1958 (11) TMI 29 - HC - Indian Laws

Enforceable contract upheld by High Court, relief granted to plaintiffs.

Panem Venkanarayana Sastry Versus Rajupalli Chinna Yella Reddy

The High Court upheld the Subordinate Judge's decision, concluding that the plaintiffs had a true and binding agreement with the 1st defendant, ... - Issues Involved1. Whether the agreement pleaded by the plaintiffs is true.2. Whether the agreement, even if true, constitutes a concluded contract enforceable by a decree for specific performance.3. Whether defendants 2 and 3 are bona fide purchasers for value without notice of the plaintiffs' rights.Issue-Wise Detailed Analysis1. Whether the Agreement Pleaded by the Plaintiffs is TrueThe plaintiffs claimed a binding and concluded contract with the 1st defendant for the sale of the suit properties, which was allegedly breached when the 1st defendant sold the properties to defendants 2 and 3. The defendants argued that there were only negotiations and no concluded agreement. The District Munsif dismissed the plaintiffs' suits, but the Subordinate Judge reversed this decision, finding that the agreement was true and that defendants 2 and 3 were not bona fide purchasers for value without notice.The High Court examined the oral agreement and the evidence presented by the plaintiffs, particularly the testimony of P.W. 3, a respectable 1st grade pleader. The court found no reason to disbelieve the evidence of P.W. 3 and P.W. 2, the natural father of the 1st defendant, who corroborated the plaintiffs' claims. The court concluded that the agreement pleaded by the plaintiffs was true.2. Whether the Agreement Constitutes a Concluded Contract Enforceable by a Decree for Specific PerformanceThe plaintiffs' agreement was subject to the approval of the 1st defendant's title by the plaintiffs' family lawyer. The defendants argued that this reservation meant there was no unqualified acceptance of the offer, rendering the contract unenforceable. The court reviewed English and Indian case law on the effect of such a provision, noting a conflict of views.The court referred to the case of Hussey v. Home Payne, where the House of Lords expressed doubts about whether a clause like 'subject to the title being approved by our solicitor' constituted a term of the contract. The court concluded that such a term is not mere surplusage but a condition precedent to the enforceability of the contract. In this case, the evidence showed that the 1st defendant assented to the term, and the plaintiffs' lawyer approved the title, fulfilling the condition and making the contract enforceable.3. Whether Defendants 2 and 3 are Bona Fide Purchasers for Value Without NoticeDefendants 2 and 3 did not testify, leaving the plaintiffs' evidence of lodging a protest with the sub-registrar uncontradicted. The Subordinate Judge found that defendants 2 and 3 were not bona fide purchasers for value without notice of the plaintiffs' claims. The court also noted that defendants 2 and 3 had not paid the entire consideration in cash, which is a requirement under Section 27(b) of the Specific Relief Act for protection as bona fide purchasers.The court dismissed the defendants' appeals, affirming the Subordinate Judge's findings that defendants 2 and 3 were not bona fide purchasers for value without notice and that the plaintiffs were entitled to specific performance of the contract.ConclusionThe High Court upheld the Subordinate Judge's decision, concluding that the plaintiffs had a true and binding agreement with the 1st defendant, which constituted a concluded contract enforceable by a decree for specific performance. Defendants 2 and 3 were not bona fide purchasers for value without notice, and the plaintiffs were entitled to the relief sought. The appeals were dismissed with costs.