Citation Codes

Equivalent Citations

citation codes

Case Number

A.F.A.D No. 253 of 1957

Judges

V. Ramaswami, C.J
N.L Untwalia, J.

Acts

provisions of section 21(d) of the Specific Relief Act
section 21, clause (d) of the Specific Relief Act,

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Smart Summary

Structured Summary of the Provided Opinion

Factual and Procedural Background

On 3 October 1953 the parties executed an agreement by which the defendants agreed to sell certain disputed lands to the plaintiffs for Rs. 2,999. The plaintiffs paid an advance of Rs. 500 on the date of the agreement. The agreement provided that the defendants would execute and register a sale deed (Kobala) in the plaintiffs' favour within six months and that the plaintiffs would pay Rs. 648 in cash on registration; the balance of consideration would be retained to redeem a prior usufructuary mortgage (for Rs. 1,851) over the property.

The plaintiffs sued for specific performance of the contract. The defendants resisted, relying on a clause of reconveyance (an option to reconvey the property to the defendants on repayment of the consideration within three years) and asserting that the plaintiffs had not redeemed the usufructuary mortgage. The trial court (Munsif) held that the plaintiffs were not entitled to specific performance but were entitled to recovery of the Rs. 500 advance. On appeal the Subordinate Judge of Dhanbad reversed the Munsif and granted specific performance, construing the reconveyance clause as a "contract to make a contract" and therefore not enforceable. The defendants (appellants) appealed to the court that produced the present opinion.

Legal Issues Presented

Whether the reconveyance clause in the agreement of 3 October 1953 constituted a completed, enforceable contract of reconveyance (i.e., a contract of resale/reconveyance) or was merely a "contract to make a contract" (and thus unenforceable as held by the lower appellate court).
Whether, on the proper construction of the agreement, the contract of sale was revocable within the meaning of section 21(d) of the Specific Relief Act and hence not capable of specific enforcement.

Arguments of the Parties

Plaintiffs' Arguments (as reflected in the record)

The plaintiffs sought a decree for specific performance of the sale agreement dated 3 October 1953.
The Subordinate Judge accepted the plaintiffs' position, construing the reconveyance clause as merely a contract to make a further contract, and granted specific performance.

Defendant/Appellants' Arguments

The defendants argued the contract contained a clause for reconveyance and that they had agreed to refund the Rs. 500 if appropriate; they also argued the plaintiffs had not redeemed the usufructuary mortgage.
In the appeal to the present court, learned counsel for the appellants submitted that the lower appellate court's view was erroneous. On proper construction the agreement created a completed contract entitling the defendants to reconveyance on repayment within three years — i.e., that there was a completed contract for re-sale and not merely a "contract to make a contract".
Appellants' counsel also contended there were translation/wording nuances in the official English translation, but the court found the core effect of the reconveyance clause clear.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court examined the agreement (Exhibit 2) and its official translation. The relevant provisions in the agreement declared:

That the defendants agreed to sell the lands to the plaintiffs for Rs. 2,999, with Rs. 500 received as an advance.
That the defendants would execute and register a Kobala (sale deed) in favour of the plaintiffs within six months, and that the plaintiffs would pay the remaining consideration at that time.
That the lands were subject to a prior usufructuary mortgage for Rs. 1,851, which would be redeemed out of the consideration, and that the plaintiffs would pay Rs. 648 in cash on registration.
Crucially, the agreement contained an express clause that if the defendants paid back the consideration (i.e., repaid the money) within three years from the date of the agreement, the plaintiffs would reconvey the properties to the defendants — in other words, an option/term allowing reconveyance within three years.

The court considered the proper construction of this reconveyance clause. It rejected the Subordinate Judge's conclusion that the clause was merely a "contract to make a contract." Instead, the court found that the clause created a completed and operative right in the defendants to obtain reconveyance of the properties within three years upon repayment — in substance a revocable sale or an option to reconvey exercisable within a specified period.

The court then applied section 21(d) of the Specific Relief Act, which provides that certain contracts cannot be specifically enforced, including "a contract which is in its nature revocable." The court relied on the statutory text and the illustration to that clause (the partnership illustration showing why revocable contracts are unsuitable for specific performance) to conclude that the present agreement was revocable in nature because the defendants had the right within three years to cause reconveyance by repayment.

Because the sale agreement was revocable under section 21(d), the plaintiffs were not entitled to a decree for specific performance. On that basis the court concluded the Subordinate Judge had erred in granting specific performance and thus set aside that judgment.

Procedurally, the court restored the trial court's (Munsif's) earlier judgment (dated 18 May 1955) that had refused specific performance and had granted recovery of the Rs. 500 advance to the plaintiffs. The appeal was allowed, with no order as to costs.

Holding and Implications

Core Ruling: The court allowed the appeal and held that the sale agreement dated 3 October 1953 was a revocable contract within the meaning of section 21(d) of the Specific Relief Act; accordingly the plaintiffs were not entitled to specific performance.

Direct consequences:

The judgment and decree of the Subordinate Judge of Dhanbad dated 11 December 1956 (which had granted specific performance) were set aside.
The judgment and decree of the learned Munsif of Dhanbad dated 18 May 1955 (which refused specific performance and granted recovery of Rs. 500) were restored.
No order as to costs was made.

Broader implications: The opinion confines its analysis to the particular contractual provisions and the application of section 21(d) of the Specific Relief Act; it does not purport to create a new legal principle beyond applying the statutory prohibition on specifically enforcing revocable contracts.

Decision as stated in the opinion: Appeal allowed.

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Jamahir Sao And Another v. Satrughna Sonar And Another

1. In the suit out of which this appeal arises the plaintiffs alleged that on the 3rd October, 1953, there was an agreement executed by the defendants in favour of the plaintiffs for sale of the disputed lands to the plaintiffs for a sum of Rs. 2999/-. It was alleged that a sum of Rs. 500/- was Paid on the date of the agreement and the deed of sale was to be executed by the defendants within six months from the date of the agreement. It was also agreed between the parties that the plaintiff would pay a sum of Rs. 648/- in cash on the date the sale was registered, 3nd the rest of the consideration was to be paid by the plaintiffs towards the liquidation of a previous usufructuary mortgage with regard to the disputed lands.

2. The plaintiffs brought the suit for specific performance of the contract.

3. The suit was contested by the defendants on the ground that there was a clause for reconveyance in the contract of sale and the defendants had also agreed to relay the sum of Rs. 500/- to the plaintiffs. The defendants also asserted that the plaintiffs had not redeemed the usufructuary mortgage and in view of the clause for reconveyance the plaintiffs were not entitled to a decree for specific performance of the contract of sale. Upon these rival contentions of the parties the learned Munsif held that the plaintiffs were not entitled to a decree for specific performance, but they were entitled to a refund of the amount of Rs. 500/- given to the defendants.

4. The learned Munsif accordingly grafted a decree to the plaintiffs for recovery of a sum of Rs. 500/- with proportionate costs. The plaintiffs took the matter in appeal to the Subordinate Judge of Dhanbad, who reversed the decree of the learned Munsif and granted the plaintiffs a decree for specific performance of the contract of sale of the disputed properties. The view taken by the learned Subordinate Judge was that the clause for reconveyance in the contract of sale was not really an agreement to re-sell but it was in the nature of “a contract to make a contract” and, therefore, not enforceable in law.

5. In support of this appeal learned Counsel for the defendant appellants made the submission that the view taken by the lower appellate court is erroneous and on a proper construction of the contract for sale dated the 3rd October, 1953, it ought to be held that there was a completed contract for re-sale of the property within a period of three years from the 3rd October, 1953, and the learned Subordinate Judge was erroneous in holding that there was “a contract to make a contract”. In our opinion the argument put forward by learned counsel for the appellants is well founded and must be accepted as correct. The agreement dated the 3rd October, 1953, which is exhibit 2, has been officially translated, and the relevant portion of this document is to the following effect:—

“This deed of agreement is executed to the following effect that we, having purchased the lands etc. recorded under Khata No. 10 situate in mauza Bastakola from Kali Charan Das under a registered Khas Kobala deed No. 1765 of 1933 A.D of the Dhanbad Sub-Registry Office, have been possessing and occupying the same and out the same we proposed to sell the lands etc. specified in the schedule below for procuring money as we stood in the need of money for carrying on our business whereupon you agreed to purchase the said entire lands for Rs. 2993/- (Rupees two thousand nine hundred and ninety nine) and we made this agreement to sell you (the said lands) for the said consideration and out of the entire consideration as per agreement we have received from you an advance of Rs. 500/- (Rupees five hundred) and we having executed this agreement in your favour agree and stipulate that for the purpose of selling the lands etc. specified in the schedule to you, we shall execute and get registered a Kobala in your favour within six months from this day and at that time we shall take the remaining amount of consideration money. Within six months from this day we shall not be competent to make any kind of transfer such as gift, sale etc. of the said lands etc. to anybody else except yourselves or to encumber the same in any way e.g mortgage etc. Should we do so, the same shall be unacceptable and inoperative. Should we fail to execute a Kobala deed in your favour in respect of sale of the lands specified in the schedule within six months from this day, your shall be competent to get it done by taking ??? course to law and we shall not be competent to raise any objection thereto. Whenever, i.e whenever within six months from this day we shall execute such deed, you shall pay us the renaming amount of consideration in the ??? manner and we shall take the same. He it stated that we mortgaged the lands etc. specified in the schedule under a Sudbandhak ??? mortgage) to the mother of Bira Goswami for Rs. 1851/- (Rupees one thousand eight hundred and fifty one) and we have not yet been able to redeem the same. When we shall execute ??? Kobala in your favour in respect of the ??? of the lands etc. specified in the schedule to you shall deduct Rs. 1851/- out of the said consideration for redeeming the said ??? (usufructuary mortgage) and you shall pay as the remaining amount of Rs. 648/- out of the ??? deration and we shall receive the same. Be it further stated that we have agreed to receive in the aforesaid manner the consideration money as per this agreement executed by us in respect selling the lands etc. specified in the ??? to you and we shall not be competent to ??? any hitch regarding the same. Should we ??? you the said consideration i.e Rs. 2999/- in respect of the said lands etc. within three years from this day, you shall accept the same. We ??? settled the said term with you End you have agreed to it and you have said that you would execute and get registered one separate agreement in our favour to that effect.

To this effect, we, of our own accord in sound state of health and in clear conscience execute this agreement Dated the 16th ??? Assin 1360. (Thirteen hundred and sixty) B.S corresponding to 3-10-53 (the third ??? Nineteen hundred and fifty-three A.D).”

6. Learned counsel for the appellants submitted that the official translation was somewhat ??? with regard to the last paragraph ??? correct translation of the document would be that the plaintiffs agreed to execute a sale-deed and there is nothing in the document with regard to registration. This portion of the document in original in Bengali is transliterated as follows.—

“Ar ejmalir ukta mulyer taka artliat ??? taka jadi amra apnadioke adya hoite 3 (tin) ??? sarer madhye ferat di taha hoile apnara ??? ben. Airup kathabatra apnader sahit sthir ??? abong apnara tahate raji hoiachhen, abong ??? mule apnara amadigoke ek khana ??? agreement lekha pora wo sampadan mate bikrof ??? diben boliachlien”.

7. In our opinion the submission on behalf of ??? appellants appears to be correct and there is a clear clause in this agreement by which the plaintiffs agreed to reconvey the properties if the defendants repaid the consideration money within three years from the 3rd October, IS53. In one opinion there was a completed contract for ??? conveyance between the parties on the date of the agreement, that is, on the 3rd October, 1953, and the learned Subordinate Judge was erroneous in holding that the clause must be construed as merely a contract to make a further contract of reconveyance.

8. If this view is correct, it follows that the learned Subordinate Judge was erroneous in granting the plaintiffs a decree for specific performance. In our view the present case comes within the ambit of section 21, clause (d) of the Specific Relief Act, which states as follows:—

“21. The following contracts cannot be specifically enforced:—

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(d) a contract which is in its nature revocable”

9. The illustration to this clause of the section is as follows:—

“A and B contract to become partners in a certain business, the contract not specifying the duration of the proposed partnership. This contact cannot be specifically performed, for, if it were so performed, either A or B might at once dissolve the partnership”.

10. On a perusal of the agreement in this case we are of opinion that there was only a revocable contract of sale between the parties and an option was given to the defendants to get reconveyance of the properties at any time within the period of three years from the 3rd October, 1953, on repayment of consideration. It should also be noticed that in this case the defendants were given six months time from the date of the agreement to execute the sale-deed, and the option given to the defendants to get reconveyance of the properties was for a period of three years from the very date of the agreement, that is, from the 3rd October, 1953. As we have already Stated, the agreement between the parties dated the 3rd October, 1953, for sale of the properties was a revocable agreement, and in view of the provisions of section 21(d) of the Specific Relief Act the plaintiffs are not entitled to a decree for specific performance. For these reasons we set aside the judgment and decree of the learned Subordinate Judge of Dhanbad, dated the 11th December, 1956, and restore the judgment and decree of the learned Munsif of Dhanbad, dated the 18th May, 1955. We accordingly allow this appeal but there will be no order as to costs.

IE/A.

11. Appeal allowed.

Jamahir Sao And Another v. Satrughna Sonar And Another

Structured Summary of the Provided Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Plaintiffs' Arguments (as reflected in the record)

Defendant/Appellants' Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Jamahir Sao And Another v. Satrughna Sonar And Another

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