Silla Chandra Sekharam Vs. Ramchandra
Sahu [1964] INSC 136 (24 April 1964)
24/04/1964 DAYAL, RAGHUBAR DAYAL, RAGHUBAR
SUBBARAO, K.
GUPTA, K.C. DAS
CITATION: 1964 AIR 1789 1964 SCR (7) 858
ACT:
Specific Performance-Perfection of title
after contract to sell-Applicability of S. 18(a)-'Subsequently to the sale or
lease', meaning -of-Specific Relief Act, 1877 (Act I of 1877), s. 18 (a).
HEADNOTE:
The respondent executed an agreement to sell
his house in order to meet family necessities for a certain sum on the
condition that he and his mother would execute a sale deed in favour of the
appellant, On the failure of the execution of the sale-deed the appellant
instituted a suit for specific performance of the contract. The trial court
held that the sale was not for legal necessity and therefore decreed the suit
in part directing that the respondent would execute the sale deed for the
alienation of his interest in the entire house and that the appellant would be
entitled to get possession of the same jointly with the respondent's mother.
The appellant appealed to the High Court and during its pendency the
respondent's mother died and therefore the only question urged on behalf of the
appellant was that the respondent, having perfected his title to the entire house,
be made to sell the same. The High Court did not agree with the contention and
held that s. 18 (a) of the Specific Relief Act did not apply to the facts of
the case as it comes into operation subsequent to the sale having taken place.
On appeal by special leave.
Held: The High Court was wrong in not
applying the provisions of s. 18(a) of the Act to the facts of the case.
The expression 'subsequently to the sale or
lease' in s. 18(a) means subsequently to the contract to sell or let.
This clause cannot be restricted in its
application to cases where actual sale or lease of property had taken place.
Kalyanpur Lime Works Ltd. v. State of Bihar,
[1954] S.C.R.
958, referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 398 of 1962.
Appeal by special leave from the judgment and
decree dated January 7, 1959, of the Orissa High Court in Appeal from Original
Decree No. 57 of 1953.
B.R. L. Iyengar, S. K. Mehta and K. L. Mehta,
for the appellant.
K. Blimsankaram, B. Parthasarthy, J. B.
Dadachanji, O. C. Mathur and Ravinder Narain, for the respondent.
April 24, 1964. The judgment of the Court was
delivered by J.RAGHUBAR DAYAL, J.-This appeal, by special leave, raises the
question of the correct interpretation of s.
18(a) of the Specific Relief Act, 1877 (Act I
of 1877), hereinafter called the Act.
859 Ramchandra, respondent, executed an
agreement to sell the house in suit to the appellant, on February 21, 1951. The
agreement stated that he was in sole possession and en- joyment of the house
which was his paternal property, that he was the Managing Member and Karta of
the family and that for meeting family necessities and discharging certain
loans he agreed to sell his undisputed house for Rs. 6,000/on condition that he
and his mother would execute a deed of sale in favour of the appellant with
respect to the house within a period of one year from the date of the execution
of the deed of agreement. Ramchandra did not execute the sale deed and the
appellant instituted the suit for specific performance of the contract.
The trial Court held that the sale was not to
be for legal necessity and therefore decreed the suit in part, on the
appellant's depositing a sum of Rs. 6,000/- less the sum of Rs. 300/- paid
before the Sub-Registrar at the time of the execution of the agreement to sell
and less the amount of costs granted to the appellant against Ramchandra within
a month and directed that defendant No. 1 would execute the sale deed for the
alienation of his interest in the entire house as covered by the agreement and
that the plaintiff would be entitled to get possession of the same jointly with
defendant No. 2, mother of Ramchandra.
The appellant went up in appeal to the High
Court against the dismissal of his suit with respect to the sale of half the
house. During the pendency of the appeal Ramchandra's mother died and therefore
the only question urged on behalf of the appellant at the hearing of the appeal
was that Ramchandra, respondent, having perfected his title to the entire
house, be made to sell the same. The High Court did not agree with the
contention and held that s. 18(a) of the Act did not apply to the facts of the
case as it comes into operation subsequent to the sale having taken place. The
High Court therefore dismissed the appeal. It is against this order that this
apeal has been filed.
Section 18(a) of the Act reads:
"Where a person contracts to sell or let
certain property, having only an imperfect title thereto, the purchaser or
lessee (except as otherwise provided by this Chapter) has the following
rights:- (a)if the vendor or lessor has subsequently to the sale or lease
acquired any interest in the property, the purchaser or lessee may compel him
to make good the contract out of such interest;" 860 The question is
whether the expression 'subsequently to the sale or lease' means 'subsequently
to the contract to sell or let' or means 'subsequently to the execution of the
sale deed or lease deed by the vendor or the lessor, as the case may be' in
pursuance of the contract to sell or let. It is contended for the appellant
that this expression means subsequently to the contract to sell or let, while
the contention for the respondent is that it means subsequent to the actual
sale or lease. We are inclined to agree with the contention for the appellant.
The case, in a way, is concluded by the
decision of this Court in Kalyanpur Lime Works Ltd. v. State of Bihar(1). In
that case the Government agreed to let the lease of the bills to Kalyanpur Lime
Works Ltd., but the lease could not be executed as the forfeiture of the lease
of a previous lessee was held invalid by the Court. When the lease of the
previous lessee expired, Kalyanpur Works Ltd., wanted the execution of the
lease for a period during which the lease to it would have continued if it had
been granted in 1934.
This Court held that the case fell within s.
18(a) of the Act. It said at p. 972:
"We agree with the High Court that
section 18(a) of the Specific Relief Act applies to the case. That section lays
down that where a person contracts to sell or let certain property having only
imperfect title thereto, if the vendor or lessor has subsequently to the sale
or lease acquired any interest in the property, the purchaser or lessee may
compel him to make good the contract out of such interest. There can be no
doubt whatever that when the Government entered into the contract to grant
leases to the Lime Co. in 1934, it had an imperfect title, inasmuch as it could
not grant a fresh lease to anyone during the existence of the previous lease in
favour of Kuchwar Co. No doubt the Government thought it had the right to
forfeit those leases and did in fact order forfeiture but it having been found
subsequently that the forfeiture was legally invalid, rights of the previous
lessees were restored. As already pointed out above this is not the case of
absence of title but is one of imperfect title and hence falls within the
meaning of section 18. After the 31st March, 1948, when the leases in favour of
Kuchwar Co. expired, the impediment in the way of the Government to grant
leases of the property stood removed, and the Lime Company's right to get the
leases revived in its favour.
This right [1954] S.C.R. 958.
861 of the plaintiff was resisted by the
Government who, on the other hand, granted the leases to defendant No. 2.
The High Court of Patna rightly took the view
that section 18(a) was applicable to the facts of this case and although
defendant No. 1 was not in a position to grant a lease from the time it agreed
to do, the impediment being now removed and a suit for specific performance not
being barred, the Lime Company was entitled to sue for that relief. We have
already held in agreement with the view of the High Court that section 18 is
attracted to the facts of this case, and the contract of which specific
performance can be decreed in favour of the plaintiff is the one embodied in
Exhibits 22 and 22(a)." It is urged for the respondent that in that case
it was not contended before this Court that s.18(a) could not apply to the
facts of the case as no lease in favour of Kalyanpur Lime Works Ltd. had been
executed and that therefore the question now before us was not discussed. It is
also urged that the Patna High Court had not actually applied the pro- visions
of s. 18(a) to the facts of the case but had decreed the specific performance
of the contract on the basis of the general principle that the purchaser in a
contract to sell entered into in the circumstances of the case, was entitled to
sue for specific performance against such interest as the vendor might
afterwards acquire in the property and support was found in what was said in
Art. 994 in Fry's 'Specific Performance', 5th Edition. In these circumstances,
we would like to consider the question directly before us.
Sections 12 to 20 of Chapter 11 of the Act
deal with con- tracts which may be specifically enforced. Section 18(a) deals
with the rights of the purchaser or lessee in cases where the vendor has
imperfect title to the property which he has contracted to sell or let.
Apparently this must deal with the rights of the would be purchaser or lessee,
and not of those who have already got the sale or lease of the property in
pursuance of the contract to sell or let. If the person who contracted to sell
or let has completed the sale or the lease transaction, nothing is left for the
vendee or the lessee to seek by way of specific performance of the contract.
This is when he himself acts according to the contract. If he does not act
according to the contract, the person who has agreed to purchase or take on
lease the property will have to seek enforcement of the contract through Court
and then it may be that the Court might not enforce the contract. The Court
will not, in view of the provisions of ss. 14 to 17 be able to 862 enforce the
contract even with respect to the property over which the person contracting to
sell or let had perfect title,. except in certain special circumstances, dealt
with in ss. 14,. 15 and 16.
Section 14 deals with cases where the part of
the contract which could not be performed bears only a small proportion to the
whole in value and admits of compensation in money.
Section 16 deals with the specific
performance of a part of a contract when that stands on a separate and
independent footing from another part of the same contract which cannot or
ought not to be specifically performed. Cases. coming under these two sections
are not expected to give rise to circumstances in which provisions of sub-cl.
(a) of s. 18 can be applied. Section 15 deals with the specific perform- ance
of a contract where the part unperformed is large. The Court has discretion in
such circumstances to direct the party in default to perform specifically so
much part of the contract as it could perform provided that the plaintiff re-
linquishes all claims to further performance, and all right to compensation
either for the deficiency, or for the loss ordamage sustained by him through
the default of the defen- dant. When a Court has dealt with a case under s. 15,
no question can however arise for action under s. 18(a). It follows, from the
consideration of both the sets of circum- stances, viz., when the person
contracting to sell or let himself performs his part of the contract and when
he is made to perform the contract wholly or partially by Court, the occasion
to apply for specific performance of the contract with respect to the property
over which the person contracting to sell or let had originally imperfect
title, does not arise. This points to the conclusion that this clause cannot
therefore be restricted in its application to cases where actual sale or lease
of property had taken place.
If clause (a) of s. 18 was to apply after the
completion of the sale or lease and on the vendor or lessor acquiring interest
in the property in which he had imperfect title to start with, there would be
considerable overlapping between the provisions of cl. (a) of s. 18 and s. 43
of the Transfer of Property Act.
Section 43 of the Transfer of Property Act
comes into play when a person fraudulently or erroneously represents that he is
authorised to transfer certain immoveable property and professes to transfer
such property for consideration, while cl. (a) of s. 18 would come into play
when the person with imperfect title has sold or leased the property. There is
some sort of representation whenever a person sells or leases property, the
representation being implicit and to the 863 effect that he is competent to
sell or let the property.
Thus there is over-lapping of the provisions
of the two sections.
The actual right of the transferee under s.
43 and cl. (a) of s. 18 is however expressed in different language. In cases
where s. 43 operates, the transferee, at his option, can have the transfer operate
on any interest which the transferor may acquire in the property at any time
during which the contract for transfer subsists. The illustration to the
section indicates that the transferee can require the transferor to deliver the
property acquired to him. The purchaser or lessee on the other hand, acting
under cl. (a) of s. 18, can compel the seller or the lessor to make good the
contract out of such interest. The difference between the two provisions is
this that in the case of the operation of s. 43, no recourse to Court is
necessary. The transfer operates on the property transferred and the transferee
can call upon the transferor to deliver the property to him.
The purchaser or the lessor having the right
mentioned in cl. (a) of s. 18 has to go to Court to compel the vendor or lessor
to perform the contract out of the interest subsequently acquired by him. The
purchaser or lessee goes to the Court to enforce the contract and the contract
in cl.
(a) of s. 18 must refer to the contract to
sell or let and not to the contract of sale or lease, which, as indicated
earlier, if voluntary, would have covered the entire property contracted to be
sold or leased, and if enforced through Court no occasion for the operation of
clause (a) of s. 18 would arise.
The expression in cl. (a) of s. 18 should
preferably be construed in a way so that there will be no overlapping bet- ween
the provisions of this clause and of s. 43 of the Transfer of Property Act, as
ordinarily the legislature does not intend to make duplicate provisions for
similar situations.
The use of the words 'vendor or lessor' in
cl. (a) are no definite pointers to the conclusion that the expression
,subsequently to the sale or lease' be given the meaning subsequently to the
actual sale or lease'.
The sections preceding s. 18 deal with
specific performance of contracts in general and therefore use the expression
'party to a contract'. Section 18 deals with the cases of contracts to sell or
let and therefore appropriately uses the simple word 'vendor' or 'lessor' with
respect to the party contracting to sell or let and 'purchaser' or 'lessee'
with respect to the party agreeing to purchase or take the property on lease.
There is no incongruity in using such expressions so long as one knows to whom
those expressions refer. In fact the word 'purchaser' or 'lessee' can be
appropriately applied to persons agreeing to purchase or take the property on
lease.
864 In this connection reference may also be
made to the provisions of cl. (d) of s. 18 which uses the words 'vendor or
lessor' and provides that where the vendor or lessor sues,,,for specific
performance of the contract and the suit is dismissed on the ground of his
imperfect title, the defendant has a right to a return of his deposit...... and
to a lien for such deposit........ on the interest of the vendor or lessor in
the property agreed to be sold or let.
It is clear that the words vendor or lessor
in this clause refer to the person contracting to sell or let the property and
who did not perform his part of the contract.
Section 25 of the Act also uses the
expression 'vendor or lessor' who has not actually sold or leased the property.
It provides inter alia that a contract for
the sale or letting of property cannot be specifically enforced in favour of
the vendor or lessor who comes within the provisions of cls. (a) to (c) of the
section. The provisions of s. 27A also use the expression 'lessor and lessee'
in connection with provisions relating to the contract to let when actually no
lease is executed.
There may be another reason for using the
expression `sale or lease' in cl. (a) of s. 18. Section 13 and illustration (a)
read:
"13. Notwithstanding anything contained
in section 56 of the Indian Contract Act, a contract is not wholly impossible
of performance because a portion of its subject matter, existing at its date,
has ceased to exist at the time of the performance.
Illustrations (a)A, contracts to sell a house
to B, for a lakh of rupees. The day after the contract is made, the house is
destroyed by a cyclone. B, may be compelled to perform his part of the contract
by paying the purchase-money.
* * * * In Pollock & Mulla's 'Specific
Relief Act', 8th edition, under s. 13, is a note:
"Illustration (a) assumes that a
contract for the sale of a house does, of itself, transfer the beneficial
interest in the house to the purchaser, and make him owner in equity in the
English phrase. This was also the law here before the Transfer of Property Act,
1882, came into force. By s. 54 of that Act it is provided that a contract for
the sale of immoveable property does not, of itself.
865 create any interest in or charge on such
property. By s. 55(5) it is enacted that the risk of destruction is borne by
the purchaser only from the date when the ownership appears to pass on
execution of a proper conveyance by the vendor [see s. 55(l)(d)]. It would,
therefore, seem that the illustration cannot now be applied where the Transfer
of Property Act is in force." It may be that just as illustration (a) to
s. 13 continues in the Act, the expression 'sale or lease' continued in cl.
(a) ,of s. 18 as at the time cl. (a) of s. 18
was originally enacted some sort of beneficial interest had passed to the
person agreeing to purchase the property by the mere agreement to sell, arrived
at between the parties.
It has also been urged for the respondent
that cl. (a) of s. 18 of the Act applies only when the person contracting to
sell or let has imperfect title to the property and not when be is not entitled
to the property as is the case in this suit, ,as Ramchandra had no title to
half the house. We do not consider it necessary to decide this question as we
are ,of opinion that it cannot be said that Ramchandra had no interest in half
the house. He had interest in the entire house and so had his mother, though in
case of actual partition the interest of each would have been fixed at half. If
Ramchandra was not competent to pass title with respect to the entire house
during the life time of his mother, he can be said to have imperfect title to
it.
We are therefore of opinion that on the death
of the mother, Ramchandra obtained title to and interest in the portion of the
house which on a private partition subsequent to the contract to sell had taken
place between Ramchandra and his mother and that therefore he has to make good
his contract out of the property he acquired subsequent to the contract to
sell.
It has been submitted for the respondent that
it need not be taken for granted that Ramchandra got title to the property
which belonged to his mother as it might be that the mother had executed some
will. No such allegation appears to have been made before the High Court where
it was urged that Ramchandra had acquired title to that portion of the house.
It was in view of this allegation that the
appellant did not argue the appeal on the basis of the ground that had been
taken in the memorandum of appeal, the ground being that Ramchandra had agreed
to sell for reasons ,of legal necessity. We therefore do not consider any force
in this contention.
L/P(D)) 1 S.C.I-28.
866 We hold that the High Court was wrong in
not applying the provisions of cl. (a) of s. 18 of the Act to the facts of the
case. We therefore allow the appeal, set aside the orders of the Courts below
and decree the plaintiff's suit and order that on payment of Rs. 6,000/- minus
Rs. 300/- paid to the respondent at the time of the execution of the agreement
for sale and such other costs to which the appellant be entitled within a month
from the date of the costs being taxed, the respondent will be directed to
execute the sale deed of the entire house covered by the agreement in favour of
the appellant. The appellant will get his costs of the trial Court, as decreed
by that Court, and of the appeal in this Court, the parties bearing their own
costs of the appeal in the High Court. In case the appellant fails to deposit
the amount aforesaid within the time allowed, his suit will stand dismissed
with costs throughout.
Appeal allowed.
Back
