Veeraswami and Others vs Durga Venkata Subbarao and Others

Viswanatha Sastri, J.—The Defendants are the Appellants in this Second Appeal, which arises out of a suit filed for a declaration of the Plaintiff''s title to a house and site of the extent of 462-1/2 square yards and for recovery of possession of the same after ejecting Defendants 1 to 3 there from and for recovery of post and future mesne profits. The Courts below have decreed the suit.

In order to appreciate the Appellants'' legal contention it is necessary to state the relevant facts. One Ramaswami Somayajulu had four sons, Suryanarayana, Sangameswata pikshitulu, Gopalakrishna-murthy and Viswanadham and the family owned, among other properties, the suit house. On 23rd March 1939, the four sons of Ramaswami Somayajulu relinquished their interest in favour of their father and became divided from one another. Thereafter Ramaswami Somayajulu died leaving his four sons above mentioned and a widow Seetharamamma, their step-mother. Under Ex. A-l dated 1st August 1942, Seethuramauima sold to her stepsons Sangamcswara Dikshitulu and Viswanadham, Defendants 4 and 5, her interest in all the properties which belonged to her deceased husband. Under Ex. A-7 dated 21st August 1942, Suryanarayana the eldest brother gave up his interest in the suit properties and others in favour of the 4th Defendant. Exhibit A-7 styled as ''deed of partition and relinquishment'' was executed for a consideration of Rs. 100 paid by the 4th Defendant to Suryanarayana.

On 18th September 1942, Defendants 4 and 5 sold the suit property to the Plaintiff for Rs. 500 under Ex, A-2 with recital that the property belonged to the vendors ancestrally with absolute right and enjoyment. Relying upon Ex. A-2 the Plaintiff filed the present suit for possession of the house and site. Defendants 1 to 8, the 1st Defendant being the father of Defendants 2 and 3, set up title to the property in themselves under a sale-deed, Ex. B-7 dated 8th January 1943, executed by Defendants 4 and 5 in their favour. Defendants 1 to 3 pleaded that Ex. A-2, the sale-deed in favour of the Plaintiff, purporting to have been executed on 18th September 1942, but presented for registration on 16th January 1943, was really executed by Defendants 4 and 5 subsequent to the date of Ex. B-7 and was collusively ante-dated in order to defeat their rights. Exhibit B-7 was registered on 8th January 1943, the date of its execution.

The finding of both the Courts below is that the sale-deed Ex. A-2 in favour of the Plaintiff was not ante-dated but a true and genuine sale-deed executed on 18th September 1942, by Defendants 4 and 5 in favour of the Plaintiff ''for proper consideration. The lower appellate Court also held that the 1st Defendant was somehow bent upon acquiring the suit property which is adjacent to his own and with this object, brought into existence documents for defeating the prior sale-deed Ex. A-2 in favour of the Plaintiff. This finding is amply spurred by the evidence, direct and circumstantial. On this finding it follows that Ex. A-2 should prevail against Ex. B-7.

Even so it was argued for the Appellants that the Plaintiff was not entitled to the entire suit property but only to the half share of his vendors Defendants 4 and 5, Defendants 1 to 3 being entitled to the remaining half share in the events that happened. Before Defendants 4 and 5 executed B-7 they had acquired the interest of their brothers Gopalakrishna-murthy and Suryanarayana under Ex. B-6 from a lady, Annapurnamma, who, in her turn, had purchased the interest of the two brothers under Ex. B-4 dated 13th September 1942, and Ex. B-5 dated 20th September 1942.

The brothers as observed by the lower appellate Court, had not scruples about selling their property in succession to different people. Though Sur yanarayana had executed Ex. A-7. on 21st August 1942, giving up his rights in the suit property in favour of the 4th Defendant he again professed to sell his interest to Amiapurn;unnia, under Ex. B-5 dated 20th September 1942. It is urged by the Appellants'' learned advocate that Ex. A-7 was inoperative to convey title to Siiryanarayana''s share, in favour of the 4th Defendant, because the document was a mere re-lease and that too by one coparcener in favour of an other and not in favour of all the other coparceners Reliance was placed on the decision in Subbanna v. Balasubba lleddi, AIR L945 Mad 142 (EB) (A), in support of the contention. It was there held that a member of a joint Hindu family governed by the Mitakshara Law cannot give or relinquish his interest in the family estate in favour of one of several coparceners if they remain joint in estate. In the present case the brothers had become divided in 1939'' and Suryanarayana, the eldest brother, succeeded as heir to his deceased father along with the widow and the other sons. As sons had already became divided during their father''s lifetime and there was no joint family in existence when Ex. A-7 was executed, the document though styled as a deed of partition and relinquishment, was really a conveyance of the interest of Suryanarayana in favour of his brother the 4th Defendant for a price, of Rs. 100.

A document, though slyled as a release, could -be treated as a conveyance if it appears clearly that the intention of the executant ol'' the document was to transfer his rights. See. Doraiswami v. Chinniah Goundan, AIR 1918 Mad 272 (B). In the present case such intention is manifest from the terms of Ex. A-7 and in addition, a price was also paid by the transferee to the transferor. In substance the transaction under Ex. A-7 was a sale of his one-fifth share in his father''s estate by Suryanarayana to the 4th Defendant. Thereafter Suryanarayana had no title to or interest in the suit property and the sale-deed, Ex. B-5 dated 20th September 1942, executed by him in favour of Annapurnamma conveyed nothing to the vendee and the further salt; by Annapurnamma in favour of Defendants 4 and 5 under Ex. B-6 was equally inoperative to convey to them the interest of Suryanarayana in the property. When Defendants 4 and 5 sold the properly under Ex. A-2 to the Plaintiff on 18th September 1912, they had acquired the . one-fifth share of Seetharamanuna under Ex. A-l and also the one-fifth share of Suryanarayana under Ex. A-2 in addition to their own two-fifths share.

They were thus in a position to validly convey and must be taken to have conveyed at least four-fifth share of the property to the Plaintiff under Ex. A-2 on 18th September 1942. The. one-fifth share of Gopalakrishnamurthy in the suit properties was purchased by Annapurnamma under Ex. B-4 dated 13th September 1942, and was conveyed by her to Defendants 4 and 5 under Ex. B-6 dated 8th January 1943. Defendants 4 and 5 having sold the entire property as absolute owners under Ex. A-2 dated 18th September 1942, in favour of the Plaintiff, the interest of Gopalakrishnamurthy in the property, though it did not vest in them on the date of Ex. A-2, but was subsequently acquired under Ex. B-6 on 8th January 1943, would endure for the benefit of the Plaintiff, if S. 43 of the Transfer of Property Act applied to the case.

It was argued that Section 43 of the Transfer of Property Act could not be invoked by the Plaintiff because he knew or should have known when he investigated the title, that the vendors had no power lo sell the property as. if they were the absolute owners thereof. It is urged that the expression ''fraudulently or erroneously represents'' in Section 43 implies not only that the transferee acts on the representation of the transferor but he is also unaware of the true I acts and where the real facts are known to the transferee, there cannot be a ''fraudulent or erroneous representation'' within the meaning of the section.

The argument was further elaborated by treating Section 43 as a branch of the law of estoppels and by, invoking the rules governing estoppels in pais, parbrcularly the rule that there is no estoppels where the true facts arc known to the person pleading estoppels. Reference was made to the decisions in Pandiri Ban-gararn v. Subbaraju, ILR 34 Mad 159 (C), Mulraj Vs. Indar Singh and Others, , and Gangabhaiv. Baswant Balappa, ILR 34 Bom 175,(E), in support of these contentions. Many cases are found cited on p. 624 of Vol. I of Chitaley and Appu Rao''s Commentaries on the Transfer of Property Act in support of the following proposition:

The expression ''fraudulently or erroneously (Section 43) connotes that the transferee is not aware of: the real facts ''and acts on the representation made. Where, therefore, the real facts were known to the transferee there cannot be a ''fraudulent or erroneous representation'' by the transferor within the meaning of this section.

It cannot be denied that there are decisions supporting this statement of the law by the learned authors.

Section 43 does not refer to the state ol knowledge of the transferee regarding the true facts relating to the title to the property transferred. Nor does it require that the transferee should have acted in good faith after due inquiry in taking the transfer (compare Section 41). Section 115 of the Evidence Act speaks of a person who has ''caused or permitted another person to believe a thing to be true and to act upon such belief. A person who knows the real facts could not be said to have been led to believe a thing to be true and cannot invoke the rule of estoppels u/s 115 of the Evidence Act. There is no warrant for importing this limitation into Section 43 of the Transfer of Properly Act.

and must have believed in the truth of the representation by the transferor. Au erroneous representation does not cease to be such because the transferee knows the true facts any more than a thief who is caught in the act ceased to be a thief. Though it may not deceive the transferee, yet it is erroneous. The representation that the transferor is authorised i to transfer may be embodied as a term of the deed or may be implied. A transferee who takes a transfer of property absolutely and pays full consideration, has acted on the representation of the transferor as to title incorporated in the deed of transfer "and is entitled to the benefit of S. 43 even though, to his know edge, the title might be defective.

The principle embodied in Section 43 was stated by the Privy Council is two eases. In Rajapakse v. Fernando, AIR 1920 PC 216 (F), it was observed:

Where a grantor had purported to grant an interest in land which he did not at the time possess I but subsequently obtained, the benefit of his subsequent acquisition goes automatically to the earlier grantee, that is, it feeds the estoppels.

In Tilakdhari Lal v. Kheclun Lai, AIR 1921 PC 112 (G), the law was thus stated:

If a man who has no title whatever to property I grants it by conveyance which in form would carry the legal estate and he subsequently acquires an interest sufficient to satisfy the grant, the estate in- stantly passes. In such a case there is nothing on which the second grant could operate in prejudice to the first.

In these statements of the law the transferee''s knowledge of the facts relating to title is not treated'' as I. material, Section 43 makes a departure from the English Law and protects the rights of subsequent transferees in good faith and for consideration without notice of the rights of the prior transferee. The Appellants do not fall within this category. It is needless to consider the origin of the rule embodied in Section 43, whether it is based on the English rule of estoppel by deed or on the rule of ''title feeding the estoppels'' or on the maxim that ''equity treats that as done which ought to be done.'' The language of Section 43 is, in my opinion, plain and explicit. I am unable to follow AIR 1926 All 102 (D), or to hold that it is only where the transferee had been led into the belief that the transferor had title and was not aware of the and facts relating to the title, that Section 43 applies. The contrary was ruled by a Full Bench in Parma Nand Vs. Champa Lal and Others, , and I am in respectful agreement with the decision of the Full Bench. The For observations in ILR 34 Mad 159 (C), with regard to TIL the principle underlying Section 43 are obiter in view of the finding that the transferee paid consideration IK only for the one-third share of the transferor and not l&'' for an one-half share. The learned Judges, however went on to observe:

The well-known maxim of the law to which rifceffect is given in S. 43 is interest feeds estoppel. That |jit. '' section only enunciates a rule winch is an illustration the go of die general principles of estoppel not confined to Kf the law of evidence, but extending to the region of Hta;" -substantive law.

ltris not legitimate to import the considerations governing personal estoppel u/s 115 of the Evidence Act into S. 43 of the Transfer of Property Act.

In Poulton v. Moore, 1915 1 KB 400 at pp. 414 and 415 (I), Phillimore, L. J., observed:

with regard to the question of estoppel by recital in a deed, it is truly said that the law of estoppel in the case of real property is different from the law of estoppel as between persons. It is the law. which operates when a grantee of land has had a conveyance of the whole interest in the land from a grantor who himself at the time had only a partial interest in the land. The former then has a right,. when the grantor gets the entire interest in the land, to say as against all the world that that interest passed to him. It does not then depend upon the mere representation by the grantor that he had the whole interest. The estate feeds the estoppel and therefore ceases to be an estate by estoppel only and becomes an interest.

Under the doctrine of title or interest feeding the estoppels, knowledge of the truth appears to be material only when the transfer is void and invalid in law and not otherwise. As already stated, a transfer of property by a person (without title is not prohibited by law though it may not be effective to vest the ownership of the property in the transferee. In Hol-royd v. Marshall, (1862) 10 HLC 191. (J), Lord West-bury stated the rule thus:

If a vendor or mortgagor agreed to sell or mortgage property, real or personal, of which he is not possessed at the time and receives consideration for the contract and afterwards becomes possessed of property answering the description in the contract, there is no doubt that a Court of equity will compel him to perform the contract and that the contract would, in equity, transfer the beneficial interest to the mortgagee or purchaser immediately on the property being acquired." In the application of this doctrine of equity it is immaterial that the transferee knew the truth that the transferor had no authority to transfer the interest; which he purported to transfer. Whether you approach the interpretation of Section 43 in the light of the English rule of estoppel by deed or of the doctrine of interest feeding the estoppels or of the equitable rule that equity regards that as done which ought to be done, the result is the same. In my opinion, if is not a condition of the applicability of Section 43 that the transferee should have had no knowledge or means of knowledge of the factual position regarding the title of the transferor. If a fraudulent or erroneous representation that the transferor is authorised to transfer the property is incorporated in the deed of transfer and the transferee accepts the transfer on those terms and pays the full consideration, the case falls within the protection given by Section 43 even though the transferee has knowledge of the facts relating to the title.

Lastly I must observe that, in view of the opinion I have formed somewhat at variance with that expressed in several reported cases, I would have referred the case to a Division Bench if it had been established that the Plaintiff was in fact aware of the defect in the transferors'' title, namely, that the one-fifth share of Gopalakrishnamurthi did not belong to his vendors on the date of Ex. A-2. All that the learned advocate for/the Appellants urged was that if the purchaser had made a careful inquiry into the family pedigree and had carried out a critical investigation of the title of the property, he might have discovered that the vendors who asserted an absolute title in themselves and purported to convey it, had no right to an one-filth .share therein.

Section 43 does not require that the transferee should have made an independent enquiry or taken reasonable care to ascertain that the transferor had power to transfer the property before claiming the benefit of the section and no decision has gone to that length. The contrast between the terms of Section 41 and those of Section 43 is significant. The transferee is_ entitled to the protection of Section 43 if he had acted on the erroneous or fraudulent representation of the transferor and paid consideration for the transfer.

For these reasons the Second Appeal fails and is dismissed with costs. No leave.