(1) This second appeal is directed against the judgment and decree of the learned First Additional District Judge, Belgium in Civil Appeal No.51 of 1957 on his file.
(2) The facts relevant to the disposal of this second appeal may be stated briefly as follows: The appellant-plaintiff had filed a suit for recovery of possession of the suit schedule house and a court yard situated to the south of C.T.S. No. 1714 at Ramdrug against the defendant who are respondents in this second appeal. The plaintiff's suit was that the suit property belonged to him; a sale transaction with regard to the same was settled between the parties; the plaintiff executed an agreement deed exhibit 44 dated 26-2-1953 by which he agreed to sell the property to the defendants for a sum of Rs. 1,800 and in pursuance thereof an earnest money of Rs. 400 was paid by the defendants to the plaintiff. It was stated in the agreement deed that the balance amount i.e., Rs. 1400 will be paid within six months from the date of exhibit 44 and a registered sale deed will be executed by the plaintiff in favour of the defendants. It was the case of the plaintiff that the defendants were put into possession of the suit properties soon after the agreement. The plaintiff alleged that he is sued a notice to the defendants on 22-8-1953 calling upon them to pay the remaining amount of the purchase money and have the sale deed executed in their favour and should they fail to pay the remaining part of the purchase money and have the sale deed executed, the earnest money paid by them will be forfeited and the plaintiff will be entitled to take possession of the suit properties. It was the case of the plaintiff that the defendants failed to pay the remaining purchase amount and take the sale deed of the suit properties as per the terms of the agreement in spite of repeated requests. Therefore he filed the suit n the court of the Civil Judge Junior Division, Ramdurg for the recovery of possession of the suit property from the defendants and for compensation for wrongful use and occupation of the same for three years at the rate of Rs. 60 per year. He had also prayed for future mesne profits from the date of suit till actual delivery of possession to him together with costs.
(3) The defendants in their written statements admitted execution of the agreement deed exhibit 44 and also the receipt of notice exhibit 46 from the plaintiff. But they stated that soon after the receipt of notice exhibit 46, they had received a notice exhibit 47 from the Bhavubands of the plaintiff on 26-8-1953 wherein they had alleged that they have also interest in the suit properties. Thereupon they i.e., the defendants issued notice exhibit 45 asking the plaintiff to remove the doubts regarding his title to the suit property. But the plaintiff failed to do the same. They also alleged that the time was not the essence of the contract. They further contended that the plaintiff has not handed over the suit property to them. They alleged that they have paid Rs. 300 to the Bhuvubands of the plaintiff and took possession of the same from them. They further contended that their possession to the suit property is lawful and therefore the plaintiff 's suit for delivery of possession was unmaintainable. The learned Civil Judge found that the plaintiff was the party to be blamed for the non-performance of the contract, that the time was not the essence of the contract, that the plaintiff delivered the possession of the suit properties to the defendants on their part were all along ready to perform their part of were all along ready to perform their part of the contract and they were not to be blamed. On the basis of these findings the learned Civil Judge took an equitable view of the case and ordered specific performance of the contract in the following terms:
'The defendants should pay Rs.1400 to the plaintiff within a month and have the sale deed at their costs. If they fail to do so, the plaintiff do recover possession of the suit property forthwith, along with future mesne profits which shall be ascertained under Order 20 Rule 12(1)(c) of the Civil Procedure Code. The defendant shall pay the costs of the plaintiff and bear their own.'
Against the judgment and decree of the learned Civil Judge the plaintiff appealed to the First Additional District Judge, Belgaum. The defendants also preferred cross objections to the extent of the order of the learned Civil J. with regard to costs awarded against them. The learned Additional District J. inter alia found that the plaintiff was to be blamed for the non-performance of the contract and has failed to satisfy the defendants regarding his exclusive title to the suit property. He further held that the defendants on their part were all along willing to perform their part of the contract and they were not to be blamed. He also found that the defendants got possession of the properties in pursuance of the agreement exhibit 44. He was also of the view that S. 53-A of the Transfer of Property Act can be availed of in the case. The however allowed the cross-objections of the defendants and dismissed the plaintiff's suit with costs.
(4) Sri Mallimath, the learned counsel for the appellant urged two contentions before me. In the first place he contended that the lower appellate court was wrong in holding that the respondents were all along willing to perform their part of the contract. He argued that the defendants-respondents in their written statement denied that the plaintiff had delivered possession of the suit property to them to pursuance of the agreement exhibit 44 and contended that they paid Rs. 300 to the Bhuvubands of the plaintiff and took possession of the suit property from them. He submitted that on the allegations made by the defendants in their written statement, it can reasonably be inferred that they were not willing to pay the balance of the purchase money. He therefore urged that S. 53-A of the Transfer of Property Act cannot be availed of by the defendants in this case. In support of his arguments, he relied on the case of Sobharam v. Totaram, AIR 1952 Nag 244. It is true in that case, it was held that in a suit for specific performance, it is incumbent on the plaintiff to prove that he was ready and willing to perform the contract as it actually was and not as it is alleged to be by him. Making a false plea that a certain obligation under the contract has been discharged does indeed show an unwillingness on the part of the transferee to abide strictly by the contract entered into between him and the transferor. I agree with the principle laid down in that case. But in view of the facts and circumstances of the present case, the ratio of that decision cannot be helpful, in my view, to the appellant. In that case the defendant had alleged that he had paid a sum of Rs. 15 to the vendor plaintiff after execution of the agreement. This allegation of his was found to be false by the Court and on the basis of this finding it was held that it cannot be said that the vendee was ready and willing to perform the contract. Their Lordships observed:
'As regards the transferee's readiness and willingness to perform his part of the contract, there is, however, no pleading. On the contrary, the respondent's allegation that he paid Rs.15 to his vendor after the execution of the agreement has been found to be false. Moreover, the respondent has not so far paid the sum of Rs. 10 which, according to him, was the balance due though under the agreement he had to pay the balance of Rs. 25 to the executant by 2-9-1941.
.............In the circumstances it must be held that he was not willing to perform his part of the contract and for that reason he cannot be allowed the benefit of S. 53-A of the Transfer of Property Act.'
But in the instance case as mentioned above, there is the clear concurrent findings of the courts below to the effect that the defendants were all along ready and willing to perform their part of the contract. Hence the case above referred to is distinguishable from the instance case. Moreover the findings of the courts below is a finding of fact which cannot be disputed in second appeal.
(5) In a decision of this Court in Namdevaru v. H.V. Rama Rao reported in AIR 1959 Mys 173 his Lordships Das Gupta the then Chief Justice observed as follows at page 175:
'Mr. Krishna Murthi, however appearing on behalf of the respondent in this appeal, strenuously urged before me that S. 53-A cannot be availed of by the appellant in this case. His argument was two-fold. In the first place, he contended that it must be shown that the transferee his either performed or is willing to perform his part of the contract. He contended that there is no evidence, and it has not been found either, that the transferee has performed or is willing to perform his part of the contract. Mr. Krishnamurthi further urged that there is also no plea that the transferee has performed or was willing to perform his part of the contract.
In my opinion, even though this question, viz., the applicability of S. 53-A of the Transfer of Property Act was not raised by the defendant in his pleading, the same was fully gone into at the hearing by both the court and both the courts have found that the appellant before me was entitled to avail himself of the provisions of the said section.
I will not be justified, in the circumstances in taking a too technical view of the matter by holding that in view of the fact there was no specific averment in his pleadings by the defendant on this question, he should not be allowed to avail himself of the provisions of the said section. On the question as to whether or not the transferee has performed or is willing to perform his part of the contract, it appears that there is a finding of the trial Court which, in my opinion, can be taken to be a clear finding of the fact that the defendant was willing to perform his part of the contract. After narrating all the facts relevant to this question, the learned Munsiff says:
'As Shamanna did not execute the sale deed, the defendant deposited the amount in Mysore Government Savings Bank as per the pass book exhibit XVII. The defendant could not do anything better under those circumstances.'
In my opinion, this should be considered as a finding that the defendant was willing to perform his part of the contract. It is true that there is no such clear finding in the judgment of the lower appellate court. All that the said Court mentioned was that the conditions as laid down in S. 53-A were all fulfilled. The learned advocate for the appellant contended before us that though put in a general form the said statement implied that the condition viz., that the transferee was willing to perform his part of the contract, was also fulfilled. Had it not been the fact that there is a clear finding on this point by the trial Court as to the applicability of S. 53-A to this case was accepted by the lower appellate court, I would have perhaps sent the case back to the lower appellate court for a finding on this point. But it seems to me that having regard to the fact that there is a clear finding on this point by the lower appellate court and there is a statement although of a general nature, viz., that the conditions laid down in S. 53-A have been fulfilled in the judgment of the lower appellate court, I do not think it would be right to send the case back to the said court for purposes of coming to a clearer finding on this point.
Apart from this as Mr. Krishnamurthi himself admitted before me, the condition as to willingness must subsist upto the date of hearing of the matter i.e., even up to the date of haring of this appeal. I put to the learned advocate for the appellant whether or not he was willing to deposit the sum of Rs. 1350 in the trial court and he expressed his willingness to do so and gave an undertaking on behalf of his client to that effect.'
In the present case, the court below says:
'Further it has been found that defendants were all along willing to perform their part of the contract. Even at the time of hearing they showed their willingness to abide by the contract.'
It must also be noted here that the remaining balance of the purchase money has been deposited by the respondents in the trial court on 27-7-1959 and this is an admitted fact in the case. In this view of the matter and in view of the principle laid down in the above mentioned case, I hold that the contention of the learned advocate for the appellant that S. 53-A of the Transfer of Property Act cannot be availed of by the respondent in this case cannot be accepted.
(6) The next contention of the learned advocate for the appellant is that in view of the finding of the courts below to the effect that the respondents were put into possession of the suit property immediately after the agreement, the appellant is entitled to interest on the remaining amount of the purchase money. Though the learned advocate for the appellant did not press his argument under S. 55(4)(a), Transfer of Property Act, he confined his claim to interest only in equity. He contended that in equity the respondent would be liable to pay interest from the date they took possession of the suit property in view of the fact that there was neither a contract to the contrary nor other circumstances which precluded the well recognised principle of equity.
(6a) On the other hand, it has been pointed out by the learned advocate for the respondents, that both the Courts below found that the plaintiff failed to clear doubts with regard to his exclusive title to the property and he is only to be blamed for the non-performance of the contract. In view of this finding of the courts below, the plaintiff cannot be held, entitled to any equitable relief. The learned advocate for the respondent relied on the following decisions: Narasingerji Gyana Gerji v. Panuganti Parthasaradhi, 1921 Mad WN 519: (AIR 1921 Mad 493) and Pulliyadi Nabanna Ellarayan v. Kuttuva China Kuna Muni Nagendra Iyen, 42 Ind Cas 509: (AIR 1918 Mad 716).
(7) In view of the contentions advanced on behalf of the parties, it would be opportune to notice the cases recognising the principles of equity laying down its limitations. The earliest case which clearly laid down the rule of equity is found in Fludyer v. Cocker, 1805-12 Ves 25: 33 ER 10. There, in 1792 the defendant entered into contracts for the purchase of estates of the Duke of Newcastle in three lots. Two of the lots were purchased by private contract on the 7th of May, and the 18th of July: The Duke of Newcastle covenanting to convey respectively, on or before the 25th of June and 18th of February following; and the defendant covenanting to pay the purchase money at the time of executing the conveyances. The defendant was let into possession of the premises comprised in those lots at Midsummer and Christmas 1792 respectively. The third lot was purchased by the defendant in July. In 1798, in answer to an application for the residue of the purchase money, with interest, the defendant offered to pay the residue of the purchase money but refused to pay interest. On these facts, the Master of the Rolls made the following observations:
'At law the purchaser could not have the right to the estate, nor the vendor to the money, until the conveyance was executed. But that has nothing to do with the mode, which this Court executes the agreement. The purchaser might have said, he would not have anything to do with the mode, in which their Court executes the agreement. The purchaser might have said, he would not have anything to do with the estate, until he got a conveyance. But that is not the course he took. He enters into possession; an act, that generally amounts to a waiver even of objections to title. He proceeds upon the supposition, that the contract will be executed; and therefore agrees that from that day he will treat it, as if it was executed. The act of taking possession is an implied agreement to pay interest; for so absurd an agreement, as that the purchaser is to receive the rents and profits, to which he has no legal title, and the vendor is not to have interest, as he has no legal title to the money, can never be implied.'
The aforesaid passage brings out clearly and tersely the principle underlying the rule or equity invoked by the plaintiffs and the implied agreement to pay interest was inferred under the circumstances.
(8) In Bennett v. Stone, 1903-1 Ch 509, Cozens Hardy L.J. summarised the law on the subject at page 524 as follows:
'The position of vendor and purchaser under a contract which is silent as to the possession and as to interest does not now admit of doubt. From the time when the purchaser could prudently take possession that is to say, from the time when a good title is first shown the parties, in view of a Court of Equity, change characters. The purchaser becomes the owner of the land, and entitled to the rents and profits and bound to discharge outgoings, and the vendor becomes entitled to the purchase-money, with interest until actual payment, and in respect of this right the vendor has a lien upon the land for his unpaid purchase-money which the Court will enforce. Whether the interest is greater or less than the rents and profits is wholly immaterial. There may, however, be conduct on the part of the vendor, or of the purchaser, which suffices to relieve the purchaser wholly or in part from the liability to pay interest.
In India this equitable principle was applied in similar circumstances. In Ratanlal Choonilal Pannalal v. Municipal Commr. for the City of Bombay, ILR 43 Bom 181: AIR PC 129 under the provision of the Bombay City Improvement Act and the Bombay City Municipal Act, when the appellant submitted a plan for erecting a new building on his property, the Commissioner directed that the line of the new building should be set back which involved a sacrifice to the owner of 28.41 square yards of site. The Municipality had take possession of the same extent on 30-6-1909. One of the questions was whether the Municipality was liable to pay interest to the appellant from the liable pay interest to the appellant from the date it took possession. The Judicial Committee at page 134 of AIR made the following observations:
'The Board is of opinion that the right to interest depends upon the following broad and clear consideration. Unless there be something in the contract of parties which necessarily imports the opposite, the date when one party enters into possession of the property of another is the proper date from which interest on the unpaid price should run. On the one hand, the new owner has possession, use and fruits; on the other, the former owner parting with these, has interest on the price. This is sound in the principle, and authority fully warrants it.'
I respectfully follow the above observations.
(9) The Bombay High Court in Pandurang v. Mahadeo, AIR 1922 Bom 186 applied the principles laid down in the aforesaid decision of the Judicial Committee to the facts before them. In the Bombay Case, in pursuance of a contract for sale of property, the purchaser was let into possession. The vendor sought to recover the balance of the purchase money with interest. The High Court held that he was entitled to recover interest. Macleod C.J. after citing the passage from the decision of the Judicial Committee extracted supra proceeded to state as follows at page 187:
'That is a principle of equity, and it is quite independent of the provisions of the Transfer of Property Act. If the ordinary course is followed, the vendor executes the sale-deed, the purchaser pays the sale price and gets possession. But if, as happened in this case, the purchaser gets possession without paying the whole of the purchase price, then it follows in equity the profits of the property.'
At page 187. Their Lordships continued to state:
'Now it may very well be that facts can be proved which would disentitle the vendor to receive more than the balance of the purchase money...........
The basis of the principle laid by the Privy Council is that the purchaser, in process and enjoying the fruits of the property should not at the same time he enjoying the use of the unpaid price, unless it can be shown that the parties have contracted to that effect; and admittedly in the case there was no contract that the purchaser should enjoy the interest of his moneys as well as the profits of the property.'
(10) A Division Bench of the Madras High Court to Rayalamma v. Butchiramayya, AIR 1942 Mad 429 accepted this principle. Venkataramma Rao J. at page 437 observed:
'In case of sales and purchases of land, as pointed out by Viscount Cave in Swift and Co. v. Board of trade, 1925 Act 520 at p. 532 'it is the practice of the Court of Chancery to require the purchaser to pay interest on his purchase money from the date when he took, or might safely have taken possession of the land; but this practice rests upon the view that the act of taking possession is an implied agreement to pay interest, and this rule has been extended to cases of compulsory purchase under the statutory enactments.'
(11) In this connection, the question to be considered is whether this rule of equity displaces the statutory provision of S. 55(4)(a) of the Transfer of Property Act. If it does not then the contention of the learned counsel for the appellant falls to the ground. It is true that when a situation is governed by a statute equity has no place. But can it be said that S. 55(4)(a) of the Transfer of Property Act would apply to the facts of the present case. This section reads:
'In the absence of a contract to the contrary, the buyer and the seller of immoveable property respectively are subject to the liabilities, and have the rights, mentioned in the rules next following, or such of them as are applicable to the property sold:
X X X X X X X X (4) The seller is entitled--
(a) to the rents and profits of the property till the ownership thereof passes to the buyer;.....................................................................................................'
It will be seen that S. 55 of the Act defines the rights and liabilities between the seller and the buyer. Sub-section 4(a) of S. 55 enacts that till the date the ownership passes to the buyer the vendor would get the rents and profits of the property and thereafter the vendee gets them. In the case of immoveable property the title passes only after the registered deed is executed. This clause gives the rents and profits of the property upto that date to the vendor and those accruing thereafter to the vendee. If the alienated property is in possession of the tenant, the rule apportions the rent between the vendor and the vendee. So too, if the vendor continue to be in actual possession after the title passes, he would have to pay the rents and profits realised to the vendee.
(12) But this provision in my view has no application to a case where in respect of the transfer of property the prospective buyer is put in possession of the property. In that case there is no completed transfer and therefore the statutory rule has no application. That situation therefore is not provided for by S. 55 of the Transfer of Property Act. This is Government by the equitable principle laid down in the aforesaid cases on the basis of an implied agreement arising out of taking over possession without paying consideration amount.
(13) The aforesaid principle of equity is independent of the Transfer of Property Act. Having regard to the circumstances, the courts implied an equitable arrangement between the parties. The prospective vendee cannot take possession of the property and at the same time enjoy the use of the unpaid price. Thus an agreement may be negatived by a contract either express or implied. The conduct of the vendor and the purchaser may relieve the purchaser wholly or in part from the liability to pay interest. For instance if the vendor did not take the consideration amount though offered by the purchaser, he may by his conduct preclude himself from claiming the interest.
(14) As mentioned above on the material in record, there is a clear finding of the courts below that immediately after the agreement exhibit 44 the defendants-respondents were put into possession of the suit property by the plaintiff-appellant. The circumstances that the appellant could not remove the doubts over his title cannot in my opinion be such a conduct on the part of the appellant which suffices to relieve the respondent-purchasers from the liability to pay interest wholly or in part. Therefore the equitable principle would be available to the appellant in this case. As laid down in the above referred cases, he would be entitled to the interest on the unpaid purchase money from the respondents.
(15) In support of his contentions that the appellant vendor cannot be held entitled to any interest in equity, the learned c advocate for the respondents relied on the case (1921) Mad WN 519: (AIR 1921 Mad 498) and 42 Ind Cas 509: (AIR 1918 Mad 716). In the first case, it has been laid down that when a vendor fails to perform his part of the contract and the circumstances are such as to require the purchaser to keep the purchase money lying idle and unproductive, the vendor will not be entitled to interest. Obviously, the facts of that case are distinguishable from the present case. The respondents got into possession of the disputed property immediately after the execution of the deed of agreement and there is a clear finding to that effect of the courts below. Further in the instant case it cannot be said that the purchase money was lying idle during the period in which the appellant is held entitled to the interest.
(16) In the latter case, it has been held that:
'In the absence of any express stipulation to the contrary the purchaser is considered as in possession from the date when he completes this contract after the time mentioned for completion and from that moment he takes the rents and profits and pays interest.
In the absence of an express condition in the contract of sale to cover all possible causes of delay, the general rule must prevail according to which if one of two contracting parties causes the other to commit a breach of one of the conditions of the contract the party at fault cannot profit by his own fault and exact the penalty for the breach.
If delay in the payment of purchase money due to the vendor's own default in showing a good title, he will not be entitled to take advantage of his own wrong and to claim interest.' This case also is not helpful to the respondents. In that case the court had declined to award interest on the unpaid purchase money to the vendor on the vendor on the ground that delay in the payment of the same was due to the vendor's own default in showing a good title. The decision of the court proceeded on the particular facts and circumstances of that case and hence the ratio of that decision cannot have a bearing on the point for determination in this case. That apart in view of the equitable principle as observed above, that decision also cannot be of any help to the respondents.
(17) It has been contended on behalf of the respondents that the agreement exhibit 44 is dated 26-2-1953. Therefore, even if it is held that the appellant is entitled to interest such a claim is barred by time. It is true that the suit for the recovery of possession in the court of the Civil Judge, Junior Division, Ramadurg was filed on 8-7-1957 viz., about 4 years after the execution of the agreement deed exhibit 44. But in that suit the appellant has claimed only 3 years compensation prior to the institution of the suit along with future mesne profits. Therefore in awarding interest to the appellant upto 3 years prior to the institution of the suit no question of limitation can arise.
(18) As mentioned above the respondents have deposited in court, the balance of the purchase money on 27-7-1959. The appellant will therefore be entitled to future interest upto that date only.
(19) The next question is what would be the rate of interest in the circumstances of this case. The appellant has claimed damages at the rate of Rs. 60 per annum. There is no satisfactory evidence on record as to what income and profit is derived by the respondents from the suit property. Therefore the same cannot be a relevant factor for determination of the interest. But taking all the circumstances of the case into consideration. I hold that the appellant is entitled in equity to have interest at the rate of 3 per cent per annum on the amount due to him from the respondents having regard to the aforesaid principle. He will be entitled to interest at this rate upto three years prior to the institution of the suit upto the date on which the balance of the purchase money has been deposited into the court viz., 27-7-1959. The respondents should deposit the same in the trial Court within 60 days from the date of this order. In case of default the appellant will be entitled to recovery of possession.
(20) Taking all the circumstances of the case into consideration, I think it would be just and equitable that the parties should be directed to bear their own costs of this appeal and it is so ordered.
(21) In the result, this appeal is dismissed with the above modifications.
(22) Appeal dismissed but decree modified.