ADIKESAVAN NAIDU Vs. MVGURUNATHA CHETTI

JUDGEMENT

(1.) The question referred to us is whether a manager of a joint Hindu family who has agreed to sell immoveable property belonging to himself and the minor members of the family is personally liable for damages for failure to perform the contract when it is found that, it is net binding on the minors. The facts briefly speaking upon which the question arises seem to be that the vendor the managing member of the family represented that circumstances existed which entitled him to sell the property and the intending purchaser, relying upon that representation, agreed to purchase the property. It is, however, found that the sale did not bind the minors shares as there was no necessity for the sale though both the contracting parties believed that there was and acted in good faith. That, as I understand it, is the result of the findings of the learned Judges who have referred the question to the Full Bench.

(2.) There is no question but that Section 73 of the Contract Act applies. Under this enactment it makes no difference as to the liability for damages caused by breach of contract whether the contract was for sale of moveable or immoveable property. It lays down that the aggrieved party is entitled to compensation for any loss or damage caused to him by the breach of contract which naturally arose in the usual course of things from such breach or which the party knew when they made the contract to be likely to result from the breach of it.

(3.) The learned Chief Justice is of opinion that the buyer in such a case as this is not entitled to damages, relying mainly on the decision in Gas Light and Coke Co v. Towse (1887) 35 Ch. D. 519. That decision was based by Mr. Justice Kay on the ruling in Bain v. Fothergill (1874) L.R. 7 H.L. 158 : 96 E.R. 635, in which it was held on the authority of Flureau v. Thornhill (1776) 2 W. Bl. 1078, " If a person enters into a contract for the sale of a real estate knowing that he has no title to it, nor any means of acquiring it, the purchaser cannot recover damages beyond the expenses he has incurred by an action for the breach of the contract; he can only obtain other damages by an action for deceit," In the same case Lord Hatherly stated "a contract for sale of a real estate is very different indeed from a contract for a sale of a chattel, where the vendor must know what his right to the chattel is." Especial reliance is placed on a passage in the judgment of Kay, J. "If he (meaning the person in whose favour a trustee leased the trust property for a certain term with a covenant for renewal for another like term) enters into it knowing exactly what the title of his vendor is, and that the carrying out of the contract eventually is subject to a possible difficulty, how can he turn round and say although I entered into that contract with you knowing of that difficulty, still I hold you liable for damages? " That observation again is founded on the doctrine that contracts for sale of immoveable property stand on a peculiar footing different from that of other contracts. That the rule in Flureau v. Thornhill (1776) 2 W. Bl. 1078, is of an anomalous nature and has been upheld mainly as it had been recognised in a series of cases in England extending over a long period of time and arising out of the peculiar difficulties of conveyancing with respect to immoveable property in that country, is made clear by the fact that English Judges themselves have refused to extend the doctrine any further. For instance it has been decided that the rule would not be applied to cases where the inability of the vendor to perform the contract was due to his not having first secured to himself the property which be assumes to sell or to his failure to make out the title due to his unwillingness to remedy the defect. See Engel v. Fitch (1868) L.R. 3 Q.B. 314 and Day v. Singleton (1899) II. Ch. 320. Justice Fry in his book on Specific Performance describes the rule established by Flureau v. Thornhill (1776) 2 W. Bl. 1078 and Bain v. Fothergill (1874) L.R. 7 H.L. 158 as an exceptional and anomalous rule.