1953 (11) TMI 28 - SC - Indian Laws

Summary

Issues Involved:
1. Conclusiveness of the agreement dated 7th February 1942.
2. Allegations of fraud and misrepresentation.
3. Authority to contract.
4. Proper form of decree for specific performance.
5. Payment of the purchase money and the role of the Custodian, U.P.

Detailed Analysis:

1. Conclusiveness of the Agreement Dated 7th February 1942:
The primary issue was whether the agreement of 7th February 1942 was a concluded one. The plaintiff argued that the Nawab agreed to sell the property for Rs. 62,000 and accepted Rs. 10,000 as earnest money, which was evidenced by a receipt. The appellants contended that the agreement was not concluded as the parties never reached finality. The trial court held there was no concluded contract, but the High Court's Full Bench found that there was a concluded contract. The Supreme Court agreed with the High Court, stating, "We hold that there was a completed contract on 7th February, 1942, which the plaintiff is entitled to have specifically performed."

2. Allegations of Fraud and Misrepresentation:
The Nawab's main defense was fraud and misrepresentation, claiming that the plaintiff's broker falsely informed him that the appellants had backed out, leading him to accept the plaintiff's offer. The Supreme Court noted that the Nawab's plea implicitly admitted the contract's validity until set aside due to fraud. The appellants' pleadings followed the same pattern, with no clear-cut plea that there was never a concluded agreement. The Supreme Court found these defenses insufficient to negate the concluded contract.

3. Authority to Contract:
The appellants argued that the parties competent to contract never met, questioning the authority of Chattar Sen to contract on behalf of the plaintiff. The Supreme Court dismissed this argument, stating, "Chattar Sen's authority to contract was not questioned. We cannot allow it to be questioned here." This established that there was an effective and concluded contract on 7th February 1942.

4. Proper Form of Decree for Specific Performance:
The Court discussed the proper form of decree in cases of specific performance where there is a subsequent purchaser. It considered three approaches: directing the vendor alone to convey, requiring both vendor and vendee to join in the conveyance, and limiting execution to the subsequent purchaser. The Supreme Court favored the second approach, directing that the subsequent transferee join in the conveyance to pass the title to the plaintiff. "In our opinion, the proper form of decree is to direct specific performance of the contract between the vendor and the plaintiff and direct the subsequent transferee to join in the conveyance so as to pass on the title which resides in him to the plaintiff."

5. Payment of the Purchase Money and the Role of the Custodian, U.P.:
The Court addressed the issue of the Rs. 62,000 due to the Nawab, noting that the appellants had paid Rs. 58,000 for the subsequent purchase. The Custodian, U.P., claimed the entire amount, but the Supreme Court found it equitable to direct Rs. 58,000 to be paid to the appellants and Rs. 4,000 to the Custodian. "We consider it right that Rs. 58,000 should be paid to them and Rs. 4,000 to the Custodian, U.P." This decision aimed to avoid unjust enrichment of the Nawab's estate and further litigation.

Conclusion:
The Supreme Court modified the High Court's decree, directing the Nawab to execute a sale deed in favor of the plaintiff, the appellants to join in the conveyance, and the payment of Rs. 58,000 to the appellants and Rs. 4,000 to the Custodian, U.P. The rest of the appeal was dismissed, and the appellants were ordered to pay the plaintiff's costs. "The High Court's decree will now be modified as follows... Except for these modifications, the decree stands and the rest of the appeal is dismissed."