1. The plaintiff brought a suit in the Court of the Subordinate Judge, Civil Station, Bangalore, for the recovery of Rs. 6750/-. His suit was dismissed and he has come up in appeal.
2. The facts of the case which are not in dispute are as follows: At a public auction held by the defendant Corporation in respect of certain building sites, one H. V. Sriranga Setty was the highest bidder for one of the sites, his bid being Rs. 15,200/-. Before the commencement of the auction, he had deposited a sum of Rs. 100/- as required by one of the conditions Of sale. Immediately after the auction he paid a further sum of Rs. 4000/- to cover 25 per cent. of the purchase money, through a cheque issued by the plaintiff. He had to pay the balance of the purchase money within 15 days from the date of confirmation of the sale on 30-7-1946, even before the sale was formally confirmed, Sriranga Setty wrote Ex. C wherein he stated that as he was a permanent resident of Saklespur it was not possible for him to manage the property at Bangalore and thatas such the sale-deed of the site may be executed in favour of the plaintiff after receiving from the latter the balance of Rs. 11,100/-.
He also stated in that letter that the earnestmoney of Rs. 4000/- had in fact been paid by the plaintiff on his behalf. The defendants then wrote to the plaintiff as per Ext. M, dated 5-8-46, in which they enclosed a copy of Sriranga Setty's letter (Ext. C) and asked him to deposit the balance of Rs. 11,100/- if he was agreeable to the arrangement proposed in Ext. C. The plaintiff accordingly deposited Rs. 11,100/- on 20-8-1946. On 11-11-1946 the defendants forwarded a copy of a draft sale-deed which they were willing to execute and asked the plaintiff to pay an additional sum of Rs. 485/- towards cost of stamp paper, drafting and typing fees. They subsequently wrote a reminder Ex. S on 26-3-1947 asking the plaintiff to pay the said amount immediately after which they would arrange for the execution and registration of the sale-deed in his favour. The plaintiff paid this amount also on 9-4-47. He however did not hear anything further from the defendants about the execution of the sale-deed and he therefore wrote Ex. W on 19-6-47 asking them to expedite the matter.
At this stage, on 17-7-47, the defendants wrote Ex. Y to the plaintiff informing him that the Standing Committee was objecting to execute the sale-deed in his favour and inquiring if it could be drafted in favour of Sriranga Setty to which the plaintiff replied on 19-11-47 as per Ext. Z drawing their attention to the previous correspondence and pointing out that the Municipal Commission (as the defendants were then called) could not raise such objection then as they had accepted from him Rs. 4000/- towards earnest money and Rs. 11,1007- being the balance of purchase money as also the cost of stamp paper, etc., amounting to Rs. 485/-. He further stated that Sriranga Setty was his nephew and not a third party and that the arrangement between them was only a transfer and insisted that the sale-deed should be executed in his favour.
He was then informed by a reply dated 25-11-47 (as per Ex. AA) that the Standing Committee of the Municipal Commission had decided against him and as such the sale-deed could only be executed in the name of Sriranga Setty. The stamp paper, which in the meanwhile had been purchased out of plaintiff's money, was returned to him with that letter. The plaintiff then issued a notice, Ext. BB, dated 12-1-48, required by Section 33 of the Bangalore Municipal Law and demanded the return of purchase money with interest, etc., aggregating Rs. 16559-9-0. The Commission did not reply to this notice but simply sent him a copy of letter Ext. CC, dated 23-3-48, addressed by them to Sriranga Setty in which they had enquired whether he would indemnify the Municipal Commission by executing the necessary bond in their favour. The plaintiff wrote back to say that he was standing by his statutory notice. Sriranga Setty also refused to execute an indemnity bond as required by them.
The defendants again wrote as per Ex. EE on 8-7-48 to the plaintiff's counsel forwarding a resolution of the Municipal Commission dated 24-6-48 to the effect that the sale-deed may be executed in favour of the plaintiff on his executing an indemnity bond as a safeguard against any possible claims by Sriranga Setty or his heirs. This evoked a reply from the plaintiff as per Ext. VIII that he stood by his demand notice issued through his advocate on 12-1-1943. Thereupon the Municipal Commission wrote to Sriranga Setty on 4-9-1948 as per Ext. GG asking him to pay the balance of Rs. 11,100/- as the plaintiff had refused to buy the site. Sriranga Setty refused to do so. He wrote as per Ex. K and asked the defendants to refund the entire sum to the plaintiff. The plaintiff however subsequently complained to the Government whereupon the defendants returned a sum of Rs. 11,149-1-0 by cheque on 2-6-1949 and refused to say the earnest money of Rs. 4100/-and other charges and hence his present suit.
3. The contention on behalf of the Corporation was that all along they were agreeable to execute the sale-deed in favour of the plaintiff provided they were safeguarded against any claim from the highest bidder, Sriranga Setty, and that the plaintiff and Sriranga Setty had unreasonably refused to give such an indemnity. They further contended that there was no privity of contract between the plaintiff and the defendants and that as such the plaintiff was not entitled to claim the suit amount.
4. Sriranga Setty has been examined in the case as P. W. 1. He has unequivocally declared that his maternal uncle, the plaintiff, had advanced Rs. 4000/- towards earnest money by means of a cheque issued by him in favour of the defendants on 19-6-1946. He has also admitted that he wrote Ext. C wherein he has not indicated any objection to the refund of Rs. 4000/- to the plaintiff.
5. We think the judgment of the lower Court is clearly wrong and cannot be supported. Mr. W. Ekambaram, learned counsel for the respondents, urged before us that there was no privity of contract between the plaintiff and the defendants. Such a plea is unintelligible as the defendants in this case have chosen to accept the arrangement by which the amount paid by Sriranga Setty was to be treated as having been paid by the plaintiff and to execute a sale-deed in his favour. They have also called for and received the necessary expenses for stamp and registration and sent to him a draft sale-deed.
Sriranga Setty has told them definitely in Ext. C and Ex. K that the sum of Rs. 4000/- paid towards earnest money really belongs to the plaintiff, his close relation, and he has not at any time subsequent thereto objected to the refund of the same to the plaintiff or to the execution of the sale-deed in his favour. The plaintiff accepted the offer made by the defendants as per Ext. M and in fact paid the balance of the purchase money as also stamp and registration charges, etc. There is therefore no substance in the contention relating to privity of contract.
6. It was next urged by Mr. Ekambaram that the plaintiff or Sriranga Setty might easily have executed the indemnity bond demanded of them when the defendants would have executed a sale-deed in favour of the plaintiff without any difficulty and that as the indemnity bond was asked for with a view to safeguarding the interest of the Corporation, the demand for it was 'bona fide'. As Sriranga Setty had himself written the letters Ext. C and Ex. K there was no possibility of any claim being made by him against the Corporation and as such there was no question of his giving an indemnity bond in the matter. Nor can the plaintiff be required to give such a bond. If the defendants insisted on such a meaningless bond, which in law they could not do, and made that a condition for executing a sale-deed which they were bound to do, the mere fact that they did so by way of abundant caution cannot justify their action, in law, or save them from the consequences of such unreasonable conduct.
7. Mr. Ekambaram further contended that the acceptance of the arrangement with the plaintiff has been by the Secretary and not by the President of the Municipal Commission and that the Secretary had no power to commit the MunicipalCommission by such an acceptance. Here again the defendants are on slippery ground. Mr. T. S. Desikachar who was the Manager of the Municipal Commission has admitted in his evidence that the
'President sees every 'tappal'. At times the Secretary used to act according to the instructions of the President..... Ex. M was notbrought to the notice of the President. Ext. M is a routine paper. On routine papers the Secretary had power to act.'
That is clearly an understandable position. By writing Ext. M to the plaintiff the Secretary was not imposing any additional or new burden or responsibility on the Municipal Commission. He was not making any new contract with the plaintiff. The Municipal Commission had merely to execute the sale-deed in favour of the plaintiff instead of the original bidder, Sriranga Setty, according to the latter's instructions. One of the duties cast on the vendor by Section 55(1)(d) of the Transfer of Property Act is, on payment or tender of the amount due in respect of the price, to execute a proper conveyance of the property When the buyer tenders it to him for execution at a proper time and place. The obligation under the sub-section is merely to execute a proper conveyance, the section being silent as to the person in whose favour the conveyance is to be executed.
In a case decided by Beaumont C. J. and Rangnekar J. and reported in -- 'Rahimtulla v. Official Assignee', AIR 1935 Bom 340 (A), it has been pointed out that unless there is anything express in the contract to convey, entitling the vendor to insist that he is not bound to execute any conveyance except in the name of the purchaser, the vendor is bound to execute a proper conveyance to the purchaser 'or his nominee'. The party to a contract may dispose of the benefit of the same in favour of any other person. Such a disposition may be made either by way of assignment or by a sale or in any other way. In England the law appears to be quite clear that a purchaser can always demand a conveyance from the vendor not only in his own favour, but in favour of any person as he would direct and the vendor cannot refuse to execute a conveyance in favour of the nominee of the purchaser. See --'Earl of Egmont v. Smith', (1877) 6 Ch D 469 at p. 474 (B), where Jessel, M. R,, has pointed out that
'an ordinary contract of sale is not only to convey to the purchaser, but to convey as the purchaser shall direct.'
It is observed in Halsbury's Laws of England, Vol. 29, Hailsham Edn., 1938, at p. 411-
'Para 558. As a rule the conveyance is made to the purchaser, but, provided the vendor is not prejudiced, the purchaser can direct it to be made to a nominee, for such estate and interest, not exceeding the interest purchased, as he pleases. Where the grantee is to enter into covenants with the vendor, the purchaser cannot substitute a new covenantor for himself without the vendor's consent, and in such a case the nominee must not be a person under disability.'
'Para 559. When the purchaser has disposed of the land before the completion of the contract, it is usual, for the purpose of saving the expense of the second conveyance and double stamp duty, to take the assurance direct to the second purchaser. The disposition may be either by assignment of the contract or resale of the land. Upon an assignment of the contract theoriginal purchaser is not usually a necessary party to the conveyance, nor is he a necessary party where there is a resale without increase of price.'
In such a course there is no additional burden cast on the vendor as he receives full consideration and goes out of the scene. It is not urged in this case that the purchaser had to perform any other obligation or that any personal qualification of the purchaser was a material element of the contract of sale, or that there was any special contract which would override the general rights of the parties.
8. In the result, we think that the judgment and decree of the learned 'Subordinate Judge must be set aside and the suit allowed.
9. As regards the amount for which a decree has to be passed in favour of the plaintiff, it is contended by Mr. Ekambaram that the plaintiff cannot claim interest on Rs. 4100/- from 19-6-46 and on Rs. 11,100/- from 5-8-46 as he has done. By virtue of Section 55(6)(b) of the T. P. Act, a purchaser is entitled, unless he has improperly declined to accept delivery of the property, to a charge on the property for the purchase money paid by him in anticipation of the delivery and also for interest thereon and if the sale falls through for no fault of his and he properly declines to accept the delivery, also for earnest money.
The defendants adopted a curious and vacillating attitude and their refusal to refund the amount even when demanded through a lawyer's notice, Exhibit BB, which expressly claimed interest from dates of deposit clearly entitles the plaintiff to claim it by way of damages. The defendants had the use of a large sum of money of the plaintiff and the latter who is described as a merchant was deprived of the use of it and is entitled to be compensated for the same. The interest claimed at 6 per cent. per annum is not unreasonable or excessive. The plaintiff cannot however claim such interest either from 19-6-46 the date of the sale or 5-8-46 but can only do so from 20-8-46 by which time the cheques issued by the plaintiff had been realised and the entire purchase money was made up.
10. We therefore allow this appeal and there will be a decree in favour of the plaintiff as prayed for but with interest only from 20-8-1946 up to date of payment. The plaintiff will have his costs from the defendants both here and in the Court below.
11. Appeal allowed.