International Vs. Bhagwandas Fateh Chand Daswani & Ors  Insc 402 (13 July 2004)
V. Patil & D.M. Dharmadhikari.
CIVIL APPEAL NO.336 OF 2002 Bhagwandas Fatehchand Daswani and Others Versus HPA
International and others Dharmadhikari J.
two cross appeals have been preferred against common judgment dated 24.4.2001
passed by the Division Bench of the High Court of Madras by which decree of
Specific Performance of Contract of Sale of the suit property granted by the
learned single judge has been set aside with certain directions to adjust the
equities between the parties.
facts of the present case should be an eye opener to functionaries in law
courts at all levels that delay more often defeats justice invariably adds
complications to the already complicated issues involved in cases coming before
them, and makes their duties more onerous by requiring them to adjust rights
and equities arising from delay.
introductory comment is occasioned by the fact that against the judgment of the
learned single judge passed on 6.9.1988 the appeal was earlier heard by the
Division Bench of the High Court on 22.3.1989 but it passed the judgment after
a period of about five years on 24.1.1994. It dismissed the appeal and
confirmed the decree of Specific Performance of the Contract granted by the
appeal preferred by the defendants, this Court by order passed on 13.1.2000
(reported in 2000 (2) SCC 13) remanded the appeal to the Division Bench of the
High Court for a fresh decision only because of long gap of five years in
hearing arguments and decision of appeal by the High Court.
remand the Division Bench reheard the appeal and by the impugned judgment dated
24.4.2001 has allowed it. The decree granted by the learned single judge of
partial relief of Specific Performance of Contract of Sale of life interest of
the vendor in the suit properly has been set aside.
this background the facts of the case may be stated:- The owner of the suit
property namely, Mouna Gurusamy Naicker, (hereinafter referred to as the
'vendor') grandfather of respondent No.6 (G. D. Narendra Kullamma Naicker)
executed a Will and two Codicils on 7.3.1948. Under the Will, the vendor herein
was bequeathed the right of enjoyment during his life, of the estate of the
testator, including the suit property (described as Municipal Door No.36C,
Mount Road, Madras-600 002) but without powers of alienation. In the Will, it
was provided that after the death of the vendor, his male issue living at the
time of his death would take all the properties absolutely. In the absence of
any such male issue of the vendor, the properties would be taken by other
descendants (hereinafter referred to as the 'reversioners').
the testator died on 23.10.1956. On 26.6.1977, the vendor entered into an
agreement of sale of the suit property with the appellant HPA International, a
partnership firm (hereinafter referred to as the vendee). It was clearly
recited in the agreement that the sale of the property was necessitated because
of the pressing demands of public authorities towards, dues and tax liabilities
on the estate and likelihood of coercive recovery of public dues by attachment
and sale by public auction. The vendor, therefore, agreed to sell and the purchaser
agreed to purchase the entire interest in the suit property at Mount Road, Madras inclusive of life interest of the Vendor and the interest
of the reversioners (described as remainder men) free from all encumbrances,
for a total price of 5.5 lacs. A sum of Rupees 25,000/- was paid as advance.
balance of the sale consideration was to be paid by the purchaser by bank
drafts in favour of the concerned public authorities for discharging the public
dues and taxes. The purchaser agreed to pay Rupees 18,000/- to the tenant in
occupation of the property which was the liability of the vendor. The vendor
agreed to obtain at his own cost and expense the sanction of the High Court of
Madras for sale of his life interest and interest of the remainder men in the
property. The agreement further provided that in case the sanction of the Court
was not accorded for the sale, the agreement shall forthwith stand cancelled
and the vendors shall return the advance amount of Rupees 25,000/- to the
was a separate stipulation in the agreement that if after the sanction of the
Court the vendor commits breach of the contract he shall return the advance
money of Rupees 25,000/- and pay a sum of Rupees 15,000/- to the vendee by way
of liquidated damages for failure to complete the sale. The agreement further
provided that if after the sanction of the Court, vendee commits breach and
does not complete the sale, he shall be liable to pay to the vendor a sum of
Rupees 15,000/- by way of liquidated damages.
part of opening recitals and clauses 1,2,3,4,6,7,9 & 15 of the agreement
dated 26.6.1977 Ex.P1 are reproduced hereunder as rights, and equities of the
contesting parties are dependent on its proper construction, and understanding:
OF SALE "THIS AGREEMENT OF SALE executed at Madras this 26th day of June
1977 between G.D. NARENDRA KULLAMMA NAICKER, son of late M.Dorai Pandian alias Subba
Naicker, Hindu, aged about 38 years and now residing at Plot No.24, Second
Stage, Panmanabha Nagar, Adyar, Madras-20, hereinafter referred to as the
VENDOR of the one part and HPA INTERNATIONAL, a firm having its business office
at No.15/16, Casa Major Road, Egmore, Madras-8 represented herein by its
Managing Partner H.A. ALEEMUDDIN, hereinafter called the PUTVHASER of the other
the Vendor is the Paternal grandson of late Mounaguruswamy Naidu, Zamindar of Naickarpatti,
Madurai District, whereas the said Mounaguruwamy Naidu owned and possessed
large immovable properties consisting of Houses and lands situate in Madurai district and in Madras City.
he executed his last Will and Testament dated 7.3.1948 and two Codicils to the
said Will, whereas he had bequeathed thereunder a life estate in all the said
properties to his grandson, the vendor herein, whereas he provided therein that
after the life time of the Vendor, his male issues, if any, who may survive
him, should take all his properties absolutely, whereas he also provided in the
said Will that if the vendor should die without leaving any male issue, his
brothers and in default of brothers, his brothers' male issues who may be alive
at the time of death of the vendor should take the property absolutely and in
default of any of them, the testators' daughter and son's daughters then living
at the time of the death of the vendor should take the property absolutely.
the said Mounaguruswami Naidu died on 23.10.1956, Whereas the vendor's father M.Doraipandian
alias Subba Naicker obtained probate to the said Will and Codicils from the High
Court, Madras in OP No.14 of 1957 and was administering the estate until
4.12.1963 when he delivered possession of the estate to the vendor under orders
of the High Court, Madras. Whereas the vendor is in possession of the said
estate ever since then and has been administering the same.
the vendor has not begotten any issues, male or female, until now, whereas the
vendor's father died on 29.9.1972. Whereas the vendor had to spend very large
sums of money for Managing the vast extent of agricultural lands comprised in
the estate and the net income from the same ever since the vendor took up
management of the same until now has been very negligible and practically nil.
the house properties have also not yielded any surplus income after discharge
large sums of money by way of public cues such as Agricultural income Tax,
Capital Gains Tax, Income-Tax, Wealth tax, penalties and interest, property
tax, Urban Land Tax, compulsory deposits, etc., payable on the various assessments
could not be paid and discharged as and where demanded for want of requisite
net income from the estate to meet the same and on account of paucity of funds
in the estate.
there is now due towards the said Public debts and public liabilities a sum of
nearly six lakhs, whereas consequent on the inability of the estate to pay the
same, interest on the said public debts are accruing from day to day thereby
increasing the liability of the estate enormously.
in consequence of the inability and failure of the estate to meet the said
public debts within the periods of the respective demands, penalties are also
levied thereby further swelling the public Debt liabilities of the estate.
the vendor apprehends that eventually the public debts and liabilities may
swallow up the estate whereas the payment of all the said Public Debts and dues
and public liabilities is a first charge on the entire state.
the vendor also apprehends that in the circumstances the State and Public Authorities
may take coercive steps and bring the properties comprised in the Estate to
sale for the realisation of the public Debts and Liabilities.
the vendor also apprehends that if the properties are brought to sale in public
auction by coercive steps by the state they may be sold away for ridiculously
low and nominal prices and that the estate would thereby be put to enormous
loss and damage, whereas the vendor has therefore considered it imperative in
the interest of the estate to sell some of the properties of the estate and to
discharge the public dues and liabilities payable by the estate from the net
sale proceeds thereof, in order to save the remaining portion of the estate.
house, ground and premises bearing Municipal Door No.36-C, Mount Road, Madras-2 and more fully described in the Schedule hereto is
comprised in the said estate.
the vendor has therefore negotiated for a sale of the same with a view to
utilize the entire net sale proceeds thereof for discharge of the public debts
and dues and public liabilities of the estate.
the Purchaser has offered to purchase the said property described in the
schedule hereto in its entirety, that is inclusive of the interest of the
remainder men after the life time of the vendor and free from all encumbrances,
charges or trusts whatsoever for the net sum of Rs.5.5 lakhs (Rupees five and a
half lakhs) only upon and subject to the performance of all the terms and
conditions mentioned hereinbelow:
the vendor has considered the said offer to be fair, reasonable and best
according to present market conditions and in the circumstances of the case.
the vendor has also considered that it is in the best interest of and
beneficial to the estate to accept the offer in order to discharge the Public
Debts and dues and public Liabilities of the estate and to save the estate from
coercive steps by the State and from a forced sale of the properties comprised
in the estate in public auction and has therefore deemed it fit, proper and
necessary to accept the said offer.
THIS AGREEMENT WITNESSETH as follows in pursuance of the premises and agreement
vendor doth hereby agrees to sell and the purchaser does hereby agrees to
purchase the entire interest, both present and future, in house ground and
premises bearing Municipal Door No.36-C, Mount Road, Madras-2 inclusive of the
life interest of the Vendor and the interests of the remaindermen and free from
all encumbrances, charges of trusts whatsoever from the net sum of Rupees five
and a half lakhs and subject to and upon all the terms and conditions mentioned
sale is of the entire interests in the said property namely, the present
interest of the vendor and the interest of the remaindermen or revesioners
after his death.
This agreement is subject to the passing of the vendor's title to the property
and of the vendor's rights to sell the entire interest, present and future in
the property by the Purchaser's advocate.
vendor shall obtain at his own cost and expense the sanction of the High Court,
Madras for the absolute sale as aforesaid
of the entire interest in the property inclusive of the interest of the remaindermen
or reversioners after the life time of the vendor.
pruchaser has this day paid to the vendor a sum of Rs.25,000/- (rupees twenty
five thousand only) by bank draft bearing No.CL/AA 779570 dated 24.6.1977 drawn
on the State Bank of India, Adyar, Madras, in favour of the Vendor, as advance
towards agreement of sale.
case sanction of the Court is not accorded as aforesaid, this agreement shall
forthwith stand cancelled and the vendor shall forthwith return the advance
amount of rupees twenty five thousand to the purchaser.
the sanction of Court is obtained the sale shall be completed within a period
of three months thereof.
balance of the sale price of Rs. Five lakhs twenty five thousand shall be paid
by the purchaser at or before the execution and registration of the sale deed
by bank draft drawn in favour of the respective concerned Public Authorities on
behalf of the vendor for discharge of the public debts and dues and public
liabilities of the said estate and other liabilities binding on the said
property, viz. The advance of Rs.18,000/- liable to be returned to the tenant
of the said property by the vendor and the commission payable by the vendor to
the broker on this transaction.
after the sanction of court to the aforesaid sale is obtained the vendor fails
to complete the sale he shall be liable to refund forthwith to the Purchaser
the advance of rupees twenty five thousand and also pay a sum of rupees fifteen
thousand to the Purchaser by way of liquidated damages for his failure to
complete the sale. If after the sanction of court is obtained the purchaser
fails to complete the same he shall be liable to pay to the vendor a sum of
rupees fifteen thousand by way of liquidated damages for his failure to
complete the same." At the time of execution of the agreement Ex.P1 dated
26.6.1977 the Testator's only daughter and the three sisters of the vendee were
the reversioners in accordance with the terms of the Will because by that time
the vendor had no male issue.
accordance with the terms of the sale agreement the vendor filed Civil Suit
No.471/77 (originating Summons Suit) on the original side of the High Court for
seeking sanction of the court for sale of full interest in the property
inclusive of his own life interest and the interest of the reversioners. The reversioners
were impleaded as parties to that suit.
16.1.1978, one of the reversioners viz., Saraswati Devi filed a written
statement objecting to the grant of sanction for sale and prayed for dismissal
of the suit. Another reversioner Prema Gangaiya adopted the written statement
filed by other reversioner and objected to the sale.
sanction sought from the Court was opposed by the above-named reversioners, the
vendor sent a lawyer's notice on 11.9.1979 to the vendee stating therein as
view of the prolonged proceedings in obtaining sanction of Court, for sale of
the above said property and the pressing demands from Tax Authorities, my
client Mr. G.D.Narendra, hereby cancels the agreement of sale referred to above
and the advance sum of Rs.25,000/- paid by your draft under the above said
agreement is, therefore, refunded by his check bearing No.........dated
11.9.1979." Soon after issuance of the above lawyer's notice, the vendor,
on 12.9.1979, instructed his lawyer stating that the suit seeking sanction of
the Court was not likely to be decided early and the chances of grant of
sanction being remote, the suit be withdrawn.
be mentioned at this very stage that eventually the suit was not, in fact,
withdrawn and, as would be stated in detail hereinafter, the suit was
prosecuted by the vendee himself who got himself transposed in the suit as
vendee sent a detailed reply to the lawyer's notice sent by the vendor
canceling the agreement. In his reply, the vendee attributed mala fides to the
vendor in rescinding the agreement. In his reply, the vendee acknowledged that
the sale was necessitated because of public liabilities towards taxes and other
dues in respect of the property but it was alleged that there was no such
pressing demand from any tax authorities creating an urgency as to compel the
vendor to rescind the contract. It was alleged in the reply that the vendor was
negotiating a sale for higher price with one Bob Daswani and to effectuate sale
in favour of the new purchaser, one of the partners of the vendor firm was
called for discussion. It is disclosed from the evidence led in the trial that
Bob Daswani and respondent Fateh Chand Daswani who were shown and impleaded as
two different persons, were one and the same although initially attempt was
made by the defendants to mislead the Court that they were two persons and the
subsequent sale to respondents 1 to 5 was without knowledge of prior agreement
with the vendee. The purchaser of the suit properties shall hereinafter be
referred as the subsequent vendee.
is to be taken note of from the lawyer's reply for vendee to the lawyer's
notice for the vendor is that the former had alleged breach of contract on the
part of the vendor with attributing intention to the latter of selling the
property for higher price to third parties. The other relevant part of the
reply to lawyer's notice sent by the vendee is the acknowledgement of the fact
of necessity of sale of the property for discharging public taxes and dues
although in reply it was reiterated that the vendee was always ready to
discharge the tax liability in accordance with the sale agreement.
relevant part of the reply reads thus:
very object of the intended sale is for discharge of the income tax and other
tax liabilities and my clients are always ready to discharge the same as per
the sale agreement." It may be mentioned at this very stage that in his
reply sent through his lawyer to the lawyer's notice of the vendor cancelling
the agreement, the vendee did not express desire to purchase life interest of
the vendor without insisting on transfer of interest of the reversioners which
was subject matter of the suit filed for seeking sanction of the Court.
29.12.1979, the vendor sold his life interest in the suit property for a sum of
Rs.4.40 lacs by executing registered instrument in favour of respondents 1 to 5
(shortly referred to as the subsequent vendee). What is apparent from the
contents of the subsequent sale deed Ex.D1 dated 29.12.1979 executed in favour
of the subsequent vendee is that large part of the sale consideration in
different sums aggregating to Rs.2.68 lacs was paid directly by the subsequent
vendee to various authorities to discharge public dues and taxes like
Corporation Property Tax, Urban Land Tax and Income Tax arrears.
subsequent vendee by separate release deeds dated 21.10.1980, 22.1.1980,
22.2.1980 and 29.4.1980 obtained surrender of rights individually from the reversioners
by paying each of them a sum of Rs. 20,000/-.
receiving the lawyer's notice and cancellation of the sale agreement, the
vendee on 25.3.1981 got himself impleaded as a party-defendant in Suit
No.471/77 which was filed to seek sanction of the Court.
16.8.1981 the vendee filed Civil Suit No.423/81 seeking Specific performance of
the Agreement of Sale agreement Ex.P1.
order dated 17.12.1981 passed in Civil Suit No.471/77 seeking sanction of the
Court, the vendor got himself transposed as co-plaintiff. The two suits i.e.
Civil Suit No.471/77,seeking court sanction for sale under the agreement Ex.P1
and Civil Suit No.423/81 seeking Specific Performance of the Agreement of Sale,
were clubbed and tried together by the learned single judge on the original
side of the High Court.
the pleadings were completed in the two suits, the vendee on 25.11.1986 filed
an affidavit purporting to be under Section 12(3) of the Specific Performance
Act of 1963 stating therein that without prejudice to his claim for transfer of
full interest in the suit property to him under the agreement of sale, if he
was found not entitled to maintain the suit seeking sanction of the Court for
sale of full interest in the property a decree be granted for Specific
Performance of transfer of life interest of the vendor in the suit property.
The relevant part of the affidavit claiming lesser relief of sale of life
interest of the vendor reads as under:
submit that the relief as prayed for in CS No.471 of 1977 can be granted by
The relief prayed for in the present suit is for a decree for specific
performance in respect of the entire property with full rights of the first
defendant and of the reversioners.
prejudice to what is stated above, it has become necessary for me to file this
affidavit before commencement of the trial of the suit under the following
state that in the event of this Hon.
taking the view and coming to the conclusion that the plaintiff herein as the
second plaintiff in CS No.471 of 1977 is not entitled to maintain the suit and
pray for the relief sought for, then, I submit that this Hon.
may be pleased to decree the suit in CS No.423 of 1981 for specific performance
of the life interest of the first defendant and direct the defendants in the
suit to execute the sale deed in favour of the plaintiff to the extent of the
life interest of the first defendant." In view of the above averment made
in the affidavit filed by the vendee in which he alternatively claimed lesser
relief of transfer of only life interest in the suit property of the vendor,
the learned single judge by common judgment dated 6.9.1988 dismissed Civil Suit
No.471/77 seeking sanction of the Court for sale as infructuous.
relevant part of order of the learned single judge dismissing Civil Suit for
sanction as infructuous reads thus:
so, by affidavit dated 25th November, 1986, Messrs. HPA International, swore in
CS No.423 of 1981, that in the event of this Court coming to the conclusion
that Messrs. HPA International as 2nd plaintiff in CS No.471 of 1977 is not
entitled to maintain the suit as prayed for, HPA International is restricting
their claim in CS No.423 of 1981 for specific performance of the agreement
Ex.P1 with reference to the life-estate of Narendra Kullamma Naicker alone and
for a direction to the defendants in that suit to execute the sale deed in favour
of the plaintiff to the extent of the life-estate of Narendra Kullamma Naicker
as provided under Section 12(3) of the Specific Relief Act for the
consideration of Rs.5,50,000/- for which he had bargained for the whole
interest in the suit property.
view of the above affidavit filed by Messrs.
International in CS No.423 of 1981, this suit viz., CS No.471 of 1977 has
become infructuous. Further, this Court cannot compel the reversioners to part
with their interest.
such, I find that the suit in CS No.471 of 1977 has become infructuous, and it
is dismissed as infructuous accordingly. No costs." It may be stated that
this part of the common judgment dismissing Civil Suit No.471/77, in which
sanction for sale was sought from the Court, has not been appealed against before
us although learned counsel for the vendee has contended that no separate
appeal was required to be filed against dismissal of the suit for court's
sanction as infructuous because the common judgment passed in the suit seeking
sanction of the suit for sale and the suit for specific performance is under
appeal before us. We shall deal with this argument separately at the
appropriate stage as to whether any separate appeal was required to be filed
against dismissal of suit seeking sanction of the Court for sale, as having
been rendered infructuous.
learned single judge by the impugned common judgment decreed Civil Suit
No.423/81 in favour of the vendee to the extent of directing conveyance of life
interest in the suit properties of the vendor under the Agreement Ex.P1. It was
further held that as the subsequent vendee has purchased the property with
knowledge of the prior sale agreement with the vendee the former should join in
re-conveying the property to the latter.
necessary to take note of the legal and factual issues decided by the learned
single judge in favour of the vendee. On the issue whether the vendee can be
granted lesser relief directing conveyance of life interest of property of the
vendor, the learned single judge held in favour of the vendee thus:
perusal of the oral and documentary evidence clearly proves that DW 1 has no
regard for truth. Further, the built-in clauses namely clauses 4 & 6 in
Ex.P1 have been introduced for the benefit of the plaintiff. The
non-enforcement of those clauses will not prejudice the Ist defendant. As such
I find that the facts of this case amply illustrate the forethought of the
framers of the Specific Relief Act in introducing Section 12 therein.
failure to get sanction of the court by the Ist defendant to convey the whole
of the interest of the suit property as contained in clause 4 of Ex.P1
agreement is not a bar for the plaintiff herein to enforce Ex.P1.since he has
relinquished the benefit that accrues to him, which will not prejudice the Ist
view of the relinquishment of the right given to the plaintiff under clause 4
of Ex.P1, clause 6 of the agreement becomes otiose." In granting decree of
Specific performance of Conveyance of life interest of the vendor, learned
single judge further held thus:
the agreement involved in this suit is capable of separation, one consisting of
enforceable portion viz. the life interest of the first defendant and
unenforceable portion viz.
of remainder men and reversioners." The learned single judge found that
the equity was in favour of the vendee as the vendor has been found guilty of
misrepresenting Bob Daswani and Fateh Chand Daswani as two persons when they
were the same and the negotiations for subsequent sale were held in presence of
one of the partners of the vendee. The learned single judge on this aspect in
the judgment comments thus:
is a pity that third defendant who is considered to be an enlightened citizen
having international connections with so much of wealth has not come forward to
state at the earliest opportunity that he carries the name Bob Daswani also.
That shows the guilty conscious of the third defendant. Having projected his
image as Bob Daswani, the presence of the first defendant and the plaintiff on
9.9.1979 he wanted to hoodwink the plaintiff for getting his sale-deed in the
name of the third defendant so as to plead that third defendant is bona fide
purchaser for value "without notice." But anticipating that his claim
would be exposed he omitted to mention the aforesaid facts that he and his wife
and children are bona fide purchases for value only. They omitted to state
"without notice." It needs to be mentioned at this stage that learned
counsel appearing for the subsequent vendee has not disputed in this appeal
that the sale in favour of the subsequent vendee was with notice of the prior
sale agreement Ex.P1 with the vendee.
the judgment granting decree of specific performance of sale of life interest
of vendor in the suit property, an appeal was preferred by the subsequent
vendee to the Division Bench of the High Court. As has been mentioned earlier,
the Division Bench concluded hearing of the appeal on 22.3.1989 but pronounced
judgments almost five years after on 24.1.1994 and dismissed the appeal. That
judgment has been set aside by this Court by order dated 13.1.2000 reported in
2000(2) SCC 13. This Court remanded the appeal for re-hearing by the Division
Bench of the High Court.
re-hearing, the Division Bench by the impugned judgment dated 24.4.2001 has
allowed the appeal preferred by the subsequent vendee. The decree granted for
conveying life interest of the vendor in the suit property has been set aside.
The only relief granted to the plaintiff, is that out of the rental income realised
by the plaintiff during long pendency of the appeal, a sum of Rs.5.5 lacs has
been deducted to deprive the subsequent vendee of that sum for his misconduct
of projecting Bob Daswani and Fateh Chand Daswani as two persons when, in fact,
they were one. Rest of the rental income recovered by the plaintiff vendee has
been directed to be paid to the subsequent vendee as a consequence of success
of appeal and setting aside of the decree for specific performance.
considering the various grounds urged in this appeal, it is necessary to
briefly indicate the basis on which the Division Bench on re-hearing of the
appeal - reversed the judgment of the learned Single Judge.
the relevant clauses of the contract the Division Bench held that clause (6),
which placed an obligation on the vendor to approach the court for sanction of
sale of interest of reversioners, was incorporated not with a view to safeguard
interest of the vendee alone but it was a term meant for benefit of both the
parties. The Division Bench in paragraph 31 held thus:
sanction referred to in the agreement is a sanction which was clearly meant for
the benefit of both the parties to the agreement. The plaintiff was interested
only in the purchase of entire interests' in the property, had made the
agreement subject to such interest being lawfully conveyed and accepted
liability for payment of liquidated damages if it failed to obtain the sale
deed after the sanction was obtained. Plaintiff not having contracted with the reversioners
to buy their interest, could not have secured the 'entire interest' in the
property without an order of this Court directing conveyance of the
reversionary interest to the purchaser. The sanction of the Court was clearly
meant for the benefit of the purchaser as well as the vendor." The
Division Bench has taken the view that as the sanction for sale was not granted
by the Court as was contemplated by the parties under the terms of the
agreement; the contract was rendered un- enforceable. The Division Bench
are entitled to contend that the contract is a contingent one, and that the
contingency contemplated by the parties not having occurred, the contract,
regard being had to what had been expressly provided by the parties in clause 6
of the agreement, had collapsed by implosion, the dismissal of the suit for
sanction having triggered it." With regard to dismissal of Civil Suit
No.471/77 seeking sanction of the Court as infructuous and having attained
finality because of non-preferring of appeal by the vendee-plaintiff in
paragraphs 25 & 34, the Division Bench held thus:
is now a matter of record that the sanction sought for the sale of reversionary
interest was not given the Civil Suit 471 of 1977 having been dismissed that
dismissal has become final. By virtue of clause 6, the suit agreement Ex.P1,
forthwith stood cancelled, if that clause was meant for the benefit of both the
parties to the contract. If the contract thus stood cancelled the suit for
specific performance had necessarily to be dismissed.
suit for sanction, CS No.471 of 1977, was in fact prosecuted by the respondent
herein, who after becoming a party to that proceeding, had itself transposed as
a co-plaintiff. Having thus put itself in a position where it could seek
sanction, plaintiff's failure to lead evidence on the justification for
sanction, on the ground that it had invoked S.12(3) of the specific Relief Act,
is a default which cannot now be turned to its advantage, after the suit for sanction
was dismissed." The claim allowed for grant of lesser relief of conveyance
of life interest of the vendor in the suit property, was negatived by the
Division Bench and the decree granted by single judge was reversed by recording
the following conclusion:
suit agreement being an integrated whole was one and indivisible incapable of
being split into an agreement for sale of life interest and another for the
sale of reversionary interest. What perished was the whole of the contract and
not only a part. What was contemplated by the parties to the agreement was the
sale of 'entire interest' in the property provided sanction was given, and in
the event of sanction not being given the agreement stood cancelled as a whole
leaving each of the parties to arrange their affairs as they thought fit wholly
unhampered by anything contained in the agreement. The agreement contemplated
the sale of all interests in the property if sanction was forthcoming, and no
sale of any part of the property in case sanction was not given. The bargain
was for all or nothing. It was not open to the court to make a new contract for
the parties after the contract in its entirety had perished." The Division
Bench negatived the claim seeking conveyance of life interest in the property
of the vendor, also on the ground of delay and equity by observing thus:
cannot be allowed to claim performance in part several years later. Had the
plaintiff been earnest about relinquishing its claim for reversionary interest,
it could have obtained Narendra's life interest in 1977 itself, and at any time
up to the execution of the sale deed by Narendra In favour of appellants in
1979. Narendra was eager to sell and had been waiting for the plaintiff to take
a sale deed from him. The sale by Narendra to appellants was for the purpose
inter alia, of raising the monies required for paying the arrears of revenue -
funds which the plaintiff could have provided by obtaining conveyance of his
life interest, but was not so provided. Having regard to these facts the prayer
for part performance made during the course of the trial at a stage when it was
evident that the suit as laid was doomed to failure, was not one which could be
acceded to. The trial court was in error in granting that prayer by ignoring
the plaintiff's conduct." As a result of the conclusion reached as
mentioned above, the Division Bench allowed the appeal and set aside the decree
of granting Specific Performance of the Contract Ex.P1 to the extent of
conveyance of life interest of the vendor. A decree of refund of full sale
price to the vendee was however granted. Since pending the appeal, the decree
granted by the learned single judge had been executed and possession had been
obtained by the vendee, who had raised further construction on the property and
collected rents from the tenants, the Division Bench in paragraph 63 made
directions to adjust the rights and equities between the parties with regard to
the amounts spent by each of them on putting up their own constructions and rental
income realised by each of them from the property. We shall separately deal
with that aspect at appropriate stage of our judgment.
have heard the learned counsel appearing for the contesting parties at great
length. Apart from long oral arguments, written submissions have been made and
plethora of case law has been placed before us on various legal contentions
the view that we propose to take and the conclusions reached by us, we do not
consider it necessary to deal with each of the rulings cited before us by the
learned counsel at the Bar. We will confine our consideration to certain
rulings directly on the issues and few others touching them.
substance, the main submission advanced by learned counsel Shri K. Parasaran on
behalf of the vendee is that the vendor clearly committed a breach of the terms
of the sale agreement Ex. P-1. During pendency of the suit seeking sanction of
the court, the contract was formally terminated by lawyer's notice dated
11.9.1979 sent by him. It is submitted that actions such as of sending notice
of terminating the contract, thereafter instructing his lawyer to withdraw the
suit for sanction followed by the negotiations which were proved to have been
held to sell the suit property to the subsequent vendee, were clearly mala fide
attempts on the part of the vendor to resile from the contract for getting
higher price for the property. It is pointed out that an attempt was made to
mislead the Court by creating confusion that Bob Daswani and Bhagwandas Daswani
were two different persons and the subsequent vendee had no knowledge of the
prior agreement entered with the plaintiff- vendee. This deception sought to be
practised on the opposite party and the court was exposed during trial and the
learned single judge has imposed penalty on the subsequent vendee for the
misconduct of misleading the court. It is submitted that the subsequent vendee
having purchased the property with knowledge of the prior agreement holds the
property in trust for the benefit of the prior vendee and is obliged in law to
make over the property to the prior vendee under decree for specific
performance of the prior contract.
90, 91 & 92 of the Indian Trusts Act are relied for the above proposition
and need reproduction at this stage for better appreciation of the arguments
advanced on this point on behalf of the vendee :- "Section 90. Advantage
gained by qualified owner. - Where a tenant for life, co-owner, mortgagee or
other qualified owner of any property, by availing himself of his position as
such, gains an advantage in derogation of the rights of the other persons
interested in the property, or where any such owner, as representing all
persons interested in such property, gains any advantage he must hold, for the benefit
of all persons so interested, the advantage so gained, but subject to repayment
by such persons of their due share of the expenses properly incurred, and to an
indemnity by the same persons against liabilities properly contracted, in
gaining such advantage.
91. Property acquired with notice of existing contract.-Where a person acquires
property with notice that another person has entered into an existing contract
affecting that property, of which specific performance could be enforced, the
former must hold the property for the benefit of the latter to the extent
necessary to give effect to the contract.
92. Purchase by person contracting to buy property to be held on trust.-Where a
person contracts to buy property to be held on trust for certain beneficiaries
and buys the property accordingly, he must hold the property for their benefit
to the extent necessary to give effect to the contract." In elaborating
the above argument to support claim of specific performance of the contract, the
further submission made is that the act of rescinding contract, pending suit
for sanction of the court and selling the property with only life interest to
the subsequent vendee, who later on, obtained surrender deeds from the reversioners
by independently paying them, were acts done in conspiracy between vendor and
the subsequent vendee. They were self-induced actions to render the suit for
seeking sanction as infructuous and frustrate the contract. It is contended
that in such a situation, the prior vendee can take recourse to section 90 read
with sections 91 & 92 of the Indian Trusts Act, and is entitled to seek
specific performance of the contract of full rights of the property i.e.
interest of the vendor and spes successionis of the reversioners. To give
effect to the right of the vendee to specific performance - the vendor, reversioners
and subsequent vendee can be compelled in law to convey full title of the
property to the plaintiff.
alternative argument advanced on behalf of the plaintiff- vendor is that
although the petitioner is, in law, entitled to conveyance of full title in the
property by the vendor, the reversioners and the subsequent vendee, he has
restricted his claim to the lesser relief of seeking conveyance only of life
interest in the property of the vendor. Such relief can be granted under
section 12(3) of the Specific Relief Act as the vendee is willing to pay full
agreed consideration for lesser relief of conveyance of life interest in the
property. Reliance is placed on Lala Durga Prasad vs. Lala Deep Chand [1954 SCR
360 at pg. 367]; Jhumma Masjid vs. Kodimaniandra Devaiah [1962 Supp (2) SCR 554
at pg. 570]; Soni Lalji Jetha vs. Sonkalidas Devchand [1967 (1) SCR 873 at pg.
879]; and Narandas Karsondas vs. S. A. Kamtam [1977 (3) SCC 247].
argued that the Division Bench of the Madras High Court was wrong in coming to
the conclusion that the contract was a contingent one and as the court did not
grant sanction for sale of reversioners' interest and dismissed the suit seeking
sanction as infructuous, the contract failed. The contention advanced is that
where the grant of sanction of the court was frustrated by the vendor himself
by prematurely rescinding the contract and instructing his lawyer not to
prosecute the sanction suit, the dismissal of the suit as infructuous was
self-induced by the vendor. The vendor cannot be allowed to take advantage of
his own wrong. The law and equity is in favour of the plaintiff- vendee.
Reliance is placed on Ganga Saran vs. Ramcharan Ram Gopal [1952 SCR 36 at pg.
it is submitted that even though sanction could not be obtained from the court
for transferring interest of the reversioners, the law permits the equity court
to grant lesser relief of directing conveyance of life interest of the vendor
on payment of full agreed consideration, in accordance with section 12(3) of
the Specific Relief Act. In this respect, it is contended that the Division
Bench of the High Court was wrong in holding that there was undue delay on the
part of the plaintiff- vendee in exercising the option for lesser relief of
transfer of life interest of the vendor. Further it is also contended that the
option exercised for lesser relief was not 'conditional,' as is sought to be
projected by the other side. It is submitted that when both suits for seeking
sanction and for specific performance were jointly tried, exercise of option by
filing affidavit stating that it was without prejudice to the right of
obtaining full title with sanction of the court, cannot be said to be
conditional to deny relief under section 12(3) of the Specific Relief Act.
support of the claim for lesser relief of transfer of life interest, it is
submitted that the clause in the contract requiring sanction of the Court for
transfer of reversioners' interest was a condition solely in favour of the
plaintiff- vendee which he could waive and the vendor could not insist on
fulfillment of that condition as a fundamental term of the contract.
reply to the plea of the finality of the decree of dismissal of sanction suit
as infructuous, being not appealed against, it is submitted that the
proceedings for sanction are summary in nature, under the rules and procedures
of Madras High Court framed for its original side. That suit for sanction which
was of summary nature happened to be clubbed with the suit for specific
performance. The two suits were jointly tried. A common judgment was passed
dismissing the sanction suit as infructuous and partly decreeing the suit for
specific performance. An appeal was filed against the common judgment.
Therefore, non-filing of appeal against the dismissal of sanction suit as infructuous
does not operate as res judicata and is no ground to refuse specific
performance of the grant of decree of specific performance of contract for
transfer of life interest for which no sanction of the court was needed.
Reliance is placed on S.P. Chengalvarya Naidu vs. Jagannath [1994 (1) SCC 1]
and Sheoparsan vs. Ramnandan [AIR 1916 PC 78 at pg. 81].
of the contentions advanced at the Bar on behalf of the plaintiff- vendee, in
our opinion, are not required to be separately dealt with because of the view
we propose to take and the conclusion reached by us which shall be elaborated
senior counsel Shri Soli J. Sorabjee appearing for the subsequent vendee rested
his argument on his main submission that the sale agreement was a contingent
contract - the contingency named being sanction of the court which did not
materialize. Upon failure of that contingency, the agreement stood cancelled
forthwith under clause (6) of the agreement. On failure of the happening of the
contingency, the agreement had been rendered unenforceable in accordance with
section 32 of the Indian Contract Act read with definition of 'Contingent
Contract' contained in section 31 of the said Act :- "Section 31.- A
'contingent contract' is a contract to do or not do something, if some event,
collateral to such contract, does or does not happen.
32. Enforcement of contracts contingent on an event happening.- Contingent
contracts to do or not to do anything if an uncertain future event happens
cannot be enforced by law unless and until that event has happened.
event becomes impossible, such contracts become void." Heavy reliance is
placed on decisions of Privy Council reported in Dalsukh M. Pancholi vs.
Guarantee Life & Employment Insurance & Co. [AIR 1947 PC 182 at pg.
186]; Narain Pattro vs. Aukhoy Narain Manna [ILR 12 Calcutta 153 at pg. 155]; Sreemati
Kalidasi Dassee vs. Sreemati Nobo Kumari Dassee [20 CWN 929 at pgg. 937, 938
& 939]; and Golab Ray & Anr vs. Muralidhar Modi & Ors. [AIR 1964 Orissa
176 at pgg. 180 & 181].
decision cited by the other side in the case of Mrs. Chandnee Widya Vatee
Madden vs. Dr. C.L. Kataial & Ors. [1964 (2) SCR 495], is sought to be
distinguished on the ground that there the vendor without sufficient reason
withdrew the application made to the Chief Commissioner for sanction and
therefore, the relief granted was to direct the vendor to make the necessary
application for sanction. In that case, it was further made clear that
ultimately if the sanction was refused, the plaintiffs would be entitled only
to damages as decreed by the High Court.
regard to the claim allowed for grant of lesser relief of transfer of life
interest, the contention in reply is that the agreement Ex. P-1 was a single
indivisible and inseparable contract based on sanction of the court. By
segregating the contract, no new contract can be created by the court and take
recourse to section 12(4) of the Specific Relief Act is impermissible. Reliance
is placed on William Graham vs. Krishna Chandra Dey [1925 PC 45]; Abdul Haq vs.
Mohammed Yehia Khan & Ors. [AIR 1924 Patna 81 at pg. 84]; and Hiralal Lachmiram Pardesi vs. Janardhan Govind Nerlekar
& Anr. [AIR 1938 Bombay 134].
claim for conveyance of life interest is also opposed on the ground that the
option exercised under section 12(3) of the Specific Relief Act was not
unconditional and without reservations. There was no surrender of claim to the
interest of the reversioners. Such a conditional claim for lesser relief was
rightly rejected by the Division Bench of the High Court. Reliance is placed on
T.V. Kochuvareed & Bolla Narayan Murthy vs. Cannamaneedi Madhavayya & Anr.
[1947 (2) MLJ 347]; and Surjith Kaur vs. Naurata Singh & Anr. [2000(7) SCC
additional ground urged to oppose claim for lesser relief of the conveyance of
life interest is that such option under section 12(3) of the Specific Relief Act
was not exercised at the first available opportunity when a formal legal notice
was given by the vendor to terminate the contract anticipating remote
possibility of grant of sanction. It is submitted that the option for lesser
relief was claimed when the joint trial had already commenced in the suits and
all the pleadings of the parties had been completed. It was not an
unconditional offer to obtain life interest. The provisions of Section
12(3)(b)(i) & (ii) of the Specific Relief Act were thus not fully complied
with which require for obtaining partial relief of specific performance,
unconditional surrender of remaining part of the contract.
reply to the argument that the sanction suit was not prosecuted by the vendor
deliberately to render it infructuous with a design to back out from the
contract in conspiracy with the subsequent vendee, it is pointed out that
despite service of notice terminating the contract, the suit was not in fact
withdrawn. Soon thereafter the vendee got himself impleaded and later
transposed in the suit as co-plaintiff. In the course of trial of sanction suit
with suit for specific performance, the vendee exercised option by an affidavit
of claiming lesser relief of life interest. He himself was thus responsible for
rendering the sanction suit infructuous. It is argued that if it was possible
to obtain sanction of the court on the ground of continuous pressure on the
property for recovery of public dues, the order of the single judge on original
side dismissing the sanction suit as infructuous should have been challenged in
appeal by the vendee. In any case when the subsequent vendee had gone in appeal
against the decree granted for life interest in the suit for specific
performance, the vendee could not have allowed the dismissal of the sanction
suit to attain finality by not filing cross appeal against the same. Even in
this Court, there is no appeal preferred and no ground urged challenging the
dismissal of the sanction suit as infructuous. It is, therefore, submitted that
one of the essential terms of the contract of obtaining sanction of the court
having been rendered impossible of performance, the contract for sale of the
property was rightly held by the Division Bench of the High Court to have
failed rendering it incapable of specific performance.
it is submitted that grant of specific relief being discretionary the court
should decline the relief to the plaintiff- vendee as the sanction suit got
delayed and ultimately no sanction was granted. The vendor had no other option
but to sell the property to clear the taxes and public dues for saving the
property from being attached and sold through coercive process of recovery of
public dues and possibly at a price less than the prevailing market price. The
subsequent vendee has purchased separately the life interest of the vendor
which alone he could convey and obtained separate surrender-deeds from the reversioners
by paying each of them price of their interest. In the agreement Ex.P-1 entered
with the vendee, as also in the sale-deed obtained by subsequent vendee, there
is clear mention of the fact of pressure on the property for recovery of taxes
and public dues. In the sale-deed obtained by the subsequent vendee, there is
recital that taxes and public dues were directly paid by the subsequent vendee
to the public authorities.
contents of the agreement of sale Ex. P-1 and the sale-deed Ex. D-1 are
evidence of the fact that early disposal of the property was the pressing
necessity to ward off coercive recovery from the property.
additional argument advanced in opposing the claim for lesser relief of
conveyance of life interest is that the clause requiring the sanction of the
court for transfer of the reversioners' interest was a term of contract for the
benefit of both the vendor and the vendee. The court's sanction would have
protected the vendor from claims and possible legal proceedings against him by
the reversioners. Court's sanction was also for the benefit of the vendee to
ensure effectuation of the agreement of sale which purported to sell entire
interest that is life interest of vendor and spes successionis of reversioners.
The term of seeking court's sanction being a term in common interest - both of
vendor and the vendee, the vendee could not be allowed to unilaterally waive it
by restricting his claim to life interest. There is also no pleading and
evidence to justify claim set up by the vendee. The dismissal of sanction suit
as infructuous was induced by the vendee becoming a co-plaintiff and filing an
affidavit restricting his claim to life interest.
was, therefore, a self-defeating act on the part of the vendee and the Division
Bench of the High Court rightly dismissed the suit for specific performance for
the life interest.
hearing the argument at length advanced by the counsel for the parties and
perusing the record of the case, the basic question that first needs
consideration is whether there was any breach of contract on the part of the
vendor so as to justify the grant of relief of specific performance of the
contract of sale. We do not consider it necessary to deal with the legal
contention whether clause (4) of the contract requiring vendor to obtain
sanction of the court was an exception clause or a fundamental term of the
contract. From the recitals of the sale agreement Ex. P-1 and particularly
those requiring the vendee to discharge public debts and dues directly as part
of the consideration of sale, it is clear that the necessity of sale for the
vendor arose for safeguarding the property from being put to auction and sale
through coercive process of recovery of public dues.
the vendor wanted to obtain market price of the property and desired to avoid
sale of the property through a coercive process at a lesser price. That there
were outstanding taxes and public dues have not been disputed by the vendee and
in fact, they are acknowledged by him in reply to the lawyer's notice sent by
the vendor terminating the contract. In the reply sent through lawyer by the
vendee, it is clearly acknowledged that tax dues were there but it is stated
that the alleged pressure from tax authority was merely as an excuse to
terminate the agreement. The motive attributed to the vendor that he tried to
wriggle out of the sale agreement Ex. P- 1, only to obtain higher price of his
property by selling it to the subsequent vendee, is not borne out from the
evidence on record.
contents of the sale-deed Ex. D-1 dated 29.12.1979 executed in favour of the
subsequent vendee clearly show that a substantial portion of agreed
consideration of Rs. 4,40,000/- was paid directly by cheques towards the
property tax [Rs.50,383.98] to Corporation of Madras, Urban Land Tax to Tehsildar
[Rs. 36,860.70] and income tax [Rs.1,10,000/-] to Income-Tax Officer. The above
payments made by the subsequent vendee to public authorities justify the stand
of the vendor that there were pressing demands of public authorities on the
property and the sale of the property, well before the impending initiation of
coercive recovery by public authorities, was an urgent necessity.
main contention advanced against the vendor is that the contract term clause
(4) imposed a liability on him to seek sanction of the court for transfer of
full title in the property. During pendency of suit for sanction, actions on
the part of the vendor such as terminating the contract by sending a lawyer's
notice and instructing his lawyer to withdraw the suit for sanction, amounted
to committing breach of the contract.
agreement was entered into on 26.6.1976. The reversioners opposed sanction by
filing written statements on 16.1.1978. It is long after, on 11.9.1979 by
lawyer's notice, the vendor terminated the contract. The sanction suit was
pending from 26.6.1976. Even after two years, the sanction was not granted. The
question is whether the agreement Ex.P-1 contemplated that the vendor should
have waited for grant of sanction by the court for an indefinite period of
time. The recitals of the agreement of sale clearly mention the necessity of
sale arising from the pressure of public dues and taxes. The vendor could not
have waited for an unreasonably long period of pendency of sanction suit when
commencement of recovery proceedings for public dues and taxes could have
commenced any time. There is no period fixed in the terms of the contract for
obtaining sanction of the court, but keeping in view the other terms of the
contract and the pressing requirement for sale of the property to clear public
dues, it has to be held that obtaining of court's sanction within a reasonable
period and in any case within a period well before commencement of recovery
proceedings for dues and taxes, was in contemplation of the parties as an
served for terminating the contract, after waiting for two years for sanction
by the court, cannot be held to be a breach of the contract on the part of the
vendor. The argument that the vendor rescinded the contract only because he had
entered into secret negotiations with the subsequent vendee to obtain higher price
for the property is not borne out from the evidence. We cannot attach too much
importance to the fact of initial attempt made by subsequent vendee to conceal
knowledge of the existing contract with the vendee when sale-deed was obtained
by the former. For the misconduct of misrepresentation and attempt to mislead
the court, the Division Bench of the High Court has rightly deducted a sum of Rs.
5.5 lacs from the rental income found payable to the subsequent vendee. We
propose not to disturb the same. But the aforesaid misconduct of subsequent
vendee does not render the act of vendor in rescinding the contract to be an
act of breach of contract which can be said to have been committed solely with
desire to obtain higher price of the property.
have mentioned above, only life interest was sold to the subsequent vendee for
higher price. Out of the agreed sale consideration, major portion of money was
directly paid by the subsequent vendee to satisfy dues and taxes of public
notice served for terminating the contract, anticipating remote prospect of
grant of sanction by the Court within a reasonable period and after waiting for
two years from date of the contract, cannot be termed to be a breach to justify
grant of any specific relief to the vendee.
this respect, it is also relevant to state that although by lawyer's notice,
the vendor terminated the contract and instructed his lawyer to withdraw the
suit for sanction, but in fact, the suit was not withdrawn. The vendee got
himself impleaded initially as defendant to the suit and then sought his
transposition as co-plaintiff.
part of the action of the vendee cannot be castigated as self- defeating
because he was naturally interested in prosecuting the suit for sanction
diligently to obtain conveyance of full rights in the property. However, the
further act on the part of the vendee of filing an affidavit restricting his
claim only to life interest resulted in dismissal of the suit for sanction as infructuous.
The learned single judge trying jointly the two suits came to the conclusion
that as the vendee gave up his claim for transfer of interest of the reversioners,
the court's sanction was not required. He dismissed the suit for sanction as infructuous.
this appeal on behalf of the vendee it is now contended that had the suit for
sanction been prosecuted by the vendor bona fide and diligently, as stipulated
in the terms of the contract, the court might have granted sanction despite
objection of the reversioners because there was likelihood of loss of the
property in process of recovery of public dues by auction and sale. If that was
the legal position, the vendee ought not to have suffered the alleged wrongful
dismissal of suit for sanction as infructuous. When decree granted for
conveyance of life interest of the vendor in the suit for specific performance
was challenged by the subsequent vendee before the Division Bench of the High
Court, the vendee could as well have preferred cross appeal against the
dismissal of the suit for sanction as infructuous. He was a co-plaintiff in
that suit and had an independent right of appeal. The non-filing of any appeal
against dismissal of sanction suit as infructuous is a clear indication that
the vendee was satisfied with the grant of decree merely of specific
performance of conveyance of life interest of the vendor. It is not open to the
vendee now to question the correctness of the dismissal of the suit for
sanction as infructuous by the learned single judge.
next question that arises is whether the terms of the contract justify grant of
decree of specific performance for lesser relief of conveyance of life interest
of the vendor.
argument advanced on behalf of the subsequent vendee seems prima facie
acceptable that the contract Ex.P-1 is one single indivisible contract for sale
of full interest in the property that is life interest of the vendor and spes successionis
of the reversioners with sanction of the court. The reversioners were not
parties to the sale agreement Ex.P-1 entered with the vendee. At the time when
the sale agreement was entered into, the parties were conscious that the vendor
had only life interest in the property and he could not convey more than his
own interest. It was open to the vendee to obtain conveyance of interest of the
reversioners by obtaining release deeds from them by paying them consideration
for surrender of their interest, as was done by the subsequent vendee. Another
course open to him was to enter into separate agreement with the reversioners
or insist on the reversioners joining the sale agreement.
seems the vendee entered into a speculative deal for obtaining full interest in
the property depending upon the sanction to be granted by the court. It seems
to be in contemplation of the parties that if the reversioners objected, the
court might refuse sanction.
could as well foresee that despite the reversioners' objection, the court might
grant sanction. The transfer of full interest in the property was, therefore,
dependent on sanction of the court. To meet this contingency, there were
specific terms such as clauses (4) and (6) incorporated in the contract whereby
it was clearly agreed that the vendor shall obtain sanction of the court at his
own expense and costs and if the sanction was not accorded by the court, the
agreement would stand cancelled and the advance money refunded to the vendee.
Clause (15) of the agreement could come into operation only if the court
granted sanction and any of the parities failed to complete the sale. Clause
(15) had no operation when the sanction was not accorded to the sale.
been seen from the facts of this case, the vendor did apply for sanction,
waited for two years and when it found that the reversioners opposed the grant
of sanction, cancelled the contract.
sanction suit, despite instructions to his lawyer was not, in fact, withdrawn.
The suit for sanction frustrated not because the vendee became co-plaintiff but
because he filed an affidavit restricting his claim to life interest of vendor.
The life interest was not agreed to be separately sold apart from the interest
of the reversioners. The terms of sale agreement Ex.P-1 clearly stipulate sale
of full interest in the property. Whatever may be the reasons, the sanction of
the court could not be obtained for sale of interest of the reversioners.
were not parties to the sale agreement Ex.P-1. In such a situation, the
question is whether in law and equity, the vendee can insist that the vendor
should convey, if not full interest, his own life interest in the property.
vendee intended to seek conveyance separately of the life interest of the
vendor, the earliest opportunity for him was when he had received notice dated
11.9.1979 sent through lawyer by the vendor cancelling the contract. Assuming
that at that time he could not opt for lesser relief as the suit for sanction
was pending, he could have, in any case, opted for conveyance of life interest
of the vendor soon after he came to know of the negotiations for sale with Bob Daswani,
which took place in the presence of one of the partners of the plaintiff-
vendee. Even after deriving the knowledge of the execution of the sale deed
dated 29.12.1979 Ex. D-1, the option to obtain lesser relief of transfer of
life interest was not exercised. It was exercised as late on 25.11.1986 by
filing an affidavit and at the time when pleadings of the parties were
completed and the joint trial in the two suits had already commenced. During
long pendency of the suits between 1979 to 1986, the parties interested in the
property changed their positions. The vendor by executing registered sale deed
in favour of the subsequent vendee got his public dues paid to relieve the
pressure on the property and obtained market price of the property. After
obtaining possession of the property pursuant to the sale deed, the subsequent
vendee has raised construction and inducted tenants. Accepting the legal stand
based on sections 90, 91 & 92 of the Indian Trusts Act that the subsequent
vendee, being a purchaser with knowledge of prior agreement, is holding the
property as a trustee for the benefit of the prior vendee, the vendor, who
changed his position by effecting subsequent sale cannot be compelled to convey
his life interest when such lesser relief was not claimed at the earliest
opportunity and the terms of the contract did not contemplate transfer of life
duly appreciating of the evidence on record, construing specific terms of the
contract and considering the conduct of the parties, we have arrived at the
conclusion that the recession of the contract, due to non-grant of sanction by
the court within two years after execution of the contract and filing of the
suit for sanction, was not an act of breach of contract on the part of the
vendor to justify grant of relief of specific performance of the contract to
the prior vendee.
also of the view that the subsequent vendee, by his own act in the pending
suits, was responsible for rendering the suit for sanction as infructuous. He
was guilty of lapse in not seeking conveyance of life interest of the vendor at
the earliest opportunity when notice of recession of the contract was received
by him and later when he derived the knowledge of execution of registered sale-
deed in favour of the subsequent vendee. The option was exercised conditionally
in the midst of the joint trial of the two suits.
was one integrated and indivisible contract by the vendor to convey full
interest in the property i.e., his own life interest and the interest of the reversioners
with sanction of the court. As the court had not granted the sanction, the
contract could not be specifically enforced. The lesser relief of transfer of
life interest was not claimed within a reasonable time after the vendor had
intimated that the contract, as agreed for full interest, was not possible of
performance. We find neither equity nor law is in favour of the plaintiff-
12(3)(a)(b)(i)(ii) of the Specific Relief Act read thus :-
Specific performance of part of contract.- (1) ..................
Where a party to a contract is unable to perform the whole of his part of it,
and the part which must be left unperformed either –
a considerable part of the whole, though admitting of compensation in money; or
not admit of compensation in money;
not entitled to obtain a decree for specific performance; but the court may, at
the suit of other party, direct the party in default to perform specifically so
much of his part of the contract as he can perform, if the other party –
a case falling under clause (a), pays or has paid the agreed consideration for
the whole of the contract reduced by the consideration for the part which must
be left unperformed and a case falling under clause (b), [pays or had paid] the
consideration for the whole of the contract without any abatement; and
either case, relinquishes all claims to the performance of the remaining part
of the contract and all right to compensation, either for the deficiency or for
the loss or damage sustained by him through the default of the defendant."
[Emphasis added] The power to grant partial relief, from the very language of
the Section 12(3) is discretionary with the Court to be exercised keeping in
view the facts and circumstances of each case and the rights and interests of
the parties involved.
is most important to be taken note of is that the reversioners were not parties
to the sale agreement Ex.P1. In the sanction suit they filed written statement
opposing the proposed sale as adversely affecting their spes successionis.
Court dismissed the sanction suit rightly or wrongly but the matter having not
been carried further in appeal, the subject of grant or refusal of sanction is
no longer open to consideration in this appeal preferred only against the
decision of the Division Bench in appeal refusing decree of Specific
Performance of Sale of life interest.
have surrendered their interest by accepting consideration separately and
executed separate release deeds in favour of the subsequent vendee. Even though
the subsequent vendee has acquired property with knowledge of sale agreement
Ex.P1 existing with the prior vendee, the latter has no equity in his favour as
to bind the reversioners and in any manner adversely affect their interest.
They were not parties to the sale agreement and have already by separate
release deeds, on accepting separate consideration, surrendered their interest
in favour of the subsequent vendee. Any grant of relief of transfer of life
interest of the vendor to the prior vendee would involve the reversioners in
further litigation. If only life interest of the vendor is allowed to be
conveyed to the prior vendee, after death of vendor, the reversioners are
likely to be involved in litigation in future to help in restoring possession
of the property to the subsequent vendee and effectuate the release deeds
executed in his favour by them.
of such equitable relief would adversely affect the immediate efficacy of the
release deeds and would create various hurdles in working out the rights and
remedies of the reversioners vis-`-vis the subsequent vendee. It would not be a
proper exercise of discretion by the Court to grant such partial relief of
directing conveyance of life interest of the vendor as that would adversely
affect the interest of the reversioners.
have already held above while construing the terms of sale agreement Ex.P1 that
as the reversioners' interest in the property was likely to be affected, the
contracting parties never intended piecemeal transfer of life interest of the
vendor and spes successionis of reversioners. What the contracting parties
intended and stipulated was transfer of full interest in the property i.e.
vendor's life interest and reversioners' spes successionis with sanction of the
Court. It is for the above reason that parties very clearly agreed by specific
clause (6) in the agreement that if the sanction of the Court was not accorded,
the agreement shall forthwith stand cancelled and the advance money received
shall be returned to the purchaser. The contracting parties were fully aware
that reversioners, who had a mere chance of succession, were not parties to the
agreement. The parties to the contract could have taken care of the eventuality
of refusal of sanction by the Court and possibility of the vendor transferring
only his life interest to the vendee, but such eventuality of separate transfer
of life interest is conspicuously absent in the terms of the agreement. Such
obligation on the part of the vendor to transfer his life interest, if sanction
for transfer of reversioners' interest was not granted, cannot be read in the
contract by implication and recourse to Section 12(3) of the Specific Relief
Act, therefore, is impermissible.
considered opinion, Section 12(3) of the Specific Relief Act can be invoked
only where terms of contract permit segregation of rights and interest of
parties in the property. The provision cannot be availed of when the terms of
the contract specifically evince a intention contrary to segregating interest
of the vendor having life interest and spes successionis of reversioners.
Neither law nor equity is in favour of the vendee to grant Specific Performance
of the Contract.
these facts, in our opinion, the learned single judge of the High Court was in
error in granting decree of specific performance of transfer of life interest
of the vendor on a finding that the vendor had committed breach by rescinding
contract during pendency of sanction suit. The Division Bench of the High
Court, in our considered opinion, rightly reversed the decree and dismissed the
fortified in our conclusion by the decisions of Privy Council reported in AIR
(34) 1947 PC 182 [Dalsukh M. Pancholi vs. The Guarantee Life and Employment
Insurance Co. Ltd., & Ors.] in which facts were somewhat similar requiring
court's approval for performance of the agreement of the sale. Two questions
were posed by the court - a) was the term "subject to the Court's
approval" an essential term of the agreement?; and b) if it was essential,
by whose default did it fail? The Privy Council answered the questions saying -
" No wonder that the approval of the 'attaching court' was insisted on as
a necessary condition for effecting the sale, for without it, the title to the
property was not at all safe. In their Lordships' opinion there can be no doubt
that the condition was an essential one." The Privy Council then recorded
the following conclusions on the questions posed :- "The person to apply
to the 'attaching Court" for securing the approval of the Court was the
vendor; on the construction of the contract, the provision for approval by the
Court was not exclusively for the benefit of the purchaser, and therefore, the
purchaser cannot by his waiver get rid of the necessity for the Court's
approval; the Court contemplated, was the Court having charge of the mortgage
proceedings, as that Court alone could get rid of the Order for public sale;
application was made by the vendor to the proper Court and was refused; the
contract then fell to the ground and had worked itself out. In their Lordships'
opinion, the contract was a contingent contract and, as the contingency failed,
there was no contract which could be made the basis for a decree for specific
performance and the appellant's suit has to be dismissed. In this view, it is
unnecessary to consider the second question, or any other point in the
case." The above Privy Council decision was sought to be distinguished on
the ground that it was not a case where the vendor was not in a position to
convey his own interest in the property without the court's sanction. In our
opinion, however, that aspect is not of much importance because our conclusion
is that the agreement was indivisible, for sale of full interest in the
property i.e. vendor'sP life interest and reversioners spes successionis. As
the court's sanction was not obtained within a reasonable time, the contract
decision of the Calcutta High Court reported in ILR 152 [Narain Pattro vs. Aukhoy
narain Manna & Ors] also supports the respondents. When the sanction as
contemplated was not obtained from the court, the contract even with variations
could not be directed to be enforced. See the following observations of the
Calcutta High Court :- "It is not necessary for us to express any opinion
as to whether the suit was barred by clause (e) of section 21 or clause (b) of
section 27 of the Specific Relief Act, for in our opinion the Judge was quite
right in saying that the contract as it stood could not be enforced, and that
section 26 had no application to the case. The contract such as it was, was not
a complete contract at any time. It was contingent upon the permission of the court.
The court's permission did not extend to the whole contract as set out in the shuttanamah.
The defendants, therefore, could not be compelled to carry out the terms of the
original agreement, nor could they have insisted upon the plaintiff's carrying
out the terms sanctioned by the court.
26, upon which the vakeel for the appellant relies, sets out cases in which
contracts cannot be specifically enforced except with a variation; and there
are five particular cases set out in which a contract may be enforced subject
to a variation, such variation being in favour of the defendant, and the
section in our opinion assumes that the parties or vakeels representing them
are agreed as to the existence of the contract, but not agreed as to specific
terms. The section provides that, when fraud or mistake of fact, or
misrepresentation has induced the defendant to sign an agreement, that
agreement can only be enforced on the terms which the defendant intended to
agree to. There is no provision of law of which we are aware which entitles the
plaintiff to claim a variation in the terms of his contract, when he finds that
the contract itself cannot be carried out. In the present case the plaintiff by
his plaint sought to enforce the original contract without any variation. It
seems to us, therefore, that the Judge was right in holding that the agreement
in the shuttanamah could not be enforced as it stood, and that section 26 would
not entitle the plaintiff to enforce it with a variation.
case of Narain Pattro (supra) was relied by the same Calcutta High Court in the
case of Sreemati Kalidasi Dassee & Ors. vs. Sreemati Nobo Kumari Dassee
& Ors. [20 CWN 929] wherein on similar circumstances for not obtaining
letters of administration from the Court, the contract was held to have failed.
(dead) by LRs. & Ors. [2003 (4) SCC 86], the agreement for sale was subject
to ratification by co-heirs and this Court concluded in para 31 as under :-
"When an agreement is entered into subject to ratification by others, a
concluded contract is not arrived at. Whenever ratification by some other
persons, who are not parties to the agreement is required, such a clause must
be held to be a condition precedent for coming into force of a concluded
contract." The alternative claim for lesser relief of life interest of
vendor has been rejected by us. We find support for our conclusion from the
following observations of Privy Council reported in AIR 1925 PC 45 [William
Graham vs. Krishna Chandra Dey], where on similar provisions of section 16 of
the old Specific Relief Act, such claim for lesser relief was negatived on the
ground that it would amount to creating a different contract between the
parties not in contemplation by them when they entered into the contract in
question, which is sought to be enforced.
Lordships think (1) that before a Court can exercise the power given by section
16 it must have before it some material tending to establish these
propositions, and cannot apply the section on a mere surmise that, if opportunity
were given for further enquiry, such material might be forthcoming and possibly
might be found to be sufficient; and (2) that the words of the section wide as
they are, do not authorise the Court to take action otherwise than judicially,
and in particular do not permit it to make for the parties, or to enforce upon
them a contract, which in substance they have not already made for themselves.
section 16, both because it must be something not covered by section 14 and
because no court can act unjudicially without either statutory warrant or
consensual authority, must be limited and the expression "stands on a
separate and independent footing" points to a limitation, which would
exclude any new bargain, that cannot be said to be contained in the old
one." As the lesser relief was claimed after long delay and the contract
was found to be indivisible and inseparable, the partial relief Apathsahaya Iyer
alias Ayawaiyer [ 37 Madras Series 403] "But when the family is divided as
here, section 17 distinctly prohibits a Court from directing the specific
performance of a part of a contract except in accordance with the preceding
sections. Even in cases where the conditions of section 15 are fulfilled the
use of the word 'may' indicates that the granting of a decree for part
performance is discretionary with the Court, and we should hold that when there
has been great delay in attempting to enforce a contract and circumstances have
greatly changed either from a rise of prices or other causes in the interval,
the Courts would be justified in refusing to given legal effect to an
the plaintiff in the present case wants the Court to compel the defendant to
execute a deed of sale for the whole property and if he refuses, to issue one
in his name under the seal of the court, and to allow him to make what he can
out of the title thus conveyed. Such a request is quite inadmissible. A sale is
a transfer of ownership in exchange for a price (section 54, Transfer of
Property Act). The defendant has nothing which he is capable of transferring in
the moiety of the property of which he is not the owner and is not in
possession. It is impossible to sever the execution of the deed from the
transfer to be effected thereby and to treat them as separate acts of the same
added] An old decision of Judicial Commissioner, Nagpur reported in AIR 1915 Nappur
15 [Shardaprasad vs. Sikandar] is being referred only because it has some
persuasive value and the facts of that case are to a great extent nearer to the
facts of the present case. The pertinent observations in that case are :-
"The first defendant made two undertakings. The first was to apply for
sanction for the sale to the plaintiffs of Sir
land without reservation of occupancy
rights. This part of his contract he duly performed. The second undertaking was
that, if sanction were granted, he would sell his share with cultivating rights
in Sir. No provision was made for the event of sanction being applied for and
refused. This part of the contract was purely a contingent contract, and if the
future event provided for became impossible the contract fell through. Sections
14 and 15 of the Specific Relief Act appear to me to refer to cases where the
inability to perform the whole contract was not contemplated by the contracting
parties. Where, as here, the contracting parties knew of and contemplated the
possibility of the whole contract being incapable of performance, for reasons
beyond the control of either of the parties, the sections have no application.
They apply to unforeseen contingencies, not to foreseen contingencies. The
parties should have provided in the contract for such an eventuality, but
failed to do so.
added] In the present case, the terms of the contract fully indicate that the
parties did contemplate that if the sanction of the court was not granted for
transfer of the interest of the reversioners, the contract could not be
enforced. Clause (6) specifically provided that in case sanction by the court
was not granted, the advance money of Rs. 25,000/- shall be refunded to the
purchaser. It was known to the parties that the vendor had only life interest
in the property and the reversioners were not the parties to the agreement. Even
with this knowledge of limited right of the vendor and the reversioners being
not signatories to the sale agreement, there is no stipulation made in the
contract that if court's sanction was not obtained for transfer of reversioners'
interest, the vendor shall convey his life interest to the vendee.
behalf of the plaintiff- vendee, strong reliance was placed on Suisse Atlant
vs. N. V. Rotterdam [1966 (2) ALL. ER 61]. It has been argued that seeking
sanction of the court for transfer of reversioner's interest was an obligation
on the vendor and if it deliberately acted in a manner to get relieved of that
obligation by not prosecuting sanction suit and prematurely terminating the
contract, the vendee has a right to waive that condition and ask for transfer
of life interest of the vendor which he could alienate to the vendee. In other
words, it is submitted that even if the clause seeking sanction of the court
was a fundamental term of the contract, its breach was deliberately committed
by the vendor and the vendee was, therefore, entitled to insist on fulfilment
of the contract to the extent the vendor is in a position to fulfil.
have gone through the opinions expressed by Hon'ble Judges of the House of
Lords in the case of Suisse Atlant (supra).
evidence, in the present, we do not find that the decision of the House of Lords,
can be taken aid of for claiming specific relief of transfer of life interest.
We have found from the evidence discussed above that there was pressure on the
property for recovery of taxes.
not expected or in contemplation, of the parties, as can be gathered from the
terms of the contract, to wait for an uncertain period of time and to expose
the property to coercive public recovery proceedings. The vendor applied for
sanction but the reversioners had opposed. Finding, no possibility of grant of
sanction, the vendor terminated the contract but did not withdraw the sanction
suit, although his lawyer was instructed accordingly. We are, therefore, not
prepared to accept that the vendor had committed any breach of the contract as
has been sought to be urged on behalf of the vendee. It is not possible to
accept allegations of fraud, conspiracy or bad faith on the part of the vendor
for which there is no firm foundation in the pleadings or the evidence led. In
this respect, the following observations of the Lord Reid in the House of
Lords' decision (supra) are pertinent :- "I think that it would be open to
the arbitrators to find that the respondents had committed a fundamental or repudiatory
breach. One way of looking at the matter would be to ask whether the party in
breach has by his breach produced a situation fundamentally different from
anything which the parties could as reasonable men have contemplated when the
contract was made. Then one would have to ask not only what had already
happened but also what was likely to happen in future. And there the fact that
the breach was deliberate might be of great importance".
the above test to the terms of the contract and the conduct of the parties
under consideration before us, we do not find that the parties had agreed to
wait for the whole period during which the suit for sanction was pending and
till its finalisation including appeal proceedings, if any. Such a course was
not in contemplation of the parties because the vendor had agreed that the
vendee would directly discharge the tax liabilities from the total amount of
sale consideration. It was not possible for the vendor to have waited
indefinitely for final orders on the suit for sanction when the reversioners
had objected to the sanction and there was remote possibility of the grant of
sanction in foreseeable near future.
argued that the Court could have granted sanction even though the reversioners
objected because there was threat of coercive sale of the property for recovery
of tax dues and taxes.
would be purely in field of speculation as to what would have actually happened
had the vendor continued to prosecute the suit despite the objection of the reversioners.
As we have mentioned above the complications in disposal of sanction suit on
merit were created by the vendee himself by getting himself transposed as co-
plaintiff and then filing an affidavit restricting his claim to transfer of
life interest. It is, thereafter, that the sanction suit was dismissed as infructuous.
If the order of the court refusing sanction was erroneous and when an appeal
was filed by the subsequent vendee against grant of decree of specific
performance of life interest to the vendee, the vendee could have appealed
against dismissal of suit for sanction as infructuous. It is argued that the
two suits were clubbed for trial and as the lesser relief of transfer of life
interest was granted in suit for specific performance, it was not necessary for
the vendee to have appealed against dismissal of the sanction suit. We need not
deal with this argument any further, as in our view, as the sanction was not
granted for sale by the court within a reasonable period of two years and the
possibility of commencement of coercive proceedings of tax recovery loomed
large, the vendor cannot be held to have committed a breach of the contract
when he served a notice of termination of contract.
behalf of the vendee, reliance is heavily placed on Satyabrata Ghose vs. Mugneeram
Bangur & Co. [1954 SCR 310]. The decision is distinguishable. In that case,
the defendant company for the purpose of developing certain land, entered into
the contract with plaintiff for sale of its plot. The sale-deed was to be
executed after construction of drains and roads. After the execution of the
agreement and when construction of public roads and drains was half done, the
land was requisitioned by the government for military purposes. The defendant
company could not further undertake the road construction work and therefore,
wrote to the plaintiff to treat agreement as cancelled. It is on these facts
that this court held :- "that having regard to the nature and terms of the
contract, the actual existence of war conditions at the time when it was
entered into, the extent of the work involved in the scheme fixing no time
limit in the agreement for the construction of the roads etc., and the fact
that the order of requisition was in its very nature of a temporary character,
the requisition did not affect the fundamental basis of the contract; nor did
the performance of the contract become illegal by reason of the requisition,
and the contract had not, therefore, become impossible within the meaning of
section 56 of the Indian Contract Act." Such is not the position in the
present case. The vendor could not have waited indefinitely for the final
result of the sanction suit as coercive proceedings for recovery of tax were
likely to be initiated at any time. We have held above that reasonable period
for obtaining sanction from the court has to be read as an implied condition of
the contract in view of the urgent necessity of sale to satisfy the tax dues
and save the property from coercive recovery. The vendor had agreed for
transfer of full interest in the property including his own life interest and
of the reversioners. As the reversioners objected and ultimately the sanction
suit failed, the performance of contract, as agreed for transfer of full
interest in the property, had become impossible. There was no agreement between
the parties that if sanction was not granted, the vendor would transfer his
life interest. On the contrary, the agreement clause specifically stated that
if the sanction was not obtained, the advance money shall be returned. This
stipulation shows an intention contrary to the parties agreeing for transfer of
life interest of vendor, if transfer of reversioners' interest was not possible
for want of court's sanction.
argument advanced is that the reversioners had merely a chance of succession
and had no transferable interest in the property. Reference is made to section
6(a) of the Transfer of Property Act which states :- "6.What may be
transferred.-Property of any kind may be transferred, except as otherwise
provided by this Act or by any other law for the time being in force, - (a) The
chance of an heir-apparent succeeding to an estate, the chance of a relation
obtaining a legacy on the death of a kinsman, or any other mere possibility of
a like nature, cannot be transferred." Elaborating this argument further,
it is argued that as the vendor erroneously represented and agreed for transfer
of spes successionis of the reversioners, on the principle of section 43 of the
Transfer of Property Act read with sections 90, 91 & 92 of the Indian
Trusts Act, the vendor, the subsequent vendee and the reversioners, who have
surrendered whatever right they had in the property, are bound by estoppel and
are obliged in law by the provisions of Specific Relief Act to transfer full
interest in the property to the prior vendee. Reliance is placed on The Humma Masjid
vs. Kodimaniandra Deviah [1962 Supp.(2) SCR 554].
above argument has no merit and the aforesaid decision is hardly of any help to
the vendee. This is not a case where the vendor had only right of spes successionis
and after execution of agreement of sale, he subsequently acquired full
interest in the property to be held bound by section 43 of the Transfer of
Property Act. In the case before us, the reversioners were not parties to the
agreement of sale. When in the suit for sanction to transfer their interest
they were made parties and were noticed, they expressly objected to the
proposed transfer. No principle of estoppel or provisions of section 43 of the
Transfer of Property Act can, therefore, operate against them. So far as the
subsequent vendee is concerned, in the course of suit, he was pushed to a
position in which he could not take a stand that he had no knowledge of the
prior agreement with the vendee but he has separately purchased life interest
from the vendor and obtained separate release deeds, on payment of
consideration, from the reversioners. The reversioners being not parties to the
sale agreement Ex. P-1 entered into with the vendee, the latter could not
enforce the contract Ex. P-1 against the former.
decision in Dr. Jiwanlal & Ors. vs. Brij Mohan Mehra & Anr. [1972 (2)
SCC 757] is also distinguishable on the facts of that case. There clauses (5)
& (6) of the agreement provided for execution of sale-deed within three
months from the date the premises agreed to be sold were vacated by the
Income-Tax Authorities . It was further provided that if the income-tax
authorities did not vacate the premises or they stood requisitioned by the
Government before registration of sale-deed - the vendor shall refund the
consideration to the purchaser. As the premises were requisitioned by the
government, the stand taken by the vendor was that it was contingent contract
and on requisition of the premises, the contract failed. On the evidence of the
parties, the finding reached was that the vendor had manipulated requisition of
the premises. This Court, therefore, in appeal held that the contract did not
provide that the sale would be effected only if the premises remain
non-requisitioned or that on requisition of the premises, the contract would
come to an end. The clause providing for refund of consideration if the
premises were not vacated by the income-tax authorities or subsequently
requisitioned by the government was held to be solely for the benefit of the
vendee. It was held that if the vendor manipulated the requisition, the vendee
could waive that condition and insist on sale of premises in the condition of
it having been requisitioned.
case before us, we have not found that the vendor was guilty of rendering the
suit for sanction infructuous. It did terminate the contract pending the suit
for sanction but never withdrew that suit. The vendee himself prosecuted it and
rendered it infructuous by his own filing of an affidavit giving up his claim
for the interest of reversioners. In such a situation where the vendor was not
in any manner guilty of not obtaining the sanction and the clause of the
contract requiring court's sanction for conveyance of full interest, being for
the benefit of both the parties, the contract had been rendered unenforceable
with the dismissal of the sanction suit.
the clause requiring obtaining of sanction was to protect interest of both the
parties and when the sanction could not be obtained for reasons beyond the
control of the parties, the contract cannot be directed to be specifically
enforced. House of Lords in the case of New Zealand Shipping Co. Ltd. vs. Societe
Des Ateliers Et. Chantiers De France [1918-19 All ER 552], in similar
circumstances, negatived the claim of specific performance. It was held in that
case that where two parties are equally blameless and none of them could be
said to have brought about a situation by their act or omission to frustrate
the contact, the contract cannot be directed to be specifically enforced.
behalf of the vendee, support for his claim was sought from the following
observations of Lord Atkinson :- "The application to contracts such as
these of the principle that a man shall not be permitted to take advantage of
his own wrong thus necessarily leaves to the blameless party an option whether
he will or will not insist on the stipulation that the contract shall be void
on the happening of the named event.
deprive him of that option would be but to effectuate the purpose of the blameable
party. When this option is left to the blameless party it is said that the
contract is voidance, but that is only another way of saying that the blameable
party cannot have the contract made void himself, cannot force the other party
to do so, and cannot deprive the latter of his right to do so. Of course the
parties may expressly or impliedly stipulate that the contract shall be
voidance at the option of any party to it. I am not dealing with such a case as
that. It may well be that question whether the particular event upon the
happening of which the contract is to be void was brought about by the act or
omission of either party to it may involve a determination of a question of
been observed by Lord Atkinson, it is always a question of fact to be
determined in each case as to who is guilty of the act or omission to render
the contract void or unenforceable. In the case of New Zealand Shipping Co.
Ltd. (supra) on facts the ultimate conclusion reached unanimously by their
Lordships was that the clause of the contract in that case, was a stipulation
in favour of both the parties and the situation was not brought about by any of
the parties to give rise to avoidance. It was found that the failure to fulfil
the contract was not due to any fault on the part of the respondents but was
due to a cause beyond their control.
present case also, we have come to conclusion that the vendor waited for a
reasonable period for grant of sanction to the sale by the court. There was a
pressing need for sale as the public dues and taxes could have been recovered
from the property by coercive process at any time. The vendor, therefore,
advisedly withdrew from the contract, negotiated sale on different terms with
the subsequent vendee and ultimately entered into the contract with the latter.
The vendor did not actually withdraw the suit for sanction. The vendee himself
became co-plaintiff to the suit and unsuccessfully tried to prosecute it. The
sanction suit was rendered infructuous by vendee's own conduct of filing
affidavit restricting his claim to life interest. He suffered the dismissal of
sanction suit as infructuous and did not question the correctness of the
court's order in appeal before the Division Bench, although the subsequent
vendee, against grant of decree of specific performance of life interest, had
preferred an appeal.
this situation, even if we come to a conclusion that the vendee had rightly
tried his utmost to obtain court's sanction and cannot be blamed for
transposing him as a co-plaintiff and prosecuting the sanction suit, the
sanction sought could not be obtained for reasons beyond the control of the
parties. The vendor can not be held guilty of the breach as to entitle the
vendee to seek specific performance of life interest of the vendor. The
contract entered into between the parties was for conveying full interest in
the property namely life interest of vendor and chance of succession of reversioners.
The contract was one and indivisible for full interest.
is no stipulation in the contract that if sanction was not obtained, the vendor
would transfer only his life interest for the same or lesser consideration. On
the contrary, the contract stipulated that if the sanction was not granted, the
contract shall stand cancelled and the advance money would be refunded to the
the stage has arrived for considering the question of adjustment of equities
between the parties because of the change of positions by them in the course of
a very long period of litigation.
decree for specific relief of conveyance of life interest, has been executed
and registered sale deed through the court in favour of the vendee has also
been issued. Possession of the property has been obtained by the vendee on
execution of decree granted by the single judge of the High Court. The Division
Bench of the High Court in adjusting the equities in paragraphs 62 to 68 of its
judgment has taken note of the above relevant facts and subsequent events.
execution of the decree and registered sale-deed the vendee plaintiff was
placed in possession of the property on 25.2.1995. The basement and ground
floor have been constructed by the subsequent vendee after obtaining possession
on the basis of his sale deed. Thereafter plaintiff- vendee, on obtaining
possession pursuant to the execution of decree granted by the learned single
judge, has constructed two floors above the ground floor although the
construction is said to be not complete in all respects. According to the
plaintiff- vendee, he has incurred an expenditure of Rs.46,28,403/- for
construction of two floors above the ground floor. As the construction put up
by the plaintiff- vendee is to ensure for the benefit of the subsequent vendee,
and the latter having succeeded in appeal before the Division Bench of the High
Court, the Division Bench in adjusting equities has directed that on payment of
construction cost incurred by the plaintiff- vendee for two floors above ground
floor, the whole construction will become the sole property of the subsequent
the date of the impugned judgment of the Division Bench the total rent received
from the property has been accounted for.
whole rental income has been directed to be paid to the successful party i.e.
the subsequent vendee. Out of the total rental income payable to the subsequent
vendee, apart from adjusting the construction cost incurred by the plaintiff-
vendee, deduction has been directed towards return of the sale consideration of
Rs.5.5 lacs paid under the sale agreement Ex. P-I A further sum of Rs.5.5 lacs
has been directed to be deducted for the misconduct of the subsequent vendee in
trying to mislead the court that Bob Daswani and F.C. Daswani were two
different persons and the subsequent vendees had no knowledge of the prior
principle of restitution contained in Section 144 of the Code of Civil
Procedure, we find no ground to interfere with the order of the Division Bench
of the High Court in directing adjustment and payment by subsequent vendee of
the cost of construction incurred by the plaintiff vendee. The directions for
return of full sale consideration as also deduction towards misconduct of
impersonation and misleading the Court also deserve no interference.
maintain the directions of the Division Bench of the High Court to deduct a sum
of Rs.5.5 lakhs for the alleged misconduct of impersonation and misleading the
Court. The Civil Appeal No.336 of 2002 preferred by the subsequent vendees only
against the above impugned directions deserves to be dismissed.
pendency of these appeals, various interim orders were passed by this Court on
27.8.2001, 11.1.2002 and 17.2.2003. In pursuance of those orders, rental income
derived from the property has been collected and paid to the subsequent vendee,
subject to the result of these appeals. Learned counsel appearing for the
subsequent vendee, at the conclusion of the arguments, has handed over to this
Court a chart mentioning the figures of total rent received up to February 2004
and separately shown the amount deposited in the Court. The figures submitted
in the chart by the subsequent vendees are open to verification by the prior
dismissal of these appeals, we confirm the judgment of Division Bench of the
High Court including the directions made to adjust equities with regard to the
construction cost and the rental income derived from the suit property.
result, both the appeals are dismissed. In the circumstances, we direct the
parties to bear their own costs in these appeals.