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Balasundara Mudaliar Vs. Muthuvenkatachala Mudaliar (Died) and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty;Contract
CourtChennai High Court
Decided On
Case NumberAppeal No. 209 of 1950 and C.M.P. Nos. 7388 and 8213 of 1953
Judge
Reported inAIR1954Mad799; (1954)IIMLJ141
ActsCode of Civil Procedure (CPC) , 1908 - Order 2, Rule 3 - Order 6, Rule 17; Contract Act, 1872 - Sections 55
AppellantBalasundara Mudaliar
RespondentMuthuvenkatachala Mudaliar (Died) and ors.
Appellant AdvocateK. Krishnaswami Iyengar, ;R. Aravamudha Iyengar, ;K. Srinivasan and ;S. Krishnaswami, Advs.
Respondent AdvocateS. Ramachandra Iyer, ;C. Natarajan, ;K. Dasarathy, ;K. Parasurama Iyer, ;M.S. Venkatarama Iyer and ;A. Seshachari, Advs.
Cases ReferredNarasingerji v. Parthasaradhi Bayanam Garu
Excerpt:
contract to reconvey land--sale and agreement to reconvey, not being a mortgage--right of repurchase optional--must be exercised according to strict terms--times, essence of contract;where m executed a sale in favour of n, and on the same date, the purchaser n executed in favour of m a counterpart to the deed of sale agreeing to reconvey the properties sold within a period of sixteen years from that date, and long after the expiry of the sixteen years, in a suit for partition filed by m's son, he added an incidental prayer for the specific performance of the agreement to reconvey,;held: the transaction not being a mortgage, and the parties having proceeded on the basis that there was a completed sale and an agreement to reconvey, time must be and was the essence of the contract, and the..........o. s. no. 87 of 1947 by the subordinate judge of cuddalore. this was a suit for partition and for specific performance, as an alternative relief. the plaintiff and the second defendant are the sons of the first defendant. the first defendant, his brother ratnavelu mudaliar, and three others were the sons of one arumugha mudaliar. defendants 3 to 6 are the daughters of ratnavelu mudaliar. the family was possessed of some landed properties and there was a partition in the family as between the brothers. the three other brothers separated leaving the first defendant and ratnavelu mudalair as joint, they being entitled in the family properties to a 2/5th share.on 15-2-1920 ratnavelu mudaliar being then the elder of the two brothers mortgaged the properties described in schedule b, part i of.....
Judgment:
1. The plaintiff appeals against the dismissal of his suit O. S. No. 87 of 1947 by the Subordinate Judge of Cuddalore. This was a suit for partition and for specific performance, as an alternative relief. The plaintiff and the second defendant are the sons of the first defendant. The first defendant, his brother Ratnavelu Mudaliar, and three others were the sons of one Arumugha Mudaliar. Defendants 3 to 6 are the daughters of Ratnavelu Mudaliar. The family was possessed of some landed properties and there was a partition in the family as between the brothers. The three other brothers separated leaving the first defendant and Ratnavelu Mudalair as joint, they being entitled in the family properties to a 2/5th share.

On 15-2-1920 Ratnavelu Mudaliar being then the elder of the two brothers mortgaged the properties described in schedule B, part I of the plaint to the father of the 9th and 10th defendants under Ex. B.14 for Rs. 2500. Subsequent to it the first defendant instituted a partition suit in O. S. No. 2$ of 1921 in the Sub-Court, Cuddalore, against his brother Ratnavelu Mudaliar and a final decree for partition was passed in 1923. There is nothing known as to how the mortgage Ex. B.14 executed by the elder brother Ratnavelu Mudaliar was disposed of in that partition. It may now be presumed that the mortgage Ex. B.14 was not disputed in that partition suit.

2. On 31-12-1923 Ratnavelu Mudaliar and the first defendant, apparently after the partition final decree, jointly mortgaged the properties in schedule B, part I of the plaint to P. V. Nata-raja Mudaliar, a relation of theirs and an advocate and a permanent resident of Madras, under Ex. B.15. Along with those properties other items of properties described in schedule B, part II, were also the subject of that mortgage. On 13-2-1933 under Ex. B.16 Nataraja Mudaliar conveyed to the 9th defendant wet lands of the extent of Ac. 63-36 cents out of the properties in schedule B part I of the plaint, for a consideration of Rs. 6000. On 9-1-1939 the 9th defendant sold some of the items of these properties which he purchased under Ex. B.16 to the 11th defendant under Ex. B.17. The 11th defendant reconveyed some of the items of properties he purchased under Ex. B.17 to the 9th defendant under Ex. B.19 dated 24-5-1945 for Rs. 3000.

In the meanwhile, the first defendant and Ratnavelu Mudaliar sold some Of the properties mortgaged to the mortgagee Nataraja Mudaliar by a sale deed Ex. B.13 dated 19-11-1923 for a sum of Rs. 13,800. On the same date there was a counterpart to the deed of sale Ex. A.3 executed by the mortgagee purchaser Nataraja Mudaliar in favour of Ratnavelu Mudaliar and the first defendant agreeing to reconvey the properties sold under Ex. B.I3 within a period of 16 years from that date. The present suit is for partition of the plaintiff's share in these properties. Subsequent to these transactions the members of the family sold portions of them to third parties, and there were also certain sales for nonpayment of the public dues and several items of properties were purchased in such auction sales by strangers. All the alienees interested in these properties have been made parties to this suit. There are no less than 43 defendants and no less than 47 issues framed in this case concerning the several alienations.

3. The plaintiff in a long plaint refers to the various alienations contending that they are not for consideration, fraudulent and not binding on him and in effect asking for a cancellation of those transactions and recovery of his share therein. There is however an alternative relief for directing the purchasers who have derived title from Nataraja Mudaliar to execute a deed of conveyance on receipt of such sums of money as may be found due to them by the plaintiff and such other sharers who will be entitled to a share in those properties. The primary relief therefore that is asked for in the plaint is to declare in effect that the sale Ex. B.13 is not binding on the plaintiff and to set aside the several alienations made subsequently. The whole plaint proceeds as if it is a suit for setting aside the alienations made by a father or managing member of the Hindu family. The main relief asked for is partition. An incidental prayer for specific performance is introduced as an alternative relief.

4. The defence is that these alienations were for consideration and for necessity. As regards the prayer for specific performance the 9th defendant in his written statement while referring to the agreement Ex. A.3 states that the time of 18 years' period fixed in that agreement was the essence of the contract, and the vendors expressly find by their conduct relinquished all rights under the said agreement and that in any event the agreement became void and unenforceable after 16 years from 19-11-1928.

5. The learned Subordinate Judge found that time was of the essence of the contract and the Might to get a reconveyance had become barred after the expiry of the period of 16 years and practically dismissed the suit in respect of the alienations and granted a decree in respect of some of the items which were not disputed and which had belonged to the maternal grandfather of the plaintiff.

6. The appeal is not pressed against defendants 12", 17, 19, 20, 21, 28 to 29, 31, 34, 35 to 39. The appeal will therefore be dismissed as against these defendants with costs in accordance with the value of their respective shares in the subject matter of the suit.

7. The main question that was argued before us was that the finding of the learned Subordinate Judge that time was of the essence of the contract and that the plaintiff was therefore not entitled to have a decree for specific performance, is erroneous. It may be mentioned here that at no time, during the pendency of the suit or before us was any objection taken as to whether the relief for specific performance would be outside the ambit of a partition suit and whether a relief for specific performance is bad for misjoinder of causes of action. The parties proceeded on the basis that there was no misjoinder and that accounts for the learned Subordinate Judge examining this issue also and giving his finding. Mr. Krishnaswami Aiyangar, learned counsel for the plaintiff, wanted to spin out a case of a mortgage by conditional sale arising on a proper consideration of the two documents Ex. B.13, the sale, and Ex. A.3 the counterpart and has also raised this question in his grounds of appeal.

But the point having been taken for the first time before us and being 'prima facie' inconsistent with the primary relief sought for in the plaint, viz., that certain alienations are not binding on the plaintiff and for partition, and the parties having proceeded to trial on the basis of a suit for partition and an alternative relief for specific performance, it would not be proper to allow the appellant to argue a new case which would further require additional evidence such as the valuation of the properties on the date of these documents when alone the court would be justified in considering the point raised by the appellant's counsel as to whether two documents really amount to a mortgage by conditional sale. He, therefore, declined to permit Mr. Krishnaswami Aiyangar to argue this position.

To rectify the defect two applications C. M. P. Nos. 7388 and 8213 of 1953 were filed seeking to amend the plaint by adding a paragraph alleging that both the documents constitute a mortgage by conditional sale and for redemption and also for relief under the Madras Agriculturists Belief Act 4 of 1938. The application for amendment is very belated and it is a totally new case that the plaintiff is seeking to raise under colour of amendment in a suit for partition and it is doubtful whether a prayer for redemption of a mortgage executed by a manager or father in a joint Hindu family could be included and relief asked for in regard to that. Further, the effect of allowing the amendment would be to remand the suit for taking further evidence. In view also of the long time that has elapsed since the institution of the suit to the date of the amendment application, which is taken only at the hearing of the appeal, we consider that the plaintiff is not entitled to have the applications allowed. The applications will therefore stand dismissed without however any order as to costs.

8. For the position taken that time is not the essence of the contract Mr. Krishnaswami Aiyangar relied on the leading decision of the Privy Council on the subject in -- 'Jamshed Khodaram v. Burjorji Dhunjibhai', AIR 1915 PC 83 (A) and contended that the agreement Ex. A.3 is practically in the same terms as the agreement that the Privy Council was considering in the said decision and the opinion of the Privy Council that in such circumstances time should not be taken as of the essence of the contract is applicable to the facts of this case. The case in 'AIR 1915 PC 83 (A)', related to an agreement to sell without there being a counterpart of a completed sale like Ex. B.13. as in the present case. In construing the term as to "completion of the contract within a fixed period" in an agreement of sale Viscount Haldane while quoting with approval the observations of Lord Cairns in -- 'Tilley v. Thomas', (1867) 3 Ch 61 (B), added these observations : "The special jurisdiction of the equity to disregard the letter of the contract in ascertaining what the parties to the contract are to be taken as having really and in substance intended as regards the time of its performance may be excluded by any plainly expressed stipulation. But to have this effect the language of the stipulation must show that the intention was to make the rights of the parties depend on the observance of the time limits prescribed in a fashion which is unmistakable. The language will have this effect if it plainly excludes the notion that these time limits were of merely secondary importance in the bargain and that to disregard them would be to disregard nothing that lay at its foundation. 'Prima facie', equity treats the importance of such time limits as being subordinate to the main purpose of the parties, and it will enjoin specific performance notwithstanding that from the point of view of a court of law the contract has not been literally performed by the plaintiff as regards the time limit specified. This is merely an illustration of the general principle of disregarding the letter for the substance which courts of equity apply, when, for instance, they decree specific performance with compensation for a non-essential deficiency in subject matter."

Our attention has been drawn to a Bench decision of this Court in -- 'Samarapuri Chettiar v. Sudarsanachariar', AIR 1919 Mad 544 (C), which appears to us to have a direct bearing on this case. In that case there was a sale deed and two days after the sale there was an agreement to reconvey the property in favour of the plaintiffs and time was fixed under that agreement. The material terms of the agreement were as follows:

"If you or any one authorised by you pay up the sale amount (Rs. 4500) to me or my heirs at any time within five years from this day (i.e.) within 31st October 1913. myself or my heirs shall sell to you etc. This agreement will not be valid after the stipulated period. After the expiration of the said period, you will claim no right or privilege whatever to this agreement."

The plaintiffs instituted a suit for redemption on the footing that the sale and agreement constituted a mortgage and the plaint was subsequently amended by asking for an alternative relief by way of specific performance of the contract to sell and the plaintiffs contended that time was not of the essence of the contract of resale. The trial court found that the transaction could not amount to a mortgage but was a sale and as regards the case for specific performance of the contract to sell, found that specific performance could be granted as time was not of the essence of the contract. In appeal the District Judge confirmed the decision. The High Court held that me doctrine that time may not be of the essence of the contract which arises on the construction of contracts of sale of immoveable property is not applicable to resale of property conveyed. Sadasiva Aiyar J. who delivered the judgment of the Bench observed :

"The true doctrine is stated in Pisher on Mortgages Chapter I, Section 1, paragraph 18, and is that if the transaction is not a mortgage the right to repurchase being an option must be exercised according to the strict terms of the power."

We are constrained in this case to hold that the transaction is not a mortgage and we proceed on the assumption that the transactions covered by Ex. B.13 is a sale and A.3 being an independent agreement of reconveyance different considerations would prevail if we have to construe it as a mortgage. But having construed it as a sale and there being no mortgage at all in this case, Ex. A.3 has to be treated as an agreement of reconveyance 'simpliciter'. Though time was fixed in an agreement to sell immoveable property but when, it is found that it will be inequitable to pin the parties to the time mentioned in the contract, then the substance and not the letter of the contract should be taken into account. As observed in the judgment of the Privy Council in -- 'AIR 1915 PC 83 (A)', in construing such contracts that notwithstanding the time that might be fixed in the contract, if the contract is performed within a reasonable time, then specific performance could be ordered of such contracts.

In this case we are in respectful agreement with Sadasiva Aiyar J. that the same principle of equity should not be applied to cases where there has been a sale and an agreement to reconvey. For, once there is sale there is a transfer of title in favour of the purchaser. But in view of there being an agreement to reconvey, the title of the purchaser is practically in abeyance until after the expiry of the period mentioned in the agreement. If the time mentioned in such an agreement is to be construed as not being of the essence of the contract and reasonable time is to be taken as what is contemplated by the parties, then the position of the purchaser would be very difficult as he would not know at what point of time his title to the property would become perfected and not questioned. What a reasonable time is would depend upon many factors and courts will have to come to a conclusion on several circumstances that may be placed in particular cases.

The object of time not being made the essence of the contract is to do justice between the partiea as observed by Lord Cairns in -- '(1867) 3 Ch 61 (B) and if we hold that in respect of an agreement of reconveyance executed by a purchaser who has obtained a sale he must wait not till the expiry of the period fixed but for a reasonable time, we consider we may not be doing justice between the parties for, as already observed, the purchaser's title could not become perfected not until the expiry of the time fixed but until the expiry of reasonable time which is indefinite and elastic.

We are therefore of opinion that in a case where there is no mortgage and where the parties have proceeded on the basis that there was a completed sale and an agreement to reconvey, time must be and is of the essence of the contract and in this case the plaintiff having allowed the period of 16 years to pass would not be entitled to have any rights for specific performance by virtue of the agreement Ex. A.3. Mr. Krishnaswami Aiyangar wanted to distinguish the case in --'AIR 1919 Mad 544 (C)', by reference to the terms of the agreement in the present case, particular emphasis being laid on Ex. A.3 being treated as a counterpart of the sale deed and to the fact of a sum of Rs. 50 having been paid as advance and to another term in the contract which is to the effect that if the vendors fail to get within the period a reconveyance, they shall lose the advance of Rs. 50 that had been paid by them in respect of the document.

It may be that the description of the document as a counterpart may have some bearing if the court is called upon to construe these documents as amounting to a mortgage by conditional sale. But as we have already held that Ex. B.13 Is a completed sale and Ex. A.3 is independent of it, we cannot attach much weight to the fact that the document is described as a counterpart. We do not consider that the mention of the forfeiting of the advance can in any manner changer the character of the document as being an agreement of sale. There is the further term that it the conveyance is not obtained within the period of 16 years, the document would become invalid, That would also show that the parties intended that time should be of the essence of the contract.

9. The other distinction which Mr. Krishna-swami Aiyangar wanted to draw between the decision in -- 'AIR 1919 Mad 544 (C)', is that the contract concerned in that decision was an option contract and that is not so in the present case. There is nothing to show from the decision in --'AIR 1919 Mad 544 (C)', that the contract there was an option contract. What is mentioned to 'Fisher on Mortgages' and which was relied upon by Sadasiva Aiyar J. is that the right of repurchase being vested in only the vendor, that option must be exercised according to the strict terms of the contract and not that the contract itself was an option contract, as commonly understood. When once that option is conferred there Is a corresponding obligation and therefore the option must be exercised according to the terms of the contract within the period fixed. We find that the learned Subordinate Judge is correct in holding that time was of the essence of the contract ana the plaintiff's claim for specific performance was barred.

10. The appeal fails and is dismissed with costs.

11. There is no substance in the memorandum of cross-objections. Defendants 3 to 6 have secured some relief in the suit and it is but proper that they should share the proportionate court-fee payable by the plaintiff which in this case, being a pauper suit, the plaintiff was directed to pay to the Government & recover the proportionate share from defendants 1 to 6. The memorandum of cross-objections is dismissed with costs.

Mack, J.

12. I am in complete agreement with my learned brother that this appeal should be dismissed with costs. I would like to add a few observations. In the first place, I do not think that a suit for specific performance or a suit for redemption of a mortgage of any kind lies within the ambit of a partition suit and that had the objection of misjoinder been taken in the trial court, it would surely have prevailed so far as the relief of specific performance is concerned. But under Section 99, C. P. Code, the parties having gone to trial without any such objection being taken, the finding of the court as regards the alternative relief is binding on all the parties. Mr. Krishnaswami Aiyangar in pressing the amendment of the plaint which we have disallowed sought to cull out a case of mortgage by conditional sale on the basis of the Privy Council decision in -- Narasingerji v. Parthasaradhi Bayanam Garu', AIR 1924 PC 226 (D).

Since that decision, however, the law has undergone a statutory change. A provision was introduced to Section 58, Transfer of Property Act by the amending Act 20 of 1929 which makes it perfectly clear that no transaction involving an agreement to reconvey shall be deemed to be a mortgage unless the condition is embodied in the document which purports to effect the sale. These two documents Exs. A. 3 and B. 13 are of the year 1928, only a few months prior to that amendment. Had they been subsequent to 1929, the new legal position which Mr. Krishnaswami Aiyangar sought to cull out from what appears to be a muddled and indefensible plaint, may have some legal basis. The Amending Act 20 of 1929 is of course not retrospective. Whether an amendment should be allowed or not however is primarily a matter of the court's discretion. I have no hesitation in agreeing with my learned brother that in these circumstances the amendment of the plaint should not be allowed and that we should proceed on the footing that the sale is a separate transaction and as something apart from the agreement to reconvey.


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