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P.R. Kanakasabapathi Chettiar and ors. Vs. P.V. Govindarajulu Naidu and anr. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai High Court
Decided On
Case NumberAppeal No. 381 of 1960
Judge
Reported inAIR1964Mad219
ActsContract Act, 1872 - Sections 2 and 29; Specific Relief Act
AppellantP.R. Kanakasabapathi Chettiar and ors.
RespondentP.V. Govindarajulu Naidu and anr.
Appellant AdvocateN.R. Raghavachari and ;K. Parasaran, Advs.
Respondent AdvocateS. Mohankumaramangalam and ;S. Palaniswami, Advs.
DispositionAppeal dismissed
Cases ReferredSakalaguna Naidu v. Chinna Munusami Nayakar
Excerpt:
.....indian contract act, 1872 and specific relief act - decree in suit for reconveyance challenged - contract to reconvey property made in favour of sisters of one of vendors - such party entitled to enforce contract - contact not uncertain on account of the fact that both parties entitled to avail option. - - sri hari naidu in the properties, or whether others participated in those rights as well. 5. the argument that the contract is void for uncertainty is difficult to appreciate, for, ex facie, we contract is crystal clear and not vitiated by any clement of uncertainty whatever, it is perfectly true, that, in terms of the contract, it is impossible to determine beforehand who would be the person or persons among the four named individuals who would first exercise the option under..........ex. b-2 explicitly relates to the rights of mr. sri hari naidu alone and leaves untouched the rights in favour of the plaintiffs under the agreement. the argument has necessarily to be repelled.5. the argument that the contract is void for uncertainty is difficult to appreciate, for, ex facie, we contract is crystal clear and not vitiated by any clement of uncertainty whatever, it is perfectly true, that, in terms of the contract, it is impossible to determine beforehand who would be the person or persons among the four named individuals who would first exercise the option under the contract. but even if more than one person chose to do so, or all of those persons attempted to, do so simultaneously, there is absolutely no element of uncertainty attached to the obligations and rights.....
Judgment:

Anantanarayanan, J.

1. In this appeal by the two defendants in the Court below, in a suit for enforcement of specific performance of a contract of sale, not merely are the facts not in dispute, for the most part, but the parties also contended themselves at the trial with marking the essential documents and not adducing any oral evidence. The facts are as follows:

A certain gentleman, Mr. Sri Hari Naidu, and his paternal grandmother Bhagirathi sold the suit properties to the defendants on 2-9-1948 under Ex B-l. On 9-9-1948 there was a registered agreement of reconveyance executed by the defendants (appellants) in favour of Mr. Sri Hari Naidu and three others, namely, his sister Jothi Bai, and Govindarajulu Naidu and Sudarsan Naidu (the latter two being the plaintiffs in the instant suit). The terms or the sale, dated 2-9-1948 are quite simple; that was a registered sale deed for Rs. 13000 in respect of the suit properties. The terms of the agreement to reconvey, Ex. A-l are of importance and the essential clause may be set forth as follows-.

'For the deed of sale executed in our favour on the 2nd day of September 1948 for Rs. 13000 in respect or the undermentioned lands, from this day after a period of 11 years and within a period of thirteen years, if any one of you amongst you (the tour persons named in the document) pay the sum of Rs. 13000 mentioned in the deed of sale, we (appellants) will execute a sale deed in his favour after a period of 11 years and within a period of 13 years. This agreement of sale will not be valid after the lapse of 13 years'.What happened subsequently was that Mr. Sri Hari Naidu, by himself, executed a registered release deed in respect of his rights under the agreement of reconveyance in favour of the two defendants (appellants) under Ex. B-2, dated 13-3-1956. It has to be made explicit and clear that this release was operative in respect of the rights of Mr. Sri Hari Naidu alone, and did not affect in any manner the rights of others named in Ex. A-l in whose favour also the agreement of reconveyance had been executed By the appellants. For, in Ex. B-2, Mr. Sri Hari Naidu explicitly states that, in view of the consideration of Rs. 13000 paid to him, he released his rights in the agreement, and that 'hereafter neither myself nor my heirs snail have any right or future claim in respect of the same.'

2. Subsequently, after the expiry of 11 years and before the expiry of 13 years, the plaintiffs, who are two of the named persons in the agreement Ex. A-l instituted the present suit for specific performance of the contract of sale, on payment of Rs. 13000. The suit was resisted by the defendants (appellants), but decreed by the learned Subordinate Judge of Salem.

3. The grounds urged in appeal by Mr. Raghavachari, for the appellants may be summarised as follows: Hastily, learned counsel contends that Mr. sri Hari Naidu was the true proprietor of the properties, which were originally sold under Ex. B-l and that they are the subject of the agreement of reconveyance under Ex. A-1. That Being the case, the other persons named in Ex. A-l such as the two plaintiffs, must be considered to be mere nominees, without any independent rights of enforcing that agreement of sale. In any event, after the execution of the release deed Ex. B-2 by Mr. Sri Hari Naidu, no further rights survived in favour of the two plaintiffs who were never the owners of the properties. It is also faintly suggested that these persons were made parties to the agreement of reconveyance, Ex. A-l, only in a nominal sense, the true agreement being in favour of Mr. Sri Hari Naidu alone. Next, it is contended, that even upon a different view of the facts of the transactions, the contract to reconvey is void for uncertainty; we shall set forth a little later the precise ground of this argument. Finally, and this is the main plea urged in the appeal, it is argued that the contract of reconveyance lacks mutuality altogether and hence though it may not be void in law, is not enforceable as such by means of a suit for specific performance under the law of specific Relief. These arguments we shall immediately scrutinise, in relation to the facts of the record.

4. As regards the first argument, evidence is altogether lacking to sustain any such plea. We are totally unaware of the circumstances under which the two plaintiffs were also made parties in whose favour the agreement of reconveyance Ex. A-l was executed. Since these persons appear to be close relatives it is barely possible and even probable, that these other persons raised some objections to the conveyance of the properties by sri Hari Naidu and Bhagirathi in the first instance, and that, in consequence, the agreement to reconvey (Ex. A-l) was executed in favour of these persons also. However this might be, we are not now really concerned with the question of the sole proprietary rights of Mr. Sri Hari Naidu in the properties, or whether others participated in those rights as well. The agreement explicitly being in favour of the two plaintiffs also, it they chose to exercise their option by depositing Rs. 13000 within the specified period, it is no answer to such, a claim that Mr. Sri Hari Naidu had prevented himself earlier from exercising his rights by executing the release deed, Ex. B-2. As we stressed earlier, Ex. B-2 explicitly relates to the rights of Mr. Sri Hari Naidu alone and leaves untouched the rights in favour of the plaintiffs under the agreement. The argument has necessarily to be repelled.

5. The argument that the contract is void for uncertainty is difficult to appreciate, for, ex facie, we contract is crystal clear and not vitiated by any clement of uncertainty whatever, it is perfectly true, that, in terms of the contract, it is impossible to determine beforehand who would be the person or persons among the four named individuals who would first exercise the option under the contract. But even if more than one person chose to do so, or all of those persons attempted to, do so simultaneously, there is absolutely no element of uncertainty attached to the obligations and rights inter se between the persons in whose favour the contract had been executed by the appellants, namely, the four named persons, and the appellants themselves. It will be for those persons to determine, in any such suit, who should have priority, or whether there should be a reconveyance in favour of all. As far as the appellants are concerned, it is perfectly clear that, in any such suit instituted by any or all or such persons after 11 years and within 13 years, and accompanied by deposit of Rs. 131000, the appellants could have no valid defence or choice except to reconvey the properties. The argument is, therefore, patently unsustainable.

6. We come to the final argument, lack of mutuality. This alone appears to require consideration at any length. Here, learned counsel for the appellants put the matters in the following form. Whatever might be the mutual rights and obligations between the parties springing from the document of sale itself, as far as the agreement to reconvey is concerned, there is an evident lack of mutuality, in the sense that the persons in whose favour that agreement had been executed are not bound, under the document, to exercise the right to repurchase the lands within this specified period. Learned counsel relies upon the following passage in Halsbury's Laws of England, 3rd Edn. volume 36, page 269, paragraph 36/, as stressing the principle that in the absence of such mutuality, refusing the contract, the contract though not void, is not specifically enforceable.

'Want of mutuality is in general a ground for refusing a judgment of specific performance. If a contract cannot be enforced against one party by reason of circumstances existing at the date of the contract, such as personal incapacity or the nature of the contract, that party will not be enabled to enforce the contract against the other party.'

7. Learned counsel further points out that the same doctrine had been upheld by the Privy council in Mir Sarwarjan v. Fakhruddin Mohamed Chowanun, ILR 39 Cal 232. In that case, a contract was entered into by the Manager of a Mohammadan minor for purchase of immoveable property on behalf of the minor, and a suit was later brought to enforce specific performance against the vendor. The Judicial Committee; held that as the minor was not bound by the contract, there. was no mutuality, and it was a necessary consequence that the minor who later reached majority, could not obtain specific performance of the contract, though it might be that the purchase itself was advantageous to him.

8. The argument, in this form, would certainly deserve serious consideration at our hands, if the agreement of reconveyance, Ex. A-l, which is apparently vitiated by a lack of mutuality as tar as rights and obligations inter se are concerned, stood by itself, as an independent transaction. But obviously, that view of the record is not justified. The agreement to reconvey and the earlier sale deed Ex. B-l which was executed barely a week earlier, have to be regarded together as forming essential components of a single agreement or transaction, the agreement to reconvey cannot be interpreted without reference to the sale itself, and it contains in the clearest terms, an essential reference to the sale in its own text, for this reason we are of the view that, though these are expressed in separate documents and not in a single document, they have to be considered together as a single agreement. That being so, it is clear enough that the agreement to reconvey is supported by consideration (S. 2(d) of the Contract Act) since the sale itself forms the content of the consideration, and that is not disputed by the learned counsel for the appellants. Further, in our best judgment, and after giving careful consideration to the matter, we are also convinced that the transaction is supported by the element of mutuality. For, it is clear enough that the vendors need not have agreed to the sale at all but for the fact that there was to be an agreement to reconvey in favour of themselves, or of others, whom they chose to associate with themselves. It may even be that the amount of consideration was determined in relation to these mutual rights and obligations; Since the vendors were not bound to convey the properties at all, but did so only because there was to come into existence an agreement to reconvey to be enforced within a specific period, the element of mutuality is essentially present. It is no answer to this to argue that the element of mutuality is absent, taking Ex. A-l separately by itself, because Ex. A-l contains no clause that the four named persons undertook to purchase the properties within the specified period.

9. The appeal consequently is seen to be devoid of merits and is dismissed with costs.

Jagadisan, J.

10. I entirely and respectfully agree with the judgment of my learned brother and if I add a few words, it is because of the strenuous arguments urged by the learned counsel for the appellants In support of what seems to me to be clearly untenable contentions. One of the points raised is whether the contract under Ex. A-l is void for uncertainty within the meaning of Section 29 of the Indian Contract Act.

11. Section 29 reads: 'Agreements, the meaning or which is not certain, or capable of being made certain, are void.'

12. This section only provides that an ambiguous contract which leaves the parties in a state of doubt as to its true meaning and import, is no valid contract, this reason behind the rule is quite obvious, me element of doubt is fatal to the consensus ad idem which is the essence of a contract. An agreement to sell a house 'or Rs. 500 or Rs. 1000 or a hundred tons of oil is not a contract as in the former case the price is not certain and in the latter case what oil was intended to be sold can be anybody's guess. 1 tail to see any uncertainty in the present agreement sought to be specifically enforced. It is quite clear and the terms of Ex. A1 expressly state that any one of the four persons named therein can exercise the right to obtain specific performance by payment of Rs. 13000 within the stipulated period. It is true that the defendants cannot anticipate with any degree of accuracy as to who would be enforcing the agreement, but that is not an uncertainty in the terms of the contract. So far as the defendants are concerned, they are bound to receive the money and execute a conveyance, whoever pays and demands a conveyance and after that they are quit of all their obligations in the matter. The rights inter se between the promisees are not their concern and have no bearing on the obligation of the promisors and such rights cannot cloud the real issue or be taken hold of to create an uncertainty where there is none. This contention of the learned counsel for the appellants must fail.

13. The next contention is that Ex. A 1 is unenforceable by way of specific performance for want of mutuality between the parties. It is pointed out that while the vendees undertook to reconvey on certain terms, there is no corresponding obligation on the part of the vendors to purchase back. This is a fallacy and a total disregard of the transaction between the parties. A sale coupled with an agreement to reconvey is one and indivisible. It cannot be notionally dissected and severed into two independent parts, a sale and an agreement to reconvey. The two constitute an integrated whole the obligation to reconvey is a term of the contract of sale and, therefore, need not be put to the test of mutuality to be enforceable. It would not be a proper mode of construing and enforcing a contract to take each term or covenant thereof in isolation apart from the other terms and to ascertain its enforceability by investigating whether it is supported by consideration and whether it fulfils the test of mutuality. As my learned brother has observed in his judgment, there can be no doubt that Ex. A.I forms part of the original sale transaction itself. It is true that they were executed on two different dates, Out it must be remembered that they were registered on the same day. In this context it may be useful to refer to the decision of the Judicial Committee in Sakalaguna Naidu v. Chinna Munusami Nayakar, ILR 51 Mad 533 : AIR 1928 PC 174. That was a case in which there was an agreement to reconvey as a counter part to a transaction of sale. The person in whose favour the right to obtain a reconveyance was granted assigned the right to a third party and the assignee filed a suit to enforce that agreement by way of specific performance. The question that arose for consideration before the Judicial committee was whether the suit for specific performance was maintainable, or, in other words, whether the right in favour of the vendor to obtain a reconveyance was assignable as a contract or not. The Judicial committee held that it was a completed contract capable of assignment. The question of mutuality as such was no doubt not considered before the Judicial Committee, apparently because it was not raised. But the decision is authority for the position that such a contract is capable of specific performance. At p. 537, (of ILR) : (at p. 176 of AIR), Sir Lancelot Sanderson, delivering the judgment of the Board observed thus:

'Their Lordships are of opinion that there was a completed contract between the parties on the 27th January 1891. All the elements necessary to constitute a contract were present. I here was an undertaking on the part of Venkatapathi to reconvey the village to Venkatasubramania 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 the 27th January 1891, obtained possession of the property, and Venkatasutxamania received Rs. 10,000, besides acquiring the right and benefit of getting back the village.....'

14. The point raised before the Board was that under such circumstances, there was only a standing otter by the purchaser which may or may not be accepted by the original vendor, and that until the offer was accepted no contract could spring into existence. But this contention was specifically repelled by their Lordships of the Judicial Committee. Though the decision really turned upon the question whether there was a completed contract capable of assignment or not, there can be no doubt that the Judicial Committee was of the opinion that the contract was also capable of being specifically enforced. In our opinion, the argument of the learned counsel that the contract of reconveyance is incapable of being enforced for lack of mutuality, is without substance, I would dismiss the appeal with costs.


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