1954 (1) TMI 33 - HC - Indian Laws

Court rules completed sale, not agreement. Transaction valid, not against public policy. Plaintiff entitled to property share.

Unnao Commercial Bank Ltd. Versus Kailash Nath And Ors.

The court determined that the transaction between parties was a completed sale, not an agreement to sell. It found the transaction was not champertous and ... - Issues Involved:1. Whether the transaction between Ram Prasad and Ratan Chand was a completed sale or an agreement to sell.2. Whether the transaction was champertous and, if so, whether it was binding on the parties.3. Whether Ratan Chand performed his part of the contract.4. The extent of the share Ratan Chand was entitled to in the property.5. The entitlement of Kailash Nath to a half share in the two houses.Detailed Analysis:1. Whether the transaction between Ram Prasad and Ratan Chand was a completed sale or an agreement to sell:The court examined the sale deed executed on 14-12-1934, which indicated that Ram Prasad sold a half share in two houses and some movable property to Ratan Chand for Rs. 400. The document stated that Ratan Chand was to defray the costs of the litigation from the sale consideration. The court found no indication that Ratan Chand was to share in the fruits of the decree. It concluded that the transaction was a completed sale and not merely an agreement to sell, despite the consideration being ascertainable only after the litigation.2. Whether the transaction was champertous and, if so, whether it was binding on the parties:The court reviewed the law on champertous transactions, noting that while such agreements are prohibited in England, they are not invalid in India unless found to be extortionate, unconscionable, or opposed to public policy. The court found that Ram Prasad had a legitimate claim, and the financing provided by Ratan Chand was not for an unrighteous cause. Consequently, the transaction was not opposed to public policy. The court also noted that no specific plea of the transaction being unfair or unconscionable was raised by the defendants.3. Whether Ratan Chand performed his part of the contract:The court addressed the contention that Ratan Chand did not defray the costs of the appeal. It found that the sale deed only mentioned the costs of the suit and not the appeal. The appeal was dismissed for non-payment of court fees, and there was no evidence that Ram Prasad incurred additional costs. The court concluded that Ratan Chand fulfilled his contractual obligations as per the sale deed.4. The extent of the share Ratan Chand was entitled to in the property:The lower appellate court had held that Ratan Chand was entitled to a one-fourth share in the property. However, the High Court disagreed, noting that the sale deed specified that Ratan Chand was to receive half of the property in all events. There was no indication that the property was to be shared equally based on the decree's outcome. Therefore, the court concluded that Ratan Chand was entitled to a half share of the property.5. The entitlement of Kailash Nath to a half share in the two houses:The court noted that the sale deed to Kailash Nath expressly mentioned the same property previously sold to Ratan Chand. The suit was for partition of a half share, and it was unnecessary to determine the respective claims of the defendants for the other half if the plaintiff was entitled to a half share. The court emphasized that the plaintiff was not bound by any partition made without their involvement.Conclusion:The court allowed the appeal, set aside the lower appellate court's decree, and restored the trial court's decree, which recognized the plaintiff's entitlement to a half share in the property. The appellant was awarded the costs of the appeal from respondent 1, who contested the appeal.