Skip to content


Golab Ray and anr. Vs. Muralidhar Modi and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty;Contract
CourtOrissa High Court
Decided On
Case NumberFirst Appeal No. 60 of 1961
Judge
Reported inAIR1964Ori176
ActsTransfer of Property Act, 1882 - Sections 52 and 54; Specific Relief Act, 1877 - Sections 19; Trusts Act - Sections 91
AppellantGolab Ray and anr.
RespondentMuralidhar Modi and ors.
Appellant AdvocateD. Narasaraju, ;B.K. Pal, ;B. Mohapatra and ;J.M. Mitra, Advs.
Respondent AdvocateL.K. Dasgupta, ;N. Mukherji, ;S.C. Ghosh, ;Ranjit Mohanty and ;A.C. Mitra, Advs.
Cases ReferredMotilal v. Nanhelal
Excerpt:
- motor vehicles act, 1988 [c.a. no. 59/1988]section 173(1) proviso; [d. biswas, amitava roy & i.a.ansari, jj] appeal without statutory deposit but within limitation/or extended period of limitation maintainability - held, if the provision of a statute speaks of entertainment of appeal, it denotes that the appeal cannot be admitted to consideration unless other requirements are complied with. the provision of sub-section (1) of section 173 permits filing of an appeal against an award within 90 days with a rider in the first proviso that such appeal filed cannot be entertained unless the statutory deposit is made. the period of limitation is applicable only to the filing of the appeal and not to the deposit to be made. it, therefore, appears that an appeal filed under section 173 cannot.....narasimham, c. j. 1. this is an appeal by defendants 1 and 2 against the judgment of the second additional subordinate judge, cuttack, decreeing the plaintiff's suit for specific performance. 2. the property involved in this litigation consists of valuable house property in the heart of cuttack town which originally belonged to defendant no. 1 shri nikunja kishore das. the plaintiff alleged that on 14-8-1957 defendant no. 1 entered into a binding contract with him to sell the property for rs. 38,000/- but as the khas-mahal is the landlord of the site, it was further agreed between the parties that a deed of contract would also be executed and duly registered, by defendant no. 1 with a view to facilitate the obtaining of permission from the khasmahal for the transfer of the property in.....
Judgment:

Narasimham, C. J.

1. This is an appeal by defendants 1 and 2 against the judgment of the Second Additional Subordinate Judge, Cuttack, decreeing the plaintiff's suit for specific performance.

2. The property involved in this litigation consists of valuable house property in the heart of Cuttack town which originally belonged to defendant No. 1 Shri Nikunja Kishore Das. The plaintiff alleged that on 14-8-1957 defendant No. 1 entered into a binding contract with him to sell the property for Rs. 38,000/- but as the Khas-mahal is the landlord of the site, it was further agreed between the parties that a deed of contract would also be executed and duly registered, by defendant No. 1 with a view to facilitate the obtaining of permission from the Khasmahal for the transfer of the property in favour of the plaintiff.

3. But according to the plaintiff the agreement, between the parties that a deed of contract would be executed later on did not in any way defraet from the finality of the contract entered into between the parties on 14-8-1957. In pursuance of the contract, stamp paper for Rs. 1.8.0, was purchased and the help of the Advocate for defendant No. 1 named Sri S. N. Dasgupta, P. W. 4 was taken, and a deed of agreement was formally scribed on 15-8-1957 on the stamp paper, after preparing 2 draft deeds (Exts 9 and 10). Defendant No. 1 then took the stamped deed of agreement and also received a sum of Rs. 100.00 from the plaintiff saying that he would obtain the written consent of his divided brothers (defdts. 4 and 5) to the sale of the property. Subsequently defendantNo. 1 was said to have resiled from the contract and to have entered into a binding agreementwith the defendants 2. and 3 for the sale of the same property to them for Rs. 40,000/-. This contract between defendant I on the one hand and the defendants 2 and 3 was finalised on 22-8-57 and registered on 23-8-1957 and a sum of Rs. 10,000/- was also paid to defendant No. I in the presence of the Sub-Registrar. On coming to know about this the plaintiff sent a telegram todefendants 2 and 3 (Ex. 18) on 22-8-57 intimating to them about the prior contract. The latter,on receipt of the same sent a counter telegram (Ex. 2/3) denying knowledge of the existence ofa prior contract with the plaintiff. The plaintiffalso gave a lawyer's notice to defendant No. 1 on 23-8-1957 calling' upon him to fulfil his part of the contract, but his efforts were of no avail.

4. Thereafter, defendant No. 1 on 24-8-1957 applied to the Khasmahal Officer Cuttack (See Ext. R) for permission to sell the property to defendants 2 and 3 for Rs. 40,0007. The Khasmahal Officer started a Miscellaneous Case No. 201 of 1957-1958 on the basis of this application, andgot the usual notices published. The plaintiff then filed an objection on 8-9-57 (Ex. R.I) before the said officer pointing out the earlier contract between him and deft, 1 and requesting him torefuse permission to defendant No. 1 to sell the property to defendants 2 and 3 and to grant permission to sell the property to himself (plaintiff).On 13-9-1957 the Khasmahal Officer heard bothparties (Ext. 8) and passed an order giving permission to defendant No. 1 to sell the property to defendants 2 and 3. As regards the objection raised by the plaintiff, his order was to the following effect :

'The applicant wants to transfer the entireholding. The objector objects on the ground thatthe has entered into a contract with the applicantto purchase the property for Rs. 38,000/-. Theapplicant wants to sell the property to oneGolabrai and Madumal for Rs. 4o,000/- The proposed transferee, along with the objector, were co-sharer tenants, before the transfer of the holding.The applicant states that he has taken Rs. 10,000/-in advance from the proposed transferee and has contracted to sell the property to him. It isbeyond the jurisdiction to decide breach of con-tract. It is also beyond the competence of thisCourt to compel the grant (applicant?) to sell his land to any particular co-sharer. I therefore find nosufficient ground in the objection of the objector.'

The plaintiff did not challenge the aforesaid orderof the Khasmahal Officer before any superiorRevenue authority, namely the District Collectoror the Commissioner and thus allowed it to be-come final. In pursuance of this order formal permission was granted on 16-9-1957 to defendant No. 1 (See Ext. T) to sell the property to defendants 2 and 3 for Rs. 40,000/- within a monthfrom that date.

5. After thus obtaining the sanction of the Khasmahal authorities, defendant-1 duly executed and got registered a sale deed in favour of defendants 2 and 3 on 21-9-57 (Ext. T). The plaintiff instituted the suit under appeal on 26-8-1957, as soon as he became aware of the contract betweendefendant No. 1 on the one hand and defendants 2 and 3 on the other.

6. Defendant No. 1 completely denied the existence of any contract between him and the plaintiff for the sale of the disputed property. According to him there were negotiations for the sale of some other properties of his situated at Bhubaneswar. Defendants 2 and 3 took the plea that they were bona fide purchasers for value and also supported the claim of defendant No. 1 that there was no contract between him and defendant No. 1 for the sale of the disputed property.

7. The lower Court completely rejected the claim of defendant No. 1 that negotiations between him and the plaintiff were carried on in respect of some of his properties in Bhubaneswar Town. He held that there was a binding contract between the two persons for the sale of the disputed property in Cuttack town and that defdts. 2 and 3 were not bona fide purchasers for value without notice of the previous contract between the plaintiff and defendant No. 1. Hence he decreed the plaintiff's suit.

8. Mr. Narasaraju eminent counsel for the defendants stated frankly that he would not challenge the finding of the lower Court rejecting the claim of defendant No. 1 that negotiations between, him and the plaintiff were carried on in respect of some of his properties in Bhubaneswar. The evidence of defendant No. 1 on this point was rightly disbelieved by the lower Court.

9. Mr. Narasaraju's contentions in this appeal are as follows :

(i) Though there were negotiations between defendant No. 1 and the plaintiff for the sale of the disputed property these negotiations did not result in a finely binding contract for sale, because the intention of the parties was that the contract would become final after the execution of the deed of contract.

(ii) In any view of the case the plaintiffs contract is incapable of specific performance because the Khasmahal has refused to give defendant No. 1 permission to sell the property to the plaintiff.

10. It is well settled that a contract for sale of immovable property need not be in writing but it is also equally well settled that the parties may agree that the negotiations between themselves for the sale of the property may not become final until the terms are reduced to writing in the form of a written contract -- see Harichand Mancharam v. Govind Laxman, AIR 1923 PC 47 and Shankarlal Narayandas v. New Mofussil, Co. Ltd., AIR 1946 PC 97. It is sometimes difficult to decide. whether an agreement is a completed bargain and the execution of a deed of agreement is a mere formality or else whether there is merely a provisional agreement which is intended to become final only after the execution of the formal deed of agreement. The question ultimately depends upon the ascertainment of the true intention of the parties, as deducible from the language used by the parties on the occasion when the negotiations took a concrete shape. As pointed out in AIR 1923 PC 47 relying on Ridgway v. Wharton, (1857) 6 HLC 238 (289) -- 'The mere fact that persons wished to have a formal agreement drawn up does not establish the proposition that they cannot be bound by a previous agreement.' Where the previous negotiations are in the nature of a written correspondence between the parties, the matter becomes a simple one of construction of those letters but where there is no written correspondence to prove the negotiations, one has to depend on oral evidence for ascertaining the true intention of the parties.

11. Here, admittedly there was no written deed of agreement between the plaintiff and defendant No. 1 and the entire case depends on appreciation of oral evidence adduced by the plaintiff. Defendant No. 1 has thoroughly discredited himself by putting forward a false story of negotiations for the sale of some properties of his at Bubaneswar Town-- which story was disbelieved by the lower Court and was rightly not pressed before us by Mr. Narasaraju. But this does not mean that the plaintiff is a very truthful person. Though he had actually filed a petition before the khasmahal officer (Ext. R. I.) on 3-9-1957 objecting to the grant of permission to the defendant No. 1 to sell the property to defendants 2 and 3, and the order of the Officer (Ext. S) shows that on 13-9-1957 both parties were present and were heard, nevertheless, while giving evidence in Court as P. W. 8 the plaintiff feigned lapse of memory when questioned, in cross-examination, as to whether he filed any such objection before the Khasmahal Officer and whether he engaged any lawyer to press his objection before that officer. Hence neither his oral testimony nor that of his gumastha (P. W. 9) can be accepted -- unless there is adequate corroboration of the same.

12. There can be no doubt that the negotiations between the plaintiff and defendant No. 1 for the sale of the disputed property had reached a very advanced stage by 14-8-1957. The site had been inspected and the property had been measured at the instance of the plaintiff -- (see evidence of P. W. 2) and the price was also fixed at Rs. 38,000/- on 14-8-1957 on the intervention of the plaintiff's uncle Lakshminarayan Modi (P. W. 6). Thus the three certainties for the sale of immovable property namely, identity of the property, price and identity of the purchaser, had been fixed by that date. The question therefore arises as to whether the intention of the parties was that on that very date the contract should be taken as final. There were certain difficulties known to both parties in finalising' the contract on that day. The disputed property was the ancestral property of defendant No. 1. In a previous partition between himself and his brothers (Ext. G, and G/1) of the year 1953 one of the contentions was :

'If any co-sharer wants to sell the property under his share or any part thereof, he will at first offer for the same at the prevailing market rate (Kalochita Malya) to other co-sharers and if none of them express his willingness to purchase the same, then only the property can be sold to a third person.'

This passage requires careful consideration. It shows that before selling the property to a third party defdt. No. I was required (i) first to ascertain its prevailing market value (Kalochita Mulya) and(ii) secondly, to offer it at that price to his co-sharers. It is only when they refuse to buy at that market price that he was free to sell it to a third party. The word offer implies that it must be free to make the offer, i.e., he could not enter into a binding contract to sell the same to a third party prior to his making the offer to his co-sharers. As both defendant 1 and plaintiff were aware of this recital in the partition deed, it follows as a necessary inference that they could not have entered into a binding contract for sale until the offer was made to the co-sharers and their refusal was obtained. 'Prevailing market price' is ordinarily the price which a willing buyer is agreeable to pay, and in this case that price was fixed only on the 14th Aug. 1957 in the presence of P. W. 6.

The offer of defendant No. 1 to his cosharers was to be made only thereafter and any general statement which he might have made to the plaintiff that his brothers were unwilling to buy the property would not be sufficient compliance with the requirements of the aforesaid recitals in the partition deed which were known to both parties. Hence they both approached Shri S. N. Dasgupta Advocate for defendant No. 1 who is the most reliable witness in this case. Defendant. No. 1 contacted him in the Civil Court premises on 14-8-1957 and as advised by the Advocate, he purchased stamp paper and gave it to him for the purpose of drafting the agreement to sell. The plaintiff was also there and handed over to the Advocate-the partition deed and some Khasmahal receipts. On the next day, viz., 15-8-1957 the parties again met the Advocate. A preliminary draft agreement (Ex. 9) was written and it was corrected by the Advocate and another final draft (Ext. 10) was-also prepared. Then according to the evidence of the Advocate (Ext. 10) the final draft was copied out on stamp paper and Rs. 100/- was paid by the plaintiff to defendant No. 1 in the presence of the Advocate, and the stamp paper containing the deed of agreement was taken by defendant No. 1 who said that he would obtain the consent of his co-sharers. But during the cross-examination of this Advocate the defendants themselves brought out the following answers :

'The oral consent of the brothers of defen-dant-1 might have been taken, and for this reason it has been so written in Ext. 10 last line above the schedule to the effect that they already declined to purchase and had consented to the Chuktipatra. They would give written consent on the deed of agreement. Nikunja Babu (defdt. No. 1) informed me that his brothers declined to purchase and gave their consent.'

These answers given by the Advocate Mr. Dasgupta, would clearly show that whatever disability there might have been on 14-8-1957 to finalise the contract, the disability leased to exist on the next day, 15-8-57, when in the presence of the plaintiff defendant No. 1 told this Advocate P. W. 4 that his brothers had declined to purchase the disputed property and had also given their consent to his selling it to third parties. It was in pursuance of this oral statement of defendant 1 that in the draft deed of agreement (Ext. 10) it was written that defendant No. 1'sbrothers had given their consent. Hence in my opinion the contract between the parties became complete on that day. (After further consideration of the evidence, his Lordship reiterated his conclusion thus :) Hence believing the evidence of Sri Dasgupta (P. W. 4) in full, and accepting that portion of the evidence of the plaintiff (P. W. 8) and his gumastha (P. W. 9) and that of the Pleader's clerk (P. W. 10) I would hold that the bargain was completed and finalised later on the 15th August, 1957, when in the presence of P. W. 4, defendant No. 1 communicated the oral consent of his brothers and also got the deed of agreement drafted. The evidence of the defendants further shows that it was the plaintiff who handed over to him the partition deed between defendant No. 1 and his brothers and also some of the Khasmahal receipts. Unless the agreement had become final so far as defendant No. 1 was concerned he would not have handed over these papers to the plaintiff.

13. I am not however prepared to believe the evidence of the plaintiff that the sum of Es. 100/-handed over to defendant No. 1 by him before P. W. 4 on 15-8-57 was part of the consideration money. In the plaint this sum was said to have been demanded by defendant No. 1 for expenses of registration of the contract. P. W. 4 did not state that when the sum was paid, it was meant to be part of the consideration money. Similarly the plaintiff's own gumastha P. W. 10 did not state that the sum was paid as consideration. He merely stated that it was paid for expenses. The pleader's clerk (who scribed the document) namely P. W. 10; also stated that the sum was paid to defendant No. 1 who required it for expenses. He further added that though the consideration for the sale was fixed at Rs. 38,000/- it was further understood that all the expenses were to be borne by the plaintiff. This view is further confirmed if the lawyer's notice sent by the plaintiff to defendant No. 1 (Ex. H) is carefully scrutinised. There also it was stated that the sum of Rs. 100/- was paid for expenses only, and it was further added that out of the consideration Rs. 2000/- would be paid at the time of registration of the deed of agreement and the balance at the time of the registration of the sale deed, after paying off the other dues of defendant No. 1. The plaintiff apparently wanted to show that the sum of Rs. 100/-was part of the consideration money, in order to support his story that the contract became final when that sum was received by defendant No. 1 from him in the presence of P. W. 4 on 15-8-1957. But even if this slightly exaggerated claim is rejected, it does not materially affect the position that on that day, the contract was complete. On the other hand the very fact that payment of Rs. 100/- towards expenses was postponed by the plaintiff till 15-8-1957 would show that it was on that day that the contract became final between the parties.

14. Mr. Narasaraju then contended that as the plaintiff was fully aware that the disputed property was the ancestral property of defendant No. 1, in which the latter's sons also had an interest, the sale has to be justified by legal necessity and a buyer would not ordinarily enter into abinding contract to purchase such property unless the seller was pinned down in writing as regards the legal necessity for the alienation so that he may not resile from it later on. This argument also is not convincing. Plaintiff's evidence is that defendant No. 1 told him that he, wanted to sell away the property in order to pay off the mortgage dues of one Bijoy Chand Mal and also a loan to Puri Bank (who had already put up his property for sale) and for other expenses. He stated that he then made enquiries about these matters. There is nothing inherently improbable if the defendant's version as regards the necessity for the sale so as to create any doubt in the mind of the plaintiff and to make him postpone his decision to enter into a final and binding agreement until the legal necessity for the alienation was actually incorporated in the deed of agreement. For validating the sale it would suffice if these matters are entered in the sale deed.

15. Mr. Narasaraju then contended that in the lawyer's notice (Ext. H) sent by the plaintiff's Advocate Mr. Mukherjee, to defendant No. 1 he has called upon to execute a deed of agreement within one week of the receipt of that notice and that if it was the intention of the parties that the contract had already been a completed one the notice would not have been couched in such language because a lawyer is expected to know that there could be no specific performance of an agreement to enter into written contract to sell the property. In my opinion too much importance cannot be attached to the recitals in Ext. H so far as this aspect is concerned. In that document, apart from calling upon defendant No. 1 to execute the deed of agreement within a week, there was also a demand on the defendant No. 1 to file an application before the Khasmahal authorities for obtaining permission to sell and also to get the sale deed executed thereafter. Both parties were fully aware that the obtaining of the permission of the Khasmahal authorities was necessary to the execution of the sale deed and hence, in a lawyer's notice of this type the plaintiff cannot toe called upon peremptorily to execute a deed of sale without completing the other formalities.

16. There can be no doubt that defendants 2 and 3 are not bona fide purchasers without notice of the prior contract. The plaintiffs had sent them a telegram intimating the existence of his prior contract with the defendant No. 1 and defendant No. 2 also had sent a reply telegraph on 24-8-1957. According to his evidence the only person from whom he had made an enquiry as to whether there was a previous contract with the plaintiff was defendant No. 1 himself. There is evidence of previous litigation and enmity between defendant No. 2 and the plaintiff. Ext. Z/11 is the judgment of the Munsif, Cuttack, in a suit between the parties (TS No. 15 of 1956). The parties are neighbours and they appear to have been quarrelling for some time regarding some nuisance committed by the defendant while constructing his own house. Considering this background of enmity between the parties who are close neighbours and also the fact that the plaintiff informed him by telegram about the existence of a previous contract, it must be held, in the circumstances of this case that the defendants 2 and 3 are not bona fide purchasers for value without notice of the prior contract.

17. I shall now take up the second contention raised by Mr. Narasaraju.

The disputed property is a leasehold property and the rights of defendant No. 1 were merely those of a lessee, the landlord (lessor) being the Govt. (Khasmahal) acting through its Revenue Officers. The lessee's right of alienation is made subject to the previous sanction of the Collector -- see term 2 at page in of the Bihar and Orissa Government Estates Manual 1919 (already cited). The lease between the parties does not contain any provision regarding the conditions to be satisfied or the matters to be considered by the Collector while agreeing or refusing to accord sanction. Even if the lessee had contracted with two different parties for the sale of his leasehold right the Collector is not bound to sanction the sale to the party with whom the earlier contract was made. The Collector's powers are unrestricted. The only check on the arbitrary or capricious exercise of power by him is by way of an appeal or revision, or by way of representation to the superior Revenue authorities such as the Commissioner or ultimately to Government in the Revenue Department. It is true that as the order is not a statutory order there is no statutory right of appeal but it is well known that all administrative orders of subordinate Revenue Officials are subject to interference by the District Collector and other superior Revenue authorities, and it is immaterial as to whether such powers of interference are described as appellate powers or revisional powers, or powers of superintendent.

18. Here as already pointed out the Khasmahal Officer after due notice to the parties concerned and after hearing the objections of the plaintiff, passed orders on 13-9-1957, sanctioning the sale of the property to defendants 2 and 3 fof Rs. 40,000/-. The plaintiff in his petition dated 3-9-1957 (Ext. R-1) not only requested the Khasmahal Officer to refuse to give permission to defendant No. 1 to sell the property to defendants 2 and 3 but also asked him to give permission to sell the same to himself (plaintiff). This prayer must be deemed to have been rejected by the Khasmahal Officer by his order dated 13-9-1957. The Khasmahal officer is free to choose between the rival claimants as to who should be his tenant in respect of the property. The order shows that the fact that defendants 2 and 3 offered Rs. 2000/- more than the plaintiff and the further fact that defendant 1 had already received Rs. 1000/-as advance from defendants 2 and 3 and that he was in urgent need of money to pay off his dues -- all weighed with the Khasmahal officer in granting permission. The plaintiff could have challenged this order by way of an administrative appeal before the District Collector or any other superior revenue authority and requested them to stay theorder according sanction until the termination of the present litigation. As already pointed out, the suit under appeal was filed on 26-8-1957 and the plaintiff could easily have asked the Revenue officers to stay their hand till the disposal of the suit. The plaintiff took no such step and allowed the order of the Khasmahal officer to become final.He is thus partly responsible for the present position.

19. The position is that the original contract between the plaintiff and defendant No. 1 has now become incapable of performance. This Court cannot compel defendant No. 1 again to apply to the Khasmahal officer to accord sanction to sell the property to the plaintiff. That officer will refuse to cancel his previous order, especially when in pursuance of that order, the sale has taken place in favour of defendants 2 and 3 and consideration had been paid. If on this ground, or on any other ground, defendant No. 1 refuses to apply to the Khasmahal officer for fresh permission, it is obviously not open to this Court to apply to that officer for that purpose. Section 19 of the Specific Relief Act provides for contingencies of this type. The only remedy open to the plaintiff in such a situation is to ask for compensation from defendant No. 1 for breach of contract.

20. The recent case of Mrs. Chandnee Vidyavati v. Dr. C. L. Katial, (Civil Appeal No. 559 of 1962 decided by the Supreme Court on 25th March 1963 (as yet unreported) (Since reported in AIR 1964 SC 978) furnishes a guidance in cases of this type. The facts of that case are very similar to the facts here. There the lease-hold property was situated in the City of Delhi and the permission of the Chief Commissioner of Delhi was required for sale of that lease-hold property by the lessee to a third party. The lessee having agreed to sell the property to the third party and to apply for permission to the Chief Commissioner, made an application for such permission but withdrew the same. In a suit for specific performance by the aggrieved party their Lordships of the Supreme Court held, on appeal, that the proper order to be passed was that within a certain period the lessee should be directed to apply to the Chief Commissioner for permission to sell the property to the plaintiff and on receipt of permission he shall convey the same. Their Lordships further added:

'In the event of the sanction being refused the plaintiff shall be entitled to damages as decreed by the High Court.'

The Punjab High Court (from whose judgment the appeal was heard by the Supreme Court) observed that if the Chief Commissioner ultimately refused to accord sanction to the same, the plaintiff may not be able to enforce the decree for specific performance of the contract. The only distinguishing feature between that case and the instant case is that here the Revenue Officer concerned (the Khasmahal Officer) after hearing all the parties namely, the plaintiff, defendant No. 1 and defendants 2 and 3 gave permission to defendant No. 1 to sell the property to defendants 2 and 3 and impliedly rejected the plaintiff's prayer for according permission in his favour. The plaintiff by his own conduct allowed this order to become final. Under such circumstances the alternative remedy mentioned by their Lordships of the Supreme Court, namely damages for breach of contract is the only course left open to the plaintiff and this has also been recognised in Section 19 of the Specific Relief Act.

21. Mr. Mitter tried to make a subtle distinction between the aforesaid decision of the Supreme Court and the present case by pointing out that there one of the terms of the contract was that if the necessary sanction was not forthcoming from the Chief Commissioner within the stipulated period it was open to the buyer either to extend the date or to treat the agreement as cancelled. Here however the draft agreement (Ext. 10) says that if defendant 1 fails to obtain the permission of the Khasmahal Officer within the stipulated period it will be open to the plaintiff to get the kabala executed and registered in his favour. Apparently, the plaintiff wanted to take the risk of purchasing the property even without obtaining the permission of the Khasmahal authorities knowing fully well that it might involve forfeiture of the tenancy itself. But this distinction between the terms of the lease in the Supreme Court case and those in the present case does not affect the main principle laid, down by their Lordships that where a sale requires the permission of some one who is not a party before the Court and is not amenable to its jurisdiction and that permission is refused, the only remedy for the aggrieved party is to claim damages for breach of contract.

Mr. Mitter then sought to rely on certain observations of the Supreme Court in Durga Prasad v. Deepchand, AIR 1954 SC 75 about the form in which a decree for specific performance should be given. But that decision dealt with a simple case where the question of obtaining permission from a third party for transfer did not arise for consideration. Hence that decision will act be of any help here and the later decision of the Supreme Court is directly in point. Similarly Mr. Mitter's reliance on Rajkishor Mohanty v. Banabehari Pat-naik, AIR 1951 Orissa 291 will not be of any avail. That was a simple case where permission of the Khasmahal authorities had not been asked for whereas here we have a peculiar case where the Khasmahal authorities refused permission to sell the property to one party and granted permission to sell the property to the rival party (defendants 2 and 3).

22. There is also an old decision of the Calcutta High Court, reported in Narain Pattro v. Aukhoy Narain, ILR 12 Cal 152 which emphasises the same principle. There a certificate guardian of some minors entered into an agreement to sell some properties to the plaintiff on behalf of the minors provided leave of Court was obtained. The Court sanctioned the sale at a higher price and the properties were then sold for that price to a third party. When the plaintiff subsequently sued the certificate guardian of the minors for specific performance of the contract their Lordships observed that specific performance could not be decreed because the permission actually given by the Court did not extend to the contract as agreed to between the parties. Here also permission actually given by the Khasmahal Officer did not extend to the contract as agreed to between the plaintiff and defendant No. 1.

23. The English and American laws on the subject are also the same. In Fry's Specific Performance (6th Edition) at page 466 (Article 999) it was observed :-

'As the consent of a third party is or may be a thing impossible to procure, a defendant whoentered into a contract to the performance of which such consent is necessary, will not, in case such consent cannot be procured, be decreed to obtain it and thus perform an impossibility.'

Again at page 607 the learned author pointed out: 'However in a case where there was a contract for sale of lease-hold property which the vendor could not assign without a license from his lessor, it was held that the rule did not prevent the purchaser from recovering damages which he had substained by reason of the vendor's wilful commission to do his best to procure the license.' The case of Day v. Singleton, (1899) 2 Ch D 320 cited in that book is very helpful in this connection. There a vendor agreed to sell lease-hold property to one Day subject to his obtaining the consent of the lessor to the transaction. The lessee died and one Singleton was his representative. While holding that the only remedy of Day was to obtain damages, Lindley M. R. observed as follows :

'It was Singleton's business as Dunne representative to obtain consent if he could (meaning the consent of the lessor) ......... If Singletoncould not obtain consent then, as already stated, specific performance would be impossible, and as Day's action as it stood must have failed.'

In the present case also not only the consent to sell in favour of the plaintiff not obtained by defendant No. 1 but such consent was asked for by the plaintiff directly from the Khasmahal officer and was rejected.

In Corpus Juris Secundu'm (Vol. 81) at pages (440-441) the American law on this subject is summarised as follows : -

'Where defendant's performance depends on the consent or approval of one not a party to the contract who is free to withhold his consent, specific performance of the contract will not be decreed where it does not appear that such consent or approval has been or can be obtained, or where it appears that such consent or approval is withheld or refused or has become impossible .........The mere fact that a contract or transfer sought to be specifically enforced is subject to the approval of a public agency whose discretion is not subject to control by the Court, is not a bar to a decree compelling a party to execute the documents necessary for the consummation of the contract or transfer and to apply to the public agency for its approval. On the other hand, 'where the public agency' fails or refuses to consent to the transfer the 'Court will not grant specific performance of the contract'.'

The two passages underlined (here in ' ') above show that it is immaterial whether the consent or approval is required to be given by a private party or public agency. Hence it will be academic to consider here whether, in giving or, refusing to give his consent the Khasmahal Officer acted as a public officer or as a mere agent of the lessor.

24. Motilal v. Nanhelal, AIR 1930 PC 287 was also cited. There the sale in question required the sanction of the Revenue Officer under Section 59 (1) of the Central Provinces Tenancy Act 1920. While decreeing the suit for specific performance their Lordships of the Privy Councilpointed out that such a decree could be passed and the party should be directed to apply to the Revenue Officer to sanction the transfer. They however left open the question as to what was to be done if sanction was refused. But they anticipated no such difficulty as will be clear from the following passage (at page 290): -

'It is not necessary for their Lordships to decide whether in this case the application for sanction or transfer must succeed. But it is immaterial to mention that no facts were brought to their Lordships' notice which would go to show that there was any reason why such sanction should not be granted.'

Apparently as the Revenue Officer was required to exercise his statutory discretion in that case, their Lordships expected that on the facts of that case sanction would not be withheld. But here as already pointed out, the Revenue Officer (Khasmahal Officer) does not exercise any statutory power while granting or withholding permission. He merely exercises the power of a lessor landlord in accordance with the terms of the lease and he has refused to give permission to the sale of the disputed property to the plaintiff.

25. Mr. Mitter then relied on the principle of lis pendens (Section 52 of the Transfer of Property Act) and the principle of constructive trust under Section 91 of the Trusts Act. In my opinion those two provisions have absolutely no application here. If the plaintiff could first establish that he is entitled to specific performance then only those principles may apply. This is made clear by the words 'so as to affect the rights of any other party' occurring in Section 52 of the Transfer of Property Act which assumes that the parties rights must first be established.

26. Similarly Section 91 of the Trusts Act says 'another person who has entered into an existing contract, affecting that property of which specific performance could be enforced'. These words show that the contract must first be capable of specific performance before the principle of Section 91 of the Trusts Act can be invoked. Hence the plaintiff must first establish, that under the provisions of the Specific Relief Act he is entitled to specific performance in the peculiar circumstances of this case. For the reasons already indicated his contract has become incapable of specific performance and his only remedy is that provided in Section 19 of the Specific Relief Act.

27. The plaintiff did not pray for an alternative relief by way of damages against defendant No. 1. Hence this litigation cannot be disposed of here straightway -- as was done by their Lordships of the Supreme Court in Civil Appeal No. 559 of 1962 (Since reported in AIR 1964 SC 978). A separate issue on this question has to be framed and remanded to the lower Court for decision. But the plaintiff cannot get any relief against defendants Nos. 2 and 3 because there was no privity of contract between them and the plaintiff and they are not liable for damages for breach of contract committed by defendant No. 1. But defendant No. I must refund to the plaintiff the sum of Rs. 100/- that he took from him on 15-8-57 for expenses connected with the registration of the deed of agreement.

The following new issue is framed for trial between the plaintiff and defendant No. 1.

'Is defendant No. 1 liable to pay damages to the plaintiff for breach of the contract which has now become impossible of performance? If so what is the amount of damages?'

The case is remanded to the trial Court for trial of this issue between plaintiff and defendant No. 1 and for disposal according to law.

The suit is dismissed as against defendants 2 and 3 and the appeal is allowed to that extent with costs throughout.

Barman, J.

28. I agree.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //