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1924 Supreme(SC) 62
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD SUMNER, SIR JOHN EDGE, AND SIR LAWRENCE JENKINS.
GRAHAM - Appellant
Versus
KRISHNA CHUNDER DEY - Respondents
On appeal from the High Court at Calcutta.
Decided On : Nov. 21. 1924.
Solicitors for appellant: Watkins & Hunter.
Specific performance of part of a contract under Section 16 of the Specific Relief Act, 1877, requires that the performable part stands on a separate and independent footing. Courts cannot create a new bargain or impose a new price where the original contract was indivisible.
Headnote:(A) Specific Relief Act, 1877 - Sections 14, 15, 16 and 17 - Specific performance of part of a contract - Sections 14 to 17 constitute a complete code for granting such relief - Relief cannot be granted unless it falls within the scope of these sections. (Paras 7, 8)
(B) Section 16 - Specific performance of a part of a contract - Power exercisable only if the part (a) taken by itself could and ought to be specifically performed, and (b) stands on a separate and independent footing from the part which cannot be performed - Court cannot act unjudicially by creating a new contract or enforcing a bargain not already made by the parties. (Paras 9, 10)
(C) Indivisible contract - Where multiple properties are sold for a single lump sum and dealt with as a whole, one part cannot be said to stand on a separate and independent footing - Remanding for assessment of price abatement in such cases would amount to imposing an arbitration or creating a new bargain. (Paras 11, 12)
Facts of the case:
A contract was executed for the sale of two plots of land for a single total price. The vendor was unable to establish a marketable title for one of the plots. The purchaser sought specific performance of the contract or a refund of the deposit. The trial court dismissed the suit, but the appellate court allowed specific performance for the one plot with a reduction in the purchase price.
Findings of Court:
The contract was for both plots together for one sum, and there was nothing in the agreement to separate them or place one on a footing independent of the other. The court cannot determine a new price or delegate such a discretionary decision to a lower court as it would be creating a new contract.
Issues: Whether the contract for the sale of two plots of land for a single price was divisible under Section 16 of the Specific Relief Act, 1877, such that specific performance could be granted for one plot with an abatement of price.
Ratio Decidendi: To invoke Section 16 of the Specific Relief Act, 1877, it must be established that the part of the contract to be performed stands on a separate and independent footing. Where parties agree to a single price for multiple items, the court cannot judicially substitute a new price or create a new bargain, as this exceeds the statutory authority.
Result: Judgment of the High Court set aside and judgment dismissing the suit restored.
Legal Category Hierarchy
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civil law
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property law
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sale of immovable property
- specific performance
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sale of immovable property
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property law
Judgement
Appeal (No. 156 of 1923) from a decree of the High Court (March 26, 1923) reversing a decree of a Subordinate Judge at Alipur.
By a contract in writing dated September 15, 1919, the appellant agreed to sell and the respondent agreed to purchase the land described in the schedule thereto at the price of Rs.1,53,000 to be paid as to Rs.501 as deposit, and by way of earnest, and the residue upon completion. The schedules to the contract contained a description of two parcels of land in the suburbs of Calcutta, one (referred to as plot A) by estimation 11 bighas, 13 cottahs with tanks, and the other (plot B) 11 bighas, 4 cottahs and 2 chitrachs with tanks. The schedule stated the boundaries of each plot.
The terms of the contract as to requisitions and objections and other matters, drew no distinction between the two plots; and it was agreed that time should be of the essence of the contract and that completion should take place within fourteen days.
The appellant having failed to make a good title to plot B, the respondent brought the present suit claiming specific performance of the contract, or alternatively a refund of the deposit with interest, and damages for breach of the contract.
The Subordinate Judge held that, having regard to the provisions of the Specific Relief Act, 1877, the appellant was not entitled to a decree for specific performance of so much of the contract as related to plot A, but he directed a return of the cheque for the deposit which had not been cashed.
Upon appeal to the High Court the decree was set aside. The learned judges (Ghose and Panton JJ.) were of opinion that the case came within s. 16 of the Specific Relief Act, 1877, since, in their view, the contract, although nominally one, was really divisible ; they were also of opinion that on general principles of equity the appellant should be held liable. On the latter point they referred to Mortlock v. Bullet ((1804) 10 Ves. 315.) and other decisions of the English Courts. They accordingly decided that the plaintiff was entitled to specific performance as to plot A, with an abatement of the purchase money in respect of the failure to make a title as to plot B, and remitted the case to the lower Court for the assessment of the abatement to be allowed.
1924. Oct. 28. Dunne K.C. and Bryan Farrer for the appellant. The case is governed entirely by the provisions of the Specific Relief Act, 1877, which replaces for India the decisions of the Courts in England. The contract as to the two plots being an indivisible contract, there was no power under s. 16 to order specific performance.
The respondent did not appear.
Nov. 21 The judgment of their Lordships was delivered by
LORD SUMNER. This was a purchasers suit to enforce under the Specific Relief Act, 1877, a contract for the sale of two plots of land for one sum of Rs. 1,53,000 in the Tollygunj District of Calcutta. The contract required the vendor to make out a marketable title and, in case of failure to do so, bound him to refund the deposit on demand. It also stipu lated that, in case of any deficiency in the area or quantity of land, no compensation should be payable by the vendor on actual measurement. There was no general condition either providing for compensation or excluding it. The vendor proved to be unable to make a title to the second plot and the trial judge, having offered the plaintiff a decree for the conveyance of the other plot on the terms of s. 15, which offer was refused, dismissed the suit without costs. On the issue of damages for breach of the contract no evidence of material damage was given.
On appeal the High Court, considering that the case fell within the terms of s. 16, allowed the appeal but, having before them no evidence of the value or character of the plots beyond the particulars given in the contract, remitted the case to the trial judge, in order that he might take evidence and assess the abatement of price to be allowed in respect of the failure to make
