1961 Supreme(Cal) 113

HIGH COURT OF CALCUTTA
A. N. Ray
ANANDILAL PODDAR - Appellant
Versus
GUNENDRA KR. ROY - Respondent
Suit 757  Of  1958
Decided On : JUNE 19, 1961

A party to a contract for the sale of land who fails to perform their obligations under the contract may be liable to have the contract rescinded.

Headnote:

SPECIFIC PERFORMANCE - Contract for sale of property - Rescission of contract - Plaintiff's failure to pay dues to mortgagee bank as per decree - Plaintiff's failure to tender conveyance - Plaintiff's failure to take possession of property - Defendant's readiness and willingness to perform contract - Rescission of contract allowed - Deposit forfeited.

Fact of the Case:

Plaintiff Anandilal Poddar filed a suit for specific performance of a contract dated August 25, 1956, as modified on September 16, 1957, for the purchase of premises No. 57, Jatindra Mohan Avenue, Calcutta, from Rai Bahadur Gunendra Krishna Roy (Roy defendant). The contract was subject to the condition that the premises would be sold free from encumbrances and that the sale would be completed by December 15, 1956. The plaintiff paid a sum of Rs. 25,000 as earnest money and in part payment of the consideration. In 1950, the defendant bank instituted a suit against Roy defendant in respect of the mortgage created on the said premises and obtained a mortgage decree for Rs. 3,32,143-4-0 and costs payable by certain instalments, and for sale of premises in default of payment. At the request of Roy defendant, the plaintiff agreed to take over the liability of Roy defendant to the defendant bank to the extent of Rs. 3,00,000 and the consideration for the sale of the premises was reduced by the said amount. The plaintiff was to pay the remaining liability of Roy defendant to the defendant bank in respect of the mortgage. The sale was to be completed by November 30, 1957, and possession was to be given by Roy defendant to the plaintiff by the same date. The plaintiff obtained a decree for specific performance on March 11, 1960. The decree directed the defendant bank not to proceed with the sale of the premises for 3 months from the date of the decree, and if within 3 months the plaintiff paid the dues to the defendant bank, the defendant bank would not proceed with the sale of the premises. The decree also declared that the contract dated August 25, 1956, as modified on September 16, 1957, ought to be specifically performed and carried into execution. The decree further ordered Roy defendant to deliver up quiet, vacant, and peaceable possession of the premises to the plaintiff, to pay damages for the premises at the rate of Rs. 200 per day from April 16, 1958, until possession was delivered up to the plaintiff, and to execute a conveyance in respect of the premises in favour of the plaintiff. The decree also directed that it be referred to the Registrar of the court to make an enquiry as to the encumbrance on the premises. Roy defendant died on September 20, 1960. The petitioners, as the legal representatives of Roy defendant, filed an application for setting aside the abatement of the suit, substitution of the petitioners as defendants in place of Roy defendant, and rescission of the contract. The petitioners contended that the plaintiff had failed to pay the dues to the defendant bank as per the decree, that the plaintiff had failed to tender the conveyance, that the plaintiff had failed to take possession of the property, and that Roy defendant was ready and willing to perform the contract.

Finding of the Court:

The court held that the plaintiff was not entitled to specific performance of the contract and that the contract should be rescinded. The court found that the plaintiff had failed to pay the dues to the defendant bank as per the decree, that the plaintiff had failed to tender the conveyance, that the plaintiff had failed to take possession of the property, and that Roy defendant was ready and willing to perform the contract. The court also found that the plaintiff had earned damages at the rate of Rs. 6,000 per month from April 16, 1958, to March 11, 1960, and that the plaintiff would continue to earn damages at the same rate until possession was delivered up to the plaintiff. The court further found that the plaintiff had not paid any sums save and except Rs. 35,000, and that the plaintiff had already earned Rs. 2,40,000 as damages and would perhaps go on earning damages with the result that the plaintiff might secure the property without having to pay any substantial sum.

Issues: 1. Whether the plaintiff was entitled to specific performance of the contract. 2. Whether the contract should be rescinded.

Ratio Decidendi: 1. The court held that the plaintiff was not entitled to specific performance of the contract because the plaintiff had failed to pay the dues to the defendant bank as per the decree, the plaintiff had failed to tender the conveyance, the plaintiff had failed to take possession of the property, and Roy defendant was ready and willing to perform the contract. 2. The court held that the contract should be rescinded because the plaintiff had committed material breaches of the contract and the defendant had suffered substantial prejudice as a result of the plaintiff's breaches.

Final Decision: The court ordered that the contract be rescinded and that all further proceedings in the suit be stayed except such as may be necessary for carrying the order into effect. The court also ordered that the petitioners were entitled to costs.