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N.M.S.S. Subramanian Chettiar Vs. S.M.A.M. Arunachalam Chettiar and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported inAIR1943Mad761; (1943)2MLJ424
AppellantN.M.S.S. Subramanian Chettiar
RespondentS.M.A.M. Arunachalam Chettiar and ors.
Cases ReferredVeerasalingam v. Satkiraz
Excerpt:
.....it was said that it is well settled law in this presidency that an unregistered document of a transfer is not of itself sufficient to support a suit for specific performance of an agreement to transfer and stress was laid on the fact that there it was not established that a separate agreement to mortgage was entered into prior to the execution of the mortgage deed in suit. the two bighas are not necessary for the use or enjoyment of the 98 bighas, nor so important for such use or enjoyment that the loss of them may not be made good in money. accordingly, it is well established that the remedy is mutual, and that the vendor may bring his action in all cases where the purchaser could sue for specific performance of the contract, and this independently of any question on the statute..........that a separate agreement to mortgage was entered into prior to the execution of the mortgage deed in suit. the decisions of this court which preceded the introduction of the proviso to section 49 no longer have application, and we do not agree that an unregistered instrument affecting immovable property is not sufficient to support a suit for specific performance. in such a suit, the production of the document and its proof will be sufficient to support the plaintiff's case if it embodies the whole agreement between the parties and there are no other factors to be taken into consideration. the proviso in express terms says that it may be received as evidence of a contract in a suit for specific performance. the subordinate judge refused to treat this as a suit for specific.....
Judgment:

Alfred Henry Lionel Leach, C.J.

1. This appeal has been placed for hearing before a Ful Bench, as it involves the consideration of certain observations contained in the judgment of this Court in Venkatadri Somappa v. Official Receiver of Bellary : AIR1938Mad801 to which exception has been taken. The appellant filed a suit in the Court of the Subordinate Judge of Devakotta to recover the sum of Rs. 14,186-15-9 which he claimed to be due to him under a deed dated 15th August, 1937. This deed admittedly purported to release the plaintiff's interests in immovable properties situate in Burma, where there is a Registration Act similar to the Indian Registration Act. The deed was not registered and consequently the defendants objected to its being admitted in evidence Their objection was upheld by the Subordinate Judge, who consequently dismissed the suit. The appeal is from this decision. The appellant says that his suit was a suit for specific performance of an agreement for the payment of the consideratior for releasing his interest in the immovable properties of the firm and by virtue of the proviso to Section 49 of the Registration Act he was entitled to produce the document in evidence in support of his claim.

2. The plaintiff, the first, second, fourth and fifth defendants, and the fathei of the sixth and seventh defendants were partners in a money lending business carried on in Burma under the vilasam of S.M.A. RM. This partnership was dissolved in the year 1937. After the dissolution, the same business was carried on by the first, second and fourth defendants and the first and second defendants were left in possession of all the immovable properties which formed part of the assets of the original partnership. The deed of the 15th August, 1937, provided for the terms of dissolution so far as the plaintiff was concerned. The deed recites that he had released his interest in the assets which were described and which included land and houses belonging to the partnership. It also recites that he had by a hundi paid a sum of Rs. 18,950 as his share of the losses which the business had incurred. After making this payment, he was entitled to the sum of Rs. 12,534-13-3, which the first and second defendants were to pay to him. The deed further provides that the plaintiff shall execute ,at the expense of the first and second defendants a formal deed releasing to them his interest in the assets and have that registered.

3. On the 12th August, 1939, the first and the second defendants tendered to the plaintiff for execution and registeration a deed of release; but, they had not paid to him the sum of Rs. 12,534-13-3, which was due to him under the deed of the 15th August, 1937, nor was any mention of this sum made in the document tendered to him. The Subordinate Judge held that in these circumstances the plaintiff was justified in refusing to execute the document, and here we agree with the Subordinate Judge. At all material times between the 15th August, 1937, and the early part of 1942 when the Japanese invaded Burma, the first and second defendants were in possession of the assets of the old partnership. The plaintiff filed this suit on the 14th August, 1940, and in his plaint expressed his willingness to execute the further deed contemplated by the agreement of the 15th August, 1937, if presented to him. The first and second defendants have not tendered any deed for execution, apart from the one which he rightly refused to sign in 1939.

4. We consider that the Subordinate Judge erred in not treating the suit as One for specific performance and admitting the deed of 15th August, 1937, in evidence. Section 49 of the Registration Act states that no document required by Section 17 or by any provision of the Transfer of Property Act, 1882, to be registered shall affect immovable property comprised therein or be received as evidence of a transaction affecting the property, unless it has been registered but there is a proviso which reads as follows:

Provided that an unregistered document affecting immoveable property and required by this Act or the Transfer of Property Act, 1882, to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877, or as evidence of part performance of a contract for the purpose of Section 53-A of the Transfer of Property Act, 1882, or as evidence of any collateral transaction not required to be effected by registered instrument.

5. This proviso was inserted.in the section by the Transfer of Property (Amendment) Supplementary Act, 1929, as the result of the decision of the Privy Council in James Skinner v. R.H. Skinner (1929) 57 M.L.J. 765 : 1929 L.R. 56 I,A. 363 : I.L.R. 51 All. 771 (P.C.). The proviso makes it perfectly clear that an unregistered document affecting immovable property may be put in evidence in a suit for specific performance. If the document is put in evidence and embodies the contract between the parties, it is sufficient to support the claim.

6. In the judgment in Venkatadri Somappa v. Official Receiver of Bellary : AIR1938Mad801 it was said that it is well settled law in this presidency that an unregistered document of a transfer is not of itself sufficient to support a suit for specific performance of an agreement to transfer and stress was laid on the fact that there it was not established that a separate agreement to mortgage was entered into prior to the execution of the mortgage deed in suit. The decisions of this Court which preceded the introduction of the proviso to Section 49 no longer have application, and we do not agree that an unregistered instrument affecting immovable property is not sufficient to support a suit for specific performance. In such a suit, the production of the document and its proof will be sufficient to support the plaintiff's case if it embodies the whole agreement between the parties and there are no other factors to be taken into consideration. The proviso in express terms says that it may be received as evidence of a contract in a suit for specific performance. The Subordinate Judge refused to treat this as a suit for specific performance, because he was of the opinion that the plaintiff had not stamped his plaint with stamps of the proper value. He considered that the suit should have been valued at Rs. 31,000, which stood to the credit of the plaintiff, in the books of the partnership. The Subordinate Judge has misunderstood the position. Out of this Rs. 31,000--the exact figure mentioned in the deed is Rs. 31,484-13-3--Rs. 18,950 had been allocated in discharge of the plaintiff's share of the losses incurred in the working of the partnership. All that the plaintiff was entitled to under the deed was the payment of Rs. 12,534-13-3 with subsequent interest and the plaintiff stamped his plaint on this amount.

7. If a suit for the recovery from the purchaser of the consideration for the transfer of the property bought is a suit for specific performance within the meaning of Chapter II of the Specific Relief Act, then this is certainly such a suit. An examination of Sections 12, 13 and 14 of the Specific Relief Act leaves no room for doubt that a suit by the vendor for the recovery of the purchase consideration is a suit for specific performance. Section 12 of the Specific Relief Act, which is the first of the sections in the Second Chapter of the Act says,

Except as otherwise provided in this Chapter, the specific performance of any contract may in the discretion of the Court be enforced--?

(a) when the act agreed to be done is in the performance, wholly or partly, of a trust;

(b) when there exists no standard for ascertaining the actual damage caused by non-performance of the act agreed to be done;

(c) when the act agreed to be done is such that pecuniary compensation for its non-performance would not afford adequate relief; or

(d) when it is probable that pecuniary compensation cannot be got for the non-performance of the act agreed to be done.

Explanation.--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.

8. Section 13 says that notwithstanding anything contained in Section 56 of the Indian; Contract Act, a contract is not wholly impossible of performance because a portion of its subject-matter, existing at its date, had ceased to exist at the time of the performance. Then follow two illustrations which have a great, bearing here. The first illustration is this:

(a) A contracts to sell a house to B for a lakh of rupees. The day after the contract is made the house is destroyed by a cyclone. B may be compelled to perform his part of the contract by paying the purchase money.

The second illustration (b) reads as follows:

In consideration of a sum of money payable by B, A contracts to grant an annuity to B for B's life. The day after the contract has been made, B is thrown from his horse and killed. B's representative may be compelled to pay the purchase money.

9. The two suits contemplated by these illustrations are suits for the recovery of money. Then, Section 14 says that where a party to a contract is unable to perform the whole of his part of it, but the part which must be left unperformed bears only a small proportion to the whole in value, and admits of compensation in money, the Court may, at the suit of either party, direct the specific performance of so much of the contract as can be performed, and award compensation in money for the deficiency. There are two illustrations to this section also, but it will be sufficient to quote the first:

(a) A contracts to sell B a piece of land consisting of 100 bighas. It turns out that 98 bighas of the land belong to A, and the two remaining bighas to a stranger, who refuses to part with them. The two bighas are not necessary for the use or enjoyment of the 98 bighas, nor so important for such use or enjoyment that the loss of them may not be made good in money. A may be directed at the suit of B to convey to B the 98 bighas and to make compensation to him for not conveying the two remaining bighas; or B may be directed at the suit of A, to pay to A, on receiving the conveyance and possession of the land, the stipulated purchase money less a sum awarded as compensation for the deficiency.

10. The principles on which these sections and their illustrations are based are to be found in paragraph 72 of Fry on Specific Performance (Sixth edition, page 33):

It may appear at first sight that, inasmuch as money in exchange for the estate is what the vendor of land is entitled to, he has a complete remedy in an action for damages, and therefore cannot sustain an action for the specific performance of the contract. But on further consideration it will be apparent that damages will not place the vendor in the same situation as if the contract had been performed; for then he would have got rid of the land and of all the burdens and liabilities attached to it, and would have the purchase money in his pocket; whereas, after an action for damages, he? still has the land and, in addition, damages, representing, in the opinion of a jury, the difference between the stipulated price and the price it would probably fetch, if resold, together with incidental expenses and any special damage which he may have suffiered. The doctrine of equity with respect to the conversion of the land into money, and of the money into land upon the execution of the contract and the lien which the vendor has on the estate for the purchase money, and his right to enforce that by the aid of the Court, are additional reasons for extending the remedy to both parties. Accordingly, it is well established that the remedy is mutual, and that the vendor may bring his action in all cases where the purchaser could sue for specific performance of the contract, and this independently of any question on the Statute of Frauds.

11. There is a decision of this Court which supports the view which we have expressed. It is Veerasalingam v. Satkiraz (1908) 19 M.L.J. 220 In that case, the plaintiff sued to recover the sum of Rs. 60, the price which he alleged the defendant had agreed to pay for the transfer to him of four pattas. The suit was filed as a small cause suit and the question was whether the District Munsiff could try it as such. It was held that he could not, because it was a suit for specific performance.

12. The plaintiff has sued for the specific performance of the contract with the first and second defendants, and he is entitled to a decree for Rs. 14,186-15-9 with interest thereon at six per cent. per annum from the date of the decree, subject to his executing the further deed contemplated by the agreement of the 15th August, 1937. As the Japanese are still in the occupation of Burma, it is not possible to register such a document. The plaintiff has, however, said in this Court that he is willing to give security for this sum to the satisfaction of the Subordinate Judge and that he will execute and register the further deed contemplated by the agreement within six months after registration has become possible again in Burma. This satisfies the first and second defendants. Accordingly, there will be a decree for the amount mentioned with interest at six per cent. from the date of the decree and the first and second defendants will deposit Rs. 14,186-15-9 in Court within three months from this date. The plaintiff will be entitled to withdraw the money from Court on furnishing security to the satisfaction of the Subordinate Judge.

13. The plaintiff has succeeded and is entitled to his costs here and below, to be paid by the first and second defendants.


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