Gurizala Vuddandam vs Juluri Venkatakameswara Rao

Basheer Ahmed Sayeed, J.—This revision petition arises out of the judgment of the learned Subordinate Judge of Guntur in a suit filed by

the plaintiff for the recovery of the advance paid by him to the defendant in respect of a contract of purchase of immovable property.

The contract of purchase is vouched by Ex. A-1. In that exhibit the parties have agreed on 24-7-1947 that the defendant should sell the

property to the plaintiff for a sum of Rs. 19,800, and that on that date a sum of Rs. 500 was paid by way of advance, the defendant agreeing to

receive the balance of consideration of Rupees 19,300 from the plaintiff within two months from the date of the contract and to execute and deliver

registered, to the plaintiff on appropriate stamp paper, a sale deed. In and by the terms of the said contract, it was further agreed that the

defendant shall put the plaintiff in possession of the property under sale at the time of the registration of the document. Before the period of two

months actually elapsed, i.e., on 17-9-1947 the plaintiff issued a notice to the defendant stating that the balance of consideration was ready and

that the defendant might make arrangement for vacating the site agreed to be sold and possession may be delivered to the plaintiff. In the said

notice there were also allegations to the effect that the defendant had agreed to keep the site vacant and ready for delivery after removal of the

thatched houses and huts constructed on the said site. It was further alleged in that notice that on the plaintiff having approached the defendant

some time before the issue of the notice in question, the defendant had told the plaintiff that it was not immediately possible for him to deliver

possession of the properties, that the people who were in occupation of the huts did not appear to vacate them. To this notice a reply was sent by

the defendant repudiating all the allegations contained in the said notice. Thereupon the plaintiff filed the suit to recover the advance paid by him as

also the sum of Rs. 400 as and by way of damages.

In regard to the claim of damages there was no proof that the plaintiff had actually suffered any damage at all and there is no finding of the

learned Subordinate Judge on that point. No question therefore arises in this revision petition as to whether the plaintiff was or was not entitled to

any damages.

The real point that arises for consideration is, as to whether the plaintiff was entitled to rescind the contract of purchase by him of the

defendant''s land when he found that the defendant was not in a position to deliver vacant possession of the site contracted to be sold. It will be

seen from the judgment of the learned Subordinate Judge that this point has not been adverted to at all in his judgment. On the other hand, the

learned Subordinate Judge has heard evidence of two witnesses on behalf of the plaintiff and one witness on behalf of the defendant on the point as

to whether there was any subsequent agreement to deliver vacant possession. The plaintiff''s witnesses spoke to the fact that there was an

agreement subsequent to Ex. A, to the effect that the defendant should vacate the tenants on the land agreed to be sold and deliver vacant

possession. As against this, there was the evidence of D. W. 1 to the effect that the plaintiff himself had agreed to vacate the tenants and take

possession. The learned Subordinate Judge did not believe the subsequent agreement set up by the plaintiff and he did not believe the evidence of

the plaintiff''s witnesses in that behalf. He was inclined more to believe the evidence of the defendant and believing the evidence of the defendant,

which in his opinion, was more probable, he dismissed the suit.

It has to be observed, however, that the learned Subordinate Judge has not approached the real issue in the case in the proper light. He has not

devoted any attention to the import of Section 55, T. P. Act, which is to the effect that in the absence of a contract to the contrary the buyer and

seller of immovable property respectively are subject to the liabilities and rights mentioned in the rules next following, or such of them as are

applicable to the properties sold. One of the rules, which is numbered as Clause 1 (f), is that the seller is bound to give, on being so required by the

buyer or such person as he directs, such possession of the property as its nature admits. This section imposes a statutory liability on the vendor to

give to the buyer or such person as he directs such possession of the property as its nature admits and this liability is to be discharged by the

vendor in the absence of any contract to the contrary. A perusal of the agreement entered into between the parties, namely, Ex. A-1, would show

that there has been no agreement to the contrary in this cage. Exhibit A-1 merely recites that there should be possession delivered at the time of the

registration of the document and that the balance of the sale price should be received simultaneously. The learned Subordinate Judge ought to have

appreciated the fact that even though the specific agreement set up by the plaintiff with regard to the delivery of vacant possession subsequent to

this contract was not true and the evidence in respect thereof could not be accepted, still there was a statutory liability imposed upon the defendant

to give vacant possession to the buyer. That aspect of the case has not been touched at all by the learned Subordinate Judge. On the facts, as

revealed by the evidence, it is obvious that irrespective of any subsequent agreement which has been set up by the buyer, namely the plaintiff, as

against the defendant, and irrespective of the fact whether the plaintiff was able to prove or not this agreement still his right to possession of the

property and, such possession as the property admits of, could not be disputed, and this obligation, the defendant was in any event bound to

discharge. In the present case the plaintiff has, within the time stipulated for the payment of the balance of the sale price, demanded that the

defendant should arrange to deliver vacant possession and the defendant was bound to satisfy the plaintiff on that point. Instead of doing so, he

made it clearly intelligible to the plaintiff that he was not in a position to deliver vacant possession. The question then arises, as to whether in the

circumstances created by the defendant, the plaintiff was entitled to a rescission of the contract and ask for a refund of the amount paid to him. This

is exactly what the plaintiff has done at an earlier stage before filing the suit. He has told the defendant that inasmuch as he was not in a position to

deliver vacant possession, at was but proper on his part to refund the amount which he had received by way of advance. This, the defendant has

not acceded to. In Panchapakesa Aiyar v. Arunachala Mudaliar, 1932 M. W. N. 122 Madhavan Nair and Jackson JJ. have held that if the buyer

has legitimate expectation of vacant possession and if such possession is not forthcoming then the buyer is entitled to rescind the contract. On the

question as to when or at what stage the non-fulfilment of that expectation of vacant possession arises to justify the rescinding of the contract, the

learned Judges have held that Section 55, Clause (1) (f), T. P. Act is silent as to when the obligation to give possession becomes enforceable and

that in these buying and selling transactions it would be difficult for the law to lay down the exact point of time. They have stated further that in such

cases mere suspicion that possession will not be forthcoming will not be enough and that a party cannot insist that one action shall precede another

in time merely because he happens to be suspicious. They hold that if the plaintiff knows and can prove that he will not get immediate possession,

that if under his contract he is entitled to immediate possession, he may, u/s 39, Contract Act put an end to the contract even before he has

completed the purchase by paying the full consideration. They have also further said that if Section 55, T. P. Act, be read as a whole, there is no

warrant for taking buyer and seller to mean those who have actually completed a sale. Those in the course of transacting a sale are also

contemplated by the said section. Therefore, in the course of a transaction a buyer who can prove that a seller is disabled from performing his

promise in entirety, is justified in putting an end to that contract.

On a consideration of the facts in the present case, I am of opinion that the facts in the report cited above do apply in their entirety to the present

case, and the decision is good authority to hold that when the vendor is not in a position to give possession of the property agreed to be sold by

him to the purchaser, the purchaser will be entitled by virtue of Section 55, Sub-clause (1) (f), T. P. Act and Section 39, Contract Act, to rescind

the contract and claim the advance that has been paid to him.

In this case what has been paid to the defendant is not earnest money. As per the terms of the contract, it is only advance though in the plaint the

plaintiff has loosely used the word earnest money. There is, therefore, no warrant to say that it being earnest money it could be forfeited for non-

performance. Again, even if this aspect of the case has not been dealt with by the learned Subordinate Judge, the fact is that according to the

contract it is an advance paid to the vendor by the intending purchaser, and that amount being part and parcel of the sale price itself, cannot be

retained by the defendant who has failed to give possession of the property to the plaintiff. It may be that the defendant is entitled to sue for specific

performance of the contract. But I do not want to say anything on that aspect of the case in this petition. The rights of the parties in that regard will

be left open. In the circumstances, I think that the learned Sub ordinate Judge is not right in having dismissed the suit on the mere ground that the

plaintiff did not prove the subsequent agreement which he sot up in respect of the defendant having agreed to deliver vacant possession after the

original agreement, Ex. A-1, had been entered into. This revision petition has therefore to be allowed. The plaintiff will be entitled to re cover the

sum of Rs. 500 paid by him to the defendant, together with cost and interest at 6 per cent. per annum. The respondent will pay the costs of the

petitioner in this petition.