LALA SHANTI SWARUP versus MUNSHI SINGH & ORS.

Citation: [1967] 2 S.C.R. 312 · Decided: 03-01-1967 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Dismissed

Judgment (excerpt)

LALA SHANTI SW ARUP 
\', 
MUNSHI SINGH & ORS. 
January 3, 1967 
[J.C. SHAH AND V. RAMASWAMI. JJ.) 
Indian Limitation Act (9 of 1908), Arts. 83 and 116-Sale of mrn111-
bered prop.erty--Cov~nant by purchas.er to pay uff e11cu111~rancc-:l;'~dl­
ure by purchaser-Loss to Vf'11dor-Su1t ro recover /oss--Pcnod of lu111ta-
tion. 
The respondents executed a simple mortgage for a sum of Rs. 12,000 
in 1914. Later .. they wld half of the mortgaged property to the appel-
lants. Out of the consideration a sum required to pay the amount (princi-
pal and interest) due to the mortgagees. was left with the appcil:rnL<. 
The oppellants took possession of the property "onveyed, but did not 
make any payment to the mortgagees. 
The mortgagees brought a suit 
for the recovery of the amount due to them and in 1937, a final decree 
was passed against the respondents. The respondents then applied under 
the U.P. Encumbered Estates Act, and the liability was apportioncJ bet-
ween the appellants and respondents. 
In 1943. the Collector took pro-
ceed!ngs under that . .\ct for the liquid~1ti0n of the t.lcbt anJ di'reclct.I the 
respondents to execute a self-liquidating inoneagc uf three-fourths of their 
half-share for a sum of about Rs. 20.8000. 
The mortgage was executed 
on 25th February 1943. 
As a result, the re;pon<lents had to Jehcr 
possession of the three-fourths share of their property to the mortg3g~c~. 
On 30th July 1943, they filed a suit for the recovery of 'bout Rs. 18 .. 000 
and interest, representing the loss they sustained owing to the failure of 
the appellants to discharge the original mortgage of 1914. 
On the question \Vhether the suit was time-barred, 
HELD : When a conveyan.ce, contains a covenant by a purchaser lo 
pay off an encumbrance on the property sold it is nothing more than 
an in1plied contract of indemnity. 
In such a case, in addition to the 
right to bring an action to have himself put in a position to meet the 
liability \Vhich the purchaser has failed to discharge, the vendor has also 
a right to bring a suit on the contract of inden1nity if, as a resuh of 
the purchaser's failure, the vendor incurs a lo3s. 
Under Art. 83 of the 
Limitation Act, 1908 which applies both to express ond implied contrJc1s 
of indemnity, the cause of action arises when 
the vendor was 
actually 
damnified. 
Therefore, in the present case, as the sale deed in fav·.:.ur 
of the appellants was a registered document, the respondents had six 
years under Art. 83 read with Art. 116, for brin~ing the suit, ftom :'5ih 
Feb;uary, 1943, when they were oe'liJolly d"11Jnifi~d. qfl<l !'1 i!io Si!if- was 
within time. The mere fact that a m<>tlJl~!Jll decrw was pqsscd q5qin$t' 
the rc.>pondent:> in 1937 was .not sufficient to start lirnftntiorl A3<t;ost. ;J?~m 
as tin1e starts running on!y when there is actual dan111ification. [314 F, H; 
315 D-E; 316 D-E, HJ 
Case law referred to, 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 784 
,1f 
1964. 
Ar»~,,] frnm the judgment and decr~c dat~d fanuar•; 23, 1959 
of the Allainbad High C·rnrt in First A;1;i~nl l\Jn. 139 of 1946. 
A 
ll 
c 
v 
E 
F 
H 
SHANTI SWARUP v. MUNSHI SINGH (Ramaswami, J.) 
31 J 
A 
B. C. Misra and P. K. Ghose, for the appellant. 
B 
c 
D 
E 
F 
G 
H 
S. T. Desai, Sardar Bahadur and Arun B. Saharya, for respon-
dents Nos. 1-9. 
The Judgment of the Court was delivered by 
Ramaswami, J. This appeal is 
brought, by certificate, from 
the judgment of the High Court of Allahabad dated January 23 
1959 in First Appeal No. 139of1946. 
Some of the plaintiff-respondents and the predecessor-in-
interest of other plaintiff-respondents owned. lands in mahal Narain 
Singh village Khetalpur Sahruiya. They 
executed 
a simple 
mortgage of this property on May 9, 1914 in favour of two persons 
Bansidhar and Khub Chand, for a sum of Rs. 12,000. Subsequently 
a sale deed of half of this property which had been mortgaged was 
executed by the owners (now represented by the plaintiff-responJents) 
on February 9, 1920, in favour of Shanti Saran, the first appellant 
aud three others, the remaining appellants. The consideration for 
the sale-deed was a sum of Rs. 16,000 out of which a sum of 
Rs.13,500 was left with the purchasers forpayr.ient of the amount due 
to the mortgagees on account of principal and interest under the 
mortgage dated May 9, 1914. The purchasers entered into pos-
session of the property conveyed to them but neither they nor the 
appellants made any payment to the mortgagee

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