Case: KAPILABEN Vs. ASHOK KUMAR JAYANTILAL SHETH THROUGH POA GOPALBHAI MADHUSUDAN PATEL

enforced by law unless and until that event has happened.? ?35. When contracts become void, which are contingent on happening of specified event within fixed time.—Contingent contracts to do or not to do anything, if a specified uncertain event happens within a fixed time, become void if, at the expiration of the time fixed, such event has not happened, or if, before the time fixed, such event becomes impossible.? The 1987 agreements are clearly contingent contracts inasmuch as they could only be enforced had the original vendees obtained the right to get the sale deed executed, and taken possession of the suit property as per the terms of the 1986 agreement. Once the 1986 agreement was cancelled by the Appellants, the original vendees? rights thereunder ceased to exist. 17. Respondent Nos. 1 contend that the Power-of-Attorney dated 11.11.2001 (supra) in favour of Mr. Dhananjay Patel shows that the 1986 agreement was not cancelled and that the original vendees continued to retain their right to get the sale deed executed in their favour. It was brought to our notice by the Appellants that the aforesaid Power-of-Attorney was subsequently cancelled by the original vendees on 6.6.2003, on the ground that Mr. Dhananjay Patel had obtained the Power-of-Attorney through misrepresentation. However, it is important to note that the original vendees have stated in the aforesaid cancellation notice that they have ‘joint ownership? of the suit property. Therefore we find some merit in the argument that the Appellants and the original vendees are acting in collusion. Nevertheless, regardless of what may be stated in the Power-of-Attorney, it has to be seen whether the original vendees have legally acquired any rights in the suit property. Respondent Nos. 1 have admitted in their plaints that the Town Planning Scheme was finalized prior to the 1986 agreement. Hence the deadline stipulated under the 1986 agreement for payment of remaining consideration by the original vendees, i.e., within three months of finalization of the Scheme, has long since lapsed. Since the original vendees never paid the remaining consideration within the time specified in the 1986 agreement, their rights thereunder never fructified. Even assuming that the original vendees acquired some interest in the suit property, the subsequent withdrawal of the suit SCS No. 194/1988 shows that the original vendees do not intend to enforce the 1986 agreement. The trial court has found that though the suit property de jure vested with the concerned government authority under the Town Planning Scheme, the de facto possession of the property remains with the Appellants and the original vendees have not taken possession thereof. Furthermore, both the trial court and the learned District Judge have on facts found that the original vendees have not shown any readiness or willingness to pay the remaining consideration to the Appellants. Hence since the original vendees have abandoned their rights under the 1986 agreement, enforcement of the 1987 agreements has become virtually impossible and Respondent Nos. 1 cannot seek specific performance of the latter. Consequently the 1987 agreements are void and unenforceable as provided under Sections 32 and 35 of the Contract Act. 18. It is relevant to note at this juncture that Respondent Nos. 1 have also pleaded that the Power-of-Attorney dated 11.11.2001 (supra) was executed in breach of the interim injunction order issued by the trial court directing maintenance of status quo in respect of the suit property. Hence they seek that action should be taken against the Appellants and the original vendees under Order XXXIX, Rule 2A of the Code of Civil Procedure, 1908 for breach of the injunction order. However, we are in agreement with the trial court?s findings that the Plaintiffs? application under Order XXXIX was moved after a delay of three years and six months, and the said delay has not been satisfactorily explained. Hence the application is barred by laches. In any case, since the original vendees have revoked the Power-of-Attorney, status-quo has been restored, and the Plaintiffs? cause of action no longer exists. The Learned District Judge and the High Court in the impugned judgement have affirmed the trial court?s reasoning on this aspect, and we see no reason to overturn their concurrent findings on this matter. It was also re-iterated before us by Respondent Nos. 1 that the original vendees were misled into withdrawing their suit SCS No. 194/1988 and that the same should not be binding upon the plaintiffs. However given that the withdrawal of the suit has attained finality before this Court, and the Trial Court and the High Court have concurrently found in the separate application made by the plaintiffs in SCS No. 658/1988, by orders date 24.1.2008 and 25.3.2008 supra (respectively), that the original vendees cannot be compelled to continue their suit against their desire, we are not inclined to interfere with the same. V. Alternative Remedy to be given to the plaintiffs 19. Though we have found that on facts and law, Respondent Nos. 1 are not entitled to specific performance of the 1986 and 1987 agreements, prima facie it does appear that the Appellants and the original vendees have colluded to frustrate performance of the 1987 agreements. The trial court had directed the original vendees to reimburse earnest money of Rs. 5000 paid by Respondent Nos. 1 towards each of the 1987 agreements with an interest of 9% p.a. from 14.9.1987 till the date of realization. We are in agreement with the aforesaid direction. With regard to the appropriate remedy to be provided to Respondent Nos. 1, it may also be pertinent to refer to Section 53 of the Contract Act, which provides that: ?53. Liability of party preventing event on which the contract is to take effect.—When a contract contains reciprocal promises, and one party to the contract prevents the other from performing his promise, the contract becomes voidable at the option of the party so prevented: and he is entitled to compensation from the other party for any loss which he may sustain in consequence of the non-performance of the contract.?

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]7. Upon considering the facts and circumstances of the present case, it is evident that there is no privity of contract between the Appellants and Respondent Nos. 1. Respondent Nos. 1 were not party to the 1986 agreement. Vice versa, the Appellants were not party to the 1987 agreements, though whether or not they had knowledge of the same is disputed. Hence Respondent Nos. 1 cannot seek specific performance of the 1986 agreement, or for that matter, the 1987 agreements, against the Appellants, except by suing as ‘representatives-in-interest? of the original vendees under Section 15(b) of the Specific Relief Act.Application of the above principles to the presentHence, in light of the above discussion, whether or not an assignee can seek specific performance would depend upon the construction of the contract in each case. The Court would have to determine the nature of interest sought to be transferred, whether such interest was meant to be enforceable only between the parties to the contract and whether the contract expressly or by necessary implication bars assignment of suchthe present case, the 1986 agreement provided that the Appellants shall execute sale deed in favour of the original vendees or ‘name proposed by the vendee? subject to the assurance that the latter would pay the remaining consideration and betterment tax within the stipulated time, and that the former would obtain the necessary permissions for construction on the suitare of the opinion that the term ‘name proposed by the vendee? in the 1986 agreement refers to a nominee to be proposed at the time of execution of the sale deed and not a subsequent assignee. At the same time, it is true the 1986 agreement does not contain any express bar against assignability. The question which arises then is whether the purported assignment in favour of Respondent Nos. 1 under the 1987 agreements is legallydecisions in Shyam Singh (supra) and Ram Baran Prasad (supra) relied upon by Respondent Nos. 1 will not help their case as this Court found on the particular facts of those cases that the terms of the contracts in those cases did not implicitly bar assignment. These decisions cannot be taken to lay down a blanket rule that in every case where there is no express bar against assignability stipulated in the contract, assignment of the interest therein should be upheld without looking at the context in which the parties contracted with eachis not disputed that the original vendees had not fulfilled their obligations under the 1986 agreement prior to the purported ‘assignment? under the 1987 agreements. Hence they had not ‘performed their part of the contract? as required under Section 15(b) of the Specific Relief Act. Applying the law as stated above, the assignment of such a contract cannot be enforced without proving that it was with the knowledge and consent of the original owners/Appellants.It is further relevant to note that under the 1987 agreements, payment of the remaining consideration amount is to be made to the original vendees, not the Appellants, and possession of the suit property is to be handed over by the original vendees. Even the consideration to be paid was twice the rate as specified in the 1986 agreement. The 1987 agreements nowhere provide for discharge of the original vendees? pending obligations towards the Appellants by Respondent Nos. 1. Hence we are inclined to accept the Appellants? argument that the 1987 agreements were not a case of assignment but appear to be independent agreements for sale which were contingent on the execution of the 1986 agreement. Therefore, the only way Respondent Nos. 1 can seek specific performance of the 1986 agreement against the Appellants is by proving the Appellants? knowledge of and consent to transfer of the original vendees? rights and liabilities to Respondent Nos. 1.It is true that Section 15(b) does not stipulate in what form the promisee?s ‘acceptance? of performance by a representative- in-interest of the promisor should be communicated. It may be either through express written consent, or implied from the actions of the promisee; though as a matter of caution, the former mode of acceptance would inevitably have higher evidentiary value. However in the present case, as the trial court and the Learned District Judge have rightly appreciated on facts, we do not find that the Appellants have either by words or by conduct, consented to the assignment of the 1986 agreement in favour of Respondent Nos.mere fact that the original owner Mr. Naranbhai Patel signed the development permissions for the suit property and may have been present at the Bhoomi Pujan does not indicate that he consented to assignment of the 1986 agreement. The 1986 agreement stipulated that the original owners would give their signatures for obtaining necessary permissions for the proposed development on the suit property. Hence, as the trial court has rightly noted, Mr. Naranbhai Patel was only carrying out his contractual obligation as he had promised to the original vendees. This does not indicate that he was under the impression that the said permissions were now to be obtained for the benefit of Respondent Nos.is pertinent to note that Respondent Nos. 1 conceded before the trial court that the Appellants had given their signatures on the layout plan for the housing scheme on the suit property to the original vendees, not to Respondent Nos. 1. Even the advertisement regarding the ‘Unnati Park? housing scheme nowhere indicates that the Appellants/original owners were developing the project on the suit property in partnership with Respondent Nos.we conclude that there was no valid assignment of rights flowing from the 1986 agreement to Respondent Nos. 1, and they cannot seek specific performance against thethere is no privity of contract between the Appellants and Respondent Nos. 1 there no longer remains any question of granting specific performance as against the1987 agreements are clearly contingent contracts inasmuch as they could only be enforced had the original vendees obtained the right to get the sale deed executed, and taken possession of the suit property as per the terms of the 1986 agreement. Once the 1986 agreement was cancelled by the Appellants, the original vendees? rights thereunder ceased towas brought to our notice by the Appellants that the aforesaid Power-of-Attorney was subsequently cancelled by the original vendees on 6.6.2003, on the ground that Mr. Dhananjay Patel had obtained the Power-of-Attorney through misrepresentation. However, it is important to note that the original vendees have stated in the aforesaid cancellation notice that they have ‘joint ownership? of the suit property. Therefore we find some merit in the argument that the Appellants and the original vendees are acting inregardless of what may be stated in the Power-of-Attorney, it has to be seen whether the original vendees have legally acquired any rights in the suit property. Respondent Nos. 1 have admitted in their plaints that the Town Planning Scheme was finalized prior to the 1986 agreement. Hence the deadline stipulated under the 1986 agreement for payment of remaining consideration by the original vendees, i.e., within three months of finalization of the Scheme, has long since lapsed. Since the original vendees never paid the remaining consideration within the time specified in the 1986 agreement, their rights thereunder neverassuming that the original vendees acquired some interest in the suit property, the subsequent withdrawal of the suit SCS No. 194/1988 shows that the original vendees do not intend to enforce the 1986 agreement. The trial court has found that though the suit property de jure vested with the concerned government authority under the Town Planning Scheme, the de facto possession of the property remains with the Appellants and the original vendees have not taken possession thereof. Furthermore, both the trial court and the learned District Judge have on facts found that the original vendees have not shown any readiness or willingness to pay the remaining consideration to the Appellants. Hence since the original vendees have abandoned their rights under the 1986 agreement, enforcement of the 1987 agreements has become virtually impossible and Respondent Nos. 1 cannot seek specific performance of the latter. Consequently the 1987 agreements are void and unenforceable as provided under Sections 32 and 35 of the Contract Act.It is relevant to note at this juncture that Respondent Nos. 1 have also pleaded that the Power-of-Attorney dated 11.11.2001 (supra) was executed in breach of the interim injunction order issued by the trial court directing maintenance of status quo in respect of the suit property. Hence they seek that action should be taken against the Appellants and the original vendees under Order XXXIX, Rule 2A of the Code of Civil Procedure, 1908 for breach of the injunction order. However, we are in agreement with the trial court?s findings that the Plaintiffs? application under Order XXXIX was moved after a delay of three years and six months, and the said delay has not been satisfactorily explained. Hence the application is barred by laches. In any case, since the original vendees have revoked the Power-of-Attorney, status-quo has been restored, and the Plaintiffs? cause of action no longer exists. The Learned District Judge and the High Court in the impugned judgement have affirmed the trial court?s reasoning on this aspect, and we see no reason to overturn their concurrent findings on thiswas also re-iterated before us by Respondent Nos. 1 that the original vendees were misled into withdrawing their suit SCS No. 194/1988 and that the same should not be binding upon the plaintiffs. However given that the withdrawal of the suit has attained finality before this Court, and the Trial Court and the High Court have concurrently found in the separate application made by the plaintiffs in SCS No. 658/1988, by orders date 24.1.2008 and 25.3.2008 supra (respectively), that the original vendees cannot be compelled to continue their suit against their desire, we are not inclined to interfere with the same.Alternative Remedy to be given to theThough we have found that on facts and law, Respondent Nos. 1 are not entitled to specific performance of the 1986 and 1987 agreements, prima facie it does appear that the Appellants and the original vendees have colluded to frustrate performance of the 1987 agreements. The trial court had directed the original vendees to reimburse earnest money of Rs. 5000 paid by Respondent Nos. 1 towards each of the 1987 agreements with an interest of 9% p.a. from 14.9.1987 till the date of realization. We are in agreement with the aforesaid direction.