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K.M. Natarajan, J.—The unsuccessful first defendant has preferred this appeal challenging the judgment and decree passed by II Additional Subordinate Judge, Salem in O.S. No. 567 of 1977. The brief facts which are necessary for the disposal of the appeal can be stated as follows : Respondents 1 and 2 herein, who are the plaintiffs before the trial Court have filed the suit to recover the purchase-money paid by the first plaintiff in respect of half of Riverdale Estate and also to create a charge on the suit property. For convenience sake, the array of parties before the trial Court is adopted in this appeal. The case of the plaintiffs is as follows: The estate called Riverdale Estate was owned by two sisters, Miss A.E.H. Short and Miss M.H. Short by virtue of the will executed by their father. As per the terms of the will, if one sister died the surviving sister should get the entire estate. Miss M.H. Short known as Mary became lunatic which necessitated the appointment of a manager to administer half of the estate. In O.P. No. 34 of 1959 G.F. Muiahead and Rev. E.L. Poyser were appointed as managers for the lunatic under the Lunacy Act. They moved I.A. No. 66 of 1960 for permission to sell the lunatic''s half share through solicitors M/s. King and Patridge at Bangalore and obtained permission from Court. The Solicitors called for tenders by fixing the last date as 31.8.1962. The first defendant offered to purchase for Rs. 5,00,000 and moved I.A. No. 402 of 1962 in this regard. In the meantime, the first plaintiff offered to purchase at Rs. 5,05,000 in I.A. No. 401 of 1962. The District Court accepted the offer of the first plaintiff and rejected the offer of the first defendant. Being aggrieved by the same, the first defendant filed revision in C.R.P. Nos. 1634 and 1635 of 1962 before this Court. Miss A.E.H. Short, known as Alice, wanted her half share to be sold through solicitors. Hence, the offer made by the first defendant and the first plaintiff was in respect of the entire property. The first plaintiff deposited Rs. 2,52,500 towards half share of the lunatic sister. He paid the other half share of the non-lunatic sister through her counsel. The property in its entirety was delivered to the first plaintiff. The C.R.P. preferred by the first defendant was allowed by the High Court setting aside the order passed by the District Court whereupon the District Court called for fresh tenders. When possession was asked for from the first plaintiff, he refused to deliver possession contending that so far as the half share of the non-lunatic sister was concerned, the sale price was already sent to the Solicitors which was accepted and deposited in bank and hence there was concluded sale in respect of half share, that delivery of possession of half share was effected, that his possession was lawful under orders of Court and that the District Court has jurisdiction only in respect of the half share of the lunatic sister. It was also contended that possession of half share without division is not possible and therefore no recovery is possible. The first plaintiff applied for return of half of the amount which he paid in respect of the half share of the lunatic. Though the said application was resisted by the first defendant, the District Court passed an order directing return of Rs. 2,25,000 retaining the balance of Rs. 27,500 as security for any possible claim in future. Against the order, an appeal was also filed. In the meantime, the lunatic sister died on 17.10.1965. Hence, the non-lunatic sister became entitled to the entire estate as per the directions of the will. Defendants 1 and 2 purchased the entire estate on 15.4.1966 from the surviving sister for Rs. 5,00,000. Defendants 1 and 2 agreed and undertook to pay Rs. 2,52,500 which the first plaintiff has already paid to the surviving sister in respect of half share which was received by her and deposited in bank. Defendants 1 and 2 instituted the suit O.S. No. 184 of 1966 for recovery of possession against plaintiffs 1 and 2 on the basis of the sale in their favour. The said suit was decreed. The first appeal (A.S. No. 218 of 1973) and the second appeal (S.A. No. 379 of 1975) preferred by the plaintiffs 1 and 2 were dismissed. Defendants 1 and 2 filed O.S. No. 76 of 1967 for recovery of mesne profits on the basis of the findings in the prior suit O.S. No. 184 of 1966 commencing from 7.9.1962 to 21.7.1966. The said suit was also decreed for Rs. 27,500. The amount already deposited as security was transferred to the file of the said suit. Defendants 1 and 2 aggrieved by the decision with regard to quantum have preferred an appeal which is still pending. It is in the above circumstances, the plaintiffs filed the suit for recovery of Rs. 2,52,500 paid towards the purchase money in respect of the non-lunatic sister''s share, with interest, creating charge over the suit property.
Defendants 1 and 2 filed a written statement denying the allegations and inter alia contending as follows : The plaintiffs are not entitled to rely upon the recitals in the sale deed and they have no right to sue the defendants on the basis of the recitals. It is further stated that the defendants undertook to pay the money only on the delivery of possession by the first plaintiff and not on the defendants taking possession of the estate. Further, there is no privity of contract between the plaintiff and the defendants in respect of the sale price for half of the non-lunatic sister. Hence, they cannot rely upon the sale deed. The plaintiffs cannot enforce the recitals in the sale deed since they are strangers to the document. The plaintiffs, who are the defendants in O.S. No. 184 of 1966 and O.S. No. 76 of 1977, having failed to plead that they were entitled to recover half of the purchase money, are barred from filing the present claim by res judicata and they were estopped from filing a separate suit. Defendants 1 and 2 are not bound by whatever the third defendant might have said. The cause of action disclosed is vague. The suit is also barred by limitation. There was no rate of interest agreed. Hence, they prayed for dismissal of the suit.
The plaintiffs filed a rejoinder to the effect that there was privity of contract between the plaintiffs and the defendants and that they are entitled to claim back the amount with a statutory charge over the property. The plaintiffs are not barred from raising the contentions by the rule of res judicata. It is also stated that the plaintiffs are entitled to claim interest.
The plaintiffs gave up the claim against the third defendant by means of an endorsement made on the plaint. Consequently, the suit against the third defendant was dismissed.
On the basis of the contentions raised by way of pleading the trial Court framed as many as 7 issues and two additional issues. Subsequently, they were recast as issues 1 to 6. On the side of the plaintiffs Exs. A-1 to A-19 were marked and on the side of the defendants Exs. B-1 to B-5 were marked. No oral evidence was adduced on both sides. The trial Court for the reasons assigned in the judgment found issues 1 to 4 against the defendants and issue Nos. 5 and 6 in favour of the plaintiffs holding that the suit is not barred by constructive res judicata by virtue of the decision in O.S. No. 184 of 1966 and the plaintiffs are not estopped from claiming the suit amount. It was also found that the plaintiffs are entitled to interest, that the suit is not barred by limitation and that a charge can be created over the property. Accordingly, the trial Court decreed the suit for Rs. 2,52,500 with interest at 6 per cent per annum from 31.8.1966 till date of realisation with proportionate costs, creating a charge on the suit property for recovery of the said amount. Aggrieved by the same, this appeal is filed.
Learned Counsel for the appellants, Mr. G. Subramaniam mainly submitted that the present suit has no cause of action on the basis of the recitals in the sale deed Ex. A-1 in favour of the defendants since the plaintiffs are not parties to Ex. A-1 sale deed. They cannot enforce it. There is no concluded contract and hence Section 55(6)(b) of the Transfer of Property Act cannot be invoked for creating a charge. Only if a charge is created, Article 62 of the Limitation Act would apply. The plaintiffs are entitled to get return of the purchase money only if peaceful delivery of possession is given. In the instant case, the defendants were constrained to take proceedings for recovery of possession. According to the learned Counsel, the cause of action arose not from the date of taking possession but on the date when his right was denied. In calculating limitation, it is the date of the judgment of the first court which was delivered on 5.8.1972, that should be taken into consideration. According to him, Article 47 alone will apply and not Article 113 or 62. Lastly he would submit that there is no provision for payment of interest and the decree awarding interest is also not sustainable. He would submit that since Section 55(6)(b) of the Transfer of Property Act is not attracted, there is no question of creating charge and admittedly Section 100 of the Transfer of Property Act does not apply.
Per contra, the learned Counsel for the respondents, Mr. T.R. Mani, submitted that Ex. A-1 sale deed is relied only as a document acknowledging the liability and the suit is not filed on the basis of the undertaking given under Ex. A-1. He would submit that on the facts and circumstances of the case, Section 55(6)(b) of the Transfer of Property Act is squarely attracted to the case of the plaintiffs and a charge on the property can be created not only against the seller, but also against all persons claiming under him to the extent of the seller''s interest in the property, for the amount of any purchase money properly paid by the buyer in anticipation of the delivery and for interest on such amount. Law imposes charge u/s 55(6)(b) of the Transfer of Property Act. According to the learned Counsel the finding in the earlier suit will not operate either as res judicata or estoppel for the present suit. The learned Counsel submitted that when once it is held that Section 55(6)(b) of the Transfer of Property Act is attracted, it cannot be said that the suit is barred by limitation and that the plaintiff is not entitled to any interest, as the period of limitation is only 12 years. Further, there is provision for payment of interest in the above section. The trial Court considered all these aspects and came to the correct conclusion and no "interference is called for. He would also submit that subsequently an amendment petition I.A. No. 650 of 1982 was filed and the interest was awarded from the date of deposit and the same has not been challenged. In view of the rival contentions the following questions arose for consideration in this appeal:
Whether the plaintiffs are entitled to claim charge u/s 55(6)(b) of the Transfer of Property Act?
Whether the plaintiffs'' claim is barred by limitation?
Whether the plaintiffs cannot rely on the covenants in the sale deed Ex. A-1 in favour of the defendants by the non-lunatic sister, being a third party to the same.
Whether the plaintiffs are entitled to claim interest?
Point No. 1 : For Proper appreciation of the respective contentions of both parties, it is worthwhile to set out certain admitted facts in this case to decide the point whether the respondents-plaintiffs are entitled to claim the right u/s 55(6)(b) of the Transfer of Property Act. The estate called ''Riverdale Estate'' which originally belonged to Thurston Holwell Short of Yercaud, was bequeathed by him under the will dated 19.4.1920 with the specific condition that if anyone of the legatees/daughters marries or dies, she will lose her right and the right will go to the other legatee. As per terms of the will one Miss Mary Holwell Short and Miss Alice Edith H. Short were entitled to the estate. Since Miss Mary Holwell Short became a lunatic, a petition was filed by her sister A.E.H. Short and another in O.P. No. 34 of 1959 to make an enquiry into the unsound mind of M.H. Short and also to appoint a guardian. The District Court by order dated 25.2.1960 declared M.H. Short as lunatic and appointed G.F. Muirhead, a partner of King and Partridge, a firm of Solicitors at Madras and Rev. E.L. Poyser of Bangalore as joint managers to look after the properties of the lunatic and also appointed her sister A.E.H. Short as the guardian of the person of the lunatic. Since the managers found it difficult to manage the estate, they filed I.A. No. 66 of 1960 seeking permission to sell the share of the lunatic in the coffee estate. The non-lunatic sister A.E.H. Short also expressed her willingness to sell her share in the estate along with the share of the lunatic in order to get a higher price. Accordingly, sanction was accorded by the District Court. Messrs. King and Partridge advertised the Riverdale Estate belonging to both the sisters for sale in English newspapers. They also received offers from various parties. The offer of the first defendant for Rs. 5,00,000 was the highest offers received by them. They filed I.A. No. 402 of 1962 in O.P. No. 34 of 1959 about the offers received from the first defendant and others. The first plaintiff herein directly filed a petition I.A. No. 401 of 1968 offering to purchase the estate for Rs. 5,05,000 and requested the court to consider his offer along with other offers. The District Court accepted the offer made by first plaintiff directing him to deposit Rs. 2,52,500 and also file a draft agreement. Accordingly the first plaintiff deposited the amount on 31.8.1962. The first plaintiff also deposited the amount representing the other half share of non-lunatic A.E.H. Short, to M/s. King and Partridge. The District Court directed the managers to execute the sale deed in favour of the first plaintiff or his nominees. Accordingly possession was delivered to the first plaintiff by the managers. The District Court allowed the application filed by the first plaintiff while dismissing the petition I.A. No. 402 of 1962. As against the said order, the first defendant filed C.R.P. Nos. 1634 and 1635 of 1962 before this Court and this Court was pleased to set aside the order passed by the District Court in I.A. No. 401 of 1962 and directing restoration of the I.A. No. 402 of 1962 for fresh disposal after directing the District Judge to hold an enquiry with regard to the market value of the estate and to give further directions to the managers to call for fresh offers or to hold public auction. When the matter was pending before the District Court for fresh disposal as per direction of the High Court, the lunatic M.H. Short died at Bangalore on 17.10.1965. Consequent upon the death of her sister, the non-lunatic sister A.E.H. Short became the owner of the entire property. She sold the property outside the court to the first defendant under a registered sale deed on 15.4.1966 conveying the entire "Riverdale Estate" for Rs. 5,00,000 under the above said sale deed the first defendant undertook to pay the sale price paid by the first plaintiff to her and obtain delivery and he paid only the balance to A.E.H. Short. Thereupon on the strength of the sale deed, Ex. A-1, the first defendant filed a suit O.S. No. 184 of 1966 for recovery of possession against the first plaintiff herein and two others. The said suit was resisted by the first plaintiff on the ground that since the non-lunatic sister has accepted the highest offer of the first plaintiff for her half share, he became the purchaser of the share of the non-lunatic sister A.E.H. Short. Miss. A.E.H. Short invested the sale price for her share in fixed deposit. Having accepted the offer of the first plaintiff and received the sale price, the said sale has been concluded in respect of her share. It was contended that the District Court and the High Court have no jurisdiction in respect of the same and those orders passed in the C.R.P. are valid in so far as the lunatic share is concerned. Hence the first defendant is not entitled to ask for the entire estate. The contention of the first plaintiff was negatived in view of the finding of the High Court in the C.R.P. that the subject matter of the sale was the whole of the Riverdale estate and the sale is good or bad in its entirety and the attempt at this stage to extricate the half share of the sister of the lunatic must fail. It was found that it is not open to the first plaintiff to put forward the said contention and consequently, the suit was decreed and delivery was ordered to be made. The first plaintiff was unsuccessful in the first appeal as well as the second appeal. In pursuance of the said decree, the first defendant has also taken delivery of possession on 15.7.1976 and filed a separate suit for recovery of damages for unlawful use and occupation and obtained a decree. Not satisfied with the quantum, he filed an appeal against the said judgment and it is pending. The first plaintiff herein filed the present suit in 1977 for recovery of the sale price paid towards the half share of the non-lunatic sister since the sale price paid towards the lunatic share has been refunded and in view of the fact that possession has been taken from him. It is only in these circumstances, it is submitted by the plaintiffs that in respect of the amount paid towards the purchase of the share of the non-lunatic sister, they are entitled to a charge u/s 55(6)(b) of the Transfer of Property Act. As already stated, the non-lunatic sister voluntarily gave her consent to the District Court for sale of her share along with the share of the lunatic in order to get higher price. Accordingly, offers were invited and the first plaintiff put forth his offer by means of a petition before the District Court and it was accepted by the District Court. The non-lunatic sister also accepted the same and received her share of the sale price, while the share of the lunatic sister was deposited in court. The non-lunatic sister who received the amount from M/s. King and Partridge, their agents, invested the same in a bank and has been receiving interest. It is only because of the order passed by the High Court in the two CR.P. Nos. 1634 and 1635 of 1962 filed by the first defendant on the ground that his offer was made within the time and subsequently the offer of the first plaintiff was made and that the Court ought not to have directed the managers to accept the said offer, the sale in favour of the staff was set aside. In the C.R.P. Jagadeesan, J. held as follows:
In the present case the non-lunatic sister consented to the sale of her interests along with the lunatic''s interest and the managers and the court have acted on such consent. She cannot now resile from the position and the respondent (first defendant) cannot claim as if there was independent sale to him for her share apart from the sale of the half share of the lunatic. The subject matter of the sale was the whole of the Riverdale estate and the sale is good or bad in its entirety. The attempt of the respondent at this stage to extricate the half share of the sister of the lunatic must fail.
The learned Counsel for the appellants mainly submitted that there was no concluded contract in respect of the half share of the non-lunatic sister and in view of the finding in the earlier proceedings instituted for recovery of possession of the property under Exs. B-3, B-4 and B-5 as there was no concluded contract, the first plaintiff is not entitled to claim the benefit u/s 55(6)(b) of the Transfer of Property Act. In this connection, the learned Counsel drew the attention of this Court to the decision of the trial court which is marked as Ex. B-3 in O.S. No. 184 of 1966 wherein under issue No. 3 it was held that there was no concluded agreement of sale of half share of Miss A.E.H. Short and that the first plaintiff herein was put in possession on the basis of the same. The learned Counsel drew the attention of this Court to the decision in Ex. B-4 as well as Ex. B-5 judgment in second appeal, where the said finding was upheld. On the other hand, the learned Counsel for the plaintiff-respondents drew the attention of this Court and submitted that in all these judgments, the decision of Jagadeesan, J. in C.R.P. Nos. 1634 and 1635 of 1962 which has already been extracted above, has been quoted and on the basis of the said finding, it was held that the plaintiff is not entitled to contend that there was separate agreement in respect of non-lunatic sister and that the order passed by the court setting aside the sale in respect of lunatic sister affects the sale in respect of the said half share and the court below has not set aside the sale in respect of the share belonging to the non-lunatic cannot be accepted. While doing so, it has been specifically observed, after referring to various letters exchanged between the non-lunatic sister and her agent, that it cannot be said on the basis of Ex. B-2 that the non-lunatic sister never have her consent to sell her share also along with the share of the lunatic and that she was only anxious about the disposal of her estate and that she should be informed of the facts. In another place, in para 13 it has been specifically observed by the trial court (O.S. No. 184 of 1966) that it cannot be said by any stretch of imagination that she did not give consent to her half share in the property. It was also observed that she gave a direction to the Manager to receive her share directly on her behalf. The above facts are not disputed. The learned Counsel for the respondents submitted that what the courts have held was that the offer and acceptance by the first plain tiff was in respect of one integrated agreement for the sale of the estate, and since the procedure adopted by the District Court in accepting the offer of the first plaintiff after the time fixed in the advertisement and not through the managers but directly is not ill accordance with the procedure, the court below negatived the contention of the plaintiff that the sale in respect of half share is to be excluded from the purview of the said order on the ground that the court has no jurisdiction and the contention that he is entitled to be in possession in respect of the half share in respect of that property was not negatived. That there was a concluded agreement in respect of the entire estate, both in respect of the share of the lunatic sister and the non-lunatic sister, is clear from the order of the District Court accepting the offer of the plaintiff and it is only because of the reasons set out in the order in C.R.P. Nos. 1634 and 1635 of 1962, the order directing the manager to execute the sale deed in favour of the plaintiff, the sale was set aside and the matter was remanded back. Since in the meantime possession has been taken by the defendant, the plaintiff filed the suit for recovering the amount of the share of the non-lunatic sister that was retained. Since the lunatic sister died, the non-lunatic sister sold the entire property outside the court to the first defendant who was also directed to pay the sale price paid by the plaintiffs to them. The learned Counsel for the appellants fairly submitted that though the appellants have no case on equitable grounds, yet he is now opposing the claim of the plaintiffs on the legal plea, namely, the plea of the limitation and in that connection the applicability of Section 55(6)(b) of the Transfer of Property Act is very relevant. It is to be noted that the plaintiffs have filed the suit for recovery of the balance of sale price and they claimed charge over the entire property including the share of the lunatic treating it as one transaction in view of the finding in the earlier proceedings. On a careful reading of the judgments, Exs. B-3, B-4 and B-5, we find that the contention put forward by the plaintiffs that there is concluded agreement in respect of the half share of the non-lunatic sister and that it has nothing to do with the agreement with regard to the sale of the half share of the lunatic sister was not accepted. But, it is nowhere stated that there is no concluded contract in respect of entire estate. As rightly observed by the trial court, all that the High Court has said in dealing with the orders passed in I.A. Nos. 401 and 402 of 1966 was that there was no concluded contract in respect of the half share of the non-lunatic sister and that non-lunatic sister has no independent right to sell her half share when especially she had already agreed to sell her half share with the share of the lunatic sister in entirety and that the estate either should be sold in entirety or not at all. Further, the acceptance of the offer of the first plaintiff by the District Court was not correct. As already stated, it is clear that there was an offer to purchase the entire property by the plaintiffs for Rs. 5,05,000 and it was accepted by the District Court and in pursuance of the same, the entire sale price was deposited, namely, half in court and the other half to the managers of the lunatic and possession was also delivered. Merely because the said order directing sale in favour of the plaintiffs was set aside on some technical ground, it cannot be said that there was no concluded agreement so as to attract Section 55(6)(b) of the Transfer of Property Act. In this connection, the learned Counsel for the respondents drew our attention to the very letter Ex. A-7, written by the non-lunatic sister accepting the offer of the plaintiff by way of reply to the letter written by M/s. King and Partridge, intimating the offer of the plaintiff for Rs. 5,05,000 and also about the deposit of her share with them. Therein she has stated that the court has no hold whatsoever upon her half share in the above estate and therefore one half of the deposited sum should be paid direct to King and Partridge on her behalf as well as the balance due to her of the purchase money on completion of the sale. Under Ex. A-6, King and Partridge informed the non-lunatic sister about investing the amount of Rs. 2,52,500 paid towards her share by the plaintiffs with the State Bank of India in the form of deposit.
Our attention was drawn to the relevant provisions of Section 55(6)(b) and Section 100, Transfer of Property Act, by the learned Counsel appearing on either side. Section 55(6)(b) reads as follows:
(6)(b) : The buyer is entitled-
(a)...
(b) unless he has improperly declined to accept delivery of the property, to a charge on the property, as against the seller and all persons claiming under him, * * *, to the extent of the seller''s interest in the property, for the amount of any purchase-money properly paid by the buyer in anticipation of the delivery and for interest on such amount; and when, he properly declined to accept the delivery, also for the earnest (if any) and for the costs (If any) awarded to him in a suit to compel specific performance of the contract or to obtain a decree for its rescission.
As per this provision, the buyer has a charge for price prepaid, that is, for price that he has paid in anticipation of completion. In this connection, the learned Counsel drew the passage in the Transfer of Property Act by Mulla, sixth edition, page 343, where the learned author has observed:
The principle underlying Section 55(6)(b) is a principle of justice, equity and good conscience and applies to Punjab Shankri v. Milkha Singh (1941) 43 P.L.R. 656 : 1971. C. 282 (41) A.L. 407. The buyer''s charge under the Section 18 a statutory charge and differs from a contractual charge which a buyer may be entitled to claim under a separate contract, Chettiar Firm v. Chettiar 1941 ARC. 47. A buyer can enforce his statutory charge against the property and the plea of want of notice on the part of a third person would be of no avail, Hari Bapuji Patankar Vs. Bhagu Sadu Birje, Abdul Hamid v. Mahomed Ali (1951) 51 Bom. L.R 817 : 52 A.B. 67But see Pushkarnarayan S. Maheshwari Vs. Kubrabai Gulamali, . A buyer''s charge exists even in cases where the buyer is in possession of the property intended to be sold and is not lost by his accepting the delivery of possession, Jibhaoo Harising v. Ajabsing Fahira AIR 1953 Bom. 253 : L.R 1971 Bom. 54 : 53 A.B. 145. The creation of a charge under the Section 18 not at all difficult when the buyer comes into possession of the property intended to be sold. It arises immediately the purchase price is paid by the buyer to the seller, Patti v. Kunhi Raman 1959 A. Ker. 389.
The charge on the property is enforceable not only against the seller but against all persons claiming under him.
Under Section 100 of the Transfer of Property Act, it is provided that charges are created by act of parties or by operation of law. In this connection the learned Counsel drew the attention of this Court to the relevant passage at page 625 wherein under the heading, "Charge by operation of law," the learned author observes:
But, as the Supreme Court observed in Laxmi Devi v. Mukand Kunwar (1965) A.S.C. 834; Manna Singh v. Wasti Ram (1960) 4 A. Punj. 296, a plain reading of Section 2(d) leaves no doubt that the provisions of Chapter IV of the Act, and therefore this section, govern charges by operation of law. The Act, however, itself creates such charges, for a charge by-operation of law arises in this Act u/s 55(4)(b) in the case of an unpaid vendor, u/s 55(6)(b) for purchase money paid in advance; u/s 73 in favour of a mortgagee on surplus sale proceeds of a revenue sale.
The learned Counsel for the appellants relied on the decisions reported in Muthu Goundan v. Chellappa Goundan (1910) 8 M.L.T. 464 : 82 I.C. 1089 and Trimbak Narayan Hardas Vs. Babulal Motaji and Others, , in support of his contention. In Muthu Goundan case, it was observed:
We do not think that Section 55(6)(b) of the Transfer of Property Act can be applied to give the vendee a charge upon the property in a case where the sale is wholly invalid: the agreement to sell does not of itself effect the transfer of any interest in the property. Vide Kurri Veera Reddi v. Kurri Bapireddi ILR 29 Mad. 336 and the charge which the vendee can claim is given to him only in the particular case where having paid money in anticipation of delivery, he fails to obtain delivery.
At the outset, it is to be noted that the facts of the case involved in the said case were not set out and it is not known under what circumstances, the learned Judges have observed as stated above in the above quoted case. Further, the above decision and the other decision relied on by the learned Counsel for the appellant, namely, Trimbak Narayan Hardas Vs. Babulal Motaji and Others, , have been referred to in a judgment of a Division Bench of this Court reported in I.T.O. Madras v. K.A. Govindaswamy AIR 1978 Mad. 186. Before ever considering the above case in I.T.O., Madras referred to, it is worthwhile to consider the case in Trimbak Narayan Hardas Vs. Babulal Motaji and Others, , which was also referred by the court below. As observed by the Court below, that was a case in which a debtor borrowed money from another. It was not a secured debt. The creditor when pressed for the return of the money, both agreed to refer the matter to a third party for arbitration. The Arbitrator passed an Award saying that the money should be re-paid within certain time and if it was not paid within such time, the debtor should sell his property to the creditor. The award was filed into Court for enforcement of specific performance. Meanwhile the debtor entered into an agreement of sale with a third party under an ante-dated document. The holder of the agreement filed a suit for specific performance impleading the debtor and the creditor saying that he had no notice of the award. The Court considered all the circumstances and found that the agreement was a fraudulent one under which no consideration passed. In view of the number of suspicious circumstances it was held that no money at all passed under the agreement. Since there was no money passed under the document, it could not be refunded and no charge was created. Admittedly, in the instant case, there was an offer and acceptance and the offer of the plaintiff was accepted by Court. He was directed to deposit the amount and the court also directed execution of the sale deed. But it was subsequently in revision at the instance of the first defendant, as stated earlier, the sale was set aside and the matter was remanded. Hence that decision is not helpful to the case of the appellants. In I.T.O. Madras v. K.A. Govindaswamy A.I.R 1978 Mad. 186 in para 9 after setting out the facts involved in the case, it was considered whether the intending purchaser could claim a charge over the property. It was observed as follows:
No doubt, the intending buyer cannot claim a charge u/s 55(6)(b) of the Transfer of Property Act after the sale deed is executed and possession of the property is taken by him. This statutory charge is the out come of the rule of justice, equity and good conscience, though there is no question of ownership involved while asserting the charge as above, as such ownership would still be in the seller. Yet in order to adjust the equity of the parties to the contract which are contained in Section 55(6)(b) of the Transfer of Property Act, the buyer is privileged to claim a statutory charge u/s 55(6)(b) of the Transfer of Property Act. There is even authority for the proposition that this statutory charge can be enforced even in court sales. No doubt, the position would be different if the agreement of sale is invalid or void or not genuine or in a case in which the seller has no personal interest in the property at all. Vide Muthu Goundan v. Chellappa Goundan (1910) 8 M.L.T. 464; Sailendra Nath Palit Vs. Syed Hade Kaza, , and Trimbak Narayan Hardas Vs. Babulal Motaji and Others, , we have already observed that this statutory privilege resulting in a charge in favour of the intending buyer is based on the well-known principle of justice, equity and conscience. This is because that once the buyer has paid the whole or part of the purchase money in question, the vendor becomes a trustee for him and to the extent to which the buyer has paid the purchase money the buyer acquires a lien over the property, as if upon the payment of a part of the purchase money the vendor has executed a mortgage to him of the property to that extent.
The said decision is, in our view, is applicable in all fours to the facts of the case of the respondents-plaintiffs.
To rebut the argument of the learned Counsel for the appellants that when possession has been delivered no charge can be created, the learned Counsel for the respondents drew our attention to the decision reported in Jibhaoo Harisingh Rajput Vs. Ajab Singh Fakira Rajput, it was observed:
If for some reason the sale is not effectuated or by reason of some technical defect it falls through, it was undoubtedly the intention of the Legislature that the buyer should have a charge on the property in respect of the purchase price paid by him If he has accepted delivery, the charge created by the statute continues to exist, but even if he has not accepted delivery, the charge is not lost unless the refusal to accept delivery is improper.
At page 267, after considering the earlier decision of the said court reported in Karalia Nanubhai v. Mansukhram (1990) 24 Bom. 400 and Lalchand v. Lakshman (1904) 28 Bom. 466it was held:
...a charge does arise in favour of the purchaser u/s 55(6)(b) of the Transfer of Property Act, even though he may be in possession of the property.
In Abdul Hamid Khan Mubin Khan Vs. Mohomed Ali Humayun, , it was held:
The charge under. Section 55(b) for the unpaid purchase money or the earnest money comes into existence from the moment the buyer pays part of the purchase money or earnest money towards the sale transaction and this charge is not lost except on account of the buyer''s own subsequent default. It is available to the buyer not only against the seller but also against the purchaser from the seller irrespective of the question whether the purchaser under the seller had or had not notice of the charge. Hence the circumstance that the transfer in favour of the subsequent purchaser has taken place before the date of the suit by the buyer praying for a declaration of the charge, makes no difference and the purchaser is bound by the decree declaring the charge : AIR (24) 1937 Bom. 142 Rel. on.
The learned trial Sub Judge relied on the decision in M.K. Sundararamier Vs. C.M.V. Krishnamachary and Another, . It was a case in which the property was delivered to the purchaser, and the facts are:
Though the purchaser was in possession on account of some supervening circumstances, the sale could not be completed. It was contended on the side of the seller that a purchaser would not be entitled to a charge because he was in possession of the property. That contention was rejected holding that Section 55 Clause 6(b) of Transfer of Property Act would apply in case where possession followed also and that section would apply in an executory contract i.e. to say sale not completed.
The learned Counsel for the respondents drew our attention to the decision in Nagammal and Others Vs. Ayyavu Thever and Others, , which was also relied on by the trial Judge. It was held in that case:
Where under an agreement of sale the vendee pays part of the purchase price by way of advance, but the contract goes off by reason of the defective title of the vendor, the vendee is entitled to a charge on the vendor''s interest in the property agreed to be sold. Since the contract goes off without any default on the part of the vendee it cannot be said that the vendee has improperly declined to accept the delivery and that therefore the vendee is deprived of the charge.
It was further held in the above case:
The charge on the seller''s interest in the property agreed to be sold created u/s 55(6)(b) in favour of a vendee can be enforced not only against the seller but against all persons claiming through him irrespective of notice of prior agreement of sale. Hence a charge can be enforced against the seller''s interest in the property notwithstanding the subsequent sale of the property.
Thus, for all these reasons, in view of the facts and circumstances of the case and the ratio laid down in the above decisions, we have no hesitation in holding that the plaintiffs are entitled to claim charge u/s 55(6)(b) of the Transfer of Property Act for the purchase money paid by them.
Points 2 and 3 : As regards these points, it is contended by the learned Counsel for the appellants that the plaintiffs are not entitled to any charge u/s 55(6)(b) of the Transfer of Property Act, the suit should have been filed within 3 years from the date of deposit or when the transaction in favour of the plaintiffs was not accepted by the court. He would submit that in the earlier suit filed by the first defendant for recovery of possession, the right of the plaintiffs claimed under the said suit was negatived and as such the suit should have been filed within three years from the date of the first Judgment under Ex. B-3 and the relevant Article is Article 47 of the Limitation Act, and as the suit has not been filed within 3 years, it is barred by limitation. It is not disputed by the learned Counsel for the appellants that when once it is held that the respondents-plaintiffs are entitled to a charge u/s 55(6)(b) of the Transfer of Property Act, Article 62 alone is applicable. Under Article 62 it is provided that to enforce payment of money secured by a mortgage or otherwise charged upon immovable property, the period of limitation is 12 years when the money sued for becomes due, while Article 47 deals with the suit for recovery of money paid upon an existing consideration which afterwards fails, and the period of limitation is 3 years from the date of failure. Article 113 is only a residuary clause. In the instant case, the purchase money was admittedly paid to the non-lunatic sister on 31.8.1962 and the charge being equated to a simple mortgage, the period of limitation under Article 62 is 12 years and it commences from that date. The plaintiffs relied on Ex. A-1 sale deed in favour of the first defendant not for enforcing the undertaking given by the first defendant to pay the sale price paid by the plaintiffs, but only for acknowledging the liability of the vendor to the plaintiffs. It is worthwhile to quote the relevant portion with regard to the acknowledgment of liability in Ex A-1 which is a sale deed in favour of the first defendant dated 15.4.1966. The various proceedings relating to the order of sale in favour of the first plaintiff and the reasons for subsequently setting aside the order were set out. It was stated as follows:
Whereas the purchasers have suggested to the vendor that a sum of Rs. 2,52,500 paid by Mr. M. Thiyagarajan to King and Partridge, which is now held in deposit by M/s. D.S''ouza and D''Silva having received the same from M/s. King and Partridge be received by the vendor herein as part of the purchase on the purchasers herein having undertaken the responsibilities of repaying the said amount of Rs. 2,52,500 to Mr. M. Thiagarajan against the return of possession of Riverdale Estate and re-delivery of the documents of title to which course M/s D''Souza and D''Silva are agreeable. Now this indenture witnesses that in pursuance of the aforesaid agreement and* in consideration of the sum of Rs. 5,00,000 paid by the purchasers to the vendor as follows : viz., Rs. 2,52,500 in deposit with M/s. D''Souza and D''Souza being the amount paid by M. Thiagarajan to M/s. King and Partridge at the time of delivery of the possession of the estate to him which is by the undertaking of the purchasers as aforesaid deemed to have been paid by the purchasers and the balance sum of Rs. 2,47,500 paid by the purchasers to the vendor on the 15th day of February 1966. The vendor doth hereby grant, convey and assign unto the purchasers all that immovable property described therein.
Though the learned Counsel for the appellants submitted that since the plaintiffs are not parties to the transaction, the plaintiffs are not entitled to enforce that stipulation in this suit it is submitted by the learned Counsel for the respondents that the plaintiffs are not basing their suit on the said undertaking but enforcing the claim only u/s 55(6)(b) of the Transfer of Property Act. The plaintiffs are relying on Ex. A-1 for the acknowledgment of liability u/s 18 of the Limitation Act. According to the learned Counsel, if once it was held that there was acknowledgment of liability, the suit which was filed in the year 1977 within 12 years from that date is within time. As per recitals in Ex. A-1, the amount due to the first plaintiff was payable on the delivery of the property. The delivery of the property took place on 15.7.1976. The suit was filed in 1977. Hence, it cannot be said that the suit is barred by limitation. The learned Counsel for the appellants has not disputed that an acknowledgment u/s 18 of the Limitation Act need not necessarily be made to the person relying on acknowledgment. Hence, in the circumstances, even though the plaintiffs are not parties to Ex. A-1, yet the plaintiffs can rely on the acknowledgment of liability by the vendor to the plaintiffs. The decisions relied on by the learned Counsel for the appellants reported in M.C. Chacko Vs. The State Bank of Travancore, Trivandrum, and Subbu Chetti v. Arunachalam Chettiar A.I.R 1930 Mad 382 : ILR 53 Mad 270for the proposition that a person who is not a party to the contract cannot enforce a charge are not at all helpful. Even in the above decisions, it is stated that there are exceptions to the above rule and they have been set out even by the trial Judge. As already stated that question does not arise. If once it is held that the plaintiff is entitled to a charge u/s 55(6)(b) of the Transfer of Property Act, all the persons claiming under the vendor are bound to repay the said amount irrespective of the fact whether they are not parties to the contract between the vendor and the vendee. As already observed, in the instant case, the plaintiffs relied on Ex. A-1 only for the purpose of proving the acknowledgment of liability and not for enforcing the suit claim on the basis of the said undertaking given under Ex. A-1. Hence in view of the findings on point No. 1 and in view of the acknowledgment under Ex. A-1, the present suit by the respondents plaintiffs is well within time and the finding of the trial Judge is unassailable. These points are answered against the appellants and in favour of the respondents.
Point 4 : As regards the 4th point, which deals with the award of interest, it is seen that, though admittedly there was no agreement for payment of interest, it is the admitted case of both the parties that the amount of Rs. 2,52,500 was paid by the plaintiffs and received by the non-lunatic sister A.E.H. Short and she also invested the same in bank deposit and received interest from the said deposit. As per Section 55(6)(b) of the Transfer of Property, the purchaser is entitled to claim interest. As rightly contended by the learned Counsel for the respondents, when once it is found that the purchaser is entitled to get refund of the purchase money in view of the provision of Section 55(6)(b), he is entitled to get interest in the absence of any contrary agreement. It is also brought to the notice of this Court that the various notices issued by the plaintiffs and the replies by the defendants clearly show that there was demand of the amount with interest and the defendants denied liability. The trial judgment considered the facts and circumstances of the case and held that though the plaintiffs claimed interest at 12 per cent per annum, they are entitled to interest at 6 per cent per annum from the date of deposit. It is not in dispute that the first defendant has already filed a suit for realizing mesne profits against'' the plaintiffs and obtained a decree and the matter is pending in appeal. The first defendant having obtained a decree for mesne profits for the entire period till the date of delivery to him it is not open to them to contend that the plaintiff is not entitled to any interest. It is also brought to the notice of this Court that subsequent to the passing of the decree, an amendment petition was filed in respect of the period of payment of interest, namely, from the date of deposit till the date of delivery and that has not been challenged. Whatever that be, in view of the finding that the plaintiff is entitled to a charge u/s 55(6)(b) of the Transfer of Property Act, the plaintiffs are certainly entitled to claim interest from the date of deposit till the date of payment as per said provision and hence we answer this point accordingly in favour of the respondents-plaintiffs and as against the appellants-defendants.
Though before the lower court it was contended that the plaint is barred by res judicata u/s 11, C.P.C. and also on account of estoppel by not raising the contentions in the prior suit under Order 2, Rule 2, C.P.C., those points were not pressed before this court. Even otherwise, we find that there is absolutely nothing to show that the plaintiffs'' claim is either barred by res judicata or by estoppel. In view of the findings on points 1 to 4, the appeal is liable to be dismissed.
In the result, the judgment and decree passed by the trial court are confirmed and this appeal is dismissed. No order as to costs in this appeal.