Saukhi Sah and Others vs Mahamaya Prasad Singh and Others

Wort, J.—This is an appeal against the decision of the learned District Judge of Muzaffarpur in which he dismissed the plaintiffs'' claim in an action for specific performance. Both the Courts have come to the conclusion against the plaintiffs on the assumption that time is of the essence of the contract which was entered into between the parties and that on the date fixed for the completion, which was the 5th December 1926, the plaintiffs were not ready and willing to perform their part of the contract. For the reasons which I shall in a moment state I am clearly of the opinion that time is not of the essence of the contract.

In an action for specific performance it is necessary for the plaintiff to prove the existence of a concluded contract between himself and the defendant and that ha was ready and willing at all material dates to perform his part of the contract. The plaintiff has succeeded on the first point, that is to say there was a binding contract between him and the defendants. As regards the question of the performance on the part of the plaintiffs, both the Courts below have come to the conclusion that neither on the 5th December nor on any date prior to that date were the plaintiffs ready to pay the balance of, the purchase money.

Now the contract was in the form of a letter which was to this effect:

The consideration money of 1 anna share in Touzi No. 3569, village Rahimpur, pargana Hajipur, has been fixed at Rs. 3,685, out of which you have at present deposited Rs. 375 which has been deposited in the cash room. You will pay the balance in one lump sum on the 15th Aghan 1334 Fasli, but if you do not do so, you, will not be entitled to get back Rs. 375.

One point, however, arose in the argument with regard to it and that was, as I understood It, that by reason of the allegation of the plaintiff and by reason of his evidence there was some sort of variation of the original contract to complete on the 5th December. That, however, in my judgment, does not appear to have been the case of the plaintiff, but seems to have been a part of his attempt to prove that he in fact had a contract with the defendants which was binding upon them. But, as I have already indicated, we are not concerned with that matter when once it has been held in this case that there was a contract which, according to its terms, was to be completed on the 5th December.

Now once having held, as the Courts below have held, that the plaintiff was not ready and willing on the 5th December to pay the balance of the purchase money, the question immediately arose as to whether time was of the essence of the contract and that the 5th December was the final date which the parties themselves had fixed for its completion. Mr. S.M. Mullick has contended that this was a point which was raised by the Judges themselves and did not arise upon the case of the parties. This argument, having regard to what I have stated, seems to me to be unfounded. The matter therefore that came to be considered, was considered as to whether time was of the essence of this contract.

This, it must be remembered, was an action in which the plaintiff sought relief which was based on equitable principles. That is none the less the fact by reason of the fact that in India relief by way of specific performance is the creature of statute.

Equity, which governs the rights of the parties in cases of specific performance of contract to sell real estate, looks not at the letter but at the substance of the agreement in order to ascertain whether the parties, notwithstanding that they named a specific time within which completion was to take place really and in substance intended more than that it should take place within a reasonable time, Jamshed Khodaram Irani v. Burjori Dhunjibhai 1915 PC 83.

Lord Haldane in that case referred to the case of Stickney v. Keeble (1915) AC 386 and to the judgment of Lord Cairns in Tilley v. Thomas (1868) 3 Ch 61 and quoted with approval these words, which give the statement of the law as laid down by Lord Justice Turner and which was relied on by Lord Cairns in Tilley v. Thomas (1868) 3 Ch 61:

A Court of Equity will indeed relieve against and enforce specific performance, notwithstanding a failure to keep the dates assigned by the contract, either for completion or for the steps towards completion, if it can do justice between the parties and if [as Turner, L.J., said in Roberts v. Berry (1851) 3 DGM & G 284] there is nothing in the express stipulations between the parties, the nature of the property, or the surrounding circumstances, which would make it inequitable to interfere with and modify the legal right.

Their Lordships therefore laid down, to paraphrase the judgment to which I have made reference, that prima facie equity does not regard the terms of the contract but rather its substance.

The disregard of the terms of a contract so far as the time is concerned may depend upon the express stipulations between the parties, the nature of the property, or the surrounding circumstances. Now is there anything in this case which would by the express stipulations between the parties prevent the ordinary rule of equity applying? It is said by Mr. Husnain that the terms by which the earnest money of Rs. 375 was to be forfeited on the noncompletion by the plaintiff with regard to the payment of the balance was an express stipulation between the parties which would negative the application of the rule of equity. It seems to me that the answer to that is that the stipulation as to the time was referable to the forfeiture of the earnest money of Rs. 375 and again, so far as the authority is concerned, it seems to me also that if that argument is to be supported, it would have been a complete answer to the case in the judgment to which I have made reference.

In that case there was a similar clause that

should the purchaser not pay the amount, that is the purchase money within the fixed period above mentioned, he would have no right to the deposit of earnest money of Rs. 4,000 paid on account, and any claim of his was to be void, and the vendor was after that date, to be at liberty to resell.

That is an equally strong if not a stronger forfeiture clause than the one which we have before us. As I have said, if this argument is to be supported it would have been a complete answer to the case of the plaintiff in that action. There is nothing in the express terms of the contract in this case which would entitle us to hold that time was of the essence of the contract. Nor was it suggested that either the nature of the property or the circumstances surrounding the making of the contract which would lead us to that conclusion. The trial Judge appears to have been influenced by certain answers given by the plaintiff but these questions relating as they did to the construction of the agreement were for the Court and not the parties.

The District Judge appears to have decided the matter solely on the construction of the document itself which, as I have already stated, does not warrant the conclusion arrived at. Having decided that point in favour of the plaintiffs, the next question that came to be determined was whether the plaintiffs have established their case that they were ready and willing to perform their part of the contract and which they appear to have pleaded in para. 7 of their plaint. There is no serious dispute here that such evidence as was called was directed to the fact of the allegation which the plaintiff set up, namely, that he was ready on or about the 3rd or 5th December to pay the balance of the purchase money. No evidence it would appear was led as regards this subsequent readiness. The plaintiff''s advocate argues that he was and always has been ready and willing to perform his part of the contract.

Now the argument which is advanced on behalf of the respondent is this; that as the plaintiffs have failed in their limited case, that is to say that they were ready on or before the 5th December to pay the balance of the purchase money, they must be held to have failed as regards any other possible case which they might establish. There is some substance in this argument as it would appear that no evidence was given by them as to the subsequent offer of payment on the 5th December. But it is contended on behalf of the plaintiffs appellants that they were ready and willing to pay the balance of the consideration money and that nowhere was it denied in the written state-merit that they were not in a position to pay it.

The confusion which has arisen in this case seems to result from the conduct of the parties themselves, but it would seem to me to be sufficiently clear that the plaintiffs, in alleging their limited case as to their readiness on the 3rd or 5th December to pay the balance of the purchase money, were endeavouring to show or to prove that the contract had in fact been entered into which was binding on the defendants. Taking not too strict a view of the pleadings, it is clear that it was incumbent upon the defendants to deny the allegation of the plaintiffs that they were ready and willing to pay the deposit. That being so, it would in my judgment, be somewhat unjust to decide that as the plaintiffs have failed in their limited case, which on the pleadings was necessary for them to establish, they must be held to have failed entirely.

The result of my decision on that point I will deal with in a moment. The next question which arises is whether the contract could be specifically performed against the 3rd party defendants who were alleged to be the subsequent purchasers. There is no decision of the District Judge on this question but there is a decision of the learned Subordinate Judge of the trial Court in which he has wrongly placed the onus on the plaintiffs. Whether there was evidence by both the parties on this question does not appear but if the point does arise as to whether specific performance can be granted against the defendants 3rd party, it would seem to me to be necessary to remand the case for the determination of the question of whether the defendants 3rd party were bona fide purchasers without notice, placing the onus, if it was not a mere academic question, on the right party. The recent decision of their Lordships of the Judicial Committee of the Privy Council on the question of onus disposes of this point: the case of Bhup Narain Singh v. Gokhul Chand Mahton 1934 PC 68.

There was a further question raised by Mr. Khurshed Husnain. It was contended that it was necessary for the plaintiffs to allege and prove that the contract entered into was for joint family necessity, it being a contract entered into by the Karta of the family. In this connexion it is to be noted that during the pendency of the appeal respondents 1 A (Banbihari Prasad Singh), 1 B (Kunjbihari Prasad Singh) 1C (Randhir Prasad Singh alias Maharaja Babu) and 1D (Ranjit Singh), have been added as representing the Karta of the family who died during the pendency of the appeal. Mr. Husnain''s contention is to some extent based on the fact of the substitution which took place. It does not clearly appear from the record whether these persons, who were joined, were in existence at the time when the contract was entered into. It is said that respondents 1A (Banbihari Prasad Singh) and 1 B (Kunjbihari Prasad Singh) were but that 1C (Randhir Prasad Singh) and 1 D (Ranjit Singh) were born subsequent to the date on which the contract was made. Upon the accuracy of this statement depends the question which Mr. Husnain argues. If as is alleged that respondents 1C and 1D Randhir Prasad Singh alias Maharaja Babu and Ranjit Singh, respectively, were born subsequent to the date of the contract and their father was already on the record of the case, it is quite clear that the question which Mr. Husnain argues does not arise in their case and the mere fact that their birth was subsequent to the date of the contract does not now entitle them to raise the question which might have been raised by their father who was a party to the action. But a different consideration might arise as regards. respondents 1A and 1B (Banbihari Prasad Singh and Kunjbihari Prasad Singh) as it is alleged that one at least of them was born in 1913 and as they were, alive at the time of the contract but were not parties to the action, it is clear that they would be entitled to raise the question which is now argued, namely, whether the transaction was for the benefit of the joint family.

On the main point, however, it seems to me to be clear that the argument cannot be supported. The argument is this, that although the defendants who were parties to the action did not raise the question, yet it was necessary for the plaintiffs to allege and prove that the transaction was for joint family necessity. In my judgment that argument cannot be supported. It is true that where the question does arise the onus is on the plaintiffs but the transaction by the Karta of the joint family is not necessarily voidable. In this case there is material upon which it might be held that the other members, who were parties to the action, had in fact concurred in the agreement if the agreement was in fact established as it has been. Therefore it cannot be said that the allegation to prove that the Karta had entered into the transaction for joint family necessity was necessarily a part of the plaintiffs'' cause of action.

Only in those circumstances, that is to say where it was the plaintiff''s cause of action it could be argued that it was necessary to prove and establish that. I revert for a moment to the question of specific performance against the defendants third party. From the pleadings it would appear that there is some dispute as regards the identity of the property. In the plaint the property is described as being Tauzi No. 3582, but quite clearly from the contract itself the Tauzi Number is given as 3569 and it has been contended in argument that what the defendants third party purchased was not the property which was the subject matter of this contract.

In addition to that question there arose in argument the question of whether in any event the defendants third party were entitled to expect a decree by reason of the doctrine of his pendens. The question which thus arose in this case was, what was the nature of their contract at the time that they entered into it and whether within the meaning of Section 52 of the Transfer of Property Act they have had a transfer of this property during the pendency of the action or otherwise dealt with it.

In my judgment the matter may be summarised in this way. I am clearly of the opinion that in the first instance time is not of the essence of this contract. The question therefore arises as to whether the plaintiff was ready and willing at material times to perform his part of the contract.

For the reasons which I have given it seems to me that that matter has not been disposed of. A third question arises as regards respondents 1A and 1B (Banbihari Prasad Singh and Kunjbihari Prasad Singh) who had been joined as party respondents during the pendency of the appeal, and the fourth question that arises is as to whether the defendants third party are bona fide purchasers without notice. That raises two other questions, namely the identity of the property and the question of the doctrine of lis pendens. In those circumstances it seems to me that it is impossible to hold that this action has been satisfactorily disposed of and therefore for that purpose the case will be remanded to the learned Subordinate Judge for the determination of the questions (1) whether the plaintiffs were ready and willing at material times to perform their part of the contract, (2) whether the persons who have been joined as respondents during the pendency of the appeal were in existence at the time when the contract was entered into and (3) whether the defendants third party were bona fide purchasers without notice and (4) the identity of the property sold, that is to say whether the property the subject matter of this contract is the subject matter of the contract with the defendants third party and also the question of the doctrine of lis pendens.

As regards the second question whether respondents 1A and 1B (Banbihari Prasad Singh and Kunjbihari Prasad Singh) were in existence at the time of the contract, if this question is answered in the affirmative, then they would be entitled to investigate the question whether the contract was for the benefit of the joint family. The learned Subordinate Judge will take evidence on this question and submit his findings to the lower appellate Court for final determination. The appeal will be allowed with costs which will abide the result of the hearing in the Court below.

Dhavle, J.

I agree.