TMI Blog2019 (11) TMI 1397X X X X Extracts X X X X X X X X Extracts X X X X ..... using scheme on the suit property to the original vendees, not to Respondent Nos. 1. Even the advertisement regarding the Unnati Park housing scheme nowhere indicates that the Appellants/original owners were developing the project on the suit property in partnership with Respondent Nos. 1 - there was no valid assignment of rights flowing from the 1986 agreement to Respondent Nos. 1, and they cannot seek specific performance against the Appellants. Whether the right of Respondent Nos. 1 to seek specific performance survives subsequent to the cancellation of the 1986 agreement by the Appellants and withdrawal of suit in SCS No. 194/1988 by the original vendees? - HELD THAT:- The trial court has found that though the suit property de jure vested with the concerned government authority under the Town Planning Scheme, the de facto possession of the property remains with the Appellants and the original vendees have not taken possession thereof. Furthermore, both the trial court and the learned District Judge have on facts found that the original vendees have not shown any readiness or willingness to pay the remaining consideration to the Appellants. Hence since the original vendees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty bearing Survey No. 354/1, admeasuring 1 acre and 31 gunthas in Village Manjalpur of Vadodara district (hereinafter suit property ). He, along with Defendants Nos. 2-5 (relatives of Defendant No. 1) executed agreement to sell dated 11.3.1986 ( 1986 agreement ) in respect of the suit property in favour of Respondent Nos. 3-11/Defendants Nos. 6-9 (hereinafter original vendees ), for which the original vendees paid earnest money of ₹ 1,54,251. The suit property was included in Town Planning Scheme No. 19 of the Vadodara Municipal Corporation and possession of the suit property was to be given to the original vendees once the aforesaid Scheme was finalized. A registered sale deed in respect of the suit property was to be executed upon receipt of the remaining consideration from the original vendees, the deadline for which was within three months of finalization of the Town Planning Scheme. The case of Respondent Nos. 1 is that the original vendees thereafter executed four agreements to sell dated 14.9.1987 ( 1987 agreements ) in respect of four different portions of the suit property, assigning the former s rights under the 1986 agreement in the latter s favour, and tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the original vendees had never become the legal owners of the suit property, they did not have any right or authority to enter into any kind of transaction qua the land with Respondent Nos. 1; and that the plaints were concocted to usurp the land. Both sets of suits, SCS No. 194/1988 and SCS Nos. 657- 660/1988, remained pending for a number of years. During that period, notably, the Appellants and the original vendees acting together executed a Power-of-Attorney dated 11.11.2001 in favour of one Dhananjay Vallabhbhai Patel. It was stated in the Power-of-Attorney that the Appellants and the original vendees are relinquishing their rights in the suit property to Mr. Dhananjay Patel for the purpose of executing sale deed in favour of one Kantilal Ambalal Patel, who is the uncle of the said Dhananjay Patel. A. Proceedings in SCS No. 194/1988 (Original vendees suit) 3. The original vendees filed withdrawal pursis on 26.7.2002 seeking to unconditionally withdraw SCS No. 194/1988 on the ground that the 1986 agreement was fraudulently registered; that they were not aware of the identity of the true owners of the suit property at the time of the 1986 agreement as it was executed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /1988 in collusion with the Appellants herein. This was based on the reasoning that the High Court and this Court had, in the earlier proceedings, sanctioned the unconditional withdrawal of SCS No. 194/1988 and not made any finding of judicial impropriety or fraud. The trial court further found that in light of revocation of the 1986 agreement by the Appellants and withdrawal of SCS No. 194/1988 by the original vendees, it was not open to the Plaintiffs to re-agitate for specific performance of the said agreement. That in any case, even if the 1986 agreement was assumed to be in force, the original vendees could not have assigned their outstanding obligation to pay the remaining consideration without the written consent of the original owner i.e., Defendant No. 1 Naranbhai. Since the 1987 agreements and the 1986 agreement were not ad idem, and new conditions were laid down in the 1987 agreements, such consent was indispensable. That neither of the Appellants had given any such consent, either verbally or by conduct; nor was there any evidence that the original vendees had paid the remaining consideration to the Appellants, such that the former s rights under the 1986 agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) of the Specific Relief Act together, the interest assignable under Section 15(b) need not be an interest in the property or a charge created in the property. A contractual interest in the form of an obligation annexed to ownership of the property may also be assignable. It was discernible from the facts and evidence on record that the Appellants had given implied consent for such assignment. Mr. Naranbhai Patel s signature on planning permissions and his presence at the Bhoomi Pujan ceremony were taken as proof that the original owners had consented to the involvement of Respondent Nos. 1 in developing a housing scheme on the suit property. Therefore, it was found that the 1986 agreement remained alive, and the rights derived therefrom in favour of the original vendees were validly assigned under the 1987 agreements. Additionally, since the High Court and this Court had clarified while sanctioning withdrawal of SCS No. 194/1988 that such withdrawal would not preclude Respondent Nos. 1 from pursuing their independent remedies, the withdrawal of the original vendees suit could not prejudice the rights of Respondent Nos. 1 to specific performance. That actual tendering of mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt had taken place, there was no evidence to show that Respondent Nos. 1 were ready and willing to perform their contractual obligations. Respondent Nos. 1 had never communicated their willingness to complete their contractual obligations under the 1986 agreement to the Appellants. Per contra, learned senior counsel for Respondent No. 1, Mr. C.U. Singh argued that the Appellants i.e. the landowners were colluding with the original vendees to avoid sale of the suit property, as evidenced by the fact that the original vendees had not contested the suit at any point of time. He brought to this Court s notice that there could not have been a termination of the 1986 agreement in 1988 given that in the Power-of-Attorney dated 11.11.2001 (supra) executed by Defendant Nos. 1-9 (the Appellants and the original vendees) in favour of Mr. Dhananjay Patel, it is stated that the original vendees have acquired rights in the suit property under the 1986 agreement. It is not open to the Appellants to accept the existence of the 1986 agreement in the Power-of-Attorney and reject it for the purpose of these suits. He further relied upon this Court s decisions in Shyam Singh v. Daryao Singh (Dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty It is well-settled that the term representative-in-interest includes the assignee of a contractual interest. Though the provisions of the Contract Act do not particularly deal with the assignability of contracts, this Court has opined time and again that a party to a contract cannot assign their obligations/liabilities without the consent of the other party. A Constitution Bench of this Court in Khardah Company Ltd v. Raymon Co (India) Private Ltd., AIR 1962 SC 1810 has laid out this principle as follows: An assignment of a contract might result by transfer either of the rights or of the obligations thereunder. But there is a well-recognised distinction between these two classes of assignments. As a rule obligations under a contract cannot be assigned except with the consent of the promisee, and when such consent is given, it is really a novation resulting in substitution of liabilities. On the other hand, rights under a contract are assignable unless the contract is personal in its nature or the rights are incapable of assignment either under the law or under an agreement between the parties. (emphasis supplied) In Khardah Company, the Appellant jute manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons he is to discharge it. The contractual rights for the payment of money or to building work, for e.g., do not involve personal considerations. (emphasis supplied) 9. It is true that Section 15(b) of the Specific Relief Act does not specifically state that obligations may not be assigned except with the consent of the other party. However a reading of Section 15(b) shows that it is nothing but a statutory formulation of the ratio laid down in the above-mentioned precedents. The rule stated in Section 15(b) is that any interest in a contract can be specifically enforced by the assignee thereof, except where the personal quality of the party is a material ingredient in the contract; or where the contract, expressly or by necessary implication, prohibits the beneficiary from transferring their contractual interest to third parties. Hence Section 15(b) does not contradict the general law on assignability of contracts as laid down by this Court, but rather clarifies that the same conditions will have to be satisfied if an assignee seeks to secure specific performance of the assigned contract. Therefore, for example, a contract for a singing performance or a painting may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employ a competent person to perform it. It is clear from the above that the promisor may employ a competent person , or assign the contract to a third party as the case may be, to perform the promise only if the parties did not intend that the promisor himself must perform it. Hence in a case where the contract is of personal nature, the promisor must necessarily show that the promisee was agreeable to performance of the contract by a third person/assignee, so as to claim exemption from the condition specified in Section 40 of the Contract Act. If the promisee s consent is not obtained, the assignee cannot seek specific performance of the contract. B. Application of the above principles to the present case 11. Hence, in light of the above discussion, whether or not an assignee can seek specific performance would depend upon the construction of the contract in each case. The Court would have to determine the nature of interest sought to be transferred, whether such interest was meant to be enforceable only between the parties to the contract and whether the contract expressly or by necessary implication bars assignment of such interest. In the present case, the 1986 agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is well established that in construing a contract it would be legitimate to take into account surrounding circumstances. Therefore on the question whether there was an agreement between the parties that the contract was to be non-transferable, the absence of a specific clause forbidding transfer is not conclusive. What has to be seen is whether it could be held on a reasonable interpretation of the contract, aided by such considerations as can legitimately be taken into account that the agreement of the parties was that it was not to be transferred. When once a conclusion is reached that such was the understanding of the parties, there is nothing in law which prevents effect from being given to it. (emphasis supplied) 12. Section 40 of the Transfer of Property Act states that a contract for sale of immovable property is a contract that a sale shall take place on terms settled between the parties . It is a settled position that such a contract does not by itself create any interest in or charge on the property. The buyer only obtains a right to get the sale deed executed, upon fulfilment of the applicable terms and conditions as consented to by all the parties. Hence the 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment. The 1987 agreements nowhere provide for discharge of the original vendees pending obligations towards the Appellants by Respondent Nos. 1. Hence we are inclined to accept the Appellants argument that the 1987 agreements were not a case of assignment but appear to be independent agreements for sale which were contingent on the execution of the 1986 agreement. Therefore, the only way Respondent Nos. 1 can seek specific performance of the 1986 agreement against the Appellants is by proving the Appellants knowledge of and consent to transfer of the original vendees rights and liabilities to Respondent Nos. 1. 14. It is true that Section 15(b) does not stipulate in what form the promisee s acceptance of performance by a representative- in-interest of the promisor should be communicated. It may be either through express written consent, or implied from the actions of the promisee; though as a matter of caution, the former mode of acceptance would inevitably have higher evidentiary value. However in the present case, as the trial court and the Learned District Judge have rightly appreciated on facts, we do not find that the Appellants have either by words or by conduct, con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain future event happens, cannot be enforced by law unless and until that event has happened. 35. When contracts become void, which are contingent on happening of specified event within fixed time.-Contingent contracts to do or not to do anything, if a specified uncertain event happens within a fixed time, become void if, at the expiration of the time fixed, such event has not happened, or if, before the time fixed, such event becomes impossible. The 1987 agreements are clearly contingent contracts inasmuch as they could only be enforced had the original vendees obtained the right to get the sale deed executed, and taken possession of the suit property as per the terms of the 1986 agreement. Once the 1986 agreement was cancelled by the Appellants, the original vendees rights thereunder ceased to exist. 17. Respondent Nos. 1 contend that the Power-of-Attorney dated 11.11.2001 (supra) in favour of Mr. Dhananjay Patel shows that the 1986 agreement was not cancelled and that the original vendees continued to retain their right to get the sale deed executed in their favour. It was brought to our notice by the Appellants that the aforesaid Power-of-Attorney was subsequently cance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty. Hence they seek that action should be taken against the Appellants and the original vendees under Order XXXIX, Rule 2A of the Code of Civil Procedure, 1908 for breach of the injunction order. However, we are in agreement with the trial court s findings that the Plaintiffs application under Order XXXIX was moved after a delay of three years and six months, and the said delay has not been satisfactorily explained. Hence the application is barred by laches. In any case, since the original vendees have revoked the Power-of-Attorney, status-quo has been restored, and the Plaintiffs cause of action no longer exists. The Learned District Judge and the High Court in the impugned judgement have affirmed the trial court s reasoning on this aspect, and we see no reason to overturn their concurrent findings on this matter. It was also re-iterated before us by Respondent Nos. 1 that the original vendees were misled into withdrawing their suit SCS No. 194/1988 and that the same should not be binding upon the plaintiffs. However given that the withdrawal of the suit has attained finality before this Court, and the Trial Court and the High Court have concurrently found in the separat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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