LALLUBHAI RUPCHAND Vs. MOHANLAL SAKARCHAND

JUDGEMENT

(1.) The first of these appeals is against the decree of the First Class Subordinate Judge at Surat decreeing the respondent's suit for specific performance of a contract for sale of a house in Gopipoora Surat. The second appeal is a companion appeal from the decree of the same Subordinate Judge dismissing the appellant's suit for return of the earnest money paid by him in respect of the contract. The agreement of sale took place on February 26, 1927, and is exhibit 28. It contains an averment that the house is of the ownership and possession of the plaintiff. It states that Rs. 500 had been paid by the purchaser as deposit or earnest money and provides that the balance was to be paid on delivery of possession of the house and execution of a conveyance. On April 5, 1927, the plaintiff sent the defendant a notice calling upon him to complete the sale. On April 19, 1927, defendant replied demanding inspection of the title-deeds. Inspection was given in the office of defendant's pleader. The defendant then wrote a letter, exhibit 10, taking various objections. He pointed out that, at the instance of the Municipality, Government had decided to acquire the suit property along with others in the same locality under the Land Acquisition Act and that a notification to that effect had been published in the Bombay Government Gazette in August, 1912. Next, it was stated that plaintiff had purchased the house from one Bai Hirakor in 1925 under a deed, exhibit 25, that under the will of her husband this Bai Hirakor had only a widow's estate and that the will was unsigned and unattested. Thirdly, it was pointed out that there had been litigation between the plaintiff and his neighbour Champaklal in 1925 and a consent decree had been passed imposing restrictive conditions as to the user of the plaintiff's property, that is to say, the decree bound the plaintiff not to build on part of the open land at the back of the house and not to close certain windows in Champaklal's house. As to one of these windows the decree provided that it was not to be closed at all; as to the other it was to remain open until such time as the plaintiff desired to build up to that height. In view of these defects, or alleged defects, in the title the defendant refused to complete and demanded return of his deposit. To this letter plaintiff replied by exhibit 36 on June 2, 1927, but he did no more than state that the defendant was aware of all the facts. The defendant then rejoined by exhibit 37 denying his knowledge of the facts, and on June 11, 1927, plaintiff filed his suit for specific performance.

(2.) On the issues framed by the trial Judge in the main suit the one to which argument has been mainly directed in this appeal is issue No. 3, which is in this form: Whether it is proved that the plaintiff's title to the property agreed to be conveyed was defective so as to entitle the defendant to refuse to complete the contract and accept the conveyance? The relevant provisions of the law are Secs.55 of the Transfer of Property Act and 25 of the Specific Relief Act. Section 55 provides: In the absence of a contract to the contrary..., (1) The seller is bound- (a) to disclose to the buyer any material defect in the property or in the seller's title thereto the latter words were added by Act XX of 1929, but the law was the same before the amendment: see Haji Essa Sulleman V/s. Dayabhai Parmanandas (1895) I.L.R. 20 Bom. 522 of which the seller is, and the buyer is not, aware, and which the buyer could not with ordinary care discover; (b) to produce to the buyer on his request for examination all documents of title relating to the property which are in the seller's possession or power; (c) to answer to the best of his information all relevant questions put to him by the buyer in respect to the property or the title thereto.... Clause 2 of the section provides: The seller shall be deemed to contract with the buyer that the interest which the seller professes to transfer to the buyer subsists and that he has power to transfer the same: The concluding words of the section are : An omission to make such disclosures as are mentioned in this section, paragraph (1) Clause (a),...is fraudulent. Section 25 of the Specific Relief Act provides: A contract for the sale or letting of property, whether moveable or immoveable, cannot be specifically enforced in favour of a vendor or lessor: (a) who, knowing himself not to have any title to the property, has contracted to sell or let the same; (b) who, though he entered into the contract believing that he had a good title to the property, cannot, at the time fixed by the parties or by the Court for the completion of the sale or letting, give the purchaser or lessee a title free from reasonable doubt;.... The effect of these provisions is that a buyer is not bound to complete the sale if there are defects in the property or in the title to the property which are material and also latent, that is to say, not discoverable by the exercise of ordinary care, or if the title is not free from reasonable doubt. Paragraph 2 of Section 55 need not be discussed and has not been discussed in the argument. The correct view appears to be that the covenant for title in that paragraph contemplates a completed contract and corresponds to the covenant for title in English conveyances. Prior to completion the buyer's right is to a title free from reasonable doubt: see Mulla's Transfer of Property Act, p. 270.

(3.) The test of materiality was laid down by Tindall C.J. in Flight V/s. Booth (1834) Bing. (N.C.) 370; it was held there that a defect to be material must be of such a nature that it might be reasonably supposed that if the buyer had been aware of it he might not have entered into the contract at all, for he would be getting something different from what he contracted to buy.