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Haradhan Debnath Vs. Bhagabati Dasi - Court Judgment

LegalCrystal Citation
SubjectContract
CourtKolkata
Decided On
Judge
Reported in(1914)ILR41Cal852
AppellantHaradhan Debnath
RespondentBhagabati Dasi
Cases ReferredMonro v. Taylor
Excerpt:
specific performance - specific relief act (i of 1877) section 22 sub-section (2)--compensation for money spent on improvements, refused to subsequent purchaser with notice of prior contract--transfer of property act (iv of 1882) section 55 sub-section (1) clause (b). - .....notice of the prior contract, and that the plaintiff was consequently entitled to a decree for specific performance. upon appeal, the district judge has reversed this decision. he has dismissed the claim for specific performance, but has directed the first defendant to refund to the plaintiff rs. 510, paid by him as earnest money. the decree of the district judge has been assailed in this court on the ground that upon the facts found, specific performance should have been decreed. this view has been controverted on behalf of the respondents, and it has been argued that if specific performance is decreed, the defendant is entitled to be reimbursed on account of the money spent by him for the improvement of the property after his purchase.2. the first question for consideration is,.....
Judgment:

Mookerjee and Beachcroft, JJ.

1. This is an appeal by the plaintiff in a suit for specific performance of a contract of sale of immoveable property, On the 22nd April 1910, the first defendant entered into an agreement with the plaintiff to transfer to him the disputed property for Rs. 3,000, and received Rs. 500, as earnest money; she subsequently received an additional sum of Rs. 10. Under the contract this transaction was to be completed within three months The conveyance, however, was not executed and circumstances which we shall presently state, and on the 30th August 1910 the first defendant, it is alleged, sold the property in suit to the second defendant, who took the conveyance in the name of his wife the third defendant. The plaintiff thereupon commenced this action on the 5th November 1910. The Court of first instance held that the transferee had taken with notice of the prior contract, and that the plaintiff was consequently entitled to a decree for specific performance. Upon appeal, the District Judge has reversed this decision. He has dismissed the claim for specific performance, but has directed the first defendant to refund to the plaintiff Rs. 510, paid by him as earnest money. The decree of the District Judge has been assailed in this court on the ground that upon the facts found, specific performance should have been decreed. This view has been controverted on behalf of the respondents, and it has been argued that if specific performance is decreed, the defendant is entitled to be reimbursed on account of the money spent by him for the improvement of the property after his purchase.

2. The first question for consideration is, whether specific performance should be allowed in this case. As already stated, the contract was to be performed within three months from the 22nd April 1910. The second defendant purchased the property after the expiration of the three months, and his case is that although, as evidence shows, the transferee was aware of the prior contract, the prior contract had ceased to be operative upon the expiry of the time limited for its performance. To determine whether the contract with the plaintiff was in force on the day when the property was transferred to the second defendant, we have to consider what had happened between the 22nd. April 1910 and the 30th August 1910. Under the contract, the vendor had agreed to satisfy the purchaser that 'she had a valid saleable interest in the property by showing him a copy of the order of the Collector about the registration of her name in respect of the property, the will of her mother Brahmamoyee and other papers relating thereto.' On the 15th July 1910, a letter was addressed on behalf of the plaintiff to the first defendant in which it was pointed out that nothing had been done up to that time towards the performance of the contract, and it was stated that as it would be necessary to examine the title to the property and to draft a conveyance the title deeds should be sent immediately. A second letter was addressed on behalf of the plaintiff, to the first defendant on the 21st July 1910, that is on the day previous to that fixed as the latest day for the performance of the agreement. In this letter it was stated that the documents relating to the property had not yet been shown nor had the plaintiff been informed as to whether the vendor had registered her name in the collectorate, but that the plaintiff was ready with the purchase money and was anxious to examine the documents of title. On the 26th July 1910, Babu Ananda Prosad Banerjee, pleader for the first defendant, wrote a letter to the plaintiff in which he stated that his client had got her name registered in the collectorate, and that the copy of the order of the collector and other title deeds relating to her title had been shown to the plaintiff, but that the plaintiff had delayed to pay the balance of the consideration money and to get a conveyance executed by her. The letter concluded with the statement that, unless within 7 days from the date thereof the balance of the consideration money was paid and a conveyance executed, the land would be transferred at the choice of the vendor and the earnest money would be forfeited. Three days later, on the 29th July, a reply was sent to this letter on behalf of the plaintiff in which he alleged that the title deeds had not been shown to him. There was subsequently a letter dated the 12th August 1910, in which the plaintiff complained that the time for the performance of the contract had already expired and that the vendor had done nothing to complete the transaction, with the result that no other course was left open to the purchaser than to seek the protection of the Court. On the 2nd September 1910, another letter was sent on behalf of the plaintiff to the first defendant in which it was stated that although after repeated demands some of the title deeds had been produced as also a draft copy of the will alleged to have been executed by her mother, neither an attested copy of the will nor the probate had been shown to him. It is not disputed that the original will was not shown by the vendor to the purchaser nor was a certified copy thereof produced. It is also conceded that the probate with copy of the will annexed was not shown to the purchaser, for the reason explained in this Court, namely, that the probate had not been actually taken out, though the order for its issue had been made by the Probate Court. It is plain consequently that the vendor had not carried out one of the essential terms of the agreement, namely, to satisfy the purchaser as to her title to the property by production of the will of her mother Brahmamoyee. It was suggested in the Court below that it was impossible for the vendor to carry out literally the terms of the agreement, because the alleged will which she undertook to produce was in the custody of the Probate Court. This may be accepted as a true statement of the circumstances of the case. But it was plainly practicable for the vendor to do the next best thing, namely, to produce a certified copy of the will. Consequently it cannot be held that the non-performance of the agreement within the three months prescribed thereby was attributable to any default on the part of the purchaser. The purchaser was entitled to insist upon the production of a certified copy of the will, as that document constituted a very important and essential element in the investigation of the title. But it has been argued on behalf of the respondents that the default on the part of the vendor was neither material nor essential, because a copy was produced of a compromise petition between the parties to the probate proceeding and that the plaintiff should have accepted that document in lieu of a certified copy of the will. In our opinion, there is no force in this contention and the cases to which reference was made on behalf of the respondents, namely, Oxford v. Provand (1868) L.R. 2 P.C. 135, 156 and Lamare v. Dixon (1813) L.R. 6 H.L. 414, 422 are clearly distinguishable. No doubt, these cases draw a distinction between essential and non-essential terms of a contract. But in the case before us, it is impossible to hold that the production of the will was a non-essential term of the agreement; nor can we hold that the plaintiff was bound to have the title investigated on the basis of the petition of compromise filed in the probate proceeding. A question might well arise hereafter as to the validity of that compromise, and the plaintiff was entitled to insist upon the production of the original or of a certified copy of the document which the defendant had expressly undertaken to produce. Reference, however, was made to Section 55, Sub-section (1) Clause (6) of the Transfer of Property Act to establish the position that the seller is only bound to produce to the buyer on his request for examination all documents of title relating to the property which are in the seller's possession or power. But it was overlooked that this is subject to the introductory words of the section, namely, 'in the absence of a contract to the contrary.' The position, therefore, is well established that on the 22nd July 1910, the plaintiff was not in default, that the contract was still enforceable at his instance, and that if it remained unperformed, the vendor defendant was responsible, for the situation. This view is consistent with the fact that subsequently the vendor defendant did call upon the plaintiff to perform the contract within a period named. There is thus no escape from the position that on the 22nd July, 1910, there was a valid and subsisting contract between the plaintiff and the first defendant which was enforceable at the instance of the plaintiff. The subsequent transferee entered into an agreement to purchase the property with full knowledge of this prior agreement. He cannot consequently claim to be a bona fide purchaser for value without notice, and the plaintiff is entitled to have the contract specifically enforced not only against the vendor but also against the transferee.

3. But it has been contended that specific performance should be refused on the ground mentioned in Section 22 of the Specific Relief Act, which provides that the jurisdiction to decree specific performance is discretionary and the Court is not bound to grant such relief merely because it is lawful to do so; the discretion of the Court, however, is not arbitrary but sound and reasonable, guided by judicial principles and. capable of correction by a Court of Appeal. It was argued for the respondents with reference to the principle thus formulated, that there was delay in the institution of the suit, and that as before its commencement the transferee had spent money for the improvement of the property, the plaintiff should not be allowed a decree for specific performance. We are of opinion that there is no force in this contention. The transfer to the third defendant took place on the 30th August 1910 and the conveyance was registered on the following day. The suit was instituted on the 5th November 1910. The Court in which the suit could be instituted was closed from the 2nd October to the 3rd November. Can we under these circumstances hold that there was such delay in the institution of this suit as disentitled the plaintiff to a decree for specific performance? Our attention has not been drawn to any case in which a delay of one month in the institution of a suit has been held sufficient to justify a refusal of relief by way of specific performance. On the other hand, there are instances in which a delay for a much longer period has not been considered sufficient. For instance, in the case of Marquis of Hertford v. Boore (1800) 5 Ves. 719 a delay of fourteen months was not considered a bar to the plaintiff's claim. In the case of Eads v. Williams (1854) 4 De G.M. & G. 674 where the contract was for a lease of a coal mine, a delay of three years and a half was considered fatal. In South-comb v. Bishop of Exeter (1848) 6 Hare 213 a delay of about eighteen months was held to have the same effect, and in Lord James Stuart v. The London and North Western Railway Company (1852) 1 DeG.M. & G. 721 a delay of twenty-one months was considered fatal to the bill for specific performance. The shortest period which has been considered fatal is a delay of 3 months and 13 days as happened in the case of Glassbrook v. Rechardson (1874) 23 W.R. (Eng.) 51. We cannot possibly give effect to the contention that the present suit was instituted with undue delay.

4. It has finally been contended that specific performance should be refused, because, in the terms of Section 22, Sub-section 2 of the Specific Relief Act, the performance of the contract would involve hardship on the purchaser defendant which he did not foresee, whereas its non-performance would involve no such hardship on the plaintiff. There is clearly no force in this contention. This clause clearly contemplates a case in which the vendor has entered into a contract without full knowledge of the circumstances. Instances of cases may be found in the books, where it has been held that mere improvidence or inadequacy is no hardship within the meaning of the rule, but that the bargain must be so hard as to be unconscionable, so that its actual performance would in the circumstances be inequitable. But where the, hardship has been brought upon the defendant by himself, the Court will not consider that as a circumstance in favour of the refusal of specific performance. On the merits of the case, we consequently hold that the plaintiff is entitled to a decree for specific performance.

5. The only other question which requires consideration is, whether the defendant is entitled to be reimbursed for the improvement that he has effected on the property. The case for the defendant is that Rs. 900 has been spent in repairs, and it has been argued that it would be unjust to allow the plaintiff to reap the benefit of this expenditure. In support of this contention, our attention has been invited to a passage from Dart on Vendors, volume II, page 944, which, however, is of no assistance to the respondents. 'Where a purchaser for value is evicted in equity under a prior title, he will be credited with all money expended by him in necessary repairs or permanent improvement': Mill v. Hill (1851) 3 H.L.C. 828. But this rule does not apply where the improvements have been made after he has discovered the defect in title: Kenney v. Browne (1796) 3 Ridg. P.C. 492. 518 Clare Hall v. Harding (1848) 6 Hare 273 and Monro v. Taylor (1850) 8 Hare 51, 60. In the case before us, what is the position of the parties? The transferee had notice of the prior agreement; but he alleges that he assumed that as the three months allowed for its performance had expired, the contract had ceased to be operative. The assumption was obviously erroneous, because even after the expiry of the time prescribed for the performance of an agreement, it may still be enforceable under various circumstances; for instance, if time is not of the essence of the contract, or if the time has been extended, or if the party who is entitled to repudiate the contract by reason of the default of the opposite party, chooses to waive the breach and seeks to enforce the contract. On the other hand, the transferee, if his allegation is assumed to be true, with full knowledge of the prior contract, did not take any steps to communicate with the plaintiff. In this view, there was an omission of enquiry which any prudent man under the circumstances would have made. We cannot consequently hold that the defendant is the victim of an honest mistake. He has deliberately omitted to make an enquiry which could have afforded him protection. But it is worthy of note that the case for the plaintiff is that the defendant was actually warned by him not to purchase the property. This was found as a fact by the Subordinate Judge who concluded upon the evidence that the defendant had been forbidden to purchase the property in view of the previous engagement with the plaintiff. This in fact was stated by Babu Annada Prosad Banerjee, the pleader for the first defendant, who was examined as a witness by the plaintiff: the statement was made in the examination-in chief and the witness adhered to it in the cross-examination, The District Judge has not negatived the finding of the Subordinate Judge that the plaintiff had forbidden the defendant to purchase the property. If this be taken to be the true state of facts, what is the position of the defendants? They have entered into the transaction with their eyes open. They have acted on the assumption of risk, and a person who entertains a doubt as to the existence, present or future, of a certain fact, cannot be said to be the victim of an honest mistake. The view we have taken is supported by the principles explained by this Court in the case of Kandarpa Nath Ghose v. Jogendra Nath Bose (1910) 12 C.L.J. 391. The position of the defendant who has taken with notice of the prior contract and who has omitted to make an effective enquiry from the plaintiff is no better than that of the vendor himself, and, so far as the vendor is concerned, it is clear that if he makes permanent improvements, the purchaser would been titled to the benefit thereof without further payment: see Clare Hall v. Harding (1848) 6 Hare 273 Monro v. Taylor (1850) 8 Hare 51. The defendants consequently have not established any right to be reimbursed for the improvement made on the property. They have not shown that the improvement was needed; on the other hand, the fact that the money spent on the improvement was 60 per cent. of the value of the house would tend to throw doubt as to the wisdom of the course adopted by them.

6. The result is that this appeal is allowed, the decree of the District Judge set aside and that of the Court of first instance restored. This order will carry costs both here and in the Court of appeal below.

7. We are informed that the balance of the purchase money was deposited by the plaintiff in Court pursuant to the order of the Court of first instance. The order of that Court with regard to the execution of the conveyance, will now be carried out. We further direct that as soon as the conveyance is executed, the plaintiff be placed in possession of the property as against the defendants in execution of the decree of this Court.


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