Case: Gorakhram Sadhuram Vs. Laxmibai Wife Of Inderlal Nandlal

(2) The suit was brought by one Laxmibai, wife of Inderlal Nandlal of Malad onfor specific performance of an agreement datedsaid to have been arrived at between her and Messrs. Gorakhram, Sadhuram, a firm carrying on business at bankers and commission agents at Kalbadevi Road, Bombay. By the agreement the defendants were to transfer the bungalow in suit at Malad to the name of the respondent whenever demanded on payment of costs of such transfer and were to debit the sum of Rs. 40,000 the value of the bungalow, to the current account of the firm of Messrs Thackersidas Nandlal, of which the plaintiffs husband andwere the owners and which firm was indebted in a large amount to Messrs. Gorakhram Sadhuram. The principal defence to the suit was that the plaintiff was not a party to the agreement and could not therefore sue upon it. It was also pleaded that the suit was barred by S. 66, Code of Civil Procedure , but no issue was raised on the point and the plea was later on abandoned. In spite of the abandonment of the plea, the point was argued at the hearing.(3) Chagla J. dismissed the plaintiffs suit and held that the plaintiff not being a party to the agreement, could not claim specific performance of it. He further held that the suit was barred by S. 66, C. P. C. This decision was reversed in appeal by Bhagwati and Tendolkar. JJ. on the finding that the plaintiff was a party to the agreement and was ready and willing to perform her part of the contract. It was further held that the suit was not barred by S. 66 Code of Civil Procedure Chagla J. has also held that the plaintiff was not ready and willing to perform her part of the contract inasmuch as her husband was not in a position to pay the sum of Rs. 40,000, the price fixed for the conveyance of the house. This aspect of the case, however, was not pressed before the Court of appeal by the counsel for the respondent and was not agitated before us. Having regard to the terms of the agreement which was arrived at between the parties, the defendants were bound on being called upon to do so, to transfer and convey the property to the name of the plaintiff, she being under an obligation to pay the costs, charges and expenses in connection therewith. The consideration money of such transfer, i.e. Rs. 40,000 had to be debited on account of the firm. There was no question whatever of any cash payment having to be made by the firm or itsIn order to judge the propriety of these contentions it is necessary to state a few facts. The plaintiffs husband andeffected a number of mortgages in favour of the appellant firm the first of them having been made onThis mortgage comprised the property in dispute which is a bungalow at Malad, a suburb of Bombay. In the year 1925 a suit was brought on this mortgage and a preliminary decree passed in favour of the appellant onThis was made absolute onProceedings in execution of the final decree were pending when onthe agreement in dispute was made. The terms of the agreement are contained in two letters dated9. The letters are in theseShahji Gorakhramji Sadhuramji. Please read Jaigopal (salutations) of Nandlal and Inderlal Nandlal. Further, our two ginning factories and one pressing factory together with the compound etc. at Panderkowda which were mortgaged with you for Rs. 3,15,000 are sold by us to you for Rs. 3,15,000. We shall execute any documents which you may ask us to do at the time you got the same transferred to your name. Further the house at Kalbadevi in Bombay, the home at Gaiwadi and the bungalow at Malad which have been mortgaged for Rs. 540,000 are sold by us for Rs. 4,40,000 ashouse at Kalbadevi l,15,000 and the bungalow at Malad for Rs. 40,000. Further, you have obtained a decree against us and also obtained an order for auction sale by the Commissioner. Whether you get the properties auctioned or sold, we shall agree to both these things. Whenever you ask us to execute any documents in respect thereof, we shall do the same. We shall not raise any objection. Further, you will have to get bungalow one in number at Malad transferred to the name of the mother of Chiru Kanhaiyalal Devda. Whatever expenses incurred in that behalf will be borne by her. You will please debit Rs. 40.000 to us. And our diamond ring one in number is pledged with you. The same shall have to be given to the mother of Chiru Kanhaiyalal. Please debit Rs.1,500 in respect thereof to us. Further, as regards monies that may remain due to you under the mortgage and current accounts, we shall pay the same, to you whenever we can. Further, our heir shall not be entitled to raise any objection in this behalf. He shall have to agree to all these arrangements... ...Shahji Nandlalji Thakerseydasji and Inderlalji Nandlalji. Please read Jaigopal (salutations) of Gorakhram Sadhuram. Further, your letter dated 10th of Bhadarva Vad (i.e.is received. What is stated therein is agreed to by us. You have asked us to get transferred bungalow 1 at Malad to the name of Shah Kanhaiyalaljis mother and to give one diamond ring to her. We agree to the same whenever you ask us to get the bungalow transferred to her name, we shall do so at your costs. We shall give one ring of diamond to her 30th orpursuance of this arrangement the diamond ring was given by the appellants to the plaintiff respondent within a month or two of its date. Onthe appellants purchased the Malad house at the auction sale. The sale was confirmed onand a sale certificate was obtained by the appellants in their name but the cost of the stamp for the sale certificate was paid on behalf of the plaintiff by her husband orbut out of her money. It is common ground now that the plaintiff was put in possession of the house soon after and she placed her furniture in it, effected repairs and paid the taxes. As a matter of fact, the taxes were paid by the appellants and subsequently recovered in cash from the plaintiff either directly or through her husband. Considerable amount was spent by her in effecting improvement to the house and she remained in possession of it and even now is in possession of it. When she demanded a conveyance from the appellant firm, they declined to do so with the result that the plaintiff had to bring this suit.(6) After confirmation of the sale of this property and other properties the appellants obtained a personal decree against the mortgagors onin the sum of Rs. 5,89,000 with future interest. In the year 1931 the plaintiffsdied. Her husband was adjudicated insolvent a few months after the institution of the suit.

Reasoning:
The letter ofin clear terms states that the bungalow was to be transferred in the name of the plaintiff and the expenses of the conveyance were to be borne by her and that the diamond ring was to be given to her.The letter ofacceptance given by the appellants accepted this proposal. It proceeded however to state that whenever the mortgagors asked the bungalow to be transferred in the name of the plaintiff it will be done at their cost and the ring will be given to her. The letters are not formal legal documents and no question was raised that the parties were not ad idem about the terms of the arrangement. There can, however, be no question that the intention of the parties was as expressed in the first letter that plaintiff would have to pay the costs of the conveyance and get it executed in her name. The appellants agreed to this. In the letter of acceptance the appellants were treating the mortgagors and their family including the plaintiff as one group because it is obvious enough that the transfer of the house in the name of the plaintiff was with the intention of benefiting her, her children, and, as a matter of fact, the whole family. As regards the ring, she was the sole promisee as it belonged toview of these circumstances I am not prepared to disbelieve the plaintiff when she states that she and Murlidhar agreed to the terms incorporated in the letter as regards the house and the ring. Chagla J. though he accepted her evidence as to the facts stated by her, was not prepared to hold on that statement that actually the agreement was made between her and Murlidhar. He thought that the arrangement made between the husband and theof the plaintiff and Murlidhar was only communicated to her. We have carefully read the evidence of the plaintiff and we consider that she has given her statement in a straightforward manner and we see no reason to disbelieve her statement when she says that both she and Murlidhar agreed to the terms of the arrangement. The clause in the debtors letter that she would be liable for payment of costs of the conveyance could not have been entered in it without her consent. About the ring, it was she and she alone who would have been keen to get it and without her demand having been met the amicable settlement could not have been made.(9) The plaintiffs husband, Inderlal Nandlal, also deposed that Murlidhar had told his wife that the diamond ring and the house would be given to her whenever she wanted them and that it was agreed that she would pay the cost of the transfer of the Malad Property in her name. Mr. Setalvad laid considerable stress on certain statements elicited in hisThe witness said that the plaintiff did not understand accounts and was not present when the accounts were being settled, that Murlidhar was not willing to give anything to him and to his father, but that he was willing to transfer the house to his wife, that he and his father agreed not to object to the auction sale if Murlidhar agreed to transfer the Malad house to his wifes name, and that the terms of the agreement were settled between Murlidhar on the one hand and by him and his father on the other and that his wife was present in the room. Itwas urged that according to this statement the agreement was really made between Murlidhar and the plaintiffs husband andand that the plaintiffs statement that she had arrived at an agreement with Murlidhar about the house and the ring cannot be accepted as true.We do not see any force in this contention. On the materials on the record it cannot be doubted that the demand for the diamond ring and for the release of the house from the mortgagees emanated from the plaintiff. Whether that demand was conveyed to the creditors representative directly by her or through her son or husband is not very material because such a procedure would be in keeping with the habits and modes of the life of the people who were transacting the business. It also cannot be doubted that the creditors representative was not prepared either to give the ring or the house to the mortgagors who would not have retained these things for a very long time and the very purpose of giving them would have been defeated. Thus the promise to give the house and the ring could only have been made to the person who made the demand and that person therefore would be the promisee under this agreement as regards these two items of property. The creditors representative, whether directly in conversation with her or by an open declaration in her presence, made a promise to the plaintiff that the house and the ring would be given to her. That she did become the promisee under his contract is clearly proved not only by the oral evidence but from the recital in the first letter in which it was clearly stipulated that she would pay the costs of the conveyance. It was in the status of a promisee that the conveyance had to be executed in her name. This construction of the agreement is fully supported by the conduct of the promisers immediately after the contract had been made. The promisors started performing their promise within two months of its having been made by directly handing over the ring to the plaintiff regarding which demand was conveyed to them by her through her husband. As soon as they succeeded in buying the property at the auction sale, they called upon the promisee who had undertaken the obligation to pay the expenses of the conveyance through the proper channel, to meet the stamp expenses in connection with the sale certificate. They further allowed her to occupy the property. The two Courts below have found that the defendants had incurred the expenses of payment of municipal taxes, etc., concerning the bungalow but that the recovered these amounts from the plaintiff. That finding is supported by the oral evidence on the record. The defendants also stood by and allowed the promisee through her husband to spend considerable sums of money on repairs and remodelling of the house. In all respects the defendants fully fulfilled their part of the promise but defaulted in executing the conveyance. When the whole promise has been substantially fulfilled and it only remains to pass legal title by the execution of a conveyance, the objection raised as to the plaintiff not being a party to the contract seems to be fulfil. It was expressly agreed that the conveyance would be executed in her name and she was therefore entitled to demand that. The decision of the High Court therefore on this point is affirmed and the contention of Mr. Setalvad negatived.(10) The contention that S. 66, Civil P.C. bars the suit has, in our opinion no, substance whatever. The appellants when they purchased the house at the auction sale were buying the property for themselves. They had undoubtedly entered into an agreement with the plaintiff that when they purchased the property at the auction sale they would convey it to her but that is not material for the application of S. 66. The property was purchased by them for a sum of Rs. 20,000. The conveyance to the plaintiff has to be for a debit of Rs. 40,000. The plea of benami purchase in such a situation could not be sustained and was rightly rejected by the High Court in appeal. The appellants purchased the property for themselves so that by acquiring it in their name they may be able to fulfil their agreement of sale with the plaintiff. In these circumstances, the provisions of S. 66 do not operate as a bar to the suit.(11) The last contention of Mr. Setalvad is equally without force. To all intents and purposes the plaintiff has been in possession of the house since the date of the agreement. She has incurred all the expenses in respect of taxes etc., she has made repairs in the house without any objection and has spent considerable sums of money on it and she has been residing in it. All that is now required is a formal document of title in her favour. The contention therefore that the suit is a belated one and that the position of the mortgagors has altered cannot be a ground to defeat her suit, particularly when the appeal court has granted her the relief claimed by her.(12) It was argued that the plaintiff could also maintain the suit as a beneficiary if she was not a party to the contract. It is unnecessary to examine this contention in view of the decision that she was actually a party to the agreement and could maintain the suit.