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Pannalal and anr. Vs. Ramnarayan and anr. - Court Judgment

LegalCrystal Citation
SubjectContract;Property
CourtRajasthan High Court
Decided On
Case NumberFirst Appeal No. 136 of 1963
Judge
Reported inAIR1971Raj294; 1970(3)WLN729
ActsTransfer of Property Act, 1882 - Sections 6 and 130; ;Specific Relief Act, 1877 - Sections 23
AppellantPannalal and anr.
RespondentRamnarayan and anr.
Appellant Advocate Ratanlal Patwa, Adv.
Respondent Advocate S.N. Bhargava and; S.M. Mehta, Advs.
DispositionAppeal allowed
Cases ReferredIn Ghulam Mohammad v. Lakha Singh.
Excerpt:
.....into an agreement with them on 2nd june, 1961.;the agreement dated 3rd march 1958, between sheo sahai and ramnarayan was a completed contract and that its benefit could also be assigned.;ramnarayan could assign the benefit of his option to re-purchase the property from sheo sahai to the plaintiff.;ex. 2 amount to an assignment of ramnarayan's right to re-purchase the property from sheo sahai and as such the plaintiffs are his representatives-in-interest within the meaning of section 23(a) of the specific relief act. under section 23(a) specific performance of the contract may be obtained by any party thereto or his representative-in-interest, and the appellants are, therefore, entitled to call upon both the respondents to specifically perform the contract because the exceptions..........described in para 1 of the plaint. this house has already been sold by defendant no. 1 to sheo sahai defendant no. 2 on 3rd december. 1957, with the condition of reconveying the house by sheo sahai within a period of six years on payment of rs. 6000/- by ramnaravan on the basis of a subsequent agreement dated 3-3-58. it was further stimulated between the plaintiffs and ramnaravan in the subsequent agreement dated 2nd june, 1961, that sheo sahai would either join as a vendor in the deed of sale to be executed in favour of the plaintiffs or that ramnaravan would first get the property transferred to himself from sheo sahai and then would transfer it to the plaintiffs under a registered sale-deed before 31st july 1961. it was also agreed that the vendors and the vendee shall bear.....
Judgment:

C.B. Bhargava, J.

1. This is an appeal from the judgment and decree dated 16th August, 1963, of the Senior Civil Judge. Aimer, dismissing the plaintiff's suit for specific performance of the contract for sale of a house.

2. Briefly stated, the facts are that Ram Naravan, defendant No. 1. entered into an agreement in writing with the plaintiffs for the sale of his house bearing AMC No. 24-412 situated in Ramsani Mohalla. Aimer, and more par-ticularly described in para 1 of the plaint. This house has already been sold by defendant No. 1 to Sheo Sahai defendant No. 2 on 3rd December. 1957, with the condition of reconveying the house by Sheo Sahai within a period of six years on payment of Rs. 6000/- by Ramnaravan on the basis of a subsequent agreement dated 3-3-58. It was further stimulated between the plaintiffs and Ramnaravan in the subsequent agreement dated 2nd June, 1961, that Sheo Sahai would either join as a vendor in the deed of sale to be executed in favour of the plaintiffs or that Ramnaravan would first get the property transferred to himself from Sheo Sahai and then would transfer it to the plaintiffs under a registered sale-deed before 31st July 1961. It was also agreed that the vendors and the vendee shall bear the expenses for the stamps and registration of the sale-deed in equal proportion.

Plaintiff's case is that he paid Rupees 468/- to defendant No. 1 on 9-6-61 for the purchase of stamps for the two sale-deeds one to be executed by defendant No. 1 in favour of the plaintiffs and the other by defendant No. 2 in favour of defendant No. 1 and actually the stamps were purchased and the sale-deeds were also written on them but they were not completed because the executant did not sign them. Further a sum of Rs. 1000/-was paid to defendant No. 1 towards the sale-price on 13-6-61. Defendant No. 1. however, did not execute any sale-deed in favour of the plaintiffs even though the plaintiffs at all times were ready and willing to perform their part of the contract. They also called upon defendant No. 2 by notice dated 14-6-61 to join the defendant No. 1 in executing the sale-deed in favour of the plaintiffs but he did not do so. It was therefore, prayed that defendants Nos. 1 and 2 be ordered to execute a sale-deed in favour of the plaintiffs on payment of a sum of Rs. 6000/- to defendant No. 2 and the balance of Rs. 4688/- to defendant No. 1.

3. The suit was contested by both the defendants. Defendant No. 1 admitted having entered into an agreement for the sale of the house with the plaintiffs on 2nd June, 1961, but his main plea was that the plaintiffs had also agreed to re-convey the said property if 12,000/-rupees were paid to them within ten years by him. Since the plaintiffs were not prepared to execute an agreement for the reconveyance of the property the whole transaction fell through. Receipt of Rs. 1468/- was also denied by the defendant. It was further stated that the suit for specific performance was not maintainable as the agreement was contingent one depending upon the will oi defendant No. 2.

4. Defendant No. 2 filed a written statement and his main plea was that being not a party to the agreement dated 2nd June 1961, the suit for specific performance was not maintainable against him. Further, Ramnaravan defendant No. 1 had no right to enter into any agreement for the sale of the house until it was reconveyed to him by defendant No. 2.

5. On these pleadings, the learned Senior Civil Judge framed the following issues:

1. Whether the agreement to sell the house No AMC 24/412 was for absolute sale or was with a condition to re-convey the property within 10 years to defendant No, 1?

2. Whether the plaintiffs paid Rupees 468/- on 9-6-61 for the purchase of stamps and Rs. 1000/- on 13-6-61 to defendant No. 1?

3. Whether out of Rs. 1568/- Paid by the plaintiffs to defendant No. 1 a sum of Rs. 1312/- was to be adjusted towards the sum of Rs. 12000/- the sale price?

4. Whether the defendants got scribed the two documents as mentioned in para 3 of the plaint?

5. Whether defendant No. 1 has no right to enter into any agreement for sale of property?

6. Whether there is no privity of contract between the plaintiffs and defendant No. 2?

7. Whether the plaintiffs are entitled to claim specific performance?

6. In support of the issues, plaintiff Pannalal gave his own statement as P. W. 1 and examined Shrikishen P. W. 2, James P. W. 3 Roopnarain P. W. 4, Madanmohan Singh P. W. 5, Lachman-das P. W. 6, Gaffar Khan P. W. 7. Kha1-ansingh P. W. 8. Babulal P. W. 9. and Sohanlal P. W. 10. In rebuttal, the defendants Ramnarayan and Sheo Sahai gave their statements as D. W. 1 and D. W. 1(1) and examined Chandrakishore D. W. 2. Somdutta D. W. 3, Mamchand D. W. 4 and Aditya D. W. 5.

7. It may also be mentioned here that Ramnarayan also had filed two other suits against the plaintiffs (1) for the return of the agreement dated 3rd March. 1958, executed by Sheo Sahai in his favour and (2) another suit for the return of Rs. 468/- as damages for the price of non-judicial stamps purchased by him which he had delivered to Pannalal who did not return it in time to claim its refund. All these suits were consolidated with the present suit.

8. The learned Judge below found that there was no agreement by the plaintiffs to reconvey the property within ten years to defendant No. 1. He further found that payment of Rs. 468/- on 9th June, 1961, for the purchase of stamps by the plaintiffs to defendant No. 1 was proved but payment of Rs. 1000/-on 13th June, 1961, was not proved. He further found that two sale-deeds were got written by defendant No. 1 and that the plaintiffs were not liable for the refund of this amount to defendant No. 1. Issue No. 5 was decided against the plaintiffs and the learned Judge held that Ramnarayan had no title in the suit house on 2nd June, 1962. He had only an expectancy of the conveyance if he paid Rs. 6000/- to Sheo Sahai within the stipulated period of six years. The contract between the plaintiffs and Ram Narayan was only a contingent one and was, therefore, not enforceable. Issue No. 6 was also decided against the plaintiffs & it was held that there was no privity of contract between them and defendant No. 2. In view of the court's finding on issues Nos. 5 and 6 plaintiffs' suit was dismissed. Defendant No. 1's suit for the recovery of Rs. 468/- as damages was also dismissed but the other suit for the return of the agreement dated 3rd March, 1958 was decreed and the plaintiffs were directed to deliver their document to defendant No. 1.

9. Being aggrieved by this judgment, plaintiffs have preferred an appeal while cross-objections have been filed on behalf of Sheo Sahai which only relate to the disallowing of costs to him by the lower court.

10. On behalf of the appellants, it is contended that virtually the agreement dated 2nd June, 1961, for the sale of the house by Ramnarayan was an assignment of his interest to repurchase the property from Sheo Sahai and the plaintiffs being representatives-in-interest were competent to enforce their right in a suit for specific performance against both the defendants. It is pointed out that till 2nd June. 1961. Ramnarayan could exercise his option of re-purchasing property from Sheo Sahai on payment of Rs. 6000/- on the basis of the agreement dated 3rd March, 1958. The plaintiffs being the representatives-in-interest of Ramnarayan also called upon Sheo Sahai on 14th June, 1961, to ioin defendant No. 1 in executing the sale-deed on receipt of Rs. 6000/-, but he declined to do so. In the present suit as well, they have alleged that Rs. 6000/- be paid to defendant No. 2 and the balance of the purchase price to defendant No. 1, and both may be directed to execute the sale-deed in their favour.

It is also contended that the finding of the lower court that Rs. 1000/- werenot paid by the plaintiffs to defendant No. 1 is also erroneous and there is no reason why plaintiff's own statement and that of his witnesses be not believed in that behalf. There is no doubt that having purchased the house from Ramnarayan on 3rd December. 1957. Sheo Sahai by his agreement dated 3rd March, 1958, had agreed to re-convey the same to Ramnarayan provided he paid Rupees 6000/- to him within a period of six years that is up to 3rd December. 1963. On the basis of this agreement. Ramnaravan had the benefit of exercising the option of re-purchasing the property on payment of Rs. 6000/- within the stipulated time. The question is whether Ramnarayan could assign his right of re-purchasing the property to the plaintiffs, and whether he can be deemed to have done so by entering into an agreement with them on 2nd June, 1961, vide Ex. 2.

11. In Venkateswara v. Raman, AIR 1917 Mad 358 it was held that all contracts capable of specific performance are assignable except those of the class prohibited by Section 23 of the Specific Relief Act.

12. In Munuswami Navudu v. Sagalaguna Nayudu. AIR 1926 Mad 699 it was held that:

'A right under an executory contract to exercise an option at a certain future date to obtain a reconveyance of immovable property at a certain price is assignable.'

It was further held per Ramesam J. that

'Such a transaction does not offend the rule against perpetuities as it does not create an interest in land in India, whatever the rule in England may be.'

The learned Judge further observed that

'Under Section 54 of the Transfer of Property Act an agreement to sell, by itself, cannot create an interest in land: much less can an option even if it is made irrevocable by reason of a contract. But I do not see why the interest under the contract is not assignable as a right ex contracts if not as a right in rem.'

In this case the facts were that on 28th January. J 891, Venkatasubrahmanva Ayvar. on behalf of himself and his minor son Krishnaswami Ayvar. sold the village of Siyatti to Venkatapathi Navudu for a consideration of Rs. 10,000/-. On the same day, the parties executed a counterpart document by which the purchaser agreed to reconvey the village for the same consideration of Rs. 10,000/- if the vendor made an application for that purpose in the month of Ani 30 years later. Venkatasubrahmany Ayvar died in 1899 leaving Krishnaswami Avvar his only son, surviving him. Krishnaswami Ayyar assigned his interest under the counterpart agreement to the plaintiff for a consideration of Rs. 19,200/- out ofwhich Rs. 10,000/- were to be paid to get a reconveyance according to the terms of that document. The suit was dismissed by the trial court but the High Court decreed the suit. An appeal was taken against this judgment to the Privy Council and this case is reported as Sakala-guna v. Munuswami, AIR 1928 PC 174. Their Lordships observed with regard to the counterpart agreement that,

'All the elements necessary to constitute a Contract were present. There was an undertaking on the part of Ven-katapathi to reconvey the village to Venkatasubrahmanya and Krishnaswami in the event of their calling for a conveyance at the time and upon the terms set out in the 'counterpart document.' The time at which the option was to be exercised and the price which was to be paid for the property were specified.

There was consideration for the contract because Venkatapathi, by the sale of 27th January. 1891, obtained possession of the property, and Venkatasubrahmanya received Rs. 10,000/- besides acquiring the right and benefit of getting back the village upon the conditions specified in the 'counterpart document'. Their Lordships, therefore, concur with the conclusion of the learned Judges of the High Court on this question.

They are also of the opinion that it was not intended that the option could be exercised only by Venkatasubrahmanya and Krishnasami personally. The terms of the contract and the time at which the option was to be exercised go to show that the intention was that the option might be exercised by the above-mentioned two persons or their heirs.

It was not disputed that if the transaction of 27th January 1891 amounted to a completed contract as their Lordships have decided the benefit of the contract could be assigned.'

This decision is, therefore, a clear authority for the view that the agreement dated 3rd March 1958, between Sheo Sahai and Ramnaravan was a completed contract and that its benefit could also be assigned.

11. The same view was held in Sinnakaruppa v. Karuppuswami, AIR 1965 Mad 506 the Court holding that such a contract for re-conveyance of the property was binding on the parties and that such an option becomes assignable and an assignee of the vendor will be entitled to claim specific performance unless the contract itself prohibits the assignment, or it has been stipulated therein that the benefit of repurchase could be claimed only by the vendor or by any particular person specified therein.

12. The Bombay High Court also in Vishweshwar v. Durgappa. AIR 1940Bom 339 took the view and held that an option to re-purchase property both under the common law as well as under Section 23(b) of the Specific. Relief Act is prima facie assignable.

13. In view of the above-mentioned decisions, it can be safely held that Ramnarayan could assign the benefit of his option to re-purchase the property from Sheo Sahai to the plaintiff.

14. The next question is whether by executing the agreement dated 2nd June, 1961. the aforesaid right was assigned to the plaintiffs. By Ex. 2 Ramnarayan agreed to sell the disputed house to the plaintiffs for Rs. 10,000/-. It is stated in the agreement that the house was free from all encumbrances except that it had been sold by him earlier to Sheo Sahai who had also agreed to reconvev it to him on payment of Rupees 6000/- within six years vide agreement dated 3rd March. 1958. No doubt Ex. 2, strictly speaking, is not an assignment of the benefit of the option to repurchase the property from Sheo Sahai, but virtually its object and purpose is the same because on the date of the agreement Ramnaravan had only an option to re-purchase the property which he could assign. It is also clear that Ramnarayan had also handed over agreement dated 3rd March. 1958. which was executed by Sheo Sahai in his favour to the plaintiffs because he had also filed a suit as already stated for its return against the plaintiffs.

15. I am, therefore, of the view that Ex. 2 amounts to an assignment of Ramnarayan's right to re-purchase the property from Sheo Sahai and as such the plaintiffs are his representatives-in-interest within the meaning of Section 23(a) of the Specific Relief Act. Under Section 23(a), specific performance of the contract may be obtained by any party thereto or his representative-in-interest and the appellants are, therefore, entitled to call upon both the respondents to specifically perform the contract because the exceptions mentioned in Section 23(b) do not apply to the present case. The agreement dated 3rd March, 1958, is not restricted to the enforcement of the right of re-purchase to Ramnarayan personally. His representative-in-interest can also enforce the rights in the same manner as he could have done it and it is not open to Sheo Sahai to plead that because there was no privity of contract between him and the appellants, no specific performance of the contract can be ordered against him.

16. In Ghulam Mohammad v. Lakha Singh. AIR 1935 Lah 181 (2) where one Ghulam Mohammed had purchased at an auction-sale square No. 70 from. Government and had deposited theearnest money in the Government Treasury but had not the means to pay the balance of the purchase price which was to be paid in instalments, he entered into an agreement with Diwan Singh to sell the square in question to him as soon as the proprietary rights were conferred on him. Diwan Singh undertaking to pay to Ghulam Mohammed the amount which the latter had deposited in the treasury as earnest money and also to pay direct into the treasury the remaining instalments. In pursuance of this agreement, Diwan Singh was put in possession of the land, Diwan Sinsh paid some of the instalments, but before the entire amount had been paid, he on 18-2-1918, entered into a further agreement with Lakha Sinah plaintiff to sell the land to him when ownership was conferred on Ghulam Mohammad in consideration of the plaintiff paving to Diwan Singh all that he had deposited into the treasury or paid to Ghulam. Mohammad and agreeing to deposit the remaining instalments into the treasury. On a suit for specific performance of the contract by Lakha Singh against Ghulam Muhammad, the latter's plea that there was no privity of contract between him and the plaintiff was rejected, and it was held that the plaintiff was the representative-in-interest of Diwan Singh and had clearly a locus standi to maintain the suit. This decision applies with full force to the facts and circumstances of the present case.

17. Here too, though there is no privity of contract between the appellants and Sheo Sahai but as the appellants are the representatives-in-interest of Ramnarayan in whose favour Sheo Sahai had made an agreement to reconvev the property within six years on the receipt of Rs. 6000/-, they can enforce the contract for sale. Before instituting the suit, they also gave a notice to Sheo Sahai expressing their preparedness to pay him Rs. 6000/- on behalf of Ramnarayan and calling upon him to join in executing the sale-deed with him. But he by his reply Ex. 9 declined to do so and challenged the plaintiffs' right to claim specific performance of the contract against him. Thus I am of the view that the appellants were entitled to enforce specific performance of the contract both against Ramnaravan and Sheo Sahai.

18. The only ground which was taken in the court below by Ramnarayan to defeat the appellants' suit for specific performance was that there was a further condition for the appellants to reconvey the property within six years to him. The lower court found that no such condition was attached at the time the agreement was made between him andthe appellants and learned counsel ap-pearing for Ramnarayan has not thought it worthwhile to refer to the evidence produced in this behalf so as to challenge the finding of the lower court. There there was no plea left for Ramnaravan Sharma to refuse specific performance of the contract.

19. Learned counsel for the appellants challenged the finding of the court below with regard to the payment of Rs. 1000/- on 13th June, 1961, to Ramnarayan. He says that it is fully established by the evidence of the plaintiff Pannalal and his witnesses that the amount of Rs. 1000/- was paid by him to Ramnarayan. I have gone through the evidence produced by the parties in this connection and in my view the lower court has come to a right conclusion. The appellants did not take any receipt from Ramnarayan for the aforesaid payment. It is said that after Exs. 3 and 4 had been written on non-judicial stamps, the parties were returning from the court and on the way Ramnaravan requested Pannalal to pay him Rs. 1000/-. It is said that Pannalal had a one thousand rupee note with him at that time. But instead of giving that note to Ramnaravan he goes to the bank to take notes of smaller denomination and there he obtained such notes from Gaffar Khan who had also gone to the bank to obtain currency notes of higher denomination that is ol Rs. 100/- each in place of ten rupee each. Another witness Khajansingh is also said to be present there because he had gone to the State Bank Manager to inquire whether he needed any paper bags for their canteen. It is not understandable why it became at all necessary for Pannalal plaintiff to obtain notes of smaller denomination for being given to Ramnarayan when the payment could be made by handing over the note of one thousand rupees. Ramnaravan is a senior clerk and it was not difficult for him to obtain notes of smaller denominations in exchange for the note of Rs. 1000/-.' No entry has been produced by Pannalal from his account-books regarding the aforesaid payment, although it is admitted that he maintained account-booka. I, therefore, agree with the lower court that payment of Rs. 1000/- to Ramnarayan by the appellants has not been proved.

20. The result of the above findings is that this appeal is accepted, judgment and decree of the lower court is set aside and the appellants' suit for specific performance of the contract for sale of the house mentioned in para 1 of the plaintiff is decreed against both the respondents on the condition that they deposit Rs. 11532/- in the lower court for payment of Rs. 6000/- to Sheo Sahai res-pendent and the balance of Rs. 5532/- to Ramnarayan on or before 1st December, 1970. The defendants shall then execute a sale-deed for the said property in favour of the plaintiffs and get it registered and deliver all title-deeds of the property to the plaintiffs and shall also deliver its possession to them. Half the expenses for stamps and registration charges for the sale-deed shall be paid by the plaintiffs and half shall be borne by Ramnarayan defendant. In case the purchase money is not deposited on or before the aforesaid date, the suit shall be dismissed. Further if the respondents do not execute the sale-deed within a month of the deposit of the purchase money as aforesaid, the court through any of its officers shall have the sale-deed executed and registered on behalf of the respondents in favour of the plaintiffs on such deed being submitted to the Court on duly stamped paper on behalf of the plaintiffs and in such case half the cost of the stamp paper and registration charges shall be deducted from the amount of Rs. 5532/- payable to Ramnarayan and shall be refunded to the appellants.

21. In the circumstances of the case, both parties shall bear their own costs of this litigation.


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