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Arunachala thevan Vs. Madappa thevar and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai
Decided On
Reported inAIR1936Mad949; 166Ind.Cas.852
AppellantArunachala thevan
RespondentMadappa thevar and ors.
Cases ReferredRanga Reddi v. Pichi Reddi
Excerpt:
- - section 27, clause (b), specific relief act, will disentitle the plaintiff to specific performance only if defendants 2 to 5 are found to be transferees for value who have paid their money in good faith and without notice of the original con-tract. after the registration of the document, title clearly passed to defendants 2 to 5 and if no consideration passed, it is the look out of defendant 1 himself. before denying specific performance to the plaintiff, the court must, in terms of section 27, clause (b), be satisfied that the transferees paid money in good faith and without notice of the original contract......on 29th november 1927 defendant 1. executed a sale deed in respect of the same properties in favour of defendants 2 to 5. hence this suit for specific performance. defendants 2 to 5 contended that they were bona fide purchasers for value without notice of the plaitiffs's agreement, and this point was raised by issues 2 and 3. the trial court found against defendants 2 to 5 on both points and decreed the plaintiff's suit. the lower appellate court has reversed that decision and dismissed the plaintiff's suit. hence this appeal.2. though at the end of para. 8 of its judgment, the lower appellate court winds up with the words:defendants 2 to 5 have discharged the onus of proving that they were bona fide purchasers for value without notice of the agreement,i cannot help thinking that.....
Judgment:

Varadachariar, J.

1. This second appeal arises out of a suit for specific performance of an agreement for sale of certain properties entered into by defendant 1 with the plaintiff on 20th November 1927. Defendants 2 to 5 denied the agreement but both the Courts have found in favour of its genuineness. On 29th November 1927 defendant 1. executed a sale deed in respect of the same properties in favour of defendants 2 to 5. Hence this suit for specific performance. Defendants 2 to 5 contended that they were bona fide purchasers for value without notice of the plaitiffs's agreement, and this point was raised by issues 2 and 3. The trial Court found against defendants 2 to 5 on both points and decreed the plaintiff's suit. The lower appellate Court has reversed that decision and dismissed the plaintiff's suit. Hence this appeal.

2. Though at the end of para. 8 of its judgment, the lower appellate Court winds up with the words:

Defendants 2 to 5 have discharged the onus of proving that they were bona fide purchasers for value without notice of the agreement,

I cannot help thinking that the lower Court has not realized that the defendants must establish both parts of the plea, viz., absence of notice and payment of consideration without notice. On the question of notice, I am not disposed to interfere with the finding of the lower appellate Court, that even at the time of the registration of the sale deed in their favour it has not been shown that defendants 2 to 5 had notice of the agreement in plaintiff's favour.

3. In setting out the points for determination, in para. 5 of its judgment, the lower appellate Court curiously enough refers only to the absence of knowledge of the prior agreement and forgets the other ingredient of payment of consideration before notice. Section 27, Clause (b), Specific Relief Act, will disentitle the plaintiff to specific performance only if defendants 2 to 5 are found to be transferees for value who have paid their money in good faith and without notice of the original con-tract. By a misapplication of certain cases where no question of specific performance arose the learned Subordinate Judge starts the discussion of the question of payment with the following three sentences:

The consideration for Ex. C is quite foreign to the scope of this suit. Even if no consideration passed for that document, that is a matter purely between defendants 2 to 5 on the one hand and defendant 1 on the other. After the registration of the document, title clearly passed to defendants 2 to 5 and if no consideration passed, it is the look out of defendant 1 himself.

4. This view is obviously wrong; and the learned Counsel for the respondents does not attempt to support it. Before denying specific performance to the plaintiff, the Court must, in terms of Section 27, Clause (b), be satisfied that the transferees paid money in good faith and without notice of the original contract. It is obvious from the terms of the section, that the payment of consideration must have been made before they had notice. This is made clear by the decision of the Bombay High Court in Himatlal Motilal v. Vasudev Ganesh (1912) 36 Bom 446. In the present case the consideration is made up of three heads : (1) The discharge of certain debts due to defendants 2 to 5 and to their mother; (2) a payment of Rs. 70 before the Sub-Registrar and (3) another cash payment of Rs. 700. There is no dispute about the existence of the debts referred to under head (1); the cash payment of Rs. 70 before the Sub-Registrar is also proved by his endorsement. As regards the third item, viz., Rs. 700, a registration copy of a mortgage bond alleged to have been executed on the same day in favour of another person for the purpose of raising money to pay Rs. 700, to defendant 1 has been put in, and there is some oral evidence in respect of the receipt of money under this mortgage and payment thereof to the vendor. In the view that the learned Judge took as to the relevancy of the question of consideration, he has not discussed the truth' or otherwise of the various steps relating to the payment of Rs. 700, nor has he considered the question whether the direction to utilise part of the consideration in discharge of the debts due to themselves and their mother will amount to a payment or not or when endorsements of discharge were accordingly made. I do not wish to say more in this connexion than to invite attention to the decision of this Court in Ranga Reddi v. Pichi Reddi 1915 1 M L W 879.

5. I must call upon the lower appellate Court to submit a finding on the question of payment of consideration for the sale deed in favour of defendants 2 to 5, firstly, with reference to the factum of payment and, secondly, whether such payment, if any, was made before defendants 2 to 5 had notice of the agreement in plaintiff's favour. I shall leave it to the lower Court to consider whether the parties should be given an opportunity of adducing further evidence. If it sees reason to think that the defendants have in any degree been misled by what happened before the trial Court and have, therefore, not led all the evidence which they should have led under issues 2 and 3, it may permit them to lead fresh evidence, and in that case give the plaintiff an opportunity of letting in rebutting evidence. Finding should be submitted by 15th July 1935. Ten days' time is allowed for filing objections.

(On receipt of finding, the following final judgment was delivered)

6. The finding of the lower appellate Court, which, I accept, is to the effect that the cash portion of the consideration for the sale in respondent's favour was paid before they had notice of the contract in plaintiffs favour. The balance of the consideration except Rs. 50 is treated as debt due from the vendor to the vendees themselves, though in one case the document stood in their mother's name. These debts must be treated as discharged by the execution of the sale deed and on the footing they will also count in the vendee's favour as payment of consideration without notice of the plaintiff's claim. As regards the Rs. 50 due under an othi in favour of a third party it is really not a part of the consideration, but a direction that the vendees as purchasers of the equity of redemption should redeem that othi. In this view, the contesting respondents must be held to be purchasers for value without notice. On this ground I affirm the decree of the lower appellate Court and dismiss this second appeal with costs of respondents 1 to 4 including costs before the lower appellate Court in connexion with the finding inquiry. (Leave to appeal is refused.)


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