Seth Amba Lal v. Harish Chander

Kapur, J.:— This is a defendant's appeal against a judgment and decree of Mr. Bahal Singh, Sub Judge, 1st Class, Delhi, dated the 12th April, 1950 decreeing the plaintiffs' suit for damages for breach of contract for sale of property situate in Karol Bagh, Delhi.

2. The defendants Amba Lal and Sri Narain owned 284 square yards of land bearing plot No. 38 in block No. 13 in Karol Bagh. On the 4th of December, 1946 Amba Lal entered into an agreement of sale of this plot of land at Rs. 35 per square yard. Rupees 1,000 were paid as earnest money and the balance was to be paid within one month. A document Exhibit P. 2 (or D.7) was executed to evidence this agreement. The agreement provided that Wazir Chand the ostensible purchaser was to remit within one month the balance of the price, Rs. 8,940 and also a draft of the power-of-attorney which was to be executed in favour of Wazir Ghand by Amba Lal who purported to enter into the agreement on behalf of himself as well as Shri Narain his co-owner. On the 6th of December 1946 Amba Lal wrote to Wazir Chand asking for the money as well as the draft of the power-of attorney and on the 11th December, 1946 Wazir Cuaud wrote to the seller. Amba Lal, that the money will be sent by him by the 22nd December, 1946 and this letter, which is Exhibit D.3 and is at page 58, is sought to be used as substituted contract in place of the old contract. Wazir Chand sent a telegram dated the 2nd January, 1947, Exhibit D.4 (at page 66) to Amba Lal stating that he would be arriving at Ajmer where the vendors reside on the 4th January to complete the transaction and he has stated on oath that he did go to Ajmer and this is also supported by a latter, Exhibit D.5 dated the 4th January, 1947 in which Wazir Chand writes to Amba Lal while he (Wazir Chand) was in Ajmer that he was sending the draft of the money dated the 2nd January, 1947. On the 6th January, 1947 he wrote another letter to Amba Lal stating that the money draft was being sent and asking for the power-of-attorney. It was accompanied by a draft of a receipt which was to be Executed by Amba Lal and a draft of the power-of-attorney. There is a document on the record Exhibit D.1, on a stamped paper purchased on the 4th of January 1947 on which is typed a draft of a power-of attorney.

3. On the 20th May, 1947 Mr. Hem Chandra Advocate, gave a notice to Amba Lal calling upon him to complete the sale within a week otherwise he will be held liable for costs. In this document the name of Harish Chandar, plaintiff No. 1, was also disclosed. As nothing was done, a suit was brought for specific performance of the contract and in the alternative for damages and this was filed on the 25th July, 1947.

4. Amba Lal's defence was that Wazir Chand was the broker and could not sue for specific performance, that the defendants were always ready and willing to perform the contract but the plaintiffs were not and that the contract was only with Wazir Chand and that there was no contract with plaintiff No. 1. The defence of Shri Narain was that he never authorised any one to enter into any contract and that plea of Shri Narain has prevailed, and as there is no appeal against this part of the decree there is nothing more to be said about that.

5. The Court has found that breach was by the defendants, that Shri Narain was not liable as he did not enter into the contract nor did he authorise Amba Lal, that Wazir Chand could sue as there was no disclosed principal, that plaintiffs were ready and willing to perform their part of the contract and defendants were not and that in the circumstances of this case there could be no decree for specific performance, but he decreed damages at the rate of Rs. 10 per square yard and interest on the amount which was kept by the defendants from January 1947 to the 18th July, 1947, i.e, Rs. 270/-. Amba Lal defendant has come up to this Court in appeal.

6. Mr. Nanak Chand has firstly submitted that time was of the essence of the contract in this case and he relied on the circumstances that the price of the land was rising but that cannot be a ground for holding that time was of the essence of the contract. Ordinarly in all contracts for sale of immovable property time is not of the essence of contract unless circumstances show otherwise. It was held in Madan Mohan…(Plaintiff) v. Jawala Parshad…(Defendant) . . 1950 52 P.L.R 201. where Jamshed Khodaram Irani v. Burjorji Dhunjibhai . I.L.R 40 Bom. 289 P.C., was relied upon. Mr. Nanak Chand has taken us through the circumstances of this case, but I am unable to find that the circumstances are such that the essentiality of time should be introduced into the contract. In my opinion the contract was an ordinary contract for sale of land and it has not been shown that time was of the essence of the contract.

7. It was then submitted that the plaintiffs were not ready and willing to perform their part of the contract. There again I am unable to accept the contention because the plaintiffs had the money, they had sent the money and the only thing which is relied upon for this purpose is that the draft power-of-attorney had not been sent. I do not think that would make any difference even if that was established. On the other hand it appears that Wazir Chand did go to Ajmer with the money and he did not find the defendants there, and in my opinion the learned Subordinate Judge has rightly held that the breach was on the part of the defendants.

8. The next contention raised by Mr. Nanak Chand was that the plaintiffs could not bring the suit because Harish Chandra, plaintiff No. 1, was an undisclosed principal and Wazir Chand was only an agent and had no right to sue. In regard to the claim for recovery of the amount paid as earnest money even an undisclosed principal can sue as was held in The Duke of Norfolk v. Worthy . 10 R.R 749., and the law on this has been stated in Bowstead's Law of Agency at page 194 in the following words:—

“An agent entered into a contract in his own name for the purchase of property, and paid a deposit. Held, that on the default of the vendor, the principal was entitled to sue in his own name for the return of the deposit”.

9. I am of the opinion that Harish Chandra was entitled to and could bring a suit for the recovery of Rs. 1,000 and that has been rightly held—

10. In regard to the suit for damages reliance is placed by the plaintiffs on section 230 of the Indian Contract Act which reads—

“230. In the absence of any contract to that effect, an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound by them.

Such a contract shall be presumed to exist in the following cases:—

(1) where the contract is made by an agent for the sale or purchase of goods for a merchant resident abroad;

(2) where the agent does not disclose the name of his principal;

(3) where the principal, though disclosed, cannot be sued”.

11. In the second portion of this section a contract is presumed to exist if the agent does not disclose the name of his principal and therefore under this section the agent of an undisclosed principal is entitled to bring a suit to personally enforce the contract entered into by him on behalf of the principal and therefore he could sue for damages also.

12. Mr. Nanak Chand submits that section 236 makes the suit of this kind incompetent. That section provides that if a person falsely contracts as an agent he is not entitled to the performance of the contract. The whole case of the defendants seems to be that the plaintiff was acting as all agent and not as a principal and therefore this section in my opinion is inapplicable. The suit, therefore, has been rightly brought.

13. As to the quantum of damages there is the evidence of witnesses to show that there was rise in prices after the contract of sale had been entered into. Kishan Chand P.W 1 stated that on the 28th May, 1948 when he entered into a contract for purchase of land the price was Rs. 60 per square yard. Mr. Guha P.W 2 who is an employee of the Tropical Insurance Company stated that the premium on the lands in this part of the town was Rs. 42/4/- per square yard on which rent had to be paid at 2½ per cent per annum. Mohammad Yusuf P.W 3 who sells on behalf of the Improvement Trust gave the price of Improvement Trust's lands, i.e, premium to be paid, to be Rs. 40 or Rs. 42 per square yard in February and March, 1947, and according to him a three-sided plot was being sold in April for Rs. 60 per square yard Raghunath Sahai P.W 4 stated that in January and February 1947 the prices were Rs. 45 per square yard, and this was brought out in cross-examination. Sital Parshad P.W 5 deposed that prices had gone up and were Rs. 60 per square yard for a three-sided plot and Rs. 45 for a two-sided plot, and this was in January 1947. Wazir Chand plaintiff as P.W 6 stated that prices had gone up and that in March 1947 the defendants wanted Rs. 5 per square yard more and were prepared to sell the property, and this was brought out in cross-examination. In this view of the evidence the learned Judge came to the conclusion that Rs. 30 per square yard would be a fair compensation and in my opinion this is fully justified by the evidence on the record.

14. Rs. 270 have been awarded as interest for the draft which was kept by the defendants from the 5th January, 1947 to the 18th July, 1947 by way of damages. That, in the circumstances of this case has been rightly awarded. In would therefore dismiss this appeal of Amba Lal and the respondents will have their costs in this Court and in the Court below.

15. Bishan Narain, J.:— I agree.

16. Appeal dismissed.