RAJABU FATHIMA BUHARI Vs. S V RAMAKRISHNA MUDALIAR

JUDGEMENT

(1.) THE above two appeals are preferred by the first and second defendants against the decree in C. S. No. 43 of 1962. The question that arises for consideration in these appeals is whether there can be a contract of honour or what is familiarly known as a gentleman's agreement which is not enforceable in a court of law based on the judgment of the Court of Appeal in Rose and Frank Co. v. J. R. Crompton and Bros. Ltd. , 1924 All ER (Reprint) 245.

(2.) THE facts of the case lie in a narrow compass. The plaintiffs are father and son and the defendants are wife and husband. The first plaintiff, the father, is the owner of 3 items of properties described in Schedules A and B to the plaint which among others were bequeathed to him by his adoptive father late S. V. Ramaswami Mudaliar subject to other dispositions under his last will and testament dated 10-9-1937 which was duly probated. The A Schedule property consists of (1) House and ground bearing door No. 46 in Rattan Bazar Road and (2) House and ground bearing door Nos. 197 and 198 Mount Road, Madras and the B Schedule property is a bungalow and ground with the leasehold right therein measuring 51 grounds and 1132 sq. ft. the ground belonging to Sri adikesavaperumal Devastanam, called 'serles gardens', Greenways Road, Adyar, madras. The absolute interest in the said lands was acquired by the first plaintiff as a result of certain proceedings taken by him. By a deed of transfer dated 4-31941, the first plaintiff's adoptive mother transferred all her interest in the said properties with the result that in or about 1941 he has been the absolute owner of the B Schedule properties and has been in possession of the same ever since 1941. Certain mortgages were created over the suit properties by the first plaintiff and the total of the principal amounts borrowed was about Rs. 1,23,000, and the mortgagees were conferred the power of private sale under Section 69 of the transfer of Property Act. Interest was largely in arrears in respect of all these mortgages in the beginning of 1959 and the mortgagees took steps under Section 69 of the Transfer of Property Act to auction the hypotheca. Rs. 1,90,000 was required to discharge all the aforesaid four mortgages and other pressing debts. It is in that context and with a view to avert the auction sales of the properties in public auction which the mortgagee brought, that the first plaintiff, on the advice of his advocate Sri V. S. Rangachari, approached the second defendant for financial help and as a result of negotiations the sales of the aforesaid properties was agreed to and it was further agreed that the plaintiffs should execute two sale deeds in the name of the first defendant of the A and B Schedule properties for rupees 1,90,000 and on 26-3-1959 in respect of the property described in the B schedule for Rs. 85,000 and the other on 31-3-1959 in respect of the properties described in the A Schedule for Rs. 1,06,000. With the sums thus advanced the mortgages standing on the aforesaid properties were fully discharged and the sales of the properties in public auction by the mortgages were averted and the purchasers were put in possession of the properties. The case of the plaintiffs is that during the negotiation and discussion at the time of the sale, an arrangement was arrived at between V. S. Rangachari and Narayana Iyer (agent of the first plaintiff) on the one hand and M. Kamal acting for the second defendant on the other, the terms of which were as follows-

(3.) THE first and second defendants filed separate written statements. The case of the first defendant is that she purchased A and B schedule properties under the sale deeds dated 31-3-1959 and 26-3-1959 for valuable consideration, that at no time either before or at the time of the purchaser of the said properties was there any agreement much less a gentleman's understanding to reconvey to the plaintiffs these properties, that the alleged 'record of Fact' purported to have been drawn up on 24-3-1959 is false, that she was not a party to the so-called record of fact dated 24-3-1959, that she never authorised her husband, the second defendant, to enter into any such agreement, that one M. Kamal referred to in the plaint had no authority to enter into any such arrangement agreeing to reconvey the properties, that there was no necessity or occasion for her to embark upon and agree to such an agreement and that in view of the phenominal rise in price of immovable properties the so-called "record of Fact", which is not binding on her appears to have been brought about that in fact there were no discussions as far as she was aware between the second defendant or his so-called agent M. Kamal regarding the alleged arrangement and that the arrangement will not bind her at all. The further contention put forward by her is that she is not a benamidar for the second defendant and that the properties were purchased with her moneys and for her benefit, that the second defendant paid the market value of the properties at the time of the sale and that the plaintiffs' case that the A schedule properties at the time of the sale and that the plaintiffs' case that the A schedule properties were worth Rs. 3,00,000 or Rs. 4,00,000 and of B schedule properties rs. 3,00,000 at the time of sale is false. Without prejudice to her contentions the further plea put forward by her was that the 'record of Fact' dated 24-3-1959 is illusory, vague, indefinite and devoid of particulars, that there was no recital therein that any firm commitment was made by her agreeing to reconvey the properties in three years, that the said 'record of Fact' was not referred to in the two later sale deeds which were executed a few days later (Exts. P-2 and P-3 relating to B and A schedule properties), that the B schedule properties which were purchased by her under Ex. P-2 were resold to the plaintiff not in pursuance of any arrangement or agreement, but because the property purchased consisted of an old dilapidated house in respect of which she was unable to secure any tenants and that several lakhs of rupees had to be spend to repair the said dilapidated building and that she did not consider the investment on the same as profitable. Lastly the first defendant contended that the said 'record of Fact' dated 24-3-1959 is vague and inadmissible in evidence, that it does not constitute a contract under the provisions of the Indian Contract Act, that the same is not enforceable under the provisions of the Specific Relief Act, and the present suit for enforcing the said 'record of Fact' is not maintainable, as the specific performance claimed is not in respect of a contract to which she was a party.