The Kapadvanj Municipality vs Ochhavlal Damodar Parikh on 16 March, 1928

Bombay High Court
The Kapadvanj Municipality vs Ochhavlal Damodar Parikh on 16 March, 1928
Equivalent citations: (1928) 30 BOMLR 920, 113 Ind Cas 161
Author: Mirza
Bench: Fawcett, Mirza


Mirza, J.

The facts which have given rise to these cross-appeals are briefly as follows :

1. The original plaintiff, Parikh Ochhavlal Damodar, bid for and purchased from the original defendant the Kapadvanj Municipality a certain property which was being used as a school, The plaintiff paid 25 per cent of the purchase price on March 1, 1918, and the balance on July 2, 1918. The sale was subject to the Commissioner’s sanction and other legal sanctions. The final sanction was given on July 10, 1919. On March 10, 1919, the plaintiff gave notice to the defendant that he would charge nine per cent, interest on the purchase money paid in by him until a document was passed by the defendant in respect of the property sold and possession given to the plaintiff. On March 8, 1920, the plaintiff executed a Kabulayat without prejudice to his claim for interest agreeing on a certain condition to take possession of the property before the execution of the conveyance. On March 9, 1920, the plaintiff was put in possession of the property by the defendant and on July 18, 1920, the conveyance was executed. On July 1, 1921, the plaintiff filed this suit claiming Rs. 2,835-8-0 for damages for loss of interest and the price of a wooden partition. The Subordinate Judge of Kapadvanj dismissed the plaintiff’s suit. In appeal the Assistant Judge of Ahmedabad reversed the judgment of the first Court and passed a decree for the plaintiff for Its. 434-10-8. Both parties have appealed against this judgment. The plaintiff contends that the decree in his favour should be for Rs. 650. The defendant contends that the dismissal of the suit by the first Court was right and should have been confirmed.

2. The lower appellate Court has held that the defendant should have given possession to the plaintiff on July 10, 1919, when the Commissioner’s sanction was received and as the defendant did not put the plaintiff in possession until March 9, 1920, the plaintiff should be compensated by being allowed interest for the period covered by those dates, at the rate of four per cent, on the purchase money paid in by him. The main question which arises in these appeals is whether the learned Judge’s finding is justified in law.

3. Primarily the defendant’s liability to pay interest on the purchase amount would be governed by the contract of sale. Conditions 6 and 8 of the conditions of sale provide that the bidder whose bid is accepted must forthwith deposit 25 per cent of the purchase price with the auctioneer, and the balance within fifteen days of the auction with the defendant. Condition 9 provides that the sale would be treated as final only after the sanction of the Commissioner and all other necessary sanctions required by law have been obtained. In case of any hitch in obtaining such sanctions the purchase money received would be returned ‘ anamat’ (as deposit). Condition 10 provided that if the sale fell through for want of proper sanction the purchase money would be returned and would carry interest at the Bombay Bank rate after the expiry of six months from the date of the auction.

4. There is no provision in the contract of sale to compensate the purchaser with interest on the purchase price paid by him, when the sale contract is confirmed by the defendant after six months from the date of the auction. The plaintiff cannot in my opinion rely upon any express stipulation for interest in his favour.

5. It is contended on behalf of the plaintiff that he is entitled to interest under the provisions of Section 55(6)(b) of the Transfer of Property Act. The learned Judge has upheld this contention He in effect holds that it was the defendant’s duty on the confirmation of the sale the full purchase price having already been received by them to express to the plaintiff their readiness and willingness to put him immediately in possession even though the conveyance may not then have been ready for execution. There being no evidence to show that such an offer was made and the plaintiff improperly declined to accept delivery of the property the lower Court holds that he has become entitled to interest on the purchase money he paid in anticipation of delivery It may be noted here that under the provisions of Section 55(6)(b) in the case of a completed contract of sale the purchase money which is to carry interest must have been properly paid by the buyer in anticipation of delivery. Under the conditions of sale here the purchase amount paid in by the plaintiff cannot be said to have been so paid by him in anticipation of delivery. After the date of such payment there was no contract of sale which had become final or binding on the defendant. The money paid in by the plaintiff must be regarded as having been paid in by him in anticipation of obtaining from the defendant a contract of sale which later would be followed by a conveyance. The contract of sale became final and complete only on July 10, 1919. Any notice as to interest or demand for an executed conveyance and possession prior to that date would not, in my opinion, help the plaintiff. In his correspondence both prior and subsequent to that date the plaintiff did not make time the essence of the contract and never demanded possession apart from an executed conveyance. The defendant was under no duty until July 10, 1919, to take up the question of the title they had to convey under the terms of the contract of sale. The duty of preparing the conveyance is not upon the vendor but the purchaser. Section 55(1)(6) requires the seller to produce to the buyer on his request for examination all documents of title relating to the property which are in the seller’s possession or power. Clause (1)(d) requires the seller to execute a proper conveyance of the property when the buyer tenders it to him for execution; Clause (1)(f) requires the seller to give on being an required the buyer such possession of the property as its nature admits.

6. The correspondence in the case to which our attention has been called makes it abundantly clear that the plaintiff never demanded possession apart from an executed conveyance. The delay in the execution of the conveyance is not shown to be due to any dilatoriness or negligence on the part of the defendant. The correspondence shows that the defendant was pressing the plaintiff to complete the matter soon. I do not see any warrant for holding as the learned Judge holds that the Chief Officer’s letters in this behalf were only a pretence. Under Clause 11 of the conditions of sale the purchaser was under a liability to vacate and deliver over for the purposes of the public road a portion of the land comprised in the sale which fell within the road-line. The plaintiff’ was negotiating with the defendant to have this clause in the conveyance cancelled or modified. Hence the delay in the preparation of the conveyance. In the circumstances of this case there was no duty, in my opinion, on the defendant to offer on July 10, 1919, or any subsequent date to put the plaintiff in possession before the conveyance was executed or its terms finally settled. If the plaintiff wanted possession before the conveyance it was his duty to have called upon the defendant in unequivocal terms to so put him in possession. By his correspondence he led the defendant to believe that he want-ed possession only along with the executed conveyance. The plaintiff has not put his case on the ground that the defendant was to blame for the delay that took place in the execution of the conveyance. The plaintiff cannot now say’ that the defendant Municipality of its own motion should have anticipated this delay and offered to put the plaintiff in possession before the conveyance was executed. That as a matter off act the Municipality eventually did so, does not in my opinion support the contention that by their conduct they recognised that it was their duty under the circumstances to have put the plaintiff in possession when the contract of sale was confirmed. The Kabulayat executed by the plaintiff on March 8, 1920, seems to indicate that the terms of the proposed conveyance between the defendant and plaintiff were not finally settled until then and that the plaintiff was not willing to take possession until the terms of conveyance were agreed to as he desired. As soon as the terms were so settled and the plaintiff’ appeared to be willing to take possession before the formal execution of the conveyance the defendant put him in possession. There is no liability on the part of the defendant to pay interest to the plaintiff on the purchase price.

7. In my opinion the plaintiff’s claim entirely fails, The defendant’s appeal should be allowed and the plaintiff’s appeal dismissed.

Fawcett, J.

8. I agree. I think that the lower appellate Court has committed an error of law in its view as to the respective obligations of the plaintiff and the defendant in regard to the contract for sale. The view of the Assistant Judge is, in effect, that the execution of the conveyance was a subsidiary matter, that the plaintiff had paid up the full amount of purchase money due, and that he was entitled to get possession, at any rate, after July 15, 1919, when the sanction of the Commissioner to the proposed sale was received. Thus, in one part of his judgment he says :

Nowhere does plaintiff in all the correspondence expressly say he wanted possession, irrespective of the conveyance, but no point can be made of it as it was the other parties’ duty to put him in possession and it was open to them to say the deed will take time but possession may be taken. He had fulfilled his part. It was for them to be ready to fulfil theirs and express the readiness.

9. Again, in another passage, he says:

Assuming both parties thought that the conveyance and delivery were necessarily required and on simultaneous processes, as the (lower) Court puts it, plaintiff cannot be affected by such an erroneous belief or notion of defendant and their failure to hit upon the expedient;, ultimately adopted earlier. Whatever his object may have been with respect to the road-line if defendant had offered delivery at once and not contributed to the delay, be would have been compelled to accept it and his mouth would have been shut once for all.

10. Further on he says :

As a rule possession is claimable concurrently with the payment of the purchase money. The contract hero was complete on July 10, 1919.

11. No daubt, it can be loosely said that possession is claimable concurrently with the payment of the purchase money; for instance, that is stated in Gour’s Transfer of Property Act, 5th Edition, Volume I, Article 1162, at page 751, and as authority there is cited the case of Prevost v. La Compagnie De Fives-Lille (1885) 10 App. Cas. 648, 650. If a reference is made to that case, it will be seen that Lord Watson was laying down what are the mutual rights and obligations of a seller and purchaser, viz., the obligation of the seller is to give the purchaser peaceable possession, and also a clear title, to enable him to defend his possession and it is the right of the seller, upon fulfilment of that obligation, to demand and receive payment of the price. On the other hand, the obligation of the purchaser is to pay the price upon delivery of possession and of a title sufficient to protect him from eviction. That merely gives what is the ordinary law in England, as well as in India under the Transfer of Property Act. As the law is summarized in Williams’ Law of Vendor and Purchaser, Vol. 2, page 34, the vendor is bound, on payment of the purchase-money, to execute a proper deed of conveyance to the purchaser of the estate sold, and to put the purchaser into possession of the land so assured. What is ordinarily contempleted is that, the terms of the conveyance having been settled, there is a meeting between the parties, at which the conveyance is signed and the money is handed over, and then possession is given. That is what is clearly contemplated by Section 55 of the Transfer of Property Act, as is, for instance, ruled in Velayutha Chetty v. Govindsawmi Naiken (1909) I.L.R. 34 Mad. 543 where it is said (p. 544) “the provisions of the Transfer of Property Act that after conveyance the vendee is entitled to possession and that the vendor has a statutory charge on the property for unpaid purchase money are perfectly clear.” In the ordinary case the purchaser cannot claim possession until the conveyance is actually executed; and the words “on being required” in Clause (f) of Sub-section (1) of Section 55 about giving the buyer possession of the property can only be construed as meaning “on being properly required,” that is, in accordance with the specific terms of the contract, or if there are no such terms mentioned, in accordance with the ordinary rule that I have mentioned. On the other hand, the vendor may give possession to the purchaser before actual completion, Clause Gour’s Transfer of Property Act, Article 1214. page 792 (5th Edn.) where it is said: “Before completion of the sale the vendor may, and on its completion, he must, deliver possession to the vendee.” That is, the thing can be done; but to lay down that, in the absence of a contract to that effect, the purchaser could insist on getting possession before the terms of the conveyance to be passed had been agreed upon, and before actual execution of the conveyance, is, in my opinion, erroneous in law. Similarly, the defendant Municipality could not, in my opinion, have legally insisted upon the plaintiff taking possession before the execution of the conveyance, supposing that they bad wanted to do so. Each party is entitled to say “Before I fulfil my final obligation, either of payment or giving possession, I want to know exactly what are the terms of the conveyance by which the ownership passes,” because that is a vital part of the transaction under Section 54. Sale, as there defined, is effected by a transfer of ownership of the property, which can only be done in a case like the present by the execution of a registered instrument; and therefore, the settlement of the terms of that registered instrument forms a very essential part of the contract. Even before the enactment of the Transfer of Property Act, it was held in Umedmal Motiram v. Davu bin Dhondiba (1878) I.L.R. 2 Bom. 547 that a mere execution of a conveyance would pass the ownership in spite of there being neither payment of purchase money, nor delivery of possession. It often happens that the parties do not come to an agreement as to the exact terms of the conveyance and a suit for specific performance results; and if a vendor was under a legal obligation to deliver possession before the terms were settled, naturally he would be in a weak position. Of course, there may be an agreement in a contract of sale to give possession before execution of the conveyance, just as in the present case there was an agreement between the parties that the intending purchaser should pay up the full amount of purchase money within a certain time, even before the draft of an execution of conveyance could be settled, and oven before the sanction of the Commissioner to the proposed sale could be received. But in the present Case there was no specific agreement to give possession within any particular time. There was no specific agreement even as to the time within which the sale was to be completed; and it is not for this Court, or any Court, to insert terms into the contract which the parties themselves did not deem fit to put in. The legal position, therefore, in my opinion, was that the contract had to be performed within a reasonable time. Thus a contract to convey “as soon as possible” has been construed to mean “within a reasonable time,” which again means such time as would be considered reasonable having regard to the circumstances of the case, at Gour’s Transfer of Property Act, Article 1167 at page 747; and the case would be analogous to one falling under Section 4b of the Indian Contract Act, which provides that, where no time for performance is specified, then the contract has to be performed within a reasonable time. There is in the present case, no question of time being of the essence of the contract, either under the terms of the contract, or by any subsequent action of any of the parties. Therefore, the position comes to this, that the plaintiff can only recover interest upon the purchase money that he paid, upon the basis of the defendant having committed a breach of contract, so that he can recover interest as damages for that breach. But, as I have already said, there is no agreement as to the time within which the contract of sale was to be completed, except an implied contract that it should be performed within a reasonable time.

12. I agree with my learned brother that Clause (b) of Sub-section (6) of Section 55 does not apply in the present case so as to give the plaintiff, under its terms, a right to recover interest on the amount of the purchase money he had paid. That clause, 1 think, is intended to meet mostly cases where there has been an actual failure of the contract for sale, the contract having fallen through on account of some default on the part of one or other of the two parties; and then this clause provides that in proper cases the buyer can recover interest on his purchase money. But, in the present case, there was, in fact, a sale carried out, and there has been delivery of possession. In regard to the words “purchase money properly paid by the buyer in anticipation of the delivery,” I agree with my learned brother, that the present is not a case that comes within those words. But, there is a principle on which, I think, interest is recoverable and that is in a case of the kind that is referred to in Jones v. Gardiner (1902) 1 Ch. 191. There it is laid down that damages can be recovered by a purchaser from his vendor for delay in completing the purchase, where the delay has been occasioned by default of the vendor, not in consequence of a defect in title, or in consequence of conveyancing diffculties, but by reason of the vendor not having used reasonable diligence to perform his contract. That cornea to very much the same thing as I mentioned, for in such a case there would be a breach of contract in failing to complete the sale within a reasonable time, and if the vendor has been to blame in the manner that is mentioned in the ruling I have given, there would be a case for the buyer recovering interest on the purchase money. Apart from some such basis I do not think the plaintiff had any case. There was no term in the written contract by which he could recover interest in a case like the present. It is no doubt somewhat hard on the plaintiff, as the purchase money was lying idle before he obtained possession; but he entered into the contract knowing the terms and the Court cannot award him damages simply out of sympathy for his loss of interest. In the present case, I have considered carefully all the documents to which our attention is drawn, but I cannot say it has been proved that the Municipality unreasonably delayed completion of the contract, so as to entitle the plaintiff to damages in the shape of interest on his purchase money.

13. As we cannot accept the finding of the lower Court, because of its being invalid by an error of law, we have a right to determine the question for ourselves under Section 103 of the Civil Procedure Code, as amended in 1926. Although, no doubt, the Municipality might have exercised greater expedition, for instance, in considering the draft of the conveyance that was sent by the plaintiff, yet, on the other hand, a Municipality is not able to dispose of business with quite the same expedition as a private individual. There have to be committees, and there has to be consultation between the members of the corporation. I do not think that this is a case where it can be said that the plaintiff was doing all he could to hurry on things, and the Municipality were doing all they could to delay mutters. There were delays on both sides, and I am not convinced that the plaintiff was actually keen on getting possession very quickly. Undoubtedly, he wanted to get the terms of the contract varied in regard to a certain road-line that is mentioned in the conditions of sale ;and, therefore, he might very well want to delay things until he had achieved that object, an object which he partially succeeded in attaining.

14. Therefore, in the circumstances of the present case, I agree with my learned brother that the plaintiff has not shown that there is a good ground for awarding him the interest claimed.

15. The appeal is therefore allowed, the decree of the lower Court is reversed and that of the trial Court restored, viz., that the plaintiff’s suit stands dismissed.

16. As we do not see sufficient reason to depart from the ordinary rule that costs should follow the event, the defendant-respondent is entitled to his costs throughout.

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