Vendor's lien and promissory note remained enforceable despite unsettled accounts and alleged Companies Act irregularities.

A vendor's lien for unpaid purchase money remained enforceable even though the parties had other mutual dealings and accounts were not finally settled, and the purchaser's promissory note did not displace that statutory charge. A defence under the third proviso to Section 92 of the Evidence Act failed because there was no clear antecedent agreement postponing payment until accounts were rendered. Alleged Companies Act defects also did not invalidate the promissory note or the supporting resolutions; the relevant corporate provisions did not defeat an otherwise authorised debt transaction. The decree of dismissal was therefore set aside and the suit held entitled to succeed.

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Issues: (i) whether the suit for recovery of unpaid purchase money with enforcement of the vendor's lien and promissory note was maintainable despite the absence of a completed settlement of mutual accounts; (ii) whether the defence could be brought within the third proviso to Section 92 of the Indian Evidence Act; and (iii) whether the alleged defects under the Companies Act invalidated the promissory note and the resolutions supporting the transaction.

Issue (i): whether the suit for recovery of unpaid purchase money with enforcement of the vendor's lien and promissory note was maintainable despite the absence of a completed settlement of mutual accounts.

Analysis: The claim was treated as one for unpaid purchase money, supported by a promissory note and a prayer for charge on the property under Section 55(4) of the Transfer of Property Act. The existence of other dealings between the parties did not, by itself, convert the claim into one requiring prior rendition of accounts. The execution of a promissory note by the purchaser did not destroy the seller's statutory vendor's lien or preclude a suit on that lien.

Conclusion: The suit was maintainable and could not be rejected merely because accounts between the parties had not been finally settled.

Issue (ii): whether the defence could be brought within the third proviso to Section 92 of the Indian Evidence Act.

Analysis: There was no satisfactory pleading or evidence of any antecedent agreement, not inconsistent with the sale deed or promissory note, postponing enforceability of the debt until accounts were rendered. General suggestions of mismanagement or an expectation of later adjustment of accounts were insufficient to satisfy the third proviso to Section 92. The alleged understanding was too vague to contradict the written instruments or defeat the claim.

Conclusion: The defence under the third proviso to Section 92 failed.

Issue (iii): whether the alleged defects under the Companies Act invalidated the promissory note and the resolutions supporting the transaction.

Analysis: The court held that Section 90 of the Indian Companies Act had no application to the execution of a promissory note by directors for unpaid purchase money. The relevant provision was Section 89, and the participation of the other directors and the absence of the company seal did not invalidate the transaction. Section 91B did not affect the validity of the resolutions; at most, a director's vote, if improperly cast, would be excluded, and any penal consequence under Section 91B(2) would not undo the resolutions themselves.

Conclusion: The Companies Act objections did not invalidate the transaction or the claim.

Final Conclusion: The decree of dismissal was set aside, and the plaintiff's suit was held entitled to succeed, with a temporary restraint on execution and liberty to the company to pursue any independent remedy available in law.

Ratio Decidendi: A vendor's lien for unpaid purchase money remains enforceable notwithstanding ancillary mutual accounts or a purchaser's promissory note, unless a specific and legally provable agreement postponing enforceability is established, and technical irregularities under the Companies Act do not invalidate an otherwise authorised corporate debt transaction.

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