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1929 Supreme(SC) 82
Privy Council At Allahabad
Sir Binod Mitter, Sir George Lowndes , Lord Tomlin, Viscount Din, Justice Lord Buckmaster, JJ.
Fatma Bibi and others -Appellant
Versus
Saadat Ali and others -Resopndent
Privy Council Appeal No. 118 of 1926, Allahabad Appeal No. 37 of 1924
Decided On : 31-10-1929
W. Wallach
A valid prior contract for the sale of property, followed by a registered conveyance, prevails over a subsequent contract for the same property, regardless of whether the first purchaser had knowledge of the later agreement.
Headnote:(A) Specific Performance of Contract - Priority of agreements - Validity of prior contract - Registration of conveyance - Where vendors entered into a contract for sale of property with a purchaser and subsequently entered into another contract with different parties due to financial urgency to satisfy a court decree - If the first contract is valid and the purchaser subsequently obtains a registered conveyance, the first purchaser is entitled to the property - Knowledge of the first purchaser regarding the subsequent contract is immaterial.
Facts of the case:
The vendors were subject to a court decree requiring payment of a specific sum by a deadline to avoid interest and costs. To obtain these funds, the vendors entered into a contract for the sale of property with a purchaser. Due to a delay in the purchaser providing the funds and the vendors' increasing anxiety regarding the court deadline, the vendors entered into a second contract for the sale of the same property with other parties. Subsequently, the first purchaser provided the funds, the property was released from the court's hold, and a registered conveyance was executed in favor of the first purchaser.
Findings of Court:
The court found that the first contract was valid and the receipt issued on that date was in order. The subsequent registration of the property in favor of the first purchaser was based on this valid earlier contract.
Issues: Whether the parties to a subsequent contract are entitled to specific performance when a prior valid contract existed and the first purchaser had already obtained a registered conveyance.
Ratio Decidendi: The validity of the earlier contract is the deciding factor. A purchaser who relies on a prior valid contract and obtains a registered conveyance is entitled to the property, and any knowledge the purchaser may have had regarding a subsequent contract entered into by the vendors is immaterial.
Result: Appeal dismissed.
Act Referred
Legal Category Hierarchy
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property law
-
sale of immovable property
- specific performance
- registration of conveyances
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sale of immovable property
Lord Buckmaster.-
The question on this appeal is whether the appellants are entitled to specific performance of a contract dated 25th October 1920, for the sale to them by respondents 2 and 3 of certain property in Mauza Sanwalpur Newada, Pargana Saharanpur. Respondent 1 is a purchaser from the other respondents under an alleged contract of 22nd October 1920. He undoubtedly obtained a conveyance of the property on 28th October 1920, and was entered on the register, but the appellants say this contract was not made on 22nd October, and that he obtained registration with full knowledge of the appellants' rights. This claim was supported by the Subordinate Judge, but rejected by the High Court.
Anexamination of the facts has satisfied their Lordships that the judgment of the High Court is correct. At the material dates the vendors were subject to adecree for the sale of the property, and a compromise decree had been passeddirecting them to lodge in Court Rs. 17,182-10-0 on or before 26th October inorder to escape interest and costs amounting to Rs. 600. It is stated inevidence, which their Lordships agree with the High Court in thinkingtrustworthy, that, in order to obtain this money, the vendors on 22nd October1920, entered into a contract for the sale of the property to respondent 1, anda receipt given on that date appears on the face of it to be perfectly inorder. The purchaser had not got the money with him, and it was necessary thathe should go away some short distance to his wife, who seems to have had chargeof the funds. He went away, but did not immediately come back. Meanwhile thevendors were becoming extremely anxious about their ability to obtain the moneynecessary to pay the decree, and proceeded to enter into another contract on25th October with the present appellants. After that, on 26th October, theoriginal purchaser returned. The money was paid into Court on 28th October, theproperty was released, and on that date conveyed to the original purchaser,respondent 1, and his purchase was registered. Their Lordships do not thinkthere is any doubt that the original purchaser had knowledge by telegram andotherwise of the transactions that had taken place, which culminated in thiscontract of 25th October. That appears to be wholly immaterial, because he wasentitled to rely on the earlier contract, and by virtue of that contract heobtained the purchase and had it duly registered. The reasons given by the HighCourt appear to their Lordships to be irrefutable and they need not berepeated. The whole appeal depends upon the existence and validity of thecontract of 22nd October.
For these reasons their Lordships will humblyadvise His Majesty that this appeal be dismissed.
The appellants will pay to respondent 1 such costs as he has properly incurred.
Appeal dismissed.
