Ragunatha Chariar vs Sadagopa Chariar

In this case the plaintiff instituted a suit for the recovery from the defendant of a sum of money which the latter had agreed to pay to two

persons, Alamelu Annual and Sreenivasa Gopala Chariar, as consideration for the transfer 10 him by the plaintiff of two decrees in O.S. bi and 63

of 1902 in the District Munsif''s Court of Valangiman. The plaintiff alleged that th''e defendant failed to pay the amounts due to the two persons

named above and that he himself had 10 pay them. The contract of assignment was dated 281U January 1904 and tins suit was instituted on the

16th July 1907. The amount due to the said two persons was in fact paid by the plaintiff''s brother and not by the plaintiff himself. The plaint alleged

that the plaintiff had made good the amount to his brother by some adjustment with him. Both the lower courts have disbelieved the adjustment and

dismissed the suit holding that the plaintiff has no cause of action to recover the amount as he has not yet sustained any damage by the defendant''s

breach of his contract. The defendant also raised the contention that the assignment of the decrees in O.S. 61 and 62 of 1902 was brought about

by fraud on the part of the plaintiff and that the consideration for the assignment subsequently failed. But these questions have now been set at rest

and have not been argued before us.

The main contention in this appeal by the plaintiff is that the nature of the plaintiff''s right against the defendant has been-misunderstood and that

the lower courts have wrongly proceeded on the footing that the defendant''s obligation under the contract Exhibit A, was to indemnify the plaintiff

against any claims by the two persons to whom he himself owed the debt which the defendant had agreed to discharge under the contract, Mr.

Section Sreenivasa Ayangar who argued the case at great length for the respondent (defendant) argued that the defendant''s obligation was to pay

the consideration for the assignment to certain other persons than the plaintiff and that the plaintiff had no right to claim the amount himself in

variance of the contract and as he had not proved that he sustained any actual damage by the defendant''s failure to perform the contract in the

manner stipulated no decree could be passed in the plaintiff''s favour, if we understand him aright he also maintained that the plaintiff''s right was

only to be indemnified against his creditors'' claims. We are by no means sure that the two contentions are not the same in substance though

expressed in different forms. It is perfectly clear to us that the amount mentioned in the contract was agreed upon as consideration for the

assignment of the decree in defendant''s favour and the plaintiff is entitled to insist that the defendant should pay it in some form or other. It is no

doubt conceivable and possible that an assignment of property may be made in consideration merely of the assignee agreeing to indemnify the

assignor against some claim by a third party. But this is not the natural interpretation to be placed where the value of the property assigned is

ascertained between the parties and the assignee is directed to pay that value to a third party. Such a direction is prima facie intended for the

benefit of the assignor-We think it would, have been perfectly open to the plaintiff in this case to pay off his two creditors himself and to claim the

payment of the consideration for the assignment direct to himself. Where the assignee is himself interested in the payment being made to a third

party, there might be reason to hold that the assignor could not alter the mode of payment prescribed by the assignment deed. It may also be

conceded that when, on the faith of the original direction, the assignee has entered into direct relations with the third party and rendered himself

liable to mate the payment to him, the assignor could no longer require the assignee to pay the consideration to himself. See Siva Subramania

Mudaliar and Others Vs. Gnanasammanda Pandara Sannadhi, , to which one of jis was a party, and Bachu Chenchu Ramaiyar v. Apparaju

Subbaramaiyar (1910) 9 M.L.J. 79. But these instances do not affect the general nature of the right possessed by a person who for a certain sum

of money executes a conveyance in favour of another, and agrees that the money should be paid to third persons. In the decision in Dorasinga

Tevur v. Arunachalam Chetty ILR (1899) M. 44, with which we agree, Subrahmanya Aiyar and Moore JJ. held that where a person executes a

lease to another and the lessee agrees in consideration thereof to discharge the debt due by the lessor to a third person but fails to do so within a

reasonable time, the lessor is entitled to recover the amount although he had not paid the debt himself.

The same view was adopted in C.M.A. 119 of 1908, to which one of us was a party, and in Daswant Singh v. Syed Sham Ramjan Ali (1907)

6 C.L.J. 398. It is also in accordance with the rule in England where a vendee of property makes a promise in consideration of the sale to

discharge certain incumbrances on the property sold. The judgment of Boddam and Bhashyam Aiyangar JJ. in Pandi Dorasami Tevar v.

Lakshmana Chetty (1903) 14 M.L.J. 285 does not support the respondent''s contention. The suit there was not to recover the amount which the

vendee had promised to pay to the vendor''s creditor but to recover as damages the amount for which the vendor had executed to his creditor a

promissory note an account of interest due to him for a period of one year in consequence of the vendee not having paid the amount immediately.

There can be no doubt that the vendor was entitled only to recover the consideration for the sale which the vendee tailed to pay to the former''s

creditor. He could not claim any further damages which he had not actually sustained. 1hangamma Nachiar v. Subbammal (1905) 16 M.L.J. 20,

decided by Moore and Sankaran Nair JJ., was a similar cage. On the other hand in S.A. No. 133 of 1907, to which Sankaran Nair J. was a

party, Dorasinga Tevar v. Arunachala Chetty ILR (1899) M. 441, Putty Narayanamoorthi Aiyar v. Marimuthu Pillai ILR (1902) M. 322, and

Kumar Nath Bhuttacharjee v. Nabokumar Bhuttacharjee ILR (1898) C. 244 the suits were for contribution and the plaintiff''s right in such cases is

undoubtedly only to recover the defendant''s portion of the money actually paid by the plaintiff.

The case on which the learned vakil for the respondent mainly relied was Izat-un-Nissa Begam v. Kunwar Pertap Singh ILR (1909) A. 553 .

But in our opinion it affords him no help whatever. There a mortgagee, in execution of a decree on his mortgage, purchased the mortgagor''s equity

of redemption subject to two prior mortgages stated to be for certain sums. It afterwards turned out that those mortgages were valueless. The

mortgagor sued to recover from the mortgagee-purchaser the amounts stated in the sale certificate as the value of those mortgages. The Judicial

Committee held that the claim was unsustainable. According to their Lordships'' view what was sold was the equity of redemption of the

mortgagor. The fact that it turned out to be more valuable than it was supposed to be at the time of the auction sale could give no right of action to

the mortgagor. They observed : ""On the sale of property subject to encumbrances the vendor gets the price of his interest, whatever it may be -

whether the price be settled by private bargain or determined by public competition - together with an indemnity against the encumbrances

affecting the land. The contract of indemnity may b; expressed or implied. If the purchaser covenants with the vendor to pay the encumbrances, it

is still nothing more than a contract of indemnity. The purchaser takes the property subject to the burthen attached to it. If the I encumbrances turn

out to be invalid the vendor has nothing to complain of. He has got what he bargaiued for. His indemnity is complete. He cannot pick up the

burthen of which the land is relieved and seize it as his own property.

It is perfectly clear that the Judicial Committee was dealing with a case where a vendee pays a certain price for the equity of redemption and

agrees to indemnify the vendor against the claims of the encumbrancers, and not one where he agrees to pay a certain sum of money for the land

sold to him and undertakes to pay a portion thereof to encumbrancers. Their Lordships observe that in such a case an express promise to

discharge encumbrances, against which the purchaser covenants to indemnify the vendor, does not change the nature of the vendor''s right which is

only to be indemnified against certain claims and not to have a certain sum of money belonging to him paid to another.

For these reasons we are of opinion that the plaintiff is entitled to recover the amount which the defendant agreed to pay to third parties. Mr.

Sreenivasa Aiyangar invites us to refer the question for decision to a Full Bench, contending that the cases of Pandi Dorasami Tevar v. Lakshmana

Chetty (1903) 14 M.L.J. 285 and of Mangamma Nachiar v. Subbammal (1905) 16 M.L.J. 20 are in conflict with Dorasinga Tevar v.

Arunachalam Chetty ILR (1899) M. 441, and draws attention to the observation of Miller J. in Ansur Subba Naidu v. Bathula Bee (1909) 8

M.L.T. 188 that there is such conflict. But we do not think, for the reasons already mentioned by us, that there is any real* conflict of authority,

and we must decline to accede to his request.

It is next contended that as the debts due to the plaintiff''s creditors have been actually paid by the plaintiff''s brother and as there is nothing to

show that the brother could or would proceed against him, the plaintiff ought not to be given a decree. It is not clear to us that the plaintiff''s brother

would not be entitled to proceed against him. Assuming, however, that he could not, that does not affect the plaintiff''s right in the view we have

expressed above.

We must finally refer to another contention of Mr. Sreenivasa Aiyangar that the defendant had difficulties in executing the decreed which were

assigned to him and that he could not be held to be guilty of default in the payment of the money which he agreed to pay. There is, in our opinion,

no substance in this argument. The defendant''s contract was to pay the consideration for the assignment to the two persons referred to above, and

he was bound to do so within a reasonable time. Moreover it was he himself that tried to repudiate the assignment on grounds which were found to

be unsustainable.

The plaintiff is entitled to a decree for the sum of Rs. 1,375 with interest at 6 per cent per annum from the date of plaint to this date and further

interest at the same rate. The defendant must pay the plaintiff''s costs throughout.