AI Structured Summary
Not yet generated for this judgment
Judgment
Courtney-Terrell, C.J.—These two appeals are respectively by defendant 5, and by defendants 2 and 3, against a decision of the Subordinate Judge of Dhanbad. The suit was for possession of three houses in Jharia. Defendants 1 and 2 are brothers. Defendants 3 and 4 are sons of a deceased brother of defendants 1 and 2. The family came from a distance and set up business in Jharia some years before the facts to be mentioned. The deceased brother and defendants 1 and 2 separated about 14 or 15 years ago and thereafter they held their property in defined shares but in common management. House No. 3 is the most valuable and the land on which it stands was acquired piece by piece between 1904 and 1914. Two of the deeds were in favour of the deceased brother and defendants 1, and three are in favour of defendant 1 alone. House No. 2 stands in a plot which was acquired in 1916 by a deed in favour of defendant 1, but the deed recites that the consideration was due to the firm under which style the family continued their business at all times. House No. 1 was acquired in 1920 under a deed which has not been produced. All three properties are recorded in the name of defendants in equal shares. The evidence amply supports the finding that the property in suit was held by the three brothers in equal separate shares. It appears that the person who actively conducted the mercantile business carried on in the firm name was defendant 1 and that the other defendants were what may be called sleeping partners.
13th November 1922, defendant 1 executed a mortgage bond mortgaging inter alia the three houses aforesaid to the plaintiff Bank and in the mortgage deed he described the property as his own self-acquisition. On 25th November 1923 he executed a mortgage to the plaintiff Bank of the equity of redemption of the first mentioned mortgage. The Bank, apparently warned by the occurrence of more than one name in the title deeds, insisted that defendants 2 and 3 should hear the first mortgage deed read over and should attest it as witnesses. There is some conflict of evidence as to where this happened and as to exactly what the defendants did and said at the time, but there is no dispute as to the fact that they did so attest the deed and I have no doubt on the evidence that the deed was read over to them and that they raised no objection whatever. I have also no doubt that they thoroughly understood the nature of the deed. They were interested in the business for which the money borrowed was required. The plaintiff had suggested that defendants 2 and 3 should execute the bond as parties, but defendant 1 had objected on the ground that they might in that event claim a share in the property mortgaged which he had described as his own acquisition. I am further satisfied that the state of affairs as to the business and property was sufficiently obscure to cause the rights to it to be a matter of doubt and difficulty to the Bank, although they might have insisted on a minute examination of title and might have discovered the title rights of defendants 2, 3 and 4 in that property. Further I am satisfied that the action of defendants 2 and 3 in attesting the document with knowledge of its contents in fact induced the plaintiff company to advance the money lent by them on the mortgage security. In 1929 the plaintiffs sued to enforce their mortgages against defendant 1 only, and on 17th March 1930, having obtained judgment, they purchased the property at the auction sale and the sale was confirmed on 15th August 1930.
20th September 1930, defendant 5 who had obtained a money decree against defendants 1 to 4 executed it, put up house No. 1 for sale, purchased this house, and the sale to him was confirmed on 1st December 1930. On 3rd March 1981, defendants 2--4 sold their two-thirds share in house No. 3 to defendant 6. The plaintiffs took out delivery of possession of the mortgaged property the sale of which to them had been confirmed and were resisted by defendants 2 to 6. They therefore brought this suit. Defendant 1 did not appear. Defendants 2--4 filed one written statement, and at the trial set up their ownership of the mortgaged property to the extent of a two-third interest and this contention they have justified. The real contention in this appeal is as to whether in the face of their conduct and attestation they are entitled to defend this suit. The facts are clear. Defendant 5 contends that he purchased bona fide and as an execution creditor the shares of defendants 2--4 and that he is not bound by the conduct of defendants 2 and 3 of which he had in any case no notice. Defendant 6 supports the case of defendants 2--4 and says that he is in possession. The Subordinate Judge decreed the suit against defendants 1, 2 and 3, and defendant 5 and defendant 6 as to 5/6th share in the property. As against defendant 4 he dismissed the suit and in this dismissal he was clearly right, for defendant 4 having a clear l/6th right in the property (being one-half of his deceased father''s share) and being unaffected by the conduct of defendants 2 and 3 is not affected by the mortgages or by the sale in execution of the money decree obtained by defendant 5. The cross-appeal by the plaintiff against this part of the decision must be dismissed but without costs as defendant 4 has not appeared.
learned Judge held that defendants 2 and 3 were estopped by their conduct as against the plaintiffs from setting up their titles (as to defendant 2 to the extent of a one-third share and as to defendant 3 as to a one-sixth share). Defendants 2 and 3 in appeal contend that at the most they had merely contracted with the plaintiffs that they would not set up their title in consideration of the loan by the plaintiffs to their relative, defendant 1, which contract would merely sound in damages for breach and would not operate as an estoppel. They further contend that in fact they made no contract at all but merely expressed an intention for the future to abstain from setting up title. They contended that they made no representation as to the title of defendant 1 to mortgage the property and they relied on the case of Jordan v. Money (1854) 5 HLC 185 This case arose out of a suit for a declaration that a certain debt secured by a bond executed by the plaintiff had been abandoned and released. It was alleged that the bond-holder, Mrs. Jordan, had relinquished her rights under the bond in certain oral conversations at the time when the marriage of the plaintiff was under consideration. The case turned purely upon the facts, and as can be seen by the judgment of Lord Brougham at p. 230, the House was of opinion that she never relinquished her rights or released the plaintiff from his obligation under the bond. It has no bearing on this case. It was cited because of a passage in the judgment of Lord Cranworth at pp. 214-215. After stating the principle of law that a representation of fact will create an estoppel and that on the facts of the case there had been no such representation, he said:
I am clearly of opinion, as clearly as I can be, knowing that I am counter in this respect certainly, to an authority for which I feel great deference, namely the Master of the Rolls, probably to the Lords Justices, and I have some reason to suppose also to some at least of your Lordships, that it does not. I am bound to state my view of the case; I think that that doctrine does not apply to a case where the representation is not a representation of a fact, but a statement of something which the party intends or does not intend to do. In the former case it is a contract, in the latter it is not.
After dealing with the facts the Lord Chancellor then said:
My opinion is that if all the evidence had come up to the mark, which for reasons I shall presently state, I do not think it did, that if upon the very eve of marriage she had said ''William Money, I never will enforce the bond against you'' that would not bring it within these cases. It might be if all statutable requisities, so far as there are statutable requisites, had been complied with, that it would have been a very good contract whereby she would have bound herself'' not to enforce the contract; in short, it could not have been, because it must have been a contract reduced into writing and signed, but that is not the way in which this case is put; it is put entirely upon the ground of representation.
The Lord Chancellor was dealing with the requirements of the Statute of Frauds in force in England. He held that there was in that case no contract which would satisfy the statute, and moreover, there had been no representation, and for these reasons the suit failed. But in the case before us the facts indicate either a valid contract or a silence amounting to representation. The circumstances were fully known to defendants 2 and 3. They were aware of their own rights, they knew the contents of the mortgage deed, they were interested with defendant 1 in the loan money, which was good consideration in so far as they were concerned, and they attested the deed raising no objection. They did more than merely stand by and allow the plaintiffs to part with their money. By their conduct they impliedly represented that whatever the title of the defendant might be he had their authority to mortgage the property and attested the deed on that basis. As was said by Lord Kingsdown in Cairncross v. Lorimer (1852) 3 MHL 827 cited with approval by the Privy Council in Sarat Chunder Dey v. Gopal Chunder Laha (1893) 20 Cal 296:
The doctrine will apply, which is to be found, I believe, in all civilized nations, that if a man either by words or by conduct has intimated that he consents to an act which has been done and that he will offer no opposition to it, although it could not have been lawfully done without his consent, and he thereby induces others to do that from which they otherwise might have abstained, he cannot question the legality of the act he had so sanctioned, to the prejudice of those who have so given faith to his words or to the fair inference to be drawn from his conduct.
Therefore, whether the case is based on the contract or is based on estoppel, it is equally operative against defendants 2 and 3 and prevents them from setting up their title as against the plaintiffs. The learned Judge has based his judgment on representation and estoppel, but even if the defendants were right in their contention that they had merely contracted not to raise their title against the plaintiffs, the contract would be a bar. In my opinion the appeal of defendants 2 and 3 must fail and be dismissed with costs. I now approach the more difficult question of the relative positions of defendant 5 and the plaintiffs. Leaving apart for the moment the position of defendant 5 as an auction purchaser at an auction sale, what is the position of an innocent purchaser for good consideration with regard to prior statements by his vendor which have deceived a prior purchaser into a prior sale? Is he bound by such statements or not?
Now in this case the representations by defendants 2 and 3 were not direct representations as to the title of defendant 1, to the property in dispute. They were representations that defendant 1 had authority to convey such rights as defendants 2 and 3 might have if any, and, as I have held, they were effective to prevent defendants 2 and 3 from raising their title as against the Bank. But are they effective so as to prevent the subsequent purchaser defendant 5 from raising the title which he has acquired. In other words if a man has once represented that another has a right to convey property, are his representations effective to prevent any subsequent purchaser from him from asserting his (the subsequent purchaser''s) title?
In Sarat Chunder Dey v. Gopal Chunder Laha (1893) 20 Cal 296 a husband had executed a hibanama (deed of gift) in favour of his wife. After his death, she, represented by her son, mortgaged the property. After her death the plaintiff purchased from the son his inherited share of the property including the mortgaged property. The mortgagee sold the property in execution of a mortgage decree which they had obtained and it was purchased by the defendants. It was held that Section 115, Evidence Act, was applicable. The son has represented that the hibanama gave his mother authority to mortgage and consequently neither he nor his representatives in estate could be allowed to deny the truth of the representation intentionally made and acted on by the mortgagee, and the purchaser from the mortgagee was in as good a position as the mortgagee himself even if he (the purchaser) were aware of the facts. Then, is the purchaser at an auction-sale held by the Court in any better position than a private purchaser?
In Mohamad Mozuffur Hossain v. Kishori Mohan Roy (1895) 22 Cal 909 it was expressly held after quoting the passage from the judgment in IA Sup Ramcoomar Coondoo v. Macqueen (1873) IA Supp 40 in which Sir Montague Smith laid down the general principle of estoppel, that the execution creditors purchased only the right, title and interest of the person making the representation and were in no better position. In Poreshnath Mukerji v. Anathnath Deb (1888) 9 Cal 265 a suit for rent by a zamindar and patnidar against a darpartnidar, was defeated on the defence of the latter that he had conveyed his interest to others, against whom the former afterwards obtained a decree, and brought the darpatni to sale in execution, buying their right, title and interest therein himself. From the darpatnidar who had thus disclaimed title, a third party claimed to-be mortgagee, and set up a decree on his mortgage followed by a purchase of the tenure at a sale in execution. He was, therefore, allowed to intervene in a suit for rent brought by the zamindar and patnidar against an ijaradar of lands, within the darpatni estates. It was held that notwithstanding this purchase, the intervening mortgagee was bound by the estoppel arising out of the mortgagor''s disclaimer of title in the suit abovementioned. It was sought on behalf of defendant 5 to distinguish these cases from the one before us on the ground that although a mortgagee auction-purchaser was in no better, position than a mortgagee as such, a stranger purchaser would be free from the estoppel against the mortgagee, but it is clear that in Debendra Nath Sen v. Mirza Abdul Samad Seraji (1909) 10 CriLJ 150 after a careful review of the authorities it was laid down that just as a purchaser at an execution sale may take advantage of an estoppel arising from the deed by which the debtor acquired title [see e.g., the cases in Poreshnath Mukerji v. Anathnath Deb (1888) 9 Cal 265 and Sarat Chunder Dey v. Gopal Chunder Laha (1893) 20 Cal 296 cited above] so the purchaser in his turn is estopped by the deed made by the debtor before the sale; in other words, the levying creditor is bound by an estoppel against the debtor as grantor. ''
This case shows that the principle on which the auction-purchaser is bound by estoppel against the judgment-debtor depends not merely on the particular character borne by the auction-purchaser but on the view that one who can take advantage of an estoppel in his favour should be bound by estoppel. In my opinion, of the two innocent parties defendant 5 and the plaintiffs both deceived by defendants 1 to 3, the law protects the plaintiffs. The decision of the Subordinate Judge was right and both appeals must be dismissed with costs. I wish to add that I have read the judgment prepared by my brother Dhavle and agree with it.
Dhavle, J.
I agree.
The learned Subordinate Judge has found that defendants 2 and 3 attested the first mortgage bond of defendant 1 in favour of the plaintiff Bank with full knowledge of the contents, and that they did so by way of giving assurance to the Bank that the properties that were going to be mortgaged were the self-acquired properties of the mortgagor (as was stated in the bond) and that they claimed no interest in the same. Defendant 2 stated in his evidence that he and his nephew Damodar attested the mortgage bond at the request of Bishuni, without knowing that the three houses were being mortgaged under it. He is unsupported, and as shown in detail by the lower Court, thoroughly unreliable. It was not the defendants'' case that Bishuni was practising any fraud upon the other defendants, and in the circumstances it is difficult to believe that Bishuni took the signatures of his brother and nephew without the contents of the bond being brought to their knowledge.
The learned advocate for defendant 5, appellant in First Appeal No. 201, has laid stress on the failure of Babu Jatindra Chandra Mullick, P.W. No. 4, a pleader (now retired) and one of the local directors of the Bank, to recollect if defendant 2 and his nephew attested the mortgage bond or if there was any talk regarding them, and on his admission that it was on the representation of Bishuni that the bond recited that the mortgaged properties were acquired by him and belonged exclusively to him. But the pleader was very advanced in years when called upon to depose to a transaction that had taken place ten years previously; and it is obvious that the examination of the title deeds and the inquiry about possession which would appear from the evidence of Panohu Gopal Roy, the Manager of the Bank, to have been made, led the Bank to ask Bishuni to get the bond attested by defendants 2 and 3, Panchu Gopal claims to have asked Bishuni to get the bond executed by those two persons and to have been satisfied, on Bishuni pointing out that in that case they would claim a share in the property, if Bishuni would get the bond attested by them.
It appears from the evidence of Mahabir Pathak, P.W. No. 3, that Bishuni brought defendants 2 and 3 from Jharia and that when the latter were asked whether they had any shares in the property, they said: "We have no objection. We accept what is being done by Bishuni Sao." It also appears that the recital that the mortgaged property belonged to Bishuni was explained to them, upon which they said: "We have no objection." An estoppel cannot, it is true be founded upon a representation which is doubtful or a matter of questionable inference; but this only means that the representation should be such as would, in the circumstances of the case, be reasonably understood in the sense contended for by the party to whom it is addressed. Regarded from this point of view, the representation amounted to no less than this: that defendants 2 and 3, so far as they had a title to the mortgaged property and an interest to challenge the mortgage, consented for their interest, to represent Bishuni as having the legal right to grant the mortgage of the entire property as if it belonged to him exclusively--the representation was really much stronger than that of Ahmad in Sarat Chunder Dey v. Gopal Chunder Laha (1893) 20 Cal 296 The learned advocate for the appellant has urged that there can be no estoppel where the statement relied upon is made to a person who knows the real facts. That may be conceded but does not help the appellant: the Bank was obviously in doubt about the exclusive title alleged by Bishuni and only accepted the mortgage from him on the representation made by defendants 2 and 3. The representation was quite unlike that discussed in Jordan v. Money (1854) 5 HLC 185 and was much more than a mere expression of any future intention of defendants 2 and 3 or a mere waiver by them.
The learned advocate for the appellant also contended that the estoppel could only bind defendants 2 and 3 personally, or that at any rate it did not bind defendant 5 who purchased their right, title and interest in an execution sale. Estoppels u/s 115, Evidence Act, are by the very terms of the section not confined to parties but extend to their representatives. The learned advocate has contended that the execution purchaser is not a representative of a judgment-debtor, and has cited (1887) Richards v. Jenkins (1887) 18 QBD 451 and Veerappa Chetty v. Ramasami Chetty AIR 1920 Mad 505 in support. The former was a decision on an interpleader issue with regard to goods taken in execution. The evidence showed that the claimant had not interest in nor the possession of the goods at the time of seizure but that they belonged to a third person. It was held that the execution creditor was entitled to succeed, and that assuming that the execution debtor (who had been paying the hire of the goods to the claimant even after the latter''s bankruptcy) was estopped from denying that the goods were the claimant''s, such estoppel did not bind the execution creditor. The case was one in which the claimant had no property in the goods at the time of the seizure, but "at the utmost only a right by way of estoppel against the execution-debtor." But in the present case the entire property, including the interest of defendants 2 and 3, had been mortgaged to the Bank and had been purchased by it in the execution sale, and the sale confirmed, before the appellant purchased that interest in his execution. The Bank was thus in a very different position to the appellant than the claimant in Richards v. Jenkins (1887) 18 QBD 451 to the execution creditor. In Veerappa Chetty v. Ramasami Chetty AIR 1920 Mad 505 the second case relied upon by the learned advocate, the contest was between two execution purchasers. The earlier of these purchases was made in execution proceedings carried on in a Court which had been deprived (by a notification of the Local Government) of local jurisdiction over the subject matter after the application for attachment of the judgment-debtor''s property and before the issue of the order of attachment. The judgment-debtor could have objected to the jurisdiction, but omitted to do so and allowed the sale to be confirmed. The other sale, which was later, was held by a Court with jurisdiction at the time in question. The judgment-debtor was precluded by the principle of Section 21, Civil P. C, from asserting afterwards that the earlier execution sale was a nullity because of want of jurisdiction; and Seshagiri Ayyar, J. held that:
Whatever may be the general position of an execution creditor in regard to cases over which a Court has jurisdiction, the principle of Debendra Nath Sen v. Mirza Abdul Samad Seraji (1909) 10 CriLJ 150 should not be extended to cases where the judgment-debtor is sought to be affected by rule of procedure relating to jurisdiction.
This would have been sufficient for the disposal of the matter; but the learned Judge appears also to have dissented from the view taken in Debendra Nath Sen v. Mirza Abdul Samad Seraji (1909) 10 CriLJ 150 viz., that:
The purchaser at an execution sale is bound by the same rule of estoppel as the judgment-debtor on the principle that the former has purchased merely the right, title and interest of the latter and does not consequently occupy a position of greater advantage.
He was of opinion that in Mohamad Mozuffur Hossain v. Kishori Mohan Roy (1895) 22 Cal 909 the Privy Council should not be taken to have disapproved Richards v. Johnston (1859) 4 H & N 660 and Richards v. Jenkins (1887) 18 QBD 451 and laid down that, an execution creditor under all circumstances-is estopped by considerations which affect the judgment-debtor, and that the contrary view would attribute to the Judicial Committee a departure from the decision in Dinendranath Sanyal v. Ramkumar Ghose (1881) 7 Cal 107 and from the high authority of the learned Lord Justices who decided Richards v. Jenkins (1887) 18 QBD 451 Debendra Nath Sen v. Mirza Abdul Samad Seraji (1909) 10 CriLJ 150 has, so far as it lays down a general rule, been followed in this Court in Nandkishore Singh and Others Vs. Mathura Sahu and Others, where certain exceptions to the rule were also expressly referred to. Richards v. Jenkins (1887) 18 QBD 451 itself points to the existence of the general rule while furnishing an exception to it. In Dinendranath Sanyal v. Ramkumar Ghose (1881) 7 Cal 107 their Lordships of the Judicial Committee merely pointed out that under the rule of Us pendens or rather the rule now found in Section 64, Civil P.C., the execution purchaser, notwithstanding that as in a private sale he acquires merely the right, title and interest of the judgment-debtor, acquires that title, by operation of law, adversely to the judgment debtor and freed from all alienations and encumbrances effected by him after the attachment of the property sold. But this plainly does not involve a denial of the general rule unmistakably found in Kay, L.J.''s observations in Madell v. Thomas (1891) 1 QBD 230:
Where property is subject to any rights by which it would be bound in the hands of the ... execution debtor, nothing can be more clear as a general proposition than that it would be subject to such rights as against the execution creditor. The defendants'' counsel admitted that as a general rule this was so....
Exceptions to the general rule other than those arising out of the application of the rule of Us pendens, &c, have been recognized, such as for example the case put in Anundo Moyee Dossee v. Dhonendro Chunder Mookerji (1871) 14 MIA 101 where it was said that an auction-purchaser from a mortgagor, who takes without notice of the mortgage thinking that he had an absolute title and holds possession for 12 years as absolute owner, was not in the same position as the mortgagor or a person claiming under a voluntary alienation from him. Richards v. Johnston (1859) 4 H & N 660 and Dinendranath Sanyal v. Ramkumar Ghose (1881) 7 Cal 107 were cited for the appellants in Poreshnath Mukerji v. Anathnath Deb (1888) 9 Cal 265 in support of the contention that a purchase by a mortgagee in execution of his mortgage decree placed him in a better position than he was in as mortgagee as regards an estoppel (by disclaimer) operative against the mortgagor at the time of the mortgage. The contention was rejected, and the decision of their Lordships of the Judicial Committee implies that there is a general rule and that the cases cited for the appellants were distinguishable on the facts (there being a finding by the jury in Richards v. Johnston (1859) 4 H & N 660 that there had been no actual transfer of the property from the judgment-debtor to the claimant''s vendor furnished exceptions which did not affect the matter for decision). Their Lordships said that it was admitted that the estoppel would have been binding on a mortgagee or assignee. This was a different estoppel altogether from the rule laid down in IA Sup Ramcoomar Coondoo v. Macqueen (1873) IA Supp 40 and afterwards embodied in Section 41, T.P. Act. The decision in Mohamad Mozuffur Hossain v. Kishori Mohan Roy (1895) 22 Cal 909 was based on that rule, and their Lordships of the Judicial Committee expressly held:
This principle applies to Abdul Ali (the original owner) and the appellants (execution purchasers from the heirs) are in the same position, as they purchased only his right, title and interest and are equally bound by it.
This again plainly implies what I have called the general rule, notwithstanding the exceptions, that have been recognized from time to time. What Mookerjee, J., showed in Debendra Nath Sen v. Mirza Abdul Samad Seraji (1909) 10 CriLJ 150 was the absence of a "comprehensive rule of absence of estoppel against the execution purchaser" deduced from earlier decisions; he was not thinking of the exceptions. The decision in Veerappa Chetty v. Ramasami Chetty AIR 1920 Mad 505 furnishes an exception to the general rule of estoppel against the execution purchaser; but if it was really meant to lay down that there is no general rule such as was expressly recognized in Debendra Nath Sen v. Mirza Abdul Samad Seraji (1909) 10 CriLJ 150 and in this Court in the case from Nandkishore Singh and Others Vs. Mathura Sahu and Others, I must respectfully dissent. When it is said that the execution purchaser is not a representative - of the judgment-debtor, what is meant is that there are occasions when he takes the judgment-debtor''s property freed from certain encumbrances, etc., created by him.
If the judgment-debtor, whose right, title and interest passes to the execution purchaser, be subject to any estoppel, it might be a question in particular cases whether or not that estoppel binds the execution purchaser, for estoppels are not confined to Section 115, Evidence Act. We are in the present case dealing with an estoppel coming within the ruling in IA Sup Ramcoomar Coondoo v. Macqueen (1873) IA Supp 40 and included in the wider rule contained in Section 115, Evidence Act. And it seems to me quite clear, notwithstanding anything that was said in Veerappa Chetty v. Ramasami Chetty AIR 1920 Mad 505 that what the appellant took by his execution purchase from defendants 2 and 3 was their right, title and interest in house No. 1 subject to the estoppel imposed upon them by their conduct to the plaintiff Bank.