Uthandia Pillai vs Ramayi Ammal, Kasinatha Devar, Soundarammal and Devadoss

Bellie, J.—The plaintiff Ramayi Ammal lost her suit in the trial Court but won in her appeal in this Court. The second defendant has filed this

Letters Patent Appeal. The suit is for specific performance of an oral agreement of sale. The plaintiffs case is that the first defendant on 19-3-1976

agreed to sell his land measuring 2.87 acres Survey No. 258/1 of K. Valasai village for a sum of Rs. 18,000 and received a sum of Rs. 1,100. On

the same day the first defendant also handed over to the plaintiff patta pass book, extract of village accounts and Field Measurement Book

attested by the Village Karnam and handed over possession of the land. When on 23-3-1976 the plaintiff approached the first defendant with the

balance of sale consideration the first defendant told her that because of the impending marriage of his daughter he was busy and had no time to go

to the Registrar''s office for registration of the sale deed and he asked the plaintiff to give him a sum of Rs. 8,000 as he was in urgent need of

money, promising to receive the balance of consideration and execute the sale deed later. But the plaintiff came to know on 27-3-1976 that the

first defendant was making frantic attempts to sell the property to some other parties for higher amount. Therefore the plaintiff sent a telegram on

that day reminding him of his agreement with her and also about the advance of Rs. 1.100 and Rs. 8,000 received by him and demanding

performance of the agreement by receiving the balance of sale consideration. But inspite of it the first defendant executed a sale deed in favour of

defendants 2 to 4 on 24-4-1976. Therefore the suit for specific performance.

The first defendant in his written statement would admit that there was an agreement on 19-3-1976 to sell the property for Rs. 18,000 and an

advance of Rs. 1,100 was received but he would state that it was agreed that the balance of consideration should be paid on 23-3-1976 and the

sale executed and time was the essence of contract. On 23-3-1976 morning the plaintiff''s men came and represented that they would not raise the

balance of consideration and they however asked the first defendant to wait till evening. But in the evening they brought only Rs. 8,000. The first

defendant received that amount under protest on the specific understanding that the agreement would stand cancelled and a fresh agreement would

be entered into and he informed them that there were better offers. Plaintiff''s men agreed to pay better price consistent with the offers made by

others and told the first defendant to keep the sum of Rs. 8,000 as deposit and a fresh sale price would be negotiated and fixed and requested the

first defendant not to enter into any agreement till 29-3-1976 to which he agreed. On 28-3-1976 a person by name Muthuvel Nadar representing

the plaintiff contacted the first defendant''s son-in-law and on a fresh negotiation the price was fixed at Rs. 27,000 and an advance of Rs. 1000

was paid for which a receipt was issued and Muthuvel Nadar regretted that the plaintiff acted hastily by sending a telegram to the first defendant on

the previous day. Muthuvel Nadar also received patta pass book on the understating that the sale price would be paid next day. Thereafter neither

the plaintiff nor her men paid any money. The first defendant on enquiry came to understand that the plaintiff was without any source of money and

therefore she was adopting delaying tactics. The agreement upon which the suit has been filed had already elapsed because the plaintiff did not

perform her part of the contract and therefore the suit is liable to be dismissed.

Defendants 2 to 4 in their written statement would contend that they were not aware of any agreement between the plaintiff and the first

defendant and they were bona fide purchasers for value and therefore the plaintiff cannot have any remedy as against them. They further contended

that they paid a cash consideration of Rs. 30,000 and they took possession of the land. They denied the allegation of the plaintiff that possession

was handed over to her.

The plaintiff has also filed a reply statement wherein inter-alia she has stated that the sales in favour of defendants 2 to 4 are not real and genuine

and is only a fraudulent transaction.

On these pleadings the learned Subordinate Judge, Ramanathapuram at Madurai held that with regard to the agreement dated 19-3-1976

pleaded by the plaintiff time was the essence of contract and the plaintiff failed to perform her part of the contract within that time and the first

defendant was not at fault and therefore the plaintiff was not entitled to specific performance of that contract. He further held that the defendants 2

to 4 did not have notice of the alleged agreement between the plaintiff and the first defendant and they are bona fide purchasers for value and

therefore the plaintiff cannot have any relief as against them. In the result the learned Subordinate Judge dismissed the suit.

In the appeal filed by the plaintiff i.e., A.S. No. 446 of 1979 Ramaswami, J., on a curious reasoning given by him, held that on 23-3-1976 the

parties entered into a fresh agreement and while that agreement was subsisting the first defendant sold the property to defendants 2 to 4 and

therefore he was at fault. He further held that defendants 2 to 4 had notice of the said agreement and therefore they are not bonafide purchasers for

value and hence they are also liable. On these findings the learned Judge set aside the Judgment of the trial Court and decreed the suit for specific

performance but he said that the plaintiff would be liable to pay a sum of Rs. 27,000 (instead of Rs. 18,000 stated in the plaint) towards

consideration of the sale. Aggrieved, the second defendant has filed this Letters Patent Appeal.

On the face of it the Judgment of the learned single Judge shows serious errors committed by him. The specific case of the plaintiff is that an

agreement was entered in to on 19-3-1976 and the sale price fixed was Rs. 18,000 and even though she was ready and willing to perform her part

of the contract the first defendant evaded to execute sale deed and she is entitled for specific performance of that agreement. Thus the plaintiff

relies on an agreement entered into on 19-3-1976, and as per that she is liable to pay only Rs. 18,000. As regards this agreement the evidence is

clear and it is also not in dispute that time was essence of the contract. Ex.A1 is a receipt issued by the first defendant on 19-3-1976 i.e., the date

of agreement for payment of advance amount of Rs. 1,100. In that it is specifically stated that the balance amount shall be paid on 23-3-1976 and

failing that the advance would lapse. This is clear indication of the time being essence of contract. The question that would arise is whether the

plaintiff was ready and willing to perform her part of the agreement on 23-3-1976 but the first defendant failed and therefore she (plaintiff) is

entitled for a decree for specific performance. The trial Court found that the plaintiff was at fault and therefore she was not entitled for the decree

prayed for. But the learned single Judge in the appeal left out this agreement dated 19-3-1976 and himself spelled out another agreement from the

written statement and evidence of the first defendant (D.W.1) and held that the plaintiff was entitled for specific performance of that agreement.

This finding of the learned Judge is obviously wrong and therefore it cannot be supported. From the plaint allegations and also from he evidence of

the plaintiff as P.W.1 it is clear that the plaintiff wants specific performance of the agreement of 19-3-1976 for Rs. 18,000. This agreement is

admitted but however it is contended by the first defendant that the plaintiff herself was at fault. Therefore what had to be considered is whether as

alleged by the plaintiff the first defendant committed default of that agreement and therefore the plaintiff is entitled for specific performance of that

agreement. No question of considering any other agreement arises at all. After committing such serious mistake the learned Judge proceeded to

consider the point whether defendants 2 to 4 were bona fide purchasers for value. Here too with reference to the so called second or fresh

agreement stated by him he held that defendants 2 to 4 had notice of the agreement by the first defendant with the plaintiff and therefore they are

not bona fide purchasers. Thus as said above the learned single Judge has committed serious error and on this ground alone his Judgment cannot

be sustained.

Now, according to the plaintiff her men took the entire balance of sale consideration to the first defendant on 23-3-1976 but he was telling them

that he was busy with the arrangement of his daughter''s marriage and therefore he had no time to come to the Registrar''s office and further telling

that he was in urgent need of money he received Rs. 8,000 promising to receive the balance amount and execute the sale deed on 29-3-1976. As

against this the first defendant would contend that on 23-3-1976 the plaintiff''s men came to him and said that they could not make out the balance

of sale consideration and on his insisting that they must pay the entire consideration within the evening lest the agreement would lapse, they then

brought Rs. 8,000 stating that they could make out only that much of amount and thereupon he told them that the agreement would lapse and the

advance of Rs. 1100 received by him would stand forfeited and they would think of fresh agreement and there are people who are prepared to

pay more consideration. The plaintiff''s men then gave Rs. 8,000 asking him to keep it as deposit and promising him that they would purchase by

payment of more sale price keeping in view the offers made by others and made a special request not to enter into any agreement with any other

person till 29-3-1976. Then on 28-3-1976 one Muthuvel Nadar representing the plaintiff approached the first defendant''s son-in-law and he

agreed to purchase the property for Rs. 27,000 and paid the first defendant an advance of Rs. 1,000. Thereafter neither the plaintiff nor her men

turned up or paid any amount.

Now whatever happened according to the first defendant, it is the case of the plaintiff that on 23-3-1976 she took the entire balance of sale

consideration to the first defendant for completing the sale whereas according to the first defendant her men brought only Rs. 8,000 stating that

they could make out only that much amount. On this point the learned trial Judge disbelieved the plaintiff''s case. The trial Judge held that the

plaintiff would have taken only Rs. 8,000 and not the full balance of sale consideration. As rightly pointed out by the learned trial Judge, if really

even though the plaintiff took the entire balance of sale consideration the first defendant took only Rs. 8,000 and agreed to receive the balance

amount and execute the sale deed some time later, that would have been mentioned in Ex.A4 receipt for Rs. 8,000. Another thing which is highly

improbable is that if the plaintiff had tendered the entire balance of sale consideration to the first defendant he would have taken only Rs. 8,000. He

could have as well received the entire balance of sale consideration and said that he would execute the sale deed shortly. In Ex.A7 notice sent by

the plaintiff it has not been mentioned that she took the entire balance of sale consideration. Even if the first defendant agreed to wait till 29-3-1976

to complete the transaction as seen in Ex.A9 reply notice, the plaintiff did not tender the entire balance of sale consideration before that date. It is

manifest therefore that the plaintiff was at fault and she failed to be ready and willing to perform her part of the contract and not the first defendant.

We have already seen above that time was the essence of the contract. Even if at the request of the plaintiff the first defendant agreed to wait till

29-3-1976, still the time was the essence of contract. Thus it is clear that the plaintiff has lost her right to enforce the contract pleaded by her.

Therefore the suit is liable to be dismissed.

Mr. R.S. Venkatachari, learned counsel for the appellant-second defendant contends that even if there was any subsisting contract between

the plaintiff and the first defendant there is absolutely nothing to show that the defendants 2 to 4 had notice of that agreement and therefore they are

bonafide purchasers for value. Here too without any reliable evidence, on mere surmises, the learned single Judge has held against these

defendants. No doubt when the defendants 2 to 4 plead so the initial onus is on them to prove that they had no knowledge of the prior agreement

pleaded by the plaintiff but such onus will be discharged by adducing negative evidence like the defendants themselves testifying to that effect. And

then the burden shifts to the plaintiff to prove that the defendants did have notice of the earlier agreement. In this case one thing that must be borne

in mind is that the alleged agreement is oral i.e., by word of mouth. Admittedly neither the plaintiff nor any of her men nor the first defendant ever

told the defendants 2 to 4 about any such agreement. In fact the defendant has been asked in his evidence repeatedly whether he did not tell about

the first agreement to the defendants 2 to 4, but he stood firm saying that he did not. This being the case how to impute knowledge to defendants 2

to 4 about the alleged agreement. One reason given by the learned single Judge is that the first defendant and defendants 2 to 4 were neighbours in

the village and therefore it is impossible to believe that the defendants 2 to 4 did not know about the agreement. This reasoning is not legally

tenable. It cannot be assumed like that. Then it is stated that it is not denied that on the date of the first agreement i.e., on 19-3-1976 the first

defendant had handed over patta pass book and extracts from other registers attested by the village Karnam to the plaintiff and the fourth

defendant in his evidence has admitted that the defendants 2 to 4 did not ask the first defendant for patta pass book or other documents of title nor

did they even make any encumbrance certificate. The question is: The first defendant''s giving the said documents to the plaintiff in what way

imputes knowledge of the prior agreement to defendants 2 to 4? First of all the first or original agreement is not in dispute and therefore there was

nothing wrong in the first defendant giving those documents to the plaintiff. Likewise the defendants 2 to 4 not asking the first defendant for any

document of title also will not attribute notice of the agreement to them. Here it may be mentioned, Mr. R. Muthukumaraswamy, learned counsel

for the first respondent-plaintiff in his arguments did not question the genuineness of the three sale deeds executed by the first defendant in favour of

defendants 2 to 4, and he did not dispute that consideration was paid for those sales. There is clear finding by the trial Court that defendants 2 to 4

are in possession of the property and he rejected the claim of the plaintiff that she was handed over possession by the first defendant. This finding

has not been seriously disputed either before the learned single Judge or in the Letters Patent Appeal. If atleast possession was with the plaintiff,

then it would be reasonable to argue that the defendants 2 to 4 have not made any enquiry before the sale and that would show that their purchase

was not bona fide. There is no other circumstance that would warrant necessity on the part of the defendants 2 to 4 to have made an enquiry

before they purchased.

However it is argued by Mr. R. Muthukumaraswamy that as stated by the learned single Judge the first defendant has admitted that he

received Ex.A5 telegram from the plaintiff on 27-3-1976 and the second defendant (D.W.5) also has stated that the first defendant told him that he

had received a telegram, and in that telegram it is clearly mentioned about the agreement in respect of the suit property and this would clearly show

that the defendants 2 to 4 would have knowledge about the agreement. This evidence, if I may say so, is too cryptic and it would be unreasonable

to attribute knowledge from it to defendants 2 to 4 about the agreement. Only because the second defendant (D.W.5) has stated that the first

defendant told him that he has received a telegram it cannot be taken that the first defendant has told the contents of it. In this connection the first

defendant (D.W.1) has more than once asserted that he never told the contents of the telegram to the second defendant. Likewise the mere fact

that the second defendant (D.W.5) has stated that the first defendant and his son-in-law were talking about the telegram it does not mean that he

knew the contents of it. The Second defendant has testified that the first defendant did not tell him that he received the telegram from the plaintiff;

nor did he ask him about it.

Mr. R. Muthukumaraswamy further contends that the second defendant (D.W.5) has stated in his evidence that when he went to ask about the

telegram the first defendant and his in son-in-law were talking. The counsel argues that when second defendant states when he went to the first

defendant to ask about the telegram this would clearly imply that he knew the contents of the telegram and he waited to talk about it. This

particular statement in the evidence which is in Tamil is:

This sentence is capable of another meaning also i.e., when he went to see first defendant the father-in-law and son-in-law were talking about the

telegram. From the context in which this piece of evidence is given, in my view, it would not give the meaning given by the counsel but would give

the other meaning stated by me. Just before this statement he (D.W.5) has stated referring to the first defendant that he told him that he received a

telegram. If the second defendant had the intention to ask the first defendant about the telegram he would have asked him then and there and no

question of going to meet the first defendant to ask about the telegram arises. Here it may be apposite to note the quotation from ""Barnhart v.

Green-Shields"" (1854) 9 Moore''s I.C. 18 , in the Judgment of the Allahabad High Court in Ashiq Husain and Others Vs. Chaturbhuj and Another

which reads:

An actual notice to constitute a binding notice must be definite information given by a person interested in the thing in respect of which the notice is

issued; for it is a settled rule that a person is not bound to attend to vague rumours or statements by mere strangers, and that a notice to be binding

must proceed from some persons interested in the thing.

In the same Allahabad Judgment it has been pointed out that in ""Hewett v. Loosemore"" (1851) 9 Hare, 449 it was held that:

Constructive notice is knowledge which the Court imputes to a person, from the circumstances of the case, upon a legal presumption so strongly

that it cannot be allowed to be rebutted, that the knowledge must exist though it may not have been formally communicated.

From all these I am clearly of the view that it cannot be held that the defendants 2 to 4 had either direct notice or constructive notice of any

agreement between the plaintiff and the first defendant.

In the result therefore the Letters Patent Appeal is allowed and the Judgment of the learned single Judge is set aside and the Judgment of the trial

Court is restored. There will be no order as to costs.