Ram Lal Dutta vs Ardhendu Shekhar Naskar

Sarkar, J.—This appeal arises but of a suit for specific performance of a contract to sell land. The suit had been brought by the purchaser and decreed by the trial court. The vendor having died shortly before the suit, his heirs had been made the Defendants and they are the Appellants before us.

The contract was made on November 13, 1937. By this contract the vendor covenanted as follows:

I agree and promise that within fifteen days from this date I shall deliver exact copies of my title deeds, etc., to the pleader appointed by you, after giving him inspection thereof. If it be decided that I have a good saleable title to the said property, then within eighteen days of the date of delivery of the copies of the said deeds, I shall, on receiving the balance of the consideration money, have a deed of sale in respect of the said property free from encumbrances and defects, written and read over and signed (and) execute the same in favour of yourself or your nominee and shall get the same registered and deliver khas possession thereof.

The land to be sold was permanently settled khas mahal land registered in the name of the vendor in the Collectorate and of which he was said to be in possession. There is a statement in the contract that the property was absolutely free from encumbrances and defects.

The purchaser''s case is that the vendor failed to give inspection of the title deeds or deliver copies thereof in terms of the contract, in spite of the purchaser''s demands. Curiously enough, there is no allegation in the plaint that the Plaintiff had all along been and also was, at the date of the suit and still is, ready and willing to perform his part of the bargain, an allegation which the authorities hold to be essential in a suit for specific performance. No point was, however, made of this defect in the plaint on behalf of the vendor and the trial court actually found, after contest on the. point, that the purchaser had been so ready and willing. We have to decide whether this finding is correct.

Two points were raised on behalf of the vendor in this appeal. First, whether the purchaser was ready and willing to perform his part of the contract and secondly, whether the suit was barred by limitation. As regards the second point, it appears that the learned pleaders for the Defendants conceded in the court below that the suit was not barred by limitation. The point as to limitation was also not taken in the grounds of the appeal to this Court. Mr. Gupta, appearing in support of the appeal, however, contended that his client was not bound by an admission on a point of law. He also contended that, with our leave, he could, in this Court, urge the point of limitation and prayed that such leave might be granted. Both these contentions are well-founded and no objection was taken to them. We, accordingly, gave him leave to argue the point of limitation.

There was one other matter argued before us, namely, whether the purchaser was entitled in this suit to a decree for damages should his claim for specific performance fail. This question will be dealt with at the end of this judgment.

I propose first to deal with the question of readiness and willingness.

(After dealing with the evidence on the point, his Lordship proceeded as follows:)

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On these facts I have come to the view that the purchaser cannot be said to have been ready and willing.

The question is whether, by giving a copy of the will and inspection of a certified copy of it and by delivering the original receipt, the vendor had done all that he had to do in the way of giving exact copies of his title deeds and giving inspection thereof. It may be stated here that it is admitted that the vendor had a perfect title to the property. There were, of course, incumbrances on it which could have been cleared with the purchase money, if and when it was paid. The purchaser''s only complaint was that the vendor did not supply copies of the title deeds nor give inspection of the originals.

(After dealing with the evidence his Lordship proceeded as follows:)

On this state of the evidence I am satisfied that the vendor had done all that he was required to do in connection with the title deeds under the contract of sale and it was the purchaser who was not ready and willing to complete the sale. In these circumstances, I hold that the vendor rightly and legally cancelled the contract by his letters of April 8, 1938 and May 31, 1938, as he was entitled to do.

I now pass on to the question of limitation. Article 113 of the Limitation Act deals expressly with suits for specific performance and provides a period of three years from the date fixed for the performance of the contract and where no such date is fixed, from the time when Plaintiff has notice that performance is refused. If this Article applies, there is no doubt that this suit was filed after the period fixed by it. Indeed, Dr. Pal, appearing for the vendor, conceded that, if Article 113 applied, his suit must be held to be barred by limitation. Dr. Pal''s contention was that the suit could be brought under Article 118. That Article deals with a suit for compensation for breach of'' a registered contract and it provides a period of six years from the date of the breach for such suit. It is conceded that, if this Article applies, this suit is not barred by the laws of limitation. Dr. Pal relied in support of his argument on the case of Tricomdas Cooverji Bhoja v. Gopinath Jiu Thahur ILR 1916 44 Cal. 759 ; L.R. 44 IndAp 65. That was a suit for minimum royalty under a registered mining lease and it was held that the suit was really for rent. It was argued that, that being so, Article 110, which specifically provided for suits "for arrears of rent", applied and that the suit was barred. Their Lordships of the Judicial Committee, following the Indian decisions on the point, held that, as the lease was registered, the Article applicable was Article 116 and the suit was not barred. They held that Article 116 was a special Article and that the suit for rent could be brought within the term "suit for compensation". Dr. Pal has argued that, if a suit for rent can be a suit for compensation, so likewise can a suit for specific performance. I am entirely unable to agree. A suit for specific performance can never be considered as a suit for compensation however wide the meaning of this word compensation may be taken to be. The idea conveyed by the word compensation is a complete antithesis of that conveyed by the words specific performance. By asking for specific performance, the Plaintiff wants precisely what he bargained for and by asking for compensation the Plaintiff proceeds on the basis that what he bargained for having been wrongfully denied to him, he wants something else which would recoup him for the loss occasioned by such denial. One gets compensation, because he has lost something, that it was agreed he would have and one gets specific performance when it is right that he should not be made to lose by a wrongful refusal of another what the latter agreed that the former should have. In a suit for specific performance the Plaintiff must ignore the breach of the contract by the Defendant, treat the contract as subsisting and be all along till the decree ready and willing to perform it. In a suit for compensation for breach of contract, which a suit under Article 116 would be, there must be a breach by the Defendant and the Plaintiff must proceed on the basis that the breach dissolved the obligations created by the contract, so that there is no further any question of those obligations being carried out, but of money being paid in lieu of the benefit of those obligations. It is, therefore, impossible that a suit for specific performance can be a suit for compensation. The case before the Judicial Committee does not make it so. There the argument was that the word compensation necessarily meant unliquidated damages and could never include rent which was a claim for a liquidated sum. The Judicial Committee did not feel that this argument was so clearly right as to induce them to accept it and overrule the interpretation, put upon that word by a long course of decisions in India, which judicial interpretation had, according to them, been given legislative sanction by the successive statutes on limitation. There has been no case holding that suits for specific performance are suits for compensation and plainly the case in the Judicial Committee offers no ground for extending further the meaning of the word compensation by including within it specific performance. There appears to have been another reason on which the Judicial Committee applied Article 116 to the case before them. They seem to have thought that Article 116 was a special Article, as it, dealt with registered contracts only, while Article 110, which applied to suits for rent, was a general Article dealing with suit for rent howsoever due. Now this reason cannot apply to the case before us. Article 116 is certainly more general than Article 113. The former deals generally with compensation for breach of a registered contract. Assume, as Dr. Pal has argued, compensation includes specific performance. It cannot be disputed that it certainly includes money compensation and all other kinds of compensation that there may be. It is, therefore, a somewhat general Article. Now Article 113 deals only with one kind of such compensation, viz., the specific performance variety of it. I wish to make it clear that, in my view, compensation can never take the shape of specific performance, but I have assumed this only for the sake of showing that, even on Dr. Pal''s argument, Article 113 must, in any event, be applied to all suits for specific performance in preference to Article 116. For these reasons, I have come to the conclusion that this suit must be held to be barred by the law of limitation.

On both these two grounds, therefore, the claim for specific performance must fail and the judgment of the court below set aside.

I now come to the last point argued by Dr. Pal, viz., that if his client was not entitled to specific performance, he was certainly entitled to damages for breach of contract. It may be stated that, so far as this claim for damages is concerned, it clearly falls within Article 116 and no question of limitation arises.

The first answer to this claim, however, is that the breach on the part of the vendor is not established. Discussing the question of readiness and willingness I have shown that it was the purchaser who wilfully and wrongfully failed to take steps to complete the transaction and that, therefore, the vendor, was justified in treating the contract as at an end, which he did. It does not matter for this purpose that the contract did not make time as of its essence. Still the purchaser had to take the steps within a reasonable time. This he did not do. On the other hand, his conduct, though not his words, clearly indicated that he had no intention of fulfilling the contract and certainly not within a reasonable time. In my view, if there was any breach it was on the part of the purchaser and not of the vendor.

The second objection to the claim for damages is that no such claim has been made in the plaint. There is no allegation of a breach by the vendor. Since Ardeshir Mama v. Flora Sassoon ILR (1928) 52 Bom. 597 : L.R. 55 I.A. 360, some doubts had been felt as to whether it was possible to combine in one suit a claim for specific performance of a contract with an alternative claim for damages for its breach. This doubt was removed by Ameer Ali J, in Calcutta Improvement Trust v. Subarnabala Debi (1928) 44 C.W.N. 541, where he held that the two could be so combined. Before dealing with this case, it is necessary to point out the distinction between damages for breach of a contract, which can only be claimed under the Contract Act and damages in substitution for specific performance, the claim for which Section 19 of the Specific Belief Act permits. The two claims are based on entirely different considerations. This is put with great clarity in the judgment of the Board in Ardeshir Mama v. Flora Sassoon (supra). As Ameer Ali J. put it, compensation in substitution for specific performance is granted where the court could have granted specific performance but declines in its discretion to do so. This follows from the principle that specific performance is essentially a discretionary relief and not a matter of right. I have noted this distinction, because the plaint in this case contains a paragraph in the following terms:

If for any reason it be found by the court that this contract cannot be enforced specifically, then the Plaintiff claims altogether Rs. 22,251 against the Defendants as "compensation", being the sum total of the earnest money paid by him and costs and interests together with the difference, etc., between the value of the property at the present time and the value thereof as mentioned in the deed of agreement for sale.

The question that arises is, is this a claim for damages for breach of contract under the Contract Act or is it a claim for damages in substitution for specific performance u/s 19 of the Specific Relief Act.

Before dealing with this question, it is as well to dispose of the point that, if this is a claim under the Specific Relief Act, it must fail. Referring to Section 2 of Lord Cairns'' Act (an English Act of 1858), the principles of which have been embodied in Section 19 of the Specific Relief Act, as they held in Mama v. Sassoon (supra) the Judicial Committee observed in that case at p. 621, 374 (I.A.):

The limited effect of the section was not long left in doubt, wide as are apparently its terms. In a series of decisions it was consistently held that just as its power to give damages additional was to be exercised in a suit in which the court had granted specific performance, so the power to give damages as an alternative to specific performance did not extend to a case in which the Plaintiff had debarred himself from claiming that form of relief, nor to a case in which the relief had become impossible. In the present instance, their Lordships are disposing of a case in which the Plaintiff had debarred himself from asking at the hearing for specific performance and in such circumstances, notwithstanding Lord Cairns'' Act, the result still was that with no award of damages-r-the court could award none--the order would be one dismissing the suit with no reservation of any liberty to proceed at law for damages.

Ameer Ali J. was only referring to this statement of the law by the Board in his observations to which I have previously referred. What had happened in Mama v. Sassoon (supra) was that, sometime after the filing of the suit for specific performance, the Plaintiff had written to the Defendant that he had decided to abandon the claim for specific performance and would at the trial instead claim damages for breach of contract. It appeared to the Board that this change of position had been made because, if the Plaintiff had persisted in his claim for specific performance, he had to keep the purchase-money ready till the decree and this he found inconvenient to do. In the aforesaid observations the Board had stated that the Plaintiff had debarred himself from asking for specific performance because of this change of position by him whereby he had indicated that he was no longer ready and willing to perform the contract. In the case before us I have already held that, long prior to the institution of the suit, the Plaintiff had ceased to be ready and willing to perform the contract and had, therefore, likewise debarred himself from asking for specific performance. That being so, it must follow on the authority of the above observation of the Judicial Committee, that the Plaintiff is not entitled to damages in substitution for specific performance. It need hardly be pointed out that by the expression "damages as an "alternative to specific performances" occurring in the above quotation their Lordships were referring to damages in substitution for specific performance.

I now return to the question whether the claim in the plaint that I have set out can be said to be a claim for damages for breach of contract under the Contract Act. In Subarnabala''s case (supra) Ameer Ali J. read at p. 549 the following passage from Williams on Vendors and Purchasers:

Under the present practice the party suing in the alternative for specific performance or damages must take care to claim particularly such damages as he is entitled to recover at law for breach of the contract, otherwise his claim for damages may be treated as if it were merely a substitution for the equitable remedy of specific performance and may be defeated by anything that should bar his right to specific performance.

Ameer Ali J. then proceeded to add:

The result is, if my inference is right and it is borne out by this note (i.e., the note from Williams quoted above) that this important matter becomes like so many major disputes of the present day a matter of words. You have got, when you claim damages in the alternative, in the Indian Courts, to make it quite clear that you have nothing to do with Lord Cairns'' Act, i.e., (Section 19, Specific Relief Act).

The point, therefore, is, is it made quite clear that the claim for damages in the plaint, in the present instance, is one under the Contract Act and has nothing to do with Section 19 of the Specific Relief Act? I have read the plaint with care and I am quite clear, in my mind, that the claim made in it is intended to be u/s 19 of the Specific Relief Act and was not intended to be and neither in fact is, a claim for damages under, the Contract Act.

I have already noticed that the plaint nowhere mentions a breach of contract by the vendor. It of course stated that the vendor did not take steps to sell the property to the purchaser (para. 8). This is not pleading breach and this pleading must be there in any event to justify the suit, for specific performance. This failure of the vendor is also said to have occurred shortly before suit and not in April, or May, 1938'', when he purported to cancel the contract. If there was any breach by the vendor, it was then that it occurred. Then para. 8 also states that the vendor was "trying to break the contract". This can only mean that there had been no actual breach by the vendor. Again, if there was a cause of action for damages for breach, it must have arisen in April or May, 1938, when the vendor purported to cancel the contract. The paragraph in the plaint stating the time when the cause of action arose should have set out this date in the alternative, but it does not do so. In fact, no date on which any cause of action for damages on breach arose is at all stated. In Manna v. Sassoon (supra), after the letter intimating a desire not to insist on specific performance but to claim damages for breach only, the plaint was amended by a claim in the alternative for the return of Rs. 1,00,000 (being the earnest money) with interest and rupees seven lakhs as damages. The Judicial Committee held that this amended claim for damages was only in substitution for specific performance and not damages for breach. I think that the claim for damages in the present instance must be interpreted in the same way.

Turning now to the paragraph of the plaint that I have already quoted, I note that the claim for compensation is made only "if for any reason it be found by the court that this "contract cannot be enforced specifically". This clearly implies a claim in substitution for specific performance should specific performance not be granted. This is made clearer in the prayer portion in which the language used is as follows:

If for any reason it be considered that the execution etc. of the Kabala by the-Court in accordance with the terms of the agreement is not possible, then a decree may be passed for the damages already mentioned.

Lastly, it has to be noted that the damages claimed include the difference between the contract rate and the market rate-at the date of the suit. If the intention was that these damages, were damages for breach, then the market rate mentioned would have been that of the date of the breach. On the other hand, in damages in substitution the relevant market rate is-that of the date of the suit or rather of the decree.

I think I have said enough to show that the damages claimed in this suit are certainly not "clearly" damages at law for breach of contract. On the other hand, in my view, the claim clearly amounts to damages in substitution for specific performance. The claim for damages must, therefore, be rejected.

The result, therefore, is that this appeal must be allowed with costs and the decree of the court below set aside The Appellants will get the costs of the court below also.

Das, J.

I agree.