1954 Present: Gratiaen J. and Fernando A.J.

W. D. BAIYA, appellant, and K. D. A. KARUNASEKERA,
Respondent

S. C. 92-D. C. Kurunegala, 5,662 L

Vendor and purchaser-Sale of immovable property-Tender of price by purchaser-Sufficiency of guarantee that is reasonably adequate-"Escrow"-Proviso (3) to s. 92 of Evidence Ordinance. , .

In the absence of an agreement on the point, a purchaser of immovable property would make a sufficient tender of the purchase price if he offers security which effectively guarantees payment of the price immediately upon the vendor's complete fulfilment of his reciprocal obligations.

Held further, that a deed may be delivered on a condition that it is not to be operative until some event happens or some condition is performed. In such a case it is until then an escrow only.

APPEAL from a judgment of the District Court, Kurunegala.

Certain immovable property had been sold to the defendant subject to an express agreement that the defendant should in turn sell it to the plaintiff for Rs. 4,200 within a stated period. As plaintiff did not possess the money to buy the property he successfully negotiated with the Agricultural and Industrial Credit Corporation to raise a loan on the property for Rs. 5,000 by mortgaging it to the Corporation immediately on the defendant signing a conveyance of the property in his favour. The intention was that Rs. 4,200 out of the loan should be applied towards the consideration for the sale. Defendant, however, refused to affix his signature to the transfer of the property unless he received the purchase price at or before the time of the signature. The plaintiff thereupon instituted the present action asking for a decree ordering the defendant to convey the property to him.

H. V. Perera, Q.C., with N. G. J. Rustomjee, for the plaintiff appellant.

N. K. Choksy, Q.C., with G. E. S. Perera, Q.C., and T. B. Dissanayake, for the defendant respondent.

Cur. adv. vult.

July 20, 1954. GRATIAEN J.-

The plaintiff had sold three allotments of land to two persons named Don Dharmadasa Gunasekera and Don Lewis Perera in 1945. He was anxious to re-acquire the properties, but did not possess the means to do so. He succeeded, however, in persuading the defendant to purchase them for the time being from Perera and Gunasekera (by P1 dated 4th November, 1946), subject to an express condition that the defendant should in turn sell them to the plaintiff for Rs. 4,200 at any time before 4th November, 1949.

The plaintiff was very energetic in his endeavours to place himself in a position to exercise this option in his favour. Certain proceedings between the parties were initiated before the Debt Conciliation Board, but I agree with Mr. Choksy that a settlement arrived at in January, 1948, before that tribunal has not materially altered the legal rights or obligations of the parties under P1. What is important, however, is that shortly afterwards, in pursuance of that settlement, the plaintiff successfully negotiated with the Agricultural and Industrial Credit Corporation to raise a loan on the properties for Rs. 5,000 by mortgaging them to the Corporation immediately on the defendant signing a conveyance in his favour in terms of P1. The intention was that Rs. 4,200 out of the loan should be applied towards the consideration required to settle the defendant's claim. The defendant agreed to co-operate in implementing this arrangement which provided a practicable solution to the plaintiff's problem without derogating from the defendant's contractual rights.

The Corporation was precluded by statute from handing over the amount of the promised loan until the defendant's deed of transfer in favour of the plaintiff, and the plaintiff's primary mortgage in favour of the Corporation, had both been duly registered. It was therefore arranged that these two instruments should be signed, notarially attested, and forwarded for r