V.M. RV. MR. RAMASWAMI CHETTIAR AND ANR. versus R. MUTHUKRISHNA IYER AND OTHERS

Citation: [1966] 3 S.C.R. 608 · Decided: 16-02-1966 · Supreme Court of India · Bench: K. SUBBA RAO · Disposal: Dismissed

Judgment (excerpt)

V. M. RV. MR. RAMASWAMI CHEITIAR AND ANR. 
A 
l'. 
R. MUTIIUKRISHNA IYER AND OTHERS . 
February 16, 1966 
[K. SUBBA RAO AND V. RAMASWAMI JJ.] 
Indemnity and guarantee-Sale of land by one having a voidable till• 
ancl puuing purchaser in pos~ession-Agreenient to indemniry purcha.ser-
Sale sec aside al the instance of person, entitled to avold-Nt> disposjeS· 
slon of purcharer-Enforceabiliry of indemnity bond. 
The second defendant sold property belonging to himself and his minor 
.on the third defendant. and also executed an indemnity bond in favour 
B 
of the vendee agreeing to indemnify him for any loss that might be caused 
C 
to him in case the sale of the third defendant's half share should later on 
be set aside. The vendee sold the property to the plaintiffs and assianed 
the indemnity bond in their favour and the plaintiffs took possession of 
tho propeny. 
The third defendant, after attaining majority, sued for 
settinJ1 aside the sale in respect of his half share and for partition. The 
plaintiffs contested the suit but the third defendant's suit was decreed. 
He, however, did not dispossess the plaintifis. 
Meanwhile, a creditor of 
the third defendant obtained a money decree against him and in execution 
D 
tllereof attached and brought to sale the third defendant's half share, and, 
the 
brother-in-law 
of the 
plaintiffs 
purchased 
the 
property, 
hut 
the 
plaintiffs 
continued 
in 
possession 
of 
the 
property. 
The 
plaintiffs, thereafter, filed the suit for recovery of half the consideration 
paid by them, on the allegation that they sustained damage by the lo~• 
of one half of the prop<>rty bought by them, and that they were entitled 
to recover damages from the second defendant. The suit was conte>ted 
on the ground that the court sale in favour of the brothers-in-law of the 
E 
plaintiffs was benami for the plaintiffs, and that as the plaintiffs never lost 
ownership or possession of the halfshare. they did not sustain any loss. 
lbe trial court decreed the suit. 
The High Court, on appeal, confined 
the de<:ree to the actual loss sustained, namely, tho amount for the court 
•ale and the amount spent for the defence of the third defendant's suit. 
In appeal to the Court, on the question of the quantum of damages to 
which the plainti1fs were entitled, 
r 
HELD : High Court was right in granting a decree to the plaintiffs 
only for the rum whiah was the actual loss sustained by them. 
The sale of the half share of the third defendant was not void ab 
initio but was only voidable. In such a caoe the indemnity bond becomes 
enforceable only if the vendee is disposscsed from the properties, hccausc, 
a broach of the covenant can only occur on the diaturbancc or the vendee"s 
pQISea.<ion. 
So long as tho vendee remains in ~on. he suffers no 
G 
loss and no suit can be brought for damage. either on the basis of the 
indemnity bond or for the broach of a convcnant of the warranty of title. 
[610 H-611 BJ 
Subbaroya Reddiar v. Ra;agopala Reddiar, (1915) IL R. 38 Mad. 887 
Muhammad Siddiq v. Muhammad Nuh, J.L.R. 52 All. 604 ond Gulabchand 
Daularram v. Suryaji Rao Ganpatrao, A.l.R. 1950 Born. 401, approved. 
CIVIL APPELLATE JURISDICTJO'S: Civil Appeal No. 7 of 1964. 
H 
Anneal from the judgment and decree dated January 7, I 955 
of the Madras High Court in Appeal Suit No. 371 of 1959. 
I
•
.• 
A 
B 
. i 
c 
D 
E 
F 
G 
""'Ji. 
~ 
. 
H 
CHETTIAR v. IYER (Ramaswami, /.) 
609 
R. Ganapathy Iyer and R. Thiagarajan, for appellants. 
M. S. K. Sastri and M. S. Narasimhan, for respondent No. 2 
The Judgment of the Court was delivered by 
Ramaswami. J. In the suit which is the~subject-matter of 
this appeal the plaintiffs alleged that Plaint 'A' Schedule properties 
belonged to the second defendant and his son, the third defendan~. 
The second defendant sold the village for Rs. 28,000/· to one Swanu-
natha Sarma by a sale deed Ex. A dated December 12, 1912 which 
he executed for himself and as guardian of the third defendant who 
was then a minor. The second defendant also agreed to inde-
mnify any loss that might be caused to his vendee in case the sale 
of his minor son's half share should later on be set aside. Accor-
dingly the second defendant executed the Indemnity Bond-Ex. 
B in favour of Swaminatha Sarma. The sons of Swaminatha Sarma 
sold Plaint 'A' Schedule village to the father of the Plaintiffs for a 
sum of Rs. 53,000/-. On the same date they assigned the Indemnity 
Bond-Ex. B to the father of the pl

Excerpt shown. Read the full judgment & AI analysis in Lexace.