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Jaswantsingh Vs. Issar Singh - Court Judgment

LegalCrystal Citation
SubjectProperty;Contract
CourtRajasthan High Court
Decided On
Case NumberFirst Appeal No. 38 of 1955
Judge
Reported inAIR1959Raj88
ActsSpecific Relief Act, 1877 - Sections 20
AppellantJaswantsingh
Respondentissar Singh
Appellant Advocate Chandmal, Adv.
Respondent Advocate Ratanlal, Adv.
DispositionAppeal allowed
Cases ReferredNarayan Nagorao v. Amrit Haribhau
Excerpt:
.....on the failure of the defendant to carry out the terms of the agreement, the plaintiff sued for specific performance of the agreement and in the alternative for the recovery of rs. learned counsel for the appellant has argued that this view of the trial court is erroneous in law in view of section 20 of the specific relief act which clearly lays down that a contract which is otherwise proper to be specifically enforced maybe thus enforced, though a sum be named in it as the amount to be paid in case of its breach, and the party in default is willing to pay the same. 1, wherein it is clearly mentioned that the executant had entered into an agreement for the sale of the disputed land for rs. ' 10. the judgment-debtors failed to deliver the first year the quantity provided, the..........the judgment and decree of the learned civil judge, ganganagar dated 23-2-1955 in a suit for specific performance of contract or in the alternative for damages. 2. the case of the plaintiff appellant is that on 9-3-1954, the defendant-respondent agreed to sell his land chak 7 kk in tehsil padampura measuring 20 bighas for rs. 6,800/- and executed an agreement ex. 1 after taking rs. 500/- as earnest money. it was also provided in the agreement that if the defendant failed to sell the land, he shall pay rs. 2,000- as damages: on the failure of the defendant to carry out the terms of the agreement, the plaintiff sued for specific performance of the agreement and in the alternative for the recovery of rs. 2,000/- ss damages as also the earnest money. the defendant denied the case of.....
Judgment:

D.M. Bhandari, J.

1. This is a civil first appeal by the plaintiff Jaswantsingh against the Judgment and decree of the learned Civil Judge, Ganganagar dated 23-2-1955 in a suit for specific performance of contract or in the alternative for damages.

2. The case of the plaintiff appellant is that on 9-3-1954, the defendant-respondent agreed to sell his land Chak 7 KK in Tehsil Padampura measuring 20 bighas for Rs. 6,800/- and executed an agreement Ex. 1 after taking Rs. 500/- as earnest money. It was also provided in the agreement that if the defendant failed to sell the land, he shall pay Rs. 2,000- as damages:

On the failure of the defendant to carry out the terms of the agreement, the plaintiff sued for specific performance of the agreement and in the alternative for the recovery of Rs. 2,000/- ss damages as also the earnest money. The defendant denied the case of the plaintiff. He pleaded that there was a talk of giving the disputed land on lease to the plaintiff tor Rs. 1,000/- per year and there was no agreement for the sale of the land.

As the defendant was an old man, very simple and illiterate, the plaintiff got the thumb impression of the defendant on a document which he described as lease deed. He denied that he had executed any agreement to sell the disputed land to the plaintiff. He further denied that he was liable to pay any damages. The learned Judge of the trial Court framed several issues.

Issue No. 5 related to the execution of the agreement. The learned Judge held that the agreement Ex. 1 was executed by the defendant in favour of the plaintiff. UP further held that according to the agreement, the plaintiff was entitled to recover only damages from the defendant, and he assessed the amount of damages at Rs. 1,000/-. The trial Court decreed the claim of the plaintiff for Rs. 1,500/- of which Rs. 500/- were the earnest money and Rs. 1,000/- the amount of damages.

3. The plaintiff has come in appeal and has prayed that the suit for specific performance of contract of sale may be decreed or in the alternative without prejudice to that prayer, the amount of damages may be enhanced by Rs. 1,000/- The main, argument addressed on behalf of the plaintiff is that the breach of contract to transfer the land by the defendant cannot be adequately relieved by compensation in money and that such contract should be ordered to be specifically enforced even though a sum has been mentioned in it as the amount to be paid in case of its breach.

Learned counsel for the defendant argued that the trial Court has taken the correct view on the interpretation of Ex. 1 under which the plaintiff can claim only damages and cannot claim specific performance.

4. In order to appreciate the respective contentions of the learned counsel of the parties, it is necessary to set out the relevant portion of Ex. 1. Ex. 1 starts by saying that the executant, i.e. the defendant, having agreed to sell the disputed land to the plaintiff further agrees to the terms mentioned thereafter. Then there are mentioned the following five conditions.

Condition No. 1 states that Rs. 500/- had been received as earnest money out of the sale price of Rs. 6,800/-. Sanction for the sale of the land shall be obtained by 15-6-1954 and the rest of the sale price i.e. Rs. 6,300/- would be received before the Registrar. Condition No. 2 relates to the expenses of registration and sanction. Condition No. 3 mentions that if the sanction is not received by 15-6-1954, the seller will pay Rs. 4,000/- and will obtain the possession of the land and will himself cultivate the land and take the produce of the land. After the sanction has been received within one month thereof, the purchaser shall get the sale deed registered and shall recover Rs. 2,300/- before the Registrar.

5. Condition No. 4 is important. It mentions that if the purchaser does not. obtain the sanction or even after the sanction, does not get the sale deed registered in favour of the seller by 15-6-1954 or sells or mortgages the land to some other person, he shall pay to the seller Rs. 2,000/- as damages in addition to the sum of Rs. 500/- of the earnest money. If the purchaser does not pay the remaining sum of Rs. 6,300/- or for any other reasons, commits default, then the earnest money would be forfeited and Rs. 2,000/- shall be payable to the seller.

6. Condition No. 5 refers to the case when Rs. 4,000/- had been paid by the purchaser to the seller and possession obtained by him. It is provided that even after receiving the sanction, if the seller does not get the sale deed registered, then the purchaser shall have a right to get the sale deed registered through a Court of law in addition to the claim of Rs. 2,000/- as damages. If, there is default by the purchaser, it is provided that Rs. 500/- would be forfeited and in addition to that Rs. 2,000/- would be claimed as damages.

7. Condition No. 6 is not material,

8. The case of the plaintiff is that the sanction of sale had been obtained from the office of the Commissioner, Bikaner on 14-5-1954, but the defendant refused to get the sale deed registered in favour of the plaintiff. The plaintiff served a notice on the defendant on 3-0-1954 for getting the sale deed registered by 15-6-1954, but no reply was received.

The conditions of the agreement Ex. 1 applicable to the present case are conditions Nos 1 and 4, The learned Civil Judge is of opinion that as in condition No. 4, it has been provided that the plaintiff will be entitled to recover Rs. 2,500/- if the sale deed is not registered by the defendant, the remedy of the plaintiff is confined to that of recovery of damages and he cannot claim specific performance of the agreement.

Learned counsel for the appellant has argued that this view of the trial Court is erroneous in law in view of Section 20 of the Specific Relief Act which clearly lays down that a contract which is otherwise proper to be specifically enforced maybe thus enforced, though a sum be named in it as the amount to be paid in case of its breach, and the party in default is willing to pay the same.

This contention is sought to be repelled by the counsel for the respondent by saying that there were alternative terms in the contract. One was to sell the land to the plaintiff and the other was to pay Rs. 2,000/- as damages if there was a default in selling the land, It is urged that the defendant had a right to perform any of these two things at his election and this being the intention of the parties in putting condition No. 4, it may be taken that the contract was fully performed if Rs. 2,000/-were paid by the defendant to the plaintiff.

I have closely scrutinised the above conditions of the contract. Reading the contract as a whole, it is clear that the primary intention of the parties: was to enter into an agreement of sale of the land. This is clear from the opening words of the agreement, Ex. 1, wherein it is clearly mentioned that the executant had entered into an agreement for the sale of the disputed land for Rs. 6,800/-.

The mention of Rs. 2,000/- as damages for breach of toe contract by any of the parties was only for the purpose of securing its performance. No doubt in condition No. 5, there is a specific reference to a suit for specific performance, in case there is a breach of condition No. 3. But this reference does not in any way affect the interpretation of condition No. 4.

The test to determine whether there is an alternative contract is whether the defendant had an alternative choice given by condition No. 4 either to sell the laud or to pay the amount of Rs. 2,000/-, and if this is not so and if the agreement points out that the sum mentioned was in the nature of a security for the performance of the contract, it cannot be said that the specific performance can be refused to the plaintiff. The law on the subject has been stated in Halsbury's Laws of England Second Edition Volume 31 paragraphs 373 and 374 :

(373) 'Where the contract contains a stipulation that in the event of non-performance a certain sum of money shall be paid, that fact is not in itself decisive in considering whether or not specific performance should be granted. Nor does the distinction between penalty and liquidated damages affect the answer to this question. The answer is to be found by considering the intention of the parties, that is, whether the party bound to performance has an alternative choice given to him by the contract, to perform or to pay the agreed sum, or whether he is bound to do a certain thing with a penal sum or sum by way of liquidated damages attached as security. In the latter case the Court, notwithstanding the penal clause, enforces performance if the contract be such that without the penal clause it would have been proper for specific performance.

(374) Where the contract contains a penalty clause, the contractee has his right in law upon the contract for the money payable under the clause, and also his right in equity to specific relief; he can, at his election, obtain either form of relief, but he cannot obtain both forms.'

9. Section 20 of the Specific Relief Act also, lays down the same law. Section 20 runs as follows :

'A contract, otherwise proper to be specifically enforced, may be thus enforced, though a sum be named in it as the amount to be paid in case of its breach, and the party in default is willing to pay the same.'

In my opinion Ex. 1 read as a whole points out that the sum of Rs. 2,000/- in condition No. 4 Avas mentioned as the amount to be paid in case of the breach of condition No. 1 and was not in the form of alternative contract under which it can be said that the contract was to be deemed fully performed by payment of Rs. 2,000/-. The same view has been taken in a number of cases. In the Privy Council case of Bissessar Dass Daga v. Emmanuel Vas, ILR 55 Cal 238: (AIR 1928 PC 27), the terms of the decree were under consideration. Clause 10 of that decree provided for the delivery of manganese ore as follows :

'That in the event of the defendants' failing to deliver the full quantity of 4,000 tons of the stipulated grade in any particular year or violating any of the conditions of this compromise, the defendants shall pay to plaintiff's damages at the rate of Re. 1/- (rupee one) per ton on the whole of the quantity which may then have remained undelivered out of the total quantity of 31,234 tons and the same shall be recovered by execution of this decree.'

10. The judgment-debtors failed to deliver the first year the quantity provided, the decree-holders applied to execute the decree by the seizure of ore of the judgment-debtors. After the date of the price of manganese ore had risen to about Rs. 25/-per ton. The judgment-debtors sought to dicharge the decree by paying Re. 1/- per ton on the undelivered ore under clause 10 of the decree.

11. It was held that the judgment-debtors could not discharge the decree since clause (10) did not provide that the payment of that amount should be a full and exclusive satisfaction of all obligations under the contract, and to hold that that was the effect of the decree would be to enable the judgment-debtors to render nugatory the injunction of the supply of the ore whenever the price of ore made it profitable to them to do so.

The above authority clearly points out that in order that a condition for the payment of damages may be construed as an alternative contract sufficient to discharge the promisor, it is necessary that there must be something in the contract pointing out that the payment of damages was to be treated as full performance of the contract. I may further refer to the case of Abdur Rahman v. Nasir AH Khan, AIR 1931 Lah 657 where the agreement for sale contained the following clause :

'If I choose to keep the land myself I shall even then be bound by the above terms, that is, I shall pay Rs. 2,000/- per square as damages and in addition to that I shall pay the expenses of the land as well as the price o trees and houses.' It was held that :

'the contract containing the above clause was not an alternative contract, but it was merely a contract to sell the land and the plaintiff was entitled to specifically enforce the same.' In the case of V. K. Kandasami Chettiar v. Shanmugha Thevar, AIR 1949 Mad 302 it was contained in the agreement that in case there was a default in completing the sale deed within the due date, the person who committed the default shall pay Rs. 100/- as damages to the other parties, and in addition that agreement was to become void. It was held that 'the mere existence of a clause to pay Rs. 100/- as damages did not prevent the plaintiff from claiming specific performance by virtue of Section 20, Specific Relief Act.'

The same principle is laid down in the case of Sangali Solagan v. Nagamuthu Malavadi, AIR 1925 Mad 227. The latest case on the point is Narayan Nagorao v. Amrit Haribhau, AIR 1957 Bom 241. Applying the principles contained in Section 20 of the Specific Relief Act, I am of opinion that in this case, the plaintiff cannot refuse the specific performance of the contract simply because a sum has been mentioned in the agreement Ex. 1 as the amount to be paid in case of its breach.

This contract is for the sale of the land and the explanation to Section 12 of the Specific Relief Act clearly states that unless and until contrary is proved, the Court shall presume that the breach of the contract transferring the immovable property, cannot be adequately relieved by compensation in money. The learned trial Judge has given no other reason for refusing the specific performance of the contract to the plaintiff except that in his view, condition No. 4 of the agreement provided for full satisfaction of the contract by payment of compensation. As already pointed out this view is wrong.

12. Learned counsel for the respondent has not been able to point out any other circumstance why the decree for specific performance could not be granted to the plaintiff. He only pointed out that according to the plaintiff the price of the land was the same at the time of filing of the suit as mentioned in Ex. 1 and the plaintiff was not likely to gain anything if he got a decree for specific performance. This by itself is no ground for not granting a decree for specific performance.

13. The result of the above discussion is that the plaintiff is entitled to get a decree for specific performance of contract for the sale of 20 bighas of land which he had agreed to purchase from the defendant under Ex. 1.

14. The appeal is, therefore, allowed, thejudgment and decree of the learned Civil Judge,Gangapur dated 23-2-1955 are set aside and instead of a decree for Rs. 1,500/- the plaintiff isawarded a decree for specific performance by thedefendant of the agreement Ex. 1 for the sale ofthe land Chak 7 KK in Tehsil Padampura measuring 20 bighas described in Ex. 1 on payment ofRs. 6,300/-. He shall also get costs in this Courtas well as in the trial Court. The expenses of registration shall be borne half and half by the parties as provided in Ex. 1.


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