Krishna Rao, J.:— This appeal is filed by the third defendant against a decree passed by the learned Subordinate Judge, Eluru in O.S No. 22 of 1966. The suit was filed by the first respondent herein for specific performance of an agreement of sale. Ex. A.1 dt. 9-2-1966 executed by the first defendant (2nd respondent herein) in favour of the plaintiff, agreeing to convey the suit land for Rs. 27,125/-. A sum of Rs. 500/- was paid as advance. Out of the balance of consideration Rs. 10,000/- was agreed to be paid on 28-2-1966 while the rest of Rs. 16,225/- had to be paid by 25-3-1966. The 1st defendant, instead of performing the contract, sold the property under Ex. B-1 dt. 27-3-1966 to the third defendant for Rs. 27,000/-. The third defendant who is the subsequent purchaser paid Rs. 10,000 on 27-3-66 itself and agreed to pay Rs. 13,750/- on the date of the registration. The balance of Rs. 3,250/- was agreed to be paid by discharging a mortgage executed by the first defendant in favour of the Co-operative Land Mortgage Bank Kovvur. The plaintiff Living come to know about the subsequent sale, filed the present suit for specific performance on 1-4-66 impleading the vendor as the first defendant and the subsequent purchaser as the third defendant. The first defendant contested the suit by filing a written statement alleging that the agreement of sale was obtained by the plaintiff who was his own brother by the exercise of force and coercion and secondly that the time was the essence of the contract and that the plaintiff himself committed a breach of the contract by not tendering the amount within the stipulated time. The third defendant filed a separate written statement pleading that he was a bona-fide purchaser for value without notice of the prior agreement of the sale in favour of the plaintiff. The trial court on a Consideration of the evidence and probabilities of the case, negatived the pleas raised by the first and the third defendants and accordingly decreed the suit for specific performance against the vendor and the third defendant who is the subsequent purchaser.
2. In this appeal filed by the third defendant, the three main points argued by the learned counsel for the appellant, Sri Ananta Babu, are (i) that the third defendant-appellant had no notice of the prior agreement of sale in favour of the plaintiff; (ii) that he paid the entire consideration bonafide and without notice of the said agreement; and (iii) that in any event, there was a prior oral agreement of sale dt. 1-2-65 that is, prior to the suit agreement in favour of the plaintiff and that the appellant is entitled to priority over the plaintiff. The first defendant represented by Sri M.S.K Sastry also contended that the agreement of sale in favour of the plaintiff was vitiated by coercion and that in any event, the plaintiff committed default in performing the contract. The learned counsel for the third defendant also supported the first defendant with respect to these contentions. We will first take up the question as to whether the third defendant had notice of the prior agreement of sale. In his evidence as D.W 1, the third defendant had made an unequivocal admission even in the chief-examination that he came to know about suit agreement Ex. A.1 on 9-2-1966, that is to say, on the very date on which the agreement was executed. The learned counsel for the third defendant was at pains to get over the admission urging that the evidence might not have been recorded properly and that the witness probably meant that he merely came to know of Ex. A.1 which was dt. 9-2-66 In support of the theory that such admission would not have been made, reliance is placed upon another statement contained in the chief-examination to the following effect:
“It is not true that I secured Ex. B.1, with the knowledge of Ex. A.1 In order to cause wrongful loss to plaintiff”.
3. I do not see how this statement helps the learned counsel. I find that it proceeds on the footing that the third defendant knew about the agreement and that he did not take the sale in order to defeat the plaintiff who had already got the agreement. If we turn to the cross-examination of the witness, it is quite clear that there was no mistake in recording the earlier admission. In answer to a question in the cross-examination it was stated as follows;
“When I knew of Ex. A.1 I did not issue notice to plaintiff that I have in my favour an earlier oral agreement”.
4. The witness was evidently asked as to what action he took when he knew about Ex. A.1 Without stating that he Dever knew about Ex. A.1 he merely stated that he did not issue any notice about his own prior oral agreement. We are therefore clear in our mind that the third defendant made a clear and unequivocal admission that he knew about Ex. A.1 agreement on 9-2-1966 itself. No attempt was made by the learned counsel for the third defendant in the lower court to challenge the correctness of the statement recorded in the evidence of D.3 during the course of the arguments in the lower court. We are not, therefore prepared to presume that the learned Judge must have wrongly recorded the evidence of the third defendant.
5. Even apart from the actual knowledge of the agreement as admitted by the third defendant it is next contended by the learned counsel for the plaintiff that he has taken possession of the property in pursuance of the agreement and that the third defendant must have been put on notice by the date of his sale on 27-3-1965. The case of the plaintiff is that he took possession of the property in pursuance of his agreement of sale and that he also installed the engine and pump set to take water to his land from the land of P.W 3 who was another brother of the plaintiff. On the date of the agreement. Ex. A.1 there was a plaintain garden and a sugarcane crop on the land. The plaintiff undertook to take possession of the crop and to loot after the same. According to P.W 3, the plaintiff used to take water from his pump-set to the suit land. It is further stated that when a Commissioner was appointed by the lower court to note these particulars in proof of the plaintiff's possession, the third defendant having come to know about this, trespassed upon the land a day earlier than the visit of the Commissioner and removed away the engine which was installed by the plaintiff. These features are noted by the Commissioner in his report which was submitted to the Court. The Commissioner's report forms part of the evidence in the case irrespective of the fact whether the Commissioner was examined as a witness or not. It was open to the third defendant to cross-examine the Commissioner but he did not choose to do. The Court below accepted the evidence of P.W 3 and on the basis of the Commissioner report came to the conclusion that the plaintiff was in possession of the land by the date when the third defendant trespassed upon the property. In view of the trespass committed by the third defendant, the plaintiff had to amend the plaint by adding a prayer for recovery of possession, alleging that the third defendant-trespassed into the land during the pendency of the suit. We are inclined to accept the finding of the Court below that the plaintiff himself was in possession of the property in pursuance of Ex. A.1 There was a good deal of controversy as to whether the plaintiff took possession of the property on the very day of the agreement or the next day. This question is really irrelevant, for it is enough if he is in possession of the property by the time of the sale executed in favour of the third defendant. As the third defendant trespassed into the property only during the pendency of the suit, it follows that the third defendant must have had notice of the plaintiff's possession on the date of his sale if he had made any inquiries. There is no evidence in the case to show that the third defendant made any inquiries or inspected the land when he purchased the property. As he is a neighboring landowner, one would expect him to have the land measured before he wants to purchase the same. Though it is stated that the third defendant got the crops estimated before be purchased, there is absolutely no evidence to show that he took anybody to the land for the purpose of estimation of the crops. We are therefore convinced beyond doubt that the third defendant is not a bonafide purchaser and that he had actual notice as admitted by him in the evidence and atleast constructive notice by virtue of the plaintiff's possession of the suit land.
6. The next point for consideration is whether the third defendant paid the full consideration. According to Section 19(b) of the Specific Relief Act, (47 of 1963) (corresponding to Section 27(b) of the Old Act) specific performance of a contract may be enforced against a party to the contract or any other person claiming under him by a title arising subsequently to the contract except a transferee for value who has paid his money in good faith and without notice of the original contract in the present case, even assuming that the third defendant had no notice of the prior agreement of sale by the date of his purchase. Ex. B.1, he had such notice when he was impleaded as a defendant in the suit. Out of the total consideration of Rs. 27,000/- admittedly 3,250/- due to the Land Mortgage Bank was not discharged by the third defendant and the said amount remained unpaid. The learned counsel for the appellant contended that as he had undertaken to pay the amount, it is equivalent to payment of consideration and that he comes within the language of Section 19(b) of the Specific Relief Act. The question for consideration now is whether in such a case, the purchaser can be said to have ‘paid his money’. The principle underlying the above provision which protects a transferee for value in good faith and without notice is stated thus by Lord Salborne in Blackwood v. London Chartered Bank of Australia(1) at page 111:—
“There is nothing more familiar than the doctrine of equity that a man, who has bona fide paid money without notice of any other title, though at the time of the payment, he, as purchaser, gets nothing but an equitable title, may afterward get in a legal title, if he can, and may hold it; though during the interval between the payment and the getting in the legal title he may have had notice of some prior dealing inconsistent with the good faith of the dealing with himself”
7. It is laid down in a number of Indian cases that before the purchaser had notice of the prior agreement of sale, he should have parted with the entire consideration to order that he may have the protection given in equity Section 19(b) of the Specific Relief Act lays down an exception to the ordinary rule that a person is bound to perform his obligation under a contract of sale and that the agreement-holder has priority in the matter of obtaining the title of the vendor. But equity protects a subsequent purchaser even as against a prior agreement-holder, provided he establishes that he parted with the entire money innocently without knowledge of the prior agreement. It follows, therefore, that unless he paid the entire money or its equivalent before he had any such notice, he will not be entitled to the protection. The point of time at which be should have no knowledge of the prior agreement is when he paid the consideration in full. In a recent case of the Madras High Court in Veeramalai v. Thadikara(2) it was held that where a purchaser merely agreed to pay part of the money and had notice of the prior agreement of sale before he paid the balance of consideration, he is not entitled to the protection under Section 27(b) of the (Old) Act. The contention that the words “has paid his money” occurring in the section are equivalent to “who has agreed to pay his money” was rejected. In coming to this conclusion, several earlier cases were referred to viz., Himatlal Motilal v. Vasudev Ganesh(3) Bhup Narain Singh v. Gokul Chand(4) Arunachala v. Madappa(5) It is accordingly held on the basis of the said decisions that the whole of the money should have been actually paid before the purchaser gets any know, ledge of the prior agreement of sale. In Sumermal Jamatraj v. Thukkappa(6) it was however held that if a transferee had agreed for adjustment of a debt due to himself towards payment of the purchase money, it is equivalent to payment within the meaning of Section 27(b) of the Old Act. But in the present case, as we have already seen, the consideration is payable under a debt due to a third party and the same remained unpaid. We therefore hold that the third defendant cannot be said to be a person who has paid his full money before he had notice of the agreement of sale.
8. The last point urged on behalf of the third defendant is that even if he is not considered a bonafide purchaser for value, the third defendant is entitled to priority over the plaintiff as his sale was in pursuance of an oral agreement in his favour on 1-2-1966. The plea of oral agreement was rightly disbelieved by the lower court and we are also convinced that it is a pure after-thought, in view of the fact that the third defendant is not entitled to protection of the Act as a bonafide purchaser. In the first place, there is no specific pleading as regards the date of the oral agreement. The most clinching circumstance is that in Ex. A.6 dt. 1-4-1966, which is a notice issued by the first defendant to the plaintiff, there was absolutely no mention of any oral agreement entered into in favour of the third defendant. The stand taken by the first defendant is that the suit agreement was mutually canceled between him and the plaintiff. This notice Ex. A.6 was given in reply to Ex. A.3 issued on behalf of the plaintiff stating that he is ready and willing as par the contract and that if the first defendant sells the property to the third defendant, a suit will be filed. The oral agreement is sought to be established by the evidence of D.Ws 2 and 3 D.W 2 is an attestor of Ex. B.11 He states that on the evening of 1-2-66, the terms of the bargain were settled and that everybody in the village including the plaintiff, knew about these terms. The evidence of D.W 3 about the oral agreement is extremely vague and he does not give the particulars about the suit agreement. There is no explanation as to why a stamped written agreement was not thought of instead of an oral agreement. No advance is said to have been paid on 1-2-1966 when the oral agreement took place. The plea of oral agreement is totally believed by the recitals in the sale deed Ex. B.1 which clearly show that the entire bargain was struck only on the date of the sale, namely 27-3-1967.
9. The third defendant placed strong reliance upon the fact that the stamp papers for the sale deed which are of a substantial amount of Rs. 1,600/- were purchased on 2-2-1966 and that the same were purchased in pursuance of the oral agreement on 1-2-1966. If that is so, there is do real explanation as to why the remaining stamp papers were purchased in the name of the vendor subsequently on different dates. There is also no explanation as to why the sale was not completed if the stamp papers were made ready on 2-2-1966 itself. The third defendant obviously pressed into service some stamp papers purchased by him with respect to some other transactions in order to lend support to his plea that there was an oral agreement on 1-2-1966. It is admitted by the third defendant in his cross-examination that he was purchasing other lands in about the month of February, 1966. It is therefore quite probable that these stamp papers might have been purchased in connection with those transactions which may have failed. We have therefore no hesitation in coming to the conclusion that the false plea of oral agreement was set up merely to get over the plaintiff's agreement. On behalf of the first defendant and also the third defendant it was contended that the suit agreement of sale was obtained by force and that the plaintiff committed breach of the contract. These are matters with respect to which the first defendant should give evidence in the witness box. The fact that be abstained himself from giving evidence clearly shows that he was unable to establish his pleas. A belated attempt was however made by filing an application before the trial court on the date of the pronouncement of the Judgment to reopen the case and to examine the first defendant as a witness. The affidavit filed in support of the said petition which is placed before us is extremely vague and does not contain any particulars as to when the first defendant left the place of when he came back to Eluru etc. We are in agreement with the lower court court that offer of the first defendant to give evidence is nothing but an ingenious attempt to forestall any objection as to his non-examination. In the reply fix A.6 given by the first defendant there was absolutely no whisper about the plaintiff's committing breach of the contract or that the agreement as obtained by force. But on the other hand, the definite stand taken in Ex. A.6 by the first defendant is that the suit agreement was mutually cancelled between the parties. In view of this plea which is not substantiated by any evidence, it is not open to the defendants to plead that the agreement was vitiated by force or that the plaintiff committed a breach.
10. For all the above reasons, we do not see any reason to interfere with the findings of the lower court.
11. This appeal is accordingly dismissed with costs of the plaintiff-first respondent.
I.S.N.R