CASE NO.: Appeal (civil) 38 of 1948 PETITIONER: GORAKHRAM SADHURAM RESPONDENT: LAXMIBAI WIFE OF INDERLAL NANDLAL DATE OF JUDGMENT: 14/03/1950 BENCH: S. FAZAL ALI & M.P. SASTRI & M.C. MAHAJAN & B.K. MUKHERJEA & S.R. DAS JUDGMENT:
JUDGMENT
AIR 1953 SC 443
The Judgment was delivered by :
MAHAJAN J. : This is an appeal from a judgment and decree of the High Court
of Judicature at Bombay dated 26-1-1948 reversing the decree passed by
Chagla J. on 7-7-1947.
2. The suit was brought by one Laxmibai, wife of Inderlal Nandlal of Malad
on 26-5-1943 for specific performance of an agreement dated 29-4-1929, said
to have been arrived at between her and Messrs. Gorakhram, Sadhuram, a firm
carrying on business at bankers and commission agents at Kalbadevi Road,
Bombay. By the agreement the defendants were to transfer the bungalow in
suit at Malad to the name of the respondent whenever demanded on payment of
costs of such transfer and were to debit the sum of Rs. 40, 000 the value
of the bungalow, to the current account of the firm of Messrs Thackersidas
Nandlal, of which the plaintiff’s husband and father-in-law were the owners
and which firm was indebted in a large amount to Messrs. Gorakhram
Sadhuram.
The principal defence to the suit was that the plaintiff was not a party to
the agreement and could not therefore sue upon it. It was also pleaded that
the suit was barred by S. 66, CPC, but no. issue was raised on the point
and the plea was later on abandoned. In spite of the abandonment of the
plea, the point was argued at the hearing.
3. Chagla J. dismissed the plaintiff’s suit and held that the plaintiff not
being a party to the agreement, could not claim specific performance of it.
He further held that the suit was barred by S. 66, CPC This decision was
reversed in appeal by Bhagwati and Tendolkar. JJ. on the finding that the
plaintiff was a party to the agreement and was ready and willing to perform
her part of the contract. It was further held that the suit was not barred
by S. 66 CPC. Chagla J. has also held that the plaintiff was not ready and
willing to perform her part of the contract inasmuch as her husband was not
in a position to pay the sum of Rs. 40, 000, the price fixed for the
conveyance of the house.
This aspect of the case, however, was not pressed before the Court of
appeal by the counsel for the respondent and was not agitated before us.
Having regard to the terms of the agreement which was arrived at between
the parties, the defendants were bound on being called upon to do so, to
transfer and convey the property to the name of the plaintiff, she being
under an obligation to pay the costs, charges and expenses in connection
therewith. The consideration money of such transfer, i.e. Rs. 40, 000 had
to be debited on account of the firm. There was no. question whatever of
any cash payment having to be made by the firm or its partners.
4. Mr. Setalvad contested the judgment of the High Court in appeal on three
grounds. (l)That the High Court had erroneously held that the plaintiff was
a party to the contract and could claim specific performance of it. It was
contended that this finding was not supported by evidence on the record and
really ran counter to it. (2) That the suit was barred by S. 66, CPC. (3)
That specific performance being a discretionary relief and the position of
the parties having altered since 1929, the Court should not specifically
enforce the agreement after a period of over 14 years.
5. In order to judge the propriety of these contentions it is necessary to
state a few facts. The plaintiff’s husband and father-in-law effected a
number of mortgages in favour of the appellant firm the first of them
having been made on 20-9-1922. This mortgage comprised the property in
dispute which is a bungalow at Malad, a suburb of Bombay. In the year 1925
a suit was brought on this mortgage and a preliminary decree passed in
favour of the appellant on 15-4-1925. This was made absolute on 8-4-1926.
Proceedings in execution of the final decree were pending when on 28-8-1929
the agreement in dispute was made.
The terms of the agreement are contained in two letters dated 29-8-1929 and
30-8-1929. The letters are in these terms : –
I
“To Shahji Gorakhramji Sadhuramji. Please read Jaigopal (salutations) of
Nandlal and Inderlal Nandlal. Further, our two ginning factories and one
pressing factory together with the compound etc. at Panderkowda which were
mortgaged with you for Rs. 3, 15, 000 are sold by us to you for Rs. 3, 15,
000. We shall execute any documents which you may ask us to do at the time
you got the same transferred to your name. Further the house at Kalbadevi
in Bombay, the home at Gaiwadi and the bungalow at Malad which have been
mortgaged for Rs. 540, 000 are sold by us for Rs. 4, 40, 000 as follows : –
The house at Kalbadevi l, 15, 000 and the bungalow at Malad for Rs. 40,
000.
Further, you have obtained a decree against us and also obtained an order
for auction sale by the Commissioner. Whether you get the properties
auctioned or sold, we shall agree to both these things. Whenever you ask us
to execute any documents in respect thereof, we shall do the same. We shall
not raise any objection.
Further, you will have to get bungalow one in number at Malad transferred
to the name of the mother of Chiru Kanhaiyalal Devda. Whatever expenses
incurred in that behalf will be borne by her. You will please debit Rs.
40.000 to us. And our diamond ring one in number is pledged with you. The
same shall have to be given to the mother of Chiru Kanhaiyalal. Please
debit Rs.1, 500 in respect thereof to us.
Further, as regards monies that may remain due to you under the mortgage
and current accounts, we shall pay the same, to you whenever we can.
Further, our heir shall not be entitled to raise any objection in this
behalf. He shall have to agree to all these
arrangements…………29-8-29.”
II
” To Shahji Nandlalji Thakerseydasji and Inderlalji Nandlalji. Please read
Jaigopal (salutations) of Gorakhram Sadhuram. Further, your letter dated
10th of Bhadarva Vad (i.e. 30-8-1929) is received. What is stated therein
is agreed to by us. You have asked us to get transferred bungalow 1 at
Malad to the name of Shah Kanhaiyalalji’s mother and to give one diamond
ring to her. We agree to the same whenever you ask us to get the bungalow
transferred to her name, we shall do so at your costs. We shall give one
ring of diamond to her 30th or 31st August 1929.”
In pursuance of this arrangement the diamond ring was given by the
appellants to the plaintiff respondent within a month or two of its date.
On 30-4-1930 the appellants purchased the Malad house at the auction sale.
The sale was confirmed on 4-7-1930 and a sale certificate was obtained by
the appellants in their name but the cost of the stamp for the sale
certificate was paid on behalf of the plaintiff by her husband or father-
in-law but out of her money.
It is common ground now that the plaintiff was put in possession of the
house soon after and she placed her furniture in it, effected repairs and
paid the taxes. As a matter of fact, the taxes were paid by the appellants
and subsequently recovered in cash from the plaintiff either directly or
through her husband. Considerable amount was spent by her in effecting
improvement to the house and she remained in possession of it and even now
is in possession of it. When she demanded a conveyance from the appellant
firm, they declined to do so with the result that the plaintiff had to
bring this suit.
6. After confirmation of the sale of this property and other properties the
appellants obtained a personal decree against the mortgagors on 18-8-1930
in the sum of Rs. 5, 89, 000 with future interest. In the year 1931 the
plaintiff’s father-in-law died. Her husband was adjudicated insolvent a few
months after the institution of the suit.
7. The first question for determination is whether in view of the contents
of the two letters above mentioned and the oral evidence in the case it can
be held that the plaintiff was a party to the contract in respect of the
diamond ring and the Malad house. The letter of 29-8-1929 in clear terms
states that the bungalow was to be transferred in the name of the plaintiff
and the expenses of the conveyance were to be borne by her and that the
diamond ring was to be given to her. The letter of acceptance given by the
appellants accepted this proposal. It proceeded however to state that
whenever the mortgagors asked the bungalow to be transferred in the name of
the plaintiff it will be done at their cost and the ring will be given to
her.
The letters are not formal legal documents and no. question was raised that
the parties were not ad idem about the terms of the arrangement. There can,
however, be no. question that the intention of the parties was as expressed
in the first letter that plaintiff would have to pay the costs of the
conveyance and get it executed in her name. The appellants agreed to this.
In the letter of acceptance the appellants were treating the mortgagors and
their family including the plaintiff as one group because it is obvious
enough that the transfer of the house in the name of the plaintiff was with
the intention of benefiting her, her children, and, as a matter of fact,
the whole family. As regards the ring, she was the sole promisee as it
belonged to her.
8. The oral evidence in the case consists of the depositions of three
witnesses, namely, the plaintiff, her husband, Inderlal Nandlal, and her
son Kanhaiyalal. All the witnesses unanimously stated that the arrangement
which was finally evidenced by the two letters above mentioned was made at
a meeting held at the Kalbadevi house of the mortgagors in the presence of
all the family members. The creditors were represented by their muneem
Murlidhar who unfortunately is dead and therefore could not appear in the
witness box.
Kanhaiyalal deposed that he was sitting near his father and grandfather and
Murlidhar and that his mother was sitting nearby in an adjoining room, that
the plaintiff told him that as the accounts were being settled she should
get the house to give in and some jewellery, that as instructed by his
mother, he went and communicated this to Murlidhar. It was not denied that
she is a purdanashin lady and would not herself take part in any
negotiations. She could only speak through her son or her husband and the
question as to whether she was a party to the agreement or not has to be
decided not on the basis that she herself actively took part in the talk
but on the basis that she was vitally interested in the agreement that she
demanded the house for herself and the creditor’s representative made
certain stipulations with her though the actual talk on her behalf was done
by her son or husband.
The evidence amounts to this that a demand was made by the plaintiff from
the creditor for the house and the jewellery and the reply was that it had
been decided to give her the ring and the Malad house and to this she
assented. The plaintiff in her statement deposed that she and Murlidhar
agreed to the transfer of the Malad house in her name and also as to the
ring, that she agreed to pay the costs of the transfer, that Murlidhar was
sitting opposite to her and though he was not willing to give the house and
the ring to her husband and father-in-law on the ground that they were
speculators, he was prepared to give them to her if she wanted both these
things. The statement of the plaintiff read as a whole shows that she was a
party to the negotiations that were being carried on with the creditor on
behalf of the family and was not present there as a mere silent spectator.
The creditor’s representative was interested in arriving at a settlement of
his claim with the whole family and not only with the two mortgagors. It
was the family property that had been mortgaged and was going to be sold in
execution of the mortgage decree. The decree-holders in order to avoid any
objections to sale of joint family property either by the debtors on by
their son or by the plaintiff, thought it prudent to make an arrangement to
which all members of the family were parties so that they might not harass
them in execution proceedings and in bringing to sale the property. It
would not have been to their advantage to enter into an arrangement only
with the mortgagors because it would then be open to the other members of
the family who had claims on the joint family property to raise all kinds
of objections to the sale of the property. It was to avoid these objections
that this arrangement was arrived at.
The mortgagors were quite willing to part with the mortgaged property but
the other members of the family would not have joined this arrangement
unless they got some benefit out of it, and were able to salvage part of
the joint family estate for themselves and their descendants and also for
the comfortable living of the mortgagors as well. If this arrangement was
only going to be with the two debtors, then it was unnecessary for the
creditor’s representative to come for this purpose to the residential house
of the debtors and meet all the members of the family at a conference.
Plaintiff’s presence at the meeting suggests that it was intended to bind
her with the terms of the arrangement by giving her the ring and the house,
so that later on she may not raise any objection claiming the ring as her
stridhana property and making a claim for the house for her residence. It
was also thought to have the son there because he might claim that the
mortgages had been made for debts which were not binding on him because
they had been incurred not for family purpose but for speculation. In view
of these circumstances I am not prepared to disbelieve the plaintiff when
she states that she and Murlidhar agreed to the terms incorporated in the
letter as regards the house and the ring.
Chagla J. though he accepted her evidence as to the facts stated by her,
was not prepared to hold on that statement that actually the agreement was
made between her and Murlidhar. He thought that the arrangement made
between the husband and the father-in-law of the plaintiff and Murlidhar
was only communicated to her. We have carefully read the evidence of the
plaintiff and we consider that she has given her statement in a
straightforward manner and we see no. reason to disbelieve her statement
when she says that both she and Murlidhar agreed to the terms of the
arrangement. The clause in the debtors’ letter that she would be liable for
payment of costs of the conveyance could not have been entered in it
without her consent. About the ring, it was she and she alone who would
have been keen to get it and without her demand having been met the
amicable settlement could not have been made.
9. The plaintiff’s husband, Inderlal Nandlal, also deposed that Murlidhar
had told his wife that the diamond ring and the house would be given to her
whenever she wanted them and that it was agreed that she would pay the cost
of the transfer of the Malad Property in her name. Mr. Setalvad laid
considerable stress on certain statements elicited in his cross-
examination. The witness said that the plaintiff did not understand
accounts & was not present when the accounts were being settled, that
Murlidhar was not willing to give anything to him and to his father, but
that he was willing to transfer the house to his wife, that he and his
father agreed not to object to the auction sale if Murlidhar agreed to
transfer the Malad house to his wife’s name, and that the terms of the
agreement were settled between Murlidhar on the one hand and by him and his
father on the other and that his wife was present in the room.
It was urged that according to this statement the agreement was really made
between Murlidhar and the plaintiff’s husband and father-in-law and that
the plaintiff’s statement that she had arrived at an agreement with
Murlidhar about the house and the ring cannot be accepted as true. We do
not see any force in this contention. On the materials on the record it
cannot be doubted that the demand for the diamond ring and for the release
of the house from the mortgagees emanated from the plaintiff.
Whether that demand was conveyed to the creditor’s representative directly
by her or through her son or husband is not very material because such a
procedure would be in keeping with the habits and modes of the life of the
people who were transacting the business. It also cannot be doubted that
the creditor’s representative was not prepared either to give the ring or
the house to the mortgagors who would not have retained these things for a
very long time and the very purpose of giving them would have been
defeated. Thus the promise to give the house and the ring could only have
been made to the person who made the demand and that person therefore would
be the promisee under this agreement as regards these two items of
property.
The creditor’s representative, whether directly in conversation with her or
by an open declaration in her presence, made a promise to the plaintiff
that the house and the ring would be given to her. That she did become the
promisee under his contract is clearly proved not only by the oral evidence
but from the recital in the first letter in which it was clearly stipulated
that she would pay the costs of the conveyance. It was in the status of a
promisee that the conveyance had to be executed in her name. This
construction of the agreement is fully supported by the conduct of the
promisers immediately after the contract had been made.
The promisors started performing their promise within two months of its
having been made by directly handing over the ring to the plaintiff
regarding which demand was conveyed to them by her through her husband. As
soon as they succeeded in buying the property at the auction sale, they
called upon the promisee who had undertaken the obligation to pay the
expenses of the conveyance through the proper channel, to meet the stamp
expenses in connection with the sale certificate. They further allowed her
to occupy the property. The two Courts below have found that the defendants
had incurred the expenses of payment of municipal taxes, etc., concerning
the bungalow but that the recovered these amounts from the plaintiff. That
finding is supported by the oral evidence on the record.
The defendants also stood by and allowed the promisee through her husband
to spend considerable sums of money on repairs and remodelling of the
house. In all respects the defendants fully fulfilled their part of the
promise but defaulted in executing the conveyance. When the whole promise
has been substantially fulfilled and it only remains to pass legal title by
the execution of a conveyance, the objection raised as to the plaintiff not
being a party to the contract seems to be fulfil. It was expressly agreed
that the conveyance would be executed in her name and she was therefore
entitled to demand that. The decision of the High Court therefore on this
point is affirmed and the contention of Mr. Setalvad negatived.
10. The contention that S. 66, Civil P.C. bars the suit has, in our opinion
no, substance whatever. The appellants when they purchased the house at the
auction sale were buying the property for themselves. They had undoubtedly
entered into an agreement with the plaintiff that when they purchased the
property at the auction sale they would convey it to her but that is not
material for the application of S. 66. The property was purchased by them
for a sum of Rs. 20, 000. The conveyance to the plaintiff has to be for a
debit of Rs. 40, 000. The plea of benami purchase in such a situation could
not be sustained and was rightly rejected by the High Court in appeal. The
appellants purchased the property for themselves so that by acquiring it in
their name they may be able to fulfil their agreement of sale with the
plaintiff. In these circumstances, the provisions of S. 66 do not operate
as a bar to the suit.
11. The last contention of Mr. Setalvad is equally without force. To all
intents and purposes the plaintiff has been in possession of the house
since the date of the agreement. She has incurred all the expenses in
respect of taxes etc., she has made repairs in the house without any
objection and has spent considerable sums of money on it and she has been
residing in it. All that is now required is a formal document of title in
her favour. The contention therefore that the suit is a belated one and
that the position of the mortgagors has altered cannot be a ground to
defeat her suit, particularly when the appeal court has granted her the
relief claimed by her.
12. It was argued that the plaintiff could also maintain the suit as a
beneficiary if she was not a party to the contract. It is unnecessary to
examine this contention in view of the decision that she was actually a
party to the agreement and could maintain the suit.
13. The result therefore is that this appeal fails and is dismissed with
costs.
