1. This appeal arises out of a suit for specific performance, instituted by a vendor and his son. The son who is the second plaintiff may be ignored for the purpose of this appeal and the vendor referred to as the plaintiff. The contract, evidenced by Ex. I, was entered into on 26th January, 1930. The plaintiff thereby agreed to sell 7 acres 74 cents of land to the defendant for a sum of about Rs. 9,000. He received Rs. 100 by way of advance and it was agreed that the balance should be paid within one month and the transaction completed. As the sale-price was mainly intended to be utilised by the vendor in discharge of his debts, it was agreed that such balance as might remain after the debts had been discharged should be paid before the Sub-Registrar at the time of the registration of the sale-deed. As a lease of the land was then outstanding, Ex. I finally provided that possession should be delivered to the vendee on the expiry of the term of that lease. For almost a year after the date of Ex. I, the sale was not completed, and in January, 1931, notices (Exs. A and B) passed between the parties wherein each accused the other of default in carrying out the contract. The defendant also alleged in his reply (Ex. B) that the plaintiff had consented to give up the contract but was now trying to revive his claim under it.
2. This suit was instituted on 26th August, 1932, after a preliminary attempt by the plaintiff to sue in forma pauperis had failed. As usual, the plaint alleged that the plaintiff was ready and willing to perform his part of the contract. The defendant raised a number of defences; of which it is sufficient at this stage to refer to one founded upon Ex. II. This is a document executed by the plaintiff on 4th August, 1932, in favour of his son-in-law, for the purpose of raising a sum of Rs. 1,000 stated to be required to enable the plaintiff to file a suit for specific performance in respect of the suit contract. The document is described as a munigutta lease under which the transferee was to remain in possession of the suit property for a period of twelve years from fasli 1342 to the end of fasli 135.3 and thereby get his advance of Rs. 1,000 liquidated. The defendant contended that by the execution of this document in respect of the suit property, the plaintiff had disabled himself from carrying out his part of the contract and that the suit should accordingly be dismissed. By way of rejoinder, the plaintiff alleged that Ex. II had been executed on the understanding that the transferee under Ex. II should give up possession whenever the plaintiff so required with a view to enable him to deliver possession to the defendant. Before the suit came on for final disposal, the plaintiff had also obtained from the transferee under Ex. II a deed of release, marked Ex. C in the case, on the 14th August, 1933. This recited the prior agreement between the parties and stated that the executant had thereby given up his rights under Ex. II and shall thereafter have nothing to do with the land. It, however, contained a clause at the end that as certain cultivators had then raised crops on the land, they should be allowed to harvest those crops at the harvest season. With reference to this contention and the allegations bearing thereon on both sides, the lower Court framed the third issue, namely, whether the plaintiff disabled himself by the date of suit from performing his part of the contract.
3. During the pendency of the suit, the plaintiff amended the plaint by including an alternative claim for damages. In answer to this claim, it was contended on behalf of the defendant that if the plaintiff had disentitled himself to claim specific performance by his own conduct, the claim for damages could not be sustained under Section 19 of the Specific Relief Act, in view of the decision of the Judicial. Committee in Ardeshir H. Mama v. Flora Sassoon (1928) 55 M.L.J. 523 : L.R. 55 IndAp 360 : I.L.R. 52 Bom. 597 . It was also contended that the claim for damages, if regarded as an independent claim, was barred by limitation, as more than three years had elapsed from the date of the breach of contract, before the amendment was made. These questions relating to the claim for damages form the subject-matter of issues 9 and 10. The eighth issue is substantially the same as the third issue for our present purpose.
4. The lower Court dealt with issues 3, 8, 9 and 10 as preliminary issues, after marking Exs. A, B and C and Exs. I and II. It was of opinion that the decision in Ardeshir H. Mama v. Flora Sassoon (1928) 55 M.L.J. 523 : L.R. 55 IndAp 360 : I.L.R. 52 Bom. 597 disentitled the plaintiff to claim specific performance after he had executed Ex. II. It also followed on that view that the claim for damages was unsustainable. The learned Subordinate Judge further held that the claim for damages was barred by limitation. He accordingly dismissed the suit. Hence this appeal by the plaintiff.
5. The claim for damages may be briefly dealt with. In Ardeshir H. Mama v. Flora Sassoon (1928) 55 M.L.J. 523 : L.R. 55 IndAp 360 : I.L.R. 52 Bom. 597 , their Lordships of the Judicial Committee have emphasised the distinction between a claim for damages on the footing that the contract had been broken by the defendant and that the breach had been accepted by the plaintiff and a claim for damages as merely an alternative to a claim for specific performance. They have pointed out that in the latter case plaintiff affirms the existence of the contract even at the date of the suit and it will not be open to him in such a case to fall back upon what they refer to as the common law claim for damages on the footing of a breach of contract already committed by the defendant. In the present case, the plaintiff clearly elected to treat the contract as in force notwithstanding the defendant's default and the lower Court was accordingly right in holding that the plaintiff's claim for damages was not sustainable as an independent claim. The same decision is also authority for holding that the award of damages under Section 19 of the Specific Relief Act cannot be claimed by a plaintiff who by his own conduct has disentitled himself to claim specific performance. In this view, it is unnecessary to deal with the question of limitation, because if the claim for damages has to be considered only under Section 19 of the Specific Relief Act, no bar of limitation will arise in the case, as a suit for specific performance had been instituted in time. The only question therefore for decision in the appeal is that raised by the third issue in the case, namely, whether the plaintiff has disabled himself from performing his part of the contract.
6. We are unable to concur in the decision of the lower Court on the third issue. It is true that in a suit for specific performance, the plaintiff must always be ready and willing to carry out his part of the contract. We do not think that the execution of Ex. II can of itself be held to show that the plaintiff was not ready and willing. A transaction whereby a vendor disposes of the subject-matter of the contract in violation of the contract has a two-fold significance: (1) as showing an intention on his part to treat the contract as at an end or to abandon the contract and (2) as bearing on the question of his capacity to perform the contract. Where subsequently to the contract the vendor sells away the subject-matter of the contract to a third party, the Court will be justified in drawing both the inferences above indicated, namely, that he had thereby shown his intention to abandon the contract so far as specific performance thereof was concerned and also disabled himself from performing the contract in the sense of conveying the property to the original vendee. As explained in Hipgrave v. Case (1885) 25 Ch. 356 and in Ardeshir H. Mama v. Flora Sassoon (1928) 55 M.L.J. 523 : L.R. 55 IndAp 360 : I.L.R. 52 Bom. 597 , such a disposition of the property by the vendor might not disentitle him to claim damages as on a breach of contract, if prior to such disposition the vendee had broken his contract; because it is recognised that on repudiation by the vendee, the vendor is entitled to treat the contract as at an end without foregoing his right to claim damages. Where, however, the subsequent transaction entered into by him is not in the nature of a sale of the subject-matter of the contract and there is nothing to show that he intended to abandon the contract or to treat it as at an end, the question whether by such transaction he has incapacitated or disabled himself from performing his part of the contract will be a question of fact, to be determined in the light of several considerations. To take an extreme case, a vendor may, pending a suit for specific performance, be obliged to lease the property, say, for a year. It seems to us it will be too much to conclude from this that the vendor has either shown an intention to abandon the contract or disabled himself from performing the contract. We can see no justification for holding that a vendor in that position must keep the property waste or cultivate it himself and lease it even for a short term only at his peril. If on the other hand the term of the lease or the nature of the transaction was such that it would be impossible for the vendor to be able to carry out his obligations even when the time arrived for his delivering possession to the vendee when he succeeded in his suit for specific performance, it might well be treated as a case where the vendor had disabled himself from carrying out his part of the contract. It does not seem to us right in all cases to take the state of things as on the date of the institution of the suit as conclusive proof that the vendor has incapacitated himself.
7. In the present case, Ex. II is no doubt for a term of 12 years. If, for instance, the allegation were true, that even when Ex. II was executed it was the understanding between the parties to Ex. II that the transferee should put the vendor back in possession whenever he wanted to enable him to deliver possession to the vendee, it would be difficult to say that the vendor by the mere execution of Ex. II had disabled himself from carrying out his contract with the vendee. Again, if as appears from Ex. C, the vendor has obtained a release from the transferee under Ex. II in sufficient time to enable him to put the vendee in possession the moment his obligation to deliver possession arises, it does not seem to us right to hold that the vendor has disabled himself either. No evidence having been recorded, we cannot say whether Ex. C has really put the vendor in a position to carry out his obligation under the contract of sale. It must be remembered in this connection, that under the Transfer of Property Act as also under the general law as stated in the passages quoted by the learned Subordinate Judge from Halsbury's Laws of England, the vendor's obligation to deliver possession arises only when the purchase money is paid by the vendee and the document of sale is executed by the vendor. It is with reference to these considerations that the question of the vendor's ability to carry out the several obligations imposed upon him by law as vendor must be determined. Where, for instance, he has made it impossible for himself even to convey the property with good title, the position might be different. But where the alleged incapacity related only to one or another of the several obligations of the vendor under the contract, it will be a question to be determined in each case whether or not the vendor is in a position to perform that particular obligation at the time when under the law he is bound to perform it. Dealing with the case in the light of these considerations, we cannot uphold the finding recorded by the lower Court on the third issue, merely on the information furnished by the documents Exs. II and C. When the case goes back to be dealt with on the merits, it will be for the Court to determine in the light of the materials that may be placed before it, whether in respect of the several obligations which the vendor has to fulfil, he is or is not in a position to carry out the same in due time. We will only add that the mere provision in Ex. C that the cultivators who had then raised crops on the land should be permitted to harvest those crops cannot be treated as disabling the vendor from delivering possession to the vendee in due course, because till the execution of the sale deed, the vendee will not in law be entitled to the rents and profits accruing on the land and whoever has raised the crops will be entitled to harvest them independently of the question of transfer of possession by the vendor to the vendee.
8. It seems to us necessary in this connection to say a word about a passage quoted by the learned Subordinate Judge from Asburner's Principles of Equity (at page 398 of the 2nd edition). It is there observed that
If A agrees to convey land to B at a future date and before that date conveys the land to a third person, A commits an anticipatory breach of his agreement; B can repudiate it. It is immaterial that A might, by repurchasing the land before the date fixed, recapacitate himself to perform his contract with B.
9. The learned Judge treats this dictum as conclusive against the plaintiff in this case. This does not seem to us to be a correct application of the passage quoted. In the context in which it occurs, the passage relates to the right of the other party to the contract to treat an anticipatory breach as putting an end to the contract; and all that the passage lays down is that in the event of an anticipatory breach by one party, the other party cannot be prevented from treating the contract as at an end merely on the ground of the possibility that the party who has broken the contract by selling away the subject-matter of the contract may subsequently re-acquire it. As we have already pointed out, there is a substantial difference between the effect of a sale and the effect of other kinds of disposition, for the purposes of the decision of the question now before us.
10. That the plaintiff had no intention of breaking or abandoning the suit contract when he entered into Ex. II is made clear by the fact that Ex. II specifically recites his intention to sue for specific performance of the contract and purports to raise money for the expenses of the litigation. We do not suggest that if as a matter of law the execution of Ex. II would of itself have sufficed to deprive the plaintiff of his right to claim specific performance his intention can help him. But in so far as the authorities lay stress upon the readiness and willingness of the vendor to carry out his contract and upon the absence of any conduct indicating an intention to abandon or repudiate the contract, this circumstance is of importance. We may also add that the fact that the plaintiff was probably led into executing Ex. II by the observations made by the Court when dismissing his petition to sue in forma pauperis is also not without significance in this connection. The order of the Court seemed to imply that it was open to the plaintiff to raise money on the security of the suit property itself. We are doubtful if that was a correct view; but whether correct or not, there can be little doubt that it must have led the plaintiff to enter into this transaction, to raise money for the expenses of the litigation.
11. It is thus clear that there has been no repudiation or abandonment of the contract by the plaintiff nor any breach nor any circumstance which must necessarily be held to have incapacitated him from performing his obligations under the contract. The decree of the lower Court is accordingly set aside and the case remanded for trial of all the issues (except 9 and 10) on the merits. The third issue must be dealt with as a question of fact, in light of the observations already made. We have dealt with the case only on the materials placed before the lower Court at the hearing of the suit. The parties will be at liberty to adduce evidence of all other relevant facts, when the case conies to be dealt with by the lower Court after remand.
12. The appellant will be entitled to the costs of this appeal from the first respondent. As the appeal has been filed in forma pauperis, there will be no direction either for payment of the court-fee payable on the memorandum of appeal or for its refund under Section 13 of the Court-Fees Act.