Sivasubramania Aiyer v. Subramania Aiyar

JUDGMENT

Abdur Rahim, Officiating C.J.

1. The question referred to us must be answered in the negative. Section 55, Sub-section 4, Clause (6) of the Transfer of Property Act says that in the absence of a contract to the contrary, the vendor shall have a charge upon the property in the hands of the buyer for the amount of the purchase money or any part thereof remaining unpaid. In this case the vendor has asked the purchaser to pay the unpaid purchase money to a certain creditor of his. It is not alleged that the creditor accepted the liability of the purchaser of the property in substitution of the vendor's own liability. But the purchaser as between himself and the vendor has accepted the obligation to pay the purchase money according to the vendor's direction. It has been held by the Privy Council in Webb v. Macpherson I.L R. (1908) C. 67, that the statutory charge created by Section 55 of the Transfer of Property Act is not to be negatived except where there is a contract to the contrary, either express or arising by necessary implication. They point out that this charge is different in its origin and nature from the 'vendor's equitable lien under the English law. They also observe that the charge is not excluded by a mere personal contract to defer payment of a portion of the purchasemoney, or to take the purchasemoney by instalments, nor is it excluded by any contract, covenant or agreement with1 respect to the purchasemoney which is not inconsistent with the continuance of the charge. It is difficult to see how a direction to the purchaser to pay the purchase money to the vendor's creditor is inconsistent with the existence of the charge. This is the view taken by the Allahabad High Court in Har Chand v. Kishori Singh (1910) 7 I.C. 639 and in Meghraj v. Abdullah (1914) 12 A.L.J. 1031. It is argued, however, that in this Court the contrary view has prevailed in Abdula Beary v. Mammali Beary I.L.R. (1910) M. 446 which has been followed in Siva Subramania Mudaliar v. Gnanasammanda Pandara Sannadhi (1911) 21 M.L.J. 869. The learned Judges who decided the former case state in their judgment that, by the terms of the contract under their consideration, the purchase money was not payable to the plaintiff and he had no right of action to recover it. That is, however, not the position involved in the present case. It has been held in Sheonandan Lal v. Zainal Abdin I.L.R. (1914) C. 819, that the vendor's charge for unpaid purchase money is not a mere personal right but is capable of being transferred to a third person and in Ramakrishna Ayyar v. Subrakmania Ayyan I.L.R. (1905) M. 805, it has been ruled that a suit to enforce the charge is governed by 12 years' limitation. A vendor's lien or charge is not lost by the mere taking of personal security. See Karuppiah Pillai v. T.R. Hari Row (1910) 21 M.L.J. 849 and Mackreth v. Symmons 2 W. & T's L.C. 964. There is no doubt a distinction, on principle, as well as authority, as pointed out by the Privy Council in Webb v. Macpherson I.L.R. (1908) C. 57 , between a conveyance or sale in consideration of a covenant to pay a sum of money in the future and a sale in consideration of money which the purchaser covenants to pay. Here the consideration for the sale is money, payable by the purchaser, only he has agreed with the vendor to pay it to a third person.

2. The learned Judges who decided Abdulla Beary v. Mammali Beary I.L.R. (1910) M. 446, seem to hold in one part of their judgment that where the purchase money is to be paid to another, that is necessarily inconsistent with the vendor retaining the charge. There is nothing in Section 55, Sub-section 4, Clause (b) to suggest that for the charge to arise or to subsist, the purchase money must be payable to the vendor himself and not, by his direction, to a third person. If the above case holds otherwise, I am of opinion that it was wrongly decided. I may mention that the decisions in Ramakrishna Ayyar v. Subrahmania Ayyan I.L.R. (1905) M. 805 and Gopala Aiyar v. Ramaswamy Sastrigal (1911) 22 M.L.J. 207, are in accordance with the view I have expressed.

T.V. Seshagiri Iyer, J.

3. I agree with the conclusions of the learned Judges who made the reference that the vendors' lien is not lost by a direction to pay the purchase money to a third person. The charge is for the purchase money and it is immaterial that that money is not directly payable to the purchaser. As was pointed out by the learned vakil for the appellant, the statute itself by Section 55(5)(b), enables the vendor to direct it to be paid to any person he names. The obvious inference is that the purchase money does not lose its character by the direction to pay another.

4. The main argument of Mr. Rajagopala Chariar was that where there is a breach of the direction to pay a third person, the right of the vendor, who is compelled to pay himself, is only to sue for damages for breach of contract and that consequently it must be deemed that there is a contract to the contrary when the direction to pay a third person was given. It cannot be contended that the lien is personal. (See Sheonandan Lal v. Zainal Abidin I.L.R. (1914) C. 849 The right to the unpaid money as well as the charge therefore can be validly assigned to a stranger. It is not clear therefore why the direction to pay a third person should deprive the vendor of his charge. The decision of the Judicial Committee in Izzat-un-Nisa Begam v. Partab Singh I.L.R. (1909) A. 583 was strongly relied upon. In that case the auction purchaser bought the property subject to encumbrances. The encumbrances were found to be invalid. Thereupon the judgment-debtor sued to recover the amount of the encumbrances by which the purchaser was benefited and claimed a charge for it on the lands sold. Their Lordships held that when property is sold subject to encumbrances, the vendor whether in a private or Courtsale retains to himself only a claim to be indemnified against the encumbrancers proceeding against him. It was also held that the vendor was not entitled to the benefit of the finding that the encumbrances were invalid. The purchaser took the risk and was consequently. entitled solely to the advantage. I fail to see how this pronouncement is an authority against the plain provisions of Section 55(4)(b).

5. The learned Judges of this Court in Abdulla Beary v. Mammali Beary (1910) I L.R. 33 M. 416, based their conclusion largely upon English decisions notwithstanding the caution of the Judicial Committee in Webb v. Macpherson I.L.R. (1903) C. 57, that the charge under the Transfer of Property Act is different in origin and nature from the vendor's lien given by Courts of Equity to an unpaid vendor. There are three classes of charges known to English law : (a) equitable charge founded on contract; (b) equitable lien enforced by Courts of Equity ; and (c) the common law lien which enables the vendor to keep back possession until he is paid : (19 Halsbury's Laws of England, paragraph 20). The legislature in India, in order to avoid these confusions, has enacted a simple rule of law ; and with all deference to the learned Judges who decided Abdulla Beary v. Mammali Beary (1911) 21 M.L.J. 859, it seems to me it would be introducing an unnecessary element of uncertainty into this country, if the interpretation of an unambiguous section were made to depend upon English decision. I do not therefore think that the English cases quoted for the respondent as showing that the rule of law in England is not as stated in Abdulla Beary v. Mammali Beary (1911) 21 M.L.J. 859 need be considered.

6. Only one other argument need be noticed. It was broadly contended that after giving the direction to the purchaser to pay the money to a third person, the vendor had no right to countermand it. Of course, if the direction had been communicated to the proposed payee, a completed contract may arise between the purchaser and the third party which may preclude the vendor from claiming the money before payment. I do not think that Gopala Aiyar v. Ramaswamy Sastrigal I.L.R. (1910) M. 446 lays down that an uncommunicated direction to a third party disables the vendor from claiming the money. On the other hand Siva Subramania Mudaliar v. Gnanasammanda Pandara Sannadhi (1911) 21 M.L.J. 859, is a direct authority to the contrary.

7. In the present case, it is not shown that the third person looked to the vendee for payment. A fortiori, therefore, when the vendor had to pay the third party himself, the lien attached to the property to the extent of that payment. I answer the question in the negative and hold that Abdulla Beary v. Mammali Beary (1910) I.L.R. 88 M. 446, was not rightly decided.

Phillips, J.

8. In this case, I have already expressed my views in the order of reference and I have heard nothing in the arguments which have now been addressed to us to induce me to change my opinion. I agree therefore in answering the question in the negative.