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CASE NO.: Appeal (civil)  6006 of 2001

PETITIONER: HPA International

RESPONDENT: Bhagwandas Fateh Chand Daswani   and Others

DATE OF JUDGMENT: 13/07/2004

BENCH: Shivaraj V. Patil & D.M. Dharmadhikari.

JUDGMENT: J U D G M E N T

                                         With

CIVIL APPEAL NO.336 OF 2002

Bhagwandas Fatehchand Daswani  and Others  Versus HPA International and others    

Dharmadhikari J.                  These two cross appeals have been preferred against common  judgment dated 24.4.2001 passed by the Division Bench of the High  Court of Madras by which  decree of Specific Performance of Contract  of Sale of the suit property granted by the learned single judge has  been set aside with certain directions to adjust the equities between  the parties.

       The facts of the present case should be an eye opener to   functionaries in law courts at all levels that delay more often defeats  justice invariably adds complications to the already complicated  issues involved in cases coming before them, and makes their duties  more onerous by requiring them to adjust rights and equities arising  from delay.

       This introductory  comment is occasioned by the fact that  against the judgment of the learned single judge passed on 6.9.1988  the appeal was earlier heard by the Division Bench of the High Court  on 22.3.1989 but it passed the judgment after a period of about five  years on 24.1.1994.  It dismissed the appeal and confirmed the  decree of Specific Performance of the Contract granted by the single  judge.  

            In appeal preferred  by the defendants, this Court by order  passed on 13.1.2000 (reported in 2000 (2) SCC 13) remanded the  appeal to the Division Bench of the High Court for a fresh decision  only because of long gap of five years in hearing arguments and  decision of appeal by the High Court.

After remand the Division Bench reheard the appeal and by the  impugned judgment dated 24.4.2001 has allowed it.  The decree  granted by the learned single judge of partial relief of Specific  Performance of Contract of Sale of life interest of the vendor in the  suit properly has been set aside.  

With this background the facts of the case may be stated:-

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       The owner of the suit property namely, Mouna Gurusamy  Naicker, (hereinafter referred to as the ’vendor’) grandfather of  respondent No.6 (G. D. Narendra Kullamma Naicker) executed a Will  and two Codicils on 7.3.1948.  Under the Will, the vendor herein was  bequeathed the right of enjoyment during his life, of the estate of the  testator, including the suit property (described as Municipal Door  No.36C, Mount Road, Madras-600 002) but without powers of  alienation.  In the Will, it was provided that after the death of  the  vendor, his male issue living at the time of his death would take all  the properties absolutely.  In the absence of any such male issue of  the vendor, the properties would be taken by other descendants  (hereinafter referred to as the ’reversioners’).   

       Shri M.G.Naicker, the testator died on 23.10.1956.  On  26.6.1977, the vendor entered into an agreement of sale of the suit  property with the appellant HPA International, a partnership firm  (hereinafter referred to as the vendee).   It was clearly recited in the  agreement that the sale of the property was necessitated because of  the pressing demands of public authorities towards, dues and tax  liabilities on the estate and likelihood of coercive recovery of public  dues by attachment and sale by public auction.  The vendor,  therefore, agreed to sell and the purchaser agreed to purchase the  entire interest in the suit property at Mount Road, Madras inclusive of  life interest of the Vendor and the interest of the reversioners  (described as remainder men) free from all encumbrances, for a total   price of 5.5 lacs.  A sum of Rupees 25,000/- was paid as advance.   The balance of the sale consideration was to be paid by the purchaser  by bank drafts in favour of the concerned public authorities for  discharging the public dues and taxes.  The purchaser agreed to pay  Rupees 18,000/- to the tenant in occupation of the property which  was the liability of the vendor. The vendor agreed to obtain at his  own cost and expense the sanction of the High Court of Madras for  sale of his life interest and interest of the remainder men in the  property.  The agreement further provided that in case the sanction  of the Court was not accorded for the sale, the agreement shall  forthwith stand cancelled and the vendors shall return  the advance  amount of Rupees 25,000/- to the purchaser.   

       There was a separate stipulation in the agreement that if after  the sanction of the Court the vendor commits breach of the contract  he shall return the advance money of  Rupees 25,000/- and pay a  sum of Rupees 15,000/- to the vendee by way of liquidated damages  for failure to complete the sale.  The agreement further provided that   if after the sanction of the Court, vendee commits breach and does  not complete the sale, he shall be liable to pay to the vendor a sum  of Rupees 15,000/- by way of liquidated damages.

        The relevant part  of opening recitals and clauses 1,2,3,4,6,7,9  & 15 of the agreement dated 26.6.1977 Ex.P1 are reproduced  hereunder as rights, and equities of the contesting parties are  dependent on its proper construction, and understanding:

AGRRMENT OF SALE         "THIS AGREEMENT OF SALE executed at Madras this 26th  day of June 1977 between G.D. NARENDRA KULLAMMA  NAICKER, son of late M.Dorai Pandian alias Subba Naicker,  Hindu, aged about 38 years and now residing at Plot No.24,  Second Stage, Panmanabha Nagar, Adyar, Madras-20,  hereinafter referred to as the VENDOR of the one part and HPA  INTERNATIONAL, a firm having its business office at No.15/16,  Casa Major Road, Egmore, Madras-8 represented herein  by its  Managing Partner H.A. ALEEMUDDIN, hereinafter called the  PUTVHASER of the other part:          WHEREAS the Vendor is the Paternal grandson of late

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Mounaguruswamy Naidu, Zamindar of Naickarpatti, Madurai  District, whereas the said Mounaguruwamy Naidu owned and  possessed large immovable properties consisting of Houses and  lands situate in Madurai district and in Madras City.

       WHEREAS he executed his last Will and Testament dated  7.3.1948 and two Codicils to the said Will, whereas he had  bequeathed thereunder a life estate in all the said properties to  his grandson, the vendor herein, whereas he provided therein  that after the life time of the Vendor, his male issues, if any,  who may survive him,  should take all his properties absolutely,  whereas he also provided in the said Will that if the vendor  should die without leaving any male issue, his brothers and in  default of brothers, his brothers’ male issues who may be alive  at the time of death of the vendor should take the property  absolutely and in default of any of them, the testators’ daughter  and son’s daughters then living at the time of the death of the  vendor should take the property absolutely.

       WHEREAS the said Mounaguruswami Naidu died on  23.10.1956, Whereas  the vendor’s father M.Doraipandian alias  Subba Naicker obtained probate to the said Will and Codicils  from the High Court, Madras in OP No.14 of 1957 and was  administering the estate until 4.12.1963 when he delivered  possession of the estate to the vendor under orders of the High  Court, Madras.  Whereas the vendor is in possession of the said  estate ever since then and has been administering the same.

       WHEREAS the vendor has not begotten any issues, male  or female, until now, whereas the vendor’s father died on  29.9.1972.  Whereas the vendor had to spend very large sums  of money for Managing the vast extent of agricultural lands  comprised in the estate and the net income from the same ever  since the vendor took up management of the same until now  has been very negligible and practically nil.

       WHEREAS the house properties have also not yielded any  surplus income after discharge of liabilities.

       WHEREAS large sums of money by  way of public cues  such as Agricultural income Tax, Capital Gains Tax, Income-Tax,  Wealth tax, penalties and interest, property tax, Urban Land  Tax, compulsory deposits, etc., payable on the various  assessments could not be paid and discharged as and where  demanded for want of requisite net income from the estate to  meet the same and on account of paucity of funds in the estate.

       WHEREAS there is now due towards the said Public debts  and public liabilities a sum of nearly six lakhs, whereas  consequent on the  inability of the estate to pay the same,  interest on the said public debts are accruing from day to day  thereby increasing the liability of the estate enormously.   Whereas in consequence of the inability and failure of the estate  to meet the said public debts  within the periods of the  respective demands, penalties are also levied thereby further  swelling the public Debt liabilities of the estate.   

       WHEREAS the vendor apprehends that eventually the  public debts and liabilities may swallow up the estate whereas  the payment of all the said Public Debts and dues and public  liabilities is a first charge on the entire state.

       WHEREAS the vendor also apprehends that in the  circumstances the State and Public Authorities may take  coercive steps and bring the properties comprised in the Estate

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to sale for the realisation of the public Debts and Liabilities.   Whereas the vendor also apprehends that if the properties are  brought to sale in public auction by coercive steps by the state  they may be sold away for ridiculously low and nominal prices  and that the estate would thereby be put to enormous loss and  damage, whereas the vendor has therefore considered it  imperative in the interest of the estate to sell some of the  properties of the estate and to discharge the public dues and  liabilities payable by the estate from the  net sale proceeds  thereof, in order to save the remaining portion of the estate.  

       WHEREAS house, ground and premises bearing Municipal  Door No.36-C, Mount Road, Madras-2 and more fully described  in the Schedule hereto is comprised in the said estate.         WHEREAS the vendor has therefore negotiated for a sale  of the same with a view to utilize the entire net sale proceeds  thereof for discharge of the public debts and dues and public  liabilities of the estate.

       WHEREAS the Purchaser has  offered to purchase the  said property described in the schedule hereto in its entirety,  that is inclusive of the interest of the remainder men after the  life time of the vendor and free from all encumbrances, charges  or trusts whatsoever for the net sum of Rs.5.5 lakhs (Rupees  five and a half lakhs) only upon and subject to the performance  of all the terms and conditions mentioned hereinbelow:

WHEREAS the vendor has considered the said offer to be   fair, reasonable and best according to present market conditions  and in the circumstances of the case.

WHEREAS the vendor has also considered that it is in  the best interest of and beneficial  to the estate to accept the  offer in order to discharge the Public Debts and dues and public  Liabilities of the estate and to save the estate from coercive  steps by the State and from a forced sale of the properties  comprised in the estate in public auction and has therefore  deemed it fit, proper and necessary to accept the said offer.

NOW THIS AGREEMENT WITNESSETH as follows in  pursuance of the premises and agreement hereinabove recited:

1.      The vendor doth hereby agrees to sell and the purchaser does  hereby agrees to purchase the entire interest, both present and  future, in house ground and premises bearing Municipal Door  No.36-C, Mount Road, Madras-2 inclusive of the life interest of  the Vendor and the interests of the remaindermen and free  from all encumbrances, charges of trusts whatsoever from the  net sum of Rupees five and a half lakhs and subject to and upon  all the terms and conditions mentioned below: 2.      The sale is of the entire interests in the said property  namely, the present interest of the vendor and the interest of  the remaindermen or revesioners after his death.

3.      This agreement is subject to the passing of the vendor’s  title to the property and of the vendor’s rights to sell the entire  interest, present and future in the property by the Purchaser’s  advocate.

4.      The vendor shall obtain at his own cost and expense the  sanction of the High Court, Madras for the absolute sale as  aforesaid of the entire interest in the property inclusive of the  interest of the remaindermen or reversioners after the life time  of the vendor.

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5.      The pruchaser has this day paid to the vendor a sum of  Rs.25,000/- (rupees twenty five thousand only) by bank draft  bearing No.CL/AA 779570 dated 24.6.1977 drawn on the State  Bank of India, Adyar, Madras, in favour of the Vendor, as  advance towards agreement of sale. 6.          In case sanction of the Court is not accorded as aforesaid,  this agreement shall forthwith stand cancelled and the vendor  shall forthwith return the advance amount of rupees twenty five  thousand to the purchaser.

7.      If the sanction of Court is obtained the sale shall be  completed within a period of three months thereof.

8.      ...................

9.       The balance of the sale price of Rs. Five lakhs twenty  five thousand shall be paid by the purchaser at or before the  execution and registration of the sale deed by bank draft drawn  in favour of the respective concerned Public Authorities on behalf  of the vendor for discharge of the public debts and dues and  public liabilities of the said  estate and other liabilities binding on  the said property, viz. The advance of Rs.18,000/- liable to be  returned to the tenant of the said property by the vendor and  the commission payable by the vendor to the broker on this  transaction. 10.     ................... 11.     ................... 12.     ................... 13.     .................... 14.     .................... 15.     If after the sanction of court to the aforesaid sale is obtained  the vendor fails to complete the sale he shall be liable to refund  forthwith to the Purchaser the advance of rupees twenty five  thousand and  also pay a sum of rupees fifteen thousand to the  Purchaser by way of liquidated damages for his failure to  complete the sale.  If after the sanction of court is obtained the  purchaser fails to complete the same he shall be liable to pay to  the vendor a sum of rupees fifteen thousand by way of  liquidated damages for his failure to complete the same."                  At the time of execution of the agreement Ex.P1 dated  26.6.1977 the Testator’s only daughter and the three sisters of the  vendee were the reversioners in accordance with the terms of the  Will because by that time the vendor had no male issue.

In accordance with the terms of the sale agreement the   vendor filed Civil Suit No.471/77 (originating Summons Suit) on the  original side of the High Court for seeking sanction of the court for  sale of full interest in the property inclusive of his own life interest  and the interest of the reversioners.  The reversioners were  impleaded as parties to that suit.   

       On 16.1.1978, one of the reversioners viz., Saraswati Devi  filed a written statement objecting to the grant of sanction for sale  and prayed for dismissal of the suit.  Another reversioner Prema  Gangaiya adopted the written statement filed by other reversioner  and objected to the sale.

       As the sanction sought from the Court was opposed by the  above-named reversioners, the vendor sent a lawyer’s notice on  11.9.1979 to the vendee stating therein as under:  

"In view of the prolonged proceedings in obtaining  sanction of Court, for sale of the above said property  and the pressing demands from Tax Authorities, my

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client Mr. G.D.Narendra, hereby cancels the  agreement of sale referred to above and the advance  sum of Rs.25,000/-  paid by your draft under the  above said agreement is, therefore, refunded by his  check bearing No.........dated 11.9.1979."

       Soon after issuance of the above lawyer’s notice, the vendor,  on 12.9.1979, instructed his lawyer stating that the suit seeking  sanction of the Court was not likely to be decided early and the  chances of grant of sanction being  remote, the suit be withdrawn.  

It may be mentioned at this very stage that eventually the suit  was not, in fact, withdrawn and, as would be stated in detail  hereinafter, the suit was prosecuted by the vendee himself who got  himself transposed in the suit as co-plaintiff.

       The vendee sent a detailed reply to the lawyer’s notice sent by  the vendor canceling the agreement. In his reply, the vendee  attributed mala fides to the vendor in rescinding the agreement. In  his reply, the vendee acknowledged that the sale was necessitated  because of public liabilities towards taxes and other dues in respect of  the property but it was alleged that there was no such  pressing  demand from any tax authorities creating an urgency as to compel  the vendor to rescind the contract.  It was  alleged in the reply that  the vendor was negotiating a sale for higher price with one Bob  Daswani and to effectuate sale in favour of the new purchaser, one of  the partners of the vendor firm was called for discussion.  It is  disclosed from the evidence led in the trial that Bob Daswani and  respondent Fateh Chand Daswani who were shown and impleaded as  two different persons, were one and the same although initially  attempt was made by the defendants to mislead the Court that they  were two persons and the subsequent sale to respondents 1 to 5 was  without knowledge of prior agreement with the  vendee.  The  purchaser of the suit properties shall hereinafter be referred as the  subsequent vendee.

       What is to  be taken note of from the lawyer’s reply for vendee  to the lawyer’s notice for the vendor is that the former had alleged  breach of contract on the part of the vendor with attributing  intention to the latter of selling  the property for higher price to third  parties.  The other  relevant part of the reply to lawyer’s notice sent  by the vendee is the acknowledgement of the  fact of necessity of  sale of the property for discharging public taxes and dues although in  reply it was  reiterated that the vendee was always ready to  discharge the tax liability in accordance with the sale agreement.   The relevant part of the reply reads thus: "The very object of the intended sale is for  discharge of the income tax and other tax  liabilities and my clients are always ready to  discharge the same as per the sale agreement."  

       It  may be mentioned at this very stage that in his reply sent  through his lawyer to the lawyer’s notice of the vendor cancelling the  agreement, the vendee did not express desire to purchase life  interest of the vendor without insisting on transfer of interest of the  reversioners which was subject matter of the suit filed for seeking  sanction of the Court.

       On 29.12.1979, the vendor sold his life interest in the suit  property for a sum of Rs.4.40 lacs by executing registered instrument  in favour of respondents 1 to 5 (shortly referred to as the  subsequent vendee).  What is apparent from the contents of the  subsequent sale deed  Ex.D1 dated 29.12.1979 executed in favour of  the subsequent vendee is that large part of the sale consideration  in different sums aggregating to Rs.2.68 lacs was paid directly by the

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subsequent vendee to various authorities to discharge public dues  and taxes  like Corporation Property Tax, Urban Land Tax and Income  Tax arrears.

       The subsequent vendee by separate release deeds dated  21.10.1980, 22.1.1980, 22.2.1980 and 29.4.1980 obtained surrender  of  rights individually from the reversioners by paying each of them  a sum of Rs. 20,000/-.

       After receiving the lawyer’s notice and cancellation of the sale  agreement, the vendee on 25.3.1981 got himself impleaded as a  party-defendant in Suit No.471/77 which was filed to seek sanction of  the Court.  

On 16.8.1981 the vendee filed Civil Suit No.423/81 seeking  Specific performance of the Agreement of Sale agreement Ex.P1.

       Under order dated 17.12.1981 passed in Civil Suit No.471/77  seeking sanction of the Court, the vendor got himself transposed as  co-plaintiff.  The two suits i.e. Civil Suit No.471/77,seeking court  sanction for sale under the agreement Ex.P1 and Civil Suit No.423/81  seeking Specific Performance of the Agreement of Sale, were clubbed  and tried together by the learned single judge on the original side of  the High Court.  

After the pleadings  were completed in the two suits,  the  vendee on 25.11.1986 filed an affidavit purporting to be under  Section 12(3) of the Specific Performance Act of 1963 stating therein  that without prejudice to his claim for transfer of full interest in the  suit property to him under the agreement of sale, if  he was found  not entitled to maintain the suit seeking sanction of the Court for sale  of full interest in the property a decree be granted for Specific  Performance of transfer of life interest of the vendor in the suit  property.  The relevant part of the affidavit claiming lesser relief of  sale of life interest of the vendor reads as under: "I submit that the relief as prayed for in CS  No.471 of 1977 can be granted by this Hon.  Court.  The relief prayed for in the present suit  is for a decree for specific performance in  respect of the entire property with full rights of  the first defendant and of the reversioners.   Without prejudice to what is stated above, it  has become necessary for me to file this  affidavit before commencement of the trial of  the suit under the following circumstances.

       I state that in the event of this Hon.  Court taking the view and coming to the  conclusion that the plaintiff herein as the  second plaintiff in CS No.471 of 1977 is not  entitled to maintain the suit and pray for the  relief sought for, then, I submit that this Hon.  C ourt may be pleased to decree the suit in CS  No.423 of 1981 for specific performance of the  life interest of the first defendant and direct  the defendants in the suit to execute the sale  deed in favour of the plaintiff to the extent of  the life interest of the first defendant."                  In view of the above averment made in the affidavit filed by the  vendee in which he alternatively claimed  lesser relief of transfer of  only life interest in the suit property of the vendor, the learned  single judge by common judgment dated 6.9.1988 dismissed Civil  Suit No.471/77 seeking sanction of the Court for sale  as infructuous.   The relevant part of order  of the learned single judge dismissing Civil

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Suit for sanction as infructuous reads thus:  "While so, by affidavit dated 25th November,  1986, Messrs. HPA International, swore in CS  No.423 of 1981, that in the event of this Court  coming to the conclusion that Messrs. HPA  International as 2nd plaintiff in CS No.471 of  1977 is not entitled to maintain the suit as  prayed for, HPA International  is restricting  their claim in CS No.423 of 1981 for specific  performance of the agreement Ex.P1 with  reference to the life-estate of Narendra  Kullamma Naicker alone and for a direction to  the defendants in that suit to execute the sale  deed in favour of the plaintiff to the extent of  the life-estate of Narendra Kullamma Naicker as  provided under  Section 12(3) of the Specific  Relief Act for the consideration of Rs.5,50,000/-  for which he had bargained for the whole  interest in the suit property.  

       In view of the above affidavit filed by Messrs.  HPA International in CS No.423 of 1981, this  suit viz., CS No.471 of 1977 has become  infructuous.  Further, this Court cannot compel  the reversioners to part with their interest.         As such, I find that the suit in CS No.471 of  1977 has become infructuous, and it is  dismissed as infructuous accordingly.  No  costs."

       It may be stated that this part of the common judgment  dismissing Civil Suit No.471/77, in which sanction for sale was sought  from the Court, has not been appealed against before us although  learned counsel for the vendee has contended that no separate  appeal was required to be  filed against dismissal of the suit for  court’s sanction as infructuous because the common judgment   passed in the suit seeking sanction of the suit for sale and the suit for  specific performance is under appeal before us.  We shall deal with  this argument separately at the appropriate stage as to whether any  separate appeal was required to be filed against dismissal of suit  seeking sanction of the Court for sale, as having been rendered  infructuous.   

       The learned single judge by the impugned common judgment  decreed Civil Suit No.423/81 in favour of the vendee to the extent of  directing conveyance of life interest in the suit properties of the  vendor under the Agreement Ex.P1.  It was further held that as the  subsequent vendee has purchased the property with knowledge of  the prior sale agreement with the vendee the former should join in  re-conveying the property to the latter.

       It is necessary to take note of the legal and factual issues  decided by the learned single judge in favour of the vendee.  On the  issue whether the vendee can be granted lesser relief directing  conveyance of life interest of property of the vendor, the learned  single judge held in favour of the vendee thus:  "A perusal of the oral and documentary  evidence clearly proves that DW 1 has no  regard for truth.  Further, the built-in clauses  namely clauses 4 & 6 in Ex.P1 have been  introduced for the benefit of the plaintiff.  The  non-enforcement of those clauses will not  prejudice the Ist defendant.  As such I find  that the facts of this case amply illustrate the  forethought of the framers of the Specific

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Relief Act in introducing Section 12 therein.   The failure to get sanction of the court by the  Ist defendant to convey the whole of the  interest of the suit property as contained in  clause 4 of Ex.P1 agreement is not a bar for  the plaintiff herein to enforce Ex.P1.since he   has relinquished the benefit that accrues to  him, which will not prejudice the Ist defendant.   In view of the relinquishment of the right given  to the plaintiff under clause 4 of Ex.P1, clause  6 of the agreement becomes otiose."           In granting decree of Specific performance of Conveyance of  life interest of the vendor, learned single judge further held thus: "Whereas, the agreement involved in this suit  is capable of separation, one consisting of  enforceable portion viz. the life interest of the  first defendant and unenforceable portion viz.  interest of remainder men and reversioners."

       The learned single judge found that the equity was in favour of  the vendee as the vendor has been found  guilty of misrepresenting  Bob Daswani and Fateh Chand Daswani as two persons when they  were the same and the negotiations for subsequent sale were held in  presence of one of the partners of the vendee.  The learned single  judge on this aspect in the judgment comments thus:  "It is a pity that third defendant who is  considered to be an enlightened citizen having  international connections with so much of  wealth has not come forward to state at the  earliest opportunity that he carries the name  Bob Daswani also. That shows the guilty  conscious of the third defendant.  Having  projected his image as Bob Daswani, the  presence of the first defendant and the plaintiff  on 9.9.1979 he wanted to hoodwink the plaintiff  for getting his sale-deed in the name of the  third defendant  so as to plead that third  defendant is bona fide purchaser for value  "without notice." But anticipating that his claim  would be exposed he omitted to mention the  aforesaid facts that he and his wife and children  are bona fide purchases for value only.  They  omitted to state "without notice."

       It needs to be mentioned at this stage that learned counsel  appearing for the subsequent vendee has not disputed in this  appeal that the sale in favour of the subsequent vendee was with  notice of the prior sale agreement Ex.P1 with the vendee.                    Against the judgment granting decree of specific performance  of sale of life interest of vendor in the suit property, an appeal was  preferred by the subsequent vendee to the Division Bench of the  High Court.  As has been mentioned earlier, the Division Bench  concluded hearing of the appeal on 22.3.1989 but pronounced  judgments almost five years after on 24.1.1994 and dismissed the  appeal.  That judgment has been set aside by this Court by order  dated 13.1.2000 reported in 2000(2) SCC 13.  This Court remanded  the appeal for re-hearing by the Division Bench of the High Court.   After re-hearing, the Division Bench  by the impugned judgment  dated 24.4.2001 has allowed the appeal preferred by the  subsequent vendee.  The decree granted for conveying life interest  of the vendor in the suit property has been set aside.  The only relief  granted to the plaintiff, is  that out of the rental income realised by

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the plaintiff during long pendency of the appeal, a sum of Rs.5.5 lacs  has been deducted to deprive the  subsequent vendee of that sum  for his misconduct of projecting Bob Daswani and Fateh Chand  Daswani as two persons when, in fact, they were one.  Rest of the  rental income recovered by the plaintiff vendee has been directed to  be paid to the subsequent vendee as a  consequence of  success of   appeal and setting aside of the decree for specific performance.

       Before  considering the various grounds urged in this appeal, it  is necessary to briefly indicate the basis on which the Division Bench  on re-hearing of the appeal - reversed the judgment of the learned  Single Judge.           Construing the  relevant clauses of the contract the Division  Bench held that clause (6), which placed an obligation on the vendor  to approach the court for sanction of sale of interest of reversioners,  was incorporated not with a view to safeguard interest of the vendee  alone but it was a term meant for benefit of both the parties.  The  Division Bench in paragraph 31 held thus:  "The sanction referred to in the agreement is a  sanction which was clearly meant for the benefit of  both the parties to the agreement.  The plaintiff was  interested only in the purchase of entire interests’ in  the property, had made the agreement subject to  such interest being lawfully conveyed and accepted  liability for payment of liquidated damages if it failed  to obtain the sale deed after the sanction was  obtained.  Plaintiff not having contracted with the  reversioners to buy their interest, could not have  secured the ’entire interest’ in the property without  an order of this Court directing conveyance of the  reversionary interest to the purchaser.  The sanction  of the Court was clearly meant for the benefit of the  purchaser as well as the vendor."

   The Division Bench has taken the view that as the sanction for sale  was not granted by the Court as was contemplated by the parties  under the terms of the agreement; the contract was rendered un- enforceable.  The Division Bench concluded thus:

"Appellants are entitled to contend that the contract  is a contingent one, and that the contingency  contemplated by the parties not having occurred, the  contract, regard being had to what had been  expressly provided by the parties in clause 6 of the  agreement, had collapsed by implosion, the dismissal  of the suit for sanction having triggered it."  

       With regard to dismissal of Civil Suit No.471/77 seeking  sanction of the Court as infructuous and having attained finality  because of non-preferring of appeal by the vendee-plaintiff in  paragraphs 25 & 34, the Division Bench held thus: "It is now a matter of record that the sanction  sought for the sale of reversionary interest was not  given the Civil Suit 471 of 1977 having been  dismissed that dismissal has become final. By virtue  of clause 6, the suit agreement Ex.P1, forthwith  stood cancelled, if that clause was meant for the  benefit of both the parties to the contract.  If the  contract thus stood cancelled the suit for specific  performance had necessarily to be dismissed.

That suit for sanction, CS No.471 of 1977, was in  fact prosecuted by the respondent herein, who after  becoming a party to that proceeding, had itself

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transposed as a co-plaintiff.  Having thus put itself in  a position where it could seek sanction, plaintiff’s  failure to lead evidence on the justification for  sanction, on the ground that it had invoked S.12(3)  of the specific Relief Act, is a default which cannot  now be turned to its advantage, after the suit for  sanction was dismissed."                  The claim allowed for grant of lesser relief of conveyance of life  interest of the vendor in the suit property, was negatived by the  Division Bench and the decree granted by single judge was reversed  by recording the following conclusion:

"The suit agreement being an integrated whole was  one and indivisible incapable of being split into an  agreement for sale of life interest and another for  the sale of reversionary interest.  What perished was  the whole of the contract and not only a part. What  was contemplated by the parties to the agreement  was the sale of ’entire interest’ in the property  provided sanction was given, and in the event of  sanction  not being given the agreement stood  cancelled as a whole leaving each of the parties to  arrange their affairs as they thought fit wholly  unhampered by anything contained in the  agreement.  The agreement contemplated the sale of  all interests in the property if sanction was  forthcoming, and no sale of any part of the property  in case sanction was not given.  The bargain was for  all or nothing.  It was not open to the court to make  a new contract for the parties after the contract in its  entirety had perished."  

       The Division Bench  negatived the claim seeking conveyance of  life interest in the property of the vendor, also on the ground of  delay and equity by observing thus:

"Plaintiff cannot be allowed to claim performance in  part several years later.  Had the plaintiff been  earnest about relinquishing its claim for reversionary  interest, it could have obtained Narendra’s life  interest in 1977 itself, and at any time up to the  execution of the sale deed by Narendra In favour of  appellants in 1979.  Narendra was eager to sell and  had been waiting for the plaintiff to take a sale deed  from him.  The sale by Narendra to appellants was  for the purpose inter alia, of raising the monies  required for paying the arrears of revenue - funds  which the plaintiff could have provided by obtaining  conveyance of his life interest, but was not so  provided.  Having regard to these facts the prayer  for part performance made during the course of the  trial at a stage when it was evident that the suit as  laid was doomed to failure, was not one which could  be acceded to.  The trial court was in error in  granting that prayer by ignoring the plaintiff’s  conduct."  

       As a result of the conclusion reached as mentioned above, the  Division Bench allowed the appeal and set aside the decree of  granting Specific Performance of the Contract Ex.P1 to the extent of  conveyance of life interest of the vendor.  A decree of refund of full  sale price to the vendee was however granted.  Since pending the  appeal, the decree granted by the learned single judge had been

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executed and possession had been obtained by the vendee, who had  raised further construction on the property and collected rents from  the tenants, the Division Bench in paragraph 63 made directions  to  adjust the rights and equities between the parties with regard to the  amounts spent by each of them on putting up their own constructions  and rental income realised by each of them  from the property.  We  shall separately deal with that aspect at appropriate stage of our  judgment. We have heard the learned counsel appearing for the  contesting parties at great length. Apart from long oral arguments,  written submissions have been made and plethora of case law has  been  placed before us on various legal contentions advanced.  Considering the view that we propose to take and the conclusions  reached by us, we do not consider it necessary to deal with each of  the rulings cited before us by the learned counsel at the Bar. We will  confine our consideration to certain rulings  directly on the issues and  few others touching them.  

In substance, the main submission advanced by learned  counsel Shri K. Parasaran on behalf of the  vendee is that the   vendor clearly committed a breach of the terms of the sale  agreement Ex. P-1.  During pendency of the suit seeking sanction of  the court, the contract was formally terminated by lawyer’s notice  dated 11.9.1979 sent by him. It is submitted that  actions such as of  sending notice of terminating the contract, thereafter instructing his  lawyer to withdraw the suit for sanction followed by the negotiations  which were proved to have been held to sell the suit property to the   subsequent vendee, were clearly mala fide attempts on the part of  the  vendor to resile from the contract for getting higher price for  the property. It is pointed out that an attempt was made to mislead  the Court by creating confusion  that Bob Daswani and Bhagwandas  Daswani were two different persons and the  subsequent vendee  had no knowledge of the prior agreement entered with the plaintiff-  vendee. This deception sought to be practised on the opposite party  and the court was exposed during trial and the learned single judge  has imposed penalty on the  subsequent vendee for the misconduct  of misleading the court. It is submitted that the  subsequent  vendee having  purchased the property with knowledge of the prior  agreement holds the property in trust for the benefit of the prior   vendee and is obliged in law to make over the property to the prior   vendee under decree for specific performance of the prior contract.   Sections 90, 91 & 92 of the Indian Trusts Act are  relied for the above  proposition and  need reproduction at this stage for better  appreciation of the arguments advanced on this point on behalf of the   vendee :-  

"Section 90.  Advantage gained by qualified owner. -  Where a tenant for life, co-owner, mortgagee or other qualified  owner of any property, by availing himself of his position as  such, gains an advantage in derogation  of the rights of the  other persons interested in the property, or where any such  owner, as representing all persons interested in such property,  gains any advantage he must hold, for the benefit of all persons  so interested, the advantage so gained, but subject to  repayment by such persons of their due share of the expenses  properly incurred, and to an indemnity by the same persons  against liabilities properly contracted, in gaining such  advantage.

Section 91. Property acquired with notice of existing  contract.-Where a person acquires property with notice that  another person has entered into an existing contract affecting  that property, of which specific performance could be enforced,  the former must hold the property for the benefit of the latter to  the extent necessary to give effect to the contract.

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Section 92. Purchase by person contracting to buy  property to be held on trust.-Where a person contracts to  buy property to be held on trust for certain beneficiaries  and  buys the property accordingly, he must hold the property for  their benefit to the extent necessary to give effect to the  contract."  

In elaborating the above argument to support claim of specific  performance of the contract, the further submission made is that the  act of rescinding  contract, pending suit for sanction of the court and  selling the property with only life interest  to the  subsequent  vendee, who later on, obtained surrender deeds from the   reversioners by independently paying them, were acts done in  conspiracy between  vendor and the  subsequent vendee. They  were self-induced actions to render the suit for seeking sanction as  infructuous and frustrate the contract.  It is contended that in such a  situation, the prior vendee can take recourse to section 90 read with  sections 91 & 92 of the Indian Trusts Act,  and is  entitled to seek  specific performance of the contract of full rights of the property i.e.  life interest of the   vendor and spes successionis  of the   reversioners. To give effect to the right of the vendee to specific  performance - the  vendor,  reversioners and  subsequent  vendee can be compelled in law to convey full title of the property to  the plaintiff.  

The alternative argument advanced  on behalf of the plaintiff-  vendor is that although the petitioner is, in law, entitled to  conveyance of full title in the property by the  vendor, the   reversioners and the  subsequent vendee, he has restricted his  claim to the lesser relief of seeking conveyance only of life interest in  the property of the  vendor.  Such relief can be granted under  section 12(3) of the Specific Relief Act as the  vendee is willing to  pay full agreed consideration for lesser relief of conveyance of life  interest in the property.  Reliance is placed on Lala Durga Prasad  vs. Lala Deep Chand [1954 SCR 360 at pg. 367]; Jhumma Masjid  vs. Kodimaniandra Devaiah [1962 Supp (2) SCR 554 at pg. 570];  Soni Lalji Jetha vs. Sonkalidas Devchand [1967 (1) SCR 873 at  pg. 879]; and Narandas Karsondas vs. S. A. Kamtam [1977 (3)  SCC 247].    

It is argued that the Division Bench of the Madras High Court  was wrong in coming to the conclusion that the contract was a  contingent one and as the court did not grant sanction for sale of   reversioners’ interest and dismissed the suit seeking  sanction as  infructuous, the contract failed. The contention advanced is that  where the grant of sanction of the court was frustrated by the   vendor himself by prematurely rescinding  the contract and  instructing his lawyer not to prosecute the sanction suit, the dismissal  of the suit as infructuous was self-induced by the  vendor. The  vendor cannot be allowed to take advantage of his own wrong.  The  law and equity is in favour of the plaintiff- vendee. Reliance is placed  on Ganga Saran vs. Ramcharan Ram Gopal [1952 SCR 36 at pg.  42].  

Alternatively, it is submitted that even though sanction could  not be obtained from the court for transferring interest of the   reversioners, the law permits the equity court to grant lesser relief  of directing conveyance of life interest of the  vendor on payment of  full agreed consideration, in accordance with section 12(3) of the  Specific Relief Act. In this respect, it is contended that the Division  Bench of the High Court was wrong in holding that there was undue  delay on the part of the plaintiff- vendee in exercising the option for  lesser relief of transfer of life interest of the  vendor.  Further it  is  also contended that the option exercised for lesser relief was not

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’conditional,’ as is sought to be projected by the other side. It is  submitted that when both suits for seeking sanction and for specific  performance were jointly tried, exercise of option by filing affidavit  stating that it was without prejudice to the right of obtaining full title  with sanction of the  court, cannot be said to be conditional to deny  relief under section 12(3) of the Specific Relief Act.  

In support of the claim for lesser relief of transfer of life  interest, it is submitted that the clause in the contract requiring  sanction of the Court for transfer of reversioners’ interest was a  condition solely in favour of the plaintiff- vendee which he could  waive and the  vendor could not insist on fulfillment of that condition  as a fundamental term of the contract.  

In reply to the plea of the finality of the decree of dismissal of  sanction suit as infructuous, being not appealed against, it is  submitted that the proceedings for sanction are summary in nature,  under the rules and procedures of Madras High Court framed for its  original side. That suit for sanction which was of summary nature  happened to be clubbed with the suit for specific performance. The  two suits were jointly tried. A common judgment was passed  dismissing the sanction suit as infructuous and partly decreeing the  suit for specific performance. An appeal was filed against the common  judgment. Therefore, non-filing of appeal against the dismissal of  sanction suit as infructuous does not operate as res judicata and is no  ground to refuse specific performance of the grant of decree of  specific performance of contract for transfer of life interest for which  no sanction of the court was needed. Reliance is placed on S.P.  Chengalvarya Naidu vs. Jagannath [1994 (1) SCC 1] and  Sheoparsan vs. Ramnandan [AIR 1916 PC 78 at pg. 81].     

Rest of the contentions advanced at the Bar on behalf of the  plaintiff- vendee, in our opinion, are not required to be separately  dealt with because of the view we propose to take and the conclusion  reached by us which shall be elaborated hereinafter.  

Learned senior counsel Shri Soli J. Sorabjee appearing for the   subsequent vendee rested his argument on his main submission  that the sale agreement was a contingent contract - the contingency  named being sanction of the court which did not materialize. Upon  failure of that contingency, the agreement stood cancelled forthwith  under clause (6) of the agreement. On failure of the happening  of  the contingency, the agreement had been rendered unenforceable in  accordance with section 32 of the Indian Contract Act read with  definition of ’Contingent Contract’ contained in section 31 of the said  Act :-  "Section 31.- A ’contingent contract’ is a contract to do or not  do something, if some event, collateral to such contract, does or  does not happen.  

Section 32. Enforcement of contracts contingent on an  event happening.- Contingent contracts to do or not to do  anything if an uncertain future event happens cannot be  enforced by law unless and until that event has happened.  

If the event becomes impossible, such contracts become void."

Heavy reliance is placed on decisions of Privy Council reported  in Dalsukh M. Pancholi vs. Guarantee Life & Employment  Insurance & Co. [AIR 1947 PC 182 at pg. 186]; Narain Pattro vs.  Aukhoy Narain Manna [ILR 12 Calcutta 153 at pg. 155]; Sreemati  Kalidasi Dassee vs. Sreemati Nobo Kumari Dassee [20 CWN 929  at pgg. 937, 938 & 939]; and Golab Ray & Anr vs. Muralidhar  Modi & Ors. [AIR 1964 Orissa 176 at pgg. 180 & 181].  

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The decision cited by the other side in the case of Mrs.  Chandnee Widya Vatee Madden vs. Dr. C.L. Kataial & Ors.  [1964 (2) SCR 495], is sought to be distinguished on the ground that  there the  vendor without sufficient reason withdrew the application  made to the Chief Commissioner for sanction and therefore, the relief  granted was to direct the  vendor to make the necessary application  for sanction.  In that case, it was further made clear that ultimately if  the sanction was refused, the plaintiffs would be entitled only to  damages as decreed by the High Court.  

With regard to the claim allowed for grant of lesser relief of  transfer of life interest, the contention in reply is that the agreement  Ex. P-1 was a single indivisible and inseparable contract based on  sanction of the court. By segregating the contract, no new contract  can be created by the court  and take recourse to section 12(4) of the  Specific Relief Act is impermissible. Reliance is placed on William  Graham vs. Krishna Chandra Dey [1925 PC 45]; Abdul Haq vs.  Mohammed Yehia Khan & Ors. [AIR 1924 Patna 81 at pg. 84]; and  Hiralal Lachmiram Pardesi vs. Janardhan Govind Nerlekar &  Anr. [AIR 1938 Bombay 134].  

The claim for conveyance of life interest is also opposed on the  ground that the option exercised under section 12(3) of the Specific  Relief Act was not unconditional and without reservations. There was  no surrender of claim to the interest of the  reversioners. Such a  conditional claim for lesser relief was rightly rejected by the Division  Bench of the High Court. Reliance is placed on T.V. Kochuvareed &  Anr. Vs. P. Mariappa Gounder & Ors. [AIR 1954 TC 10, para 40];  Bolla Narayan Murthy vs. Cannamaneedi Madhavayya & Anr.  [1947 (2) MLJ 347]; and Surjith Kaur vs. Naurata Singh & Anr.  [2000(7) SCC 379].  

The additional ground urged to oppose claim for lesser relief  of the conveyance of life interest is that such option under section  12(3) of the Specific Relief Act was not exercised at the first available  opportunity when a formal legal notice was given by the  vendor to  terminate the contract anticipating remote possibility of grant of  sanction. It is submitted that the option for lesser relief was claimed  when the joint trial had already commenced in the suits and all the  pleadings of the parties had been completed. It was not an  unconditional offer to obtain life interest. The provisions of Section  12(3)(b)(i) & (ii) of the Specific Relief Act were thus not fully  complied with which require for obtaining partial relief of specific  performance, unconditional surrender of remaining part of the  contract. In reply to the argument that the sanction suit was not  prosecuted by the  vendor deliberately to render it infructuous with a  design to back out from the contract in conspiracy with the   subsequent vendee, it is pointed out that despite service of  notice  terminating the contract, the suit was not in fact withdrawn. Soon  thereafter the  vendee got himself impleaded  and later transposed  in the suit  as co-plaintiff. In the course of trial of sanction suit with  suit for specific performance, the  vendee exercised option by an  affidavit of claiming lesser relief of life interest. He himself was thus  responsible for rendering the sanction suit infructuous. It is argued  that if it was possible to obtain sanction of the court on the ground of  continuous pressure on the property for recovery of public dues, the  order of the single judge on original side dismissing the sanction suit  as infructuous should have been challenged in appeal by the   vendee. In any case when the  subsequent vendee had gone in  appeal against the decree granted for life interest in the suit for  specific performance, the  vendee could not have allowed the  dismissal of the sanction suit to attain finality by not filing cross  appeal against the same. Even in this Court, there is no appeal

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preferred and no ground urged challenging the dismissal of the  sanction suit as infructuous. It is, therefore, submitted that one of  the essential terms of the contract of obtaining sanction of the court  having been rendered impossible of performance, the contract for  sale of the property was rightly held by the Division Bench of the  High Court to have failed rendering it incapable of specific  performance.  

Lastly, it is submitted that grant of specific relief being  discretionary the court should decline the relief to the plaintiff-  vendee as the sanction suit got delayed and ultimately no sanction   was granted. The  vendor had no other option but to sell the  property to clear the taxes and public dues for saving the property  from being attached and sold through coercive process of recovery of  public dues and possibly at a price less than the prevailing market  price. The  subsequent vendee has purchased separately the life  interest of the  vendor which alone he could convey and obtained  separate surrender-deeds from the  reversioners by paying each of  them price of their interest. In the agreement Ex.P-1 entered with the   vendee, as also in the sale-deed obtained by  subsequent vendee,  there is clear mention of the fact of pressure on the property for  recovery of taxes and public dues. In the sale-deed obtained by the   subsequent vendee, there is recital that taxes and public dues were  directly paid by the  subsequent vendee to the public authorities.  The contents of the agreement of sale Ex. P-1 and the sale-deed Ex.  D-1 are evidence of the fact that early disposal of the property was  the pressing necessity to ward off coercive recovery from the  property.   

The additional argument advanced in opposing the claim for  lesser relief of conveyance of life interest is that the clause requiring  the sanction of the court for transfer of  the  reversioners’ interest  was a term of contract for the benefit of both the  vendor and the   vendee. The court’s sanction would have protected the  vendor from  claims and possible legal proceedings against him by the   reversioners. Court’s sanction was also for the benefit of the  vendee  to ensure effectuation of the agreement of sale which purported to  sell entire interest that is life interest of  vendor and spes  successionis  of  reversioners. The term of seeking court’s sanction  being a term in common interest - both of  vendor and the  vendee,  the  vendee could not be allowed to unilaterally waive it by  restricting his claim to life interest. There is also no pleading and  evidence to justify claim set up by  the vendee. The dismissal of  sanction suit as infructuous was induced by  the vendee becoming a  co-plaintiff and filing an affidavit restricting his claim to life interest.  It was, therefore, a self-defeating act on the part of the  vendee and  the Division Bench of the High Court rightly dismissed the suit for  specific performance for the life interest.  

After hearing the argument at length advanced by the counsel  for the parties and perusing the record of the case, the basic question  that first needs consideration is whether there was any breach of  contract on the part of the  vendor so as to justify the grant of relief  of specific performance of the contract of sale. We do not consider it  necessary to deal with the legal contention whether clause (4) of the  contract requiring  vendor to obtain sanction of the court was an  exception clause or a fundamental term of the contract. From the  recitals of the sale agreement Ex. P-1 and particularly those requiring  the  vendee to discharge public debts and dues directly as part of  the consideration of sale, it is clear that the necessity of sale for the   vendor arose for safeguarding the property from being put to auction  and sale through coercive process of recovery of public dues.  Naturally, the  vendor wanted to obtain market price of the property  and desired to avoid sale of the property through a coercive process  at a lesser price. That there were outstanding taxes and public dues

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have not been disputed by the  vendee and in fact, they are  acknowledged by him in reply to the lawyer’s notice sent by the   vendor terminating the contract. In the reply sent through lawyer by  the  vendee, it is clearly acknowledged that tax dues were there but  it is stated that the alleged pressure from tax authority was merely  as an excuse to terminate the agreement. The motive attributed to  the  vendor that he tried to wriggle out of the sale agreement Ex. P- 1, only to obtain higher price of his property by selling it to the   subsequent vendee, is not borne out from the evidence on record.  The contents of the sale-deed Ex. D-1 dated 29.12.1979 executed in  favour of the  subsequent vendee clearly show that a substantial  portion of agreed consideration of Rs. 4,40,000/- was paid directly by  cheques  towards the property tax [Rs.50,383.98] to Corporation of  Madras, Urban Land Tax to Tehsildar  [Rs. 36,860.70] and income tax  [Rs.1,10,000/-] to Income-Tax Officer. The above payments made by  the  subsequent vendee to public authorities justify the stand of  the  vendor that there were pressing demands of public authorities  on the property and the sale of the property, well before the  impending initiation of coercive recovery by public authorities, was an  urgent necessity.  

The main contention advanced against the  vendor is that the  contract term clause (4) imposed a liability on him to seek sanction of  the court for transfer of full title in the property. During pendency of  suit for sanction, actions on the part of the vendor such as  terminating the contract by sending a lawyer’s notice and instructing  his lawyer to withdraw the suit for sanction, amounted to committing  breach of the contract.  

The agreement was entered into on 26.6.1976. The   reversioners opposed sanction by filing written statements on  16.1.1978. It is long after, on 11.9.1979 by lawyer’s notice, the   vendor terminated the contract. The sanction suit was pending from  26.6.1976. Even after two years, the sanction was not granted. The  question is whether the agreement Ex.P-1 contemplated that the   vendor should have waited for grant of sanction by the court for an  indefinite period of time. The recitals of the agreement of sale clearly  mention the necessity of sale arising from the pressure of public dues  and taxes. The  vendor could not have waited for an unreasonably  long period of  pendency of sanction suit when commencement of  recovery proceedings for public dues and taxes could have  commenced any time. There is no period fixed in the terms of the  contract for obtaining  sanction of the court, but keeping in view the  other terms of the contract and the pressing requirement for sale of  the property to clear public dues,  it has to be held that obtaining of  court’s sanction within a reasonable period and in any case within a  period well before commencement of recovery proceedings for dues  and taxes, was in contemplation of the parties as an implied term.  Notice served for terminating the contract, after waiting for two years  for sanction by the court, cannot be held to be a breach of the  contract on the part of the  vendor. The argument that the  vendor  rescinded the contract only because he had entered into  secret  negotiations with the  subsequent vendee to obtain higher price for  the property is not borne out from the evidence. We cannot attach  too much importance to the fact of initial attempt made by   subsequent vendee to conceal knowledge of the existing contract  with the  vendee when sale-deed was obtained by the former.  For  the misconduct of misrepresentation and attempt to mislead the  court, the Division Bench of the High Court has rightly deducted a  sum of Rs. 5.5 lacs from the rental income found payable to the   subsequent vendee. We propose not to disturb the same. But the  aforesaid misconduct of  subsequent vendee does not render the  act of  vendor in rescinding the contract to be an act of breach of  contract which can be said to have been committed solely with desire  to obtain higher price of the property.  

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As we have mentioned above, only life interest was sold to the   subsequent vendee for higher price. Out of the agreed sale  consideration, major portion of money was directly paid by the   subsequent vendee to satisfy dues and taxes of public authorities.   The notice served for terminating the contract, anticipating remote  prospect of grant of sanction by the Court within a reasonable period  and after waiting for two years from date of the contract, cannot be  termed to be a breach to justify grant of any specific relief to the   vendee.  In this respect, it is also relevant to state that although by  lawyer’s notice, the  vendor terminated the contract and instructed  his lawyer to withdraw the suit for sanction, but in fact, the suit was  not withdrawn. The  vendee got himself impleaded initially as  defendant to the suit and then sought his transposition as co-plaintiff.  That part of the action of the  vendee cannot be castigated as self- defeating because he was naturally interested in prosecuting the suit  for sanction diligently to obtain conveyance of full rights in the  property. However, the further act on the part of the  vendee of  filing an affidavit restricting his claim only to life interest resulted in  dismissal of the suit for sanction as infructuous. The learned single  judge trying jointly the two suits came to the conclusion that as the   vendee gave up his claim for transfer of interest of the  reversioners,  the court’s sanction was not required. He dismissed the suit for  sanction as infructuous.  

In this appeal on behalf of the  vendee it is now contended  that had the suit for sanction been prosecuted by the  vendor bona  fide and diligently, as stipulated in the terms of the contract,  the  court might have granted sanction despite objection of the   reversioners because there was likelihood of loss of the property in  process of recovery of public dues by auction and sale.  If that was  the legal position, the  vendee ought not to have suffered the  alleged wrongful dismissal of suit for sanction as infructuous. When  decree granted for conveyance of life interest of the  vendor in the  suit for specific performance was challenged by the  subsequent  vendee before the Division Bench of the High Court, the  vendee  could as well have preferred cross appeal against the dismissal of the  suit for sanction as infructuous. He was a co-plaintiff in that suit and  had an independent right of appeal. The non-filing of any appeal  against dismissal of sanction suit as infructuous is a clear indication  that the  vendee was satisfied with the grant of decree merely of  specific performance of conveyance of life interest of the  vendor. It  is not open to the  vendee now to question the correctness of the  dismissal of the suit for sanction as infructuous by the learned single  judge.  

The next question that arises is whether the terms of the  contract justify grant of decree of specific performance for lesser  relief of conveyance of life interest of the  vendor.  

The argument advanced on behalf of the  subsequent vendee  seems prima facie acceptable that the contract Ex.P-1 is one single  indivisible contract for sale of full interest in the property that is life  interest of the  vendor and spes successionis of the  reversioners  with sanction of the court. The  reversioners were not parties to the  sale agreement Ex.P-1 entered with the  vendee. At the time when  the sale agreement was entered into, the parties were conscious that  the  vendor had only life interest in the property and he could not  convey more than his own interest. It was open to the  vendee to  obtain conveyance of interest of the  reversioners by obtaining  release deeds from them by paying them consideration for surrender  of their interest, as was done by the  subsequent vendee. Another  course open to him was to enter into separate agreement with the   reversioners or insist on the  reversioners joining the sale agreement.

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It seems the  vendee entered into a speculative deal for obtaining  full interest in the property depending upon the sanction to be  granted by the court.  It seems to be in contemplation of the parties  that if the  reversioners objected, the court might refuse sanction.  They could  as well foresee  that despite the  reversioners’ objection,  the court might grant sanction. The transfer of full interest in the  property was, therefore, dependent on sanction of the court. To meet  this contingency, there were specific terms such as clauses (4) and  (6) incorporated in the contract whereby it was clearly agreed that  the  vendor shall obtain sanction of the court at his own expense and  costs and if the sanction was not accorded by the court, the  agreement would stand cancelled and the advance money refunded  to the  vendee. Clause (15) of the agreement could come into  operation only if the court granted sanction and any of the parities  failed to complete the sale. Clause (15) had no operation when the  sanction was not accorded to the sale.  

As has been seen from the facts of this case, the  vendor did  apply for sanction, waited for two years and when it found that the   reversioners opposed the grant of sanction, cancelled the contract.  The sanction suit, despite instructions to his lawyer was not, in fact,  withdrawn. The suit for sanction frustrated not because the  vendee  became co-plaintiff but because he filed an affidavit restricting his  claim to life interest of  vendor.  The life interest was not agreed to  be separately sold apart from the interest of the  reversioners.  The  terms of sale agreement Ex.P-1 clearly stipulate sale of full interest in  the property.  Whatever may be the reasons, the sanction of the  court could not be obtained for sale of interest of the  reversioners.  The  reversioners were not parties to the sale agreement Ex.P-1. In  such a situation, the question is whether in law and equity, the   vendee can insist that the  vendor should convey, if not full interest,  his own life interest in the property.  

If the  vendee intended to seek conveyance  separately of the  life interest of the  vendor, the earliest opportunity for him was when  he had received notice dated 11.9.1979 sent through lawyer by the   vendor cancelling the contract. Assuming that at that time he could  not opt for lesser relief as the suit for sanction was pending, he could  have, in any case, opted for conveyance of life interest of the   vendor soon after he came to know of the negotiations for sale with  Bob Daswani, which took place in the presence of one of the partners  of the plaintiff- vendee. Even after deriving the knowledge of the  execution of the sale deed dated 29.12.1979 Ex. D-1, the option to  obtain lesser relief of transfer of life interest was not exercised. It  was exercised as late on 25.11.1986 by filing an affidavit and at the  time when pleadings of the parties were completed and the joint trial  in the two suits had already commenced. During long pendency of  the suits between 1979 to 1986, the parties interested in the  property changed their positions. The  vendor by executing  registered sale deed in favour of the  subsequent vendee got his  public dues paid to relieve the pressure on the property and obtained  market price of the property. After obtaining possession of the  property pursuant to the sale deed, the  subsequent vendee has  raised construction and inducted tenants. Accepting the legal stand  based on sections 90, 91 & 92 of the Indian Trusts Act that the   subsequent vendee, being a purchaser with knowledge of prior  agreement, is holding the property as a trustee for the benefit of the  prior  vendee, the  vendor, who changed his position by effecting  subsequent sale cannot be compelled to convey his life interest when  such lesser relief was not claimed at the earliest opportunity and the  terms of the contract did not contemplate transfer of life interest  alone.   

On duly appreciating of the evidence on record, construing  specific terms of the contract and considering the conduct of the

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parties, we have arrived at the conclusion that the recession of the  contract, due to non-grant of sanction by the court within two years  after execution of the contract and filing of the suit for sanction,  was not an act of breach of contract on the part of the  vendor  to justify grant of relief of specific performance of the contract to the  prior  vendee.  

We are also of the view that the  subsequent vendee, by his  own act in the pending suits, was responsible for rendering the suit  for sanction as infructuous. He was guilty of lapse in not seeking  conveyance  of life interest of the  vendor at the earliest opportunity  when notice of recession of the contract was received by him and  later when he derived the knowledge of execution of registered sale- deed in favour of the  subsequent vendee. The option was  exercised conditionally in the midst of the joint trial of the two suits.  There was one integrated and indivisible contract by the   vendor to convey full interest  in the property i.e., his own life  interest and the interest of the  reversioners with sanction of the  court. As the court had not granted the sanction, the contract could  not be specifically enforced. The lesser relief of transfer of life interest  was not claimed within a reasonable time after the  vendor had  intimated that the contract, as agreed for full interest, was not  possible of performance. We find neither equity nor law is in favour of  the plaintiff- vendee.  

Section 12(3)(a)(b)(i)(ii) of the Specific Relief Act  read thus :- "12. Specific performance of part of contract.-                   (1) ..................

(2) ..................

(3) Where a party to a contract is unable to perform the  whole of his part of it, and the part which must be left  unperformed either -  

(a)     forms a considerable part of the whole, though  admitting of compensation in money; or  

(b)     does not admit of compensation in money;  

he is not entitled to obtain a decree for specific  performance; but the court may, at the suit of other  party, direct the party in default to perform specifically so  much of his part of the contract as he can perform, if the  other party -  

(i)     in a case falling under clause (a), pays or  has paid the agreed consideration for the  whole of the contract reduced by the  consideration for the part which must be left  unperformed and a case falling under clause  (b), [pays or had paid] the consideration for  the whole of the contract without any  abatement; and  

(ii)    in either case, relinquishes all claims to the  performance of the remaining part of the  contract and all right to compensation, either  for the deficiency or for the loss or damage  sustained by him through the default of the  defendant."         [Emphasis added]         The power to grant partial relief, from the very language of the  Section 12(3) is discretionary with the Court to be exercised keeping

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in view the facts and circumstances of each case and the rights and  interests of the parties involved.  

       What is most important to be taken note of is that the   reversioners were not parties to the sale agreement Ex.P1.  In the  sanction suit they filed written statement opposing the proposed sale  as adversely affecting their spes successionis.    

       The Court dismissed the sanction suit rightly or wrongly but the  matter having not  been carried further in appeal, the subject of  grant or refusal of sanction is no longer open to consideration in this  appeal preferred only against the decision of the Division Bench in  appeal refusing  decree of Specific Performance of Sale of life  interest.

       The  reversioners have surrendered their interest by accepting  consideration separately and executed separate release deeds in  favour of the  subsequent vendee.  Even though the  subsequent  vendee has acquired property  with knowledge of sale agreement  Ex.P1  existing with the prior  vendee, the latter has no equity in his  favour as to bind the  reversioners and in any manner adversely  affect their interest.  They were not parties to the sale agreement  and have already by separate release deeds, on accepting separate  consideration, surrendered their interest in favour of the   subsequent vendee.  Any grant of relief of transfer of life interest of  the vendor to the prior  vendee would involve the  reversioners in  further litigation.  If only life interest of the   vendor is allowed to be  conveyed to the prior  vendee, after death of  vendor, the   reversioners are likely to  be involved in litigation in future to help  in restoring possession of the property to the  subsequent vendee  and effectuate the release deeds executed in his favour by them.   Grant of such equitable relief would adversely affect the immediate   efficacy of the release deeds and would create various hurdles in  working out the rights and remedies of the reversioners vis-‘-vis  the  subsequent vendee.  It would not be a proper exercise of  discretion by the Court to grant such partial relief of directing  conveyance of life interest of the  vendor as that would adversely  affect the interest of the  reversioners.   

We have already held above while construing the terms of sale  agreement Ex.P1 that as the  reversioners’ interest in the property  was likely to be affected, the contracting parties never intended  piecemeal transfer of life interest of the  vendor and  spes  successionis of  reversioners.  What the contracting parties intended  and stipulated was transfer of full interest in the property i.e.   vendor’s life interest and  reversioners’ spes successionis with  sanction of the Court.  It is for the above reason that parties very  clearly agreed by specific clause (6) in the agreement that if the  sanction of the Court was not accorded, the agreement shall forthwith  stand cancelled and the advance money received shall be returned to  the purchaser.  The contracting parties were fully aware that   reversioners, who had a mere chance of succession, were not  parties to the agreement.  The parties to the contract could have  taken care of the eventuality of refusal of sanction by the Court and  possibility of the  vendor transferring only his life interest to the   vendee, but such eventuality of separate transfer of life interest is  conspicuously absent in the terms of the agreement.  Such obligation  on the part of the vendor to transfer his life interest, if sanction for  transfer of reversioners’ interest was not granted, cannot be read in  the contract by implication and recourse to Section 12(3) of the  Specific Relief Act, therefore, is impermissible.

       In our considered opinion, Section 12(3) of the Specific Relief  Act can be invoked only where terms of contract permit segregation  of rights and interest of parties in the property.  The provision cannot

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be availed of when the terms of the contract specifically evince a   intention contrary to segregating interest of the vendor having life  interest and spes successionis of reversioners. Neither law nor  equity is in favour of the vendee to grant Specific Performance of the  Contract.

On these facts, in our opinion, the learned single judge of the  High Court was in error in granting decree of specific performance of  transfer of life interest of the  vendor on a finding that the  vendor  had committed breach by rescinding contract during pendency of  sanction suit. The Division Bench of the High Court, in our considered  opinion, rightly reversed the decree and dismissed the suit.

We are fortified in our conclusion by the decisions of Privy Council  reported in AIR (34) 1947 PC 182 [Dalsukh M. Pancholi vs. The  Guarantee Life and Employment Insurance Co. Ltd., & Ors.] in which   facts were somewhat similar requiring court’s approval for performance of  the agreement of the sale. Two questions were posed by the court - a) was  the term "subject to the Court’s approval" an essential term of the  agreement?; and b) if it was essential, by whose default did it fail? The  Privy Council answered the questions saying - " No wonder that the  approval of the ’attaching court’ was insisted on as a necessary condition  for effecting the sale, for without it, the title to the property was not at all  safe. In their Lordships’ opinion there can be no doubt that the condition  was an essential one."  The Privy Council then recorded the following conclusions on the  questions posed :-  "The person to apply to the ’attaching Court" for securing the  approval of the Court was the  vendor; on the construction of the  contract, the provision for approval by the Court was not exclusively  for the benefit of the purchaser, and therefore, the purchaser cannot  by his waiver get rid of the necessity for the Court’s approval; the  Court contemplated, was the Court having charge of the mortgage  proceedings, as that Court alone could get rid of the Order for public  sale; application was made by the  vendor to the proper Court and  was refused; the contract then fell to the ground and had worked  itself out. In their Lordships’ opinion, the contract was  a contingent  contract and, as the contingency failed, there was no contract which  could be made the basis for a decree for specific performance and  the appellant’s suit has to be dismissed. In this view, it is  unnecessary to consider the second question, or any other point in  the case."  

       The above Privy Council decision was sought to be distinguished  on the ground that it was not a case where  the  vendor was not in a  position to convey his own interest in the property without the court’s  sanction. In our opinion, however, that aspect is not of much  importance because our conclusion is that the agreement was  indivisible, for sale of full interest in the property i.e. vendor’sP life  interest and  reversioners spes successionis. As the court’s sanction  was not obtained within a reasonable time, the contract became  unenforceable.  

The decision of the Calcutta High Court reported in ILR 152  [Narain Pattro vs. Aukhoy narain Manna & Ors] also supports  the respondents. When the sanction as contemplated was not  obtained from the court, the contract even with variations could  not be directed to be enforced. See the following observations of the  Calcutta High Court :-  

"It is not necessary for us to express any opinion as to whether  the suit was barred by clause (e) of section 21 or clause (b) of  section 27 of the Specific Relief Act, for in our opinion the  Judge was quite right in saying that the contract as it stood

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could not be enforced, and that section 26 had no application  to the case. The contract such as it was, was not a complete  contract at any time. It was contingent upon the permission of  the court. The court’s permission did not extend to the whole  contract as set out in the shuttanamah. The defendants,  therefore, could not be compelled to carry out  the terms of  the original agreement, nor could they have insisted upon the  plaintiff’s carrying out the terms sanctioned by the court.  Section 26, upon which the vakeel for the appellant relies, sets  out cases in which contracts cannot be specifically enforced  except  with a variation; and there are five particular cases set  out in which a contract may be enforced subject to a variation,  such variation being in favour of the defendant, and the  section in our opinion assumes that the parties or vakeels  representing them are agreed as to the existence of the  contract, but not agreed as to specific terms. The section  provides that, when fraud or mistake of fact, or  misrepresentation has induced the defendant to sign an  agreement, that agreement can only be enforced on the terms  which the defendant intended to agree to. There is no  provision of law of which we are aware which entitles the  plaintiff to claim a variation  in the terms of his contract, when  he finds that the contract itself cannot be carried out. In the  present case the plaintiff by his plaint sought to enforce the  original contract without any variation. It seems to us,  therefore, that the Judge was right in holding that the  agreement in the shuttanamah could not be enforced as it  stood, and that section 26 would not entitle the plaintiff to  enforce it with a variation.    

       The case of Narain Pattro (supra) was  relied by the same  Calcutta High Court in the case of Sreemati Kalidasi Dassee & Ors.   vs. Sreemati Nobo Kumari Dassee & Ors. [20 CWN 929] wherein  on similar circumstances for not obtaining letters of administration  from the Court, the contract was held to have failed.  

       In the case M.V. Shankar Bhat & Anr. Vs. Claude Pinto  Since (dead) by LRs. & Ors. [2003 (4) SCC 86], the agreement for  sale was subject to ratification by co-heirs and this Court concluded  in para 31 as under :-  "When an agreement is entered into subject to ratification by  others, a concluded contract is not arrived at. Whenever  ratification by some other persons, who are not parties to the  agreement is required, such a clause must  be held to be a  condition precedent for coming into force  of a concluded  contract."  

       The alternative claim for lesser relief of life interest of  vendor  has been rejected by us.  We find support for our conclusion from the  following observations of Privy Council  reported in AIR 1925 PC 45  [William Graham vs. Krishna Chandra Dey], where on similar  provisions of section 16 of the old Specific  Relief Act, such claim for  lesser relief was negatived on the ground that it would amount to  creating a different contract between the parties not in contemplation  by them when they entered into the contract in question, which is  sought to be enforced.  

"Their Lordships think (1) that before a Court can exercise the  power given by section 16 it must have before it some material  tending to establish these propositions, and cannot apply the  section on a mere surmise that, if opportunity were given for  further enquiry, such material might be forthcoming and  possibly might be found to be sufficient; and (2) that the  words of the section wide as they are, do not authorise the

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Court to take action otherwise than judicially, and in particular  do not permit it to make for the parties, or to enforce upon  them a contract, which in substance they have not already  made for themselves. .............

...............

Hence section 16, both because it must be something not  covered by section 14 and because no court can act  unjudicially without either statutory warrant or consensual  authority, must be limited and the expression "stands on a  separate and independent footing" points to a limitation, which  would exclude any new bargain, that cannot be said to be  contained in the old one."  

       As the lesser relief was claimed after long delay and the  contract was found to be indivisible and inseparable, the partial relief  was denied in the case of Govinda Naicken & Anr. Vs.  Apathsahaya Iyer alias Ayawaiyer [ 37 Madras Series 403]  

"But when the family is divided as here, section 17 distinctly  prohibits a Court from directing the specific performance of a  part of a contract except in accordance with the preceding  sections. Even in cases where the conditions of section  15 are fulfilled the use of the word ’may’ indicates that  the granting of a decree for part performance is  discretionary with the Court, and we should hold that  when there has been  great delay in attempting to  enforce a contract and circumstances have greatly  changed either from a rise of prices or other causes in  the interval, the Courts would be justified in refusing to  given legal effect to an inequitable arrangement.  

Now the plaintiff in the present case wants the Court to compel  the defendant to execute a deed of sale for the whole property  and if he refuses, to issue one in his name under the seal of  the court, and to allow him to make what he can out of the  title thus conveyed. Such a request is quite inadmissible. A  sale is a transfer of ownership in exchange for a price (section  54, Transfer of Property Act). The defendant has nothing which  he is capable of transferring in the moiety of the property  of  which he is not the owner and is not in possession. It is  impossible to sever the execution of the deed from the transfer  to be effected thereby and to treat them as separate acts of  the same person.  [Emphasis added]

       An old decision of Judicial Commissioner, Nagpur reported in  AIR 1915 Nappur 15 [Shardaprasad vs. Sikandar] is being referred  only because it has some persuasive value and the facts of that case  are to a great extent nearer to the facts of the present case. The  pertinent observations in that case are :-           "The first defendant made two undertakings. The first was to  apply for sanction for the sale to the plaintiffs of Sir land  without reservation of occupancy rights. This part of his  contract he duly performed. The second undertaking was that,  if sanction were granted, he would sell his share with  cultivating rights in Sir. No provision was made for the event of  sanction being applied for and refused. This part of the  contract was purely a contingent contract, and if the future   event provided for became impossible the contract fell  through. Sections 14 and 15 of the Specific Relief Act

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appear to me to refer to cases where the inability to  perform the whole contract was not contemplated by  the contracting parties. Where, as here, the contracting  parties knew of and contemplated the possibility of the  whole contract being incapable of performance, for  reasons beyond the control of either of the parties, the  sections have no application. They apply to unforeseen  contingencies, not to foreseen contingencies. The  parties should have provided in the contract for such an  eventuality, but failed to do so.  

[Emphasis added]

       In the present case, the terms of the contract fully indicate that  the parties did contemplate that if the sanction of the court was not  granted for transfer of the interest of the  reversioners, the contract  could not be enforced. Clause (6) specifically provided that in case  sanction by the court was not granted, the advance money of Rs.  25,000/- shall be refunded to the purchaser. It was known to the  parties that the  vendor had only life interest in the property and the   reversioners were not the parties to the agreement.  Even with this  knowledge of limited right of the  vendor and the  reversioners  being not signatories to the sale agreement, there is no stipulation  made in the contract that if court’s sanction was not obtained for  transfer of  reversioners’ interest, the  vendor shall convey his life  interest to the  vendee.  

       On behalf of the plaintiff- vendee, strong reliance was placed  on Suisse Atlant  vs. N. V. Rotterdam [1966 (2) ALL. ER 61]. It  has been argued that seeking sanction of the court for transfer of  reversioner’s interest was an obligation on the  vendor and if it  deliberately acted in a manner to get relieved of that obligation by  not prosecuting sanction suit and prematurely terminating the  contract, the  vendee has a right to waive that condition and ask for  transfer of life interest of the  vendor which he could alienate to the   vendee. In other words, it is submitted that even if the clause  seeking sanction of the court was a fundamental term of the contract,  its breach was deliberately committed by the  vendor and the   vendee was, therefore, entitled to insist on fulfilment  of the contract  to the extent the  vendor is in a position to fulfil.  

       We have gone through the opinions expressed by Hon’ble  Judges of the House of Lords in the case of Suisse Atlant (supra).  On the evidence, in the present, we do not find that the decision of  the House of Lords, can be taken aid of for claiming specific relief of  transfer of life interest. We have found from the evidence discussed  above that there was pressure on the property for recovery of taxes.  It was not expected or in contemplation, of the parties, as can be  gathered from the terms of the contract, to wait for an uncertain  period of time and to expose the property to coercive public recovery  proceedings. The  vendor applied for sanction but the reversioners  had opposed. Finding, no possibility of grant of sanction, the  vendor  terminated the contract but did not withdraw the sanction suit,  although his lawyer was instructed accordingly. We are, therefore,  not prepared to accept that the  vendor had committed any breach  of the contract as has been sought to be urged on behalf of the   vendee. It is not possible to accept allegations of fraud, conspiracy  or bad faith on the part of the  vendor for which there is no firm  foundation in the pleadings or the evidence led. In this respect, the  following observations of the Lord Reid in the House of Lords’ decision  (supra) are pertinent :-  

"I think that it would be open to the arbitrators to find that the  respondents had committed a fundamental or repudiatory

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breach. One way of looking at the matter would be to ask  whether the party in breach has by his breach produced a  situation fundamentally different from anything which the  parties could as reasonable men have contemplated when the   contract was made. Then one would have to ask not only what  had already happened but also what was likely to happen in  future. And there the fact that the breach was deliberate might  be of great importance".  

       Applying the above test to the terms of the contract and the  conduct of the parties under consideration before us, we do not find  that the parties had agreed to wait for the whole period during which  the suit for sanction was pending and till its finalisation including  appeal proceedings, if any. Such a course was not in contemplation of  the parties because the  vendor had agreed that the  vendee would  directly discharge the tax liabilities from the total amount of sale  consideration. It was not possible for the  vendor  to have waited  indefinitely for final orders on the suit for sanction when the   reversioners had objected to the sanction and there was remote  possibility of the grant of sanction in foreseeable near future.  

       It is argued  that the Court could have granted sanction even  though the  reversioners objected because there was threat of  coercive sale of the property for recovery of tax dues and taxes.  

       It would be purely in field of speculation as to what would have  actually happened had the  vendor continued to prosecute the suit  despite the objection of the  reversioners. As we have mentioned  above the complications in disposal  of sanction suit on merit were  created by the  vendee himself by getting himself transposed as co- plaintiff and then filing an affidavit restricting his claim to transfer of  life interest. It is, thereafter, that the sanction suit was dismissed as  infructuous. If the order of the court refusing sanction was erroneous  and when an appeal was filed by the  subsequent vendee against  grant of decree of specific performance of life interest  to the   vendee, the  vendee could have appealed against dismissal of suit  for sanction as infructuous. It is argued that the two suits were  clubbed for trial and as the lesser relief of transfer of life interest was  granted in suit for specific performance, it was not necessary for the   vendee to have appealed against dismissal of the sanction suit. We  need not deal with this argument any further, as in our view, as the  sanction was not granted for sale by the court within a  reasonable  period of two years and the possibility of commencement of coercive  proceedings of tax recovery loomed large, the vendor cannot be held  to have committed a breach of the contract when he served a notice  of termination of contract.  

       On behalf of the  vendee, reliance is heavily placed on  Satyabrata Ghose vs. Mugneeram Bangur & Co. [1954 SCR  310]. The decision  is distinguishable. In that case, the defendant  company for the purpose of developing certain land, entered into the  contract with plaintiff for sale of its plot. The sale-deed was to be  executed after construction of drains and roads. After the execution  of the agreement and when construction of public roads and drains  was half done, the land was requisitioned by the government for  military purposes. The defendant company could not further  undertake the road construction work and therefore, wrote to the  plaintiff to treat agreement as cancelled. It is on these facts that this  court held  :-  

"that having regard to the nature and terms of the contract,  the actual existence of war conditions at the time when it was  entered into, the extent of the work involved in the scheme  fixing no time limit in the agreement for the construction of the  roads etc., and the fact that the order of requisition was in its

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very nature of a temporary character, the requisition did not  affect the fundamental basis of the contract; nor did the  performance of the contract become illegal by reason of the  requisition, and the contract had not, therefore, become  impossible within the meaning of section 56 of the Indian  Contract Act."  

       Such is not the position in the present case.  The  vendor could  not have waited indefinitely for the final result of the sanction suit as  coercive proceedings for recovery of tax were likely to be initiated at  any time. We have held above that reasonable period for obtaining  sanction from the court has to be read as an implied condition of the  contract in view of the urgent necessity of sale to satisfy the tax dues  and save the property from coercive recovery.  The  vendor had  agreed for transfer of full interest  in the property including his own  life interest and of the  reversioners.  As the  reversioners  objected and ultimately the sanction suit failed, the performance of  contract, as agreed for transfer of full interest in the property, had  become impossible. There was no agreement between the parties  that if sanction was not granted, the  vendor would transfer his life  interest. On the contrary, the agreement clause specifically stated  that if the sanction was not obtained, the advance money shall be  returned. This stipulation shows an intention contrary to the parties  agreeing for transfer of life interest of  vendor, if transfer of   reversioners’ interest was not possible for want of court’s sanction.  

       Another argument advanced is that the  reversioners had  merely a chance  of succession and had no transferable interest in  the property. Reference is made to section 6(a) of the Transfer of  Property Act which states :-  

"6.What may be transferred.-Property of any kind may be  transferred, except as otherwise provided by this Act or by any  other law for the time being in force, -  

(a) The chance of an heir-apparent succeeding to an estate,  the chance of a relation obtaining a legacy on the death of a  kinsman, or any other mere possibility of a like nature, cannot  be transferred."  

       Elaborating this argument  further, it is argued that as the   vendor erroneously represented and agreed for transfer of spes  successionis of the  reversioners, on the principle of section 43 of  the Transfer of Property Act read with sections 90, 91 & 92 of the  Indian Trusts Act, the  vendor, the  subsequent vendee and the   reversioners, who have surrendered whatever right they had in the  property, are bound by estoppel  and are obliged in law by the  provisions of Specific Relief Act to transfer full interest in the property  to the prior  vendee. Reliance is placed on The Humma Masjid vs.  Kodimaniandra Deviah [1962 Supp.(2) SCR 554].

       The above argument has no merit and the aforesaid  decision is  hardly of any help to the  vendee. This is not a case where the   vendor had only right of  spes successionis and after execution of  agreement of sale, he subsequently acquired full interest in the  property to be held bound by section 43 of the Transfer of Property  Act. In the case before us, the  reversioners were not parties to the  agreement of sale. When in the suit for sanction to transfer their  interest they were made parties and were noticed, they expressly  objected to the proposed transfer. No principle of  estoppel or  provisions of section 43 of the Transfer of Property Act can,  therefore, operate against them. So far as the  subsequent vendee  is concerned, in the course of suit, he was pushed to a position in  which he could not take a stand that he had no knowledge of the  prior  agreement with the  vendee but he has separately purchased

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life interest from the  vendor and obtained separate release deeds,  on payment of consideration, from the  reversioners. The   reversioners being not parties to the sale agreement  Ex. P-1  entered into with the  vendee, the latter could not enforce the  contract Ex. P-1 against the former.  

       The decision in Dr. Jiwanlal & Ors. vs. Brij Mohan Mehra &  Anr. [1972 (2) SCC 757] is also distinguishable on the facts of that  case. There clauses (5) & (6) of the agreement provided for  execution of sale-deed within three months from the date the  premises agreed to be sold were vacated by the Income-Tax  Authorities . It was further provided that if the income-tax authorities  did not vacate the premises or they stood requisitioned by the  Government before registration of sale-deed - the  vendor shall  refund the consideration to the purchaser.  As the premises were  requisitioned by the government, the stand taken by the  vendor  was that it was contingent contract and on requisition of the  premises, the contract failed. On the evidence of the parties, the  finding reached was that the  vendor had manipulated requisition of  the premises. This Court, therefore,  in appeal held that the contract  did not provide that the sale would be effected only if the premises  remain non-requisitioned or that on requisition of the premises, the  contract would come to an end. The clause providing for refund of  consideration if the premises were not vacated by the income-tax  authorities or subsequently requisitioned by the government  was  held to be solely for the benefit of the  vendee. It was held that if  the  vendor manipulated the requisition, the  vendee could waive  that condition and insist on sale of premises in the condition of it  having been requisitioned.  

       In the case before us, we have not found that the  vendor was  guilty of rendering the suit for sanction infructuous. It did terminate  the contract pending the suit for sanction but never withdrew that  suit. The  vendee himself prosecuted it and rendered it infructuous  by his own filing of an affidavit giving up his claim for the interest of   reversioners. In such a situation where the  vendor was not in any  manner guilty of not obtaining the sanction and the clause of the  contract requiring court’s sanction for conveyance of full interest,  being for the benefit of both the parties, the contract had been  rendered unenforceable with the dismissal of the sanction suit.  

       Where the clause requiring obtaining of sanction was to protect  interest of both the parties and when the sanction could not be  obtained for reasons beyond the control of the parties, the contract  cannot be directed to be specifically enforced. House of Lords in the  case of  New Zealand Shipping Co. Ltd. vs. Societe Des Ateliers  Et. Chantiers De France [1918-19 All ER 552], in similar  circumstances, negatived the claim of specific performance. It was  held in that case that where two parties are equally blameless  and  none of them could be said to have brought about a situation by their  act or omission to frustrate the contact, the contract cannot be  directed to be specifically enforced.  

On behalf of the  vendee, support for his claim was sought  from the following observations of Lord Atkinson :-  

"The application to contracts such as these of the principle that  a man shall not be permitted to take advantage of his own  wrong thus necessarily leaves to the blameless party an option  whether he will or will not insist on the stipulation that the  contract shall be void on the happening of the named event.  To deprive him of that option would be but to effectuate the  purpose of the blameable party. When this option is left to the  blameless party it is said  that the contract is voidance, but  that is only another way of saying that the blameable party

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cannot have the contract made void himself, cannot force the  other party to do so, and cannot deprive the latter of his right  to do so. Of course the parties may expressly or impliedly  stipulate that the contract shall be voidance at the option of  any party to it. I am not dealing with such a case as that. It  may well be that question whether the particular event upon  the happening of which the contract is to be void was brought  about by the act or omission of either party to it may involve a  determination of a question of fact.  

As has been observed by Lord Atkinson, it is always a  question of fact to be determined in each case as to who is guilty of  the act or  omission to render the contract  void or unenforceable. In  the case of New Zealand Shipping Co. Ltd. (supra) on facts the  ultimate conclusion reached unanimously by their Lordships was that  the clause of the contract in that case, was a stipulation in favour of  both the parties and the  situation was not brought about by any of  the parties to give rise to avoidance. It was found that the failure to  fulfil the contract was not due to any fault on the part of the  respondents but was due to a cause beyond their control.  

In the present case also,  we have come to conclusion that  the  vendor waited for a reasonable period for grant of sanction to  the sale by the court. There was a pressing need for sale  as the  public dues and taxes could have been recovered from the property  by coercive process at any time. The  vendor, therefore, advisedly  withdrew from the contract, negotiated sale on different terms with  the  subsequent vendee and ultimately entered into the contract  with the latter. The  vendor did not actually withdraw the suit for  sanction. The  vendee himself became co-plaintiff to the suit and  unsuccessfully tried to prosecute it. The sanction suit was rendered  infructuous by  vendee’s own conduct of filing affidavit restricting his  claim to life interest. He suffered the dismissal of sanction suit as  infructuous and did not question the correctness of the court’s order  in appeal before the Division Bench, although the  subsequent  vendee, against grant of decree of specific performance of life  interest, had preferred an appeal.  

In this situation, even if we come to a conclusion that the   vendee had rightly tried his utmost to obtain  court’s sanction and  cannot be blamed for transposing him as a co-plaintiff and  prosecuting the sanction suit, the sanction sought could not be  obtained for reasons beyond the control of the parties. The  vendor  can not be held guilty of the breach as to entitle the  vendee to seek  specific performance of  life interest of the  vendor. The contract  entered into between the parties was for conveying full interest in the  property namely life interest of  vendor and chance of succession of   reversioners. The contract was one and indivisible for full interest.  There is no stipulation in the contract that if sanction was not  obtained, the  vendor would transfer only his life interest for the  same or lesser consideration. On the contrary, the contract stipulated  that if the sanction was not granted, the contract shall stand  cancelled and the advance money would be refunded to the  purchaser.           Lastly, the stage has arrived for considering the question of  adjustment of equities between the  parties because of the change of  positions by them in the course of a very long period of litigation.   The decree for specific relief of conveyance of life interest, has been  executed and  registered sale deed through the court in favour of the  vendee has also been issued.  Possession of the property has been  obtained by the vendee on execution of decree granted by the single  judge of the High Court.  The Division Bench of the High Court in  adjusting the equities in paragraphs 62 to 68 of its judgment has

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taken note of the above relevant facts and subsequent events.   

After execution of the decree and registered sale-deed the   vendee plaintiff was placed in possession of the property on  25.2.1995.  The basement and ground floor have been constructed  by the  subsequent vendee after obtaining possession on the basis  of his sale deed.  Thereafter  plaintiff- vendee, on obtaining  possession pursuant to the execution of decree granted by the  learned single judge, has constructed two floors above the ground  floor although the construction is said to be not complete in all  respects.  According to the plaintiff- vendee, he has incurred an  expenditure of Rs.46,28,403/- for construction of two floors above  the ground floor.  As the construction put up by the plaintiff- vendee  is to ensure for the benefit of the subsequent vendee, and the  latter having succeeded in appeal before the Division Bench of the  High Court,  the Division Bench in adjusting equities has directed that  on payment of construction cost incurred by the plaintiff- vendee for  two floors above ground floor, the whole construction will  become  the sole property of the  subsequent vendee.   

From the date of the impugned judgment of the Division Bench  the total rent received from the property has been accounted for.   The whole rental income has been directed to be paid to the  successful party i.e. the subsequent vendee.  Out of the total rental  income payable to the subsequent vendee, apart from adjusting  the construction cost incurred by the plaintiff- vendee, deduction has  been  directed towards return of the sale consideration of Rs.5.5 lacs   paid under the sale agreement Ex. P-I  A further sum of Rs.5.5 lacs  has been directed to be  deducted for the misconduct of the   subsequent vendee in trying to mislead the court that Bob Daswani  and F.C. Daswani were two different persons and the  subsequent  vendees had no knowledge of the prior agreement.   

On the principle of restitution contained in Section 144 of the  Code of Civil Procedure, we find no ground to interfere with the order  of the Division Bench of the High Court in directing adjustment and  payment by  subsequent vendee of the cost of construction  incurred by the plaintiff  vendee.   The directions for return of full   sale consideration as also deduction towards misconduct of  impersonation and misleading the Court also deserve no interference.   We maintain the directions of the Division Bench of the High  Court to deduct a sum of Rs.5.5 lakhs for the alleged misconduct of  impersonation and misleading the Court. The Civil Appeal No.336 of  2002 preferred by the subsequent vendees only against the above  impugned directions deserves to be dismissed.

During pendency of these appeals, various interim orders were  passed by this Court on 27.8.2001, 11.1.2002 and 17.2.2003.  In  pursuance of those orders, rental income derived from the property  has been collected and paid to the  subsequent vendee, subject to  the result of these appeals.  Learned counsel appearing for the   subsequent vendee, at the conclusion of the arguments, has  handed over to this Court a chart mentioning the figures of total rent  received up to February 2004 and separately shown the amount  deposited in the Court.  The figures submitted in the chart by the  subsequent vendees are open to verification by the prior vendee.   With dismissal of these appeals, we confirm the judgment of  Division  Bench of the High Court including the directions made to adjust  equities with regard to the construction cost and the rental income  derived from the suit property.   In the result, both the appeals are dismissed.  In the  circumstances, we direct the parties to bear their own costs in these  appeals.

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