Singh Vs. Daryao Singh & Ors  Insc 577 (19 November 2003)
V. Patil & D.M. Dharmadhikari. Dharmadhikari J.
High Court of Allahabad in Second Appeal before it by impugned judgment dated
30.9.1997, concurring with the two courts below, has dismissed the suit of the
plaintiff/appellant seeking specific performance of Agreement of Repurchase of
property in dispute on the ground that under the terms of the agreement dated
4.2.1971, the right of repurchase was personal in favour of the original
contracting parties (defendant nos. 2 to 4) and the said right was not
assignable or transferable in favour of the plaintiff.
only legal question involved is whether the terms of the agreement of
repurchase dated 4.2.1971 contain any implied prohibition on the original
contracting parties (particularly defendants 2 to 4) from transferring or
assigning their rights in favour of third party? The relevant facts for
deciding the above legal question are as under:- Defendants 2 to 4 were Bhumidars
of the lands in dispute situate at village Nala, District Muzaffarnagar in the
State of Uttar Pradesh. On 4.2.1971, the owners executed
registered sale-deed in favour of defendant No.1 (contesting respondent no.1
herein) for a consideration of Rs.4900/-. On the same day defendant No.1 who
had purchased the property executed an agreement for re- conveyance of the said
property in favour of defendant Nos. 2 to 4.
relevant terms of the Agreement of Repurchase dated 4.2.1971, on interpretation
of which the parties are at variance, in its relevant parts (rendered into
English) read as under:
dated 4.2.1971 ORIGINAL ON STAMP PAPER OF RS.2.25/- Whereas we, Daryao Singh
son of Hardeva the first party and Surajmal, Peetam and Babu sons of Rati ram,
the second party, Jat, residents of Village Nala Pargana Kandhala, Tehsil Budhana
District Muzaffarnagar. The party No.2 has executed a sale deed today in favour
of the party No.1 for a sum of Rs.4900/- in respect of 2 Bigha 7 Biswas of the
land of Khasra No.95, bearing a rent of rs.6.25 annually situate in Khata
No.331 of village Nala, Pargana Kandhala, Tehsil Budhna, District Muzaffarnagar,
about which it was agreed between the parties that if the second party paid the
entire consideration of the sale deed Rs.4900/- to the first party or to the
heirs of the first party within ten years from today then in that situation the
first party will reconvey the aforesaid land by sale-deed in favour of the
second party without any objection. If for any reason the first party does not
execute a sale deed in favour of the second party, after five years but within
ten years from the date of sale deed dated 4.2.71, then the second party will
have a right to deposit the entire consideration Rs.4900/- in the Civil Court
and get the sale deed executed by the Court, the first party will have no
objection. The present agreement will be binding upon the parties and the heirs
of the parties. Therefore, these few comments by way of agreement of reconveyance
of sale within ten years are being written so that this document may be used
when necessary. After the limitation of ten years the second party will have no
right at all to get released the aforesaid and from party No.1."
[Underlining by court to add emphasis] Under the above terms of the agreement
of repurchase defendant Nos. 2 to 4 sold their rights to obtain reconveyance of
sale in favour of plaintiff (present appellant) by executing a document dated
02.6.1977, on payment of a sum of Rs.19,000/-. The said document is also
registered and its execution is not in dispute.
court of Munsif Magistrate, Kairana, Distt. Muzafarnagar dismissed the suit by
holding that defendant Nos. 2 to 4 having already transferred their rights in
the property in favour of defendant No.1, had no right left in the property to
transfer the same in favour of the plaintiff. In the opinion of the trial court
the document dated 2.6.1977 executed in favour of the plaintiff does not amount
to transfer of right of repurchase in favour of the plaintiff but it was a transfer
of interest in the property involved which was invalid as the defendant nos. 2
to 4 had already transferred their interest and title in the land to defendant
this stage, it may be mentioned that we have looked into the terms of the
document dated 2.6.1977 and we find a clear stipulation therein to indicate
that whatever right of repurchase that existed in favour of defendant Nos 2 to
4 has been transferred by them in favour of defendant No.1. The reasoning of
the trial court, therefore, is that right of repurchase has not been assigned
or transferred in the document dated 2.6.1977 is prima facie erroneous and has
not been supported by any of the parties before us in this appeal.
first appellate court upheld dismissal of the suit by the trial court not only
on the ground that no right of repurchase had been transferred in favour of the
plaintiff but also on additional ground that the right of repurchase, if any,
available to defendants 2 to 4 was a right personal to them and was not assignable
High Court by the impugned judgment passed in Second Appeal re-examined the
terms of the document in question dated 4.2.1971 (Ex.4) to arrive at a
conclusion that the right of repurchase was available personally to the
contracting parties defendant nos. 2 to 4 and to their heirs. It held that as
under the terms of the said document there is no clear stipulation permitting
respondents 2 to 4 to transfer the right of purchase to anybody else, the said
right was not assignable. The relevant finding of the High Court reads thus:
is true that there is no negative clause that the said right of repurchase
cannot be transferred to a stranger but the deed dated 4.2.1971 (Ex.4) is
specific that it is binding upon the parties and their heirs. The said clause
does not permit respondents 2 to 4 to transfer the right of repurchase to
anybody else including the appellant." We have heard the learned counsel
appearing on either side and looked carefully and minutely into the terms of
the disputed document comparing it with the vernacular copy. We have extracted
above the relevant recitals of the said document. As has been noted by the High
Court and the courts below, it contains no express prohibition on transfer or
assignment of right by the original contracting parties to third party. The
only question is whether such prohibition against assignment or transfer can be
read into the document by implication.
considered opinion, reading the document as a whole and particularly keeping in
view the fact that a long period of ten years was fixed for obtaining reconveyance,
no implied prohibition of transfer or assignment can be inferred in the
document particularly in view of the clear provisions of Section 15(b) of the
Specific Relief Act 1963 which read as under:
may obtain specific performance Except as otherwise provided by this Chapter,
the specific performance of a contract may be obtained by-
representative in interest or the principal, of any party thereto;
that where the learning, skill, solvency or any personal quality of such party
is a material ingredient in the contract, or where the contract provides that
his interest shall not be assigned, his representative in interest or his
principal shall not be entitled to specific performance of the contract, unless
such party has already performed his part of the contract, or the performance
thereof by his representative in interest, or his principal, has been accepted
by the other party." [Emphasis added] As is to be seen from the provisions
of Section 15(b) of the Specific Relief Act, 1963, specific performance of the
contract may be obtained by 'any party thereto' or 'their representative in
interest'. This expression clearly includes the transferees and assignees from
the contracting party in whose favour the right exists.
right of seeking specific performance would, however, be not available in terms
of proviso below clause (b) where "the contract provides that the
'interest shall not be assigned'.
in this case under the terms of the document dated 4.2.1971 Ex.4, there is no
express prohibition against assignment or transfer of the right of repurchase
by the original party in favour of the third party. Learned counsel appearing
for the contesting respondent (defendant No.1) very strenuously urged that in
the recitals of the document at the appropriate place there is mention of the
parties and their heirs but there is no mention of the transferees or assignees
of the contracting parties. This omission is a clear indication of implied
prohibition against transfer or assignment of any right by the original
find it difficult to accept this proposition. True, it is that there is no
clear stipulation permitting assignment or transfer of right of the purchaser
by original party in favour of the third party but both contracting parties
would be presumed to have been alive to the legal provisions contained in
Section 15(b) of the Specific Relief Act. The two documents one of sale and
the other of repurchase were executed on the same day. As the sale and
agreement of repurchase are contained in two separate documents, although
contemporaneously executed, the transaction cannot treated to be a 'mortgage'
as defined in Section 58(c) read with proviso thereunder of the Transfer of
Property Act but it seems to be a transaction akin to a 'mortgage' if not
'mortgage proper'. From the tenor and contents of the two documents
contemporaneously executed, it seems that the defendant nos. 2 to 4 to raise
money, sold the property but with a right of repurchase on return of the money.
A long period of ten years for obtaining re-conveyance was agreed between the
original contracting parties to indicate the nature of transaction to be one to
satisfy the monetary need of the transferer.
period of five years was stipulated for obtaining re-conveyance mutually,
failing which after expiry of the period of five years, re- conveyance could be
obtained through court within an outer limit of ten years from the original
date of the execution of the document. It seems unjust to construe the terms of
the document to mean that though the original transferers of the property are
unable to raise requisite money within the initial period of five years and
thereafter continue to be incapable financially to approach court for seeking
re- conveyance, they would have no right to assign or transfer their right on
value to others. This would result in deprivation of the property or
competitive value altogether to the original owners.
considered opinion, in the absence of any words or expressions in the documents
indicating prohibition on assignment or transfer of right of repurchase and in
the face of clear provisions of Section 15(b) of the Specific Relief Act, 1963,
an implied prohibition cannot be read into the terms of the documents. Merely
because in the documents, there is mention of 'heirs' of the contracting
parties but not their 'assignees' or 'transferees', the legal right of assignment
available to the benefit of original contracting party under Section 15(b) of
the Act cannot be denied to it.
fortified in our view by two direct decisions of this Court rendered in
somewhat similar circumstances with documents contemporaneously executed for
sale and repurchase with comparable stipulations. See T.M. Balakrishna Mudaliar
vs. M. Satyanarayana Rao & Ors. [1993 (2) SCC 740] and Habiba Khatoon vs. Ubaidul
Huq [1997 (7) SCC 452].
case of Habiba Khatoon(supra), taking stock of earlier decisions of this Court,
the Privy Council and the High Court of Bombay, the law on the present
contested issue was explained to uphold the right of repurchase of the original
contracting party thus:- "We may in this connection also usefully refer to
a decision of this Court in the case of T.M. Balakrishna Mudaliar vs. M. Satyanarayana
Rao & Ors. Considering the provisions of section 15(b) of the Specific
Relief Act, 1963, a Bench of two learned Judges of this Court speaking through Kasliwal,
J., endorsed (in para 10 of the SCC) the statement of law flowing from the
decision of Sakalaguna Nayadu as well as the decision of Beaumont, C.J.,
speaking for the Bombay High Court in the case of Vishweshwar Narsabhatta Gaddada
vs. Durgappa Irappa Bhatkar. The statement of law which got imprimatur of this
Court in para 9 of the Report runs as follows : (SCC p.745).
Privy Council in Sakalaguna Nayudu vs. Chinna Munnuswami nayakar has held that
the benefit of a contract of repurchase which did not show that it was intended
only for the benefit of the parties contracting, could be assigned and such
contract is enforceable.
C.J. in Vishweshwar Narsabhatta Gaddada vs. Durgappa Irappa Bhatkar held that
both under the common law as well as under Section 23(b) of the Specific Relief
Act, 1877, an option given to repurchase the property sold would prima facie be
assignable, though it might also be so worded as to show that it was to be
personal to the grantee and not assignable. On the particular facts of that case,
it was held that the contract was assignable. In Sinnakaruppa Gounder v. M.Karuppuswami
Gounder it was held (AIR p.508, para 5) 'In our view, generally speaking, the
benefits of a contracat of repurchase must be assignable, unless the terms of
the contract are such as to show that the right of repurchase is personal to
the vendor. In the latter case it will be for the person who pleads that the
contract is not enforeable, to show that the intention of the parties thereto
was that it was to be enforced only by the persons named therein and not by the
assignee.' " From the statement of law as has been approved and followed
by this Court in two the decisions in Habiba Khatoon and TM Balakrishna Mudaliar
(supra) unless the contents of the document in question and evidence in
relation thereto are so clear to infer a prohibition against assignment or
transfer, the right of repurchase has to be held to be assignable or
transferable and cannot be treated as personal to the contracting parties.
very unsubstantial ground that the document in question makes a mention only of
'parties' and their 'heirs' and not 'assignees' or 'transferees', it cannot be
held that the right of repurchase was not assignable. In our considered
opinion, therefore, the courts below were in error in construing the document
in question in a manner to infer an implied prohibition against assignment and
this appeal, the respondent filed an application (not numbered) dated 25.8.2001
seeking permission to raise additional grounds and file additional documents.
In the additional grounds, it is urged on behalf of the contesting respondent
that suit land recorded as Holding No. 306 area 0.8693 hectares, as a result of
consolidation proceedings under the provisions of UP Consolidation of Holdings
Act, 1953 [hereinafter referred to as 'the Act of 1953'] has been converted
into a new holding called 'Chuk' comprising several other plots with area
0.7724 hectares. Learned counsel appearing for the respondent in support of the
additional grounds argues that the property agreed to be sold as a result of
consolidation proceedings having lost its identity, the suit for specific
performance of contract for the original Holding No. 306, has been rendered infructuous.
reliance is placed on the decision of this Court in the case of Piarey Lal vs.
Hori Lal [1977 (2) SCR 915].
other side, learned counsel appearing for the appellant seriously disputed the
fact that as a result of consolidation proceedings, identity of the suit land
had been lost and specific performance of agreement of sale cannot be granted.
It is contended that as a result of consolidation proceedings, 'there is merely
substitution of one property for the other' and the suit for specific
performance cannot be said to have been rendered incompetent or infructuous.
Reliance is placed on the decision of this Court reported in Rajeshwar vs.
Board of Revenue [1995 Allahabad Law Journal 144].
additional grounds urged in this appeal as a result of subsequent legal
developments of consolidation of holdings under the Act of 1953 raise issues
both of fact and law. We consider it just and proper to remand the case to the
trial court for deciding these additional issues arising on facts and law.
result of discussion aforesaid, this appeal partly succeeds and is allowed. The
concurrent findings of the courts below that the right of repurchase under the
agreement was personal to the original contracting party and their heirs, are
hereby set aside. It is held that the plaintiff as 'assignee' or 'transferee'
from the original contracting party is entitled to seek specific performance of
the contract from contesting respondent no. 1.
case is remanded to the trial court for deciding the limited issues arising
between the parties on facts and law on the applicability and effect of the
provisions of the Act of 1953.
trial court shall grant opportunity to the parties to amend their pleadings. It
shall then frame issues on those amended pleadings and after granting them
opportunity to lead evidence decide the suit in accordance with law. The suit
was filed in the year 1981. The trial court shall make every endeavour to
complete the trial on the additional issues and decide the suit as
expeditiously as possible. To facilitate early disposal of the suit, the
parties are directed to appear before the trial court on 15th December, 2003. In the circumstances, we make no
order as to costs in this appeal.