By Exs. A and C, dated 29-4-1939 and 9-5-1939 respectively, the owners of a certain property agreed to convey it to the appellant, and part of the consideration was paid. On 3rd June 1939 however, the owners conveyed the property by Ex. V to the defendant. The findings of fact of the Courts below are that subsequent to the execution of the sale deed, Ex. V, but prior to the date of registration, 12th July, 1939, the defendant had notice of the prior agreement in favour of the appellant. The question is whether in the circumstances the appellant (plaintiff) is entitled to enforce the contract of sale against either the original owners or the defendant. Both the lower Courts held that he could not.
It is complained against the judgments of the Courts below that the trial Court wrongly threw the onus on the plaintiff. It is, however, conceded that the learned District Judge in appeal held that the burden lay on the defendant of proving that he was a transferee for value who had paid his money in good faith and without notice of the original contract. The appellant, however, complains that although the learned District Judge rightly placed the onus on the defendant, he closely followed the reasoning of the trial Court and went as far as to include in his own judgment an extensive passage from the judgment of the first Court. That may be so; but I do not think the learned District Judge ever forgot to exercise his independent judgment or lost sight of the fact that the onus lay upon the defendant. It is always very difficult and at times well nigh impossible, to prove a negative. So the learned Judge has paid more attention to the positive acts of the plaintiff than to the bare denial of the defendant.
No authority has been cited in support of the appellant's contention that if the vendee had notice of the agreement before the registration was completed the plaintiff is entitled to enforce his agreement against the transferee. In order that S. 27 of the Specific Relief Act may be invoked notice has to be given before the money is paid. That is clearly the view taken in Himatlal Motilal v. Vasudev Ganesh (1), where the question arose whether the person in whose favour an agreement had been executed was entitled to enforce his agreement against the transferee, where the transferee had paid a part of the consideration and not the whole. The learned Judges held that the law in India was the same as in England on this point and that he could do so provided that the whole of the consideration had not been paid. The learned Advocate for the appellant, placing reliance on the words actually used by the learned Judges in that case, argues that the defendant cannot avail himself of S. 27, because a part of the consideration was an adjustment of an amount due under a prior mortgage and was not therefore paid in cash. In Gudur Ranga Reddi v. Gundala Pitchi Reddi (2) the learned Judges held that where the sale consideration was an adjustment of a prior debt, the transferee was not protected by S. 27 of the Specific Relief Act. They said,
“We are of opinion that the recital in Ex. II does not operate as an adjustment so as to put the appellant in the same position as a man who had “paid his money in good faith” within the meaning of S. 27 of the Specific Relief Act.”
This section protects a transferee who has “paid his money.” If he has not paid any money, then it is rather difficult to literally apply this section. If he has not paid the whole of the consideration, as in Himatlal Motilal v. Vasudev Ganesh , it again cannot be said that he has paid his money; for he has paid only a part of it. Where, however, a portion of the consideration was in adjustment of an outstanding debt and the remainder was paid in cash, the transferee thereby paid to the transferor all that had to be paid under the contract and can therefore literally be said to have “paid his money.” The facts of this case therefore attract S. 27 and render the suit contract unenforceable against the respondents.
The appeal fails and is dismissed with costs.
N.R.R