- (1.) THIS is a defendants' second appeal arising out of a suit for specific performance of a contract dated 29- 6-1956 to sell some plots of land and a house for a sum of Rs. 5000/- to the plaintiffs by their owner Deo Karan, the father of defendant-respondent No. 3, Smt. Sukhdei. An amount of Rs. 4000/-was paid at the time of the execution of the agreement for sale. Subsequently, this very property was sold to the defen dants-appellants on 2-7-1956. In the suit for specific performance, filed on 26th of May, 1959, the plaintiffs impleaded the vendor, Deo Karan, with whom they had entered into the contract of sale and to whom they had paid Rs. 4000/- and also the subsequent transferees, the defen dants-appellants, Jhandoo and Chhittar, who claimed to be bona fide purchasers for value without notice of the prior agreement for sale. Both the courts below have held that the defendants-appellants had notice of the agreement to sell between the plaintiffs-respondents and Deo Karan, now represented by his heir Smt. Sukhdei, defendant-respondent No. 3. It is true that the finding that the appellants had notice of the prior agreement to sell in favour of the plain tiffs-respondents is based largely on cir cumstantial evidence, and. in particular, on the fact that a reply was sent by Deo Karan to a notice given by the defendants-appellants to him, in which it is alleged that they had challenged the right of Deo Karan to make a transfer. Since neither the actual notice sent by the defendants-appellants to Deo Karan nor its copy has been placed on record, it is difficult to say what was actually communicated to Deo Karan whose reply is on record. The reply also does not definitely fix the knowledge of the con tract to sell upon the defendants-appel lants. Nevertheless, inasmuch as there is sufficient circumstantial evidence to warrant the inference that the defen dants-appellants knew of the previous contract to sell in favour of the plain tiffs-respondents, it is not open for me to disturb that finding of fact in second appeal.
(2.) BOTH the courts below had, however, refused to grant specific per formance of the contract against the defendants-appellants who had, after pur chasing the property, obtained possession of the land, demolished the dilapidated structure on it, and built a new one in its place. The lower appellate court dealt with this aspect of the matter and found that the plaintiffs-respondents had stood by without objecting or giving any notice to the defendants-appellants, for nearly three years, until the defendants- appellants had invested a substantial amount in their constructions on the land purchased. In other words, the lower appellate court had invoked the Prin ciple of an equitable estoppels against the plaintiffs-respondents in refusing to order specific performance of the contract to convey the property to the plaintiffs- respondents after a lapse of nearly three years. Indeed, the contract could not be specifically performed inasmuch as the character of the property itself had changed substantially since its purchase. Therefore, although the plaintiffs-respon dents would have been entitled to the specific performance of the contract against the defendants-appellants under Section 27, sub-section (b) of the Specific Relief Act if the plaintiffs were vigilant because the defendants-appellants were held to have notice of the prior agree ment to sell, yet, the contract could not be specifically enforced against the defen dants-appellants after equities had appear ed in their favour. The conduct of the plaintiffs- respondents had. it was rightly held, disentitled them from obtaining relief under S. 27 (b) of the Specific Relief Act against the defendants-appellants. And, of course, no specific relief could have been granted against Deo Karan or his heir, defendant-respondent No. 3, Smt. Sukhdei, who had already parted with the property in favour of the defen dants-appellants. The only course open to the courts below was to pass a decree awarding compensation under Section 19 of the Specific Relief Act of 1877 as a substitute for specific performance. They awarded this compensation, not against the vendor of the defendants- appellants, who was also bound by the previous contract in favour of the plaintiffs-res pondents, but against the purchasers, that is to say, the defendants-appellants who were not parties to that contract. The lower appellate court had even awarded a decree for interest under Sec tion 55 (6) (b) of the Transfer of Pro perty Act against the defendants-appel lants. I do not see how this provision was applicable at all to the defendants-appellants in this case. The provision deals with liabilities of a defaulting seller to a purchaser. Learned counsel for the defen dants-appellants has contended that his clients purchased the property free from any charge. My attention was invited to the provisions of Section 54 of the Trans fer of Property Act which deals with the contract of ?ale in the following words:- "A contract for the sale of immov able property is a contract that a sale of such property shall take place on terms settled between the parties. It does not, of itself, create any interest in or charge on such property/' Again, Section 100 of the Transfer of Property Act was referred to. Here, it is laid down:- "Where immovable property of one person is by act of parties or operation of law made security for the payment of money to another, and the transaction does not amount to a mortgage, the latter person is said to have a charge on the property; and all the provisions herein before contained which apply to a simple mortgage shall, so far as may be, apply to such charge." Learned counsel placed the contract to sell the property before me and pointed out that there was nothing in this con tract to lead to the inference that there was any charge created on the property agreed to be sold. Reliance was also placed on Satyabrata Ghose v. M. Bangur and Co., AIR 1954 SC 44 and R. L. Toshniwal v. S. R. Alshi, AIR 1960 SC 1368 for the proposition that a contract of sale does not create any charge on immovable pro perty to be sold. In view of the clear words of Section 54, no authority is really needed to substantiate the proposi tion: The Courts below, however, seem to have dealt with the case as though the contract for sale itself created some charge on the property to be sold and that the defendants-appellants, having stepped into the shoes of the vendor, were also bound to discharge even the obligations incurred by the vendor in entering into an agreement to sell to the plaintiffs- respondents. Under the law, the obligation of the defendants-appel lants was confined to the liability to have the contract for specific performance en forced against them instead of enforc ing it against their vendor. That liability arose under Section 27 (b) of the Specific Relief Act. The vendor, however, had incurred an additional liability under Sec tion 19 of the Specific Relief Act, 1877-The question before me is whether liabi lity under Section 19 could be fastened upon the purchasers as well when the contract, which could have been enforc ed against them if the plaintiffs' conduct in acquiescing and standing by when the constructions were going up, had not disentitled them from obtaining specific performance.
(3.) Section 19 of the Specific Relief Act, 1877, reads as follows:- "Any person suing for the specific performance of a contract may also ask for compensation for its breach, either in addition to, or in substitution for, such performance. If in any such suit the court decides that specific performance ought not to be granted, but that there is a contract be tween the parties which has been broken by the defendant and that the plaintiff is entitled to compensation for that breach, it shall award him compensation accordingly. "If in any such suit the Court deci des that specific performance ought to be granted, but that it is not sufficient to satisfy the justice of the case, and that some compensation for breach of the contract should also be made to the plaintiff, it shall award him such com pensation accordingly. Compensation awarded under this section may be assessed in such manner as the court may direct. Explanation:- The circumstance that the _ contract has become incapable of specific performance does not preclude the court from exercising the jurisdic tion conferred by this section." ;