Specific performance of sale agreement upheld; later transferees with notice must join conveyance, with equity guiding deposit distribution.

A concluded agreement for sale was found to exist where the receipt described the payment as earnest money under a completed bargain and fixed a time for execution of the sale deed, making the contract specifically enforceable. Allegations of fraud, misrepresentation, non-fulfilment of conditions, and absence of competent assent did not displace that conclusion. Where the property had been transferred to purchasers with notice, the proper decree was to enforce the original contract and require the later transferees to join in the conveyance so title could pass without altering the bargain or special covenants. Equity also governed distribution of the deposited purchase money, with a directed payment to the transferees and the balance to the Custodian.

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Issues: (i) Whether the agreement for sale dated 7 February 1942 was a concluded contract enforceable by specific performance. (ii) What should be the proper form of decree where the property had been subsequently transferred to purchasers with notice, and how the balance of the purchase money should be distributed.

Issue (i): Whether the agreement for sale dated 7 February 1942 was a concluded contract enforceable by specific performance.

Analysis: The receipt for Rs. 10,000 described the amount as earnest money out of Rs. 62,000 for the contract of sale and stated that the sale deed would be executed within three months, which supported the existence of a completed bargain. The pleas of fraud, misrepresentation, and non-fulfilment of conditions were treated as inconsistent with a clear denial of a concluded contract. The later dispute about the form of warranty in the sale deed did not affect the prior contract, nor did the argument based on the alleged absence of meeting of competent parties, since the broker's authority was relied upon and the bargain was already binding.

Conclusion: The agreement was a concluded contract and was specifically enforceable in favour of the respondent.

Issue (ii): What should be the proper form of decree where the property had been subsequently transferred to purchasers with notice, and how the balance of the purchase money should be distributed.

Analysis: The statutory provisions concerning obligations arising in favour of a prior contract-holder, enforcement against transferees with notice, and specific performance against subsequent transferees did not themselves determine the exact form of decree. The Court held that the better course was to direct the vendor to perform the original contract and require the subsequent transferees to join in the conveyance so that title could pass without remaking the bargain or disturbing special covenants between the later transferees and the vendor. On the facts, equity also justified payment of Rs. 58,000 out of the deposited purchase money to the subsequent transferees and the balance to the Custodian.

Conclusion: The decree was to be modified accordingly, with the subsequent transferees joining in the conveyance and receiving Rs. 58,000 from the deposit.

Final Conclusion: The appeal failed on the main challenge to specific performance but succeeded to the limited extent of modifying the decree on the manner of conveyance and distribution of the deposited amount.

Ratio Decidendi: In a suit for specific performance against a vendor and subsequent transferees with notice, the proper decree is to enforce the original contract and require the subsequent transferee to join in the conveyance so that title passes to the purchaser, and equity may govern the distribution of the purchase money where the circumstances justify such relief.

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