1. The defendant-appellant is a resident of Godhra in the Distract of Panchmahals and he owned a house property bearing Municipal Nos. 5146 and 5147 in City Tika NO. 60, Lot NO. 66. It had two floors. While the ground floor thereof was let out by him to witness Ramanlal Girdharilal Ex. 32 on a monthly rent of Rs. 18/-, the first floor was let out to witness Shantilal Ex. 65 on a monthly rent of Rs.10/-. This house property adjoins the building where the plaintiff's firm has been carrying on its business since last several years. On 29-11-49 Abdulsatar Haji Ibrahim Dadi of Godhra - the defendant-appellant executed an agreement Ex. 28 in favour of the plaintiff-respondent whereby he agreed to sell the suit property for a sum of Rs. 12,051/-. Rs. 2000/- were paid by the plaintiff by way of earnest money thereunder to the defendant. The agreement then provided that the sale-deed would be executed on obtaining the certificate from the Custodian of the Evacuee Property and on receiving the balance of the amount. For obtaining the certificate the defendant was to apply to the Custodian on the next day. One of the conditions was that the rent realized out of the suit property was to be taken by the plaintiff and no interest was to be paid on the earnest money till the certificate was obtained.
2. It appears that by a notification published on 6th October 1949 in the Bombay Government Gazette, the Collector and Deputy Custodian of Evacuee property, Panchmahals, assumed possession of the properties specified in the schedule annexed thereto in pursuance of the powers vested in him as Deputy Custodian under Sub-section (1) of Section 6 of the Bombay Administration of Evacuee Property Act, 1949. The suit property was shown therein as belonging to the defendant and valued at Rs. 12000/-. In those circumstances, since the tenants were directed to pay rent for the premises occupied by them to the Deputy Custodian, the plaintiff could not realize any amount of rent from them. The case of the plaintiff then was that by an order dated 8th July 1958 this property which was taken over by the Deputy Custodian, came to be restored to the defendants under Section 16 of the Administration of Evacuee Property Act, 1950. The tenants occupying the premises were directed to pay rent with effect from that date to the defendant. The plaintiff came to know about this order and consequently he gave a notice dated 22-9-58 to the defendant calling upon him to execute the sale-deed in respect of the property as per the terms contained in the agreement Ex. 28 dated 29-11-49. He showed his willingness to pay the balance of the amount after deducting the amount of earnest money, as also the amount of rent which, according to him, came to Rs. 3020/-. That notice came to be refused by the defendant. In the meantime as he came to know about the defendant's intention to sell off the property, he gave a public notice Ex. 29 which was published in the daily paper 'Janastta' of Ahmedabad. The defendant came to know about it and that led him to give a reply Ex. 31 dated 19-10-58 through his advocate. In that reply, all that he stated was 'that by lapse of time the agreement which was executed in 1949, had become ineffective at law and then after denying his liability to comply with the terms of that agreement and asserting his right to sell and dispose off the property to any person, he has stated that he was not even liable to pay any amount under the said agreement as it was barred by limitation.' Be it noted that he raised no other contentions therein such as those urged in a suit filed by the plaintiff for the enforcement of that agreement passed by him. Soon after on receipt of that reply, i.e. on 19-12-58 the plaintiff filed Special Civil Suit No. 11 of 1958 in the Court of the Civil Judge (S.D) at Godhra, wherein his main prayer was for a decree for specific performance of that agreement Ex. 28 dated 29th November 1949, requiring the defendant to execute the sale-deed in respect of the suit property on his paying the remaining amount of Rs. 7,027/- or any such amount as may be declared by the Court, which he was willing and ready to pay. In the alternative, he also prayed that in case for any reason whatever, the Court did not think it proper to pass a decree accordingly, the defendant may be directed to pay the amount of Rs. 5024/- together with future interest thereon from the defendant. That amount consisted of Rs. 2000/- which he had paid by way of earnest money under the agreement and Rs, 3024 due on account of rent for a period from 30-11-49 till 1-12-58 at the rate of Rs. 28/- per month, as per the terms thereof.
3. This suit was resisted by the defendant as per the contentions raised in his written statement Ex. 12 in the case. He inter alia contended that the agreement was illegal and void - the same having been entered into in respect of his evacuee property which had vested in the Deputy Custodian of the Evacuee Property; that he alone was entitled to sell the property to any person whomsoever he liked; that, therefore, there was no question of obtaining any certificate from him for the sale of the property as alleged, that the condition of obtaining such a certificate mentioned in the agreement was impossible of performance, and that, therefore, the agreement passed by him was void. He further contended that such an agreement being void and ineffective cannot be enforced in law; that he was not entitled to a refund of the earnest money as well under any such agreement; that the claim in that respect is barred by limitation; that the plaintiff is not entitled to claim any amount on that account either from the tenants or from the Custodian; that the suit is barred by delay and latches, and that it may be dismissed with costs.
4. The trial Court raised the issues as set out in para 3 of the Judgment and in its opinion, the agreement was neither invalid nor ineffective as alleged by the defendant; that it was not against public policy as alleged; that the claim for the refund of earnest money as also for a sum of Rs. 3024 due on account of arrears of rent under the terms of the agreement was not time-barred; that the suit was maintainable; and that the plaintiff was entitled to specific performance of the agreement. He, however, found that since the defendant had neither recovered any rent from any of the tenants nor from the Custodian in respect of the suit property, plaintiff was not entitled to get any such amount, but instead, he would be entitled to get interest at the rate of 6% on the amount of Rs. 2000 given by way of earnest money. In the result, he passed a decree directing the defendant to execute the sale-deed as per the terms and conditions embodied in the agreement Ex. 28 on or before 3rd October 1960. He further directed the plaintiff to bear the cost of the execution of the sale-deed as also of the registration thereof and on failure of the defendant to execute the sale-deed, the Court will execute it at the cost of the plaintiff. The plaintiff was directed to pay Rs. 8971/- only being the balance due from him to the defendant towards the purchase price of Rs. 12,051/-. The defendant was directed to pay the costs of the plaintiff and bear his own. Feeling dissatisfied with that decree passed on 30th August 1960 by Mr. T. P. Shah, Civil Judge (S.D.). Godhra, the defendant has come in appeal before this Court.
5. The contention made out by Mr. Oza, the learned advocate for the appellant, was that the agreement Ex. 28 dated 29-11-49 passed by the defendant in respect of the suit property in favour of the plaintiff was void - it being in contravention of the provisions contained in Section 40 and 41 of the Administration of Evacuee Property Act (Act No. XXXI of 1950), or under Section 38 of the Ordinance No.XXVII of 1949 which was in force then. According to him, since it was an evacuee property at the time when this agreement came to be executed by the defendant-appellant, in view of the provisions contained in Sections 40 and 41 of the Act, that transaction entered into by him in relation to such property was void and ineffective inasmuch as the same has been entered into without obtaining the previous approval of the Deputy Custodian in whom it had already vested. That way it was said that the consideration or the object of that agreement was such which was forbidden by law and therefore unlawful, and when that is so, such agreement was void as contemplated under Section 23 of the Indian Contract Act.
6. Before we turn to this principal contention, it is essential to point out that the Bombay Evacuee (Administration of Property) Act, 1949 came in effect on 17th May 1949 and it was in pursuance of the powers vested in the Deputy Custodian under Section 6(1) of the Act, he assumed possession of the suit property which was of Abdulsatar Haji Ibrahim Dadi - the defendant in the case. On 18-10-49, however, the Ordinance No. XXVII of 1949 called 'The Administration of Evacuee Property Ordinance, 1949', hereinafter to be referred to as 'the Ordinance' came to be issued by the Governor General of India. By reason of Section 55 of this Ordinance the Bombay Act came to be repealed and as provided therein, notwithstanding the repeal by this Ordinance of the Administration of Evacuee Property Ordinance, 1949 (XII of 1949) or of any corresponding law, anything done or any action taken in the exercise of any power conferred by that Ordinance or law shall be deemed to have been done or taken in the exercise of the powers conferred by this Ordinance and any penalty incurred or proceeding commenced under that Ordinance or law shall be deemed to be penalty incurred or proceeding commenced under this Ordinance as if this Ordinance were in force on the day on which such thing was done, action taken, penalty incurred or proceeding commenced. Thus, it was during the existence of this Ordinance that the agreement Ex. 28 had come to be executed by the defendant in respect of the suit property. The validity or otherwise of the agreement would ordinarily be governed by the law as it then prevailed. This Ordinance was later on repealed by Act No. XXXI of 1950 known by the name of the Administration of Evacuee Property Act, hereinafter to be referred to as 'the Act'. Section 58 of the Act whereby the Ordinance came to be repealed, has provided that it shall not affect the previous operation of the Ordinance, Regulation or corresponding law and subject thereto, anything done or any action taken in the exercise of any power conferred by or under that Ordinance, Regulation or corresponding law shall be deemed to have been done or taken in the exercise of the powers conferred by or under this Act as if this Act were in force on the day on which such thing was done or action taken.
7. It was urged by Mr. Oza, that the agreement Ex. 28 related to evacuee property as defined under S. 2(f) of the Act inasmuch as it belonged to the defendant who was said to be an evacuee as contemplated under Section 2(d) of the Act. When that is so, that property no sooner it came to be notified as such, vested in the Custodian under Section 9 of the Act. He alone was thus entitled to deal with that property and by reason of Sections 40 and 41 of the Act, the defendant had no right to effect any transaction in relation to that property, and in case he does, without the approval of the Custodian, it becomes void and ineffective in law. Section 41 of the Act provides as under:-
'Subject to the other provisions contained in this Act, every transaction entered into by any person in respect of property declared or deemed to be declared to be evacuee property within the meaning of this Act, shall be void unless entered into by or with the previous approval of the Custodian.'
Now apart from the fact that no such provision existed in the Ordinance, it has to be read subject to the other provisions contained in this Act, as stated therein. The other provision to be considered is contained in Section 40 of the Act. It runs thus:-
'40. (1) No transfer made after the 14th day of August, 1947, but before the 7th day of May, 1954 by or on behalf of any person in any manner whatsoever of any property belonging to him shall be effective so as to confer any rights or remedies in respect of the transfer on the parties thereto or any person claiming under them or either of them, if, it any time after the transfer, the transferor, becomes an evacuee within the meaning of Section 2 or the property of the transferor is declared or notified to be evacuee property within the meaning of this Act, unless the transfer is confirmed by the Custodian in accordance with the provisions of this Act.'
Then sub-section (3) thereof provides that an application under sub-section (1) for the confirmation of any transfer may be made by the transferor or the transferee or any person claiming under, or lawfully authorised by either of them to the Custodian within two months from the date of the transfer or within two months from the date of the declaration or notification referred to in sub-section (1) whichever is later, and the provisions of Section 5 of the Indian Limitation Act, 1908 (IX of 1908) shall apply to any such application. It is worth nothing that under Section 41 'any transaction' entered into by any person in respect of any evacuee property shall be void. In other words, it covers not only transfer of any property effected having regard to the provisions contained in the Transfer of Property Act, but also any agreements to transfer in respect of any such property. We are therefore concerned with the effect of Section 40 of the Act, which has been similar to Section 38 of the Ordinance which governed the transaction as per the agreement Ex. 28 executed by the defendant in respect of the alleged evacuee property. In other words, Section 41 of the Act has no application what ever and the validity or otherwise of the agreement Ex. 28 has to be judged on the basis of Section 38 of the Ordinance which has been incorporated in Section 40 of the Act of 1950.
8. It was, however, urged by Mr. Desai, the leaned advocate for the respondent, that the defendant was not an evacuee as defined under Section 2 (d) of the Ordinance and consequently his property cannot be called evacuee property as contemplated under Section 2 (f) of the Ordinance. He then contended that even if it was taken to be the evacuee property having regard to the scheme of the provisions contained in the Ordinance, much though the evacuee property vested in Custodian under Section 8 thereof, the defendant cannot be said to have been divested of his right or interest of ownership therein. He was, according to him, quite competent to enter into any such agreement whereby he bound himself the carry out the same after the bar or restriction imposed on his right came to be removed. He further urged that this property has been admittedly restored to the defendant by the Custodian as per the order Ex. 33 dated 8-7-58 under Section 16(1) of the Act which is similar to the provision contained in Section 16 of the Ordinance. He then invited a reference to Section 16 and in particular sub-section (3)thereof which says that upon the restoration of the property to the evacuee or to his heir, as the case may be, the Custodian shall stand absolved of all responsibilities in respect of the property so restored and that such restoration shall not prejudice the rights, if any, in respect of the property which any other person may be entitled to enforce against the person to whom the property has been so restored. In other words, the contention is that with the restoration of the property to the defendant, it became a free property which can be dealt with by the defendant in any manner he chose - he being its owner. The bar or restriction if any, contemplated under the provisions of the Act or the Ordinance, as the case may be, came to an end in respect of that property. With such restoration of the property to the defendant, the right to claim the specific performance of an agreement for sale that was executed by the defendant before in favour of the plaintiff, would arise and revive as any such right for claiming enforcement thereof as contemplated in the latter part of sub-section (3) of Section 16 of the Ordinance was in no way affected or prejudiced. It appears, thereof, clear that at the date when the suit is filed for enforcing the agreement for sale in respect of the property which happened to be evacuee property till that date, it would be maintainable unless it is shown that the defendant was not competent to execute any such agreement for sale in respect of that property so that any such agreement would be void and ineffective by reason of the same being hit by Section 40 of the Act or Section 38 of the Ordinance.
9. Now it is indeed true that whenever any such agreement is challenged on the ground of invalidity or the like, it has to be so shown by one who so alleges. The case of the defendant was that while he was not an evacuee within the meaning of the term defined in Section 2(d) of the Act inasmuch as he had never left India for Pakistan or so in 1948, but that since the plaintiff knew about the property being an evacuee property and that way knowing full well about such a property being evacuee property, he had taken undue advantage in obtaining the agreement from him. That plea has no substance whatever and in fact the terms of the agreement as also other circumstances amply belie it. What appears is that with the coming in force of the Bombay Act, the Deputy Custodian in pursuance of the powers vested in him under sub-section (1) of Section 6 of the evacuee property specified in the Schedule annexed thereto. The suit property formed a part thereof and it belonged to the defendant and was valued at Rs. 12,000/-. This notification was published in the Gazette on 6th October 1949. It appears, as contemplated in Section 7 of the Ordinance, where the Custodian is of the opinion that any property is evacuee property within the meaning of this Ordinance, he may, after causing notice thereof to be given in such manner as may be prescribed to the persons interested, and after holding such inquiry into the matter as the circumstances of the case permit, pass an order declaring any such property to be evacuee property. We have, however, no material on record to know as to whether any such notice was issued to him and whether any such inquiry was held before holding this property as an evacuee property. But whatever that be, the fact remains that with the notification issued on 6th October, 1949 under the previous Act, it can be taken as declared to have been the evacuee property and that the Deputy Custodian assumed possession thereof. In fact he recovered constructive possession thereof in the present case by calling upon the tenants to pay the rent in respect of the premises occupied by tenants. Under Section 8 any property declared to be evacuee property under Section 7 shall veste in the Custodian. Neither the defendant nor the plaintiff has chosen to put any such material on record and all that we find is that some dispute was going on with regard to the declaration of this property as an evacuee property between the defendant and the Custodian and that it came to be finally decided in 1955 that the defendant was an evacuee and the property in question was an evacuee property as would appear from the endorsement made in the property Register the copy whereof has been produced at Ex. 32 in the case. That endorsement shows the date of such a declaration as on 27-10-55. This becomes all the more clear if we turn to the recitals in the agreement itself. In this agreement while the defendant has described himself as an owner and a person in possession of that property, he has stated that there was a necessity to obtain the certificate from the Custodian Office of the District of Panchmahals and that he would apply for obtaining the same on the next day i.e. on 30-11-49. After obtaining such certificate, he would execute the sale-deed on receiving the balance amount. The plaintiff has also referred to in his plaint about some dispute going on with regard to this property. It would, therefore, follow that not only this property was declared as an evacuee property under Section 6(1) of the Bombay Act, 1949, but that some dispute in that regard was pending. In other words, it is reasonable to think that the defendant must have challenged any such declaration about his property being an evacuee property for the reasons that he was not an evacuee as contemplated under Section 2 (d) of the Ordinance. His evidence shows that he had never left the Province for any place outside the territories now forming the part of India on account of the setting up of the Dominion of India and Pakistan or on account of civil disturbances or the fear of such disturbances, on or after the 1st day of March 1947. Whatever that be, any such question as to whether he was in reality an evacuee and that way his property an evacuee property as contemplated under Section 2 (d) & (f) respectively, could not be agitated in a Civil Court. The jurisdiction of a Civil Court has been barred by reason of Section 23 of the Ordinance as also by reason of Section 46 of the Act. It is, therefore, enough to observe that the property in question has to be treated as evacuee property at the time when the defendant executed the agreement Ex. 28 in favour of the plaintiff and it is on that basis that the question about the validity thereof or otherwise has to be determined. The only thing that can be said is that the defendant may have allowed the plaintiff to understand that he would be able to obtain the certificate in that respect by making an application to the Custodian and after obtaining the permission or the certificate as the case may be, he would execute the sale-deed in pursuance of that agreement.
10. The question then is as to whether the defendant was competent to enter into any such agreement in respect of any such evacuee property with any other person, and if he did so without obtaining the necessary previous permission. Whether he acted against the provisions of the Act so as to render any such agreement void and unenforceable at law. In other words, the point to be considered is as to whether the defendant can be said to have been divested of his right or interest in that property so as to forbid him from entering into such an agreement for sale. The contention of Mr. Oza is that by reason of Section 38 of the Ordinance, he was forbidden from entering into any such contract in relation to any such evacuee property unless it was approved by the Custodian. According to him, not having obtained any such consent renders his act unlawful in regard to that property and that it cannot, therefore, be given any effect in law. On the other hand what was urged by Mr. Dessai was that having regard to the scheme of the provisions contained in the Ordinance, much though the property can be said to have vested in the Custodian, it does not take us to mean that the defendant or the real owner thereof was divested of his right or interest in the property so as to make him incompetent to deal with the same. His further contention was that Section 38 of the Ordinance merely puts a restriction on the power to transfer that property and in no case can such an agreement as per Ex. 28 be called a transfer of property or of any right or interest in any such property so as to fall within the ambit of Section 38 of the Ordinance.
11. It would not be so very necessary to refer to the provisions of the Ordinance in details for the reason that the scheme of this Ordinance has come to be considered in the case of Abdul Majid Haji Mahomed v. P. R. Nayak : AIR1951Bom440 . The relevant observations runs thus:-
'Now looking to the various provisions of this Act, it is clear that the object and purpose of the legislature in enacting this Ordinance was to deal with the custody management and administration of evacuee property. The evacuee was to be prevented from exercising any rights as an owner in respect of his property, and the property was to vest in the Custodian. But the property was not to vest in him as an owner with the rights of an owner; it was to vest in him for the purposes of the Ordinance; his powers and rights were confined to the provisions contained in the Ordinance itself.'
Then at p. 640 (of Bom LR) = (at p. 448 of AIR) in more specific and clear language it has been observed as under:-
'The effect of the Ordinance is not to transfer the title vested in the evacuee as the owner of the property to the State or to any other person. As I said before the only effect of vesting the property in the Custodian is to give the Custodian certain powers enumerated in the Ordinance for the purpose of managing and administering the evacuee property. The title of the evacuee remains, as it were, in statutory suspense until it is determined by Parliament as to how that title is to be dealt with or disposed of. It would not be true to say that the title of the evacuee is destroyed or extinguished. The title is in existence, but its exercise has been suspended by reason of the Ordinance. This is not clearly a case where a property is destroyed by the State and both the property and the title disappear. There is neither destruction of property nor extinguishment of title.'
Another case referred to by Mr. Desai was one of M.B. Namazi v. Deputy Custodian of Evacuee Property, Madras : AIR1951Mad930 . In that case also, after considering the scheme in the Ordinance, almost similar observations have been made and they are:-
'The entire scheme of the Administration of Evacuee Property Ordinance (1949) in respect of 'evacuee property' is a provision for the custody and administration of such property and not for confiscation. The evacuee's title as such is never affected. Even the rights of a heir are recognised. Restoration of the property is contemplated. The Custodian acts practically as a statutory agent with large powers but under a duty to keep accounts. There is no deprivation of the property of the evacuee within the meaning of Art. 31(1).'
In the light of these observations, with which we respectfully, agree, it appears clear that the evacuee's title was not affected in the sense that he was not divested of his right or interest in the property so much so that he cannot enter into any such agreement for sale of that property. The Custodian merely acted as a statutory agent having powers to manage and administer the evacuee property, and as observed in the Bombay case, the title of the evacuee remained, as it were, in statutory suspense till the property came to be restored to him in 1958 under Section 16(1) of the Act. In our view, therefore, he was not a person who could be called incompetent to enter into any such agreement so as to render the same invalid on that account only, though no doubt by that he cannot transfer his right or interest in property without obtaining approval of the Dy. Custodian of property.
12. That takes us to the question as to whether Section 38 of the Ordinance comes in the way of the defendant so as to render the agreement Ex. 28 invalid. Section 38 of the Ordinance runs thus:-
'38 (1) No transfer of any right or interest in any property made in any manner whatsoever after the 14th day of August, 1947, by or on behalf of an evacuee or by or on behalf of a person who has become an evacuee after the date of the transfer, shall be effective so as to confer any rights or remedies on the parties to such transfer or on any person claiming under them unless it is confirmed by the Custodian.'
Sub-section (2) thereof then provides for an application for confirmation of such transfer and the Custodian is required to hold an inquiry in that regard under sub-section (4) thereof. Then comes Section 39 which prohibits registration of documents in certain cases. The contention of Mr. Oza, the learned advocate for the appellant, was that the word 'transfer' used in Section 38 has not to be given a narrow meaning as contemplated under the provisions of Transfer of Property Act. In other words, his contention was that by reason of the use of the word 'transfer', the Legislature contemplated to include agreements to transfer any such property. In support of that proposition, he invited a reference to a decision in the case of Netram v. Custodian General of Evacuee Property, ILR, 1965-1 Punj 619, where it has been observed that the word 'transfer' has been used in Section 40 of the Act in a comprehensive sense precluding narrowness and technicality. Transfer of property involves a series of steps, first an agreement to sell, then the execution of the deed of conveyance and finally the registration. On the other hand, it was urged by Mr. Desai, the learned advocate for the respondent, that the word 'transfer' contemplates nothing short of a transfer of property as such and, at any rate, according to him, in absence of any definition given to the term 'transfer' in the Ordinance or in the Act as the case may be, one has to turn to the provisions contained in the Transfer of Property Act. He then invited a reference to Section 54 of the Transfer of Property Act which defines 'sale' and 'a contract for sale'. 'Sale' has been defined as 'a transfer of ownership in exchange for a price paid or promised or part paid and part-promised. Such transfer, in the case of tangible immoveable property of the value of one hundred rupees and upwards, or in the case of a reversion or other tangible thing, can be made only by a registered instrument . . . . . . . . A contract for the sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties. It does not of itself, create any interest in or charge on such property.' Laying emphasis on the latter part of the definition of a contract for sale as per Ex. 28 does not and cannot create any interest in or charge on such property. In those circumstances, Section 38 would not come in the way for it does not create any right or interest in any such evacuee property. Now, it is clear that the term 'transfer' used either in the Ordinance or the Acthas not been defined. When a term such as 'transfer in relation to any property' is required to be considered, one would be justified in looking at the provisions governing the transfer of property contained in the Transfer of Property Act, 1882. Section 5 of the Transfer of Property' as meaning an act by which a living person conveys property in present or in future, to one or more other living persons, or to himself, or to himself and one or more other living persons, and 'to transfer property' is to perform such act. Section 6 thereof provides that property of any kind may be transferred, except as otherwise provided by this Act or by any other law for the time being in fore, and then it sets out certain rights which cannot be transferred in clauses (a) to (l). Clause (h) provides that no transfer can be made (1) in so far as it is opposed to the nature of the interest affected thereby, or (2) for an unlawful object or consideration within the meaning of Section 23 of the Indian Contract Act, 1872, or (3) to a person legally disqualified to be transferee. It would follow from this provision that if any law for the time being in force forbids any property being transferred to anyone else, that would become void. Then Section 7 refers to persons competent to transfer. As stated therein, every person competent to contract and entitled to transferable property, or authorised to dispose of transferable property not his own, is competent to transfer such property either wholly or in part and either absolutely or conditionally, in the circumstances, to the extent and in the manner, allowed and prescribed by any law for the time being in force. Section 11 of the Contract Act defines the capacity to contract as under:-
'Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind, and is not disqualified from contracting by any law to which he is subject.'
Then comes Section 8 which says that 'unless a different intention is expressed or necessarily implied, a transfer of property passes forthwith to the transferee all the interest which the transferor is then capable of passing in the property and in the legal incidents thereof. . . . . .' Now, in order that there is a transfer of property so as to convey the same to any other person, it has to be effected in the manner laid down under the other provisions of the Transfer of Property Act. They may relate to sale, mortgage, lease etc. We have already referred to Section 54 which relates to sale of immovable property and in order that there is transfer of ownership by reason of any such sale, in the case of tangible immoveable property of the value of one hundred rupees and upwards, it can be made only by a registered instrument. In view of this provision, in order that there arises any transfer of property or transfer of any right or interest in any property, it can take place having regard to Section 54 of the Act. It is only then that there would arise a valid transfer of any property or of any right or interest in the property. In the latter part of Section 54, as already pointed out hereabove, a contract for sale of immovable property has been defined as a contract that a sale of such property shall take place on terms settled between the parties. In other words, it is distinct from a contract of sale whereby transfer of ownership is effected. A contract for sale is in no way a contract of sale so as to transfer any right or interest in any property. But a contract for the sale of immovable property all that the purchaser gets is a right for obtaining a sale of such property on the terms agreed to between the parties. His remedy, thus, is to get a deed of sale for transfer of ownership and no more. It confers no right and no interest on any such property comprised under the contact for sale such as Ex. 28 in the case. In fact even after a decree for specific performance, the purchaser cannot be said to have any interest in the property unless that is created by having the instrument registered as required under Section 54 of the Act when the value of the property is one hundred rupees and upwards. In our view, therefore, the meaning to term 'transfer' used in Section 38 of the Ordinance as also under Section 40 of the Act has to be given having regard to and in relation to the provisions relating to the transfer of property which have been in the Transfer of Property Act. 1882. If, on the other hand, it was so intended to cover any such agreement for sale of any such property or any right or interest in any such property, the words would have been to that effect such as we find in Section 41 of the Act of 1950 viz., 'any transaction' used therein. Section 38 of the Ordinance does not refer to any such transaction and it refers to only a transfer of any right or interest in the property. With respect, therefore, we are unable to agree with the view taken in the Punjab case about the meaning to be given to a term 'transfer' used in Section 38 of the Ordinance, to include any agreement for transfer by giving a very wide and comprehensive meaning to that term. On the other hand, in the case of Kirodimal Ganeshlal Bani v. Haji Suleman Haji Wali Mohd., AIR 1960 Madh Pra 136, Section 40(1) of the Act (analogous to Section 38 of the Ordinance) came to be considered and it was held that it operates upon transfers only and not on agreements to transfer. It has been further observed that 'section 40 by itself, does not impose any disability on the power to contract. Such contracts would be valid and binding on the evacuee personally . . . . . . . The specific performance of the contract for sale does not defeat the provisions of S. 40 (especially when the transfer is to take place after 7-5-1954).' In our view, therefore section 38 of the Ordinance or Section 40(1) of the Act does not impose any disability on the power to contract and that it does not operate on the agreements to transfer. It operates only upon transfers which create right or interest in property.
13. It was next contended by Mr. Oza that much though the latter part of the definition of 'contract for sale' given in Section 54 of the Act provides that it does not create any interest or charge on such property, by reason of Section 55(6)(b) of the Transfer of Property Act, the buyer is entitled to claim a charge on the property for the amount of any purchase money properly paid as also for the earnest money as contemplated therein. By reason of this provision, according to him, it can be easily said that the interest or charge on the property is created by reason of this agreement Ex. 28 inasmuch as Rs. 2000 were paid to the defendant by the buyer for securing the contract and taking the same towards the purchaser price for the property in question. In support thereof, he invited a reference to a decision in the case of Rabindra Nath Banerjee v. Harendra Kumar, : AIR1956Cal462 , where it was held that 'where there is a part payment of the purchase price or payment of what is called the earnest money, the provisions of Section 55(6)(b). Transfer of Property Act, would be attracted and it will be treated as though the ownership of the property had passed and there is a charge for part of the purchase money paid. Such a purchaser under an agreement for sale has an interest and even a charge in the immovable property sole in execution.' Now we have already pointed out hereabove, an express provision contained in Section 54 of the Transfer of Property Act saying that any such contract for sale does not create any interest in or charge on any property. Section 55(6)(b) would, therefore, naturally lead to some anomalous position inasmuch as it entitles the purchaser to have a charge in respect of any such purchase money paid or in respect of the earnest money referred to therein. Now while the latter part contained in Section 54 of the Transfer of Property Act requires an act of parties for creating any right or interest in any such property comprised thereunder, unless it is so created there is no such right or interest created by a simple agreement for sale, even though an earnest money has been paid thereunder. Any such payment, for securing the enforcement of the agreement, would not turn the effect to be given to any such agreement other than one given in latter part of Section 54 which relates to contract for sale. Section 55(6)(b) on the other hand provides for an equitable remedy by making an express provision in respect of purchase money or the earnest money as the case may be. In other words, it creates a statutory charge and not a charge or interest which can be said to have been created by the Act of parties. Not only that, but any such charge under Section 55(6)(b) of the Act again depends upon certain contingencies. It does not create an absolute charge as such. That charge arises provided it is shown that the buyer has no improperty declined to accept delivery of the property.
14. Mr. Desai, on the other hand, invited a reference to a decision of Division Bench of the High Court of Bombay in the case of Mahadeo Chintaman Wadekar v. Vasudev J. Kirtikar, (1899) ILR 23 Bom 181. This decision lends support to the view taken by us in that regard. The facts of the case were that on 16th May 1895, one Dinaji Moroba sold the property, subject to the mortgage, to the applicant's daughter Mothibai and that Mothibai had afterwards by a registered agreement, dated 28th August 1896, contracted to sell it to him for Rs.2,200 of which he had paid a part as earnest money. On 17th October, 1896, in execution of a mortgage decree obtained by one Sadaram Ramchandra againt Dinaji Moroba, the sale of that property took place. The opponent Rao Bahadur Vasudev. J., Kirtikar bought the property. That led the applicant Mahadeo Chintaman Wadekar to apply for setting aside the sale alleging that Dinaji Moroba had sold the property subject to the mortgage to his daughter who in turn had contracted to sell it to him. The question arose as to whether he had any right or interest in the property so as to entitle him to present an application or setting aside the sale in execution. On a consideration of Section 54 of the Transfer of Property Act, it was held that 'a person who has contracted to purchase land, or an interest in land, does not by any such contract become the owner, in equity, of such land or such interest in view of Section 54 of the Act. He has a personal right against his vendor or the assignee with notice of his vendor to compel the latter by a suit for specific performance to perform his contract; but he has no direct right over the land.' He was, therefore, not entitled to apply to set aside the sale under Section 310A of the Civil Procedure Code. While considering the same, they also considered the effect of Section 55(6)(b) of the Transfer of Property Act and observed as under:-
'Assuming that under Section 54 of the Transfer of Property Act the applicant as against his vendor has a lien or charge upon the subject-matter of his purchaser for the earnest that he has paid, and that a person holding a simple lien over immoveable property is pro tanto meaning of S. 310A - the inclination of our opinion is to the contrary view - we cannot think that the applicant can be said to be owner of even the interest over which his lien extends. The lien or charge which the section gives him, is at the most, a contingent lien which will only become absolute if he is ready and willing to perform his contract when the time for performance arrives, or if he properly declines to perform it.'
Apart from the fact that the decision would bind this Court - the same having been prior to 1-5-60 we agree with the view expressed therein and with respect, we are unable to agree with the view expressed by a Single Judge of the High Court of Calcutta in : AIR1956Cal462 , relied upon by Mr. Oza for the appellant. In our view, therefore, the agreement Ex. 28 does not create any interest or charge in the property so as to attract the provisions contained in Section 38 of the Ordinance or Section 40 of the Act.
15. In those circumstances, it is unnecessary to consider as to whether the prohibition contemplated under Section 38 of the Ordinance or Section 40 of the Act is absolute so much so that any such transfer would become void. If any such transfer, however, of any property or any right or interest in evacuee property had been effected by the evacuee after 14th August 1947, it would become ineffective if no approval of the Custodian was obtained. It would not bind the custodian and as long as there continued a restriction under Section 38 of the Ordinance or Section 40 of the Act, absence of any approval of the Custodian would render a transfer ineffective and even void. Some authorities were cited by Mr. Oza to say that any transfer which was void cannot become enforceable later on by reason of the fact that any such disability or restriction which rendered the same void ab initio cannot be validated subsequently and to that position in law there hardly arises any dispute. In fact that position was conceded by the learned advocate of the respondent and, therefore, it is unnecessary to refer to those authorities such as Gaurishankar Balmukund v. Chinnumiya, ILR 46 Cal 183 : (AIR 1918 PC 168), Sundrabai Sitaram v. Manohar Dhondu, 35 Bom LR 404 : (AIR 1933 Bom 262). Surajmull Nagoremull v. Triton Insurance Co. Ltd. , and Waman Shirniwas v. Ratilal Bhagwandas and Co. : AIR1959SC689 . In the present case, however, as already held above, the defendant had a right in him to bind himself by passing such an agreement Ex. 28 in respect of his property and that since it was not actually transferred as contemplated under Section 38 of the Ordinance, it cannot be hit thereby and it remained a valid agreement. The performance thereof, however, can be said to be in abeyance by reason of the statutory suspense, as it were, created by the provisions of the Act, in the authority and power to transfer the property to the defendant. In pursuance of an order Ex. 33 passed on 8-7-58 under Section 1 of the Act the property has been restored free from any such restriction and since by reason of sub-section (3) of Section 16 the right to enforce any such right under the agreement has not been affected, the plaintiff would be entitled to claim specific performance thereof.
16. Now even apart from Section 16(3) of the Act, the plaintiff is entitled to claim performance of that contract under Section 18(a) of the Specific Relief Act, Section 18 runs thus:-
'18. Where a person contracts to sell or let certain property, having only an imperfect title thereto, the purchaser or lessee (except as otherwise provided by this chapter) has the following rights:-
(a) if the vendor or lessor has subsequently to the sale or lease acquired any interest in the property, the purchaser or lessee may compel him to make good the contract out of such interest: ** ** ** ** **'
The defendant had contracted to sell the property as per the terms and conditions set out in the agreement Ex. 28 and since that agreement is valid, the plaintiff has a right to enforce the performance thereof. As already observed hereabove, the defendant was competent to pass any such agreement and bind himself personally by the terms or conditions set out therein for transferring the property. What obviously prevented him from passing any such transfer in pursuance of the agreement was due to the statutory restriction on him contemplated in Section 38 of the Ordinance or Section 40 of the Act. He was not competent to effect a valid title in the plaintiff during that period. The title to the property that way was rather an imperfect title in him. This restriction came to an end and the property has been restored to him under Section 16(1) of the Act. By that event, the title in him over the property became full and perfect which he can, pass on to anyone by passing a registered sale-deed or the like. During that period, on the other hand, it was not possible for the plaintiff to enforce his right to obtain a valid transfer of the property. But his right to enforce it revived and that way arose as soon as it became a free property of the defendant liable to be transferred in accordance with law, and more so, as the plaintiff's right had remained unaffected as stated in sub-section (3) of Section 38 of the Ordinance or of Section 40 of the Act. It was attempted to be urged by Mr. Oza that Section 18 requires or presupposes a valid agreement and that the fact about the title being defective was known to the plaintiff. In other words, according to him, the plaintiff knew that it was an evacuee property and that in spite of it he had chosen to obtain an agreement for sale from the defendant. We have already found that the defendant was competent to pass any such agreement and bind himself and that it was valid. That right of the defendant to fulfil the contract, or of the plaintiff to enforce that contract had merely remained suspended till such time that the property came back to him. On his getting back the property he was bound to make good the contract. This is not a case where something which was invalid by reason of any disqualification prevailing or incompetence on his part of transfer the property, and the same being removed, he is called upon to fulfil the contract. Such a contract would be void ab initio by reason of transferor's incapacity to contract or incompetent to contract. In our view, therefore, under section 18 of the Specific Relief Act the plaintiff was entitled to compel the defendant to make good the contract after the property in question came to be restored to him under Section 16(1) of the Act.
17. Mr. Oza then contended that the agreement Ex. 28 was such which cannot be specifically enforced in view of the provisions contained in Section 32 of the Contract Act. Section 31 of the Contract Act defines a 'contingent contract' as a contract to do or not to do something, if some event, collateral to such contract, does or does not happen. Then comes Section 32 which says that contingent contracts to do or not to do anything if an uncertain future event happens, cannot be enforced by law unless and until that event has happened. If the event becomes impossible, such contracts become void. On the basis of this provision contained in Section 32 of the Indian Contract Act, he contended that the performance of the contract depended upon the defendant obtaining a certificate from the Custodian and that, therefore, it became a contingent contract. His further contention was that since the property had been restored to the defendant, that contingency became impossible of performance and therefore void. As we have already stated hereabove, there existed some dispute with regard to the fact as to whether the property in question was an evacuee property. While that dispute was pending, this agreement had come to be executed by the defendant. It was in those circumstances that the defendant assured the plaintiff that he would make an application on the next day to the Custodian for obtaining the necessary certificate and after obtaining the same, he would execute the sale-deed in respect of the property. Such a condition was in the nature of perfecting the transfer of valid title in favour of the purchaser. Such a contingency was quite possible in the sense that the Custodian had the authority to confirm the same or give consent in respect thereof. Such a condition was not such which was impossible of performance and in fact he had admitted to move the Custodian on the next day though no doubt with no success. It appears that the matter or the inquiry as the case may be, went on for long till 1955. As to what exactly happened we are unable to know in absence of any material on record in that regard. This condition of obtaining a certificate or the consent of the Custodian because unnecessary in view of the property being restored to him by the Custodian free from any such restrictions under Section 16(1) of the Act. It cannot, therefore, be said that a contract depended upno a condition which cannot be enforced at law or that which had become impossible of performance so as to render any such contract void.
18. It was then urged that the performance of the contract depended on the volition of a third party, namely, the Deputy Custodian of Evacuee Property and that when such is the case, having regard to Section 21 of the Specific Relief Act the relief claimed by the plaintiff cannot be given by the Court. He invited a reference to clause (b) of Section 21 of the Specific Relief Act which provides as under:-
'21. The following contracts cannot be specifically enforced:-
xx xx xx xx (b) a contract which runs into such minute or numerous details, or which is so dependent on the personal qualifications or volition of the parties, or otherwise from its nature is such that the Court cannot enforce specific performance of its material terms; xx xx xx xx'
The emphasis was that it depended upon the volition of the Custodian and it cannot be said that he shall necessarily act and issue a certificate as required by the defendant. In that respect, he invited a reference to the case of Shree Ambarnath Mills Corporation, Bombay v. D. B. Godbole : AIR1957Bom119 . In that case the question that arose was as to whether there is an enforceable agreement of sale wherein it was provided that the price for which the properties were agreed to be conveyed to the plaintiff was indefinite and that it was to be determined by an expert appointed in this behalf by the Government of India. Ministry of Rehabilitation. It was then observed as under:-
'The Government of India is not a party to this agreement and is under no obligation to appoint any person to determine the market value of the properties. The determination of the market value must, therefore, depend upon the volition of a person other than the parties to the agreement. The agreement also does not contain any indication whether the person designated in this behalf is to be accepted by the parties as an expert in ascertaining the market value. Again, the quantum of property to be conveyed to the plaintiffs is indefinite.'
In those circumstances, the specific performance of the contract was not granted. In the present case, however, there is no such question of compelling or requiring the Custodian to issue the necessary certificate. All that the agreement provided was that the defendant should apply to the Custodian for obtaining a certificate. That obviously meant to move the Custodian for enabling him to execute the sale-deed in accordance with law. It did not, therefore, depend upon the volition of any party to the contract much less to that of the Custodian for, after all, the Custodian was to act according to the provisions of the Ordinance and he had to decide as to whether any such certificate should be issued or not, and pass orders on any such application given by the defendant for that purpose. It did not depend upon his performance of any act so as to say that he may act or may not act according to his own personal wish or volition. In fact Section 21 refers to the volition of the parties - obviously meaning the parties to the agreement, and not of any party - such as a statutory authority with powers to act according to the provisions governing the same. We do not, therefore, think that the case relied upon by Mr. Oza wold stand on the same footing as to justify us in holding that any such agreement Ex. 28 cannot be specifically enforced. In fact no such considerations now arise for the simple reason that the property has been restored to the defendant and he has to comply with the terms and conditions set out in the agreement itself. At the date when the specific performance is claimed therefor, there is no question of anything depending on the volition of any such property as is sought to be urged before us.
19. Mr. Oza then contended that having regard to the provisions contained in Section 22 of the Specific Relief Act, the Court should refuse to give any relief for specific performance of the contract as sought for by the plaintiff. He relied upon clauses I and II of Section 22 of the Act. According to him, the plaintiff has taken unfair advantage over the defendant in obtaining the agreement Ex. 28 in the case. That way the case would fall under clause I of Section 22 of the Act. What was said in this connection was that since the property was an evacuee property at the time when the agreement was effected, it was bound to fetch less price and now that it is free from any such restrictions under the provisions of the Act, a free property would fetch far more. It would fetch about Rs. 20,000 to 25,000 as averred by the defendant. If, therefore, the specific performance of the contract were to be effected, the plaintiff would get unfair advantage. On the same basis an attempt was made to bring it within clause II of Section 22 which refers to some hardship on the defendant which he did not foresee viz., about any such restoration of the property. In those circumstances, he urged that the Court should not exercise its discretion in passing a decree for specific performance of the agreement. Now Section 22 of the Specific Relief Act gives discretion to a Court to pass a decree for specific performance of the contract and the Court is not bound to grant such relief merely because it is lawful to do so. At the same time, as provided therein, the discretion of the Court is not arbitrary but sound and reasonable, guided by judicial principles and capable of correction by a Court of appeal. Turning to clause I, it is obvious that there has been no fraud or misrepresentation shown on the part of the plaintiff in obtaining the agreement for sale. It was the defendant who can be in the know of the property declared as an evacuee property and an assurance was given by him to the plaintiff that he would obtain the certificate from the Deputy Custodian of Evacuee Property to fulfil the contract. He took away the earnest money and left the plaintiff to his fate. Besides, there is no evidence that the property was worth more than the price agreed to be given by the plaintiff. In fact it was valued at Rs. 12,000 in the notification by which it came to be declared as evacuee property. Besides it appears from the evidence of Ratilal that the Custodian had chosen to auction this property for sale and the highest bid was of Rs. 16,000 only in 1956. That, however, could not be given effect to as later on the property came to be restored to the defendant. There is no suggestion whatever made eve in the evidence of Ratilal that the property was worth more than Rs. 20,000 or so at the date when the contract took place. The price agreed to be paid by the plaintiff under the agreement was therefore quite adequate and there is hardly anything to justify us to say that any unfair or undue advantage was at all taken by the plaintiff. Nor would there arise any question of hardship to the defendant, as neither of the parties possibly visualized when that property would revert back to him or that the prices would shoot up and he would stand to suffer in 1958. One has to consider the circumstances prevailing at the date of the agreement and not as to what happened subsequently. Such considerations cannot be taken into account. A future increase in the price of a property agreed to be sold cannot be a good ground for refusing enforcement of any contract for sale of an immovable property. In this connection, Mr. Desai invited a reference to the case of Muthukumaraswami Goundan v. Ranga Rao, ILR (1964) 2 Mad 500, where it has been observed as follows:-
'The mere fact that the defendant entered into a losing bargain or one where plaintiff will reap great gains is clearly not enough ground to deprive the plaintiff of the benefit of his contract. However wide the jurisdiction of the Court may be to grant succour to persons who have been victimised there is no power to grant relief to a person whose only complaint is that the bargain is foolish and improvident. If the Court were to strike down a bargain on the ground that it was not wise on the part of one of the contracting parties to have entered into it, it would be assuming an overriding power to interfere with the freedom of contract.'
Thus, the mere ground that the prices have gone up in 1958 when he is required to execute the contract for sale, cannot justify the Court to refuse the relief sought for enforcement of the contract. In fact if we turn to the Explanation to Section 12 of the Specific Relief Act. It clearly provides that 'unless and until the contrary is proved the Court shall presume that the breach of a contract to transfer immovable property cannot be adequately relieved by compensation in money and that the breach of a contract to transfer movable property can be thus relieved.' In other words, when a contract is to transfer immovable property the Court has to presume that it cannot be relieved by compensation and there is hardly anything to show that the compensation can serve as an adequate relied in the circumstances of this case. The property appears to have been agreed to be taken from the defendant as it adjoined the plaintiff's shop which has been there since long. No compensation can therefore be an adequate relief to him. On the other hand, it is the defendant who has tried to take undue advantage of the entire position to an extent that he goes out to challenge his own contract by calling it an invalid agreement and that again he declies to go by it after the property has been restored to him. Not only that, but he has gone to the length of declining to refund even the earnest money received by him. This attitude of his can be easily characterized as one who wants to take rather unfair advantage over the plaintiff and more particularly when in his reply Ex. 30 to the notice no such contentions were at all raised. The only contention raised therein was that much time had elapsed and that, therefore, it was not enforceable. In the suit, however, he has taken all such pleas which justify this Court to characterize as hardly proper. In fact that attitude has continued even before this Court in going to an extent that even with the declaration of the agreement being void, the plaintiff would not be entitled to claim back his earnest money or even interest thereon. It is hardly necessary to point out that even if any such agreement were declared to be void, by reason of Section 65 of the Indian Contract Act, the plaintiff would be entitled to get back his amount and the defendant was bound to restore it after making compensation for it when he has received any such advantage. In our view, there is no good ground shown why we should refuse to enforce the contract solemnly entered into by him in favour of the plaintiff. The learned Judge was right in so holding.
20. That takes us to the question of limitation and latches raised by Mr. Oza for the appellant. In our view there hardly arises any question of limitation for the simple reason that having regard to Article 113 of the Indian Limitation Act which provides the period of limitation as three years and it begins to run from the date when the plaintiff came to know about the refusal of performance by the defendant. The plaintiff came to know about his refusal to perform his part of the contract on 9-10-58. Soon thereafter i.e., on 9-12-58 the plaintiff has filed this suit. The suit is, therefore, obviously in time.
21. With regard to the question of latches, no such considerations arise for, after all, as already stated above, the right to claim relief for obtaining the sale-deed from the defendant in respect of the property was, as it were, under suspension and the plaintiff could not have enforced the same as the law then prevailed in regard to the property in question. With the removal of that bar or restriction in regard to that property and no sooner the plaintiff came to know about it, he immediately called upon the defendant to perform his part of the contract, and at the same time stating that he was willing and ready to perform his part of the contract viz., to pay up the balance of the amount for the price of the property in question. It was urged that the plaintiff could have applied to the Custodian. But as we said above, since the plaintiff had not right or interest in the property, he was not entitled to apply under any of the provisions of the Ordinance or of the Act. His right to claim the specific performance of the contract arose with the restoration of the property to the defendant under Section 16(1) of the Act. Since his rights were not prejudiced in claiming the enforcement of this contract by reason of Section 16(3) of the Act, there was nothing that comes in his way in obtaining the reliefs sought for in the suit.
22. It was lastly urged by Mr. Oza that the plaintiff had not deposited the balance of the amount and according to him, merely stating that he was willing and ready to pay the amount in the plaint was not enough. There is hardly any justification to say so for we are not shown any provision of law, which requires him to deposit the balance of the amount in Court. The statement in the plaint in that respect is enough to show that he was ready and willing to abide by the terms of the contract. That point has no substance whatever.;
23. We, therefore, agree with the findings recorded by the learned Judge and hold that the agreement was valid and quite enforceable at law. The plaintiff was entitled to claim specific performance thereof and the decree passed by the trial Court, therefore, is quite proper.
24. In the result, therefore, the appeal fails and it is dismissed. The decree passed by the trial Court is confirmed. The appellant shall pay the costs of the respondent and bear his own.
25. Appeal dismissed.