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Ganga Singh and ors. Vs. Santosh Kumar and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty;Contract
CourtAllahabad High Court
Decided On
Case NumberSecond Appeal No. 501 of 1952
Judge
Reported inAIR1963All201
ActsContract Act, 1872 - Sections 55 and 56; Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950; Specific Relief Act, 1877 - Sections 14 and 19
AppellantGanga Singh and ors.
RespondentSantosh Kumar and ors.
Appellant AdvocateN.P. Asthana and ;N.S. Singhal, Advs.
Respondent AdvocateP.C. Gautam, Adv.
DispositionAppeal allowed
Excerpt:
.....- subsequent passing of u.p. zamindari abolition and land reforms act does not affect breach of contract - agreement to recover zamindari lands sold - lands vested in state under u.p. zamindari abolition and land reforms act - that part of land vested in state cannot be transferred - agreement becomes impossible of performance - doctrine of impossibility enables court to enforce contract equitably. (ii) specific relief - section 19 of specific relief act,1962 - specific performance cannot be granted - breach of contract - compensation can be awarded by court. - - in opposing this argument the plaintiff's counsel relied on the decision of the full bench referred to above in which it was held that under that act the previous sir and khudkasht fights of the zamindar as well as his..........to re-sell under two separate registered documents. by the first these ancestors sold certain plots of land to the four vendees for a sum of rs. 2500/- and by the second the vendees agreed to reconvey the same property to the vendors if the sale pries was paid bach within ten years. the property was subject to pre-emption and one misri lal asserted this right successfully in the law courts. he stepped into the position of the vendors and obtained possession. subsequently he transferred about half of the land to two persons, shishpal singh and bhura singh who are co-defendants in the suit, in 1946 the agreement of reconveyance was enforced by the present plaintiffs who are the descendants of the original vendors. on refusal, they filed the present suit for specific performance on.....
Judgment:

S.S. Dhavan, J.

1. This order will be deemed to be a continuation of my order dated 18th September 1961 and the two orders together will constitute the judgment in this appeal. The facts which have given rise to this second appeal have been detailed in the previous order, but a very brief resume will not be out of place. In 1936 the ancestors of the plaintiffs-appellants entered into a transaction of sale and agreement to re-sell under two separate registered documents. By the first these ancestors sold certain plots of land to the four vendees for a sum of Rs. 2500/- and by the second the vendees agreed to reconvey the same property to the vendors if the sale pries was paid bach within ten years. The property was subject to pre-emption and one Misri Lal asserted this right successfully in the law courts. He stepped into the position of the vendors and obtained possession. Subsequently he transferred about half of the land to two persons, Shishpal Singh and Bhura Singh who are co-defendants in the suit, in 1946 the agreement of reconveyance was enforced by the present plaintiffs who are the descendants of the original vendors. On refusal, they filed the present suit for specific performance on 18th January 1948. The defendants were the original party to the agreement of 1936, the preemptor-Misri Lal, and his transferee Shishpal Singh and Bhura Singh.

2. The suit was contested and a number of pleas were raised in defence. Both the Courts below upheld them and dismissed the suit and the plaintiffs came to this Court in second appeal.

3. After a lengthy hearing I reversed the findings of the Court below and came to the conclusion that the plaintiff's appeal must be allowed.

4. As regards the relief to which the plaintiffs are entitled, it is common ground that the position of the parties has been altered to some extent by the Zamindari Abolition and Land Reforms Act under which the Zamindari property vested in the State. It was conceded by the learned counsel for the plaintiff appellants that it is no longer possible for the defendants to reconvey the property which has vested in the State and the agreement of re-sale has to this extent become impossible of performance. But the plaintiffs pointed out that some of the plots were the khudkasht or grove land of the preemptor and were subsequently settled under Section 18 of the Z. A. & L. R. Act either with him or with the transferees Shishpal Singh and Bhura Singh. The plaintiffs submitted that the agreement of resale could be enforced as regards these plots.

This contention was accepted and art issue was remitted to the Court below for a finding whether any partof the land which was agreed to be reconveyed under the agreement of 1936 was settled with Misri Lal under Section 18 of the Z. A. and L. .R Act or with Shishpai Singh or Bhura Singh as the Bhumidhar of that land. The learned Judge after hearing the parties and recording their evidence came to the conclusion that tour plots namely, 388/1, 413/1, 418/2, and 429/2 were in the personal cultivation of Misri Lal on the date immediately preceding the date of vesting and he became the Bhumidhar of these plots under Section 18. He also found that none of the plots included in the land were settled with Bhura Singh and Shishpai Singh under Section 18.

5. The parties have filed their objections against these findings, In addition, the defendants nave filed an application for a review of my findings in the previous order dated 18th September, 1961 on the ground that the foundation of the decision has been shattered by a recent decision of the Supreme Court in Sheo Ambar Singh v. Allhabad Bank : [1962]2SCR441 , reversing the decision of the full Bench of this Court in Sheo Ambar Singh v. Allahabad Bank Ltd. : AIR1959All179 . Before considering the effect of the findings of the lower Court on remand, I shall deal with the prayer for review. On the earlier occasion It was argued on behalf of the defendants that the agreement to re-sell the property had become impossible of performance because of the vesting of the Zamindari in me State under Z. A. and 1. R. Act. In opposing this argument the plaintiff's counsel relied on the decision of the Full Bench referred to above in which it was held that under that Act the previous sir and Khudkasht fights of the zamindar as well as his rights in the groves fiave been allowed to continue to vest in the Zamindar andonly a new nomenclature has been given to those rights.

But since then the Supreme Court has reversed theview of the Full Bench and held that the rights conferred on an intermediary under Section 18 of the Z. A. and L. R. Act are new rights and a mortgage of zamindari property could not be enforced against the Bhumdhari rights of the zamindar which he acquired in the same land under Section 18 of the Z. A. and L. R. Act. Mr, Gautam, learned counsel for the defendant-respondents, relying on this decision argued that the principle laid down by the Supreme Court should also be extended to agreements tor the conveyance of zamindari land which subsequently be came bhumidhari land of the seller (if I may use the word land -- a common expression). Counsel argued that under the agreement of 1936 the original vendee had agreed to resell his zamindari in the property which had been conveyed to him. But zamindari had now been abolished and the contract had become impossible of performance. The bhumidhari rights under Section 18 acquired by the pre-emp-for are new rights altogether which he did not have in 1936 and could not have agreed to sell. Therefore the doctrine of frustration of contract by operation of law should be applied to the agreement and the defendant (pre-emptor) absolved from the obligation of performing it.

6. Two questions arise in this case which must be kept distinct. The first is whether the doctrine of frustration applies to this agreement at all, and if so, to what extent, secondly, even if the contract has become impossible or performance after the passing of the Z. A. and L. R. aCT, does this fact save the defendant from the charge of being guilty of breach of contract I shall consider the second question first.

7. Under the agreement of 1936 the defendants (or their predecessors-in-interest) agreed to resell certain plots of land to the plaintiff's ancestors for a sum of Rs. 2500/-provided the option to repurchase was exercised within ten years. In 1946 this option was exercised and the present defendants were called upon to reconvey the land to the plaintiffs. They refused to do so. At that time the Z. A. and L R. Act had not been passed and there was nothing to prevent the defendants from performing their obligation under contract. Their refusal was wrongful and they were guilty of breach of contract The plaintiffs filed the present suit for specific performance on 18th January 1946 and the defendants resisted it and still retused to perform the contract. They had no valid defence to offer and the breach became final and complete. The subsequent passing of the Z. A. and L. R. Act vesting zamindari property in the State cannot save the defendants from the consequences of their breach even if that Act made it impossible for them to perform the contract. Where a party to a contract has already committed breach of contract he cannot subsequently rely on a subsequent event which made the contract impossible of performance. Produce Brokers Co. v. Weis and Co. (1918) 87 LJ KB 472, Mertena v. Home Freeholds Co. (1921) 2 KB 526, Therefore, whether the plaintiffs are entitled to specific performance or not, the defendants must be held guilty of breach of contract and liable to pay compensation to the plaintiffs as damages. The only question is : which of the defendants are so liable and what is the measure of damages?

8. I shall now consider whether the agreement to resell the land has been rendered impossible by the Z. A. and L R. Act. It is common ground that the agreement was to re-sell zamindari property, and that a subs-tantial part of it has vested in the State free of all in-cumbrances. It was conceded by Mr. Ambika Prasad for the plaintiffs that that part of the land which has vested in the State but not been resettled with any of the defendants under Section 18 of the Act cannot be transferred and to that extent the agreement has become impossible of performance. The controversy is limited to these plots which were resettled with some of the defendants or their transferees. The lower Court was requested to determine which plots were resettled with which defendant under Section 18.

9. The learned Judge has found that seven plots were leased out by the defendant Misri Lal to Ram Charan. the father of the defendants Shishpal Singh and Bhura Singh. The date of the transfer is 20th April 1944- that is, before the plaintiffs had exercised their option. The tenancy was therefore, perfectly valid and the tenant's right would be protected in case of transfer of ownership. A year later on 17-7-1945 Misri Lal tratisferrad the ownership in ten plots to the defendants Shishpal Singh and Bhura Singh, and these ten included the seven which had been already let out to their father. The court below has found that the tenancy was a genuine transaction and that the father did not acquire the tenancy rights on behalf of the joint family consisting of himself and his two sons. Subsequently, Ram Charan acquired certain rights in these plots by paying ten times the amount of rent. This was done while the plaintiffs' suit was pending cut they never gave Ram Charan notice that they had exercised their option of re-purchase nor did they make him a co-defendant in the present suit.

In 1952 under Section 18 of the Z. A. and L. R. Act Ram Charan acquired bhumidhari rights in these seven plots. As regards these rights he cannot be regarded as a transferee of the defendants and there is no privity of contract between him and the plaintiffs. He is not even a party to the suit. The plaintiffs could not have compelled Ram Charan to sell these plots to them, I am informed that Ram Charan died in 1958 and his bhumidhari rights were inherited by his two sons Shishpal Singh and Bhura Singh, the second and the third defendants. Their rights in these plots are the same as those of their father, and as the plaintiffs could not have compelled Ram Charan to sell these plots they cannot force his heirs to transfer them. Therefore the suit for specific performance must fail with regard to the seven plots in which Ram Charan acquired bhumdhari rights which were subsequently inherited by the defendants Shishpal Singh and Bhura Singh.

The controversy is therefore limited to four plots which have been found by the lower court to have been in the personal cultivation of the preemptor Misri Lal, Defendant No. 1, and of which he became the bhumidhar under Section 18 of the Z. A. and L. R. Act. These are plots Nos. 388/1, 413/1, 418/2 and 429/2. Misri Lal died during the pendency of this appeal and his son Santosh Kumar and widow Smt. Anandi have been impleadedi as his heirs, ff the agreement for sale with regard to these four plots could be enforced against Misri Lal, it could also be enforced against his son and widow. I have now to consider whether my view in the previous order dated 18th September 1961 requires modification after the judgment of the Supreme Court in : [1962]2SCR441 ).

10. After hearing Mr. Gautam at considerable length I am of the opinion that that decision does not affect the merits of the present case. In the case before the Supreme Court the transaction was one of simple mortgage which had been completed and nothing remained to be done either by the mortgagor or the mortgagee. The former had obtained a loan and had mortgaged some properly as security. The property mortgaged consisted of the proprietary right of the Zamindar in the land. After the coming into force of the Z. A. and L. R. Act the mortgagee sought to release his security and enforced the mortgage against the bhumidari rights acquired by the mortgagor in the same land. The latter objected on the ground that his 'new rights were not subject to the mortgage.

A Full Bench of this Court took the view that, the previous sir and khudkasht right of the zamindar continued to vest in him though under a new nomenclature. On appeal the Supreme Court considered the effect of the Z. A. and L. R. Act on the security and held that as the proprietary rights had vested in the State free of inciimbrance, the security was destroyed subject to a right of a mortgagee to substituted security. The Court expressly referred to Section 6(h) of the Act and pointed out that that clause made it impossible for the mortgagee to proceed either against the proprietary rights which had vested in the State or against the new Bhumidhari rights of the zamindar and his only remedy was to claim payment or the mortgage-money out of the amount due to the mortgagor as compensation.

11. But in the present case there is no question of considering the effect of the 1. A. and L. R. Act on a simple mortgage of zamindari property. This is a case of an agreement by one party to reconvey land. This is not a case of a completed transaction but one in which a party has yet to perform his part of the bargain and the question before the Court is whether he is still in a position to perform it or should be allowed to avoid this obligation by raising the technical plea that the nature of his rights in the same land has changed. The subject-matter of the transaction was land. It was con-veyed to this party and he simultaneously agreed to reconvey it to the seller within 10 years. Today the subject-matter of the agreement remains substantially the same, namely, the land, though the nature of his rights in it has changed. But he is still in possession of the land and enjoys all the rights in it short of full ownership. His new rights are not subject to any prohibition against transfer. Bhoomdhari rights are transferable subject to certain restrictions. The burden of his obligation under the agreement has not been increased as he was to convey all his rights in the land and he is not being asked to do any thing more. Therefore he is still in a position substantially to perform his obligation under the contract by transferring all his right in the same land such as they are.

The main purpose of the original venture has not been destroyed namely, the conveyance of the land. If as a result of the Z. A. and L. R. Act the defendants' rights have changed from full proprietorship to bhumidhari, this is a matter for the purchaser who was free not to exercise the option. Mr. Ambika Prasad, relying on Section 15 of the Specific Relief Act, stated that the plaintiffs will be satisfied if the defendants transfer their bhumidhari plots to them. As pointed out by me in my earlier order, the Supreme Court has held in Satyabrata Ghose v. Mugneeram Bangur and Co. : AIR1954SC44 that tha word 'impossible' in Section 56 of the Contract Act has not been used in the sense of physical or literal impossibility. At the risk of repetition, I would like to quote the following observation from the previous order :

'The sanctity of contract is the foundation of our law of contract and the doctrine of impossibility does not displace that principle, but merely enables the Court to enforce it equitably. It releases a party from its obligations to perform a contract where performance has become Impossible as a result of events out of the control of that party. An agreement for the sale of a house,for example, cannot be performed if the house is destroyed by enemy action or any other cause, in such cases the principle of sanctity of contract is not compromised if the court holds that it has become impossible for the seller to perform the agreement. But the doctrine of impossibility cannot be applied in a manner which will weaken the sanctity of contract. The plea of impossibility will not be entertained by the Court if in spite of supervening events, the object and purpose of the parties is not rendered useless and the contract can be performed substantially in accordance with the original intention of the parties though not literally in accordance with the language of the agreement. The Court will not apply the doctrine of impossibility to assist a party wh ch dees not want to fulfil his obligations under the contract and relies on literal impossibility to back out of it. Ttu doctrine of impossibility, which is based on equity and common sense cannot be permitted to become a device for destroying the sanctity of contract.'

12. There is nothing in the judgment of the Supreme Court to suggest that they took the view that if land was conveyed to a party under an agreement that he is to reconvey it at the option of the seller, he can back out of the agreement and keep the land to himself on the plea that after the passing of the Z. A. and L. R. Act his control over and possession cf the land is by virtue of new rights acquiried in the same land in place of the old. In my opinion, the rights may be new, but the party is still in a position to carry out substantially his part of the bargain.

13. I am therefore of the opinion that the plaintiff's are entitled to a decree for specific performance against the defendant Misri Lal for the sale of plots Nos. 388/1, 413/1, 418/2 and 429 of which he became a bhumidhar under Section 18 of the Z. A. and L. R. Act.

14. As regards the refusal of the defendants to sell the remaining plots when a demand was made by the plaintiffs in 1945, I think the plaintiffs cannot obtain specific performance but are entitled to 2 decree for damages. Under Section 19 of the Specific Relief Act if the Court decides that specific performance cannot be granted but that there has been a breach of contract, it shalt award the plaintiff compensation to which he may be entitled. In Arya Pradishak Pratiniclhi Sablia v. Ram Chand, AIR 1924 Lah. 713 it was held that a Court can award damages in a suit for specific performance though not specifically prayed for and it ought to award damages when it thinks that damages should be awarded.

15. !n my opinion the plaintiffs are entitled to and should be awarded damages as compensation for the loss caused to them by deliberate breach of contract by the defendants in 1946. The parties liable to pay compensation are the respondents Santosh Kumar and Smt. Anandi as the legal representatives of the deceased defendant Misri Lal who was under an obligation to reconvey the property but refused to do so and in fact transferred It to others with the knowledge that the period of option had not expired. They are liable to pay compensation, to the plaintiffs for the loss suffered by them as a result of the Zamindari property in the land in suit not having been conveyed to them before it vested in the State. The measure of. compensation will be the difference between the price which they agreed to pay and the market value of the property in 1946 when the breach of contract took place. In assessing the total amount of compensation the execution court shall be guided by the following principles.

(1) Allowance shall be made for the value of tries four piots 388/1, 418/1, 418/2, 429/2 in respect ot which the plaintiffs are being granted a decree for specific performance. The court shall deduct from the amount of compensation the market value of these plots at the time of the breach of these contracts.

(2) In assessing the amount of compensation payable to the piaintiffs in respect of plots Nos. 237, 319/2,, 388/2, 416, 417, 426/1 and 423/1 the Court shall, bear in mind that the pre-emptor Misri Lal was entitled to let. out these plots to Ram Charan and that Ram Charan's tenancy rights could not have been disturbed by the plaintiffs even if the plots had been reconveyed to them, under the agreement. The measure of compensation will therefore be the value at the time of breach of the proprietary rights in respect of these plots minus the value of the tenancy rights which subsequently became Bhumi--dhari rights.

(3) In assessing the compensation in respect of plots Nos. 491, 476, 492 the court shall assess the market value of these plots on the date of breach of contract and calculate the amount of compensation as the difference between the proportionate price of these plots under the agreement of 1936 and their market value in 1945 at the time of the breach of the agreement.

16. The liability for compensation in respect of the failure to convey plots Nos. 237, 319/2, 388/2, 416/41/, 426/1 and 429 shall be that of respondents Santosn-Kumar and Smt. Anandi (as heirs of Misri Lal) and the respondents Shishpal Singh and Bhura Singh jointly and severally. As stated above in assessing the value of the land, the value of the proprietary rights minus the tenancy rights will be considered.

17. The liability for compensation in respect of plots Nos. 476, 491 and 492 shall also be that of respondents Santosh Kumar and Smt. Anandi (as the heirs of Misri Lal) and the respondents Shishpal Singh and Bhura Singh jointly and severally.

18. I, therefore, allow this appeal and grant the plaintiffs-appellants a decree for specific performance against the respondents Santosh Kumar and Smt. Anandi in respect of plots Nos. 388/1, 413/1, 418/2, 429/2. The plaintiffs shall deposit the amount of Rs. 1900/- being the sale price, in court within three months from today, after which the aforesaid respondents will execute a sale deed in favour of the plaintiffs-appellants within one month. In case they fail to do so, the court will execute the sale deed. As regards possession of these plots it was conceded by the plaintiffs-appellants that the civil court cannot grant possession until after the issue of a notification under Section 52 of the Consolidation of Holdings Act as the villages in which these plots are situate are under consolidation, The court will, therefore, execute the sale deed without delivery of possession., but this is without prejudice to the right of the plaintiffs to agitate berore the Consolidation authorities their right of possession after the sale deed had been executed in their favour under the decree of this Court.

19. In the event of failure to deposit the sale price within the prescribed time the decree for specific performance shall stand dismissed, but the decres for damages shall stand.

20. The plaintiffs-appellants shall pay the court fee on the amount of compensation to which they are held entitled by the trial court and the decree shall be passed subject to the payment of this court-fee. The plaintiffs-appellants shall realise their costs from the1968 UNION OP INDIA v. yAKUR ALI KHAN (S. S.respondents Nos. 1, 2, 3 and 4. The record shall be returned to the trial court at a very early date.

21. Leave to appeal is refused.


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