not in any event, to get possession of the occupancy jot lands, including the lands with which-we are concerned, as opposed to 11 bighas and odd of kheraji lands in mauza Bhawanandpur until the year 1928.

13. Section 51 of the Contract Act, upon which Mr. Sarju Prasad relies, provides that:

“When a contract consists of reciprocal promises, to be simultaneously performed, no promisor need perform his promise unless the promisee is ready and willing to perform his reciprocal promise.”

14. This section has obviously no application. We are not dealing with reciprocal promises to be simultaneously performed. The vendee was to pay off the mortgage at once, or in the immediate future. He had also to pay off certain other debts for which part of the consideration was left with him, and to pay the balance in cash. The vendors in return were to place the vendees in immediate possession of portion of the property and in, possession of the remainder in 1928. It has not been shown that the vendors failed to carry out these promises in all respects. The first breach of the contract was by the vendees.

15. True, the contract went on to provide for the possible future contingency that the vendees might be in whole or in part dispossessed by reason of some undisclosed defect of title; but for any such contingency it also set out the remedy of the vendees, namely, a claim for damages and compensation against the vendors. These provisions being expressly set out in the contract, the vendees-would obviously not be entitled to resort to an entirely different remedy for which the contract did not provide. The contingency did not arise until December 1928, when the share of widow M was lost to the vendees, by which time the vendees themselves were already in default.

16. The obligation laid upon the vendees under the terms of the contract to pay off: the mortgage was upon those terms wholly independent of any subsequent dispossession of the vendees which might eventuate, and for which the remedy was expressly and independently provided. The contract was not at all the sort of contract contemplated in Section 51 of the Contract Act.

17. Nor has S. 54 any application. That section relates to contracts consisting of reciprocal promises, such that one of them cannot be performed, or that its performance cannot be claimed, until the other has been performed. The contract with which we are concerned does not provide that performance of the one portion shall be dependent upon the performance of the other, for there was no promise of the vendors upon the performance of which the payment of the Rs. 1660 to the mortgagee was made to depend. On the contrary, this sum of Rs. 1660 was the money of the vendors. It was entrusted to the vendees for a particular purpose, and clearly upon the terms of the contract the vendees had to apply it to that purpose upon the vendors carrying out their immediate promises, which they did by handing over the property. The vendees withheld payment not because of any breach of the terms of the contract by the vendors but for other reasons. They could not be allowed to say that they withheld payment by reason of any default on the plaintiff's part. Had, however, they actually done this it would have been something they were not entitled to do under the contract.

18. I would go further. The mortgage could not be split. It had to be redeemed as a whole, or not at all. If therefore the vendors had failed at the time of the sale to put their vendees in possession of this very small proportion of the vended property, one bigha and odd out of 25 bighas, the vendees would still not have been entitled, either in equity or upon the actual terms of the contract, to refuse to redeem the mortgage, or to leave an unpaid amount thereof proportionate to the extent of their failure to get possession.

19. The suit is really one under the provisions of Section 73 of the Contract Act. This section provides that

“When a contract has been broken, the party who suffers by such breach is entitled to receive, from party who has broken the contract, compensation for any loss or damages caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it.”

20. This provision is strictly applicable, and in my judgment, the learned Subordinate Judge was right in holding that the plaintiff was entitled to compensation for any loss or damage caused to him by the defendants' breach of the contract. It is true that upon the same provision and indeed under the express terms of the contract, the appellants had a claim for damages against the plaintiff. The appellants, however, in this suit have claimed no set off. Nor could they have done so. The suit was filed in 1941, the dispossession of the appellants was in 1928, and any claim, therefore, was in 1941 long barred by limitation. I turn now to Mr. Sarju Prasad's second argument. Under the terms of S. 73, the compensation is only for loss actually suffered, and such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach. The learned Subordinate Judge was therefore, in my opinion, wrong in holding that the plaintiff could get any compensation in respect of lands which had been sold by him or Mt. Sukhni before 14th September 1937. In respect of such lands the plaintiff or his predecessor Mt. Sukhni had already received full compensation in the purchase price, and no further loss was caused. It may be that the plaintiff may subsequently be sued by his vendees for return of the purchase money. That, however, may or may not happen. If it is a mere contingent liability, and not as yet at least actual loss. Section 73 would give no cause of action in respect thereof, unless and until the damage is actually suffered. No compensation can, therefore, be allowed in the present suit in respect of any such lands, which are covered by the kebalas Exs. B, C and D.

21. Certain sudbharna deeds (Exs. 4a to 4d) were also executed in respect of portions of the property. In respect of these, all that is left to the plaintiff is the equity of redemption. That is all he has lost, and consequently the measure of his compensation must be the value of the equity of redemption. This will have to be worked out by the Court below.

22. In short, I would allow the appeal only to this extent that the plaintiff shall get no compensation in respect of the lands covered by Exs. B, C and D, in respect of the sudbharna lands he shall get compensation upon the basis of the value of his share of the equity of redemption. This should be worked out by the learned Subordinate Judge after taking evidence if necessary. A fresh decree should be prepared by the learned Subordinate Judge upon these lines, and should carry costs in proportion to success. As to costs of the appeal, as it has succeeded only to a very minor extent. I consider the appellants should pay the respondents' costs.

Ray, J.:— I agree.

V.R/D.H

23. Appeal partly allowed.