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Paulo David De Souza Vs. K.R. Daphtary - Court Judgment

LegalCrystal Citation
SubjectProperty;Contract
CourtMumbai
Decided On
Case NumberO.C.J. Suit No. 1034 of 1923
Judge
Reported inAIR1924Bom252; (1923)25BOMLR610
AppellantPaulo David De Souza
RespondentK.R. Daphtary
Excerpt:
contract - specific performance-marketable title-title free from reasonable doubt-giving time to vendors to obtain order of court for clearing title-order passed-vendee cannot repudiate contract for want of title-high court-extraordinary original civil jurisdiction-authority to trustee to sell trust property. ;the property in dispute belonged to two brothers a and l, who owned it in equal shares as tenants-in-common. on a's death, his son (plaintiff no. 1) as sole executor took out probate of his will, and under its provisions conveyed a moiety of the property to himself and plaintiff no. 3. l died next leaving a will under which he authorised his executor to sell his moiety, if necessary. defendant no. 2 administered the estate, and ceased to hold the moiety as executor but held it as a..........to the beneficiaries if a sale was to take place under a decree of the court, for at a court sale the property would hardly have realised the price offered by the first defendant. having regard to the special facts of the case, i am not prepared to say that kemp j. acted beyond his jurisdiction in making the order which he did, or that the order is otherwise invalid. i am not sure whether, when an express power of sale is given to an executor to be exercised by him when he thought it necessary, it ceases to operate when the executor on a complete administration of the estate ceases to be an executor. it was assumed throughout the argument that it does, and i have proceeded on that assumption.14. the last point urged on behalf of the first defendant was that he contracted with the.....
Judgment:

Mulla, J.

1. The question arises whether the plaintiff's have made out a marketable title to the property. The first defendant contends that they have not, and on his behalf the following points have been raised, namely,

(1) that the order does not in fact empower the second defendant to sell the moiety vested in him;

(2) that even if it does, it was obtained by underhand dealing on the part of the second defendant;

(3) that the learned Judge had no jurisdiction to make the order; and

(4) that the first defendant contracted with the plaintiffs on the footing that they were absolute owners, and the plaintiffs could not force on him a title different to that which he agreed to take.

2. I shall deal with these points in order.

3. The first point is that the order does not authorise the second defendant to sell the moiety vested in him. I think it does. The agreement was for the sale of the whole property not merely of the interests of the first and third plaintiffs and the fifth and sixth plaintiffs. What was sanctioned was the sale of the whole property. One moiety was vested in the first and the third plaintiffs and the other in the second defendant. That being so, the order empowered the second defendant to execute or join in the conveyance of the property. It was argued that 'to execute' means 'to sign'. I think that what the second defendant was empowered to do was to sell the moiety vested in him and to convey it by the deed of conveyance. This is put beyond all doubt by the second part of the order by which it is provided that the second defendant should hand over the nett sale proceeds of the half share of Lawrence De Souza to the Accountant General of Bombay. It appears from the plaintiffs-letter of October 23 that this direction did not appear in the order originally submitted to the learned Judge, but that he ordered that direction to be added in the order. If the order did not empower the second defendant to sell the moiety vested in him, the direction for handing over 'the nett sale proceeds of the half share of the said Lawrence De Souza' would be meaningless. The order is not artistically drawn, but its meaning is plain.

4. The next point taken on behalf of the first defendant was that the order was obtained by underhand dealing on the part of the second defendant, in that the petition did not even refer to the agreement for sale or mention the fact that there were minor beneficiaries. It was also said that the agreement could not have been before the learned Judge as it was not put in evidence. Now it is not correct to say that the petition does not state that there were minor beneficiaries. Paragraph 10 of the petition expressly mentions this fact. Immediately this fact was brought to the notice of counsel for the second defendant, he withdrew the charge of underhand dealing to that extent. As regards the other charge it is true that the petition does not refer specifically to the agreement, but the agreement is thrice referred to in the order, and it is impossible to believe that the order was made without the learned Judge having the agreement before him. It is true also that the agreement was not put in evidence, but it is not the practice to do so on applications of this nature. Before the order was obtained the attorneys for the plaintiffs sent a copy of the petition to the attorneys for the first defendant with their letter of October 11, 1922, and gave them notice that they would apply for the order. The first defendant did not appear before the Chamber Judge when the order was made. Such being the facts, the charge of underhand dealing ought never to have been made.

5. The third point is one of jurisdiction. The petition was presented to the Court in the exercise of its extraordinary original civil jurisdiction. It was headed 'In the matter of the Indian Trusts Act II of 1882 and in the matter of the trusts created by the will of Lawrence De Souza.' I do not think that the order was made under the Indian Trusts Act, nor was it seriously contended that it was. The only section of that Act that could possibly be referred to in this connection would be Section 34. That section provides that a trustee may apply by petition to a principal civil Court of original jurisdiction for its opinion, advice or direction on any present questions respecting the administration of the trust property. I do not think that this section enables the Court to sanction a sale of the trust property by trustees where no power of sale is given by the trust deed. I think that the order was made under the extraordinary civil jurisdiction of the Court.

6. That the High Court of Bombay hat: this jurisdiction is beyond all doubt. This jurisdiction was recognised in In re Manilal Hargovan I.L.R. (1900) 25 Bom. 353, where Sir Lawrence Jenkins sanctioned the gale of a minor's interest in Hindu joint family property. It was also recognised in In re Shirinbai Merwanji I.L.R. (1918) 43 Bom. 519 : 21 Bom L.R. 41, where Marten J. sanctioned a sale by trustees of immoveable property vested in them. But this jurisdiction is of an extremely delicate character and has to be exercised with the greatest caution. 'The principle,' as observed by Romer L.J. in In re New [1901] 2 Ch. 534, 'seems to be this-that the Court may, on an emergency, do something not authorised by the trust. It has no general power to interfere with or disregard the trust; but there are cases where the Court has gone beyond the express provisions of the trust instrument-cases of emergency, cases not foreseen or provided for by the author the trust, where the circumstances require that something should be done.' But the Court will not in the exercise of its extraordinary jurisdiction sanction an unauthorised change of investment proposed on the mere ground that it will be to the advantage of the beneficiaries : In re Tollemache. [1903] 1 Ch. 955: [1903] 1 Ch. 457.

7. These cases, it must be observed, are cases of change of investment, the principle being that the Court will not sanction an unauthorised change of investment except in cases of emergency. Kemp J. treated the case as one of emergency, and he passed the order. He had the jurisdiction to make the order, and he made it. That being so, it seems to me that the order cannot be challenged except on the ground of 'fraud or underhand dealing'. Gungapershad Sahu v. Maharani Bibi . Neither of these two elements is present in this case.

8. But it was urged for the first defendant that the originating summons in the present case could not be distinguished from a suit for specific performance, and that a Court trying such a suit was entitled, in cases of title, to determine for itself whether the title was marketable, though the question of title might have been adjudicated upon in a previous suit. On the analogy of this principle it was urged that it was competent to me to go behind the order of Kemp J., and determine whether the order was a right order to make on the facts of the case. Counsel for the first defendant also argued that the facts of the case were not such as gave jurisdiction to the Court to make the order. 1 proceed to examine these facts.

9. The said property was purchased by the two brothers in 1886, Part thereof was used by them for the business which they carried on as coach builders and the rest was let out to tenants. Clause 2 of the will of Lawrence is as follows:

I have my partnership business of coach-builders wherein my brother A.F. De Souza is my partner. The immoveable property in which the business is carried on is also partnership property. The said business has large debts which must be paid as Boon as possible. If considered neeesary by the executors, the business or property or both might be sold.

10. The first part of para 12 of the petition is as follows:

The said coach factory business has ceased to be paying owing to increase in product and use of motor curs in India.

11. Clause (b) of para 12 of the petition is as follows:

The said two eons of A.F. De Souza (first and third plaintiffs) are now getting old and want to close the conch building business and return to Goa in their native place. They are anxious to get their shares forthwith and it no steps are taken by the petitioners to help in such realization by applying to the Honourable Court for the necessary sanction for the sale, the petitioners apprehend that the two sons of A.F. De Souza will tile a suit for partition and there might be a litigation and even the present price may not be realised at a forced sale in such partition suit.

12. It was not suggested at the argument of the summons before me that the facts stated in para 12 of the petition were not correct.

13. These then were the facts before Kemp J. when he made the order. It was not as if the testator never contemplated a sale of his half share, for by Clause 2 of his will he gave an express power to his executors to sell it if they thought it necessary. Moreover, if a suit for partition were instituted by the first and third plaintiffs, it is almost certain that if all the parties had applied for an order for sale, the Court would have made the order. A sale, therefore, was inevitable, and a change of investment was bound to take place. The question before Kemp J. was whether it should be left to take place under a decree in a partition suit or whether it could be effected by an order of the Court in the exercise of its extraordinary jurisdiction. There would have been obvious injury to the beneficiaries if a sale was to take place under a decree of the Court, for at a Court sale the property would hardly have realised the price offered by the first defendant. Having regard to the special facts of the case, I am not prepared to say that Kemp J. acted beyond his jurisdiction in making the order which he did, or that the order is otherwise invalid. I am not sure whether, when an express power of sale is given to an executor to be exercised by him when he thought it necessary, it ceases to operate when the executor on a complete administration of the estate ceases to be an executor. It was assumed throughout the argument that it does, and I have proceeded on that assumption.

14. The last point urged on behalf of the first defendant was that he contracted with the plaintiffs on the footing that they were absolute owners, and that the plaintiffs could not force upon him a title different to that he agreed to take. When the summons was first argued before me, counsel for the first defendant stated that his client was quite prepared to complete the sale if only the title was marketable. The above objection to title was taken for the first time when I invited further argument on the summons on April 6. The objection raised is inconsistent with the readiness and willingness of the first defendant to complete the transaction. The first defendant, however, is entitled to take the point, and I proceed to consider it.

15. The first defendant, it may be observed, is an attorney of this Court. There is no evidence to show whether the agreement was drafted by him or by his partner who has attested it. Clause 5 of the agreement for sale provides for the execution of the conveyance by 'the vendors and all other necessary parties.' Clause 6 of the agreement provides that 'if any documents or orders of the Court are required to be obtained by the vendors for the clearance of the title or for the completion of their title to sell, the costs thereof shall be paid by the vendors alone.' It may be observed that the words 'orders of the Court' do not occur in all agreements for sale of land. They are added only when there are minors or other persons under disability. I think those words were deliberately inserted in the agreement for sale to provide for the costs of the order empowering the second defendant to sell the moiety vested in him. It so appears also from the correspondence annexed to the plaint and put in evidence by counsel for the first defendant If that be so, it cannot be said that the plaintiffs are forcing a, new contract on the first defendant or are substituting a new vendor. But even if they are, the conduct of the first defendant as disclosed by the correspondence is a complete answer to that contention.

16. It seems to be settled law that the title which the vendor must show must be a title in himself, or in those whom he has a legal or equitable right to require to join in the conveyance; he has no right to say that some other person is willing to enter into a contract, and to force the title of that other person on the purchaser : In re Bryant and Barningham's Contract (1890) 44 Ch. D. 281; In re Head's Trustees and Macdonald (1890) 45 Ch. D. 310. When a person sells property which he is neither able to convey himself nor has the power to compel a conveyance of it from any other person, the purchaser, as soon as he finds that to be the case, may say, 'I will have nothing to do with it,' and he may repudiate the contract : Forrer v. Nash (1865) 35 Beav. 167. This right of repudiation must be distinguished from the common law right of rescission, and arises out of that want of mutuality which, unless waived, is generally fatal to relief by way of specific performance. But the right must be exercised, if it is to be exercised at all, as soon as the defect is ascertained. If, after ascertaining the defect, the purchaser still treats the contract as subsisting, he does not retain the right to repudiate at any subsequent moment he may choose : Halkett v. Dudley (Earl) [1907] 1 Ch. 590. Now assuming that the first defendant was entitled, immediately he carne to know of the defect, to repudiate the contract, was such right exercised, or did he still continue to treat, the contract as in operation? The answer is furnished by the correspondents. The correspondence leaves no doubt that at the date of said order the first defendant still continued to treat the contract as subsisting. For though by his attorneys' letter of August 31, 1922, he purported to put an end to the agreement, he gave further time to the plaintiffs by his attorneys' letter of September 14, after the plaintiffs wrote to him stating that the petition was ready and that they would apply for an order immediately after they received the petition duly declared by the second defendant who was then at Karachi. The following is the material portion of the letter of September 14:

We do not agree with you that our client hag no right to put an end to the contract as he has done. Without prejudice to the aforesaid contention and oar client's right to terminate the contract as he has done, we are instructed in order to leave no ground for complaint to your clients, to give them time up to the 15th proximo to make out a complete and marketable title to the property on the distinct understanding that the said date would be of the essence of the proposal, and if by that date the title is not made out, our client will not be bound to wait any longer and will be deemed to have terminated the contract.

17. The order was made on October 13, and the plaintiffs informed the first defendant about it, and asked for a draft conveyance. On October 17, the first defendant's attorneys wrote to the plaintiffs' attorneys requesting information on certain points, namely, under what section of the Indian Trusts Act the order was made, and whether certain letters of theirs were brought to the notice of the Court. The plaintiffs' attorneys replied stating that the order was made in the exercise of the extraordinary jurisdiction of the Court. The first defendant's attorneys then enquired whether any cases in support of the application were brought to the notice of the learned Judge who made the order. The plaintiffs replied stating that the order having been made, the first defendant was bound to complete and there the correspondence ended. It is clear that the enquiry which the first defendant made from time to time would have been useless if the contract had been effectually repudiated : Halkett v. Dudley (Earl). I, therefore, hold that the first defendant is now precluded from setting up the original want of mutuality in the contract.

18. All objections to title raised by the first defendant fail. The title, I hold, is marketable and it is free from reasonable doubt.

19. The first question is answered in the affirmative. Defendant No. 1 to pay plaintiffs' costs.


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