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Ramakrishna Naidu Vs. Palaniappa Chettiar - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai High Court
Decided On
Case NumberLetters Patent Appeal No. 13 of 1959
Judge
Reported inAIR1963Mad17
ActsSpecific Relief Act, 1877 - Sections 22
AppellantRamakrishna Naidu
RespondentPalaniappa Chettiar
Appellant AdvocateK.S. Desikan and ;K. Raman, Advs.
Respondent AdvocateK.S. Ramamurthi and ;K. Sarvabhauman, Advs.
DispositionAppeal dismissed
Cases ReferredGobinda Chandra v. Nanda Kumar
Excerpt:
property - specific performance - section 22 of specific relief act, 1877 - whether plaintiff entitled to obtain specific performance of agreement to sell - plaintiff suppressed material information concerning property which defendant was not aware of - such suppression resulted in unequal bargain between parties - such bargain oppressive and unconscionable and cannot be enforced by way of specific performance. - - ' this principle has been well recognised by english authorities through a long chain of decisions. gray two jars evidently objects de art, whose value was well known to the plaintiff, who had been for 25 years a dealer in curiosities, and who was well acquainted with the prices which articles of this kind would fetch. nanda kumar, air 1915 cal 298, applied the above..........necessary for a consideration of this letters patent appeal are briefly the following: 2. the suit property is 5 acres and 35 cents of dry land in a village near chidamoaram in south arcot district. the defendant, palaniappa chettiar is a nattukottai chettiar who was at one time doing money-lending business in chidambaram. his native place is valayapathi near pudukottai. the suit property belonged to one narayanaswami nadar, who had borrowed money from the defendant. the defendant obtained a decree, attached the suit property, brought it to sale in court auction, and purchased it on 14-4-1941. the sale was confirmed on 28-6-1941, and the defendant obtained possession through court on 17-3-1941. some years later, the defendant wound up his business at chidambaram, and went away to.....
Judgment:

Ramakrishnan, J.

1. This Letters Patent Appeal is directed against the judgment of Ganapatia Pillai, J. in S. A. No. 15 of 1957. That appeal was tiled against the judgment and decree of the learned Subordinate Judge, Cuddalore, in A. S. No. 127 of 1955 preferred against the decree of the District Munsif, Tirukoilur in O. S. No. 282 of 1952. The prior facts necessary for a consideration of this Letters Patent Appeal are briefly the following:

2. The suit property is 5 acres and 35 cents of dry land in a village near Chidamoaram in South Arcot district. The defendant, Palaniappa Chettiar is a Nattukottai Chettiar who was at one time doing money-lending business in Chidambaram. His native place is Valayapathi near Pudukottai. The suit property belonged to one Narayanaswami Nadar, who had borrowed money from the defendant. The defendant obtained a decree, attached the suit property, brought it to sale in court auction, and purchased it on 14-4-1941. The sale was confirmed on 28-6-1941, and the defendant obtained possession through court on 17-3-1941. Some years later, the defendant wound up his business at Chidambaram, and went away to live in his native place Valayapathi. The plaintiff met the defendant at Valayapathi, and entered into an agreement of purchase with him Of the Suit property for a consideration of Rs. 1500 out of which Rs. 300 was paid immediately in cash as advance, and the balance was agreed to be paid within one month.

It is common ground that when the plaintiff tendered the balance of consideration, the defendant refused to accept it, and refused to execute the sale deed. When the plaintiff sent a notice on 11-6-1951, the defendant sent a reply notice refusing to sell the property. He alleged various grounds, but out of them, the most significant was the claim that at the time of the agreement, the defendant was not aware of the fact that a scheme of irrigation by the digging of a channel had been in progress for the irrigation of the concerned property which had become thereby very valuable, and that the plaintiff was aware of the scheme, but had taken advantage of this knowledge in obtaining the agreement, and therefore the bargain was neither fair nor equitable nor just nor conscionable. It may also be pointed out that shortly after this, Narayanaswami Nadar the original owner of the property filed a petition in the executing court under Order XXI, Rule 90, C. P. C. for setting aside the court sale alleging that the money decree had been discharged in some other manner, the defendant appeared in person, and agreed to the setting aside af the decree. It was found that these proceedings were collusive and therefore not binding on the plaintiff. Nothing turns now upon this aspect of the case, be cause the disposal of the case has proceeded on the ground that the defendant owned the property, and the question that arose for consideration was whether in the circumstances of the case, the plaintiff was entitled to obtain specific performance of the agreement to sell.

3. The learned District Munsif of Tirukoilur who tried the suit found, that there was nothing in the circumstances of the case which gave the plaintiff an unfair advantage in regard to the bargain, and decreed the suit for specific performance. The learned Subordinate Judge of Cuddalore, in appeal, came to the conclusion that the plaintiff had suppressed the material fact about the irrigation facilities, above mentioned, of which the defendant was not aware and that though this might not amount to fraud, still it would not justify the court in granting specific performance, in the alternative, the lower appellate court held that the plaintiff was entitled to damages which were fixed at Rs. 1500, besides the return of the advance of Rs. 300. Therefore, in lieu of the trial court's decree, the first appellate court granted to the plaintiff a decree for Rs. 1800. It was against this decision, that the plaintiff filed the second appeal before Ganapatia Pillai, J. mere was also a memorandum of cross-objections filed by the defendant. The plaintiff reiterated his claim that specific performance should be decreed. Ganapatia Pillai, J. upheld the first appellate court's view, and held that Section 22(1) of the Specific Relief Act would apply to this case, where the plaintiff had suppressed material information concerning the property, of which the defendant was not aware, which had the result of making the bargain between the parties unequal. The second appeal was dismissed and the memorandum of cross-objections which related to the award of damages was also dismissed.

4. In this Utters Patent Appeal, Sri K.S. Desman Who appeared for the appellant-plaintiff took as through the relevant documents and the authorities, and pressed on us that, in the circumstances of the case, specific performance of the agreement should have been decreed. The principal reason which made the transaction unfair and unequal, was that an irrigation channel was being constructed which would render the land, which hitherto was lying fallow, considerably more valuable. The defendant had gone away to his village near Pudukottai and had no Knowledge of this development in regard to the property which was situated near Chidambaram. The plaintiff, however, was aware of this fact. After he became aware of this fact, he went to the defendant's village at Valayapatti and it was there that the agreement of sale was entered into. It is found by the courts below that the properly at the time of the suit had become very valuable and certainly its value would have exceeded Rs. 3000, whereas the plaintiff wanted to have his bargain settled at Rs. 1500, that is half of its real value, relying on the agreement. No doubt, if the bargain was fair proper and not oppressive, it is immaterial that by force of subsequent circumstances, for example, by a rise in the price of the landed property, the contract had become more beneficial to the purchaser, when it would not be a case where specific performance could be refused; but in this case, reliance is being placed not on the mere appreciation of the price, but upon the provision for irrigation facilities to the land, of which the plaintiff knew, but the defendant did not. We entirely agree with the view of Ganapatia Pillai, J. that this is a case where the plaintiff obtained an unfair advantage, even though there might not be fraud or misrepresentation on the plaintiffs part, and that Section 22(1) of the Specific ReliefAct 1877 will apply to the facts of the case. Section 22 reads as follows:

'22. The jurisdiction to decree specific performance is discretionary, and the court is not bound to grant such relief merely because it is lawful to do so; but 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.

The following are cases in which the court may properly exercise a discretion not to decree specific performance : (i) where the circumstances under which the contract is made are such as to give the plaintiff an unfair advantage over the defendant, though there may be no fraud or misrepresentation on the plaintiff's part.'

This principle has been well recognised by English authorities through a long chain of decisions. In Falcke v. Gray, (1859) 4 Drew 651 : 29 LJ Ch 28, plaintiff had agreed to purchase from one Mrs. Gray two jars evidently objects de art, whose value was well known to the plaintiff, who had been for 25 years a dealer in curiosities, and who was well acquainted with the prices which articles of this kind would fetch. Mr. Gray consulted one Brend, a house agent who did not know the value of the article but who thought they would be worth 20 a piece. The bargain to sell was struck at . 40. When the plaintiff, on defendant's refusal to complete the sale, sued for specific performance of the agreement to sell, the claim was negatived by the court, following a long line of prior authorities in English courts which have laid down:

'Where the contract, although not actually fraudulent, was one in which the parties were not on an equal footing, the plaintiff knowing, and the seller being ignorant, of the value of the thing sold, and the price appeared to be inadequate, the court would refuse relief.'

The principle has been firmly established in the law of specific performance. Fry in his book 'A treatise on the Specific Performance of Contracts', 6th Edn. at page 185 says:

'There are many instances in which, though there is nothing that actually amounts to fraud, there is nevertheless a want of that equality and fairness in the contract which, as we have seen, are essential in order that the court may exercise its extraordinary jurisdiction in specific performance.'

Halsbury in his 'Laws of England' (pages 366 and 367 of Hailsham Edn., Vol. 31) under the heading 'Oppressiveness of Contract' has dealt with this subject:

'The discretion of the court to grant specific performance is not exercised if the contract is not 'equal and fair'. In such a case, even though no fraud such as to justify rescission is alleged, the court does not interfere to enforce the contract. Unfairness may consist in such suppression of fact as does not, in the opinion of the court, amount to fraud or misrepresentation, such as the conduct of a lessee in obtaining the renewal of a lease while suppressing the fact that the person on whose life the old lease depended was in extremis.'

5. The Calcutta High Court in Gobinda Chandra v. Nanda Kumar, AIR 1915 Cal 298, applied the above principle as well as Section 22 of the Specific Relief Act and held:

'There may be cases which cannot be brought within the four corners of any of the provisions of the Central Act as to the invalidity or voidability of agreements, butare nevertheless cases in which a court of equity may properly refuse to exercise its jurisdiction under the Specific Relief Act. Section 22 of the latter enactment as well as both principle and authority point to the same conclusion.'

6. We are, therefore, in full agreement with Ganapatia Pillai, J. that the bargain in this case was oppressive and unconscionable, and that it is not an appropriate one for being enforced by way of specific performance. Though before Ganapatia Pillai, J. the defendant filed a memorandum of cross-objections objecting to the award of Rs. 1500 as damages to the plaintiff, at the time of the hearing, it was not pressed, and this question is also not before us in the Letters Patent Appeal. The Letters Patent Appeal is dismissed with costs.


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