Debi Prasad Agarwala vs Haji Syed Mehdi Hasan and Others

Manohar Lall, J.—This is an appeal by the plaintiff against the decision of the learned Subordinate Judge of Shahabad dated 4th January 1937 by which he has dismissed the claim against the respondent, defendant 1, in an action arising out of a transaction of a mokarari lease by which the former sajadanashin of Khankah Sassaram granted a permanent lease to the plaintiff of a portion of the wakf property and put him in possession but of which he was dispossessed on 6th February 1928 with the result that the plaintiff claimed damages and return of the nazarana under the following circumstances.: It appears that before the former sajadanashin executed the mukarrari lease on 8th September 1925 in favour of the plaintiff reserving the rent of Rs. 6 per annum on taking a nazarana. of Rupees 2500 the then sajadanashin had already entered into a contract of permanent lease of the same property in favour of one Lachmi Ram.

After the plaintiff was put. in possession in September 1925 Lachmi Ram instituted a title suit in the Court of the Subordinate Judge of Arrah for enforcing specific performance of his earlier con-tract of lease in respect of the leasehold properties of which the plaintiff had been: put in possession under the document of 1925. The plaintiff and the former sajadanashin were both defendants in the action and they jointly resisted the claim of Lachmi Ram, but the Court, by the judgment and'' decree dated 15th June 1927, decreed the suit of Lachmi Ram. The appeal by the plaintiff before the District Judge of Arrah was unsuccessful, when he preferred a. second appeal to the High Court. During the pendency of the appeal in the High Court, Lachmi Ram took delivery of possession by executing his decree and thereby dispossessed the plaintiff on 6th February 1928.

The High Court ultimately dismissed the appeal on 4th July 1930. Simultaneously with the deed of mukarrari of 8th September 1925 in favour of the plaintiff, the former sajadanashin had entered into an indemnity mortgage bond bearing date 18th September 1925 to the effect that if any flaw or defect was found in the mukarrari properties and if the plaintiff was dispossessed he would be competent to recover the nazarana of Rs. 2500 together with costs and damages which the plaintiff may have to pay and incur from the properties hypothecated by the bond which were the exclusive properties of that sajadanashin.

The former sajadanashin was ousted from possession by the appointment of a receiver from the khanka properties under the orders, of the District Judge; that receiver is defendant 1 in the action. On the death of the sajadanashin his legal heirs, namely defendants 2 to 8, entered into possession of the properties left by the sajadanashin as his personal properties including the properties entered in the schedule of the indemnity bond of 18th September 1925. Accordingly the plaintiff instituted the present suit on 3rd July 1933 for recovery of the sum of Rs. 3999-7-0 which is made up of the nazarana amount Rs. 2500, Rs. 3000-5-0 as the costs of defending the suit of Lachmi Ram, Rs. 851-5-0 as the costs realized by Lachmi Ram in execution of his decree and Rupees 2848-6-0 as costs of repairs of the house (the property leased).

Although the claim of the plaintiff came up to this figure of Rs. 9200 including interest he, in the plaint, gave a remission of Rs. 5200-9-0 out of the costs of repairing the house and costs of the suit of Lachmi Ram and interest and limited his claim to Rs. 3999-7-0 as stated already, apparently to bring the suit within the pecuniary jurisdiction of the Munsif so that the appeal may lie to the District Judge and not to the High Court. The cause of action stated in para. 19 of the plaint is dated 6th February 1928 when the plaintiff was dispossessed by Lachmi Ram and therefore "failure of consideration" of the mukarrari settlement occurred and also 4th July 1930 the date of the judgment of the High Court.

The plaintiff asked for a decree against defendant 1 as the receiver but if the whole or any portion of this claim was not decreed against defendant 1 he prayed that the whole or the balance may be decreed against defendants 2 to 8 and that the mortgaged properties entered in the indemnity bond of 18th September 1925 may be directed to be sold in the manner provided by Order 34, Civil P.C. The only contesting party to the suit was defendant 1 who contended that the subject-matter of the lease was the personal property of the former sajadanashin and that the suit has been unnecessarily brought and is not maintainable against the khanka which was in the charge of defendant 1 as a receiver.

As an alternative it was prayed that the former sajadanashin had no right under the Mahomedan law to execute any lease of a house for a period of more than one year without the sanction of the Kazi and therefore the lease was illegal, invalid and inoperative from the beginning. The payment of the nazarana by the plaintiff and the plaintiff''s entering into possession of the leasehold properties was also denied. The plea of limitation was also raised.

The learned Munsif held that the properties given in lease to the plaintiff belonged to the khanka, that the amount of nazarana was actually paid and appropriated in the funds of the khanka and therefore the khanka was liable to refund the amount of Rs. 2500 but was not liable for any loss or damages incurred by the plaintiff which were recoverable from the heirs of the former sajadanashin to the extent of the personal assets left by him. He also held that the grant of the perpetual lease of the wakf property was absolutely void and there was a complete breach of trust committed by the then sajadanashin. With regard to the question of limitation, the learned Munsif held that the suit was within time as having been instituted within six years of the date of dispossession.

In the result he decreed the suit for Rs. 2500 with interest at 6 per cent, per annum from the date of the suit against defendant 1 and for the balance against defendants 2 to 8 against whom a preliminary decree in terms of Order 34 was passed with interest at the bond rate and costs. Defendants 2 to 8 did not challenge this decree but defendant 1, the receiver of the khanka, preferred an appeal before the learned District Judge which was disposed of by the learned Subordinate Judge on 4th January 1937. Before the learned Subordinate Judge the receiver gave up the contention that the property was not the property of the khanka.

The learned Judge was satisfied from the evidence in the case and, in agreement with the learned trial Court, held that the property leased out was a part of the khanka wakf estate. The learned Subordinate Judge also agreed with the Munsif that the plaintiff had paid the sum of Rs. 2500 as nazarana or the consideration of the lease in question to the former sajadanashin who deposited the amount in the funds of the khanka; the entries in the cash book of this estate showed that the amount had been put in the coffers of the khanka. The finding of the Munsif, that the grant to the plaintiff of a perpetual lease of the wakf property was ab initio void, was affirmed.

The learned Subordinate Judge pointed out that the lessor, namely the former sajadanashin as well as the plaintiff, were fully aware of the infirmity of the title that was going to be conveyed under the lease of 1925, that there is not the least whisper in the document of lease showing that the permanent lease in question was going to be granted for any justifying necessity and that at the trial the plaintiff did not adduce any iota of legal proof in support of any necessity for the creation of the incumbrance in question.

Upon these findings the only question which remained was whether the claim could be decreed against the receiver and whether the suit was within time. The learned Subordinate Judge having held that the transaction of the lease was void abinitio and that the plaintiff had full knowledge of the infirmity of his own title at the time he entered into this transaction and advanced the nazarana at his own risk, held that the receiver could not be saddled with the liability of refunding the nazarana as "there is no privity of contract between the then sajadanashin and the present receiver of the wakf estate even though the estate was in possession of the plaintiff''s money."

He therefore came to the conclusion that defendant 1, the receiver, could not be held liable. Upon the question of limitation the learned Subordinate Judge came to the conclusion that the consideration of the lease having failed ab initio the cause of action for the recovery of the nazarana arose from the date of the lease and therefore the plaintiff''s suit having been instituted more than six years thereafter was barred by limitation. In the alternative he held that if the plaintiff''s lease be assumed to be voidable only on the objection of a third party and possession was taken under it still, relying upon the decision in Mt. Lakhpat Kuar v. Durga Prasad AIR (1929) Pat 388 the learned Judge held that limitation would run from 15th June 1927 when the claim of Lachmi Ram was established against the plaintiff and the former sajadanashin, and therefore the suit of the plaintiff was still beyond six years of this date.

The result was that the learned Subordinate Judge dismissed the suit as against the receiver but otherwise affirmed the decree in part against defendants 2 to 8. He never considered the question whether a decree for the full amount should be given against defendants 2 to 8. Hence the appeal before us.

The findings of fact arrived at by the Courts below have not been challenged by the appellant and cannot be interfered with by us in second appeal. But Mr. Hasan Jan appearing for the receiver wanted to challenge the correctness of the finding that the nazarana amount, Rs. 2500, was credited in the books of the khanka and spent by it; but we are unable to accede to this argument.

In order to come to a conclusion in favour of the respondent, it would have been necessary to examine the accounts of the khanka not only for that date but for the whole year if not for some other years also. Accordingly, it is not open to any of the parties before us to challenge the findings of fact which have been concurrently arrived at by the Courts below. The only question which presents difficulty is whether the suit for the plaintiff is within time. Mr. S.M. Mullick appearing for the appellant strongly contends that the suit is a suit for damages on account of the failure of the then sajadanashin to preserve the plaintiff in quiet enjoyment of the leasehold properties and therefore there was a breach of duty on behalf of the lessor as provided by Section 108(c), T.P. Act. He points Out that the cause of action arose to him not when the lease was granted nor when the Court held in June 1927 in the suit of Lachmi Ram that the lessor had no title to give to the plaintiff but when the High Court affirmed the decision on 4th July 1930 or in any case not earlier than 6th February 1928 when the plaintiff was dispossessed.

He therefore contended that limitation started from any of these two dates with the result that the suit was within time being a suit for damages for breach of a contract in writing registered within the meaning of Article 116, Limitation Act. Mr. Hasan Jan on the other hand contended that the suit must be held to be a suit to which Article 97, Limitation Act, applied and that the starting point of limitation was the date when the trial Court gave the decision that the plaintiff had no title to remain upon the land by his order dated 15th June 1927. In other words, he contended that if it was a suit for damages the plaintiff was damnified by the decision on 15th June 1927, and therefore the suit was beyond six years; but so far as this suit was for the recovery of the nazarana amount, the plaintiff must come within three years of the date of the lease, or of the date of the decision of the trial Court or of the date of dispossession and that the suit is beyond three years of any of these dates.

A large number of cases were cited before us; but it is unnecessary to discuss these cases because after the decision of their Lordships of the Judicial Committee in Tricomdas Cooverji Bhoja v. Gopinath Jiu Thakur AIR (1916) PC 182, it has been consistently held by this Court that a suit for damages for return of the nazarana or for any consequent costs and damages must be governed by Article 116 even though a suit may apparently fall within Article 97, Limitation Act: see Rajendra Narayan Singh v. Lalmohan AIR (1936) Pat 462. In that case the plaintiff had obtained a lease of a certain piece of land under a registered document, as in the present case, after paying a certain premium to the lessor but afterwards it having been found that the lessor had no right to make such a grant the lease was held to be void ab initio and when the lessee asked for the return of the money paid to the lessor u/s 65, Contract Act, the suit for refund of the money was held to be governed not by Article 65 or Article 97 but by Article 116, Limitation Act. The learned Judges relied upon an earlier Division Bench decision of this Court (referred to later).

The same view was taken in Mt. Lakhpat Kuar v. Durga Prasad AIR (1929) Pat 388. That suit was a suit for refund of the purchase money by a vendee paid under a registered document on the ground that the consideration for the sale had failed. It was held that the suit was governed by Article 116 and that the fact that the suit was in substance for a refund of the purchase-money and not in the nature of damages, although that claim was made in the alternative, was immaterial. Das, J. made this observation at page 435: But in the view which I take it is immaterial to consider whether the suit is a suit for refund of. the purchase money or a suit for damages for breach of the covenant u/s 55, Clause (2), T.P. Act.

He then drew attention to the case in Tricomdas Cooverji Bhoja v. Gopinath Jiu Thakur AIR (1916) PC 182, referred by me above and held that he regarded this decision of the Judicial Committee as establishing that where the suit is in substance a suit based on a registered document and where such a suit could be regarded as a suit for compensation for breach of contract, Article 116 must apply although such a suit may fall under some other provision of the Limitation Act. At p. 435 the learned Judge also made this observation that the question whether the plaintiff had or had not knowledge of the infirmity of the title of their vendor is irrelevant. The starting point of limitation was also considered in 8 Pat 432,1 and the learned Judge referred to two oft-cited cases, Subbaraya Reddiar v. Rajagopala Reddiar AIR (1915) Mad 708 and Multanmal Jayaram v. Budhumal Kevalchand AIR (1921) Bom 252, where three classes of cases under which such questions are discussed wore pointed out as being (a) where from the inception the vendor had no title to convoy and the vendee has not been put in possession of the property; (b).

Where the sale is only voidable on the objection of third parties and possession is taken under the voidable sale; and (c) where though the title is known to be imperfect the contract is in part carried out by giving possession of the properties. Here I wish to read from the judgment of Das, J. at p. 438:

It was contended before us that the sale was not voidable but void ab initio since it has been found that Mt. Lakhpat had no title whatever to convey. But this point was very completely dealt with in the judgment of the High Court, where it was pointed out that a transaction cannot be regarded as void ab initio where both the parties consider that the vendor has a good title to convey. This being so, as between the parties to this litigation it cannot be regarded that the sale was void ab initio and there is no doubt that possession was taken under the voidable sale.

These remarks apply very closely to the facts of the present case. As between the sajadanashin and the plaintiff the transaction cannot be regarded as void ab initio when both the parties considered that the lessor had a good title to convey and there is no doubt that possession was taken under the lease which could be avoided (after possession had been delivered) only on the objection of a third party. The quotation from remarks of the learned Judge of the Madrag High Court is very apposite at this stage:

In the second class of cases the cause of action can arise only when it is found that there is no good title. The party is in possession and that is what at the outset under a contract of sale a purchaser is entitled to, and so long as his possession is not disturbed, he is not damnified.

In 6 Pat 6066 the lessor having failed to put the lessee in possession of the properties demised, the suit by the lessee to recover the salami which he had paid for the lease was held to be governed by Article 116, Limitation Act, provided the lease was in writing and registered. In my opinion, these three cases decided by Division Benches of this Court and founded upon the decision of the Privy Council in Tricomdas Cooverji Bhoja v. Gopinath Jiu Thakur AIR (1916) PC 182 are sufficient to dispose of the contention of the respondent that the present suit so far as the amount of Rs. 2500 is concerned is not a suit to recover damages but a suit to recover the actual amount of salami within the terms of Section 65, Contract Act, and therefore should be governed by Article 97, Limitation Act, and not by Article 116. The question which then remains to be determined is what is the starting point of limitation. In Harnath Kuer v. Inder Bahadur Singh (1922) the suit was instituted to recover the consideration paid under an agreement which was void ab initio, the agreement in question being the transfer of a right to expectancy. Their Lordships of the Judicial Committee in dealing with the argument based on Section 65, Contract Act, observed as follows:

An agreement therefore discovered to be void is one discovered to be not enforceable by law, and, on the language of the Section, would include an agreement that was void in that sense from its inception as distinct from a contract that becomes void. The agreement here was manifestly void from its inception, and it was void because its subject matter was incapable of being bound in the manner stipulated. Though this aspect of the case has not been satisfactorily presented or developed in the pleadings and the proceedings before the lower Courts, their Lordships think there are materials on the record from which it may be fairly inferred in the peculiar circumstances of this case that there was a misapprehension as to the private rights of Indar Singh in the villages which he purported to sell by the instrument of 2nd January 1880, and that the true nature of those rights was not discovered by the plaintiff or Rachpal Singh earlier than the time at which his demand for possession was resisted, and that was well within the period of limitation.

In the present case, the plaintiff was actually placed in possession thereby leading to the inference that both the parties thought that they had a right to enter into this transaction of lease which was in law void ab initio. It may be remembered here that the defenee of the receiver was that this property was not the property of the Khanka but was the personal property of the former sajadanashin. The plaintiff also was apparently in doubt as to the true position because he took an indemnity bond from the sajadanashin binding him and his personal properties in case he was disturbed in possession. In Juscurn Boid v. Prthichand Lal AIR (1918) PC 151 their Lordships of the Judicial Committee again had to consider the question as to how the starting point of limitation should be decided in such cases. In that case the plaintiff instituted a suit against the zamindar to recover certain sums which he had to pay as purchaser of a patni taluk of a defaulting patnidar at a sale for arrears of rent under the Patni Regulation of 1819, the sale having been subsequently set aside in a suit by the darpatnidar to which the plaintiff was a party. The sale was set aside by the order of the District Judge dated 24th August 1905 which was affirmed by the High Court in appeal on 3rd August 1906. The plaintiff gave up possession on 28th August following. The Courts below treated the suit as governed by Article 97, Limitation Act as being a suit for money paid on an existing consideration which afterwards failed and held that it was barred by limitation as having been brought more than three years beyond 24th August 1905, being the date of the decree of the District Judge, setting aside the sale when it was found that the consideration failed. It was decided by their Lordships that

whatever may be the theory under other systems of law, under the Indian law and procedure an original decree is not suspended by presentation of an appeal nor is its operation interrupted where the decree on appeal is one of dismissal.

This incidentally would settle that the starting point of limitation would be the date of the decision of the learned Subordinate Judge dated 15th June 1927, if there was nothing else in the case. Their Lordships then made the following weighty observations:

To escape from this position and its consequence a new starting point was suggested in the course of the argument here; it was contended that the period of limitation began to run when possession was lost. There may be circumstances in which a failure to get or retain possession may justly be regarded as the time from which the limitation period should run, but that is not the case here. The quality of the possession acquired by the present purchaser excludes the idea that the starting point is to be sought in a disturbance of possession or in any event other than the challenge to the sale and the negation of the purchaser''s title to the entirety of what he bought involved in the decree of 24th August 1905. If further support of this view be required, it may be found in the express provision of Section 14 of the Regulation which directs that in the suit for reversal itself the purchaser is to be indemnified against all loss.

In my opinion in the circustances of each case the Court is to decide whether the failure to give or retain possession may justly be regarded as the time from which limitation period should run. In the present case the lessee was in possession from the date of the lease. The decree of the Subordinate Judge of June 1927 merely decided that upon Lachmi Ram''s depositing the balance of the consideration money which he had not paid to the former sajadanashin a formal deed of lease would be executed and registered by the former sajadanashin and then possession would be delivered by ousting the present plaintiff.

It may well have been that Lachmi Ram would have taken some considerable time to perform the obligations imposed upon him by the decree before he would be vested with a title and before he would be entitled to oust the present plaintiff. The plaintiff cant therefore have no cause of action for return of the money until he was actually ousted from possession by a formal delivery of possession or by an actual delivery of possession. In my opinion the suit, whether it is regarded as a suit for return of the very amount paid as nazarana or as a suit for compensation, having been instituted within six years of the date when the plaintiff was dispossessed therefore is within time.

But it was argued by Mr. Hasan Jan appearing on behalf of the receiver that there is no privity of contract between the then sajadanashin and the present receiver, defendant 1. This argument is of no substance. Upon the finding that the khanka estate was in possession in September 1925, of the sum of Rs. 2500 which the plaintiff had paid to the sajadanashin the terms of Section 65, Contract Act, apply and the person in charge of the khanka estate is bound to refund the amount which has been in possession of the khanka ever since 1925.

The plaintiff has discharged the onus which lay upon him when he proved that a sum of Rs. 1000 was entered in the cash book of the khanka on 20th August 1925 and the balance of the sum of Rs. 1500 was credited on 20th September 1925 in its books. The question as to the subsequent application of the money or its misappropriation by the sajadanashin is no concern of the plaintiff. I would therefore allow the appeal of the plaintiff and restore the decision of the learned Munsif with costs throughout.

Harries, C.J.

I agree.