Kalyani Ammal vs Ezhumalai Nattar and Another

M. Natesan, J.—The plaintiff, the decision in whose favour in the Court of first instance has been reversed on appeal raises an interesting

question of law and I shall first set out the facts not in dispute. The suit is one for recovery of damages on breach of covenant of title and quiet

enjoyment in relation to a purchase of certain immovable property by the plaintiff from one Thayanayaki Ammal. The property had originally

belonged to a certain Kuppa Nattar, the maternal grandfather of the contesting respondent, the third defendant in the case. This Kuppa Nattar had

two daughters, the said Thayanayaki Ammal and Chinnakolandai, mother of the third defendant. On 6th May, 1927, he settled the property of his

aforesaid daughters for their life, the present third defendant to take the property absolutely after their lifetime. In 1930 Kuppa Nattar alleging

dissatisfaction with his daughters'' treatment of himself and his wife, purported to revoke the settlement deed but later conveyed the property in

favour of his daughter Thayanayaki for a consideration of Rs. 400. Thayanayaki in her turn sold the property to the plaintiff under the registered

sale deed dated 2nd March, 1947 for a consideration of Rs. 2,500. Exhibit A-1 is the registration copy of the deed. On Chinnakolandai''s death

the present third defendant instituted the suit O.S. No. 93 of 1951 on the file of the District Munsif''s Court, Chidambaram, impugning the validity

of the revocation deed and the subsequent transfers and claiming possession of the property. The present plaintiff was the first defendant in that

suit. It was decided therein that the revocation was invalid and did not affect the third defendant''s vested rights under the settlement deed. But it

was held that the 3rd defendant could claim possession of the suit property only after the lifetime of Thayanayaki, the plaintiff''s vendor. The

present plaintiff had then contended that certain improvement had been effected by her and this was evaluated at Rs. 800. Thayanayaki Ammal

died on 4th May, 1957 and thereupon the present third defendant as the remainderman filed the suit O.S. No. 158 of 1957 on the file of the Court

of the District Munsif, Chidambaram,, for possession of the suit property impleading the present plaintiff as the sole defendant in the suit. This suit

ended in a decree by consent on 19th June, 1958. It was provided by the decree that the third defendant should before taking possession of the

property personally, and charged on the suit property pay the present plaintiff a sum of Rs. 1,350 inclusive of the sum of Rs. 800 found as the

value of improvements in O.S. No. 93 of 1951. Till payment of this amount the plaintiff could enjoy the suit properties but should vacate and

deliver vacant possession on receipt of the said sum of Rs. 1,350. There is no dispute that the 3rd defendant deposited the amount of Rs. 1,350 in

Court as provided for in the compromise and that he took possession of the suit property from the plaintiff on 12th December, 1958. Within ten

days of losing possession of the suit property on 22nd December, 1958, the plaintiff filed the suit out of which the present second appeal arises

claiming damages for breach of covenant of title and quiet enjoyment against the defendants in the suit as heirs and legal representatives of

Thayanayaki Ammal. Besides the third defendant two other persons were impleaded, defendants 1 and 2 as person in possession of the property

of Thayanayaki Ammal. Several defences were raised against the claim, inter alia, res judicata, estoppel and limitation and there was also a

counter-claim. The property was subject to a mortgage dated nth September, 1947 in favour of Thayanayaki Ammal herself for a sum of Rs.

1,000. The third defendant counter claimed for the amounts due under this mortgage with interest till 12th December, 1958, paying the necessary

Court-fee. The trial Court dismissed the suit as regards defendants 1 and 2 as they were not heirs of Thayanayaki Ammal and were not in

possession of any of her assets. The third defendant claimed himself to be heir to the deceased. At the trial, it came out that the third defendant had

a sister Valambal who also would be an heir. She was subsequently impleaded as a respondent (4th defendant) in the appellate Court and she has

remained ex parte. The trial Court assessed the market value of the property which the plaintiff purchased and lost at Rs. 4,000 on the date the

plaintiff lost possession. As the plaintiff had received a sum of Rs. 1,350 as and for the value of improvements to the property, the trial Court

passed a decree for damages in favour of the plaintiff for a sum of Rs. 2,650 against the estate of Thayanayaki Ammal in the hands of the third

defendant. The trial Court rejected the counter-claim holding that no counter-claim was tenable on the facts of the case pointing out that the

personal remedy on the mortgage had become barred. On appeal by the third defendant, the learned Subordinate Judge has construed the earlier

compromise decree in O.S. No. 158 of 1957 between the plaintiff and the third defendant, Exhibit A-2, as in full settlement of all claims of the

plaintiff. In the circumstances, while finding against the pleas of res judicata estoppel by judgment and limitation reasserted by the third defendant,

plaintiff was held estopped by conduct from claiming any damages, the plaintiff having taken Rs. 1,350 under the settlement in O.S. No. 158 of

1957.

On the contentions of Counsel before me, three questions arise for consideration in the appeal (1) the question whether the earlier settlement in

O.S. No. 158 of 1957 precluded the plaintiff from agitating her claim in damages for breach of covenant of title and quiet enjoyment, (2) the

contention that as the plaintiff lost her right to possession only by the death of her covenantor, the covenant of quite enjoyment also came to an

end; and (3) the question as to the quantum of damages which the plaintiff is entitled to, the property having been subject to an encumbrance at the

time of the dispossession in favour of the covenantor herself. I may at once state that there is no substance in the first contention. The suit O.S. No.

1580 of 1957 was a suit by the present third defendant as the remainderman and not as representing the estate of the deceased. True, it is recited

in the memorandum of compromise that over and above the sum of Rs. 800 provided for as the value of the improvements in O.S. No. 93 of

1951, the plaintiff therein, the present third defendant, was to pay the present plaintiff, the defendant therein, a further sum of Rs. 330 in respect of

the claim over the suit property then put forward by her. The lower appellate Court has placed considerable reliance for its construction of the

compromise on a term-therein that excepting the right to the sum of Rs. 1,350 the present plaintiff shall not have any other over the suit property.

There is absolutely nothing in the compromise even impliedly suggesting that the claim for damages for breach of covenants under the sale deed

was also subject of the settlement. Certainly the claim for damages for breach of covenant and quiet enjoyment is not a claim over the property the

subject of that suit.

On the death of the vendor, her title over the property had become extinguished and equally all rights and interests of the vendee over the

property. The term in question, in the compromise is only a specific re-affirmation of this position, the only possible claim relating to improvements

having been settled. In fact, it is this term negativing all interests and rights over the property that gives the present plaintiff her cause of action to

their damages. It is a coincidence that the remainderman is also a legal representative of the life tenant who had attempted to convey absolute

interest in the property. The present suit is laid against the third defendant not as a remainderman who has taken possession of the suit property but

as heir of Thayanayaki Ammal who has inherited her other properties. The learned. Subordinate Judge himself remarks that the plaintiff had not

specifically given up her rights to claim damages in respect of her eventual dispossession. It must be noted that the cause of action for the present

suit is the dispossession and the dispossession was on 12th December, 1958. Now if notwithstanding the compromise decree, the third defendant

had not deposited the sum of Rs. 1,350 and not taken possession, the present plaintiff would have had no cause of action on the basis of the

covenant of quiet enjoyment. It is the loss of the properties and all rights therein that has given her the cause of action to maintain the suit against the

heir of her vendor. No doubt it would have been open to the third defendant in his suit for possession to have settled this claim also, in the

particular circumstances, as he happened to be an heir of the deceased. But that has not been the subject of the compromise. Admittedly, the claim

for damages was not mooted in those proceedings. Nor any case of representation to base an estoppel thereon has been made out. There is no

evidence of any representation by the present plaintiff that on payment of Rs. 1,350 she would make no claim against the estate of Thayanayaki

Ammal for damages.

Now to take up the second point, the conveyance in question by the deceased in favour of the plaintiff contains the usual covenant of title and

quiet enjoyment. It is recited in the sale deed that the property conveyed is the sale acquisition of the vendor and that the consideration of Rs.

2,500 settled having received, the vendee and her heirs may thenceforth hold and enjoy the property with absolute rights as under an out and out

sale with rights of alienation by gift, sale or otherwise. The vendor gives an assurance against encumbrance and a covenant holding herself

responsible for losses that may be suffered by reason of any encumbrance over the property. It has turned out since, that she had no authority to

grant a conveyance which could enure beyond her life. By the conveyance she has guaranteed quiet enjoyment to the vendee and her heirs from

generation to generation giving absolute rights purporting to convey as full owner. Certainly she cannot escape from responsibility for the obligation

she has guaranteed when it is ultimately found that her title was not as extensive as she purported it to be. She may be dead but her estate could be

made to answer for the breach. The covenant for quiet enjoyment in its nature can survive the covenantor, it is not a simple personal covenant of

the vendor to come to an end with life with which the purported transfer came to an end. The covenant neither expressly nor impliedly is limited in

its duration to the lifetime of the vendor and as observed in Gulabchand Daulatram Vs. Suryajirao Ganpatrao, , "" it would indeed be a startling

result of the incident of the covenant if it was to be extinguished precisely at the moment when the necessity for the protection afforded by it arises

.

The vendor in that case who prior to the impugned alienation had been a ward under the Bombay Court of Ward Act, was not competent to

dispose of property beyond his lifetime without the previous sanction of the Collector. By the sale deed in question there, he purported to convey

absolute interest in two houses to the vendees. After the death of the vendor his son filed a suit and recovered possession of the houses on the

ground that the sale was void beyond the lifetime of the vendor. The suit out of which the appeal in question came up before their Lordships of the

Bombay High Court was filed against the son of the vendor as the legal representative of the vendor claiming damages for breach of the covenant

of title and quiet enjoyment. The plaintiff relied upon the covenant for title and quiet enjoyment arising by obligation of law u/s 55, Clause (2) of the

Transfer of Property Act as well as by the express words in the sale deed, as in the instant case. It is in the context of this claim that Shah, J., who

delivered the judgment of the Bench made the observation above referred to. This case comes close enough to the instant case on hand.

Illustrative of the liability on the covenant in such circumstances, reference may be made to Williams v. Burrel (1845) 1 Com. Bench Rep. H. 8

Vict. 402 at 433. There one George, devisee for life with leasing power, by an indenture of lease granted a demise to one Williams for 99 years if

three persons therein named should so long live, the indenture assuring the demised premises for the term to the lessee, his executors,

administrators and assigns. This lease having upon the death of the George been held to be void as against the remainderman by the judgment of

the Court of law, on the ground that it was not made in due conformity with the leasing power, it was held that the clause in question operated as

an express covenant for quiet enjoyment during the whole term granted by the lease and consequently the Williams or his assigns or executors etc.

right to recover against the executors or George the value of the term, the costs of defending the action of ejectment brought by the remainderman,

and also the sum recovered by him for mesne profits. Tindal, C.J., stated:

...both upon principle and authority, we think this is an express covenant for quiet enjoyment, which extend to the terms purported to be granted

and consequently that the defendants are liable thereon are executors of the covenantor.

I may also refer to Lock v. Furze (1865) 1 L.R.441. The facts as set out in the headnote are, A was in a possession of premises under a lease

from B, which would expire on the 4th December, 1864. In February, 1860, A in consideration of a premium of �400 obtained from B, a

further lease of the same premises for 21 years and 21 days, to commence from the expiration of the former lease. On the death of B in 1863, it

was found that B was only tenant for life, with power to grant leases in possession and not in reversion, and consequently that the lease so granted

by him to A in February 1860 was void. A thereupon obtained from the reversioners a fresh lease for seven years at a considerable increase of

rent and sued C (B''s executor) upon the covenant for quiet enjoyment obtained in the void lease. The plaintiff who got judgment was held entitled

to recover besides the � 400 premium which he had paid to B, the costs of preparing the void lease, and the value of what he had lost by B''s

breach of contract, substantially the difference between the value of the term professed to be granted to him by the lease of November, 1850 and

that of his 7 years term which he obtained from the reversioner. In the course of his judgment Channell, C.J., observed:

The testator expressly bargained for that which he could not perform; and therefore I think the proper principle upon which the damages should be

assessed is, a full compensation to the plaintiff for that which he has lost, not limited to the amount actually paid by him.

Looking at the matter from another angle in the present case the estate of the deceased has had the benefit of the bargain by which the deceased

had assured quiet enjoyment absolutely and forever to the vendee, and received consideration on such assurance. If by her death the position

should be lost, I do not see why her estate which had gained under the covenant should not be made to compensate in damages for breach of the

covenants. The representatives of the estate will be bound by the covenant of the deceased. There is nothing in the nature : or character of the

covenant that would terminate it with the death of the covenantor vis-a-vis the covenantor''s representatives and the covenantee.

To take up the third question, damages, it is well settled that if the purchaser is compelled to give up possession by reason of the extinction of

the settlor''s title, the normal measure of damages follows the general principles of law, the purchaser is evicted the measure of damages is the

market value of the land at the time of eviction as pointed in Mayne and Mecgregor on Damages, 12th Edition, page 463:

The market value of the land is to be taken at the time neither of contract nor of conveyance but of eviction, and that therefore any increase in its

value, whether due to ordinary market changes or to improvements made on the land by the purchaser will fall within the assessment figure.

In Williams on Vendor and Purchaser, 4th Edition, Volume II, the principle is thus stated at page 1089:

The measure of damages for breach of covenant for quiet enjoyment (which, as we have seen is not broken until some actual disturbance has taken

place) is what the covenantee has lost in consequence of the breach of the covenant; that is to say, in case of an entire eviction, the value at the

date of the breach of the property so taken away from him.

At page 1090 it is stated:

The actual value of the land as it existed at the date of the breach of covenant would include the value of any building or similar improvements

which the purchaser has erected or made.

In the present case both the Courts below have concurrently assessed the market value of the property at Rs. 4,000. The plaintiff had already

received a sum of Rs. 1,350 as the value of the improvements she had given up and normally she would be entitled to the balance, namely, a sum

of Rs. 2,650 as damages. But the property on the date of dispossession was subject to an encumbrance in favour of the vendor herself. The 3rd

defendant had put in a counter claim for Rs. 1,843-75 made up of the principal and interest due on the mortgage less a sum of Rs. 100 stated to

have been paid for the mortgage. The personal remedy on the mortgage had become barred long ago but the mortgage was subsisting. The trial

Court while granting the decree for damages rejected the counterclaim in its entirety as not maintainable either independently or as a set off, legal or

equitable. The appellate Court while of the view that there could be a set off, has not gone into the claim as it was dismissing the suit. The learned

Subordinate Judge felt that, if necessary, the counter claim would have to be remanded for fresh disposal. I do not think that any remand is

necessary in this case. The plaintiff is entitled only for the value of the property on the date of the dispossession and it is manifest that the monetary

loss which the plain-�tiff has sustained is the value of the equity of redemption. The mortgage was subsisting at the time of the dispossession. It

must be borne in mind that if the mortgagor was personally liable, if the property had been sold free of encumbrances on the date of dispossession,

the mortgagor could have got only the market price less the amount due on the mortgage. To the extent there was a subsisting encumbrance on the

property, the value of the property stood diminished. The plaintiff could get only the diminished value. In the circumstances, it is unnecessary to

examine the question whether there can be a set-off legal or equitable or the counter claim is tenable. The plaintiff who is entitled only to the value

of the property can get only its real value namely the diminished value of the property by reason of the subsisting encumbrance and not the value of

the property free of encumbrances.

In this view before the case could be finally disposed of, it is necessary to ascertain the amount actually due on the mortgage as on 12th

December, 1958, the date of dispossession. A finding in that regard is therefore necessary and the learned Subordinate Judge, Cuddalore, will

submit a finding, on the question whether any amount and if so what amount was due and outstanding on the mortgage dated 11 th September,

1947 executed by the plaintiff in favour of the deceased Thayanayaki Ammal on 12th December, 1958. The parties may be permitted to adduce

evidence on the question. Time for submission of findings eight weeks from the receipt of records. Objections, if any, ten days.

(On receipt of the findings, the Court delivered the following Judgment).

The learned Subordinate Judge has submitted, his finding that a sum of Rs. 1,743-75 was due on the mortgage of the property as on 12th

December, 1958,, the date of plaintiff''s dispossession. It follows that the loss that the plaintiff has suffered by the dispossession is the value of the

property less the amount due on the mortgage. Giving credit for the other amounts already paid and deducting the value of the encumbrance, the

plaintiff will be entitled to, as damages, the sum of Rs. 906-25.

There will be a decree for the said amount from the estate of the deceased Thayanayaki Ammal in the hands of the third defendant with interest

thereon at 51/2 per cent. per annum, from the date of the plaint till date of realisation. Having regard to the circumstances of the case, the plaintiff

will be entitled to proportionate costs on the amount decreed, in all the three Courts. The second appeal is allowed accordingly. No leave.