JHANDOO Vs. RAMESH CHANDRA

JUDGEMENT

(1.) THIS is a defendants' second appeal arising out of a suit for specific performance of a contract dated 29- 6-1956 to sell some plots of land and a house for a sum of Rs. 5000/- to the plaintiffs by their owner Deo Karan, the father of defendant-respondent No. 3, Smt. Sukhdei. An amount of Rs. 4000/-was paid at the time of the execution of the agreement for sale. Subsequently, this very property was sold to the defen dants-appellants on 2-7-1956. In the suit for specific performance, filed on 26th of May, 1959, the plaintiffs impleaded the vendor, Deo Karan, with whom they had entered into the contract of sale and to whom they had paid Rs. 4000/- and also the subsequent transferees, the defen dants-appellants, Jhandoo and Chhittar, who claimed to be bona fide purchasers for value without notice of the prior agreement for sale. Both the courts below have held that the defendants-appellants had notice of the agreement to sell between the plaintiffs-respondents and Deo Karan, now represented by his heir Smt. Sukhdei, defendant-respondent No. 3. It is true that the finding that the appellants had notice of the prior agreement to sell in favour of the plain tiffs-respondents is based largely on cir cumstantial evidence, and. in particular, on the fact that a reply was sent by Deo Karan to a notice given by the defendants-appellants to him, in which it is alleged that they had challenged the right of Deo Karan to make a transfer. Since neither the actual notice sent by the defendants-appellants to Deo Karan nor its copy has been placed on record, it is difficult to say what was actually communicated to Deo Karan whose reply is on record. The reply also does not definitely fix the knowledge of the con tract to sell upon the defendants-appel lants. Nevertheless, inasmuch as there is sufficient circumstantial evidence to warrant the inference that the defen dants-appellants knew of the previous contract to sell in favour of the plain tiffs-respondents, it is not open for me to disturb that finding of fact in second appeal.

(2.) BOTH the courts below had, however, refused to grant specific per formance of the contract against the defendants-appellants who had, after pur chasing the property, obtained possession of the land, demolished the dilapidated structure on it, and built a new one in its place. The lower appellate court dealt with this aspect of the matter and found that the plaintiffs-respondents had stood by without objecting or giving any notice to the defendants-appellants, for nearly three years, until the defendants- appellants had invested a substantial amount in their constructions on the land purchased. In other words, the lower appellate court had invoked the Prin ciple of an equitable estoppels against the plaintiffs-respondents in refusing to order specific performance of the contract to convey the property to the plaintiffs- respondents after a lapse of nearly three years. Indeed, the contract could not be specifically performed inasmuch as the character of the property itself had changed substantially since its purchase. Therefore, although the plaintiffs-respon dents would have been entitled to the specific performance of the contract against the defendants-appellants under Section 27, sub-section (b) of the Specific Relief Act if the plaintiffs were vigilant because the defendants-appellants were held to have notice of the prior agree ment to sell, yet, the contract could not be specifically enforced against the defen dants-appellants after equities had appear ed in their favour. The conduct of the plaintiffs- respondents had. it was rightly held, disentitled them from obtaining relief under S. 27 (b) of the Specific Relief Act against the defendants-appellants. And, of course, no specific relief could have been granted against Deo Karan or his heir, defendant-respondent No. 3, Smt. Sukhdei, who had already parted with the property in favour of the defen dants-appellants. The only course open to the courts below was to pass a decree awarding compensation under Section 19 of the Specific Relief Act of 1877 as a substitute for specific performance. They awarded this compensation, not against the vendor of the defendants- appellants, who was also bound by the previous contract in favour of the plaintiffs-res pondents, but against the purchasers, that is to say, the defendants-appellants who were not parties to that contract. The lower appellate court had even awarded a decree for interest under Sec tion 55 (6) (b) of the Transfer of Pro perty Act against the defendants-appel lants. I do not see how this provision was applicable at all to the defendants-appellants in this case. The provision deals with liabilities of a defaulting seller to a purchaser.

(3.) Section 19 of the Specific Relief Act, 1877, reads as follows:-