A contract that settles accounts and provides for the sale of property, including restrictions on the vendor's right to sell to third parties, is a contract for sale. A suit to enforce such an agreement is one for specific performance and is subject to the laws of limitation.

Judgement

Appeal (No. 22 of 1919) from a judgment and decree of the High Court (January 14, 1916) reversing a decree of the Subordinate Judge of North Arcot.

The suit was instituted on August 24, 1900, by the Court of Wards on behalf of the first respondent (a minor) to obtain possession of five villages in circumstances stated in the judgment of the Judicial Committee. The plaint alleged that the villages had been sold in 1883 under a decree against the plaintiffs father, and had been purchased by the first defendant as agent for, and at the request of, the plaintiffs father, and that by an agreement in writing made on August 25, 1888, the first defendant had agreed to convey them to the plaintiff upon Rs.99,568, the sum then found to be due, being paid or secured by mortgage. The plaintiff claimed a declaration of title, and possession upon payment of, or execution of a mortgage for, such sum as should be found due on taking accounts. The other defendants were mortgagees under mortgages executed by the first defendant; the plaintiff was willing that provision should be made for their discharge if they were valid, which he denied. The defendants denied that the first defendant was a trustee, contending that the rights of the parties were governed by the agreement of 1888, and that any suit for specific performance of that agreement was barred by limitation; the mortgagee defendants also pleaded that they were bona fide purchasers for value. The mortgages to the third defendant were made in 1894 and 1898.

The terms of the agreement of August 25, 1888, sufficiently appear from the judgment.

The Subordinate Judge held that the rights of the parties depended upon that agreement. In his view it did not constitute a charge upon the property, and the remedy of the plaintiff was for specific performance, which remedy was barred by limitation.

On appeal the learned judges of the High Court (Sir S. Subrahmanya Ayyar, Officiating C.J., Benson and Bhashyam Ayyangar J.) agreed that the legal relation of the parties was settled and determined by the agreement of 1888, but held that that agreement proceeded on the footing that the plaintiff was the beneficial owner, the word " sale " being used in the sense of a conveyance by a legal to a beneficial owner. They held therefore that the suit was really one by a beneficial owner for possession on payment of such sums as was due, and consequently was not barred, as it would have been if it were for specific performance of the contract of 1888. They remitted the case for further findings, and after certain further proceedings the High Court delivered its final judgment. A formal decree was passed, which settled the amounts due by the plaintiff to the first respondent, and by the first defendant to the other defendants, provided for payment of the mortgages out of the sum to be paid by the plaintiff (defendant No. 5, being found to be a bona fide purchaser for value, in full; the other mortgagee defendants, not being so found, proportionately), for a conveyance to the plaintiff on payment, and for a sale if the plaintiff failed to make payment.

1922. May 4, 5. De Gruyther K.C. and Dube for the appellants. The plaintiff is precluded from asserting any title, legal or equitable, to the villages by s. 317 of the Code of Civil Procedure, 1882. The plaintiffs claim, if any, is for specific performance of the agreement of 1888, and that claim is barred by the Indian Limitation Act, 1908, Sch. I., art. 113. The agreement, upon its true construction, was one for the sale of the villages ; its terms are consistent only with the first defendant being the beneficial owner. If this appeal succeeds the appellants do not oppose the making of any order necessary to preserve the rights of defendant No. 3 as a mortgagee.

Parikh for the respondents Nos. 8, 9, 10, being the legal representatives of defendant No. 3. These respondents are concerned only with the preservation of their rights as mortgagees. An order sh