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Bapu Apaji Potdar Vs. Kashinath Sadoba Gulmire - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtMumbai
Decided On
Case NumberSecond Appeal No. 769 of 1914
Judge
Reported in(1917)19BOMLR100
AppellantBapu Apaji Potdar
RespondentKashinath Sadoba Gulmire
Excerpt:
.....to admissions. - in the last of the sub-sections it is clearly recognized that relief by way of specific performance may in certain events be open to the purchaser. then turning to the specific relief act, section 27(b) provides that specific performance may be enforced against either a party to a contract or any other person claiming under him by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract and by section 12 of the same act it is laid down that unless and until the contrary is proved, the court shall presume that a breach of the contract to transfer immoveable property cannot be adequately relieved by compensation in money. once it is recognised that the plaintiff is..........value of upwards of rs. 100 can only be made by a registered instrument and that a contract for sale of immoveable property is a contract that a sale of such property shall take place on terms settled between the parties; it does not, of itself, create any interest in or charge on such property.3. section 54 does not however exhaust the relations which flow from a contract for sale of immoveable property according to indian statute law. this section cannot be read by itself and one finds in the same act important provisions in sections 40 and 55 the latter of which sections imposes many obligations on the vendor and gives corresponding rights to the purchaser with reference to the property contracted to be sold. in the last of the sub-sections it is clearly recognized that relief by.....
Judgment:

Basil Scott, Kt., C.J.

1. The question for our determination is whether when the plaintiff being the owner of certain immoveable property seeks to recover possession of that property, it is a valid defence to the suit that the plaintiff' has agreed to sell the property to the defendant the agreement being at the date of suit still capable of specific enforcement but there being no registered conveyance passing the property to the defendant. It is to be taken for the purposes of the case that possession has been taken by the defendant under the agreement for sale and that he is willing to perform his part of it with the plaintiff.

2. We must start with the propositions enunciated in Section 54 of the Transfer of Property Act that sale is a transfer of ownership in exchange for a price paid or promised or part paid or part promised, that such transfer in the case of immoveable property of the value of upwards of Rs. 100 can only be made by a registered instrument and that a contract for sale of immoveable property is a contract that a sale of such property shall take place on terms settled between the parties; it does not, of itself, create any interest in or charge on such property.

3. Section 54 does not however exhaust the relations which flow from a contract for sale of immoveable property according to Indian statute law. This section cannot be read by itself and one finds in the same Act important provisions in Sections 40 and 55 the latter of which sections imposes many obligations on the vendor and gives corresponding rights to the purchaser with reference to the property contracted to be sold. In the last of the Sub-sections it is clearly recognized that relief by way of specific performance may in certain events be open to the purchaser. Then turning to the Specific Relief Act, Section 27(b) provides that specific performance may be enforced against either a party to a contract or any other person claiming under him by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract and by Section 12 of the same Act it is laid down that unless and until the contrary is proved, the Court shall presume that a breach of the contract to transfer immoveable property cannot be adequately relieved by compensation in money. Section 91 of the Indian Trusts Act in the Chapter describing certain obligations in the nature of trusts provides that where a person acquires property with notice that another person has entered into an existing contract affecting that property, of which specific performance can be enforced, the former must hold the property for the benefit of the latter to the extent necessary to give effect to the contract and Section 95 provides that a person holding property in accordance with that section must, so far as may be, perform the same duties and is subject, so far as may be, to the same liabilities and disabilities, as if he were a trustee of the property for the person for whose benefit he holds it. According to the Specific Relief Act, Section 3, 'obligation' includes every duty enforceable by law and 'trust' includes every species of constructive fiduciary ownership and 'trustee' includes every person holding constructively a fiduciary character. Illustration (g) to that section enunciates in the following manner the same rule as Section 91 of the Indian Trusts Act: 'A buys certain land with notice that B has already contracted to buy it. A is a trustee, within the meaning of this Act, for B, of the land so bought'. In Section 40 of the Transfer of Property Act it is laid down that where a third person is entitled to the benefit of an obligation arising out of contract and annexed to the ownership of immoveable property, but not amounting to an. interest therein, such obligation can be enforced against a transferee with notice thereof. The illustration is substantially the same as illustration (g) to Section 3 of the Specific Relief Act above quoted.

4. It could not be contended that obligations arising out of contract attaching to a transferee with notice as annexed to the ownership of the property transferred did not attach also to his transferor. The obligation, therefore, of which a person who has contracted to buy immoveable property has the benefit and which he may enforce against the vendor or his transferee with notice, is as appears from the provisions above referred to fiduciary and can be enforced as though the person bound was a trustee. Where, then, a vendor who has contracted to sell immoveable property and has under the contract put the prospective vendee in possession, sues the latter in ejectment, he repudiates, if the vendee is willing to complete the purchase, the fiduciary obligation arising out of the contract and annexed to the ownership of the property and seeks to treat the vendee as a trespasser. Once it is recognised that the plaintiff is violating his fiduciary obligation, it is clear that the Court cannot grant him the relief which he seeks, for it will not aid him in committing a breach of trust and his suit must fail; the defendant is no trespasser, but is in possession under the contract which the plaintiff has bound himself to carry out. The same conclusion was arrived at, without reference to the fiduciary aspect of the vendor's position, by a Full Bench of the Allahabad High Court in Begam v. Muhammad Yakub I.L.R. (1894) All. 344, F.B. The passage from Story's Equity Jurisprudence cited by Mr. Justice Banerji in that case is very apposite upon the question which we have to determine. It is as follows:-' A more general ground and that which ought to be the governing rule in cases of this sort, is that nothing is to be considered as a part performance which does not put the party into a situation which is a fraud upon him unless the agreement is fully performed. Thus, for instance, if upon a parol agreement a man is admitted into possession, he is made a trespasser and is liable to answer as a trespasser, if there be no agreement valid in law or equity. Now for the purpose of defending himself against a charge as a trespasser and against an action to account for the profits in such a case, the evidence of a parol agreement would seem to be admissible for his protection; and if admissible for such a purpose, there seems no reason why it should not be admissible throughout.' Mr. Justice Banerji observes: 'The Courts in this country being Courts both of law and equity are as much bound as the Courts of equity in England, to give effect to the principles enunciated in the passage quoted above. Upon a legitimate application of these principles not only is the purchaser who has obtained possession entitled to enforce specific performance of the contract for sale, but if an attempt be made by the seller to evict him by an action in ejectment he would have a valid answer to the action on the ground of fraud. The same ground would be available to him to entitle him to recover possession in the event of his being ousted by the seller. To hold otherwise would be to enable a seller to perpetrate a fraud on the purchaser with impunity.' A Full Bench of the Madras High Court have taken a different view. They do not appear, however, to have considered the fiduciary aspect of the vendor's position and the impropriety of permitting him to succeed against his vendee in a suit for possession. We are of opinion that a suit for specific performance is not the purchaser's only remedy and that he may in the circumstances stated in the question, if there are no other facts operating to his prejudice, successfully plead his contract of sale and the possession acquired under it. Whether in a suit where the purchaser is a defendant it would be open to a mofussil Court to decree specific performance against the plaintiff vendor we are not called upon to decide. It is hardly likely, however, that the plaintiff, faced with the prospect of the dismissal of the suit for possession, would refuse the offer of a decree allowing specific performance to the defendant on payment of the balance of his purchase money.


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