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Abdul Razak Vs. J.H. Brown and Co. and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Judge
Reported in57Ind.Cas.485
AppellantAbdul Razak
RespondentJ.H. Brown and Co. and anr.
Cases ReferredNatesa Aiyar v. Appavu Padayachi
Excerpt:
specific performance - vendor and purchaser--contract of sale--time fixed for performance--default by purchaser--vendor, right of, to rescind contract and retain, earnest money. - - it may well be that there may be circumstances which would justify this court in declining and which would require the court, according to its ordinary rules ,to refuse to order specific performance, in which it could not be said that the purchaser had repudiated the contract or that he had entirely put an end to it bo as to enable the vendor to retain the deposit. there was a provision that, on failure to pay any instalment on the due date, the vendor should be at liberty to cancel the agreement and the whole sum already paid should be forfeited......to the plaintiff. the courts below have held that the plaintiff is not entitled to obtain specific performance. i think the law has been correctly applied to the facts of the case and that the decision is right. the agreement was entered into on 7th february 1914 and the end of april wag mentioned as the time by which the whole of the purchase money should be paid. the subsequent correspondence shows that the plaintiff was unable to procure the money. extensions of time were granted at his request. in august 1916 he was informed that unless he completed the purchase by the end of that month, the property would be disposed of to others. applications for farther time were made accompanied by various excuses for inability to produce the purchase money. the vendor's patience was at.....
Judgment:

Burn, J.

1. The suit is for specific performance of a contract to convey certain lands in Mettupalyam to the plaintiff. The Courts below have held that the plaintiff is not entitled to obtain specific performance. I think the law has been correctly applied to the facts of the case and that the decision is right. The agreement was entered into on 7th February 1914 and the end of April wag mentioned as the time by which the whole of the purchase money should be paid. The subsequent correspondence shows that the plaintiff was unable to procure the money. Extensions of time were granted at his request. In August 1916 he was informed that unless he completed the purchase by the end of that month, the property would be disposed of to others. Applications for farther time were made accompanied by various excuses for inability to produce the purchase money. The vendor's patience was at last exhausted and on 14th December 1916 a peremptory notice was sent to the plaintiff requiring him to complete the payment within a week. This was not done and the defendant cancelled the contract with effect from the 21st of December. It is dear that the plaintiff was not then or for sometime afterwards in a position to make the necessary payments. The argument for the appellant is that the lower Courts are wrong in having taken into consideration, what transpired prior to 14th December 1916 in judging of whether reasonable time was given for the completion of the contract. No authority has been cited for this proposition. On the contrary it is clear that these events and the conduct of the parties are relevant. The law is thus stated in Mahadeo Prosad Agarwala v. Narain Chandra 57 Ind. Cas. 121 : 80 C.L.J. 224 : 24 C.W.W. 330. 'The reasonableness of the time so limited is determined by the Court with reference not merely to what remains to be done at the date, of the notice, but all the circumstances of the Case including the previous delay of the party in default and the attitude of the other side in relation to it.' In the present case the history of the transactions between the parties for close on three years fully justified the conclusions of the lower Courts as to the sufficiency of the time allowed.

2. On the date of the contract for sale a sum of Rs. 500 was paid by the purchaser. This amount is described as 'earned money' towards the purchase of the property. This sum the defendant has been allowed to retain according to the decree of the lower Court. It is e contended for the appellant that he is entitled to a refund of this amount. The District Judge relies upon the decision in Natesa Aiyar v. Appavu Padayachi 19 Ind. Cas. 462 : (1913) M.W.N. 341 : 38 M.p 178 : 24 M.L.J. 488 : 13 M.L.T. 391 in support of his order. In that case there was an express agreement as to how the money paid, when the bargain was entered into, was to be disposed of. In the present case there was no such agreement. This, however, is of no consequence. The decision of the majority of the Fall Bench in Natesa Aiyar v. Appavu Padayachi 19 Ind. Cas. 462 : (1913) M.W.N. 341 : 38 M.p 178 : 24 M.L.J. 488 : 13 M.L.T. 391 proceeds on the authority of Howe v. Smith (1884) 27 Ch. D. 89 : 53 L.J. Ch. 1055 : 50 L.T. 573 : 32 W.R. 802 : 48 J.P. 773, and it also is an instance of the absence of any such express agreement Reliance has been placed on a passage in the judgment of Cotton, L.J., in Howe v. Smith (1884) 27 Ch. D. 89 : 53 L.J. Ch. 1055 : 50 L.T. 573 : 32 W.R. 802 : 48 J.P. 773 as indicating that the decision is not applicable to the facts of this case. The passage runs as follows: 'I do not say that in all cases where this Court would refuse specific performance, the vendor ought to be entitled to retain the deposit. It may well be that there may be circumstances which would justify this Court in declining and which would require the Court, according to its ordinary Rules , to refuse to order specific performance, in which it could not be said that the purchaser had repudiated the contract or that he had entirely put an end to it BO as to enable the vendor to retain the deposit. In order to enable the vendor so to act, in my opinion, there must be acts on the part of the purchaser which not only amount to delay sufficient to deprive him of the equitable remedy of specific performance but which would make his conduct amount to a repudiation on his part of the contract' (page 95). It is argued that the plaintiff, far from repudiating the contract, is seeking to enforce it. Howe v. Smith (1884) 27 Ch. D. 89 : 53 L.J. Ch. 1055 : 50 L.T. 573 : 32 W.R. 802 : 48 J.P. 773 however, was also an action by a purchaser for specific performance. The .judgments make it clear that what has to be looked at is the general conduct of the purchaser. It is not enough that he should assert a desire to perform if in fact he must be held to have recoded from the bargain. (Vile judgments of Bowen and Fry, L.J.S.) I entertain no doubt on the facts of this case that the vendor was justified in treating the contract as rescinded in spite of the subsequent protestations of the plaintiff.

3. Next it has been contended that the decisions of the Judicial Committee in Kilmer v. British Columbia Orchard Lands (1913) A.C. 319 : 82 L.J.P.C. 77 : 108 L.T. 306 : 57 S.J. 338 : 29 T.L.R. 319 and Steedman v. Drinkle (19l6) A.C. 275 : 85 L.J.P.C. 79 : 114 L.T. 218 : 32 T.L.R. 231 are at variance with Howe v. Smith (1884) 27 Ch. D. 89 : 53 L.J. Ch. 1055 : 50 L.T. 573 : 32 W.R. 802 : 48 J.P. 773, which case should no longer be regarded as an authority. The cases are, however, distinguishable. In the later cases no sum had been paid expressly as 'deposit' or 'earnest'. Part payment of the price was made at the time of the agreement and the balance was payable in instalments. There was a provision that, on failure to pay any instalment on the due date, the vendor should be at liberty to cancel the agreement and the whole sum already paid should be forfeited. The result was that the nearer the purchaser came to fulfilling his part of the agreement, the heavier were the losses which he might incur on default. These decisions follow the ruling in Dagenham (Thames) Dock Company, In re, Hulse, Ex parte (1873) 8 Ch. App. 1022 : 43 L.J. Ch. 261 : 21 W.R. 898, where the facts were similar. The conditions were treated as penalties which could be relieved against. It may be pointed out that Howe v. Smith (1884) 27 Ch. D. 89 : 53 L.J. Ch. 1055 : 50 L.T. 573 : 32 W.R. 802 : 48 J.P. 773 and other cases relating to 'deposits' or 'earnest money' are not referred to in the judgment of the Judicial Committee. In England the forfeiture (on repudiation) of a fixed sum paid as deposit or earnest at the time the bargain is struck as a guarantee for due performance, is treated on a different footing from other liabilities provided for in the event of breach of the contract at any stage. I do not think that the decisions relied upon for the appellant can be held to modify the rule in Howe v. Smith (1884) 27 Ch. D. 89 : 53 L.J. Ch. 1055 : 50 L.T. 573 : 32 W.R. 802 : 48 J.P. 773. The majority of the Judges in Natesa Aiyar v. Appavu Padayachi 19 Ind. Cas. 432 : (1913) M.W.N. 341 : 38 M.P 178 : 24 M.L.J. 488 : 13 M.L.T. 391 held that the distinction of English Law is applicable in India also. In the present case the amount of the deposit is not so large as to throw doubts on the object with which it was made. In my opinion the learned District Judge is right and I would dismiss the appeal with costs.

Sadasiva Aiyyr, J.

4. I entirely agree that time was made the essence of the contract by the vendor by his final letter and that the time allowed was reasonable, having regard to all that had passed. Plaintiff's non-compliance with the requisition in the vendor's final letter within the time so allowed was legal repudiation of the contract. He is, therefore, not entitled to specific performance. As regards the earnest money, whether it can be retained as such or not, I am clear that it is not an unreasonable sum to allow to the vendor as damages against the vendee for the latter's' breach of contract. I agree in the decree proposed by my learned brother and I have nothing further to add.


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