P. Jagadeesan and Company, Madurai and others v. A. Krishnan and another
2001-08-21
K.GOVINDARAJAN
body2001
DigiLaw.ai
ORDER: The unsuccessful plaintiff before the lower appellate Court has filed this second appeal. 2. The plaintiff filed a suit in O.S. No.279 of 1986 on the file of the Sub Court, Madurai for specific performance of the agreement dated 29.10.1985 marked as Ex.A-9. 3. The plaintiff was a partnership firm running its business as a lessee in door No.12, Sambanthamoorthy Street, Madurai town. The said building belongs to the defendant. In the month of October, 1985 the defendant expressed his idea of demolishing and reconstructing the entire building leased out to the plaintiff. The defendant agreed that the plaintiff could continue as a tenant as before and he can also vacate only a portion of the building and continue to occupy the rest of the portion till the surrendered portion is reconstructed. The plaintiff would state that he has agreed for the same. To that effect an agreement was executed on 29.10.1985. As per the agreement the defendant agreed to lease out a total extent of 1326 sq.ft. to him in the new building and the plaintiff was allowed to carry on his business in rear portion of the building for the purpose of constructing the cellar portion. The defendant also had agreed to proceed with the construction of the back portion of the building after putting the plaintiff in possession of the front portion and the cellar portion. It is the case of the plaintiff that he temporarily shifted the business to door No.44 West Masi Street, Madurai and stored the goods in the back portion of the building. Though he was ready and willing to perform his part of the contract, the defendant has not done his part and he was going on constructing the other portions of the building without constructing the cellar portion which was agreed to be leased out to the plaintiff. According to him, the defendant did not complete the construction in two months as agreed and he was attempting to lease out the building to third parties. On the basis of the above pleadings the plaintiff has filed the present suit. 4. The defendant resisted the suit stating that the agreement is not specifically enforceable and there is no concluded and binding contract between the parties. The defendant had denied the contention of the plaintiff that he had neglected to construct the portion mentioned in the agreement.
On the basis of the above pleadings the plaintiff has filed the present suit. 4. The defendant resisted the suit stating that the agreement is not specifically enforceable and there is no concluded and binding contract between the parties. The defendant had denied the contention of the plaintiff that he had neglected to construct the portion mentioned in the agreement. It is the specific case of the defendant that he was not able to construct the cellar portion as per the plan. If the plaintiff’s request had to be complied with by providing cellar portion as per the original plan, the entire construction should have to be pulled down to the ground level to oblige the plaintiff. It is also the specific case of the defendant that the agreement had to be construed only as a promise and cannot be specifically enforced and it is impossible for the defendant to construct the cellar portion as per the original plan. On the basis of the abovesaid pleadings, he prayed that the suit has to be dismissed. 5. The trial Court decreed that suit as prayed for. So the defendant filed appeal in A.S. No.51 of 1987 on the file of the District Court, Madurai. The learned District Judge allowed the appeal by setting aside the judgment and decree of the trial Court and dismissed the suit. Hence, this second appeal. 6. Pending second appeal, the managing partner Jagadeesan died and the other partner Maran executed a release deed in favour of one Inbam, another partner. He also died pending second appeal. So, his legal representatives have been brought on record. As on date the plaintiff- partnership firm has become a proprietary concern of Inbam, in view of the release deed executed by the said Maran. 7. The substantial question of law that was framed for consideration in this second appeal is: “Whether the Court below is right in holding that the suit agreement is not enforceable?” 8. Though originally the plaintiff- partnership firm filed the present suit, the managing partner Jagadeesan died and the other partners Inbam and Maran carried on the said partnership firm. The said Inbam also died on 20.4.1997 and during his lifetime the said Maran executed a release deed dated 1.4.1999 in favour of the said Inbam and he took over the partnership business with all its assets and liabilities as a sole proprietor. 9.
The said Inbam also died on 20.4.1997 and during his lifetime the said Maran executed a release deed dated 1.4.1999 in favour of the said Inbam and he took over the partnership business with all its assets and liabilities as a sole proprietor. 9. The learned counsel appearing for the 2nd respondent has also raised an objection stating that this second appeal cannot be sustained at the instance of the present appellants as the suit agreement itself is only in favour of the partner on behalf of the partnership firm. There cannot be any dispute that the lease of the property in question was in favour of the partnership. Originally there were three partners. Since one partner, Jagadeesan died, the existing partners Inbam and Maran continued the said business. In view of the release deed executed by Maran, in favour of another partner Inbam, he took over all the assets and liabilities of the partnership firm and so it cannot be now said as contended by the learned counsel appearing for the 2nd respondent that the legal representatives of the said Inbam cannot sustain this second appeal on the basis of the agreement Ex.A-9. Since they have inherited the rights of their father, they are entitled to enforce the agreement, if they are able to sustain the case of the plaintiff. The learned counsel appearing for the 2nd respondent has relied on the decisions in Narayanan v. Umayal, (1959)1 M.L.J. 282 : A.I.R. 1959 Mad. 238 and in Commissioner of I.T. v. G.S. Mills, A.I.R. 1966 S.C. 24 in support of his submission that the appellants cannot claim any right on the agreement Ex.A-9. The said decisions do not support the learned counsel to sustain his submission. In both the decisions it is held that the legal representatives of the deceased partners are entitled to step into the shoes of the deceased. In the present case, though the agreement was entered into by the firm, due to the death of one partner out of three others, two partners continued the firm and one partner had released his right to another.
In the present case, though the agreement was entered into by the firm, due to the death of one partner out of three others, two partners continued the firm and one partner had released his right to another. Though partnership between them came to an end in view of the fact that all assets and liabilities devolved on Inbam, he is entitled to sustain the claim made by the firm on the basis of Ex.A-9 agreement as a tenant has an interest under the Transfer of Property Act in the demised premises which squarely falls within the expression “property” occurring in Sub-clause (f) of Art.19(1) of the Constitution, as held in Bombay Corporation v. Pancham, (1966)1 S.C.J. 49: A.I.R. 1965 S.C. 1008. So, the objection raised by the learned counsel appearing for the 2nd respondent in this regard is overruled. 10. The trial Court decreed the suit accepting the case of the plaintiff. The lower appellate Court rejected the case of the plaintiff on the basis that Ex.A-9 agreement did not create any right in the plaintiff to sue straightaway for possession of the suit property as the same was not a completed contract, that the suit as framed is not maintainable, that it is not possible for the defendant to deliver the same portion as agreed upon and that the agreement is an executory contract and so it cannot be enforced as the same has become impossible for performance. Ultimately, the lower appellate Court found that the suit is not maintainable and on that basis dismissed the suit by allowing the appeal. 11. The learned counsel appearing for the appellants has submitted that the lower appellate Court had erroneously proceeded with the case as if Ex.A-9 agreement creates a fresh lease, and so the agreement is an executory one. The learned counsel referring to Ex.A-9 has further submitted that the lease in favour of the plaintiff had not been terminated, and the said lease continues. By executing Ex.A-9 agreement, the parties have come to an arrangement temporarily for the purpose of putting up new construction. On the basis of the fact that the plaintiff was permitted to carry on the business in the rear portion of the suit building, he has also submitted that the plaintiff has not surrendered the lease. According to him, Ex.A-9 cannot be construed as a fresh agreement for lease.
On the basis of the fact that the plaintiff was permitted to carry on the business in the rear portion of the suit building, he has also submitted that the plaintiff has not surrendered the lease. According to him, Ex.A-9 cannot be construed as a fresh agreement for lease. On the basis of the said agreement, it is his further submission that the lower appellate Court has misconceived itself by holding that the suit as framed is not maintainable, as the plaintiff has come forward with the suit for recovery of possession straightaway, without establishing his right to file such a suit. 12. The learned counsel appearing for the Ist respondent has submitted that the plaintiff is not carrying on any business after it becomes a proprietary concern and so the plaintiff cannot enforce the agreement Ex.A-9, as it was executed only to carry on the business. He has also submitted that Ex.A-9 has to be construed only as a fresh lease, as the subject matter, namely, the suit building is not the same which was leased out originally. He has reiterated the reasonings given by the lower appellate Court in support of his further submission to sustain the judgment of the lower appellate Court. 13. The plaintiff/ tenant has filed the suit to enforce the clauses in the agreement marked as Ex.A-9. The following clauses are incorporated in the said agreement: (1) The agreement was executed between the parties so as to enable the landlord to put up the new construction. (2) After construction, the defendant/ landlord has agreed to hand over possession of the shop in the ground floor measuring 30’ 9" north-south and 11’ east-west and the cellar portion measuring 38’ north-south and 26’ east-west, measuring totally about 1326 sq.ft. to be in possession as a tenant, though the plaintiff was in possession of 1,950 sq.ft. as a tenant originally. (3) So as to enable the landlord to proceed with the construction as per the plan, the tenant should vacate the front portion, namely, cellar portion and he has to carry on the business in the rear portion of the suit building. (4) Immediately after completion of the front portion of the suit building, the tenant should vacate the rear portion. (5) The shops and cellar portion should be constructed within two months from the date of the agreement.
(4) Immediately after completion of the front portion of the suit building, the tenant should vacate the rear portion. (5) The shops and cellar portion should be constructed within two months from the date of the agreement. (6) The tenant should shift the telephone to the rear portion of the suit building at his own risk, and when he takes possession of the front portion, he can shift the said telephone. To shift the goods to the rear portion of the suit building, the landlord assured to help the tenant both in shifting and also for safety. In the abovesaid agreement, only the landlord/ first respondent has signed and the plaintiff/ tenant has not signed the same. 14. The lower appellate Court relying on Secs.105 and 107 of the Transfer of Property Act has found that unless status as a lessor is created in favour of the plaintiff/ first appellant, the plaintiff should have filed a suit for specific performance directing the defendant to execute a lease deed on the basis of Ex.A-9, in favour of the plaintiff. Without doing so, the plaintiff sued for possession of the suit building straightaway, which cannot be sustained. This finding of the lower appellate Court cannot be countenanced. On reading the clauses mentioned under Ex.A-9, it is clear that earlier lease in favour of the plaintiff was not determined, and continues. Only certain temporary arrangements had been agreed upon between the parties for the purpose of constructing the new building. 15. The tenancy between the parties was contractual tenancy and the tenancy had never been determined by issue of notice to quit. The lease can generally be determined only as contemplated under Sec.111 of the Transfer of Property Act. So, merely because the tenant had agreed to shift the business to the rear portion of the suit building so as to enable the landlord to put up the new construction in the front portion, it cannot be construed that the tenant has surrendered his leasehold right, or there will be an automatic termination of tenancy. In Ex.A-9 it is specifically stated that after construction of the said front portion, the landlord had agreed to hand over possession of the same with lesser area to the plaintiff to enable him to continue as a tenant.
In Ex.A-9 it is specifically stated that after construction of the said front portion, the landlord had agreed to hand over possession of the same with lesser area to the plaintiff to enable him to continue as a tenant. Even as stated in the latter portion of the agreement, after handing over possession of the front portion to the tenant, the tenant should vacate the rear portion, and also he can shift the telephone to the front portion from the rear portion. From the said agreement, I am not able to see any intention of the parties to surrender the leasehold right with respect to the front portion nor the landlord terminated the tenancy with respect to the same. Ex.A-9 agreement cannot be construed as if it determines the lease or creates new lease or gives right to create the same. So, the lower appellate Court is not correct in holding tat the plaintiff/ tenant should have come forward with the suit for specific performance with the prayer, directing the defendant to execute the lease deed. This approach of the lower appellate Court is only on the erroneous view that the earlier tenancy is not in existence, and continuing. 16. Moreover, the lower appellate Court has not adverted to the findings of the trial Court in this regard while reversing the same. It is well settled by the Apex Court in the decision in Santosh Hazari v. Purushotham Tiwari, (2001)2 M.L.J. 69 (S.C.): (2001)1 C.T.C. 505: (2001)1 Supreme 642 , that while reversing the judgment of the trial Court, the lower appellate Court must come into close quarters with the reasoning assigned by the trial Court and then assign its own reasons for arriving at a different finding. It has also been held by the Apex Court that unless there is some special feature about the evidence of a particular witness which has escaped the trial Judge’s notice or there is a sufficient balance of improbability to displace his opinion as to where the credibility lies, the appellate Court should not interfere with the finding of the trial Judge on a question of fact. In the present case, the trial Court found that the suit as framed is maintainable as the original lease continues. 17.
In the present case, the trial Court found that the suit as framed is maintainable as the original lease continues. 17. The lower appellate Court proceeds on the basis that Ex.A-9 is not a completed contract but it is an executory contract and so the suit filed for recovery of possession alone cannot be sustained. An executed contact consists of an act for a promise and it is the act which forms the consideration and the obligation is outstanding on one side only which is a present one, as opposed to a future consideration. The word “consideration” has not been defined in the Transfer of Property Act, 1882. But it has been used therein in the same sense as defined under Sec.2(d) of the Contract Act. The legal term “consideration” does not mean payment of money only but it means a reasonable equivalent or other valuable benefit passed on by the promisor to the promisee or by a transferor to a transferee. 18. Whereas in an executory contract, the obligation is outstanding on both sides, and it is in fact a promise for a promise, one promise is brought by the other. In other words, a contract becomes binding on the exchange of valid promises, one being the consideration for the other. 19. In the present case, the obligation is cast upon the lessor to hand over the reconstructed portion as agreed, to the lessee, and it is also specifically stated that he would complete the building within two months and hand over possession of the same to the lessee. The lessee vacated the front portion for construction of the building and the said act forms the consideration, and outstanding obligation is on the respondent to hand over the constructed portion to the plaintiff. In view of the above, there cannot be any doubt that Ex.A-9 has to be construed only as a completed contract and not an executory contract as held by the lower appellate Court. 20. While considering the issue regarding the enforceability of Ex.A-9, the lower appellate Court has come to the conclusion that it is not possible for the defendant to deliver the same portion measuring 26’ east-west, the cellar portion. According to the lower appellate Court, the requirement of the plaintiff with regard to cellar portion cannot be complied with since the entire building has been constructed at a heavy cost.
According to the lower appellate Court, the requirement of the plaintiff with regard to cellar portion cannot be complied with since the entire building has been constructed at a heavy cost. To come to such a conclusion, the lower appellate Court has relied on the evidence of P.W.1 to find that he has not objected for demolishing the cellar portion, and he has not issued any notice to the defendant requiring him to construct the cellar portion as per Ex.A-9. This finding was also on the basis that the construction was not on the basis of the sanctioned plan but by modifying the same, the defendant had reduced the size of the cellar portion and so the defendant cannot hand over possession of the portion to the plaintiff as per the measurements mentioned under Ex.A-9, and hence the suit agreement is not enforceable without demolishing the entire building. 21. The lower appellate Court has completely ignored Sec.12 of the Specific Relief Act, 1963. According to the said provision, if either party to the contract is unable to perform the whole of it or the part which cannot be performed bears a small proportion to the entire contract, the Court can direct specific performance of so much of the contract that can be performed and award compensation in money for the deficiency. In the decision in Parthasarathy Mudaliar v. Kondia Chettiar, (1966)1 M.L.J. 90 , the Division Bench of this Court, construing Sec.15 of the old Act, held that specific performance in respect of a portion of the property capable of being sold can be ordered on the purchaser paying the entire consideration and relinquishing his claim in respect of the balance of the amount and the damages arising therefrom. Applying the said principle, the learned Judge of this Court in the decision in Krishnaswami, S.V. v. Munian, (1988)1 L.W. 602, has held thus: “As per Sec.15 of the old Act the specific performance will have to be ordered as per the terms of the contract and on condition the person asking for the specific performance relinquishes all claim to further performance and all right to compensation, either for the deficiency or for the loss or damages sustained by him.
But the provisions had been changed under the new Act under Sec.12(3)(b)(i) to the effect that in such a case the party asking for specific performance need to pay only the consideration for the whole of the contract reduced by the consideration for the part which is left unperformed. Hence under the new provisions the respondent can ask for specific performance of the contract by paying money equal to the value of the lands comprised in ‘A’ Schedule. Hence both the Courts below are right in holding that the respondent is entitled to the relief of specific performance in respect of ‘A’ Schedule lands on payment of proportionate consideration equal to the value of A Schedule lands.” In view of the abovesaid decided cases, the lower appellate Court is not correct in reversing the judgment of the trial Court holding that the building has not been constructed as agreed to between the parties, and the lessor cannot hand over possession as mentioned under Ex.A-9, and so the same is not enforceable. Moreover, the lessor has not constructed the building in accordance with the plan and so he cannot be allowed to take advantage of his own wrongs. 22. The lower appellate Court has also found that Ex.A-9 is only a unilateral agreement signed by the defendant alone and so the same cannot be construed as a lease deed as contemplated under Sec.105 of the Transfer of Property Act. The lower appellate Court has also found that no rent is mentioned in Ex.A-9 with respect to the new construction. This finding of the lower appellate Court is contrary to the settled principles of law. The Division Bench of this Court in the decision in Kumaraswamy and others v. S.K. John (died) and others, (1993)2 M.L.J. 144 , while considering the similar issue, where the agreement was not signed by a purchaser, has held as follows: "28.... Learned counsel for the appellants argued that Ex.A-1 contract is unilateral in character. It has been executed by appellants 1 and 2 in favour of the first respondent undertaking to convey the suit lands on receipt of the balance of sale consideration within a period of one year. The first respondent is not a signatory to this agreement. So there is no mutuality between the parties to the contract.
It has been executed by appellants 1 and 2 in favour of the first respondent undertaking to convey the suit lands on receipt of the balance of sale consideration within a period of one year. The first respondent is not a signatory to this agreement. So there is no mutuality between the parties to the contract. In support of this contentions, learned counsel for the appellants relied on the decision in Narayana Pillai Chandrasekharan Nair v. Kunju Amrita Thangamma, A.I.R. 1990 Ker. 177, wherein an agreement for sale of property was unilaterally executed by the vendor, and towards the sale consideration a pronote, liable to become time-barred, was executed by the vendor and the pronote had become time-barred on the expiry of the term fixed for execution of sale deed. Held there was no mutuality between the parties and the agreement could not be termed as a contract in the circumstances of the case and specific performance could not be granted. But the facts in that case are different. There the pronote which ultimately became time-barred was executed in consideration of the agreement. Learned Judge has found that there was nothing which the defendant could have enforced in case of breach by the plaintiff except the pronote which was liable to become time-barred and which actually became time-barred on the expiry of the time fixed in the agreement. In K.Sheik Adham Sahib (died) v. A. Maruthamuthu Pillai, (1986)2 M.L.J. 367 , Swamikannu, J. has held that a contract to be specifically enforced by the Court, must be as a general rule, be mutual. The doctrine of mutuality means that the contract should be mutually enforceable by each party against the other and not that right for right, there must be a corresponding clause. A contact may contain a series of clauses and covenants which form the total bargain each of which is a consideration for the other. Mutuality does not mean equality and exact arithmetical correspondence. It means that each party must have the freedom to enforce rights under the contract against the other. The Specific Relief Act does not anywhere repudiate the doctrine of mutuality. So mutuality means that each party must have the freedom to enforce the rights under the contract against the other.
Mutuality does not mean equality and exact arithmetical correspondence. It means that each party must have the freedom to enforce rights under the contract against the other. The Specific Relief Act does not anywhere repudiate the doctrine of mutuality. So mutuality means that each party must have the freedom to enforce the rights under the contract against the other. But, under Sec.20(4) of the Specific Relief Act the Court shall not refuse to any party specific performance of the contract merely on the ground that the contract is not enforceable at the instance of the other party. In Nanak Builders and Investors v. Vinod Kumar Alag, A.I.R. 1991 Del. 315, as per the agreement for sale on receipt of part of consideration the vendor had to hand over possession of the land to the vendee. It was argued on behalf of the vendor that thereafter there was no security for him that he would receive the balance sale consideration, lack of this opportunity showed that the agreement suffered on account of lack of mutuality and was, therefore unenforceable. The appellant also relied on the decision of this Court in K.Sheik Adham Sahib (died) v. A. Maruthamuthu Pillai, (1986)2 M.L.J. 367 referred to above. Held on facts, that the argument of the defendant does not appear to be sound. Apart from this Sec.20, Sub-sec.(4) of the Specific Relief Act, specifically provides that the Court shall not refuse to any party specific performances of a contract merely on the ground that the contract is not enforceable at the instance of the other party. This statutory provision takes care of such an argument as has been advanced on behalf of the appellant. So we do not find any substance in the argument based on lack of mutuality in Ex.A-1 agreement advanced on behalf of the appellants." The abovesaid decision has been followed by a single Judge of this Court in Subbammal v, Masanamuthu Thevar, (1999)1 C.T.C. 36 to hold that though the agreement was signed by vendors and not by vendees, the same would bind on the vendees as mutuality had been established. 23. In the present case, though the said agreement Ex.A-9 had only been signed by the defendant, it cannot be said that the plaintiff did not accept the said agreement.
23. In the present case, though the said agreement Ex.A-9 had only been signed by the defendant, it cannot be said that the plaintiff did not accept the said agreement. As mentioned in the agreement, it is the admitted fact that the plaintiff had vacated the portion and occupied the rear portion so as to enable the defendant to put up the new construction. So, it cannot be said that there was no mutuality between the parties. It is not the case of the defendant that the plaintiff did not agree for the terms mentioned under Ex.A-9 agreement. The suit itself is only to enforce the agreement Ex.A-9. So, merely because the plaintiff has not signed Ex.A-9 agreement, it cannot be said that there was no mutuality. 24. Though under Sec.107 of the Transfer of Property Act an agreement to lease of an immovable property shall be executed by both landlord and lessee, the said provision will not apply to the facts of the present case, as Ex.A-9 agreement cannot be construed as a lease deed. Such a finding given by the lower appellate Court has been rejected by this Court on the basis of the reasonings stated supra. So, the findings of the lower appellate Court on the basis that the document Ex.A-9 was only signed by the defendant cannot be sustained in law. 25. In view of the above discussion, I am constrained to interfere with the judgment and decree of the lower appellate Court, and so they are set aside, and the judgment and decree of the trial Court are confirmed. Consequently, this second appeal is allowed. No costs.