Sir Lancelot Sanderson:
This is an appeal by special leave from a judgment and decree of the Judicial Commissioner of the North West Frontier Province, dated 18th January 1930, amending a decree dated 11th November 1925, as well as from the decree as amended and the subsequent order dated 2Gth June 1930, in execution granting mesne profits to the plaintiff-respondent.
The suit was brought on 12th May 1922 by the plaintiff, K. S. Mian Feroze Shah in the first instance against Mohammad Afzal Khan praying for a decree for possession of certain lands in the villages of Ahmadabad and Narai by specific performance of an alleged agreement dated 1st May 1921 by means of the execution and registration of a sale deed and for the recovery of the sum of Rs. 4,520 and for such other and further relief as the Court might deem equitable.
The defendant, Mohammad Afzal, pleaded in his written statement, among other pleas, that he had parted with his rights and possession in the lands in the said village of Ahmadabad to M. Aslam Khan, Mt. Khaperai and Mt. Mashala.
Consequently the three last named persons were added as defendants. They are the appellants in this appeal, and they will hereinafter be referred to as the appellants. Attar Singh, who was alleged to be a mortgagee, was added as a defendant, but it appears that the District Judge decided not to deal with the rights of the alleged mortgagee but to confine his decision to the case against the appellants. The alleged mortgagee has not been represented in this appeal and no question as to his rights has been raised before their Lordships. The learned District Judge of Peshawar decided that the plaintiff was not entitled to specific performance of the alleged contract but that he was entitled to recover from the defendant Mohammad Afzal the sum of Rs. 53,900, which he held the defendant Mohammad Afzal had borrowed from the plaintiff.
The plaintiff appealed against the District Judge's judgment and decree to the Judicial Commissioner of the North West Frontier Province, who, on 11th November 1925, allowed the appeal, set aside the decree of the District Judge and granted to the plaintiff a decree for specific performance of the agreement dated 1st May 1921, against the defendant Mohammed Afzal in respect of the lands mentioned in the Judicial Commissioner's decree, He made no order as to the recovery of the sum of Rs. 4,520, on the ground that it had not been demanded in the appeal. No appeal has been found by the plaintiff against the Judicial Commissioner's order as to the sum of Rs. 4,520, and their Lordships need not refer to this matter again.
The Judicial Commissioner ordered that the costs of the appeal should be paid by Mohammad Aslam Khan, Mt. Khaperai and Mt. Mashala only. It is to be noted that, although the appellants were added as defendants in the suit, the plaint was not amended, and that consequently no relief was prayed against them, that the Judicial Commissioner's decree granted specific performance of the contract against the defendant Mohammad Afzal only, and that although no relief was granted against the appellants, they were directed to pay the costs of the appeal. (After describing the further progress of the case in execution and after mentioning that the decree was ordered to be amended by the Judicial Commissioner so as to make it a decree for specific performance and possession against all the defendants, their Lordships proceeded on merits.) It appears that Mohammad Afzal Khan was a member of a well-known family of Mardan in the Peshawar District. He succeeded to a flourishing estate in the year 1915 and from that time onwards he seems to have been steadily dissipating it. From August to December 1920, on the strength of several mortgages he borrowed Rs. 80,000 from the firm of Attar Singh of Hoti. This led his relatives to apply to the District authorities that he should be taken under the superintendence of the Court of Wards. The application was made on 16th December 1920. In January and February 1921, Mohammad Afzal Khan appears to have borrowed a further sum of Rs. 60,000 from the firm of Partap Singh of Hoti. Apparently by this time his credit with the Mardan money-lenders was exhausted, for at the beginning of May 1921 he approached K. S. Mian Feroze Shah and Mian of Ziarat of Kaka Sahib, who lives at Nowshera. On 1st May 1921 ha entered into an agreement with Feroze Shah undertaking: to sell him his land in Ahmedabad and Narai at the rate of Rs. 170 a jarib. He received Rs. 12,000 in cash on the spot. On subsequent dates from the 27th May to 27th August, he received further sums of Rs. 41,900. Under the terms of the agreement a deed of sale was to be executed and registered within a week, a time which was subsequently extended to a month. Mohammad Afzal himself raised very strong objections to being taken under the Court of Wards. Finally, the application, which had been strongly recommended by the Assistant Commissioner of Mardan, was rejected by the Chief Commissioner, North-West Frontier Province, on 5th December 1921. From that date onwards Mohammad Afzal, who had hitherto been in alliance with Feroze Shah, begin to side with his relatives. On 2nd March 1922 he sold his house and hujra to Mohammad Aslam Khan, his first cousin. On 3rd April 1922 he sold the land in Ahmedabad (which was covered by the abovementioned agreement) to Mohammad Aslam Khan and his (Mohammad Afzal's) stepmother and stepsister who are the appellants in this appeal. Part of the consideration of the sale of 3rd April 1922 was land belonging to the appellants in the village of Kot Jhungra. On 7th December 1922, Mohammad Afzal sold part of this Kot Jhungra land to another first cousin Dost Mohammad Khan, and some time later he sold the remainder of the same land to the same cousin.
On the issues raised in the case the Judicial Commissioner held (1) that Mohammad Afzal was not insane or under the influence of the plaintiff, but that he was reckless and grossly extravagant; (2) that the sum of Rs. 53,900 had been paid by the plaintiff to the defendant Mohammad Afzal; (3) that the agreement of 1st May 1921, amounted to a legal contract capable of enforcement as such; (4) that the parties did intend to act upon the agreement.
None of the abovementioned decisions of the Judicial Commissioner have been disputed in this appeal, and it therefore falls to be decided upon the assumption that the abovementioned findings are correct. The important question arises upon the next issue considered by the Judicial Commissioner, viz., whether the appellants were protected by the exception contained in Cl. (b), S. 27, Specific Relief Act, 1877. The section is as follows:
"Except as otherwise provided by this chapter specific performance of a contract may be enforced against (a) either party thereto; (b) any other person claiming under him by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract."
Their Lordships have no doubt on the facts of this case that specific performance of the contract of 1st May 1921, could have been enforced by the plaintiff against the defendant Mohammad Afzal but for the fact that he had transferred the lands, covered by the sale of 3rd April 1922 to the appellants; further, that the appellants are persons claiming under the said defendant by a title arising subsequently to the said contract between the plaintiff and Mohammad Afzal. The question therefore arises whether the appellants were transferees for value who had paid their money in good faith and without notice of the original contract.
It was alleged that the appellants had paid Rs. 10,000 to Mohammad Afzal before the execution of the sale deed of 3rd April 1922. The balance of that part of the consideration, which was to be paid in money, viz., Rs. 17,960, admittedly had not been paid. The Judicial Commissioner was of opinion that the passing of the consideration of Rupees 10,000 was "a matter of some doubt"; he did not however decide that it was not paid. His finding was that the appellants had notice of the agreement of 1st May 1921 between Mohammad Afzal and the plaintiffs, and that it was difficult to ascribe to them the character of bona fide purchasers. He therefore held that the appellants were not protected by Cl. (b), S. 27, Specific Relief Act.
Their Lordships, after examination of the evidence, are not prepared to hold that the sum of Rs. 10,000 was not paid by the appellants to Mohammad Afzal, though they are not surprised at the doubt which was expressed by the Judicial Commissioner with respect to that matter. There remains the question whether the appellants had actual or constructive notice of the agreement of 1st May 1921, at the time when the deed of sale of 3rd April 1922 was executed. A question was raised as to the party upon whom the onus in respect of this matter rested. Their Lordships do not consider it necessary to enter upon a discussion on the question of onus because the whole of the evidence in the case is before them and they have no difficulty in arriving at a conclusion in respect thereof.
The Judicial Commissioner held that the appellants must have known on 3rd April
1922, of the agreement which Mohammad Afzal had made with the plaintiff on 1st May 1921. Their Lordships are not prepared to hold that the Judicial Commissioner's finding in this respect was wrong. There was evidence upon which he might arrive at that conclusion. However that may be, their Lordships upon consideration of the whole evidence, both verbal and documentary, are clearly of opinion that the circumstances connected with Mohammad Afzal's dealings with his property, which were undoubtedly known to the appellants, were such as to put the appellant upon inquiry, and that if reasonable inquiries had been made by the appellants before the transaction of 3rd April 1922 they must have become aware of the agreement between the plaintiff and Mohammad Afzal of 1st May 1991. The appellants therefore cannot predicate of themselves that they are transferees without notice of the original contract within the meaning of the exception in S.27 (b) Specific Relief Act of 1877.
As already mentioned the whole matter is before their Lordships on this appeal, and it is open to them to make the proper order in view of the abovementioned conclusions. They are of opinion that the plaintiff should have a decree for specific performance of the agreement of 1st May 1921, against the appellants as well as against Mohammad Afzal, subject to the appellants' right of pre-emption, which will be referred to hereinafter. (Their Lordships, after referring to the right of pre-emption and question of mesne profits, proceeded.) In the result their Lordships are of opinion that the decree of the District Judge dated 28th June 1924, the decree of the Judicial Commissioner dated 11th November 1926, the decree of the Judicial Commissioner dated 18th January 1930 and the decree of the Judicial Commissioner of 26th June 1930 be set aside except in so far as the decrees contain direction as to costs, which directions shall stand. Further, they are of opinion that a decree should be made in favour of the plaintiff respondent against Mohammad Afzal and the appellants for specific performance of the agreement of 1st May 1921, and, if the plaint be amended, for mesne profits upon the terms and conditions hereinbefore mentioned.
Any directions, which may be necessary for carrying out the terms of the Order in Council, should be made by the Judicial Commissioner who will have discretion as to the costs relating to such directions. Their Lordships will humbly advise His Majesty accordingly. The appellants must pay to the plaintiff-respondent his costs of this appeal.