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Harkisandas Bhagwandas Vs. Bai Dhanoo - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai
Decided On
Case NumberSecond Appeal No. 674 of 1930
Judge
Reported inAIR1934Bom171; (1934)36BOMLR290
AppellantHarkisandas Bhagwandas
RespondentBai Dhanoo
DispositionAppeal dismissed
Excerpt:
.....limitation act (ix of 1908), article 113-refusal of performance.; where a person sells his land or house to another person and the latter enters into a contract to convey the property back to the vendor or to the vendor or his heirs, the right to obtain a reconveyance from the vendee or his heirs is ordinarily assignable even to a stranger who can enforce it by a suit. where, however, the intention of the parties is that the vendor or his heirs alone have the right of repurchasing the property, the assignee outside the family cannot enforce the contract specifically.; sakalaguna nayudu v. chinna munuswami nayakar (1928) l.r. 55 i.a. 243 s.c. : 30 bom. l.r. 1379, followed.; gurunath balaji v. yamunava (1911) i.l.r. bom. 258 s.c. : l.r. 240 and vithoba madhav v. madhav damodar..........as the rest of the points go, the result may be summed up thus : (a) where a person sells his land or house to another person and the latter enters into a contract to convey the property back to the vendor or to the vendor or his heirs, the right to obtain a reconveyance from the vendee or his heirs is ordinarily assignable even to a stranger who can enforce it by a suit. (b) but when the intention of the parties was that the vendor or his heirs alone should be given the right of repurchasing the property, the assignee outside the family cannot enforce the contract specifically. for the reasons given above, i am of opinion that the present case falls under the second of the two classes.13. it was, however, contended for the plaintiffs (appellants) that plaintiff no. 2, who is the.....
Judgment:

Shingne, J.

1. On November 1, 1898, Ranchod, the father of plaintiff No. 2, sold the house in suit to one Bai Jivi for Rs. 899 under a registered deed. On the same day Bai Jivi executed an agreement in writing in favour of Ranchod, agreeing that she or her heirs would reconvey the house to Ranchod or his heirs on repayment of the sum of Rs. 899 with interest at eight annas per cent, per mensem. The agreement was not registered. Ranchod died leaving a son, who is plaintiff No. 2 in this case. Bai Jivi died leaving a daughter by name Bai Mani, who was the original defendant in this suit but died pending this suit. Her daughter Bai Dhanoo was, therefore, brought on record as her heir or legal representative. In October, 1918, plaintiff No. 2 assigned by a deed his right in the house to plaintiff No. 1. Prior to the assignment, plaintiff No. 2 had given to Bai Mani a notice (Exh. 42) asking the latter to make up the account in respect of the transaction and to reconvey the house on taking the amount that would be found due. In the notice reliance was placed on an agreement to reconvey the house. A reply was sent on behalf of Bai Mani on October 2, 1915. I propose to deal with the necessary portion of the contents of the reply while considering the point of limitation raised in this appeal. It is sufficient to say that, in the reply, the right to demand reconveyance was denied.

2. In 1919 both the plaintiffs brought a redemption suit alleging that the transaction between Ranchod and Bai Jivi was really one of mortgage, The defendant contended inter alia that the transaction was a sale and that there was no agreement to reconvey the house, and that even if there was any such agreement, the suit was out of time.

3. The trial Court dismissed the suit, holding that the agreement was forged, that even if it was genuine, it was not admissible in evidence as it was not registered, and that the transaction between Ranchod and Bai Jivi was one of sale. On appeal to the District Court, the agreement was held proved, but the appeal was dismissed on the ground that the agreement could not be treated as a separate document, entirely apart from the sale-deed, and that, as a consequence, it required registration. It was also held that the transaction in favour of Bai Jivi was not proved to be a mortgage. It may be noted that while the appeal was pending in the District Court, plaintiffs had asked for amendment of the plaint, praying for specific performance of the agreement to reconvey the house, if the relief already claimed could not be granted. The application was made in February 1924.

4. Plaintiffs filed a second appeal. In the course of the hearing of the second appeal, a Preference was made to a Full Bench vide Harkisandas v. Bai Dhanu : (1926)28BOMLR954 It was ultimately held that the deed passed by Ranchod was not proved to be a mortgage and that the transaction was a sale coupled with an agreement to reconvey the house. It was, therefore, held that the agreement did not require' registration. The decree dismissing the suit was, as a consequence, set aside and the amendment, as prayed for in the District Court, was allowed and the suit was remanded for disposal in the light of the amendment. It may be noted that an argument was addressed to the High Court on the ground that the agreement was void as offending against the rule of perpetuity. But the argument failed and it was held that the agreement was not void.

5. When the hearing of the case was resumed in the trial Court, the plaint was amended and the claim for specific performance was formally put in. The defendant contested the claim both on merits and on the ground of limitation.

6. The trial Court held that the intention of the parties to the agreement was that assignees outside the family of Ranchod could not enforce it and that the claim for specific performance was barred by time. The appellate Court agreed with the view and dismissed the appeal filed on behalf of the plaintiffs, who thereupon filed this second appeal.

7. The first contention advanced on behalf of the appellant was that the agreement could be enforced by plaintiff No. 1 though he was a stranger, and that, even if it was held otherwise, the presence of plaintiff No. 2 in the suit set all matters right. The second contention was that there was no refusal of performance within the meaning of Article 113. of the Indian Limitation Act.

8. In support of the first contention, it was argued that it was not denied that plaintiff No. 2 could claim reconveyance of the house and that, as a consequence, plaintiff No. 1 could claim the same relief as he was the assignee from plaintiff No. 2 and in that capacity was a representative of the latter within the meaning of Section 23(b) of the Specific Relief Act. The contention was further strengthened by citing a recent decision of their Lordships of the Privy Council in Sakalaguna Nayudu v. Chinna Munuswami Nayakar on appeal against the decision of the High Court of Madras in Munuswami Nayudu v. Sagalaguna Nayudu I.L.R. (1925) Mad. 387 The relevant facts of the case were as follows. By a deed of sale, dated January 27, 1891, one Venkata Subrahmanaya Ayyar on behalf of himself and as guardian of his minor son Krishnaswami Ayyar sold a village 'to Venkatapathi Naidu. On the same day, the parties executed what was called a 'counterpart document' by which it was provided that Venkatapathi Naidu should reconvey the village to Venkata Subrahmanya Ayyar in the cultivation season of the thirtieth year counted from the date of sale, upon his paying to the vendee a certain sum stated therein. After the death of his father Krishnaswami Ayyar assigned his interest in the 'counterpart document' to one Chinna Munuswami Naidu, who demanded a reconveyance from the sons of the original vendee, and on their refusal to pass the reconveyance Chinna Munuswami Naidu sued for specific performance of the agreement. It was held by the High Court that the ' counterpart document' was executed by the vendee in favour of both vendors, though the name of Krishnaswami Ayyar was not mentioned in the document, and that the 'counterpart document' was a completed contract and that the interest under the contract was assignable, and a decree was passed in favour of the plaintiff. The defendants appealed, but their Lordships of the Privy Council dismissed the appeal and confirmed the decree of the High Court of Madras. Their Lordships observed (p. 247):

The terms of the contract and the time at which the option was to be exercised go to show that the intention was that the option might be exercised by the above mentioned two persons or their heirs.

It was not disputed that if the transaction of January 27, 1891, amounted to a completed contract, as their Lordships have decided, the benefit of the contract could be assigned.

It may be noted that in the judgment of the High Court of Madras, Spencer J. had observed (p. 391):

I think that there was no personal element in this transaction which would make the contract incapable of being specifically enforced under Section 21(b) of the Specific Relief Act.

Ramesam J., who was the other member of the Division Bench, had observed (p. 399):

The term of 30 years, in my opinion, makes it clear that the option was not intended to be personal.

9. The point to be considered is if the above decision, of their Lordships of the Privy Council in any way affects the rulings of this Court to which I now propose to refer. In Gurunath Balaji v. Yamanava I.L.R. (1911) Bom. 258 : 13 Bom. L.R. 240 a deed of sale with an option of repurchase contained the following clause:

I have given the land into your possession ; if perhaps (at any time) I require back the land, I will pay you the aforesaid Rs. 600, and any money you may have spent on bringing the land into good condition and purchase back the land.

In a suit brought thirty-five years after the execution of the deed by the grandson of the vendor against the daughter-in-law of the vendee to exercise the option of repurchase, it was held that the covenant to repurchase was purely personal and the suit was dismissed. In Vithoba Madhav v. Madhav Damodar I.L.R. (1918) Bom. 344 : 20 Bom. L.R. 654 a judgment-debtor sold his land to the decree-holder on condition that within two years after the lapse of ten years, the vendor or his descendants should have the right to repurchase the land for the price for which the land was sold. After the death of the vendor and his son, the vendor's widow sold the right to repurchase the land to one Manja who sold half of the right to plaintiff No. 1 and the other half to plaintiff No. 2. The plaintiffs offered to repurchase the land from the vendee's widow. The claim was allowed by the lower Courts. On second appeal, the suit was dismissed. It was held that the intention of the parties was that the vendor and his descendants alone should be given the privilege of repurchasing the land on the conditions stipulated between the parties and that the assignees outside the family could not enforce the contract specifically. In the course of the judgment Beaman J. observed as follows (p. 349 ):

What we find is that Gidd Hegde under the severe pressure of adverse circumstances was compelled to part with his family land. At that time he had no means of saving it from the decree-holder and the terms of the document indicate that he had very little hopes of being in a position to buy it back even after the lapse of ten years. The sentiment of the agricultural classes in this country towards their land is well-known to every Judge of experience; and we can well understand that the creditor may have so far relented as to have given his debtor this locus poenitentioe after the lapse of ten years and so enable him to get back his family land. Founding the motive of the whole contract in this sentiment, it would be apparent that the vendee would have had no like inducement to allow any stranger to buy this land from him after the lapse of ten years at the price he had paid for it. There may have been a very good and sufficient reason why he should have made this concession to the original owner of the land and his descendants, meaning by that term his family, but we can see no reason whatever why the vendee should have bound himself in like manner to sell to anyone who had no previous connection with or interest in the land. That being my view of the true nature of the sale-deed of 1903 and the intention of the parties when the reservation clause was made, it follows that assignees outside the family could not enforce the contract specifically.

Beaman J. further observed (p. 350):

This would then be a case of personal quality mentioned in Section 23 of the Specific Relief Act. Personal quality need not necessarily be restricted to particular skill or learning but may include anything peculiar to a man or his descendants which would entitle them to especial favour at the hands of other contracting parties. Such I believe to have been the case here.

This observation may be compared with what Fry L.J. observes in Section 229 in his treatise on Specific Performance. Section 229 runs thus:.where, though the relation established by the contract may have in it nothing personal, some previous personal relation of favour, or otherwise, between the contracting parties has been a material motive to the contract, it can be enforced by that person only, and not by a concealed cestui que trust or principal or assign.

Ramesam J. in the case of Munnuswami Nayudu v. Sagalaguna Nayudu, referred to above, observed that in his opinion he did not find anything in Section 23(b) of the Specific Relief Act justifying an extension of it to cover a case to which Section 229 of Fry L.J. could apply. But Beaman J., as quoted above, was of a different opinion. Heaton J. in the same case observed as follows (p. 351):

In the first instance one would assume that where there was an agreement to sell back family land to a member of the family, that agreement was intended to subsist only for the benefit of members of that family. In this particular document I think the recitals and terms used suggest that the parties were dominated by the common sentiment and that there was no intention that the right to buy back should pass to any one outside the family.

10. It will be found on a reference to Situl Purshad v. Luchmi Purshad I.L.R. (1883) Cal. 30 that their Lordships confirmed the decree of the High Court, which, agreeing with the trial Court, had thrown out a suit brought by an assignee, and the reason given was that the power reserved to the original vendor to repurchase the property conveyed by him was on the facts of the case purely personal to him and his heirs.

11. In the present case the following facts are proved : (a) Plaintiff No. 2's father Ranchod was related to the vendee (Bai Jivi). Both were neighbours; (b) the sale-deed contained a stipulation that Ranchod was given the right to occupy the ground floor of the house during his lifetime and the evidence shows that this stipulation was observed. Relying on these facts the lower appellate Court, agreeing with the trial Court, held that the only inference that could be deduced was that the right to demand reconveyance was given only to the vendor and his heirs. I agree with the view. This conclusion does not, in my opinion, conflict with the decision of their Lordships of the Privy Council. In the case before the Privy Council it was not disputed that if the 'counterpart document' was a completed contract, the benefit of the contract could be assigned. Ramesam J. had held that the decision in Vithoba Madhav v. Madhav Damodar was distinguishable, as the option given in the Madras case was not intended to be personal. The facts proved in the Madras case afforded no material to suppose that there was anything to support the view that the benefit of the contract was meant to be personal.

12. This High Court has already held that the agreement did not offend against the rule of perpetuity. So far, therefore, as the rest of the points go, the result may be summed up thus : (a) Where a person sells his land or house to another person and the latter enters into a contract to convey the property back to the vendor or to the vendor or his heirs, the right to obtain a reconveyance from the vendee or his heirs is ordinarily assignable even to a stranger who can enforce it by a suit. (b) But when the intention of the parties was that the vendor or his heirs alone should be given the right of repurchasing the property, the assignee outside the family cannot enforce the contract specifically. For the reasons given above, I am of opinion that the present case falls under the second of the two classes.

13. It was, however, contended for the plaintiffs (appellants) that plaintiff No. 2, who is the son of the original vendor, is a party to the suit, and that, as a consequence, there could be no objection to allowing specific performance to either of the plaintiffs. Reference was made I in this connection to the amendment-application made to the District Court in 1924. But in this case plaintiff No. 2 has already parted with his interest and plaintiff No. 1, who is the party interested in carrying on the litigation, is not entitled to specific performance having regard to the reasons given above. I do not, therefore, think that the contention can be accepted.

14. The second contention advanced by Mr. Dave remains. It relates to the point of limitation. In this connection, the facts are that on September 27, 1915, plaintiff No. 2 had given a notice through his vakil asking Bai Mani (the original vendee's daughter) to make accounts and to re-sell the house on taking the sum that would be found due. On be-half of Bai Mani, a reply was sent on October 2, 1915. Paragraphs 1, 3 and 7 of that reply run thus:

1. You have mentioned the document of sale dated November 1, 1908, in your notice. From that it is clear that you and your client are fully aware of the sale-deed and all the conditions therein and therefore you have no reason or no ground whatever to send such notice as was given by you.

3. In your notice you refer to a certain agreement. But you have not shown any such agreement and you have not even sent a copy thereof. And from the first Panubhai Motiram, husband of Bai Mani, has been carrying on vahivat on behalf of Bai Jivi and her daughter Bai Mani and he is well acquainted in every respect. He says that what is stated by your client with regard to the agreement is not true,

7. It is not necessary to give any further reply. What your client writes is not true and proper and the demand made therein is groundless and is not maintainable in any way. However if your client wants to take any steps he may do so at his risk and on his responsibility.

15. The suit was filed on February 10, 1919. It has been held by both the lower Courts that in the aforesaid reply, specific performance was refused and that as no date for specific performance was fixed in the document, time began to run under Article 113 of the Indian Limitation Act from the date when plaintiff No. 2 had notice that performance was refused, that is to say from October 2, 1915. It was, however, contended on behalf of the appellants that the notice was given on the assumption that the sale-deed was a mortgage and the reference to the agreement to re-sell the house made in the notice related to the alleged mortgage and hence the reply given on behalf of Bai Mani ought to be read in the same light. It was further contended that the suit as originally filed was on the same line of reasoning and asked for redemption. Having regard to these facts, it was argued that there could be no demand for specific performance as such nor any refusal of specific performance, within the meaning of Article 113 of the Indian Limitation Act, in the reply given on October 2, 1915. In other words, it was contended that at the time when the reply was sent, there could be no consciousness in the mind of Bai Mani or her husband, who was then looking after the house in suit, that there was any liability of the nature of specific performance. Various authorities were cited in support of the contention that there ought to be such consciousness. Having regard to the facts of this case, it is not necessary to consider them in this judgment. The notice given, on behalf of plaintiff No. 2, referred to the undertaking to re-sell the house. No doubt, the notice was drafted on the line that the sale-deed passed to Bai Jivi was really of the nature of a mortgage. But it is important to note that the reply stated that the original transaction was a sale out and out, that the demand made was groundless, and that there was no truth in the allegation that there was an agreement to reconvey the house. Thus, it is clear that the facts underlying the controversy were that on behalf of Ranchod it was alleged that there was an agreement to reconvey the house, and because of the agreement it was contended that the sale-deed was not what it purported to be, but was a mortgage. A total denial of the existence of such an agreement clearly appears in the reply. Whatever legal name might have been given to the transaction, whether the sale, together with the agreement, made the transaction one of mortgage, or whether the transaction was one of sale coupled with an agreement to reconvey-all this was a matter of law. It is sufficient to observe that plaintiff No. 2 relied on an agreement for reconveyance and insisted upon its performance, and Bai Mani, the then owner of the house, stated in reply that there was no such agreement and that the demand made by plaintiff No. 2 Was groundless and was not maintainable. This, in my opinion, was a refusal to perform the agreement. It was open to plaintiff No. 2 on the strength of the contents of the reply to forthwith bring a suit for redemption and for specific performance in the alternative. The suit was evidently brought after three years from the receipt of the reply which must have been presumably communicated to plaintiff No. 2 very soon after it was received by his vakil. Having regard to what has been stated above, I agree with both the lower Courts that the amended claim for specific performance is time-barred.

16. It was argued on behalf of the respondent that the document, containing the agreement to reconvey, contained merely a standing offer and that inasmuch as the original vendor had died before accepting it, there could be no acceptance of the offer, so that the agreement had not ripened into a contract. Such an argument was advanced before their Lordships of the Privy Council in the case above referred to, but failed. Having regard to the observations of their Lordships in that case, the argument must equally fail in this case.

17. There is an aspect of the case, which was not considered by both the Courts. Specific performance is a discretionary relief. No doubt, the discretion of the Court is to be exercised in accordance with judicial principles. In this very case, Fawcett J., in his judgment in support of the reference to the full bench, had observed as follows (p. 964):

If specific performance is sought at the time when the principle of the rule against perpetuity may be said to operate, or rather when the estate would be unduly' tied up' by holding the contract still enforceable, I conceive the Court might legitimately refuse the plaintiff relief by specific performance, and would at most give him only nominal damages ..

This aspect of the case has not been considered by any of the two lower Courts. The case was gone into on the assumption that if the right to specific performance was established and enforceable according to the Indian Limitation Act, a decree for specific performance was a certainty. In the view I have taken above, it is not, however, necessary to dwell on the merits of this point.

18. I confirm the decree of the lower appellate Court and dismiss the appeal with costs.


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