Ouseph Souro Vs. Thommen Michael - Court Judgment

Velu Pillai, J.

1. The suit out of which these appeals have arisen, was instituted in the District Court at Anji-kaimal, to enforce a covenant for indemnity in a partition deed. Deceased Avira, who was the father of defendants 1 to 10 and the husband of the 15th defendant, and his brothers, the 13th defendant and the plaintiff, partitioned their properties in the year 1103 by deed Ext. C, by which a mortgage and puravaipa right over a property, which was subject to an encumbrance in Favour of a church, was allotted to the share of the plaintiff; Avira undertook by Ext. C to clear the encumbrance, and in the event of default, to indemnify the plaintiff, the properties allotted to him being also made answerable.

The church obtained a decree Ext. I against the plaintiff, and another, and in execution purchased the mortgage and puravaipa right, and obtained delivery of possession under Ext, B on the 30th Dhanu 1116. The plaintiff has therefore sued to recover damages, to the extent of the mort-gage and puravaipa amounts and interest, charged on four items of properties allotted to the share of Avira, impleading also defendants 11, 12 and 14, who are subsequent transferees of some of them.

The court below overruled the contentions ot defendants 1 and 11 to 14, and decreed the suit in terms of the plaint. The 11th defendant who is the transferee of item 1, and the 12th defendant who is the transferee of item 4, of the properties scheduled in the plaint, have preferred these appeals.

2. The chief question for determination is, whether the defendants 11 and 12 and the predecessor-in-interest of the former, were transferees for value without notice of the covenant for indem-nity. Item 1 was purchased by Avira under a document of the year 1100; but this and other items of properties, in the names of the three brothers, were thrown into the hotchpot and partitioned by Ext. C. Avira then sold item 1 by deed Ext. IV of the year 1107 to Jacob, who was a minor, and was represented by his guardian Pappi, referring to the document of 1100, and not to Ext. C, as the source of his title; subsequently, in the year 1119, Jacob sold item 1 to the 11th defendant, by Ext. III.

The onus is on the transferee to prove that he had no notice of the prior charge. This has been so laid down by the Privy Council in Bhup Narain Singh v. Gokul Chand, ILR 13 Pat 242: (AIR 1934 PC 68), and Subramonia Iyer v. Lekshmikutty Amma, 23 Cochin 173 (FB), to mention only two cases on the subject.

3. The first question is, whether the 11th defendant has proved, that his transferor had no notice. The recital in Ext. IV, by itself, cannot be held to be conclusive. At the trial, the 11th defendant testified, that Avira had represented to Pappi aforesaid at the time of Ext. IV, that the property was not subject to any prior charge, but in cross-examination admitted, that his only information was from the recital in the document. There being no other evidence, it must be held, that the 11th defendant has not sustained the onus of proof, that his predecessor was a transferee without notice.

4. It has next to be considered, whether the 11th defendant is a transferee without notice. This has to he decided on the terms of Explanation 1 to Section 3 of the Cochin Transfer of Property Act, which came into force on the 1st Chingam, 1112. The relevant part of Explanation 1 to Section 3 is extracted below :

'Where any transaction relating to immovable property is required by law to be and has been effected by a registered instrument, any person acquiring such property or any part of, or share or interest in, such property shall be deemed to have notice of such instrument as from the date of registration.....'

No question arose at the hearing, on the latter part of the Explanation, or on the provisos to it, which are not therefore quoted. This Explanation corresponds to Explanation I to Section 3 of the Transfer of Property Act, 1882 as amended by Acts XX of 1929 and V of 1930. Previously to these amendment Acts, opinion was divergent in the several High Courts in India, whether registralion of a document constituted notice to subsequent transferees, till the Privy Council pronounced itself in Tilakdhari Lal v. Khedan Lal, 47 hid App 239: (AIR 1921 PC 112), treating the question as one of fact depending on the circumstances of each case, at the same time pointing out, that the Transfer of Property Act, 1882 omitted to enact a definite rule.

Apparently, the Indian legislature has made good this emission, by the amendments. In the erstwhile Cochin State, the Transfer of Property Act as amended, was enacted as law, and came into force on the date aforesaid.

5. In applying the Explanation to the present case, no process of interpretation giving a retrospective operation to the provision, is involved. It may be taken, that the Cochin Transfer of Property Act speaks as from the 1st Chingam, 1112 only. Even so, the Explanation affects a transferee after that date, by imputing notice to him of any prior transaction concerning the property evidenced by a registered instrument, if a registered instrument is by law necessary; in other words, the Explanation casts a duty on all transferees after the date, to search the registry for any prior transaction.

This is not giving retrospective operation to the Statute. The partition deed was reduced to writing, and was therefore a transaction which was 'required by law to be and has been effected by a registered instrument.' This condition in the explanation too is fulfilled. A similar view has been taken by Umamaheswaran, J. in Balakrishnayya v. Mallikarjuna Rao, 1955 Andh WR 699, on the meaning and effect of the corresponding Explanation in the Transfer of Property Act, 1882. We therefore hold, that the plea of transferee without notice is not available to the llth defendant and to his predecessor-in-interest.

6. The conveyance to the 12th defendant for item 4 is Ext. II of the year 1122 by Avira's heirs. There was a sale deed of the year 1117, Ext. VIII, for the same property, but the vendee under it also participated in executing Ext. II. Both Exts. II and VIII referred to Ext. C, and relied on it as the source of the title conveyed, The 12th defendant had no evidence that he was a transferee without notice.

7. We feel no doubt as to the scope of the covenant in Ext. C. which was to create a charge on the property allotted to Avira, for any loss which may be occasioned to the plaintiff, by his default in the performance of his obligation. But it was contended, relying on the Explanation to Section 73 of the Indian Contract Act, that the plaintiff ought to have mitigated damages, in all possible ways, even by discharging the encumbrance by finding the money himself.

Assuming, that this rule as to mitigation of damages is not confined to a claim for compensation for damages caused by breach of contract, and may be extended to a claim based on a specific covenant for indemnity, we are of the view, that the 11th defendant cannot be permitted to take the point at this stage, having failed to do so in the written statement and in the appeal memorandum. A plea under the Explanation to Section 73 of the Indian Contract Act does involve questions of fact relating to the 'means which existed of remedying the inconvenience caused by the non-performance of the contract' of which the opposite party is entitled to notice, in order that he may answer them.

8. On the measure of damages, we entertain no doubt, that on the true construction of the covenant for the indemnity, the 11th defendant is hound to compensate the plaintiff for the loss of the mortgage and puravaipa right sustained by him. Dhanu Lal v. Kuldip Narayan Singh, AIR 1940 Pat 88, Ghulam Haider v. Iqbal Nath, AIR 1939 Lah 118 and Girish Chandra Das v. Kunjo Behari Malo, ILR 35 Cal 683, cited at the bar, turned on the question whether the loss or damage sustained 'naturally arose in the usual course of things' from breach of contract, and are inapplicable to the present case, in which on the covenant for indemnity, the market value of the property lost by the plaintiff must be held to be the measure of damages.

A similar view was taken by a full bench of the Cochin High Court in Paramsewara Menon v. Narayana Menon, 24 Cochin 749 (FB), by the Travancore High Court in Padmanabha Nambu Pillai v. Padmanabhan Neelakantan, 11 Trav LJ 484 and by the Madras High Court in Venkita-swami v. Venkayya, AIR 1953 Mad 529. It is unnecessary to multiply cases.

9. A few circumstances were pointed out on behalf of the 11th defendant, that the plaintiff had not acted bong fide in making this claim. He appears to have waited too long before he sued; and when he did sue, he left out other items of properties which belonged to Avira, but which were stated to be in the possession of Avira's heirs or of some favoured transferees under them. It was also hinted that a common fund had came into the hands of the plaintiff and another, upon the acquisition of a property by Government, and that the present claim might have been adjusted between them.

These, no doubt, are suspicious circumstances, but neither the llth defendant, nor the 12th defendant have succeeded in making a point of them, or in establishing a defence to the suit on that basis.

10. The plaintiff is therefore entitled to recover the market value of the mortgage and pura-vaipa right which he had lost. The estimate of the loss made by him and accepted by the court below was at Rs. 1,550, being the aggregate of the mortgage and puravaipa amounts, in addition to interest thereon from the date of the sale in execution. The sale was for a sum of Rs. 467-9-7, subject to prior encumbrances amounting to Rs. 382 and interest. The plaintiff adduced no evidence whatever, as to the market value of the right he lost, and there is no presumption, that this is equivalent to the amounts of the mortgage and the pura-vaipa documents.

In the absence of evidence as to such value, and as to the interest which had accrued on the prior encumbrances which were reserved, the market value of the right which the plaintiff lost, can be taken to be only Rs. 467-9-7 plus Rs. 382 or Rs. 849-9-7.

11. There is an error in the decree passed by the lower court, in that, it has allowed interest from the date of the court sale. The plaintiff can claim interest at 6 per cent only from the 30th Dhanu 1116, the date on which he lost possession.

12. In the result, the decree of the court below is modified, and the plaintiff is given a decree to recover Rs. 849-9-7 with interest at 6 per cent thereon, from the 30th Dhanu, 1116. The appeals-are allowed in part to the extent indicated. In the circumstances we direct that the plaintiff shall suffer his costs in the two courts.