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1928 Supreme(SC) 38
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD PHILLIMORE, LORD BLANESBURGH, AND MR, AMEER ALI.
ARDESHIR MAMA - Appellant
Versus
FLORA SASSOON - Respondents
On Appeal from the High Court at Bombay.
Decided On : May 21, 1928.
Solicitors for appellant :Ranken Ford & Chester. Solicitors for respondent: Sanderson, Lee & Co.
A plaintiff who abandons a claim for specific performance by declaring they are no longer ready and willing to perform the contract disentitles themselves to substitutionary damages under Section 19 of the Specific Relief Act, 1877, unless the suit is properly amended into an action for damages.
Headnote:(A) Specific Relief Act, 1877 - Sections 19, 24(c), 27(6), and 29 - Compensation in substitution for specific performance - A plaintiff suing for specific performance must maintain continuous readiness and willingness to perform the contract. If the plaintiff formally abandons the claim for specific performance by declaring they are no longer ready or willing, they disentitle themselves to such relief and, consequently, the court cannot award compensation in substitution under Section 19.
(B) Specific Relief Act, 1877 - Section 29 - Amendment of pleadings - While the dismissal of a suit for specific performance bars a subsequent suit for compensation, the court possesses the power to allow an amendment to convert a pending suit for specific performance into one for damages for breach of contract. This power should be exercised cautiously to ensure the suit does not become a gamble at the defendant's expense.
(C) Law of Agency - Authority of agent - A contract is not binding on the principal if the agent lacked authority to agree to vital terms or the specific description of the property. Where an agent inserts unauthorized terms, the resulting document may be construed as a counter-offer rather than a concluded agreement.
Facts of the case:
A purchaser instituted a suit for specific performance of a contract for the sale of residential property and grounds, claiming damages in the alternative. The seller denied that the agent had the authority to enter into the contract. During the proceedings, the purchaser notified the seller that he would abandon the claim for specific performance and instead seek damages. The trial court awarded damages, but the appellate court reversed the decision, holding that the agent lacked authority and that the abandonment of specific performance precluded the award of damages.
Findings of Court:
The agent did not have the authority to bind the principal to the specific parcels of land or the payment terms stipulated in the agreement. The document signed by the agent was a counter-offer and not a concluded contract.
Issues: Whether the agent had the authority to bind the principal to the contract and whether a plaintiff who abandons a claim for specific performance is entitled to damages under the statutory provisions for specific relief.
Ratio Decidendi: The court held that the right to compensation in substitution for specific performance under Section 19 of the Specific Relief Act is contingent upon the plaintiff's eligibility for specific performance. By abandoning the claim for specific performance, the plaintiff ceases to be "ready and willing," thereby removing the court's jurisdiction to award substitutionary damages. However, the court may allow an amendment to convert the suit into a general action for damages for breach of contract to prevent the defendant from using delay to exhaust the plaintiff's resources, provided the amendment is handled with strict judicial scrutiny.
Result: Appeal dismissed.
Appeal (No. 100 of 1926) from a decree of the High Court in its appellate jurisdiction (October 5, 1925) reversing a decree of the Court in its original jurisdiction.
The suit was instituted by the appellant in the High Court on January 10, 1921, against the respondent.
By his plaint the appellant alleged a contract made on December 29, 1919, by one Judah on behalf of the respondent for the sale to him of a residential property in Bombay together with grounds according to a plan for eighteen lakhs of rupees, of which one lakh had been paid as earnest money. He asserted by his plaint that he was always ready and willing to perform the contract, and claimed specific performance, also such damages as the Court should think fit in addition to, or in substitution for, specific performance.
The respondent by her written statement denied the authority of Judah to make the alleged contract on her behalf.
The respondents solicitors in Bombay in July, 1920, repudiated the existence of a contract and sent to the appellant a cheque for the earnest money, but he returned the cheque to them. In August, 1920, the property, with a slight variation of the boundary, was sold by the respondent to another purchaser for twenty -five lakhs, subject to the appellant abandoning or failing to enforce the contract sued on.
On March 19, 1924, the appellant by his solicitors gave notice that he would not claim specific performance but would claim damages, which he assessed at seven lakhs.
Issues were framed in January, 1925, of which those material on the present appeal were (1.) whether there was a concluded agreement as alleged, and (2.) whether the appellant was entitled to any, and if so what, damages.
At the trial objection was taken that the plaintiff could not recover damages without an amendment of the plaint. By leave the plaint was amended by a claim in the alternative for the return of the lakh of rupees with interest and seven lakhs as damages.
No oral evidence was called at the trial.
The trial judge (Mirza J.) held that there was a contract between the parties and assessed the damages at seven lakhs, He made a decree for that amount and for the one lakh earnest money with interest.
An appeal was heard by Macleod C.J. and Coyajee J. and was allowed save as to the earnest money. The learned Chief Justice held on the documents that Judah had not authority to make the contract alleged, and held further that even if there was a contract the Court could not, upon the true construction of s. 19 of the Specific Relief Act, 1877, award damages seeing that the appellant had abandoned his claim to specific performance.
Coyajee J. differed as to the true construction of s. 19.
1928. Feb. 13, 14, 16. Upjohn K.C. and Beebee for the appellant. The documents establish that Judah had authority to make the contract sued on. The plaint claimed specific performance, and in the alternative damages for breach of contract. The appellant by his notice of March 19, 1924, abandoned his claim to specific performance ; he was entitled so to do under Order xxiii., r. 1 (1.). Although the claim to specific performance treated the contract as subsisting, the plaintiff could claim damages instead. That was definitely held in Karsandas v. Chhotalal (( 1923) I. L. R. 25 B. 1037.) Sect. 29 of the Specific Relief Act authorizes an alternative claim for compensation for breach of contract. That compensation is to be assessed just #s under s. 73 of the Indian Contract Act, 1872. which also uses the word " compensation." Damages can be given even if not asked for; therefore no amendment of the plaint was needed Callianji Harjivan v. Narsi Tricum . (( 1895) I. L. R. 19 B. 764.) The measure of damages was the difference between the value at the date of the breach and the contract price Ranchod v. Manmohandas (( 1907) I. L. R. 32 B. 165.) ; Nabinchandra Saha Paramanick v. Krishna Barana Dasi (( 1911) I. L. R. 3. C. 458.) ; Adikesavan Naidu v. Gurunatha Chetti (( 1916) I
