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CASE NO.: Appeal (civil)  857 of 1998

PETITIONER: Shyam Singh

RESPONDENT: Daryao Singh (dead) by Lrs. & Ors                

DATE OF JUDGMENT: 19/11/2003

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

JUDGMENT: J U D G M E N T

Dharmadhikari J.

       The High Court of Allahabad in Second Appeal before it by  impugned judgment dated 30.9.1997, concurring with the two courts  below, has dismissed the suit of the plaintiff/appellant seeking  specific performance of Agreement of Repurchase of property in  dispute on the ground that under the terms of the agreement dated  4.2.1971, the right of repurchase was personal in favour of the  original contracting parties (defendant nos. 2 to 4) and the said right  was not assignable or transferable in favour of the plaintiff.           The only legal question involved is whether the terms of the  agreement of repurchase dated 4.2.1971 contain any implied  prohibition on the original contracting parties (particularly defendants  2 to 4) from transferring or assigning their rights in favour of third  party?

The relevant facts for deciding the above legal question are as  under:-

Defendants 2 to 4 were Bhumidars of the lands in dispute  situate at village Nala, District Muzaffarnagar in the State of Uttar  Pradesh.  On 4.2.1971, the owners executed registered sale-deed in  favour of defendant No.1 (contesting respondent no.1 herein) for a  consideration of Rs.4900/-.   On the same day defendant No.1 who  had purchased the property executed an agreement for re- conveyance of the said property in favour of defendant Nos. 2 to 4.   The relevant terms of the Agreement of Repurchase dated 4.2.1971,  on interpretation of which the parties are at variance, in its relevant  parts (rendered into English) read as under:

"Ex.4 dated 4.2.1971

ORIGINAL ON STAMP PAPER OF RS.2.25/-

Whereas we, Daryao Singh son of Hardeva the first party and  Surajmal, Peetam and Babu sons of Rati ram, the second party,  Jat, residents of Village Nala Pargana Kandhala, Tehsil  Budhana District Muzaffarnagar.  The party No.2 has executed  a sale deed today in favour of the party No.1 for a sum of  Rs.4900/- in respect of   2 Bigha 7 Biswas of the land of  Khasra No.95, bearing a rent of rs.6.25 annually situate in  Khata No.331 of village Nala, Pargana Kandhala, Tehsil

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Budhna, District Muzaffarnagar, about which it was agreed  between the parties that if the second party paid the entire  consideration of the sale deed Rs.4900/- to the first party or to  the heirs of the first party within ten years from today then  in that situation the first party will reconvey the aforesaid  land by sale-deed in favour of the second party without any  objection.  If for any reason the first party does not execute  a sale deed in favour of the second party, after five years  but within ten years from the date of sale deed dated 4.2.71,  then the second party will have  a right to deposit the entire  consideration Rs.4900/- in the Civil Court and get the sale  deed executed by the Court, the first party will have no  objection.  The present agreement will be binding upon the  parties and the heirs of the parties.  Therefore, these few  comments by way of agreement of reconveyance of sale within  ten years are being written so that this document may be used  when necessary.  After the limitation of ten years the second  party will have no right at all to get released the aforesaid and  from party No.1." [Underlining by court to add emphasis]

Under the above terms of the agreement of repurchase   defendant Nos. 2 to 4 sold their rights to obtain reconveyance of sale  in favour of plaintiff (present appellant) by executing a document  dated 02.6.1977, on payment of a sum of Rs.19,000/-. The said  document is also registered and its execution is not in dispute.

The court of Munsif Magistrate, Kairana, Distt. Muzafarnagar  dismissed the suit by holding that defendant Nos. 2 to 4 having  already transferred their rights in the property in favour of defendant  No.1, had no right  left in the property to transfer the same in favour  of the plaintiff.  In the opinion of the trial court the document dated  2.6.1977 executed in favour of the plaintiff does not amount to  transfer of  right of repurchase in favour of the plaintiff but it was a  transfer of interest in the property involved which was invalid as the  defendant nos. 2 to 4 had already transferred their interest and title  in the land to defendant no. 1.   

At this stage, it may be mentioned that we have looked into the  terms of the document dated 2.6.1977 and we find a clear stipulation  therein to indicate that whatever right of repurchase that existed in  favour of  defendant  Nos 2 to 4 has been transferred by them in  favour of  defendant No.1.  The reasoning of the trial court,  therefore, is that right of repurchase has not been assigned or  transferred in the document dated 2.6.1977 is prima facie erroneous  and has not been supported by any of the parties before us in this  appeal.

The first appellate court upheld dismissal of the suit by the trial  court not only on the ground that no right of repurchase had been  transferred  in favour of the plaintiff but also on additional ground  that the right of repurchase, if any, available to defendants 2 to 4  was a right personal to them and was not assignable or transferable.  The High Court by the impugned judgment passed in Second Appeal  re-examined the terms of the document in question dated 4.2.1971  (Ex.4) to arrive at a conclusion that the right of repurchase was  available personally to the contracting parties defendant nos. 2 to 4  and to their heirs.  It held that as under the terms of the said  document there is no clear stipulation permitting respondents 2 to 4  to transfer the right of purchase to anybody else, the said right was  not assignable.  The relevant finding of the High Court reads thus:

"It is true that there is no negative clause that the  said right of repurchase cannot be transferred to a  stranger but the deed dated 4.2.1971 (Ex.4) is

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specific that it is binding upon the parties and their  heirs.  The said clause does not permit respondents  2 to 4 to transfer the right of repurchase to  anybody else including the appellant."

We have heard the learned counsel appearing on either side  and looked carefully and minutely into the terms of the disputed  document comparing it with the vernacular copy.  We have extracted  above the relevant recitals of the said document.  As has been noted  by the High Court and the courts below, it contains no express  prohibition on transfer or assignment of right by the original  contracting parties to third party. The only question is whether such  prohibition against assignment or transfer can be read into the  document by implication.

In our considered opinion, reading the document as a whole  and particularly keeping in view the fact that a long period of ten  years was fixed for obtaining reconveyance,  no implied prohibition of  transfer or assignment can be inferred in the document particularly in  view of the clear provisions of Section 15(b) of the Specific Relief Act  1963 which read as under:

"15.Who may obtain specific performance \026 Except  as otherwise provided by this Chapter, the specific  performance of a contract may be obtained by-

(a)    any party thereto; (b)     the representative in interest or the  principal, of any party thereto;

Provided that where the learning, skill, solvency or  any personal quality of such party is a material  ingredient in the contract, or where the contract  provides that his interest shall not be  assigned, his representative in interest or his  principal shall not be entitled to specific  performance of the contract, unless such party has  already performed his part of the contract, or the  performance thereof by his representative in  interest, or his principal, has been accepted by the  other party." [Emphasis added] As is to be seen from the provisions of Section 15(b) of the  Specific Relief Act, 1963, specific performance of the contract may be  obtained by ’any party thereto’ or ’their representative in  interest’. This expression clearly includes the transferees and  assignees from the contracting party in whose favour the right exists.   Such right of seeking specific performance would, however, be not  available in terms of proviso below clause (b) where "the contract  provides that the ’interest shall not be assigned’.

Clearly in this case under the terms of the document dated  4.2.1971 Ex.4, there is no express prohibition against assignment or  transfer of the right of repurchase by the original party in favour of  the third party.  Learned counsel appearing for the contesting  respondent (defendant No.1) very strenuously urged that in the  recitals of the document at the appropriate place there is  mention of  the parties and their heirs but there is no mention of the  transferees or assignees of the contracting parties. This omission   is a clear indication of implied prohibition against transfer or  assignment of any right by the original contracting party.   

We find it difficult to accept this proposition.   True,  it is that  there is no clear stipulation permitting assignment or transfer of right  of the purchaser by original party in favour of the third party but both

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contracting parties would be presumed to have been alive to the legal  provisions contained in Section 15(b) of the Specific Relief Act.  The  two documents \026 one of sale and the other of repurchase \026 were  executed on the same day. As the sale and agreement of repurchase  are contained in two separate documents, although  contemporaneously executed, the transaction cannot treated to be a  ’mortgage’ as defined in Section 58(c) read with proviso thereunder  of the Transfer of Property Act but it seems to be a transaction akin  to a ’mortgage’ \026 if not ’mortgage proper’.  From the tenor and  contents of the two documents contemporaneously executed, it  seems that the defendant nos. 2 to 4 to raise money, sold the  property but with a right of repurchase on return of the money.  A  long period of ten years for obtaining re-conveyance was agreed  between the original contracting parties to indicate the nature of  transaction to be one to satisfy the monetary need of the transferer.   Initial  period of five years was stipulated for obtaining re-conveyance  mutually, failing which after expiry of the period of five years, re- conveyance could be obtained through court within an outer limit of  ten years from the original date of the execution of the document. It  seems unjust to construe the terms of the document to mean that  though the original transferers of the property are unable to raise  requisite money within the initial period of five years and thereafter  continue to be incapable financially to approach court for seeking re- conveyance, they would have no right to assign or transfer their right  on value to others.   This would result in deprivation of the property  or competitive value altogether to the original owners.  

In our considered opinion, in the absence of any words or  expressions in the documents indicating prohibition on assignment or  transfer of right of repurchase and in the face of clear provisions of  Section 15(b) of the Specific Relief Act, 1963, an implied prohibition  cannot be read into the terms of the documents. Merely because in  the documents, there is mention of ’heirs’ of the contracting parties  but not their ’assignees’ or ’transferees’,  the legal right of  assignment available to the benefit of original contracting party under  Section 15(b) of the Act cannot be denied to it.  

We are fortified in our view by two direct decisions of this Court  rendered in somewhat similar circumstances with documents  contemporaneously executed for sale and repurchase with  comparable stipulations. See T.M. Balakrishna Mudaliar vs. M.  Satyanarayana Rao & Ors. [1993 (2) SCC 740] and  Habiba  Khatoon vs. Ubaidul Huq [1997 (7) SCC 452]. In the case of Habiba Khatoon(supra), taking stock of earlier  decisions of this Court, the Privy Council  and  the High Court of  Bombay, the law on the present contested issue was explained to  uphold the right of repurchase of the original contracting party thus:-  "We may in this connection also usefully refer to a  decision of this Court in the case of T.M.  Balakrishna Mudaliar vs. M. Satyanarayana  Rao & Ors. Considering the provisions of section  15(b) of the Specific Relief Act, 1963, a Bench of  two learned Judges of this Court speaking through  Kasliwal, J., endorsed (in para 10 of the SCC) the  statement of law flowing from the decision of  Sakalaguna Nayadu as well as the decision of  Beaumont, C.J., speaking for the Bombay High  Court in the case of Vishweshwar Narsabhatta  Gaddada vs. Durgappa Irappa Bhatkar. The  statement of law which got imprimatur of this  Court in para 9 of the Report runs as follows : (SCC  p.745).

The Privy Council in Sakalaguna Nayudu vs.  Chinna Munnuswami nayakar has held that the

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benefit of a contract of repurchase which did  not show that it was intended only for the  benefit of the parties contracting, could be  assigned and such contract is enforceable.   Beaumont, C.J. in Vishweshwar Narsabhatta  Gaddada vs. Durgappa Irappa Bhatkar held  that both under the common law as well as  under Section 23(b) of the Specific Relief Act,  1877, an option given to repurchase the  property sold would prima facie be assignable,  though it might also be so worded as to show  that it was to be personal to the grantee and  not assignable.  On the particular facts of that  case, it was held that the contract was  assignable.  In Sinnakaruppa Gounder v.  M.Karuppuswami Gounder it was held (AIR  p.508, para 5)

’In our view, generally speaking, the benefits  of a contracat of repurchase must be  assignable, unless the terms of the contract  are such as to show that the right of  repurchase is personal to the vendor.  In the  latter case it will be for the person who  pleads that the contract is not enforeable, to  show that the intention of the parties thereto  was that it was to be enforced only by the  persons named therein and not by the  assignee.’ "

From  the statement of law as has been approved and followed   by this Court in two the decisions in Habiba Khatoon and TM  Balakrishna Mudaliar (supra) unless the contents of the document in  question and evidence in relation thereto are so clear to infer a  prohibition against assignment or transfer, the right of repurchase  has to be held to be assignable or transferable and cannot be treated  as personal to the contracting parties.

On a very unsubstantial ground that the document in question  makes a mention only of ’parties’ and their ’heirs’ and not ’assignees’  or ’transferees’, it cannot be held that the right of repurchase was not  assignable.  In our considered opinion, therefore, the courts below  were in error in construing the document in question in a manner to  infer an implied prohibition against assignment and transfer.

In this appeal, the respondent filed an application (not  numbered) dated 25.8.2001 seeking permission to raise additional  grounds and file additional documents. In the additional grounds, it is  urged on behalf of the contesting respondent that suit land recorded  as Holding No. 306 area 0.8693 hectares, as a result of consolidation  proceedings under the provisions of  UP Consolidation of Holdings  Act, 1953 [hereinafter referred to as ’the Act of 1953’] has been  converted into a new holding called ’Chuk’ comprising several other  plots with area 0.7724 hectares. Learned counsel appearing for the  respondent in support of the additional grounds argues that the  property agreed to be sold as a result of consolidation proceedings  having lost its identity, the suit for specific performance of contract  for the original Holding No. 306, has been rendered infructuous.  Heavy reliance is placed on the decision of this Court in the case of  Piarey Lal vs. Hori Lal [1977 (2) SCR 915].     

On the other side, learned counsel appearing for the appellant  seriously disputed the fact that as a result of consolidation  proceedings, identity of the suit land had been lost and specific  performance of agreement of sale cannot be granted. It is contended

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that as a result of consolidation proceedings, ’there is merely  substitution of one property for the other’ and the suit for  specific performance cannot be said to have been rendered  incompetent or infructuous. Reliance is placed on the decision of this  Court reported in Rajeshwar vs. Board of Revenue [1995  Allahabad Law Journal 144].  

The additional grounds urged in this appeal as a result of  subsequent legal developments of consolidation of holdings under the  Act of 1953 raise issues both of fact and law. We consider it just and  proper to remand the case to the trial court for deciding these  additional issues arising on facts and law.  

As a result of discussion aforesaid, this appeal partly succeeds  and is allowed. The concurrent findings of the courts below that the  right of repurchase under the agreement was personal to the original  contracting party and their heirs, are hereby set aside. It is held that  the plaintiff as ’assignee’ or ’transferee’ from the original contracting  party is entitled to seek specific performance of the contract from  contesting respondent no. 1.  

The case is remanded to the trial court for deciding the limited  issues arising between the parties on facts and law on the  applicability and effect of the provisions of the Act of 1953.  

The trial court shall grant opportunity to the parties to amend  their pleadings. It shall then frame issues on those amended  pleadings and after granting them opportunity to lead evidence  decide the suit in accordance with law. The suit was filed in the year  1981. The trial court shall make every endeavour to complete the  trial on the additional issues and decide the suit as expeditiously as  possible. To facilitate early disposal of the suit, the parties are  directed to appear before the trial court on 15th December, 2003. In  the circumstances, we make no order as to costs in this appeal.