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Lalji and ors. Vs. Ramji Seth - Court Judgment

LegalCrystal Citation
SubjectContract;Property
CourtAllahabad High Court
Decided On
Case NumberSecond Appeal No. 255 of 1968
Judge
Reported inAIR1978All212
ActsSpecific Relief Act, 1963 - Sections 20 and 20(4)
AppellantLalji and ors.
RespondentRamji Seth
Appellant AdvocateSidheshwari Pd. and ;Shitla Prasad, Advs.
Respondent AdvocateDeo Narain Misra and ;Satya Narain Misra, Advs.
DispositionAppeal dismissed
Excerpt:
property - contract of sale - section 20 (4) and explanation 1 to section 20 of specific relief act, 1963 - registered deed executed by which property agreed to be sold was also mortgaged ( suit for specific performance of contract of sale - insufficient consideration in deed is not a valid reason for rejecting suit - deed not conferring any unfair advantage - doctrine that contract to be specifically enforceable should be mutually binding stands abolished not recognized by section 20 (4) - held, specific relief cannot be denied either on ground of unfair advantage or want of mutuality. - - 1964 is clearly an agreement of sale of the property in dispute......on the ground that the suit was barred by section 20 sub-clause (a) and sub-clause (b) of the specific relief act, 1963. it further held that on account of the want of mutuality of the promises the plaintiff respondent was not entitled to the equitable relief of specific performance. the trial court therefore refused to grant the relief for specific performance of the agreement dated 2nd dec. 1964 but decreed the plaintiff's suit for recovery of rs. 1,584/- from the defendant appellant no. 1. against the decision of the trial court the matter went up in appeal. the lower appellate court allowed the appeal and directed specific performance of the contract of sale. aggrieved the appellants have filed the present second appeal in this court.4. it is admitted on record that the.....
Judgment:

S.D. Agarwal, J.

1. This second appeal arises out of a suit filed by the plaintiff respondent Ramji Seth for specific performance of the contract of sale entered into on 2-12-1964 in respect of house No. K 46/167 situate in mohalla Hartinath, district Varanasi.

2. On 2-12-1964 Lalji executed a registered deed in favour of the plaintiff respondent Ramji Seth agreeing to sell the property in dispute. By this deed the property agreed to be sold was also mortgaged in favour of Ramji Seth for a sum of Rs. 1,500/- in case the plaintiff respondent did not obtain the sale deed for the disputed premises. The plaintiff respondent was willing to purchase the disputed premises but Lalji transferred the disputed premises to Suraj Prasad and Harihar Prasad defendants appellants Nos. 2 and 3 on 3rd April 1965. The defence of appellant No. 1 Lalji was to the effect that he did not execute the agreement for sale but had in fact executed a simple mortgage in favour of the plaintiff for a sum of Rupees 1,500/-. It was further alleged that by this deed an unfair advantage was sought to be taken from the appellant No. 1 and that the price of the house agreed to be sold was inadequate and as such the agreement was not specifically enforceable. It was further pleaded in defence that since the agreement lacked mutuality the same was not enforceable. The defendants appellants Nos. 2 and 3, however, claimed to be bona fide purchasers and sought the benefit of Section 41 of the Transfer of Property Act.

3. The trial court, after examining the document in question, held that the agreement dated 2nd Dec. 1964 is an agreement for sale and as also a mortgage deed. It further held that since the defendants appellants Nos. 2 and 3 did not enter into the witness box to depose that they took reasonable care to ascertain that the transferor had power to transfer the house in suit nor they produced any evidence in that connection, the suit was not barred by Section 41 of the Transfer of Property Act. The trial court however, refused to grant relief to the plaintiff respondent on the ground that the suit was barred by Section 20 Sub-clause (a) and Sub-clause (b) of the Specific Relief Act, 1963. It further held that on account of the want of mutuality of the promises the plaintiff respondent was not entitled to the equitable relief of specific performance. The trial court therefore refused to grant the relief for specific performance of the agreement dated 2nd Dec. 1964 but decreed the plaintiff's suit for recovery of Rs. 1,584/- from the defendant appellant No. 1. Against the decision of the trial court the matter went up in appeal. The lower appellate court allowed the appeal and directed specific performance of the contract of sale. Aggrieved the appellants have filed the present second appeal in this Court.

4. It is admitted on record that the agreement dated 2nd Dec. 1964 was executed by the defendant appellant Lalji in favour of Ramji Seth. His only defence was that it was a simple mortgage and could not be treated as an agreement for sale of the property in dispute. The trial court held against the appellants and the said finding was not challenged before the lower appellate court. I have gone through the agreement in question and I am in agreement with the view taken by the trial court. On a reading of the entire agreement it is clear that the agreement dated 2nd Dec. 1964 is clearly an agreement of sale of the property in dispute.

5. Two questions arise in the present appeal. Firstly, as to whether it could be held that the plaintiff respondent had taken unfair advantage and as such the relief could not be granted to him in view of the Specific Relief Act. Secondly whether there was want of mutuality and as such the agreement was not enforceable.

6. While considering the first question it is relevant to quote Section 20, Explanation I, of the Specific Relief Act.

'Mere inadequacy of consideration, or the mere fact that the contract is onerous to the defendant or improvident in its nature, shall not be deemed to constitute an unfair advantage within the meaning of Clause (a) or hardship within the meaning of Clause (b).'

7. In view of Explanation I to Section 20 the mere inadequacy of consideration would not entitle the court to refuse to grant a decree for specific performance. In view of this provision the view taken by the lower appellate court is correct and does not suffer from any illegality. It may further be stated here that the lower appellate court has recorded a categorical finding of fact that the price offered by the plaintiff respondent, i. e. a sum of Rs. 3,000/-, was not inadequate at the time of the contract of sale. In view of this finding also the question of taking of any unfair advantage does not arise.

8. In regard to the second question it may be stated that prior to the enactment of the Specific Relief Act, 1963, there was scope to apply the doctrine of English law that a contract to be specifically enforceable must be mutually binding. As a rule the court did not grant specific performance at the suit of one party when it could not do so at the suit of the other. This principle of mutuality has been abolished and now not recognised by the Specific Relief Act, 1963. Section 20(4) of the Specific Relief Act, 1963, provides as follows:--

'The court shall not refuse to any party specific performance of a contract merely on the ground that the contract is not enforceable at the instance of the other party.'

9. In view of the above provision it is not open to the appellants to urge that the agreement is not enforceable on the ground of want of mutuality.

9A. There is another aspect of the matter. In the instant case the contract is not bilateral. It is a unilateral promise by the vendor, namely, defendant appellant Lalji, to sell the property to the plaintiff respondent Ramji Seth after having received consideration. In Shree Ram v. Ratanlal : AIR1965All83 a Division Bench of this Court while considering this question has held as follows (at page 86 of AIR):

'It is true that to be specifically enforced a bilateral contract must be mutual, that is to say, 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 i 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 ; Fazalddin Mandal v. Panchanan Das : AIR1957Cal92 .'

10. In view of the principles of law laid down above it is clear that the court could not refuse the decree for specific performance on the ground of want of mutuality.

11. In the result there is no force in this appeal. It is accordingly dismissed. The parties are directed to bear their own costs.


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