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Report No. 70

51.21. Fraud.-

With section 55(1)(a) must be read the last clause of section 55 which enacts that an omission to make the disclosure of the nature referred to in this clause is fraudulent. This fraud will entitle the buyer not only to avoid the contract, where the transaction has not passed beyond the stage of contract, but also to set aside the sale itself where the contract has been completed by the execution of the conveyance. Before the sale is set aside, the buyer can sue for return of the purchase-money.

This remedy is independent of a suit for rescission of the sale deed, which the buyer may also bring if he so chooses. Where the buyer has suffered loss by reason of the fraud, he will, it is conceived, be entitled to claim damages from the seller, whether the fraud is discovered before or after conveyance.

51.22. Section 55(1)(a)-Effect of non-disclosure discovered before or after conveyance.-

The effect of non-disclosure of a material defect in title varies according as the discovery is before or after conveyance.

(a) If the buyer discovers a material defect which has not been disclosed and such discovery takes place before he has accepted the conveyance, then he may claim damages or rescind the contract for misrepresentation. He may also resist a suit for specific performance.

(b) If the buyer has accepted the conveyance, his remedy is in damages on the covenant for title1 because the duty of disclosure merges in the conveyance,2 in the absence of provision. The right to sue for damages remains unaffected by the fact that the buyer knew of the defect in the title.3 This is because the remedy on the covenant is available irrespective of fraud or misrepresentation.

(c) However, non-disclosure of a material defect, where fraudulent, may be made the basis of a suit for setting aside the sale on the ground of fraud.4

1. Turner v. Moon, (1901) 2 Ch 825.

2. MuIla, (1973), p. 317.

3. Thammi Neni v. Dhavala Poli Naidu, AIR 1954 Mad 205.

4. Gajapathi v. Alagia, 1886 ILR 9 Mad 89.

51.23. Section 55(1)(b) and section 55(1)(c).-

The obligations laid down in sections 55(1)(b) and 55(1)(c)-production of documents of title and answering of questions-are intended to ensure to the satisfaction of the buyer that the seller has done his utmost to perform his obligations, particularly the obligation under clause (a) to disclose defects in the property or title.

51.24. Section 55(1)(d)-Recommendation.-

In section 55(1)(d), the duty of the seller to execute a proper conveyance on payment or tender of the price arises when the buyer tenders "it" to him for execution at the proper time and place. Here the pronoun "it" stands for "conveyance". There is no ambiguity, but opportunity could be taken of substituting the word "conveyance" for the word "it". This is a very minor change. Besides this, it is desirable to amplify the clause by providing that the conveyance should be executed in favour of the buyer or such person as the buyer directs. Compare the provision in section 55(1)(f) as to delivery. We recommend this amplification of section 55(1)(d).

51.25. Section 55(1)(d)-Conveyance in whose favour.-

In England, a buyer can always demand that the conveyance should be executed in his favour, or in favour of any person he may nominate.1 The Act merely enacts that the seller shall execute a proper conveyance; it does not say that it should necessarily be in favour of the buyer. It has been held by the High Court of Bombay2 that the rule of English law would apply here also, and that the buyer can, under section 55(1)(d), call upon the seller to execute a conveyance in favour of the buyer's nominee.

This view has been followed by the Mysore High Court3. It is also the rule in England that the buyer may require the seller to convey the property in parcels on receipt of the whole purchase-money and the additional cost of the several conveyance, provided they are executed at the same time and not at various times.4

1. Egmont (Earl) v. Smith, (1887) 46 LI Ch 356 (358): 6 Ch D 469 (474).

2. Rahimlulla v. Official Assignee, AIR 1935 Born 340 (341, 343) (DB).

3. AIR 1954 Mys 145 (147): ILR 1954 Mys 274 (DB).

4. Egmonta (Earl) v. Smith, (1877) 46 LJ Ch 356 (358): 6 Ch D 469; Farrand Contract and Conveyance, pp. 209 to 213.

51.26. Section 55(1)(e).-

Section 55(1)(e) deals with the duty of the seller to take care of the property and the documents of title between the date of contract of sale and delivery. This does not, of course, mean that the risk passes to the buyer on contract. That is not the law in India, and the buyer does not get any interest in the property by mere contract. Nevertheless, this duty seems to have been imposed in order to avoid any objections later being made by the buyer that the property or the documents are not in the original condition.

51.27. Section 55(1)(f).-

The seller is, under clause (f), bound to give, on demand, such possession as the nature of the property admits of. The nature of the possession will vary according to the nature of the property and also its extent. Where an estate is a vast one, it is not required that buyer must walk over the whole land. Incidentally, clause (f) does not mean that in every case delivery is a sufficient step for transferring the ownership. That is a matter governed by section 54. Also, all liabilities under section 55(1) are governed by the opening words, "such of them as are applicable to the property sold".

51.28. Section 55(1)(f)-Vacant possession.-

Normally, it is an implicit term of the contract of sale that vacant possession shall be given to the purchaser on completion. This becomes of importance where the land is subject to a tenancy or has been lawfully requisitioned by a public authority.1

In India, though section 55 does not expressly use the word "vacant", yet since section 55(1)(f) obliges the seller to give, on being so required, the buyer or such person as he directs, such possession of the property as its nature admits, therefore, unk Is the buyer has been given notice of a lease or of a mortgage in possession, a st ler is bound to give vacant possession, at least if the property professed to be sold is tangible immovable property. It is for this reason that where property is sold with all rights and free from incumbrances, the seller is bound to give vacant possession of property which is occupied by the trespassers:2

1. Cook v. Taylor, (1942) 2 All ER 85.

2. Shashi Bhushan v. Rai Chand, AIR 1950 Cal 333.

51.29. Section 55(1)(g).-

Clause (g) deals with the payment of public charges on the property and needs no comment.

51.30. Section 55(2).-

The seller's covenant for title is found in sub-section (2), which reads-

"55. (2) The seller shall be deemed to contract with the buyer that the interest which the seller professes to transfer to the buyer subsists and that he has power to transfer the same:

Provided that, where the sale is made by a person in a fiduciary character, he shall be deemed to contract with the buyer that the seller has done no act whereby the property is incumbered or whereby he is hindered from transferring it.

The benefit of the contract mentioned in this rule shall be annexed to, and shall go with, the interest of the transferee as such and may be enforced by every person in whom that interest is for the whole, or any part thereof from time to time vested".

The Transfer of Property Act, 1882 Back

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