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Puliyadi Navanna Ellarayan Vs. Kuttuva China Kuna Muni Nagendra Iyen and anr. - Court Judgment

LegalCrystal Citation
CourtChennai
Decided On
Judge
Reported inAIR1918Mad716; 42Ind.Cas.509
AppellantPuliyadi Navanna Ellarayan
RespondentKuttuva China Kuna Muni Nagendra Iyen and anr.
Cases ReferredTransfer of Property Act and Muthia Chetty v. Sinna Velliam Ohelty
Excerpt:
transfer of property act (iv of 1882), section 55 (4)(b) - vendor and purchaser--delay in payment of purchase. money due to default of vendor--interest, vendor whether entitled to--contract act (ix. of 1872), sections 52, 54. - .....the remainder belonging to his brother who did not join in the contract to sell or in the sale-deed. rs. 300 were paid in advance by the purchasers. plaintiff brought this suit to recover interest from the date fixed for performance of the contract up to the date when he took the balance: of rs. 1,700 out of court. he succeeded,; in the first court, but on appeal the district judge dismissed his suit for two reasons:(1) that the stipulation for payment of interest occurs only in the contract to sell and not m the sale-deed and that the latter must be treated as superseding the former, both documents having been executed on the same day.(2) that plaintiff was himself the cause of the default in payment.2. the stipulation for interest in exhibit b is worded thus:3. 'in the event.....
Judgment:

Spencer, J.

1. The plaintiff sold for Rs. 2,000 a house in which he had only a partial interest, the remainder belonging to his brother who did not join in the contract to sell or in the sale-deed. Rs. 300 were paid in advance by the purchasers. Plaintiff brought this suit to recover interest from the date fixed for performance of the contract up to the date when he took the balance: of Rs. 1,700 out of Court. He succeeded,; in the first Court, but on appeal the District Judge dismissed his suit for two reasons:

(1) That the stipulation for payment of interest occurs only in the contract to sell and not m the sale-deed and that the latter must be treated as superseding the former, both documents having been executed on the same day.

(2) That plaintiff was himself the cause of the default in payment.

2. The stipulation for interest in Exhibit B is worded thus:

3. 'In the event of your failing to pay the said sum of Rs. 1,700 after my executing the sale-deed by the said term you shall pay me at my demand the principal and interest by calculating interest at one and a half per cent, per mensem from date of default'. This evidently indicates the intention of the parties that it should take effect after the execution of the sale-deed. It relates to a matter upon which the sale-deed is silent. It is not possible to gather from the documents that the par-ties intended in the later document to avoid the condition already agreed to in the former document as to payment of interest. I am unable, therefore, to support the learn-ed Judge's conclusion on the first point.

4. On the second point I think we must accept the finding of fact. It is argued that the legal consequence as to the defendants not being liable for interest does not follow, and, the case of Greenwood v. Churchill (1845) 8 Beav 413: 14 L. J. Ch. 143: 68 R. R. 180. and some observations in Section 1412 of Fry on Specific Performance, page 682 (5th Edition are quoted by appellant's Vakil in favour of the view that the purchaser will not be released from the obligation arising from an express condition that he should pay interest. In Greenwood v. Churchill (1845) 8 Beav 413 the sale-deed provided that interest should be paid, 'if any delay arose from, any cause whatever' The Master of the Rolls thought that the express terms of the contract could not be altered and that the purchaser was liable but without prejudice to any application he might make for compensation. On the other hand in Jones v. Gardiner (1845) 8 Beav, 413: 14 L. J. Ch. 143., where the condition was that the purchaser should pay interest for delay if he made default and it was in fact found that the delay occasioned was the fault of the vendor, it was held, referring to Denning v. Henderson (1848) 17 L. 3. Ch. 8: 12 Jur. 89. that the purchaser could not be made to pay interest for delay.

5. In Adusumilli Singarayadu v. Sayani Narayanasami (1912) M. W. N. 915. the vendor failed to give a good title to the property till long after the date fixed for the execution of the conveyance and the payment of consideration. The Judges, of whom my learned brother was one, refused to enforce the stipulation contained in a collateral agreement that interest should be paid by the purchaser from the day specified for payment of the consideration for the sale. They referred to the case of Monck v. Huskisson (1827) 4 Russ. 121 1 Sim. 280., in which under similar circumstances Leach, V. C., declared that the stipulation for interest would not make interest run before the time when a good title was shown, but would only affect its rate. This English decision has been doubted (See Fry, Note to Section 1413) as being difficult to reconcile with another pronouncement by the same Vice Chancellor in Esdaile v. Stephenson (1822) 1 Sim. & St. 122. There, as in Greenwood v. Churchill (1), an express stipulation applying to every delay, however caused, was considered to be binding on the purchaser and he was made to pay interest in spite of an allegation that the delay was attributable to the vendor.

6. In the absence of any express stipulation, the ordinary rule in England is declared in this decision to be that the purchaser is considered as in possession from the date when he completes his contract after the time mentioned for completion and from that moment he takes the rents and profits and pays interest. The same is the law in India. [Vide Section 55 (4)(b) of the Transfer of Property Act and Muthia Chetty v. Sinna Velliam Ohelty (1911) 2 M. W. N. 228 If the rents are much less than the interest and the delay is due to the fault of the vendor, the vendor will not be allowed to take advantage of his own wrong and the Courts will deny him interest.

7. In the case before us the purchasers brought a separate suit Original Suit No. 394 of 1913 for breach of covenant of title and for loss of rent from a date some months after the registration of the sale-deed up to the date of delivery of possession, having previously recovered mesne profits from the date of execution of the sale-deed in another suit, Original Suit No. 619 of 1909.

10. I am of opinion that in the absence of an express condition in the contract for sale to cover all possible causes of delay the general rule must prevail.

8. According to this rule if one of two contracting parties causes the other to commit a breach of one of the conditions of their contract, the party at fault cannot profit by his own fault and exact the penalty for the breach.

9. I think that the plaintiff is not entitled to interest and that the second appeal should be dismissed with costs.

Sadasiva Aiyar, J.

10. I agree with my learned brother that this second appeal should be dismissed with costs. I am, however, inclined to uphold both the reasons on which the District Judge based his decision dismissing the plaintiff's (appellant's) suit.

11. The District Judge finds as a fact that both parties intended that the contract of sale under Exhibits B and B-1 should be superseded when later on that same day, the plaintiff executed the sale-deed Exhibit A. The 1st defendant as his 1st witness says that when the agreement B was executed, it was represented to him that the whole house belonged to the plaintiff' under a Court auction-purchase, but when the sale certificate was afterwards shown to him on the same day, the 1st defendant found that it stood in the names of both the plaintiff and his brother. The 1st defendant remonstrated. Thereupon, the agreement found in Exhibits B and B-1 (dated 19th October 1908) to give time to the plaintiff till 13th November 1908 to execute the document of sale and the corresponding agreement on the plaintiff's part to give time to the 1st defendant to pay the balance of the purchase-money, (Rs. 1, 700) till that same date (13th November 1908) were rescinded by mutual consent and the plaintiff agreed to execute the sale-deed Exhibit A at once mentioning in that sale-deed that the money Rs. 1,700 was received before the Registering Officer and the plaintiff further promised to execute an indemnity bond on the next day. I think the District Judge believed the 1st defendant's evidence in this matter when he arrived at the finding that' the contract of sale was superseded by the sale-deed. Perhaps the better way of stating the matter would have been, not that the sale-deed itself superseded the contract under Exhibits Band B-1, but that just before the sale-deed was written a distinct subsequent oral agreement came into existence modifying B and B-1 in the following ways: (a) the plaintiff's promise to execute the sale-deed was to be performed on the very same day, (b) an indemnity bond was to be executed the next day by plaintiff and (c) the payment of the balance of the purchase-money was to be made at the time of the registration of the sale-deed and not on or before 13th November 1908. Such an oral agreement can be proved (see Section 92 of the Evidence Act). The finding by the District Judge of such a subsequent oral agreement is a finding of fact which we could not interfere with in second appeal and on that finding, the plaintiff's suit based upon the agreements B and-B-1 was rightly dismissed.

12. On the second question, I think that the plaintiff's default in executing the indemnity bond disabled him from insisting upon the payment of the balance of the purchase-money. Sections 52 and hi of the Contract Act are as follows:

16. 52. Where the order in which reciprocal promises are to be performed is expressly fixed by the contract, they shall be performed in that order; and, where the order is not expressly fixed by the contract, they shall be performed in that order which the nature of the transaction requires.

13. 54. When a contract consists of reciprocal promises, such that one of them cannot be performed, or that its performance cannot be claimed till the other has been performed, and the promisor of the promise last mentioned fails to perform it, such promisor cannot claim the performance of the reciprocal promise and must make compensation to the other party to the contract for any loss which such other party may sustain by the non-performance of the contract.

14. I think the nature of the modified contract for sale of land proved by the 1st defendant is such that the plaintiff cannot claim to be paid Rs. 1,700 at the time of the registration of Exhibit A, as he had not performed his promise to execute the indemnity bond which promise ought from the nature of the transaction to have been performed first, before he could claim the balance of purchase-money. The obligation of the plaintiff to give the indemnity bond ceased only when the 1st defendant dispensed with it in August 1910. (See judgment Exhibit D-1). The plaintiff claims interest in this suit only till the 30th August 1910 and such claim was rightly dismissed as he had no right to claim the Rs. 1,700 till the defendants dispensed with the indemnity bond.

15. As the English cases do not deal clearly with the difficult questions whether where the title to only a fraction of the property sold was established ultimately as in this case, the vendor is entitled to interest at all and if so whether he could claim interest on a proportionate fraction of the unpaid purchase-money corresponding to the fraction to which the title of the vendor was established and what the date is from which interest is to be calculated and no definite principle can be deduced from those English cases on these points, I do not think it necessary to refer to them in detail.


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