Malaimel Thiruvenkatachariar and Another vs Pari Seshadri Iyengar and Others

John Wallis, Kt., C.J.—In this case the plaintiff sues to recover property in possession of defendants 4 and 5. Defendants 1 to 3 first

contracted on the 12th July 1911 to sell the property to the defendants 4 and 5, then on the 11th September 1911 sold it by registered sale deed

to the plaintiff who had notice of the previous contract and subsequently on the 17th October 1911 executed a registered sale deed in favour of

defendants 4 and 5 and put them in possession, alter which the plaintiff instituted the present suit O.S. 23 of 1912 for possession. The Lower

Appellate Court has decided that, as the defendants 4 and 5 have not obtained a registered sale deed they are not entitled to possession citing the

Pull Bench decision, in Kurri Veerareddi v. Kurri Bapireddi ILR (1904) M. 330. That however was a suit by the plaintiff to recover possession

from the defendant who had not obtained a registered sale deed but only a contract to sell. Here the plaintiff has obtained a transfer by a duly

registered document from defendants 1 to 3 with notice of the prior contract by these defendants to sell the property to defts. 4 and 5. In this state

of things he is bound by. Section 91 of the Indian Trusts Act to hold the property for the benefit of defendants 4 and 5 to the extent necessary to

give effect to the contract. No such statutory obligation is imposed on the original owner who refuses to carry out his contract to sell and the

decision in Kurri Veerareddi v. Kurri Bapireddi ILR (1904) M. 336 is therefore distinguishable. The question then is whether the defendants 4 and

5, who in the absence of a registered conveyance, have no right to recover possession of the property, can defend their possession as against the

plaintiff by reason of duty imposed on him by Section 91 of the Indian Trusts Act to hold the property for them so far as may be necessary for the

performance of the contract with defendants 1 to 1 In Lakshmi Doss v. Roop Laul ILR (1906) M. 169, a defendant who had made a transfer

under circumstances which entitled him to avoid it was held by a Full Bench to be entitled to retain his possession against the transferee though he

had not sued to set it aside and such a suit had become barred. Similarly in the present case, it seems to me, that defendants 4 and 5 are entitled to

resist the plaintiff''s suit for possession by virtue of the duty they are under to hold the property for the benefit of defendants 4 and 5 by virtue of

Section 91 of the Indian Trusts Act. Though the provision would not enable the 4th and 5th defendants to sue for possession without at the same

time praying for a conveyance, there is, as pointed out in Raja Rajeswara Dorai alias Muthu Ramalinga Dorai late a minor through his next friend

M. Velusami Thevar, declared a Major Vs. A.L.A.R.R.M. Arunachellam Chettiar and Another, , a great difference between the position of a

plaintiff and a defendant in such a case, and I think it is quite unnecessary to deprive the defendants 4 and 5 of possession and drive them to

another suit. This is also the decision in Puchha Lai v. Kunj Behari (1913) 19 C.L.J. 213, I would therefore reverse the decrees of the Lower

Courts and remand the suit to the first court for trial of issues 2, 3 and 4. Costs will abide.

Srinivasa Aiyangar, J.

The question whether defendants 4 and 5 are entitled to resist the suit for possession by the plaintiff, who has now gob the title, has to be

determined by a consideration not merely of the provisions of Section 91 of the Trust Act but also of Section 40 of the Transfer of Property Act

and Section 27 of the Specific Relief Act. All the three sections enact in substance the right of a person who had obtained a contract of sale, to

enforce the contract against a person who has subsequently obtained a legal title to the property from the vendor; the contract by itself does not

create a right in rem, but only creates a right in personam against the vendor and that obligation is made enforceable against the subsequent

purchaser, as an obligation in personam to a limited extent, namely, to the extent of compelling him to give effect to the previous contract by way of

specific performance, though he is not liable in damages as the original vendor would be. The language of Section 91 of the Trust Act is that the

subsequent transferee ""must hold the property for the benefit of the latter to the extent necessary to give effect to the contract."" It is clear therefore

that the subsequent transferee is not a simple trustee for the person holding the contract, but he is only a person who holds the property for the

benefit of the contractee to the extent necessary to give effect to the contract. If the contract by itself does not create a right in rem in the property

contracted to be sold (as is now settled by the decision of the Full Bench in Kurri Veerareddi v. Kurri Bapireddi ILR (1904) M. 333 it cannot

have any greater effect as against the transferee with notice. The person holding a contract for sale can undoubtedly bring a suit as plaintiff to

enforce that contract against the subsequent transferee and obtain a conveyance from him, Potter v. Sanders (1843) 6 H p 1 67 Eng. Rep. 1057,

Daniels v. Davison (1811) 17 Ven p. 433, 34 Eng. Rep. 157 and in the same suit, he may be entitled to recover possession of the property,

although strictly speaking his right to such possession would accrue to him only after the execution of the conveyance. In Gffur v. Bhikaji ILR

(1901) B. 159, the plaintiff who had obtained a sale deed from his vendor sued to recover possession from a person to whom his vendor had sold

the property with notice of the agreement for sale but before the actual conveyance. Section 91 of the Indian Trust Act was considered and the

plaintiff was given a decree for possession against the subsequent purchaser but the correct form of the decree was said to be a decree for

conveyance by the defendant to the plaintiff. A similar view was taken in a case in this court, Gudur Ranga Reddi v. Gundala Pitchi Reddi (1914) 1

L.W. 879. In that case specific performance against the vendor and the subsequent transferee with notice, was directed by ordering that the

conveyance should be executed by both the vendor and the transferee.

In the case of a simple trust, where the trustee is a bare legal owner the cestui gue trust may be entitled to possession of the property and may

compel the trustee to place him in possession. If however the trust is an active trust, that is if the trustee has to perform any duties in connection

with the trust property, the cestui que trust is not entitled to possession as a matter of right, though the court can\in its discretion give possession.

See Lewin on Trusts, page 847; Perry on Trusts, Sections 328 and 329; Underhill on Trusts, page 363; and Godefroi on Trusts, page 431.

The further question which is the only one which arises in this case is whether a person who is actually in possession under a prior agreement for

sale could be deprived of his possession by a subsequent purchaser on the strength of his title. In Kurri Veerareddi v. Kurri Bapireddi ILR (1904)

M. 336, already referred to, this Court has held that as against the vendor himself he cannot keep possession, though, undoubtedly, he would be

entitled to enforce the contract by calling for a conveyance. But the difference between that case and the present case is that chapter 9 of the

Indian Trusts Act contains no provision which imposes an obligation on the vendor to hold the property as a trustee for the contractee. I must,

however, confess that on principle this should not make any difference. In the first place it was wholly unnecessary to enact that the seller should

hold the property for the benefit of the purchaser to the extent necessary to give effect to the contract, for that is his obligation under the contract

itself. The need for Section 91 arose, because the obligation of the original seller was made enforceable against the subsequent transferee with

notice. If by the contract of sale the purchaser obtained no kind of interest in the property, if the ownership was wholly in the seller, and if by virtue

of such ownership he is entitled to eject the purchaser as if hp/were a trespasser, it is difficult to see why a transferee from him should be in a

worse position. In Kolathu Aiyar v. Ranga Vadhyar (1913) 234 M.L.J. 84 , the learned Judges seem to think that such a transferee can recover

possession.

Questions have arisen as to the position of persons bound by obligations in the nature of trusts under one or other of the sections contained in

chapter 9 of the Trusts Act, and in these cases it has been held that a person in possession of the property is entitled to resist a claim for

possession on the part of those who are bound by such obligations, by pleading such an obligation, though an action by him as plaintiff to enforce

that obligation by calling for a conveyance or by setting aside a conveyance already executed, under some one or other of the provisions of the

Specific. Relief Act, may have been barred by limitation. Though there have been observations here and there in this court, see Roop Laul v.

Lakshimi Doss ILR (1905) M. 1 per Subramania Aiyar, J.; Raja Rajeswari Dorai v. Arunachallam Chettiar ILR (1913) M. 32 per Sadasiva

Aiyar, J. that a. defendant in possession who had not taken steps to set aside a conveyance or to call for a conveyance within the time limited by

law is not entitled to resist a suit for possession by the legal owner, it may be taken as settled so far as this Court is concerned by the decision of a

Full Bench in Lakshmi Doss v. Roop Laul ILR (1906) M. 169, that persons in possession, who have parted with their ownership by a legal

conveyance which they are at liberty to repudiate, can by virtue of the possession plead the invalidity of the plaintiff''s title as against them and

prevent the plaintiffs from recovering possession on a defeasible title. In Madagula Latchiah v. Pally Mukkalinga ILR (1907) M. 393, the contract

between a suit to recover possession in defeasance of the legal title after the time limited to set aside that title, and a suit in which the plea that the

plaintiff has a defensible title is set up to defend the possession, is clearly brought out. The various provisions in chapter 9 of the Trusts Act were

discussed at length in Raja Rajeswari Dorai v. Arunachallam Chettiar ILR (1913) M. 32 where also the same principle was laid down, though

Sadasiva Iyer, J. was inclined to doubt the correctness of the decision in Lakshmi Doss v. Roop Laul ILR (1906) M. 169. These were however

cases where the defendant in possession was the original owner who had conveyed the property to the plaintiff under circumstances which entitled

him to rescind, and in which he defended his possession on his original title which did not pass absolutely to the plaintiff. In cases, however, where

the. defendant in possession was not the owner at any time, but was only entitled to get a transfer of the ownership, as a personal obligation, it is

difficult to distinguish on principle the decision in Kurri Veerareddi v. Kurri, Bapireddi ILR (1904) M. 336 and hold that he is entitled to resist the

transferee''s suit for possession. There is however the provision in Section 91 of the Trusts Act, and it is unnecessary to extend that decision to

cases of transferees. After all, in legal theory, there does not seem to be any difference between the position of a buyer under a contract of sale in

England and under the Indian Statute, Maitland''s Equity, p. 111. In Namasivayam Pillai v. Nellayappa Pilla ILR (1894) M. 43, on a consideration

of the several statutory provisions as regards subsequent transferees with notice, it was held that he cannot sue to recover possession from a

person who had a prior contract for sale. This decision was not referred to or overruled by the decision of the Full Bench. The same view was

taken in Puchha Lal v. Kunj Behari (1913) 19 C.L.J. 213, which has been followed in a still more recent case in Calcutta, Khagendra Nath

Chatterjee v. Sonatan Guha (1915) 20 C.W.N. 149. Whether even the original vendor can recover possession, if he had delivered possession in

pursuance of an express stipulation in the contract of sale, it is unnecessary to consider. Such possession may enure till the conveyance is executed,

when the purchaser would become entitled to possession not by virtue of the contract, but by virtue of his title see Doed Tomes v. Chamberlaine

(1839) 5 M. & W. 14, Zimbler v. Abrahams (1903) I.K.B. 577. There is this further fact in this case; the 4th and. 5th defendants have obtained a

conveyance from their vendors. Though at the time of the conveyance to the said defendants they had already executed a sale in favour of the

plaintiff, I am inclined to hold that, they were still entitled to fulfil their original contract by executing a conveyance, at the request of the contract

and to this extent repudiate the title conveyed to the plaintiff, not for their own benefit, but for the benefit of the 4th and 5th defendants and to the

extent necessary to fulfil their obligation. The question whether the plaintiff was transferee for value without notice has not been tried. 1 agree the

appeal must be allowed and the suit remanded to the first court for the trial of issues ''2 to 4. Cost incurred hitherto will abide.