1936   Present : Moseley J. and Fernando A.J.

PAIVA v. MARIKAR et al.

177-D. C. Kalutara, 18,566.

Specific performance-Agreement to transfer land-Alternative option to pay damages-No right to specific performance-Sale to third party-Notice of existing agreement-Trusts Ordinance, No. 9 of 1917, s. 93.

By deed dated April 22, 1931, the first defendant agreed to transfer the premises in suit to the plaintiff before June 30, 1931, after discharging an existing mortgage. The agreement was subject to the condition that in case the first defendant failed to execute the transfer he should pay to the plaintiff the sum of Rs. 250, consisting of Rs. 125 paid in advance and another sum of Rs. 125 as damages.

It was further provided that, if the said amount was not paid, the plaintiff could recover the same according to law. On September 4, 1933, the first defendant conveyed the premises to the second defendant.

Held that, on the failure of the defendant to fulfil the contract, he had the option of paying the sum of Rs. 250 which was an alternative obligation and that the agreement was not one of which specific performance could be demanded.

Held further, that the title acquired by the second defendant was not affected by the agreement as, in view of the time that had expired, it was not an existing agreement within the meaning of section 93 of the Trusts Ordinance.

Mathas v. Raymond (2 N. L. R. 270) followed ; Appuhamy v. Silva (17 N. L. R. 238) distinguished.

THIS was an action for specific performance of agreement dated April 22, 1931, by which the first defendant agreed to transfer the premises at a price of Rs. 325, of which a sum of Rs. 125 was paid in advance. The defendant undertook to discharge the existing mortgage on the premises and to convey the same to the plaintiff before June 30, 1931, free from all encumbrances.

On September 4, 1933, the first defendant transferred the premises to the second defendant.

The learned District Judge held that as the agreement had been duly registered, there was sufficient notice to the second defendant and that the transfer to the latter was subject to the agreement in favour of the plaintiff. He therefore entered judgment in favour of the plaintiff ordering specific performance of the agreement.

H. V. Perera (with him G. E. Chitty), for second defendant, appellant. -It is clear from the circumstances that the agreement to pay a sum of money was an alternative to the agreement to convey the property free of mortgage. Among others, the fact that this was one of several properties covered by the mortgage bond to secure a total debt of some Rs. 2,000 (a sum far in excess of the value of the property to be transferred) seems to point to this conclusion. If an alternative method of discharge of the liabilities arising on the contract appears, upon a proper interpretation, to have been in contemplation of the parties at the time they entered upon it, the Court will not decree a specific performance of one of those alternatives. See Fry on Specific Performance (5th ed.), p. 68, also

Mathas v. Raymond [1 2N. L. R 270] and Appuhamy v. Silva [. 2 17 N. L. R. 238]. The agreement to pay the money was, it is submitted, a substitute for specific performance of the obligation to convey. In any event the time for performance had expired in terms of PI on June 30, 1931, while the purchase by the second defendant was on September 4, 1933. The registration of P 1, therefore cannot be said to have constituted notice of an existing contract in respect of the property, as against second defendant.

N. E. Weerasooria (with him T. S. Fernando), for plaintiff, respondent. -We are here dealing with what is simply an agreement to convey immovable property. That is what the contract should be interpreted to mean. The mention of a sum of money to be paid in default of performance does not alter the true nature of the contract. It merely