Chunduru Kanniah Gupta and Another vs Pallamparthi Subbarami Reddi

Govinda Menon, J.—Defendants 1 and 3 are the appellants in this second appeal. The plaintiff''s suit was for specific performance of a

contract, Exhibit P-2, dated 27th April, 1942, for sale of certain piece of land belonging to the joint family of defendants 1 and 2. This agreement

though it was intended to be executed by both the defendants, was, in fact, signed only by the first defendant. The second defendant is alleged to

have later entered into another agreement with the plaintiff, Exhibit P-I, dated 25th May, 1942, but the finding of the lower courts is that this is not

a document which could be enforced as it has not been proved to be genuine. On the 6th August, 1942, defendants 1 and 2 sold the same

property to the third defendant under Exhibit D-5 and the present suit for specific performance of the contract, Exhibit P-2, was filed, making the

purchaser under Exhibit D-5 also a party.

The trial court found that the entire document, Exhibit P-2, is unenforceable because, according to the learned District Munsif, certain decisions

of this Court are to the effect that the document cannot be enforced even as against the first executant. On that ground the suit was dismissed even

though there were findings that the third defendant was not a person who can claim protection according to the provisions of Section 27 of the

Specific Relief Act.

On appeal by the plaintiff, the learned Subordinate Judge, Nellore, agreed with the trial Court as regards the applicability of Section 27 of the

Specific Relief Act and also as regards the unenforceable nature of Exhibit P-1 but came to the conclusion that Exhibit P-2 can be enforced against

the first executant and there-fore granted a decree for specific performance of the first defendant''s share of the suit property, on the plaintiff

fulfilling the necessary conditions regarding the payment of the balance of purchase money and other matters.

Three points have been raised by the learned advocate for the appellants, the first of them being that Exhibit P-2 was only an inchoate

agreement and not a completed transaction and as such unenforceable even as against the first defendant. The second point was that in the

lawyer''s notice Exhibit P-3, dated 19th May, 1942, the plaintiff had agreed to resort only to his remedy, in the event of the first defendant not

executing the conveyance as agreed to under the document, to have the liquidated damages mentioned in that document in addition to the return of

the advance payment made under the agreement. The contention is that the relief regarding the specific performance must be deemed to have been

impliedly relinquished by not specifically being asked for in this registered notice. As a subsidiary contention to this point Mr. K. Umamaheswaram

raised a further argument that since the third defendant purchased the property after Exhibit P-3 was received by the first defendant it should be

deemed that the plaintiff is estopped from saying that the remedy by way of specific performance was still existing; and lastly he argued that the

direction by the lower appellate Court that the plaintiff should pay the second defendant his costs is unjustifiable, for the person who is really to get

the costs is the third defendant and not the second defendant.

I shall deal with these points seriatim. To justify his contention that the agreement cannot be enforced even as regards the first, defendant, well-

known decision of this Court beginning with Sivaswami Chetty and Others Vs. Sevugan Chetty, have been brought to my notice''. In that case

Bashyam Ayyangar, J., held that where a document which was intended to be signed by more than one person was signed only by some of them,

the others having refused to execute the deed when asked to do so, and the defence was that no suit could be brought on the document inasmuch

as it was not completed as the younger of the brothers who had agreed to sign had not signed it, it constituted merely a proposed agreement which

had never been perfected. It was further held that if the parties intended that all the persons intended to execute the document should execute it, the

document could not take effect even against the persons who have executed it for the reason that the person who had alone executed it happened

to be the managing member. The learned Judge relied on certain English cases and came to that conclusion. At page 393 it is mentioned as follows:

If the parties intended that all the members of the family should execute the document it cannot take effect by reason that the person who alone

executed the document happens to be the managing member and that the debt is recited to have been incurred for the benefit of the family.

In another passage the learned Judge holds:

If one intends to be a joint and several obligee or only a joint obligee with others there is a right of contribution against his co-obligees, if his

intention be carried out, but if he becomes a mere several obligee, he has no right of contribution.

This decision was subsequently followed in Amirtham Pillai Vs. Nanjah Gownden and Another, , where Sadasiva Ayyar, J., held that where it was

intended that two persons should jointly execute a promissory note and should become jointly liable and one of them alone executes it, the note is

not enforceable even as against the other. The decision of the Calcutta High Court reported in Ram Saran Roy v. Shoshi Bushan Ghost (1921) 65

I.C. 594., also to the same effect, was brought to my notice. The learned Judges Chatterjee and Panton, JJ., held as is seen from the head-note

thus:

In a suit for specific performance of a contract alleged to have been entered into by defendants 1 and 2 to sell certain property, it was found that it

was agreed between the plaintiff and first defendant that the latter and the second defendant would sell the property to the plaintiff.

Held, that as the agreement proposed was between the plaintiff on the one hand and defendants 1 and 2 on the other and as the second defendant

had not agreed there was no completed contract which could be specifically enforced even as regards the first defendant.

Now, these cases proceed on the basis that if the original intention was that more than one person should execute the document but only one of

them actually executed it, the document cannot be enforced even as against the actual executant.

The principle so broadly stated came up for criticism and consideration in later decisions of this Court. Coutts-Trotter, J. (as he then was) in

Nethiri Menon v. Gopalan Nair (1915) 29 M.L.J. 291 : ILR 39 Mad 539, had to deal with a similar case : and, there, the Bench consisting of

Spencer and Coutts-Trotter, JJ., held that if a document is drawn up in the name of several persons and it is the intention of the parties that all

should execute it, it will become incomplete and inoperative till all have done so; but it is a question of fact in each case as to what was the intention

of the parties. During the course of the discussion, a distinction was pointed out and it was held that if the person who actually executed the

document did so on the understanding that it would become operative only if the others has signed it, then, it would become inoperative if the

others did not put in their signature; and as it is held that the question of intention in each case is a question of fact it was not a matter for

interference in second appeal unless the finding of the lower appellate Court is not justified by the evidence on record. To the same effect are the

earlier cases in Krishnamachariar v. Narasimhachariar ILR (1908) Mad. 114, and Sethuram Sahib v. Vasanlha Rao ILR (1910) Mad. 314. In

Bangarasami Aiyangar Vs. A.R.A.A.R.S.M. Somasundaram Chettiar and Others, , Sadasiva Ayyar and Tyabji, JJ., held that where a document

recites that it was executed by A, B and C but only A and B executed it, actually, the question whether A and B agreed to be liable only if G also

joined is a question of fact to be decided according to the circumstances of each case and cannot be the subject of a second appeal unless there is

no evidence to justify the finding of the Court below. The learned Judges considered the cases in Sivaswami Chelti v. Sevugan Chetti ILR (1902)

Mad. 389 and Krishnamachariar v. Narasimhachariar ILR (1908) Mad. 114. A clear exposition of the principle of law applicable to such cases

can be found in Umax Baksh v. Mul Raj AIR 1942 Lah. 86, where Dalip Singh, J., put the point in the following way:

If the intention of the parties to an agreement to sell is that nobody would agree to sell his share, unless all the others also agreed to sell their shares,

it cannot be held that where one of them had failed to sign the document it was a complete document. On the other hand if the sales are not

interdependent in the sense that each vendor might well have sold his share of the property without reference to the sale by others and what really

should have been a number of separate sales are rolled into one because of convenience then the fact that in the agreement to sell one of the

vendors had not joined would not affect its validity as between the vendee and the vendor who had signed the agreement to sell. The question of

intention has to be settled by reference to the terms of the document, and to the circumstances of the case.

I am in perfect agreement with the proposition of law stated there. It is also useful in this connection to refer to a recent pronouncement of the

House of Lords in Lady Naas v. Westminster Bank, Ltd. (1940) A.C. 366, where all the noble Lords who took part in that decision were of

opinion that the statement of Sir George Jessel, M.R., in Luke v. South Kensington Hold Co. (1879) 11 Ch. D. 121 that

It is well settled that if two persons execute a deed on the faith that a third will do so, and that is known to the other parties to the deed, the deed

does not bind in equity if the third refuses to execute.

is expressed far too widely. At page 389 Lord Russel of Killowen discusses this aspect of the case and in the same tenor discussion is found in the

speeches of the other noble Lords as well especially that of Viscount Maugham, the presiding noble Lord. In view of the repeated pronouncements

of this Court explaining the principle, it is unnecessary to deal at great length with this House of Lords pronouncement; but since the earlier cases in

India had been based to some extent upon the dictum of Sir George Jessel, M.R., I think it is advisable to show how that, dictum has been later on

criticised and considered by the House of Lords.

Applying the principles of law as stated above, we have to ascertain whether in the case under consideration, it was the intention of the first

defendant to sign the document and make it effective only if the second defendant had also executed the same. The learned Subordinate Judge

after discussing the evidence of the witnesses was of the view that the first defendant was quite prepared to execute the agreement by himself alone

but that it was only by way of abundant caution that the plaintiff wanted that the second defendant''s signature also should be got to Exhibit P-2 by

the elder brother. We have also the evidence of the first defendant examined as D.W. I and he stated that P.W. 2 agreed that he would get the

signature of the second defendant without assistance of the first defendant. The first defendant further stated that he never undertook that he would

get the sale deed executed on behalf of his brother also; whether he agreed with it or not there was no reference whatsoever to that fact in case the

brother did not agree to sign Exhibit P-2. In cross-examination also he made certain statements but the purport of the whole thing is that that the

first defendant did not make it a condition of the validity and the enforceability of the document unless the second defendant had also signed it.

Such being the case, I agree with the learned Subordinate Judge that the document can be enforced as regards the share of the first defendant.

On the second question whether there was election on the part of the plaintiff and whether the plaintiff is estopped I do not find any difficulty

whatsoever. Exhibit P-3 simply mentions that if the document is not executed, then recourse to the remedy by way of damages which had been

liquidated in the deed would be taken. I do not think that this is either an express election or an election can be implied and abandonment of the

remedy of specific performance can be inferred from this lawyer''s notice. In order that a legal remedy which a party is entitled to enforce should

be deemed to have been waived or abandoned by him there must be an express mention of the circumstances by the party either by word or by

deed or there should be clear indication by his conduct from which it can be implied that there has been such a waiver or abandonment. Moreover,

the question has not been so clearly put forward as an issue in the trial Court; and considered in that light. I do not think I need say more on this

subject as I am of opinion that it is impossible to infer from Exhibit P-3 that there has been an abandonment, much less is there any estoppel

because it is nowhere stated that the third defendant was induced to purchase this property as a result of the statement contained in Exhibit P-3.

We do not find any plea put forward by the third defendant that he purchased the property after knowing that the plaintiff had sent the registered

notice, Exhibit P-3. On the other hand, the third defendant''s case throughout has been that he was, a bona fide purchaser of this property for

proper and valuable consideration without knowledge of the previous agreement between the first defendant and the plaintiff and therefore he is

protected under the provisions of Section 27 of the Specific Relief Act. In these circumstances I find it difficult to accede to the contention of Mr.

Umamaheswaram that the question of estoppel can be raised in this case.

With regard to the last contention I am of opinion that the learned advocate is entitled to succeed. The second defendant''s conduct has been

criticised in severe terms by the lower Court as unscrupulous and such being the case I do not see any reason why the second defendant should be

entitled to get the costs from the plaintiff. In substitution of the lower Court''s order directing the plaintiff to pay the second defendant''s costs, I

would direct that the plaintiff should pay the costs of the third defendant instead of the second defendant; but the plaintiff should get his own costs

from the first defendant throughout. The third defendant is entitled to stand in the shoes of the second defendant as regards costs. The second

appeal therefore fails subject to the small modification mentioned above and is dismissed with costs.