AI Structured Summary
Not yet generated for this judgment
Judgment
King, J.—The ultimate transaction which has given rise to these appeals is the sale by defendants 2 to 4 of certain properties to defendant 1
in December, 1929. The consideration of Rs. 2,500 was by the terms of the sale-deed retained in the hands of defendant 1 for the purpose of
discharging two debts due to plaintiff; one on a first mortgage and the other on a promissory note. The property sold was subject also to a second
and a third mortgage. These mortgages the Vendors undertook to discharge.
Defendant 1 did not discharge the promissory note debt and plaintiff accordingly sued in 1931 to recover it and obtained decree against
defendants 2 to 4. In execution of that decree he attached the debt which he alleged to be due from defendant 1 to defendants 2 to 4 as unpaid
purchase-money in respect of the sale. On notice being sent to defendant 1, he denied that any debt was due, con-1 ending that he was under no
liability to pay the purchase-money until defendants 2 to 4 had cleared off the second and third, mortgages. The executing Court accepting this
contention raised the attachment on 1st August, 1935. Plaintiff thereupon filed the present suit (O.S. No. 188 of 1936) under Order 21, Rule 63
impleading all four defendants. The suit was dismissed by the learned District Munsif of Razole.
Meanwhile in August, 1936, defendants 2 to 4 transferred to defendant 5, their right to receive from defendant 1 the unpaid purchase-money.
Defendant 5 in 1937 paid off the second and third mortgages, and then in O.S. No. 23 of 1938, sued defendant 1 for the money, and. obtained a
decree. The decree, however, did not award him interest from the date of the sale transaction. Against this part of the decree defendant 5
appealed and this appeal (A.S. No. 4811940), was heard recently by me sitting with Lakshmana Rao,. J. We confirmed, the decree refusing
interest for the whole period until defendant 5 paid off the two mortgages, holding that u/s 55 (5) (b) of the Transfer of Property Act, defendant 1
was entitled to retain the purchase-money in his hands.
Plaintiff appealed against the decree of the District Munsif in the present suit. Defendant 5 was impleaded as supplemental respondent. The
appeal was allowed. Defendant 5 and defendant I have separately filed the two second appeals which I have now heard.
The first point taken for the appellants is that plaintiff''s suit was not maintainable. It is argued on the authority of Atmakuru Butchayya Chetty
Vs. Chakram Krishnamachari, , that when a garnishee denies his liability to the judgment-debtor the question between him and the decree-holder is
one which is outside the scope of Order 21, Rules 58 to 63, altogether. It is clear, however, that Atmakuru Butchayya Chetty Vs. Chakram
Krishnamachari, , does not go so far as this, and recognises that where the ""existence of the debt"" is admitted by the garnishee these rules apply.
The expression ""existence of the debt'' is ambiguous but I think it must be interpreted to mean ""existence of facts from a consideration of which it
follows in law that the garnishee is indebted"". Here defendant 1 admitted that he had purchased the property and had not paid for it, and in essence
claimed only that he was entitled not to refuse payment altogether but only to defer it. I would accordingly hold that plaintiff''s suit does lie.
The question then arises whether in 1935 at the time of the order raising the attachment, defendant 1 was under any immediate obligation to his
vendors. The argument for plaintiff is that even though a Bench of this Court may have held that defendant 1 was entitled to retain the purchase-
money in his hands this privilege was coupled with a corresponding duty u/s 55 (5) (b) to pay it to the mortgagees. As he had not fulfilled this duty
for nearly six years, the right of his vendors to receive the purchase-money had been restored. In support of this argument I have been referred to
Ragunatha Chariar Vs. Sadagopa Chariar, , and Komu Kutti Vs. Kumara Menon and Others, , but these are cases which have nothing to do with
Section 55 (5) (ft). They merely lay it down that where a vendee has undertaken to discharge his vendor''s debts to simple money creditors and
fails to do so within a reasonable time the vendor may sue the vendee directly for the money.
The learned advocates for the appellants do not deny that u/s 55 (5) (b), it is the duty of the vendee to pay the money which he retains in his
hands to the mortgagees, but they argue that this obligation cannot arise if the sum required to pay off the mortgagees is greater than the amount of
the purchase-money. Although the Transfer of Property Act is not specifically referred to in that judgment this principle seems clearly to follow
from a judgment of the Privy Council reported in 3 CWN 201 (Privy Council) . It is there explicitly laid down that a vendee charged with the
obligation of paying off an encumbrancer to a certain extent may defer doing so until the vendor is prepared to contribute the remainder of the sum
due to pay him off completely. In 1935, therefore defendant 1 was not compellable to pay anything to the second and third mortgagees unless
defendants 2 to 4 joined with him in paying them off--and it follows from this that in 1935 defendants. 2 to 4 had no legal claim upon defendant 1
for the amount of the purchase-money.
But this finding does not conclude the matter. A debt which is not immediately payable in 1935, may nevertheless be attachable in 1935, if it is
an obligation already in existence. It is argued for the appellants that there was no debt or obligation in existence at any time before 1937, but it
seems clear to me that the obligation to pay for the property purchased sprang into-being by virtue of the very transaction of sale itself in 1929.
The right which is given to the vendee by Section 55 (5) (b) is not a right to say that he is under no obligation, but a right to postpone the discharge
of that obligation. The cases cited for the appellants, viz., Haridas Acharjia Chowdhry v. Baroda Kishore Acharjia Chowdhry I.L.R.(1899) Cal.
38 Lachman v. Jarbhandan I.L.R.(1927) All. 507 and G. D. John v. Sombamurthi Ayyar (1928) 56 M.L.J. 299 are clear cases in which an
obligation is not yet due, and easily therefore distinguishable from the facts of the present case. For these reasons I hold that the obligation in
question in this case was a debt attachable in 1935 and these appeals must therefore fail. They are dismissed with costs. Leave refused.