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Fateh Chand and anr. Vs. Narsingh Das and anr. - Court Judgment

LegalCrystal Citation
CourtKolkata
Decided On
Judge
Reported in16Ind.Cas.988
AppellantFateh Chand and anr.;dhruba Pattra
RespondentNarsingh Das and anr.;narsingh Das and ors.
Cases ReferredMati Lal Pal v. Preo Nath Mitra
Excerpt:
specific performance, suit for - possession, whether can be claimed--agreement to finance litigation and get conveyance upon payment of certain sum--litigation successful in first court--litigation compromised in appeal by defendant with knowledge of agreement--suit for specific performance, if should be decreed. - .....on the 30th may 1905, the plaintiff commenced the present action for a declaration that the consent decree of the 11th may 1905 was fraudulent and collusive, and did not affect his rights to the decree of the 12th december 1904; he further prayed for specific performance of the agreement of the 21st september 1904. the first defendant did not resist the claim; but the second and third defendants denied the factum and validity of the agreement sought to be specifically enforced. the court of first instance dismissed the suit; upon appeal, a decree has been made in favour of the plaintiff. on behalf of the second and third defendants, that decree has been assailed substantially on two grounds: namely, first that the agreement is of such a nature that a court of equity will not.....
Judgment:

1. These two appeals have been preferred--one by the second and third defendents, another by the fourth defendant--against the decree in a suit for specific performance of a contract for sale of land. The events antecedent to the suit, as found by the Subordinate Judge, may be briefly narrated. On the 23rd December 1902, the first defendant brought an action in ejectment against the second and third defendants in respect of the property now in dispute, On the 12th December 1904, a decree was made in that suit, whereby the title of the first defendant to the disputed property was established and he became entitled to recover possession by ejectment of the second and third defendants. During the pendency of that suit, the present plaintiff had entered into an agreement with the first defendant on the 21st September 1904, to the effect that he would finance the litigation and that if in the end a decree was made in favour of the first defendant, the benefit thereof would accrue to the plaintiff. It was further agreed between the parties that the first defendant, upon receipt of Rs. 2,000, would execute a conveyance in favour of the plaintiff in respect of the property to which his title might be ultimately established. There was also a detailed provision as to the liability for costs to which further reference is not needed for our present purpose. As already stated, the suit was successful in the primary Court, and the second and third defendants preferred an appeal against the decree of the 12th December 1904. On the 11th May 1905 a decree was made by consent as between the appellants and the respondent, as a result whereof, the decree of the Court of first instance was set aside. It has been found that the second and third defendants obtained the assent of the first defendant to this compromise by the payment of Rs. 1,500. It has also been found that the second and third defendants, at the time they accepted the settlement, were aware of the agreement of the 21st September 1904 between the present plaintiff and the first defendant; in fact, the Subordinate Judge has held that these defendants had in their possession a copy of the agreement in question. On the 30th May 1905, the plaintiff commenced the present action for a declaration that the consent decree of the 11th May 1905 was fraudulent and collusive, and did not affect his rights to the decree of the 12th December 1904; he further prayed for specific performance of the agreement of the 21st September 1904. The first defendant did not resist the claim; but the second and third defendants denied the factum and validity of the agreement sought to be specifically enforced. The Court of first instance dismissed the suit; upon appeal, a decree has been made in favour of the plaintiff. On behalf of the second and third defendants, that decree has been assailed substantially on two grounds: namely, first that the agreement is of such a nature that a Court of Equity will not specifically enforce it: and secondly, that no decree for specific performance ought to be made in this suit, because even if the decree be declared inoperative, the second and third defendants are entitled to be restored to the position they occupied as appellants against the decree of the 12th December 1904.

2. In so far as the first contention is concerned, it is clear that there is no substance in it. It was laid down by the Judicial Committee, in the cases of Bhagwat Dayal Singh v. Debi Dayal Sahu 12 C.W.N. 393 : 35 C. 420 : 10 Bom. L.R. 230 : 7 C.L.J. 335 : 5 A.L.J. 184 : 18 M.L.J. 100 : 3 M.L.T. 344 : 14 Bur. L.R. 49 and Lala Achal Ram v Raja Kazim Hussain Khan 27 A. 271 : 9 C.W.N. 477 : 15 M.L.J. 197 : 32 I.A. 113(P.C.) and in earlier decisions reviewed in the case of Gossain Ramdhan Puri v. Gossain Dalmir Puri 14 C.W.N. 191 at p. 200 : 2 Ind. Cas. 385 that, the propriety of an agreement of this nature can be questioned only by the parties thereto. The first defendant has not contended that the terms upon which the plaintiff undertook to finance him in the earlier litigation were unconscionable and ought not to be enforced in a Court of Equity. The position, therefore, is that as between the first defendant on the one hand and the second and third defendants on the other, the consent decree is valid and binding. As was pointed out in the cases of In re South American and Mexican Company (1895) 1 Ch. 37 : 64 L.J .Ch. 189 : 12 R. 1 : 71 L.T. 594 : 43 W.R. 131, and The Bellcairn 10 Pr. D. 161 : 55 L.J. Adm. 3 : 53 L.T. 686 : 34 W.R. 55 : 5 Asp. M.C. 503, a decree by consent is operative between the parties, so long as it is not set aside in a proper judicial proceeding, in the same manner as if it were a decree upon contest. This principle, however, cannot be applied to the prejudice of a stranger to the decree. The plaintiff is entitled to show that the decree is fraudulent and collusive and does not affect his legal rights. In other words, as was pointed out in the cases of Huddersfield Banking Company v. Henry Lister and Son (1895) 2 Ch. 273 : 64 L.J. Ch. 523 : 12 R. 331 : 72 L.T. 703 : 43 W.R. 567 and Great North-West Central Railway v. Charlebois (1899) A.C. 114 : 68 L.J.P.C. 25 : 79 L.T. 35 a consent decree has no greater validity than the agreement between the parties, in so far as strangers to that agreement are concerned. The question, therefore, arises, whether the plaintiff could have been affected by any agreement between the first defendant and the second and third defendants to his prejudice. It has not been disputed and it cannot be disputed that if the first defendant had conveyed or surrendered to the second and third defendants his rights under the decree of the 12th December 1904, and if the latter had accepted the conveyance or the surrender with notice of the agreement between the plaintiff and the first defendant, the position of the plaintiff would have remained unaffected. He would have been entitled under Section 27, Clause (6), of the Specific Relief Act to claim specific performance of the agreement, not merely against the first defendant, but also as against the second and third defendants. In our opinion, the position of the second and third defendants is the same as if they had accepted a private assignment from the first defendant with notice of the obligation under which he stood in relation to the plaintiff. They cannot, through the intervention of the Court and under the device of a consent decree, acquire higher rights than they would have done under a private conveyance. That this position is obviously sound, will be clear if we bear in mind that the second and third defendants paid consideration to the first defendant for this settlement. The second and third defendants cannot occupy a better position than a person who, having a prior title, gets in the subsequent estate which is affected by the contract; such a person, if he has notice, cannot protect himself from the performance of the contract, by his elder title. Smith v. Phillips 1 Keen 694 : 44 R.R. 138 : 6 L.J.L.J. Ch. 253 : Light foot v. Heron 3 Y. & C. 586 : 51 R.R. 406 : Union Bank v. Kent 39 Ch. D. 238 at p. 246 : 57 Ch. 1022 : 59 L.T. 714 : 37 W.R. 364 : Mumford v. Stohwasser L.R. 18 Eq. 556 : 43 L.J. ch. 694 : 30 L.T. 859 : 22 W.R. 833 : as to this last case see Hunt v. Luck (1901) 1 Ch. 45 : 70 L.J. Ch. 30 : 83 L.T. 479 : 49 W.R. 155 : 17 T.L.R. 3 : (1902) 1 Ch. 428 : 86 L.T. 68 : 50 W.R.R. 291 : 71 L.J. Ch. 239 : 18 T.L.R. 255. The view of the Subordinate Judge that a decree for specific performance ought to be made in favour of the plaintiff, must, consequently, be upheld. It has been contended, however, on behalf of the appellant that the direction given by the Subordinate Judge that the sum of Bs 2,000 payable by the plaintiff for the conveyance should be deposited to the credit of the first defendant alone, cannot be supported. His contention in substance is that if the rights of the first defendant have vested in the second and third defendants, the latter alone are entitled to the money and are liable to execute the conveyance. This position, in our opinion, is only partially sound. As between the first and the second and third defendants, the consent decree is, no doubt, valid and operative. At the same time, we do not know what equities there may be between these parties. The proper course to follow is to direct that the conveyance be executed by all the three defendants and the sum of Rs. 2,000 be deposited to their credit. Prima facie, the second and third defendants alone are entitled to this sum; but if the first defendant establishes to the satisfaction of the Court that he has a valid claim to any portion of this sum, the Court will be free to distribute it as between the first defendant on the one hand and the second and third defendants on the other. The first contention of the appellant must, therefore, be allowed only in part.

3. In so far as the second contention is concerned, it is plainly unsustainable. The learned Vakil for the appellants has contended that they are entitled to be restored to the position which they occupied when the consent decree was made; in other words, that the consent decree should be vacated and the parties should be relegated to the position of appellants and respondent in the litigation of 1904. In support of this position, reliance has been placed upon the decision of the Judicial Committee in the case of Khajooroonissa v. Roushan Jehan 2 C. 184 : 3 I.A. 291 : 26 W.R. 36. That case, however, is clearly distinguishable. No doubt, as laid down by the Judicial Committee in the case mentioned, as also by this Court in other cases reviewed in Raj Kumar Roy v. Harakrishna Chakrabutty 15 C.L.J. 217 : 10 Ind. Cas. 355 if a consent decree is vacated, the parties are restored to the position they occupied when the consent decree was made. But that principle can have no possible application to this case. It is not competent to the plaintiff to invite the Court to vacate the consent decree to which he is no party. He is a stranger to that decree, and the only declaration he can seek is that the decree does not prejudice his rights. Consequently, we cannot direct that the consent decree be vacated at the instance of the plaintiff, and that the appeal which was terminated by that decree be now heard as if no consent decree had ever been made.

4. The result is that the appeal by the second and third defendants is allowed in part and the decree of the Subordinate Judge modified. The plaintiff will have a decree for specific performance; the conveyance will be executed by the first, second and third defendants, and, upon their refusal, by the Court, on their behalf. The sum of Rs. 2,000 payable by the plaintiff has been, we understand, already brought into Court and deposited to the credit of the first defendant. The deposit will now be taken to have been made to the credit of all the three defendants, and if this sum has been attached as the property of the first defendant, that attachment will cease. The second and third defendants are prima facie entitled to this sum, as by virtue of the consent decree, the title of the first defendant has vested in them. Notice will, however, issue upon the first defendant, and he will, be allowed an opportunity to satisfy the Court of first instance, within one month after service of notice upon him, that he has a valid claim to any portion of this sum of Rs. 2,000. If he establishes a claim to any portion, it will be paid to him. If he does not appear, or if the Court is not satisfied that he has a valid claim to any portion of this sum, the second and third defendants will be at liberty to take out the whole of this sum. The order for costs made by the Court below in respect of the first and second Courts will stand. But the parties will bear their own costs in this Court.

5. We find that there was a prayer for possession in the plaint. As has been already held by this Court Madan Mohan Singh v Gaja Prasad Singh 14 C.J. 159 : 11 Ind. Cas. 228, such prayer for possession may be coupled with a prayer for specific performance of the contract. We, therefore, direct that as soon as the conveyance is executed, the plaintiff be placed in possession of the property covered by the conveyance.

6. In so far as the appeal by the fourth defendant is concerned, it is obvious that he has no title at all. He purchased during the pendency of the present litigation and is barred by the doctrine of lis pendens, as laid down by this Court in the case of Mati Lal Pal v. Preo Nath Mitra 13 C.W.N. 226 : 9 C.L.J. 96 : 3 Ind. Cas. 696. His appeal will, therefore, stand dismissed.


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