Skip to content


Meghji Moorji Vs. Tyeballi Kamruddin - Court Judgment

LegalCrystal Citation
SubjectProperty;Contract
CourtMumbai
Decided On
Case NumberO.C.J. Appeal No. 14 of 1924, Suit No. 2591 of 1921
Judge
Reported inAIR1925Bom64; (1924)26BOMLR1019
AppellantMeghji Moorji
RespondentTyeballi Kamruddin
DispositionAppeal allowed
Excerpt:
.....plaintiff ultimately took out an originating summons against s & m for determining whether the title was marketable. the court held on june 20, 1921, that it was not. the same day the plaintiff wrote to s & m putting an end to the contract.;the plaintiff eventually filed a suit to recover the earnest money paid by him to defendants, rs. 1,20,000 paid by him to their common solicitors, and the cost and expenses incurred by him in the transaction. the defendant resisted the claim and counter-claimed that he was ready and willing to excute the assignment on receipt of rs. 46,000 from the plaintiff:-;(1) that if it was essential for the defendant to make out a marketable title to the lease-hold property in the sense of the lessee getting a right to it as a permanent lease-hold, the..........the circumstances of the case. on the other hand, it is urged that the plaintiff really authorised messrs. mulla and mulla to complete the sale on april 20, 1920, and as a result of that authority which messrs. mulla and mulla had, the assignment, exh. 1, was prepared, and as part-payment of purchase money was paid by the plaintiff, he could not now call upon the defendant to make out a marketable title. in substance the argument is that he effectively waived his right to the marketable title being made out by the defendant, when he accepted the title through his solicitors on april 20.2. before dealing with these points, it may be mentioned that it is not suggested before us that the plaintiff knew at the date of his contract with the defendant, or thereafter, of the express terms upon.....
Judgment:

Lallubhai Shah, Ag. C.J.

1. [His lordship, after setting out the facts of the case at considerable length, proceeded as follows:] In the appeal before us on these facts, it has been contended that there was no waiver on the part of the plaintiff to insist upon the stipulation as to the marketable title being deduced by the defendant, that there was no estoppel, and that in fact as the title was not marketable, no decree for specific performance could be, and should be, passed under the circumstances of the case. On the other hand, it is urged that the plaintiff really authorised Messrs. Mulla and Mulla to complete the sale on April 20, 1920, and as a result of that authority which Messrs. Mulla and Mulla had, the assignment, Exh. 1, was prepared, and as part-payment of purchase money was paid by the plaintiff, he could not now call upon the defendant to make out a marketable title. In substance the argument is that he effectively waived his right to the marketable title being made out by the defendant, when he accepted the title through his solicitors on April 20.

2. Before dealing with these points, it may be mentioned that it is not suggested before us that the plaintiff knew at the date of his contract with the defendant, or thereafter, of the express terms upon which the defendant had agreed to buy from Lelin-wala. The finding on issue No. 2 by the learned trial Judge is not challenged before us, nor is the finding on issue No. 1 questioned, and it is to be Taken as found by the learned trial Judge that the plaintiff did not know that he was only obtaining a leasehold title for a limited term. Though the learned Judge does not consider it necessary to record any finding on issue No. 6, which is whether the defendant has made out such title as he had agreed to make out, it is clear that for the purposes of this appeal it must be taken that in fact the title which the defendant was able to make out was not marketable. Though the learned counsel for the defendant-respondent has made a somewhat faint attempt to suggest that it may be treated as an open question in this appeal, it seems to me that after the decision of the Court of Appeal between the plaintiff and his sub-purchaser, it cannot be treated as an open question. It may be mentioned that though the parties to this litigation may have known generally that it was a leasehold property, and not a freehold, it has been assumed by the parties throughout in this case that they at least expected, and were entitled to expect, to get a right to the renewal of the lease in perpetuity. The evidence of Mr. Dastur. who acted as a member of the firm of Messrs. Mulla and Mulla in connection with this contract both for the defendant and the plaintiff, says at the end of his evidence:-

We didn't quite notice the point regarding the difficulty as to renewal, which was subsequently raised. But I believe I contended with Judah and Solomon that the plaintiff had never agreed to sell perpetual leasehold. When we examined the documents we took the title to be one of perpetual leasehold. I accepted the title on behalf of both, viz., defendant and. plaintiff.

3. There is no doubt from the correspondence, and also from the evidence recorded at the trial, that at least the plaintiff and his sub-purchasers to whom the property was sold on the same terms on which the plaintiff had bought from the defendant, were under the clear impression that at least title to a perpetual leasehold was to be made out. That is the basis upon which the questions raised on the originating summonn were considered; and that is the basis upon which the decision in that case proceeds.

4. In this view it is clear that for the purpose of determining whether marketable title was made out, it must be taken that, though it was known to be a leasehold property, it was necessary to make out a title to a perpetual leasehold or at least to the right to get such a leasehold. From this point of view it has been definitely held that as between the plaintiff and his Hub-purchasers the title was not marketable on the ground that Bai Avabai under the lease of 1901 did not bind herself to take out a lease at the end of 99 years' period fixed in the head-lease, but agreed that if and when the lease was renewed she and her heirs and assigns would pass on the benefit of that renewal to their lessee. That was not considered sufficient to give to the subsequent lessees the right to the renewal of the lease in perpetuity, and therefore the title was held to be defective. It is difficult to hold that as between the defendant and the plaintiff, if it is necessary for the defendant to make out a marketable title, that the defect does not exist. Taking it, therefore, for the purposes of this appeal that if it is essential for the defendant to make out a marketable title to this leasehold property in the sense of the lessee getting the right to it as a permanent leasehold, the defendant is not in a position to make out that title, according to the view taken in the proceedings, to which I have referred.

5. The main point, however, upon which the decision of the lower Court is based, and which has been argued before us, is the point of waiver as to the stipulation to make out a marketable title. Now it is clear that in order that there may be an effectual waiver of any stipulation in an agreement, it must be intentional and based upon full knowledge of the circumstances, then the question is whether the plaintiff' in this case is proved to have waived his right to the benefit of this stipulation as to marketable title being made out by the defendant. In connection with this point, it is important to remember that Messrs. Mulla and Mulla had already investigated the title on behalf of the defendant with reference to his contract betwen the defendant and Lelinwala, and on this point the evidence of Mr. Dastur is important:-

Q. Did you tell him what he was purchasing under his agreement?

A. Yes, I did. That he was practically purchasing the interest of Tyeballi under his agreement. That is he was purchasing the property on the same terms that. Tyeballi had agreed to purchase from Lelinwala. The completion of the matter proceeded on that basis, I remember plaintiff's agreement to sell to Simon and Motilal. I wrote to Judah and Solomon, who represented Simon and Motilal, that this assignment would be direct to them. I must have received a letter from Judah and Solomon dated March 11, 1920, as per this press copy. They refused to complete before May 31. It was then decided to take an assignment in plaintiff's favour as Shroff and Vacha were pressing to complete the matter on behalf of Lelinwala.

Then further on in cross-examination he says:-

Mr. S. Mulla was only attending to the preparation of the agreement for sale between Lelinwala and Tyeballi. After that I was attending to the matter. The title was practically investigated before the agreement was prepared. I had gone through the title deed; so also had Mr. S. Mulla. After the agreement was executed, we had gone through the title deeds again and taken search in the Sub-registrar's office, We hadn't taken search in that, office (of head-lease of 1869; his records begin only from 1867). We began only with a title deed of a certain date, I don't remember the year. A clerk took the search, not I. I can't say it was completed before plaintiff became our client. The notes of search are in the missing file. I don't know what took place between plaintiff and S. Mulla, before plaintiff was sent to me. There was no necessity to re-investigate the title after pluintiff became our client and I don't think I did. The agreement between plaintiff and defendant was executed outside our office. Our advice was sought and in regard to that agreement by plaintiff after it had been executed.

6. This evidence clearly shows that practically the title was investigated by Messrs. Mulla and Mulla as regards the contract between Lelinwala and Tyeballi, and they made no further effort when they were engaged by the plaintiff to investigate the title so far as the plaintiff was concerned. They were apparently satisfied that a title to a perpetual leasehold was sufficiently made out, and as they did not realise the defect which came to be subsequently discovered, they thought that there was no need to investigate the title further. But it must be remembered that all the knowledge that Messrs. Mulla and Mulla had before the plaintiff engaged them for the purposes of the contract in question, was acquired by them on behalf of Tyeballi, and all the knowledge that they had acquired as regards the terms of the contract between Lelinwala and Tyeballi as regards the lease could not be attributed to the plaintiff. In fact the learned Judge has not attributed that knowledge to the plaintiff, and quite rightly, under the circumstances. The fact appears to be that Messrs. Mulla and Mulla being satisfied as to the marketable nature of the title, they naturally advised the defendant and the plaintiff accordingly, and they accepted that advice. The plaintiff paid Rs. 1,24,000 on April 16, 1920, a substantial part of which was used by Messrs. Mulla and Mulla for the purpose of getting the assignment, which is Exh. 1 in the case. On April 20, 1920, it was signed only by Lelinwala who got the balance of his money. The defendant beyond paying Rs. 12,000 as earnest money to Lelinwala had not paid anything to him, and Rs. 1,16,000 paid on April 20 to Lefimwala was part of the money received by Messrs. Mulla and Mulla from the plaintiff. The plaintiff was not present at the, time, and he never agreed in terms to accept the conveyance or & assignment. It is true that thereafter two letters were written by Messrs. Mulla and Mulla to the plaintiff, one on May 5, 1920, and the other on June 1, 1920. In the letter of May 5 it was distinctly stated that arrangement was made that defendant was to have possession of the property in the sense that he was to receive rents till the balance of the consideration money was not paid by the plaintiff to the defendant and Exh 1 not completed, as it was intended to be completed. On June 1, again, there was a demand made for Rs 46,000 and for the completion of the document; but the plaintiff did not reply. Thereafter there was practically silence for a long time until we come to September and October when at the request of Messrs. Merwanji, Kola & Co., Messrs. Mulla and Mulla informed the plaintiff of what the defendant was demanding. As I have already indicated in the statement of facts, that in December 1920, the plaintiff's solicitors Messrs. Captain & Vaidya took practically the same view as to the marketable nature of the title as Messrs. Mulla and Mulla, and on behalf of the plaintiff they did their best to make out a marketable title. Unfortunately, however, with the best of efforts on the part of the plaintiff to make out that position he failed, and all this time the silence of both parties, namely, of the defendant and the plaintiff, appears to me to be attributable to the fact that they were waiting to see the result of the proceedings taken by the plaintiff to make out a marketable title. As soon as the plaint-tiff found that he failed in his efforts to make out a marketable title, and that it was definitely held by the Court of Appeal that a marketable title was not made out, be at once wrote to the defendant's solicitors saying that he did not complete the contract, and that the contract was to be treated as rescinded.

7. Taking the conduct of the plaintiff as a whole, it seems to me that he was first acting according to the advice of Messrs. Mulla and Mulla and thereafter, according to the advice of Messrs. Captain and Vaidya, and he was as anxious as the defendant to see that the contract was put through. That was natural under the circumstances as he stood to gain by making out that position, if not as much as the defendant, at least to a certain extent, and the defendant was also interested in the same sense. Therefore both the defendant and the plaintiff really were waiting to see the result of the proceedings which the plaintiff took in this matter.

8. I am not prepared to hold on these facts that there was an intentonal waiver of the stipulation as to marketable title, for the simple reason that at the time he had no knowledge of all the circumstances. In fact there had been no independent investigation of title on his behalf. Messrs. Mulla and Mulla who had already investigated the title thought that was sufficient, and under those circumstances it seems to me that it would not be right to hold that the plaintiff was consciously waiving his right to the benefit of the stipulation of marketable title in his agreement. As soon as Messrs. Judah and Solomon found the defect in the title, the plaintiff remained silent and waited to see the result of that dispute. He did his best to see that the dispute was settled in a manner he wished it to be settled But he failed, and he at once put an end to the contract. Under the circumstances I am not satisfied that there was any waiver on the part of the plaintiff. Equally I am not satisfied that there was any estoppel in virtue of what happened on April 20, 1920, in connection with the assignment, Exh. 1. It is true that the plaintiff paid a part of the purchase money, and the best part of it was used for the purpose of paying off Lelinwala on behalf of the defendant by Messrs. Mulla and Mulla. It is also true, as pointed out by the learned trial Judge, that if the purchaser enters into possession or pays the whole or part of the purchase money, or does other acts, which a purchaser is not bound to do until a good title has been made, he may be deemed to have waived objections to the title. The question as to whether the objection as to title is waived, is one of fact, and it may be that under certain circumstances the payment if purchase money may indicate a waiver on his part. But here it seems to me that the whole thing proceeded upon what may be described as an honest error of judgment on the part of Messrs. Mulla and Mulla in advising that marketable title was made out, and so far as the parties are concerned, it must be taken to be a case of proceeding on a common mistake induced by the advice of the solicitors.

9. With reference to this aspect of the case, it seems to me that the case of Jones v. Clifford (1876) 3 Ch. D. 779. which the learned Judge had referred to, is somewhat similar to the present case, and it is in favour of the plaintiff', and not against him. In that case it was distinctly agreed that it was to be assumed that a person who died in 1841 was seized in fee of the freeholds, and that the defendant should not 'require the production of or investigate or make any objection in respect of the prior title' thereto. The sub-purchaser happened to discover a defect after the title was accepted by the defendant, and it was held that the defendant was not precluded by the condition or the acceptance of title from taking objection, and the Court could not decree specific performance. Although there was no fraud, there being a common mistake, the defendant there was held to be entitled to an inquiry as to the title to the freeholds at the date of the contract.

10. Similarly here, though the matter proceeded so far as the preparation of the assignment, Exh. 1, it seems to me that when the defect was discovered subsequently at the instance of the sub-purchasers from the plaintiff, the plaintiff' is equally entitled to the benefit of the stipulation that marketable title was to be made out, even though he had in a sense accepted the title on April 20, 1920. Under the circumstances of this case it cannot be inferred that he waived his right to the stipulation or that he was estopped. In fact the basis for the plea of estoppel appears to me to be weaker even than the plea as to waiver. Beyond the conduct as indicated by what happened on April 20, 1920, there is nothing in the conduct of the plaintiff' to show that he ever represented to the defendant, or that the defendant was in any sense influenced by the representation, that the title was good. In fact both of them were advised by the common solicitors Messrs. Mulla and Mulla, and whatever the mistake underlying that advice may be, it was a case of a common mistake. It cannot be said in this case that the defendant acted on any belief induced by the representation of the plaintiff.

11. The learned Judge has referred to the doctrine of part performance as accepted in Bapu Apaji v. Kashinath Sadoba I.L.R. (1917) 41 Bom. 438, 19 Bom. L.R. 100. After a careful consideration of the facts of this case, I do not see how that doctrine could apply to this case. There was no question of any defect in the title of the vendor at all. Where there is an agreement for sale, and where there has been transfer of possession in pursuance of that agreement to the purchaser and the contract price has been received by the vendor, the vendor cannot recover back the possession, but must be prepared to fulfil the contract by executing a conveyance. That really is the result of that judgment. It is not at all clear, and it is not necessary for the purpose of this case to decide, as to whether in a given case where there is admittedly a defect in the title of the vendor, the purchaser could not, even if these things had happened, get the benefit of the plea that he was not bound to complete the contract. That must depend upon the circumstances of the case. That point did not arise for consideration in Bapu Apaji v. Kashinath, nor does it appear to have arisen for decision in any of the cases to which reference has been made in that judgment. For instance, in the case of Karalia Nanubhai v. Mansukhram I.L.R. (1900) 24 Bom. 400, 2 Bom. L.R. 220, to which the learned trial Judge has referred, there was no question of any defect in the title of the vendor at all. No doubt if a stage has been reached in a given case where practically the property has passed, though the legal ownership may not have, the question would arise as to whether the purchaser could repudiate the contract on the ground that no marketable title has been made out. The facts of the present case do not appear to me to invite the applica-cation of the principle underlying the decision in Bapu Apaji v. Kashinath. In the first place, the possession such as there could be of this property, has been with the defendant, and has never been with the plaintiff. It is quite true that as a result of the arrangement it was intended to be given to the plaintiff, if he acted in a particular way. But he never did act in that way and he never took possession. The purchase money was paid in art, and that fact does not appear to me to negative the possibility of a dispute as to marketable title arising between the parties. The dispute did arise in fact, and I have already referred to the way in which that dispute was ultimately disposed of between the plaintiff and his sub-purchasers. The mere fact that Messrs. Mulla and Mulla came to the conclusion that the title was marketable and advised both the parties to act on that basis, and that both parties acted on that, basis up to a certain point, does not preclude the plaintiff from taking up the position, if he is otherwise able to make out, that the title is not marketable. The decision in M'Culloch v. Gregory (1855) 1 K. & J. 280 appears to be in point. It is not necessary to refer to the observations of the Vice-Chancellor in that case in detail. But the principle underlying that decision applies to the facts of this case. If we were to hold that the plaintiff' is estopped from making out the plea that the. title is not marketable, or that he has waived his right to the benefit of the-stipulation about a marketable title, we would practically be holding that he was bound by the advice of Messrs. Mulla and Mulla which both parties accepted for the time being.

12. On the whole, therefore, we are satisfied that the view taken by the learned Judge in this case is wrong. We allow this appeal, set aside the decree of the trial Court and pass a decree in favour of the plaintiff for Rs. 1,26,000 with interest at six per cent from this date until payment, with costs of the appeal and of the suit. The defendant's counter-claim is dismissed. The decretal amount to be a charge on the property in question. We further direct that the amount paid by the defendant to Messrs. Merwanji Kola & Co. under the order of this Court dated November 18, 1921, as representing the net rents of the property recovered by the defendant should be paid over to the plaintiff in part satisfaction of this decree.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //