TMI Blog1958 (11) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... ntiff's rights under the con-tract. It was also alleged that the sale deed in favour of defendants 2 and 3 was collusive and ante-dated document, and that defendants 2 and 3 were not bona fide purchasers for value. 3. The case of the 1st defendant Is that there were only negotiations in respect of the purchase of the suit properties by the plaintiffs and that those negotiations had never become crystallized into a concluded and binding agreement, and that, therefore, he was free to sell and convey the properties to defendants 2 and 3. The case of the defendants 2 and 3 is that 'they were bona fide purchasers for value without notice of the alleged rights of the plaintiffs and that the plaintiffs were not entitled to the reliefs prayed for by them. 4. The learned District Munsif found that the agreement of sale pleaded by the plaintiffs was not true; and, therefore, dismissed the suit for specific performance. The defts. claimed compensatory costs which, however, were disallowed. The plaintiffs filed three appeals (A. S. Nos. 144 to 146 of 1954) on the file of the Court of the Subordinate Judge, Cuddapah. The successful defendants filed cross-objections with respect to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erties in three equal shares to each one of the plaintiffs in the three suits for a sum of ₹ 2,000/-. It was also agreed that from and out of the sum of ₹ 2.000/- to be paid by P. W. 1 the amounts due under the usufructuary mortgage and on the promissory note were to he deducted and the balance of ₹ 400/- alone should be paid to the 1st defendant. In pursuance of this agreement the defendant got a draft conveyance prepared by one karnam, Rarnayya. That draft is marked as Ex. A-3. P.W. 6, who is the plaintiff in O. S. No. 322 of 1951, purchased also non-judicial stamp papers for the registration on the same day. Those stamp papers are marked as Ex. A-8. It was also agreed that the sale should be comleted on the 1st defendant's title being approved y the plaintiff's family lawyer, Mr. P. Subba Rao, who was examined as P.W. 3, Accordingly P.W. 1, the 1st defendant and P.W.2, the natural father of the 1st defendant went to the house of P.W.3. P.W.I told P.W.3 about the terms already agreed upon between them. Thereupon, P.W.3 asked the 1st defendant whether it was so. The 1st defendant said 'yes'. Then P.W. 1 told P.W. 3 that he had some doubt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter from his father P.W.2 and his suggestion is that the plaintiffs wanted to knock off the property for a cheap price. Besides the 1st defendant who was examined as P.W. 1, only one witness was examined on the side of the defendants and that is one of the attestors of Ex. B-l. His evidence has no bearing upon the real matter in issue. The second and third defendants-did not give evidence. 9. The learned Subordinate Judge found on the evidence that there was a concluded contract on the 21st of July 1951. In doing so, he placed strong reliance on the evidence of P.W.3. As the learned Subordinate Judge has rightly pointed out, if the evidence of P.W. 3 is believed, and I see no reason why it should not have been believed, then, the plaintiffs case as to the agreement and its terms stands established in all particulars. There is also the evidence of P.W. 2, the father or. the 1st defendant. He has corroborated P.W.3. He speaks to the agreement, their conference in-the house of P.W. 3. the receipt of the letter of P.W. 1 and his reply thereto (Ex. A-4). 10. P.W. 3 is a 1st grade pleader, who has been practising in Cuddapah since 1921. The learned-Subordinate Judge thought that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purchaser. One view is that it is only indicative of the intention on the part of the purchaser to safeguard his rights and it means no more than what the law allows him, viz., the right to examine the title of the vendor and satisfy himself that it is good, with . the assistance of his solicitor or lawyer. The other view is that such a reservation constitutes a term of the contract, the fulfilment of which alone would result in an enforceable agreement. 16. The divergence of opinion above indicated is well illustrated in the decisions of Court of Appeal and the House of Lords in the well-known case of Hussey v. Home Payne (1879) 4 AC311. It will be necessary to set out in brief outline the facts of that case for a proper appreciation of the opinions expressed by the Court of Appeal and the House of Lords:-- Horne Payne owned a free-hold property called the Mornington estate; Hussey wanted to purchase it; There were negotiations. Home Payne wrote a letter on 4th October 1870 intimating to the prospective purchaser that she was prepared to accept 37,500/- for the entire property, or . 34.000/- for the property without the house and some ground. The agent of Hussey wrot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated his view in these words: -- My Lords, I have not desired to put the opinion which I have offered to your Lordship upon that ground, and I should doubt very much myself, if it were necessary to decide it, whether the opinion of the Court of Appeal in this respect could be maintained. I feel great difficulty in thinking that any person could have intended term of this kind to have that operation, became as was pointed out in the course of the argument; it virtually would reduce the agreement to that which is illusory. It would make the vendor bound by the agreement, but it would leave the purchaser perfectly free. He might appoint any solicitor he pleased -- he might change his solicitor from time to time. There is no directio 'personarum; there is no appointment of any arbihrator in whom both sides might be supposed to have confidence. It would be simply leaving the purchaser, through the medium of his solicitors, at liberty to say from caprice at any moment, we do not like the title, we do not approve of the title and, therefore, the agreement goes for nothing. My Lords, I have great difficulty in thinking that of person would agree to a term which would have that o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y that the title shall be approved by any one, either by his solicitor or his conveyancing counsel, or any one else. All that he is entitled to require is what is called a marketable title, or, as it is sometimes called, a good title. Therefore, when he puts in subject to the tide being approved by our solicitors , he must be taken to mean what he says, that is, to make it a condition that solicitors of his own selection shall approve of the title. 21. Cotton L. J. has put the objection in a more pointed form. He observed that the rule of law is that the Judge, subject to the ordinary right of appeal, is the person to decide whether or not a good title can be made. That is what the law provides independently of stipulation, but this stipulation would make the solicitor, provided he acted reasonably and bona fide, the sole and absolute Judge as to whether there was or was not a good title . In other words, the law gives the right to the purchaser to demand of his vendor a good and marketable title. Whether, in a given case there is a god and marketable tide or not is a matter for the court to deride. But where the parties come to an agreement that the purchaser's solici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find a great lawyer, once in a way, mistaking the meaning of an uninstructed and perhaps inaccurate layman. 25. In Hudson v. Buck, (1877) 7 Ch. D. 683 Fry., J., took the same view that such a reservation constitutes a condition. In Bartlett v. Greene, (1874) 30 LT 553, Coleridge, L. C. J. and Brett, ).. took the same view. To the same effect are tns observations of Farwell J., in Caney v. Leith. 1937-2 All ER 532 :-- As a matter of construction I have not the smallest doubt that the word lease as used in this document refers to the existing lease, which is to be assigned by the plaintiffs to the defendant, and not to some other lease which has to be obtained. In my judgment, the condition is a condition that the solicitors of the purchaser are to approve a document which is in existence and which neither the plaintiffs nor the defendant had any power to alter or vary in any way. It is this document which has to be approved, and which the solicitors of the purchaser have not approved. It is, however, said that, although the solicitors have net approved the lease, the contract is now enforceable, because the solicitors ought to have approved the lease, and that, by not appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he view expressed by Lord Chancellor were merely observations and not strictly ratio decidendi in the case. 28. In Koylash Chunder Doss v. Tariney Chum Singhee. ILR 10 Cal 588, (here was a reference to the title deeds and other papers being brought to the house of the attorney. But the decision in that case really rested upon the stipulation as to the payment of earnest money as an clement of the contract and since the earnest money was never agreed to there was no question of a concluded contract. 29. In Treacher and Co. Ltd. v. Mahommed Ally Adamji Peerbhoy, ILR 35 Bom 110, Dayar J. had to consider a similar clause, and on a review of some of the English authorities referred to above, he held that such a provision constituted a condition the fulfilment of which was necessary for the enforcement of the contract. In W.P. Abro v. Promotho Nath Mukherjee, 18 Cal WN 568 at pp. 572 and 573: (AIR 1914 Cal 777 (2) at pp. 778-780), Chaudhuri J., has taken the same view, 30. In Krishnaji v. Ramachandra, (AIR 1933 Bom 51), Wadia J., followed the decision of the Bombay High Court in ILR 35 Bom 110 (supra) and held that the words to the satisfaction of the purchaser's attorneys ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purchaser's lawyer is a condition precedent to the enforceability of the contract for sale and when such an approval has been given the contract of sale becomes enforceable. 34. In some cases a view has been taken that a provision that the contract is subject to the ap-proval by the purchaser's solicitor may be a condition subsequent to the contract, the non-fulfil-ment of which provides for the discharge and cancellation of the contract. In an old English case' in Williams v. Edwards (1827) 2 Sim. 78 at p. 83 the contract between the parties contained a clause in the following effect: If the counsel of the defendant shall be of opinion that a marketable title cannot be made by the time appointed for the completion of the said purchase, this agreement shall be void and cancelled. Speaking of that clause. Vice Chancellor, said as follows: There appears to be nothing unreasonable in that. There might be circumstances which might make it very proper for both parties to insert that term; and jt was the contract of both the parties, this court cannot make a new contract for them. 35. So, in a concluded contract it is open to, parties to provide for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be said that any binding contract has been arrived at between the parties. I do not find in this decision reference to the pre-vioes cases or any full discussion of the implications of that term. In view of the authorities, English and Indian, referred to supra, I do not find that the insertion of a term like the one in question is open to any objection. With great respect to the learned Judge, I am unable to follow the observations contained in the passage extracted above. 38. Mr. Subrahrnanyam, contends that if the contract is conditional upon the title being examined by the purchaser's solicitor, the latter would be constituted the sole arbiter and it may be possible Aat by caprice or want of good faith, he may turn down a good title. In such a case, the vendor has no remedy at all. This contention does not appear to be correct at all. The lawyer's approval is no doubt necessary for its enforcement. If such an approval is obtained the purchaser as well as the vendor can both claim that the condition stipulated had been fulfilled and, therefore, there is an enforceable contract. If the assent of the lawyer is unreasonably withheld it is always open to the vendo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s held that notice by the vendor requiring the purchaser to complete the contract in 10 days was held quite reasonable. The contract in this case is stated to have been settled on the 21st of July 1951. P. W. 3, contracted Mr. Sitaramayya within five or six days. P. W- 1 wrote to the 1st defendant on the 1st of August 1951 to be ready to execute the conveyance. The time that elapsed' between the agreement and the approval of the lawyer was about 10 days. In the circum-stances of this case, there has been no unreasonable' delay. 40. Lastly, it was contended by Mr. Subrahmanyam that the agreement set up even if proved as a conditional contract, the condition stipulated had not been fulfilled. I am unable to see any force, whatever, in this contention. Having regard to the evidence of P. W. 3, and the intimation of the approval of the lawyer by P. W. 1 to the 1st defendant, it is meaningless to contend that the condition as to the approval by the lawyer has not been fulfilled. There was some comment made that there is no evidence that Mr. Sitaramayya was. consulted by P. W. 3 and that Sitaramayya was not called. I am unable to understand this argument. P. W. 3 definitely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 3, That being so it is argued that defendants 2 and 3 are not entitled to the protection afforded to bona fide purchasers for value who have paid the money in good faith without notice of the claim of the original contract. In support of this contention he has placed reliance on: Himatlal Motilal v. Vasudev Ganesh, ILR 36 Bom 446; and Ranga Reddy v. Pichee Reddy, 1 Mad L W 879: (AIR 1915 Mad 37). 44. Mr. Subrahmanyam has invited by attention to a decision of the Madras High Court in Aru-nachala v. Madappa, AIR 1936 Mad 949 and of Horwill J. in Sumermal Jamatraj v. Thukkappa, AIR 1944 Mad 391 (2). I am unable to see the relevance of these cases to the facts of the present case. In the latter case Horwill J., held 'that where the transferee paid the consideration partly in adjustment of an outstanding debt and the balance in cash, the requirements of Section 27 of the Specific Relief Act, are satisfied. In a very recent case decided hy the Madras High Court in Mary Joseph v. Mohd. Hajee Moosa and Co., a Bench of the Madras High Court have affirmed the view of Horwill J., in AIR 1944 Mad 391 (2) (Supra). The facts of this case are different. 45. It is not necessary to purs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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