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Krishnaji Gopinath Rele Vs. Ramchandra Kashinath Mastakar - Court Judgment

LegalCrystal Citation
SubjectContract
CourtMumbai
Decided On
Case NumberO.C.J. Suit No. 943 of 1930 (O.S.)
Judge
Reported in(1931)33BOMLR1377
AppellantKrishnaji Gopinath Rele
RespondentRamchandra Kashinath Mastakar
Excerpt:
contract for sale-sale of land-conditions for sale-marketable title-misrepresentation as to tenure of land-specific relief act (i of 1877), section 25(2).;the plaintiff contracted to sell ma land, a large portion of which was represented to be government leasehold in perpetuity renewable every fifty years, but which turned out to be 'newly assessed land':-;held, that the misdesoription of the land sold entitled the vendee to rescind the contract, as he could not be considered to have purchased the thing which was really the subject of the sale:;flight v. booth (1834) 1 bing. n.c. 370, in re contract between fawcett and holmes (1889) 42 ch.d. 150, and puckelt and smith's contract, in re [1902] 2 ch. 258, followed.;a condition in an agreement of sale that the vendor should make out a title..........in the case of leasehold land there is a greater certainty of the tenure. in the text-books on land tenure these two tenures are treated as separate tenures amongst the existing tenures in the city of bombay, and judging from the correspondence and the answers to the requisitions the parties themselves treated the same as being separate. it is, therefore, for the plaintiff to show that a right of permanent occupancy of land is the same or substantially the same as a lease of land in perpetuity, and he has not done so. if a person contracts to purchase one thing and does not get that thing or substantially the same thing, he can, if he chooses, refuse to accept another thing without being bound to give any reason or explanation for his refusal. if, therefore, a person agreed to.....
Judgment:

Wadia, J.

1. This is an originating summons taken out by the plaintiff for determination of certain questions arising under a contract for sale dated January 25, 1930, under which he agreed to sell his property situate at Falkland Road, Bombay, to the defendant for the sum of Rs. 37,5C0. There are three questions on the originating summons, the principal one being whether the plaintiff as vendor has made out a marketable title to the property. The summons came on for hearing before me in Chambers on July 7, 1930, when the defendant contended that the questions could not be decided on the summons, but should be raised in a regular suit. The summons was, however, adjourned into Court for hearing and final disposal. The property contains by admeasurement-1555 square yards together with the building standing thereon. Under Clause 5 of the agreement the vendor agreed to make out a marketable title to the property ' to the satisfaction of the purchaser's attorneys', and to clear all defects in the title. Under Clause 5 (a) the vendor declared that the tenure of 1260 square yards of the land was Government leasehold tenure in perpetuity renewable at the expiration of every fifty years, and the remaining portion of the land admeasuring about 295 square yards was of freehold tenure. Under Clause 6 the purchaser had the option to rescind the agreement if inter alia the title was not marketable or if the tenure of the land agreed to be sold was not the tenure described in Clause 5 (a). The sale was to be completed within three months from the date of the agreement.

2. On January 28, 1930, the plaintiff sent the title-deeds to the defendant's attorneys, and correspondence ensued almost forthwith regarding various points in the title between the respective attorneys of the parties. The defendant's attorneys sent the first set of requisitions on title on February 15,1930, and a second set on March 6, 1930. In the correspondence and on the answers to the requisitions the plaintiff contended that he had made out a marketable title to the property, whilst the defendant contended that he had not. On April 25, 1930, which was the last day for the completion of sale, the defendant wrote through his attorneys to the plaintiff treating the sale as having fallen through, and the plaintiff took out this originating summons on April 30,1930, for the determination of the questions mentioned therein. Counsel for the defendant applied to the Court to have another question added to the originating summons relating to the return of the earnest money. The application was made at the commencement, and no objection was raised at that time. The question itself was, however, formulated just when the defendant's counsel began his closing address, as follows :-

Whether the plaintiff is bound to return to the defendant the sum of Rs. 3,000 paid as earnest and in parb payment of the purchase price with interest thereon.

3. Objection was then raised on the ground that the evidence was closed, but as the application had been made at the commencement, and the determination of the question had nothing to do with the evidence led by either party, I allowed the question to be added to the summons.

4. The defendant contends on various grounds that the plaintiff has not made out a marketable title to the property agreed to be sold to him. Under Clause 5 of the agreement the vendor had to make out such a title ' to the satisfaction of the purchaser's attorneys.' The legal effect of this stipulation has been considered before in English and Indian cases. All these decisions were discussed by Mr. Justice Davar in Treacher & Go. Ltd. v. Mahomedally Adamji Peerbhoy I.L.R. (1910) Bom. 110 12 Bom. L.R. 597 and he came to the conclusion that in view of such a stipulation it was incumbent upon the vendor to establish either that the solicitors approved of the title or that there was such a title tendered as made it unreasonable not to approve of it. It has been held that the words are not merely surplus age in the sense that they express only what is implied by the law, but that they import an additional term in the agreement. The term, however, does not give the solicitor arbitrary and absolute power to reject a title however good it may be. He is the sole judge, provided he acts 'reasonably and bona fide'. The question of bona fides arises very rarely, if at all, but who is to determine whether the solicitor acted 'reasonably', a word which has never been exactly defined, when disputes arise between the vendor and purchaser I do not think that it can be said that the vendor by such a stipulation entirely surrenders his right to assert and maintain that he has made out a marketable title to the judgment of the purchaser's solicitor. When, however, one does assert that right, the Court has to determine whether he has or has not acted reasonably. For the purpose of such determination the Court has to examine the title tendered to the solicitor to consider whether it was such as would induce the Court to hold that its rejection was reasonable or unreasonable. The Court must then examine the grounds on which the solicitor rejects the title and consider whether on the whole it would also have come to the same conclusion, even though the solicitor may have acted in respect of one or the other grounds of rejection with greater caution than the circumstances of the case reasonably required. In this connection I would mention the case of Pyrke v. Waddingham (1882) 10 Hare 1 where Turner V.C. at p. 10 says in effect that a doubtful title which a purchaser will not be compelled to accept is not only a title upon which the Court entertains doubts, but includes also a title which, although the Court has a favourable opinion of it, may yet reasonably and fairly be a question for other competent persons to decide. It follows, therefore, that the Court cannot lightly disregard the judgment of a solicitor on the question whether the title is marketable or not, but at the same time when disputes arise, I do not think that the purchaser is entitled to maintain that his solicitor's judgment is the last word on the subject. It comes ultimately to this that the Court must determine whether the title is or is not marketable, having due regard to the grounds of rejection put forward by the solicitor.

5. Coming to the main grounds of contention, the defendant contends in the first place that the plaintiff has failed to give him the tenure in respect of the larger portion of the property agreed to be sold to him which the plaintiff agreed to give, and that he is, therefore, entitled to rescind the contract under Clause 6 of the agreement. As I have stated before, the tenure of 1260 square yards of the land is described in Clause 5(a) of the agreement as Government leasehold tenure in perpetuity renewable at the expiration of every fifty years with the additional statement, ('the same having been renewed about a year ago'). The agreement was executed on January 25, 1930, and the title deeds were sent to the purchaser's attorneys on January 28, 1930. On January 29, the plaintiff's attorneys further sent an extract from the survey register for the town and island of Bombay. On investigating the title the defendant's attorneys found that the tenure of 1260 square yards was the tenure of 'newly assessed land.' The title in dispute commences with a document giving the terms of the sale by the Collector dated August 28, 1878. It gave to the purchaser a ' right of permanent occupancy.' The assessment was to be charged at nine pies per square yard per annum, and it was to be subject to revision of increased or decreased assessment every fifty years. On February 3, 1930, the defendant's attorneys by their letter drew the attention of the plaintiff's attorneys to the difference in the tenure. The plaintiff contends that there is no difference between the two tenures or rather that they are substantially the same. Unfortunately there is no decided case in which the incidents of the tenure 'newly assessed' land have been considered before. Newly assessed lands are really government lands which were found in the course of the city survey to have been encroached upon by private individuals. The tenure has its origin in the City Land Revenue Act (Bom. II of 1876), under which the encroached lands were newly assessed by the Collector and the encroachments thereby legalised. Under that Act the Collector has certain powers of recovering land revenue in arrears by levying attachment and sale of the occupant's other property, and if necessary even by his arrest and detention. In the case of leasehold lands, however, they are always held under regular deeds or leases, the terms and conditions of which determine the relations between the Government and the lessee. Leaseholds are held for varying terms of years or in perpetuity, and are also held on varying conditions which at times may be very favourable to the lessee. Leaseholds for long periods of years or in perpetuity are renewed at the expiry of the period of guarantee at revised rents, the revision of which may also be according to a condition that may have been laid down in the lease, It must, therefore, be stated that in the case of leasehold land there is a greater certainty of the tenure. In the text-books on land tenure these two tenures are treated as separate tenures amongst the existing tenures in the city of Bombay, and judging from the correspondence and the answers to the requisitions the parties themselves treated the same as being separate. It is, therefore, for the plaintiff to show that a right of permanent occupancy of land is the same or substantially the same as a lease of land in perpetuity, and he has not done so. If a person contracts to purchase one thing and does not get that thing or substantially the same thing, he can, if he chooses, refuse to accept another thing without being bound to give any reason or explanation for his refusal. If, therefore, a person agreed to purchase a property of one tenure, he cannot be compelled to purchase another of which the tenure or a material part of it is different, unless, as I have stated, he is able to show to the Court that the two are substantially the same. In Ayles v. Gox (1852) 16 Beav. 23 a person contracted to buy copyhold, and it was held that he could not be compelled to take the estate, even if a part of it turned out to be freehold. In that case there was a condition in the contract that errors in description should not vitiate the sale, but it was nevertheless held that the condition did not alter the legal position.

6. In their letter of February 3, 1930, the defendant's attorneys stated that it was represented to them and to the defendant that 1260 square yards were of Government leasehold in perpetuity renewable every fifty years, whereas the tenure was really newly assessed. The plaintiff's attorneys replied on February 10, 1930, that there was no misrepresentation, and that the defendant had pointed out at the time of execution of the agreement that the land was held from Government in perpetuity, assessment being renewable every fifty years. The defendant's attorneys replied saying that the plaintiff represented that the tenure was leasehold in perpetuity, but did not represent that the land revenue was subject to an increase every fifty years nor that the prior rent was increased about a year ago, i.e., in August 1928. The defendant's attorneys also stated that but for the representation made to the defendant about the tenure he would not have entered into the agreement, and that the defendant even asked the plaintiff for the lease from the Government which the plaintiff promised to send along with the other title-deeds. It is significant that all these statements have at no stage been denied in correspondence, but in para. 4 of his affidavit in rejoinder on the summons the plaintiff says that he informed the defendant about the tenure being newly assessed and about the rent having been increased from Rs. 59-1-0 per annum for ground to Rs. 819. He did not say so in his evidence. On the contrary he stated that the statement in para. 4 of his affidavit was not correct. In his examination-in-chief he stated that he had conversation with Ramrao, the managing clerk of the defendant's attorneys, on the day the agreement was executed, but in his cross-examination he stated he had no conversation with any one, and certainly none with the defendant. All previous negotiations are always merged in the final agreement, but even in deposing to the previous negotiations the plaintiff has contradicted himself several times. He had two brokers on his side. Two drafts were prepared, the second of which has been signed by him. In his examination-in-chief he stated that he only read the draft (Exhibit Q) in portions, but in cross-examination he stated that he approved of it and signed it. The plaintiff understands English, and therefore there is no question of the draft being explained or interpreted to him. He further stated that on January 25, 1930, he gave three Collector's bills, two old and one recent to Ramrao, but even in that he has contradicted himself. I do not believe him when he says that he gave the Collector's bills on January 25, 1980, and I believe Ramrao when he says that they were not so given to him, for if they were, the schedule would have been different and the term 'land newly assessed' which is mentioned on the very face of the bills would have correctly appeared in the final agreement that was executed on January 25, 1930. A misrepresentation need not necessarily be a fraudulent representation. Under Section 18(3) of the Indian Contract Act misrepresentation means and includes 'causing however innocently a party to an agreement to make a mistake as to the substance of the thing which is the subject of the agreement'. The plaintiff did not represent at the time of the agreement what the correct tenure was, nor did he state that only recently, i.e., in August 1928, there had been an increase in the ground rent to nearly fifteen times as much as before. Had he done so the defendant would not have entered into the agreement as he says so himself in the correspondence. It appears to me that either through a mistake or inadvertently the plaintiff misrepresented the tenure as described in Clause 5 (a). His counsel, however, argued that there was no misrepresentation, but at the most it can be stated that it was a misdescription of the tenure, and that too not a material one. In my opinion the misdescription is of importance and comes within the rule laid down by Tindal C. J. in Flight v. Booth (1834) 1 Bing. N.C. 370 The passage runs as follows (p. 377):-.we think it is, at all events, a safe rule to adopt, that where the misdescription, although not proceeding from fraud, is in a material and substantial point, so far affecting the subject-matter of the contract that it may reasonably be supposed, that, but for such misdescription, the purchaser might never have entered into the contract at all, in such case the contract is avoided altogether, and the purchaser is not bound to resort to the clause of compensation, Under such a state of facts, the purchaser may be considered as not having purchased the thing which was really the subject of the sale....

7. This case has been followed in In re Contract between Fawcett and Holmes (1889) 42 Ch.D. 150 and in Puokett and Smith's Contract, In re [1902] 2 Ch. 258 The passage I have just quoted from the judgment of Tindal 0. J. has been adopted by Fry on Specific Performance, 6th Edn., at p. 576. The purchaser is, therefore, under Clause 6 of the agreement, entitled to rescind the contract, as in respect of the tenure of the property he cannot be considered to have purchased the thing which is really the subject of the sale.

8. [His Lordship, after dealing with matters not material to this report, concluded:] Under the agreement the vendor is bound to make out a marketable title to the property. Under Section 25(2) of the Specific Relief Act a contract for the sale of property cannot be specifically enforced in favour of the vendor who cannot give the purchaser a title free from reasonable doubt. It has been held by our appeal Court in Haji Oosman v. Haroon Saleh Mahomed I.L.R. (1922) Bom. 369 24 Bom. L.R. 978 that the word ' marketable ' and the expression 'free from reasonable doubt' really mean one and the same thing. The Court does not force a doubtful title upon a purchaser. It is of course not easy to explain what amount of doubt upon a point there must be to induce a Court to refuse specific performance, for the question whether the doubt is a reasonable one must be determined on the facts of each case as they exist at the time when the suit is brought. But as Lord Esher M. R. remarked in Nottingham Patent Brick and Tile Company v. Butler (1886) 16 Q.R.D. 778 if a title depends upon evidence of matters of fact, it is a title which is capable of being disputed, and the purchaser would be buying a law-suit, and a Court of equity would not enforce the contract, There must be, however, as Alderson B. remarked in Cattell v. Corrall (1840) 4 Y. & C. Ex. 228 a reasonable and decent probability of litigation. That judgment has been followed by our appeal Court in Haji Oosman's case referred to before. Mr. Justice Beaman in Ahmedbhoy Habibbhoy v. Sir Dinshaw M. Petit (1909) 11 Bom. L.R. 345 held that no title by the head of a joint Hindu family or a family in which whether in fact joint or any claims are put forward by the members that property is ancestral can be forced upon an unwilling purchaser unless all the coparceners agreed. It was, however, argued that none of the sons of the vendor nor any of the sons of the vendor's brothers had put forward any claim. They may not have put forward any claim till now, but if there is a reasonable probability that forcing a title upon an unwilling purchaser will involve him in litigation, the Court cannot enforce the contract, as I have stated before. It is laid down in Tottempudi Venkataratnam v. Tottempudi Sheshamma I.L.R. (1903) Mad. 228 that the fact that one or the other of the testator's sons does not object to the will does not make the property disposed of by that will self-acquired. I cannot, therefore, say that the purchaser's attorneys have acted arbitrarily when they stated in correspondence as well as in their requisitions that the title was not marketable on this ground also, and I uphold the purchaser's objection.

9. I would, therefore, answer question No. 1 in the summons in the negative, No. 2 in the negative, and on No. 4 I hold that the defendant is entitled to a return of the sum of Rs. 3,000, with interest on Rs. 2,000 from January 25, 1930, and on Rs. 1,000 from January 80, 1930, at six per cent, per annum till payment.


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