Amma Bibi and Others vs Udit Narain Misra and others

This appeal has arisen out of a suit which was instituted by the plaintiff respondent for the specific performance of a contract for the sale of certain villages, which is alleged to have been entered into on the 15th of September 1896, with an alternative claim that if for any reason the Court should decline to pass a decree for specific performance, the contract should be treated as rescinded, and certain moneys which were paid by the plaintiff respondent to the defendants appellants as portion of the consideration for the sale should be ordered to be refunded to the plaintiff. The facts of the case are not complicated. The defendants appear to have been pressed for money. There was a foreclosure decree outstanding against them, which was to become absolute on the 15th of September 1896. In order to raise money and save the property from foreclosure the defendants induced the plaintiff, who was a party defendant as a puisne mortgagee to the foreclosure suit, to purchase the property, the subject-matter of the suit. It was necessary that the agreement for purchase should be entered into forthwith in order that money might be provided for the satisfaction of the debt in respect of which the foreclosure decree had been obtained. Unfortunately the agreement was not committed to writing, as it is perfectly clear from the evidence that the parties were not clear in their minds as to the details of the arrangement finally come to. The plaintiff in part satisfaction of the purchase money paid into Court in the foreclosure suit on the 15th of September 1896, a sum of Rs. 13,865-6-0, and from that day to this he has not been repaid any portion of this sum, nor has he obtained a conveyance of the property agreed to be sold. Although the terms of the contract were not committed to writing, we have two documents which afford some evidence as to what these terms were. One of the documents is a receipt for the money which was paid by the plaintiff, and the other is a petition which was filed by the defendants in the foreclosure suit. According to the receipt, which was signed by the defendants, the agreement was that a sale-deed of the property should be executed in respect of four villages, namely, Banurpara, Kargara, Sakrauli and Pakri, at a price which would represent Rs. 100 for every Rs. 2-6 of the annual profits as shown by the Government village rent-rolls. In the petition which was filed by the defendants on the same day the payment made by the plaintiff in respect of the purchase money is mentioned, and afterwards the conditions upon which the sale was agreed to are stated thus: The condition is that the defendants will execute within a month a sale-deed in respect of the following villages, in favour of Maulvi Minnat-ulla aforesaid in lieu of the aforesaid sum (i.e., the sum paid by the plaintiff) and the debt due to the said Maulvi, at a profit of Rs. 2-6 per cent. per annum in accordance with the Government village jamabandis." It is also stated in this petition that at the time of the execution of the sale deed Maulvi Minnat-ulla will execute an agreement for the re-sale of the property within a year, subject to conditions agreed upon between the parties. The sale-deed was not executed within one month; and after some time the plaintiff instituted a suit against the defendants for a refund of the purchase money which had been paid by him in respect of the sale, alleging that the defendants had failed to fulfil the contract, the conveyance of the property not having been executed by them within one month. The defendants resisted the claim., and the learned Subordinate Judge before whom this suit was heard was of opinion that time was not of the essence of the contract, and he dismissed the plaintiff''s suit. On appeal to this High Court that decision was affirmed on the 18th of January 1900. The only matter decided in that suit was that time was not of the essence of the contract. From that time to the present the defendants have retained the money which was paid by the plaintiff for the purchase of the property, but have failed to execute a conveyance to him. This delay no doubt has been due to the differences existing between the parties as to the terms of the agreement for the purchase. The defendants set up the case that the purchase money was not to be calculated upon the basis of the existing Government jamabandis, but upon the actual collections at the date of the agreement, as shown in their private rent-rolls, and that the Government jamabandis were to be corrected according to the private rent-rolls. We would here remark that in the record the words "gain (private) rent-rolls" have been mistranslated "village rent-rolls." A number of witnesses have been examined to prove the terms of the agreement. The plaintiff and his witnesses have maintained that the written documents to which we have referred truly set forth what was agreed upon, while the defendants and their witnesses have as stoutly maintained that the purchase money was to be ascertained, not upon the existing Government rent-rolls, but on the basis of the private rent-rolls of the defendants. It is alleged by the defendants that the object of fixing a month for the completion of the contract was to enable the defendants to have the Government rent-rolls amended and certified. As a matter of fact, however, no application was made by the defendants for the amendment of these rent-rolls until 28 days of the month had elapsed, and it is clear from what has transpired that the rent-rolls of these four villages could not have been amended within the limited space of one month. The amendment of them was not completed until the 10th of January 1897. It appears to us clear that the parties did enter into an agreement for the sale and purchase of the property, but it is equally clear that a difference arose between them as regards the basis upon which the purchase money was to be calculated, and that they failed to settle this difference. Upon the true construction of the receipt and the petition to which we have referred, we are disposed to think that probably the plaintiff''s case is the true one, and that the price agreed upon was to be calculated upon the basis of the then existing Government rent-roll. The defendants, however, have insisted throughout that that was not the true contract; they seek to add a term to the contract set up by the plaintiff. The parol evidence leaves it doubtful what the true facts were. Some of the witnesses, as we have stated, positively maintain the truth of the case made by the defendant, while the others as stoutly support the case made by the plaintiff. In this conflict of testimony we are not satisfied as to what the contract really was, and we cannot, therefore, give a decree for specific performance. 2. The learned advocate for the plaintiff respondent at the outset of the hearing of this appeal stated to us that his client was prepared to accept the property upon the terms set up by the defendants, provided that they named a specific sum as the purchase money. He also stated that his client was perfectly -willing to treat the contract as rescinded, and obtain a decree for the return of the money which he paid on foot of it with reasonable interest. Nothing could be fairer than the position which he has taken up from the outset of the hearing of this appeal. The defendants have failed to meet him fairly in this matter. In the first place the Statute of limitation is set up as a bar to the suit. It is said that, inasmuch as the contract was, as was found in the previous suit, to be completed within one month after the date of the agreement, the suit ought to have been brought within three years from that period, and this period having elapsed before the suit was brought the suit is barred by limitation. 3. In the previous suit, we may point out, it was not decided that there was any binding contract entered into between the parties, or any such definite contract as the Court could specifically enforce. Undoubtedly the large sum which we have mentioned was paid by the plaintiff on foot of an agreement for the purchase of the property, and that sum was accepted by the defendants as part payment of the purchase money. Can it now be said, having regard to all the circumstances of this case, that the plaintiff, if he now fails to establish his rights to a decree for specific performance, is barred by limitation from recovering the price which he admittedly paid on foot of a contract of purchase and which the defendants have all along held as part of the purchase money payable under that contract? We think not. As we have already pointed out, the evidence as to the terms of the contract is so conflicting that we are unable to discover what the true agreement was, and so cannot give a decree for specific performance. According to the documents before us the plaintiff''s version of the agreement is correct, but the defendants have throughout insisted upon adding an additional term to those contained in these documents to which there is no evidence that the plaintiff assented. Undoubtedly there was an agreement for the purchase and sale of the property, and undoubtedly the plaintiff believed that the price was to be calculated upon the basis of the existing Government jamabandis and in that belief paid a portion of the purchase money. The defendants, however, have set up an additional term, and maintained that according to the true agreement between the parties a much higher price was agreed to be paid, namely, a price to be calculated on the basis of the actual collections made at the time. 4. The case does not appear to us to be unlike that which came finally for determination before their Lordships of the Privy Council, namely, the case of Bassu Kuar v. Dhum Singh 11 A. 47. In that case it was held that money due on an account stated, which would as such have been barred in three years from the date of the statement under Article 64 of the Limitation Act, becomes, for purposes of limitation, a debt of another character when, it having been the subject of an arrangement whereby it was to be retained by the debtor as part of the consideration upon a proposed sale of land, that arrangement failed, the sale not being specifically enforceable and so declared by decree. In that case, in con temptation of a sale of land by the debtor to the creditor, it was agreed that a book debt should be retained by the debtor in satisfaction of part of the price, but the parties failing to agree as to certain other terms a suit brought by the intending vendor for specific performance was, although decreed by the Court of first instance on the 24th of February 1881, dismissed by the High Court on the 14th of March 1884, on the ground that no binding contract enforceable by law had been made by the parties. It was held by their Lordships of the Privy Council that this decree brought about a new state of things and imposed a new obligation on the debtor, who could no longer allege that he was absolved by the creditor''s being entitled to the land instead of the money. He became bound to pay that which he had retained in payment of his laud, the date of the decree being the date of the failure of an existing consideration within the meaning of Article 97. It was held by their Lordships that the matter might be regarded as falling under Section 65 of the Contract Act under which, when the agreement was decreed to be ineffectual, the debtor having previously received an advantage under it, was liable to restore that advantage, or to make compensation for it. Their Lordships in their judgment reversing the decree of the High Court, which held that the claim for return of the money paid under these circumstances was barred by limitation, observed: "It must be remembered that it has throughout been common ground to both disputants that there was a contract made between them, and that among its terms were the sale of the villages for Rs. 55,000, the retention by Dhum Singh of his debt of Rs. 33,359-3-6 as part payment, and the payment by Baru Mal of the balance. Their quarrel was about other matters. Dhum Singh alleged that the terms just mentioned were all the terms of the contract, and he claimed its completion on that footing. Baru Mal alleged that there were other terms, accused Dhum Singh of dishonesty, and after a time claimed the right of receding from the bargain altogether. But the Subordinate Judge took the view of Dhum Singh and decreed completion of the contract according to that view. Up to the date of the Subordinate Judge''s decree in 1881 Dhum Singh retained the amount of his debt as of right and in accordance with the contract alleged by him. After the decree of 1881 he still retained it as of right and with a title which could not be disputed in any Court of justice except by the one made of appeal from the decree of 1881. Baru Mal might have sued for his debt, but the utmost benefit which could have come to him from such a suit would have been to have it suspended or retained in Court till after the decision of the appeal in the suit for specific performance." Later on in the judgment they say: In their Lordships view the decree of the High Court in 1884 brought about a new state of things and imposed a new obligation on Dhum Singh. He was now no longer in the position of being able to allege that his debt to Baru Mal had been wiped out by the contract, and that instead thereof Baru Mal was entitled to the villages. He became bound to pay that which he had retained in payment for his land, and the matter may be viewed in either of two ways according to the terms of the Contract Act IX of 1872, or according to the terms of the Limitation Act XV of 1877." Their Lordships then refer to Section 65 of the Contract Act which provides that "when an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it to the person from whom he received it," and observe: "In this case there most certainly was an agreement which, as written, was in the terms alleged by Dhum Singh. But it was held not to be enforceable by him because there were other unwritten terms which he would not admit, and the other party did not seek to enforce the agreement according to his version of it but threw it up altogether. The agreement became wholly ineffectual, and was discovered to be so when the High Court decreed it to be so. The advantage received by Dhum Singh under it was the retention of his debt. Therefore, by the terms of the Statute he became bound to pay his debt on the 14th of March, 1884 (i.e., the date of the High Court''s decree declaring that the contract was not enforceable)." Their Lordships then referred to the terms of the Limitation Act and held that the case fell within Article 97. They say: "An action for money paid for an existing consideration, which afterwards fails, is not barred till three years after date of the failure. The debt retained in part payment of the purchase money is in effect, and as between the vendor and purchaser a payment of that part; and if that were doubtful on the first retention, while there was yet an undecided dispute, it could no longer be doubtful when a decree of a Court of justice authorized the retention, and in effect substituted the land for the debt. Dhum Singh retained the money, and Baru Mal lost the use of it in consideration of the villages which formed the subject of the sale-deed. That consideration failed when the decree of 1884 was made, and it failed none-the-less because the failure was owing to Baru Mal''s own reluctance to take it under the conditions insisted on by Dhum Singh." This is a clear authority in support of the respondent''s contention, that if the contract in this case is not specifically enforceable, he is entitled to a refund of the money which was paid as part of the consideration for the purchase. There was undoubtedly an agreement for sale. The money in question was admittedly paid as part of the consideration for the sale. Owing to the conflict in the evidence and to the fact that the defendants insisted that there was a term in the contract that does not appear in the document to which we have referred, and to their insistence on the enforcement of the agreement according to their version of it, the contract has not been carried out. The plaintiff has throughout expressed his willingness to abandon the contract altogether, or to perform it according to the terms appearing in the documents which we have mentioned. He has gone further, and at the outset of the hearing of this appeal expressed his willingness to accept the defendants'' version of the agreement, provided that a definite sum was named by the defendants as the price payable according to their contention; but this offer has been rejected. We are wholly unable upon the evidence to say with any degree of certainty what the terms of the contract were, and we, therefore, cannot make a decree for specific performance. The agreement is not one which, in the view which we take, this Court ought to or can enforce, and we so declare. This being our view, it necessarily follows that the defendants must repay to the plaintiff the money which he paid in part satisfaction of the purchase money. The Statute of limitation does not bar the claim for the recovery of the money, inasmuch as there was an existing consideration for the payment which has only now failed by reason of our judgment that the contract is not enforceable. We are bound to apply to the case Article 97 of the Limitation Act in view of the decision of their Lordships of the Privy Council in the case to which we have referred. According to it the limitation begins to run from the date of the failure of the consideration. In this case the consideration fails from the present time by reason of the pronouncement of the Court. But the contract is not legally enforceable. The suit, therefore, so far as regards the alternative relief prayed for, is not barred by limitation, and we are glad to be able consistently with what justice and fair dealing dictate to give the plaintiff respondent that relief, that is, the alternative relief claimed in his plaint. He is not entitled to a decree for specific performance, and in that respect the decree of the lower Court will be set aside, and instead we dismiss the plaintiff''s claim for specific performance. But we give him a decree for the recovery of the sum of Rs. 13,865-6-0 with simple interest at the rate of 6 per cent. per annum from the 15th of September 1896 up to the date of payment. 5. The defendants appellants must pay the plaintiff''s costs of this appeal and also costs in the Court below.

Ross, for the Appellants. De Gruyther, K.C., for the Respondents. JUDGMENT 6. Their Lordships are of opinion that the judgment of the High Court is quite right. They will, therefore, humbly advise His Majesty that the appeals and the cross-appeals ought all to be dismissed. The parties will bear their own costs of their respective appeals.