Raghunathan and others vs Chellammal

Suryamurthy, J.—A.S. No. 795 of 1977:--This is an appeal by the defendants in O.S. No. 13 of 1976 on the file of the Sub-Court, Cuddalore, against whom the suit instituted by Chellammal, the respondent for recovery of Rs. 15,000 by way of damages and for a charge over the plaint B schedule properties and for mesne profits realised form the B schedule properties to be determined under O.20, R.20 C.P.C., was decreed for a sum of Rs. 10,700 with a charge over the plaint B schedule properties for the amount decreed. In other respects, the suit was dismissed. The respondent was awarded proportionate costs from the defendants. The properties more fully described in schedule A to the plaint belonged originally to Veerasami Iyer. On 13th December, 1920, Veerasami Iyer executed Ex.B1, a settlement deed, giving a life estate to Lakshmi Ammal and Narayanaswami Iyer and the vested remainder to the sons of Narayanaswami Iyer, and in the absence of sons, to the daughters of Narayanaswami Iyer. Though each of them was entitled only to a life estate, Lakshmi Ammal and Narayanaswami Iyer sold the A schedule property to Eswarakrishna Iyer by executing Ex. A1, dated 11th December, 1929 as if they were absolutely entitled to the property and without disclosing the fact that they were entitled only to a life estate. However, by the same document, viz., A1, they had given the B schedule property as security to indemnify the vendee in respect of any loss he may sustain in case of any breach in the warranty of title to the A schedule property. Under Ex. A2, dated 17th June, 1935, Veeraswami Iyer, the settlor, had purchased the A schedule property from Eswarakrishna Iyer, for a consideration of Rs. 400 only, though Eswarakrishna Iyer himself had purchased the property for Rs. 1,000. Though there is no evidence to show as to what happened between 1929 and 1935, the fact that Eswarakrishna Iyer sold the plaint A schedule property for Rs. 400 only would show that he was anxious to get rid of the property on his coming to know of the defect in the title of his vendors. It is also highly probable that Veerasami Iyer himself purchased the property in order to avert any litigation by Eswarakrishna Iyer. Veerasami Iyer, who was the author of Ex. A1, knew that what he settled on Lakshmi Ammal and Narayanaswami Iyer was only a life estate and what Eswarakrishna Iyer purchased was only the right of the vendors under Ex.A1, viz., the life estate of each of the vendors. However, he executed Ex. A3, dated 18th October, 1937 purporting to settle the A schedule property on his son Ramamoorthi Iyer absolutely as if there was no defect in his title under Ex. A2. Ramamoorthi Iyer, son of Veeraswami Iyer, who should have been fully aware of the defect in the title of his father as well as of himself, sold the A schedule property to the plaintiff under Ex. A4, dated 28th November, 1951 for a consideration of Rs. 4,000 as if he and his minor son were entitled to an absolute estate in the property. The plaintiff in her turn sold the A schedule property to one Mannangatti Ammal under a deed, dated 19th August, 1964.

After the death of Lakshmiammal and Narayanaswami Iyer, Raghunathan, the first appellant herein, instituted O.S. 678 of 1968 on the file of the District Munsif Court, Cuddalore, against Chellammal, the respondent, and one Mannangatti, as defendants 1 and 2, for a declaration of his title to the A schedule property and for recovery of the same with mesne profits, past and future, contending that what Lakshmiammal and Narayanaswami Iyer were entitled to was only a limited interest, viz., life-estate, that Chellammal and Mannangatti were entitled only to the limited interest purchased by them respectively and that he was entitled to the property after the death of Lakshmi Ammal and Narayanaswami Iyer. Lakshmi Ammal and Narayanaswami Iyer died prior to the institution of O.S. No. 678 of 1968 aforesaid. Chellammal and Mannangatti Ammal contested the suit. However, O.S. No. 678 of 1968 was decreed, and the title of the plaintiff in that suit was declared. He was given a decree for recovery of possession with a sum of Rs. 125 towards past mesne profits. It was further ordered that the quantum of future mesne profits will be decided in a separate enquiry under Or.20, R. 12, C.P.C. without a declaration that the plaintiff in that suit was entitled to future mesne profits also. The judgment and decree of the learned District Munsif of Cuddalore in O.S. No. 678 of 1968 were confirmed on appeal by the Sub-Court, Chidambaram in A.S. No. 115 of 1972. The respondent herein and her co-defendant therein were dispossessed in execution proceedings, and the respondent herein has compensated Mannangatti Ammal by paying her damages for the loss sustained by her due to the breach in the warranty of title. Thereafter, the respondent has filed this suit SOT the reliefs aforesaid.

The appellants, among whom the first appellant is the main contesting defendant, contested the claim of the respondent contending that there was no breach in the covenant of title, that the purchase by the plaintiff was with full knowledge of the defect in the title of her vendors, and that the plaintiff is not entitled to any damages.

The learned trial Judge having found in favour of the plaintiff-respondent, as mentioned above, the defendants have preferred this appeal.

The two points that arise for consideration in this appeal are--(1) Whether the plaintiff-respondent is entitled to damages for breach in the warranty of title? 2. If so, whether the plaintiff-respondent is also, entitled to a charge over the B schedule property ?

There is no dispute about the fact that Narayanaswami Iyer and Lakshmi Ammal were entitled only to a life estate each, and that they executed Ex.A1, dated 11th December, 1929, as if they were entitled to an absolute estate. Ramamoorthi Iyer, son of Veeraswamy Iyer, from whom the respondent has ultimately purchased the property before selling it to Mannangatti Ammal, is liable in damages for a breach in the covenant of title notwithstanding the fact that he was not the person who executed Ex.A1 and whether or not he was aware of the defect in the title.

S.55 (2) of the Transfer of Property Act which lays down that:

The seller shall be deemed to contract with the buyer that the interest which the seller professed to transfer to the buyer subsists and that he has power to transfer the same

also makes it abundantly clear that

The benefit of the contract mentioned in this rule shall be annexed to, and shall go with, the interest of the transferee as such and may be enforced by every person in whom that interest is for the whole or any part thereof, from time to time, vested.

Therefore, the benefit of the covenant for title runs with the land and is enforceable by the subsequent purchasers of the land, and if the buyer resells to several purchasers, each of the purchasers is entitled to sue on the covenant in respect of his part.

In Gurusami Gounder v. Santhappa 77 L.W. 555 Veeraswami, J. (as he then was), has observed that--

S.55 (2) of the Transfer of Property Act clearly provides that the seller shall be deemed to contract with the buyer that the interest which the seller professes to transfer to the buyer subsists and that he has power to transfer the same. The section goes further to provide that the benefit of such a contract is annexed to and shall go with the interest of the transferee as such and is enforceable by every person in whom that interest or part of it is vested. When the lower appellate court observed that there was no privity of contract between the first defendant and the appellant as purchaser from the 12th defendant, it apparently overlooked this statutory provision. In one sense one may say that strictly speaking, there is no privity of contract between the seller and the transferee from a buyer of immoveable property but there is clearly by reason of S.55(2) of the Act, privity of estate between such persons which will enable the transferee from a purchaser to sue for damages in breach of a deemed covenant of title.

Similarly, in Kalyani Ammal v. Ezhumalai Nattar 1969-1-M.L.J. 76=81 L.W 272 Natesan, J. has held that the vendor cannot escape from responsibility for the obligation the vendor had guaranteed when it is ultimately found that her title was not as extensive as she purported it to be, that the vendor may be dead, but the estate of the vendor may be made to answer for the breach and that the covenant for quiet enjoyment in its nature can survive the covenantor, and that it is not a simple personal covenant of the vendor to come to an end with which the purported transfer came to an end. Natesan, J. has further observed that

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.

Subsequently, the learned Judge has observed that he could not see why the estate which had gained under the covenant should not be made to compensate in damages for breach of the covenants and that the representatives of the estate would be bound by the covenant of the deceased (vendor). Therefore, the respondent I entitled to recover damages from the appellants on account of the breach of the warranty of title. The purchaser, who was compelled to give up possession by reason of the breach in the warranty of title given by the vendor is entitled to recover market value of the land at the time of the eviction as damages, and this is the basis for the compensation awarded by the trial court. Admittedly, the property was sold by the first defendant after he succeeded in the prior suit. The consideration received by the sale was a sum of Rs. 10,700, and this is the amount awarded as damages.

The next question to be considered is whether the plaintiff is entitled to a charge over the B schedule properties. In Natesa Vanniyan Vs. Gopalasami Mudaliar, Jackson, J. speaking for the Bench has observed that "the Transfer of Property Act does not apply to any transfer by operation of law (S. 2-d) and therefore, the implied covenant for title in S. 55(2) is not annexed to the interest of transferee by court sale" and has, however, held that if the right and interest of judgment-debtor, which is sold by an action of the court, should happen to include an interest which the transfer was capable of passing, then that interest could be purchased at the court sale along with the property to which it was attached and if such interest were covenant running with the land, as, for instance, the covenant for title provided in S. 55(2) that interest could be transferred at a Court sale. However, he has observed that--

......though the Transfer of Property Act mentions certain contracts the benefit of which shall be annexed to and go with the interest of the transferee, there is no such mention of a covenant of indemnity.

He held that a covenant given in a security bond by the husband of a vendor undertaking that if the vendee should be deprived of any of the properties he would compensate the vendee with equivalent property, is not covenant running with the land.

In the same case, Reilly, J. has observed that the benefit of the contract, viz, the covenant to compensate for loss by reason of breach in the warranty of title, does not run with the land in the absence of an assignment of the security. The learned Judge was of the opinion that if it was intended by the collateral security bond to make the B schedule property permanently liable to Subramania Sastri''s assignees and representative-in-interest, it would be unenforceable as violating the rule against perpetuities. Of London and South Western Rly. Co. v. Gomm. Therefore, the plaintiff is not entitled to a charge over the property more fully described in schedule B annexed to the plaint, and to this extent, the appellants succeed in this appeal, and the charge created by the trial court in respect of the property described in schedule B annexed to the plaint is set aside.

The learned counsel for the appellants contends that the appellants are not liable to compensate the respondent for the loss sustained by her on account of the malfeasance or misfeasance committed by Narayanaswami Iyer by selling an absolute estate to which he was not entitled and thereby depriving the first appellant of his absolute right to the property. The first appellant was not born on the date of the sale deed executed by Lakshmi Ammal and Narayanaswami Iyer, and he is not sought to be made personally liable now for the loss caused to the vendee and his successors-in-interest by reason of the breach in the warranty of title given by Lakshmi Ammal and Narayanaswami Iyer. The first appellant is liable only to the extent of the estate of the deceased Narayanaswami Iyer in his hands.

Consequently, this appeal is allowed in part, and the judgment and decree of the trial court are modified, and while confirming the decree for damages in a sum of Rs. 10,700 the decree for a charge over the plaint B schedule property is set aside. There will be no order as to costs. App. No. 138 of 1981:- This appeal has been filed by the plaintiff in O.S. 13 of 1976 against the judgment and decree of the learned trial Judge refusing to grant him mesne profits, past and future. The mesne profits are claimed on the basis of the income that might have been derived from the plaint B schedule property. The plaintiff has no manner of right to possession of the B schedule property, and the defendants were not in wrongful enjoyment of the B schedule property. Therefore, the claim of the plaintiff for mesne profits from the B schedule property cannot be sustained. Hence, this appeal is dismissed. There will be no order as to costs.