Skip to content


Lalit Mohan Taran Vs. Lal Mohan Deb and ors. - Court Judgment

LegalCrystal Citation
Subject;Property;Contract
CourtGuwahati High Court
Decided On
Case NumberSecond Appeal No. 9 of 1974
Judge
ActsSpecific Relief Act, 1963 - Sections 20
AppellantLalit Mohan Taran
RespondentLal Mohan Deb and ors.
Appellant AdvocateP.M. Palit and H.N. Kar, Advs.
Respondent AdvocateS. Deb, Adv.
DispositionAppeal allowed
Excerpt:
.....bad for non-joinder of necessary party as the heirs of one banamali who were in possession of the suit land were not impleaded. 6. whether the suit is bad for defect of party? and that the heirs of banamali had been possessing the major portion of the suit land since before the purchase of the land by the defendants, and accordingly he found the suit to be infirm due to non-joinder of the heirs of banamali and for failure to amend the plaint excluding defendant 5's share even after the defendant 5 was impleaded. ii thereof specific performance of a contract may be enforced against either party thereto and any other person claiming under him by a title arising subsequent to the contract except a transferee for value who has paid his money in good faith and without notice of the original..........agreement signed by defendants 1 to 4 would not bind him and that there was no partition of the suit land among the co-sharers. in their written statement the defendants 1 to 4 stated that the suit was bad for non-joinder of necessary party as the heirs of one banamali who were in possession of the suit land were not impleaded.the trial court framed the following 7 issues : -- 1. whether there was any contract of reconveyance between the plaintiff and defendants 1 to 4 in respect of the suit property?2. whether the plaintiff tendered and offered the consideration money to the defdts. to have the reconveyance deed executed by the defendants?3. whether the plaintiff is entitled to get a decree for specific performance of contract for reconveyance against the defdts. in respect of the.....
Judgment:

K.N. Saikia, J.

1. This plaintiffs second appeal is from the appellate judgment and decree of the Addl. District Judge, Tripura at Agartala dismissing the plaintiff's appeal and upholding the Munsiff's judgment and decree dismissing the suit. The Title Suit No. 14 of 1970 was for specific performance of contract of reconveyance of land sold to the defendants by the plaintiff on 26-5-69 at a consideration of Rs. 2,500/-. The defendants 1 to 4 had also executed an agreement on the same date i.e, 26-5-69 to the effect that they would reconvey the land to the plaintiff on payment of the consideration money to the defendants within 30th day of Ashadh, 1377 B. S.; and that thereafter even though the plaintiff tendered the consideration money to the defendants during the stipulated period, the latter neither accepted the money nor did execute the deed of reconveyance as agreed and that too even after a pleader's notice.

2. The suit was originally instituted against the defendants 1 to 4 who filed a joint written statement. The defendant 5 was impleaded at his instance and he filed a separate written statement saying, inter alia, that he did not sign any agreement to reconvey the land; that the agreement signed by defendants 1 to 4 would not bind him and that there was no partition of the suit land among the co-sharers. In their written statement the defendants 1 to 4 stated that the suit was bad for non-joinder of necessary party as the heirs of one Banamali who were in possession of the suit land were not impleaded.

The trial Court framed the following 7 issues : --

1. Whether there was any contract of reconveyance between the plaintiff and defendants 1 to 4 in respect of the suit property?

2. Whether the plaintiff tendered and offered the consideration money to the defdts. to have the reconveyance deed executed by the defendants?

3. Whether the plaintiff is entitled to get a decree for specific performance of contract for reconveyance against the defdts. in respect of the entire suit property?

4. Whether the defdt, 5 has any interest in the suit property, if so, to what extent?

5. Whether the suit is maintainable without a prayer for partition?

6. Whether the suit is bad for defect of party?

7. To what relief the parties are entitled?

The trial Court on evidence found that the defendant 5 was a co-sharer in the suit land, there was no partition among the co-sharers; defendnts 1 to 4 did not have right to agree to reconvey the entire land; and that the heirs of Banamali had been possessing the major portion of the suit land since before the purchase of the land by the defendants, and accordingly he found the suit to be infirm due to non-joinder of the heirs of Banamali and for failure to amend the plaint excluding defendant 5's share even after the defendant 5 was impleaded. The suit was accordingly dismissed. The first appellate Court agreed that the decree would be infructuous and unacceptable if it was passed in the absence of the heirs of Banamali who had been possessing the part of the suit land since a very long time and also, that the plaintiff's claim of reconveyance of the entire suit property could not be decreed as the 5th defendant did not sign any agreement to reconvey the land and that the defendants 1 to 4 themselves had no right to reconvey the entire suit land. The appeal was consequently dismissed. Hence this second appeal.

3. Mr. P. M. Palit, the learned counsel for the appellant submits, inter alia, that the defendants 1 to 4 having not denied their execution of the agreement for reconveyance and the defendant 1 having even deposed that the defendants 1 to 4 had no objection to reconvey their shares to the plaintiff and the heirs of Banamali having been upon the land even since before it was sold by the plaintiffs to the defendants, the learned Courts below erred in law in not decreeing the suit for specific performance at least to the extent of the shares of defendants 1 to 4 and subject to whatever right the heirs of Banamali might have had upon the lands.

4. The first question to be decided, therefore, is whether the agreement to reconvey the land executed by the defendants 1 to 4 is specifically enforceable either wholly or by excluding the share of defendant 5, and subject to the rights, if any, acquired by the heirs of Banamali on the suit land?

There is no doubt that a contract for the sale of land is presumed to be a fit subject matter for exercise of jurisdiction in specific performance of contract. The remedy for specific performance is discretionary and the plaintiff must show himself actively willing to perform his part of the contract. Under Section 10 of the Specific Relief Act, 1963 (hereinafter referred to as the Act) except as provided in Chap. II of that Act the specific performance of any contract may, in the discretion of the Court, be enforced when the act agreed to be done is such that compensation in money for its non-performance would not afford adequate relief and unless and until contrary is proved the Court shall presume that the breach of a contract to transfer immovable property cannot be adequately relieved by compensation of money. Under Section 19 of the Act except as otherwise provided by Chap. II thereof specific performance of a contract may be enforced against either party thereto and any other person claiming under him by a title arising subsequent to the contract except a transferee for value who has paid his money in good faith and without notice of the original contract. Under Section 20 of the Act the jurisdiction to decree of specific performance is discretionary and the Court is not bound to grant such relief merely because it is lawful to do so; but the discretion of the Court is not arbitrary but sound and reasonable, guided by judicial principles and capable of correction by a Court of appeal. Under Sub-sec. (3) thereof the Court may properly exercise discretion to decree specific performance in any case whether the plaintiff has done substantial acts or suffer losses in consequence of a contract capable of specific performance.

5. It is settled law that the claim for specific performance assumes the existence of an actionable contract. The Court may exercise a discretion in granting or withholding a decree for specific performance; and in the exercise of that discretion the circumstances of the case, and the conduct of the parties and their respective interest under a contract are to be remembered as was held in Oxford v. Provand, (1868) LR 2 PC 135, 151. The relief of specific performance of a contract being of equitable origin and within the discretion of the Court he who seeks equity must come with clean hand. As was held in Jethalal Nanshah Modi v. Bachu, AIR 1945 Bom 481, the specific performance of a contract could not be decreed merely because it was lawful. The Court would consider the conduct of the parties, the circumstances attending its execution and refuse specific performance in its discretion. The discretion exercised by the trial Court will not be interfered with in appeal unless it has been exercised perversely, arbitrarily or against judicial principles. It was ruled in Mademsetty. Satyanarayana v, G. Yelloji Rao, AIR 1965 SC 1405 that the jurisdiction to decree specific performance is discretionary and the Court is not bound to grant such relief merely because it is lawful to do so but the discretion of the Court is not arbitrary but sound and reasonable guided by judicial principles and capable of correction by a Court of appeal.

6. In the facts of the instant case it is seen that the plaintiff sold to the defendants the suit land on 26-5-69 at a consideration of Rs. 2,500/- by a registered sale deed. On the same date, out of the 5 vendees 4 of them namely, defendants 1 to 4 also executed an agreement to the effect that they would reconvey the land to the plaintiff on payment of the consideration money to the defendants within 30th day of Ashadh, 1377 B.S. The averment of the plaintiff that he tendered the consideration money to the defendnats within the 30th day of Ashadh, 1377 B.S. and even served a pleaders notice has not been denied by the defendants. There is, therefore, no doubt that the transaction of sale by the plaintiff to the defendant was complete and valid. Can the agreement to reconvey executed on the same date be rejected on the ground of nudum pactum ex quo non oritur actio? If not what would be the consideration to support the agreement for reconveyance? In Sakalaguna Nayudu v. Chinna Munuswami Nayakar, AIR 1928 PC 174 under similar circumstances the judicial committee of the Privy Council stated that all the elements necessary to constitute a contract existed in the case and that the sale deed and the counterpart must be read as constituting a total system of rights and obligation, mutually supported by consideration and that, further, the undertaking to reconvey was specifically enforceable as such. Mutuality is an essential element in a contract to be specifically performed. In Halsbury's Laws of England, 3rd Ed. V. 36, Page 269, Para 367 it is emphasised that in the absence of mutuality infusing the contract the contract is not specifically enforceable. But the rule regarding lack of mutuality is not without exception or apparent exceptions. One such exception is of a contract where one party has an option by the exercise of which the other party becomes bound to perform his part. In Dr. S. C. Banerjee's Law of Specific Relief (Tagore Law Lectures) 6th Ed. reprint, 1979 at page 109 such contracts are called option contracts. Option contract contains a term which empowers the option holder to elect within a specific time whether the contract shall operate further. An option is an act in the law which is conditional upon the option holder electing that it shall become fully and unconditionally operative between the parties. The option holder has the benefit not of mere revocable offer but of an irrevocable and binding though conditional contract. It is as much as conditional contract as if it depended on any other contingency to exercise an option by a 3rd party. In such contracts the promise is conditional and until the performance of the condition is made or excused, there is no liability upon the promisor. This was the dictum enunciated in Weeding v. Weeding, 1 John & H 424. According to the author there can be no mutuality in the option contracts until the party to whom the option is given has exercised the option. In Chinnakkal v. Chinnathambi, AIR 1934 Mad 703 : 152 Ind Cas 634, the plaintiff executed the sale deed for herself and on behalf of her minor son and took on the same date from the vendee (the defendant) a promise to reconvey the properties. She sued for the specific performance of the agreement. The defendant pleaded want of mutuality. It was held that the privilege under the agreement was conferred either on the plaintiff or on her minor sons or whatever force there can be in the objection as regards the minor, no such objection could arise as regards the plaintiff. According to the author the option for which the consideration has been given is both an offer and also an unilateral contract. When the offer is reasonably accepted a new contract -- usually bye-lateral -- arises and it is this contract which is specifically enforced. If the option was given for valid consideration, the acceptor may enforce it. It is not necessary that the consideration should have been given exclusively for the option. It is enough if it is one term of the contract for which consideration was given. It is the contract created by the acceptance of the option which is enforced. To support an option contract it is not necessary to have a separate and distinct consideration. The covenant in the contract including the option clause, must be read as part of the consideration for the performance. In Hullon v. Watling, (1948) Ch 398 : (1948) 1 All ER 803, 806 the plaintiff took on lease in 1937 a business concern. The option was given to her to purchase for a stated sum the house in which the business has been carried on. The plaintiff exercised option to purchase in 1944. The defendant pleaded want of consideration for the above covenant but the contention was repelled and specific performance was decreed. In Ram Das Rae v. Brindaban Ram, AIR 1931 All 113 a Division Bench held that an agreement to reconvey the property cannot be ignored as nudum pactum and as such void of any legal effect. The reciprocity between the parties is evidence of consideration and is capable of being specifically enforced. In N. B. Sitarama Rao v. Venkatarama Reddiar, AIR 1956 Mad 261 (FB) a sale deed was executed in favour of 2 brothers A and B of whom A was major and B was minor represented by A as his guardian. On the same date the vendees A and B executed a Deed in favour of the vendors whereby A and B agreed to reconvey the properties to the vendors after B attained majority, the consideration being the same as that mentioned in the sale deed. The vendors transferred the benefit of reconveyance to C who brought a suit for specific performance of the agreement to reconvey against A and B. It was held by the Full Bench that the sale deed and the deed of reconveyance formed part of one transaction and that the agreement to reconvey was part of the original undertaking to transfer, the element of each of which cannot be disassociated from the other; that each document should be deemed to be consideration for the other along with the money that was passed and the obligation for reconveyance could not be separated from the parties; that the doctrine of mutuality did not apply and as the contract could not be bifurcated it has specifically to be enforced and B could not repudiate the liability to reconvey at the same time retaining to himself the advantage gained by purchase. The contract of reconveyance, therefore, could be specifically enforced against the minor.

In G. Srinivasalu Naidu v. Raju Naicker, AIR 1955 Mad. 635 it was held that a sale followed by an agreement of reconveyance should be treated as one transaction and that consideration for the reconveyance should be the sale itself. Similarly in Rakhama Sitaram Ghadge v. Laxman Sitaram Ghadge, AIR 1960 Bom 105 it was held in a Letters Patent Appeal that Section 21 of the Act sets out certain contracts which cannot be specifically enforced and a contract which may be enforced at a time to be selected by one of the parties thereto and not at the instance of the other is not enumerated as one which is incapable of specific performance. Therefore, an agreement to reconvey land to the vendor at any time on repayment of the sale price cannot be said to be void on ground of absence of mutuality and is specifically enforceable.

7. In Shanmugam Pillai v. Annalakshmi, AIR 1950 F C 38, where there was a separate agreement executed on same day when there was sale of portion of hypotheca to mortgagee in satisfaction of mortgage debt and lease back to mortgagor for fixed period the suit for specific performance of agreement to repurchase was accepted to be specifically enforceable. In Chunchun Jha v. Ebadat Ali, AIR 1954 SC 345, emphasis was laid on the tenor of the instrument to determine the question as to whether a given transaction was a mortgage by conditional sale or a sale outright with a condition of repurchase and each case, it was held, must be decided on its own facts. The real question was not what the parties intended or meant but what was the legal effect of the words which the parties used. If there was ambiguity in the language employed, then it was permissible to look to the surrounding circumstances to determine what was intended. The law on the subject was further crystallized in K. Simrathmull v. Nanjalhigiah Gowder, AIR 1963 SC 1182, where the plaintiff borrowed a certain amount from the defendant and in lieu thereof executed deed of conveyance of certain land with a house thereon in favour of the defendant. On the same day another deed of reconveyance was executed by the defendant. By this deed the defendant agreed to reconvey the house, but the exercise of the right of demanding reconveyance by the plaintiff was subject to two conditions (1) that the right must be exercised within two years, and (2) that the rent payable by the plaintiff should not be in arrears for more than six months at any time. The plaintiff broke the second condition. The defendant refused to reconvey. In a suit for specific performance, the plaintiff prayed that the court should exercise its equitable jurisdiction and give relief against the forfeiture clause. It was held that (1) the sale deed, the deed of reconveyance and the rent note were parts of the same transaction and that the transaction was not one of mortgage by conditional sale, and (2) that the court could not relieve the plaintiff against the forfeiture clause. If the original vendor, i.e., the plaintiff failed to act punctually according to the terms of the contract the right to repurchase would be lost and could not be specifically enforced. In Mademsetty Satyanarayana v. G. Yelloji Rao, AIR 1965 SC 1405, it was held that while mere delay extending up to period of limitation was not sufficient ground to refuse relief, proof of waiver or abandonment of right was not a pre-condition for its refusal. The field of discretion could not be defined but Court would not grant relief if it would be inequitable. Where the plaintiff was never ready and willing to perform his part of the contract the specific performance will be denied as was held in Gomathinayagam Pillai v, Palaniswami Nadar, AIR 1967 SC 868. The equitable nature of the relief was emphasised in K. Kalpana Saraswathi v. P. S. S. Somasundaram Chettiar, AIR 1980 SC 512, where it has been held that specific performance is an equitable relief and he who seeks equity can be put on terms to ensure that equity is done to the opposite party even while granting the relief. The final end of law is justice, and so the means to it too should be informed by equity. That is why he who seeks equity shall do equity. It has further been held that even at the appellate stage the Supreme Court would extend time to make deposit to enable the party to get advantage of an agreement. In Babu Lal v. Hazari Lal Kishori Lal AIR 1982 SC 818, it was held that the relief of possession could be granted even at the appellate stage.

8. Applying the foregoing principles to the facts of this case, it is seen that the plaintiff was ready and willing to perform his part and there is no doubt about hi's having sold the land to the defendants. The agreement to reconvey has not been disputed by defendants 1 to 4. Equity will not therefore allow the defendants to retain unfair advantage by refusing to reconvey the land. The defendant 5 having not executed the deed of reconveyance it may be left to his option but so far as defendants 1 to 4 are concerned, they are bound to execute the deed of reconveyance as stipulated in the agreement. The fact that defendant 5 did not execute the agreement for reconveyance would in no way affect the plaintiff's right to reconveyance of the shares of defendants 1 to 4. The Court can under such circumstances mould the relief according to the circumstances of the case.

9. The fact that the heirs of Banamali have been squatting upon the land even since before the land was sold to the defendants would not in any way impair the right of the plaintiff to get the land reconveyed. The right created by contract is a right in personam. The parties to a suit for specific performance are the parties to the contract and their successors and assignees. The heirs of Banamali were not necessary parties to such a suit. If they acquire any right over the land that right will be vis-a-vis the plaintiff after the land is reconveyed but that cannot be a ground for refusing specific performance.

10. It is accordingly directed that a decree be passed that the defendants 1 to 4 do execute a deed reconveying their shares of the suit land to the plaintiff in accordance with the stipulation in the agreement of reconveyance executed by them receiving back the consideration money within six months from today. This appeal is accordingly allowed but under the circumstances of the case, I leave the parties to bear their own costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //