- (1.) THIS is a plaintiffs' second appeal in a suit for specific performance of a contract of sale of a house. The original plaintiff Mohd. Ibrahim having died shortly after filing the suit, he is represented by his heirs and legal representatives. Respondents Nos. 1 and 2 are the subsequent transferees of the house which was the subject-matter of the contract of sale. The vendor, Mohd. Zia Khan, was defendant No. 3. He died during the pendency of appeal in the lower appellate court and is now represented by defendant- respondents Nos. 2 (sic) to 6.
(2.) THE plaintiffs' case was that on 17th Feb., 1964, Mohd. Zia Khan agreed to sell the house in suit to him for Rs. 12,000/-. Out of it, Rs. 6,400/- were paid that day as advance and the balance Rs. 5600/- were payable before the Sub-Registrar at the time of the registration of the sale-deed; that the sale-deed was to be executed within a period of 5 months; that the plaintiff was in possession of the house since long before the said agreement as a tenant of Mohd. Zia Khan and continued to remain in possession; that on account of circumstances beyond his control, the plaintiff could not get the sale-deed executed within 5 months as originally agreed, and on his request, Mohd. Zia Khan agreed on 9th August, 1965, on payment of Rs. 600/-, to extend the time for completion of the sale up to the end of November, 1965, that the plaintiff requested Mohd. Zia Khan to execute the sale-deed during the last week of October, 1965 but Mohd. Zia Khan did not do so, and on enquiry the Plaintiff found that Mohd Zia Khan had sold the property on 15th October, 1965 to defendant-respondents Nos. 1 and 2 for a real consideration of Rs. 6000/- only although the consideration shown in the sale-deed was Rs. 7000/-; that defendants Nos. 1 and 2 knew that Mohd. Zia Khan had agreed to sell the house to the plaintiff and had extended the date for completing the sale and that the house was in the plaintiff's possession as a tenant, but prevailed upon Mohd. Zia Khan to execute the sale-deed in their favour with full knowledge of the contract in the plaintiff's favour; that the plaintiff asked the defendants to execute the sale-deed in his favour but they refused, hence the suit. THE relief originally claimed in the suit was for specific performance of the agreement dated 17th February, 1964 coupled with the agreement dated 9th August, 1965, on payment of Rs. 5,600/- with the prayer in the alternative that the specific performance of the contract may be decreed in favour of the plaintiff even on payment of Rs. 6000/- the amount actually paid or Rs. 7000/- shown to have been paid by defendants Nos. 1 and 2 to Mohd. Zia Khan, as the court may deem fit. By an amendment of the plaint, a further plea in the alternative was added to the effect that if the court be not inclined to decree specific performance of the contract or if the plaintiff is not found entitled to the same, although he was always ready and willing to purchase the house in suit, a decree for the refund of Rs. 6,400/- paid to Mohd. Zia Khan towards part payment of the price and for recovery of Rs. 5,600/- as compensation for the breach of contract may be passed, and further prayer claiming relief to that effect was also added. THE third defendant Mohd. Zia Khan, denied the plaintiff's claim but specifically stated that there was an agreement between him and the plaintiff but the plaintiff did not get the sale-deed executed within time; that the third defendant's son was ill and he was in urgent need of money and had repeatedly asked the plaintiff to have the sale-deed executed and pay the money, but the plaintiff did not care and the third defendant was compelled to execute the sale-deed in favour of third persons and even his son died in the meanwhile; that the third defendant was not at fault and did not want to do anything which may harm the plaintiff and further that Qudrat Ullah had purchased the house in suit in the name of his son-in-law's son and the latter's wife and had promised that he would meet the litigation with which the third defendant will have, no concern and on being assured as aforesaid by Qudrat Ullah, he, the third defendant, who was in urgent used of money for the treatment of his son, executed the sale-deed. THE third defendant did not, however appear at the trial and the suit was contested by the subsequent transferees, defendants Nos. 1 and 2. Further, in their written statement, they denied the plaint allegations in toto, and pleaded that the agreements dated 17th February, 1964 and 9th August, 1965 were fictitious and fraudulent, antedated and collusive; that even according to the plaintiff's own allegations, since he was not ready and willing to perform his part of the contract within the time limited by the original agreement, he was not entitled to specific performance of the same; that the subsequent agreement dated 9th August, 1965 could not revive the agreement dated 17th February, 1964 which had already extinguished; that the plaintiff's allegation that he was prepared or willing to perform his part of the contract was false; and in the end it was pleaded, in the alternative, by them that they bona fide purchased the house for valuable consideration of Rs. 7000/- without notice of any prior agreement between the plaintiff and defendant No. 3. The trial court found that Mohd. Zia Khan, defendant No. 3, entered into the agreement of sale of the house in suit in favour of the plaintiff as alleged in the plaint and the agreement subsisted on the date of the sale of the house in suit in favour of defendants Nos. 1 and 2. It further found that although defendants Nos. 1 and 2 did not have any express notice of the two agreements dated 17th February, 1964 and 9th August, 1965 in the plaintiff's favour, they must be deemed to have notice of the same. On the point whether the consideration for the sale in favour of defendants Nos. 1 and 2 was Rs. 7000/- as shown in the sale-deed or Rs. 6000/- as alleged by the plaintiff, the trial court held that it was Rs. 7000/-. In the result the trial court decreed the suit for specific performance of the contract for sale of the house in suit in the plaintiff's favour on payment of Rs. 5,600/- allowing the plaintiff one month's time to deposit the amount of Rs. 5,600/- in court. Defendants Nos. 1 and 2 preferred a first appeal in this court, being First Appeal No. 311 of 1968. The execution of the sale-deed of the house in suit, in execution of the decree appealed from was stayed by this court and when the stay order came up for confirmation on 6th January, 1969, this court permitted the plaintiff to withdraw the amount of Rs. 5,600/- which he had deposited in the executing court. The first appeal was transferred to the district court and having been allowed by the court of the Additional District Judge, Bareilly, who heard it, by judgement dated 22nd Dec., 1971, the matter has come up again in this court on second appeal, this time by the original plaintiff's heirs. The lower appellate court confirmed the finding of the trial court that the two agreements dated 17th February, 1964 and 9th August, 1965 were genuine and the plaintiff's right to get the sale, deed executed in his favour was subsisting on 15th October, 1965 when defendants Nos. 1 and 2 got the sale- deed executed in their favour, but on the question whether defendants Nos. 1 and 2 were transferee in good faith for value without notice of the contract in favour of the plaintiff, it held that although defendants Nos. 1 and 2 had knowledge of the agreement dated 17th February, 1964 for the sale of the house in favour of' the plaintiff for Rs. 2,000/- out of which Rs. 6,400/- had already been paid in advance, they had no knowledge of the subsequent agreement dated 9th August, 1965 extending the time for execution of the sale-deed in favour of the plaintiff up to November, 1965. Having arrived at this finding, the lower appellate court held that it could not be said that defendants Nos. 1 and 2 had notice of the 'original contract', which in the present case meant the entire contract with the plaintiff comprised in both the agreements dated 17th February, 1964 and 9th August, 1965 and that, therefore, defendants Nos. 1 and 2 were transferees for value who had paid their money in good faith and without notice of the original contract within the meaning of Section 19(b) of the Specific Relief Act, 1963, with the result that specific performance of the contract in the plaintiff's favour could not be enforced against them. This led to the dismissal of the plaintiff's suit by the lower appellate court.
(3.) IT was contended before me by the learned counsel for the plaintiff-appellants that the last finding of the lower appellate court was erroneous in law. IT was urged that the lower appellate court had disbelieved Kamar Akhtar, defendant No. 2 (D.W. 1), his father Ali Ahmad (D.W. 3) and the latter's father-in-law Qudrat Ullah (D.W. 4) and had believed the plaintiff's case that the bargain for the sale of the house was settled between him and Mohd. Zia Khan at the Arhat shop of Qudrat Ullah in the presence of the said three persons and had held that defendants Nos. 1 and 2 knew about the agreement dated 17th February, 1964 for sale of the house in the plaintiff's favour for Rs. 12000/-, out of which Rs. 6,400/- had been paid in advance by the plaintiff, and that being so, the lower appellate court could not have come to the finding that defendants Nos. 1 and 2 had no notice of the contract of sale which, was found by the lower court to have been subsisting on 15th October, 1964, simply because the time for completion of the sale had been extended by Mohd. Zia Khan by a fresh agreement in writing dated 9th August, 1965. This contention raised by the learned counsel for the appellants has considerable force. It is well settled that time is not of the essence of a contract for sale of immoveable property. See Jamshed Khodaram Irani v. Burjorji Dhunjibhai (AIR 1915 PC 83). Learned counsel for the respondents referred me to the terms of the agreement dated 17th February, 1964 and contended, particularly on the basis of the clause which said that if the purchaser did not get the sale-deed executed and registered within the time limited for doing so the amount of earnest money will be forfeited and the conditions of the agreement will become wholly null and void and the purchaser will not have any right for refund of the earnest money or for purchase of the property thereafter, that time was of the essence of the contract. This contention of the learned counsel for the respondents is, however, devoid of merit. The fact that the amount paid at the time of the execution of the agreement was more than half the consideration for sale, being Rs. 6,400/- out of Rs. 12,000/- and the forfeiture of the amount in accordance with the said term would have been penal and, therefore, not enforceable according to its letter, and, the further fact that Mohd. Zia Khan served a notice dated 7th July, 1965 (Ext. 5) on the plaintiff requiring him to get the sale-deed executed within 30 days thereafter, go to show, in the light of the law declared by the Privy Council in Jamshed Khodaram Irani's case (supra), that time was not of the essence of the contract. Mohd. Zia Khan sought to make time of the essence by serving the notice dated 7th July, 1965, and thereafter agreed, on payment of Rs. 600/- as compensation for the delay, to extend the time for execution of the sale-deed upto November, 1965. On these facts it cannot he said that the agreement extending the time for execution of the sale-deed up to November, 1965 was a fresh agreement of sale. It only extended the time for execution of the sale-deed under the original contract dated 17th February, 1964. The lower appellate court having found that defendants Nos. 1 and 2 had knowledge of the original contract dated 17th February, 1964, it was in error in holding that they had no notice of the contract of sale in as much as they had no knowledge of agreement dated 9th August, 1965. Even the finding of the lower appellate court on the point of knowledge or notice of the agreement dated 9th August, 1965 is vitiated in law. The lower appellate court has on this point simply believed Kamar Akhtar (D.W. 1). Mohd. Kabir (D.W. 2) and Ali Ahmad (D.W. 3) when they stated that they had gone along with Mohd. Zia Khan to inspect the house before purchasing it and had met Mohd. Ibrahim there and when the fact of Kamar Akhtar's proposal to purchase the house was made known to the plaintiff, he even expressed his approval of the transaction and offered to vacate the house the moment he was able to secure alternative accommodation. This alleged visit was after the agreement dated 9th August, 1965. The said allegation about the conduct of the plaintiff was unbelievable in face of the fact that Mohd. Zia Khan had only 2 months ago agreed to extend the time for selling the property in his favour and the time so extended had not till then expired. But the lower appellate court believed it simply because, according to it, it was most reasonable that the intending purchaser would like to see the house from inside before he decides to purchase it at a particular sum. The lower appellate Court, however, ignored the fact that it was the duty of defendants Nos. 1 and 2 to have enquired into the character of the plaintiff's possession of the house, more so in view of their knowledge of the agreement of sale in his favour, and the general law that time is not of the essence of a contract of sale of moveable property. Which the defendants Nos. 1 and 2 obviously failed to do on the plea that the plaintiff's possession of the house in suit was admittedly that of a tenant and not in part performance of the agreement to sell. A tell-tale circumstance was the fact that while Mohd. Zia Khan had agreed to sell the house to the plaintiff for Rs. 12000/- and had already received Rs. 6,400/- at the time of the execution of the agreement dated 17th February, 1964, the consideration for which the house was sold to defendants Nos. 1 and 2 was shown to be Rs. 7000/- only. What impelled Mohd. Zia Khan to sell the property for Rs. 7000/- only has been candidly explained by him in his written statement when he said that he was in urgent need of money for the treatment of his son and defendants Nos. 1 and 2 assured him that they would take care of the litigation with the plaintiff. It is impossible in the circumstance to come to any conclusion except that defendant's Nos. 1 and 2 were fully aware of the subsisting agreement of sale in the plaintiff's favour and purchased the property knowing full well that even if they had ultimately to lose the property they would yet get at least Rs. 5,600/- out of the sum of Rs. 7000/- paid by them as consideration to Mohd. Zia Khan in view of the fact that that Mohd. Zia Khan had agreed to sell the house in suit to the plaintiff for Rs. 12,000/-. Defendants Nos. 1 and 2 when they took the transfer for Rs. 7,000/- could by no stretch of imagination be said to be persons who had paid their money in good faith. The finding arrived at by the lower appellate court on this point may very well be termed to be perverse and it must be held that defendants Nos. 1 and 2 could not be said to be transferees for value who had paid their money in good faith and without notice of the original contract of sale of the house in favour of the plaintiff.;