Sivasubramania Ayyar vs Subramania Ayyar

Abdur Rahim, Officiating C.J.

The question referred to us must be answered in the negative. Section 55, Sub-section 4, Clause (b) of the Transfer of Property Act, says that

in the absence of a contract to the contrary, the vendor shall have a charge upon the property in the hands of the buyer for the amount of the

purchase money or any part thereof remaining unpaid. In this case the vendor has asked the purchaser to pay the unpaid purchase money to a

certain creditor of his. It is not alleged that the creditor accepted the liability of the purchaser of the property in substitution of the vendor''s own

liability. But the purchaser as between himself and the vendor has accepted the obligation to pay the purchase money according to the vendor''s

direction. It has been held by the Privy Council in Webb v. Macpherson ILR (1903) 31 Cal 57 that the statutory charge created by Section 55 of

the Transfer of Property Act is not to be negatived except where there is a contract to the contrary, either express or arising by necessary

implication. They point out that this charge is different, in its origin and nature, from the vendor''s equitable lien under the English law. They also

observe that; ""the charge is not excluded by a mere personal contract to defer payment of a portion of the purchase money, or to take the

purchase money by instalments, nor is it excluded by any contract, covenant or agreement with respect to the purchase money which is not

inconsistent with the continuance of the charge."" It is difficult to see how a direction to the purchaser to pay the purchase money to the vendor''s

creditor is inconsistent with the existence of the charge. This is the view taken by the Allahabad High Court in Har Chand v. Kishori Singh (1910)

7 I.C. 639 and in Meghraj v. Abdullah (1914) 12 A.L.J. 1034. It is argued, however, that in this Court the contrary view has prevailed in Abdulla

Beary v. Mammali Beary ILR (1910) Mad. 446, which has been followed in Siva Subramania Mudaliar and Others Vs. Gnanasammanda Pandara

Sannadhi, . The learned Judges who decided the former case state in their judgment that, by the terms of the contract under their consideration, the

purchase money was not payable to the plaintiff and he had no right of action to recover it. That is, however, not the position involved in the

present case. It has been held in Sheonandan Lal v. Zainal Abdin ILR (1914) Calc. 849 that the vendor''s charge for unpaid purchase money is not

a mere personal right but is capable of being transferred to a third person and in Ramakrishna Ayyar v. Subrahmania Ayyen ILR (1903) Mad.

305, it has been ruled that a suit to enforce the charge is governed by twelve years'' limitation. A vendor''s lien or charge is not lost by the mere

taking of personal security. See Karuppiah Pillai Vs. T.R. Hari Row and Another, and Mackreth v. Symmons (1808) 2 White and Tudor''s

Leading Cases, (VII edn,), 946. There is no doubt a distinction, on principle as well as authority, as pointed out by the Privy Council in Webb v.

Macpherson ILR (1904) Calc. 57, between a conveyance or sale in consideration of a covenant to pay a sum of money in the future, and a sale in

consideration of money which the purchaser covenants to pay. Here the consideration for the sale is money, payable by the purchaser, only he has

agreed with the vendor to pay it to a third person.

The learned Judges who decided Abdulla Beary v. Mammali Beary ILR (1910) Mad. 446 seem to hold in one part of their judgment that where

the purchase money is to be paid to another, that is necessarily inconsistent with the vendor retaining the charge. There is nothing in Section 55,

Sub-section (4), Clause (6), to suggest that for the charge to arise or to subsist, the purchase money must he payable to the vendor himself and

not, by his direction, to a third person. If the above case holds otherwise, I am of opinion that it was wrongly decided. I may mention that the

decisions in Ramakrishna Ayyar v. Subrahmania Ayyen ILR (1903) Mad. 305 and Gopala Aiyar v. Ramaswamy Sastrigal (1911) 22 M.L.J. 207

are in accordance with the view I have expressed,

Seshagiri Ayyar, J.

I agree with the conclusions of the learned Judges who made the reference that the vendor''s lien is not lost by a direction to pay the purchase

money to a third person. The charge is for the purchase money and it is immaterial that that money is not directly payable to the purchaser. As was

pointed out by the learned vakil for the respondent, the statute itself, by Section 55(5)(b), enables the vendor to direct it to be paid to any person

he names. The obvious inference is that the purchase money does not lose its character by the direction to pay another.

The main argument of Mr. Rajagopalachariyar was that where there is a breach of the direction to pay a third person, the right of the vendor,

who is compelled to pay himself, is only to sue for damages for breach of contract, and that consequently it must be deemed that there is a contract

to the contrary when the direction to pay a third person was given. It cannot be contended that the lien is personal: see Sheonandan Lal v. Zainal

Abdin ILR (1914) Calc. 849. The right to the unpaid money as well as the charge therefore can be validly assigned to a stranger. It is not clear

therefore why the direction to pay a third person should deprive the vendor of his charge. The decision of the Judicial Committee in Izaat-un-Nisa

Begam v. Partab Singh ILR (1909) All. 583 was strongly relied upon. In that case the auction purchaser bought the property subject to

encumbrances. The encumbrances were found to be invalid. Thereupon the judgment-debtor sued to recover the amount of the encumbrances by

which the purchaser was benefited, and claimed a charge for it on the lands sold. Their Lordships held that when property is sold subject to

encumbrances, the vendor whether in a private or Court-sale retains-to himself only a claim to be indemnified against the encumbrancers

proceeding against him. It was also held that the vendor was not entitled to the benefit of the finding that the encumbrances were invalid. The

purchaser took the risk and was consequently entitled solely to the advantage. I fail to see how this pronouncement is an authority against the plain

provisions of Section 55(4)(6).

The learned Judges of this Court in Abdulla Beary v. Mammali Beary ILR (1910) Mad. 446 based their conclusion largely upon English

decisions notwithstanding the caution of the Judicial Committee in Webb v. Macpherson ILR (1904) Calc. 57 that the charge under the Transfer of

Property Act ""is different in origin and nature from the vendor''s lien given by Courts of Equity to an unpaid vendor."" There are three classes of

charges known to English law: (a) equitable charge founded on contract; (b) equitable lien enforced by Courts of Equity; and (c) the common law

lien which enables the vendor to keep back possession until he is paid (19 Halsbury''s Laws of England, paragraph 20). The legislature in India, in

order to avoid these confusions, has enacted a simple rule of law; and with all deference to the learned Judges who decided Abdulla Beary v.

Mammali Beary ILR (1910) Mad. 446, it seems to me it would be introducing an unnecessary element of uncertainty into this country, if the

interpretation of an unambiguous section were made to depend upon English decisions. I do not therefore think that the English cases quoted for

the respondent as 3howing that the rule of law in England is not as stated in Abdulla Beary v. Mammali Beary ILR (1910) Mad. 446 need be

considered.

Only one other argument need he noticed. It was broadly contended that after giving the direction to the purchaser to pay the money to a third

person, the vendor had no right to countermand it. Of course, if the direction had been communicated to the proposed payee, a completed

contract may arise between the purchaser and the third party which may preclude the vendor from claiming the money before payment. I do not

think that Gopala Aiyar v. Ramaswamy Sastriga (1911) 22 M.L.J. 207 lays down that an uncommunicated direction to a third party disables the

vendor from claiming the money. On the other band, Siva Subramania Mudaliar and Others Vs. Gnanasammanda Pandara Sannadhi, is a direct

authority to the contrary.

In the present case, it is not shown that the third person looked to the vendee for payment. A fortiori, therefore, when the vendor had to pay the

third party himself, the lien attached to the property to the extent of that payment. I answer the question in the negative and hold that Abdulla Beary

v. Mammali Beary ILR (1910) Mad. 446 was not rightly decided.

Phillips, J.

In this case, I have already expressed my views in the Order of Reference and I have heard nothing in the arguments which have now been

addressed to us to induce me to change my opinion. I agree therefore in answering the question in the negative.