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Sethu Parvathy Ammal Vs. Bajji K. Srinivasan Chettiar and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty;Contract
CourtChennai High Court
Decided On
Case NumberSecond Appeal No. 312 of 1969
Judge
Reported inAIR1972Mad222
ActsSpecific Relief Act, 1877 - Sections 12(3) and 15; Specific Relief Act, 1963
AppellantSethu Parvathy Ammal
RespondentBajji K. Srinivasan Chettiar and ors.
Cases ReferredNaas v. Westminster Bank Ltd.
Excerpt:
property - execution of documents - specific relief act, 1877 and specific relief act, 1963 - document proposed to be executed between several parties - only some of them executed documents and others do not - binding nature of documents even with respect to executing parties will be gathered from intention of parties - executing party who does not want enforceability has to show that they would not have executed document if other party had not joined in agreement. - - a, 4, the first defendant acting on his behalf as well as guardian of his minor children, defendants, 2 to 4, sold the property for rupees 11,000 to the fifth defendant in the suit, the fifth defendant being the brother's sambandhi of the first defendant. consequently, when the fifth defendant filed an appeal, he was.....1. the plaintiff in o. s. no. 53 of 1965 on the file of the court of the subordinate judge of thanjavur, who succeeded before the trial court, but lost before the first appellate court is the appellant before this court. she instituted the suit for specific performance of a contract to sell certain immovable property under ex. a-1 dated 10-2-1965. that agreement was executed by the first defendant on behalf of himself and as guardian of his minor children, defendants 2 to 4 agreeing to sell the property to the appellant for a consideration of rs. 10,000. the agreement itself recites that out of the consideration of rs. 10,000, rs. 4000 had already been accounted for, by payment of rs. 2698-10 to the nicholson town bank ltd., thanjavur, on behalf of the first defendant, a sum of rs. 500 to.....
Judgment:

1. The plaintiff in O. S. No. 53 of 1965 on the file of the Court of the Subordinate Judge of Thanjavur, who succeeded before the trial court, but lost before the first appellate court is the appellant before this court. She instituted the suit for specific performance of a contract to sell certain immovable property under Ex. A-1 dated 10-2-1965. That agreement was executed by the first defendant on behalf of himself and as guardian of his minor children, defendants 2 to 4 agreeing to sell the property to the appellant for a consideration of Rs. 10,000. The agreement itself recites that out of the consideration of Rs. 10,000, Rs. 4000 had already been accounted for, by payment of Rs. 2698-10 to the Nicholson Town Bank Ltd., Thanjavur, on behalf of the first defendant, a sum of Rs. 500 to one Chakrapani Iyer on account of the first defendant and the balance of Rs. 801-90 received by the first defendant by then. Ex. A-1 agreement contemplates the mother of the first defendant Sonna Ammal being a party to that agreement, but she has not actually signed the agreement. This agreement provided a period of three months for execution of the sale deed on receipt of the balance consideration of Rs. 6000. Twelve days after this agreement came into existence, that is, on 22nd February, 1965 under the original of Ex. A, 4, the first defendant acting on his behalf as well as guardian of his minor children, defendants, 2 to 4, sold the property for Rupees 11,000 to the fifth defendant in the suit, the fifth defendant being the brother's sambandhi of the first defendant. After the plaintiff-appellant came to know of this sale, she issued a notice to the defendants and afterwards instituted the present suit for specific performance of the agreement, Ex. A-1. The defence of the first defendant was that the agreement was incomplete and that in any event it was not enforceable for want of mutuality, since the first defendant had no right to bind his minor children by entering into the agreement. The fifth defendant in the suit, in addition to putting forward the contention that the agreement was incomplete, also contended that he was a bond fide purchaser for value without notice of the suit agreement. The learned Subordinate Judge, Thanjavur, who tried the suit, came to the conclusion that the fifth defendant was not a bond fide purchaser for value without notice of the suit agreement. As a matter of fact, he recorded a finding that the sale in favour of the fifth defendant was a faked up one, in order to help the first defendant to refute the rights of the appellant, who had already parted with a sum of Rs. 4000. As far as the contention regarding the incompleteness of the agreement is concerned, the learned Subordinate Judge held against the defendants and therefore on 29th September, 1966 he decreed the suit directing the plaintiff to deposit into court the balance of consideration of Rs. 6000 and giving one month's time for that purpose. As against this judgment and decree of the learned Subordinate Judge, the 5th defendant alone preferred an appeal. the learned District Judge of West Thanjavur on 16th December, 1968 in A. S. No. 302 of 1966 allowed the appeal,. He posed before him the following two points for determination, namely, (1) whether the suit agreement of sale is not valid in law to enable the plaintiff to specifically enforce it and whether as such no decree for specific performance can be passed on the basis of such an agreement; and (2) whether the fifth defendant is not a bona fide purchaser for value. As far as the second point is concerned, he agreed with the conclusion of the learned Subordinate Judge. he also recorded a finding that the collusion between the first defendant and the fifth defendant was quite patent. As far as the first point is concerned, the learned District Judge held that the agreement was incomplete, since the mother of the first defendant had not executed the same and therefore on the basis of such an incomplete agreement, the appellant herein would not be entitled to a decree for specific performance. However, at the same time, he passed a decree in favour of the appellant for a sum of Rs. 4000 which the appellant had already parted with. It is against this judgment and decree of the learned District Judge of West Thanjavur, the present second appeal has been preferred by the plaintiff in the suit.

2. Before I proceed to deal with the controversy raised in the second appeal, it is necessary to refer as to how the mother of the first defendant came into the picture. Under Ex. B-1 dated 19th August 1959, there was a partition between the first defendant and his brothers of the family properties. Under this document, there is a provision for maintenance made in favour of their mother, each one of the sons paying ten kalams of paddy per year and also a sum of Rs. 40 being the value of two sarees. The document also provided that if any one of the sons defaulted in performing this obligation, the mother will have a charge against the property allotted to the share of that son. It is because of this maintenance charge which the mother of the first defendant had over the suit property which was allotted at that partition to the share of the first defendant, the mother came into the picture. As I have pointed out already, the suit agreement Ex. A-1 recites as if the mother of the first defendant was intended to be a party, but actually it was not signed by the mother. It is against this context the question arose whether the agreement, Ex. A-1 executed by the first defendant alone on his behalf and as guardian of the three minor children, namely, defendants 2 to 4 could be said to be an incomplete one so as to prevent the appellant from obtaining a decree for specific performance even against those defendants who had signed the agreement. it is on this point, the courts below have differed.

3. Before I deal with this, it is easier to dispose of the point regarding the 5th defendant being a bona find purchaser for value without notice or not. I have already referred to the fact that both the courts below have concurrently come to the conclusion that there was collusion between the first defendant and the fifth defendant with regard to the sale of the property in favour of the fifth defendant by defendants 1 to 4 in the suit. As a matter of fact, taking into account the relationship between the parties and the evidence adduced by the fifth defendant himself, the courts below could not have come to any other conclusion and therefore in view of this patent position, even the learned counsel for the respondents did not seek to challenge this finding of the courts below on this aspect.

4. Arising from this aspect, there is one argument of Mr. N. C. Raghavachari, learned counsel for the appellant, which has to be immediately noticed. That argument is, against the decree of the learned subordinate Judge an appeal was preferred only by the fifth defendant and as soon as the learned District Judge came to the conclusion that the fifth defendant was not a bona fide purchaser for value without notice, the appeal preferred by the fifth defendant should have been straightway dismissed and the learned District Judge ought not to have gone into the question whether the agreement, Ex. A-1 itself was incomplete or not. I am unable to accept this contention. Before the trial court, even in the written statement the fifth defendant put forward two contentions. One was that the agreement Ex. A-1 was incomplete and therefore was incapable of being specifically enforced. The second was that even if the agreement was capable of being enforced, as far as he was concerned, he was a bona fide purchaser for value without notice and therefore he could not be compelled to execute the sale deed in favour of the plaintiff. When the learned Subordinate Judge decreed the suit he held against the fifth defendant on both these aspects. Consequently, when the fifth defendant filed an appeal, he was entitled to canvass the correctness of the conclusion of the trial court on both these aspects and therefore even when he had failed on his plea that he was a bona fide purchaser for value, he was certainly entitled to defend his purchase by putting forward and establishing the contention that Ex. A-1 was a an incomplete agreement and therefore was incapable of being specially enforced. Consequently, I am of the opinion that there is no substance in this contention of the learned counsel for the appellant.

5. Then there remains the primary question for consideration, namely, whether, by the mother of the first defendant not executing Ex. A-1, Ex. A-1 can be specifically enforced against defendants 1 to 4 or whether the agreement is such that it is incapable of being enforced even against defendants 1 to 4 who had executed the document. On this question, a number of authorities was placed before me. I shall refer to them and also the ratio that is deducible from those decisions.

6. The first decision that was brought to my notice is a decision of a Bench of this court in Sivasami Chetti v. Sevugan Chetti ILR (1902) Mad 389. That related to a suit on a hypothecation bond. That hypothecation bond recited that it was executed by the elder brother on his own behalf and on behalf of his minor son and by his two brothers. In fact, it was signed only by the eldest for himself and his son, the other brothers having refused to execute it, when asked to do so. It is in that context a question arose whether the plaintiff could file a suit on the hypothecation bond and could get any relief even against the eldest brother who had executed the document. Dealing with this question, this court observed-

'But in my opinion, the appellant's contention that Ex. J. was intended both by the plaintiff and the first defendant to be executed by all the members of the family and that it was not intended that the first defendant alone, by signing it was to bind himself, or in his capacity as managing member, bind the whole family, is well founded,. When a document is intended to be executed by several persons, but is executed only by some of them, the question whether it takes effect as against those who have executed it notwithstanding that the rest have declined to join in the execution of the document, rests upon the intention of the parties.'

Apart from the particular decision reached in that case, the important thing to note is that the learned Judges had laid down that whether a document was intended to take effect at least against those persons who had executed the same of it was intended to take effect only if all the parties contemplated to be made parties had executed the same was dependent upon the intention of the parties.

7. The next decision to which my attention was drawn is that of a Bench of this Court in Ullathil Kolathil Nethiri Menon v. Mullapuli Gopalan Nair, ILR 39 Mad 597 : AIR 1916 Mad 692. In that case also, the document was executed by only four out of five contracting trustees. The question was whether that document could be validly enforced. Regarding that question the Bench observed:

'As to the first point, the law is well settled and clearly understood both in this country and in England. The majority of a body of charitable trustees can legally bind the whole body, Wilkinson, v. Malin, 1832 2 Tyr 544. In re Whiteley, Bishop of London v. Whiteley, 1910 1 Ch 600 and Teramath v. lakshmi ILR (1883) Mad 270; but if a document is drawn up in the name of all, and it is the intention of the parties that all should execute it, it will be incomplete and inoperative till all have done so. See Sivasami Chetti v. Sevugan Chetti, ILR (1902) Mad 389 and Latch v. Wedlake, 1840 11 A & E 959. It is a question of fact as to what was the intention of the parties.'

8. The next decision relied on is that of the Lahore High Court in Dr. Umar Baksh v. Mul Raj. AIR 1942 Lah 86. In that decision, the principle was laid down in the following terms:--

'If the intention of the parties in this document had been that nobody would agree to sell his share unless all the others also agreed to sell their shares. the matter would ex necessity be different. In such a case it could not be held that where one of them had failed to sign the document, the document was a complete document. On the other hand, if the sales were not interdependent in the sense that each vendor might well have sold his share of the property without reference to the sale by others, and what really should have been a number of separate sale deeds were rolled into one because of convenience, then the fact that in the agreement to sell, one of the vendors had not joined would not affect the question as between the vendee and the vendor who had signed the agreement to sell. The question of intention has to be settled by a reference to the terms of the document and to the circumstances of the case.'

This observation of the Lahore High Court was followed by Govinda Menon, J. in Chunduru Kanniah Gupta v. Pallamparthi Subbarami Reddy : AIR1952Mad687 . That also dealt with a suit for specific performance. The property involved in the suit belonged to a joint family consisting of defendants 1 and 2. The agreement, though it was intended to be executed by both the defendants, was in fact signed by only the first defendant and the second defendant did not sign the same. The question for consideration was, whether the agreement for specific performance could be enforced at least against the first defendant. Govinda Menon, J. after referring to the decision of this court in ILR (1902) Mad 389 and certain other decisions and also the decision of the Lahore High Court referred to above, pointed out-

'Applying the principles of law as stated above, we have to ascertain whether in the case under consideration, it was the intention of the first defendant to sign the document and make it effective only if the second defendant had also executed the same. The learned Subordinate Judge after discussing the evidence of the witnesses was of the view that the first defendant was quite prepared to execute the agreement by himself alone but that it was only by way of abundant caution that the plaintiff wanted that the second defendant's signature also should be got to Ex. P-2 by the elder brother. We have also the evidence of the first defendant examined as D.W. 1 and he stated that P.W. 2 agreed that he would get the signature of the second defendant without the assistance of the first defendant. The first defendant further stated that he never undertook that he would get the sale deed executed on behalf of his brother also; whether he agreed with it or not and that there was no reference whatsoever to that fact in case the brother did not agree to sign Ex. P-2. In cross--examination also he made certain statements but the purport of the whole thing is that the first defendant did not make it a condition of the validity and the enforceability of the document unless the second defendant had also signed it. Such being the case, I agree with the learned Subordinate Judge that the document can be enforced as regards the share of the first defendant.'

9. The next decision to which reference had to be made is that of the Calcutta High Court is Ramsaran Roy v. Shoshi Bhushan Ghose, (1922) 65 Ind Cas 594 (Cal). In that case the plaintiff contended that it was agreed that the defendant No. 1 and the defendant No. 2 together was a further agreement that if the defendant No, 2 did not consent to sell his share, the defendant No. 1 would sell his own moiety share. It was found as a fact that the second defendant did not agree to sell his share at all. In that context, the question for consideration was, whether the agreement could be enforced as against the first defendant alone. Dealing with the question, the learned Judges observed-

'The agreement proposed was between the plaintiff on the one hand, and defendants Nos. 1 and 2 on the other, but the defendant No. 2 did not agree. That being so, we think that the courts below were right in holding that there was no completed contract.'

Basing upon the ratio flowing from the other decisions referred to by me already, namely, whether the agreement is enforceable at least against the persons who executed it or not was dependent upon the intention of the parties, it was sought to be urged before the learned Judges of the Calcutta High court that the intention should be considered. Dealing with that argument, the learned Judges pointed out:

'It has been pressed upon us that the question of intention ought to have been gone into. But the plaintiff set up an alternative case, viz., that there was an agreement that the defendant No. 1 would sell his own share even if the defendant No. 2 did not agree. That case has been found against the plaintiff by both the courts. But the fact that such an alternative case was set up indicates how the agreement was understood by the parties.' I am referring to this aspect merely for the purpose of showing that even the Calcutta High Court went by the proposition that it was only the intention of the parties that has a to be looked into for the purpose of arriving at a conclusion whether an agreement could be enforced at least against the person who had executed the same, but they did not go into the question of intention in the particular case in view of the express alternative case set up by the plaintiff that there was specific agreement that if the second defendant did not agree. then the first defendant would perform his part of the agreement.

10. All these cases have been considered by Natesan J. in a recent judgment of his namely, S. A. No. 1374 of 1965, D/- 16-10-1969 (Mad). In that case, the plaintiff entered into an agreement for the purchase of the property belonging to the joint family consisting of three brothers. The document was executed by one of the brothers on his own behalf and also purporting to act on behalf of other two brothers. It was actually found that he had no authority to enter into the agreement on behalf of the other two brothers; nor did he enter into the agreement as the manager of the joint family. In such a context, the question came up for consideration whether the agreement could be enforced who had signed the agreement. After elaborately considering the law as gathered from the decisions of courts of this country as well as from those in England, Natesan J. came to the conclusion that the plaintiff was entitled to get a decree for specific performance against the one-third share of the property belonging to the defendant who had signed the agreement.

11. There is only one other decision to which reference has to be made, because the learned District Judge himself has purported to follow that decision in the present case. That is a decision of the Federal Court in Jainarain Ram Lundia v. Surajmull Sagarmull . That was a case in which an agreement was entered into between the plaintiff and four other persons who were entitled to 350 shares in a sugar mill and were also owners of a share in a partnership. The facts as gathered from the said judgment are these, One hundred out of these 350 shares belonged to one Gobardhandas and his brother Badri Prasad, another 150 shares belonged to Jainarain Ram and the other 100 shares belonged to Biseswarnath. The case of the plaintiff was that there was an agreement to sell these 350 shares by all these four persons who were entitled to the same. It was actually found that Badri Prasad who along with his brother Gobardhandas was entitled to 100 shares did not join the agreement at all. The suit for specific performance was instituted against all the four of them and even before the trial court the suit against Badri Prasad was withdrawn and was dismissed against him. The plaintiff also gave up their claim against Gobardhandas, who was impleaded as defendant No. 1 Ultimately the question for consideration was, whether the plaintiffs were entitled to obtain a decree for specific performance against the other two persons, namely, jainarain Ram and Bisweswar nath who had 250 shares belonging to them. An argument was advanced before the Federal Court that the agreement was an incomplete one, since it was entered into for the purchase of the entirety of the 350 shares a from all the four persons and since the plaintiffs had given up their claim against two defendants who owned 100 shares. the suit could not be decreed against the other two defendants for the sale of the other 250 shares. The Federal Court noticed the law in this behalf as stated in Halsbury's Laws of England, 2nd Edn. Vol. 7, page 72 and as laid down by the Courts in England in Luke v. South Kensignton Hotel co., 1879 11 Ch D 121 and Naas v. Westminster Bank Ltd., 1940 AC 366 and proceeded to state:

'When parties enter into an agreement on the clear understanding that some other person should be a party to it, obviously no perfected contract is possible so long as this other person does not join the agreement. This would be the position in law apart from any rule of equity. The proposition laid down by Sir George Jessel goes much further than this... He speaks of tow persons executing a deed on the faith that a third will do so and if this is known to the other party, equity will refuse to fasten any liability on the executing parties if the third party does not join in the act. It has been pointed out in the judgments of the various Law Lords who decided the case Naas v. Westminster Bank Ltd., 1940 AC 366 : 1940 1 All ER 485, that there is much that is indefinite and vague in the words of the learned Master of Rolls. the word 'faith' cannot be taken to refer to a mere subjective expectation or intention in the mind of a particular party. It must be a matter not of conjecture but of positive proof; and in order that a relief might be claimed in equity, it is necessary to prove that substantial injustice would result if the deed is enforced unconditionally against the executing parties. Relief, therefore, could be given in those cases where the strict enforcement of law would lead to the executing parties being saddled with heavier liability than they otherwise would incur or would make the transaction substantially different from what it would have been if all the parties had joined.'

Having made the above observations with regard to the legal position, the Federal Court proceeded to deal with the case before it, in the following terms:

'Whether Gobardhandas thought rightly or wrongly that he had authority to dispose of the shares standing in the name of his brother purpose. All that we can say is this that there is nothing in this letter which would show that it was the intention of the signatories that they would sell their shares and interests to the plaintiffs if and only if Badri Prasad sold his. Badri Prasad was not in the picture at all and although Gobardhandas apparently agreed to sell his shares as well, there is no evidence of any understanding, either express or implied, even amongst the defendants inter se that unless Badri Prasad actually came and joined the agreement, the contract would not be perfect or complete. None of the defendants or even their Solicitor was examined as a witness in this case and no questions on this point were put to the plaintiff's witnesses during their cross-examination. The letter of 28th December 1940 if it shows anything shows unmistakably that the vendors were anxious to dispose of their shares by any means possible and they did not care whether the shares were purchased by Khaitans or anybody else. The letter of both the appellants written to Himatsinga on 5th January 1941, practically clinches the matter and proves conclusively that the promise to sell their shares and interests in the business was not in any way dependent upon any body else's joining with them in the transaction. Thus there was no intention on the part of the defendants that the contract would not be binding unless Badri Prasad became a party to it and there has been no suggestion made on behalf of the appellants either here or in the courts below that any injustice would be done to them if they are compelled to perform the agreement which they made'.

12. The principles deducible from the above decisions can be now stated as follows:--

1. Where a document is proposed to be executed by several parties and only some of them execute and others do not, whether the document is binding on those at least who have executed it depends upon the intention of the parties; and

2. The intention that the document would be incomplete and would not be enforceable against the executing parties has to be established by the executing parties by showing that they would not have executed the agreement if the other party had not joined in the agreement or that they did not intend to be bound by the agreement until ands unless the others who were proposed to be parties to the agreement joined in the execution.

13. Now, the question for consideration is, what exactly are the facts of the present case with reference to the application of the above principles. Unfortunately the learned District Judge had not decided with reference to the intention of the parties. The learned District Judge has extracted the two sentences italicised by me above in the judgment of the Federal court and he was of the view that those two sentences concluded the matter against the appellant in the present case. I am clearly of the opinion that the learned District Judge has erred in this behalf. It is not only these two sentences in the judgment of the Federal Court which have to be looked into for the purpose of finding out the law, but also the other portions of the judgment which I have already extracted. If those portions are also looked into., it will be clear that the Federal Court held in that case that unless the defendants who executed the agreement could show that there was no intention on their part to be bound by that agreement without the others joining the same, the agreement could be enforced as against them. The learned District Judge not having borne this principle in mind, the question for consideration is, what exactly is the position in the present case, having regard to the facts found. As far as the facts of the present case are concerned, certain salient features have to be notices. In the first place, Ex. A-1 mentions the name of the mother of the first defendant as one of the parties to the agreement. But the agreement itself does not indicate what exactly was the nature of the interest the mother of the first defendant had in the suit property. On the other had, the agreement proceeds to state that the property belonged to the first defendant absolutely, having been allotted to his share in the partition between him and his brothers under Ex. B-1 dated 19th August 1959. Therefore, for the purpose of finding out the nature of the interest which the first defendant's mother had in the suit property, we have to travel outside the agreement Ex. A-1 itself, and the interest which the mother of the first defendant had in the suit property can be found only from Ex. B-1. As I have already pointed out, under that document she had a charge over the property for the maintenance payable by the first defendant. (His Lordship here discussed the facts of the case and proceeded). For these reasons, I hold that the decision of the learned District Judge in this behalf is patently erroneous in law and the appellant is entitled to a decree for specific performance against the defendants in the suit, in respect of the property proposed to be conveyed by defendants 1 to 4 in favour of the appellant herein. I repeat that there is a specific and express finding of the courts below that the sale deed in favour of the fifth defendant is a faked one; that the collusion between the first defendant and the fifth defendant is patent; and that they have entered into the sale transaction with a view to defeat the rights of the appellant under Ex. A-1.

14. There is only one other matter to which I shall draw attention. The mother of the first defendant is not a party to the suit. Therefore, the decree that is passed in favour of the appellant will not affect any right which the mother of the first defendant may have in the suit property. As a matter of fact, Mr. N. C. Raghavachari, learned counsel for the appellant, having regard to the language of Section 15 of the Specific Relief Act, 1877, corresponding to Sec. 12(3), the Specific Relief Act, 1963, expressly stated that the appellant is prepared to take the sale deed on paying full consideration agreed upon under Ex. A-1, subject to any rights which the first defendant's mother may have over the suit property.

15. With the above reservation, the second appeal is allowed, the judgment and decree of the learned District Judge of West Thanjavur dated 16th December 1968 in A. S. 302 of 1966 are set aside and those of the learned Subordinate Judge of Thanjavur in O. S. 53 of 1965 are restored. It is represented to me that as per the direction of the learned Subordinate Judge, the balance of consideration, namely, Rs. 6000, had already been deposited into court and the same is in court deposit. Time for execution of the sale deed by the respondents herein is one month from today, there will be no order as to costs. No leave.

16. Appeal allowed.


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