Skip to content


Prem Sukh Gulgulia and anr. Vs. Habib Ullah and ors. - Court Judgment

LegalCrystal Citation
SubjectContract;Property
CourtKolkata
Decided On
Reported inAIR1945Cal355
AppellantPrem Sukh Gulgulia and anr.
RespondentHabib Ullah and ors.
Cases ReferredMahammad Emartulla v. Mahammad Didar Bux
Excerpt:
- .....and (2) it must be by the beneficial owner or a person who claims the property through him. nim chand's suit for declaration of title or for possession against prem sukh would have been barred, as the case is that prem sukh, the certified purchaser at the court sale was his benamidar. if nim chand instead of suing himself had sold those properties to the plaintiffs, the plaintiffs' suit against prem sukh would also have been barred, as the plaintiffs would be persons claiming the properties through nim chand. this is clear from the section itself. the question however is, can a person who had entered into a contract for sale with beneficial owner maintain a suit for specific performance against the certified purchaser on the ground that the latter was the benamidar of his vendor. the.....
Judgment:

1. Nim Chand, who is defendant 1, in the suit in which the appeals arise, instituted a suit (Money Suit No. 78 of 1932) against three persons, Sorab, Habib Ulla and Nasib, to recover money said to be due on a promissory note. During the pendency of the suit, he attached before judgments lots Nos. 1 to 41 described in the plaint of the suit we have before us. That suit was ultimately decreed for RS. 3500 against Nasib only and was dismissed against Sorab and Habib Ulla. Nim Chand started execution proceedings (NO. 341 of 1935) against Nasib. He attached more properties--lots Nos. 42 to 63--as belonging to Nasib. He alleged that the properties which he had attached before judgment as well as these properties belonged exclusively to Nasib. Sorab and Habib Ulla filed claims in the execution proceedings, stating that some of the properties attached belonged to them exclusively and in the rest they had shares. Those claims being dismissed they filed a title suit against Nim Chand and Nasib being No. 260 of 1935 under Order 21 Rule 63, Civil P. C. The execution proceedings were not, however, stayed. That suit was compromised on 30th October 1935 and on the same day a written agreement between Nim Chand and Sorab and Habib Ulla, which has been marked as Ex. 1, was executed. This agreement was executed by Loonkoran Bhutra alias Lonji Babu on behalf of Nim Chand. Loon-koran is an officer of Nim Chand holding a general power of attorney from the latter. Sorab and Habib Ulla admitted that Nasib was the exclusive owner of all the properties attached (namely lots 1 to 63). The agreement embodied in Ex. 1 was that if Nim Chand was successful in purchasing those properties at the execution sale, which was to take place the next day, he would convey a third share to Sorab and Habib Ulla for a consideration of Rs. 300 (which was paid on the date of the agreement), that if he failed to purchase the same but a third party purchased, he would refund the said sum of Rs. 300 and if he purchased some and a stranger purchased the rest he would make a proportionate refund. This last mentioned clause necessarily implied that he would convey to Sorab and Habib Ulla one-third share of the properties which he would purchase at that execution sale in case he failed to purchase the whole lot. He promised to execute the conveyance after the confirmation of the sale and after he got possession through Court.

2. On the next day the Court held the sale. Lots Nos. 1 to 4, 7, 36 to 41, 48, 60 and 63, which were the most valuable of the properties attached and which included the plot on which Sorab and Habib Ulla had their dwelling houses, were purchased ostensibly by Prem Sukh Gulgulia, who is defendant 2, and the rest purchased by Nim Chand. The total bid of Nim Chand and Prem Sukh did not reach the decretal amount. The sale certificates were issued in the names of Nim Chand and Prem Sukh for the properties they respectively had purchased in the said sale. Prem Sukh is a friend of Nim Chand and has been found by the lower appellate Court to be a benamidar of Nim Chand. In fact the allegation is that at his intervention the compromise of Title Suit No. 260 of 1935 was brought about in the manner stated above. The finding of the learned Judge on the question of benami has not been, as it could not be, challenged before us.

3. After the confirmation of the sale, there was some difference between Sorab and Habib Ulla on the one part and Nim Chand on the other respecting the execution of conveyance. Those differences were settled in April 1936 by Nim Chand agreeing to get a release from Prem Sukh in a short time in respect of the properties for which the sale certificate stood in the latter's name and then to execute the conveyance in favour of the plaintiffs for all the lots--Nos. 1 to 63. In case, he failed to get the deed of release from Prem Sukh within a reasonable time he promised to execute the conveyance with a recital that Prem Sukh was his benamidar for the properties which stood in Prem Sukh's name. The learned District Judge finds that this agreement, which is pleaded in para. 9 of the plaint, has been proved. The conveyance was not however executed, and Nim Chand made it quite clear by his later conduct that he was not prepared to execute it. Sorab died leaving plaintiffs 2 and 3 as his heirs. They with Habib Ulla, who is plaintiff 1, filed the suit, on 14th March 1939, which is a suit for specific performance of the contract embodied in Ex. 1. They prayed for a conveyance of all 63 items of property. Nim Chand is defendant 1 in the suit and Prem Sukh has been joined as defendant 2 with an allegation that he is the benamidar of defendant 1 in respect of the items we have mentioned above. Important averments concerning the purchase of those valuable items of property by Nim Chand in the benami of Prem Sukh have been made in para. 8 of the plaint, and we will deal with those allegations hereafter, when we would be considering the effect of Section 66(2), Civil P. C.

4. The trial Court found that the agreement for sale embodied in Ex. 1, which had been executed by Loonkoran purporting to act as the authorised agent of Nim Chand, was binding on the latter, that Section 66, Civil P. C., did not affect the suit and that the suit had been instituted within time. It, however, held that that agreement was not good in law being against the provisions of Section 6(a), T. P. Act, that the agreement of April 1936, which had been pleaded in para. 9 of the plaint was not proved and that defendant 2 was not a benamidar of defendant 1. It also held that in any event there could not have been a decree for specific performance of items 36 to 41, as those items consisted of structures only and there was no contract for sale of structures. On the view that the only contract for sale which had been proved was not good in law the suit was dismissed by the trial Court. On an appeal by the plaintiff, the learned District Judge has reversed that judgment and decree and has decreed the plaintiff's suit. The learned District Judge found that, (i) the contract for sale as embodied in Ex. 1 included items 36 to 41, (ii) that the said contract was good in law, (iii) that defendant 2 was benamidar for defendant 1, that the subsequent contract of April 1936 as pleaded in para. 9 of the plaint has been established and that Section 66(1), Civil P. C., did not debar the plaintiffs from getting a decree for specific performance in respect of the properties purchased ostensibly by defendant 2. Against his decree these two second appeals have been filed--one, being NO. 1302 of 1940, by defendant 1 (Nim Chand) and the other, being No. 1296 of 1940 by defendant 2 (Prem Sukh). The points urged by the appellant in the first mentioned appeal are: (1) that the contract as embodied in Ex. 1, as also the contract pleaded in paragraph 9 of the plaint are not binding on him as Loonkoran had no authority to enter into such a contract on his behalf; (2) that assuming the contract embodied in Ex. 1 to be binding on him it is not valid in law, it being a contract for sale of an expectancy; and (3) that in any event the suit is barred by limitation.

5. The only point urged by the appellant in the other appeal is that there cannot in law be a decree for specific performance in respect of the items of property for which the sale certificate has been issued in his name, in view of Section 66(1), Civil P. C. We will first deal with the points raised in the appeal filed by defendant 1. Loonkoran is the principal officer and am-muktear of Nim Chand. The am-muktarnama is Ex. A. The point depends upon the construction of that document. There is no express term in that document authorising Loonkoran to enter into contracts for sale of land on behalf of his principal. He is, however, expressly authorised to conduct litigations on his principal's behalf and to compromise litigations by signing solenamahs. The last mentioned power makes the agreement embodied in Ex. 1 binding on Nim Chand, his principal, for that agreement was the essential part of the compromise of the plaintiffs' Title Suit No. 260 of 1935. The agreement of April 1936 was only a confirmation of the agreement for sale as embodied in Ex. 1. We therefore overrule this point. (2) We have already recited the terms of the contract for sale, Ex. 1. At the time of the execution of the said contract, Nim Chand had no title to any one of the properties he agreed to sell. He expected to buy them at the court sale to be held the next day. Section 6(a), T. P. Act, in terms applies only to transfers of immovable property. As in India a contract for sale does not pass any title from the seller to the purchaser by reason of Section 54, T. P. Act, that section does not directly make Ex. 1 illegal. But, it cannot now be doubted by reason of the express decision of the Judicial Committee in Annada Mohan Roy v. Gour Mohan Mullick ('23) 10 A. I. R. 1923 P. C. 189, that where an actual conveyance of a thing would be illegal by reason of Section 6(a), T. P. Act, as for instance the sale of the so-called interest of a Hindu reversioner of the last male owner when his widow is alive, an agreement to sell that interest would also be bad. This proposition follows from Section 23, Contract Act, which enacts, that the consideration or object of an agreement would not be lawful if it is of such a nature that, if permitted, would defeat the provisions of any law. The question therefore is whether what has been agreed to be sold by Ex. 1 is a 'mere possibility of a like nature' as the expectancy of an heir apparent or the expectancy of a relation to get a legacy from a kinsman then living. There was no doubt an element of chance so far as Ex. 1 was concerned at the time of its execution, for the vendor may or may not have been successful in buying any one item of property at the court sale, that was to be held later on; but the chance was not so remote as in those two cases mentioned, namely, of the heir apparent or of the relation to obtain a legacy from a living kinsman. Transfers of non-existent, or as it is conveniently called after-acquired property, provided they are not of the nature contemplated in Section 6(a), T. P. Act, are perfectly valid. The transfer would be regarded in a Court of justice as a contract to transfer after the vendor had acquired title and would fasten upon the property as soon as the vendor acquires it: Holroyd v. Marshall (1864) 10 H. L. C. 191, Collyer v. Isaacs (1882) 19 Ch. D. 342 and Tailby v. Official Receiver (1888) 13 A. C. 523. The principles laid down in those cases have been followed in India: see Khobhari Singh v. Ram Prosad Roy ('08) 7 C. L. J. 387. If that be so, we do not see any ground for holding a contract for sale of non-existent property, that is, of property which is not of the vendor's at the time of the contract, but which the vendor thinks of acquiring by purchase later on, to be bad in law. There is nothing in the Contract Act or in law which makes it invalid. The second point is accordingly overruled. (3) We do not see any substance in the point of limitation. Article 113, Schedule 2, Limitation Act, applies. As there is no fixed time for performance mentioned in Ex. 1, time would run from the date of refusal by the vendor to convey. In this case the facts lead to the only conclusion that the refusal by defendant 1 to convey was later than April 1936, for the finding of the learned District Judge that even in April 1936, Lunkoran who was Nim Chand's principal officer and was all in all assured the plaintiffs that the conveyance would be executed as soon as defendant 2 would execute a deed of release. The suit was filed on 14th March 1939, which is well within three years of the refusal.

6. On these conclusions the plaintiffs are entitled to get a decree for specific performance in respect of the properties for which the sale certificate stands in the name of defendant 1. They would be entitled to a decree in respect of the other properties if Section 66(1), Civil P. C., does not stand in their way. This question which has been raised in Appeal No. 1296 must therefore be considered. The learned Munsif did not bestow such attention to the question as its importance demands. The learned District Judge was more elaborate, but we cannot support the reasons which he has given in support of his conclusion that that section did not debar the plaintiff from getting a decree for specific performance in respect of the properties ostensibly purchased by defendant 2 at the said court sale. The learned District Judge held that where there is a contract by the benamidar, who had purchased at a court sale, to convey the property to the beneficial owner, the suit by the beneficial owner is not affected by Section 66(1) of the Code, where the contract is made after the court sale. Relying upon that proposition of law he held that Section 66(1) did not debar the plaintiff from getting specific performance in respect of the properties which stand in the name of defendant 2, as the plaintiffs had proved the contract of April 1936, pleaded in para. 9 of the plaint, which was after the court sale at which defendant 2 had purchased. The proposition of law has been correctly stated by the learned District Judge. It has had the approval of the Judicial Committee of Privy Council in Ramathai Vadivelu v. Peria Manicka ('20) 7 A. I. R. 1920 P. C. 30, but the learned District Judge has misapplied it to the facts of this case, as defendant 2, the benamidar, was not a party to that contract. The point therefore must be considered afresh.

7. Section 66 is divided in two sub-sections. Sub-section (2) is an exception to the substantive enactment which is in Sub-section (1). For the present we would leave out of consideration the provisions of Sub-section (2) and whatever observations we make in this part of the judgment relate to Sub-section(1). To attract the operation of that sub-section, the suit (and suit may be of any character) must be (1) against the benamidar certified purchaser or his privies; and (2) it must be by the beneficial owner or a person who claims the property through him. Nim Chand's suit for declaration of title or for possession against Prem Sukh would have been barred, as the case is that Prem Sukh, the certified purchaser at the court sale was his benamidar. If Nim Chand instead of suing himself had sold those properties to the plaintiffs, the plaintiffs' suit against Prem Sukh would also have been barred, as the plaintiffs would be persons claiming the properties through Nim Chand. This is clear from the section itself. The question however is, can a person who had entered into a contract for sale with beneficial owner maintain a suit for specific performance against the certified purchaser on the ground that the latter was the benamidar of his vendor. The question boils down to this, namely, whether the intending purchaser can be said to be claiming the property through the beneficial owner. The plaintiffs-respondents urge that he cannot be considered to be claiming the property through the beneficial owner, as a contract for sale passes no title. We however think that when such an intending purchaser claims specific performance against the certified purchaser on the ground that he is his vendor's benamidar, he does claim through his vendor. The language of the enactment is sufficiently wide to cover the case.

8. The necessary parties in a suit for specific performance of a contract for sale are the parties to the contract, or if they are dead their legal representatives, as also a person who had purchased the property from the vendor after the contract. He is a necessary party as he would be affected, if he is volunteer, or if a purchaser for value, had purchased with notice of the contract. A person who claims adversely to the vendor is, however, not a necessary party. Where the property stands in the name of a person other than the vendor, and the suit for specific performance is brought by the purchaser, that person may be joined as a defendant as a proper party on an allegation that he is the benamidar of the vendor but if he appears and contends that he is not the benamidar of the vendor the proper procedure would be to discharge him from the suit, leaving it to the plaintiff in the suit for specific performance to institute a suit against him after he had got the conveyance in execution of the decree for specific performance against his vendor. This is on the principle that the scope of a suit for specific performance of a contract for sale ought not to be enlarged and the suit turned also into a title suit between one of either of the parties to the contract and a stranger to the contract. A simple illustration would make the point clear. B agrees to sell a property to A. After the contract A gets a notice from a third party (C) informing him that the property is not of his vendor's (B) but of the claimant, C, and that be would be purchasing it at his risk. Thereafter B refuses to execute the conveyance on the ground that the contract had been discharged by breach on A's part. We do not see on what principle A would be allowed to bring a suit against B and C asking the Court to determine first the question whether B or C is really the owner and then if it finds B to be the owner to decree specific performance against him. C can well contend that he cannot be compelled to prove his title in a suit instituted by a person whose very plaint shows that he has no right to proceed against him till he gets the semblance of title by a conveyance from B by reason of the decree for specific performance. A suit of that description would, in substance, be a title suit between B and c and a suit for specific performance between A and B. So, any defence which would have been a good one if a separate suit had been instituted by B against o, ought to be a good defence in that composite suit. The case which we have before us is a composite suit. As soon as defendant 2 pleaded that he was the real owner and not benamidar of defendant 1, it became in substance the combination of two suits -- a suit by defendant 1 for a declaration that defendant 2, the certified purchaser, is his benamidar, and a suit for specific performance by the plaintiffs against defendant 1. As the suit if instituted by defendant 1 against defendant 2 for a declaration that the properties in question are really his would have been barred by reason of Section 66(1) of the Code, that sub-section would debar the plaintiffs from getting relief in respect of them. This is an additional reason on which we hold that Section 66(1) applies. The plaintiffs can succeed in respect of those properties which stand in defendant 2's name only if they can bring the case within Sub-section (2) of Section 66.

9. Sub-section (2) consists of two parts. The first part lays down that a suit against a certified purchaser or his privy, where the plaintiff alleges that he is the beneficial owner or where the plaintiff claims through a person who is alleged by him to be beneficial owner, is not barred where the name of that certified purchaser was inserted in the sale certificate fraudulently. The second part preserves the claim of a third party against the property purchased benami at a court sale, where he has the right to proceed against the beneficial owner. This last portion was not in Section 317, Civil P. C. of 1882. On the section as it stood in the Code of Civil Procedure of 1882, there was a conflict of decisions in the High Courts on the point as to whether a creditor of a person could attach property purchased at a court sale by another on the ground that the latter was only a benamidar of his debtor. This Court held that he could attach property on that allegation in spite of Section 317 but the Allahabad and the Madras High Court took the opposite view: Kanizak Sukina v. Monohar Dass ('86) 12 Cal. 204, 21 Cal. Subha Bibi v. Hara Lal Dass ('94) 21 Cal. 519. Rama Kurup v. Sridevi ('93) 16 Mad. 290, Ram Narayan v. Mohanian ('04) 26 All. 82 (F. B.). The Full Bench decision of the Allahabad High Court was in 1903. One of the Judges, Banerji J., pointed out that Section 317 was not happily worded and suggested an amendment. In the Code of 1908 the point was cleared up and the last part gave effect to the decisions of this Court. That is the history of that part of Section 66(2). It cannot be invoked by the plaintiffs before us for two reasons, namely because their claim is not against the properties and because they are not third parties in the sense used there but they claim through defendant 1. There is no similarity between them and a creditor, secured or unsecured of defendant 1. That part of the sub section was enacted for the protection of creditors of the beneficial owner to prevent fraudulent secretion of property.

10. The first part of Section 66, Sub-section (2) preserves a suit against the certified purchaser or his privies where his name had been inserted fraudulently in the sale certificate. The cases would generally be of the type where the plaintiff had asked the defendant to purchase a property at a court sale in his, the plaintiff's name, but the defendant made the purchase in his own name and had the sale certificate issued in his name with a fraudulent design, namely, to cheat the plaintiff. Such a suit would come within the language of Section 66 Sub-section (1), but would not be barred by reason of the first part of Sub-section (2); that part was introduced for preventing a plea founded upon Sub-section (1), for to allow the plea would be to help fraud, which the substantive enactment contained in Sub-section (1) was designed to prevent. We have said that those would generally be the type of cases, the fraud intended being against the person who had paid the price to the certified purchaser with instructions to purchase in his name. But in our judgment those would not be the only cases which would come within that part of the sub-section. As the substantive enactment contained in Sub-section (1) bars the equitable jurisdiction of Courts it has been repeatedly held by this Court that it must be strictly construed and should not be extended beyond its express words: see Mahammad Emartulla v. Mahammad Didar Bux ('20) 7 A. I. R. 1920 Cal. 48 at p. 52.

11. On the self-same principle the exception to the substantive rule which is contained in Sub-section (2) should not be narrowly construed, but as much scope should be given to it as its language can bear. If a fraud is contemplated and that fraud is sought to be accomplished through the insertion of the name of a person in the sale certificate, who did not pay for the property purchased and so did not in reality purchase it, the bar imposed by Sub-section (1) cannot in our judgment be applied. In the case before us the plaintiff pleaded fraud in para. 8 of the plaint. The fraud pleaded is, that with a view to take fraudulent advantage of that term in Ex. 1, which provided that defendant 1 would convey to the plaintiff one-third of those properties which he would purchase at the court sale and would refund the sum of Rs. 300 or proportionate part of it if a third party purchased, Loon-koran, a trusted officer and an authorised agent of the said defendant 1, entered into a conspiracy with defendant 2, to have the purchase of the most valuable properties effected in the name of defendant 2. The learned District Judge has found the fraud as alleged by the plaintiffs to be proved to the hilt. We must, therefore, hold that the plaintiffs' suit in respect of the properties purchased in the name of defendant 2 is saved on that finding of the District Judge by the first part of Sub-section (2) of Section 66, Civil P. C. The result is that both the appeals are dismissed with costs to the plaintiffs-respondents.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //