ABRAHAM EZRA ISSAC MANSOOR Vs. ABDUL MAHOMED ALIBHAI

JUDGEMENT

(1.) This is an appeal from a judgment of Mr. Justice Tendolkar. It seems that on February 9, 1943, the plaintiff and the defendant entered into an agreement whereby the defendant agreed to sell to the plaintiff an immoveable property for the price of Rs. 48,000. The amount of earnest money of Rs. 3,000 had already been paid by the plaintiff to the defendant on January 18, 1943. The defendant was the mortgagee of this property and the mortgagor filed a suit to redeem the property and after some contest a redemption decree was passed in favour of the mortgagor, and as the mortgagor redeemed the property, the defendant informed the plaintiff that he was not in a position to complete the contract and convey the property. He sent a cheque for Rs. 3,000 returning the earnest money which had been deposited with him by the plaintiff. The plaintiff, in the first instance, refused to accept the cheque of Rs. 3,000 and claimed damages for breach of contract. Ultimately he accepted the cheque of Rs. 3,000 without prejudice to his claims and contentions, and filed this suit claiming in the first instance a sum of Rs. 80 being interest on the sum of Rs. 3,000 at 6 per cent, per annum item February 9, 1943, to July 22, 1943, and a sum of Rs. 748-11-6 which were the costs incurred by the plaintiff of and incidental to the agreement for sale, and damages in the sum of Rs. 12,000 or such other sum as the Court may award for breach of contract by the defendant. The learned Judge took the view that the contract between the parties was an absolute one. He then considered whether the rule of Bain V/s. Fothergill (1873- 4) L.R. 7 H.L. 158 and Flureau V/s. Thornhill (1776) 2 W.BI. 1078 applied in India, and came to the conclusion that that rule did not apply, that the parties were governed by the plain words of Section 73 of the Indian Contract Act, and that the defendant was liable to-pay damages for the breach of contract. He fixed the date of breach and referred the suit to the Commissioner to ascertain damages on the footing of a breach on that date. The defendant has come in appeal from that decision.

(2.) Now, it is unnecessary, in my opinion, to express any opinion on the very interesting question raised by the learned trial Judge as to whether the well known English rule in Bain v. Foihergill and Flureau V/s. Thornhill applies or does not apply in India. As the learned Judge has himself pointed out, there are conflicting decisions of our own Court. There are also decisions of other High Courts to be considered before one can express one's opinion one way or the other. But as this appeal is capable of being disposed of on a much narrower point, it is not at all desirable to launch upon the more ambitious question of the applicability of the rule in Bain V/s. Fothergill and Flureau V/s. Thornhill to this country. Therefore that question must still remain undetermined till a proper occasion arises when the whole matter may be considered from all aspects.

(3.) Now turning to the agreement for sale, in Clause 2 of the agreement it is stated that the vendor is in possession of the property as mortgagee from one Abdul Latiff and has agreed to sell the property as such mortgagee under the power of sale reserved to him under the indenture of mortgage dated February 7, 1936. The vendor alone will execute the conveyance on completion. Then Clause 5 contains the usual provision that the vendor shall make out a marketable title to the said land, hereditaments and premises agreed to be sold. And Clause 7 of the agreement provides that if the title be not proved marketable, the vendor will pay back the earnest money with interest at 6 per cent, per annum from January 18, 1943, and pay costs incurred up to date. It is therefore clear from this agreement that the vendor was entering into an agreement for sale of a property of which he was the mortgagee. It is also clear in law that the mortgagor has the right to redeem a property which he has mortgaged till the equity of redemption has been extinguished, and it is now also clear law, as laid down in Abraham Ezra V/s. Abdul Latif (1943) 46 Bom. L.R. 159 that an agreement for sale by the mortgagee with a purchaser does not extinguish the equity of redemption vested in the mortgagor. Therefore, in my opinion, this agreement by the vendor to sell the property was not an absolute agreement, but a conditional one. What the vendor agreed with the purchaser was that he would sell the property, convey the property, make out a marketable title, provided the mortgagor did not redeem the property as he was entitled to do under Section 60 of the Transfer of Property Act, 1882. Mr. Peerbhoy says that that is not what the vendor has stated in the agreement. In my opinion, nothing could have been more clearly and emphatically stated than that by reason of Clause 2 of the agreement. Clause 2 does state the fact that the vendor is selling the property as a mortgagee under the power of sale reserved to him under the indenture of mortgage. It is not necessary in an agreement for sale to set out the law, and once the vendor has stated that he is selling as a mortgagee, Section 60 of the Transfer of Property Act makes it clear that his right to self is dependent upon and conditional upon the mortgagor not redeeming the property, and Sec. 60 also makes it clear that the right of the mortgagor to redeem continues and subsists till the equity of redemption is extinguished. Therefore, with very great respect to the learned Judge, I do not agree that this agreement was an absolute agreement of sale and not a conditional one.