Saturday, January 21, 2023

A somewhat curious case

Curious case
A somewhat curious case:

Plaintiff Venkatrama Aiyar was convicted of the murder of his wife and sentenced to transportation for life.

On the eve of departure for Port Blair he executed a deed of gift in favour of one Singam Aiyar, a relation of his. This was on 23-5-1900.

The deed of gift runs as follows:
"You, Singam Aiyar, should obtain possession of and enjoy the undermentioned moveable and immoveable properties with the rights of gift, sale etc. 

In case my sentence should terminate and I should come back to my village, you should hand over the said properties to me. 

If I should not return, you should get the undermentioned properties. You should discharge the debts due by me from my property and also collect the debts due to me."

Four years afterwards on 20-6-1904, Singam Aiyar sold certain of the immovable properties, (which are the subject matter of the present suit).

Singam Aiyar died subsequently. Plaintiff was released after serving 16 years and returned to his native place in October 1916.

He brings the present suit to recover possession of the property from the vendees (purchasers) of Singam Aiyar.

The District Munsif gave him a decree for possession and mesne profits. 

But the District Judge has set aside the decree and directed that the suit should be dismissed with costs. 

This Second Appeal was preferred in the Madras High Court.

The District Judge has decided against the plaintiff on two grounds, viz. One is limitation, and the second ground is that the obligation to surrender the properties is only a personal one against Singam Aiyar and his heirs, are not against the alienees (purchasers).

But this suit against the alienees alone without impleading Singam Aiyar's sons.

The question is whether the right to recover the property is personal, only to Singam Aiyar and possibly his sons will depend on the question of whether the defeasance clause is legal and enforceable.

Transfer of Property Act 
The relevant provisions of the Transfer of Property Act are Sections 31 and 126.

Section 31 says:
 "On a transfer of property an interest therein, may be created with the condition super-added that it shall cease to exist in case a specified uncertain event shall happen, or in case a specified uncertain event shall not happen."
This is a general clause. 

But the specific clause having reference only to gifts is Section 126. 
This runs thus:
"The donor and donee may agree that on the happening of any specified event, which does not depend on the will of the donor, a gift shall be a suspended or revoked. 
Nothing in this section shall be deemed to affect the rights of transferees for consideration without notice." 

The rights of transferees for consideration without notice should be safeguarded. 

This general rule appears to be in accordance with English Law, - Vide 24 Halsbury 170.

"An estate in fee may be granted with words of direct limitation so as to be prima facie a fee simple, but with further words, sometimes called words of collateral limitation whereby it is liable to be determined on the happening of some future event, provided that this is of such a nature that by possibility it may never happen all. 

An estate so limited is called a "determinable fee" and moreover it is no objection that the future event may happen at a time beyond the limit allowed by the rule against perpetuities."

Whether the defendants are transferees for consideration without notice so as to be entitled to the benefit of the last paragraph of Section 126 is a point.

That point has not been determined by the District Judge and on which a finding will be necessary.

defeasance clause:
Whether a defeasance clause, such as the present, transgresses any rule of Hindu Law. 

Unlike English Law, Hindu Law treats all conditions of defeasance as illegal.

(defeasance = if a condition is fulfilled, that renders the deed null and void).

Lord Justice Turner said:
"A man cannot create a new form of estate or alter the line of succession allowed by law, for the purpose of carrying out his on wishes or views of policy."

In this case:
The property conveyed shall go to Singam Aiyar and pass to his heirs in the ordinary course of inheritance subject to the single contingency that, if the plaintiff returns it will go back to him and pass to him and pass to his heirs in the ordinary course of inheritance.

In our opinion, the clause providing that in the event of the plaintiff's return, all the properties shall revert to him is legal and enforceable, equally upon Singam Aiyar and upon Singam Aiyar's heirs.

Purchasers' position:
It only remains to determine whether the defendants are entitled to resist the suit as purchasers for consideration without notice. 

The District Judge found that the defendants are bona-fide purchasers for value without notice.

HC finding:
It is however clear to our mind that they are persons who purchased the property with notice of the defeasance clause in the original deed of gift granted by the plaintiff to Singam Aiyar. 

HC allowed the second appeal and set aside the District Judge's verdict and thereby confirmed the District Munsif's judgment passed in favour of the plaintiff.

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