Judgement

Appeal (No. 36 of 1933) from a decree of the Court of the Judicial Commissioner (January 19, 1931) reversing a decree of the District Judge of Sukkur (September 11, 1926).

On December 20, 1921, the respondent, in circumstances which appear from the judgment of the Judicial Committee, instituted a suit against the Secretary of State for India in Council and the appellant claiming a declaration of his title to, and possession of, a plot of land. The Secretary of State did not defend the suit. The appellant by an amendment to his written statement pleaded " as the plaintiff has agreed to convey this plot to the defendant, and as possession is with him, he could not legally be evicted."

The trial judge dismissed the suit. Upon appeal to the Court of the Judicial Commissioner the decision was reversed on the ground that the defendants possession could not be referred to the agreement to sell to him. A decree was made for possession and mesne profits, and that compensation be paid to the defendant for improvements effected by him.

1934. June 25, 26. Dunne K.C. and Pringle for the appellant. The plaintiffs agreement to sell the property to the defendant was capable of being specifically enforced when the suit was instituted, and furnishes a valid defence to the claim to eject him Puccha Lal v. Kunj Behari Lal (( 1913) 18 C. W.

N. 445.); Bapu Apaji v. Kashinath Sadoba (( 1916) I. L. R. 41 Bom. 438.); Venkatesh Damodar v. Mallappa Bhimappa (( 1921) I. L. R. 46 Bom. 722.); Karalia Nanubhai v. Mansukhram . (( 1900) I. L.

R. 24 Bom. 400.) The plaintiff, as vendor, was in the position of a trustee for the defendant, and upon principles enacted by the Trusts Act, 1882, ss. 3, 14, 91, could not set up a title adverse to him. The decision of the Board in Ariff v. Jadunath Majumdar (( 1931) L. R. 58 I. A. 91.) is distinguishable, because in that case enforcement of the contract by specific performance was barred by limitation when the suit was instituted, and that fact was made the basis of the judgment. In Currimbhoy & Co. v. Greet (( 1932) L. R. 60 I. A. 297.), the alleged contract was in 1920 and the suit in 1924, so that there also specific performance was barred ; further, as it was held that there was no completed contract any observations relevant to the present question were obiter.

De Gruyther K.C. and Godfrey for the respondent. The appellant was not put into possession under the agreement; he was in possession under the invalid order of the collector, and was a mere trespasser. The English equitable doctrine of part performance, therefore, even if applicable in India at the date of this suit, has no bearing ; nor in the circumstances of the case can the plaintiff be regarded as being in the position of a trustee for the defendant. The decisions in India with regard to a defendant in an ejection suit who is in possession under an agreement by the plaintiff were con flicting before the judgment of the Board in Ariffs case. (( 1931) L. R. 58 I. A. 91.) That judgment, however, makes it clear that, having regard to provisions of the Transfer of Property Act, 1882 (which had not been materially amended when the present suit was proceeding), the defendant can avail himself of the agreement only if it is still enforceable, and only by bringing a suit for specific performance. In the present case no suit was brought, nor did the defendant apply for a stay for that purpose. Moreover, apart from limitation, specific performance could not have been obtained, because the defendant, having obtained a cancellation of the grant, could not show that he was ready and willing to pay the plaintiff the price ; that is essential in a suit for specific performance Ardeshir Mama v. Sassoon . (( 1928) L. R. 55 I. A. 360, 375.) The observations in Currimbhoy & Co. v. Creel (( 1932) L, R. 60 I. A. 297.) show that the principles of Ariffs case apply even if specific performance is not barred when the suit for eject ment is brought ; in that case, although the contract was in 1920, there was no refusal to perform it until 1923, so that specific performance was not barred. The Indian decisions relied upon for the appellant were cases in which the defendant had been put into possession and had paid the agreed price ; moreover they were before Ariffs case. Bapu Apaji v. Kashinath Sadoba (( 1916) I. L. R. 41 B. 438.) reversed the previous current of authority in Bombay by reason of a misunderstanding of the decisions of the Board in 1914 and 1916 explained in Ariffs case, in which case the Bombay case itself was cited. [Reference was made also to Maung Shwe Goh v. Maung Inn (( 1916) L. R. 44 I. A. 15.); Kurri Veerareddi v. Kurri Bapireddi (( 1906) I.L.R.29M.336(F. B.).); and Ramanathan v. Ranganathan (( 1917) I. L. R. 40 M.

1134.), and other cases.]

Dunne K.C. replied.

July 23. The judgment of their Lordships was delivered by

LORD MACMILLAN. The plaintiff in this suit, who is the respondent in the appeal, prays the Court (1.) to declare him to be the rightful owner of the southern half of a plot of land in New Sukkur, and (2.) to put him in possession thereof by dispossessing the defendant, who is the present appellant. The suit was also directed against the Secretary of State for India in Council, who, however, took no part in the proceedings.

The District Judge dismissed the suit. On appeal, his judgment was reversed by the Court of the Judicial Commissioner of Sind and a decree for possession granted in favour of the plaintiff. Hence the present appeal by the unsuccessful defendant. It will be convenient to refer to the parties in their original characters of plaintiff and defendant, bearing in mind that the plaintiff is now the respondent and the defendant now the appellant.

The circumstances in which the defendant came to be in possession of the half-plot of land from which the plaintiff seeks to eject him may be shortly stated. In the year 1919 the plaintiff and the defendant were both applicants for a grant of the same plot of building ground in New Sukkur, The collector by order dated February 25, 1919, granted the northern half of the plot to the defendant, and the southern half to the plaintiff. Instruments giving effect to the grants were duly executed and registered. Each party entered into possession of his respective half-plot and began building operations.

The plaintiff is an Afghan refugee and political pensioner who formerly resided at Quetta, but at the date of the grant in his favour was living under orders at Sukkur. He was understood to be desirous of returning to Quetta, and the collector accordingly directed in the order making the grant to him of the southern half-plot that he " should be requested to execute a private agreement with [the defendant, the grantee of the other half-plot] to sell him his half of the land at cost price if he gets permission to go to Quetta by the middle of May next." In compliance with this request, the plaintiff on March 25, 1919, executed an agreement declaring that if during May, 1919, he should get permission to live permanently at Quetta as before he would sell his half-plot to the defendant at cost price.

On May 23, 1919, the collector addressed a communication to the plaintiff informing him that he had been allowed by the Government to return to Quetta, and on or about June 4 the plaintiff and his family left for Quetta. He was then called upon to execute a conveyance of his half-plot in favour of the defendant in terms of his agreement. He appears to have raised some question as to whether the permission which he had received entitled him to reside pemanently at Quetta, and the collector was authorized to inform him that this was so. Nevertheless, he failed to execute a conveyance in favour of the defendant, and on December 22, 1920, the collector made an order cancelling the grant in his favour of the southern half-plot. The plaintiff appealed against this order to the commissioner, who declined to recall it. On March 17, 1921, the collector made a new grant of the southern half-plot to the defendant, who entered into possession and proceeded to carry on building operations upon it.

The plaintiff then raised the present action of ejectment. In his plaint, which is dated December 20, 1921, he pleaded (inter alia) that he had committed no breach of the terms of his grant or of his agreement, that the order of the collector cancelling his grant was ultra vires, and that the defendant was a trespasser who should be ejected. The defendant, in his written statement dated May 7, 1922, pleaded that the plaintiff had failed to observe the terms of his agreement, that the collectors cancelling order was legal and justified, and that the plaintiff was not entitled to dispossess him. Having apparently some doubt as to whether in his written statement he had sufficiently and properly pleaded by way of defence the plaintiffs agreement to convey the southern half-plot to him, the defendant asked leave to amend, and on August 3, 1925, he was allowed by the acting District Judge to add the following paragraph " That this defendant further pleads that as plaintiff has agreed to convey the [half] plot to this defendant, and as possession [is] with him he could not be legally evicted."

The District Judge held that the condition on which the plaintiff had agreed to sell his southern half-plot to the defendant had been satisfied by the permission granted to him to return to Quetta. He further held that the collectors order cancelling the grant in favour of the plaintiff was illegal and void. These findings were not contested in the Court of the Judicial Commissioner or before their Lordships. It is now also common ground that at the date of the institution of the present suit, an action by the defendant for specific performance of the plaintiffs agreement to sell to him the southern half-plot would have been in time, but that by August 3, 1925, when the defendant was allowed by the acting District Judge to amend his written statement, such an action would have been barred by the Limitation Act, s. 3, read with Sch. I., art. 113. The effective decision of the District Judge was that the defendant having become entitled to specific performance of the plaintiffs agreement to sell the southern half-plot to him, " the possession of the defendant, coupled with the existence of the agreement in his favour, is a complete defence to the suit."

In the Court of the Judicial Commissioner on appeal the decision of the District Judge was reversed, and the plaintiff held entitled to succeed, mainly on the ground that the defendants possession of the half-plot was not attributable to the plaintiffs agreement to sell it to him but to the collectors unwarranted grant in his favour, and therefore could not be founded upon by the defendant as part performance of the agreement of sale. It was also pointed out that the defendant had not made a counterclaim for specific performance, assuming such to be competent, or taken any action to enforce the agreement of sale, and that as he could not now do so it afforded him no valid defence.

When the case was before the Judicial Commissioners Court the judgment of the High Court at Calcutta in Ariff v. Jadunoth Majumdar (( 1928) I. L. R. 55 C. 1090.) had not been reversed, as it subsequently was, by this Board, and the Judicial Commissioners Court had not the benefit of the elucidation of this branch of the law contained in the judgment of Lord Russell of Killowen, who expressed the views of the Board in that appeal. (( 1931) L. R. 58 I. A. 91, 95.) In the light of the principles there enunciated their Lordships have no hesitation in holding that the plaintiff is entitled to eject the defendant, and in thus affirming the decision of the Court of the Judicial Commissioner, though on other grounds which they will now proceed to state.

The plaintiff is the registered proprietor of the half-plot in question. Prima facie he is entitled to possession of it. The defendant whom he seeks to eject does not put forward any title to possession; he merely pleads that the plaintiff has agreed to sell him the half-plot, and that he is in fact in possession of it. Their Lordships will assume without deciding that the defendant sufficiently pleaded the agreement of sale in his written statement of May 7, 1922, when an action for specific performance would still have been in time, and that the amendment of August 3, 1925, by which date the defendant could no longer have sued for specific performance, was an unnecessary precaution.

As the law of India stood at the date of this case, it is, in their Lordships opinion, no relevant defence to an action by a landowner for ejectment to plead that the plaintiff has agreed to sell to the defendant the land of which the plaintiff seeks to obtain possession. By s. 54 of the Transfer of Property Act, a transfer by sale of tangible immovable property of the value of Rs.100 and upwards can be made only by a registered instrument. The land in question is admittedly, worth more than Rs.100, and the defendant has no registered instrument of transfer in his favour. The section expressly enacts that a contract for the sale of immovable property " does not of itself create any interest in or charge on such property.1 There is therefore no room for the application of the English equitable doctrine that " a contract for sale of real property makes the purchaser the owner in equity of the estate." The underlying principle upon which this rule depends is inapplicable to the sale of real estate in India in view of the express enactment just quoted see per Lord Buckmaster in Maung Shwe Goh v. Maung Inn . (L. R. 44 I. A. 15, 19.) In English practice, the defendant in an action of ejectment, who is in a position to plead that the plaintiff has by an enforceable agreement contracted to sell to him the land in question, may counterclaim for specific performance and make good his claim without raising a separate action. In India, at any rate in the mofussil, such a counterclaim is not competent. The defendants proper course in the present case, as Lord Russell of Killowen points out in Ariff v. Jadunath Majumdar (L. R. 58 I. A. 91, 101.), would have been to have founded on the agreement of sale and to have applied for a stay of the proceedings in order to enable him to compel the plaintiff to execute an instrument in his favour which he could have duly registered. The remedy thus available to the defendant would not have depended on any recognition of the agreement of sale as in itself a defence to the action of ejectment, but rather on the principle that the Court will not grant a decree of ejectment which can at once be rendered ineffective by the same Court being required to grant a decree of specific performance resulting in reinstatement. But the defendant did not ask for a stay, and did not raise any action for specific performance. Now he is too late to do so ; the agreement of sale has become unenforceable.

The English doctrine of part performance, as Lord Russell of Killowen explained in Ariffs case (1), is not available in India by way of defence to an action of ejectment (apart from the subsequent statutory alteration of the law mentioned hereafter). The fact that the plaintiff has agreed to sell the land in question to the defendant is not rendered an effective defence by reason of the plaintiff having in part performance of the agreement permitted the defendant to take possession. The function of the plea of part performance in England is to enable the defendant to elide the Statute of Frauds and claim that his contract of sale is enforceable notwithstanding the statute by reason of the part performance. It is pleaded to overcome a statutory obstacle in the way of the proof of the contract of sale. In India there is no Statute of Frauds. " That an English equitable doctrine affecting the provisions of an English statute relating to the right to sue upon a contract, should be applied by analogy to such a statute as the Transfer of Property Act and with such a result as to create without any writing an interest which the statute says can only be created by means of a registered instrument, appears to their Lordships, in the absence of some binding authority to that effect, to be impossible." So said Lord Russell of Killowen in Ariffs case (L. R. 58 I. A. 91, 101.), and proceeded to show that there was no such authority.

The result is that, under the law applicable to the present case, an averment of the existence of a contract of sale, whether with or without an averment of possession following upon the contract, is not a relevant defence to an action of ejectment in India. If the contract is still enforceable the defendant may found upon it to have the suit stayed, and by suing for specific performance obtain a title which will protect him from ejectment. But if it is no longer enforce able, its part performance will not avail him to any effect see Currimbhoy & Co. v. Greet, per Lord Thankerton. (L. R. 60 I. A. 297, 303, 304.)

In the present instance, as was pointed out in the Judicial Commissioners Court, the defendants possession was not even referable to the agreement of sale, but their Lordships do not proceed upon that circumstance. Their ground of judgment is more fundamental.

It remains to take note of the fact that since the present suit was brought the law in India has been altered by the Transfer of Property (Amendment) Act XX. of 1929, which has inserted a new s. 53a in the principal Act, whereby a defendant in an action of ejectment may, in certain circumstances, effectively plead possession under an unregistered contract of sale in defence to the action. Their Lordships views, as expressed in the present case, must therefore be understood to be referable to the state of the law before this partial importation into India of the English equitable doctrine of part performance.

As regards the compensation payable to the defendant for improvements, and as regards the mesne profits payable to the plaintiff, no objection was stated before their Lordships to the manner in which these matters are dealt with in the judgment of the Judicial Commissioners Court, which will accordingly stand.

Their Lordships will humbly advise His Majesty that the judgment of the Court of the Judicial Commissioner be affirmed and the appeal be dismissed. In both of the Courts below the parties were ordered to bear their own costs. This will remain unaffected by their Lordships judgment, but in the present appeal the respondent will have his costs from the appellant.