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Case Number

L.P.A No. 121 of 1951.

Attorney(S)

Messrs, V.C Veeraraghavan and S. Thyagarajan for Applts.
Messrs. G.R Jagadisan and T.V Balakrishnan for Respts.

Judges

Rajamannar, C.J
Rajagopala Ayyangar, J.

Acts

S. 92 of the Evidence Act

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Smart Summary

Structured Summary of the Opinion (Delivered by the Chief Justice)

Factual and Procedural Background

The appeal is a Letters Patent Appeal against the judgment of Viswanatha Sastri, J., in A.S. No. 287 of 1947. Plaintiffs brought a suit for specific performance of an agreement to reconvey certain suit properties. Plaintiffs 1 to 3 were brothers and plaintiffs 4 to 6 their sons. Defendants 1 and 2 were brothers and defendants 3 and 4 their sons. By a sale deed dated 9 May 1937 (Ex. D.18) executed by the plaintiffs, the suit properties were conveyed to the second defendant. On 14 May 1937 the first defendant executed in favour of plaintiffs 1 to 3 an agreement of reconveyance (Ex. P.1), which formed the basis of the suit for specific performance.

It was admitted before the Court that the suit properties were purchased for the joint family of the defendants though the sale deed itself named the second defendant, and that the first defendant executed Ex. P.1 as the family manager. At trial and before Viswanatha Sastri, J., the defendants contended that Ex. P.1 (the agreement to reconvey) was not binding on other family members because it was not justified by any family necessity or benefit, on the basis that sale and reconvey were independent transactions. Viswanatha Sastri, J. held that sale and reconvey were parts of a single transaction, that the agreement to reconvey formed part of the consideration for the sale, and therefore need not be independently justified by family necessity or benefit. This Letters Patent Appeal challenges that conclusion.

Legal Issues Presented

Whether an agreement to reconvey, executed by the manager of a joint family as part of the arrangement under which a sale deed was executed, must be treated as so distinct and separate from the sale that it requires proof of family necessity or benefit in order to bind other members of the joint family.
Whether the sale and the agreement to reconvey should be regarded as separate and independent transactions to be judged separately (as argued with reference to Veeraswami v. Narayya), or whether they may be parts of a single transaction such that the agreement to reconvey forms part of the consideration for the sale.

Arguments of the Parties

Appellants' Arguments

The agreement to reconvey executed by the first defendant (the family manager) was not binding on other members of the joint family because it was not justified by any family necessity or benefit.
The sale (Ex. D.18) and the agreement to reconvey (Ex. P.1) were two independent transactions which should be judged separately; because the properties were purchased for the benefit of the joint family, any transaction by the manager that affected the family's interest (such as an agreement to reconvey) could bind the family only if it were for necessity or benefit.
In support of the independence argument, reliance was placed on the Privy Council decision in Veeraswami v. Narayya and on an unreported decision of Govinda Menon, J. (S.A. No. 851 of 1946, as referred to earlier in the opinion).

The opinion does not contain a detailed statement of the plaintiffs' separate legal arguments beyond asserting that they sued for specific performance based on Ex. P.1, and the judge's finding that Ex. P.1 formed part of the consideration for the sale.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Veeraswami v. Narayya (Privy Council)	Cited on the applicability of S. 92 of the Evidence Act to oral agreements to reconvey; the Privy Council held that S. 92 did not preclude evidence of such an oral agreement because it did not contradict, vary or add to the sale deed within the meaning of S. 92. Their Lordships described the sale and the agreement to reconvey as separate and independent transactions for the purpose of that question.	The Court analyzed Veeraswami at length and concluded that the Privy Council's decision concerned only the question of whether S. 92 excluded the oral agreement. The Court held that Veeraswami's characterization of the sale and reconvey as separate transactions for the S. 92 enquiry did not bear on the present question of whether an agreement to reconvey that formed part of the arrangement underpinning a sale needed separate justification by family necessity or benefit.
Govinda Menon, J. — unreported decision (referred to as S.A. No. 851 of 1946)	Relied upon by defendants below; on facts the learned Judge did not follow it. The opinion reports that an unreported decision of Govinda Menon, J. was relied on in the trial court but Viswanatha Sastri, J. found himself unable to follow it.	The present Court noted that Viswanatha Sastri, J. could not follow that unreported decision; no further application of the unreported decision to the present facts was made by this Court beyond observing that Viswanatha Sastri, J. did not accept it.
Govinda Menon, J. — judgment in S.A. No. 831 of 1946 (as discussed later in the opinion)	In that case the manager of a joint family purchased property and on the same day executed an agreement to reconvey to the vendor; the Court below had found sale and reconvey were parts of the same transaction, but Govinda Menon, J., relying on Veeraswami, treated them as different transactions and remanded for evidence on whether the reconvey formed part of the bargain and thereby conferred benefit on the family.	The present Court held that Govinda Menon, J.'s decision did not assist the appellants. The Court explained that Govinda Menon had treated the transactions as separate for some purposes but also accepted that if the agreement to reconvey formed part of the bargaining it could be binding as conferring benefit. The present Court found on the evidence before it that the agreement to reconvey was part of the bargain and therefore dismissed the appellants' contentions against enforceability on that ground.

Court's Reasoning and Analysis

The Court proceeded by first setting out the material facts: Ex. D.18 was a sale deed conveying the properties to the second defendant; Ex. P.1 (dated 14 May 1937) was an agreement by the first defendant to reconvey to plaintiffs 1 to 3 upon repayment within ten years; the first defendant acted as family manager and the purchase was for the joint family though the deed named the second defendant.

Viswanatha Sastri, J.'s conclusion at first instance was that the sale and the agreement to reconvey should be considered parts of the same transaction and that the agreement to reconvey formed part of the consideration for the sale. Therefore, according to that Judge, it would be impossible to require proof of family necessity or benefit for the agreement to reconvey standing by itself any more than for the sale to the family. The present Court accepted that approach after analysis.

The appellants relied heavily on the Privy Council decision in Veeraswami v. Narayya to argue that the sale and the reconveyance agreement are separate transactions and must be judged independently. The Court examined Veeraswami at length and clarified that the Privy Council's holding dealt only with whether S. 92 of the Evidence Act barred evidence of an oral agreement to reconvey and that, in that context, their Lordships characterized the sale and reconvey as separate transactions for the purpose of determining whether the oral agreement contradicted or varied the sale deed. The present Court concluded that those observations in Veeraswami about separability were confined to the S. 92 question and did not decide the separate question whether, when an agreement to reconvey forms part of the same bargain as the sale, it must be independently justified by family necessity or benefit.

The Court next addressed Govinda Menon, J.'s judgment (referred to in two places in the opinion, once as S.A. No. 851 of 1946 and later as S.A. No. 831 of 1946). In that case the learned Judge, while noting Veeraswami, treated the sale and reconvey as different transactions for certain purposes and remanded for evidence to determine whether the reconvey formed part of the bargaining which culminated in the sale, in which case it could be supported as conferring benefit. The present Court observed that Govinda Menon, J.'s decision did not aid the appellants because, on the evidence before the present Court, the agreement to reconvey was part of the bargain which produced the sale. Consequently, the requirement of family necessity or benefit to sustain an agreement executed in the manager's name did not operate to defeat enforceability in this case.

The Court therefore rejected the appellants' central contention that the agreement to reconvey was a separate transaction requiring independent proof of family necessity or benefit. The Court also declined to entertain a late-raised contention by the appellants that the agreement (if treated as in favour of all family members) was unenforceable for want of mutuality because three members of the plaintiffs' family were minors when the agreement was executed; the Court refused to allow this new point to be raised at the late stage.

Holding and Implications

Holding: The Letters Patent Appeal is DISMISSED (dismissed with costs).

Implications:

Direct effect: The trial court's treatment (as adopted by Viswanatha Sastri, J.) that the sale and the agreement to reconvey were parts of a single transaction and that the agreement to reconvey formed part of the consideration for the sale is upheld on the facts of this case. As a result, the appellants' contention that the agreement was unenforceable for lack of family necessity or benefit fails, and the appeal is dismissed.
Scope and precedent: The Court emphasized that the Privy Council decision in Veeraswami v. Narayya concerned only the applicability of S. 92 of the Evidence Act and that its description of the sale and reconvey as separate transactions was tied to that evidentiary question; the Court did not treat Veeraswami as resolving the present substantive question and did not adopt it as a controlling authority to require separability for all purposes. The opinion does not proclaim a broad new rule beyond the application to the present facts, and it expressly does not follow parts of Govinda Menon, J.'s earlier observations with which the Court was unable to concur.
No broader doctrinal change is announced in this opinion; the Court's decision is based on the factual finding that the reconveyance agreement formed part of the bargain and therefore could be binding on the family without separate proof of family necessity or benefit.

This summary is restricted to and derived solely from the information present in the provided opinion. No information has been inferred or added beyond the text of that opinion.

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G. Srinivasulu Naidu And Others v. Raju Naicker And Others.

(Delivered by the Chief Justice.)

To decide the only question which has been placed before us in this Letters Patent Appeal against the judgment of Viswanatha Sastri, J. in A.S No. 287 of 1947, it is sufficient to state the following facts. The defendants are the appellants. The suit was for specific performance of an agreement to reconvey the suit properties. Plaintiffs 1 to 3 are brothers, and plaintiffs 4 to 6 are their sons. Defendants 1 and 2 are brothers and defendants 3 and A their eons. By a deed of sale dated 9th May 1937 (Ex. D. 18) executed by the plaintiffs, the suit properties were conveyed to the second defendant. On 14th May 1937, the first defendant executed in favour of plaintiffs 1 to 3 an agreement of reconveyance (Ex. P. 1), which is the basis of the present suit for specific performance. The material part of this agreement runs as follows:

“I have obtained a sale deed for R. 5000 from you in respect of the under mentioned family properties belonging to you for bar family in the name of my undivided younger brother Kesavalu Naidu on the aforesaid date. If as requested by you, you shall pay the sale amount at any time within a period of tea years from now, we shall receive the said amount, and myself and my younger brother Kesavalu Naidu mentioned above shall reconvey the said properties to yon absolutely by means of a sale deed after receiving the above mentioned amount.”

It was further recited that the first defendant as family manager had full authority to execute the agreement. Before us, it was not disputed that the suit properties were purchased under Ex. D.18 for the joint family of the defendants, though the sale deed itself was taken in the name of the second defendant. It was also admitted that the first defendant in executing Ex. P. 1 was doing so on behalf of the family as its manager. On these facts, it was contended for the defendants-appellants in the trial Court and before Viswanatha Sastri, J. and the contention was repeated before us, that the agreement for reconveyance executed by the first defendant was not binding on the other numbers of the family, as it was not justified by any family necessity or benefit. The basis of the contention was that the sale and the agreement to reconvey ware two independent transactions and as the properties were purchased for the benefit of the family of the defendants, any sale of joint family property by its manager could be binding only if it was for necessity or benefit. The learned Judge, Viswanatha Sastri, J. held that the sale and the agreement to reconvey should be considered as parts of the same transaction and they were both executed in fulfilment of a single contract. He found that the agreement to reconvey was a part of the consideration for the sale. In such cases, it would be impossible to prove necessity or benefit for the agreement to reconvey, standing by itself, and the agreement to reconvey need not be justified by family necessity or benefit any more than the sale to the family. On his reasoning, he rejected the contention of the defendants. An unreported decision of Govinda Menon, J, in S.A No. 851 of 1946 was relied upon, but the learned Judge found himself unable to follow it.

Learned Counsel for appellants again pressed before us the contention that the sale and the agreement to reconvey were two different transactions to be judged separately. In support of this contention, he relied strongly on the decision of the Privy Council in Veeraswami v. Narayya(1) which had also been relied upon by Govinda Menon, J. It is necessary, therefore, to deal with that case at some length. In that case, the appellant and his father sold certain properties to the respondents for Rs. 6,000 and a sale deed was executed on 30th November 1932. In 1940 the appellant, alleging that when the properties were sold it was verbally agreed that they should be reconveyed if the purchase price was repaid within a period of five years, which was later extended for a further three years, instituted a suit against the respondents for specific performance of the alleged oral agreement to reconvey. The evidence established that there was such an oral agreement. It was, however, contended that the appellant was precluded by S. 92 of the Evidence Act from adducing evidence of such an agreement. Their Lordships of the judicial Committee overruled that contention on the ground that S. 92 of the Evidence Act did not preclude evidence of such an agreement because the agreement did not contradict, vary or subtract from the terms of the sale deed within the meaning of that section; nor did the agreement add to the terms of the sale deed. The decision was therefore, on the applicability of S. 92 of the Evidence Act to the facts before them. In dealing with the objection based on that section, their Lordships observed that the sale and agreement to reconvey should be treated as separate and independent transactions, that is to say, that the terms of each should be taken separately. The following observations of their Lordships only lead on to the discussion of the only question which fell for decision:

“In their Lordships' opinion, the correct way of stating the position is to say that the agreement reached covered several matters but that the intention was that each of these should be effected as a separate and independent transaction. There was to be an outright sale and that, upon the happening of a certain event, was to be followed by a reconveyance of what had been sold. The second transaction, by its very nature, premised the previous completion of the first. Both, it is true, may be taken as arranged at the same time and agreement upon one part of the bargain may well have promoted agreement as to the rest, but such considerations do not necessarily affect the final result of the bargaining. The determining factor lies in the ultimate shape of the agreement rather than in the process by which it is reached.”

Immediately after these observations, their Lordships proceed to say:

“Such being the character of the agreement in question, their Lordships find it impossible to hold that it contradicted, varied or subtracted from the terms of the sale deed. On the contrary, it left those terms and the interest passing thereunder to the purchaser entirely unaffected. Can it then be said to have added to the terms of the sale deed? The words ‘adding to’ which are part of S. 92, must receive their due weight, but in the opinion of their Lordships they do not suffice to exclude the oral agreement relied upon by the appellants.”

We fail to see how this decision has any bearing, direct or indirect, on the question to be decided by us in this case, namely, whether an agreement to reconvey, which was a part of the arrangement under which the tale deed was executed, should be treated as So distinct and separate from the sale itself as to require necessary or benefit to support it.

We shall now refer to the judgment of Govinda Menon, J., in S.A No. 831 of 1946. The decision itself does not assist the appellants. The itself defendant in the case before him, who was the manager of a joint family, purchased with funds belonging to the joint family certain property, by a sale deed dated 17th May 1939. On the same day, he executed in favour of the vendor an agreement to reconvey the property for the same consideration, in case demand was made within four years from the date. The vendor brought a suit for specific performance of this agreement of reconveyance. The suit was resisted inter alia on the ground that it would not be binding on the other members of the family as it could not be supported by necessity or benefit to the family. The Courts below found that both the sale and the agreement to reconvey were parts of the same transaction, and, there, fore, the agreement to reconvey was binding on the other members of the family. The learned Judge relied on the decision of the Privy Council in Veeraswami v. Narayya, above mentioned, and held that the two should be treated as different transactions and each had to be considered in its own setting. He then proceeded to say:

“It might be that part of the bargaining by which the purchase under Ex. D-1 was effected might be the agreement to reconvey, in which case it could not be said that by Ex. P.1 no benefit was conferred upon the joint family. This is a matter which depends entirely upon the evidence adduced in the case.”

He, therefore, remanded the suit to the Court of first instance for fresh disposal. It is clear that the learned Judge was inclined to hold that if the agreement to reconvey was part of the bargaining which culminated in the sale, then the agreement to reconvey could be supported on the ground of benefit to the family. This view does not certainly help the appellants in view of the evidence in this case, which shows that the agreement to reconvey was part of the bargain. There are, however; certain observations in the course of his judgment with which we are unable to concur, with all deference to the learned Judge. These observations relate to the effect of the Privy Council decision in Veeraswami v. Natayya. As we have explained above, the only question of law before their Lordships of the Judicial Committee was whether the oral agreement to reconvey could be availed of having regard to S. 92 of the Evidence Act. Their Lordships set out the question thus:

“On the wording of this enactment (S. 92) the question under discussion comes to this—does ‘the oral agreement as to reconveyance contradict, vary, add to or subtract from the terms of the sale deed?”

All that their Lordships decided was that the agreement did not offend the provision of S. 92. It is in this context that they described the sale and the agreement to reconvey as being separate and independent transactions. Govinda Menon, J. thought that the decision compelled him to hold that this should be the approach for every purpose. But, as we have said, these observations did not materially affect the ultimate decision of the learned Judge, because he was of opinion that if the agreement to reconvey was part of the bargaining by which the purchase was made, then the agreement would be binding on the family. The appellants' contention, therefore, fails.

Learned Counsel for the appellants raised another contention, namely, that if the agreement to reconvey executed in favour of plaintiffs 1 to 3 should be treated as an agreement executed in favour of all the members of the family, then it is unenforceable, because there could be no mutuality as three of the members of the plaintiffs' family were minors on the date of the agreement. This contention was admittedly not raised at any time before, and we see no reason why the appellants should be permitted to raise a new point at this late stage.

The Letters Patent Appeal is dismissed with costs.

V.C.S

G. Srinivasulu Naidu And Others v. Raju Naicker And Others.

Structured Summary of the Opinion (Delivered by the Chief Justice)

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellants' Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

G. Srinivasulu Naidu And Others v. Raju Naicker And Others.

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