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Nur Mahomed Peerbhoy And Another v. Dinshaw Hormasji Motiwalla And Another

Privy Council
Nov 21, 1922
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Summary of the Opinion delivered by Lord Dunedin

Factual and Procedural Background

This suit was brought on 11 August 1913 by Dinshaw Hormasji Motiwalla against Adam Haji Jacob (alias Adam Abdulla Patel), Nur Mahomed Purhai Damji (defendant 2) and Waman Ganesh Desai (defendant 3) for specific performance under the Specific Relief Act, 1877, of a contract of sale dated 17 July 1912.

The contract concerned a defined parcel of land (identified in the opinion by Municipal No. 139 and Collector's Survey No. 17, Pot Nos. 2, 3, 4 and 5) for a price of Rs. 15,600, of which Rs. 1,000 was paid as earnest money by Motiwalla. Completion was to take place within two months; the contract was registered on 22 July 1912.

The relief sought was a decree compelling Adam Haji Jacob (and, in relation to Municipal No. 139, defendants 2 and 3) to execute sale deeds in favour of Motiwalla. Adam admitted the contract and the receipt of Rs. 1,000, and said he was ready to convey the Collector's Survey No. 17 plots but unable to convey Municipal No. 139 because that property had been sold in execution on 25 April 1913 to defendant 2.

Defendants 2 and 3 claimed title under the Court-sale of 25 April 1913 and pleaded the contract of 17 July 1912 was void as against them by reason of Section 64 of the Code of Civil Procedure, 1908. The plaintiff replied that the Court-sale on its face included only Municipal No. 139 and did not include Collector's Survey No. 17, Pot Nos. 2–5.

The subordinate Court dismissed the suit; the Court of Appeal reversed and granted specific performance. The present opinion (Privy Council) addresses the consolidated appeals from that judgment.

Legal Issues Presented

  1. Whether Section 64 of the Code of Civil Procedure, 1908 (and its explanation regarding claims enforceable under attachment and rateable distribution) rendered the contract of 17 July 1912 void as against creditors and purchasers in execution.
  2. Whether Section 40 of the Transfer of Property Act applies so as to enable the plaintiff to enforce a contract to sell against a purchaser at a judicial sale who had notice of the contract.
  3. Whether the purchasers at the judicial sale (defendants 2 and 3) had such notice of the antecedent contract as would bind them under Section 40.
  4. Whether the Court-sale of 25 April 1913 included the Collector's Survey No. 17, Pot Nos. 2, 3, 4 and 5 (i.e., whether those plots were within the title acquired by defendants 2 and 3).

Arguments of the Parties

Plaintiff (Dinshaw Hormasji Motiwalla)

  • Plaintiff relied on the written contract of 17 July 1912 and sought specific performance in respect of both Municipal No. 139 and Collector's Survey No. 17 (Pot Nos. 2–5).
  • Plaintiff asserted that only Municipal No. 139 was included in the Court-sale of 25 April 1913; therefore, defendants 2 and 3 could not rely on that sale to defeat the plaintiff's claim in respect of the Collector's Survey No. 17 plots.
  • Notice of the antecedent contract was said to have been given at the judicial sale by Mr. Kirtikar, a pleader acting for the plaintiff (he read the agreement and made a vernacular statement that his client would claim the property and that the plaintiff would bid).

Defendant 1 (Adam Haji Jacob)

  • Admitted the contract and the receipt of Rs. 1,000 but pleaded inability to convey Municipal No. 139 because it had been sold in execution to defendant 2 on 25 April 1913.

Defendants 2 and 3 (Purchasers at Court-sale)

  • Asserted title under the Court-sale of 25 April 1913, purchased by defendant 2 for Rs. 11,500.
  • Pleading: the contract of 17 July 1912 was void under Section 64, Code of Civil Procedure, 1908, as against claims enforceable under attachment and rateable distribution.
  • Denied the assertions that unequivocal notice of the prior contract was given at the sale.

Lower Courts' Positions (as argued in the opinion)

  • Subordinate Judge: Relied on a precedent (Bibi Mian Khan v. Gulab Chand Ram Chand) and held that Section 64 (with its explanation) made transfers following the contract void as against persons entitled to rateable distribution; thus the plaintiff's claim for specific performance was unavailable.
  • Court of Appeal: Held Section 64 did not apply because the July 1912 instrument was merely a contract to sell (not a transfer or delivery), and instead Section 40 of the Transfer of Property Act applied to bind purchasers with notice; the Court of Appeal concluded the buyer at the judicial sale had notice and granted specific performance.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Bibi Mian Khan v. Gulab Chand Ram Chand (1911) 13 BLR 1189; 12 IC 923 Authority relied upon to the effect that Section 64 (with its explanation) renders transfers following a contract void as against claimants entitled to rateable distribution under an attachment. The Subordinate Judge relied on this case to hold the plaintiff's contract was made unavailable as against creditors entitled to rateable distribution. The Privy Council noted this reliance but did not finally decide the point on that precedent because it disposed of the case on another ground.
Mina Kumari v. Bijoy Singh Dudhuria AIR 1916 PC 238 (and associated reports) Potentially relevant authority on the effect of attachment-related provisions and antecedent contractual rights; raised for consideration whether it bears on the present question. The Privy Council observed that it would have to consider whether what was said in Mina Kumari had bearing on the present case (and whether differences in statutory phrasing affect applicability), but the Privy Council did not decide this issue because it found the plaintiff's case failed for want of sufficient notice.

Court's Reasoning and Analysis

The Privy Council recognised that the primary contested questions—whether Section 64 of the Code of Civil Procedure, 1908 operated to void the contract as against claimants entitled to rateable distribution, and whether authorities such as Mina Kumari were applicable—were matters of considerable difficulty that might require fuller argument. In particular, the Council noted:

  • Section 64, with its explanation, declares private transfers or payments contrary to an attachment to be void as against claims enforceable under the attachment, which include claims for rateable distribution under Section 73.
  • There is a need to consider whether previous decisions under older statutory language (for example decisions under Section 276 of the 1882 Code) apply to the differently worded Section 64 of the 1908 Code.

However, the Court declined to resolve those contested points because it found the plaintiff's case failed on a separate and dispositive ground: even assuming Section 64 did not invalidate the contract and that Section 40 of the Transfer of Property Act governs the rights of a person "entitled to the benefit of an obligation arising out of contract and annexed to the ownership of immovable property", the plaintiff could only succeed against a purchaser at judicial sale if that purchaser bought with notice of the contract.

On the factual question of notice, the Court examined the evidence concerning the notification alleged to have been given at the judicial sale:

  • The claimed notice was given by Mr. Kirtikar, a pleader for the plaintiff, who arrived at the sale at about 4 p.m., whereas the sale had begun before 3 p.m.
  • Kirtikar stated that he read the agreement (in English) and made a general statement in the vernacular that his client would claim the property and that the plaintiff would bid.
  • Defendants' witnesses denied Kirtikar's account.
  • Even accepting Kirtikar's account at its best, the Privy Council considered it "far short of such unequivocal notice as ought, ... to have been given in the case of a Court-sale." The Court emphasised that judicial sales would lose their security if vague references to antecedent contracts could be held to invalidate a buyer's title.

The Council also analysed the executed sale documents and the schedules of the attachments: while the prohibitory order of 19 August 1911 described both Municipal No. 139 and the Survey No. 17 plots (Pot Nos. 2–5), the schedule to the attachment of 10 August 1912 specified the property as Municipal No. 139 and reproduced the earlier description without specifying boundaries, and on that basis the Court concluded the sale of 25 April 1913 could not have included Survey No. 17, Pots 2–5.

Combining these conclusions, the Privy Council held that:

  • Notice to the purchaser at the judicial sale was insufficient to bind that purchaser under Section 40 of the Transfer of Property Act.
  • The purchasers (appellants) had not purchased plots Pot Nos. 2, 3, 4 and 5 and therefore lacked locus standi to resist the plaintiff's claim in respect of those plots.
  • The purchasers had established their right to retain Municipal No. 139, acquired at the judicial sale.

Holding and Implications

APPEAL PARTLY ALLOWED.

Direct consequences and orders made by the Privy Council (as stated in the opinion):

  • The decree for specific performance as granted by the Court of Appeal cannot stand in its entirety because the purchasers are entitled to retain Municipal No. 139; accordingly the appeal is allowed in part.
  • The appellants (purchasers at the judicial sale) did not acquire plots Collector's Survey No. 17, Pot Numbers 2, 3, 4 and 5 and therefore have no locus to resist the plaintiff's claim in respect of those plots; the plaintiff has liberty to apply in the High Court, if so advised, for a decree of specific performance in respect of plots Pot Nos. 2–5 upon such terms as the High Court may consider just.
  • The Subordinate Judge's order that Adam Haji Jacob should repay Rs. 1,000 to Motiwalla was to stand.
  • The appeal from the decree of the High Court in Adam Jacob's appeal to the High Court should be dismissed; the appellants will have the costs of the consolidated appeals.

The opinion does not purport to lay down a new general precedent on the broader statutory interaction between Section 64 (CPC) and antecedent contracts; the Privy Council expressly declined to decide several difficult statutory questions (including the bearing of prior authorities such as Mina Kumari) because the case was resolved on the narrower ground of inadequate notice to the judicial purchaser and on the proper scope of the Court-sale.

Outcome stated in the opinion: Appeal partly allowed.

Show all summary ...

Lord Dunedin :-

The suit in which these two consolidated appeals have arisen was brought in the Court of the First Class Subordinate Judge of Thana on the 11th August, 1913, by Dinshaw Hormasji Motiwalla against Adam Haji Jacob alias Adam Abdulla Patel, Nur Mahomed Purhai Damji, who is defendant 2, and Waman Ganesh Desai, the defendant 3, to obtain under the Specific Relief Act, 1877, a decree for the specific performance of a contract of sale of the 17th July, 1912, by which it was agreed that Adam Haji Jacob should sell and convey to Motiwalla, and Motiwalla should purchase :-

"All that piece or parcel of land with the bungalow, trees, plants, shrubs, etc., and a well standing thereon, situate lying and being at Hill Road, Bandra, in the Thana District, Sub-District Bandra, and measuring about 5,000 square yards, bearing Municipal No. 139 and City Survey No. 136, and bearing Collector's Survey No. 17, Pot Nos. 2, 3, 4 and 5 and measuring 25 Gunthas, and bounded on the East by property of Rustomji Muncherji Jasawala, on the West by property of Burjorji Ghamat, on the South by Government Hill Road, and on the North by the land of Mr. Dias, and which said premises are particularly described in the title-deed now in the possession of the mortgagees Sorabshah and Pirojsha Framji Bandrawala"
for the price of Rs. 15,600, of which Rs. 1,000 were in compliance with the contract, paid as earnest-money by Motiwalla to Adam Haji Jacob on the execution of the contract. The purchase was to be completed within two months from the 17th July, 1912. The contract was registered by the Sub-Registrar of Bandra on the 22nd July, 1912.

The only relief prayed for, to which it is necessary to refer, may, in effect, be briefly stated as follows :-

That it should be decreed that Adam Haji Jacob, and the defendants 2 and 3, should execute a deed of sale in favour of Motiwalla, of the property described as bearing Municipal Number 139, and that Adam Haji Jacob should execute a deed of sale, in favour of Motiwalla, of the property described as bearing Collector's Survey Number 17, Pot Numbers 2, 3, 4, and 5. Adam Haji Jacob, by his written statement, admitted that the contract of the 17th July, 1912, was made and that he had received as earnest-money Rs. 1,000, and pleaded, in effect, that he was ready and willing to convey to Motiwalla the property bearing Collector's Number 17, Pot Numbers 2, 3, 4 and 5, but that he was unable to convey to Motiwalla the property bearing Municipal Number 139, as it had been sold on the 25th April, 1913, to the defendant 2, in execution of a decree against him (Adam Haji Jacob).

The defendants 2 and 3 who claimed title under the Court-sale of the 25th April, 1913, separately filed written statements, in which they pleaded that the contract of the 17th July, 1912, was void under Section 64 of the Code of Civil Procedure, 1908. They also pleaded that all the property in respect of which specific performance was claimed by Motiwalla, was purchased at the Court-sale of the 25th April, 1913, by the defendant 2, and they further pleaded several other matters, which, in the view that their Lordships take of the case, need not be considered by them.

To the allegation that the whole property was included in the Court-sale the plaintiff replied that on the face of the sale only property bearing Municipal Number 139 was included.

The history of the various executions as regards the lands in question is as given by the learned Judges of the Court of Appeal as follows :-

"On the 19th of August, 1911, an attachment was levied by a judgment-creditor under Darkhast No. 32 of 1911, and in June, 1912, the property was put up for sale after being attached. On the 29th of August, 1912, the judgment-debtor, that is, the first defendant, paid in the whole of the decretal amount and costs, and therefore the sale was not confirmed, and the Darkhast proceedings were struck off on the 1st of October, 1912. Before the payment of the decretal amount, namely, on the 9th of August, 1912, another Darkhast was taken out by another decree-holder, being Darkhast No. 120 of 1912, and on the 10th of August the property was attached under that Darkhast. On the 12th of August the new decree holder applied for rateable distribution of the proceeds of sale of the property. That application was refused on the ground that the money which had then been lodged in Court was not money realised in execution, but paid him in order to avoid the completion of execution, and there were, therefore, no assets rateably distributable. His application having been refused, the second decree-holder applied for sale of the attached property, which was accordingly sold on the 25th of April, 1913. It was purchased by the second defendant for a sum of Rs. 11,500. On payment of the purchase-money by the second defendant, it became distributable under the provisions of Section 73 of the Code, and would be assets which those entitled to rateable distribution would look to, so far as there had been execution under the attachment at that time subsisting.

The description of the property as given in the prohibitory order of the 19th August, 1911, was as follows :-

Creditors of Adam Haji Jacob had obtained against him a money decree, and in execution of that decree they, on the 19th August, 1911, obtained from the Court executing that decree a prohibitory order and attachment of the following immoveable property of Adam Haji Jacob :-

"1. One tiled house on the Hill Road at Kasha Bandra in Taluka Salsette, District Thana, having four slopes and walls of earth and stones (together with) the ground and the tenement, the front yard and the rear yard and the out-house and (together with) the room for preparing food and the kitchen and a hut of i.e., (thatched with) palm-leaves for Mali (gardner) and (together with) one other small stable (roofed) with Mangalore tiles and a water well and a privy and a pipe (all) the appurtenances thereto. This house bears Municipal No. 139. (The house) including the fruit-bearing and flower-bearing trees and shrubs standing in the compound of this house and together with the fences and hedges. The four boundaries hereof are as follows :- The same is bounded on the east partly by a stone wall and partly by a Mendi hedge, and beyond that there is the property of Jehangir Rustomji Jasawala; on the west by the stone wall belonging to the defendant himself, and beyond that there is the property of Burjorji Navroji Ghamat; on the south by the public road and on the north by the following Survey Nos. in the Saja of Kasba Bandra :-

Survey No. Pot No. Falni No. Land. Assessment.

Acres. Gunthas. Rs. A. p.

17 2 ......... 0 4 100

17 3 .......... 0 4 100

17 4 .......... 0 12 300

17 5 ........... 0 4 100."

Now the schedule of the prohibitory order of the attachment of the 10th August, 1912, specifies the property as being Municipal Number 139, and gives first the description of the property as given in the order of the 19th August, 1911, without specifying the boundaries. It is clear, therefore, that the sale of the 25th April, 1913, which forms the title of defendants 2 and 3, cannot include the land described as Survey No. 17, Pot Numbers 2, 3, 4, and 5.

The Subordinate Judge dismissed the suit upon the ground that the contract of which the plaintiff asks specific performance was made unavailable in respect of Section 64 of the Code of Civil Procedure, 1908. That section is as follows :-

"Where an attachment has been made, any private transfer or delivery of the property attached or of any interest therein and any payment to the judgment-debtor of any debt dividend or other monies contrary to such attachment, shall be void as against all claims enforceable under the attachment."

"Explanation :- For the purposes of the section, claims enforceable under an attachment include claims for the rateable distribution of assets."

With Section 64 should be read S. 73 of that Code, which, so far as it is material in considering the facts of this case, is as follows :-

"(1) :- Where assets are held by a Court and more persons than one have, before the receipt of such assets made application to the Court for the execution of decrees for the payment of money passed against the same judgment-debtor and have not obtained satisfaction thereof, the assets after deducting the cost of realisation, shall be rateably distributed among all such persons."

The Court of Appeal reversed this judgment and gave decree for specific performance.

The difference of opinion lay in this. The learned Subordinate Judge, relying on a judgment reported in Bibi Mian Khan v. Gulab Chand Ram Chand (1911) 13 BLR 1189 : 12 IC 923 held that as Section 64 with its explanation made any transfer to follow on the contract void in a question with persons having a claim for rateable distribution, and as the executing creditor under the attachment of the 9th August, 1912 had applied for rateable distribution under the attachment of the 19th August, 1911, before the proceedings under that attachment were finally closed, that kept, so to speak, any transfer in respect of the contract of July, 1912, void until it was made finally void against him by the prohibitory order under his own attachment of the 9th August, 1912.

The Court of appeal held that as the contract of July, 1912, was only a contract to sell, and not a transfer with delivery of any property or interest, Section 64 had no application

They then held that Section 40 of the Transfer of Property Act directly applied, and that in the terms of that section the plaintiff was a person entitled to the benefit of an obligation arising out of contract and annexed to the ownership of immoveable property, and as such entitled to enforce it against a transferee with notice and they held that the buyers at the Court-sale had notice of the contract.

The point raised by the learned Judge seems to their Lordships to be one of considerable difficulty, and not as easily to be disposed of as was done by the learned Judges of the Court of Appeal. In particular, it would have to be considered whether what was said in the case of Mina Kumari v. Bijoy Singh Dudhuria AIR 1916 PC 238:44 Cal 662 : 44 IA 72 : 1 PLW 425 : (1917) MWN 473 : 15 ALJ 382 : 25 CLJ 508 : 5 LW 711 : 21 CWN 585 : 32 MLJ 425 : 19 Bom LR 424 (P C) has any bearing on the question, or whether that case is rendered inapplicable owing to the difference of phraseology of Section 64 of the Civil Procedure Code of 1908 from Section 276 of the Code of Civil Procedure of 1882, under which that case was determined. It would also have to be considered whether at any given moment the plaintiff was able to get specific performance.

Their Lordships, if it had been necessary to determine these questions, would have required further argument. But they do not now think it necessary to decide the question, because they think the plaintiff's case fails on another ground.

Assuming that Section 64 has no effect, and that Section 40 of the Transfer of Property Act has full scope, it is only if the purchaser at the Judicial Sale bought with notice of the contract that it could be enforced against him.

Now on this point the evidence seems to their Lordships quite unsatisfactory. Judicial sales would be robbed of all their security if vague references to antecedent contracts could be held to invalidate the buyer's title. The notice given here is said to have been given by a Mr. Kirtikar, a pleader acting on behalf of the plaintift. But Mr. Kirtikar did not arrive at the sale until 4 p. m. the sale having begun before 3 p. m. He says he read the agreement, which was in English, but that he made a general statement in the vernacular that his client would claim on the property; further that the plaintiff himself would bid at the sale. Kirtikar's statements are denied by the defendants' witnesses. But taking them at their best, they seem to their Lordships far short of such unequivocal notice as ought, they think, to have been given in the case of a Court-sale.

Their Lordships think that the plaintiff fails in his ease. The result is that, inasmuch as their Lordships have already held that the appellants have not purchased plots Pot Numbers 2, 3, 4, and 5, and have no locus standi to resist the plaintiff's claim in respect of those plots, but that, on the other hand, they have made out their claim to retain plot Municipal Number 139, the decree for specific performance cannot stand, and the appeal must be allowed; but the first respondent should have liberty to apply in the High Court, if so advised, to have a decree for specific performance in respect of plots Pot Numbers 2, 3, 4, and 5 upon such terms as to the Court may seem just. The order of the Subordinate Judge that Adam Haji Jacob should repay Motiwalla Rs.1,000 should stand. The appeal from the decree of the High Court in Adam Jacob's appeal to the High Court should be dismissed. The appellants will have the costs of the consolidated appeals. Their Lordships will humbly advise His Majesty accordingly.

Appeal partly allowed.