Case: Chidambaraiyer And Others Vs. P. S. Renga Iyer And Others

1939 is a registered copy of the partition deed by the members of the family and paragraphs 2 and 4 of that document make provision with regard to the matters in question which run as follows: x x x x x x x" Later on the learned Judges proceed to state:"We are unable to accept the arguments for the reasons stated already. It is clear as were have referred to already that for the amounts entered as credit in the family business account which was a liability payable by the family from and out of the interest under Exhibit B-1 the religious functions have to be performed and that there was a substitution of the mortgage amount under Exhibit B-3. Mr. Ramachandra Aiyar contends that there is no oral evidence about that substitutions; nor is it possible to conclude from the meagre and scanty documentary evidence let in that there has been any such substitution. The answer to this argument is that the credit amount in favour of Kolathu Iyen is only a ledger entry making the liability on the family with regard to a sum of money out of which certain charities have to be performed. In Exhibit B-3 we do not find any credit entry in the name of Kolathu Iyen as well as patasala account. Those liabilities must be deemed to have been discharged by item 1 in Exhibit B-2 namely, the mortgage amount. The result is the discharge of one liability by another and we are unable to see that such a state of things would not amount to a transfer." These observations also make it clear that the learned Judges clearly held that the mortgage interest in Ex. A-1 was transferred in discharge of the liability undertaken under Ex. B-1. But strong reliance was placed by the learned counsel for the appellants on the following concluding observation of the learned Judges :"In the present case the joint family has lost the mortgage interest and the trust has gained that interest. Therefore the transfer under Ex. B-3 must be deemed to be for valuable consideration." Relying upon this observation the learned counsel commented that the learned Judges held that a mere transfer of an interest in favour of another was in itself a transfer for valuable consideration. To accept this argument is to ignore the elaborate discussion that preceded the said observation and the relevant extracts from the judgment we have extracted earlier. In the context of the preceding discussion the said observation can only mean that the transfer in favour of a charity is discharge of the earlier obligation is a transfer for valuable consideration. Agreeing with the High Court, we hold that there was a transfer of the mortgage interest under Ex. A-1 in trust to a charity in discharge of an earlier obligation undertaken by the family to set apart a sum of Rs. 36,988-9-8 in favour of the charity. Under para, (b) of S. 9-A (10) (ii) of the Act, to attract that provision the transfer shall be for a valuable consideration. The short question, therefore, is whether the transfer in trust of a property in discharge of an earlier obligation was for valuable consideration within the meaning of para (b) of S. 9-A (10) (ii) of the Act. So stated there can only be one answer. The classic definition of "valuable consideration" is given in Currie v. Misa, (1875) 10 Ex. 153 at p. 162, thus : "A valuable consideration in the sense of the law may consist either in some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility, given suffered or undertaken by the other". Section 2(d) of the Contract Act defines consideration thus:"When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing something such act or abstinence or promise is called a consideration for the promise." So far as is relevant to the present enquiry, the content of the two definitions is practically the same, though the expression "valuable" is implied under S. 2(d) of the Contract Act, for consideration shall be "something which not only parties regard but the law can regard as having some value". From the definitions it is apparent that consideration may be negative or positive. In the present case the mortgage interest was transferred in trust to the charity. What was the consideration that passed from the charity to the family? The family was under an obligation to pay to the charity the amount set apart to it under Ex. B-1. The mortgage interest was transferred in discharge of that obligation. That is to say, the charity agreed as a consideration for the transfer of the mortgage interest not to enforce its right to recover that amount from the family. The charity gave up that right in consideration of the mortgage interest acquired by it. We therefore, hold that the family transferred the mortgage interest in trust to the charity for valuable consideration within the meaning of S. 9-A (10) (ii) (b) of the Act. It follows that the mortgage, Ex. A-1, was rightly held by the High Court not liable to be scaled down under the provisions of the Act. 15. In the reply the learned counsel for the appellants sought to raise another plea, namely, that there was no valid transfer of the mortgage deed in favour of the charity inasmuch as the said transfer was not effected by the registered document. This plea was not raised at any stage of the litigation, presumably because Ex. B-3 was a registered document. We cannot, therefore, permit the appellants to raise the plea for the first time before us. 16. In this view it is not necessary to express our opinion on the question whether para. (c) of S. 9-A (10) (ii) of the Act was attracted to the mortgage in question.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]Later on the learned Judges proceed to state:"We are unable to accept the arguments for the reasons stated already. It is clear as were have referred to already that for the amounts entered as credit in the family business account which was a liability payable by the family from and out of the interest under Exhibit B-1 the religious functions have to be performed and that there was a substitution of the mortgage amount under Exhibit B-3. Mr. Ramachandra Aiyar contends that there is no oral evidence about that substitutions; nor is it possible to conclude from the meagre and scanty documentary evidence let in that there has been any such substitution. The answer to this argument is that the credit amount in favour of Kolathu Iyen is only a ledger entry making the liability on the family with regard to a sum of money out of which certain charities have to be performed. In Exhibit B-3 we do not find any credit entry in the name of Kolathu Iyen as well as patasala account. Those liabilities must be deemed to have been discharged by item 1 in Exhibit B-2 namely, the mortgage amount. The result is the discharge of one liability by another and we are unable to see that such a state of things would not amount to a transfer."These observations also make it clear that the learned Judges clearly held that the mortgage interest in Ex. A-1 was transferred in discharge of the liability undertaken under Ex. B-1. But strong reliance was placed by the learned counsel for the appellants on the following concluding observation of the learned Judges :"In the present case the joint family has lost the mortgage interest and the trust has gained that interest. Therefore the transfer under Ex. B-3 must be deemed to be for valuable consideration."Relying upon this observation the learned counsel commented that the learned Judges held that a mere transfer of an interest in favour of another was in itself a transfer for valuable consideration. To accept this argument is to ignore the elaborate discussion that preceded the said observation and the relevant extracts from the judgment we have extracted earlier. In the context of the preceding discussion the said observation can only mean that the transfer in favour of a charity is discharge of the earlier obligation is a transfer for valuable consideration. Agreeing with the High Court, we hold that there was a transfer of the mortgage interest under Ex. A-1 in trust to a charity in discharge of an earlier obligation undertaken by the family to set apart a sum of Rs. 36,988-9-8 in favour of the charity. Under para, (b) of S. 9-A (10) (ii) of the Act, to attract that provision the transfer shall be for a valuable consideration. The short question, therefore, is whether the transfer in trust of a property in discharge of an earlier obligation was for valuable consideration within the meaning of para (b) of S. 9-A (10) (ii) of the Act. So stated there can only be one answer. The classic definition of "valuable consideration" is given in Currie v. Misa, (1875) 10 Ex. 153 at p. 162, thus : "A valuable consideration in the sense of the law may consist either in some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility, given suffered or undertaken by the other"Section 2(d) of the Contract Act defines consideration thus:"When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing something such act or abstinence or promise is called a consideration for the promise."So far as is relevant to the present enquiry, the content of the two definitions is practically the same, though the expression "valuable" is implied under S. 2(d) of the Contract Act, for consideration shall be "something which not only parties regard but the law can regard as having some value". From the definitions it is apparent that consideration may be negative or positive. In the present case the mortgage interest was transferred in trust to the charity. What was the consideration that passed from the charity to the family? The family was under an obligation to pay to the charity the amount set apart to it under Ex. B-1. The mortgage interest was transferred in discharge of that obligation. That is to say, the charity agreed as a consideration for the transfer of the mortgage interest not to enforce its right to recover that amount from the family. The charity gave up that right in consideration of the mortgage interest acquired by it. We therefore, hold that the family transferred the mortgage interest in trust to the charity for valuable consideration within the meaning of S. 9-A (10) (ii) (b) of the Act. It follows that the mortgage, Ex. A-1, was rightly held by the High Court not liable to be scaled down under the provisions of the Act15. In the reply the learned counsel for the appellants sought to raise another plea, namely, that there was no valid transfer of the mortgage deed in favour of the charity inasmuch as the said transfer was not effected by the registered document. This plea was not raised at any stage of the litigation, presumably because Ex. B-3 was a registered document. We cannot, therefore, permit the appellants to raise the plea for the first time before us.