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TMI Blog1963 (10) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... n a revenue sale, and that the plaintiff was not entitled to any relief, for the reason that there was no total failure of consideration. 3. The question for consideration in this appeal, therefore, is whether the plaintiff is entitled to a refund of the proportionate purchase money. It is admitted that originally these two properties belonged to the defaulter and that there was a subsisting mortgage on S. No. 303/1 when the State attached that property. The mortgagee instituted a suit in O. S. 5707112 and obtained a decree and in execution thereof the transferee of the decree purchased the property in 1119. When the auction purchaser was about to take delivery, the "Government Pleader filed an application, Ext. II. in the case, objecting to delivery. Ext. II was filed on 23-3-1112. That petition was allowed by the Munsif, but in revision the petition was dismissed. When the properties were put up for sale in the revenue case, it was stated in the sale proclamation that what was being sold in S. No. 303 /1 was (" * * * * .") Ext. D3 is the proclamation notice and in the relevant column the above description has been inserted, Ext. D-3 is dated 18-3-1122. The reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... down in those rulings can be applied to the facts of this case, although the question here arises in the context of a sale under the Revenue Recovery Act. 6. The next question is whether it is possible to give any relief to the plaintiff, in the circumstances of this case. It was submitted for the respondent that there was no total failure of consideration as the plaintiff got title to and possession of S. No. 15/2, and as both items were sold in one lot and for a single consideration. I think the argument is sound. Unless the consideration can be severed it is impossible to find out the extent of the failure of consideration. As the sale of the two items was in one lot for a single consideration, it is difficult to say that the consideration failed in toto. There is also no criterion to apportion the consideration as between the two properties. In Firm Narasingi Vannechand v. Narasayya, AIR 1945 Mad 363 it was held that when a judgment-debtor is found to have no title to a part of the property sold in auction, a suit by the auction purchaser for refund of the proportionate part of the purchase money is not maintainable. In the course of the judgment Leach C. J., observed: "It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the High Court had repelled the objections of the State to the delivery of the property to the auction purchaser in that case, and if the State, through one of its agents knew at the time when the revenue sale was conducted that the defaulter had no title at all to the property, and if that property was proclaimed for sale stating that the defaulter had the equity of redemption in that property, the State was guilty of fraud, and if on account of that fraud the plaintiff sustained damage, the plaintiff was entitled to recover compensation for the same from the State. In this connection counsel referred me to the ruling in Sundara Gopalan v. Venkatavarada Ayyangar ILR 17 Mad 228 for the proposition that fraud would vitiate a sale in invitum, even if there is no warranty of title in such a sale. At page 231 Muthuswamy Iyer, J., said: "I do not desire to be understood as suggesting that in case of fraud there would be no remedy, out this is not that case. What I Hold is that where the Court sale is not vitiated by fraud, the only extent, to which the purchaser can claim relief, is that indicated by section 315 ........" But in order to make out a case of fraud against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be false; and it seems to me to be an untenable proposition, that if each be innocent, the act of either or both can be a fraud. No case could be found in which such a principle is laid down, as was admitted in the course of the argument. It must be conceded, that if one employ an agent to make a contract and that agent, though the principal be perfectly guiltless, knowingly commit a fraud in making it, not only is the contract void, but the principal is liable to an action......... But, in the present case, the agent acted without any fraudulent intent; and therefore his act alone neither renders the plaintiff liable to an action nor vitiates the contract." This case did not meet with approval of the House of Lords in Pearsort and Son Ltd. v. Dublin Corporation, 1907 AC 351. There, the defendant had invited the plaintiffs to tender for certain sewage work and for the purpose of enabling them to tender, plans with drawings and specifications were given to the plaintiffs by the defendant. These plans and drawings and specifications had been prepared by engineers employed by the corporation and in these drawings and plans were certain statements as to the relevant circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other agent of the company namely the property manager. Mr. Addis, and then informed the purchaser that the tenants paid the rent regularly, when in fact many did not. Goddard, J. held that the company cannot be made liable for any fraud. This Court of appeal took the opposite view that the company was liable for fraud. One reason was that one of the company's agents had been fraudulent so that the ordinary rule of vicarious liability applies. According to a second and more substantial reason, however, the company was liable in fraud for Mr. De Rees's false but innocent presentation, which the company through its agent Mr. Addis knew to be untrue, even though the company did riot know that Mr. De Rees made the statement. It followed from this that the company would be liable where one of its agents made an innocent though untrue statement, provided that the statement was known to be untrue by any other agent or officer of the company. It is obvious that this case repudiated the authority of (1840) 6 M 358. In the course of the judgment Slesser L. J., after quoting the observations of Lord Loreburn, L. C., and Lord Halsbury in Pearson and Son case 1907 AC 351 said at page ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... great difficulty in finding actual fraud when the agent did not know the false character of the statement made by him. The same view was taken by Birkett, L. J. 11. The whole question was reviewed by Patrick Devlin in an article contributed by him to the Law Quarterly Review, Vol. 53, page 344 and his conclusion is that the decision in London County case 1936 2 All ER 1039 was not right. At page 362 it is stated: "There is no way of combining an innocent principal and agent so as to produce dishonesty. You may add knowledge to knowledge or, as Slesser L. J., put it, state of mind to state of mind. But you cannot add an innocent state of mind to an innocent state of mind and get as a result a dishonest state of mind. You cannot add innocent knowledge to innocent knowledge and get guilty knowledge. If it be possible to fuse a number of states of mind together and from the composition thereby obtained to distil a notional dishonesty, it might he possible to satisfy the requirements for an action of deceit, even in the case of an innocent division of the ingredients. But to do this would be to go far beyond any principle of law that has yet been laid down......... There is no possib ..... X X X X Extracts X X X X X X X X Extracts X X X X
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