1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE, BENCH AT AURANGABAD FIRST APPEAL NO. 3333/2008 Jagannath s/o Ambadas Hande, Age : 58 years, Occu. Business, R/o Center Hanuman, Latur, Tq & Dist. Latur. ...Appellant. Versus 1 Geetadevi s/o Gangakishan Tiwari, Age : Adult, Occu. Household, R/o Center Hanuman, Latur, Tq. & Dist. Latur. 2 Bansilal s/o Ratanlal Tiwari, Age : 82 years, Occu. Nil, R/o 3-3-138/A, Kachiguda, Hydeerabad (A.P.). (Abated as per Court’s order dated 20/08/2009) 2 Ramanlal s/o Bansilal Tiwari, Age : 43 years, Occu. Business, R/o 3-3, 138/A, Kachiguda, Hyderabad (Amendment made as per order dt. 29/4/2010 in C.A. No. 725/2010). ...Respondents. Shri S.B. Rohile, Advocate for appellant. Shri C.R. Deshpande, Advocate for respondent No.1. Respondent No.2 abated as per Court’s order dt. 20/08/2009. CORAM : A.V. NIRGUDE, J Date : 2nd August, 2010. ORAL JUDGMENT:- 1 Heard. 2 2 This appeal is filed against the judgment and decree passed by Civil Judge (Senior Division), Latur on 09/04/2008 in Special Civil Suit No. 141/2003. 3 The facts leading to this litigation are almost admitted and can be noted as under. Bansilal original defendants No.1 was father of Ramanlal the original defendants 2. They became owners of the certain house property after death of one Kamalbai w/o Balsilal. This house was partly occupied by Jagannath the appellant, as tenant since many years. Bansilal during his life time for himself and on behalf of his son agreed to sell the entire house to the original plaintiff Geetadevi for a sum of Rs.4,51,000/- and received a sum of Rs. 3,36,000/- which was paid as earnest. The agreement took place on 05/11/2001. A small portion of the house admeasuring 12x20 feet was handed over in possession of the original plaintiff. It seems, thereafter, the original defendants No. 1 and 2 Bansilal and Ramanlal agreed to sale this very property to the appellant. This agreement took place on 29/05/2002. This time also, the agreement price of the house property was Rs.4,51,000/-. The appellant paid certain amount as earnest. He was already occupying part of the house as tenant and he continued to occupy the said portion then as the proposed purchaser. 4 The original plaintiff Geetadevi filed the suit for specific performance and in the alternative, she sought refund of the earnest amount (with interest) which she had paid. It seems, the original plaintiff Geetadevi did not know the appellant’s concern to 3 the property as a proposed purchaser but she made him party to her suit probably because he was occupying part of the suit house as tenant. As expected the appellant filed a written statement in which he stoutly contended that he had agreed to purchase the property and also paid certain earnest amount etc. During the pendency of the suit, the defendant no.1 died, and it is admittedly the original defendant no.2 was his only legal representatives. After framing of issues, the learned judge of the trial Court allowed the parties to lead evidence. The original plaintiff successfully proved the fact that the agreement took place on 05/11/2001 and that he had parted with substantial amount of earnest (Rs. 3,36,000/-). He even examined the attesting witness of this document. 5 The original defendant No.2 neither filed any written statement nor cross examined the original plaintiff’s witness. On the other hand, the appellant who was defendant in the lower Court, could not effectively cross examine the witness of the plaintiff on this point as he pleaded ignorance of the agreement dated 05/11/2001. The original plaintiff thus proved her case of the agreement and payment of earnest. The learned judge of the trial Court however, refused to grant the discretionary relief of specific performance but directed the original defendant No.2 to refund amount of earnest to her and until such amount is paid, he created charge on the suit house. 6 The original respondent No.2 did not filed any appeal against this judgment. The appellant who was the defendant no. 3 in the 4 trial Court filed this appeal for limited purpose. He did not challenge the judgment and decree directing the original defendant No.2 to refund the amount of earnest to the original plaintiff but he challenged only the directions to create charge on the suit property, for the amount of earnest with interest. 7 So the question that arises for my consideration is whether in the facts and circumstances of the case, the original plaintiff was entitled to a charge on the suit property for securing refund of the earnest amount? In this regard, the appellant’s advocate asserted that no charge could be kept on the suit property because the appellant had no knowledge of the agreement dated 05/11/2001 until he agreed to purchase the suit property on 29/05/2002. He also asserted that he learnt about this transaction only after the filing of the suit which was filed on 15/10/2003. As against this, the learned advocate appearing for the original plaintiff placed reliance on the provisions of Section 55 of the Transfer of Property Act, 1882, particularly sub section (6) (b). Section 55 reads as under. 55. Rights and liabilities of buyer and seller In the absence of a contract to the contrary, the buyer and the seller of immovable property respectively are subject to the liabilities, and have the rights, mentioned in the rules next following or such of them as are applicable to the property sold: (1) The seller is bound- (a) to disclose to the buyer any material defect in the property or in the seller's title thereto of which the seller is, and the buyer is not, aware, and which the buyer could not with ordinary care discover; (b) to produce to the buyer on his request for examination all documents of title relating to the property which are in the seller's possession or power; (c) to answer to the best of his information all relevant questions put to him by the buyer in respect to the property or the title thereto; (d) on payment or tender of the amount due in respect of the price, to execute a proper 5 conveyance of the property when the buyer tenders it to him for execution at a proper time and place; (e) between the date of the contract of sale and the delivery of the property, to take as much care of the property and all documents of title relating thereto which are in his possession as an owner of ordinary prudence would take of such property and documents; (f) to give, on being so required, the buyer, or such person as he directs, such possession of the property as its nature admits; (g) to pay all public charges and rent accrued due in respect of the property up to the date of the sale, the interest on all encumbrances on such property due on such date, and, except where the property is sold subject to encumbrances, to discharge all encumbrances on the property then existing. (2) 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: PROVIDED that, where the sale is made by a person in a fiduciary character, he shall be deemed to contract with the buyer that the seller has done no act whereby the property is encumbered or whereby he is hindered from transferring it. 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. (3) Where the whole of the purchase-money has been paid to the seller, he is also bound to deliver to the buyer all documents of title relating to the property which are in the seller's possession or power: PROVIDED that, (a) where the seller retains any part of the property comprised in such documents, he is entitled to retain them all, and, (b) where the whole of such property is sold to different buyers, the buyers of the lot of greatest value is entitled to such documents. But in case (a) the seller, and in case (b) the buyer, of the lot of greatest value, is bound, upon every reasonable request by the buyer, or by any of the other buyers, as the case may be, and at the cost of the person making the request, to produce the said documents and furnish such true copies thereof or extracts therefrom as he may require; and in the meantime, the seller, or the buyer of the lot of greatest value, as the case may be, shall keep the said documents safe, uncancelled and undefaced, unless prevented from so doing by fire or other inevitable accident. (4) The seller is entitled- (a) to the rents and profits of the property till the ownership thereof passes to the buyer; (b) where the ownership of the property has passed to the buyer before payment of the whole of the purchase-money, to a charge upon the property in the hands of the buyer, any transferee without consideration or any transferee with notice of the non-payment, for the amount of the purchase-money, or any part thereof remaining unpaid, and for interest on 6 such amount or part from the date on which possession has been delivered. (5) The buyer is bound- (a) to disclose to the seller any fact as to the nature or extent of the seller's interest in the property of which the buyer is aware, but of which he has reason to believe that the seller is not aware, and which materially increases the value of such interest; (b) to pay or tender, at the time and place of completing the sale, the purchase-money to the seller or such person as he directs: PROVIDED that, where the property is sold free from encumbrances, the buyer may retain out of the purchase-money the amount of any encumbrances on the property existing at the date of the sale, and shall pay the amount so retained to the persons entitled thereto; (c) where the ownership of the property has passed to the buyer, to bear any loss arising from the destruction, injury or decrease in value of the property not caused by the seller; (d) where the ownership of the property has passed to the buyer, as between himself and the seller, to pay all public charges and rent which may become payable in respect of the property, the principal moneys due on any encumbrances subject to which the property is sold, and the interest thereon afterwards accruing due. (6) The buyer is entitled- (a) where the ownership of the property has passed to him, to the benefit of any improvement in, or increase in value of, the property, and to the rents and profits thereof; (b) unless he has improperly declined to accept delivery of the property, to a charge on the property, as against the seller and all persons claiming under him, to the extent of the seller's interest in the property, for the amount of any purchase-money properly paid by the buyer in anticipation of the delivery and for interest on such amount; and, when he properly declines to accept the delivery, also for the earnest (if any) and for the costs (if any) awarded to him of a suit to compel specific performance of the contract or to obtain a decree for its rescission. An omission to make such disclosures as are mentioned in this section, paragraph (1), clause (a) and paragraph (5), clause (a), is fraudulent. 8 This provision read with Section 100 of the Transfer of Property Act, which defines the term charge is squarely applicable to the facts of this case. All that the original plaintiff had to show was that she had not improperly declined to accept the delivery of the property which was agreed to be sold to her vide agreement dated 05/11/2001. So, she is entitled to a charge on the suit property. 7 9 The learned Advocate appearing for the original plaintiff placed reliance on few judgments to support his submissions. Although the principle embodied in Section 55(6)(b) is very clear and it does not need any support from any precedent, still the judgment of Supreme Court in the case of Delhi Development Authority Vs. Skipper Constructions Pvt. Ltd. Reported in AIR 2000 S.S. 573 would make an interesting reading. The judgment fully supports the principle laid down by Section 55(1)(b). The learned Advocate appearing for the original plaintiff also placed reliance on a old judgment of Bombay High Court, in the case of A. Hamid Vs. Mohd. Ali Humayun reported in AIR 1952 BOM. 67. In this judgment, learned single judge of this Court clearly held that Section 55(6)(b) gives charge to the buyer which is available to him irrespective of the question as to whether subsequent purchaser does or does not have notice of the charge. The appeal should therefore, fail. ORDER The appeal stands dismissed. In view of this, all interim orders shall stand vacated. The application to continue them for a period of eight weeks is rejected. [A.V. NIRGUDE, J.] tsk/fa3333.08ok