HPA International v. Bhagwandas Fateh Chand Daswani and Ors.
Civil Appeal Nos. 6006 of 2001 and 336 of 2002
(Contingent Contracts-Implied terms)
Due to likelihood of coercive recovery of public dues by attachment and sale of property by public auction, sale of property was necessitated (this fact was recited in agreement) and defendant entered into an agreement with plaintiff for sale of above-said property on certain terms: firstly, vendor was to surrender entire interest in suit property to vendee, inclusive of his own life-interest and that of reversioners free from all encumbrances, against sale consideration; secondly, vendor was to get the sanction of the Court for sale of interest of reversioners in the property at his own expenses; thirdly, in Court’s refusing to grant the sanction, vendor was to return back the earnest money paid by vendee on account of agreement standing cancelled. Though vendor filed a suit in Court for seeking the aforementioned sanction but two reversioners objected to the same and in view of prolonged proceedings (for almost two years) and pressing demands from tax authorities for payment of public dues, vendor abrogated the agreement and instructed his lawyer to withdraw the suit. Even when replying to the alleged ‘breach’ of contract by vendor, vendee did not express desire to purchase life interest of vendor alone without insisting on performance of entire obligation as in contract. However, the suit was not withdrawn but was joined by vendee as co-plaintiff. It was only after vendee requesting the said Court to grant him only life interest of vendor, leaving aside his earlier claim for interest of reversioners also, was the said suit declared as infructuous. The vendee filed the present appeal for obtaining a decree for specific performance against vendor and reversioners.
- Whether during the pendency of the suit for sanction, actions on the part of the vendor such as terminating contract by notice, instructing lawyer to withdraw the suit, amounted to breach of the contract?
- Whether the performance of obligation of vendor to transfer his lone title also arose upon the sanction of the Court and not otherwise?
1) Since there were pressing demands from public authorities requiring vendor to discharge public debts, and the sale of the property was an urgent necessity well before the impending initiation of coercive recovery by the authorities (as recited in the agreement also), hence, in view of prolonged proceedings before the said Court for sanction (due to opposition by reversioners), vendor could not have waited for an “unreasonably long time” of pendency of sanction suit. “Obtaining the Court’s sanction within a reasonable time and in any case, well before the initiation of recovery proceedings for debt, was in contemplation of parties as implied term”; since even after waiting for a reasonable time Court’s sanction was not obtained, hence repudiation was not breach.
2) “When an agreement is entered into subject to ratification by others not party to contract, a concluded contract is not arrived at and such ratification is held to be condition precedent for coming into force of a concluded contract.”
The contract stipulated the transfer of entire interest in the property of that of vendor and of reversioners, hence, was one single indivisible contract, conditional upon sanction of the Court. The reversioners were not parties to contract and parties were conscious that vendor had only life interest in property and he could not convey more than his own interest. Therefore it was in contemplation of parties that transfer of entire interest was conditional upon sanction of the Court been granted, hence, the obligation of vendor to transfer his own title was also subject to sanction of the Court unless varied by agreement. Since such variation never took place nor was asked by vendee even during initiation of Court proceedings, hence, it will be inequitable for vendor to be compelled to give specific performance.
Author: Vishrut Kansal (National University of Juridical Sciences, Kolkata)