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Shree Ram Vs. Ratanlal - Court Judgment

LegalCrystal Citation
SubjectContract
CourtAllahabad High Court
Decided On
Case NumberFirst Appeal No. 125 of 1962
Judge
Reported inAIR1965All83
ActsContract Act, 1872 - Sections 2 and 25; Specific Relief Act, 1877 - Sections 21
AppellantShree Ram
RespondentRatanlal
Appellant AdvocateJagdish Swarup, Adv.
Respondent AdvocateG.D. Srivastava, Adv.
DispositionAppeal dismissed
Excerpt:
.....of bilateral contract - sections 2(a) and 25 of contract act, 1872 - sale and subsequent agreement to reconvey same property - at a specified price and within specified period - promise enforceable by law when offeree exercises his option and accepts the offer - contract must be mutual - it is based on principle of equity - no application to unilateral promise. - cantonments act[c.a. no. 41/2006]. section 346 & cantonment fund (servants rules, 1937, rules 13, 14 & 15: [h.l. gokhale, ag. cj, p.v. hardas, naresh h. patil, r.m. borde & r.m. savant, jj] jurisdiction of school tribunal constituted under maharashtra employees of private schools (conditions of service) regulations act, (3 of 1978) held, school run by the cantonment board is a primary school and it is not a school..........the defendant also gave evidence and produced one hansraj who claimed that he settled the sale transaction between the parties, and there was no agreement for re-conveyance at the time. 3. the learned judge believed the plaintiff's version that the sale and the agreement to reconvey were parts of the same transaction and rejected the defendant's explanation for signing the agreement of 6th april 1960 as completely false. he decreed the suit for specific performance and the defendant has now come to this court in appeal. 3a. jagdish swarup who argued this appeal with ability and commendable brevity, stated at the very outset that he would not press before this court the plea that the agreement of re-conveyance was void on the ground that it had been made by the appellant as karta.....
Judgment:

Dhavan, J.

1. This is a defendant's appeal from the decree of the First Additional Civil Judge, Meerut for specific performance of an agreement to re-convey a plot of land. The facts are these. The plaintiff-respondent Ratan Lal alleged in his plaint that he entered into an agreement with defendant appellant Shree Ram by which he sold the plot of land in dispute for a sum of Rs. 10,000/- and the appellant agreed to reconvey It to the respondent for a sum of Rs. 15,000/-within a period of two years at the option of the plaintiff. According to the plaintiff, though the sale was executed on 31-3-1960 and the agreement to re-convey on 5th April, they formed parts of the same transaction. The plaintiff alleged that he exercised his option on or about the 6th February 1961 and asked the appellant to re-convey the land to him but the latter did not turn up at the office of the Registrar. The plaintiff further alleged that the respondent was given a second opportunity to go to the office of the Registrar and fulfil his obligation to re-convey the land but he stayed away. The plaintiff sent the appellant a registered notice in reply to which the latter repudiated the agreement completely and wrote that it was not binding on him. Thereupon the plaintiff filed the present suit for specific performance.

2. The defendant resisted the suit. He admitted having executed the agreement to re-convey the land but he gave his own version of the circumstances in which he signed it. He alleged that the sale and the agreement to re-convey were not parts of the same transaction. According tohim, the plaintiff sold the land outright to him by the sale deed of 31-3-1960 and there was no agreement for re-sale at that time; however subsequently the plaintiff approached him with a request to sign an agreement of re-conveyance so that he (the plaintiff) could assuage the feelings of his wife and son who were angry with him for having sold the land. According to the appellant, he signed the agreement only after he was assured by the plaintiff that it would remain a paper transaction and not be enforceable. The appellant also pleaded that the agreement of sale was without consideration and, therefore, void and not enforceable. Alternatively he contended that he had signed the agreement as the Karta of a Joint Hindu family and as there was no necessity to re-convey the property, the agreement was it legal for this reason too. Lastly, the appellant pleaded that the plaintiff never having offered him the amount of Rs. 15,000/- as stipulated under the agreement of re-sale was not entitled to specific performance. Both sides led evidence in support of their respective versions. The plaintiff gave evidence himself and produced the scribe who wrote out the agreement (Kishan Chand P. W. 2) and the broker who is alleged to have arranged the transaction between the parties (Radhey Shyam Nilam P. W. 3). He also produced one Dhani Ram who is alleged to have made an agreement with the plaintiff for the purchase of the land for about Rs. 45,000/-. The defendant also gave evidence and produced one Hansraj who claimed that he settled the sale transaction between the parties, and there was no agreement for re-conveyance at the time.

3. The learned Judge believed the plaintiff's version that the sale and the agreement to reconvey were parts of the same transaction and rejected the defendant's explanation for signing the agreement of 6th April 1960 as completely false. He decreed the suit for specific performance and the defendant has now come to this Court in appeal.

3A. Jagdish Swarup who argued this appeal with ability and commendable brevity, stated at the very outset that he would not press before this Court the plea that the agreement of re-conveyance was void on the ground that it had been made by the appellant as Karta of the Joint Hindu Family without legal necessity. Learned counsel stated very properly in our opinion, that it would be very difficult for him to substantiate this plea from the evidence on record. Learned counsel pressed two arguments in support of this appeal--first, that the sale and the agreement to re-convey were separate and independent transactions and therefore, the second transaction was without consideration and unenforceable; secondly, the agreement to re-convey was not enforceable for want of mutuality.

4. The question whether the sale of 31st March and the agreement of 5th April are integral parts of a single transaction, connected and interdependent, or whether they are separate and independent of each other is one of fact, not of law The Court has to choose between the two versions--the respondent's version that he needed a sum of Rs. 10,000/- and the appellant agreed to lend him this sum on the security of the land in disputebut insisted that there should be no mortgage but a sale followed by an agreement to re-sell, and the appellant's version that the plaintiff sold the land outright to him and subsequently begged him to execute a fictitious agreement of re-conveyance for the sake of maintaining peace within his own family. The learned Judge after an exhaustive review of the entire evidence rejected the appellant's version as false. We have read the whole of the evidence ourselves and are in agreement with the view taken by the learned Judge. The appellant's explanation why he executed the agreement of re-conveyance is most improbable and in fact incredible. He is shop keeper of 58 years of age and may fairly be described as a man of experience. That be should have agreed to execute, at the request of a comparative stranger, a document which was likely to create trouble for him in the future cannot be believed. On the other hand, the respondent's version is straighforward. He alleged that he needed money and a loan from the appellant was arranged by a broker on the following terms: The respondent was to receive Rs. 10,000/- from the appellant on the security of the land in dispute, but the latter said that he had been advised by lawyers that there should be two agreements--one of sale and the other of reconveyance--which should not be executed on the same day to avoid the danger of the entire transaction being treated as a mortgage. This vei'sion is corroborated by the broker (Radhey Shyam P. W. 3) who arranged the transaction and by the scribe (Kishan Chand P. W. 2) who wrote out the two agreements. They both deposed that the parties discussed the nature of the transaction in their presence and the agreement was that the appellant would pay a sum of Rupees 10,000/- to the respondent who would execute a sale deed which was to be followed after a few days by an agreement by the appellant to re-convey the property. The plaintiff explained that the price for re-conveyance was fixed at a sum which was Rs. 5000/- higher than the amount paid to him under the loan because the appellant had to pay interest. This explanation must be believed because it is natural in a loan transaction that the lender must receive same interest on the money lent by him.

5. Jagdish Swamp argued that the plaintiff's version should be disbelieved because he had attempted to change his story in the plaint. We are not impressed with this argument which has been discussed at length by the learned Judge. It appears that the defendant in his reply to the plaintiff's notice in February 1960 did not take the stand that the agreement of 5th April 1960 was intended to be a fictitious transaction, but merely wrote that it was not binding on him. There was no reference whatever to the circumstance in which the apellant is alleged to have been induced by the respondent to execute this agreement. It was in the written statement that the defendant came out for the first time with the story of the Fictitious naure of the transaction. As oberved by the learned Judge, this defence must have taken the plaintiff by surprise and he was compelled to file a replication explaining that the sale and the agreement to re-sell were intergral parts of a single transaction. However we are not inclined to accept the view of the trial court that the defendant forged the dateon the receipt Exhibit A-1, because this date appears on the sale deed as well. But the date of execution of the receipt does not affect the case in view of our finding that the sale and the agreement to re-sale were a single transaction. If the plaintiff, taken by surprise by the appellant's false story, was tempted to allege that the receipt was executed on 5th April it does not effect the truth of his story as a whole.

6. Even if it is assumed that the sale and the contract for re-conveyance were separate and independent transactions, the subsequent conduct of the parties in this case resulted in a binding contract for the re-conveyance of the land. On 31st March 1960 the land was sold to the appellant and on 5th April he executed the agreement of 5th April promising to re-convey the land to the appellant within a period of two years for a sum of Rupees 15,000/- if he so desires. Mr. Jagdish Swamp has argued that if this agreement is not a part of the sale transaction the promise to re-convey is not binding on the appellant as it is nudum pactum a promise without consideration. Counsel pointed out that there was no corresponding promise to purchase the land by the respondent who had an option to purchase within two years. Even assuming that this is so, a contract was created at a later stage when the respondent within two years exercised his option. Para 1 of the agreement runs thus:

'(1) Whenever the second set (the respondent) desires to buy the property detailed as given below within a period of two years and would offer the agreed sum of Rs. 15,000/- to the 1st set (the appellant) the first set shall execute, complete and get registered a sale deed in favour of the 2nd set or in whosoever's name the 2nd set would desire'. .

7. It is true that if this paragraph is construed as a promise to sell the land within two years at the option of the respondent, it was not binding of itself, being without consideration. (We have assumed for the purpose of this argument that the agreement of 5th April is a separate transaction). But a promise to re-convey land within a specified period at the option of the promisee is at least an offer or option which becomes a proraise enforceable at law when the offeree exercises his option and accepts the offer. Protap Chandra v. Kali Charan : AIR1952Cal32 . Therefore, para 1 contains an offer by the appellant to sell the land to the respondent for Rs. 15,000/-, the offer (or the option) to remain open for two years An offer may be accepted at any time within the period prescribed by the offeree unless it is withdrawn earlier. It was conceded by Mr. Jagdish Samp that if this paragraph contained an offer it had not been withdrawn by the respondent expressly or impliedly. The position might have been different if the respondent had revoked his offer before it was accepted or had sold the land to a third person and the respondent was informed of the sale in which case the offer would have been revoked by the conduct of the appellant. But fortunately for the ends of justice, the appellant after having decided to break his word neglected. to take the precaution of withdrawing the offer contained in para 1 of the agreement, and this offer was converted into a promise when it was accepted by the respondent.After this it could not be revoked and the appellant was bound to reoonvey and the respondent to purchase the land. The appellant having refused to fulfil the agreement the respondent is entitled to a decree for specific performance.

8. Learned counsel then argued that the agreement to re-convey is not enforceable for want of mutuality. We do not agree. If the sale and the promise to re-sell were parts of a single transaction, no question of mutuality arises. The appellant's promise to re-convey the land is based on consideration. This consideration may be a promise for a promise or an act already performed in return for a promise. In the latter case the promise is enforceable because the promisor has already received consideration for it.

9. It is true that to be specifically enforced a bilateral contract must be mutual, that is to say, at the date of the contract it must be enforceable by either party against the other. It is based on the principle of equity that the law will not permit a party to enforce a contract which the other party could not have enforced against him. But this doctrine has no application to a unilateral promise for which the promisee has already received consideration. In such a case the party seeking to enforce the promise has already performed his obligations and no question of enforcing the contract against him can arise. Rakhama Sitaram Ghadge v. Laxman Sitaram Ghadge AIR 1960 Bom 105; Ramdas Rae v. Brindaban Ram : AIR1931All113 ; Fazaladdtn Mandal v. Panchanan Dae : AIR1957Cal92 .

10. Finally Jagdish Swarup argued that the respondent is not entitled to specific performance as he did not comply with the terms of the agreement and did not tender the amount of Rs. 15,000/-. We find little force in this argument. The appellant's oase never has been that he was ready and willing to perform the agreement but the respondent did not tender the price of the land. He simply repudiated the entire agreement as not binding on him. In such a case of sale with an agreement of re-purchase within a specified period, the seller of the property offers to purchase it within that period but the purchaser denies that there was any agreement, his conduct amounts to a complete repudiation of the agreement, and in such a case no question of the formal tender arises. The question to be decided is not whether any money was within the power of the seller but whether the purchaser refused to cany out his part of the contract. International Contractors Ltd v. Parsanta Kumar AIR 1902 SC 77.

11. The appeal is dismissed with costs.

12. The appellant is directed to execute within three months of today a sale-deed re-conveying the property in dispute to the respondent asdirected by the trial court, falling which the respondent shall be at liberty to have the (sic)executed through the Court.


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