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Prasanta Kumar Sur Vs. International Contractors Ltd. - Court Judgment

LegalCrystal Citation
SubjectProperty;Contract
CourtKolkata High Court
Decided On
Case NumberA.F.O.D. No. 127 of 1950
Judge
Reported inAIR1955Cal101,59CWN675
ActsSpecific Relief Act, 1877 - Section 12; ;Transfer of Property Act, 1882 - Section 54; ;Contract Act, 1872 - Section 55
AppellantPrasanta Kumar Sur
Respondentinternational Contractors Ltd.
Appellant AdvocateAtul Chandra Gupta, ;Aloke Gupta and ;Amal Kumar Bose, Advs.
Respondent AdvocateSitraram Banerjee, Shyama Charan Mitra and ;Manan Kumar Ghose, Advs.
DispositionAppeal allowed
Cases ReferredChelikani Venkatarayanim Garu v. Venkata Subadrayamma
Excerpt:
- .....provisions contained in the agreement ex. 1 did not affect the rights of the plaintiff to bring a suitfor specific performance after 10-2-1943. 8. mr. banerjee on the other hand contends that time being the essence of the contract as under the agreement the provisions required the plaintiff to tender in the first instance the totalamount of the consideration before the completion of the period of two years from the date of the agreement and only on such payment would the defendant execute the conveyance in his favour. the letter dated 18-12-1942 written on behalf of the defendant to the plaintiff could not be interpreted as a refusal or repudiation. clause 3 of the agreement clearly provided thatafter 10-2-1943 the agreement had become wholly inoperative and unenforceable. 9. before we.....
Judgment:

R.P. Mookerjee, J.

1. This is a plaintiff's appeal which arises out of a suit brought by him for specific performance of a contract for the sale of the property in suit. The relevant facts are almost all admitted ones.

2. Premises No. 83, Bagmari Road in the eastern suburbs of Calcutta originally belonged to the plaintiff and his co-sharers. The northern portion of the said premises came to be possessed by the plaintiff alone. On or about 4-2-1941 the plaintiff executed in favour of the defendant company, a conveyance in respect of the separated northern portion of the said premises for & consideration of Rs. 10,000/-.

3. The plaintiff's case is that he was in urgent need of Rs. 10,000/-. He had proposed to the defendant Company for an advance of Rs. 10,000/- on the security of the said property. The defendant refused to accept the property on mortgage but was agreeable to pay Rs. 10,000/-on the plaintiff executing a conveyance in respect of the said property. The defendant also agreed to execute an agreement for re-sale simultaneously with the execution of the conveyance for a consideration of Rs. 10,001/- on condition that the said consideration was paid and the transfer obtained within two years of the execution of the agreement. The plaintiff executed the conveyance on 4-2-1941. On 10-2-1941 such an agreement also was signed.

On 26-11-1942 i.e. within twenty-two months of the date of the agreement the plaintiff offered to the defendant company to complete the purchase and sent a draft conveyance for approval. Certain letters were exchanged between the parties thereafter and ultimately on 18-12-1942 the defendant refused to complete the transaction on the allegation that there had been no concluded or valid agreement of sale as alleged. Pour months alter the expiry of the period of two years from the date of the agreement the present suit was filed on 10-6-1943. The plaintiff claimed that he was entitled to specific performance of the, contract for sale on payment of Rs. 10,001/- at the cost of the plaintiff. There was an alternative prayer for a decree for redemption on the footing that the transaction was in reality a mortgage and for consequential reliefs.

4. The defence as originally filed was on the footing that the alleged contract was not a genuine one. Even if it were found to be genuine the plaintiff was not entitled to any relief as he had not tendered the amount of consideration. The plaintiff was also alleged not to be in a position to make the payment at the relevant time and he could never have been ready and willing to perform the contract. The alternative claim for redemption was also resisted.

5. The learned Subordinate Judge on the evidence came to the conclusion that the story as set up by the plaintiff that the original proposal by the plaintiff to the defendant was for a loan on a mortgage of the premises in question, which had been denied by the defendant, was true. Though the transaction was in fact intended to be a mortgage by conditional sale, in view of Section 53(c), Transfer of Property Act, as amended by Act 20 of 1929, the transaction could not be treated as a mortgage by conditional sale. The conditions of re-sale had not been embodied in the conveyance Ex. C. Had the case not been governed by the proviso to Section 58(c), Transfer of Property Act the transaction would have been held to be a mortgage by conditional sale. The then market value of the property was found to be much higher than Rs. 10,000/- which had been stated to be the consideration for the conveyance.

6. The agreement Ex. 1 was found to be a genuine and valid document. The Court further came to the conclusion that the contract could be enforced specifically unless there was some other legal bar. The learned Subordinate Judge thereafter found that the plaintiff not having tendered the full amount as mentioned in the agreement he was not entitled to pray for specific performance of the contract. The repudiation of the contract by the defendant did not entitle the plaintiff to claim specific performance without having performed completely his part of the contract. On an interpretation of the agreement Ex. 1 it was, further held that on 10-2-1943 the said agreement had become inoperative and stood cancelled. The plaint having been filed pfter that date the suit was not entertainable. Time being the essence of the contract and the agreement having become inoperative after 10-2-1943 the plaintiff was not entitled to any relief.

7. Mr. Gupta appearing on behalf of the appellant contends that on the findings reached by the lower Court about the due execution and the binding nature of the agreement Ex. 1 the plaintiff is entitled to claim specific performance of the contract. The defendant having repudiated the contract on 18-12-1942 it was not necessary for the plaintiff to make a formal tenderwhich was surely to be refused by the defendant. The fact that the amount was not tendered would not affect the right of the plaintiff toclaim specific performance. Further, the provisions contained in the agreement Ex. 1 did not affect the rights of the plaintiff to bring a suitfor specific performance after 10-2-1943.

8. Mr. Banerjee on the other hand contends that time being the essence of the contract as under the agreement the provisions required the plaintiff to tender in the first instance the totalamount of the consideration before the completion of the period of two years from the date of the agreement and only on such payment would the defendant execute the conveyance in his favour. The letter dated 18-12-1942 written on behalf of the defendant to the plaintiff could not be interpreted as a refusal or repudiation. Clause 3 of the agreement clearly provided thatafter 10-2-1943 the agreement had become wholly inoperative and unenforceable.

9. Before we consider the questions of law raised on behalf of the parties before us it is necessary that the provisions contained in the agreement should be carefully examined.

10. Ex. 1 being the memorandum of agreement was in the usual form whereby the vendor agreed to sell and the purchaser agreed to purchase the property in suit for Rs. 10,001/-.

11. The relevant portions of Clauses 3 and 4 maybe quoted:

'Clause 3 : The purchase shall be completed by the purchasers within two years i.e. to say, on or before 10-2-1943, time being the essence of the contract. If the purchasers shall on or before 10-2-1943 pay to the vendor a sum of Rs. 10,001/- the vendor shall at the cost of the purchasers execute such conveyance as may be necessary for conveying and transferring its right, title and interest in the said property free from encumbrances if any created by it, and shall also make over such documents of title relating to the same as it may have in its possession provided always that the conveyance shall be executed by the vendor in favour of the said Prasanta Kumar Sur if he be living at that time and failing him, in favour of the said Dilip Kumar Sur if the latter be then living and failing the said Dilip Kumar Sur, in favour of the said Srimati Kalyani Bala Sur.

Clause 4 : This agreement shall become inoperative and stand cancelled after 10-2-1943.'

12. It is evident that the parties intended that the purchase would be completed within two years that is on or before 10-2-1943. Who is to take the initiative in this matter and at what stage the consideration is to be paid by the purchaser?

13. That the purchaser is willing and ready to complete the transaction is in the first instance to be intimated by him.

14. The ordinary rule governing vendors and purchasers is that the payment of the consideration is to be simultaneous with and at the time when the conveyance is executed by the vendor. See -- 'Nicholson v. Smith', (1882) 22 Ch D 640 (A) also see -- 'Protap Chandra v. Kali Charan', : AIR1952Cal32 . In any particular case, however, the parties may agree to deviate from the ordinary rule. Unless, therefore, there be any special contract the parties are to follow the normal rule governing vendors and purchasers.

15. Does Clause (3) in the agreement of the present case introduce any special contract as between the parties requiring the payment of the consideration not at the time of the execution of the conveyance but before the same?

16. In our view Clause (3) taken as a whole does not introduce any special arrangement but describes merely the normal practice.

17. From the evidence adduced in this case it is disclosed' that on 26-11-1942, sometime before the expiry of the period of two years, the plaintiff had through his solicitor intimated the defendant Company his desire to complete the purchase In terms of the agreement. The draft conveyance also was sent by the solicitor to the defendant for approval. The attitude taken up on the defendant's side was feigning ignorance of the agreement itself. Execution of the agreement was denied and the document was described to be a spurious one. The letter sent by the defendant's solicitor on 18-12-1942 conveyed the information as aforesaid and the draft conveyance was returned along with the same.

18. On these facts it must be held that the plaintiff had within the period intimated his readiness to complete the transaction and the defendant had refused either to accept the contract as valid and binding or to act according to the terms thereof.

19. We shall consider at the proper place the objection raised on behalf of the defendant that the offer made by the plaintiff was neither legal nor sufficient in the eye of law as the consideration money was not paid along with the letter intimating readiness to complete the transaction.

20. As stated already the defendant has not contested before us the finding that the document was not a spurious one but valid and binding. It, therefore, remains for us to consider the implications thereof.

21. We may at this stage dispose of one other argument advanced by the defendant that the plaintiff's claim had become barred on the date the suit was filed. It is argued that under Clause (4) the contract itself became unenforceable on the expiry of two years and the suit having been filed after the expiry of that period it had become barred. This is wholly untenable. Clause (4) requires that necessary steps are to be taken before 10-2-1943 and if such steps are not taken the rights of the plaintiff to get a conve-yance will be lost. The Intimation by the plaintiff to the defendant that he was ready and willing to abide by the terms might have been kept pending by the defendant till the last day. A suit for specific performance therefore if brought after the period so fixed and after giving an opportunity in the present case to the defendant to change his mind and act according to the terms would not have the effect of making the suit barred.

22. The repudiation of the contract by the defendant as conveyed in the solicitor's letters cannot be taken to be an irrevocable decision by the defendant. It was open to the Company to reconsider the portion and agree to act according to the terms. If the suit by the plaintiff had been one for damages it could have been contended that the cause of action was as from the date of the repudiation (Plorrie Edridge v. Rustomji Danjibhoy ). For filing a suit for specific performance, however, the plaintiff had rightly waited till after 10-2-1943. The language used in Clause 4 of the agreement does not stand in the way.

23. We have next to consider whether the failure on the part of the plaintiff to actually tender the amount of the consideration bars a suit for specific performance. There is no question that there had been an express repudiation of the contract by the defendant as conveyed in the solicitor's letter dated 18-12-1942. Was it necessary for the plaintiff after such clear repudiation to tender the amount of the consideration? Such a tender would be a useless formality when the defendant repudiates the contract itself.

24. Non-performance of some of the terms of the contract on part of the plaintiff in a suit for specific performance is excused when that has resulted from the default of the vendor defendant -- 'Hotham v. East India Co.', (1787) 1 TR 638 (D); -- 'Manik Chandra v. Abhoy Cha-ran', AIR 1917 Cal 283 (E).

25. Reference may also be made to the principle enunciated by Wigram V.C. in -- 'Hunter v. Daniel', (1845) 4 Hare 420 at p. 433 (F), referred to with approval by the Judicial Committee in -- 'Chelikani Venkatarayanim Garu v. Venkata Subadrayamma', AIR 1923 PC 26 at p. 28 (G) :

'The practice of the Courts is not to require a party to make a formal tender where from the facts stated in the Bill or from the evidence it appears the tender would have been a mere form and that the party to whom it was made would have refused to accept the money.'

26. The result, therefore, is that the plaintiff's claim for specific performance must be held to be well founded. This appeal is accordingly allowed and the judgment and the decree passed by the lower Court are set aside. The plaintiff is directed to deposit in the Court below Rs. 10,001/- within two months from this date and the defendant Company is directed to execute the conveyance within one month from the date of the deposit as aforesaid and execute and register the same at the cost of the plaintiff andif the defendant Company refuses or neglects to execute and/or register the said conveyance within the time so granted the Court below will execute the same on behalf of the defendant Company. If the plaintiff fails to deposit Rs. 10,001/- within the date fixed as aforesaid this appeal will stand dismissed with costs. If the deposit by the plaintiff is made within the due date the plaintiff will be entitled to the costs of the trial Court and of this Court.

Renupada Mukherjee, J.

27. 1 agree.


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