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1916 Supreme(SC) 18
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD SHAW OF DUNFERMLINE, SIR JOHN EDGE, AND SIR LAWRENCE JENKINS.
JATINDRA NATH BASU - Appellant
Versus
PEYER DEYE DEBI - Respondents
On Appeal From The High Court in Bengal.
Decided On : Mar. 28. 1916.
Solicitor for appellants : G. C. Farr.
Solicitors for respondents: Watkins & Hunter.
A contract for the sale of a decree is executory until a written assignment is made under Section 232 of the Code of Civil Procedure. If the decree becomes barred by limitation before such assignment, specific performance cannot be granted as the decree is no longer executable.
Headnote:(A) Code of Civil Procedure, 1882 - Section 232 - Limitation Act, 1877 - Schedule II, Article 179 - Specific performance of contract for sale of a decree - Agreement to sell a mortgage decree - Decree becoming barred by limitation before assignment - A transfer of a decree can be effected only by an assignment in writing under Section 232 of the Code of Civil Procedure, 1882 - If no such assignment takes place, the purchaser cannot apply to the court to keep the decree alive - Once a decree becomes barred by limitation, it becomes a "dead decree" and cannot be assigned as a decree capable of execution - A party cannot seek specific performance of an agreement which they are unable to perform or which has become impossible to perform due to the subject matter becoming unenforceable.
(B) Specific Performance - Nature of agreement - The expression specific performance presupposes an executory agreement, as distinct from an executed one, where something remains to be done, such as the execution of a deed or conveyance, to put the parties in the position relative to each other in which they were intended to be placed.
Facts of the case:
An agreement was entered into for the sale of a mortgage decree for a specified sum. The purchaser subsequently purchased the mortgaged property at a court sale. However, the formal assignment of the decree was not completed due to disputes regarding certain payments and the administration of the estate. Before the assignment could be executed, the decree became barred by limitation. The vendors then instituted a suit for specific performance of the contract or, alternatively, for the recovery of the purchase price.
Findings of Court:
The court found that the agreement was executory and required a written assignment to transfer the interest in the decree. Because the decree had become barred by limitation, it was no longer capable of execution and therefore could not be assigned as a valid, executable decree as contemplated in the agreement.
Issues: Whether a party is entitled to specific performance of a contract for the sale of a decree that has become barred by limitation before a formal written assignment took place, and whether the duty to keep the decree alive rested with the vendor or the purchaser.
Ratio Decidendi: Under Section 232 of the Code of Civil Procedure, 1882, no interest is acquired in a decree until it is assigned in writing. Since the decree had not been transferred by a written assignment, the purchaser had no legal standing to apply to the court to keep the decree alive. Consequently, once the decree became barred by limitation, it became a "dead decree," rendering the vendors unable to perform the contract of assigning a decree capable of execution.
Result: Appeal allowed.
Legal Category Hierarchy
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practice and procedure
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civil procedure
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execution of decrees
- assignment of decrees
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execution of decrees
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civil procedure
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contract law
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specific performance
- executory agreements
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specific performance
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limitation law
- bar of limitation
Judgement
Appeal from a judgment and decree of the High Court (March 1, 1909) reversing a judgment and decree of Chitty J. (April 6, 1908).
The suit was for specific performance of a contract for the sale of a decree and was instituted under the following circumstances. Bangsa Gopal Nandi sued to enforce a mortgage upon certain properties in the Darbhanga and Monghyr districts and died, having by his will appointed two executors and an executrix. On July 28, 1893, the executors, as administrators pendente lite, obtained a decree for Rs. 24,588. Bhupendra Nath Basu, the holder of a subsequent mortgage upon the same properties, obtained a decree about the same time. In 1894 the holder of a mortgage prior to either of those above mentioned but secured only upon the Darbhanga property, obtained a mortgage decree for Rs. 77,000, and that property was ordered to be sold under the decree upon June 21, 1895. The Darbhanga property was of very considerable value; that at Monghyr was worth only about Rs. 3000.
On June 20, 1895, the executors and executrix agreed to sell their decree for the sum of Rs. 19,000 to Trailokya Nath Basu, who was a brother of Bhupendra and intended to bid for the Darbhanga property upon their joint account. The contract was evidenced in writing, but no assignment took place. On the following day Trailokay Nath Basu purchased the Darbhanga property for Rs. 77,517. The executors and executrix did not bid at the sale, it being, as they alleged, part of the agreement that they should abstain from doing so.
Difficulties arose as to the completion of the sale by the assignment of the decree. A part of the Monghyr property had been sold for Government revenue and a balance of Rs. 1046 paid over to the estate of the deceased. Disputes arose as to whether the purchaser was entitled to this sum, and further delay occurred owing to a suit for the administration of the estate. On May 8, 1898, however, the executors and executrix expressed their willingness to make the assignment, recognizing the purchasers right to the above sum. The purchaser required to be assured that the decree existed unimpaired as against the Monghyr property. Drafts were exchanged, but no assignment took place. On June 8, 1898, the executors and executrix applied to enforce their decree by sale. This application was opposed by Trailokya, and it was ultimately held by the High Court (see I. L. R. 30 Calc. 761) that the decree had become barred under the Limitation Act, 1877, Sched. II., art. 179, on June 1, 1898.
Meanwhile on June 20, 1898, the present suit had been instituted in the High Court by the then representatives of the estate of Bangsa Gopal Nandi against Trailokya and Bhupendra Nath Basu for specific performance of the contract, or alternatively to recover the amount of the decree. After prolonged and various proceedings not material for any purpose of this report the suit was dismissed by Chitty J., who held that the decree-holders were bound to keep the decree alive, and that having allowed it to become barred they were not entitled to specific performance.
The High Court (Sir Francis Maclean C.J., Harington and Fletcher JJ.) reversed this decision. The learned judges found that the agreement was entered into by Trailokya in order to induce the executors to abstain from bidding at the sale, and that upon the faith of the agreement they did so abstain; that since May 8, 1897, the executors and executrix had been ready and willing to make the assignment, but that Trailokya was not anxious to complete his agreement. They held that upon the contract the decree became in equity the property of the purchaser subject to his obligation to pay the purchase price ; that the executors owed no duty to the purchaser to keep the decree alive, since he had not asked them to take any step with that object. They further held that the surviving executor of Bangsa Gopal Nandi should have sued ; subject to his being joined as a plaintiff and to the deducti
