Skip to content


R.G. Lakhmidas and Co. Vs. Sir Dorab Tata - Court Judgment

LegalCrystal Citation
SubjectProperty;Contract
CourtMumbai
Decided On
Case NumberO.C.J. Appeal No. 130 of 1925
Judge
Reported inAIR1927Bom195; (1927)29BOMLR19; 101Ind.Cas.229
AppellantR.G. Lakhmidas and Co.
RespondentSir Dorab Tata
DispositionAppeal allowed
Excerpt:
contract-sale of land vested in trustees under a deed of settlement-power to sell under the deed-resolution of trustees approving the sale not in accordance with the, provisions of (he deed--refusal of defendant to accept title,-marketable title-want of mutuality-indian contract act (ix of 1872), section 39-indian registration act (xvi of 1908), section 17(1)(b)(c) and (2) (v)-agreement to sell -registration-recovery of earnest-money paid by the purchaser-transfer of property act (iv of 1882), sections 54 and 55(6)(b).;plaintiffs, who were trustees under a deed of settlement, agreed in the course of correspondence with defendants to sell two plots of land out of the lands comprised in the deed. the defendants subsequently paid us. 40,000 to the plaintiffs as earnest-money. the defendants.....amberson marten, c.j.1. this is a vendor and purchaser summons taken. out under rule 212 by the present trustees of a deed of settlement dated march 8, 1889, as vendors to determine (1) whether they had made out a marketable) title to the property sold to the defendants, and (2) whether the defendants should be ordered to specifically perform the agreement between the parties.2. under rules 212 and 220 the procedure in force on the original' bide with reference to such summonses in a plaint without a prayer, but specifying the appropriate questions, which are afterwards embodied in a separate summons signed by the judge. but both here and in england it is not open to claim specific performance on an originating summons. that must de left to a suit, as must also any question affecting the.....
Judgment:

Amberson Marten, C.J.

1. This is a vendor and purchaser summons taken. out under Rule 212 by the present trustees of a deed of settlement dated March 8, 1889, as vendors to determine (1) whether they had made out a marketable) title to the property sold to the defendants, and (2) whether the defendants should be ordered to specifically perform the agreement between the parties.

2. Under Rules 212 and 220 the procedure in force on the Original' Bide with reference to such summonses in a plaint without a prayer, but specifying the appropriate questions, which are afterwards embodied in a separate summons signed by the Judge. But both here and in England it is not open to claim specific performance on an Originating Summons. That must de left to a suit, as must also any question affecting the validity or existence of the contract. Consequently the trial Judge rightly declined to hear question No. 2, although the summons had been signed by the Vacation Judge. As regards question No. 1, unfortunately both it and also the body of the plaint were so drawn as to conceal the real point in issue between the parties.

3. The defendants put in what purports to bo a written statement in which they submitted certain other questions as being the proper ones which should de put to the Court. But in the result. the learned trial Judge was only prepared to answer the first question in the plaintiffs' summons. Before us it became clear that this single question was insufficient to deal with the real dispute between the parties. Accordingly, we allowed the Originating Summons to be amended by striking out the original two questions, and by substituting therefor the following questions, viz.:-

1. Whether the plaintiffs made out a marketable title to the property (a) prior to October 21, 1924, and (6) prior to February 17, 1925 ?

2. Whether the notice of September 6, 1924, is valid in view of the following objections taken by the plaintiffs, viz. :

(a) That it was written 'without prejudice';

(b) That the defendants were not entitled to make time of the essence of the contract;

(c) That the time fixed in the said notice was under the circumstances unreasonable;

(d) That the said notice did not inform the plaintiff's as to what they Were required to do to complete their title to the property.

3. Whether the defendants ever determined the contract, and if so, when ?

4. Whether in any event the defendants kept the contract alive by the correspondence subsequent to October 30, 1924 ?

5. Whether the defendants are entitled to a refund of Re. 40,000 with interest thereon at the rate of six per cent. per annum from November 1, 1923, and to the costs of and incidental to the investigation of title ?

2. We think that it is permissible on an Originating Summons to ask the above questions Nos. 2 and 3, and 5. In re Jackson and Woodburn's Contract (1887) 37 Ch. D. 44 may be cited in support of questions Nos. 2 and 3, and In re Hargreaves and Thompson's Contract (1886) 32 Ch. D. 454 in support of question No. 5.

3. The contract in question is contained in two letters, dated October 16 and 20, 1928, Ex, 7, passing between the defendants and Mr. R.D. Tata (plaintiff No. 2) as one of the vendor-trustees, but who has died during the pendency of this appeal. A third letter, dated October 24, 1923, signed by Mr. R.D. Tata, acknowledges the receipt of a cheque for R.s. 40,000 for earnest-money.

5. The real point in dispute is whether, having regard to certain restrictions imposed by the settlement on the trustees' power of sale, a good title was over shown or made out prior to October 21 or 30, 1924, from which date the defendants have treated the contract as at an end. It was at one time contended that there was no power of sale at all under the settlement, But the learned Judge was clearly right in holding this argument to be untenable. The settlement, no doubt, is drawn in a peculiar form and at considerable length, but, on being read carefully, it is clear that the settled land was treated merely as an investment, and that whether it was land originally comprised in the settlement or subsequently acquired under the power to purchase land, it was all subject to reinvestment under the general power of sale for that purpose. But it is equally clear that this power was subject to the following important restrictions, viz. :

that the power of investment variation exchange and transposition hereinabove conferred upon the trustees or trustee shall not be exercised as regards any of the lands messuages tenements and hereditaments whether freehold or leasehold forming part of the said trust premises for the time being except by a resolution passed and sanctioned by a majority of three-fourths of the votes of the entire number of the said trustees for the time being (such majority to be ascertained as hereinafter provided).

4. It was next declared :

that any sale or exchange of freehold or leasehold lands messuages tenements and hereditaments made under the powers in that behalf hereinabove contained may be made by public auction or private contract and that the trustees or trustee may make any stipulation as to title or evidence of commencement of title or otherwise in any conditions of sale or contract for sale.

6. This reference to 'sale' and 'contract for sale' clearly shows that sales were contemplated, although the actual word 'sale' was not used in the preceding clauses. As regards the reference to the majority of the trustees there was a proviso that-

the tenant for life for the time being of the said trust premises shall in all questions in which the trustees acting in the execution of the trusts of these presents shall differ in opinion be deemed to have two votes and in ascertaining the majority of the said trustees the vote or opinion of the said tenant for life for the time being shall be equal to the votes or opinions of two of the acting trustees and in case after counting such two votes of the tenant for life for the time being there shall be an equality of votes the tenant for life for the time being shall have a casting vote as well as and in addition to the said two votes.

5. It was also declared :

that (unless by these presents otherwise expressly provided) in all matters of and concerning the trust premises wherein the trustees have by virtue of these presents a discretionary power the votes of the majority of the trustees for the time being voting therein such majority to be ascertained by reckoning the votes of the trustees as hereinbefore mentioned shall bind as well the minority of the trustees for the time being voting therein as also any trustees or trustee who may not have voted therein.

7. There was a further proviso that if any trustee should become bankrupt or insolvent, he should thenceforth ipso facto cease to be a trustee. Then there way a power in certain events for the surviving or continuing trustees to appoint new trustees. This was followed by an important proviso which ran :

Provided always that the number of trustees of these presents shall always be kept up to five but shall never exceed seven.

8. At all material dates for the purposes of this suit, Sir Dorab Tata (plaintiff No. 1), in addition to being a trustee, was also the tenant for life under the settlement, and was, accordingly, entitled to two votes, and also to a casting vote in ascertaining the majority of votes of the trustees in the event of a difference of opinion. The number of trustees under this settlement was originally seven. Prior to February 12, 1925, the only resolution of the trustees, communicated to the defendants with reference to the suit sale was one of December 4, 1923, Ex. 1. It is common ground that at this date there were only throe trustees of the settlement, viz., Sir Dorab Tata and Messrs. R.D. Tata and H.E. Bamji. It is also common ground, as shown by the resolution itself, that at that meeting of December 4, 1923. only two trustees were present, viz., Mr. R.D. Tata and Mr. H.E. Bamji: It is conceded that Mr. J.D. Ghandy was present as purporting to represent Sir Dorab Tata. But the settlement contains we power to appoint proxies and on the evidence before us Mr. Ghandy's presence was immaterial., except that it may be noted that he was the, solicitor for the trustees. At that meeting a resolution was passed purporting to approve the sale to the defendants.

9. That resolution is challenged by the defendants as being invalid inasmuch as the number of trustees was two below the minimum number, and the resolution was not passed by a three-quarter majority of the minimum number. It was urged in reply by the plaintiffs that the main provisions of the settlement clearly contemplated that the trusts might be carried out by the surviving trustees or trustee. It was pointed out that the very expression 'trustees or trustee' as used. in the settlement was thereby defined to include the original trustees and 'the survivors and survivor of them and the executors and administrators of such survivor who together with the trustees or trustee appointed as hereinafter provided are unless otherwise designated referred to as the trustees or trustee.' It was further contended that the proviso that the number of trustees should always be kept up to five was only a corollary to the power of appointing new trustees; and that such latter power was permissive only and not compulsory inasmuch as the settlement only provided that 'it shall be lawful' for the surviving or continuing trustees or trustee to make a new appointment. Further, even if such power of appointment had been in imperative terms by the use of some such words as 'the surviving or continuing trustees or trustee shall appoint,' yet the English authorities show that those words may be treated as directory merely and do not paralyse the execution of the trusts by the surviving trustees, provided the main body of the trusts clearly contemplates that the trusts may in certain events be carried out by the surviving trustees or trustee. In support of these propositions Sections 76 and 44 of the Indian Trusts Act, 1882, and Lane v. Debenham (1853) 11 Hare 188 and Warburton v. Sandys (1845) 14 Sim. 622 were cited to us. (See also In re Bacon: Toovey v. Turner [1907] 1 Ch. 475

10. But oven if for the sake of argument it is conceded that this contention of the plaintiffs is correct, they are still left with this difficulty that, assuming three surviving trustees could act without the appointment of new trustees, yet a three-quarter majority of such three trustees would be two and a quarter. Or if Sir Dorab is to be taken as representing two votes, then the requisite three-quarter majority would be three. In fact, however, there were only two trustees present at the meeting of December 4, 1923, and consequently their two votes fell short of the requisite two and one quarter or three.

11. It was argued for the plaintiffs that the law neglects fractions, and that, accordingly, two votes would be sufficient. For this purpose we were referred to the rules about the computation of time as showing that for certain purposes the law neglects fractions of a day. It was urged in short that de minimis non curat lex. But counsel was unable to produce any authority showing that the rules about, the computation of time had been extended to subjects like the present. On the other hand, the mode in which the proviso in Section 101, Sub-section (4), of the Government of India Act, 1.915, has been construed in practice is opposed to that contention. This proviso enacts that not less than one-third of the Judges must be barristers or advocates, and that not less than one-third must be members of the Indian Civil Service. Accordingly, in this High Court, where the number of permanent Judges has hitherto been seven or eight, it has always been considered to be essential under that section that there should be three barrister Judges and three I.C. S. Judges. I think, then, that counsel for the defendants gave the right answer when he urged that if the necessary three-quarter majority mentioned in the settlement is in fact two and a quarter, then two is less than that minimum number, I would hold, therefore, on that ground alone, that the proviso in the settlement was not satisfied and that, accordingly, the resolution in question was invalid.

12. But I am disposed to think that in calculating the number of votes, Sir Dorab should be given two, thus making the total four and not three. Sir Dorab was absent, and, therefore, in calculating the votes I think he should be taken to differ within the meaning of the later proviso. If that is so, the plaintiffs must necessarily fail even if their argument on the fractions were correct, because on. that hypothesis there were only two votes instead of the requisite three to make up the three-quarter majority of four.

13. I now come to consider what the parties did between the date of the contract and October 21, 1924. Nothing appears to have been done till November 26, 1923, when the correspondence between the solicitors of the respective parties opens. Thereafter, up to March 7, 1924, the parties appear to have been engaged on an unsuccessful attempt to agree on a formal agreement of sale. This was followed between March. 12 and 19 by some letters of mutual incrimination. Then two months were allowed to pass until on May 27, 1924, the plaintiffs' solicitors gave a notice to the defendants to complete within fifteen days, time being in this respect of the essence of the contract. But it would follow from my above finding as to the non-compliance of the proviso in the settlement that the plaintiffs being themselves in default had no right to give this notice.

14. This was followed on June 4, 1924, by the defendants' requisitions on title, No. 12 of which asked in effect for production of a resolution showing the sanction to the sale by a three-quarter majority of the trustees as provided by the settlement. These requisitions were answered on June 24. The reply to Requisition No. 12 was that the resolution would be produced. It would appear from the defendants' letter of June 26 that some delay then took place owing to the illness of their partner Mr. Papa who was attending to th9 matter. Accordingly, it was not till July 16 that the defendants' solicitors again wrote insisting on Requisition 12 and certain other requisitions. The plaintiffs replied by a letter of July 23, in which they for the first time gave the defendants a copy of the above resolution of December 4, 1923. In this respect it is agreed by counsel on both sides that the alleged copy appearing on page 72 of Part. II of our Appeal Paper Book is incorrect, and that the true copy sent is that contained at p. 17 of Part II subject to certain verbal slips as to dates and otherwise being corrected,

15. On August 7, 1924, the defendants replied stating that the plaintiffs had failed to make out a marketable title, and that in particular as regards Requisition No. 12 the resolution was insufficient and not in accordance with the provisions of the trust deed, They also raised a new point as to a Municipal resolution for compulsory purchase, which they had recently discovered. No reply was sent by the plaintiffs. Accordingly, on September 6, 1924, the defendants wrote an important letter reiterating the point about the Municipal resolution, and without prejudice to their rights in that respect, they also called on the plaintiffs to make out a marketable title and complete the sale by October 21, 1924, time being of the essence of the contract, and they gave notice that in default of the plaintiffs doing so the defendants would treat the contract as at an end.

16. The reply by the plaintiffs on September 10 was that they had already made out a title free from any reasonable doubt. and they, accordingly, called on the defendants to send the draft conveyance for approval and to complete the sale within a fortnight ; otherwise the plaintiffs would take further proceedings. As to the Municipal resolution, they said this was the first time they had heard of it, and in any event it was not a ground for cancelling the contract, as no notice had been served by the Municipality.

17. On September 12, the defendants, without prejudice to their contentions raised in their letter of September 6, asked for information as to certain deeds which they had found on taking search in the Sub-Registrar's office. The plaintiffs replied on October 10, stating in effect that these documents did not affect the property in question, and stating at the end that their clients had now no alternative but to proceed further in the matter. Then, on October 30, the defendants wrote saying in effect that, as the plaintiffs had failed to comply with the notice given in the defendants' letter of September 6 to make out a marketable title by October 21, the agreement had been at an end since the latter date. They, accordingly, called on the plaintiffs to return them the earnest-money with interest and costs, within eight days, in default of which a suit would be filed.

18. The subsequent correspondence is headed 'Without prejudice,' but it has gone in with the consent of both, parties. It begins with a letter, which is undated in the Appeal Paper Book, but which in fact was dated December 12, 1924. It ends with a letter of April 14, 1925. It shows that the parties were endeavouring to agree on the questions to bo formulated to the Court for settling the disputes between them. Eventually they could not agree even on this, and subsequently the present proceedings were instituted by the plaintiffs on June 4, 1925.

19. It is, however, material to observe that, by a letter of February 10, 1925, the defendants under counsel's advice asked whether a resolution in terms of the trust deed had been passed by the trustees, and whether new trustees had been yet appointed. In answer to this the plaintiffs gave inspection to the defendants of two resolutions of the trustees dated June 13, 1924, and January 29, 1925, and also a copy of a deed of appointment purporting to have been made on September 15, 1924. They also stated that three new trustees had been appointed, viz., Messrs. S.D. Saklatvalla, K.B. Saklatvalla and N.D. Tata (plaintiffs Nos. 3, 4 and 5), and that the original trust deeds had been lodged for registration. It is common ground that this was the first intimation which the defendants had received of these particular resolutions and appointment respectively.

20. I will, accordingly, now proceed to deal with theses documents. As regards the resolution of June 13, 1924, Exhibit 2, it is common ground that only two trustees were then present, viz. Mr. R.D. Tata and Mr. H.E. Bamji. Sir Dorab was absent. The resolution runs as follows :-

The trustees were informed that on the death of Mr. Jumsetji Nusserwanji Tata and Mr. Kaikhusru Edulji Bamji no new trustees were appointed as there ; were already five trustees. Since then Sir Ratan Tata died and Mr. Fardunji Maneckji Kanga resigned the office of trustee. As there remained only three trustees it was necessary to appoint two more trustees to make up the number of five trustees. Resolved that Mr. Sorabji Dorabji Saklatvalla and Kaikobad Bapuji Saklatvalla be appointed trustees in place of Sir Ratan Tata deceased and Mr, Fardunji Maneckji Kanga resigned respectively. The trustees directed that necessary Deed of Appointment be prepared.

21. I think it clear that this resolution cannot be regarded as a valid appointment of now trustees. Even if the settlement did not require an appointment to bo by deed,, still it is clear that this resolution contemplated that a deed of appointment should be prepared. But apart from this I think it was a vital defect that the appointment was only by two trustees and not by all three. The, power of appointing new trustees was vested in the surviving or continuing trustees or trustee including every refusing or retiring trustee who was willing to act in the execution, of that power. And even if the special clauses in the settlement as to the mode of ascertaining a majority and as to the majority binding the minority could apply here, yet I think it was essential that there should bo a majority in favour of the proposed appointment, after reckoning Sir Dorab as having two hostile votes and a casting vote. On that basis the proposal failed as the two trustees present would be outvoted by the absent Sir Dorab.

22. I may here state that I do not think the majority clause Would enable, say, three out of five trustees, to hold a hole in the corner meeting without notice to their co-trustees, and thus to treat the latter as if they were non-existent. They are still trustees and entitled to bo heard and to take their part in the execution of the trusts. In fact it is not proved that Sir Dorab had notice of this meeting, although once more Mr. Ghandy purported to represent him. AS regards the majority clause, I have already indicated my views on the construction of the settlement. But it will be borne in mind that we are not here dealing with the proviso restricting a sale, but only with the power of appointing new trustees. A three-quarter majority wan, therefore, not essential.

23. In my judgment, then, the resolution of June 13, 1924, was invalid, because even if it was not essential that Sir Dorab should join in the appointment, still in his absence ho must be taken to have voted hostilely, and, therefore, his two hostile votes, or opinions, to use the language of the settlement, would, by reason of his casting vote, override the views of the two trustees present at the meeting.

24. As regards the appointment of now trustees of September 15, 1924, Ex. A, that appears to have been valid. Mr. S. 1). Saklatvalla and Mr. K.B. Saklatvalla (plaintiffs Nos. 3 and 4) were thereby appointed trustees in the place of Sir Ratan Tata deceased and Mr. F.M. Kanga who, according to the recital in that deed, had resigned his office of trustee on July 5, 1922. It would appear from the attestation that that deed was signed by Sir Dorab Tata in London. It appears to have boon stamped in Bombay on October 31., and to have been lodged for registration on November 14.

25. But unfortunately for the plaintiffs this did not end their troubles, for it would appear that, on September 23, 1924; Mr. H.E. Bamji was adjudicated an insolvent. Accordingly, under the express provisions of the settlement he thereby ipso facto ceased to bo a trustee. So once more the number of trustees fell below the minimum of five.

26. It is not, however, suggested that there was any further resolution of the trustees to sell, nor is there any evidence before us to show that all the five trustees, or even all the trustees for the time being, agreed to the sale to the defendants prior to the end of October 1924. The legal position, then, in my judgment, is that up to that date the plaintiffs had not shown a good title. Accordingly, they were in default, and their letter of September 10 calling on the defendants to send a draft conveyances and to complete within a fortnight was, in my judgment, clearly wrong. At that date, on the information then before the defendants, nobody could have drawn a conveyance on their behalf so as to show a good title. In a peculiar settlement of this nature it would be essential to show not only that the vendors had a power of sale, but also that they had validly complied with the restrictions on that power of sale. This at that time could not be done. Consequently a conveyance, if taken on the then existing materials, would be nothing less than a clear breach of trust, of which any beneficiary in after years might take advantage. I may here add that there is no question of obtaining the consent of all the beneficiaries, for there are a large number of limitations under this settement including an ultimate trust in certain contingencies to charity.

27. It is, however, urged that the conduct of the defendants has disentitled them from relying on this defect in the vendors' title at that date. This argument found favour with the learned Judge and he held that the defendants bad taken a mass of frivolous objections, that the delay between November 1923 and June 1924 was due to a lengthy and useless correspondence occasioned by their conduct, that the defaulting parties here were the defendants and not the plaintiffs, and that a Court of Equity will not assist a dishonest purchaser to get out of his bargain by resorting to tactics of the kind which were displayed in the correspondence on behalf of the defendants. In my judgment these strong comments by the learned Judge on the conduct of the defendants are unjustified. The learned Judge seems almost to have ignored the point that it was the duty of the plaintiffs as vendors to make out their title and not for the defendant-purchasers to do so. I cannot lay too great a stress on this elementary proposition, one reason for which is that the vendor knows his title and the purchaser doss not. And even where a vendor has under the contract an express power of rescission if requisitions are made, which he is unwilling to comply with, yet that power does not enable him to override reasonable requisitions. (See Quinion v. Horne [1900] 1 Ch. 596 and In re Jackson and Haden's Contract. [1906] 1 Ch. 412 We have, however, thought it right to look at the correspondence between November 1923 and March 1924 relative to the draft agreement. The draft itself was not in evidence in the Court below, but we have made it an appeal exhibit. Looking at that draft agreement it is clear that the defendants were entitled to object to any clause being inserted which was not covered by the existing contract between the parties, or which would be implied under Section 55 of the Transfer of Property Act. I 'do not, therefore, attach any blame to most of the defendants' objections. On the other hand, there were certain amendments made by them in connection with notices from the Municipality and so on, which they may not have been strictly entitled to insist on. I think, therefore, that no particular blame can be attached to either party for the breakdown of the negotiations for a formal contract, and for their future reliance on the contract contained in the original correspondence, Ex. 7.

28. It was next said that the defendants novel brought their objections clearly to the minds of the plaintiffs. I do not propose to detail the actual requisitions and answers and the relevant correspondence any further than I have already done. It is sufficient to say that they were discussed before us in detail. The learned Judge seems to have thought that the plaintiffs' solicitors were misled by the ambiguity of the defendants' requisitions, and that they ought not to be allowed to take advantage of what was obviously a mistake on the part of the plaintiffs' attorneys which the defendants with due care on that behalf could have easily rectified. With all respect, I do not agree with this view. The requisitions seem to me fairly to raise the point now relied on, although, in the light of subsequent events, it may be that the defendants could have framed their objections in an even more explicit manner. But I see nothing reprehensible on their part and much less that there was any sharp practice or unfair advantage taken. Before us plaintiffs' counsel felt the difficulty of maintaining this extreme position, and stated that he did not go to the length of contending that the defendants were in default. It was sufficient for his purpose to say that the plaintiffs were not in default, or at any rate were not guilty of such gross delay as would alone justify a notice being given making time of the essence of the contract. He, accordingly, cited Section 55 of the Indian Contract Act and Jamshed Khodaram v. Burjorji Dhunjibhai I.L.R (1915) 40 Bom. 280 and Fry, 6th Ed., p. 510 and Halsbury, Vol. XXVII, p. 68, para. 118.

29. But the view I take of the facts is that up to this date the defendants had rightly called the plaintiffs' attention to a serious defect in their title involving a breach of trust, and had requested them to remedy it. But, on the other hand, the plaintiffs had repeatedly declined to do so, and on the contrary had insisted that they had already made out a marketable title, and they had consequently called on the defendants to furnish, a draft conveyance and to complete within a limited time, in default of which the plaintiffs would take proceedings.

30. On that finding of fact, I think the plaintiffs thereby broke their contract, for they were bound to show a good title and on the other hand, they were insisting on the defendants taking a title which in fact was bad as involving a breach of trust. That being so, I think the defendants wore entitled to regard that breach as a repudiation of the contract, and to treat the contract as at an end accordingly.

31. It was stated by the learned Judge that the defendants did not base their case on that ground in the Court below, viz under Section 39 of the Indian Contract Act, but relief on their right to repudiate the contract on the ground of non-mutuality. But the learned Judge has to some degree discussed the applicability of Section 39 and moreover it would appear that, on the summons before him, the question of rescission was not properly before the Court; for the original question No. 1 did not raise the question of rescission and the learned Judge rightly declined to decide the original question No. 2 as to specific performance. I think, therefore, it is open to us on the amended summons to decide the case on this point of law, whatever may have been the argument of law presented to the learned Judge in the Court below. And I am unable to take his view that b?cause the suit contract was signed by Mr. R.D. Tata alone, the remedies of the defendants would be merely against Mr. Tata. The plaintiffs' claim under that contract, and they have admitted in para. 2 of the plaint that they have received the earnest money. They can, therefore, be in no better position than Mr. R.D. Tata himself.

32. But even if the alternative right of determining the contract for want of mutuality is considered, I am not satisfied that the defendants ever lost that right. They had never agreed to accept any title other than that by trustees selling in pursuance of a proper resolution to that effect in accordance with the express provisions of the deed of settlement. Accordingly, there was nothing up to the end of October 1924 which relieved the plaintiffs from the necessity of clearing the above defect in their title, for up to that date the plaintiffs had not taken the requisite steps which would render the sale effective against all their beneficiaries. Consequently there was no contract binding on the trust estate.

33. Now, what Lord Parker (then Mr. Justice Parker) decided in Halkett v. Dudley [1907] 1 Ch. 590 amounts, I think, to this that if and when a purchaser discovers that there is a want of mutuality between him and the vendor, he can then and there repudiate the contract. But if he does not do so, then it is not open to him at any time thereafter to repudiate without giving a reasonable notice. He must at least give a reasonable notice to his vendor to remove the defect in question. Thus the learned Judge says (p. 600) :-

It is not necessary for me to go so far as to hold that, by not repudiating promptly, the purchaser lost his right of repudiation altogether ; but it seems to me that by treating the contract as subsisting after the discovery of the defect he did preclude himself from exercising a right of repudiation at a subsequent time before giving the vendor & reasonable time to cure the defect, and that thereafter his only safe course was to limit the time within which the defect must be removed and a title made out, if the contract was to go through.

34. That decision was followed by this Court in Bai Dosibai v. Bai Dhanbai : AIR1925Bom85 where it was held, at p. 1094, that the purchaser had not lost her right of repudiation altogether, and where in the result the Court gave time to the vendor to remove the then defect in the title by obtaining a release of the restrictive covenant then objected to. So, here, it may bo said that at any rate by July 23, 1924, when the defendants got a copy of the resolution of December 4, 1923, they must have been aware of the want of mutuality and yet they did not at once repudiate. Yet, nevertheless, I think the six weeks' notice given by the letter of September 6 to make out a marketable title to complete by October 21, was, under all the circumstances, a reasonable notice. It is true that in the plaintiffs' answers to requisitions of June 24, 1924, they had stated that two more trustees were being appointed. Accordingly, it might be reasonable to wait some time for this appointment to be completed, and for a further resolution to be passed. But, in view of the fact that no further information on this point was given, and that on the contrary the defendants Were required by the plaintiffs' letter of July 23, and September 10, to take the title as it stood, I would hold that the six weeks' clear time given by the notice of September 6 was reasonable having regard to the information then in the possession of the defendants.

35. It seems to me, therefore, unnecessary to determine the plaintiffs' further objection that the notice of September 6, 1924, did not validly make time of the essence of the contract. It was argued that the notice was ambiguous and inconsistent inasmuch as the first portion of it threatened repudiation on the ground of the Municipal notice, and the second portion demanded completion, and moreover the second portion was described as being without prejudice to the first portion. I think in substance the notice amounted to this that the plaintiffs were required to deal with two alleged defects, viz., the Municipal notice and the want of a marketable title having regard to requisitions Nos. 12 and 13. The words 'without prejudice' in the second portion were not used in the sense that the notice was not to be used in evidence against the defendants. They were merely intended to preserve the defendants' alleged rights in respect of the Municipal resolution. Consequently In re Western and Thomas's Contract, [1907] 1 Ch. 244 which decides that a notice headed 'without prejudice' is invalid, does not apply here.

36. But one cannot deal with the case as if the plaintiffs' letters of September 10 and October 10 had never been written. I think, therefore, that by October 30, 1924, the defendants were entitled to consider that the plaintiffs had said their last word and were insisting on the title being taken as it was, despite the sis weeks' time given to cure the defects complained of, I would hold, therefore, that the defendants were entitled, on October 30, to treat the contract as at end on the ground of want of mutuality oven if they had not made time of the essence of the contract, There is authority for saying that a notice making time of the essence is unnecessary, whore the vendor definitely declines to perform his contract. (See Bullen and Leake, 8th Edn., p. 291 (note E), and Williams v. Brisco (1882) 22 Ch. D. 441. And, I think, a similar proposition applies to a case of non-mutuality, where a notice reasonable in point of time has been given as here to remedy the defect.

37. In the view, then, which I take, the contract was validly determined by the defendants by their letter of October 30, 1924, inasmuch as they were entitled to do so either under Section 39 of the Indian Contract Act, or on the ground of want of mutuality. That being so, I do not think there is anything in the subsequent correspondence from December onwards to alter their position. Some attempt was made by the plaintiffs to rely on the request contained in the defendants' letter of February 10, 1925, for information about the resolution and the appointment of new trustees. But this was solely with a view to the case which was to be submitted jointly with the consent of both parties to the Court, and in no way injured the legal position of the defendants. On the contrary it shows how extremely dilatory the vendors were in supplying reasonable information to their purchasers.

38. It follows that in my judgment it is unnecessary to decide whether the plaintiffs had made out a good title by at any rate February 17, 1925. But, on the existing materials, I am not satisfied that they did so oven by this late date. For that purpose it would seem necessary, or at any rate desirable, for the plaintiffs to show that the deed, Ex. B. dated January 8, 1925, appointing Mr. N.D. Tata (plaintiff No. 5) to be a trustee in the place of Mr. H.E. Bamji was in fact executed on that date or at any rate before the trustees' meeting of January 29, 1925. Otherwise there were only four trustees instead of the minimum, number of five. Moreover, Mr. K.D. Saklatvalla (plaintiff No. 4) was absent from that meeting, although it is urged that he consented to the resolutions. But what is very strange is that the meeting in addition to approving the suit contract purported to appoint plaintiff No. 5 to be a trustee in the place of Mr. Bamji, and resolved that 'the necessary deed of appointment be executed.'

39. Stopping there, one would infer that Ex. B, although dated January 8, was not in fact executed until after this meeting on January 29 more especially as Mr. Ghandy, the solicitor to the trustees, way himself present at the meeting, and Ex. B was not lodged for registration till February 5, 1925.

40. The plaintiffs, however, say that this is all a mistake, that Ex. B was in fact executed by January 8, 1925, that no objection of this sort was raised in the Court below, and, accordingly, they tendered an affidavit to explain how the alleged mistake arose. The defendants objected to our receiving further evidence unless they were allowed to cross-examine and if necessary to adduce further evidence. Accordingly, we thought it right to determine this appeal on the existing materials and to reject the affidavit as evidence, but allow it to be marked for identification only.

41. On the present materials I would, if necessary, hold that the real date of the execution of Ex. B is too doubtful, and the point involved too important to justify one in finding a marketable title had then been made out. But if contrary to the view which I hold, the contract was still subsisting on February 17, 1925, I would nevertheless have been prepared to give the plaintiffs a further opportunity of proving the real date of Ex. B either on a remand of the present summons or in some separate suit.

42. I have now dealt with all the points raised by the amended summons, and the above findings would normally dispose of them in favour of the defendants. But there is yet another point of importance which was raised by the Bench, and it arises in consequence of a recent decision by their Lordships of the Privy Council in Dayal Singh v, Indar Singh. : (1926)28BOMLR1372 , P.C.

43. That point is whether the purchasers can recover their deposit inasmuch as the contract was not registered under the Indian Registration Act, 1908. No such point was taken in the Court below. It was not to the interest of either party to do so, and as regards the Court itself it has been considered by our High Court, and I believe by all Indian Courts, that since 1877 a contract for sale of land is protected by the exemption in Section 17 (2) (v) of the Indian Registration Act inasmuch as it does not 'itself' create any right to land, but merely creates a right to obtain any document which will create such a right. This is borne out by Section 54 of the Transfer of Property Act, which provides that such a contract 'does not, of itself, create any interest in or charge on such land.' So, too, the contingent charge given by Section 55 (6) (b) of the latter Act to the purchaser for his earnest-money in the event of his not having 'improperly declined to accept delivery of the property' has been regarded as not. created by the contract 'itself' within the meaning of the Indian Registration Act. And indeed Section 54 of the Transfer of Property Act expressly says that the contract does not of itself create a charge.

44. In Dayal Singh v. Indar Singh, a purchaser brought a suit for specific performance on a document which expressly acknowledged the receipt by the vendor of Rs. 1,000 for earnest-money. But the document contained this passage : 'The land has at any rats been sold and the vendee has become entitled to it. I (vendor) am simply entitled to receive Rs. 9,000' (the balance of the purchase money). Subsequently the vendor died, and his representatives pleaded in defence that the document was void for want of registration. They appear to have rested this plea on the allegation that the document effected a sale and was not a mere agreement for sale. The Courts below held, however, that the document was merely an agreement, and this particular finding was assumed by their Lordships of the Privy Council to be correct for the purposes of that case. But the Board then dealt with a point not raised in the Courts below, viz., that the purchaser got a charge for his earnest-money under Section 55 (6) (b) of the Transfer of Property Act, and that consequently the agreement conferred upon him an interest in land, and not merely the right to obtain another document which would give him that interest. This point their Lordships held to be good in a judgment which concluded as follows (p. 1376):-

Their Lordships are of opinion that the section applied to the agreement in this case, where the buyer had paid earnest money, find so far from refusing to accept delivery, was pressing for specific performance, and that the agreement did in itself create an interest and therefore did not allow of the application of Section 17(2)(v). It was therefore compulsorily registrable under Section 17 and, not having been registered, was inadmissible in evidence under Section 49.

Their Lordships will, therefore, humbly advise His Majesty to allow the appeal and to dismiss the suit.

45. Now the present case is, I think, distinguishable in this respect, viz., that the suit contract did not acknowledge the receipt of any earnest-money, whereas the contract in the Privy Council case ( Dayal Singh's case ) did, and so expressly fell within the opening words of Section 7(1)(c). No doubt, in a contract contained in correspondence, one must look at the whole correspondence and not necessarily stop at, say, two letters if subsequent letters show the parties were really still negotiating on material points. (See Hussey v. Horne-Payne (1879) 4 App. Cas. 311 and Bristol, Cardiff' and Swansea Aerated Bread Co. v. Maggs (1890) 44 Ch.D. 616). If, however, the two letters show a complete contract, further negotiations between the parties cannot, without the consent of both, get rid of the contract already arrived at. (See Perry v. Suffields, Limited [1916] 2 Ch. 187. But I road the purchasers' letter of October 16, and the vendors' reply of October 20, 1923, as an offer and acceptance which made a complete contract. Consequently, although the vendors wrote on October 24, acknowledging the receipt of the earnest-money, that letter was not, I think, part of the contract, despite the fact that, according to the learned Judge's notes, all three letters 'constituting contract' were put in as Ex. 7. The true test is whether on say, October 22, 1923, either party could have treated the previous correspondence as mere negotiations, and declined to proceed further. In my opinion they could not. The payment of earnest money though contemplated by the first two letters was not a condition precedent. Its non-payment could at most be a breach of an existing contract.

46. That being so, the contract, if it required registration at all, would only come within Section 1.7 (1) (?>). The decision of the Privy Council in 187.1 in Futteh Chund Sahoo v. Leelumber Singh Doss (1871) 14 M.I.A. 129 shows that, prior to the Transfer of Property Act, 1882, a contract acknowledging the payment of the consideration money would require registration as the consideration money 'was for what was to be ultimately an absolute sale of the property in question and what in equity would operate as a sale of the property.' (See p. 131). And, doubtless, the ratio decidendi of that case would extend to a contract which did not contain a receipt for any earnest money. But that decision involved the inconvenience) of the compulsory registration of two documents, viz., the contract and the conveyance. Accordingly, what is now Section 17 (2) (v) of the Indian Registration Act, 1908, was passed in 1877 to exempt the ordinary contract of sale from registration and to confine registration to the conveyance. (See Chunilal Panalal v. Bomanji Mancherji Modi I.L.R. (1883) 7 Bom. 310

47. Later still the Transfer of Property Act, 1882, was passed, and as regards this Presidency it has been in force since January 1, 1893. Consequently, since that date, by virtue of Section 54, a contract of sale dons not of itself create any interest in or charge on the land sold. It would, therefore, seem to follow from Section 54 that such a contract is not one of those 'instruments which purport or operate to create. . . any interest ...' in land within the meaning of Section 17 (1) (b) of the Indian Registration Act, and, therefore, does not require registration under that clause. Or that alternatively it is exempted by Section 17(2)(v) as 'not itself creating...any interest' but 'merely creating a right to obtain another document 'which will create such interest.

48. This view obtains support from Maung Shwe Goh v. Maung Inn (1916) L.R. 44 IndAp 15 where their Lordships of the Privy Council in an appeal from Burma would seem to be of opinion that, having regard to Section 54, the English doctrine that in equity the purchaser is the owner of the laud from the data of the contract and the vendor merely a trustee for him does not now apply to India. If that is so, then it would seem to follow that their Lordships recognised that the ratio decidendi in Futteh Chund Sahoo v. Leelumber Singh Doss (1871) 14 M.I.A. 129 can no longer prevail in those parts of India where Section 54 has come into operation, for the contract could no longer operate in equity as a sale or transfer of ownership of the property.

49. I recognise that in Bapu, Apaji v. Kashinath Sadob I.L.R. (1916) 41 Bom. 438 our Full Bench has decided that a vendor owes certain fiduciary duties to his purchaser which may be pleaded in defence to an ejectment suit brought by the vendor in breach of those duties In that particular case the purchaser was still entitled to specific performance ; and the principle has been extended by Sir Norman Macleod and Mr. Justice Shah, in Venkatesh v. Mallappa (1921) 24 Bom. L.R. 242 to a case whore the purchaser's right to specific performance has become barred by time. But, having regard to Section 54 of the Transfer of Property Act, the true distinction would appear to be that pointed out by their Lordships of the Privy Council during the argument of the above appeal from Burma (Maung Shwe Goh v. Maung Inn) (1916) 19 Bom. L.R. 179 viz. that the purchaser gets no interest in the res but only a personal right against his vendor. Thus the Lord Chancellor (Lord Buckmaster) says (p. 181):-

Is not the English doctrine based on this that the purchaser is the owner and entitled to outer,... It seems that in India, he [the purchaser] has not the right to enter,

6. And Lord Wrenbury adds (p. 181) :-

If he has no interest in the res, he has no right to enter. His interest in the res only dates from the registration of the transfer.

50. In that case no point as to registration appears to have been raised, although like in Bayed Singh v. Indar Singh, it was a purchaser's action for specific performance, and the contract sued on contained an acknowledgment by the vendor that he had already received Rs. 50,000 out of the purchase money. (See Maung Shwe Goh v. Maung Inn. (1916) 19 Bom. L.R. 179 The fact that the sale was by a mortgagor to his mortgagee does not affect the question of registration. And if it be said that in Maung Shwe Goh v. Maung Inn, the Board were only considering a point arising in execution of a decree (see p. 184), it may be answered that the decree itself, which was for specific performance, had boon previously confirmed by the Board in Davis v. Maung Shwe Go (1911) L.R. 38 IndAp 155 in a detailed judgment. As there is nothing in the reports to shew that the contract of April 4, 1906, was ever registered, the case is difficult to reconcile with the decision in Dayal Singh v. Indar Singh.

51. It may be argued that Sub-sections (b) and (c) of a 17 (I) both refer to the 'creation' etc. of an interest in land, and that consequently both sub-sections must be read alike : and that an interest in bind, present or future, is either created in both cases or in none. But as I read Sub-section (e), it is intended to catch written receipts for the purchase money 'on account of the creation of any. . . interest' in land. Accordingly, I do not think its operation should bo confined to those cases where the interest in laud has already been created. On the other hand, in Sub-section (b) one has to see whether the contract itself operates to create etc. any interest in land.

52. Unfortunately neither Section 54 of the Transfer of Property Act, nor the two previous decisions of the Board in the Burma case (Maung Shwe Goh v. Maung Inn and Davis v Maung Shwe Go) would appear to have been brought to the attention of their Lordships who decided Dayal Singh v. Indar Singh, for otherwise in a case of this far-reaching importance a reference to them might have been expected in the judgments delivered. This may, I think, justify us in refusing to extend the decision in Dayal Singh v. Indar Singh beyond any case to which it strictly applies, until their Lordships have had an opportunity of further enunciating the law on the point. Accordingly, in the present case, I think, we are not bound to extend that decision to a contract registrable, if at all, under Section 17 (1) (b). So, too, in Vallabhdas Gordhandas v. Mulchand, Hemraj (1926) O.C.J. 47 of 1926 decided by Marten C.J. and Kemp J. on September 15, 1926 (Unrep.) we recently refused to extend the decision to a case where the vendor was suing for specific performance, and where in our judgment the purchaser had improperly declined to accept delivery of the property, and consequently was not entitled to the charge under Section 55(6)(b) of the Transfer of Property Act on which the decision in Dayal Singh v. Indar Singh was based.

53. On the other hand, we reject the argument that .Dayal Singh v. Indar Singh is not binding on us because it was heard ex parte, and consequently the Board had no arguments from counsel in support of the view which has prevailed in India since 1877. In our judgment it would normally be our duty to follow any decision of the Privy Council whether or no all parties were represented by counsel before their Lordships.

54. One further point I may mention. It may be urged that as soon as any purchase money was paid, the purchaser got a contingent charge under Section 55 (6) (b) of the Transfer of Property Act, and that thereupon the contract required registration. But in my view the necessity for registration must be determined at the date of the instrument and not by subsequent events. Consequently, in the present case I do not think that the payment of earnest-money on October 24, 1923, rendered the antecedent contract of October 20 registrable. To hold otherwise would cause great confusion in practice, and might easily lead to hardship on individuals, to say nothing of difficulties as to the time within which the registration must be effected. It may, however, be that the letter of October 24, 1923, acknowledging the receipt of the earnest-money, required itself registration under Section 17 (1) (e) in view of Dayal Singh v. Indar Singh and was, accordingly, inadmissible in evidence. But, even if that is so, the point is immaterial, for para, 2 of the plaint contains a clear admission by the plaintiffs that the defendants paid the Rs. 40,000 'as and by way of earnest-money.'

55. On the other hand, under the peculiar circumstances of the present case, we have thought it right to consider the question whether the contract itself required registration, notwithstanding the admission in the pleadings as to its existence. In the result, we think the contract did not require registration. It is unnecessary, therefore, to pursue the question as to the effect of the pleaded admissions in this respect. But I may point out that the parties were not content with their pleadings. The two letters themselves were tendered and admitted in evidence as part of Ex. 7 on the adjourned hearing on November 16, 1925.

56. In my judgment, then, the defendants ought to succeed on the amended summons for the reasons already given. I would, accordingly, answer the questions raised by that summons as follows :-

1. (a) No.

(b) Not on the materials at present before the Court.

2. Yes, but it is unnecessary to decide whether time was thereby validly made of the essence of the contract.

3. Yes, by their letter of October 30, 1924.

4. No.

5. Yes.

57. I would, accordingly, allow the appeal, and set aside the order under appeal, and direct instead that the questions in the amended - Originating Summons be answered as above mentioned. There should, accordingly, in my judgment, be an order on the plaintiffs for payment of the earnest-money etc. as asked by Question No. 5. The plaintiffs should also be ordered to pay the coats of the defendants of this appeal and in the Court below, and there should be interest on judgment at six per cant per annum. The amended summons and the draft order should be shown to us.

58. The two letters of October 16 and 20, Ex. 7, will be impounded under Section 61 (2) and (3) of the Indian Stamp Act, 1899, and sent to the Collector for action, if he thinks fit, under Section 61 (4) (a). In our opinion these two letters or one of them should have been stamped as an agreement and were wrongly admitted in evidence without payment of the appropriate duty (eight annas) and penalty (Rs. 5). (See Indian Stamp Act, Section 35 (a) and (c).) But having regard to Section 36, this Court can now only act under Section 61.

59. In conclusion, I should like to express my appreciation of the assistance rendered to us by the able arguments of counsel on this appeal. And should it be desired to take this case further, we will take special steps to see that any further appeal is expedited, as, quite apart from the merits of the case, we recognise the great importance of a further and early decision being obtained from their Lordships of the Privy Council on the subject of the registration of contracts for the sale of land, for a large number of cases in our Courts are affected thereby in the absence of any further legislation on the point.

Kemp J.

60. This is an appeal from the decision of Mr. Justice Mirza on certain questions raised on an Originating Summons taken out by the plaintiffs with respect to a contract for the sale of certain trust property to the appellants. What we consider the proper questions for decision have been raised before and approved by us so as to enable an answer to be given on all the points in dispute in the Originating Summons. These questions have, accordingly, been argued before us,

61. The plaintiffs were at the date of this Originating Summons the trustees under a Deed of Settlement dated March 8, 1889, executed by the late Jamshedji Nusserwanji Tata. The terms of the trust deed are material and have provided counsel on both sides with ample material for argument. I do not propose to discuss each clause in detail. In the view T. take of the terms of the settlement I have arrived at the following conclusions :-

(1) The number of trustees was always to be kept up to five but not to exceed seven :

(2) the trustees had power to sell the trust land the subject-matter of the settlement:

(3) this power could only be exorcised by a resolution passed and sanctioned by a majority of three-fourths of the votes, calculated as in (4), of the entire number of trustees for the time being, such number not to be less than five and not more than seven :

(4) the tenant for life for the time bung under the trust being of the age of twenty-one years was to be one of the trustees and in case of difference of opinion between the trustees in the execution of the trusts was to have two votes and a further casting vote when the votes so calculated were equally divided.

62. It is admitted that the tenant for life entitled to the benefit of the trust under (4) is plaintiff No. 1 Sir Dorab Tata.

63. Plaintiff No. 2 died after the filing of the appeal.

64. Mr. Justice Mirza held that the plaintiff's had not failed to make out a marketable title and he gave no answer to the second question raised before him and left the plaintiffs, so far as that question was concerned, to a remedy by a properly constituted suit.

65. The contract of sale was effected in correspondence. By their letter of October 16, 1923, addressed to the trustees of the Tata Settlement, the appellants intimated their willingness to purchase certain land-part of the subject-matter of the trust-on Sewri Road. The letter goes on to state :-' On your having accepted this offer we are duly to pay to you Rs. 40,000 as earnest money. 'Clearly this letter was something more than an intimation of a willingness to negotiate. It was an offer and was, in my opinion, rightly treated as such and accepted on October 20, 1923, by plaintiff No. 2 who in his letter to the appellants signed himself one of the trustees of the Tata Settlement.

66. Plaintiff No. 2, therefore, purported to accept the offer on behalf of the trustees and it remained to the trustees to ratify his act by a resolution passed and sanctioned according to the trust deed. There is nothing to show that any resolution, in accordance with the trust deed, had been passed by them. In foot, it appears no such resolution had been passed then as the first intimation we have of the acceptance of the offer is contained in the resolution of December 4, 1923, which, in my opinion, was not a resolution in accordance with the trust deed.

67. On December 4, 1923, two of the trustees, Messrs. R.D. Tata and Bamji, were present. The third trustee, Sir Dorabji Tata, was in England. The solicitor to the trustees, Mr. Ghandy, was present at the meeting and purported to represent Sir Dorabji. It was resolved that the land in question be sold to the defendant on the terms contained in the correspondence. The trustees present noted that there should be not less than five trustees and resolved to ask the prospective life tenants under the settlement, the two Saklatvallas, to be trustees. I am of opinion that the resolution passed on this occasion was not in accordance with the provisions of the trust deed because there were not five trustees in existence and the resolution was not passed by a three-fourths majority. Sir Dorabji Tata being a life tenant was entitled to two votes in the case of any difference between the trustees and there is nothing to show that Mr. Ghandy could properly represent him at the meeting.

68. Then, on June 13, 1924, there was another resolution passed at which Mr. R.D. Tata and Mr. Bamji as trustees were present and again Mr. Ghandy represented Sir Dorabji. Tata, the third trustee. At the meeting it was resolved that Mr. S.D. Saklatvalla and Mr. K.B. Saklatvalla be appointed trustees in place of two deceased trustees and that the necessary deed of appointment be prepared. Hero again the objection might be taken that Mr. Ghandy did not properly represent Sir Dorabji Tata, but on September 15, 19(sic)4, a deed of appointment was executed pursuant to the resolution passed on June 13, 1924, and by that deed which was executed by all the trustees the, two Saklatvallas were appointed trustees. On this date, therefore, there were five trustees in accordance with the trust deed but no resolution was passed by them authorising the sale of the property in question. Matters became complicated again because, on September 23, 1924, a trustee, Mr. Bamji, became insolvent and thereby under the terms of the settlement o?as?d to be a trustee. That was the position on October 30, 1924, when the defendants-appellants put an end to the contract.

69. Subsequently, on January 19, 1925, the trustees seem to have realised what was required of them under the trust deed in respect of the exercise of the power to sell the trust property. At that meeting Sir Dorabji Tata, Mr. R.D. Tata and Mr. S. I). Saklatvalla were present. So was Mr. N. I). Tata, who is described as one of the trustees in the minutes of the meeting, although one of the objects of that meeting was to appoint him in place of the insolvent Mr. Bamji. Mr. Ghandy was also present as the solicitor to the trustees. It was resolved that Mr. N.D. Tata be appointed a trustee in place of Mr Bamji and that the necessary deed of appointment be executed. It was further resolved that the land in question be sold to the defendants and the trustees' solicitors were instructed to prepare the necessary documents. It will be noted that Mr. K.B. Saklatvalla who was a trustee was not present at this meeting. He appears to have been upcountry and to have consented to the resolutions passed. If he had no notice of the meeting I would be inclined to hold that the resolution authorising the sale of the land was ineffective even though had he been present and objected the necessary majority of three-fourths of the votes would have been obtained with the assistance of Sir Dorabji Tata's votes. Another objection, however, to this resolution is that Mr. N.D. Tata had not, on January 29, been appointed a trustee although the deed of appointment appointing him and executed by all the remaining trustees is dated January 8, 1925. It was registered on February 5, 1925, which suggests that it was prepared before the meeting of January 29, 1925, but executed afterwards. If he was not a trustee on January 29, 1925, there was not the requisite number of five trustees in existence on that date. I am aware, however, that it might be contended that as Mr. K.B. Saklatvalla had consented to his appointment he became, with the consent of the other trustees, a trustee on January 29, 1925. It is really, however, immaterial in the view that I take whether the resolutions of January 29, 1925, were valid or not as the material date, in my opinion, is October 21, 1924, which the defendants intimated was to be the latest date which they would allow plaintiffs for making out a marketable title and completing the contract.

70. Here I may state that if the question as to whether there was an agreement or not is in dispute it is not a matter for an Originating Summons at all. However, the parties agreed to have the question determined by an Originating Summons before Mirza J. and any failure by the trustees to ratify the contract before the defendants put an end to it may bo regarded as a question of title.

71. On June 4, 1924, the appellants' attorneys sent their requisitions to the attorneys of the trustees. Requisition No. 12 is :-

The aforesaid. Deed of Settlement authorises the Trustees to vary investments only by resolutions passed and sanctioned by a majority of three-fourths of the entire number of the Trustees for the time being. Please produce the original resolution.

72. Requisition No. 13 inquired: 'Are the vendors the only present trustees of the aforesaid Deed of Settlement ?' The trustees' attorneys, on June 24, 1924, returned the following answers-to Requisition No. 12: 'This will be produced' ; to Requisition No. 13: 'The present trustees are Sir I). J. Tata, R.D. Tata, H.E. Bamji. Two more Trustees are being appointed.' The appellants had, therefore, no knowledge of whether the trustees had passed a proper resolution completing their title. It will be noticed that Requisition No. 12 is clearly directed to this question. The answer to Requisition No. 13 merely states who the present trustees, i. e., those on Juno 24, 1924, are. The learned Judge considered that the answer to Requisition No. 13 and the inspection which the appellants had had of the trust deed was sufficient notice to them. He says :-'The contract was incomplete by reason of the fact that there were not then at least five duly appointed trustees who could by a three-fourths majority pass a resolution authorising the sale of the property to the defendants'; and that the defendants did not choose immediately to repudiate the contract for want of mutuality. I regret I am unable to agree because there was nothing before the appellants then to satisfy them that a proper resolution had been passed and they would not have been justified in saying that, on October 20, 1923, there had not been a resolution in accordance with the trust deed, The mistake the trustees appear to have made is that they regarded the matter as one of conveyance only whilst it was in fact one of title.

73. On July 16, 1924, the defendants' attorneys wrote :-

With reference to the reply to requisition No. 12 it is clear from your reply that there is no valid agreement between the parties and under the circumstances there is no binding agreement between the parties. Without prejudice to the purchaser's above contention and his strict rights in the matter and assuming also that the trustees have the right under the Deed of Settlement to sell and convey, we say that the vendors will have to satisfy the purchasers that all the previous formalities have been complied with by giving them inspection of the Trustees' minutes book and furnishing a certified true notarial copy thereof at their costs.

74. On July 23, 1924, the trustees' attorneys replied:-

With reference to your letter of 16th instant our clients deny that they have failed to make out a marketable title or that the replies to the requisitions on title are unsatisfactory as alleged therein.

75. They further state that they are not aware of the previous formalities referred to in the purchasers' attorneys' letters which ought to be complied with and they send with their letter a copy of the resolution of December 4, 1923. They further proceed to say :-

We are therefore now instructed to ask you to submit the draft conveyance for our approval within a week failing which our clients will take it that your clients are not desirous of completing the matter and will take such steps in the matter as they may be advised herein to compel your clients to complete the sale.

76. I am of opinion that up to this date at any rate there had been no ambiguity in what the appellants were asking for. On August 7, 1924, the appellants' attorneys wrote :-

Our clients repeat that your clients have failed to make out a marketable title and their further replies to the requisitions in your letter under reply throw very little further light upon the matter.

77. And further:-

With reference to your reply to requisition 12 the resolution is insufficient and not in accordance with the provisions of the trust deed.

78. On September 6, 1924, the appellants' attorneys wrote again stating that there was a material defect in the title on the ground that the trustees had deliberately concealed a resolution passed by the Bombay Municipality to acquire the land or a portion of it. They then go on to say that without prejudice to their clients' strict rights and contentions in the events aforesaid they note that the trustees had done nothing further to make out a marketable title :-

Therefore without prejudice to our clients' strict lights and contentions aforesaid we are hereby instructed, to call upon your clients to make out a marketable title and complete the sale by October 21, 1924, (time being of the essence of the contract), In default of your clients doing so our clients will treat the contract as at an end and hold your clients liable for return of the earnest-money and damages.

79. I think it may fairly be said that by this letter the appellants gave the trustees further time to complete their title and were ready to accept a marketable title by October 21, 1924.

80. On September 2'S, 1924, the trustee Mr. Bamji became insolvent and therefore ceased to bo a trustee under the terms of the settlement. On September 10, 1924, the trustees' attorneys wrote :-.

As our clients have made out a title free from any reasonable doubt we have to call upon your client to send draft conveyance for our approval and otherwise to complete the sale within a fortnight otherwise our clients will take further proceedings.

81. They wrote again on October 10, 1924:-

Our clients have now no alternative but to proceed further in the matter.

82. On October 30, 1924, the defendants' attorneys wrote :-

Your clients having also failed to carry out the requisition contained in the last para of our letter of the 6th ultimo the agreement (if it was at all binding upon our clients ) has been at an end since the date mentioned in the said letter.

and demanding the return of the Us. 40,000 earnest-money.

83. Reverting to the appellants' letter of September 6, 1924, it had not, in my opinion, the effect of making time of the essence of the contract, though I think the trustees had been guilty of unreasonable delay justifying the despatch of such a notice. But the notice purports to preserve the appellants' right to repudiate the agreement and at the same time to make time of the essence. I do not think such a notice can bo regarded as a proper notice for the latter purpose. Further, although the appellants cannot rely on this notice to make time of the essence of the contract, the trustees in their turn can rely on it as giving them further time to pass the necessary resolution or, as the appellants put it, to make out a marketable title. Were it not for this letter of September 6, 1924, I think, as the trustees had by their attorneys letter of July 23, 1924, refused to do anything further, claiming that they had already made out a marketable title and asking the appellants to send the draft conveyance within a week or they would take stops to compel them to complete, the appellants were not bound to give any further time at all. They could have accepted the trustees' letter of July 23, 1924, as a refusal to do anything more. But the appellants by their letter of September 6, 1924, regarded the matter as still open so far as making out a marketable title was concerned.

84. By their letters of September 10, 1924, and October 10, 1924, the trustees adhered to the position they had taken up in the earlier letters. It was not till October 30, 1924, that the appellants intimated that the agreement 'if it was at all binding upon our clients' had been terminated on October 21, 1924. After that there was no further explanation and the subsequent correspondence is concerned with preparations for submitting questions to the Court on the Originating Summons.

85. Under these circumstances, it appears to me that the appellants were entitled to require that the trustees should complete their title by a resolution in conformity with the terms of the trust deed. How could the defendants prepare the draft conveyance without this information The error of the trustees appears to have been that they regarded the matter as one of conveyance and not of title. It was, I think, ineffectual for them to appoint additional trustees by a resolution on January 29, 1925, to make up the requisite numb:?r of five. Till that there never were as many as five trustees to any resolution authorising a sale, and it really does not matter what they did after October 21, 1924, to perfect their title to enable them to convey.

86. It remains to give an answer to question No. 5, and here we have to consider the effect of the decision in Dayal Singh v. Indar Singh : (1926)28BOMLR1372 and whether it applies to the present case. Turning to the judgment in that case it is clear that, under the agreement for sale there, the receipt of Rs. 1,000 by way of earnest-money was acknowledged and their Lordships held that the agreement did in itself create an interest which was compulsorily registrable under Section 17(2)(v)of the Indian Registration Act. I take that case to decide that although an agreement for the sale of immoveable property does not of itself, by virtue of Section 54 of the Transfer of Property Act, create any interest in or charge on such property, nevertheless if by it any purchase money is acknowledged to have been received, the agreement would require registration under Section 17 of the Indian Registration Act as creating a charge on immoveable property under Section 55 of the Transfer of Property Act. An agreement for the sale of immoveable property cannot, if not compulsorily registrable when made, subsequently have to be registered by virtue of anything done under it. Section 17 (1) (b) of the Indian Registration Act appears to me to refer to a nontestamentary instrument which at its inception creates a charge in immoveable property. In the present case the contract was created, if at all, by the letters of October 16 and 20, 1923. On the latter date no part of the purchase pries had been paid under the agreement and indeed the earnest-money was not paid until October 24, 1923. The contract, if it was compulsorily registrable, was so on October 20, 1923. It appears to me, therefore, that the circumstances of the present case do not come within the ambit of the decision in the Privy Council case cited to us.

87. In Maung Shwe Goh v. Maung Inn (1916) 19 Bom. L.R. 179 the agreement for sale provided that if certain mortgage moneys were not repaid by a certain date the mortgagor agreed to sell the mortgage land for the amount due on the mortgage plus a further sum. There the agreement did acknowledge the receipt of a portion of the price, viz., the mortgage money, and provided for payment of a further sum in the event of the mortgage moneys not being repaid by the specified date. That decision was given in execution proceedings arising from the decision of the Board in Davis v. Maung Shwe Go (1911) L.R. 38 IndAp 155 where no objection was taken that the contract should have been registered under Section 17 of the Indian Registration Act. In Maung Shwe Goh v. Maung Inn the remarks of their Lordships show that an agreement for the sale of immoveable property does not, under Section 54 of the Transfer of Property Act, in India, create in favour of the purchaser any interest in the res,

88. I have, with great respect, some difficulty in reconciling the decision in Davis v. Maung Shwe Go with their Lordships decision in Dayal Singh's case except on the assumption that the point was not present to the minds of their Lordships or the eminent counsel who argued the appeal in the former case. We find that the purchaser here has not been in default and as the agreement contained in the two letters of October 16 and 20, 1928, does not require registration, he is entitled to a refund of the earnest-money paid by him subsequently.

89. I agree with the answers given by the Chief Justice and the order proposed.


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