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Smart Summary

Factual and Procedural Background

This appeal arises from the judgment and decree dated 22-12-1939 in Civil Suit No. 9-A of 1937 passed by Mr. M.D. Deoras, 3rd Subordinate Judge, 1st Class, Nagpur. The original suit was instituted by Mohammad Abdul Sattar (identified as predecessor in title of the present appellants, except appellant 3) against Noorumiya (who died during the pendency of the appeal) and Noorumiya's two sons and a daughter (who are now the legal representatives and respondents in their own right).

The suit sought specific performance of a contract of sale and possession of certain immovable property. The contract relied upon was an isar chithi, Exhibit P-2, dated 16-1-1934 in favour of Mohammad Abdul Sattar. The instrument purported to fix a total consideration of Rs. 10,000 made up of separate items (including Rs. 100 as earnest money, Rs. 1056 as khata balance, Rs. 7,444 for two mortgage deeds and Rs. 1,400 to be received before the Sub-Registrar).

The signatories agreed to execute and register a sale deed within one month, but the sale deed was not executed. Mohammad Abdul Sattar presented the isar chithi for registration on 14-5-1934; the Sub-Registrar refused to register because the defendants (executants) were not present and there was no time to summon them (Ex. P1-1). Mohammad Abdul Sattar filed the plaint for specific performance on 15-1-1937 (the last day of limitation).

Defendants denied the allegations, pleaded fraud, and one defendant (defendant 4) denied making the thumb mark on the document. The defendants additionally pointed out that by Notification No. 1475–1075-XII dated 20-4-1937, Provincial Government had commenced land acquisition proceedings in respect of the house and site in question and contended that the suit for specific performance was therefore not maintainable. The plaintiff did not amend his plaint to claim damages either simpliciter or in the alternative.

The suit proceeded and the acquisition proceedings continued. The original suit terminated on 22-12-1939 against the plaintiff Mohammad Abdul Sattar. A decree "as lie was passed" in his favour, but his remaining claim was negatived. The present appeal followed from that judgment and decree.

Legal Issues Presented

  1. Whether, in view of land acquisition proceedings and the vesting of the property in the government, the suit for specific performance remained maintainable or enforceable.
  2. Whether the plaintiff/appellant was entitled to the compensation money paid by the Collector as a substitute for specific performance or could claim that money under Section 73(2) of the Transfer of Property Act or other provisions.
  3. Whether Section 91 of the Trusts Act or Section 3, illustration (g) of the Specific Relief Act could be invoked to treat the government as a trustee for the plaintiff's benefit in the context of compulsory acquisition.
  4. Whether the plaintiff should be permitted, by amendment of pleadings long after filing and after pursuing specific performance, to seek damages as an alternative remedy once specific performance had become impossible or was dismissed.

Arguments of the Parties

Respondents' Arguments (Mr. Bobde)

  • Raised a preliminary objection that, because the land acquisition proceedings had long since terminated, there was no possibility of specific performance and the appeal should be dismissed on that ground alone.

Appellants' / Plaintiff's Arguments (Mr. Shareef)

  • Contended entitlement to the compensation money lying with the Collector, invoking Section 73(2) of the Transfer of Property Act as authority for substituted security where compulsory acquisition entitles the mortgagee to claim mortgage money out of compensation.
  • Relied on Section 91 of the Trusts Act and sought a declaration of right in accordance with that section.
  • Relied on the case cited as 15 C.W.N 420 to support an entitlement to relief despite acquisition.
  • Later applied to amend the pleadings to claim damages once it became apparent that specific performance was impossible.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
52 Bom. 597 Explains the historical distinction between damages and specific performance in equity; states that the power to give damages as an alternative to specific performance does not extend to cases where the plaintiff has debarred himself from claiming that relief or where the relief has become impossible. The court applied this principle to hold that the present case falls within the category where specific performance had become impossible, and therefore damages could not be claimed as an alternative after the plaintiff elected and pursued specific performance.
15 C.W.N 420 Was a decision concerning a suit for damages for breach of an agreement of sale where the plaintiff's cause of action arose prior to acquisition; used to permit a damages claim in that factual context. The court distinguished that case as materially different and held that it did not support the appellants because here the plaintiff elected specific performance and the facts and timing differed.
(1888) 39 Ch. D 5083 (at pp. 518, 519) Illustrates that Courts of Equity may refuse specific performance (and also damages) in cases of fraud or 'trickiness'—the principle that one seeking equity must come with clean hands. The court invoked this authority to support refusal of both specific performance and damages where the plaintiff's conduct or the transaction is tainted by suspicion, fraud, or trickiness.

Court's Reasoning and Analysis

The court proceeded through a sequence of legal determinations grounded in statutory interpretation and equitable principles as laid out in the opinion:

  1. Relevance of Section 73(2) of the Transfer of Property Act: The court held that S.73(2), which deals with substituted security where compulsory acquisition entitles a mortgagee to claim mortgage money out of compensation, is not relevant to the present context and the court would not extend that principle beyond its proper scope.
  2. Application of Section 91 of the Trusts Act and the concept of government as trustee: The court found Section 91 inapplicable because, under Section 16 of the Land Acquisition Act, property vests absolutely in the Crown; consequently the property could not be treated as being held for the benefit of any private person. For the same reasons the court held that Section 3, illustration (g) of the Specific Relief Act does not make the government a trustee in this context.
  3. Distinguishing authority cited by appellant: The court distinguished the decision referred to as 15 C.W.N 420, observing that that case involved a suit for damages where the cause of action had arisen prior to acquisition and thus was not analogous to a plaintiff who elected specific performance while acquisition proceedings were ongoing.
  4. Historical and equitable distinction between specific performance and damages: The court recited the history—the limitation on equity to grant damages as an alternative only within certain circumstances—and quoted the principle from 52 Bom. 597 that damages as an alternative are not available where specific performance has become impossible or where the plaintiff has precluded himself from seeking that relief.
  5. Timing and election by plaintiff: The court emphasised that the plaintiff filed the suit for specific performance on the last day of limitation (15-1-1937), the acquisition notification issued on 20-4-1937, and defendants drew attention to the acquisition on 27-8-1937. Despite being warned, the plaintiff persisted in seeking specific performance and did not amend to claim damages at that stage. After dismissal and a long lapse of time (noted as twelve years in the opinion), the plaintiff sought to amend, which the court rejected as untimely and inconsistent with the plaintiff's prior election.
  6. Findings on the merits and credibility of the transaction: The court accepted the trial court's finding that parts of the consideration were not genuinely owed by the defendants — specifically that Rs. 1,000 (of Rs. 1,056) related to an advance to a third party (Abdul Aziz) and could not be credited to the defendants without their consent. The thumb mark of defendant 4 was seriously in dispute and the trial court found it to be of some other person. The court observed that prima facie the two mortgages mentioned appeared not to be within time and there was no acceptable evidence of payment or adjustment.
  7. Equity and clean hands: Even if specific performance had been possible despite acquisition, the court stated it would have refused specific performance on equitable grounds because the transaction was "not entirely above suspicion" and involved fraud or trickiness; equity requires that a claimant come with clean hands.
  8. Consequence for damages and amendment: The court held that damages should not be awarded where specific performance would have been refused on equitable grounds; therefore the application to amend and claim damages was rejected as both untimely and substantively unmeritorious.
  9. Conclusion of analysis: The court concluded that specific performance was now impossible, the plaintiffs had no right or interest in the compensation money into which the property had been converted, amendment was not allowable at this late stage, and the appeal must fail.

Holding and Implications

APPEAL DISMISSED

Direct consequences for the parties:

  • The appeal is dismissed with costs.
  • The court held that specific performance of the contract cannot be decreed because land acquisition made specific performance impossible and, in any event, on the facts and findings of the trial court the transaction was tainted by suspicion such that equity would have refused specific performance.
  • The plaintiffs/appellants are not entitled to the compensation money paid under the acquisition because they had no legal or equitable right or interest in the property at the relevant time.
  • The application to amend pleadings to claim damages was refused as being late and inconsistent with the plaintiffs' election to pursue specific performance, and on substantive grounds (damages would not be appropriate where specific performance would have been denied for equitable reasons).

Broader implications: The opinion applies established equitable principles and authorities to the facts; it does not purport to establish a new precedent beyond applying the existing law to the circumstances of this case.

    Mohamad Abdul Jabbar v. Lalmia

    1. This is an appeal from the judgment and decree passed by Mr. M.D Deoras, 3rd Subordinate Judge, 1st Class, Nagpur, on 22-12-1939 in civil Suit No. 9-A of 1937. The suit was brought by plaintiff Mohammad Abdul Sattar (predecessor in title of the present appellants, except appellant 3) against Noorumiya (who died during the pendency of this appeal) and his two sons and a daughter who are now the legal representatives of Noorumiya as well as respondents in their own right.

    2. The suit was for specific performance of a contract of sale of certain immovable property and its possession. The suit is based on an isar chithi, Ex. P-2, executed on 161-1934 in favour of Mohammad Abdul Sattar. By this document the signatories purported to agree to sell some house property to Mohammad Abdul Sattar for a consideration of Rs. 10,000 to be made up as follows:

    Rs. 100, taken as earnest money on 16-1-1934, Rs. 1056, Khata balance, Rs. 7444, havala for two mortgage deeds dated 17-8-1921 and 28-9-1922 in favour of Abdul Aziz son of Abdul Ramhim and Rs. 1400, to be received before the Sub-Registrar at the time of execution. Rs. 10,000 Total.

    3. The signatories further purported to agree to execute the sale-deed and get it registered within one month. The sale deed was not executed and Mohammad Abdul Sattar presented the isar chithi for registration on 14-5-1934. Since the defendants (executants) were not present, the Sub-Registrar refused to register the instrument because there was no time to summon the executants: vide Ex. Pi-1. Mohammad Abdul Sattar did nothing till the last day of limitation, and on 15-1-1937 presented his plaint and asked for the relief of specific performance against the defendants-respondents in this matter. Defendants 1 to 3 denied the allegations and pleaded fraud and defendant 4 denied that she made her thumb mark on the document. All the four defendants further pointed out that by notification No. 1475–1075-XII, dated 20-4-1937, Provincial Government had started land acquisition proceedings in respect of this house and site and that the suit for specific performance was, therefore, not maintainable. Even though warned in this manner, Mohammad Abdul Sattar did not choose to amend his plaint and ask for damages either simpliciter or even in the alternative. Of course his claim to have specific performance precluded at the moment a relief by way of damages for if he elected to have damages, he could not go on asking for specific performance. He contented himself by saying:

    “Plaintiff does not know if any proceedings for the acquisition of any land in suit is started under the Land Acquisition Act. Even if any such proceedings are going on, it would not affect plaintiff's right to get the specific performance. The compensation money would go to the person who would be found by the Government entitled to get the same.”

    4. So the suit went on and the proceedings, for acquisition also went on, and the suit terminated on 22-12-1939 against the plaintiff Mohammad Abdul Sattar. A decree for as lie was passed in his favour, but his remaining claim was negatived. Hence this appeal.

    5. Mr. Bobde who appears for the respondents raised a preliminary objection that inasmuch as the land acquisition proceedings have long since terminated, there is no possibility of specific performance and the appeal is liable to be dismissed on that ground alone. Mr. Shareef on the other hand contended that he was entitled to the compensation money lying with the Collector. In support of his case, he cited Section 73(2) of the Transfer of Property Act. That sub-section deals with substituted security in cases where as a result of compulsory acquisition, the mortgagee is entitled to claim payment of his mortgage money, in whole or in part, out of the amount due to the mortgagor as compensation. This sub-section has no relevance whatever in this context and we are not inclined to extend the principle of this sub-section to any other case even if it could be done.

    6. Mr. Shareef next relied on Section 91 of the Trusts Act and said that his right must be declared in accordance with this section. The section has no application to cases of compulsory acquisition under the Land Acquisition Act for under S. 16 of the latter Act the property vests absolutely in the Crown. The property cannot be said to be held for the benefit of anybody other than the local body for whose benefit the property is acquired. For the same reasons Section 3, illust. (g) of the Specific Relief Act, does not constitute Government a trustee.

    7. Mr. Shareef next contended that on the authority of 15 C.W.N 4201 he should be allowed specific performance. That case decided nothing of the kind. It was a suit for damages for breach of an agreement of sale. Since the plaintiff claimed damages to start with and his cause of action had airsen prior to the acquisition proceedings, he was permitted to sue. The case here is entirely different. The plaintiff in the present suit has elected to sue for specific performance and even when he knew that the claim for specific performance had become impossible, he has persisted in that course. The case in 15 C.W.N 420 does not, therefore, help the appellants.

    8. The distinction between a claim for specific performance and a claim for damages is a matter of history. Before Lord Cairn's Act the Courts of Equity in England could not award damages, for as Lord Eldon said that was ‘purely at law.’

    9. After Lord Cairn's Act, the Courts of Equity could award damages additional to or alternative to specific performance. But this exercise of power was limited by certain well-settled considerations. In 52 Bom. 597,2 their Lordships have given the history of the delevopment of this branch of law in England and stated the considerations in these words:

    “In a series of decisions it was consistently held that just as its power to give damages additional was to be exercised in a suit in which the Court had granted specific performance, so the power to give damages as an alternative to specific performance did not extend to a case in which the plaintiff had debarred himself from claiming that form of relief, nor to a case in which that relief had become impossible.”

    10. The case of 52 Bom. 597, fell within the first category of cases described above under the alternative relief of damages. This case falls within the second part where the relief of specific performance has become impossible.

    11. Mr. Shareef's claim that he is seeking specific relief against the compensation money is untenable. A contract of sale of immovable property does not, of itself, create any interest in or charge on such property. The law in India is different and equitable estates not being recognised, there was no right or title, legal or even equitable, entitling the plaintiffs-appellants to the money.

    12. When Mr. Shareef was faced with this difficulty, he applied for amendment of the pleadings and claimed the relief of damages. To a case of this type the observations of their Lordships in 52 Bom. 597 apply with even greater force. The suit was launched on 15-1-1937, on the last day of limitation. The Revenue Department Notification of which the plaintiff in this case must be presumed to have knowledge came out on 20-4-1937. On 27-8-1937 the defendant in the case pointed out this fact. The plaintiff elected to pursue the remedy of specific performance even though he knew that if not impossible at the time, (the acquisition proceedings might have been abandoned) it could at any moment become impossible. Twelve years have now elapsed and having lost the claim for specific performance the plaintiff seeks the alternative relief. On a dismissal of such a suit, the plaintiff's right in respect of the contract must be deemed to be at an end and there was no reservation of any right, as if, to proceed again for damages and this is what it would amount to were the plaintiffs (appellants) allowed to amend the pleadings at this late stage. We accordingly reject the application for amendment.

    13. It is not now necessary to discuss the merits of the claim but we have satisfied ourselves that the transaction is not entirely above suspicion. The consideration for the sale is made up of various items of which the only real item appears to be Rs. 100. With regard to Rs. 1056 the lower Court has found that Rs. 1000 cannot be included. The lower Court's observations can be quoted here:

    “As regards the alleged Khata debt of Rs. 1056 it is clear from the plaintiff's own evidence that the amount of Rs. 1000 was advanced by the plaintiff not to the defendants 1-4 but to Abdul Aziz who took a mortgage from the defendants. The plaintiff could not, therefore, credit this amount of Rs. 1000 in the name of Abdul Aziz and debit the same to the defendants without the consent of the defendants. The plaintiff himself admits in his cross-examination that he had never consulted the defendants about this.”

    14. The trial Court's finding, therefore, that Rs. 1000 were not part of the money owed by the defendants appears to us proper and correct. Though the trial Court did not give its finding on the question whether the two mortgages of Abdul Aziz were within time, we cannot help noticing that prima facie they are not. Mr. Shareef claimed that the mortgage money has been paid or at any rate the amount was adjusted. There is no evidence of this which would be acceptable. When this is coupled with the fact that the thumb mark of defendant 4 is seriously in dispute and that the trial Court found it to of some other persons, we reach a stage where even if specific performance was possible, it would have been refused by us. The Court of Equity refused specific performance not only for fraud but also for trickiness for he who comes into equity must come with clean hands. Dam ages also, should not be granted in cases where the Court of Equity would not have granted specific performance: See, (1888) 39 Ch. D 5083 at pp. 518, 519. We accordingly conclude that specific performance is now impossible and we cannot decree it for “equity like nature does nothing in vain.” We cannot hold the plaintiffs-appellants entitled to the compensation money into which the property was converted because they had no right or interest in that property. We cannot all-owe the amendment as it is late and after the dismissal of the suit for specific performance, when plaintiff, Mohammad Abdul Satfcar, was warned and elected to go on with specific performance. We would not allow amendment also because on the facts found by the trial Court (with which we see no reason, whatever, to differ) we would have refused specific performance, and the claim for damages on this account would also have been negatived because damages could have been awarded only if specific performance could rightly have been claimed. The appeal, therefore, fails and is dismissed with costs.

    15. Appeal dismissed.

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    Mohamad Abdul Jabbar v. Lalmia
    (Jul 31, 1946)