Ananta Kumar Sardar v. Shishu Bala Mondal — 1989 DIGILAW 384 (CAL)

JUDGMENT This appeal is directed against the judgment and decree passed by the learned Subordinate Judge, Alipore in Title Appeal No. 124 of 1971 reversing those passed by the learned Munsif at Baruipur in Title Suit No. 343 of 1968. The plaintiff/appellant filed the said suit against the defendant/respondents for specific performance of contract for sale. The plaintiff's case was that the plaintiff sold 11/112 decimals of land described in the schedule to the plaint to defendant nos. 2 and 3 by a Kobala dated 6.6.64 (Ext. A2). Defendant nos. 2 and 3 in turn executed a deed of agreement (Ext. 1) stipulating that the defendant would recovery the property to the plaintiff for a consideration of Rs. 200/- if they wanted to sell the said property. Defendant no. 3 transferred his share in the disputed property to Ashit and Netai in terms of the compromise decree in Title Suit no. 459 of 1965. Defendant no. 2 sold his share to defendant no. 1 by a Kobala. The plaintiff's case was that under the agreement dated 6.6.64, the plaintiff was entitled to get the property from the transferee defendant no. 1. 2. Defendant no. 1 contested the suit by filing a written statement in which it was pleaded inter alia that the agreement could not be split up for specific performance and that the was a bona fide purchaser without notice of the agreement and the contract could not be enforced against her. It was further pleaded that the agreement was void as the plaintiff executed it while he was a minor. 3. The learned Munsif held that the agreement for reconveyance being executed by the father and natural guardian of the plaintiff for his benefit the contract was valid and binding upon the plaintiff. He further held that it was a personal covenant and not a restraint on alienation within the meaning of s. 10 of the Transfer of Property Act. He further held that the defendant no. 1 purchased the suit property from the defendant no. 2 with notice of the said agreement and therefore the contract was enforceable against him. The learned Munsif therefore, passed a decree for specific performance of contract in part upon payment of proportionate consideration of Rs. 100/-. 4. He further held that the defendant no. 1 purchased the suit property from the defendant no. 2 with notice of the said agreement and therefore the contract was enforceable against him. The learned Munsif therefore, passed a decree for specific performance of contract in part upon payment of proportionate consideration of Rs. 100/-. 4. The learned Subordinate Judge who heard the appeal preferred by the defendants held that the plaintiff was not entitled to split up the claim and specific performance of the contract in part. He further held that the defendant no. 1 was a bona fide purchaser for value without notice. He further held that it was not within the competence either of the Manager of the minor's estate or of the guardian of the minor to bind the minor or minor'" estate by a contract of purchase and as the minor was not bound by the contract, there was no mutuality and that consequently the minor could not obtain specific performance of contract. He further held that though the agreement was not a transfer and it was not hit by s. 14 of the Transfer of Property Act, still the principle of the rule against perpetuity would apply as regards the agreement for sale or resale. He held that the agreement was void under the rule against perpetuity. The learned Subordinate Judge accordingly allowed the appeal and set aside the judgment and decree passed by the learned Munsif and dismissed the suit. Being aggrieved, the plaintiff has preferred this second appeal. 5. Mr. Bhattacharjee, learned Advocate for the appellant has challenged all the aforesaid findings of the learned Subordinate Judge. He has contended that the contract for reconveyance being not a transfer of interest in the land is not hit by s. 10 of the Transfer of Property Act nor cannot be said to offend the rule against perpetuity. He has further contended that the agreement being entered by father and natural guardian of the plaintiff for his benefit was binding on him and the plaintiff could, therefore, enforce the contract and that after enactment of sub-s. (4) of S. 20 of the Specific Relief Act, 1963, there is no scope for contending that the doctrine of mutuality will defeat a claim for specific performance. He has further contended that the deed of agreement is a registered one and on defendant no. He has further contended that the deed of agreement is a registered one and on defendant no. 1’s own showing, she did not make any search or enquiry at all before purchase and had she made any search or enquiry as a prudent purchaser would do, she would have come to know the existence of the agreement for reconveyance and it must be held in such circumstances that the defendant no. 1 had notice of the disputed agreement for reconveyance. He has further contended that in the facts of the case, there was no bar to passing a decree for specific performance of contract in part. Mr. Chowdhury, learned Advocate for the respondent has, on the other hand, supported all the findings of the learned Subordinate Judge. 6. Let me first consider whether the agreement is void under s. 10 of the Transfer of the Property Act. Section 10 of the Transfer of Property Act refers to a condition absolutely restraining alienation by the transferee of the estate transferred. It has no application to an agreement affecting the transferee personally. In this case the plaintiff sold the land to the defendant nos. 2 and 3 and on the same date defendants nos. 2 and 3 executed a separate agreement that if they wanted to sell the land they would sell it back to the plaintiff for the same price and would sell it to no one else unless the plaintiff declined to purchase. The said contract would be binding on the parties and their heirs, assigns and legal representatives. No time limit was fixed. If this had been a condition of the sale it would have been invalid as a restraint on alienation but this was a special independent personal contract between the parties which was binding on them and could be enforced against a transferee with notice. 7. The rule against perpetuity does not apply to personal agreement which does not create an interest in property, An agreement for the purchase of land creates in English law an equitable interest in the land and is, therefore, so far as specific performance is concerned, subject to rule against perpetuity. Before the Transfer of Property Act a contract of sale of land was treated as creating an equitable interest in land for Indian cases followed the English law. Before the Transfer of Property Act a contract of sale of land was treated as creating an equitable interest in land for Indian cases followed the English law. Accordingly, in a case decided in 1875 a covenant for pre-emption unlimited in point of time occurring in a deed of partition was held to offend the rule against perpetuity (Sreemutty Trippora v. Juggernath (1876) 24 WR 321 but there has been a change in the legal position in India since the passing of the Transfer of Property Act. Section 54 enacts that an agreement for the sale of land does not of itself, create an interest in land. There was considerable conflict of decisions as to the application of the rule against perpetuity to such agreement. This conflict has been resolved by the Supreme Court in Ram Baran v. Ram Mohit AIR 1967 SC 744 where it held that a mere contract for sale of immovable property does not create any interest in immovable property; it follows that the rule against perpetuity cannot be applied to a covenant of pre-emption even though there is no time limit within which the option has to be exercised. Therefore, the view taken by the learned Subordinate Judge is clearly wrong. 8. The next point for my consideration is whether the lower appellate court was right in holding that the minor could not obtain specific performance of contract as there was no mutuality. Application of the doctrine of mutuality to specific performance of contract became the settled law in India on the authority of Privy Council in Mir Sarwajan v. Fakhruddin, 16 CWN 74 : ILR 39 C 232. In that case during minority of the plaintiff his guardian entered into a contract for purchase of property. It was held that it was not within the competence of a minor's guardian to bind the minor or the minor estate, by a contract for the purchase of immovable property for the minor it was further held that as the minor was not bound by the contract, there was no mutuality and the minor who had by then attained majority was not entitled to a specific performance of contract. This principle was applied in a long catena of cases in different High Courts till 1948. This principle was applied in a long catena of cases in different High Courts till 1948. Thereafter in Subramanyan v. Subba Rao AIR 1948 PC 95 : 75 IA 115 the Privy Council had to deal with a case where the mother of an infant as his natural guardian entered into a contract for the sale of the minor's property to a stranger. The contract was for the benefit of the minor and in pursuance of the agreement, the transferee was put in possession of the property. No sale deed was however executed, and the minor through his guardian instituted a suit for recovery of possession of the property contracted to be sold on the ground that the contract was not binding on him. It was held by the Privy Counsil that the defendant was protected under s. 53A of the Transfer of Property Act (doctrine of part performance), and the minor for whose benefit the contract was entered into answered most aptly the description of the 'transferor' in the sense in which the expression was used in the section. It was held that the guardian was competent to enter into such a contract. On the strength of this decision it has been held by Viswanath Shastri, J. of the Madras High Court in Ramlingan v. Babanambal (1951 AM 431) that when the mother of a Hindu minor entered into a contract for sale of the minor's property for purposes considered under the Hindu law as necessary, and there was no doubt about the competency of the guardian to act on behalf of the minor, the contract could be specifically enforced against the minor, and the line of authorities beginning with Mir Sarwarjan's case had no application to such circumstances. I most respectfully agree with this view. In this case father and natural guardian of the plaintiff entered into the contract for reconveyance which was obviously for the benefit of the minor. The contract can, therefore, be enforced by the minor against the transferee. 9. The Legislature set the controversy at rest by enacting sub-s. (4) of s. 20 of the Specific Relief Act, 1963 while recommending insertion of that sub-section the Law Commission observed that there was still scope for application of the rule in Mir Sarwarjan's case but they did not consider it necessary to import the doctrine of mutuality into the codified law of specific performance. On the contrary they wanted to do away with the doctrine by insertion of the new sub-section which they did and which was enacted of sub-s. (4) of s. 20. Accordingly, it was provided in s. 20. (4) of the new Act that specific performance of a contract hall not be refused on the ground that the contract is not enforceable at the instance of the other party. Thus there is no further scope for contending that the doctrine of mutuality will defeat a claim for specific performance and the lower appellate court was obviously wrong. 10. The next question that falls for consideration is whether the lower appellate court was right in holding that the defendant no. 1 was a bona fide purchaser for value without notice. Under s. 3 of the Transfer of Property, a person is said to have notice of a fact when he actually knows the fact, or when, but for wilful abstention from an inquiry or search which he ought to have made, or gross negligence, he would have known it. It is a duty of a purchaser to investigate title. Defendant no. 1 has deposed that her purchase was conducted by her brother on her behalf. Her brother has been examined as DW2, who deposed that he did not search the registration office nor he asked the defendant nos. 2 and 3 anything before purchase by his sister. In this case, therefore, there was absolutely no search or enquiry before purchase. The agreement for reconveyance is a registered document. The enquiry or search in the registration office would have revealed the existence of the agreement for reconveyance. Absence of enquiry or search whatever before purchase indicates wilful abstention or at any rate gross negligence. Constructive notice may be safely inferred in these circumstances. The lower appellate court was not, therefore, justified in holding that defendant no. 1 had no constructive notice of the agreement in question. 11. The last question for my consideration is whether the plaintiff/appellant is entitled to specific performance of a part of contract. The general rule is that the court will not order specific performance of a part of a contract. Sub-sections (2) to (4) of s. 12 of the Specific Relief Act provide exceptions. 11. The last question for my consideration is whether the plaintiff/appellant is entitled to specific performance of a part of contract. The general rule is that the court will not order specific performance of a part of a contract. Sub-sections (2) to (4) of s. 12 of the Specific Relief Act provide exceptions. While sub-s. (2) relaxes the rule in favour of both the parties, sub-s. (3) does so for the benefit of the party not in default. In this case defendant no. 3 transferred undivided 1/2 share in the suit property to third parties in a compromise decree in another suit and the defendants are, therefore, incapable of performing that part of the contract. The part left unperformed is considerable and not a small proportion to the whole in value Sub-section (2) has, therefore, no application but in my opinion there is no bar to the application of sub-s. (3) in this case. Section 12(3) of the Specific Relief Act, 1963 provides that where a party to a contract is unable to perform the whole of his part of it, he is not entitled to obtain a decree for specific performance if the part which must be left unperformed form a considerable part of the whole, though admitting of compensation in money or if the part which must be left unperformed does not admit of compensation in money. However, at the suit of the other party, the Court may direct such a party in default to perform specifically so much of his part of the contract as he can perform if the party bringing the suit, that is the plaintiff, fulfils the conditions laid down in clauses (i) and (ii) of that sub-section. These conditions are firstly that in the case in which the pent which must be left unperformed forms a considerable part of the whole and admits of compensation in money, the plaintiff must pay the agreed consideration for the whole of the contract reduced by the consideration for the part which must be left unperformed while in the case in which the unperformed part does not admit of compensation in money the plaintiff must pay consideration for the whole of the contract without any abatement. The second condition is that in either of the above two cases, the plaintiff must relinquish all claims to the performance of the remaining part of the contract and all right to compensation, either for the deficiency or for the loss or damage sustained by him through the default of the defendant. In this case the part which must be left unperformed forms a considerable part of the whole and it admits of compensation in money. The lower appellate court was therefore, wrong in his view that sub-s. (3) of s. 12 has no application in the present case. 12. In the result, the appeal is allowed with costs and the judgment and decree of the lower appellate court are set aside and those of the trial court are restored and affirmed. Appeal allowed.