24 April 1964
Supreme Court


Case number: Appeal (civil) 398 of 1962






DATE OF JUDGMENT: 24/04/1964


CITATION:  1964 AIR 1789            1964 SCR  (7) 858

ACT: Specific  Performance-Perfection of title after contract  to sell-Applicability of S. 18(a)-’Subsequently to the sale  or lease’,  meaning  -of-Specific Relief Act, 1877  (Act  I  of 1877), s. 18 (a).

HEADNOTE: The  respondent executed an agreement to sell his  house  in order  to meet family necessities for a certain sum  on  the condition  that he and his mother would execute a sale  deed in favour of the appellant, On the failure of the  execution of  the  sale-deed  the  appellant  instituted  a  suit  for specific performance of the contract.  The trial court  held that  the  sale was not for legal  necessity  and  therefore decreed the suit in part directing that the respondent would execute the sale deed for the alienation of his interest  in the entire house and that the appellant would be entitled to get  possession  of the same jointly with  the  respondent’s mother.  The appellant appealed to the High Court and during its pendency the respondent’s mother died and therefore  the only question urged on behalf of the appellant was that  the respondent, having perfected his title to the entire  house, be made to sell the same.  The High Court did not agree with the  contention  and  held that s. 18 (a)  of  the  Specific Relief  Act  did not apply to the facts of the  case  as  it comes  into  operation subsequent to the sale  having  taken place.  On appeal by special leave. Held:  The  High  Court  was  wrong  in  not  applying   the provisions of s. 18(a) of the Act to the facts of the case. The  expression  ’subsequently to the sale or lease’  in  s. 18(a)  means  subsequently to the contract to sell  or  let. This clause cannot be restricted in its application to cases where actual sale or lease of property had taken place. Kalyanpur  Lime Works Ltd. v. State of Bihar, [1954]  S.C.R. 958, referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 398 of  1962. Appeal  by special leave from the judgment and decree  dated



January  7,  1959, of the Orissa High Court in  Appeal  from Original Decree No. 57 of 1953. B.R.  L.  Iyengar, S. K. Mehta and K. L. Mehta,  for  the appellant. K.   Blimsankaram, B. Parthasarthy, J. B. Dadachanji, O.   C. Mathur and Ravinder Narain, for the respondent. April 24, 1964.  The judgment of the Court was delivered by J.RAGHUBAR  DAYAL,  J.-This  appeal,  by  special  leave, raises  the  question of the correct  interpretation  of  s. 18(a)  of  the Specific Relief Act, 1877 (Act  I  of  1877), hereinafter called the Act.  859 Ramchandra,  respondent, executed an agreement to  sell  the house  in suit to the appellant, on February 21, 1951.   The agreement  stated  that he was in sole  possession  and  en- joyment  of the house which was his paternal property,  that he was the Managing Member and Karta of the family and  that for meeting family necessities and discharging certain loans he  agreed  to sell his undisputed house  for  Rs.  6,000/on condition  that  he and his mother would execute a  deed  of sale  in favour of the appellant with respect to  the  house within  a period of one year from the date of the  execution of  the deed of agreement.  Ramchandra did not  execute  the sale deed and the appellant instituted the suit for specific performance of the contract. The  trial Court held that the sale was not to be for  legal necessity  and  therefore decreed the suit in part,  on  the appellant’s depositing a sum of Rs. 6,000/- less the sum  of Rs.  300/- paid before the Sub-Registrar at the time of  the execution  of the agreement to sell and less the  amount  of costs  granted to the appellant against Ramchandra within  a month  and directed that defendant No. 1 would  execute  the sale  deed for the alienation of his interest in the  entire house  as  covered by the agreement and that  the  plaintiff would be entitled to get possession of the same jointly with defendant No. 2, mother of Ramchandra. The  appellant went up in appeal to the High  Court  against the  dismissal of his suit with respect to the sale of  half the  house.  During the pendency of the appeal  Ramchandra’s mother died and therefore the only question urged on  behalf of  the  appellant  at the hearing of the  appeal  was  that Ramchandra,  respondent, having perfected his title  to  the entire house, be made to sell the same.  The High Court  did not agree with the contention and held that s. 18(a) of  the Act did not apply to the facts of the case as it comes  into operation  subsequent to the sale having taken  place.   The High  Court therefore dismissed the appeal.  It  is  against this order that this apeal has been filed.               Section 18(a) of the Act reads:               "Where  a  person  contracts to  sell  or  let               certain  property,  having only  an  imperfect               title thereto, the purchaser or lessee (except               as otherwise provided by this Chapter) has the               following rights:-               (a)if the vendor or lessor has subsequently               to the sale or lease acquired any interest  in               the  property,  the purchaser  or  lessee  may               compel  him to make good the contract  out  of               such interest;" 860 The question is whether the expression ’subsequently to  the sale  or lease’ means ’subsequently to the contract to  sell or let’ or means ’subsequently to the execution of the  sale deed or lease deed by the vendor or the lessor, as the  case may be’ in pursuance of the contract to sell or let.  It  is



contended  for   the appellant that  this  expression  means subsequently  to  the  contract to sell or  let,  while  the contention for the respondent is that it means subsequent to the actual sale or lease.  We are inclined to agree with the contention for the appellant. The  case,  in a way, is concluded by the decision  of  this Court in Kalyanpur Lime Works Ltd. v. State of Bihar(1).  In that  case  the Government agreed to let the  lease  of  the bills to Kalyanpur Lime Works Ltd., but the lease could  not be  executed  as the forfeiture of the lease of  a  previous lessee was held invalid by the Court.  When the lease of the previous  lessee expired, Kalyanpur Works Ltd.,  wanted  the execution  of the lease for a period during which the  lease to  it would have continued if it had been granted in  1934. This  Court held that the case fell within s. 18(a)  of  the Act.  It said at p. 972:               "We  agree  with the High Court  that  section               18(a)  of the Specific Relief Act  applies  to               the case.  That section lays down that where a               person  contracts  to  sell  or  let   certain               property having only imperfect title  thereto,               if  the vendor or lessor has  subsequently  to               the sale or lease acquired any interest in the               property,  the purchaser or lessee may  compel               him  to  make good the contract  out  of  such               interest.  There can be no doubt whatever that               when the Government entered into the  contract               to  grant leases to the Lime Co. in  1934,  it               had  an imperfect title, inasmuch as it  could               not  grant a fresh lease to anyone during  the               existence  of the previous lease in favour  of               Kuchwar Co. No doubt the Government thought it               had the right to forfeit those leases and  did               in  fact order forfeiture but it  having  been               found  subsequently  that the  forfeiture  was               legally   invalid,  rights  of  the   previous               lessees were restored.  As already pointed out               above this is not the case of absence of title               but is one of imperfect title and hence  falls               within  the meaning of section 18.  After  the               31st March, 1948, when the leases in favour of               Kuchwar Co. expired, the impediment in the way               of  the  Government  to grant  leases  of  the               property stood removed, and the Lime Company’s               right to get the leases revived in its favour.               This right               [1954] S.C.R. 958.               861               of   the   plaintiff  was  resisted   by   the               Government who, on the other hand, granted the               leases to defendant No. 2.               The High Court of Patna rightly took the  view               that section 18(a) was applicable to the facts               of this case and although defendant No. 1  was               not  in a position to grant a lease  from  the               time it agreed to do, the impediment being now               removed  and a suit for  specific  performance               not   being  barred,  the  Lime  Company   was               entitled  to  sue for that  relief.   We  have               already held in agreement with the view of the               High Court that section 18 is attracted to the               facts of this case, and the contract of  which               specific performance can be decreed in  favour               of  the  plaintiff  is  the  one  embodied  in               Exhibits 22 and 22(a)."



It is urged for the respondent that in that case it was  not contended before this Court that s.18(a) could not apply  to the  facts  of the case as no lease in favour  of  Kalyanpur Lime  Works  Ltd. had been executed and that  therefore  the question now before us was not discussed.  It is also  urged that the Patna High Court had not actually applied the  pro- visions of s. 18(a) to the facts of the case but had decreed the specific performance of the contract on the basis of the general  principle that the purchaser in a contract to  sell entered into in the circumstances of the case, was  entitled to sue for specific performance against such interest as the vendor might afterwards acquire in the property and  support was  found in what was said in Art. 994 in  Fry’s  ’Specific Performance’, 5th Edition.  In these circumstances, we would like to consider the question directly before us. Sections  12 to 20 of Chapter 11 of the Act deal  with  con- tracts  which may be specifically enforced.   Section  18(a) deals  with the rights of the purchaser or lessee  in  cases where  the vendor has imperfect title to the property  which he has contracted to sell or let.  Apparently this must deal with the rights of the would be purchaser or lessee, and not of  those  who  have already got the sale or  lease  of  the property  in pursuance of the contract to sell or  let.   If the  person who contracted to sell or let has completed  the sale  or  the  lease transaction, nothing is  left  for  the vendee or the lessee to seek by way of specific  performance of the contract.  This is when he himself acts according  to the contract.  If he does not act according to the contract, the  person who has agreed to purchase or take on lease  the property  will  have  to seek enforcement  of  the  contract through  Court and then it may be that the Court  might  not enforce  the contract.  The Court will not, in view  of  the provisions of ss. 14 to 17 be able to 862 enforce the contract even with respect to the property  over which  the  person contracting to sell or  let  had  perfect title,. except in certain special circumstances, dealt  with in ss. 14,. 15 and 16. Section  14 deals with cases where the part of the  contract which  could not be performed bears only a small  proportion to  the whole in value and admits of compensation in  money. Section 16 deals with the specific performance of a part  of a  contract when that stands on a separate  and  independent footing from another part of the same contract which  cannot or  ought not to be specifically performed.   Cases.  coming under  these two sections are not expected to give  rise  to circumstances  in which provisions of sub-cl. (a) of  s.  18 can be applied.  Section 15 deals with the specific perform- ance of a contract where the part unperformed is large.  The Court  has  discretion in such circumstances to  direct  the party in default to perform specifically so much part of the contract as it could perform provided that the plaintiff re- linquishes all claims to further performance, and all  right to  compensation either for the deficiency, or for the  loss ordamage sustained by him through the default of the  defen- dant.   When a Court has dealt with a case under s.  15,  no question  can however arise for action under s.  18(a).   It follows, from the consideration of both the sets of  circum- stances,  viz., when the person contracting to sell  or  let him  self performs his part of the contract and when  he  is made  to perform the contract wholly or partially by  Court, the  occasion  to  apply for  specific  performance  of  the contract with respect to the property over which the  person contracting  to sell or let had originally imperfect  title, does  not  arise.  This points to the conclusion  that  this



clause cannot therefore be restricted in its application  to cases  where  actual  sale or lease of  property  had  taken place. If clause (a) of s. 18 was to apply after the completion  of the  sale  or lease and on the vendor  or  lessor  acquiring interest in the property in which he had imperfect title  to start with, there would be considerable overlapping  between the provisions of cl. (a) of s. 18 and s. 43 of the Transfer of Property Act. Section  43 of the Transfer of Property Act comes into  play when a person fraudulently or erroneously represents that he is  authorised to transfer certain immoveable  property  and professes to transfer such property for consideration, while cl.  (a) of s. 18 would come into play when the person  with imperfect  title has sold or leased the property.  There  is some  sort  of  representation whenever a  person  sells  or leases  property, the representation being implicit  and  to the 863 effect  that  he is competent to sell or let  the  property. Thus  there  is over-lapping of the provisions  of  the  two sections. The  actual right of the transferee under s. 43 and cl.  (a) of  s.  18 is however expressed in different  language.   In cases  where s. 43 operates, the transferee, at his  option, can  have  the transfer operate on any  interest  which  the transferor  may acquire in the property at any  time  during which the contract for transfer subsists.  The  illustration to the section indicates that the transferee can require the transferor  to  deliver the property acquired to  him.   The purchaser or lessee on the other hand, acting under cl.  (a) of  s. 18, can compel the seller or the lessor to make  good the  contract out of such interest.  The difference  between the two provisions is this that in the case of the operation of  s. 43, no recourse to Court is necessary.  The  transfer operates on the property transferred and the transferee  can call  upon  the transferor to deliver the property  to  him. The  purchaser or the lessor having the right  mentioned  in cl. (a) of s. 18 has to go to Court to compel the vendor  or lessor   to  perform  the  contract  out  of  the   interest subsequently acquired by him.  The purchaser or lessee  goes to the Court to enforce the contract and the contract in cl. (a)  of s. 18 must refer to the contract to sell or let  and not  to the contract of sale or lease, which,  as  indicated earlier,  if  voluntary,  would  have  covered  the   entire property  contracted to be sold or leased, and  if  enforced through Court no occasion for the operation of clause (a) of s. 18 would arise. The  expression  in cl. (a) of s. 18  should  preferably  be construed in a way so that there will be no overlapping bet- ween  the  provisions  of this clause and of s.  43  of  the Transfer of Property Act, as ordinarily the legislature does not   intend  to  make  duplicate  provisions  for   similar situations. The  use of the words ’vendor or lessor’ in cl. (a)  are  no definite  pointers  to the conclusion  that  the  expression ,subsequently  to  the sale or lease’ be given  the  meaning subsequently to the actual sale or lease’. The sections preceding s. 18 deal with specific  performance of  contracts  in general and therefore use  the  expression ’party  to a contract’.  Section 18 deals with the cases  of contracts  to sell or let and therefore  appropriately  uses the  simple  word ’vendor’ or ’lessor’ with respect  to  the party contracting to sell or let and ’purchaser’ or ’lessee’ with  respect to the party agreeing to purchase or take  the



property  on lease.  There is no incongruity in  using  such expressions  so long as one knows to whom those  expressions refer.   In  fact the word ’purchaser’ or  ’lessee’  can  be appropriately  applied  to persons agreeing to  purchase  or take the property on lease. 864 In  this  connection  reference  may also  be  made  to  the provisions of cl. (d) of s. 18 which uses the words  ’vendor or  lessor’  and provides that where the  vendor  or  lessor sues,,,for specific performance of the contract and the suit is  dismissed  on  the ground of his  imperfect  title,  the defendant  has a right to a return of his deposit......  and to  a lien for such deposit........ on the interest  of  the vendor  or lessor in the property agreed to be sold or  let. It  is clear that the words vendor or lessor in this  clause refer to the person contracting to sell or let the  property and who did not perform his part of the contract. Section  25 of the Act also uses the expression  ’vendor  or lessor’  who has not actually sold or leased  the  property. It  provides  inter  alia that a contract for  the  sale  or letting  of  property  cannot be  specifically  enforced  in favour  of  the  vendor  or  lessor  who  comes  within  the provisions  of  cls.  (a)  to  (c)  of  the  section.    The provisions  of  s. 27A also use the expression  ’lessor  and lessee’  in  connection  with  provisions  relating  to  the contract to let when actually no lease is executed. There  may be another reason for using the expression  ‘sale or lease’ in cl. (a) of s. 18.  Section 13 and  illustration (a) read:               "13.   Notwithstanding anything  contained  in               section  56  of  the Indian  Contract  Act,  a               contract   is   not   wholly   impossible   of               performance  because a portion of its  subject               matter,  existing at its date, has  ceased  to               exist at the time of the performance.                               Illustrations               (a)A, contracts to sell a house to B, for a               lakh of rupees.  The day after the contract is               made, the house is destroyed by a cyclone.  B,               may  be compelled to perform his part  of  the               contract by paying the purchase-money.               *        *       *   * In  Pollock  & Mulla’s ’Specific Relief Act’,  8th  edition, under s. 13, is a note:               "Illustration (a) assumes that a contract  for               the sale of a house does, of itself,  transfer               the  beneficial interest in the house  to  the               purchaser, and make him owner in equity in the               English  phrase.  This was also the  law  here               before  the  Transfer of Property  Act,  1882,               came  into force.  By s. 54 of that Act it  is               provided  that  a  contract for  the  sale  of               immoveable property does not, of itself.               865               create  any  interest  in or  charge  on  such               property.  By s. 55(5) it is enacted that  the               risk of destruction is borne by the  purchaser               only from the date when the ownership  appears               to pass on execution of a proper conveyance by               the  vendor  [see  s.  55(l)(d)].   It  would,               therefore,  seem that the illustration  cannot               now be applied where the Transfer of  Property               Act is in force." It  may be that just as illustration (a) to s. 13  continues in the Act, the expression ’sale or lease’ continued in  cl.



(a) ,of s. 18 as at the time cl. (a) of s. 18 was originally enacted  some sort of beneficial interest had passed to  the person  agreeing  to  purchase  the  property  by  the  mere agreement to sell, arrived at between the parties. It has also been urged for the respondent that cl. (a) of s. 18  of the Act applies only when the person  contracting  to sell or let has imperfect title to the property and not when be  is not entitled to the property as is the case  in  this suit, ,as Ramchandra had no title to half the house.  We  do not consider it necessary to decide this question as we  are ,of  opinion that it cannot be said that Ramchandra  had  no interest  in half the house.  He had interest in the  entire house  and  so  had his mother, though  in  case  of  actual partition  the  interest of each would have  been  fixed  at half.   If Ramchandra was not competent to pass  title  with respect  to  the entire house during the life  time  of  his mother, he can be said to have imperfect title to it. We are therefore of opinion that on the death of the mother, Ramchandra obtained title to and interest in the portion  of the  house  which on a private partition subsequent  to  the contract to sell had taken place between Ramchandra and  his mother  and that therefore he has to make good his  contract out  of the property he acquired subsequent to the  contract to sell. It has been submitted for the respondent that it need not be taken for granted that Ramchandra got title to the  property which belonged to his mother as it might be that the  mother had executed some will.  No such allegation appears to  have been  made  before the High Court where it  was  urged  that Ramchandra had acquired title to that portion of the  house. It was in view of this allegation that the appellant did not argue  the appeal on the basis of the ground that  had  been taken  in  the memorandum of appeal, the ground  being  that Ramchandra  had  agreed  to  sell  for  reasons  ,of   legal necessity.   We therefore do not consider any force in  this contention. L/P(D)) 1 S.C.I-28. 866 We  hold that the High Court was wrong in not  applying  the provisions  of cl. (a) of s. 18 of the Act to the  facts  of the  case.   We therefore allow the appeal,  set  aside  the orders  of the Courts below and decree the plaintiff’s  suit and  order  that on payment of Rs. 6,000/- minus  Rs.  300/- paid  to the respondent at the time of the execution of  the agreement  for  sale  and  such other  costs  to  which  the appellant  be entitled within a month from the date  of  the costs  being  taxed,  the respondent  will  be  directed  to execute  the  sale deed of the entire house covered  by  the agreement  in favour of the appellant.  The  appellant  will get his costs of the trial Court, as decreed by that  Court, and  of the appeal in this Court, the parties bearing  their own  costs  of the appeal in the High Court.   In  case  the appellant  fails to deposit the amount aforesaid within  the time  allowed,  his  suit will stand  dismissed  with  costs throughout. Appeal allowed. 867