A. Madurai Chetty And Another v. T. Babu Saheb And Another

1. In this case the purchasers sued for specific performance and the vendors for the rescission of the contract. Both suits were decided in favour of the purchasers, and the vendors appeal. The house in question stood in the name of Ellammal who, on 10th March 1916, executed in favour of her daughter's son Balasundara Chetti an unregistered document Ex. 1, reciting that she had promised to give his mother the house as a dowry and that the mother had paid Rs. 2,000, and providing that he was to have the house after her (Ellammal's) death. Then on 17th November 1916 she and her husband Madurai Chetty contracted in Ex. B to sell the house to Melu T.C Muhamad Oosman Sait & Co., the contract taking the form of a receipt for Rs. 500 which contained the stipulation that

“the sale is subject to good title, if the title is found not in order this earnest of Rs. 500 is to be refunded, and they are to return the title-deeds.”

2. On 28th December Ellammal got her grandson Balasundara Chetty to endorse on Ex. 1 a release of all his rights under it:

“In future my grandmother shall enjoy all rights in respect of the said house as before. I have no right whatever.”

3. It appears from the oral evidence that the purchasers under Ex. B had come to know of Ex. 1 and that the vendors in consequence had paid Balasundara Chetty to execute this release. It was not registered, nor was Ex. 1 registered. The purchasers' subsequent letter Ex. D shows that the purchasers in addition to the deposit of Rs. 500 made further payments of Rs. 250 and Rs. 750, and we were told that these sums were utilized to induce Balasundara Chetty to endorse a release on Ex. 1. The purchasers then discovered that even before the date of Ex. 1 Balasundara Chetty; had executed a mortgage of the suit house, and this fact coupled with the recital of Ellammal in Ex. 1 that his mother had paid Rs. 2,000 opened up a possibility of a case being set up that the house had been purchased benami for his mother and had descended to him.

4. On 16th February 1917 the vendors' vakil in Ex. C called upon the purchasers to complete within a week, in default of which their clients would forfeit the deposit and sue for the return of the title-deeds. The purchasers' vakil in Ex. D, dated 21st February 1917, replied that the encumbrance certificate had disclosed the existence of the mortgage by Balasundara Chetty and an assignment of that mortgage, and that he had written to the mortgagor, the mortgagee and his assign to let him know what their claims were to the property. He said the delay was due to the vendor's not coming forward to set aside the mortgage, and refused to proceed further until they did. To this the vendor's vakil replied in Ex. E, dated 7th March 1917, that the mortgage was executed without authority and could not affect the purchasers' rights and that his clients were willing to give an indemnity.

5. This was followed up by a letter from another vakil on the vendors' behalf saying that, since no reply had been received to their vakil's letter dated 21st February the vendors cancelled the contract. The purchasers' vakil replied in Ex. G, dated 9th March 1917, that the letter dated 21st February 1917 had not been received, and that the purchasers were entitled to satisfactory assurances that the mortgages would not prejudice his clients and that they were entitled to discharge the mortgages out of the purchase money if the vendors did not set them aside.

6. The vendor's vakil replied in Ex. H, dated 13th March 1917 that the purchasers were not entitled to this and that his clients had directed him to give notice cancelling the contract because the purchasers were insisting on their bringing an unnecessary suit against the grandson who was a pauper and could not be made to pay costs. They gave the purchasers time until the 20th to pay the purchase-money and execute the sale deed and stated that in the event of their failure to do so, the contract must be regarded as rescinded.

7. The puchasers' vakil in Ex. J., dated 15th March 1917, replied that the purchasers were entitled to have time to makinquiries into the encumbrances created by Balasundara Chetty and could not accept the mere statements of the vendors and conclude the sale. They followed this up by a letter Ex. K, dated 20th March 1917, enclosing a form of declaration which they required the vendors to sign before a Magistrate and repeated that the vendors were bound to see to the discharge of the mortgages. The declaration was one which Ellammal could not truly make owing to her having executed Ex. 1. The vendors' vakil replied on 26th March 1917 that the contract was rescinded owing to the purchasers' failure to complete the contract and their insistence on the discharge of the encumbrances and the declaration, and this is the rescission on which they now rely. In their reply Ex. M, also dated 26th March 1917, the, purchasers' vakil again insisted on the contract being specifically performed, the mortgage discharged, and the declaration asked for given and intimated that they would sue for specific performance of the contract.

8. In my opinion they were entitled to do so. A purchaser is entitled to a good and a marketable title. If the title is found to be doubtful so as to require investigation he cannot be compelled either to rescind the contract or to accept without investigation the doubtful title. He may, it is well settled in England, sue for specific performance of the contract and ask for an inquiry into the title by the result of which he will be bound.

9. In the present case before the agreement to sell the property had been mortgaged by the vendors, grandson; and one of the vendors by executing Ex. 1 had created evidence that it had been purchased in her name benami for her daughter, the mother of the mortgagor. Her conduct in executing Ex. 1 shortly before entering into the agreement to sell has not been explained; for the story told by her husband in the box that she signed Ex. 1 to convert her grandson to a virtuous life is as unworthy of acceptance as his other story that his unwillingness to complete the contract was due to his wife having fallen out of a carriage. Whatever the motives with which Ex. 1 was signed it might have been used by the mortgagee and his assignee as evidence in support of the grandson's right to execute the mortgage on the suit property and the validity of that mortgage would not have been affected by his subsequent endorsement on Ex. 1 renouncing his claims even if that endorsement had been registered, as it was not. In these circumstances the vendors were not entitled to call upon the purchasers to complete the contract within a stated time without further investigation and to rescind the contract for their failure to do so. On the other hand the purchasers were entitled to sue for specific performance and an inquiry into title. The evidence in this case established the title to their satisfaction, and in these circumstances they were entitled to ask for the specific performance which the learned Judge has decreed. Reliance was placed on the decision of the Privy Council in Bindeshri Prasad v. Mahant Jairam(1). In that case however the whole trouble arose because the purchaser who sued for specific performance had insisted both before suit and in his plaint on the insertion of a covenant in the sale-deed to which he was not entitled. In this case the vendors were entitled to sue for specific performance with a view of clearing up the question of title and the case is therefore distinguishable. The learned Judge was right in his conclusion and the appeals are dismissed with costs.

S.N/R.K

10. Appeal dismissed.