Dr. Gwasha Lal and Others vs Kartar Singh

S. Murtaza Fazl Ali, J.—This is a plaintiffs' suit for recovery of an amount of Rs. 40,000/- as damages for a breach of the terms of a sale

made by the defendant in favour of the original plaintiff Mst Tek Batni. The suit arises out of the following facts:

The defendant who was a Wasildar with respect to an area of 5 Kanals and 13 Marias under Khasra No. 1447 Min plot No. 39 executed a

registered deed of sale of his Wasildari interest in favour of Sh: Tek Batni for a sum of Rs. 28000/- At the time of the execution of the sale deed, it

was agreed between the parties, that; an application will be submitted to the Nazool Department for sanctioning the transfer and for mutating the

name of the vendee and thereafter possession will be given to the plaintiff. It is further alleged by the plaintiffs that an application before the Nazool

department was in fact given by the plaintiff but due to the default of the defendant no orders could be passed on that application, and eventually in

the year 1952 the land was resumed by the State as the defendant had committed a breach of the conditions of his lease.

The plaintiffs further alleged that the defendant while selling the property to her did not disclose the inherent defects in his title, namely the fact that

the sale to the plaintiff required sanction under Paragraph 35 of the ""Rules for Grant of Lands in Jammu and Kashmir for Building Purposes"", and

that the defendant had already incurred a liability under which the State could resume the land, by virtue of his conduct in not putting up a building

on his land, within three years of the date of his lease. It may be mentioned that the defendant had taken the original lease of the land from the

Nazool department by virtue of the lease deed Ex. P dated 3-5-1993 which is equivalent to 18-8-1936. Under Paragraph 25 of the Wasildari

Rules, the defendant should have constructed a building on this land within three years of the lease, that is to say, by August 1939.

It is admitted that the defendant did not construct any building and therefore, a right to resume the land clearly accrued to the State the superior

landlord of the property. The plaintiff's case is that this material defect in the title of the defendant was not disclosed to her at the time of the sale

which amounted to a breach of warranty of title as also non-disclosure within the meaning of Section 55 clause 1(a) of the Transfer of Property

Act. It is also alleged that the fact that the sale required sanction of the State was also not revealed to the plaintiff. Lastly it is alleged that after the

sale deed was entered into between the parties, the defendant did not deliver possession of the property to the plaintiff and the defendant,

therefore, committed a further breach of warranty of title of ensuring quiet possession to the vendee. The plaintiff further alleged that by virtue of

the fact that the land was resumed by the State under an order dated 14-8-1952, the contract between the parties became void and, therefore, the

plaintiff was entitled to compensation by way of restitution as also to damages u/s 73 of the Contract Act.

According to the plaintiff, the order of resumption cancelled completely the rights of the defendant and amounted to refusal to grant sanction to the

sale in favour of the plaintiff and, therefore, provided a valid cause of action to the plaintiff for the present suit. The plaintiff further alleged that she

came to know of these facts on 20-7-2009 and the suit was filed in this Court on 3-ll-1955 I might also mention here that after the suit was filed,

the plaintiff sought an amendment of the plaint by inserting Para 5-A under which he claimed advantages and benefits amounting to Rs. 40,000/- on

the contract of sale having become void by virtue of the order of resumption. This amendment was allowed by me after hearing counsel for the

parties by an order dated 18-7-58.

The suit was resisted by the defendant on the ground that the plaintiff was fully aware of the precarious interest which was being sold to her

namely the conditions laid down in Rules 25 and 35 of ""Rules for grant of land in Jammu and Kashmir province for building purposes.'' It was

further contended that the Plaintiff took possession of the land in question and it was due to her own default that sanction for the sale could not be

granted. The Defendant further denied the allegations of fraud and wilful concealment. The defendant further contended that the State had no right

to resume the land and, therefore, the order of resumption was without jurisdiction and could not affect the rights of the plaintiff.

The defendant further denied the allegation regarding the breach of warranty of title as also of the covenants contained in the registered agreement,

The defendant further contended that the sale deed was in fact acted upon and the plaintiff having taken possession of the land under the sale, there

was no ground for the plaintiff to recover any damages. Further pleas regarding the suit being barred by limitation and the suit being bad for non-

joinder of necessary parties were also taken by the defendant.

On the pleadings of the parties the following issues were raised in the case;-

Is the suit bad for non-joinder of the State as a defendant?

Is the suit barred by limitation?

Was the plaintiff Tek Batni a Benamidar for her husband Dr. Gwasha Lal? If so, what would be its effect on the suit?

Did the defendant practise any fraud as alleged on the purchaser in execution of the sale deed?

Were the plaintiffs not put in possession of the lands in suit?

Has the defendant committed any breach of the terms and covenants of the sale deed? If so, what is its effect on the suit?

Was the State competent to resume the land? If so, was such resumption due to fault of any of the parties to the suit?

Is the defendant entitled to invoke the doctrine of part performance?

Are the plaintiffs entitled to damages? If so, to what extent?

To what relief, if any, are the plaintiffs entitled?

In view of Issue No. 1 namely as to whether the State was a necessary party to the suit by an order dated 15-7-60. I thought that it was

expedient to add the State as a party defendant to the suit and accordingly I issued a notice to the State to show cause why it should not be added

as a party defendant to the suit. The State appeared in obedience to the notice issued by this Court and submitted its objections. After-hearing the

State, and counsel for the parties I discharged the notice to the State for being added as a party and I held that the State was not a necessary party

by an order dated 20-4-61, which is on the record.

I would first take up Issue No. 1.

ISSUE NO. I:

For the reasons that I have already given in my order dated 20-4-61, I have already held that the State was not a necessary party to the suit. I

might further mention that as the plain tiff had not claimed any relief against the State and the present suit is really a dispute inter se between the

plaintiff and the defendant, the State cannot come into the picture at all. If the defendant believed that the State was wrong in resuming the land, he

could have filed a separate suit against the State for such reliefs as he may have been advised to seek, but he cannot raise the validity of the action

of the State in the present suit particularly when prima facie the State was entitled to resume the land as held by me in the order referred to above.

The fact remains that the land in question was in fact resumed by the State and this suit was really concerned not with the factum of resumption but

with the consequences that would flow from the resumption of the land by the State and the State was, therefore, not at all interested in this case.

Issue No. 1 is accordingly answered against the defendant and in favour of the plaintiff.

ISSUE NO. 3.

According to the defendant the real pur chaser was Dr. Gwasha Lal, the husband of the original plaintiff Shrimati Tek Batni and he had in fact

paid the consideration for the sale deed. The plaintiff's case, however, was that Smt. Tek Batni had purchased the property from her own funds

which constituted her Istri-Dhan and Dr. Gwasha Lal had nothing to do with the transaction. In my opinion, this question is not very relevant for

purpose of deciding this suit, because we are really concerned with the default of the vendor whoever he might be.

As however, some evidence has been led on this point, I prefer to give a finding on this issue also. It is well settled that the onus of proving that a

transaction is Benami, is on the party, that sets up such a case. It is, therefore, clear that it was for the defendant to prove that Tek Batni was a

Benamidar for her husband Dr. Gwasha Lal It is equally clear that Benami transactions are so common in India, particularly between husband and

wife, that a slight proof may be sufficient for the defendant to discharge his onus. (After discussing the evidence, His Lordship answered Issue No.

3 against the defendant and in favour of the plaintiff.)

I would now take up Issue No. 7 before taking up any other issue.

ISSUE NO. 7.

I have already held while deciding Issue No. 1 that the State was Prima facie competent to resume the land. It would appear from the original

lease granted to the defendant which is Ex. PX in the case that the lease was granted to him for residential purposes. The words ""residential

purposes"" have not been defined in the ""Rules for Grant of Lands in Jammu and Kashmir Provinces for Building Purposes"" but it follows that where

a vacant piece of land is being taken up by a person for residential purposes, the only purpose that can be conceived in the circumstances is that

the lessee is to put up a building for his residence on that vacant land. (His Lordship here quoted Rule 25 and after discussing the evidence held

that the order of resumption of land by the State was passed due to the default of the defendant in not constructing a building over his plot within 3

years of his lease as required by Rule 25, and not due to any default of the plaintiff, and answered Issue No. 7 in favour of the plaintiff and against

the defendant.)

Issues Nos. 4, 5 and 6 may be taken up together. I would first take up the question as to whether the plaintiffs were put into possession of the

land in suit.

(On consideration of the evidence and circumstances on the record, His Lordship held that the plaintiffs were put in possession of the land in

dispute after the sale in favour of Shrimati Tek Batni was effected, and decided. Issue No. 5 against the plaintiff and in favour of the defendant.)

I would now take up issues Nos. 4 and 6 because they are clearly inter-connected.

The fraud mentioned in Issue No. 4 consists of non-disclosure by the defendant with respect to certain matters which he should have disclosed

u/s 55 Clause 1 of the Transfer of Property Act. Section 55 (1) Clause (a) of the Transfer of Property Act, runs as follows:

To disclose to the buyer any material defect in the property or in the seller's title thereto of which the seller is and the buyer is not aware and which

the buyer could not with ordinary care discover.

Under Section 55 an omission to make such disclosures as are mentioned in Section 55 (1) (a) is fraudulent. It has been contended by Lala Sunder

Lal for the plaintiffs that the non-disclosure on the part of the defendant consisted of the fact that the defendant did not tell the plaintiff that: sanction

was required under Rule 35 for the sale in question and secondly that the plaintiff was not informed that the defendant by not complying with the

provisions of Rule 25 had rendered the land liable to resumption by the State.

As regards the first point learned Counsel for the plaintiff conceded that there can be no question of non-disclosure as even at the time when the

sale deed was executed, the parties were fully aware that sanction had to be obtained before the sale could be confirmed. The fact that such

sanction had to be obtained, and an application for the same had to be given finds mention in the sale deed itself. The learned Counsel for the

plaintiff has abandoned this ground so I need not enter into it any further. The only ground taken by the learned Counsel for the plaintiff is that he

was not made aware of the fact that the defendant by not constructing a building within three years of his lease had rendered the land liable to

resumption and this constituted a material defect of title which the defendant was bound to disclose to the plaintiff.

There can be no doubt that the fact that the defendant had rendered the land liable to resumption by his wilful default was undoubtedly a material

defect of title, because if it was known to the purchaser he may not have thought of finalising the deal. But before there is a breach of Section 55

(1) (a) it must be shown that the buyer could not with ordinary diligence discover the defect. In the present case, there are number of

circumstances, to show that the plaintiff would be deemed to be aware of the defective title of the defendant. In the first place, there is the fact that

the plainiff was purchasing a mere Wasildar right which was subject to the conditions which were regulated not by a private document but by a set

of rules which have the force of law and which have been published in the gazette from time to time namely ""The Rules for Grant of Lands in

Jammu and Kashmir Provinces for Building Purposes"".

The moment the plaintiff knew that she was purchasing a Wasildari interest, she would at once be put on an enquiry as to the incidents of such a

right which were no secret and could have been discovered by ordinary diligence. (After discussing the evidence, His Lordship concluded that the

plaintiff was fully aware of the Rules regulating the property purchased by her and continued:)

Once we fix the plaintiff with the knowledge of these rules, it follows almost automatically that she would have at once discovered that the land

being a vacant site no building was constructed on it by the defendant although it should have been constructed within three years as required by

Rule 25 of the said rules. In this connection, Mr. Sunder Lal contended that it may be that the defendant may have constructed a building within

three years and may have demolished the same in the year 1946 in which case the plaintiff could not be aware of these facts.

It is however not the case of the plaintiff in her pleadings that she was aware of these facts. The stand taken by her is that the defendant had

committed a breach of para 25 of the said Rules by not constructing a building within three years of his lease. In these circumstances, it is not

possible for me to accept the argument of Mr. Sunder Lal on this point. It is well settled that where a buyer has the means of discovering the

defects of title, there can be no breach of Section 55 Para (1) Clause (a), of the Transfer of Property Act. The section is very clear on the point

and it is not necessary for me to cite authorities in support of this proposition.

We are now left with the question as to whether the defendant has committed any breach of the terms and covenants of the sale which is the most

important question to be decided in this case. I might mention here that the Transfer of Property Act has given recognition to the age old Roman

Law maxim ""Caveat Emptor"" ""(Purchaser beware) in Section 55(1) (a) of the Transfer of Property Act. At the same time an exception to this

maxim has been laid down in Para 2 of Section 55 which is as follows:

The seller shall be deemed to contract with the buyer that the interest which the seller professes to transfer to the buyer subsists and that he has

power to transfer the same.

A perusal of this clause clearly shows that the statute imports an implied warranty of title in a contract of sale even though there is no express

warranty. The warranty of title contained in the Act relates firstly to the question that the vendor has a good title to convey and that the vendor has

power to convey the property and secondly that the vendee should enjoy a peaceful and undisturbed possession of the property sold.

It is true that the clause docs not lay down in specific terms, the warranty which extends to the enjoyment of peaceful possession, but the language

in which it is couched clearly indicates that the covcnan (sic) enjoy peaceful possession is clearly implied and implicit in the warranty contained in

the Para 2 of Section 55 of the Transfer of Property Act. The warranty under this paragraph is absolute and irrevocable and is not subject to any

conditions, except that the clause does not apply to cases where there is a clear contract between the parties to the contrary. Such a contract can

be either express or implied but the contract must be such as would clearly negative the warranty of title.

For instance where in the sale deed the seller mentions clearly that he would not be liable for any compensation if any defect is found in his title, this

will be a contract to the contrary. In these circumstances, therefore, it is clear to me that the defendant was bound to give a good title to the plaintiff

and also guarantee peaceful possession of the plaintiff. This is also clear from the facts found by me.

Another question is as to what is the effect of Para 35 of Wasildari rules. Para 35 of the rules is as under:

No Wasildar shall mortgage, sell or in any other way transfer the land leased to him under these rules or the building erected on such land, except

with the permission of His Highness the Maharaja Sahib Bahadur obtained through the Governor. All transactions entered into by the Wasildar

without such permission shall be void and no court shall take cognizance of the same. Provided always, that the Durbar shall have a preferential

right of purchase in the case of all transfers intended to be made under the provisions of this clause paying a fair market value thereof.

A perusal of this paragraph clearly shows that all transactions entered into by Wasildar namely the defendant in this case would be void and no

court shall take cognizance of such a transaction. In the present case it is admitted that no such sanction was taken for the sale in favour of the

plaintiff. In fact the argument of the plaintiff is that the order of resumption clearly amounts to refusal of sanction to the sale. I am inclined to agree

with this argument.

It is obvious that if the Nazool authorities had any intention to grant permission to the sale, there could be no question of resumption. On the other

hand, if the Nazool department decided once for all to resume the land, it decided to exercise its right of re-entry in the land. It follows as a logical

corollary that the sanction to sale was refused, because the order of refusal to grant sanction was implicitly contained in the order of resumption,

particularly when an application for sanction to sale was admittedly pending before the Nazool department and the order of resumption was

passed in spite of this application.

Learned Counsel for the defendant contended that the order of resumption merely shows that the superior landlord has accepted his intention to

exercise his right of re-entry and unless he proceeds to enforce this right it cannot be said that sanction has been refused. I am, however, unable to

agree with this argument. The order of resumption can be passed only on the ground that the lease in favour of the lessor has been terminated or

has been forfeited and that the right of forfeiture has already accrued to the superior landlord. Once, this is done, the question of granting of

sanction for sale of the land, the result of which is to continue the lease, cannot possibly arise.

I would hold that by virtue of the order of resumption the sale became void ab initio and the defendant, therefore committed a breach of warranty

of title in as much as the peaceful possession of the plaintiff was disturbed and the defendant was unable to give a good and marketable title to the

purchaser namely the plaintiff. In fact as the right to resume the land had accrued long before the defendant sold the land to the plaintiff, it cannot

be said that the defendant had a good and perfect title to sell the land to the plaintiff. Learned Counsel for the defendant however, has put forward

a number of arguments to repel the argument regarding breach of warranty of title on the part of the defendant.

He has contended in the first place, that as there is neither any prayer nor any relief in the plaint to set aside the sale, itself, the plaintiff cannot get a

decree for damages for breach of the covenant of title unless the sale, which having passed out of the stage of contract into one of conveyance, is

actually set aside. In support of this argument reliance has been placed first of all on Raja Rajeswara Dorai v. Arunachellam 19 Ind Cas 596

(Mad), where it has been held

that a mere repudiation in pais by the plaintiff cannot constitute an effectual rescission of a contract or deed and such effectual rescission entitling

the plaintiff to obtain further reliefs must be made by a decree of a court declaring that the contract or transaction is void and setting it aside.

The facts of that case are clearly distinguishable from the facts of the present case. In that case it appears that the suit was for possession of the

property from the defendants. The ground on Which the suit was based was that the defendant had obtained a lease by exercise of undue

influence. It is, therefore, clear that the suit being one for possession and the lease having been sought to be rescinded on the ground of undue

influence was voidable and not void. Under these circumstances, therefore, it was necessary for the plaintiff in that case to have got the sale deed

set aside before he could succeed in taking possession of the properties. This decision would obviously not apply to this case where a sale under

Para 35 of the said RULES was per se (sic) and destitute of any legal effect. In my opinion, therefore, this decision is of no assistance to the

defendant.

Reliance was also placed on a decision of the Sindh Chief Court, reported in Allahdino Bacha v. Udhoomal Amardinomal AIR 1942 Sindh

In that case it appears that the defendant had title at least to a. part of the property and it was held that as the sale deed was voidable because

of the material defect in the vendor's title, the remedy could not be granted unless the sale was set aside. In this case it is clear that by virtue of Rule

35 the sale was void in its entirety. The defendant cannot be said to have title even to a part of the property as was the case before the Sindh Chief

court. Moreover, the observations made by their Lordships were with respect to Section 55(1) (a) of the Transfer of Property Act, a breach of

which would certainly render the sale to be only voidable and not void.

That case, therefore, also does not help the defendant. It is obvious that where a contract is void being prohibited under a provision of a statute or

provision of a law having the force of a statute, the contract is absolutely void and as such it need not be set aside. In such cases no legal contract

ever came into being and the rights of the parties are to be determined independently of the deed. There is no need to avoid or cancel that which

never existed in the eye of law. I am supported by the observations of Justice Vivian Bose in Asaram v. Ludheshwar AIR 1938 Nag 335 (FB).

On the other hand a complete answer to the argument advanced by learned Counsel for defendant is to be found in the decision of the Privy

Council reported in S C. Jayawardene v. Jayawardene AIR 1939 P.C. 138.

The facts in the case seem to be very much similar to the facts of the present case. In the case reported above, it appears that the donor was a

lessee of government lands and the lease contained a clause that the lessee had no authority to sub let, donate, or dispose of the lease interest

without the consent of the Government and if he did so the same would be void. In the present case also the original lease in favour of the

defendant did contain such a clause which is embodied in Para 35 of the said Rules. An identical argument was advanced before the Privy Council

in that case, which was to the effect that as the lessee had made a gift in favour of the donee the gift had to be set aside even though it was void.

Their Lordships repelled this argument by making the following observations:

It is no doubt also true that a solemnly executed and duly registered instrument must stand until set aside by a competent court....

In their Lordships' opinion, whatever may be the case as regards other property the leasehold estate the subject matter of the present action could

not for the reasons given pass to the donees....

Where however the lease has, as in the present case, been disposed of contrary to the terms contained in it, and that disposition is void or has

been avoided by a landlord, there is, in their Lordships' view, no room for the application of such a doctrine, even in the case of a sale or other

disposition for value much less where the disposition is a gift.

In view, therefore, of the observations made by the Privy Council referred to above, the principle laid down by their Lordships would also apply to

a sale, it is manifest that in the present case the sale of the defendant's interest in favour of the plaintiff being in direct contravention of Rule 35 of

the said Rules, and the sale having been avoided by the order of resumption the sale was void and it was not necessary for the plaintiff to set aside

the sale before claiming damages.

It was next contended by the learned Counsel for the defendant that Section 55 clause 2 of the Transfer of Property Act, would not apply to

the present case in as much as there was a contract to the contrary in the sale deed Ex. PW2/1. Reliance was placed on the words ""(Original in

Urdu omitted here-Ed.) (all the rights of user possessed by the vendor) and it was contended that by virtue of this recital, the vendor indicated his

intention, not to be indemnified if there was any defect of title.

It is well settled that a contract to the contrary must specifically negative the warranty of title. The words quoted above, in my opinion, do not at all

negative the warranty of title but on the other hand amount to an express covenant including a warranty of title. These words read in the context of

the other recitals in the sale deed clearly indicate that the vendor is stipulating to sell all his rights that he possessed unto vendee. I am, therefore,

unable to agree with Mr. Anant Ram counsel for the defendant, that there is a contract to the contrary in the deed negativing the warranty of title

contemplated by Section 55 clause 2 of the Transfer of Property Act.

It was further contended by learned Counsel for the defendant that this suit was not based on the implied warranty of title u/s 55(2) of the Act

but under an express warranty of title contained in the sale deed itself, and therefore, the plaintiff cannot be allowed to rely on an implied warranty

of title. A perusal of the various paragraphs of the plaint would clearly show that the plaintiff had based her right both on the express covenant

mentioned in the sale deed as also on the implied warranty of title as contemplated by Section 55(2) of the Transfer of Property Act. (His Lordship

in this connection referred to certain Paras in the plaint and finally overruled the contention.)

Lastly, it was contended that as the plaintiff was fully aware of the defects of title of the defendant, she cannot sue the defendant for damages

for breach of warranty of title. In support of this argument learned Counsel for the defendant has relied on certain English authorities as also on the

decisions of certain High Courts in India with which I shall deal immediately. I might, however, mention at the very outset that the argument is really

founded on the principle ""Caveat Emptor""' as also on the law which prevailed in England.

The law in India, however, is essentially different on this question from the law in England: Section 55(2) of the Transfer of Property Act imports an

implied warranty into a contract even though it is not there, whereas under the ""Conveyance of the Property Act,"" which is applicable to England,

the provision is that the warranty of title should be specifically mentioned in every sale deed. I might in this connection refer to a ease of the

Bombay High Court Abraham Ezra Issac Mansoor Vs. Abdul Mahomed Alibhai, where a Division Bench made the following observations:

The learned Judge also relied on Section 55(2) T. P. Act. Now that corresponds to what is known in English law as a covenant for title. In

England there is no statutory guarantee of good title. Our law makes a departure from the English law and provides for a statutory guarantee of

good title in the absence of any contract to the contrary arrived at between the parties to the agreement themselves.

Similar observations were made by Deva Doss J. in (sic) Pandithan v. Munibadra Nainar AIR 1926 Mad 255, where his Lordship observed as

follows:

No doubt under the English Conveyancing practice all the covenants of title and eonvenants for quiet enjoyment are set out in the deed itself but

under the Transfer of Property Act the technicalities of the English conveyancing have been done away with and in the case of a sale of property,

all the covenants which are usually found in an English conveyance deed are to be read into the sale deed by reason of the provision of the Transfer

of Property Act.

I would now deal with the authorities cited by learned Counsel for the defendant.

The first case relied upon by learned Counsel for the defendant was the case of Patman v. Harland (1881) 50 L.J. Ch 642, where it was held

that a lessee has constructive notice of his lessor's title and even if there is an express contract with the lessor allowing a breach of the restrictive

covenant, the lessee cannot repudiate the contract

The facts of that case were essentially different from the facts of the present case. Moreover their Lordships had decided that case on an

interpretation of the provisions of the Vendor and Purchaser Act 1874. As already pointed out the provisions of T. P. Act which prevail in this

country are essentially different from the provisions of the Vendor and Purchaser Act In these circumstances, therefore the principle laid down in

that case, cannot be applied to the facts of the present case.

Similarly reliance was placed on the case of Hayford v. Griddle (1855) 22 Beav 477 at p. 481, in which it was held that on the purchase of an

underlease, the lessee could not raise a valid objection to the title, if the under-lease was forfeited by the non-performance of the covenant in the

original lease. This case, it appears, was decided before the Vendor and Purchaser Act as also before the Conveyancing of the Property Act

which made provisions regarding the warranty of title. In construing therefore the provisions of the Transfer of Property Act, it will not be

necessary for us to refer to these eases.

The learned Counsel then relied on the decision of the Madras High Court reported in Gondu Ramasubba Iyer Vs. Muthiah Kone and Others,

. There, Devadoss J. was really considering the effect of Section 55(1) (a) and not of Section 55(2) of T. P. Act. While considering the effect of

Section 55(1) (a) his Lordship observed as follows:

The question here is whether the vendor could prove that the plaintiff was aware of a defect in the title. Where the vendee buys property with the

full knowledge that the vendor has not a good title he cannot be said to have been defrauded by the vendor. The 1st clause of Section 55 makes

only omissions to make such disclosures as are mentioned in the Section, Para 1 Clause (a) and Para 5 Clause (a) fraudulent. Paragraph 1 (a)

casts the duty on the seller to disclose material defects in the property which the buyer could not with ordinary care discover, but where the vendee

is perfectly aware of the defect in title or existence of an encumbrance there is no duty on the part of the seller to inform the buyer of that which the

latter is perfectly aware.

His Lordship was not at all considering the effect of an implied warranty of title as contemplated by Section 55(2) of the Act and this clause

would naturally have no application to that case, because in that case the suit was for recovery for money due under a hypothecation bond

executed by the first defendant in favour of the plaintiff. The suit in that case was not on the basis of con tract of sale of Immovable property so as

to attract the provisions of Section 55(2) of the Act. Under these circumstances, this case also does not seem to be or any avail to the plaintiff.

Reliance was then placed on a case of the Lahore High Court reported in Kulla Mal v. Umra 61 Ind Cas 604, where Justice Martineau

agreeing with a previous decision of that court observed as follows:

I see no reason for differentiating between the case of a sale by a person without a title and a case like the present in which the sale though effected

by a person having a good title is liable to be set aside at the instance of a third party.... I agree, therefore, with the Lower Appellate Court that in

accordance with the rule of Caveat Emptor, the plaintiffs are not as matters stand at present, entitled to a refund of the money which they paid to

the defendants for the land. The appeal is accordingly dismissed with costs.

It is obvious that the provisions of T. P. Act do not apply to the Punjab and therefore, his Lordship really based his decision on the rule of

Caveat Emptor"" a rule which has been specifically not followed by virtue of clause 2 of Section 55 of T. P. Act. I might, however, mention here

that later decisions of the same High Court have consistently taken the view that where Section 55 (2) of T. P. Act applied, the fact that the vendee

had knowledge of the defect of the plaintiff's title would not stand in the way of the plaintiffs in suing the defendant for damages. I might refer to a

Division Bench decision of the Lahore High Court reported in Lachhman Das v. Jowahir Singh AIR 1924 Lah 476, where their Lordships while

agreeing with a Full Bench of the Madras High Court observed as follows:

We agree with the findings of the court below that the plaintiff was aware of the facts above alluded to, when he entered into the contract in dispute

though it is not unlikely that subsequently the latter, on changing his mind, decided not to run any risk. We agree also with the view that in spite of

these findings, he was entitled to a refund of what he had actually paid. Lala Tirath Ram was referred to a Full Bench decision of the Madras High

Court in Adikesavan Naidu v. Gurunatha Chetti ILR 40 Mad 338: (AIR 1918 Mad 1315), where it has been held that the knowledge of the

purchaser as to the defects of title in his vendor does not deprive him of his right to recover damages.

The decision of Justice Matineau reported in 61i Ind Cas 604 (Lah) is contrary to the later Division Bench decision of the same High Court and

must, therefore, be deemed to have been overruled. Moreover, I shall show that the view taken by the Lahore High Court is the view that has

been taken by almost all the High Courts in India. This matter was considered by a Single Bench of the Madras High Court as early as 1915 and in

Subbaraya Reddiar v. Rajagopala Reddiar AIR 1915 Mad 708, Seshagiri Aiyar J. observed as follows:

The contention for the counter petitioner is that as there is no express covenant for title and as the plaintiff took with full knowledge of the (sic) of

title, the principle of caveat emptor applied and there is no cause of action. In India there is a statutory guarantee for good title unless the same is

excluded by the contract of parties, vide Section 55 Clause (2), T. P. Act. The question of the knowledge of the purchaser does not affect the

rights to be indemnified under the Indian Statute Law.

The matter was fully and elaborately discussed in a later Full Bench decision of the same High Court reported in AIR 1918 Mad 1315 where

Justice Seshagiri Aiyar was one of the judges who constituted the Full Bench. Abdur Rahim J., made the following observations in that case:

The question is then raised whether Section 55 Sub-section (2) T. P. Act applies and if it does, whether from the fact that the buyer knew that the

property belonged to the family of which the vendor was only the managing member it can be deduced that there was a 'contract to the contrary'

within the meaning of Section 55. Section 55 deals with rights and liabilities of buyer and seller. Sub-section (2) enacts that in the absence of a

contract to the contrary the seller shall be deemed to contract with the buyer that the interest the seller professes to transfer to the buyer subsists

and that he has power to transfer the same....,

Then the mere fact that the intending purchaser knew that the property belonged to the family cannot in my opinion be said by itself to imply a

contract on the part of the buyer that the seller purporting to have power to sell the property would be absolved from liability if it turned out that he

had no such power: See Arunachala Aiyar v. Rarnaswami Aiyar AIR 1915 Mad 742 and AIR 1915 Mad 708. For these reasons I agree with the

view expressed by Seshagiri Aiyer J. in the order of reference and would answer the question referred to us in the affirmative.

Similarly Sadasiva Aiyar and Napier JJ. who constituted the Full Bench took the same view.

In that Full Bench case, the court discussed the English Law on the subject and pointed out that most of the English cases could not be applied

to India and the case of Gas Light and Coke Co. v. Towse (1887) 35 Ch D 519 was expressly dissented from. I might mention here that this was

also one of the cases that was cited by learned Counsel for the defendant in support of his argument.

The Full Bench has been followed consistently in later decision of the Madras High Court for instance Ramayya v. Kotayya AIR 1930 Mad 748

and AIR 1926 Mad 255. The same view has been taken by Justice Chandrasekhara Aiyar in T. Paparao v. Polinaidu AIR 1945 Mad 205. An

identical question arose before the Allahabad High. Court and the Division Bench of that Court consisting of Mukerji and Bennet JJ. in Nawal

Kishore Vs. Sarju and Another , held that warranty u/s 55 (2) of T.P. Act was an absolute one and the mere fact that the vendee had knowledge

of the defective title of the vendor would not prevent him from recovering damages from the vendor. Their Lordships made the following

observations:

On the other hand there are two clearly applicable cases which go entirely against the appellant. These are Ram Chunder Dutt v. Dwarka Nath

Bysack ILR Cal 330 and Muhammad Ibrahim v. Nakched Ram 6 Ind Cas 890 (All). In both these cases it was held that unless the vendor'

liability as imposed by Section 55 Sub-section (2) was excluded by express covenant, his liability would be deemed to subsist; notwithstanding the

fact that the vendee may have some idea as to the defect in the title of the vendor. In the Calcutta case it was stated that the vendee was entitled to

rely on the assurance of title on the part of the vendor although he himself may have had some doubt as to it. We are of opinion that the view taken

in Calcutta and this Court quoted above is the correct view. The liability of the vendor clearly exists.

This case was followed by a Single Judge in a later decision reported in Shahu Avadesh Kumar and Others Vs. S. Zakaul Husnain and Others,

which is also to the same effect. The Calcutta High Court has also taken the same view in ILR 16 Cal 330. The same view has also been taken by

the Patna High Court in a Division Bench decision reported in Mt. Lakhpat Kuer Vs. Durga Prasad, , where their Lordships made the following

observations:

It was contended that the present suit does not lie because the plaintiffs were aware of the infirmity of the title of the defendant. But that question

does not arise in view of the fact that the conveyance imports a covenant for title u/s 55 Clause (2), T. P. Act. That clause provides as follows:

'The seller shall be deemed to contract with the buyer that the interest which the seller professes to transfer to the buyer subsists and that he has

power to transfer the same.' and then follows a proviso with which we are not concerned in this litigation. It will be noticed that the covenant which

Section 55 Clause (2) imports has nothing to do with the question whether the buyer has or has not notice of the infirmity of the title of the seller.

The question whether the plaintiffs had or had not knowledge of the infirmity of the title of Mt. Lakhpat is, therefore, irrelevant.

This case was followed by a later decision of the same High Court reported in Sheokumar Tewari and Another Vs. Central Co-operative Bank

Dinapur and Others,

Thus it is generally settled that in a case where there has been a breach of implied warranty contemplated by Section 55 (2) the mere fact that

the vendee had knowledge of defect of vendor's title, does not prevent him from recovering damages from the vendor on account of the breach. It

seems to me that when there has been a breach of covenant of title, the vendee has two remedies. He can either sue for damages for breach of

covenant as implied u/s 55 (2) and in this case he will be entitled to damages u/s 73 of the Contract Act. He has also an alternative remedy to sue

for restitution of the benefits gained by the vendor u/s G5 of the Contract Act,

In the present case, the plaintiff had sued both for breach of covenant of title as also for restitution. In view, however, of my finding that he is

entitled to the damages for a breach of the covenant of title, it is not necessary for me to consider the effect of Section 65 of the Contract Act. But

I might mention that on the facts found by me, it is clear that by virtue of the order of resumption, the con tract of sale in favour of the plaintiff

became void and, therefore, Section 65 would clearly apply.

It was, however, submitted by learned Counsel for the defendant that as both the parties knew about the fact that the contract may become void if

the permission was refused, the doctrine of pari delicto would apply and the plaintiff cannot get any relief u/s 65 of the Contract Act. I am,

however, unable to agree with this contention. The doctrine of pari delicto would apply only in cases where there is some fraud committed by both

the parties or where the object of the contract itself is illegal. I am supported in my view by the decisions reported in Dhanna Munda and Another

Vs. Mt. Kosila Banian, & Nath Khan v. Mt. Sewak Koeri, 15 Cal WN 408. Bose, J. in a Full Bench case reported in AIR 1938 Nag 335 was

also of the same view.

In the instant case, it is nobody's case that the purpose or object of the sale was unlawful. In these circumstances, therefore, I do not see why

Section 65 would not apply in this case. The question, however, may not detain us any further in view of my finding that the defendant has clearly

committed a breach of warranty of title imported in the sale deed u/s 55 (2) of T. P. Act. This issue is, therefore, answered in favour of the plaintiff

and against the defendant.

ISSUE NO. 2.

The question for consideration is as to whether the suit of the plaintiff is barred by limitation. It is now settled by consensus of opinions, of

almost all the High Courts in India, that where the plaintiff sues for damages for breach of covenant of contact in writing registered, the period of

limitation would be governed by Article 116 which prevails in India which corresponds to Article 120 of the State. The most important authority in

this case which has been relied upon by a number of High Courts is to be found in Arunachala Aiyar and Two Ors. Vs. T. Ramasami Aiyar and

Others, where their Lordships relying on a Privy Council ease held as follows:

It is contended before us that as the sale deed in this case was executed in 1904 long after the Transfer of Property Act came into force, the

proper article to be applied in respect of a suit claiming compensation for breach of an express or implied covenant of title and quiet enjoyment is

Article 116 which allows a period of six years. We think that this contention must be upheld. It has been decided in a series of cases beginning in

1889 (see the two cases reported in Kasturi Naickcn v. Venkatusubba Mudaly 1 MLJ 162 and Naravana Reddi v. Peda Rama Reddi 1 MLJ

479) that in all registered conveyances executed after the Transfer of Property Act came into force a covenant for title is implied by Section 55

clause (2) of that Act that the registered conveyance should be read as if it expressly embodied that covenant and that the breach of that covenant

is the breach of a contract in writing registered within the meaning of Article 116."" The view taken by the Madras High Court has been endorsed

by a later decision of the same High Court reported in AIR 1926 Mad 255. To the same effect is the decision of the Allahabad High Court

reported in Muhammad Siddiq and Others Vs. Muhammad Nuh , where a Division Bench consisting of Sulaiman and Kendall JJ. observed as

follows:

It therefore follows that if a statute lays down that a certain covenant should necessarily be implied in a certain contract and that contract itself is in

writing registered, Article 116 would be applicable and the time begins to run from the date of dispossession.... Thus there is a considerable

preponderance of authority in favour of the view that even in cases of implied covenants if the contract itself is registered Article 116 is applicable.

The same view was taken by a Division Bench of the Patna High Court reported in Debi Prasad Agarwala Vs. Haji Syed Mehdi Hasan and

Others, . The Bombay High court in Gulabchand Daulatram Vs. Suryajirao Ganpatrao, also seems to have token the same view. To the same

effect is the authority of the Nagpur High Court it-ported to Kashirao v. Zabu AIR 1932 Nag 5 where Subhedar J. made the following

observations:

In the cases of transactions of class (b) viz., those voidable at the option of third parties where the plaintiff vendee upon dispossession or

disturbance of title to retain possession sues for damages for breach of covenant for title either express or implied by law, the view entertained is

also unanimous that in such cases the starting point of limitation under Article 116 of the Limitation schedule is the date of dispossession of the

plaintiff or disturbance of his title to retain possession under the transaction and not the date of sale.

The decision of the Privy Council reported in Tricomdas Cooverji Bhoja v. Sri Gopinath Jiu Thakur AIR 1916 P.C. 182 in my opinion settles the

controversy.

It was contended by learned Counsel for the defendant that Article 62 of India which corresponds to Article 95 of the State Act would apply

to this case. I am, however, unable to agree with this contention, because Article 116 of the India Act and which is Article 120 of the State Act, is

a specific article which applied to suits relating to a breach of contracts which are registered, I might, however, mention here that there was some

controversy on the question as to whether limitation would run from the date of registered deed or from the date of dispossession.

Article 20 of the State Act, however, provides that the period shall be 12 years as against the period of six years under the Indian Act, hence the

suit is within a period of 12 years, even from the date of execution of the sale deed. It is, therefore, not necessary for me to go into the question as

to whether limitation would run from the date of dispossession namely the resumption order or from the date of registered sale deed because in

either case the present suit does not appear to be barred by limitation. Issue No. 2 is answered in favour of the plaintiff and against the defendant.

ISSUE NO. 8: This issue was not pressed before me and nor does it arise on the facts of the case. This must, therefore, be answered in favour

of the plaintiff and against the defendant.

ISSUE NO. 9. In view of my findings on issue Nos 2, 4, 6 and 7 it follow, that the plaintiff is entitled to damages u/s 73 of the Contract Act.

The plaintiff has not, however, himself claimed damages in proportion to the market value of the property in 1952, that is, at the time when the

contract became void and the land was resumed by the State. The plaintiff has claimed a sum of Rs. 40,000/- which is built up of the consideration

paid to the defendant, the expenses incurred by the plaintiff and the interest thereon at the rate of 6 per cent. The plaintiff has, however, given up a

sum of Rs. 5000/-.

In view of my findings, however, that the plaintiff was in possession of the property until 14th August, 1952 it will not be proper to allow him

interest on the consideration money from the date of execution of the sale-deed. The plaintiff is however, entitled only to interest at the rate of 6 per

cent per annum from 15-8-1952 till the date of the suit. The plaintiff will be also entitled to interest pendent lite at the rate of 6 per cent and also to

future interest at the same rate.

For the reasons given above, the plaintiffs suit is decreed as indicated above and a decree for a sum of Rs. 33,758.75np is passed in favour of

the plaintiff against the defendant.

The plaintiffs will be entitled to costs of the suit as also to pendent lite interest at the rate of 6 per cent per annum and future interes at the same

rate.