1. This is defendant''s appeal, against whom a decree for possession by specific performance of an agreement of sale has been passed by the trial Court.
2. The plaintiff-respondent filed a suit for possession by specific performance of the agreement of sale dated 27th of Oct., 1959(Ext. P-1) whereby the defendant is alleged to have agreed to sell one-half share in bungalow No. K51/5/13 situated at Court Road, Amritsar, along with vacant land and outhouses appurtenant thereto. The suit property is an evacuee property which vested in the Custodian of Evacuee Properties and afterwards in the Central Government by virtue of the provisions of the Displaced Persons (Compensation and Rehabilitation) Act, 1954. The Central Government under the provisions of the said Act through the Local District Rent and Managing Officer put the property on auction-sale on 19th Oct., 1950. The parties are said to be displaced persons. According to the plaintiff, at one stage of the auction he and the defendant mutually agreed not to outbid each other and they both entered into a mutual under-standing hereby the plaintiff was refrained from giving any further bid at that auction, and the defendant was thus to convey one-half share of the property in favour of the plaintiff in the event of acceptance of their bid and on the transfer of property in defendant''s favour by the Central Government pursuant to the said auction-sale. The plaintiff maintains that in pursuance of that mutual understanding refrained himself from giving any further bid at the auction and the defendant gave a bid of Rs. 68,100/- which was finally accepted buy the authorities concerned.
3. The plaintiff further states that afterwards on 27th of Oct., 1959, the defendant executed in his favour the agreement, a copy of which is also Ext. P. 7 promising to convey one-half share in the property in his favour after the sale certificate had been given to the defendant by the Central Government under the provisions of the aforesaid Act. The agreement shows that the defendants was to furnish as consideration of the sale, verified claims in the aggregate amount of Rs. 68,100/- out of which verified claim to the extent of 10 per cent had been made over by him to the Government by way of earnest money at the auction-sale. The relevant terms and conditions of the agreement are as under :--
"(a) That Rs. 2,200/- (Rupees two thousand and two hundred only) are being paid as an earnest money by the purchaser to the seller by Cheque No. G-025218 dated 27-10-1959 on the Allahabad Bank Ltd., Amritsar, and when the payment of Rs. 34,050/ (Rupees thirty four thousand and fifty only) in the shape of verified clam or bonds shall be made by the purchaser to the seller and accepted by the department the sum of Rupees 2,200/- paid as an earnest money shall be refunded.
(b) That the purchaser shall submit bonds or verified claim of Rs. 34,050/- within the specified period to the seller when demanded in writing by the seller, dully supported by the required formalities.
(c) That in case the bid of the seller is not accepted by the sanctioning authority, the earnest money paid by the purchaser shall be refunded to him within a week from the intimation of rejection of the bid for which the purchaser shall be informed by the seller.
(d) That if any default is found in the claim or bonds of any of the parties, each will be solely responsible for it.
(e) That the sale deed shall be executed by the seller in favour of the purchaser when demanded in writing within thirty days from the date the property is registered in the name of the seller and the intimation of the same shall be given to the purchaser by the seller in writing and all expenses pertaining to registration etc. for the sale of half share of bungalow shall be borne by the purchaser.
(f) That the income, rents, taxes and profits, liabilities and losses of the above-mentioned property shall be shared by the parties equally till the execution of the sale is completed."
The plaintiff further pleaded that he has always been ready and willing to perform his part of the agreement but the defendant illegally and without reasonable cause has repudiated the same and has not allowed him to share the profits accruing from this property as per terms of the agreement.
4. According to the plaintiff, the earnest money of Rs. 2,200/- was duly paid on 3rd of Nov., 1959, by obtaining a cash order of the same amount as the defendant has created some dispute about the encashment of the cheque dated 27th of Oct., 1959, which was given to him at the time of agreement Exhibit P-7, Subsequent thereto, two notices, Ext. P-3 dated 21-11-1959 and Ext. P-9 dated 7-7-1960, were given to the defendant calling upon him to perform his part of the agreement. Since the defendant never performed his part and rather tried to transfer the house in dispute, the plaintiff was obliged to file a suit on 27th of July, 1960 for injunction restraining the defendant to alienate the property in any manner. A copy of the plaint is Ext. DA on the record and a copy of the written statement filed thereto is Exhibit P-12, and a copy of the judgment dated 6-12-1960 is Ext. P-13, The said suit was dismissed as it was pleaded by the defendant that the suit as such was not maintainable because so far he had not been granted the sale certificate and thus no cause of action had accrued to the plaintiff.
5. Before filing the present suit on 11th of Feb., 1966, the plaintiff again issued a notice dated 7-1-1966 Ext. P-14 calling upon the defendant to perform his part of the agreement. In para 23 of the plaint or was stated that the cause of action arose to the plaintiff on 8-4-1965 when the certificate of sale was issued to the defendant and on 10-1-1966 when the defendant refused to abide by his commitments and render the accounts.
6. In the last, a prayer was made that a decree for possession by specific performance of the contract dated 27th Oct., 1959. And for rendition of accounts from 27th Oct., 1959, till date, be passed in favour of the plaintiff against the defendant. It was further prayed that the defendant be ordered to fulfil his obligations as detailed in the agreement of sale dated 27th Oct., 1959, and get the sale deed registered, deliver possession and receive its consideration as agreed or in cash. The plaintiff be granted such other reliefs to which he is entitled under law and equity.
7. The defendant in his written statement took all possible pleas and objections. He denied having entered into an agreement as alleged by the plaintiff. He also denied that he and the plaintiff agreed at the auction-sale in question not to bid out each other and to let him alone to give bid at the auction-sale. According to him, such an agreement would be against public policy and, therefore, void in the years of law. According to the defendant, the parties on 27th of Oct., 1959 discussed the sale of one-half portion of the property in dispute in favour of the plaintiff and a proposed agreement in that behalf was drafted by the same could not be concluded so as to bind the parties. However, the defendant admitted that a cheque of Rs. 2,200/- was given to him by the plaintiff but, nevertheless, it was mutually agreed between the that the proposed agreement was to take effect only if the said cheque had been honoured by the plaintiff''s bankers. Since the said cheque was dishonoured, no binding agreement came into existence between him and the plaintiff. The receipt of any cash bank order of Rs. 2,200/- dated 3rd Nov., 1959 in lieu thereof sent by the plaintiff was denied.
8. It was pleaded that the agreement could not be enforced because, at the time of its execution, the defendant had no title or interest in the property in question, which vested, for all purposes, in the Central Government. In para 7 of the Preliminary Objections in the written statement, it was averred that the property in suit stands acquired by the Amritsar Improvement Trust through the Collector and, therefore, no suit for specific performance is legally maintainable nor can any such alleged agreement be specifically enforced. It was also denied that the plaintiff was ready and willing to perform his part of the agreement and, therefore, under these circumstances, the suit was liable to be dismissed.
9. Under the replication filed on behalf of the plaintiff, the averments made in the plaint were reiterated. In reply to para 7 of the Preliminary Objections in the written statement, suit was stated that there has been no acquisition of the property in dispute and much less is there any bar to the specific performance being granted.
10. On the pleadings of the parties, the trial Court framed the following issues :--
(1) Whether the mutual understanding as detailed in para No. 4 of the plaint was arrived at between the parties on 19-10-1959, as alleged ?
(2) Whether in pursuance of the said understanding the plaintiff refrained from bidding at he auction and eventually in 27-10-1959, and agreement to sell 1/2 of the property as detailed in para No. 1 of the plaint was executed by the defendant in favour of the plaintiff? If so, what were the terms and conditions of the said agreement?
(3) Whether the plaintiff has been ready and willing to perform his part of the contract?
(4) Whether the defendants with an ulterior motive dishonestly and with a view to wriggle out of the commitments made some unauthorised additions at the foot of the agreement without the plaintiff''s consent and knowledge. If s, to what effect on the said agreement?
(5) Whether the point does not disclose any cause of action for bringing a suit for possession by specific performance as alleged in para No. 2 of the preliminary objections ?
(6) Whether the suit merits dismissal as alleged in para No. 3 of the preliminary objections of the written statement ?
(7) Whether the agreement dated 27-10-1959 is void for the reasons as detailed in paras Nos. 4 and 5 the preliminary objections of the written statement ?
(8) Whether the plaintiff has committed breach of the terms of the agreement dated 27-10-1959?
(9) Whether the suit for specific performance is not legally maintainable for the reasons as alleged in para No. 7 of the preliminary objections of the written statement?
(10) Whether the agreement as aforesaid is unenforceable for the reasons as detailed in para No. 9 of the preliminary objections of the written statement?
(11) Whether the agreement dated 27-10-1959 cannot be specifically enforced for the reasons as detailed in paras Nos. 8 and 10 of the preliminary objections of the written statement?
(12) Whether the suit is within time?
(13) Whether the present suit is barred under the provisions of O. 22, R. 2, C. P. C. ?
(14) Whether the plaintiff is entitled to the relief of specific performance ?
(15) Whether the defendant is liable to render accounts in respect of the rents and profits and expenditure in connection with the suit property, to the plaintiff ?
(16) Whether the plaintiff is guilty of laches and delay for the reasons as detailed in para No. 19 of the written statement on merits?
(17) Whether the suit for specific performance is not legally maintainable as alleged kin para No. 1 of the preliminary objections of the written statement ?
(18) Relief.
Issues Nos. 1 and 2 were discussed together by the trial Court and were decided in favour of the plaintiff. It was concluded thereunder that the defendant executed agreement Ext. D-1 and thereby agreed to convey one-half share in the property in favour of the plaintiff. Issue No. 7 was decided against the defendant and it was held that there was no infirmity in the agreement in question on account of any vagueness of any of its terms. Issues Nos. 10, 4, 8 and 3 were discussed together and were decided in favour of the plaintiff and against the defendant. It was found thereunder that the plaintiff had always been ready and willing to perform his part of the agreement. Issues Nos. 6 and 11 were also discussed together and were decided against the defendant. According to the finding of the trial Court, the agreement in question clearly lays down that after the defendant had obtained the sale certificate in his name from the Government and the same has been registered by the Department he was then to execute a regular sale deed in favour of the plaintiff. Under issue No. 9, which is the most material issue in the present case, it was held that even though the acquisition proceedings have been taken to acquire the property in dispute but since the possession has not been taken as yet by the Improvement Trust, the property still vests in the defendants and, therefore, the plaintiff is entitled to the decree prayed for and, in any case, the principles of equality require that the defendant shares with the plaintiff the amount of compensation to be received by him on account of the acquisition of the property by the Government. Under issue No.12, the suit was held to be within time.. Issues Nos. 13, 16, 14, 5 and 7 were decided against the defendant. Under issue No. 15, the trial Court came to the conclusion that the defendant must render accounts to the plaintiff and also pay to him one-half share of the profits and income which have accrued from his property. As a result of these findings, the plaintiff''s suit for specific performance of the agreement was decreed. Along with it, a preliminary decree for rendition of accounts regarding the income and profits which have accrued to the defendants from this property from the date on which the defendant entered into possession thereof till the execution of sale deed by him pursuant to this decree, was also passed in favour of the plaintiff and against the defendant. Dissatisfied with the same, the defendant has come up in appeal to this Court.
11. During the pendency of this appeal, the defendant-appellant filed Civil Misc. Application No. 460-C of 1975 dated 10th Feb., 1975 in which it was stated that the Improvement Trust of Amritsar took possession of the house in dispute on 28th of Oct., 1973, in pursuance of the acquisition proceedings taken earlier and the compensation to the tune of Rs. 1,17,655.50 p. for the whole property has been deposited with the President, Land Acquisition Tribunal, Amritsar, on 6th of Feb., 1973 and, therefore under these circumstances, the specific performance of agreement has become impossible and the appellant is in no position to execute any sale deed for the property in dispute in favour of the plaintiff as the property stands transferred in the name of the Improvement Trust. Notice of this application was given to the plaintiff-respondent and a detailed reply dated 1st of Feb., 1981, was filed thereto. The taking over of the possession by the Improvement Trust was not specifically denied though it was stated that it is still very much in dispute as to whether the Improvement Trust has been able to take actual physical possession or not. However, it was admitted that the award dated 26th August, 1967, has been made and since there was a dispute as to the payment of compensation, the same was deposited u/s 31(2) of the Land Acquisition Act, 1894, with the Tribunal. However, the defendant-appellant filed along with the said civil miscellaneous application, a certificate from the Land Acquisition Collector, Amritsar Improvement Trust, dated 27th March, 1974, to the effect that the said amount of compensation was deposited and the possession of the house was delivered to the Trust on 28th Oct., 1973. This fact was never specifically denied by the plaintiff-respondent. The said civil miscellaneous application was direction to be heard with the main case, vide this Court''s order dated 28th Feb., 1975 and thus the same will be dealt with subsequently in this order.
12. I have heard the learned counsel for the parties and also gone through the relevant documents on the record. Learned counsel for the defendant-appellant contended that the agreement of sale dated 27th of Oct., 1959 was unenforceable as there was interpolation and the same was against public policy because the parties could not enter into any such agreement as alleged by the plaintiff. In any case, the plaintiff had not enough money in his bank on the date of agreement and, therefore, the cheque was rightly dishonoured and on that agreement became inexecutable as per its terms.
13. It was next contended that the plaintiff was not ready and willing to perform his part of the agreement. Even if the same was repudiated by the defendant, still the plaintiff was to show his readiness and willingness to perform his part. According to the learned counsel, the plaintiff has already sold his verified claim in the year 1961 whereas the sale certificate was issued in favour of the defendant on 3rd April, 1965 and the same was registered on 19th April, 1966. Thus, the plaintiff should have proved his readiness and willingness on these relevant dates to perform his part of the agreement. Moreover, according to the learned counsel, the defendant could not enter into any such agreement as to convey the title in the property in the year 1959 because he had no such title at the at time in his favour. The title, if any, would have vested in the defendant-appellant on the execution of the sale deed in his favour.
14. It was lastly contended that the performance of the contract became impossible because the property in dispute was acquired under the Land Acquisition Act in as much as even possession had been taken by the Improvement Trust on 28th Oct., 1973. And, therefore, no decree for specific performance of the agreement could be passed under these circumstances. In any case, unless a sale deed was executed in favour of the plaintiff, no title can be said to have passed to him and, therefore, he was not entitled to claim any rendition of accounts from the date of the agreement till the execution of the sale deed, if any, as per clause (f) of the agreement Ext. P-7.
15. As regards the point as to whether there was any interpolation or not in the agreement, and, therefore, the same was not enforceable, I do not find any force in the contention raised on behalf of the appellant. From the evidence on the record, it is amply proved that the said interpolation was at the instance of the defendant. It does not bear the signature of the plaintiff nor was he said to be present at the time when the said clause was inserted. From the conduct of the defendant, it is quite evident that he has no regard for truth. He is capable of making any statement which may suit his interests. The trial Court has discussed the entire evidence in detail and the learned counsel for the appellant was unable to challenge the same. From the copy of the accounts book Ext. P.W. 2/3 it is quite clear that the plaintiff had enough money in his account as to honour the cheque for a sum of Rupees 2,200/- The same was dishonoured as the signatures of the plaintiff did not tally. The finding of the trial Court on this matter that this was done by the defendant because the cheque was in his possession and the said interpolation was made with a purpose to repudiate the agreement on that account, is therefore, maintained.
16. The contention of the earned counsel for the appellant that the said agreement was against public policy has also no force. In support of his contention, he relied upon Chattamal Jethmal v. Rewachand AIR 1914 Sind 165; Parduman Chand v. Kashmira Singh AIR 1943 Lah 100 ; and
17. After hearing the learned counsel for the parties, and going through the case law cited at the Bar, I am of the considered opinion that the said agreement between he parties could not be said to be against public policy. In Parduman Chand''s case (supra) what was held was that an agreement by the intending bidders at an auction forming a ring to share the profits resulting from the "knock out" is against public policy, which is not the position in the present case. Such a matter has been discussed in Bhagwant Genuji Gireme''s case (supra) and held that a partnership formed solely with a view to take toll contracts at a public auction is in itself not illegal. The principle of public policy cannot be made to sons who agreed not to bid against one another at a public sale held for forming out public revenues. The combination of persons ho agreed not to held for forming out public revenues. The combination is not rendered illegal merely because Government is a party to the sale or that the proceeds of the sale would be credited to public revenues or that it might result in possible loss tot he Government. Nor can the combination be regarded as other than innocent merely because it discouraged competition amongst the partners themselves. Similarly, in the present case, if both the parties agreed not that the defendant will convey half of the property in favour of the plaintiff in case his bid was accepted and the sale deed was duly executed in his favour could not be said to be against any public policy. Therefore, there is nothing wrong in the finding of the trial Court in this respect and the same is affirmed.
18. It was next contended on behalf of the defendant-appellant that the plaintiff was never ready and willing to perform his part of the contract. In any case, there was no question of any repudiation on the part of the defendant because, according to the terms of agreement, he was required to execute the sale deed in favour of the plaintiff from the date the property was registered in the name of the defendant. According to the learned counsel, though the sale certificate in favour of the defendant was issued on 3rd April, 1965, yet the same was registered on 19th April, 1966 whereas, the present suit was filed on 15th Feb., 1966. Therefore, under these circumstances the plaintiff has failed to prove his readiness and willingness at the relevant time even if there was any repudiation on the part of the defendant. In support of his contention, he referred to
19. The most material issue in this appeal is as to what is the effect of the proceedings under the Land Acquisition Act, taken at the instance of the Improvement Trust for implementation of its scheme. It is the common case of the parties now the notification under Sections 4 and 6 of the Land Acquisition Act, 1894, were issued in the year 1962 and the award was given by the Collector on 26th July, 1967, i.e. during the pendency of the suit in the trial Court. Now. On 28th Oct., 1973, the possession has also been taken by the Improvement Trust as is evident from the certificate of the Land Acquisition Collector, Amritsar Improvement Trust, filed along with Civil Misc. Appln. No. 460-C of 1975, which has not been denied in the reply filed to the said application. This was the subject mater of issue No. 9 before the trial Court. The trial Court took the view that since the possession had not been taken u/s 16 of the Land Acquisition Act as yet, the property as such does vest in the State Government and legally it still remains to be property of the owner. Reliance in this respect was placed on
" ''Sale defined--''Sale'' is a transfer of ownership in exchange for a price paid or ownership or part paid and part promised.
Sale how made--Such transfer, in the case of tangible immovable property of the value of hundred rupees and upwards, or in the case of aversion or other intangible thing, can be made only by a registered instrument.
In the case of tangible immovable property of a value of less than one hundred rupees, such transfer may be made either by a registered instrument or by delivery of the property
Delivery of tangible immovable property takes place when the seller places the buyer, or such person as he directs, in possession of the property.
Contract for sale--A control for sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties.
It does not, of itself, create any interest in or charge on such property."
The learned counsel for the plaintiff-respondent tried to distinguish these authorities by contending that the present agreement Exhibit P-7 is not simpliciter an agreement for sale. From the terms of the agreement, the learned counsel contended, it is quite evident that the parties were entitled to share equally income, rents, taxes, profits, liabilities and losses with respect to the property in dispute till the execution of the sale deed was completed. This term, according to the earned counsel, being an integral part of the whole agreement, created a charge on the property in dispute and, therefore, the said agreement is not covered by the provisions of Section 54 of the Transfer of Property Act. However, no case law has been cited by the learned counsel to support his contention.
20. After going through the case law relied upon by the learned counsel for the appellant, I am of the considered opinion applicable to the facts of the present case. In
21. For the reasons recorded above, this appeal succeeds, the judgment and decree of the trial Court are set aside and the plaintiff-respondent''s suit for specific performance of the contract is dismissed with no order as to costs.
22. Appeal allowed.
