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1920 Supreme(SC) 51
Privy Council
Ameer Ali, Sir John Edge, Atkinson, Justice Buckmaster, JJ.
(Srimati) Giribala Dasi -Appellant
Versus
Kalidas Bhanja and others -Resopndent
Decided On : 08-07-1920
W.W. Box and Co., Water house and Co. , Bhugwandin Dube, L. DeGruyther , J.E. Harmon
Specific performance of a lease requires a fixed commencement date. An agreement to execute a lease upon the fulfillment of a condition (e.g., debt repayment) creates a condition precedent; if unfulfilled, the contract cannot be specifically enforced.
Headnote:(A) Specific Performance of Contracts - Agreement to grant a lease - Certainty of terms - Commencement date - Condition precedent - For a decree of specific performance of an agreement to grant a lease, the agreement must expressly or impliedly fix the date from which the term is to run. An agreement to execute a lease "hereafter" implies a reasonable time, but if the parties agree that execution is contingent upon the fulfillment of a specific condition, such as the repayment of a debt, that condition becomes a condition precedent that must be satisfied before the contract can be enforced. (Paras 15, 21, 22)
(B) Limitation - Where a condition precedent is attached to an obligation, the failure to fulfill that condition may prevent the remedy from being maintained, particularly where a significant delay in instituting the suit would otherwise act as a bar to relief. (Para 22)
Facts of the case:
The plaintiffs sought specific performance of an agreement to purchase a share of an estate or, in the alternative, the specific performance of an agreement to grant a permanent lease. The predecessor of the defendant had purchased the property and written a letter promising to execute a permanent lease "hereafter" for a specified annual sum. It was subsequently agreed between the parties that the formal lease would be executed after the predecessor had liquidated certain debts incurred during the purchase. The predecessor died before the debts were paid or the lease was executed. The plaintiffs argued that the commencement date of the lease could be implied from a notice served upon tenants.
Findings of Court:
The court found that the agreement for the sale of the property was not proved. Regarding the lease, the court held that the agreement to delay execution until the repayment of debts constituted a condition precedent. Since the debt remained unpaid, the condition was not fulfilled. Furthermore, the court found that the agreement lacked a fixed commencement date, which is a fundamental requirement for the specific performance of a lease.
Issues: 1. Whether the agreement to grant a permanent lease "hereafter" was sufficiently certain and unambiguous to be specifically enforced. 2. Whether the agreement to delay the execution of the lease until the repayment of debts created a condition precedent. 3. Whether the commencement date of the lease could be implied from a notice to tenants directing them to pay rents to the plaintiffs.
Ratio Decidendi: Specific performance of an agreement to grant a lease cannot be decreed unless the agreement fixes the date from which the term is to run. Additionally, when parties agree that a contract will be performed only after a certain event occurs, that event is a condition precedent. If the condition remains unfulfilled, the obligation to perform is not triggered, and the action for specific performance cannot be maintained.
Result: Appeal allowed.
Legal Category Hierarchy
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property law
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land tenure
- lease
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land tenure
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contract law
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specific performance
- certainty of terms
- conditions precedent
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specific performance
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practice and procedure
- limitation
Lord Atkinson :-
The plaintiffs in the action out of which this appeal has arisen were maliks of an eight annas share of Taluk No. 381, within the Colleotorate touzi of District 24 Pergunnahs; one Jogendranath Bose and Nagendrabala Dasi resident in Calcutta were maliks of a four annas share of this same taluk. Of this latter share the plaintiffs had ever since the death of their father been in possession as ijaradars of the said owners thereof, and one Hari Charan Bose resident within the aforesaid district was the malik of the remaining four annas' share. In order to overcome inconvenience and to facilitate the plaintiffs in collecting the rents payable by the tenants of the 12 annas' share of the entire taluk, the plaintiffs desired to purchase the four annas' share of Hari Charan Bose, and thus become entitled to collect the rents of the tenants of the entire taluk treated as one estate.
They accordingly proposed to the said Hari Charan that he should sell to Hem Chandra Bhanja, acting on behalf of himself and his co-plaintiffs, his aforesaid share for the sum of Rs. 14,000, of which Rs. 500 were to be paid as earnest money. This proposal was accepted by Hari Charan Bose. In pursuance of this arrangement a deed styled a deed of agreement of sale, dated the 31st August, 1901, was executed by Hari Charan Bose by which after acknowledging the receipt of the Rs. 500 earnest money, it was provided that upon payment to him, his heirs or representatives of Rs. 13,500, the balance of the purchase money within two years from the date of the deed, he or they would execute in favour of Hem Chandra Bhanja an "out and out deed of sale free from all incumbrances and cause the registration of the same."
It is averred in para 3 of the plaint filed by the plaintiffs that when Nayan Chandra Bose, a kinsman of theirs, heard that Hari Charan had agreed to sell his four annas' share in the manner suggested, he earnestly requested the plaintiffs to procure that the sale should be made to him, Nayan Chandra, instead of to Hem Chandra, and that the necessity the plaintiffs were under the purchase the property having been explained by them to him, Nayan Chandra, he promised that, after this purchase of the said share should be made, he would grant to them a mourasi mokurari ijara lease of the share so purchased for the annual jumma of Rs. 840, exclusive of the revenue and road cess payable in respect thereof, so that the plaintiffs would thus have in their own hand the collection of the rents of the entire 16 annas; that yielding to his importunities the plaintiffs agreed to his proposal and got the share purchased from Hari Charan Bose to be conveyed to him, Nayan Chandra Bose. This is the case made in the plaint upon this point. The plaint does not contain any further statement whatever as to the particulars of the lease to be given; when it was to commence or what was to be its duration.
By deed bearing date of the 21st November 1903, made between Hiri Charan Bose and Nayan Chandra Bose, after reciting that the former had agreed wish the latter for the absolute sale of the aforesaid share for Rs. 14,000, and had received Rs. 7,000 portion thereof, as earnest money, this one four annas share was conveyed to Nayan Chandra. It appears from a memorandum printed at p. 27 of the record, that Rs. 7,000 had been received by the vendor, in addition to two sums of Rs. 2,000 and Ra. 5,000 paid on the 7th and 8th of September respectively, the receipts for which are printed at pp. 15 and 13 of the record.
Mr. DeGruyther contended on behalf of the respondents that the first sum of Rs. 7,000 so averred to have been paid was paid out of the proper monies of the plaintiffs and that the further sum of Rs. 7,000 was, with the aid of the plaintiffs, borrowed by Nayan Chandra Bose from some friends for which loan he remains indebted. This may be so. It has not been made as clear as it might be, but if the fact be so, then as six per cent. on Rs. 7,000 would only amount
