Kerala High Court
Jay Thomas vs Umayal Chettiyappan on 2 July, 2025
Author: Sathish Ninan
Bench: Sathish Ninan
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE SATHISH NINAN
&
THE HONOURABLE MR.JUSTICE P. KRISHNA KUMAR
WEDNESDAY, THE 2ND DAY OF JULY 2025 / 11TH ASHADHA, 1947
RFA NO. 490 OF 2008
AGAINST THE JUDGMENT DATED 22.12.2005 IN OS NO.79 OF 2002 OF
SUB COURT, NEDUMANGAD
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APPELLANT/PLAINTIFF:
JAY THOMAS,
IC AMBU PARK, CANNON SHED ROAD, COCHIN -11.
BY ADV SMT.NISHA JOHN
RESPONDENTS/DEFENDANTS:
1 MRS.UMAYAL CHETTIYAPPAN,
W/O .LATE M. CHETTIYAPPAN, RESIDING AT NO.9,
"DEVI MAHALAKSHMI", ADAYAR CLUB GATE ROAD,
MADRAS - 600028.
2 AZHAGU ANNAMALAI,
D/O. LATE M. CHETTIYAPPAN, RESIDING AT NO.9,
"DEVI MAHALAKSHMI", ADAYAR CLUB GATE ROAD,
MADRAS - 600028.
3 MEYYAMMAL VENKITACHALAM,
D/O. LATE M. CHETTIYAPPAN, RESIDING AT 13/1,
RENJITH ROAD, KOTTURPURAM MADRAS - 600085.
4 SIVAGAMI MUTHUKARUPPAN,
D/O .LATE M. CHETTIYAPPAN, RESIDING AT NO.9,
"DEVI MAHALAKSHMI", ADAYAR CLUB GATE ROAD,
MADRAS - 600028.
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RFA NO. 490 OF 2008 -2-
5 MISS.C.JAYALEKSHMI,
D/O. LATE M. CHETTIYAPPAN, RESIDING AT NO.9,
"DEVI MAHALAKSHMI", ADAYAR CLUB GATE ROAD,
MADRAS - 600028.
6 SENDIL MEYAPPAN,
S/O .LATE M. CHETTIYAPPAN, RESIDING AT NO.9,
"DEVI MAHALAKSHMI", ADAYAR CLUB GATE ROAD,
MADRAS - 600028.
7 KURIEN E.KALATHIL,
S/O.SRI.V.K.EAPEN, RESIDING AT C-10 JAWAHAR NAGAR,
KAWDIAR, THIRUVANANTHAPURAM.
8 INDIAN BANK,
REPRESENTED BY ITS CHIEF MANAGER,
THIRUVANANTHAPURAM MAIN BRANCH, M.G.ROAD
THIRUVANANTHAPURAM.
9 M/S.THE FEDERAL BANK LIMITED, ALUVA,
REPRESENTED BY ITS MANAGER, NANTHANCODE BRANCH,
THIRUVANANTHAPURAM.
BY ADVS.
SRI.P.B.SUBRAMANYAN
SRI.M.RAMESH CHANDER (SR.)
SRI.BINOY VASUDEVAN
SMT.K.V.RAJESWARI
SHRI.ZAKEER HUSSAIN
SMT.K.A.SANJEETHA
SRI.SABU GEORGE
SMT.B.ANUSREE
SRI.MANU VYASAN PETER
SMT.MEERA P.
THIS REGULAR FIRST APPEAL HAVING COME UP FOR HEARING ON
02.07.2025, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
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SATHISH NINAN &
P. KRISHNA KUMAR, JJ.
= = = = = = = = = = = = = = = = = =
R.F.A. No.490 of 2008
= = = = = = = = = = = = = = = = = =
Dated this the 2nd day of July, 2025
J U D G M E N T
Sathish Ninan, J.
The suit for recovery of unpaid sale consideration
was dismissed by the trial court. The plaintiff is in
appeal.
2. Late K.T.Thomas, the original plaintiff, had
entered into Ext.A1 agreement for sale dated 23.11.1987
with Late Chettiyappan, the predecessor of defendants 1
to 6 in respect of the plaint schedule property. The
property is a plantation. The property was agreed to be
sold for a consideration of ₹ 132 lakhs with the
liabilities. It was the term of the agreement that, if
on ascertainment of the liabilities it was found to
exceed the sale consideration, the purchaser had the
option to rescind the contract. On the date of Ext.A1,
an amount of ₹ 75,000/- was paid as earnest money. There
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were subsisting liabilities to the 8 th defendant Bank,
under the Agriculture Income Tax Act and also as dues to
labourers.
3. In the meanwhile, revenue recovery proceedings
were initiated against the property for recovery of the
agriculture income tax dues. The proceedings were
challenged by the original plaintiff before this Court.
As per Ext.A18 judgment in W.A. 1009/1988 this Court set
aside the assessment and directed fresh assessment to be
made. The matter was carried to the Apex Court. On the
strength of Ext.A1 agreement, Chettiyappan got himself
impleaded in the said proceedings. Before the Apex Court
Chettiyappan undertook to pay the dues to the Government
which was stated to be approximately ₹ 33 lakhs. As per
Ext.A3 order, the Apex Court permitted Chettiyappan to
deposit the said amount towards the liability of the
original plaintiff and the Collector was directed to
handover possession of the property to Chettiyappan.
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4. In the meanwhile, further advances were made by
Chettiyappan to the original plaintiff making the total
advance sale consideration at ₹ 16 lakhs. As was
required by Chettiyappan the original plaintiff gave his
property at Bangalore as security for the advance
amount. So also he executed power of attorney in favour
of Chettiyappan empowering sale of the property.
5. In the year 1991, on the strength of the power
of attorney, Chettiyappan executed sale deeds (37 in
number) conveying the property to himself. In the year
1993, on coming to know about the sale deeds, the
original plaintiff executed cancellation deeds
purporting to cancel the sale deeds. After the death of
Chettiyappan, his legal heirs viz. defendants 1 to 6
conveyed the property to the 7 th defendant.
6. According to the plaintiffs, out of the total
sale consideration, only an amount of ₹ 16 lakhs was
paid. The suit is filed for recovery of the balance sale
consideration charged on the property.
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7. The defendants contended that the total sale
consideration agreed under Ext.A1 was ₹ 1,32,00,000/-
which included the liabilities and encumbrances over the
property. The liabilities were cleared from out of the
sale consideration. The claim that only ₹ 16 lakhs was
paid towards sale consideration was denied. It was
contended that no further amounts are due under the sale
deeds. The first defendant raised a counter claim for
recovery of the excess amounts, over and above the sale
consideration, that Chettiyappan had to pay for
discharge of the liabilities.
8. The trial court found that the total sale
consideration fixed under Ext.A1 agreement included the
liabilities. It was also found that Chettiyappan had
discharged the liabilities over the property and that
after execution of the sale deeds no further amounts
remained to be paid to the plaintiff towards sale
consideration. The counter claim was not pursued by the
first defendant who had raised the same. Accordingly the
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suit and the counter claim were dismissed.
9. We have heard the learned counsel on either
side.
10. The points that arise for determinations are: -
(i) In the suit for recovery of unpaid sale consideration, is the plaintiff
entitled to rely on the quantum of consideration mentioned in Ext.A1
agreement for sale entered into between the parties preceding the
execution of the sale deed to prove that the sale consideration is more
than that mentioned in the sale deed?
(ii) Does the transaction under Ext.A1 agreement, in law, represent a sale
"subject to encumbrance" or "free of encumbrance"?
(iii) Does the evidence on record establish the plaintiffs claim for unpaid
sale consideration?
11. The suit is filed for recovery of unpaid sale
consideration. The plaintiff accepts the sale. However,
to prove the consideration under the sale deeds, the
deeds/copies were not produced. On the other hand, they
relied on the recital in Ext.A1 sale agreement with
regard to the consideration. Copies of the sale deeds
(37 in number) are produced before this Court along with
a petition under Order XLI Rule 27 of the Code of Civil
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Procedure. It is the contention of the plaintiffs that
the actual consideration for sale is as mentioned in
Ext.A1 agreement and that the consideration mentioned in
the sale deeds are much lower and not correct. In Vasu
Bhaskaran v. Parukutty Amma & Anr. (2012 (1) KHC 285), a Division Bench
of this Court has after referring to the precedents on
the point held that the parties to the sale deed cannot,
in the light of Section 92 of the Evidence Act contend
that the actual value is higher than or at variance from
that mentioned in the sale deed. Therefore, the very
claim of the plaintiff based on the value as mentioned
in Ext.A1 agreement for sale is unsustainable.
12. Now we proceed to consider the claim of the
plaintiff as one for unpaid sale consideration based on
the quantum of consideration mentioned in the sale deeds
executed pursuant to Ext.A1. According to the plaintiff,
out of the total sale consideration, only an amount of
₹16 lakhs has been paid. The sale was "subject to the
liabilities" over the property; meaning that, the
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purchaser was to bear the liabilities in addition to the
sale consideration. To substantiate the contention, the
learned counsel for the appellant relied on Joseph v. Joseph
(1972 KLT 829) and Joy Varghese and Another v. Ulahanan alias John and Another
(2008 (4) KHC 331). Referring to Section 55(4)(b) and 55(5)
(b) of the Transfer of Property Act, with regard to the
rights and liabilities of the vendor and the vendee
regarding the encumbrance over the property, the court
held :-
"..... In the one case, the vendor is liable to pay only the interest on the
encumbrance till the date of the sale and the vendee becomes liable to pay the
principal due on the encumbrances as well as the interest thereon accruing after
the sale. In the other case, the duty of discharging all encumbrances existing on
the property on the date of the sale is laid on the seller who receives the full
value of the property as its price. It may be that instead of the vendor himself
paying the amount he may reserve a portion of the purchase money with the
vendee for payment to the creditor. The vendee in that case would only be an
agent who has undertaken the obligation to pay the amount on behalf of the
vendor. ....."
Therein the question was, to whom the benefit of
reduction in the amount of encumbrance would inure when
unpaid purchase price is reserved with the vendee for
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discharge of the encumbrance. The court held that in
such a case where instead of clearing the encumbrance by
himself, the vendor has left the money in the hands of
the vendee for clearing off the liabilities, the vendee
is only an agent of the vendor and if the vendee is able
to bring down the liability then such benefit would go
the vendor. Similar is the view expressed in Joy Varghese's
case (supra).
13. According to the appellant, the sale
consideration fixed in Ext.A1 was in addition to the
liabilities over the property. The purchaser was to pay
the sale consideration and also to pay off the
liabilities. If the sale was free of liabilities, then
the purchaser gets the property encumbrance-free for the
promised price, with the liability to discharge the
encumbrance being on the vendor. Ext.A1 agreement
specifically states that the sale is subject to the
liabilities. Hence the plaintiff is entitled to the
entire sale consideration without regard to the
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liabilities over the property which were cleared by
Chettiyappan, it is argued.
14. On a reading of Ext.A1 agreement in its
entirety and the conduct of the parties, we are unable
to agree with the above contention. Ext.A1 agreement
specifically recites the 'price of the property' as
₹ 1,32,00,000/-. It has been recited in Ext.A1 that the
property is subjected to various liabilities. The vendor
was to provide all the details of the liabilities. It
was also provided that if the quantum of liabilities was
found to exceed the sale consideration of
₹ 1,32,00,000/- it was open for the purchaser to rescind
the agreement. The agreement also stipulates that "the
said estate shall be sold free from encumbrances".
Though the total sale consideration fixed under Ext.A1
is ₹ 1,32,00,000/-, noticeably, the only amount paid to
the vendor as on the date of Ext.A1 is ₹ 75,000/- which
is only a minuscule of the total. Notably, the parties
were aware that the liabilities over the property were
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huge and even the parties were apprehensive if it would
be more than the sale consideration. The purchaser was
given an option to rescind the contract if on
calculating the liabilities it was found that the
liabilities exceed the sale consideration fixed. Ext.A1
further provided that the sale shall be free from
liabilities. The above factors sufficiently indicate
that from out of the purchase price the vendee was to
pay off the liabilities and the balance amount if any
only goes to the vendor.
15. The above is evident from the further conduct
of the parties. After execution of Ext.A1, the plaintiff
obtained further amounts from Chettiyappan totaling to
₹ 16 lakhs. For the further advances Chettiyappan
required the plaintiff to furnish security. Accordingly,
the property of the plaintiff situated at Bangalore was
given as security. A power of attorney was executed in
favour of Chettiyappan for sale of the property. If it
was intended that it was the liability of the purchaser
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Chettiyappan to wipe off the encumbrance over the
property in addition to the sale consideration fixed,
then there is no reason why for the advance amount of
₹ 16 lakhs received by the original plaintiff he was
required to furnish security. All the above give no room
for doubt that the sale was free of encumbrances; in
other words the liabilities over the property were to be
paid off from the total consideration fixed and was not
in addition to the sale consideration.
16. Having held as above, it needs to be considered
whether there is unpaid sale consideration due to the
plaintiffs. The sale deeds recite that the consideration
have been discharged in the manner as indicated in the
deeds; substantial portions have been paid to clear off
the liabilities. Some of the payments are recited to
have been paid to the plaintiff through Bank(₹ 19
lakhs), the details of which have also been specified in
the sale deeds. Ext.B4 certificate from the Agricultural
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Income Tax department, Exts.B6 to B9 communication from
the Employees Provident Fund Department, Ext.B11 series
and Ext.B12 documents relating to settlement of gratuity
of the workers of the estate etc. are documents
constituting sufficient evidence of the clearance of
liabilities over the property. PW1 has admitted the
existence of the liabilities under the heads. He
deposed, "Agricultural Income Tax, Sales Tax, Back wages of employees, PF dues,
Electricity dues, Land Taxes, Water charges, Building Tax എനന്നിവ dues കകാണണും A1 സമയതത.
Indian Bank-നണും dues കകാണണും. Madras-ലലെ Parek and Co യത dues ഉണണകാ എനറന്നിയന്നില. Ext.A1
കകാലെതത dues ഒനണും quantify ലചെയന്നിരുനന്നില. Approximate amount 2 3/4 ണകകാടന്നി എനറന്നിയകാമകായന്നിരുന.
Staff Gratuity യണും balance കകാണണും. Vincent എലനകാരകാൾകണും Misrilal Parasmill എനയകാൾകണും dues
ഉണകായന്നിരുണനകാ എനറന്നിയന്നില." Though the learned counsel for the
appellant vehemently raised arguments challenging the
genuineness of the receipts regarding payment of gratuity,
contending that the persons named in some of the
receipts are not the workers in the estate, PW1 deposed
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that he had not even seen the receipts ("പ്രതന്നി ഭകാഗത്തുനന്നിനണും
ഹകാജരകാകന്നിയ രസസീതുകൾ പരന്നിണശകാധന്നിച്ചു ണനകാകന്നിണയകാ (Q) പരന്നിണശകാധന്നിചന്നില ."). The total
sale consideration under the sale deeds is 73 lakhs. Out
of the same, as noted above, ₹ 19 lakhs is paid to the
vendor. The liabilities cleared by Chettiyappan is much
more than that. The sale consideration under the sale
deeds have thus been duly discharged. Therefore, the
plaintiff was unable to prove that any part of the
consideration remain unpaid, to be recovered from the
defendants. We concur with the trial court in having
held so. The points are thus answered against the
appellants.
17. Incidentally we also consider it appropriate to
notice that the original plaintiff had in the year 1993
executed cancellations purporting to cancel the sale
deeds. He never choose to file a suit to set aside the
sale deeds. The present suit has been filed 8 years
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after the cancellation.
18. We do not find any merit in the appeal. Appeal
fails and is dismissed. No costs.
Sd/-
SATHISH NINAN
JUDGE
Sd/-
P. KRISHNA KUMAR
JUDGE
kns/-
//True Copy//
P.S. To Judge
PETITIONER ANNEXURES
Annexure 19(a) CERTIFIED COPY OF DOCUMENT NO. 3365 OF 1991
OF SRO THIRUVANANTHAPURAM
Annexure 19(b) CERTIFIED COPY OF DOCUMENT NO. 3366 OF 1991
OF SRO THIRUVANANTHAPURAM
Annexure 19(c) CERTIFIED COPY OF DOCUMENT NO. 3367 OF 1991
OF SRO THIRUVANANTHAPURAM
Annexure 19(d) CERTIFIED COPY OF DOCUMENT NO. 3368 OF 1991
OF SRO THIRUVANANTHAPURAM
Annexure 19(e) CERTIFIED COPY OF DOCUMENT NO. 3369 OF 1991
OF SRO THIRUVANANTHAPURAM
Annexure 19(f) CERTIFIED COPY OF DOCUMENT NO. 3370 OF 1991
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Annexure 19(g) CERTIFIED COPY OF DOCUMENT NO. 3371 OF 1991
OF SRO THIRUVANANTHAPURAM
Annexure 19(h) CERTIFIED COPY OF DOCUMENT NO. 3372 OF 1991
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OF SRO THIRUVANANTHAPURAM
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