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  • Chaudhuri, J.
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Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

This suit was brought by the plaintiff for the refund of earnest money (Rs. 1,001), paid in connexion with an intended purchase of premises described in the plaint, together with interest and costs. The parties had executed an agreement for sale dated 10 November 1911 under which the sale was made subject to approval of title by the purchaser's solicitor, Mr. B. Sreemany. Clauses 3 and 4 of the agreement required the vendor to produce title deeds to the purchaser's solicitor and provided that the purchase was to be completed by 15 December 1911 provided the title was approved by the purchaser's solicitor.

Requisitions on title were made by the purchaser's solicitor. After receiving answers, by letter dated 22 December 1911 Mr. Sreemany advised his client not to accept the title and asked for return of the earnest money and payment of his costs. Specific objections included: (1) absence of proof in the partition records of payment of consideration money recited in the conveyance (a certificate apparently missing from the record searched by the purchaser's solicitor); (2) the District Judge of Lahore's order authorising the vendor to sell was, in the solicitor's view, insufficient to authorise this particular sale; and (3) discovery of a mortgage-deed executed by Radha Nath Sircar affecting the property, with inadequate explanation from the defendants as to its operation against the land in question.

Subsequent searches by the parties revealed the Registrar's Sale Book entry showing the payment recited in the conveyance, but this was found only after the purchaser's solicitor had searched and had advised rejection of the title. The defendants contended that the predecessor purchased for value without notice, which would render the mortgage inoperative as against them; however, the court observed that whether the predecessor purchased without notice was a matter of evidence.

The suit proceeded to hearing. The court reviewed the requisitions and the parties' conduct of searches and assistance in clearing title, and delivered judgment ordering repayment with interest and costs and dismissing a counter-action conditioned on this decision.

Legal Issues Presented

  1. Whether the purchaser's solicitor's rejection of title, in terms of the agreement which expressly made approval by the named solicitor a condition, was unreasonable or mala fide so as to prevent the purchaser from being excused from the contract.
  2. Whether the vendor had tendered a satisfactory title in the circumstances—specifically (a) whether the absence (in the purchaser's search) of a certificate of payment recited in the conveyance was fatal to title, (b) whether the District Judge of Lahore's order authorising sale was sufficient to authorise the sale to the plaintiff, and (c) whether the discovered mortgage by Radha Nath Sircar was satisfactorily explained so as not to affect the title.
  3. Whether the plaintiff was entitled to the refund of earnest money with interest and to costs, given the solicitor's rejection of title and the defendants' conduct in relation to providing assistance and information.

Arguments of the Parties

Plaintiff's Arguments

  • The purchaser's solicitor, after requisitions and searches, found the answers unsatisfactory and advised his client not to accept the title; he therefore demanded return of earnest money and payment of his costs.
  • Specific objections advanced by the solicitor were: (a) the conveyance in the partition records recited a certificate showing payment to the Registrar but no such certificate was found in the search; (b) the Lahore District Judge's order authorising sale was insufficient to authorise sale to the plaintiff; and (c) an outstanding mortgage by Radha Nath Sircar was discovered and had not been satisfactorily explained by the defendants.
  • The plaintiff relied upon the express contractual provision that title was subject to approval by the named solicitor, and maintained that in the circumstances rejection of title was justified.

Defendants' Arguments

  • The defendants (through their counsel) contended that the purchaser's solicitor's rejection was unreasonable and did not amount to mala fides; they challenged the sufficiency of the solicitor's objections.
  • As to the mortgage, the defendants asserted that the predecessor had purchased for value without notice, rendering the mortgage inoperative as against the vendors' title.
  • The defendants suggested that any difficulty about the Lahore District Judge's order could have been remedied or amended and also proposed a reduction in price or indemnity as means to protect the purchaser against mortgage claims.
  • In the written statement the rejection of title by the purchaser's solicitor had been characterised as mala fide and unreasonable, though in oral submissions their counsel disavowed alleging mala fides and relied instead on unreasonableness.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Bartlett v. Greene (1874) 80 L.T. 553 Holds that a stipulation for approval of title by the purchaser's solicitor is a reasonable and effective contractual stipulation; approval by solicitor has substance beyond implied legal terms. The court relied on Bartlett v. Greene to affirm that the express stipulation for solicitor's approval must be given effect and is not a mere formality.
Sreegopal Mullick v. Ram Churn Nuskar, 8 C. 856; 12 C.L.R. 152 Decision that the attorney's decision is conclusive unless there is want of good faith or objections are distinctly unreasonable. The court treated the decision as leading authority in this Court and followed its rule that solicitor's disapproval is binding unless shown to be mala fide or distinctly unreasonable.
Unison v. Buck (1877) 7 Ch. D. 683; 47 L.J. Ch. 247; 38 L.T. 56; 26 W.R. 190 Discusses the standard that disapproval must be "utterly unreasonable" (as expressed in related dicta) to be disregarded. Used by the court to underscore the threshold for disregarding a solicitor's rejection — that it must be shown to be utterly/unreasonably bad.
Hussey v. Horne Payne (1878) 8 Ch. D. 670; 47 L.J. Ch. 751; 38 L.T. 543; 26 W.R. 703 Part of the English authorities examining the effect of a solicitor's approval clause and the circumstances in which disapproval can be disregarded. Cited as part of the chain of English authority supporting the Court's approach that solicitor's approval is decisive unless shown to be in bad faith or unreasonable.
Hudson v. Buck (1877) 7 Ch. D. 683; 47 L.J. Ch. 247; 38 L.T. 56; 26 W.R. 190 Lord Justice Fry's formulation that disapproval must be "utterly unreasonable" to be of no avail. The court quoted this standard and treated "utterly unreasonable" as commensurate with the requirement that disapproval be mala fide or plainly unreasonable to be disregarded.
Clack v. Wood (1882) 9 Q.B.D. 276; 47 L.T. 144; 30 W.R. 913 Held that a vendor seeking specific performance must show either approval by purchaser's attorney or that such a title had been tendered as would make disapproval unreasonable. The court cited Clack v. Wood to support the proposition that vendor cannot force specific performance where solicitor has not approved and disapproval is not shown to be unreasonable.
Treacher & Co., Ltd. v. Mahomedali Adamji Peerbhoy, 7 Ind. Cas. 669; 12 Bom.L.R. 597; 35 B. 110 Decision following English authorities (including Clack v. Wood) on the effect of solicitor's disapproval and related principles. The court noted and relied on this judgment as following the established English line, reinforcing the view that solicitor's rejection is conclusive absent bad faith or distinct unreasonableness.
Cohen v. Sutherland, 17 C. 919 Referenced as an instance where the Court had followed the decision in Sreegopal Mullick v. Ram Churn Nuskar. Used to show that Sreegopal Mullick had been followed on several occasions in this Court and so formed part of the domestic precedent underpinning the court's approach.

Court's Reasoning and Analysis

The court proceeded by addressing each of the principal objections raised by the purchaser's solicitor and by applying the established legal principle concerning a contractual stipulation that title is subject to the approval of a named solicitor.

  1. Missing certificate in partition records: The purchaser's solicitor's initial search failed to find the certificate of payment recited in the conveyance. The court noted that after the suit was instituted and after the first day's hearing, further search by the defendants produced the Registrar's Sale Book entry showing payment. The court observed, however, that because the purchaser's solicitor had undertaken and performed the initial search himself, his failure to find the certificate in that search was not by itself a sufficient ground for rejecting the title.
  2. Lahore District Judge's order: The court held that the District Judge's order authorising sale "to the person who offered the highest price" was insufficient as tendered; it would have been reasonable and straightforward to state the substance of the agreement and obtain sanction specifically authorising the sale to the plaintiff. The court accepted that the plaintiff's solicitor was justified in regarding the order as unsatisfactory.
  3. Radha Nath Sircar's mortgage: The mortgage surfaced in searches and appeared to affect the premises in suit. The defendants' answer—that their predecessor purchased for value without notice and therefore the mortgage was inoperative—was a matter for evidence. The court was not prepared to force an unwilling purchaser to accept a title whose validity depended on contested evidence about notice. The absence of a satisfactory explanation made the solicitor's caution reasonable.
  4. Other title-deeds and trust-deed: The court noted defendants did not produce original title-deeds nor offer to procure copies; defendants gave little assistance in clearing title. The absence of these documents lent weight to the solicitor's cautious approach.
  5. Legal principle on solicitor's approval: The court reviewed English and local authorities (including Bartlett v. Greene, Sreegopal Mullick v. Ram Churn Nuskar, Unison/Hudson v. Buck, Clack v. Wood and others) and summarised the leading position: an express stipulation that a named solicitor approve title is effective, and the solicitor's decision is conclusive unless there is a want of good faith or the objections are distinctly/utterly unreasonable. The court regarded the various formulations (mala fide, "distinctly unreasonable", "utterly unreasonable") as practically co-extensive for the purposes of the decision.
  6. Application of principle to facts: Applying the established rule, the court concluded it could not hold that the purchaser's solicitor acted unreasonably or in bad faith. Given the unsatisfactory District Judge's order as tendered, the unexplained mortgage and the defendants' failure to assist in clarifying title, the solicitor's rejection of the title was justified. The court also rejected the idea of compelling an unwilling purchaser to accept an indemnity or price reduction as a substitute for a clear title.

Holding and Implications

Core Ruling: The court decreed in favour of the plaintiff. Concretely:

  • The plaintiff is entitled to repayment of the earnest money of Rs. 1,001, with interest at 6% from the date of payment until suit.
  • The plaintiff is entitled to the costs of investigating title amounting to Rs. 57-3-9 and to the costs of the suit on scale No. II.
  • The counter-action was dismissed (the parties having agreed the counter-action was to be governed by the decision in this case), although the plaintiff was not awarded further costs from the counter-action except the costs of filing his written statement therein; the court allowed costs for the written statement and the preparation of three briefs.
  • Interest on the decree was ordered at 6%.

Implications:

  • The direct consequence is the refund to the plaintiff with specified interest and the award of specified costs as set out above.
  • The decision applies and reinforces the established principle that an express contractual condition granting a named solicitor the power to approve title will be enforced: the solicitor's rejection is decisive unless shown to be in bad faith or plainly unreasonable. The court applied existing English and local authorities rather than announcing any novel legal principle.
  • The opinion does not purport to create new precedent beyond applying and following the cited authorities; the holding turned on the facts (insufficient judge's order as tendered, unexplained mortgage, and defendants' failure to assist) and on established law about solicitor approval clauses.

This summary is strictly limited to the material and conclusions expressly contained in the provided opinion.

Show full summary ...

    W.P Abro v. Promotho Nath Mukerjee

    1. This is a suit for the refund of earnest money, paid in view of aw intended purchase by the plaintiff of the premises mentioned in the plaint, with interest and costs. There was an agreement on the 10th November, 1911, for the sale by the defendant to the plaintiff of the said premises subject to the approval of title by Mr. B. Sreemany, solicitor for the purchaser, Clauses 3 and 4 of which run thus : The vendor shall make over to the purchaser's solictior all the title--deeds relating to the property on the day following the execution of these presents and the purchase shall be completed within 15th day of December, 1911, provided the title be approved of by the purchaser's solicitor--

    " (Clause 3). If the title be found good and be approved of by the purchaser's solicitor then the vendors will execute a proper conveyance in favour of the purchaser or his nominee or nominees in which the vendor shall make all necessary parties join, and the purchaser shall be entitled to the possession of the property from the date of the purchase, all outgoings prior thereto being borne and paid by the vendors"
    -- (Clause 4). Requisitions of title were sent in. Answers were received, and eventually the plaintiff's solicitor, Mr. Sreemany, by his letter of the 22nd December, 1911, informed the defendant that ho had advised his cilent not to accept the title. He asked for the return of the earnest money and for payment of his bill of costs. In that letter the attorney said that the answers to his requisitions were not satisfactory and he specified the following items : that when this property was sold in a partition suit there was no proof of the payment of the consideration money by the purchaser at the sale directed in the partition proceedings to the Commissioner of partition : that he was unable to get any proof of such payment from search in the records of those proceedings : that the order of the Lahore Court authorising the defendant No. 1 to sell the infant's share was insufficient and unsatisfactory, and an amendment of that order was necessary : that no explanation had been given regarding a mortgage-deed affecting this property which he had discovered during his search for encumbrances, the deed appearing to have been executed by one Radha Nath Sircar. In the first requisition on title, the defendants wore called upon to produce certain original documents or authenticated copies thereof. The defendants said that they had not any in their possession, and they asked plaintiff's attorney to inspect the records of Suit No. 342 of 1879 in which the partition proceedings had taken place. A search was thereupon made by the plaintiff's attorney and an objection was taken by him that although the conveyance which was the source of the title of the defendant's father recited that a certificate was to be appended to the conveyance showing payment to the Registrar of the money derived from the sale of the property directed by this Court in the partition proceedings, yet such a certificate was wanting. It seems that in the records he searched he was unable to find any proof of such payment to the Registrar. No doubt the circumstances showed that the amount must have been paid to the Registrar. Since the institution of the suit and in fact after the first day's hearing upon further time being obtained by the defendants and upon a search being made by them, the Registrar's Sale Book has been found in which an entry appears showing payment of the money which the conveyance recited had been paid. Since the attorney searched the records and had taken upon himself the duty of making the search, I do not think that his failure to obtain this evidence was by itself sufficient ground for rejecting the title.

    2. The second objection relates to the Lahore District Judge's order. The order authorised the adult defendant to sell to the person who offered the highest price. This order seems to me insufficient. There was no difficulty in mentioning the substance of the agreement to the District Judge and getting his sanction to the proposed sale to the plaintiff, and the position taken by the defendant's attorney, that as the terms of the agreement between the parties were vague and the actual amount to be paid by the plaintiff remained undetermined, the agreement to sell to him could not be mentioned in the application for the Judge's sanction--this position does not appear to me to be reasonable. The agreement was for a particular sum liable to deduction at a particular rate for deficiency, if any, in the quantity of land mentioned in the agreement. The terms are in no way vague, and I cannot say that it was not a just objection on the part of the plaintiff's attorney that the order authorising the sale was unsatisfactory.

    3. The next point relates to the mortgage which the plaintiff's attorney found outstanding upon the search made by him and which appeared to have been executed by one Radha Nath Sircar for Rs. 10,000 in favour of one Ram Gopal Bose. When the plaintiff's attorney asked for futher information about the matter, the defendants' answer was as folows : The vendors have no knowledge whatsoever of the existence of any such mortgage. If Radha Nath executed any such mortgage during the pendency of the Suit No. 342 of 1879, the sale would not be binding upon the purchaser for value without notice at an auction sale ordered in the said suit." They asked whether the mortgage in question was in respect of the premises purchased by the vendors. It appears that the mortgage covered the premises in suit and also other properties. The answer to the plaintiff's requisition by the defendants is unsatisfactory. The defendants suggested that as their father was the purchaser for value without notice, the mortgage was inoperative. Now, the question as to whether the purchase was without notice or not, is matter of evidence, and I am not prepared to say that the plaintiff was not justified in requiring satisfactory explanation. In the absence of such explanation I do not think he could be forced to take the title offered.

    4. In addition to the grounds taken on the requisitions, two other grounds which do not appear to me of much value have been taken by the plaintiff's Counsel, namely, that there was nothing to show that the vendors fully represented the interest of Soshi Bhusan Mukerjee. A further ground was taken about the absence of the trust-deed which was the subject-matter of litigation in the suit above-mentioned and also the absence of other title-deeds. Now, so far as the title-deeds are concerned, they appeared not to be in the possession of the defendants and they did not even offer to give any copies or procure any copies for the plaintiff.

    5. In the agreement for the sale to the plaintiff the express provision was that the title was to be subject to the approval of the plaintiff's attorney therein named. It seems quite clear from paragraph 4 of the agreement that what was intended was that the title was to be found good and approved of by the purchaser's solicitor. Although in the written statement the rejection of title by the plaintiff's solicitor was charged to be mala fide and unreasonable, learned Counsel for the defendants stated that he did not make any charge of mala fides against the plaintiff or his attorney, but that he rested his case solely on the ground that their objection was unreasonable." It is clear that the agreement expressly stipulated for a person therein designated to approve the title on behalf of the plaintiff. In Bartlett v. Greene (1874) 80 L.T. 553., Lord Coleridge, L. C. J., said that such a stipulation was a reasonable stipulation : that it could not be treated as having no meaning : that it was not correct to say that the stipulation for the approval of the solicitor puts into the contract no other terms than what the law would have implied. It was an express stipulation and, therefore, effect was to be given to it. Justice Brett in the same case said that the stipulation was an ordinary and important one, and unless the approval of the solicitor was withheld unreasonably or mala fide (which was not alleged in that case), a contracting party was entitled to be excused from the contract on the ground of that approval being withheld. It seems that his Lordship used the ex- , pression "unreasonable" there as an alternative for the expression mala fide," and practically as co-extensive with it for purposes of the decision in that case. The leading case in this Court is that of Sreegopal Mullick v. Ram Churn Nuskar 8 C. 856 : 12 C.L.R. 152.. It was decided by Wilson, J., after a careful consideration of the leading English cases up to that date, including Unison v. Buck (1877) 7 Ch. D. 683 : 47 L.J. Ch. 247 : 38 L.T. 56 : 26 W.R. 190. and Hussey v. Horne Payne (1878) 8 Ch. D. 670 : 47 L.J. Ch. 751 : 38 L.T. 543 : 26 W.R. 703., containing the dictum of Lord Cairns. His Lordship Mr. Justice Wilson held that the decision of the attorneys was conclusive, unless there was some want of good faith or unless their objections were distinctly unreasonable. In Hudson v. Buck (1877) 7 Ch. D. 683 : 47 L.J. Ch. 247 : 38 L.T. 56 : 26 W.R. 190. Lord Justice Fry held that the disapproval to be of no avail must be shown to be "utterly unreasonable objections to the title." Sir George Jessell, M. R., in that, case expressed his approval of the observations made by Lord Justice Fry. In this Court - the decision in Sreegopal Mullick v. Ram Churn Nuskar 8 C. 856 : 12 C.L.R. 152. has been followed on several occasions : see Cohen v. Sutherland 17 C. 919.. My attention has been called to the judgment of Mr. Justice Davar in Treacher & Co., Ltd. v. Mahomedali Adamji Peerbhoy 7 Ind. Cas. 669 : 12 Bom.L.R. 597 :35 B. 110 where his Lordship follows the decision in Clack v. Wood (1882) 9 Q.B.D. 276 : 47 L.T. 144 : 30 W.R. 913. after discussing the case of Sreegopal Mullick v. Ram Churn Nuskur 8 C. 856 : 12 C.L.R. 152. and the other cases I have mentioned. In Clack v. Wood (1882) 9 Q. B. D. 276 : 47 L.T. 144 : 30 W.R. 913. Lord Justice Lindely held that in order for the vendor to succeed in a suit asking for specific performance of such a contract, it was necessary for him to show that the purchaser's attorney had approved the title, or that such a title had been tendered as made it unreasonable to disapprove it. The way that the cases have dealt with the question of unreasonableness seems to me as almost meaning the same thing as mala fide. The expressions distinctly unreasonable" and utterly unreasonable" and the juxtaposition of the expressions mala fide" or unreasonable" lead me to that conclusion.

    6. I. cannot hold in this case that there was such unreasonableness on the part of the plaintiff's attorney. It might be that the order from the District Judge of Lahore could have been amended, or that there would have been no difficulty in getting it amended, but the order as tendered to the other side was clearly not an order authorising this particular sale. It may have been the highest value offered for the premises, but there was nothing to show it was. It may also be that so far as. Radha Nath Sircar's mortgage was concerned, the predecessor of the defendants purchased the property without notice of the mortgage, but I do not think that I can compel an unwilling purchaser to take title which is dependent upon evidence whether the purchase was with or without notice. An offer was made on behalf of the defendants that they were ready to reduce the price stipulated for, in order to safeguard the interests of the purchaser in respect of any likely claims against him arising upon the mortgage. But a purchaser cannot be compelled to accept an indemnity or a reduction. It was argued that the facts of the case showed that the mortgage was of no value and that in any event it did not affect the title, but was merely a question of conveyancing. The mortgage was one of the year 1886. There is nothing to shew as to what had happened in respect of that mortgage. It may very well be that there are no claims outstanding in respect of that mortgage : but I cannot hold that it is unreasonable for the attorney who had the approval of the title in this case upon the facts placed before him that he unreasonably rejected the title offered. I notice that he did not receive much help from the defendants side. I may add that learned Counsel when he was opening the case for the defendants was instructed to make statements relating to this mortgage which have since transpired to be utterly incorrect. Up to the date of the hearing of the suit nothing was apparently known by the defendants about this mortgage. They Had taken no trouble to find out anything about it. Even on the day of the hearing they had no information relating to it, although in their letter of the 4th January they said, that they would make inquiries and inform the plaintiff, they had apparently made no inquiries and certainly gave, the plaintiff no information. On the first day of the hearing defendants Counsel opened that Radha Nath Sarcar had, pending the Suit No. 342 of 1878, mortgaged his 1-6th undivided share in ten properties including the one in suit. He was instructed that in a partition suit, the number of which he could not give, this property had been dealt 'with : that he was not certain that there had been any partition suit at all : but, as there were ten properties, the defendants would be entitled to require specific performance of the agreement in suit by offering a reasonable reduction in the value. The case was then adjourned to allow further search which, however, elicited nothing further about the mortgage, except that in the conditions of sale the mortgage was not disclosed nor anything mentioned about it in the notification of sale under which the sale was held in 1887. Reference was made on behalf of the defendants to their letter of the 13th January in which they had said that they wanted to clear up the title, to which the plaintiff did not reply. But at no time had the defendants, up to the time of the suit and even up to the date of the first hearing, given any assistance to the plaintiff or his attorney. Taking all the circumstances into consideration, the suit must be decreed, namely, the sum of Rs. 1,001 is directed to be refunded to the plaintiff with interest at 6 per cent. from the date of .payment until suit. The plaintiff is also entitled to the costs of investigating title, amounting to Rs. 57-3-9. He is also entitled to the costs of the suit on scale No. II. The parties having agreed that no evidence was to be given in the counter action and that it was to be governed by the decision in this case, I dismiss that suit, but do not award the plaintiff in the first suit any further costs except the costs of filing his written statement in the counter-suit, I will allow the costs of the written statement and the preparation of three briefs. Interest at 6 per cent. on the decree.

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    Comments

    W.P Abro v. Promotho Nath Mukerjee
    (Jan 19, 1914)