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Karsandas Kalidas Ghia Vs. Chhotalal Motichand - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtMumbai
Decided On
Case NumberO.C.J. No. 18 of 1923 and Suit No. 3152 of 1920
Judge
Reported inAIR1924Bom119; (1923)25BOMLR1037
AppellantKarsandas Kalidas Ghia
RespondentChhotalal Motichand
DispositionAppeal dismissed
Excerpt:
specific relief act (i of 1877), section 38 - specific performance-discretion of court -abandonment of claim for specific performance-claim for return of earnest money and damages-when can the claim be allowed-civil procedure code (act v of 1908), order vii, rule 7, order xxiii, rule 1-notice to complete a sale-seasonable time-time of the essence of the contract.; on october 2, 1919, the defendant agreed to sell his house to the plaintiff, received earnest money, and undertook to deduce a marketable title and complete the sale in six months' time. a condition of the contract was that ' the vendor and all other persons whom the purchaser or his attorneys shall consider to be necessary parties ' were to execute the conveyance. as the property continued to appreciate id value, the defendant.....fawcett, j.1. the facts in this case are sufficiently detailed in the judgment of the court below and that of my learned brother. i proceed to consider the contentions urged before us in this appeal.2. i first take up the contention of the respondent's counsel, mr. lalji, that in any case the contract could not be enforced for want of mutuality. this is based on the ground that two of the defendant's brothers were minors at the time of the contract and on the ruling of the privy council in mir sarwarjan v. fakhrud-din mahomed chowdhur : 14 bom. l.r. 5 in my opinion this plea must be rejected. first of all the objection of want of mutuality has never before been raised by the plaintiff and no issue was framed upon that point. in fact it amounts to an inconsistent plea which would require.....
Judgment:

Fawcett, J.

1. The facts in this case are sufficiently detailed in the judgment of the Court below and that of my learned brother. I proceed to consider the contentions urged before us in this appeal.

2. I first take up the contention of the respondent's counsel, Mr. Lalji, that in any case the contract could not be enforced for want of mutuality. This is based on the ground that two of the defendant's brothers were minors at the time of the contract and on the ruling of the Privy Council in Mir Sarwarjan v. Fakhrud-din Mahomed Chowdhur : 14 Bom. L.R. 5 In my opinion this plea must be rejected. First of all the objection of want of mutuality has never before been raised by the plaintiff and no issue was framed upon that point. In fact it amounts to an inconsistent plea which would require an amendment of plaint (Order VI, Rule 7, Civil Procedure Code). No such amendment has been asked for. Secondly, the plaintiff has by his conduct precluded him-self from raising this point, especially in view of his consent to the application to the Court to sanction the sale on behalf of the minors: see Asbury, Vol. XXVII, Article 11(2), p. 12; and Fry on Specific Performance, Article 468, p. 224. The case, in my opinion, falls under Section 115 of the Indian Evidence Act. Thirdly, the case of Mir Sarwarjan v. Fakhruddin Mahomed Chowdhuri was quite different from the present case. In that case the contract for sale was by, or on behalf of, the minor alone, whereas in the present case it is by a person, who is the manager of a joint Hindu family which included minor brothers. The difficulty about the minors in such a case is in Bombay got over by an appointment of a guardian and sanction to the proposed alienation in accordance with the ruling in In re Manilal Hurgovanw. The authority given by the Court in such a case is accepted by conveyances in Bombay as sufficient and no question was raised by the plaintiff's attorneys as to the Court's authority to pass the proposed order, and apparently there was so contest regarding the matter at the trial: cf. the finding of the lower Court on issue No. 10. Mr. Lalji also cited Baluswami Aiyar v. Lakshmana Aiyar I.L.R. (1921) 44 Mad. 605 but the applicability of that ruling depends on facts which have not been proved to exist in this case. The remark in the lower Court's judgment in the last line of p. 54, part I, of the Paper Book, shows that the defendant's power to convey alone was not even discussed before it. And supposing he had no such power, the contract could still have been performed in the manner by which defend ant put himself in a position to fulfil it in March 192 L.

3. The two main issues raised by the appellant's counsel, Mr. Munshi, are (1) whether the defendant committed breach of the contract, and (2) whether the plaintiff kept the contract alive, so that he was bound by the defendant's offer to perform it on April 1, 1921. His main contention is that time was not of the essence of the contract under the original contract, and that though the plaintiff subsequently made time of the essence of the contract by his letter of June 28, 1920, this was waived by his conduct in continuing the negotiations; that the contract being kept open, the other side could take advantage of this to offer to perform it; that the filing of the suit for specific per-romance implied that the contract was still subsisting at the date of the suit; that the plaintiff by dropping his claim for specific performance refused to perform the contract though defendant was ready and willing to perform his part of the contract; that the result was that he could not maintain his claim to damages and there was also a repudiation of the contract, entitling the defendant to forfeit the deposit: and that accordingly the plaintiff's suit should have been dismissed with costs. He relied mainly upon two cases, namely, Frost v. Knight (1872) L.R. 7 Ex. 111 and Hipgrave v. Case (1885) 28 Ch. D. 356. But before considering these cases and the other contention put forward, it is desirable to note exactly what it was that the learned Judge decided. He holds (1) there was a breach of the contract on the part of the defendant (pp. 57, 59 and 60 of the Paper Book) ; (2) the plaintiff did not keep the contract alive, as contended by the defiance (pp. 57, 60, 61); (3) the plaintiff is entitled to the alternative relief of damages (pp. 57, 58, 59); and (4) in any case the Court, in the exercise of its discretion, would not decree specific performance (p. 59).

4. In regard to the first point the judgment has not dealt as fully or definitely as it might have with the question: What was the time for performance and what was the actual date on which the defendant committed a breach of the contract This is an important question, because it is not sufficient to show that the defendant was not able to perform his part of the contract within the period of seven days mentioned in the letter of June 28, 1923, unless it is also shown that the time for performance of the contract had then expired. The original time fixed for the completion of the conveyance expired in April 1920. But, as time was not of the essence of the contract, it must be taken that no time for the performance was specified within the meaning of Section 46 of the Indian Contract Act: that is, the plaintiff's engagement bad to be performed within a reasonable time. A subsidiary question arises as to whether the plaintiff was justified in making time the essence of the contract as he did in the letter of June 28, 1920, and whether the time so specified of seven days was a reasonable time to allow. Unfortunately no issues were raised upon this point apparently because of the undesirable practice of raising an issue on every statement of the plaint which is contested, without confining the issues to the main question for decision in accordance with the observations of Scott C.J. in Wet End Watch Company v. Berna Watch Company I.L.R. (1910) 35 Bom. 425 : 13 Bom. L.R. 212. The point is not therefore discussed as a particular issue in the lower Court's judgment. However at p. 60 the learned Judge says:

Id the first place when the Court refused to sanction the sale in June 1920 the defendant was unable to perform the contract. There was a breach on his part.

5. Again at p. 61 the learned Judge says :

Further it seems to me that in view of what happened in June 1020 it was perfectly open to the plaintiff to make time of the essence of the contract and to give to the defendant a final opportunity to fulfils the contract. When he could novae that the plaintiff was entitled to sue on the footing of a breach by the defendants.

6. And at p. 57 of the Paper Book the learned Judge says :

It is clear from the correspondences between the parties that the plaintiff insisted upon making time of the essence of the contract in June as I think at that stage he was entitled to do and that the defendant treated the contract as at an end.

7. I take it therefore that the lower Court found that the plaintiff was justified in making time of the essence of the contract, as was done by the letter of June 28 and that the period of seven days fixed for completion of the sale in that letter was a reasonable one, so that on the defendant's failure to perform the contract within that period there was breach on his part. The learned Judge has also apparently held that there was no waiver on the part of the plaintiff, although this point is not discussed in detail. At p. 58 he says that the plaintiff did not by his conduct definitely commit himself so as to be precluded from claiming either specific performance or the alternative relief of damages, and at p. 61, in connection with the passage already quoted as to the plaintiff being justified in making time of the essence of the contract, no reference is made to any subsequent waiver by the plaintiff of his fiction.

8. The first question, then, is whether the lower Court has erred in holding that there was a breach on the part of the defendant in failing to complete his part of the contract by July 6, 1920, when the period of seven days specified in the letter of Jane 28, 1928, expired. Mr. Munshi's contention on this part of his case was mainly based on the assumption that the defendant could convey a good title as the manager of the joint Hindu family consisting of himself and his brothers, and that his offer to convey the property on that basis, which was made in his attorneys' letter of July 6, 1920, was therefore a good one. As already remarked, however, the lower Court's judgment shows that no attempt was made at the hearing to justify the position that defendant alone was competent to convey a good title. And, in my opinion, such a position is entirely opposed to condition 4 of the contract, under which 'the vendor and all other persons whom the purchaser or his attorneys shall consider to be necessary parties' were to execute the conveyance. This leaves it to the plaintiff to say who were necessary parties, and he could properly insist on defendant's adult brothers and a duly constituted guardian of the minor brothers joining in the conveyance. Condition was obviously intended to protect the plaintiff from having to accept a title, which, though outwardly good, would render him liable to litigation ; and a conveyance by a manager of a joint Hindu family, which contains minor members, is just the sort of transaction which would lead to such litigation. In this particular case defendant's brothers objected to the sale in February 1923 and warned plaintiff that if he proceeded with this purchase he would do so at his own risk (Paper Book, Part I, p 18, Part III, p. 28). Plaintiff was, therefore, clearly justified in requiring that all the brothers should join in the conveyance, and this was recognised by the defendant, who took steps accordingly (of. Paper Book, Part I, pp. 81, 35, 36).

9. Though the learned Judge has held on the second issue that it is not proved that there was any collusion between defendant and his adult brother, Narotam, the circumstances of the case strongly suggest this. I also think that there is substantial ground for the allegation in para 9 of the plaint that defendant's petition to the Court was intentionally made in a way that would almost necessarily lead to its rejection, as was at the time pointed out in plaintiff's attorneys' letter of April 16, 1920, (Paper Book, Part I, p. 22), though the learned Judge has on issue No. 4 held it not proved that the petition was a dishonest one. The correspondence, to my mind, contains conclusive evidence of defendant's desire to delay the completion of the ' sale owing to the considerable rise in the market value of the ' property since the date of the contract; and as remarked by the learned Judge (Paper Book, Part I, p. 55) 'the defendant was anxious to sell to some body else if possible.' The circumstances, in my opinion, clearly prove that there was deliberate delay on the part of the defendant, who was not really willing to complete. No doubt the rise in the value of the property would make it difficult for him to obtain the Court's sanction to the sale on behalf of his minor brothers, but this was in accordance with defendant's own desires. This position continued up to the date of the suit, and it was only when the market subsequently fell that defendant's wishes and ability to complete the sale again corresponded, but in an opposite direction to the former position. The facts seem to me perfectly clear, and though there is no actual evidence on record as to the market fluctuations of immoveable property in Bombay in 1920-22, it would be absurd for the Court to shut its eyes to what is plain to it from the different positions taken up by the parties at different times and its knowledge of a notorious fact from (inter alias) litigation that has come up before this High Court on its Original Side: of. Cooper v. General Accident, Fire, and Life Assurance Corporation, Limited (1922) 39 T.L.R. 113, per Viscount Cave. I entirely concur with the view taken by the Judge below that 'when the Court refused to sanction the sale in June 1920 the defendant was unable to perform the contract' (p, 60). I also concur with his finding (p 57) that the plaintiff was entitled to make time of the essence of the contract as he did by his letter of June 28, 1920. There had been a previous warning to defendant in his letter of April 6, 1920 (Paper Book, Part III, p 34), which led to the application to the Court to sanction the sale ; and when that application was refused, the inability of defendant to give plaintiff a good title under conditions 4 and 5 of the contract became definitely ascertained. There was a failure on his part to make out a title contracted for and obtain the concurrence of other parties, as required by condition 4 of the contract. This was a breach going to the root of the contract, and the correspondence and other circumstances clearly show that the defendant up to the date of the suit had no intention of fulfilling his part of the contract.

10. That being so, I think the period of seven days allowed by the notice of June 28, 1920, was a reasonable one (of. Fry on Specific Performance, Article 1095, at p. 512). It did not really matter whether seven days, or seventy days, were fixed : the defendant would not have got himself into a position to fulfil his contract (as he did in 1921), even if the period fixed had covered the four months prior to the institution of the suit, or indeed any period before the time when the market turned in his favour. The case is quite different to the ordinary one, where there are difficulties is the way of clearing the title, which require time for their removal, and where the notice gives insufficient time for that purpose. The general rule is that when a substantial defect is ascertained, the purchaser must exercise his right of repudiation or of seeking the aid of the Court for specific performance without undue delay (of. Halsbury, Vol. XXV, Article 692, at p. 404, and Fry on Specific Performance, Article 1100, at p. 514). Also, as ruled in Stickney v. Keeble [1915] A.C. 386, the prior delay of defendant must be taken into consideration in determining the reasonableness of the time fixed by the notice. The case was, therefore, one in which a short period for completion of the contract might reasonably be fixed. To use the language of Section 48 of the Indian Contract Act, defendant by failing to get the Court's sanction by July 5 had failed to perform his engagement within a reasonable time. I hold accordingly that there was a breach of contract by defendant on July 5, 1920,

11. But it is said that there was waiver by plaintiff of his right to act on such a breach by his continuing in negotiation as to the title. In support of this reliance is placed on the letter of plaintiff's attorneys, dated July 6, 1920 (Paper Book, Part III, p. 41) in which they ask defendant's attorneys to give them inspection of a supposed agreement between defendant and one Lukmanji regarding the assignment of the Improvement Trust lease to defendant, and of the letters of administration of his father's estate that had been granted to defendant. It is not clear that these documents where really wanted for the investigation of defendant's title, and as there is no evidence on the point, it is a matter of speculation why their inspection was desired. But assuming that it was for the purpose of such an investigation, it is to be remarked that the request does not appear to have been complied with, and plaintiff's attorney's letters of July 22 and 24, 1920, (Paper Book, Part III, pp. 46 and 47) make it quite clear that plaintiff would not accept any other title than one passed by a conveyance in which defendant's brothers joined. Also the plaintiff's attorneys' second letter of July 6, 1920 (Paper Book, Part III, p. 41) implies that plaintiff was not willing to accept the conveyance by defendant alone, which was offered in the letter of defendant's attorneys of the same date. A suit had already been threatened, and the defendant's letter of August 3, 1920 (Paper Book Part III, p 47) shows that his attorneys were aware that the idea had not been dropped. No other evidence of a desire, or effort, on the part of the plaintiff to continue the negotiations is adduced, except the third para of plaintiff's letter of July 14, 1920, in which he asks if defendant is prepared to comply with his requirement that the brothers should join in the conveyance. That merely amounts to a statement that defendant could not comply, for it is coupled with a reference to the Court's refusal to sanction the sale; and it was met by a refusal to discuss the matter, as plaintiff was understood to have filed a suit. In these circumstances, it is, in my opinion, absurd to suggest that there was any waiver by plaintiff'. There was no 'course of conduct inconsistent with the intention of insisting on such an objection' (Fry on Specific Performance, Article 1120, at p. 520). It is quite clear that plaintiff' and his advisers were all along determined to sue, for he really wanted at that time to buy the property, probably in order to take advantage of the rising market (of. the statement in his letter of April 16, 1920, that he had received a good offer for the property, Paper Book, Part I, p. 22).

12. I, therefore, hold that there was no waiver on the part of the plaintiff as alleged. It follows that ho is entitled to recover the damages allowed by the lower Court (viz., the costs of and incidental to the investigation of title up to the date of suit) unless Mr. Munshi's second contention is correct.

13. This contention is that in any case plaintiff's abandonment of his claim to specific performance at the hearing entitles the defendant (a) to forfeit the plaintiff's deposit and (b) to ask the Court to dismiss his suit with costs. Mr. Munshi submitted an elaborate argument on this point, and in regard to the first part of it I concur with him that the plaintiff treated the contract as subsisting up to the date of the suit. It was in fact necessary for him to do so, if ho hoped to get a decree for specific performance, for if the plaintiff repudiates his obligation under this contract, this debars him from claiming specific performance of the contract by the other party : see Halsbury, Vol. XXVII Art. 101, p. 59. But Mr. Munshi relies on the principle laid down in Frost v. Knight (1872) L.R. 7 Ex 111 that, if the promises keeps the contract alive for his own purpose, he also keeps it alive for the benefit of his opponent; 'he remains subject to all his own obligations and liabilities under it, and enables the other party not only to complete the contract, if so advised, notwithstanding his previous repudiation of it, but also to take advantage of any supervening circumstances which would justify him in declining to complete it.'

14. I take it that it is in this sense that the lower Court found on issue No. 8 that the plaintiff did not keep the contract alive down to the date of hearing (see Paper Book, pp. 60, 61), i.e., he did not keep it alive so as to enable the provisory to take advantage of this in the way laid down in that case. As I have already said I do not think it can be held that the plaintiff' did not treat the contract as still subsisting, but in my opinion the contention that therefore the plaintiff could not abandon the claim to specific performance except under penalty of dismissal of his suit with costs and to forfeiture of his deposit is incorrect for the following reasons.

(1) This contention overlooks the fact that no one has an absolute right to a decree for specific performance, but as laid down in Sections 12 and 22 of the Specific Belief Act the grant or refusal of this relief is purely discretionary with the Court. I think that the right held to be kept open under the doctrine of Frost v. Knight is a purely legal right implied in the 'continuance' of the contract, which is referred to in the last sentence of Section 89 of the Indian Contract Act, It seems to me doubtful whether such a right exists in a case like this falling under the provisions of Section 54 of the Indian Contract Act, which expressly enacts that the provisory cannot, after a breach on his part, 'claim the performance of the reciprocal promise' (of. Sabapathy v. Vanmahalingam I.L.R. (1914) Mad 959, 969). But assuming that it does the fact remains that, after a suit has been filed for specific performance, the question whether a decree should be granted or refused is one purely for the Court in the exercise of its jurisdiction on judicial principles, and the domain of strict law is superseded by the domain of discretion and equity. I concur with the view taken in Gobinda Chandra Chuckerbutty v. Nanda Kumar Das (1914) 18 C.W.N. 689 that in exercising a discretion under Section 22 of the Specific Relief Act, the Courts are not tied down by the rules laid down in the Indian Contract Act and by those alone.

(2)In exercising its discretion, the Court can take into consideration the plaintiff's abandonment of his claim to specific performance, a position he is entitled to take up under Order XXIII, rule 1, of the Civil Procedure Code. A somewhat similar point arose in Bombay Cycle & Motor Agency Ltd. v. Rustomji Dossabhai N. Wadia (1921) O.C.J. 7 of 1921 decided by Maclecd. In that case also there was a change of position by the parties. The plaintiff sued for specific performance. Abandoning that, he wanted to fall back upon the alternative relief of damages, if on an inspection of defendant's accounts he found it worth while to do so. The main question decided was one of procedure with which we are not concerned in this case. The remarks which I am going to cite are purely obiter, but they deal with the point in consideration and I think they may properly be mentioned. In the appeal Court's judgment the learned Chief Justice says :

It is the Court alone which has to decide whether specific performance ought or ought not to be granted, and unless the parties come to the Court agreed as to what the terms of the decree should be, the Court has to come to a derision on that question ; and it is open to the plaintiffs to say that considering all the facts of the case, the Court ought not to grant the prayer for specific performance in the plaint, but to grant the alternative prayer for damages. Mr. Justice Shah in his judgment says:

The plaintiffs' claim has been dismissed, as they were not then prepared to submit to a decree for specific performance by consent. They were in no sense bound to consent to such a decree ; and just as the defendants changed their position, they were also in my opinion entitled to consider their position with reference to the state of the market as it developed during the tendency of the suit, and to limit their prayer to damages, if so advised.(3)The Court can no doubt come to the conclusion that in the circumstances the plaintiff's proper and equitable remedy is to get a decree for specific performance, and that if he refuses to take this his suit should be dismissed with costs. Bat the present is certainly not a case of that kind. As remarked by the learned Judge at p. 57, Part I, of the Paper Book 'the controversy between the parties from time to time has changed with the market value of the property and even the form it has taken at this hearing is due largely to the fluctuations in the market value of the property'. There can be no doubt, in my opinion, that the defendant's failure to perform the contract prior to the suit and his desire to perform it after the suit is entirely due to such fluctuations. The maxim applies 'That he who comes into equity must come with clean hands', and the defendant is really in the same box as the plaintiff in regard to the latter seeking to avoid the performance of the contract.

(4) The lower Court has decided that in any case in the exercise ( of its discretion it would not grant a decree for specific performance (p. 59 of the Paper Book), and the appellate Court should be slow to interfere with the exercise of such a discretion. I fully agree with the Judge below that in all the circumstances it would not be equitable to give the defendant, in view of his previous conduct, the advantage he seeks to obtain from the turn of the market. It is true that he does not here seek a decree for specific performance. But the basis on which he claims that the plaintiff's suit should be dismissed with costs is on the basis of his right to specific performance.

(5) Hipgrave v. Case (1885) 28 Ch. D. 356 is, no doubt, a decision which goes to support Mr. Munshi's contention. But it is to be read in the light of the peculiar history of the circumstances under which the alternative remedy of damages came to be allowed, first under Lord Cairns' Act and then under the Judicature Act of 1873, A succinct account of this will be found in the Encyclopedia of the Laws of England, Vol. II, at pp. 670, 671. Also the stricter rules in England as to pleadings and amendment thereof, compared with those of India, have to be taken into consideration, as pointed out in the lower Court's judgment. The case, in my opinion, has no application to one like this where the plaintiff expressly makes an alternative prayer in the plaint for damages, not only as a substitute for specific performance but also coupled with a prayer in the alternative for rescission of the contract. The Courts in India have a general right to give such relief as they may think just, under Order VII, Rule 7, Civil Procedure Code, and are: not so tied down as the Courts used to be in England: of. Callianji Harjivan v. Narsi Tricum I.L.R. (1895) 19 Bom. 764. There is also no question of defendant's being taken by surprise.

(6) Apart from the considerations like those which weighed with the Court in Hipgrave v. Case the plaintiff' is dominus litia, and the ordinary rule is that if lie claims alternative reliefs he can choose at the hearing which he will ask for; of. Order XXIII, Rule 1, Civil Procedure Code, and Farrant v. Olver. [1922] W.N. 47. No doubt the facts in the latter case are different from those here, but that does not affect the above principle.

(7) The defendant's ability to give a good title arose only after the suit; and it is at least doubtful whether, having failed to obtain the requisite concurrence of his adult brother and the Court's sanction prior to the suit and having thus incapacitated himself from performing his contract, he could recapacitate himself by such subsequent action. Thus it has been held that-'If A agrees to convey land to B at a future date and before that date conveys the land to a third person, A commits an anticipatory breach of his agreement, and B can repudiate it. It is immaterial that B might, by repurchasing the land before the date fixed, recapacitate himself to perform his contract with B.' See Ashburner's Principles of Equity, p. 549, and the cases there cited.

(8) As regards the defendant's claim to forfeit the deposit I take the law to be that, where there is no repudiation of the contract by the purchaser, nor any conduct on his part amounting to repudiation, he is entitled to a return of the deposit, though specific performance is refused : see Pollock and Mulla's Contract and Specific Belief Acts, 4th Edn., p. 887 and cases there cited. Here there has been no such repudiation prior to suit, and the claim is based merely on his abandonment at the hearing of the claim to specific performance. In my opinion, he was at liberty to abandon it, and this is not a case which can properly to treated as a repudiation entitling the defendant to forfeit the deposit. Further the right of the purchaser to recover his deposit springs out of breach of contract by the vendor ( Halabury, Vol. XXV, Article 688, p. 401 ) and on the finding that there has been such a breach by the defendant the plaintiff is clearly entitled to recover his deposit.

(9) Mr. Coltman contended that the sale of the property by the defendant was held up for two years by the suit, and it was only fair in the circumstances that the plaintiff should to deemed to have made a final election when he brought his suit for specific performance ; for if he had not treated the contract as subsisting, the defendant could have sold the property to some other party. If the defendant's conduct had been free from blame, there would no doubt be considerable force in this contention. But the balance of equities of the case is not in favour of the defendant, and I do not think that this consideration can be held to outweigh the other considerations that go against him. Substantial justice is, in my opinion, done by the decision of the lower Court.

15. I would, therefore, dismiss the appeal with costs.

Coyajee, J.

16. On October 2, 1919, the defendant (now appellant) entered into an agreement in writing, Ex. B, to sell the immoveable property therein described to the plaintiff (respondent) for the price of Rs. 1,60,001. A sum of Rs. 25,000 was paid by the purchaser as 'earnest money' and it was agreed that 'the balance, viz., Rupees one lac and thirty-five thousand and one shall be paid on the completion of the purchase.' The purchase was to be completed within six months. The vendor agreed to deduce at his own cost 'a marketable title free from all ascendable doubts' and to 'do all such things and take such actions and proceedings as may be necessary for clearing up any defect in such title,' and also to 'put the purchaser in vacant possession of the second, third and fourth floors of the said hereditaments and by getting the tenants of the remaining portion to attars to the purchaser' (Clause 5). It was also agreed that 'upon payment of the purchase-money at the time and in manner aforesaid, the vendor and all other persona whom the purchaser or his attorneys shall consider to be necessary parties shall execute a proper assignment of the said premises to the said purchaser or to such other person or persons as the purchaser may nominator' (Clause 4).

17. At the date of the contract the said property admittedly belonged to a joint Hindu family consisting of four brothers, namely, the defendant, Narotam, Nandlal and Manilal-the last two being then minors. The purchaser, however, had no knowledge of these facts. The further relevant history of. the property is thus stated by the trial Judge : 'The original lease of the property was taken from the Improvement Trust by one Lookmanji Noorbhoy, He agreed to assign his right to Karsandas Kalidas and his brother Narotam Kalidas in March 1911 for Rs. 46,500. The lease which was not then executed in favour of Lookmanji was ultimately executed by the Trustees of the Improvement Trust directly in favour of and in the name of Karsandas Kalidas (i.e., the defendant) only on October 17, 1911.'

18. The main question for determination is whether, on the facts of this particular case, the purchaser is entitled to the return of the deposit money (Rs. 25,000), or whether the vendor should be permitted to retain it?

19. The evidence bearing on this question is documentary. It consists, with a few exceptions, of letters which have passed between the parties. The correspondence began soon after the contract, and was kept up until this suit was brought (November 12, 1920 ); and it continued even thereafter. The conclusions to which this evidence leads me are :

(1) Throughout the period intervening between the date of the contract and the date of filing the plaint, the plaintiff had continually been pressing for completion of the sale.

(2) As for the defendant, he apparently entertained the hope of making a still better bargain. He wanted to gain time, and was therefore anxious on the one hand to keep the plaintiff to his promise. On the other hand he did all he could up to the time this suit was brought, to delay from time to time the fulfilment of the contract. The difficulties arriving from the fact of his brothers having an interest in the property were held in reserve to serve as an excuse for backing out of the contract in the event of his being able to find a higher price elsewhere.

3. There was such a protracted default on the part of the vendor as to give the purchaser the right to say that the vendor had refused to perform his part of the contract.

20. Soon after the contract, the plaintiff applied for and obtained the sanction of the Improvement Trust Board to the proposed assignment of the lease in his favour. By Clause 3 of the contract, however, it was the vendor's duty to secure it. Plaintiff sent a draft assignment to the defendant for his approval. It was not returned. On February 4, 1920, Messrs. Mehta, Dalpatram and Lalji, as attorneys of the vendor's brothers, wrote to the plaintiff as follows:

We understand that our client's brother Mr. Karsandas Kalidas has contracted to sell the abovementioned property to your client. This is therefore to give your client notice that the said property belongs jointly to the said Karsandas Kalidas and our clients although the lease from the Improvement Trust was taken in the name of Mr. Karsandas Kalidas for the sake of convenience. If your client completes the purchase notwithstanding this notice he will do so at his own risk.

We have therefore to request you to let as know if your client after this intimation desires to complete the purchase in which case we have instructions to take proceedings to restrain the sale.

21. On the same day plaintiff's attorneys sent a copy of it to defendant's attorney and asked : ''please let us know by tomorrow evening what your client has to say in this matter.'' It is found by the lower Court-and the finding is not challenged here-that until this date the plaintiff had no knowledge of the defendant's brothers' being interested in the property. No reply was given, and plaintiff's attorneys wrote again on February 2 : 'by the reason of your client's studied silence, our client is led to believe that your client has put up his brothers to make a false claim with a view to delay the completion of the sale.' On February 10, defendant's attorney wrote denying any desire to delay completion, and added : 'As regards the claim made by my client's brothers the fact is that they are all joint with my client and the property was erected out of joint family funds and the lease was taken in my client's name as the eldest member of the family. The attitude taken up by my client's brothers is unreasonable and I have this day written to them to join in the conveyance.' On the next day the plaintiff's attorneys called for 'the names of all your client's brothers... and if any of your client's brothers...are minors, we shall thank you to let us know accordingly.' This apparently had reference to Clause 4 of the contract. Another letter of the same date contains the plaintiff's complaint that 'Neither in kasha nor in the puce agreement for sale any mention is made of the alleged joint ness of your client and his brothers, nor was the fact (if a fact it is) even mentioned or information as to it conveyed to our clients.' On February 19, the defendant's attorney wrote : 'So far as my client understands his brother is willing to sign the conveyance,' and added that the plaintiff knew all along that the defendant was a member of a joint Hindu family. Plaintiff replied on the same day denying this and inquiring whether the minor brothers would be made parties to the conveyance and whether the defendant was prepared to obtain an order from the Court permitting him to convey the minors' interests. On March 8, plaintiff's attorneys wrote ; 'Your client has been observing a studious silence regarding all our letters in this matter. Please note that unless your client makes out a marketable title and gets all the necessary persons joined in the conveyance by the second proximo our client will proceed in the matter.' The second proximo has reference to the termination of the six months' period allowed by the contract, On March 24, the defendant's attorney replied that ho had addressed a letter to Messrs. Mehta, Dalpatram and Lalji to obtain the necessary order from the Court as regards the minors' interests. Plaintiff's attorneys wrote on the same day, stating that that could not abate their client's anxiety, for what he really wanted was a speedy completion of the matter which was being unnecessarily delayed, The six months' period having expired, plaintiff's attorneys wrote as follows on April 6:

Notwithstanding our repeated reminders your client had not answered our client's queries nor has he made out a marketable title as contracted nor have you as yet returned the draft assignment duly approved.

Our client's moneys are lying idle and please note that our client will charge at 12 per cent, per annum on the balance of the consideration money.

We also require your client to make out a marketable title and to execute a proper assignment to our client as provided by the agreement for sale on or before the 29th Instant. Please note that in default our client will without further intimation file the necessary suit against your client.

22. On April 15, plaintiff's attorneys called for the papers for obtaining the Court's order for perusal, and added that 'this is of course without prejudice to...our letter of the 6th instant.' The draft petition being supplied, plaintiff's attorneys wrote on April 16:

The petition does not comply with any of the material requirements on law nor does it place before the Court the materials on a consideration of which the Court may make an order . It is evident that your client's desire is to get out of the bargain and for that purpose he has all along suppressed the facts from our client, has failed to give the necessary information...and has now hit upon the plan of presenting to the Court a petition disclosing scarcely any material fact so as to make it probable that the Court should not grant the order and then to make an excuse of it for non-completion....Our client has received a good offer for the property and he insists upon completion of the sale.

23. The petition is Ex. E : read by the light of the defendant's conduct it is fairly open to this criticism, I agree with my learned brother when he observes that the circumstances of the case strongly suggest a collusion between the defendant and his brother Narotam whose opposition is evidenced by Ex. F. Thus in June 1920 the defendant was unable, and in my opinion also unwilling, to complete the sale. In these circumstances, on June 22, the plaintiff offered to buy the defendant's own interest on certain terries; but the offer was rejected as 'absurd.' The plaintiff then adopted the course which I think he was perfectly justified in doing. On June 28, he allowed the defendant one week's time within which to complete the sale, making time of the essence of the contract. The time so allowed expired on July 5. On the 6th, the defendant took up a different attitude : he alleged that he was the manager of the joint Hindu family and as such was entitled to sell the property on behalf of all the members, and it was unnecessary to obtain the Court's order with regard to the minors' interests. No attempt was made to justify this position either in the lower Court or before us ; moreover the position disregards the clear provisions of the fourth clause of the contract. More letters followed. On July 21, the defendant's attorney wrote : 'Please let me know if you have accepted the title.' The reply was;

24. It is no use pretending ignorance of our client's contentions as to your client's title to the property. We see no reason why you should be ignoring all the previous correspondences in the connection. Please let us know what your client has done regarding our client's requirements as to his title to the property, before you ask us whether our client has accepted the title.' Plaintiff's letter of the 24th is to the same effect and reminds the defendant that he had failed to obtain the Court's sanction to the proposed sale. In the opinion of the learned trial Judge, with which I agree, the further correspondence shows that the defendant was anxious to sell the property to some other purchaser, but was waiting to see what steps the plaintiff was going to take. On August 30, plaintiff gave a warning to the defendant 'against dealing with the property in any manner' and intimated that draft plaint was ready. Some more letters followed. As I understand them, the plaintiff was anxious to make it clear that it was not he who was repudiating the contract bat that there was a protracted default on the part of the defendant.

25. The plaint was filed on November 12, 1920. It was thereby alleged that the defendant had deliberately contrived to recede from the contract by putting up his adult brother to resist its completion and by failing to make a genuine effort to secure the Court's permission to convey the minors' interests. Plaintiff claimed specific performance of the contract. In the alternative he claimed (1) a return of his deposit, (2) costs of investigation of title, and (3) a sum of Rs. 40,000 'as damages for the defendant's wilful default in carrying out the said agreement and consequent breach oil the contract.' With this third item we are no longer concerned.

26. About this time, events were happening which were beyond the control of these litigants, but which, by the time the case was set down for hearing in December 1922, induced them to re-consider their respective positions. As the learned Judge observes : 'The controversy between the parties from time to time has changed with the market value of the property aim even the form it has taken at the hearing is due largely to the fluctuations in the market value of the property.'

27. On March 10, 1921, the defendant applied to the Court to appoint him guardian of the property of one of the said minors (the other having then reached his age of majority) and to authorize him to convey his interest also. A perusal of his petition. Ex. G. clearly shews a real attempt on his part to secure a favorable order-which indeed was made on March 12. This indeed is the first real endeavors made by the defendant to carry out the contract made on October 2, 1919. But this attempt was made nearly four months after the plaint was u filed. The petition, Ex. G. may be compared-contrasted rather-with the earlier one, Ex. E. On April 22, defendant's attorney wrote to the plaintiff's: 'We fail to understand your client's object in proceeding with this suit as our client is willing to convey the property and has as a matter of fact obtained the necessary Judge's Order authorizing him to complete the sale on behalf of his minor brother.' On April, 25, plaintiff's attorneys replied : 'Before your client would object to our client proceeding with the suit we shall thank you to let us know to which of the relies claimed in the plaint your client is willing to submit.' And on the 6th May this reply was amplified by making it clear that the plaintiff would insist on claiming compensation.

28. In his written statement, declared on August 20, 1921, reference is made to the Judge's order obtained on March 12; the defendant declares that he is ready and willing to complete the sale.

29. The learned trial Judge has held that at the date of the contract plaintiff had no knowledge that other persons besides this defendant had an interest in the property ; that defendant was guilty of a breach of the contract; that in November 1920 when the plaint was filed the plaintiff had a clear cause of action ; that plaintiff had not kept the contract alive up to the day of hearing; that in the peculiar circumstances of this case, in the exercise of his judicial discretion, he would not force specific performance on the plaintiff; and that the plaintiff was entitled to the deposit and to costs incidental to the investigation of title.

30. In my opinion he has reached the right conclusions.

31. The nature of a deposit is thus explained by Cotton L.J. in Howe v. Smith (1884) 27 Ch. D. 89 :

The deposit, as I understand it, and using the words of Lord Justice James, is a guarantee that the contract shall be performed. If the sale goes on,... it goes in part payment of the purchase-money for which it is deposited; but if on the default of the purchaser the contract goes off, that is to say, if he repudiates the contract, then...he can have no right to recover the deposit.

I do not say chat in all cases where this Court would refuse specific perform acne, the vendor ought to be entitled to retain the deposit. It may well be that there may be circumstances which would justify this Court in declining, and which would require the Court, according to its ordinary rules, to refuse to order specific performance, in which it could not be said that the purchaser had repudiated the contract, or that he had entirely put) an end to it so as to enable the vendor to retain the deposit. In order to enable the vendor as to act, in my opinion there must be acts on the part of the purchaser which not only amount to delay sufficient to deprive him of the equitable remedy of specific performance, but which would make his conduct amount to a repudiation on his part of the contract.

In the present case the contract is silent as to what should happen to the deposit money in case the contract goes off. Upon the special facts of this case I do not see any reason for refusing the plaintiff's claim to recover this deposit, and for allowing the defendant to retain it. From first to last, from the date of the contract up to the institution of this suit, the plaintiff had been making a continous and pressing demand for completion of the sale. The defendant on the other hand was doing all he could to delay and even to defeat it; he was in my opinion clearly guilty of default.

32. It is true, the parties did not by the terms of their agreement make time of the essence of the contract. But in such a case, if unnecessary delay is created by one party the other has a right to limit a reasonable time within which the contract should be perfected by the other : Taylor v. Brown (1839) 2 Beav. 180. Accordingly the plaintiff expressly made time of the essence of the contract by his letter of June 28, 1920. But it is urged that the time so allowed was only one week, and that it was therefore too short What is a reasonable time must depend upon the facts of each particular case. The question of reasonableness of notice should be considered with reference to the past attitude of the parties. Ordinarily, one week's time would be too short; in the circumstances of this case it was not. The contract allowed the parties six months for completion of the sale. Even though time was not of the essence of the contract, it was clearly the duty of the vendor to begin making some progress towards fulfilment of the contract. He had no right to expect the purchaser to wait an indefinite time. The defendant here did nothing beyond causing unnecessary delay; he was both unable and unwilling to fulfil the contract, and his inability was of his own making. The first genuine effort he made to fulfil his contract was in March 1921, and that was nearly four months after the plaint was filed. In considering the question of sufficiency of time, his past conduct is relevant. As observed by Lord Parker of Waddington in Stickney v. Keeble [1915] A.C. 386: 'In considering whether the time so limited is a reasonable time the Court will consider all the circumstances of the case. No doubt what remains to be done at the date of the notice is of importance, but it is by no means the only relevant fact. The fact that the purchaser has continually been pressing for completion, or has before given similar notices which he has waived, or that it is specially important to him to obtain early completion, are equally relevant facts.' In my opinion therefore there was a breach on the part of the defendant, at any rate on July 5, 1920, ii not earlier. On July 6, he, as I have endeavored to point out, took up a different attitude, which, moreover, he has made no attempt to justify. The further letters which passed between the parties do not, in my opinion, amount to a waiver of objection on the part of the plaintiff. In his letters of July 22 and 24 he was referring to the provisions contained in the fourth clause of the contract, and he warned the defendant not to ignore 'all the previous correspondence in this connection,' and he reminded the defendant that 'he had failed to obtain the Court's sanction to the proposed sale.' By his plaint he claimed damages for defendant's 'wilful default in carrying out the said agreement and consequent breach of contract.' This position he has done nothing to give up. In my opinion, therefore, the learned Judge was right in awarding to the plaintiff by way of damages all costs incurred by him in consequence of the failure on the part of the defendant to perform the contract in time. I also hold that he was right in permitting the plaintiff to recover the deposit money.

33. It was contended on behalf of the defendant that the plaintiff, having at the hearing of the suit abandoned his claim to specific performance, was not entitled to a return of the deposit money. The plaintiff, however, had not claimed specific performance alone. The claim to damages and to a return of the deposit was expressly made in the plaint. It was the defendant's non-performance or breach of the contract which gave rise to the suit. The plaint sets out all the necessary facts bearing on both these relies. It was competent to him to make those claims. And, as shown in the judgment of my learned brother, it was equally competent to him at the hearing to abandon any part of his claim (Order XXIII, Rule 1, Code of Civil Procedure). The interval of time between the date of the contract and the date of hearing was over three years. Plaintiff was in no sense responsible for this delay. Under the stress of circumstances, as explained by the lower Court, the plaintiff abandoned his claim to specific performance. He had done nothing to keep the contract alive in the sense chat the defendant who was himself in default became entitled to say that if for any reason the claim to specific performance was either abandoned or disallowsd, the plaintiff should not be permitted to recover the deposit. Moreover, the jurisdiction to decree specific performance of a contract is discretionary, and the Court is not bound to grant such relief (Section 22, Specific Relief Act). And if, while disallowing specific performance, the Court finds that the plaintiff is entitled to a remedy, it is competent to the Court to award the appropriate remedy. Here the learned Judge observes that in the exercise of his discretion he would not-on the special facts of this case-have forced specific performance on the plaintiff; he would have disallowed it, not because of any fault of the plaintiff but because it would inure to the benefit of the defendant who was definitely unable or unwilling to fulfil the contract before the suit was filed. I agree then that to permit the defendant to retain this deposit or part payment would be to permit him to take advantage of his own default. The appeal therefore fails.


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