Madan Choudhry and Others vs Kamaldhari Thakur and Others

Ross, J.—In order to understand the position of the parties to this suit in which the Subordinate Judge of Darbhanga has passed a decree against which the defendants third party have appealed, it will be well to state chronologically the course of events in regard to the three properties, Kanigaon, Mohanpur and Rasulpur Nista which are the subject matter of the alleged agreement for sale of which specific performance is sought. These properties belonged to one Shaikh Abbas Ali who died on 2nd May 1923. On his death they devolved upon Shaikh Akabir Ali who died on 12th June 1924 and after him upon Shaikh Aziz Ahmad who is defendant 1. The properties were heavily encumbered in the time of Abbas Ali.

On 11th January 1916 he executed a simple mortgage for Rs. 1,500 in favour of Bhatu Jha, the principal defendant second party. On 6th April 1918 he executed a further mortgage to Bhatu Jha for Rs. 15,766-8-0. On that day and on the following day he executed two usufructuary mortgages in favour of the same mortgagee, one for Rs. 7,450 and the other for Rs. 1,988-4-0. These were executed in order to pay off earlier usufructuary mortgages in favour of one Prabhunandan Singh; and on 23rd June 1918 he executed a third usufructuary mortgage for Rs. 600. Consequently the estate was encumbered to the extent of over Rs. 27,000 in favour of defendant second party.

The next stage in the transactions affecting the property was that on 28th April 1919 Abbas Ali executed four simple mortgages in favour of Raghubir Prasad Singh, Sital Prasad Singh, Dasain Mahton and Rambihari Jha for various sums of which a certain portion was paid in cash and the balance was left with the mortgagees in order to pay off Bhatu Jha ; and on the same day an usufructuary mortgage for Rs. 10,000 which was not paid was executed also in favour of the same persons and for the same purpose. There was a clause in the mortgages which ran as follows:

The aforesaid persons have agreed to advance the loan on condition that in the event of any desire on my part, to sell any mauza constituting milkiat interest, forming either the whole or a portion of the mortgaged properties, I shall not sell the same to any person other than the aforesaid persons, and that as security for the above I should separately execute and get registered a deed of agreement in favour of the aforesaid persons. Having agreed to this proposal I separately execute a deed of agreement of today in favour of the aforesaid persons (Ex. A-1.)

The agreement was in fact executed on 9th May 1919 and it was to the following effect:

I shall not sell to any other person the milkiat interest being either the whole or a portion of the mortgaged properties covered by the mortgage and'' sudbharna deeds, which I have executed today in favour of the said mahajans, nor shall I borrow money from any other mahajans and pay off their dues : (Ex. D-2).

The next stage was that in 1920 by three deeds executed, one on 9th July 1920 by Rambihari Jha, and the other two on 14th December 1920 by the other three mortgagees, Raghubir Singh, Sital Prasad Singh and Dasain Mahton, their interests in these mortgages and in the agreement were transferred to Bharosi Jha the principal defendant among the defendants third party and the appellant in this appeal. (Exs. C, Ex. C-1 and C-2). On 11th February 1924 an agreement to sell the property for Rs. 76,000 purports to have been executed by Akabir Ali in favour of Bharosi Jha (Ex. D) and after his death another agreement to the same effect was executed by his successor-in-interest, the present defendant 1, on 10th August 1924 (Ex. D-1). On 24th October 1924 a deed of sale in respect of a part of the mortgaged property is said to have been executed by defendant 1 in favour of Madan Chowdhry, who is admittedly a farzidar for Bharosi Jha, in consideration of Rs. 10,000 of which Rs. 1,430 was paid in cash (Ex. B). This deed was presented for registration on 28th November 1924 and was actually registered on 22nd December of that year.

On 7th December 1924 the balance of the property was sold by another conveyance in favour of Bharosi Jha in consideration of Rs. 66,000 of which Rs. 458 was paid in cash (Ex. B-1). This deed was also registered on 22nd December 1924. Prior to these deeds, however, the plaintiff alleges that a concluded agreement for sale had been entered into between Aziz Ahmad and himself some time in September 1924 and that Rs. 100 was paid on 27th September 1924 in pursuance of that agreement and towards the end of October another sum of Rs. 800, and on 25th October a stamp of Rs. 500 was purchased for the conveyance itself. The parties went to Muzaffarpur on 25th October to one of the pleading pleaders there, Maulavi Muhammad Akhtar, who settled, the draft deed of sale on 26th October and on 27th October the deed is said to have been faircopied and executed with some slight modification of the terms. The agreement was that the property was to be sold for Rs. 48,000, but that there was to be a further payment, called nazarana, of Rs. 8,000 which was not to appear on the face of the conveyance. Subsequently this nazarana was increased by by Rs. 2,000 with the consent of the plaintiff and the consideration was raised to Rs. 49,500 in order to pay off a debt due to one Nath Mall who had obtained an attachment of the property before judgment in a suit brought for his debt. The case for the plaintiff is that the full nazarana of Rs. 8,000 had been paid, the balance of Rs. 7,100 being paid at the time of the execution of the conveyance and that Rs. 500 out of the consideration had also been paid in cash at the time of executing the conveyance, while the balance of the consideration was provided for by the terms of the deed itself. All that remained outstanding therefore was a sum of Rs. 2,000 which he alleges he was always ready or willing to pay.

The learned Subordinate Judge held that the agreement for sale set up by the plaintiff had been proved; but he also held that the sum of Rs. 7,100 and apparently also the sum of Rs. 500 had not been paid, and in decreeing specific performance of the agreement he required that the plaintiff should pay these sums before the conveyance was executed. This is the decision which is attacked in appeal by the defendants third party.

I shall deal first with the position of the defendants third party, because if there was a valid agreement for sale in favour of Bharosi Jha anterior to the plaintiff''s agreement, that would be a complete answer to the suit.

I have quoted the relevant clause of the mortgage deed (Ex. A-1) of 29th April 1919. The agreement of 9th May 1919 reproduces and extends this clause. But that will not give this agreement any independent force. The rule is that.

the mortgagee cannot, at the moment when lie is lending his money and taking his security, enter into an agreement the effect of which would be that the mortgagor should have no equity of redemption. But there is nothing to prevent that being done by an agreement which in substance and in fact is subsequent to and independent of the original bargain per Vaughen Williams, L.J. Lisle v. Reeve [1902] 1 Ch. 53 .

This case went to the House of Lords where the decision of the Court of appeal was upheld on the facts, the statement of the law not being dissented from. If the clause in the mortgage is bad, this agreement which is not in substance and in fact subsequent to and independent of it, does not make it any better. Now this clause is not strictly an option to purchase. It is an agreement not to sell to anyone but the mortgagee, so that it is even stronger than an option to purchase. In Samuel v. Jarrah Timber and Wood Paving Corporation Ltd.,[1904] A.C. 323, the House of Lords decided that.

the doctrine "once a mortgage always a mortgage" means that no contract between a, mortgagor and a mortgagee made at the time of the mortgage and as part of the mortgage transaction, or, in other words, as one o� the terms of the loan, can be valid if it prevents the mortgagor from getting back his property on paying off what is due on his security. Any bargain which has that effect is invalid, and is inconsistent with the transaction being a mortgage.

Now there can be no doubt that this clause materially interferes with the mortgagor''s ability to redeem. No price is fixed for the property and the mortgagee is given an absolute right to object to any sale to any other person. This, in my opinion, is not a clause which, standing in a mortgage, can have any legal effect.

The case then comes back to the later agreements said to have been entered into by Akabir Ali and Aziz Ahmad. The agreement executed by Akabir Ali is an unregistered agreement on a stamped paper; and the question is whether it was executed on the date that it bears. It is not disputed that the signature of Akabir on this paper is genuine. But the evidence of Babu Jugeswar Prasad, pleader, proves that there was in existence a blank stamped paper bearing Akabir''s signature which was for some time in his custody and was made over by him to Aziz some, months after Akabir''s death. Another pleader Muhammad Ayub says that some time in 1925 i.e., after Akabir''s death a deed of agreement was brought to him on which ho was asked to put his signature. He looked at the paper and found that it purported to have been executed by Akabir Husain. He told the person who approached him to bring the executant, but the executant was not brought and there the matter ended. Similar evidence is given by another pleader Halim Raza who says that in June 1925 a document purporting to have been executed by Akabir on a stamped paper was brought to him and ho was asked to sign, but he refused to do so as the date had already expired. It is true that he makes a mistake about the date in this agreement, confusing it with the date of the agreement by Aziz, bat there is no ground to doubt the evidence of these two pleaders; and taken with the evidence of Babu Jugeswar Prasad it leaves no room for doubting that this document was a subsequent fabrication.

The case is even clearer with regard; to the last agreement, said to have been executed by Aziz. This document which is on an unstamped paper is witnessed by a dismissed orderly of the Munsiff''s Court and by another witness whose evidence the learned Subordinate Judge for good reason did not believe. But the document was also signed by two pleaders Maulavi Muhammad Jalil and Mulavi Azizul Rahman and their signatures were dated. The fatal defect in the evidence on this document is that these pleaders were not examined. It is true that another pleader Rameswar Prasad was examined to prove their signatures. But the point is not whether their signatures are genuine but whether the dates under the signatures are genuine; and on this point this witness was unable to make any statement. He admitted that he could not be certain that the dates under the signatures of the pleaders were really put in by them. Another significant fact is that in the deed of sale of 24th October there is no reference to these alleged agreements which however, are recited in the later deed of 7th December. All this clearly indicates that these are-subsequent fabrications which probably came into existence between these two dates. Consequently the defendants have in my opinion failed to establish any prior equity.

Before dealing with the plaintiff''s case I may refer to the defendant''s legal title, the deeds of 24th October and 7th December 1924.

The learned Subordinate Judge does not believe that the former deed was executed on 24th October, because there was delay in registering it. This does not seem to me a sufficient reason for doubting the genuineness of this deed. The vendor was evidently in treaty with both of the proposed vendees, plaintiff and defendants third party and this would; afford a sufficient ground for the delay in the registration. The deed shows that the stamp was purchased on 24th October and the presumption is that the. deed was executed on the date it bears and there is evidence of execution. No doubt has been thrown upon the execution of the second deed on 7th December. These deeds confer a legal title on defendants third party which would be-displaced by an earlier agreement to sell to the plaintiff only if the defendants had knowledge of that agreement. The learned Subordinate Judge has not come to any finding on this point, apparently because he held that the deed in favour of the plaintiff was actually executed on 27th October before either of these deeds. In view of the position arising on the plaintiff''s agreement, to be presently discussed, it is unnecessary to deal further with this matter : but the fact that the defence has gone the length of fabricating two agreements for sale would indicate that Bharosi Jha took his conveyances with notice of the plaintiff''s equitable title.

This brings ma to the plaintiff''s case. It seems to me that the plaintiff has satisfactorily proved that there was a concluded agreement for sale of the property to him before the earlier of the defendants'' conveyances. The evidence of Babu Jugeswar Prasad is to the effect that by 27th September 1924 the parties informed him that everything was settled for the sale of the village which the plaintiff got from his father and in pursuance of that settlement Rs. 100 was paid there and then on account of a nazarana of Rs. 8,000 which was not to toe mentioned in the kabala. The consideration was to be expressed to be Rs. 48,000. And again, a week before the re-opening of the civil Court, that, is, towards the end of October, a further sum of Rs. 800 was paid at his house towards the nazarana. There is no ground for distrusting this evidence. Then there is the evidence of Maulavi Muhammad Akhfcar who settled the draft deed of sale. It seems to me that the parties would hardly have gone to a senior pleader at Mujaffarpur to settle the draft and purchased a stamp of Rs, 500 unless there was already a definite agreement about the terms of the sale. It is true that Maulavi Muhammad Akhtar says that there were lots of differences between Aziz and the plaintiff, but this can hardly relate to the terms of the agreement itself. The problem seems to have-been how the payment of Rs. 8,000 which was not to appear on the face of the conveyance was to be safeguarded. The draft prepared by Maulavi Muhammad Akhtar has been produced and it agrees verbatim with the deed as executed except in the point of the additional payment of Rs. 1,500 to Nath Mall which was subsequently agreed upon. Then there is the evidence of Manlavi Kamaluddin, a senior pleader of Darbhanga who says that when Aziz Ahmad showed him a draft of a kabala purported to have been executed by him sin favour of Bharosi Jha he told him that he had already executed a kabala for the same properties in favour of the plaintiff and also that he had received a portion of the consideration money. The object of his consulting the pleader was to obtain his opinion as to whether he would be criminally prosecuted if ha executed a second kabala in respect of the same properties. And Pandit Bhubneswar Misser, another senior pleader of Darbhanga deposes that in November 1924 Aziz Ahmad came to him and said that he had no objection to register the conveyance in suit, but he was in some doubts about his position because of an order of attachment before judgment.

Learned Counsel for the appellants arguing that the agreement was not concluded referred to the evidence of Ram-pratap Thakur, plaintiff 3, who negotiated the sale where he says that if there was any excess claim of the creditors it was to be satisfied by the vendor, whereas the deed itself shows that this was to be done by the vendee: and also where he says that if the opinion of the pleader who drafted the deed had been adverse to him he would not have purchased the properties. On this evidence the argument is that the agreement could not have been concluded in September. But these statements made in cross-examination cannot outweigh the evidence of the pleaders and the facts of a settled draft and a conveyance actually executed. For there is no doubt that the deed was actually executed. This is proved by the vendor''s own admission to the pleaders, and the deed (Ex. 3) bears on each page a signature which agrees with his admitted signatures. But he kept back the last page of the deed for some purpose of his own, while the rest of the document was deposited with an independent third party. The plaintiff gives an obviously false explanation of this fact and the real object doubtless was to secure payment of the full nazarana before the deed was delivered.

This being the state of the facts with regard to the agreement, the next question is whether the plaintiff was at all times ready and willing to perform his part of the agreement. The payments of Rs. 100 and Rs. 800 and the purchase of a stamp for Rs. 500 have been definitely established and this is not questioned. The question is whether Rs. 7,100 the balance of the nazarana and the sum of Rs. 500 to be paid in cash out of the consideration expressed in the deed were actually paid. The evidence consists of the statements of three witnesses. Plaintiff 3 says that out of the nazarana he paid Rs. 7,100 as well as Rs. 500 out of the consideration money after the execution of the deed, that is to say, on 27th October. Against this is the fact that it was on 8th November 1924 that ho borrowed Rs. 5,000 from Nath Mall on a mortgage (Ex. A): and this loan is expressed in that deed to have been taken for the purposes of this purchase. He admits that the vendor insisted on payment of the full nazarana at the time of execution and would not put it off until registration because this sum was not expressed in the deed. And he further admits that ho never demanded any receipt for the money. Jamuna Prasad who was the principal intermediary in the negotiations also deposes that Rs. 7,100 and Rs. 500 were paid at the time of execution. He says that it did not occur to him to pay the Rs. 7,600 in the presence of any pleader and that the money was paid in the presence of the attesting witnesses. Now of the three attesting witnesses, only one, Chatrabhuj Narayan, has been examined and he is a person of no consideration. He admits that he lias given away his properties and that iris pay is only Rs. 40 a month. He professess ignorance as to whether he is in debt or not. A witness of this kind cannot be relied upon to establish a serious point like this. When we find that the small payments of Rs. 100 and Ks. 800 wore made in the presence of a pleader, it is impossible to believe that this large payment was made only in the presence of a witness of this kind and without any receipt being taken.

The evidence of Mohibul Huq, the third party, with whom the deed texcept the last page) was deposited is (hat the document was kept with him on the condition that when Jamuna Misser would pay the balance of the consideration it would be returned. And this is the only possible meaning of this deposit of the deed. It is indeed admitted by the plaintiff that something remained due, viz, Rs. 2,000. But it seems to me unlikely that if Rs. 8,000 had been paid, the plaintiff would have allowed the sale to fall through for nonpayment of the further sum of Rs. 2,000 which he seems to have agreed, without objection to pay even after the, terms of sale had been settled. In my judgment the evidence of payment of. Rs. 7,600 is unreliable and unsatisfactory and is negatived by the circumstances attending the alleged payment. I hold therefore on evidence that the learned Subordinate Judge was right in finding that Rs. 7,100 on account of the nazarana and Rs. 500 out of the consideration mentioned in in the deed were never paid.

The question then is as to the consequences of this state of facts. In Ardeshir H. Mama v. Flora Sassoon AIR 1928 P.C. 208 their Lordships of the Judicial Committee held that the plaintiff.

in a suit for specifics performance had to allege and, if the fact was traversed, he was required to prove a continuous readiness and willingness from the date of the contract to the time of the hearing, to perform the contract on his part. Failure to make good the averment brought with it the inevitable dismissal of his suit.

Now, as I have said, in his plaint the plaintiff declares only that he was ready and willing to pay Rs. 2,000. It has been found that Rs. 7,100 out of the nazarana of Rs. 8,000 was never paid. That is the most substantial part of the agreement. The consideration to be paid in cash was only Rs. 500; the balance was set off against the preexisting encumbrances; so that the substance of the transaction from the vendor''s point of view was the nazarana of Rs. 8,000. Of this Rs. 7,100 was never paid and the plaintiff has falsely alleged that it was paid. Consequently he has never been ready and willing to perform the most important part of the agreement, but on the contrary has falsely said that it had been performed.

Another difficulty in the way of the plaintiff is the terms of the sale itself. According to the deed Rs. 49,000 was to be left in deposit with the vendee to pay to Nath Mall Rs. 1,530 (the sum already referred to) and

out of the balance he should, in case of necessity, meet all costs of a suit against Bhatu Jha alias Newazi Jha from the Court of first instance up to the appellate Privy Council and pay whatever amount is determined as a result of the suit.

Now, is this a term that the Court could see carried out? In Waring v. AIR 1928 P.C. 208. Manchester, Sheffield and Lincolnshire Ry. Co. [1848] 7 Here 492. Vice Chancellor Wigram laid down:

In the common case of a bill for specific performance by a purchaser the Court will not direct a conveyance unless the plaintiff will pay what is due. The Court can decree that, and the Court will, therefore, in that case, give relief; but if that which the plaintiff is to give on a bill for specific performance be something to be done at a future time, and which the Court cannot enforce, the understood rule has always been that the Court in that case will not give relief.

And in Blacket v. Bates [1866] 1 Ch. 124. Lord Cran-worth said:

Had it been an agreement, would there have been a case for specific performance? I think not, and for this short and simple reason that the Court does not grant specific performance unless it can give full relief to both parties. Here the plaintiff gets at once what he seeks, the lease; but the defendant cannot get what he is entitled to, for his right is not a right to something which can be performed at once, but a right to enforce the performance by the plaintiff of daily duties during the whole term of the lease.

The same principle seems to me to (apply here, apart altogether from the consideration whether this is a kind of litigation that the Court would encourage, not to say enforce. It appears that there had been some mistake in Bhatu Jha''s mortgages about the due date of payment and out of this the present plaintiff seems to have built up a theory of forgery which, as far as one can judge on the references to the matter in this suit, has no merit and the resulting litigation would certainly not be one that any Court would compel him to carry to the Privy Council. This term has only to be stated to answer the claim for specific performance.

The difficulties in the plaintiff''s way are illustrated by the decree which the Subordinate Judge has made. He has required the plaintiff to pay the balance of the nazarana of Rs. 10,000 and the consideration to be mentioned in the deed to be executed is Rs. 49,500. It is also directed that "the nazarana should be mentioned at Rs. 10,000." If this means that the nazarana of Rs. 10,000 is to be expressed in the deed of sale, then this is not what the parties agreed upon but is contrary to the terms that this sum was not to appear on the face of the conveyance. But if the terms of the agreement are adhered to, the conveyance will be a fraud on the public revenue. Section 27, Stamp Act 1899, requires that the consideration and all other facts and circumstances affecting the charge ablity of any instrument with duty shall be fully and truly set forth therein. Here the parties have deliberately omitted Rs. 10,000 out of the consideration and thus the revenue is defrauded. Consequently the Court is in this predicament that it must either execute a conveyance which is a fraud on the revenue or it must execute a conveyance in terms which were never agreed upon.

On all these grounds I hold that the claim for specific performance must fail. Equally the plaintiff is not entitled to damages and, as there is no claim for money had and received, he cannot obtain any relief in this suit.

The result is that the appeal must be decreed with costs and the suit dismissed with costs.

Wort, J.

I entirely agree.