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Burjorji Dhunjibhai Contractor Vs. Jamshed K. Irani - Court Judgment

LegalCrystal Citation
SubjectProperty;Contract
CourtMumbai
Decided On
Case NumberAppeal No. 43 of 1912
Judge
Reported inAIR1914Bom288; (1913)15BOMLR405; 20Ind.Cas.469
AppellantBurjorji Dhunjibhai Contractor
RespondentJamshed K. Irani
DispositionSuit dismissed
Excerpt:
.....1906 in answer to an application that the land held by motabhai might be transferred to the vendor. the purchaser's attorneys were satisfied by the ist of september that the lands agreed to be solder were identical with those referred to in the collector's sanction and in the rent-bills; 115. 12. the only other point as to which the purchaser's attorneys were not immediately satisfied was with regard to the devolution of the interest of one mangalji ishwarbhai who had been a co-mortgagee with the defendant of the interest of motabhai. with reference to these recitals the plaintiff's attorneys required evidence of the death of mangalji and as to who were his next of kin and that his son chimanlal had power and authority to sign the deed of the 28th october 1908 and give a good..........to the fault of the vendor or of the purchaser.5. the learned judge was of opinion that under the contract time was not of the essence. if, however, that is the correct conclusion, it is difficult to see with what object clause 5 can have been inserted, which provides that if the purchaser does not pay the amount within the fixed period of two months from the 8th of july he shall have no claim to the deposit-money, and no claim under the contract, and the vendor may sell as he pleases to any one else. the law in india is contained in section 55 of the contract act under which in order to render a contract voidable on failure to perform a particular promise at or before a specified time it is necessary that an intention should be shown by the parties to make time of the essence of the.....
Judgment:

Basil Scott, Kt., C.J.

1. This is an appeal from a decree for specific performance passed by Mr. Justice Macleod at the instance of a purchaser of immoveable property.

2. The contract for sale was made on the 8th of July 1911 in the Gujarati language. The subject-matter was certain land situate at Kelva-JMahim belonging, to the defendant -which had been taken from Government on lease for 999 years under what are known as the Gujarat Rules, the lease commencing from the 1st of August 1890. The purchase-money was fixed at Rs. 81,000 which by the agreement now under consideration was to, be paid as to Rs. 80,500 at the time of signing the document of sale and as to the balance on the transfer of the land after registration. The provision as to the payment of the consideration-money appears to have been varied by another agreement of even date under which in lieu of Rs. 30,000 part of the consideration the defendant agreed to take a property belonging to the plaintiff situate at Parbhadevi in Mahim within the Island of Bombay. The agreement for sale contained three clauses which are of special importance with reference to the questions arising in this case, viz., case. 2, 5 and 7.

2. The pakka (formal) sale (conveyance) of this land is to be prepared and received within two months from this day. And at the time of signing the document of sale, Rs. 80,500 are to be paid. And as to the balance of Rs. 500, the same is to be paid on the transfer of the land (after) the document shall have been registered.

5. On payment of Rs. 81,000 by the purchaser to the vendor as mentioned in the above el. 2, the document of sale (conveyance) is to be got executed by the vendor. But should I not pay the amount within the fixed period given (herein) then I shall have no right (or claim) to Rs. 4000 paid this day to you under this bargain paper as earnest money on account of (this) sale. And if I prefer (any) claim, the same is null (and void). And after this date the vendor of this property has authority in every way to sell the same to another.

7. The boundaries (limits) of the above property are to be shown and the (boundary) marks are duly to be made (P fixed) by the vendor at his expense and are to be given to the purchaser. The grass (growing) on this land for the current monsoon has been given (sold) for Rs. 10,500. The vendor is duly to give credit for that amount to the purchaser.

3. The agreement was entered into at the beginning of the monsoon and the price realised by the monsoon grass-crop, which would be reaped probably in September, was to be credited to the purchaser against his purchase-money, presumably on the assumption that he would have come into possession by the time the crop was reaped. After the conclusion of the agreement, the matter was taken in hand on behalf of the plaintiff by Messrs. Little & Co. and on behalf of the defendant by Messrs. Bicknell Merwanji and Romer. The correspondence between these firms of solicitors during the first two months after the execution of the agreement shows that both the parties believed completion within the time stated to be essential; and requisitions were made by the plaintiff's attorneys and answered by the defendant's attorneys upon that basis until the early part of September when the plaintiff changed his attorneys. A change of front then took place on the part of his advisers and it was for the first time denied that time was of the essence of the contract. Objections which had been dropped by Messrs. Little and Co. were revived by their successors Messrs. Mulla and Mulla, notwithstanding constant pressure by the vendor's solicitors and limited extensions of time until the defendant's patience being exhausted the contract was finally cancelled. Thereupon the objections which had been persisted in were waived and a suit was commenced for specific performance.

4. The questions arising are : Whether time was originally of the essence of the contract; if not, whether it was made so subsequently ; and if it was for either reason of the essence of the contract, whether the non-completion within the time limited was due to the fault of the vendor or of the purchaser.

5. The learned Judge was of opinion that under the contract time was not of the essence. If, however, that is the correct conclusion, it is difficult to see with what object clause 5 can have been inserted, which provides that if the purchaser does not pay the amount within the fixed period of two months from the 8th of July he shall have no claim to the deposit-money, and no claim under the contract, and the vendor may sell as he pleases to any one else. The law in India is contained in Section 55 of the Contract Act under which in order to render a contract voidable on failure to perform a particular promise at or before a specified time it is necessary that an intention should be shown by the parties to make time of the essence of the contract. It is argued that clause 5 cannot be relied upon as a real indication of the intention of the parties having regard to the decisions of Lord Eldon in Seton v. Slade (1802) 7 Ves. 265, and of Lord Romilly in Parkin v. Thorold (1852) 16 Beav. 59. The contract in each of those cases contained a clause for forfeiture and re-sale on non-performance of conditions, but that clause had no bearing upon the decision in either case as the rescinding party was the purchaser and the clause in question was directed merely to declaring the rights of the vendor arising upon the default of the purchaser. Where, however, the vendor has rescinded the contract, a clause providing for forfeiture of the deposit and resale or for annulment of the contract has had full effect given to it, the principle being that a contract both at law and in equity must have the same meaning. Equity only did not enforce a contract where there was certain conduct on the part of one party or the other which would make it unjust to enforce the contract according to its terms. According to the report of Lloyd v. Collett (1793) 4 Bro. C.C. 469, Lord Eldon said: ' It is one thing to say, the time is not so essential, that in no case in which the day has, by any means been suffered to elapse, the Court would relieve against it, and decree performance. The conduct of the parties, inevitable accident etc., might induce the Court to relieve. But it is a different thing to say the appointment of a day is to have no effect at all; and that it is not in the power of the parties to contract that, if the agreement is not executed at a particular time, the parties shall be at liberty to rescind.' In Seton v. Slade (1802) 7 Ves. 265 he said ' there is no authority that has not some reference to the conduct of the party in the mean time.' The later cases of Hudson v. Temple (1860) 29 Beav. 536 and Barclay v. Messenger (1874) 43 L.J. Ch. 449 are authorities in favour of the contention that class. 5 of this contract ought to be given effect to according to its terms. I am not aware, and the Court has not been informed, where the learned Judge obtained his authority for the sweeping statement that a clause providing that upon non-completior within the fixed period the earnest-money will be forfeited and the vendor will be at liberty to re-sell has never beer considered by the Courts as making time as of the essence of the contract.

6. Time, then, being in my opinion of the essence of the con tract as it was originally framed, no waiver of that conditior has been pleaded by the plaintiff. The question, therefore, is whether the negotiations following upon the contract with reference to the making out a marketable title by the defendant disclosed any conduct on his part which would render it inequitable for him to rescind the contract contrary to the wishes of the plaintiff. From the commencement of those negotiations there had been only two points upon which the purchaser's solicitors were not immediately satisfied.

7. The first arose upon the terms of the lease which had been granted by Government to Motabhai Bhikaji under which the vendor claimed title. That lease was a lease for reclamation of certain salt marsh lands under which the lessee covenanted to completely re-claim the lands so as not to allow tide or salt-water to enter upon them and to bring them under cultivation by a certain period and to maintain the reclamation for the residue of the term, and that he would not assign or underlet the lands, until the whole should have been completely reclaimed and rendered cultivable, without the previous consent in writing of the Thana Collector.

8. The agreement for sale to the plaintiff contained the following recital :-' The purchaser has seen this land and has-received copies of the lease and of the Collector's reply and he has satisfied himself thereby'. It is common ground that the Collector's reply referred to in the recital was a letter ad dressed by the Collector of Thana to the vendor which was signed on the 13th November 1906 in answer to an application that the land held by Motabhai might be transferred to the vendor. It stated (as regards the lands the subject of this suit) that as the entry of salt-water had been stopped according to the terms of the lease and paddy grain and grass were grown thereon and the same were rendered cultivable, there was no objection to the transfer, and the applicant Motabhai might arrange with the Mamlatdar to have the transfer effected.

9. The lease itself bears an endorsement, dated the 29th of July 1908, signed by the Collector of Thana reciting the application of the vendor and that in accordance with the order of the 13th November 1906 the transfer had been effected to his name.

10. Notwithstanding these facts appearing on the title-deeds produced by the vendor, the purchaser's attorneys sent in a requisition that the permission of the Collector to the proposed argument by the lease should be obtained. The vendor's attorneys contended this was unnecessary and in answer to another requisition produced receipted bills for the Government rent or assessment up to date. The purchaser's attorneys were satisfied by the Ist of September that the lands agreed to be solder were identical with those referred to in the Collector's sanction and in the rent-bills; and as to the question of the Collector's permission to the proposed transfer by the vendor confined themselves to further communications with the Collector with the result that that officer informed them on the nth of September that he had no objection to the proposed assignment. At that time the defendant had for the convenience of the plaintiff but without prejudice extended the time for completion until the 19th of September.

11. In my opinion the purchaser was never in a position to contend that the sanction of the Collector was necessary and the attitude taken up after the change of attorneys that completion must be delayed until the Collector had certified that all conditions of the lease had been complied with had no justification in face of the proof produced of payment of rent up to date; see Bridges v. Longman (1857) 24 Beav. 27; Attorney General of Victoria v. Ettershank (1875) 6 P.C. 854; and Davenport v. The Queen (1877) 3 App. Cas. 115.

12. The only other point as to which the purchaser's attorneys were not immediately satisfied was with regard to the devolution of the interest of one Mangalji Ishwarbhai who had been a co-mortgagee with the defendant of the interest of Motabhai. Motabhai had mortgaged his interest under the lease to the defendant and three Hindus who contributed part of the mortgage-money on joint-account. The Hindus represented, as appears from the recitals in the title-deeds, the firms of Motichand Khetsey and Raochand Oojamchand. Mangalji Ishwarbhai and Hathibhai Ishwarbhai represented Motichand Khetsey, and Nagindas Lalloobhai, Raochand Oojamchand. Mangalji died in 1904 and a conveyance of the equity of redemption by the mortgagor, on the 28th of October 1908, had been taken by the defendant by Nagindas Lalloobhai as representing his firm of Raochand Oojamchand and by Chimanlal Mangalji and Hathibhai Ishwarbhai as representing the firm of Motichand Khetsey.

13. In that document and in another 'document of even date, Whereby the defendant became sole owner-of the property by buying out his co-owners, were recitals stating that Chimanlal was the only heir of Mangalji. With reference to these recitals the plaintiff's attorneys required evidence of the death of Mangalji and as to who were his next of kin and that his son Chimanlal had power and authority to sign the deed of the 28th October 1908 and give a good receipt for the consideration binding on all members of the family. The defendant's attorneys' reply on the 1st of September 1911 was that the vendor was well acquainted with the deceased and knew the recital to be correct but he could not produce any other evidence.

14. There the matter rested till the 16th of September when the plaintiff's new attorneys took up the requisition again. The defendant's attorneys adhered to their original position throughout in spite of frequent letters from the plaintiff's attorneys and finally when the latter realised that the defendant's patience was exhausted the requisition was dropped.

15. It appears to me that the attitude of the plaintiff's new attorneys was in this matter also quite unreasonable. The deeds of the 28th of October had been executed in Bombay by a constituted attorney of Chimanlal and Hathibhai who was a resident of Bombay and in the presence of a Bombay pleader. The recitals in the deeds indicated that the interest acquired ' and surrendered to the defendant by Chimanlal and Hathibhai was the interest of a firm of which one at least of the original partners Hathibhai was a party to the deeds.

16. There is nothing in the correspondence to show that inquiries in Bombay had suggested doubts as to correctness of the recitals or of the defendant's assurances. After the 1st of September 1911 the subject was not again referred to by Little and Co. as long as they acted for the purchaser. On the 5th of September they wrote that the assignment from the vendor was being prepared and when ready would be sent for approval, and on the 6th the vendor's attorneys wrote in reply, ' We take it that your client accepts our client's title'. This appears to me to be the correct conclusion, for the purchaser's attorneys had written to the Collector on the 1st September as follows:-

From your silence we gather that the Government have no objection cion the assignment from Mr. Burjorji Dhunjibhoy Contractor to our abovenamed client of the land under Survey Nos. 835, 836, 934 and 942 leased by the Secretary of State for India and referred to in the said letter of 26th July last and that sanction is not necessary. Upon that supposition our client will the 7th instant 'complete the purchase, which please note.

17. And although the Collector had replied in a non-committal manner on the 4th as follows :-

With reference to your letter No. 9037/11 of the 1st September 1911, on behalf of your client Mr. Jamshed Khodaram Irani regarding the assignment of leasehold lands in the Mahim Taluka, I have the honour to inform you that your previous applications are under enquiry and a reply will be given to you on receipt of the Mamlatdar's report. If in the meantime your client makes the assignment without the Collector's permission he does it at his own risk

18. Messrs. Little & Co. put the assignment in hand.

19. The truth seems to me to be that the plaintiff had not even on the 19th of September money to complete the contract according to its terms.

20. Having arranged to make up the price as to Rs. 30,000 by the transfer of his Parbhadevi property to the defendant, he was still in want of money and suggested on the 22nd of September that for the balance the defendant should finance him by taking a mortgage upon certain terms. There are various other indications in the correspondence that the defendant's real difficulty was in finding money to complete his contract. '

21. In my opinion the defendant was in no way to blame and was justified in putting an end to the contract under the circumstances.

22. The defendant is entitled to retain the deposit of Rs. 4000 '. see Howe v. Smith (1884) 27 Ch. D. 89 and Bishen Chand v. Radha Kishan Das I.L.R. (1897) All. 489.

23. We reverse the decree of the lower Court and dismiss the suit with costs throughout.


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