P (PLP)

KAYANI, J.‑This is a first appeal from a decree of the Senior Sub‑Judge of Lahore by Which the defendant, Rai Bahadur Jodha Mal Kuthalia of Hoshiarpur, was directed to refund to the second plaintiff, Rai Bahadur Mohan Singh Oberoi, Managing Director of The Associated Hotels of India Ltd., Calcutta, a sum of' Rs. five lacs with interest at s4 per cent, per annum amounting to Rs. ten thousand which the second plaintiff had advanced to the defendant as earnest money for the purchase of Nedou's Hotel and certain adjacent properties ‑in Lahore. The first plaintiff is the Associated Hotels of India, Ltd., and was impleaded by way of abundant caution. The agreement of sale was executed on the 2nd of October, 1946 and is, in material parts, as follows:‑

1. The purchase money is Rs. 52,75,000. 2, The purchaser has paid Rs. five lacs an earnest money.

4. Registration of the sale deed will" be completed before the 2nd of December, 1946. In case the purchaser refuses to have the sale deed registered and pay the balance price to the vendor, the earnest money shall stand forfeited; and if the vender fails to execute the sale‑deed in favour of the vendee or his nominee, the vendee will be entitled specifically to enforce the contract.

5. The vendor assures the purchaser that the said property, which he has agreed to sell, was purchased by him from Rai Bahadur Gopal Dass and Brothers and shall satisfy the pur chaser as to the clear title of the aforesaid property before the registration of the sale deed, and also hereby undertakes to indemnify the purchaser for all losses and damage to be suffered by the purchaser on account of any defect in title or other encumbrances thereto. Subsequently, the date for the completion of the contract was extended to tile 20th) January 1947 and the sale money increased by twenty five thousand. But for this extension of time, the present litigation may not have been born at all, for on the 7th of December, 1946. a notice was issued by the Lahore Improvement Trust under section 36 of the Punjab Town Improvement Act, ‑1922, to the effect that the Trust in question had framed a development scheme for the acquisition of 118.8 acres of land which included the property in suit and objections were invited up to the 7th of March. Nothing happened, however, until the 13th of January, 1947, when the defendant tele graphically asked the second plaintiff to expedite the completion of the sale deed. In reply, the plaintiff sent a refusal the same day on the ground that the property in question was affected by the development scheme, at the same time asking for a refund of the earnest money. The defendant replied on the 14th January that failure to complete the sale by the agreed date would result in forfeiture of the earnest money, and this was followed by replies and counter replies as to whether or not the notice amounted to defect in the defendant's title. Since the parties could not come to a decision themselves, they went to a court of law on the 6th June, 1947. In the meantime, the defendant had filed objections before the Improvement Trust, requesting for the exclusion of his property from 'the development scheme. The Trust decided on the 23rd of April that there was no case for exclusion, but that " ex emption would be considered at the proper time; if the owner applies for it." It is of some academic interest to note that the scheme did not fructify. On the 26th June, 1947 there was a resolution 'that the Trust had decided "with regret that in view of the coming partition of the Punjab ,which will considerably affect the position of Lahore, it is necessary to suspend or cancel some of the schemes, but it was not until the 27th of October 1947 that the present scheme, known as the. Council Chamber Scheme was " abandoned and de-notified ". 'The plaintiff alleged that the notice in question constituted a material defect in the property and the title of the defendant defeated the purpose and object of the agreement of sale and prevented the purchaser from obtaining such title to the property as be was led to expect: It was further alleged that while tree defendant was aware of the intended acquisition, the plaintiff was not so aware until January, 1947 and that the defendant's conduct in his failure to disclose the scheme even after its publication was fraudulent. Alternatively, it was pleaded that since the parties were under a mistake as to a matter of fact essential to the agreement, the agreement was void. It is enough to say that the defendant traversed these pleading; whereupon the following issues were framed:‑ 1. (a) Whether .the property in suit or any portion thereof was ever notified to be acquired by the Improvement Trust or was affected by a scheme prepared by the Lahore Improvement Trust for the compulsory acquisition of it? (b) If so, when and what is its effect on the obligations arising out of the contract? O. P;

2. Did the Lahore, Improvement Trust withdraw the scheme of the compulsory acquisition of this property? If so, when and what is its effect on the right, of the parties in this case? O‑ P‑ Defendants.

3. Whether on the date of the agreement for sale the defendant was in the know of the acquisition scheme of the Lahore Improvement Trust? If so, what is its effect on the legality of the contract? O. P. Plaintiff

4. Whether the contract of sale was vitiated by reason of the ignorance of both parties as to the contemplated scheme of the Improvement Trust for the compulsory acquisition o= this property, on the ground of a mistake of fact? O. P Plaintiff.

5. Was the purchaser justified in law to put an end to the contract by reason of the scheme of the Improvement Trust? If so, when did he do so? O. P. Plaintiff.

6. If the ‑ above issue is held in favour of at plaintiffs, are they not entitled to the refund of Rs. 5 lacs from the defend ants? O. P. Defendants.

7. Are the plaintiffs entitled to any interest? If so, at what rate? O. P: Plaintiff.

8. Was the contract in question entered into by plaintiff No. 2 for and on behalf of plaintiff No. 1? O. P. Plaintiff.

9. If the above issue is not established, cannot plaintiff No. 2 pursue this claim in his own personal right? O. P. Defendants.

10. Relief. The findings of the learned Senior Subordinate Judge on points material to this appeal are that at the date of the agreement both parties were ignorant of any contemplated acquisition of the property in suit by the Trust (and this finding is now accepted), that such ignorance, however, had bearing on the result " because it is the mutual mistake of a fact which renders the contract void ", and that even apart from this con sideration, on the scheme had not been proved to have existed at the time of the agreement, there was no question of any mistake of fact such .as was contemplated by section 20 of the Contract Act. On the fifth issue, however, he held in one place that the notice under section 36 of the Punjab Town Improve ment Act had the effect of creating in the purchaser's mind a reasonable apprehension that he would not get what he had contracted to buy, and, in another place, that such notice could create a legitimate apprehension that the vendor was not in a position to convey a title free from reasonable doubt. "Inasmuch as the former conclusion, namely, that the purchaser would not be getting what he had contracted to buy, car flow only from a mistake of fact, which the learned judge has already held rot to exist, it is clear that his inferences are contradictory on this point. However, he should he regarded as having held that the purchaser was entitled to repudiate the contract because the seller could not convey to him a title free from reason able doubt. Contracts and agreements in this country are regulated by the Contract Act as supplemented by the Specific Relief Act and the Transfer of Property Act. Under section 2, clause (g) of the Contract Act, agreement not enforceable by law is said to be void. Under clause (72) an agreement enforceable by law is a contract and under cl, use (i) an agreement which is enforceable by law at the option of one party thereto but not at the option or the other is a voidable contract. In other words, there is no such thing as a void contract, for an, agreement, in order to be a contract, must be enforceable in law, and as such, it cannot be void. Under section 37, " the parties to a contract must either perform, or offer to perform, their respective promises, unless such performance is dispensed with or excused under the provisions of this Act, or of any other law." We have, there fore, to see whether in the circumstances of the present case either the Contract Act or the two other Acts supplementary thereto excuse any of the parties from the performance of their respective promises. The relevant provisions in these Acts may be shortly stated:‑ Contract Act, section '70. ' Where both the parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void." Specific Relief Act, section 25, clause (b) ‑A contract for the sale or letting of property, whether movable or immovable, cannot be specifically enforced in favour of a vendor or lessor who, though he entered into the contract believing that he had a good title to the property, cannot, at the time fixed by the parties or by the Court for the completion of the sale or letting, give the purchaser a title free from reasonable doubt. Transfer of Property Act section 55.‑In the absence of a con tract to the contrary, the buyer and the seller of immovable property respectively or subject to the liabilities, and have the rights, mentioned in the rules next following, or such of them as are applicable to the property sold Rule I (a) the seller is bound to disclose to the buyer any material defect in the property or in the seller's title thereto of which the seller is, and the buyer is not, aware, and which the buyer could not with ordinary care discover. An omission to make such disclosure ..is fraudulent. It is not necessary to examine the incidents and consequences of the notice which was issued by the Lahore Improvement Trust in respect of the property in: suit. Under section 24 of the Punjab` Town Improvement Act of 1922, the Trust may, for the purpose of developing any locality, prepare a development scheme ", and when such a scheme has been framed, the Trust prepares under section 36, a notice stating that the scheme has been framed, giving the boundaries of the localities comp rised in the scheme, and publishes such notice in the Gazette and another paper, inviting objections within a specified time. The next step is that during the thirty days following the publication of the notice, separate notices are served on the owners and occupiers of the premises proposed to be acquired inviting objections within sixty days (section 38). After hearing objections, the Trust either abandons the scheme or applies to the Provincial Government for sanction to the Scheme (section 40). Under section 41, the Government may sanction or refuse to sanction the scheme, or send it back for reconsideration. If it is sanctioned, the Government issues a notification to that effect under section

42. Under section 2 of the Schedule to this Act, a notice under section 36 has the same effect as publication in the Gazette of a notification under subsection (1) of section 4 of the Land Acquisition Act, 1894, while the publication of a notification by the Government under section 42 has the same effect as a declaration by the Government under section 6 of the Land Acquisition Act. Under section 4 of the Land Acquisition Act, whenever it appears to the Provincial Government that land in any locality is needed or is likely to be needed for any public purpose; a notification to that effect shall be published in the Official Gazette ". This is merely preparatory, or perhaps "explo ratory, for the object of the notification, is to enable an officer to enter upon, survey and take levels of any land in such locality, to dig or bore into the subsoil to do all other acts necessary to ascertain whether the land is adapted for such purpose". The Collector next hears objections under section 5 A, and under section 6, the Government when " satisfied " after considering, the Collector's report, " that any particular land is needed for a public purpose, makes a " declaration to that effect under the signature of a Secretary or other authorised official. This declaration is then published and the Collector is authorized under section 7 to take order for the acquisition of the land. While, thus, section 4 contemplates the possibility of land in a certain locality being acquired, at the stage when section 6 becomes operative, the Government has decided to acquire it and also to specify the extent of its requirements. And since sections 36 and 42 of the, Punjab Town Improve ment Act have respectively been made to correspond to sections 4 and 6 of the Land Acquisition Act, it is fairly reasonable to assume that when notice of a projected development scheme appears in the Gazette under section 36 it merely entails a possibility of acquisition which is removed from ultimate fulfillment by several hurdles, not the least of which is the sanction of Government. That the scheme had remained at the initial stage before it was dropped in October 1947 is evident from the fact that not even a notice of acquisition was served on the owners and occupiers as required by section 38 of the Act. It will be seen from the letter Ex. P. 18 which the defendant wrote to the Trust on the 5th of March, 1947, that his "objections were made to the notice which had been published in the press under section 36; and that they were not based on any notice which he ought to have received under section

38. To these facts may now applied the law which regulates contracts and agreements and which has already been noticed. Under section 20 of the Contract Act, an agreement is void where both parties, thereto are under a mistake as to a matter of fact essential to the agreement. What mistake could there be in the mind of the parties as to any matter connected with the agreement which the parties did not know at the time but which has been disclosed to then now? It is possible that if the plaintiff had known, on the 2nd of October, 1946, the date of the agreement, that a development scheme existed, he may not have contracted to by the property and in that view of the cage his mistake should be regarded as relating to a matter essential to the agreement, but on this important matter, namely, that such a scheme was under contemplation on the 2nd of October, we have no evidence. In support of the argument that a mistake of fact existed in this case, learned counsel for the plaintiff strongly relied on Narsing Dass Kothari v. Chuttoo Lali Missar (I. L. R. 5C Cal. 615). In that case the respondent leas a Court Receiver who held a sale of certain properties by auction and entered into an agreement of sale with the appellant on the 29th November 1919. Subsequently, the appellant discover the existence of a notice under section 63 of the Calcutta Improvement Act which had been published on the 18th of December 1918, that is to say, prior to the date of the agreement. That section relates to the preparation of a plan of a proposed public street, and with that d stinguishing feature, is identical in substance with section 3i6 of the Punjab Town Improvement Act in so far as it relates o the publication of a notice and the inviting of objections. The date fixed for the hearing of objections was the 3.lst of March 1919, and this date, as expressly noticed by Sanderson, C. J., had expired before the date of the agreement of sale. Upon this discovery the appellant filed a suit for the refund of the initial deposit, Buckland, J., dismissing the suit, came to the conclusion that under section 63 of the Calcutta Improvement Act nothing more had been done than to prepare a plan of a proposed public street and to publish the ‑requisite notices, but that even if the further step of application to Government for sanction had been taken, it would have made no difference. In his view, the land sold was, notwithstanding the notice, " subject to no disabilities or burden or restriction on the owner's use, whatever might be the most appropriate expression." Such notice " in fact might not, and did not in law, as a neces sary consequence, result in detriment to the purchaser of property by curtailing his right as owner." The argument was apparently based on section 55 of the Transfer of Property Act, which requires the seller to disclose to the buyer any material defect in the property of which the seller alone is aware. In appeal, the judgment of Buckland J. was reversed, but not on this ground. Sanderson C. J., writing the main judgment observed that section 55 was inapplicable, as the Receive: himself‑ was not, in fact, aware of the existence of a notice. and as under the same section an omission to make such disclosure is fraudulent, the .question of a constructive notice should not arise, for a man cannot commit fraud except with a conscious mind. The case, however, in his opinion fell under section 20 of the Contract Act, for although it was true that nothing further might happen in pursuance of the notice, it was equally true that the Trust might eventually carry out street improvements which would affect these premises. This was evidently a matter of fact essential to the agreement. Richardson J., agreeing, added that "the notice in the Gazette did crystallize the general liability to which this property in common with other properties in Calcutta is subject in such a way as to entitle the buyer to say that he would not be getting a property of the description which at the time of the sale he thought, he was getting He might, in the result be entitled merely to a sum of money by way of compensation." I respectfully agree with these valuable observations, but cannot apply them to the present case for the reason already noticed, namely, that at the date of the agreement the notice was not in existence, and that perhaps, even the scheme itself was not under contemplation. On the other hand, these are clearly an authority in favour of the defendant for the view that section 55 of the Transfer of Property Act is not applicable as the defendant himself was not aware of the " material defect in the property " assuming that a notice of this nature constitutes such defect, though Buckland J., was clearly opposed to that view and as, quite obviously, he was not in fraud. For the same reason, Ramlal Sen v. Suradhanisundaree Pal Chaudhurani (I. L R. 63 Calcutta 124), which was again cited for the plaintiff, may be distinguished. In that case also a sale took place in a Court auction on the 31st July 1931. It was subsequently found that the entire frontage of one of the pro perties sold was cut off by an alignment made by the Calcutta Corporation in 1910. Under section 302 of the Calcutta Municipal Act the Corporation may prescribe for a public street a building line or street alignment. Section 302 requires that no portion of any building or boundary wall shall be erected or added to within a street alignment. Derbyshire C J., citing Narsing Dass Kothari v. Chuttoo Loll Misser (I. L. R. 50 CAI. 615) merely as showing the trend of judicial opinion in that Court, observed that this was " a very material burden or liability on this property ". At any time the premises might be cut down and until then the occupier would be restricted in the use and development of the property. But for such 'misdescrip tion ", the purchaser would have never entered into the agree ment. Costello J. agreeing, referred to Lallubhai Rupchand v. Chimanlal Manilas (I. L. R. 59 Bombay 83) and observed that the buyer was getting something different from what he had bargained for. The Bombay case, which will be noticed later in this judgment, considered only the provisions of section 25 of the Specific Relief Act and section 55 of the Transfer of Property Act. It will be noticed that the learned judges in Ramlal Sen's case did not base their reasoning wait special reference to any provision of the laws of Pakistan When Derbyshire C. J., termed the defect as a " misdescription ", it might be argued that he had in mind " material defect in the property " con templated by section 55 of the Transfer of Property Act, but he did not consider the further requirement of that section that the seller should be aware of such defect and that the buyer should not only be not aware of it ; he should not be able to discover it with ordinary care. When, however, the learned judge further observed that the buyer would not have entered into an agreement but for such misdescription, his argument might be assumed to fall under section 20 of the Contract Act, but here, again, the difficulty is that if there was any mistake of fact, both parties should have been under that mistake, and there is no evidence that even the Receiver was not aware of the existence of alignment scheme. The reason why there was no express reference to any provision of law is clear from the judgment. The sale was held tinder a Court auction and was governed by conditions of sale prevailing in the Calcutta Court. Under condition No 12, an error or mis‑statement in the particulars or description of the property sold, if capable of compen sation, was not enough to annul the sale, and the question before "the Court, therefore, was whether there had been such error or mis‑statement as could avoid the sale. This ruling should not, therefore, be treated as authority on any of the questions involved in the present case, as it had no occasion to examine all the implications of the relevant law on the subject, but even if it were, the utmost length to which we can stretch it is to hold that there would be a mistake as to a matter of fact essen tial to the agreement if, at the date of the agreement there had existed something which, if known to the buyer; would have caused him to alter his mind. As to whether such mistake would avoid the agreement would depend on whether the seller also was under the same mistake. In support of the defendant's case on this point, Ganga Bakhsh Singh v. Chhingi Lal (A. I. R. 1926 All. 469) was cited. This is a Single Bench case by Mukerji J., and possesses circumstances very similar to the present case. On the 22nd, pf August 1915 there was a contract of sale and in January of the following, yea; the Improvement Trust notified an intention to acquire the, property in question. It was bled that the mere fact that there was souse chance of the land agreed to be sold being acquired by the Trust was no justification for the pur chaser to resile from his contract. The Trust might or might not acquire the land, and in case of acquisition the plaintiff` would receive compensation. Holding that in the present case the parties were, at the time of the agreement, not under a mistake as to a matter of tact essential to the agreement, I turn to section 55 of the Transfer of Property Act, which has already been partially examined. That section prescribes it as one of the duties of the seller to disclose to the buyer any material defect in the property or in the seller's title thereto. The seller should be aware of such defect and the buyer should not be so aware. Further, the buyer should not, with ordinary care, be able to discover that defect. If the seller fails in this duty, his conduct would be deemed to be fraudulent. If follows that the agreement, having been occasioned by fraud, will amount to a contract under section 19 of the Contract Act which is voidable at the option of the buyer. The very fact that no clement of fraud is involved in this case (it was alleged in the plaint but was not alleged in appeal) takes the matter out of the pale of section 55, Contract pct. Another important ingredient of that section which is asking in the present case is that the seller also was unaware of the alleged defect. Taking that view of the matter, it seems unnecessary to examine the further question whether there exists any material defect in the property or in the seller's title. As regards the latter, it may t once be stated that the seller's title is still intact and will remain intact until the Government publishes a notification under section 42 of the Town Improvement Act, and this point is not in serious contest, To explain what constitutes a material defect in property, number of rulings, both English and Indian, were cited, but host of these hardly cover the circumstances of the present case thus, in Ibrahim bhai v. Fletchet (I. L. R. 21 Bombay 827, F. B.), Fletcher had sold two bungalows in Poona Cantonment "including sites and buildings" and it was discovered later by the vendee, when he received a notice from the Cantonment Committee, that the sites belonged to Government. Farren C. J. observed that the vendee knew nothing about the tenure upon which bungalows in the Cantonment were held, and that the agreement was calculated to induce in the vendee's mind a belief that Fletcher was selling, and he was purchasing, "something more than a mere revocable licence to occupy the land." In that case, clearly, there was a material defect in the property of which the buyer was not aware. In Harilal v. Mulchand (A. I. R. 1928 Bombay 42) the plaintiff sued for a refund of sale money in respect of a field on the ground of a subsequent discovery that the seller had no right of ownership himself, but was only a sub‑mortgagee. In Ballawd v. Way (150 English Reports 520) certain leasehold premises sold by auction and described as free from all charges, encumbrances and liabilities, were found liable to be taken by a certain Company under an Act of Parliament. It was held that the purchaser could rescind the contract, because, although the transaction had been represented to him to be a good investment, it had turned out to be no investment at all, but a mere right to compensation. In all these cases, it will have been noticed, defect in the property had existed at the time of the sale arid the buyer had not been aware of it. Reference, however, might profitably be made to Lallubhai Rupchand v. Chimanlal monilal (I. L. R. 59 Bombay 83), where the effect of section 55 of the Transfer of Property Act and section 25 of the Specific Relief Act was noticed. In that case the contract‑of sale took place on the 26th February, 1927, and the sale was to be completed within a certain period. Having inspected the documents of title, the buyer took three objections of which only one is material to our purpose. He pointed out that there was a Gazette notification of as long ago as the 22nd August 1912 showing that Government had "decided" to acquire the property the subject‑matter of sale, at the instance of the Surat Municipality. With reference to the word "material" occurring in the phrase "material defect in the property" in section 55 of the Transfer of Property Act, Broomfield J., made the following observation: 'The test of materiality bas been laid down by Tindall C. J. in Flight v. Booth (1834) 1 Bing (N. C.) 370; it was held there that a defect to be material must be of such a nature that it might be reasonably supposed that if the buyer had been aware of it; he might not have entered into the contract at all, for he would be getting something different from what he contracted; ,to buy's: The learned Judge then went to section 25, of the Specific ,Relief. Act and relied upon Pyrke v. Waddingham (10 Hare 1) for the meaning of the expression "a title free from reasonable doubt," as "a marketable title which can at all times be forced upon an unwilling purchaser'". But while he purported to apply the principles; of these two cases to the case before him, he merely held that "the liability of this property to be compulsorily acquired may fairly be said to amount to a material defect," for toe buyer is entitled to say that he wants a house and not a right to compensation". Finally, it was observed that Parsing Dass Kothari v. Chutoo Lall Miseer (50 Cal: 615) and Ballard v. Way supported the view that the liability to acquisition by the Municipality should be regarded as a material and a latent defect. "The Calcutta case", his Lordship added, "was decided under section 20 of the Indian Contract Act because it was found that both parties to the contract were unaware of the fact that the property had been notified for acquisition. But obviously, the position of the purchaser could be no worse if he was ignorant of the fact of the notification while the seller was aware of it." I may point out with great respect that one fundamental distinction between section 20 of the Contract Act and section 55 of the Transfer of, Property Act consists in whether both parties to the contract or the seller alone has knowledge of a defect in the property sold for while in the former case the ignorance of the parties is not dishonest, in the latter the element of fraud necessarily intervenes, and it is for that reason that section 55 of the Transfer of property Act expressly declare the conduct of the seller to be fraudulent when he falls to dis. close to the buyer a material defect in the property. It is therefore, difficult to understand how a reasoning under section 20 of the Contract Act can be used in support of a reasoning under section 55 of the Transfer of Property Act: Further, while it is of great advantage to cite paralled English cases for the interpretation of doubtful words and phrases, it does not appear safe to adopt those interpretations in all cases, without being clear that the language of the statute in the two countries is virtually identical, lest in the adoption we should find bur meaning divorced from our own context. The English cases do, not purport to be based on any Code except that of equity, and in some of them there are passages which, when applied to our own law, do; not make it clear whether they illustrate the phrase "material defect tit property'' used' in section 55 of the Transfer of property Act or "a title free from reasonable doubt" of which section 25 of the specific Relief Act takes notice. Thus, in Pyrke v. Waddingham (10 Hare 1 (1852)) on which Broomfield J., relied for the observation that a marketable title is one which can at all times be forced upon an unwilling purchaser, the question involved being one of a doubtful 'title, there is hardly any justification for acing it in support of the reasoning that the liability of certain property to be acquired by the Government constitutes a material defect in that property. Pyrke v. Waddingham merely laid down that even where the opinion of the Court was in favour of the seller s title being free from reasonable doubt, if that opinion was not founded upon any general rule of law or upon reasoning so conclusive as to satisfy the Court that other competent person might not entertain a different opinion, or that the purchaser might not be exposed to substantial and not merely idle litigation, it should refuse to enforce specific performance. The principle involved in Pyrke v. Waddingkam was approved in Mullings v. Trinder (1870 L. R. 10 Eq. 449) but the decision was disapproved and not followed although the circumstances were precisely similar. It appears from Fry on Specific Performance, section 885, that since Pyrke v. Wadding ham there has been considerable oscillation in judicial opinions. That, however, is not so much to the point. What is to the point is the material fact that neither this case nor any other of the English cases including Ballard v. Way takes notice of all the incidents arising from section 55 of the Contract Act, one of these being that the vendor should be aware of the defect and the vendee should not be so aware, and another being that failure of the vendor to disclose such defect will amount to fraud. Again, Flight v. Booth, which Broomfield J. cited as containing a test of "materiality", in so far as it lays down that "a defect to be material must be of such a nature that it might be reasonably supposed that if the buyer had been aware of it, he might not have entered the contract at all, for he would be getting something different from what he contracted to buy", appears more appropriate to support the language of section 20 of the Contract Act than of section 55 of the Transfer of Pro perty Act, because if the purchaser did not know what he was contracting to buy, he would well be under a mistake as to a matter of fact essential to the agreement, and if only that mistake could be brought home to the seller also, the case would be covered by section

20. While on the subject of English case, I may also refer to a passage in Halsbury's Laws of England, on which also reliance was placed for the plaintiff. That authoritative book, from which we not infrequently draw inspiration, states in paragraph 344 of Volume 29 that "any fact calculated to prevent the pur chaser from obtaining such title as he was led to expect con stitutes a defect of title". Taken as it stands, that observation lends considerable force to the plaintiff's case, but it will be noticed that the observation in question purports to be based on Denne v. Light (1857) (26 L. J. Ch. 459), where the facts were that a place of agricultural land to 'which the contract of sale related was found to be without any means of access, and the contract itself was silent as to any right of way. It is clear that the seller in that case had not so full a title (which would naturally included a right of way) as the buyer believed him to possess. It is significant that Fry on Specific Performance mentioned this case as an instance of "Hardship of the Contract" to which he has devoted a separate chapter. See Chapter 6, section

435. The observation made in the latter book with reference to Denne v. Light is as follows: "Where a contract, if enforced would make a man buy what he could not enjoy, the Court will, on the ground of hardship, refuse to interfere." The principle involved in this case has been enacted in section 22, part 11 of the Specific Relief Act, which lays down that the Court may properly exercise a discretion not to decree specific performance where the performance of the contract would involve some hardship on the defendant which he did not foresee, whereas its non‑performance would involve no such hardship on the plaintiff. Illustration (j) under Part 11 is precisely the instance which forms the subject‑matter of Denne v. Light. This further illustrates the point which I wish to make out, that it is unsafe to adduce principles of English law without trying to discover whether there corresponds to those principles any thing in our own law which may be said to constitute a recognition of those principles in all details. In so far, therefore, as Lallubhai Rupchand v. Chimanlal Manilal (59 Bombay 83) rests for its decision purely on English cases, it would not be safe to accept it as a guide. It is possible, however, that on those facts our decision also would have been identical, for it appears from the use of the phrase "Government had decided to acquire the suit property" that the stage of a preparatory notice had passed and that acquisition had become more or less certain. In any case, the decision to acquire had been taken long before the agreement of sale was entered into between the parties, and if the seller was aware of it, his conduct in failing to disclose it was fraudulent; but if he also was ignorant of it, he was, alike with the buyer, under a mistake of fact in respect of a matter essential to the agreement and was therefore hit by section 20 of the Contract Act. I now come to the third point, which rests on the language of section 25 of the Specific Relief Act According to that section, a contract of sale cannot be specifically enforced in favour of a vendor who, though he entered into the contract believing that he had a good title to the property, cannot, at the time fixed for completion of the sale, give the purchaser a title "free from reasonable doubt". It should not be difficult to decide what test should be applied to determine the precise meaning of that phrase, for, as Varadachariar J. observed in Bkottiprolu Seelharamamma v. Ramireddi Patta Reddi (A. I. R. 1940 Madras 739), "the test is expressly laid down in that section and it will not be safe to attempt to paraphrase it". In that case the purchaser had agreed to buy an absolute estate, and it turned out to be a ' Hindu daughter's limited estate which was claimed to be absolute by reason of a settlement with an adopted son whose adoption had been questioned by the heirs in the first instance. The learned judges citing with approval the following passage from Williams on Vendor and Purchaser, dismissed the seller's suit for specific performance: "Where there is a real ground of suspicion of some matter which would cause a defect in the legal title, the Court may, unless the suspicion is removed by sufficient evidence, pronounce title to be too doubtful to be forced on the vendor". In Haji Oosman Haji Ismail v. Haroon Saleh Muhammad (I. L. R. 47 Bombay 369), the seller had agreed to make out a "marketable title" in the property sold, but as it was found that he had himself bought it of a Cochi Memon having sons, and as Cochi Memons follow Hindu law according to which sons have a vested interest in the father's property from birth, the vendee refused to buy it. The learned judges decreed the suit for specific performance holding that it was settled law that the sons of a Cochi Memon have no vested interest in their father's estate. They defined the term "marketable title" as a title "free froze reasonable doubt" within the 'Meaning of section 25 of the Specific Relief Act. In H. v. Low. & Co. v. Jyoti Prasad Dev (58 Indian Appeale, 392), the question under discussion was whether certain facts constituted "want of the lessors's title". The lessor had given to the lessee a lease of underground coal rights and it was agrees that within a certain period the lessee would take the lease, but that if he failed to do so, except for reason of want of the lessor's title, the initial deposit made by the lessee would be forfeited. The lessee's solicitor having discovered that the land was in the occupation of other persons, inquired as to what right the lessor had to the underground, and Survey Settlement Record showing the lessor as landlord and the occupants as grantees were shown to him. He however, asked for evidence that the lessor had not parted with mineral rights in favour of the grantees. This was not furnished, and the lessee instituted a suit for refund of the deposit on the ground that the lessor had not established his title to the subsoil. It was held by the privy Council that the parties having made their own bargain as to the circumstances in which the deposit should be forfeited, the first question would be to determine the true meaning of that clause, namely, want of the les sor's title". The burden was upon the lessee to show want of title. This covered both deficiency as well as absence of title. The test of discovering such want of title was whether the lessor could enforce specific performance of the contract. Under section 25 clause (b) of the Specific Relief Act a contract cannot be enforced by a party who cannot give a title free from reasonable doubt. The question, their Lordships thought, was one of degree. There was no evidence that the grantees had ever claimed subsoil rights, and there were previous decisions of the Board which showed that un less subsoil rights were expressly included in a grant, they were not to be regarded as part of the grant: The possibility that oral proof of the grant being inclusive of subsoil rights might be adduced by the grantees was reduced in these circumstances to a contingency so remote as to be practically negligible." Their Lordship held that there was no reasonable doubt in that case as to the title of the lessor. Krishniji v. Ramchandra (A.

1. R. 1932 Bombay 51) which was one of the cases cued for the plaintiff, though it purports to be a decision with reference to section 25 of the Specific Relief Act, does not exactly cover the point. In that case the seller represent ed a large portion of the land which he was selling to be Government lease hold, renewable every fifty years, whereas it turned out to be "newly assessed land". Wadia J., who heard the suit, himself regarded the matter as merely a mis-description and relied upon the opinion of Tindal C. J. in Flight v. Booth that where the mis-description is so substantial that but for such mis-description the purchaser might never have entered into the contract at all, the contract is avoided altogether. This was, in my opinion, a case of "material defect in property" and not one in which any doubt was cast on the seller's title such as it was. In Tulsidas v. Pritbhai (I. L. R. (1942) Karachi, 543), the defendants agreed to sell certain property after making out "a clear, valid, subsisting and marketable title". The plaintiff having learnt that the sellers had become owners of the property by an oral gift from one Vishindas, questioned the latter as to his title, and was told, among other things, that the sellers had agreed with him, namely, Vishindas, to sell this property only if they replaced it by equivalent property. The plaintiff thereupon desired Vishindas also to be joined in the sale deed, and as this was not done, he refused to purchase the property. It was held in a suit for refund of earnest money that the title of the sellers was not free from reasonable doubt within the meaning of section 25 of the Specific Relief Act. It is clear from these cases that section 25 (b) of the specific Relief Act becomes operative only when circumstances are disclosed which cast some measure of doubt on the title of the seller. And here I might with advantage revert to Pyrke v. Waddingham (10 Here 1) where it was laid down that even if the opinion of the Court in such circumstances is in favour of the seller's title, if that opinion cannot be founded on any general rule of law or upon reasoning so conclusive as to satisfy the Court that other competent persons might not entertain a different opinion, or that the purchaser might not be exposed to substantial and not merely idle litigation, specific performance should be refused. But there is no warrant for the view, and indeed there cannot be, that where an Improvement Trust or other authority notifies its intention to acquire any land, the title of the owner of that land thereafter becomes doubtful. That title, in fact, is recognized until the very day of the acquisition, and it is for that reason that the owner receives compensation. There is one English authority in which the precise question with which we are faced here was examined, and that is in In re. Forsey and Hollebone's Contract (2 Chancery 379.) On the 10th of December 1926, a contract to sell freehold property free from encumbrances except to the extent indicated in a schedule was executed, but it was discovered that on the 26th of October 1925 the Town Council of Eastbourne, in exercise of powers under the Town Planning Act of 1925, had decided by a resolution to prepare a town planning scheme with reference to certain land which included the subject‑matter of the contract. The resolution was next registered as a "Land charge" under the Land Charges Act 1925. Such resolution would, in ordinary course, be followed by actual preparation of the scheme, which would then be submitted for approval to the Minister of Health. It is then only that a scheme may result in the owner being deprived of full enjoyment. This action, it is instructive to add here would correspond to the publication of sanction by the Provincial Government under section 12 of the Punjab Town Improvement Act. The question was whether the resolution of the Town Council amounted to an encumbrance on the property. Eve J., who heard the suit, held that until and unless the approval of the Minister to the scheme had been obtained, there was really no scheme which could affect the property. There was a potential interference, but until that potentiality had ripened into actual interference, it could not be held that there was any encumbrance. In appeal, the Lord justices approved of this decision. Lord Hansworth M. R. put to himself the following question: Is the resolution a restriction which affects the property so that the property which can now be conveyed is different from the property contracted to be sold? and answered it by reproducing the opinion of Eve J. that it was merely a potential, not actual inter ference. The scheme had to be passed by the Minister. "There may be restrictions imposed by the scheme on the purchaser, but I, reject the view that the scheme operates as an existing encumbrance on the land". Sargant L. J. observed, firstly, that the only effect of the Town Planning Act on this property would be to take off about ten feet of the front garden and drive and add it t9 the road in front in order to make it wider. "But even n twenty feet were taken for this purpose and the scheme went through, that would not, in my opinion, make the property a different property from that contracted to be sold. Secondly, it was pointed out, the scheme may not be carried out. Even if it was carried outs compensation would be paid to the owner. Lawrence L. J. added that even if the scheme went through ultimately, the objection was so "shadowy" (apparently at that stage) that it could not prevail. It may be pointed out that unlike the present case, the resolution in Porsey and Hollebone's Contract had been passed before the actual date of the contract, so that it could have been argued that the purchaser would not have entered into the agreement if he had known of the existence of the resolution. The view that I take, however, is not entirely based on this case. In brief, I hold that if the notice had existed at the date of the' agreement, but both parties had been unaware of it, the buyer should be regarded to have been under a mistake of fact so that if he had known it, he would not have interred into the contract. The notice, however, could not operate as a material defect either in the property or in the seller's title thereto; still less did it cast a cloud on the seller's title. When valuable property is acquired by the Government or a Corporation; it is a misfortune anyhow. When acquisition takes place after a contract of sale the misfortune is merely transferred from the seller to the buyer. In the result, I hold that since the defendant can enforce specific performance of the contract, he is entitled to retain the earnest money. The appeal is consequently accepted with costs of both Courts and the plaintiff's suit dismissed. MUHAMMAD SHARIF, J.‑--The r(al question for determination in this first appeal by the defendant‑vendor is: Whether a noti fication under section 36 of the Punjab Town Improvement Act, 1922, after the contract of sale, produces a "defect in title or property" entitling the intending purchaser to rescind the contract? On 2nd of October 1946 the defendant agreed to sell to R. B. Mohan Singh Oberoi considerable property situated at Lahore for Rs. 52,75,000/‑ and received Rs. 5,00,000 as earnest money. The sale was to be completed before 2nd of December 1946. Before that date, however, the parties agreed on 19th of November 1946 to extend the date of completion and registration of the sale deed to 20th January 1947 in consideration of a small increase in price by Rs. 20,000/‑. In the meantime the Lahore Improve ment Trust by its resolution of 7th December 1946 framed Development Scheme under Sections 24/28, Sub‑section (2) of the Punjab Town Improvement Act, 1922, "for the acquisition of an area measuring approximately 118.8 acres situated on the Mall" and notice under section 36 was published in the Tribune on 11th December 1946. The scheme covered the property agreed to be sold. On 13th January 1947 the vendor sent to the purchaser a telegram duly confirmed by a letter, demanding money for stamp and registration expenses and inquiring about the date on which the deed was to be registered. The purchaser replied the same day stating that the notice by the Improvement Trust was "a serious defect in title" and he was not, therefore, prepared to have the sale completed. The return of the earnest money was also asked for and in the event of default "you will be liable to pay interest on the entire amount referred to above at the rate of six percent per annum from 16th January 1947 till realisation. The defendant wrote again on the 17th January 1947 that the notice had no baring on the agreement and "discloses no defect of any kind in my title". The purchaser was warned that it was a breach of contract and on his refusal to take the property "your earnest money stands forfeited to me". This was followed by a registered notice of 30th January 1947 through the plaintiff's solicitors in which it was emphasized that the notice of acquisition was "a material defect in property"; that there was no breach of contract; that the deposit could not be legally forfeited and that interest shall be charged from 17th instant onwards. On 5th March 1947 the defendant preferred objections to the scheme to the. Improvement Trust. The "Objections Committee" on 23rd of April 1947 ordered "No case for exclusion. Exemption will be considered at the proper time, if the owner applies for it. On 6th June 1947 a suit for the refund of the earnest money and interest was instituted. While it was pending and long before the written statement was filed, the Improvement Trust decided with "regret" on 26th June 1947 that "in view of the coming Partition of the Punjab, which will considerably affect the position of Lahore, it is necessary to suspend or cancel some of the schemes at present under action or consideration until such time as the future of Lahore can more definitely be known". Finally, on 27th of October 1947 "The Council Chamber Scheme" (affecting the property in dispute) was abandoned and de-notified so far as acquisition and execution was concerned. The suit was carried through and ended in a decree for the plaintiff. It was held that the notice under section 36 of the Punjab Town Improvement Act, 1982; created a reasonable apprehension in the mind of the purchaser that he would not get what he had contracted to buy and that the vendor was not in a position to convey a title free from reasonable doubt and as such the purchaser could validly terminate the contract and claim his money back with interest. The defendant has now come up in appeal. An important condition of the agreement of 2nd October 1946 is contained in clause 5 which is as follows:‑ "That the vendor assures the purchaser that the said property, which he has agreed to sell, was purchased by him from R. B. Gopal Das and Brothers and shall satisfy the purchaser as to the clear title of the aforesaid property before the registration of the sale deed and also hereby undertakes to indemnify the purchaser for all losses and damages to be suffered by the purchaser on account of any defect in title or other encumbrances thereto." It is not disputed that the vendor had acquired a valid title from the previous owners R. B. Gopal Das and Brothers. It is also not disputed that at the time the notice was issued under section 36 of the Punjab Town Improvement Act, the vendor was, still the owner of the property agreed to be sold. The statutory obligations of the vendor as to 'clear title" axe detailed in section 55 of the Transfer of Property Act. In the absence of a contract to the contrary the seller is bound (a) to disclose to the buyer any material defect in the property or in the 'seller's title thereto of which the seller is; and the buyer is not, aware, and which the buyer could not with ordinary care discover. An omission to make such disclosure is fraudulent. Clause (a) of section 55 of the Transfer of Property Act evidently refers to the obligations on the part of the seller to dis close latent defects of which he is aware and which the buyer could not with ordinary care discover for himself. The failure to do so constitutes fraud and under section 19 of the Indian Contract Act is voidable: "When consent to an agreement is caused by ....fraud, the agreement is a contract voidable at the option of the party whose consent was so caused". The notification under the Punjab Town Improvement Act was made two months after the agreement and the seller, therefore, could not be accused of suppressing an important fact at the time of the contract of sale. To the above may be added section 25 clause (b) of the Specific Relief Act which is:‑ A contract for the sale or letting of property, whether mov able or immovable, cannot be specifically enforced in favour of a vendor or lessor who, though he entered into the contract believing that he had a good title to the property cannot, at the time fixed by the parties or by the Court for the completion of the sale or letting, give the purchaser or lessee a title free from reasonable doubt." It usually covers cases whereon an investigation of the title of the vendor, it was found that some strangers with some reason or justification were making claims against the property and the completion of the bargain would involve the vendee into much litigation and inconvenience: In such cases. specific performance could not be forced upon the unwilling purchaser. A very large number of cases[(1). 3 I. C. 124. (2). 39 I. C. 627 (P.C.) (3).68

1. C. 862,

1. L. R.47 Bom. 369. (4). 64 L. C. 87. (5). A. I. R. 1925 Sind 342. (6). A. I. R. 1943 Sind 92. (7). A. I. R. 1940 Mad. 739: (8). A. I. R. 1931 P. C. 299. (9). I. L. R. 21 Bom. 827 and (10). A. I. R. 1928 Bom. 42.] cited at the Bar fall in this category. In the cases noted in the margin, third persons' genuine claims against the property and their truth or false hood could not be ascertained with out litigation between the vendor and the strangers. In these circum stances, it was rightly considered a calamity that an intending pur chaser should be made to pay the money and get in return not pro perty but worry and litigation. In A. I. R. 1931 P. C. 299, their Lordships of the Privy Council found "the doubt" unreasonable and specific performance was decreed. It was, however a case of lease and different considera tions would prevail in a contract of sale. The position was summed up in paragraph 881 in Fry on Specific Performance. It was pointed out that "doubts on the title of an estate are often questions liable to be discussed between the owner of the estate and some third person not before the Court, and, therefore, not bound by its decision. If, therefore, there be any reasonable chance that some third person may raise a question against the owner of the estate, after the completion of the contract, the Court may consider this to be a circumstance which renders the bargain a hard one for the purchaser, and one which in the exercise of its discretion, it will not compel him to execute. Though every title must in itself be either good or bad, there must be many titles which the Court cannot pronounce with certainty to belong to either of these cate gories in the absence of the parties interested in supporting both alternatives, and without having heard the evidence they might have to produce, and the arguments they might be able to urge; and it is in the absence of these parties that the question is general ly agitated in proceedings for specific performance. The Court, when fully informed, must know whether a title be good or bad; when partially informed, it often may and ought to doubt." There is yet another class oh cases where both the parties might be under a mistake as to a matter of fact essential to the agreement. The very basis of consent is absent and the agree ment is void under section 20 of the Indian Contract Act. This should be clearly distinguished from the cases where one party is aware and the other party is not aware of a "material fact" at the time of the contract and the failure to communicate it might amount to "fraud". The learned counsel for the plaintiff maintained that the publication of a notification under the Punjab Town Improvement Act constituted a burden or a liability upon or a danger to the property and specific performance could not have been decreed under clause (b) of section 25 of the Specific Relief Act. Reliance was placed upon I. L. R. 50 Calcutta 615, I. L. R. 63 Calcutta 124 and I. L. R. 59 Bombay

83. In I. L. R. 50 Calcutta. 615 the property was sold by public auction on 2‑9th of November 1919 by the Receiver appointed by the Court and the plaintiff was declared to be the purchaser. The plaintiff subsequently discovered that at the time when the auction was held, there had been already published in the Calcutta Gazette a notice under section t:3 (2) of the Calcutta Improvement Acts 1911‑1915, on the 18th December 1918 which stated that the Board of Trustees for the Improvement of Calcutta had prepared a plan of a proposed public street known as Proposed public street, Burrabazar alignment and that among other municipal holdings through which the proposed public street would pass were the premises sold at the public auction. The plaintiff refused to complete the purchase and instituted the suit against, the defendant for a declaration that his agreement for the purchase of the said premises was void and inoperative and for the recovery of the sum which the plaintiff had deposited as earnest money. The suit was dismissed by Buckland J., and the appeal was heard by a Division Bench. It was found that the Receiver was not aware of the said notice and section 55 clause (a) of the Transfer of Property Act had no application. The learned Chief Justice Sanderson held that the notice issued by the Improvement Trust and the liability to restriction upon the use of the premises consequent upon the proceedings initiated by the Improvement rust may be said to be "a matter of fact essential to the agree ment. That essential matter of fact was unknown both to the plaintiff and the defendant at the time of the plaintiff's purchase; consequently by reason of the provisions of section 20 of the Contract Act the agreement was void. Richardson J., who ddelivered a separate concurrent judgment, remarked that "the notice in the Gazette did crystallise the general liability to which this property in common with other properties in Calcutta, is subject in such a way as to entitle the buyer to say that he would not be getting a property of the description which at the time of the sale, he thought, he was getting. He would be getting a pro perty which he might not be able to keep and instead of which, he might in the result be entitled merely to a sum of money by way of compensation." This case was, as already observed, decided in conformity with the provisions of section 20 of the Indian Contract Act as a "matter of fact essential to the agreement". That is a matter which would surely influence the position of the purchaser and was not known either to one or to the other party. The notice by the Improvement Trust bad been issued before the sale was made. In I. L. R. 63 Calcutta. 124, some property in Maniktala Street and Ramkrishna Bagchi Lane was sold on 31st of July 1931 by the Registrar of the Court to the plaintiff by public auction and the usual 25 percent deposit was made by the purchaser. On 10th of August 1931 requisitions were put to the sellers with regard to the title of the property and amongst them this question " Is the property affected by any scheme of alignment of the Calcutta Corporation or the Calcutta Improvement Trust?" Answer " Not to the knowledge of the plaintiff." After that requisition had been answered, the purchaser's attorney caused searches to be made in the Surveyor's Department of the Corporation of Calcutta and it was discovered that the front portion of property No. 183, Maniktala Street, fell within and was affected by alignment made by the Calcutta Corporation in 1910 under the Calcutta Municipal Improvement Act of 1899. It was held that "the subjection of the whole of the frontage of a property extending hack twelve feet from the present front of the building to the restrictions and liabilities imposed by the street alignment is a very material burden or liability on this property." It was further held that where the existence of the street alignment was undisclosed by the vendor and the purchaser in the absence of a notice of street alignment believed that he was buying an unrestricted freehold, but that he was actually buying a freehold subject to a substantial and material disadvantage by reason of the alignment end repudiat ed the contract, "the non‑disclosure of the street alignment mount ed to such an error or mis-description that it might reasonably be supposed that, but for that error or mis-description, the purchaser would never have entered into that contract at all; and cinder those circumstances the contract was avoided altogether and the purchaser was not bound to resort to the clause for compensation." Reference was made to I. L. R. 50 Calcutta 615 and I. L. R. 59 Bombay 83 with approval. Costello J. in his concurring judgment observed that " the defect, if material, must be of such a nature that one might reasonably suppose that the buyer, if he had known of it, might not have made the contract, because he was getting something different from what in fact he intended to buy. In the present instance, it is clear upon the evidence that, had the purchaser known of existence of the road alignment notice, he never would have made a bid at the auction or thought of buying this property at all:" The case was decided on the ground that " the existence of the road alignment notice is something in the nature of a restriction upon the user and enjoyment of the property and something, which, had the purchaser known of it at the time of the Court sale, might have prevented him from purchasing the property." The applicability of section 55. of the Transfer 'of Property Act or section 20 of the Indian Contract Act was not at all considered. If this " material fact " was unknown to both the parties, the contract would very well be avoided under section 20 of the Indian Contract Act and if the seller had deliber ately concealed a fact, it would have amounted to a fraud. " The restriction upon the user and enjoyment of the property" was in existence at the time when the sale was made but it was not known or communicated to the purchaser. In I. L. R. 59 Bombay 83 the contract of sale was made on 26th of February 1927. On inspection of the title deeds, it was revealed that at the instance of the Surat Municipality, the Govern ment had decided to acquire the property along with others in the same locality under the Land Acquisition Act, and that a notifica tion to that effect had been published in the Bombay Government Gazette dated 22nd, August 1912. It was found that the vendor had purchased the house from one Bai Hirakor in 1925 and that under the will of her husband, she had only a widow's estate and that the will was unsigned and unattested. It was further found that in a suit between the vendor and his neighbour, the vendor had by a consent decree agreed to certain restrictive conditions as to the use of the property, namely, to keep open to the sky the chowk land at the back of the house and not to close the neigh bour's window which opened on the roof of the vendor's house. It was pointed out that if the defendant‑purchaser was not aware of the consent decree with the neighbour and the vendor had failed to disclose this, his failure would have amounted to fraud. The title acquired by the widow under the will was considered not free from doubt and the purchaser could not be forced to accept it. It was held that " the liability of this property to be compulsorily acquired may fairly be said to amount to a material defect. The buyer is entitled to say that he wants a house and not a right to compensation." The argument that the notification was made as long ago as," 1912 and must therefore be regarded as obsolete, failed to satisfy the learned judge and there was the likelihood of steps being taken for the acquisition of the property for municipal pur poses such as the widening of the street or a town‑planning scheme. This case could also be held covered by section 20 of the Indian Contract Act as was done in I. L. R. 50 Calcutta

615. This ruling is of importance as laying down the test of materiality that " a defect to be material must be of such a nature that it might reasonably be supposed that if the buyer had been aware of it, he might not have entered into the contract at all, for he would be getting something different from what he contracted to buy " and Flight v. Booth ((1834)

1. Bing. (N. C.) 370) decided by Tindall J. was followed. In the Calcutta and the Bombay cases discussed above where notification under the Land Acquisition Act or the Town Improvement Act had been published long before the contract of sale was entered into, the fact of this publication was held to be a " material fact," which was likely to influence a party in the purchase of the property and the failure to disclose it or the ignorance of it created conditions under which the specific performance could not be legitimately enforced. The liability or burden upon the property or a defect in the property had come into existence before the contract of sale. In williams on vendor and purchaser, Fourth Edition, at page 216 the rule was thus stated:‑ "And with regard to charges generally, the rule of course applies that the purchaser is entitled to have the property sold free from all encumbrances, except those, if any, subject to which he agreed to buy; but future statutory burdens, which have not attached as charges on the land sold or become actual liabilities due from its owner at the date for completion of the sale, are not considered to be encumbrances within the meaning of this rule, even though the event, which will ultimately cause the charge or liability to arise, happened before the sale." The principle deduced from the decided cases noted above or that enunciated in williams on vendor and purchaser may now be applied to the facts of the present case. Section 24 of the Punjab Town Improvement Act, 1922, authorises the trust to prepare a development scheme " and " an expansion scheme " or a combination of one or more types of schemes under, section 28: Under section 36 when a scheme under the Act has been framed, the trust shall prepare a notice stating that the scheme has been framed; the boundaries of the localities comprised in the scheme and the place at which details of the scheme may be inspected. The trust shall also publish a notice to that effect in the official gazette and in newspapers. Under section 38 a notice published under section 36 in respect of the scheme shall be served on every person whom the trust has reason to believe after due enquiry to be the owner of any immovable property, which it is proposed to acquire in execut ing the scheme. Under section 40 the trust shall consider any objection or representation and may either abandon the scheme apply to the Provincial Government for sanction. The Government may sanction the scheme or refuse to sanction the scheme or return it for reconsideration under section

41. If the scheme is sanctioned, the Provincial Government shall notify the sanction and the trust shall forthwith proceed to execute such scheme. According to the schedule attached to the Town Improve ment Act the publication of a notice under section 36 shall be: substituted for and have the same effect as publication of a notification under subsection (1) of section 5 of the Land Acquisition Act, 1884, which is as follows:‑ Whenever it appears to the Provincial Government that land in any locality is needed or is likely to be needed for any public purpose, a notification to that effect shall be published in the official gazette, and the Collector shall cause public notice of the substance of such notification to be given at convenient places in the said locality." Subsection (2) says that thereupon, it shall be lawful for any officer, and for his servants and workmen to enter upon and survey, to dig, to do all other acts necessary to ascertain whether the land is adapted for such purpose; to set out the boundaries of the land proposed to be taken, etc. etc. A notification under section 4 is of an exploratory character and the object is to find whether the land covered by the notification would or would not be suitable for the purpose for which it is intended to be acquired. A notification under section 42 of the Punjab Town Improvement Act, is, in accordance with the schedule, tantamount to one under section '6 of the Land Acquisition Act. This signifies the satisfaction of the Government that any particular land is heeded for a public purpose and a declaration shall be made to that effect under the signature of a Secretary to such Government. It shall be pub lished in the said gazette, shall state the district in which the land is situated, the purpose for which it is needed, its approximate area and, where a plan shall have been made of the land, the place where such plan shall be inspected. Under subsection (3) of section 6 the said declaration shall be conclusive evidence that the land is needed for a public purpose, and, after making such declaration, the Provincial Government may acquire the land in the manner laid down in the Act. The final decision that a particular land is to be acquired is proclaimed by a notification under section 6 of the Land Acquisi tion Act only. Till that stage is reached, all notices are no more than an indication of intention on the part of Government to acquire a particular property. The learned counsel for the appellant contended that the mere preparation of a scheme before final sanction did not impose any burden or restriction upon the use or enjoyment of the property, nor would this be the case so long as the vendor is in a position to deliver vacant possession, notwithstanding the fact that a requisi tion, order by the Government bad been made. In support of these propositions he referred to some English decisions. In re forsay and Hollebone's Contract reported as (1927) 2 Ch. 379, the contract was made on 10th December 1926 for the conveyance of certain premises " for an estate in fee simple absolute, free from encumbrances," except as hereinafter mentioned. Shortly before the date fixed for completion, the purchaser discovered that the property was included in the area proposed to be dealt with by the local authority by a resolution dated 26th October 1925, under section 2 of the Town Planning Act, 1925, which resolution had been register d as a land charge under the Land Charges Registra tion Act, 1,925, in January 1926. Neither the vendor nor the purchaser was aware of the existence of this resolution at the date of the contract. The purchaser applied that the vendor had not shown a good title to the property sold in accordance with the contract and for repayment of the deposit. Eve J., after referring to the provisions of the Act, held "There is a potential interference with its enjoyment, but until that potentiality has ripened into an actual interference, I cannot bring myself to hold that the property is affected in the sense that there is an encumbrance imposed on it by the mere passing of the resolution, and on those grounds I am prepared to hold, and do hold, that the mere passing and registration of a resolution of this nature does not operate to impose on the land included in the area any subsisting encumbrance." According to the Act, it could not be known whether the resolution will ever come into operation, or if it comes into operation, it will include the whole of the area and in particular this particular part of the area, or it will be in such terms as will necessitate any interference whatever with the enjoyment of the property the subject‑matter of this sale. The resolution could be of no effect till the scheme met with the approval of the Minister of Health. This case was taken up in appeal by the purchaser. The observations of Eve, j reproduced above were approved by Lord Hanworth, M. R, who hold that " there may be restrictions imposed by the scheme on the purchaser, but I reject the view that the scheme operates as an existing encumbrance on the land. Sargant, L. J., pointed out "The only circumstance which might cause the property to be affected by the resolution to adopt the scheme is this: if the road in front were widened so as to make it a 50 feet road, ten feet might be taken off the front drive and garden. But even if twenty feet were taken for this purpose and the scheme went through, that would not, in my opinion, make the property a different property from that contracted to be sold Quite apart from that, it is by no means certain that the scheme will be fully carried out; and if it were, compensation would have to be paid for land affected." Lawrence, L. J. also agreed with the above proposition of law. This case is a useful authority for saying that a mere Town Improve ment scheme did not create any burden upon the land but the fact that the scheme had been prepared before the contract of sale was entered into, would in this country have been a good ground for avoiding the contract under section 20 of the Indian Contract Act as being a " fact essential to the agreement," not within the knowledge of the parties, in accordance with I. L. R. 50 Calcutta

615. In re Winslow Hall Estates Company and United Class Bottle Manufacturers, Limited's Contract reported as (1941) 1 Ch. 503, a contract for the sale of the land was entered into on 23rd December 1940. Notice was given on behalf of the Govern ment on 25th January 1941, to the purchasers that it was intended to requisition the land under regulation 51 (1) of the Defence (General) Regulations, 1939. The vendors were in a position to complete on 3rd February 1941. The Government did not take possession of the land until after 10th March 1941. The purchasers wanted to repudiate the contract. Bennett, J. observed:‑ "I am not going to decide what the position of the parties would have been if possession had been taken before the date fixed for completion or before the vendors were in a position to complete, since it appears from the evidence that on 3rd Feb ruary 1941, the vendors were in a position to hand to the pur chasers a properly executed conveyance and to give them vacant possession of the property which they bad contracted to sell. On those facts the purchasers have not proved that when the summons was issued on 10th March 1941, the vendors were unable to give them vacant possession of the property contracted to be sold. Indeed, the vendors have proved that they were in a position to do so at that date." The purchasers' case was dismissed. The requisition order by the Government had been made but the contract was no allowed to be put an end to as the vendors were still in a position to deliver the possession of the property sold. Cook v. Taylor reported as (1942) 1 Ch. 349 dealt with a case where a vendor entered into an agreement for the sale of freehold house on 4th of February 1941. The sale was to be completed on 25th of February 1941 and the purchaser paid deposit of X50 On 19th February 1 3,41, the property was re quisitioned and taken over by the town clerk of Reading under the Defence (General) Regulations, 1939. The action was commenced by the vender against the purchaser, who had refused to complete, for specific performance of the contract. Simond, J. held "It seems to me that, from the moment when the requisitioning authority served the notice and took the keys from the vendor the vendor was not in a position to give vacant possession and was not in a position to allow the purchaser to enter on the property. It does not appear to me to be material whether it was before or after 25th February that occupation was actually taken by those persons who ultimately became the occupants." (1941) 1 Ch. 503 was distinguished on the "vital difference" that in this case the vendor was not in a position to do that which he had contracted to do and give vacant possession to the purchaser, for he had already parted with the keys of the property, which is equivalent to symbolical delivery of the property to the requisitioning authority. From that moment he could not give vacant possession to the purchaser. The same proposition was affirmed in James Macara Limited v. Barclay. (1945) 1 K. B. D.

148. Reliance by the learned counsel for the appellant was also placed on A. I. R. 1926 Allahabad 469 and A. I. R. 1940 Sind

58. The former is a Single Bench ruling and clearly supports the appellant. Mukerji J. held:‑ "The mere fact that there was some chance of the land being acquired by the Improvement Trust was no justification for the plaintiff to resile from the contract. The land might be acquired or might not be acquired by the Improvement Trust, and in the case of acquisition the plaintiff would be entitled to receive the compensation from the Trust. The parties were bound by their contract; and surely the default was on behalf of the respondent and not on behalf of the defendants. In the circumstances, the plaintiff forfeited the earnest money and was not entitled to receive the same." The other did not relate to the effect of a notification under the Town Improvement Act and simply stated that no interest in favour of the Government arose from the notification under section 4 of the Land Acquisition Act, although the date of the notification was important as the date at which values were to be considered; but the identity of the property was to be determined by notifica tion under section

6. It would be clear from the above discussion that not a single decided case was quoted for the plaintiff where the effect of a notification of an intention to acquire a property for the first time after the contract of sale, was considered The purchaser could legitimately repudiate the contract either on the ground that there was a defect in title to the property or that he would not get the property he had bargained for. That the vendor appellant was still the owner of the property in January 1947 and even after that, admits of no doubt. The property which had been agreed to be sold was still there and could .be conveyed and its possession delivered and no diminution in the area or in interest had occurred. There was no doubt a threat of the acquisition of the property by the Government which might or might not have materialised. Each and every property is liable to be acquired by the Government under the Land Acquisition Act and to that extent every property may be said to be exposed to that eventuality. It would, however, be too much to say that any burden was created or that any liability was imposed simply because there was a communication of an intention, that the property might be required for a public purpose. There was nothing to prohibit the vendor or the vendee to complete the transaction. It is true that, if the factum of a notification of acquisition had existed before the contract of sale was negotiated, it was a very material fact likely to influence the mind of the intending purchaser. In the present case this happened at a time when the agreement had been duly completed by the parties and for which none of them could be held responsible. If it happened, say, one day after the sale deed had been registered, the purchaser had to deal with the Improvement Trust or with the Government and iii principle it should not make any difference that it happened a little earlier but after the due execution of the contract of sale. The parties are bound by their own acts unless the action was induced or influenced in any was by circumstances which the law describes as fraudulent or mistaken. These are absent in this case and the contract originally made, could be enforced. The purchaser could not, on his own initiative, rescind the contract and as it was done illegally, he is liable to forfeit the amount of his deposit money, in accordance with the terms of the agreement. I hold, therefore, that the publication of a notification under Section 36 of the Punjab Town Improvement Act 1922, by itself, did not cause any defect in title or property, justifying the rescission of a contract of sale. The appeal is consequently accepted with costs throughout and the judgment and decree of the lower Court set aside. Appeal accepted.