HPA INTERNATIONAL v. BHAGWANDAS FATEH CHAND DASWANI AND ORS.

74 SUPREME COURT REPORTS [2004] SUPP. 3 S.C.R. A obtaining release deeds from them by paying them consideration for surrender of their interest, as was done by the subsequent vendee. Another course open to him was to enter into separate agreement with the reversioners or insist on the reversioners joining the sale agreement. It seems the vendee entered into a speculative deal for obtaining full interest in the property depending upon the sanction to be granted by the court. It seems to be in contemplation of the parties that if the reversioners objected, the court might refuse sanction. They could as well foresee that despite the reversioners' objection, the court might grant sanction. The transfer of full interest in the property was, therefore, dependent on sanction of the court. To meet this contingency, there were specific terms such as clauses (4) and (6) incorporated in the contract whereby it was clearly agreed that the vendor shall obtain sanction of the court at his own expense and costs and if the sanction was not accorded by the court, the agreement would stand cancelled and the advance money refunded to the vendee. Clause (15) of the agreement could come into operation only if the court granted sanction and any of the parities failed to complete the sale. Clause ( 15) had no operation when the sanction was not accorded to the sale.·

As has been seen from the facts of this case, the vendor did apply for sanction, waited for two years and when it found that the reversioners opposed the grant of sanction, cancelled the contract. The sanction suit, despite instructions to his lawyer was not, in fact, withdrawn. The suit for sanction frustrated not because the vendee became co-plaintiff but because he filed an affidavit restricting his claim to life interest of vendor. The life interest was not agreed to be separately sold apart from the interest of the reversioners. The terms of sale agreement Ex.P-1 clearly stipulate sale offull interest in the property. Whatever may be the reasons, the sanction of the court could not be obtained for sale of interest of the reversioners. The reversioners were not parties to the sale agreement Ex.P-1. In such a situation, the question is whether in law and equity, the vendee can insist that the vendor should convey, if not full interest, his own life interest in the property.

If the vendee intended to seek conveyance separately of the life interest of the vendor, the earliest opportunity for him was when he had - received notice dated I 1.9.1979 sent through lawyer by the vendor cancelling the contract. Assuming that at that time he could not opt for

HPA INTERNATIONAL v. B.F.C. DASW AN! [DHARMADHIKARI,J.] 15 lesser relief as the suit for sanction was pending, he could have, in any case, opted for conveyance of life interest of the vendor soon after he came to know of the negotiations for sale with Bob Daswani, which took place in the presence of one of the partners of the plaintiff-vendee. Even after deriving the knowledge of the execution of the sale deed dated 29.12.1979 Ex. D-1, the option to obtain lesser relief of transfer of life interest was not exercised. It was exercised as late on 25.11.J 986 by filing an affidavit and at the time when pleadings of the parties were completed and the joint trial in the two suits had already commenced. During long pendency of the suits between 1979 to 1986, the parties interested in the property changed their positions. The vendor by executing registered sale deed in favour of the subsequent vendee got his public dues paid to relieve the pressure on the property and obtained market price of the property. After obtaining possession of the property pursuant to the sale deed, the subsequent vendee has raised constn1ction and inducted tenants. Accepting the legal stand based on sectioiis.90, 91 & 92 of the Indian Trusts Act that the subsequent vendee, being a purchaser with knowledge of prior agreement, is holding D • the property as a trustee for the benefit of the prior vendee, the vendor, who changed his position by effecting subsequent sale cannot be compelled to convey his life interest when such lesser relief was not claimed at the earliest opportunity and the terms of the contract did not contemplate transfer of life interest alone. E On duly appreciating of the evidence on record, construing specific terms of the contract and considering the conduct of the parties, we have arrived at the conclusion that the recession of the contract, due to non-grant of sanction by the court within two years after execution of the contract and filing of the suit for sanction, was not an act of breach of contract on p the part of the vendor to justify grant of relief of specific performance of the contract to the prior vendee.

We are also of the view that the subsequent vendee, by his own act in the pending suits, was responsible for rendering the suit for sanction as infructuous. He was guilty of lapse in not seeking conveyance of life G interest of the vendor at the earliest opportunity when notice of recession

- of the contract was received by him and later when he derived the knowledge of execution ofregistered sale-deed in favour of the subsequent vendee. The option was exercised conditionally in the midst of the joint trial of the two suits. H

76 SUPREME COURT REPORTS [2004] SUPP. 3 S.C.R.

A There was one integrated and indivisible contract by the vendor to convey full interest in the property i.e., his own life interest and the interest of the reversioners with sanction of the court. As the court had not granted the sanction, the contract could not be specifically enforced. The lesser relief of transfer of life interest was not claimed within a reasonable time B after the vendor had intimated that the contract, as agreed for full interest, was not possible of performance. We find neither equity nor law is in favour of the plaintiff-vendee.

Section 12(3)(a)(b)(i)(ii) of the Specific Relief Act read thus :- "12. Specific pe1formance of part of contract.- c ( 1) ................. .

(3) Where a party to a contract is unable to perform the whole D of his part of it, and the part which must be left unperformed either-

(a) forms a considerable part of the whole, though admit- ting of compensation in money; or E (b) does not admit of compensation in money;

he is not entitled to obtain a decree for specific performance; but the court may, at the suit of other party, direct the party in default to perform specifically so much of his part of the contract as he F can perform, if the other party -

(i) in a case falling under clause (a), pays or has paid the agreed consideration for the whole of the contract reduced by the consideration for the part which must be left unperformed and a case falling under clause (b ), G [pays or had paid] the consideration for the whole of the contract without any abatement; and

H (ii) in either case, relinquishes all claims to the perform- ance of the remaining part of the contract and all right to compensation, either for the deficiency or for the -

HPA INTERNATIONAL v. B.F.C. DASWANJ [DHARMADHIKARI, J.] 77

loss or damage sustained by him through the default of the defendant." [Emphasis added]

The power to grant partial relief, from the very language of the Section 12(3) is discretionary with the Court to be exercised keeping in view the facts and circumstances of each case and the rights and interests of the parties involved.

What is most important to be taken note of is that the reversioners were not parties to the sale agreement Ex.Pl. In the sanction suit they filed written statement opposing the proposed sale as adversely affecting their spes successionis.

The Court dismissed the sanction suit rightly or wrongly but the matter having not been carried further in appeal, the subject of grant or refusal of sanction is no longer open to consideration in this appeal preferred only against the decision of the Division Bench in appeal refusing D • decree of Specific Performance of Sale of life interest.

The reversioners have surrendered their interest by accepting consid- eration separately and executed separate release deeds in favour of the subsequent vendee. Even though the subsequent vendee has acquired property with knowledge of sale agreement Ex.Pl existing with the prior vendee, the latter has no equity in his favour as to bind the reversioners and in any manner adversely affect their interest. They were not parties to the sale agreement and have already by separate release deeds, on accepting separate consideration, surrendered their interest in favour of the subsequent vendee. Any grant of relief of transfer of life interest of the vendor to the prior vendee would involve the reversioners in further litigation. If only life interest of the vendor is allowt;d to be conveyed to the prior vendee, after death of vendor, the reversioners are likely to be involved in litigation in future to help in restoring possession of the property to the subsequent vendee and effectuate the release deeds executed in his favour by them. Grant of such equitable relief would adversely affect the immediate efficacy of the release deeds and would create various hurdles in working out the rights and remedies of the reversioners vis-a- vis the subsequent vendee. It would not be a proper exercise of discretion by the Court to grant such pa1iial relief of directing conveyance of life interest of the vendor as that would adversely affect the interest of the H

78 SUPREME COURT REPORTS [2004] SUPP. 3 S.C.R.

A reversioners. We have already held above while construing the terms of sale agreement Ex.Pl that as the reversioners' interest in the property was likely to be affected, the contracting parties never intended piecemeal transfer oflife interest of the vendor and spes succession is of reversioners. B What the contracting parties intended and stipulated was transfer of full interest in the property i.e. vendor's life interest and reversioners' spes successionis with sanction of the Court. It is for the above reason that parties very clearly agreed by specific clause (6) in the agreement that if the sanction of the Court was not accorded, the agreement shall forthwith stand cancelled and the advance money re;:eived shall be returned to the purchaser. The contracting parties were fully aware that reversioners, who had a mere chance of succession, were not parties to the agreement. The parties to the contract could have taken care of the eventuality of refusal of sanction by the Court and possibility of the vendor transferring only his life interest to the vendee, but such eventuality of separate transfer of life interest is conspicuously absent in the terms of the agreement. Such • obligation on the part of the vendor to transfer his life interest, if sanction for transfer of reversioners' interest was not granted, cannot be read in the contract by implication and recourse to Section 12(3) of the Specific Relief Act, therefore, is impermissible. E Jn our considered opinion, Sectio~ 12(3) of the Specific Relief Act can be inv0ked only where terms of contract permit segregation of rights and interest of parties in the property. The provision cannot be availed of when the terms of the contract specifically evince a intention contrary to segregating interest of the vendor having life interest and spes succession is of reversioners. Neither law nor equity is in favour of the vendee to grant Specific Perfonnance of the Contract.

On these facts, in our opinion, the learned single judge of the High Court was in error in granting decree of specific performance of transfer of life interest of the vendor on a finding that the vendor had committed breach by rescinding contract during pendency of sanction suit. The Division Bench of the High Court, in our considered opinion, rightly reversed the decree and dismissed the suit.

We are fortified in our conclusion by the decisions of Privy Council H reported in AIR (34) 1947 PC 182 [Dalsukh M. Pancholi v. The Guarantee

HPA INTERNATIONAL v. B.F.C. DASWANI [DHARMADHIKARI, J.] 79

Life and Employment Insurance Co. Ltd., & Ors.] in which facts were somewhat similar requiring court's approval for performance of the agreement of the sale. Two questions were posed by the court - (a) was the term "subject to the Court's approval" an essential term of the agreement?; and (b) if it was essential, by whose default did it fail? The Privy Council answered the questions saying - " No wonder that the approval of the 'attaching court' was insisted on as a necessary condition for effecting the sale, for without it, the title to the property was not at all safe. In their Lordships' opinion there can be no doubt that the condition was an essential one."

The Privy Council then recorded the following conclusions on the questions posed :-

"The person to apply to the 'attaching Court" for securing the approval of the Court was the vendor; on the construction of the contract, the provision for approval by the Court was not exclu- D sively for the benefit of the purchaser, and therefore, the purchaser cannot by his waiver get rid of the necessity for the Court's approval; the Court contemplated, was the Court having charge of the mortgage proceedings, as that Court alone could get rid of the Order for public sale; application was made by the vendor to the proper Court and was refused; the contract then fell to the ground and had worked itselfout. In their Lordships' opinion, the contract was a contingent contract and, as the contingency failed, there was no contract which could be made the basis for a decree for specific performance and the appellant's suit has to be dismissed. In this view, it is unnecessary to consider the second question, or any other point in the case."

The above Privy Council decision was sought to be distinguished on the ground that it was not a case where the vendor was not in a position to convey his own interest in the property without the court's sanction. In G our opinion, however, that aspect is not of much importance because our conclusion is that the agreement was indivisible, for sale of full interest in the prope11y i.e. vendor's life interest and reversioners spes successionis . ,,..,, . As the cou11's sanction was not obtained within a reasonable time, the contract became unenforceable. H

80 SUPREME COURT REPORTS [2004] SUPP. 3 S.C.R.

A The decision of the Calcutta High Court reported in !LR 152 [Narain Pattro v. Aukhoy Narain Manna & Ors.] also supports the respondents. When the sanction as contemplated was not obtained from the court, the contract even with variations could not be directed to be enforced. See the following observations of the Calcutta High Court :-

B "It is not necessary for us to express any opinion as to whether the suit was barred by clause ( e) of section 21 or clause (b) of section 27 of the Specific Relief Act, for in our opinion the Judge was quite right in saying that the contract as it stood could not be enforced, and that section 26 had no application to the case. The contract such c as it was, was not a complete contract at any time. It was contingent upon the permission of the court. The court's permission did not extend to the whole contract as set out in the shuttanamah. The defendants, therefore, could not be compelled to carry out the terms of the original agreement, nor could they have insisted upon the plaintiffs carrying out the terms sanctioned by the court. D Section 26, upon which the vakeel for the appellant relies, sets out .. cases in which contracts cannot be specifically enforced except with a variation; and there are five particular cases set out in which a contract may be enforced subject to a variation, such variation being in favour of the defendant, and the section in our opinion assumes that the parties or vakeels representing them are agreed as to the existence of the contract, but not agreed as to specific terms. The section provides that, when fraud or mistake of fact, or misrepresentation has induced the defendant to sign an agreement, that agreement can only be enforced on the terms which the defendant intended to agree to. There is no provision of law of which we are aware which entitles the plaintiff to claim a variation in the terms of his contract, when he finds that the contract itself cannot be carried out. In the present case the plaintiff by his plaint sought to enforce the original contract without any variation. It seems to us, therefore, that the Judge was right in holding that the agreement in the shuttanamah could not be enforced as it stood, and that section 26 would not entitle the plaintiff to enforce it with a variation.

The case of Narain Pattro (supra) was relied by the same Calcutta H High Court in the case of Sreemati Kalidasi Dassee & Ors. v. Sreemati

HPA INTERNATIONAL v. B.F.C. DASWANI[DHARMADHIKARI, J.] 81

Nobo Kumari Dassee & Ors., 20 CWN 929 wherein on similar circumstances for not obtaining letters of administration from the Court, tl)e contract was held to have failed.

In the case M V. Shankar Bhat & Anr. v. Claude Pinto Since (dead) by LRs. & Ors., [2003] 4 sec 86, the agreement for sale was subject to ratification by co-heirs and this Court concluded in para 31 as under :-

"When an agreement is entered into subject to ratification by others, a concluded contract is not arrived at. Whenever ratifica- tion by some other persons, who are not parties to the agreement is required, such a clause must be held to be a condition precedent for coming into force of a concluded contract."

The alternative claim for lesser relief of life interest of vendor has been rejected by us. We find support for our conclusion from the following observations of Privy Council reported in AIR 1925 PC 45 [William D Graham v. Krishna Chandra Dey], where on similar provisions of section 16 of the old Specific Relief Act, such claim for lesser relief was negatived on the ground that it would amount to creating a different contract between the parties not in contemplation by them when they entered into the contract in question, which is sought to be enforced. E "Their Lordships think (1) that before a Court can exercise the power given by section 16 it must have before it some material tending to establish these propositions, and cannot apply the section on a mere surmise that, if opportunity were given for F further enquiry, such material might be forthcoming and possibly might be found to be sufficient; and (2) that the words of the section wide as they are, do not authorise the Court to take action otherwise than judicially, and in particular do not permit it to make for the parties, or to enforce upon them a contract, which in substance they have not already made for themselves ............. . G

Hence section 16, both because it must be something not covered by section 14 and because no court can act unjudicially without H

82 SUPREME COURT REPORTS [2004] SUPP. 3 S.C.R.

A either statutory warrant or consensual authority, must be limited and the expression "stands on a separate and independent footing" points to a limitation, which would exclude any new bargain, that cannot be said to be contained in the old one."

B As the lesser relief was claimed after long delay and the contract was found to be indivisible and inseparable, the partial relief was denied in the case of Govinda Naicken & Anr. v. Apathsahaya Iyer alias Ayawaiyer, 37 Madras Series 403.

"But when the family is divided as here, section 17 distinctly c prohibits a Court from directing the specific performance of a part of a contract except in accordance with the preceding sections. Even in cases where the conditions of section 15 are fulfilled the use of the word 'may' indicates that the granting of a decree for part performance is discretionary with the Court, and we should D hold that when there has been great delay in attempting to enforce a contract and circumstances have greatly changed either from a rise of prices or other causes in the interval, the Courts would be justifi-ed in refusing to given legal effect to an inequitable arrangement. E Now the plaintiff in the present case wants the Court to compel the defendant to execute a deed of sale for the whole property and if he refuses, to is.sue one in his name under th.: seal of the court, and to allow him to make what he can out of the title thus conveyed. Such a request is quite inadmissible. A sale is a transfer of ownership in exchange for a price (section 54, Transfer of Property Act). The defendant has nothing which he is capable of transferring in the moiety of the property of which he is not the owner and is not in possession. It is impossible to sever the execution of the deed from the transfer to be effected thereby and to treat them as separate acts of the same person.

[Emphasis added}

H An old decision of Judicial Commissioner, Nagpur reported in AIR (1915) Nappur 15 [Shardaprasad v. Sikandar] is being referred only because it has some persuasive value and the facts of that case are to a great -

HPA INTERNATIONAL v. B.F.C. DASWANI fDHARMADHIKARI, J.] 83

extent nearer to the facts of the present case. The pertinent observations in that case are :-

"The first defendant made two undertakings. The first was to apply for sanction for the sale to the plaintiffs of Sir land without reservation of occupancy rights. This part of his contract he duly performed. The second undertaking was that, if sanction were granted, he would sell his share with cultivating rights in Sr. No provision was made for the event of sanction being applied for and refused. This part of the contract was purely a contingent contract, and if the future event provided for became impossible the contract fell through. Sections 14 and 15 ofthe Specific ReliefAct appear to me to refer to cases where the inability to perform the whole contract was not contemplated by the contracting parties. Where, as here, the contracting parties knew ofand contemplated the possibility of the whole contract being incapable of performance, for reasons beyond the control of either of the parties, the sections have no application. They apply to unforeseen contingencies, not to foreseen contingencies. The parties should have provided in the contract for such an eventuality, but failed to do so. [Emphasis added]

In the present case, the terms of the contract fully indicate that the E pat1ies did contemplate that if the sanction of the court was not granted for transfer of the interest of the reversioners, the contract could not be enforced. Clause (6) specifically provided that in case sanction by the court was not granted, the advance money of Rs. 25,000 shall be refunded to the purchaser. It was known to the parties that the vendor had only life F interest in the property and the reversioners were not the parties to the agreement. Even with this knowledge of limited right of the vendor and the reversioners being not signatories to the sale agreement, there is no stipulation made in the contract that if court's sanction was not obtained for transfer of reversioners' interest, the vendor shall convey his life interest to the vendee. G

On behalf of the plaintiff-vendee, strong reliance was placed on Suisse Atlant v. N. V. Rotterdam, [ 1966] 2 ALL. ER 61. It has been argued that seeking sanction of the cou11 for transfer of reversioner's interest was an obligation on the vendor and if it deliberately acted in a manner to get H

84 SUPREME COURT REPORTS [2004] SUPP. 3 S.C.R. A relieved of that obligation by not prosecuting sanction suit and prematurely terminating the contract, the vendee has a right to waive that condition and ask for transfer of life interest of the vendor which he could alienate to the vendee. in other words, it is submitted that even ifthe clause seeking sanction of the court was a fundamental term of the contract, its breach was deliberately committed by the vendor and the vendee was, therefore, entitled to insist on fulfilment of the contract to the extent the vendor is in a position to fulfil.

We have gone through the opinions expressed by Hon'ble Judges of the House of Lords in the case of Suisse At/ant (supra). On the evidence, in the present, we do not find that the decision of the House of Lords, can be taken aid of for claiming specific relief of transfer of life interest. We have found from the evidence discussed above that there was pressure on the property for recovery of taxes. It was not expected or in contemplation, of the parties, as can be gathered from the terms of the contract, to wait for an uncertain period of time and to expose the property to coercive public recovery proceedings. The vendor applied for sanction but the reversioners had opposed. Finding, no possibility of grant of sanction, the vendor terminated the contract but did not withdraw the sanction suit, although his lawyer was instructed accordingly. We are, therefore, not prepared to accept that the vendor had committed any breach of the contract as has been sought to be urged on behalf of the vendee. It is not possible to accept allegations of fraud, conspiracy or bad faith on the part of the vendor for which there is no firm foundation in the pleadings or the evidence led. In this respect, the following observations of the Lord F Reid in the House of Lords' decision (supra) are pertinent :-

"I think that it would be open to the arbitrators to find that the respondents had committed a fundamental or repudiatory breach. One way of looking at the matter would be to ask whether the G pa1iy in breach has by his breach produced a situation fundamen- tally different from anything which the parties could as reasonable men have contemplated when the contract was made. Then one would have to ask not only what had already happened but also what was likely to happen in future. And there the fact that the breach was deliberate might be of great importance".

HPA INTERNATIONAL v. B.F.C. DASWANI [DHARMADHIKARI, J.] 85

Applying the above test to the terms of the contract and the conduct of the parties under consideration before us, we do not find that the parties had agreed to wait for the whole period during which the suit for sanction was pending and till its finalisation including appeal proceedings, if any. Such a course was not in contemplation of the parties because the vendor had agreed that the vendee would directly discharge the tax liabilities from the total amount of sale consideration. It was not possible for the vendor to have waited indefinitely for final orders on the suit for sanction when the reversioners had objected to the sanction and there was remote possibility of the grant of sanction in foreseeable near future.

It is argued that the Court could have granted sanction even though the reversioners objected because there was threat of coercive sale of the property for recovery of tax dues and taxes.

It would be purely in field of speculation as to what would have actually happened had the vendor continued to prosecute the suit despite the objection of the reversioners. As we have mentioned above the complications in disposal of sanction suit on merit were created by the vendee himself by getting himself transposed as co-plaintiff and then filing an affidavit restricting his claim to transfer of life interest. It is, thereafter, that the sanction suit was dismissed as infructuous. If the order of the court refusing sanction was erroneous and when an appeal was filed by the subsequent vendee against grant of decree of specific performance of life interest to the vendee, the vendee could have appealed against dismissal of suit for sanction as infructuous. It is argued that the two suits were clubbed for trial and as the lesser relief of transfer of life interest was granted in suit for specific performance, it was not necessary for the vendee to have appealed against dismissal of the sanction suit. We need not deal with this argument any further, as in our view, as the sanction was not granted for sale by the court within a reasonable period of two years and the possibility of commencement of coercive proceedings of tax recovery loomed large, the vendor cannot be held to have committed a breach of the contract when he served a notice of termination of contract.

On behalf of the vendee, reliance is heavily placed on Satyabrata Ghose v. Mugneeram Bangur & Co., [1954] SCR 310. The decision is distinguishable. In that case, the defendant company for the purpose of H

86 SUPREME COURT REPORTS [2004] SUPP. 3 S.C.R.

A developing certain land, entered into the contract with plaintiff for sale of its plot. The sale-deed was to be executed after construction of drains and roads. After the execution of the agreement and when construction of public roads and ·drains was half done, the land was requisitioned by the government for military purposes. The defendant company could not B further undertake the road construction work and therefore, wrote to the plaintiff to treat agreement as cancelled. It is on these facts that this court held :-

"that having regard to the nature and terms of the contract, the

c actual existence of war conditions at the time when it was entered into, the extent of the work involved in the scheme fixing no time limit in the agreement for the construction of the roads etc., and the fact that the order of requisition was in its very nature of a temporary character, the requisition did not affect the fundamental basis of the contract; nor did the performance of the contract become illegal by reason of the requisition, and the contract had not, therefore, become impossible within the meaning of section 56 of the Indian Contract Act."

Such is not the position in the present case. The vendor could not have waited indefinitely for the final result of the sanction suit as coercive proceedings for recovery of tax were likely to be initiated at any time. We have held above that reasonable period for obtaining sanction from the court has to be read as an implied condition of the contract in view of the urgent necessity of sale to satisfy the tax dues and save the property from coercive recovery. The vendor had agreed for transfer of full interest in the property including his own life interest and of the reversioners. As the reversioners objected and ultimately the sanction suit failed, the performance of contract, as agreed for transfer of full interest in the property, had become impossible. There was no agreement between the parties that if sanction was not granted, the vendor would transfer his life interest. On the contrary, the agreement clause specifically stated that if the sanction was not obtained, the advance money shall be returned. This stipulation shows an intention contrary to the pa11ies agreeing for transfer of life interest of vendor, if transfer of reversioners' interest was not possible for want of court's sanction.

HPA INTERNATIONAL v. B.F.C. OASWANI [DHARMADHIKARI, J.) 87

Another argument advanced is that the reversioners had merely a A chance of succession and had no transferable interest in the property. Reference is made to section 6(a) of the Transfer of Property Act which states :-

"6. What may be transferred-Property of any kind may be transferred, except as otherwise provided by this Act or by any other law for the time being in force, -

(a) The chance of an heir-apparent succeeding to an estate, the chance of a relation obtaining a legacy on the death of a kinsman, or any other mere possibility of a like nature, cannot be trans- ferred."

Elaborating this argument further, it is argued that as the vendor erroneously represented and agreed for transfer of spes successionis of the reversioners, on the principle of section 43 of the Transfer of Property Act D read with sections 90, 91 & 92 of the Indian Trusts Act, the vendor, the subsequent vendee and the reversioners, who have surrendered whatever right they had in the property, are bound by estoppel and are obliged in law by the provisions of Specific Relief Act to transfer full interest in the property to the prior vendee. Reliance is placed on The Jumma Masjid v. E Kodimaniandra Deviah, [1962] Supp. 2 SCR 554.

The above argument has no merit and the aforesaid decision is hardly of any help to the vendee. This is not a case where the vendor had only right of spes successionis and after execution of agreement of sale, he subsequently acquired full interest in the property to be held bound by section 43 of the Transfer of Property Act. In the case before us, the reversioners were not parties to the agreement of sale. When in the suit for sanction to transfer their interest they were made parties and were noticed, they expressly objected to the proposed transfer. No principle of estoppel or provisions of section 43 of the Transfer of Property Act can, therefore, operate against them. So far as the subsequent vendee is concerned, in the course of suit, he was pushed to a position in which he could not take a stand that he had no knowledge of the prior agreement with the vendee but he has separately purchased life interest from the vendor and obtained separate release deeds, on payment of consideration, H

88 SUPREME COURT REPORTS [2004] SUPP. 3 S.C.R.

A from the reversioners. The reversioners being not parties to the sale agreement Ex. P-1 entered into with the vendee, the latter could not enforce the contract Ex. P-1 against the former.

The decision in Dr. Jiwanlal & Ors. v. Brij Mohan Mehra & Anr., B [1972] 2 sec 757 is also distinguishable on the facts of that case. There clauses (5) & (6) of the agreement provided for execution of sale-deed within three months from the date the premises agreed to be sold were vacated by the Income-Tax Authorities . It was fu1ther provided that if the income-tax authorities did not vacate the premises or they stood requisitioned by the Government before registration of sale-deed - the vendor shall refund the consideration to the purchaser. As the premises were requisitioned by the government, the stand taken by the vendor was that it was contingent contract and on requisition of the premises, the contract failed. On the evidence of the parties, the finding reached was that the vendor had manipulated requisition of the premises. This Court, therefore, in appeal held that the contract did not provide that the sale would be effected only if the premises remain non-requisitioned or that on requisition of the premises, the contract would come to an end. The clause providing for refund of consideration if the premises were not vacated by the income- tax authorities or subsequently requisitioned by the government was held to be solely for the benefit of the vendee. It was held that if the vendor manipulated the requisition, the vendee could waive that condition and insist on sale of premises in the condition of it having been requisitioned.

In the case before us, we have not found that the vendor was guilty of rendering the suit for sanction infructuous. It did terminate the contract pending the suit for sanction but never withdrew that suit. The vendee himself prosecuted it and rendered it infructuous by his own filing of an affidavit giving up his claim for the interest of reversioners. In such a situation where the vendor was not in any manner guilty of not obtaining the sanction and the clause of the contract requiring court's sanction for conveyance of full interest, being for the benefit of both the parties, the contract had been rendered unenforceable with the dismissal of the sanction suit.

Where the clause requmng obtaining of sanction was to protect interest of both the parties and when the sanction could not be obtained

HPA INTERNATIONAL v. B.F.C. DASWANI [DHARMADHIKARI, J.] 89

for reasons beyond the control of the parties, the contract cannot be directed to be specifically enforced. House of Lords in the case of New Zealand Shipping Co. Ltd. v. Societe Des Ateliers Et. Chantiers De France, 1918- 19 All ER 552, in similar circumstances, negatived the claim of specific performance. It was held in that case that where two parties are equally blameless and none of them could be said to have brought about a situation by their act or omission to frustrate the contact, the contract cannot be directed to be specifically enforced.

On behalf of the vendee, support for his claim was sought from the following observations of Lord Atkinson :-

"The application to contracts such as these of the principle that c a man shall not be permitted to take advantage of his own wrong thus necessarily leaves to the blameless party an option whether he will or will not insist on the stipulation that the contract shall D . ) be void on the happening of the named event. To deprive him of that option would be but to effectuate the purpose of the blame- able party. When this option is left to the blameless party it is said that the contract is voidance, but that is only another way of saying that the blameable party cannot have the contract made void himself, cannot force the other party to do so, and cannot deprive the latter of his right to do so. Of course the parties may expressly E or impliedly stipulate that the contract shall be voidance at the option of any party to it. I am not dealing with such a case as that. It may well be that question whether the particular event upon the happening of which the contract is to be void was brought about by the act or omission of either party to it may involve a p determination of a question of fact.

As has been observed by Lord Atkinson, it.is always a question of fact to be determined in each case as to who is guilty of the act or omission to render the contract void or unenforceable. In the case of New Zealand Shipping Co. Ltd. (supra) on facts the ultimate conclusion reached G unanimously by their Lordships was that the clause of the contract in that case, was a stipulation in favour of both the parties and the situation was not brought about by any of the parties to give rise to avoidance. It was found that the failure to fulfil the contract was not due to any fault on the part of the respondents but was due to a cause beyond their control. H

90 SUPREME COURT REPORTS [2004] SUPP. 3 S.C.R.

A In the present case also, we have come to conclusion that the vendor waited for a reasonable period for grant of sanction to the sale by the court. There was a pressing need for sale as the public dues and taxes could have been recovered from the property by coercive process at any time. The vendor, therefore, advisedly withdrew from the contract, negotiated sale B on different terms with the subsequent vendee and ultimately entered into the contract with the latter. The vendor did not actually withdraw the suit for sanction. The vendee himself became co-plaintiff to the suit and unsuccessfully tried to prosecute it. The sanction suit was rendered infructuous by vendee's own conduct of filing affidavit restricting his claim to life interest. He suffered the dismissal of sanction suit as c infructuous and did not question the correctness of the court's order in appeal before the Division Bench, although the subsequent vendee, against grant of decree of specific performance of life interest, had preferred an appeal.

D In this situation, even if we come to a conclusion that the vendee had rightly tried his utmost to obtain court's sanction and cannot be blamed •• for transposing him as a co-plaintiff and prosecuting the sanction suit, the sanction sought could not be obtained for reasons beyond the control of the parties. The vendor can not be held guilty of the breach as to entitle the vendee to seek specific performance of life interest of the vendor. The contract entered into between the parties was for conveying full interest in the property namely life interest of vendor and chance of succession of reversioners. The contract was one and indivisible for full interest. There is no stipulation in the contract that if sanction was not obtained, the vendor would transfer only his life interest for the same or lesser consideration. On the contrary, the contract stipulated that if the sanction was not granted, the contract shall stand cancelled and the advance money would be refunded to the purchaser.

Lastly, the stage has arrived for considering the question of adjustment of equities between the parties because of the change of positions by them in the course of a very long period of litigation. The decree for specific relief of conveyance of life interest, has been executed and registered sale deed through the coU11 in favour of the vendee has also been issued. Possession of the prope11y has been obtained by the vendee on execution of decree granted by the single judge of the High Court. The Division

HPA INTERNATIONAL v, B.f,(;, DASWANI (DHARMADHIKARI, J.) 91

Bench of the High Court in adjusting the equities in paragraphs 62 to 68 A of its judgment has taken note of the above relevant facts and subsequent events.

After execution of the decree and registered sale-deed the vendee plaintiff was placed in possession of the property on 25.2.1995. · The B basement and ground floor have been constructed by the subsequent vendee after obtaining possession on the basis of his sale deed. Thereafter _) plaintiff-vendee, on obtaining possession pursuant to the execution of decree granted by the learned single judge, has constructed two floors above the ground floor although the construction is said to be not complete in all respects. According to the plaintiff-vendee, he has incurred an C expenditure of Rs. 46,28,403 for construction of two floors above the ground floor. As the construction put up by the plaintiff-vendee is to ensure for the benefit of the subsequent vendee, and the latter having succeeded in appeal before the Division Bench of the High Court, the Division Bench in adjusting equities has directed that on payment of construction cost D , t incurred by the plaintiff-vendee for two floors above ground floor, the whole construction will become the sole property of the subsequent vendee.

From the date of the impugned judgment of the Division Bench the total rent received from' the property has been accounted for. The whole E rental income has been directed to be paid to the successful party i.e. the subsequent vendee, Out of the total rental income payable to the subsequent vendee, apart from adjusting the construction cost incurred by the plaintiff-vendee, deduction has been directed towards return of the sale consideration of Rs.5.5 lacs paid under the sale agreement Ex. P-1 A F further sum of Rs.5.5 lacs has been directed to be deducted for the misconduct of the subsequent vendee in trying to mislead the court that Bob Daswani and F.C. Daswani were two different persons and the subsequent vendees had no knowledge of the prior agreement.

On the principle of restitution contained in Section 144 of the Code G of Civil Procedure, we find no ground to interfere with the order of the Division Bench of the High Court in directing adjustment and payment by subsequent vendee of the cost of construction incurred by the plaintiff vendee. The directions for return offull sale consideration as also deduction towards misconduct of impersonation and misleading the Court also H

92 SUPREME COURT REPORTS [2004] SUPP. 3 S.C.R.

A deserve no interference.

We maintain the directions of the Division Bench of the High Court to deduct a sum ofRs.5.5 lakhs for the alleged misconduct of impersonation and misleading the Court. The Civil Appeal No.336 of 2002 preferred by the subsequent vendees only against the above impugned directions deserves to be dismissed.

During pendency of these appeals, various interim orders were passed by this Court on 27.8.2001, 11.1.2002 and 17.2.2003. In pursuance of \__ those orders, rental income derived from the property has been collected and paid to the subsequent vendee, subject to the result of these appeals. Learned counsel appearing for the subsequent vendee, at the conclusion of the arguments, has handed over to this Court a chart mentioning the figures of total rent received up to February 2004 and separately shown the amount deposited in the Court. The figures submitted in the chart by the subsequent vendees are open to verification by the prior vendee. With D dismissal of these appeals, we confirm the judgment of Division Bench of the High Court including the directions made to adjust equities with regard to the construction cost and the rental income derived from the suit property.

E In the result, both the appeals are dismissed. In the circumstances, we direct the parties to bear their own costs in these appeals.

G.N. Appeals dismissed.