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Hari Krishna Agarwala Vs. K.C. Gupta - Court Judgment

LegalCrystal Citation
SubjectCivil ;Property
CourtAllahabad
Decided On
Reported inAIR1949All440
AppellantHari Krishna Agarwala
RespondentK.C. Gupta
Excerpt:
.....and his father and he, therefore, suppressed the letter which his father had written to him and only produced his own correspondence with the defendant. the question has been more clearly and better discussed in pomeroy's book on specific performance of contract (edn. i took pity, but i did not abandon the idea of going in for the house, as i needed the house badly. 190 is clearly applicable......sent to his father and that he had placed the papers in the hands of his lawyer to file a suit for specific performance. thereupon the suit was filed on 31st may 1943.4. in defence the defendant took several pleas. it is not necessary to deal with them in detail and we shall only mention such of the pleas as have been urged before us. the learned civil judge framed three issues which were as follows:1. did the plaintiff agree to accept damages in lieu of specific performance of the contract in suit; if so, how does the fact affect the case?2. is the plaintiff not entitled as of right to claim specific performance of the contract in suit in view of the circumstances set up in paras. 17 and 18 of the written statement?3. is the plaintiff entitled to recover damages claimed; if so, how.....
Judgment:

Malik, C.J.

1. The plaintiff-appellant was an original resident of Allahabad. He was employed as Assistant Controller of Purchase Cotton Textiles Directorate, Government of India, Bombay, and it is his case that he was anxious to settle in Allahabad after retirement from Government service and, though he had a house in the City of Allahabad, he wanted to purchase a bungalow in the civil station and that therefore he entered into a contract with the defendant on 21st March 1913, to buy the defendant's house for a sum of Rs. 15,000. The defendant is also a Government servant and in the course of his employment was posted at Allahabad and had built a house in Lukerganj after borrowing money from certain persons. He had to pay a large sum of interest on the money borrowed but was not able to clear off the liabilities. He had been transferred to Lucknow where on all the material dates he was posted. The creditors of the defendant proceeded to attach the house and the defendant ultimately was forced to agree to its sale and entered into the contract dated, 21st March 1943, with the plaintiff. The fact that there was such a contract is not denied.

2. Soon after the contract there were differences between the parties about certain minor Terms, specially about the payment of brokerage. Ultimately, on 29th April 1913, all the terms were settled. A draft of the sale-deed had already been sent by the defendant to the plaintiff for approval on the 26th and this draft was approved by the plaintiff on the 29th. One thing, however, still remained to be done and it was the obtaining of the permission of the Collector for the sale. The house was built on leasehold land and under the lease the lessee could transfer the premises only with the permission of the Collector and to a party approved by him. Between 29th April and 3rd May the defendant got money from a relation of his which was sufficient to clear off his liabilities and therefore the necessity for the sale no longer existed. He, therefore, wrote a letter dated 3rd May 1943, to the plaintiff at Bombay in which he explained the circumstances that had compelled him to agree to sell the house, the value that he and his wife attached to the house and the change in the circumstances which had enabled him to pay off all his liabilities so that there was no longer any necessity for sale and requested the plaintiff to relieve him of his obligation under the contract and to agree to take compensation instead. The relevant portion of the letter dated 3rd May 1943, is as follows:

But as I am now in a position to pay them all and clear their account fully, my prayer to you is that you will be good enough to release me from the contract and allow me to keep the house. Needless to say that I shall always remain grateful to you for it. As a gentleman and a reasonable man I hope you will have no hesitation in acceding to my request. It might cause you some pecuniary loss. I am prepared to compensate you for that loss.

The defendant also enclosed a crossed cheque for Rs. 1,000, the amount that he had received as earnest money. The plaintiff, who was at Bombay, sent this letter to his son who was in Allahabad, and on 11th May 1943, the plaintiff's son, Shri Krishna Agarwal, wrote a letter, which was marked 'without prejudice,' to the defendant. In this letter he said as follows:

My father and I are very much touched by your letter and we want to respect your wishes so far as is reasonable. In order to keep ready money to be paid to you at a moment's notice by way of the. consideration of the sale deed we had to sell our valuable shares in an unfavourable market at a loss of about Rs. 4,000 (four thousand only). The prices of the shares have risen very high now and this is an additional loss. We have thus suffered a loss of more than Rs. 4,000 on account of our entering into a contract with you for the sale of the house.... If you really wish to retain the house you can send a cheque for Rs. 4,000 as compensation for the loss that we have suffered. This must be done within 48 hours of the receipt of this letter by you. If it is not so done, the above offer will be with-drawn and the contract of sale will be specifically enforced.

3. The defendant was not willing to pay the sum of Rs. 4,000 which he considered to be an exaggerated amount and offered in his letter dated 14th May 1943, to pay reasonable compensation for the amount of loss suffered by the plaintiff. The plaintiff's son, in his letter dated 22nd May 1943, replied that he was not willing to accept anything less than Rs. 4,000 and as the sum of Rs. 4,000 had not been paid he was returning the cheque for Rs. 1.000 which had been sent to his father and that he had placed the papers in the hands of his lawyer to file a suit for specific performance. Thereupon the suit was filed on 31st May 1943.

4. In defence the defendant took several pleas. It is not necessary to deal with them in detail and we shall only mention such of the pleas as have been urged before us. The learned Civil Judge framed three issues which were as follows:

1. Did the plaintiff agree to accept damages in lieu of specific performance of the contract in suit; if so, how does the fact affect the case?

2. Is the plaintiff not entitled as of right to claim specific performance of the contract in suit in view of the circumstances set up in Paras. 17 and 18 of the written statement?

3. Is the plaintiff entitled to recover damages claimed; if so, how much?

The learned Civil Judge decided on issues 1 and 2 that the plaintiff had written to his son, Shri Krishna Agarwal, to settle the amount of damages and that the covering letter of the plaintiff, sent along with the defendant's letter dated 3rd May 1943, had been deliberately suppressed and had not been destroyed as suggested in his evidence by Mr. shri Krishna Agarwal, the son of the plaintiff. The lower Court was of the opinion that this was a case where damages would be adequate relief and that there would be special hardship to the defendant if the contract was specifically enforced. Coming to the amount of damages, the lower Court assessed the sum at Rs. 600 and while dismissing the suit for specific performance of contract, passed a decree for Rs. 1600 in plaintiff's favour with proportionate costs.

5. The defendant has submitted to the decree but the plaintiff has appealed. On behalf of the plaintiff learned Counsel has urged that the lower Court was wrong in its view that there would be any special hardship to the defendant which would justify in law the refusal of a relief for specific performance and that the defendant had not led sufficient evidence to satisfy the Court that damages would be adequate relief. The learned Counsel has also urged that, even if the plaintiff's son suppressed the letter written to him by the plaintiff as the covering letter to the defendant's letter dated 3rd May it was of no consequence as even if the plaintiff was agreeable to accepting the defendant's proposal for a rescission of the contract, that rescission not having been communicated to the defendant, it was of no legal effect.

6. The judgment of the lower Court is being supported on four grounds. The first ground urged before us by the learned Counsel for the respondent is that the plaintiff having agreed not to enforce performance of the contract, there was no contract in existence which could be enforced and he has relied on Section 63, Contract Act, and a ruling of their Lordships of the Judicial Committee in Firm Chhunna Mai-Ram Nath v. Firm Mool Chand Ram Bhagat A.I.R. (15) 1928 P.C 99. Section 63, Contract Act, provides that

every promisee may dispense with or remit, wholly or in part, the performance of the promise made to him, or may extend the time for such performance, or may accept instead of it any satisfaction which he thinks fit.

The question before their Lordships of the Judicial Committee arose whether such rescission of contract should be by a subsequent contract which should fulfil all the requirements of a 'valid contract between the parties. Dealing with this point their Lordships of the Judicial Committee observed:

The appellants contended that Section 63 applied only where there was an agreement to dispense or a contract, supported by consideration, to do so, and that in any case it could only operate, when the party dispensing had performed his part of the contract and only something remained to be performed on the other side unless dispensed with.... They further said that, if they had been wrong in refusing in advance to accept bales, this repudiation has not been accepted by the respondents, and therefore the contract remained alive and ought to have been performed. It is evident that the alleged dispensation under Section 63 is by itself a complete answer, unless the absence of contract or consideration is fatal, for the appellants again and again dispensed with the performance by the respondents of their promise to deliver the goods contracted for, and they cannot recover damages for the breach of a promise touching the ,performance of a thing they wholly dispense with.

Their Lordships, after holding that they did not agree with the decision of a Bench of the Bombay High Court in Abaji Sitaram Modah v. Trim-bah Municipality 28 Bom. 66, which had laid down that a new agreement for consideration was necessary, went on to hold:

The language of the section does not refer to any such agreement and ought not to be enlarged by any implication of English doctrines. On this they agree with the learned Judges of the High Court.

In the All India Reporter the relevant portion of the judgment of the Lahore High Court is quoted which their Lordships of the Judicial Committee approved. The Lahore High Court had held that:

The section is a clear departure from the English law on the subject and if we may say so, a very wise departure and specially suited to the conditions of this country. It is clear that the section is not to be used by a plaintiff as creating a cause of action and that it does not entitle the remitter to improve his own position and to enlarge time or to make a remission to the detriment of the other side, but whether the remission be accepted in so many words or not, it creates a plea which a defendant can always urge to meet an action.

7. The question for decision is whether in this case the lower Court was right in holding that the plaintiff had dispensed with the performance of the contract. The defendant had written to the plaintiff a letter on 3rd May 1943, the relevant portion of which has been quoted above, in which he had made the request that the plaintiff may relieve him from the performance of the contract and may accept compensation instead. What the plaintiff's reaction to this letter was, about that there is no direct evidence, but it is admitted that on receipt of this letter the plaintiff wrote a letter to his son in Allahabad and after the receipt of the letter from his father the son sent a reply to the defendant. The letter sent by the father to his son has not been produced. The defendant in his written statement had pleaded in para. 19 that

the plaintiff agreed to rescission and novation of the contract and demanded damages and since then there remained no contract for sale.

The plaintiff did not come into the witness box and did not say what he had written to his son. His son, Shri Krishna Agarwal, was examined as a witness for the plaintiff and according to him his father had left the discretion whether to accept damages or not and to fix the amount of damages entirely to him. His statement is that he had destroyed the covering letter as he did not consider it to be of any importance. In view of the fact that the entire correspondence has been preserved, the lower Court was of the opinion that the covering letter had not been destroyed but was being suppressed and we have no reason to differ from the finding recorded by the lower Court. The question arises what inference should be drawn under Section 114, illust. (g), Evidence Act, from the suppression of this letter. The learned Counsel for the plain-tiff-appellant has urged that the letter was never summoned from the plaintiff and that may have been a good answer but unfortunately for the plaintiff the plaintiff's case is that the letter was destroyed soon after its receipt and therefore there was no point in the defendant summoning it from the plaintiff. We are inclined to accept the view of the lower Court that the letter was deliberately suppressed and if the letter was deliberately suppressed, the only reason for the suppression would be that, if produced, it would not support the plaintiff's case. We think it is very likely that the plaintiff, who is an elderly man holding a responsible Government post, was willing, on receipt of the pitiable appeal from the defendant, to accept damages and to dispense with the performance of the contract, but the son, , who was in Allahabad and within easy reach of legal advice, was not quite so generous and thought that if the performance of the contract had to be dispensed with it had better be dispensed with for a price which would be a real profit to him and his father and he, therefore, suppressed the letter which his father had written to him and only produced his own correspondence with the defendant. In the absence of any evidence given by the plaintiff, we are not pre-pared to differ from the conclusion arrived at by lower Court that the plaintiff was willing to accept damages and had dispensed with the performance of the contract.

8. The next question urged by learned Counsel is that in this case damages were adequate relief. He has cited various passages from 'Banerji on Specific Relief' to show that there is no real difference between a claim for the specific performance of a contract in respect of moveable property and a claim for the specific performance of a contract in respect of immovable property and that in the case of a claim for the specific performance of a contract in respect of movable property of rare value a breach of contract in respect of which cannot be adequately compensated for by the award of any damages, specific performance would be granted. In the case of immovable property, as it is difficult to assess the damage the presumption is that damages would not be sufficient compensation and the Courts would specifically enforce the (contract unless the defendant can prove that damages would be adequate relief. The question has been more clearly and better discussed in Pomeroy's book on Specific Performance of Contract (Edn. 3rd). The learned author has pointed out that in cases of contracts for the purchase of lands or things that relate to realties, those being of a permanent nature were expected to have a special value, and if a person agreed to purchase them, it was on a particular liking to the land, and such contracts were different from the contracts entered into about goods in the way of trade and that was how the rule started but later it came to be assumed by the Courts that in all contracts for sale of land damages were inadequate compensation for a breach of contract. The learned author has further pointed out that the situation has changed and land was offered, bought and held simply as merchandise for mere purposes of pecuniary profit, possessing no interest in the eyes of the purchaser and owner other than its market value, but the rule having once been established has now become universal and the actual motives and design of the purchaser are never inquired into, for it is assumed in every instance that damages are an inadequate relief for the breach of a land contract.

9. So far as we are concerned, the law is laid down in the Specific Relief Act. Section 12 of the Act sets out the cases in which specific performance is enforceable. Clause (c) provides that the specific performance may be granted

when the act agreed to be done is such that pecuniary compensation for its non-performance would not afford adequate relief

and the explanation to the section provides that

unless and until the contrary is proved, the Court shall presume that the breach of a contract to transfer immoveable property cannot be adequately relieved by compensation in money, and that the breach of a contract to transfer moveable property can be thus relieved.

It has, therefore, made it a question of burden of proof, it being assumed that in cases of a breach of contract to transfer immovable property it may be possible for the defendant to prove that damages would be adequate relief. Section 21, Clause (a), Specific Relief Act, provides that a contract cannot be specifically enforced for the non-performance of which compensation in money is an adequate relief. The question is whether in this case the lower Court was right in holding that the defendant had had established that compensation would be an adequate relief and that the plaintiff was, therefore, not entitled to claim specific performance.

10. A great deal of argument has been addressed to us on the question whether the letter dated 11th May 1943, marked 'without prejudice' can be used in evidence against the plaintiff. The lower Court has taken the contents of that letter into consideration and has admitted that letter in evidence. It is not necessary for us to consider this letter as the facts appear from the statements of Shri Krishna, plaintiff's son, and the defendant. Mr. Pathak has urged that as the offer contained in the letter dated 11th May 1943, was without prejudice, even the evidence given by the plaintiff's son in the witness box could not be relied upon. This is an argument which we cannot accept. Section 23, Evidence Act - which is the only section which has anything to do with the point under consideration-provides that

in civil oases no admission is relevant, if it is made either upon an express condition that evidence of it is not to be given, or under circumstances from which the Court can infer that the parties agreed together that evidence of it should not be given.

The second part of the section is not applicable. The first part provides that if an admission was made on an express condition that evidence of it is not to be given, then that admission is not relevant. If the words 'without prejudice' are interpreted to convey an express condition that evidence of the admission is not to be given, then the first part of the section would govern the question of the admissibility of this letter. For the purpose of this case we can assume that the words 'without prejudice' were intended by Shri Krishna to convey that if the offer was not accepted, no further use was to be made of the offer contained in the letter and on this interpretation, according to the first part of Section 23, Evidence Act, the letter may not be taken into account. But, in his examination-in- chief, Shri Krishna stated that

after the breach of the contract on the part of the defendant, his son came to me and pleaded mercy. I took pity, but I did not abandon the idea of going in for the house, as I needed the house badly. I told him that he shall have to give up the house failing which suit for specific performance shall be filed. I only said that I would be prepared to recommend to my father for a favourable consideration in case defendant was to pay the proposed amount immediately. That was not accepted. My father had valuable shares which he sold just to keep ready cash. He lost over Rs. 4,000, but in order to end all dispute, I suggested Rs. 4,000.

The defendant, when he came into the witness box, stated that he had sent his son to discuss the question of compensation with the plaintiff's eon and his son came back and informed him that the plaintiff was not willing to accept less than Rs. 4,000 to relieve him of his liability under the contract. It would thus appear that at one stage the plaintiff considered that he could be sufficiently compensated for the breach of the contract by receipt of a sum of Rs. 4,000 as damages.

11. Learned Counsel for the plaintiff has urged that this was a matter of charity and a matter of special concession. That may be so, though we doubt very much that the plaintiff's son, if he had been actuated by such motives, would have demanded a sum of Rs. 4,000 as damages. The fact remains, however, that this is not a case where the plaintiff took his stand upon the contract and was of the opinion that nothing less than specific performance would do and was at one stage willing to accept compensation in lieu of specific performance. The question arises whether in such a case the Court should decree specific performance. Section 21, Specific Relief Act, which we have already quoted, provides that, where damages are adequate, relief for specific performance of a contract shall not be granted. In this case it is established that at one stage the plaintiff considered that damages would be adequate compensation and in view of plaintiff's own conduct we are not in a position to differ from the finding arrived at by the lower Court. If the defendant had been willing to pay Rs. 4,000 the plaintiff could not have said that he would refuse to accept the amount as sufficient compensation for the loss of the property. We are, therefore, of the opinion that this is a case where the lower Court was justified in granting damages in place of specific performance.

12. In Ramji Patel v. Rao Kishore Singh A.I.R. (16) 1929 P.C. 190 the case which had come up to the High Court in second appeal-the District Judge had held that Rs. 20,000 were an adequate relief for the breach of a contract for sale of immoveable property. The suit for specific performance, in spite of that finding, had been decreed by the Court of the Judicial Commissioner of the Central Provinces. Their Lordships of the Judicial Committee pointed out that, on that finding, Rs. 20,000 were an adequate relief and that finding being a finding of fact recorded by the District Judge which could not be interfered with in second appeal, the jurisdiction to grant specific performance was barred by Section 21 (a),-Specific Relief Act, and instead of specific performance, their Lordships passed a decree for damages. In the case before us, the plaintiff having himself at one stage offered to accept damages as adequate compensation, the principle of the decision in Ramji Patel's case A.I.R. (16) 1929 P.C. 190 is clearly applicable.

13. The third point urged by learned Counsel is that the Court cannot grant specific performance of the contract inasmuch as the property was such that it could only be sold under the Collector's sanction and to a person approved by the Collector, the house being on Nazul land, it was held by the plaintiff as a lessee from the Government. The plea was not taken in the lower Court and we cannot, therefore, go into this matter any further and allow this point to be raised before us.

14. The last argument advanced by learned Counsel for the respondent is that there would be special hardship caused to his client, if the contract is specifically enforced, as he too has retired, or is retiring, from Government service and wants to settle in Allahabad and that he has a sentimental attachment to the house and had spent a large sum of money in building the house and in paying off interest on the sum borrowed for the purpose and that it was only because of the fact that he was in financial difficulties that he had been forced to agree to the sale of the house. We are of the opinion that these are considerations which are not really relevant in considering whether specific performance should or should not be granted. Whatever reason which forced the defendant to enter into the agreement, it is not suggested that the agreement was unfair or that the house was being sold for an inadequate price. Learned Counsel has urged that, as the relief for specific performance is discretionary, sentimental and other considerations should also weigh with this Court. We are of the opinion that this is not possible as the discretion has to be exercised in accordance with settled and fixed principles and, if the contract is unobjectionable in its nature and circumstances, specific performance, as has been observed in 'Fry on Specific Performance,' Edn. 6, p. 20, is as much a matter of course, and therefore of right, as are damages. A mere hardship of the result will not affect the discretion of the Court.

15. Learned Counsel for the plaintiff-appellant has challenged the amount of damages only on one ground. He has urged that there seems to be no reason why the plaintiff should not get pendentelite and future interest on a sum of Rs. 1,600 decreed by the lower Court. Learned Counsel (appears to be right. No reason is given why the plaintiff should not get pendente lite and future interest. We, therefore, direct that the plaintiff shall get future and pendente lite interest at the rare of 3 1/4 percent. on a sum of Rs. 1,600 from the date of the suit to the date of payment. With this modification, the appeal is dismissed. Having considered this matter carefully, we are of the opinion that this is a case in which we should not allow any party costs in this Court. We, therefore, direct that the parties shall bear their own costs of this Court.


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