P L D 1954 Federal Court 35 (PLP)

AKRAM, J.--‑On the 2nd of October 1946, an agreement (Exh. P. 12) was executed by the defendant R. B. Jodha Mal Kothalia, for the sale of a certain property to the plaintiff No. 2, R. B. Mohan Singh Oberoi, Managing Director of the Associated Hotels of India Ltd., Plaintiff No.

1. In the agree ment of sale the price was fixed at Rs, 52,75,000 and out of it Rs. 5,00,000 was acknowledged to have been received by the defendant as earnest money. The material clauses in the agreement were paragraphs 4 and

5. Paragraph 4. "That the registration 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 for feited and if the vendor fails to execute the sale‑deed in favour of the vendee or his nominee or nomi nees, vendee will be entitled to specifically enforce the contract and the vendor in that case will be liable for all expenses and damages sustained by the vendee". Paragraph 5. "That the vendor assures the purchaser that the said property, which he has agreed to sell was purchased by him from Rai Bahadur Gopal Das & 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 sale or other encumbrances thereto". Subsequently by mutual consent (Exh. P. 4) time for the completion of the sale was extended till the 20th January 1947. On the 11th December 1946, a notice dated the 7th December, 1946, (Exh. P. 1) was published in the newspaper. "The Tribune" under section 36 of The Punjab Town Improve ment Act (IV of 1922), to the effect that the Lahore Improve ment Trust, had framed a Development Scheme and proposed the acquisition of a large area for that purpose. Upon inspec tion of the scheme and the map attached thereto it transpired that the property which way going to be sold to the plaintiff No. 2, under agreement (Exh. P. 12), dated the 2nd of October 1946, was comprised within that area. The plaintiff No. 2, thereupon refused to complete the sale on the ground that the notice under section 36 of Act IV of 1922, constituted a material defect in the title to the property and demanded the return of the earnest money (Exhs. P. 7, P. 11 and D 6), but the defendant demurred and took the attitude that he was entitled to forfeit the earnest money as the notice under section 36 had created no defect in the property or in his title and the plaintiffs were acting unlawfully in breach of the agreement (Exhs. D. 9 and P. 10). The plaintiffs then on the 6th June 1947, instituted the suit No. 514/161 of 1947, in the Court of the Senior Subordinate Judge of Lahore, for rescinding the contract and for the refund of the earnest money with interest at six percent, per annum, claiming a total sum of sm. of Rs. 5,10,

000. While the suit was pending the Development Scheme came to be abandoned and denotified on the 27th October 1947 (Exh. P. 17). The learned Senior Subordinate judge on the 14th March 1949, decreed the suit of the plaintiff No. 2, for Rs. 5,08,333‑5‑4 with costs and interest at five per cent, per annum, but dismissed tine suit of the plaintiff No.

1. Upon appeal by the defendant, the High Court of Judi cature at Lahore, on the 24th of November 1949, reversed the judgment of the Senior Subordinate Judge and dismissed the suit. Against this judgment of the Lahore High Court, the plaintiffs preferred the present appeal upon obtaining a certi ficate of fitness of the appeal under section 110 of the C. P. C. Mr. Pritt, for the appellants, contended the notice (Exh. P. 1) under section 36 of Act IV of 1922. created a reasonable apprehension in the mind of the appellant No. 2, with regard to the beneficial enjoyment of the property and consequently with regard to a clear title to the property; that the relevant part of section 36 is in the following terms:-- Section 36 "(1) When a scheme under this framed, the Trust shall prepare a notice stating‑ (i) the fact that the scheme has been framed, (ii) ... ... ... ... ... ... ... ... (iii) ... ... ... ... ... ... (2) The Trust shall‑ (a) notwithstanding anything contained in section 78 cause the said notice to be published weekly for three con secutive weeks in the Official Gazette and in a newspaper or newspapers with a statement of the period within which objections will be received and .." ; and so in the face of the notice (Exh. P 1) under the above section the assurance given by the respondent in paragraph 5 of the agreement (Exh. P. 12) could not be carried into effect because eventually the scheme might have matured and resul ted in the losing of the property by the appellant ; that the appellant wanted the property for running a hotel‑business and not for obtaining compensation money from the Lahore Improvement Trust ; that both under the general law (vide section 56 Contract Act, 55 (2) Transfer of Property Act and 25 (b) Specific Relief Act) as well as under para. 5 of the agreement (Exh. P. 12) the respondent was bound to satisfy the appellant that on the date of the registration of the sale deed, the respondent would give what he had agreed to make over and what the appellant was led to expect ; that the ap pellant was under no obligation to take any kind of risk in the matter ; (1) Ballard v.Way and another, (2) Ramlal Sen v. Suradhanisundaree Pal Chaudhurani ; (3) Nursing Dass Kothayi v. Chuttoo Lal Misser ; (4) Lallubhai Rupchand v. Chimanlal Mandal and another ; (5) Flight v. Booth ; and other cases referred to ; that no question in the present case arises either of a mutual mistake of any essential fact under section 20 of the Contract Act or of any fraud under section 55 (1) (a) of the 1 ransfet of Property Act ; that the sole point for determination was whether under the altered circumstances the respondent was or, was not in a position to make out a title free, from reasonable doubt as required by law and to fulfil his obligations as laid down under the agreement (Exh. P. 12). In Ballard v. Way and another (150 E R 540), the defendant autho rised the sale of a certain property by public auction. In the conditions of sale there was no express warranty of title. Plaintiff was the purchaser and he deposited a part of the purchase money with the auctioneers. Sub sequently he discovered that by the provisions of an Act of Parliament, the South London Market Company was authorised to acquire the said property, if needed, for the purposes of the Act. The plaintiff thereupon declined to complete the sale and sought for the recovery of the money paid and for compensation. It was held that the plaintiff was entitled to rescind the contract and to recover the money advanced on ascertaining that the property was liable to be taken away for the purposes of the Act. Baron Park observed in the course of his judgment "it is impossible that there can be a good title when the property is subject to such a liability as this". In Ramlal Sen v. Suradhanisundaree Pal Chaudhurani (I L R 63 Cal. 124.), there was a Court sale which purported to be of a freehold interest in a certain property ; subsequently the existence of a street alignment came to be known to the purchaser and he instituted a suit for the recovery of the price paid. It was held that the sale was void (section 20 of the Contract Act) and the purchaser was entitled to the return of his purchase money with interest. In Nursing Dass Kothari v. Chuttoo Lal Misser (I L R 50 Cal. 615.), after the final bid for a certain property at an auction‑sale, the purchaser found that there had been a notice under section 63 (2) of The Calcutta Improvement Trust, which showed that there was a plan prepared for a proposed public street which covered almost half the purchased property ; the purchaser thereupon refused to complete the sale and sued for the recovery of the money which he had paid. The suit was dismissed but on appeal it was held that the notice under section 63 (2) with the consequent liability to restriction upon the use of the premises constituted "a matter of fact essential to the agreement" (section 20 Contract Act) and in the circumstances the contract was void and the plaintiff was entitled to succeed. In Lallubhai Rupchand v. Chimanlal Manilal and another (I L R 59 Born. 83.), a contract was entered into in February 1927, whereby a certain property was agreed to be sold by the plaintiff to the defendant who paid Rs. 500 as earnest money. In May 1927, it was discovered that the Provincial Government had decided to acquire the property. The defendant thereupon repudiated the contract ; in the result two cross suits came to be instituted, one by the vendor for the specific performance of the contract and the other by the purchaser for the return,of his earnest money. The trial Court decreed the vendor's suit and dismissed the suit of the purchaser. Upon appeal by the purchaser, the suit for the specific performance was dismissed and the suit for the return of the earnest money was decreed under section 20 of the Contract Act. In Flight v. Booth ((1834) 131 E R 1160.), there was a misdescription of the property in the printed particulars of sale by reason of which the purchaser sought to rescind the contract. Tindal C. J., decreed the suit after making the following observation :‑ "We think it is, at all events, a safe rule to adopt that where the misdescription, although not proceeding from fraud, is in a material and substantial point, so far affecting the subject matter of the contract that it may reasonably be supposed, that, but for such misdescription, the purchaser might never have entered into the contract at all, in such case the contract is avoided altogether, and the purchaser is not bound to resort to the clause of compensation. Under such state of facts, the purchaser may be considered as not having purchased the thin which was really the subject of the sale ". On the other band, Mr. Niamat Ullah Chaudhuri, for the respondent, argued that the liability of a property to acquisition for public purposes under legislative enactments could not be considered as a defect of title ; that every property was open to such risk and liability ; that many enactments were in existence, which if resorted to, would affect proprietary interests ; that the cases cited for the appellant were all cases of mutual mistake in respect to a fact essential to the agreement and are thus clearly distinguishable ; that until there was something definite and not a bare chance or a vague apprehension of compulsory acquisition, it could not be said that there was a reasonable doubt as to the title or the enjoyment of the property ; that under Act IV of 1922, the Punjab Town Improvement Act, different stages have to be gone through in the process of finalizing a scheme. Notice under section 36 of the said Act is merely a preliminary or an exploratory stage and may or may not materialise ; that. in any case no loss of property could be reasonably apprehended between the date of the contract and the date fixed for the sale ; that under clause 5 of the agreement no assurance was given by the seller that the property would not be subject to any risk after the date of sale. (1) Hillingdon Estates Co. v. Stoneleld Estates Ltd ; (1952) 1 Ch. 627. (2) Ruldu Ram and others v. Bhuri Lai and another; A I R 1952 Pb. (India) 380. (3) S. Ahmed Hussain Sahib v. K. K. Geni Veeri Chettiar and others ; A I R 1953 Mad. 628. (4) Fletcher and another v. Manton ; 64 Commonwealth Law Reports 37. (5) In re Forsey and Hollebone's Contract ; (1927) 2 Ch. 379. (6) In re Winslow Hall Estates Company and United Glass Bottle Manufacturers, Limited's Contract ; (1941) 1 Ch. 503. (7) Gunga Bakhsh Singh v. Chhinggi Lal ; and other cases cited in support. A I R (1926) All.

469. In Hillingdon Estates Co. v. Stonefield Estates Ltd. ((1952) 1 Ch. 627.) there was a contract for the sale of two separate plots of land in 1938, one was completed, but the other one was delayed on account of the outbreak of war in 1.939, and for several other reasons. In 1948 the local authority made a compulsory purchase order affecting the plot of which the sale still remained to be completed, and in 1949 gave the purchasers and the sellers notice to treat. The purchaser thereafter brought an action to rescind the contract. Held, dismissing the action that the contract bad not been frustrated and could and should be carried into effect. It is to be observed that under the English doctrine of equity, on the execution of a contract for the sale of land the purchaser becomes the owner of the equitable estate. Further in the above case the completion of the purchase of one plot and the delay in completing the purchase of the other plot for about 12 years may have been considered as putting the purchaser in the position of the real owner of the other plot also, subject to the payment of the purchase money‑‑the performance of a substantial part of the contract having altered the status quo of the parties. But section 54 of the Transfer of Property Act, which is applicable in view of section 4 of the same Act; makes the position quite different with regard to the case we have to decide. Under that section a contract to sell immovable property confers no interest in the property in favour of the intending purchaser. In Ruldu Ram and others v. Bhuri Lai and another (supra) there was a contract for the purchase of certain immovable property and Rs. 500 was paid as earnest money. The sale was to be completed by the 7th March, 1947 ; on the 6th March, 1947, however, a portion of the property was burnt down during the communal riots. In a suit for the refund of the earnest money, it was held that in view of section 13, Illustration (a) of the Specific Relief Act, the purchaser was not entitled to the relief he was seeking. This case is quite different on facts to the facts of the present case. Section 13, Specific Relief Act refers to the general law of contract stated in section 56 of the Contract Act, and declares that in spite of section 56 of the Contract Act, the fact that a portion of the subject‑matter of the contract has ceased to exist at the time of the performance of the contract, does not render the contract void and thereafter sections 14 and 15 lay down the rules which are to be followed in such cases for granting relief by specific performance. No question of a reasonable doubt in title for rescinding a contract arises under section

13. In S. Ahmed Hussain Sahib v. K. K. Geni Veeri Chettiar and others (supra), the plaintiff instituted two suits for the recovery of the sale price of two different plots of land after setting aside the sale‑deeds dated 22nd January 1946, under section 55 (1) (a) of the Transfer of Property Act, on the ground that subsequent to the purchase, the plaintiff had come to know that the lands were comprised in a town planning scheme notified in May, 1941, of which the defendant had knowledge but had fraudulently refrained from disclosing it to the plaintiff. The suits were dismissed and so were the appeals. The Appellate Court in dis missing the appeals made the following observation :‑ "It is not even shown whether the lands which are the subject‑matter of these suits were set apart in the draft scheme for any public purpose We, however, agree with the finding of the lower Court, that the plaintiff must have learnt about the scheme earlier than the sale and not after ............... section 55 (1) (a), T. P. Act could not, therefore, be invoked by the plaintiff". In Fletcher and another v. Manton (supra) the Housing Commission on the 8th March, 1940, authorised the serving of a notice on the owner of certain houses for the demolition thereof under the Slum Reclamation and Housing Act, 1938 ; without any knowledge of this on the part of either party, the plaintiff entered into a contract on the 21st March, 1940, for the purchase of the said houses with their site. The notice issued was received by the defendant on the 3rd April, 1940, and in compliance therewith, he demolished the houses. The plaintiff thereupon repudiated the contract and sought for the return of their earnest money. Held, that as the plaintiffs had become the equitable owners of the property they were to bear the loss and so there was no reason for them for refusing to accept title . It should be noticed here that the property was slum property liable at any moment of time to be affected by the service of a demolition order under a general Act of Parliament. Further that under the prevailing rule of equity ownership of the equitable estate was to be regarded as having passed to the purchaser. In Forsey and Hollebone's Contract (supra), the purchaser agreed to purchase "an estate in fee simple absolute, free from incumbrance". Before the date for the completion of the sale, the purchaser discovered that the property was included in an area which was subject to a resolution by a local authority under section 2 of the Town Planning Act, 1925. On an application by the purchaser for the return of his money on the ground that the vendor had failed to make good title in accordance with the contract, it was held, dismissing the application, that the mere passing of a resolution by the local authority did not create an incumbrance on the land within the terms of the contract ; further "that the resolution was passed not so much for the purpose of imposing restrictions as of preventing unreasonable claims for compensation being made by persons buying up land subject to the proposed scheme"; that consequently there was no such interference with the property as made it different from that which was sold. In re Winslow Hall Estates Company and United Glass Bottle Manufacturers Limited's Contract (supra) a contract for the sale of land was entered into on the 23rd December, 1940 ; and on the 25th January, 1941 under the Defence Regulation, 1939, notice of intention to requisition was given to the purchaser ; the sale was to be completed on the 3rd February, 1941, but subsequently by consent it was extended to the 25th January 1941. Possession by the Government was, however, not taken until after the 90th of March, 1941. On a summons taken out by the purchaser on the 10th March, 1941 ; Held, that the requisition notice did not create any en cumbrance on the land so as to prevent the vendors from performing their contract ; that as there was no burden imposed on the land in addition to what all land in England was subject at that time there existed no obstacle in the way of giving actual possession on the date fixed for the completion of the sale. It is to be observed that notice in this case was served of a proposal for requisition under an emergency legislation in national interest, and the requisition, even if made, could be effective only for the period during which the emergency lasted ; further more that from the date of the contract the equitable ownership of the property vested in the purchaser so that the purchaser was under an obligation to take the property with all the advantages and disadvantages attaching to it. In Gunga Bakhsh Singh v. Chhinggi Lal (sutra) the reasoning given is to my mind not very convincing. The main basis of the decisions cited for the respondent seems to me to be the English doctrine of equity that the vendee becomes the owner of the equitable estate from the time of the contract for sale, but as already pointed out section 54 of the Transfer of Property Act overrides the said rule. The relevant part of section 54 of the Transfer of Property Act which admittedly applies is as follows :‑ Section 54. "A contract for the sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties. It does not, of itself, create any interest in or charge on such property". The said decisions, therefore, are not of much assistance in resolving the present controversy as to what .is the effect of a notice issued under section 36 of Act IV of 1922, with a view to a compulsory acquisition of the whole of a Property which is already under a contract of sale i.e. in the present case, whether such a notice creates a material defect or a reasonable doubt in the title of the property under contract or in the unrestricted use of enjoyment thereof so as to entitle the appellants to rescind the contract under the general law as also under the express covenant contained in clause 5 of the agreement (Exh. p. 12). As to the general law, on a consideration of the relevant authorities placed before us, I am of opinion that where prior to the completion of the sale there occurs something which leads to a likelihood of a substantial diminution or restriction in the full enjoyment of the property regarding which the purchaser had no knowledge at the time of the contract, then the purchaser becomes entitled to rescind the contract or to get the sale set aside in the absence of acquiescence or waiver on his part. It is of little importance whether what affects the property happens before or after the execution of the contract provided it occurs before the title passes to the purchaser. Each case is to be judged however, on its own particular set of facts, and precedents therefore are not of much assistance except by way of affording a valuable guidance. The following proposition formulated by Sir John Simon in the case of Bell v. Lever Brothers Ltd. (L R (1932) A C 161 at p. 225.) and referred to with approval in the judgment by Lord Atkin deserves special attention in this connection :‑ "Whenever it is to be inferred from the terms of a contract or its surrounding circumstances that the consensus has been reached upon the basis of a particular contractual assumption, and that assumption is not true, the contract is avoided : i.e., it is void ab initio if the assumption is of present fact and it ceases to bind if the assumption is of future fact". It may be further observed that even where the vendor becomes entitled to forfeiture of the earnest money, the forfeiture can be justified only of the amount which is reasonable or not unreason able.‑W. J. Younie and others v. Tulsiram Jankiram and others. (29 A I R 1942 Cal. 382.). But, apart from the purely legal aspect of the matter when we look to clause 5 of the agreement (Exh. P. 12) we find that the vendor undertook that he "shall satisfy the purchaser as to the clear title of the aforesaid property before the registration of they sale deed". The above undertaking clearly indicates that the contract was subject to the title being approved by the purchaser and that this was a term in the contract and not merely an expression of what would be implied by law. With reference to a similar stipulation in the case of Hussey v. Hornepayne ((1878) 8 Ch. 670.), Lord Justice Cotton observed "this stipulation would make the solicitor, provided he acted reasonably and bona fide, the sole and absolute judge as to whether there was or was not a good title". I accordingly hold that the appellant is entitled to succeed both under the general law relating to implied covenants for title and for quiet enjoyment as well as under the express terms of the agreement contained in Exh. P. 1.2. I would, therefore, set aside the judgment and the decree of the Court of appeal below and restore those of the trial Court with costs of this Court and of the lower appellate Court. SHAHABUDDIN, J.

‑This appeal arises out of a suit brought by the appellants, the Associated Hotels of India Ltd., and their Managing Director Rai Bahadur Mohan Singh Oberoi in the Court of the Senior Subordinate Judge Lahore for the recovery with interest of Rs. 5,00,000 from the respondent under the following circumstances. On 2nd October 1946 the respondent executed in favour of the second appellant an agreement for the sale to him of 160 kanals known as Nedous Hotel, Post Office and Mela Ram building together with all structures and fittings for Rs. 52.75

000. In this agreement a payment of Rs. 5,00,000 by the second appellant as earnest money was acknowledged, and 2nd December 1946 was fixed as the date by which the sale‑deed should be registered. It was also stipulated in the agreement that in case the purchaser refused to have the deed of conveyance registered and pay the balance price to the vendor, the earnest money shall stand forfeited. By another clause of the agreement, the vendor assured the purchaser that the property had been purchased by the vendor from Rai Baba dur Gopal Das and Brothers, and undertook to satisfy the purchaser "as to the clear title of the aforesaid property before the registration of the sale‑deed" and also "to indemnify the purchaser for all losses and damages to be suffered by the purchaser on account of any defect in title or other incumbrances thereto". Subsequently on 19th November 1946 by mutual agreement the period fixed for the registration of the sale‑deed was extended to 20th January 1947 in consideration of an increase in the sale price by Rs. 25,

000. While matters stood thus, there appeared in the Official Gazette and also in 'The Tribune' of 11th December 1946 a notification that the Lahore Improvement Trust had issued on 7th December 1946 a notice under section 36 of the Punjab Town Improvement Act, 1922 to the effect that the Improvement Trust had framed a development scheme for the compulsory acquisition of an area of land specified therein. That area included the property the respondent had agreed to sell to the second appellant. In that notice objections were invited to the said scheme. Thereafter, there was an exchange of letters between the parties in which the second appellant took up the position that as the above‑mentioned notice was a serious defect in title he would not have the sale‑deed registered and that if the earnest money was not refunded before 16th January 1947, interest would become payable on that amount at 6 per cent per annum, while the respondent's position was that that notice did not disclose any defect in his title, that he was prepared to perform his part of the contract, and if the second appellant did not perform his part, the earnest money would stand forfeited. On 5th March 1947 the respondent wrote to the Secretary of the Lahore Improvement Trust objecting to the scheme on several grounds and stating that if the scheme was considered to be valid the respondent would be prepared to put up buildings at his own expense according to the plan approved by the Improve ment Trust, It was also stated in that letter that the respondent bad sustained a heavy loss on account of the fact that the sale of the property bad fallen through because of the publication of the notification that a scheme had been framed for acquiring the property. This application was rejected on 23rd April 1.947 by the Improvement Trust with the observation that there was no case for exclusion but that the question of exemption would be consi dered at the proper time if the owner applied for it. The scheme was ultimately abandoned in October 1947. The appellants' suit was ordered to be registered on 7th June 1947. Their claim was based on the following groends :‑ (1) that the notice intended acquisition of the property consti tuted a material defect in the property and in the title of the defendant as it defeated the purpose and object of agreement of sale of which the respondent was aware viz. the beneficial enjoy ment of the property, and that the purchaser was prevented from obtaining the property he was led to expect ; (2) that the defendant was aware at the time of the agreement or soon thereafter of the scheme for acquiring the property and yet did not disclose it to the purchaser, who became aware of it only in January 1.947, and that this omission on the part of the defendant was fraudulent ; and (3) that alternatively the parties to the agreement for sale were under a mistake as to a matter of fact essential to the contract and therefore it was void, or, that the contract for sale had become frustrated. It was stated in the plaint that the agreement for sale was obtained and the earnest money was paid by the second appellant (2nd plaintiff) on behalf of the first appellant (first plaintiff) and the prayer was for a decree, for the amount claimed, in favour of either of the appellants. In the written statement the allegation that the defendant was aware of the notice issued by the Improvement Trust and yet failed to disclose that fact to the second appellant was denied. On the other hand it was stated that the respondent came to know of the notice only when he heard about it from the second appellant. It was also denied that the agreement for sale was entered into subject to any specific purpose or object or that the defendant was aware of the purpose of which the property was to be purchased. It was pleaded that the intended acquisition did not defeat the alleged object of the purchaser, that the publication of the above said notice could not affect the validity of the agreement particularly as the scheme was subsequently cancelled, and that as in the circumstances the second appellant was not entitled to repudiate the contract his action amounted to a breach of the agreement and therefore the earnest money could not be refunded. It was also alleged that there was no privity of contract between the first appellant and the respondent and that the first appellant had no locus standi to sue. In the replication filed by the plaintiffs, their position in the plaint was reiterated. The Senior Subordinate judge found that the agreement for sale was only in favour of the second appellant and there was no evidence that the transaction was entered into on behalf of the first appellant. This finding was not contested before the High Court, and in this Court the case proceeded on the basis that the second appellant was the purchaser. As regards the case of the appellants that there was a fraudulent omission on the part of the respondent to disclose the issue of the notice, the finding of the Senior Subordinate judge was against the appellants, and this also was not questioned subsequent to the judgment of the trial Court. The plea of mistake of fact was rejected by the Senior Subordinate judge as the scheme of the Improvement Trust was not in existence at the time of the agreement. He, therefore, held that the question of the contract having become void did not arise. But he took the view that the publication of the notice of the Improvement Trust created a reasonable apprehension in the mind of the purchaser, that he would not get what he had agreed to buy and that the vendor would not be able to pass a title free from reasonable doubt. He held that 'in view of this notice it was open to the purchaser either to accept the transaction with the intended risk of acquisition or to repudiate it, and that he had chosen the latter course which was neither arbitrary nor mala fide. In respect of the claim for interest, which was opposed by the respondent, the Senior Subordinate judge held that as the purchaser was justified in the circumstances to repudiate the contract, he was entitled to interest up to the date of the refund. He, therefore, decreed suit in favour of the second appellant only, for Rs. 5,00,000 the amount of the earnest money, with interest at 5% per annum for the period for which it was claimed. He also allowed future interest on the decretal amount at the same rate. The respondent appealed from this decrees to the Lahore High Court, and Muhammad Sharif and Kayani JJ. set aside the decree and dismissed the suit. The learned Judges held that the notice issued by the Improvement Trust in this case entailed only a mere possibility or a threat of the acquisition of the property which might or might not have materialised. They came to the conclusion that if this notice had existed on the date of the agreement and the parties had been unaware of it, the purchaser could have been regarded as having been under a mistake of fact affecting the validity of the contract, but that the notice issued subsequent to the agreement could not operate as a material defect within the meaning of section 55 of the Transfer of Property Act or as a reasonable doubt about title in the meaning of section 25 (b) of the Specific Relief Act. Accord ing to Muhammad Sharif, J. the notice issued by the Improvement Trust being only a preliminary step did not create any liability on the property so as to attract section 25 (b) although if the same notice had existed before the agreement it was a very material fact likely to influence the mind of the intending purchaser. Kayani, J. observed that there was no warrant for the view that where an Improvement Trust or other authority notifies only its intention to acquire any land, the title of the owner to that land becomes doubtful, as his title in fact is recognised until the very day of acquisition. This appeal was filed on the requisite certificate obtained by the appellants from the High Court under sections 109 and 110 of the C. P. C., granting them leave to appeal to this Court. According to Mr. Pritt, who appeared for the appellants the only point for determination is whether the purchaser in this case was entitled to say that there was no clear title to the property in the meaning of section 25 of the Specific Relief Act and so he was not bound to complete the purchase and consequently he was entitled to a refund of the earnest money. But Mr. Niamatullah appearing for the respondent contended that under the law of this country the claim of the appellants could be allowed only under a Statute or under the terms of the agreement, that action for the refund of earnest money could be based only on section 65 of the Contract Act which obviously did not apply as the contract in this case was not void, and that as far as the forfeiture clause in the agreement was concerned, a refusal to complete the purchase would lead to the forfeiture of the earnest money unless such refusal was allowed under the law. The answer to the argument of Mr. Niamatullah is found in the following observation of their Lordships of the Privy Council in H. V. Low & Co. v. Jyoti Prasad Sing Deo (58 I A 392.) where the appellant company had brought an action to recover from the respondent ' a sum of Rs. 34,000 odd which it had paid as a salami for the grant of lease, one of the terms of the agreement being that the salami should be forfeited if the appellant company neglected or failed to take the lease. " The action is not one by an intending lessor for specific performance, but, in their Lordships' opinion, the test of the appellant Company's right to recover the salami is whether an action for specific performance at the instance of the respondent could have been successfully resisted by the appellant company on the ground that the respondent's title was defective The Specific Relief Act (No. I of 1877) formulates the test By section 25 of that statute it is enacted that a contract for the letting of property cannot be specifically enforced in favour of the lessor who cannot give the lessee 'a title free from reasonable doubt.' Reference may also be made to section 18, which enacts that where the lessor sues for specific performance of the contract, and the suit is dismissed on the ground of his imperfect title', the defendant is entitled to the return of the deposit he had made. The real question at issue, therefore, is whether the appellant company has shown that the respondent's title to grant a lease of the mineral rights in the two villages is not free from reasonable doubt. It is obvious that the question is one of degree. The doubt suggested must be a reasonable doubt ; the imperfection must be material". Sections 18 and 25, it may be mentioned here, apply to contracts for the sale or letting of property. The principal question for decision in this appeal, therefore, is whether owing to the issue of the notice by the Improvement Trust under section 36 of the Punjab Town Improvement Act, 1922 the purchaser was entitled to say that on the day fixed for the registration of the sale‑deed the vendor was not in a position to give him, the purchaser, a title free from reasonable doubt within the meaning of section 25 (b) of the Specific Relief Act. Before setting out the contentions raised on both sides it is necessary to refer to the provisions of the Punjab Town Improve ment Act of 1922. Under section 24 of that Act the Improvement Trust may prepare a scheme for developing any locality and after such a scheme is prepared a notice has to issue under section 36 stating the scheme and boundaries of the localities comprised in it and inviting objections within a specified time and this notice should be published in the Official Gazette and a newspaper or newspapers. Thereafter under section 38 notices should be served within 30 days on the owner or occupier of the property to be acquired, inviting their objections. The Trust on hearing the objections may abandon the scheme or send it to Government for sanction under section

40. If the Government sanctions the scheme it has to issue a notification under section 42 stating its sanction. In the present case as stated already a notice under section 36 was issued. The objection of the vendor was dismissed and the scheme was abandoned in October 1947 while the suit was filed in June that year. The abandonment of this scheme was relied on by the respondent at the trial, but after it was held by the Senior Subordinate judge to be of no con sequence in this case, that matter was not agitated before the High Court or here, as the crucial date is the date r; xed for the registration of the sale‑deed. The argument of Mr. Pritt for the appellant was to the following effect. Under the terms of the agreement the vendor undertook to satisfy the purchaser as to the clear title to the property, before the registration of the sale‑deed. The vendor had no doubt a clear title at the time of the agreement tot sale but before the purchaser could complete the purchase a cloud appeared over it by the issue of the notice that the Improvement Trust had drawn up a scheme for the acquisition of the area which included the property in question. The position thereafter changed, as the possibility of what the vendor had agreed to purchase not passing to him had arisen. He had contracted for the purchase of this property for beneficial enjoyment and for running a hotel, and the issue of the notice, though it did not amount to a decision to acquire that property nevertheless made the property liable to be compulsorily acquired, and in view of such a liability it could not be said that the vendor was in a position to convey a title giving the purchaser the benefit he had contracted for. The word 'title' in section 25 should be construed in the broader sense as meaning absence of the possibility of the benefit of contract disappearing and not in the narrow sense that on the date fixed for the completion of the sale the vendor could legally convey the property. 'Title free from reasonable doubt' in the meaning of section 25 (b) Specific Relief Act is the marketable title which at all times can be forced upon an unwilling purchaser, but in the circumstances of this case it can hardly be said that the title with the liability created by the notice was such as a Court can force upon the purchaser who had contracted to buy the property for fifty three lacs of rupees for the purpose of beneficial enjoyment and running a hotel. Mr. Niamatullah, on the other hand, contended that the legal title to this property would continue to vest in the vendor unaffected till the Government notified under section 42 of the Punjab Town Improvement Act its sanction of the scheme to acquire the property, and that till that stage was reached there could be no doubt whatsoever about the title which the vendor could convey to the purchaser. The mere danger and even a strong probability that the purchaser will not be able to have beneficial enjoyment of the property or an apprehension however reasonable that he may not get what he bargained for would not make the vendor's title in any way defective. He further argued that there was no proof that the purchaser wanted this property for benificial enjoyment and that that fact was known to the vendor. He said that the allegation in this connection was denied by tie defendant and the evidence did not disclose that the vendor knew that the purchaser was Associated Hotels Ltd. or that the purpose of the purchase was beneficial enjoyment and the running of a hotel. He pointed out that even if the property was acquired the purchaser would get compensation. It is true that there is no proof that the vendor was informed by the purchaser that he," as buying the property for beneficial enjoyment and running a hotel ; but there is clear evidence that the intention of the purchaser was in fact to get the property for those purposes. No issue was raised on this point and the judgments of the Courts below contain observations indicating that the case proceeded on the basis that the purchase was for beneficial enjoyment. Further it is clear that the purchaser is the Managing Director of the Associated Hotels Ltd. and the evidence of the vendor discloses that he knew that the purchaser owned the Maidan Hotel of Delhi There was no suggestion that the purchase was for a purpose other than beneficial enjoyment. I, therefore, think that we should proceed in this appeal on the footing that the purchase was for beneficial enjoyment. In this view, it is clear that the purchaser in this case did not contract for tile right to compensation. Therefore the fact that in any case he would have received compensation is hardly relevant. The argument of Mr. Niamatullah seems to me to overlook the important fact that when the liability of compulsory acquisition of the property agreed to be sold arises the vendor can pass at best only a title subject to that liability. The position then is that the vendor who undertook to satisfy the purchaser before the registration of the sale‑deed as to the clear title is unable to do so on the date fixed for completion of the sale, for, he cannot say with any degree of certainty as to whether the D purchaser can continue to have beneficial enjoyment, as, a third party has come on the scene over whom the vendor has no control, and if that party proceeds with its scheme and gets it sanctioned the purchaser can get only compensation for which he has not contracted. In such circumstances it appears to me that the title of vendor becomes imperfect and not free from reasonable doubt In Ballard v. Way and another (150 E R 540.) cited for the appellants property sold by auction and described as free from all liabilities was found to be liable to be taken away for the purposes of an Act of Parliament. It was held that the title could not be said to be good when it was subject to such a liability. In Lallubhai Rupchand v. Chimanlal Manilal and another (I L R 59 Bom. 83.) another case cited for the appellants after the contract for sale (which was in 1927) but before the completion of the sale it was discovered that the Government had decided in 1912 to acquire the property at the instance of a municipality. The purchaser in that case had discovered certain other defects also. As for the liability of the property to be compulsorily acquired it was held by the High Court of Bombay that that liability might fairly be said to amount to a material defect. The trial Court had held that the liability of acquisition was not a defect as the purchaser would get compensation and would not be a loser. Bromfield, J. who delivered the judgment of the Court observed in this connection that the buyer was entitled to say that he wanted a house and not a right to compensation. In reaching this conclusion the learned judge relied on the English decisions Flight v. Booth ((1834) 131 E R 1160) and Pyrke v. Waddingham (19 R R 243.). Referring to Flight v. Booth (supra) Bromfield, J. observed that 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 that he contracted to buy". Referring to Pyrke v.Waddingham (supra) the learned judge pointed out that a title free from reasonable doubt was explained there, as a marketable title which can at all times be forced upon an unwilling purchaser. These observations, with which I with respect agree, clearly support the position taken by Mr. Pritt. This decision was, however, distinguished by the learned judges of the Court below on the ground that what was considered in that case to be a material defect was in existence at the time of the contract for sale so that if both sides were not aware of it the case would come under section 20 of the Contract Act and if the purchaser alone was unaware of it section 55 (1) (a) of the Transfer of Property Act would apply. But if the defect was material enough to be considered as a matter essential to the agreement in the meaning of section 20 of the Contract Act or a material defect in the meaning of section 55 of the Transfer of Property Act, there seems to be no reason why it should not constitute an imperfection in or a reasonable doubt about title when it created a liability of the purchaser's title to property being reduced to a mere right to compensation for which he did not contract. Another ground on which this decision was distinguished by the learned judges of the Lahore High Court and by Mr. Niamat ullah was that in that case the Government had decided to acquire the property, whereas, here, the notice was but a first step in a process which had yet to be gone through to reach the final stage of acquisition. It was argued that if a notice was issued under section 6 of the Land Acquisition Act to the effect that Government had decided to acquire the property or under section 42 of the Punjab Town Improvement Act that the scheme for acquisition had been sanctioned, then the title of the vendor would get affected. This does not seem to be consistent with the position that as long as the vendor's title to convey remains intact the purchaser cannot resile from the contract. In accordance with that view the title should remain unaffected till the acquisition proceedings are completed and possession is taken over, for, even after the notification under section 6 of the Land Acquisition Act, Government may not proceed to actually take over the property. As a matter of fact in the Bombay case the decision to acquire had been taken in 1912 and yet the property had not been acquired by 1927. If the threat of acquisition given by notice under section 36 of the Punjab Town Improvement Act may or may not materialise, even the final decision to acquire may or may not be carried out. Muhammad Sharif, J. observed that 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, and this also formed a part of Mr. Niamatullah's argument. But as pointed out in Nursing Dass Kothari v. Chuttoo Lall Misser (50 Cal. 615.) also cited for the appellants the general liability of acquisition is crystallised when a notice of the kind we are concerned with in this case is issued. There, the suit had been brought for a declaration that an agreement for the purchase of certain premises was void and inoperative and for the recovery of the earnest money which the purchaser had deposited, as subsequent to the agreement the plaintiff' discovered that a notice had already been published under section 63 (2) of Calcutta Improvement Act which affected the premises. That notice had the same effect as the one issued in the present case. Buckland, J. who tried the suit on the original side had dismissed it taking the view that as nothing more had been done than to prepare a plan of a proposed public street and to publish the requisite notices, the sale was not subject to any disability or burden or restriction on the owner's use and that the fact of the notice not having been known to the purchaser did not result in detriment to him by curtailment of his right as owner. On appeal this decision was set aside, and Sanderson, C. J. in rejecting the argument that because the notice issued was only the initial step it did not follow that further steps would be taken, observed : "That is true. On the other hand the converse is equally true and the proceedings under section 63 having been initiated the Improvement Trust might eventually carry out street improvements which would affect the premises". He held that the issue of that notice was not known to the parties, and, as it was a matter of fact essential to the agreement, the contract was void. The other learned judge, Richardson, J., in dealing with the argument that every house in Calcutta was subject to a possibility that it might be acquired observed: "But in my opinion, 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 would be getting a property 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". These observations, with which I with respect agree, directly apply to the present case. The learned judges of the Lahore High Court distinguished this case also on the ground that it was under section 20 of the Contract Act. The observation I made on a similar comment in respect of the Bombay decision applies here also. Mr. Niamatullah's comment was that only Richardson, J. made the observation supporting the contention of Mr. Pritt that the notice constituted a defect in title, but that the learned Chief Justice did not make any such observation. But it is clear from the Chief justice's judgment that the existence of that notice was 'a matter essential to the agreement'. One of the decisions relied on for the respondent in this connection is Ganga Bakhsh Singh and others v. Chhinggi Lal (A I R 1926 All. 469.) where after the agreement for sale the Improvement Trust bad notified their intention to acquire the lands agreed to be sold, and the purchaser thereupon asked the vendors to refund the earnest money which they refused to do. The Courts below were of the opinion that as it was notorious that the Improvement Trust did not pay adequate value of the land the notification so changed the circumstances that the purchaser was justified in rescinding the contract and claiming the refund of earnest money. Mookerji, J. of the Allahabad High Court sitting singly held that the mere fact that there was some chance of the land being acquired was no justification for the purchasers to resile from the contract. He observed that the land might or might not be acquired and in the case of acquisition the purchaser would have become entitled to receive compensation. This decision is directly in favour of the vendor in this case, but there the question was not discussed fully and the learned judge appears to have been of the opinion that the right to compensation was as good as title to the beneficial enjoyment of the property. In view of the observations I have made earlier on this aspect of the matter I am unable to agree with the view expressed in this decision. Reliance was placed for the respondent on In re Forsey & Hollebone's Contract (1927 (2) Ch. 379.) and this decision was referred to also by the learned judges of the High Court. There, the purchaser had agreed on 10th December 1926 to purchase the free hold property free from incumbrances except those mentioned in the Schedule to the agreement. Shortly before the date fixed for the completion of the purchase the purchaser's solicitors discovered that the town Council of Eastborne bad passed a resolution on 26th October 1925 deciding to prepare a Town Planning Scheme with reference to an area within the borough. The property agreed to be sold was situate in that area, but neither the vendee nor the purchaser was aware of the existence of this resolution at the date of the contract. Eve, J. who heard the case dismissed the purchaser's summons observing that the resolution was only to prepare a Town Planning Scheme and there was very little evidence that any steps had been taken towards the elaboration of the scheme. He, however, pointed out that the approval of the Minister for Health to the scheme under the Act had to be obtained. He then went on to observe "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 incumbrance imposed on it by the mere passing of the resolution". He, however, did not dispose of the matter on this point alone. He held that under the Property Act 1925 the purchaser should be deemed to have had notice of this resolution. Finally he said that if 'the resolution, contrary to the conclusions he had arrived at affected the land it was an incumbrance of which the purchaser had notice. On appeal this decision was upheld but in doing so their Lordships of the Court of Appeal considered the question whether the resolution so affected the property that what could be conveyed was different from what had been contracted to be sold. The Master of Rolls observed that Eve, J. considered the matter from the right point of view and that was '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 ?' That the scheme in that case even if it was sanctioned could not materially affect the property is clear from the following observation of Sargent, L. J. " This is a villa property with, obviously, a building line on the frontage. The Public Health Act, 1875, applies to Eastborne and it is clear therefore that the owner of this land could not build anything in front of the house without the per mission of the local authority * * * It is contended that the property is different from that which was contracted to be sold, that the vendor contracted to sell it free from incumbrances, and that here there is a restrictive condition which the vendor ught to, but cannot, clear off the title. But the purchaser could not expect to obtain a property on which she could build a garage or anything else in front of the building line. 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 ft. 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. observed :‑ " I will assume that the scheme will go through and will embrace the property, still I agree with the learned Judge that the objection of the purchaser on this ground is so shadowy that it cannot prevail." This decision in my opinion does not apply to the present case. It was not based solely on the fact that the scheme in that case had yet to be sanctioned by the Minister. On the other hand, the fact that even if the scheme went through it would affect only a small portion of the property was an important point in that case. There was also the fact that under the law the purchaser was to be deemed to have had notice of the resolution. But in the present case there was no restriction at the time of the contract for sale and the liability that arose thereafter was as stated already a liability of the title to beneficial enjoyment being reduced to a mere right to compensation in respect of the entire property. A reference may conveniently be made at this stage to the decision in Ramlal Sen v. Suradhanisundaree Pal Chaudhurani (I L R 63 Cal. 124.), another case relied on for the appellants. There, a certain property was sold by the Registrar of the High Court of Calcutta by public auction in 1931. After the sale it was discovered that the front portion of the premises that were sold fell within and was affected by the alignment which had been made by the Calcutta Corporation in 1910. One of the conditions of the sale held by Court was that if an error or a mis‑statement in the particulars and description of the property occurs and such error and mis‑statement is capable of compensation, the sale shall not be annulled and the purchaser will not be entitled to be discharged from the purchase. The purchaser applied for the sale to be set aside and asked for the refund of the deposit, but the vendor declined to refund and when the matter came before the Registrar, one of the points formulated by him for decision was whether a good title can be made out to the said property. He decided against the purchaser and when the matter went up on appeal Derbyshire, C. J. in dealing with the question for decision observed : ‑ Each case must be decided upon its own particular facts and the law applicable to contracts of vendor and purchaser. In my view this subjection of the whole of the frontage of the property extending back twelve feet from the present front of the building to the restrictions and liabilities imposed by the alignment is a very material burden or liability on this property. At any time the owner and the occupier may find their premises cut down at the instance of the Calcutta Corporation and all the time until then they are under fear of the property being cut down, and are restricted in their use and development of this property by the alignment. The purchaser is a doctor, who says that he bought the premises for his own use. The removal of the two front rooms might be a serious handicap to him in his profession." It was held that that defect was not capable of compensation and the sale was, therefore, set aside. The learned judges of the Lahore High Court have distinguished this decision on the ground that applicability of section 55 of the Transfer of Property Act and section 20 of the Contract Act were not considered and the matter was decided on a rule of the Court regarding sales. But to decide the case under the rule of Court mentioned above, it had to be determined whether the fact that the property fell in the line of alignment changed the position to this extent that the purchaser would get something different from what he had contracted for. The facts in S. Ahmed Hussain Sahib v. K. K. Geni Chettiar and others (A I R 1953 Mad. 628.) another case cited for the respondent were different from those under consideration. There, the action was brought by the purchaser after the completion of the purchase for setting aside two sale‑deeds, and for the recovery of the sale price on grounds, one of which was that the fact that a scheme under the Town Planning Act was in force was a material defect in the seller's title which the defendants were aware of and were bound to disclose to the purchaser. It was found that the defendant was aware of the scheme, but that its existence at the time of the sale was not a material defect. It was also observed that the scheme bad yet to be sanctioned by Government and that till that was done there was no interference ; but there are also observations in the judgment to the effect that it was not even shown that the lands in question had been set apart in that scheme for any public purpose or were directly sought to be acquired under the scheme so that it could be said that the purchaser would be entitled only to compensation, and not to the land even if the Government sanctioned the scheme, and that had he been aware of it he would not have entered into the contract at all. Reference was made on behalf of the respondent also to (i) In re. Winslow Hall Estate Company and United Glass Bottle Manufactures Limited's Contract (1941 (1) Ch. 503.), (ii) Cook v. Taylor (1942 (1) Ch. 349.) and (iii) James Macara Limited v. Barclay (1945 (1) K. B. 148.). But these were cases of requisitioning of property under the Defence Regulations during the War when everybody's property in England was in immediate danger of being taken over in the national interests and to them the English rule of equity, that when a valid contract for the sale of land is made and the vendor makes a good title, the purchaser is, from the date of the contract, to be considered the owner of the land and consequently must suffer whatever loss or detriment that may after that time fall , on that property, applied. In re. Winslow Hall Estate case the contract which was for sale of land with vacant possession was entered into on 23rd December 1940 and before the date of completion notice of requisition was received and possession was taken by 10th June 1941. The purchaser took summons on March 10, 1941. It was held that the notice of requisition was only a polite intimation of the action proposed to be taken and not an addition to the burden already existing on everybody's land in England under the Defence Regulation and that the purchaser had not proved that when the summons was issued on March 10, 1941 the vendors were unable to give them vacant possession. The purchaser's summons was, therefore, dismissed. In Cook v. Taylor where the contract was for sale with vacant possession, before the date fixed for completion the keys of the property were taken away by the authorities. It was held that the vendor who had undertaken to give vacant possession was unable to do so and hence the decision was in favour of the purchaser. In the third case, where also the contract was for sale with vacant possession, before the date fixed for completion the authorities had served only the notice of requisition on the vendor but had not taken actual possession. It was held that on a construction of the regulation, service of notice of requisition of itself created an immediate interest in possession in the authority issuing the notice and that the purchaser was, therefore, entitled to a refund of the amount of the deposit. In the present case the danger of loss of title to the beneficial enjoyment of the entire property did not exist at the time of the contract for sale but appeared before the date fixed for the registration of the sale‑deed with the result that on that date the E vendor was not in a position to give the purchaser the title to beneficial enjoyment which he had contracted for, and the English rule of equity referred to above does not apply here. Muhammad Sharif, J. observed that if the notice of the Improvement Trust had been issued a day after the sale‑deed was registered the purchaser would have had to deal with the Improvement Trust and the Government, and in principle it should not make any difference because the notice was issued before the date fixed for registration and after the agreement for sale. Kayani J's. observation is to the effect that if the property was acquired by Government or a Corporation it was a misfortune but the misfortune is merely transferred from the seller to the buyer. These observations seem to me to overlook that under section 54 of the Transfer of Property Act which has been made applicable to all municipal towns in the Punjab by a notification of 1935 a contract for sale does not of itself create any interest in or a charge on the property. That being so, the fact that the notice appeared before the purchaser became the owner does in principle make a difference. Mr. Raja Iyer who also appeared for the respondent argued that compulsory acquisition should be regarded as on the same footing as Vis Major; and relying on Illustration A to section 13 of the Specific Relief Act he contended that the purchaser in this case having contracted to buy the property was bound to complete the purchase. But that Illustration goes beyond the section it illustrates. While according to it a person who contracts to buy a house is bound to pay the purchase money even if the house is destroyed by a cyclone, the section lays down only that where a portion of the subject‑matter of the contract ceases to exist the contract does not become wholly impossible of performance. The section itself does not give any right to specific performance. On the other hand section 17 prohibits the Court from decreeing partial performance except in cases covered by sections 14 to 16 which lay down the rule under which a decree for partial performance can be granted. Those sections do not say that even if the entire property contracted for has disappeared the purchaser should still pay the purchase money. The Illustration in question seems to assume that the contract for sale of itself transfers the beneficial interest to the buyer ; but as indicated already this is against the provision of section 54 of the Transfer of Property Act. Illustration A to section 13 of the Specific Relief Act cannot, therefore. be applied to this case. In Ruldu Ram and others v. Bhuri Lai and another (A I R 1952 Ph. (India) 380.), (a case of East Punjab, India), one of the cases cited by Mr. Raja Iyer. Illustration A to section 13 of the Specific Relief Act was relied upon, but there is no discussion in that judgment of the points adverted to above. The two other cases on which Mr. Raja Iyer relied Fletcher and another v. Manton (64 Commonwealth Law Reports 37.) and Hillingdon Estate Co v. Stonefield Estate (1952 (1) Ch. 627.), are also inapplicable, as they proceed on the principle of English Law which, as has been pointed out above, does not apply here. I am, therefore, of the opinion that the respondent, though he had good title at the time of the contract for sale, was not in a position to give the second appellant at the time fixed for the completion of the sale, a title free from reasonable doubt, owing to the material imperfection that set into it as a result of the notice issued by the Improvement Trust, and that the second appellant was, therefore, entitled to repudiate the contract and to claim the earnest money he had paid. The trial Court awarded him interest on the amount of the earnest money and that part of the decree was not challenged before us. I would, therefore, allow the appeal, set aside the judgment and decree of the High Court and restore the judgment and decree of the Court of the Senior Subordinate judge with costs here and in the High Court. CORNELIUS, J.‑--I agree entirely with the conclusions reached upon the points arising in this case by my brother Shahabuddin J., but as we are reversing the judgment of the High Court, I think it desirable that I should state my reasons in my own words. The facts are not in doubt. The agreement of sale was executed on the 2nd October 1946, and the sale was to be completed by the 20th January 1947. The vendor undertook to "satisfy the purchaser as to the clear title of the (aforesaid) property before the registration of the sale‑deed". As regards the earnest money, amounting to five lakhs of rupees, it was provided that "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". The stipulation must be confined in its effect to wrongful refusal, or, in other words, to refusal otherwise than in exercise of a legal right to terminate arising in favour of the vendor. The vendee repudiated the contract on the 13th January, 1947, on the ground that a "serious defect in title" had appeared in consequence of a "notice of acquisition under section 36 of the Punjab Town Improvement Act" which had been published in a Lahore daily newspaper on the 7th December 1946, by the direction of the Lahore Improvement Trust. A demand for refund of the earnest money was also made. The vendor replied on the 17th January, 1947, to the following effect :‑ (1) the notice of acquisition by the Lahore Improvement Trust has no bearing upon the agreement of sale ; (2) the notice disclosed no defect of any kind in the vendor's title ; and (3) by declining to complete the sale, the vendee was com mitting a breach of the contract, and, therefore, no question of refund of earnest money arose. Neither then nor at any stage of the proceedings was the question raised that the action of the vendee was vitiated by having been taken too early. It was conceded in the arguments before us that it was impossible for the vendor to remove the alleged defect in his title by the due date. The law is clear that it being an essential condition of the purchaser's liability that the vendor shall show a good title, the purchaser has a right to repudiate the contract at once, if this stipulation be broken. The principle has been stated by Dart in the Law and Practice of Vendor and Purchaser, 8th edition, p. 964, in the following words :‑ "A purchaser's right to repudiate a contract is an equitable right arising from want of mutuality, which must be exercised if at all, as soon as the purchaser finds that the vendor cannot make a good title". (The expression "want of mutuality" is to be understood in the sense that whereas the promise of one party is enforceable in full, e.g., a promise to pay a specified sum of money and execute a conveyance, the other party's promise cannot be fully enforced owing to his inability to give all that he contracted to give). The consequences of delay by a purchaser may be that he may lose the right if in the interval either he himself does some act under the contract which involves or implies the continued existence of the contract, or suffers the other party to do such act without asserting the right to rescind. I may refer to Weston v. Savage ((1879) 10 Ch. D. 736.), where also the purchaser rescinded before the due date as a useful precedent. A clear defect in the title offered to the purchaser was held to absolve him from waiting until the due date before issuing his writ. Both parties adhered thereafter to their respective standpoints, but it is of advantage to reproduce an extract from a letter dated the 30th January 1947 sent by the vendee's solicitors to the vendor‑‑ "The agreement for sale, as you are aware, was entered into for the beneficial enjoyment of the property in question, including the running of a hotel business. The notice of acqui sition is a material defect in property and has a material bearing upon the agreement and the rights of the parties thereunder. Yon cannot insist on the completion of the purchase nor are you entitled to forfeit the deposit." Two matters arising out of this statement may conveniently be dealt with here. There seems no doubt of the vendee's intention to acquire the property in question for beneficial enjoyment. The positive averment to that effect supported by the vendee's evidence is met on the side of the vendor by a plea of ignorance. There need be no doubt that the vendee intended by the transaction to make an investment of a large sum of money secured upon a valuable piece of immovable property. Equally, there is no ground to suspect that he was embarking on a mere speculation, that is to say, there is nothing to indicate that his sole or main object in laying out a sum of money was to gain in the result another sum of money, if possible, larger in amount. In the latter case, the intervention of circumstances which might tend to produce a result opposite to that desired by the speculator could hardly avail to avoid the transaction, but the matter is different where what the vendee desires is a piece of property, and in the result he stands to get a property different from what he contracted to get or believed that he would get under the contract. Where the vendee is faced with the prospect of being left with nothing but a sum of money as a result of his entering into the transaction, e.g., a sum by way of compensation assessed according to law, the difference is even more marked. The second matter to be noticed is that the vendor at no time attempted to enforce the contract. It was open to him to set up a counter‑claim on that basis in the suit which was instituted on the 8th May, 1947, by the vendee for the recovery of his deposit with interest, but the claim was not put forward even at that stage. The vendee appears to have been content to retain the property as well as the earnest money. The contents and effect of the notice under section 36, Punjab Town Improvement Act, 1922, may now be considered. Under the Town Improvement Act, action may be taken by an Improvement Trust in respect of properties, in a number of ways, in relation to schemes for a variety of which provision is made in the Act. The notice affecting the suit‑land, however, purported to announce the framing of a "development scheme" and the object of the scheme was said to have reference to section 24 and section 28 (2) clauses (i) and (ii) of the Act and to be "for the acquisition of an area measuring 118.8 acres" of which the boundaries were stated with accuracy. The suit‑land which measures about 20 acres is wholly included within this area. From the point of view of persons interested in retaining titles vested in themselves in land included within the area of the scheme, the notice undoubtedly constituted a direct threat to their further retention of such titles. The intention was clearly stated to be the compulsory acquisition of such titles, and no other object of any kind was avowed by the notice. Under the Act, it is the duty of the Improvement Trust to notify each affected owner and to specify the period within which objections should be filed against the proposed acquisition, but the Act nowhere holds out any hope that any such objection, however well‑founded it may be in reason from the view point of the title‑holder, will prevail against the expressed intention of the Trust. In this very case the vendor on the 5th March, 1947, filed objections before the Trust which were set out in six paragraphs and raised such matters as the following :‑ (1) that the mere acquisition of land is not a purpose for which the Trust was authorised to frame schemes ; (2) that the Trust's object appeared to be to acquire the properties compulsorily for the purpose of re‑sale at a profit ; (3) that the objector was prepared to put up buildings according to any lay‑out plan approved by the Trust at his own This objection was peremptorily dismissed by the Trust by an order of the 23rd April, 1947, reading as follows :‑ "No case for exclusions. Exemption will be considered al the proper time if the owner applied for it." In the absence of details of the development scheme which had been framed by the Trust, it is not possible fully to understand the meaning and effect of this order, but its language is sufficient to point the moral, for the purposes of this case, namely, that the Trust was not bound to deal with the objections in any specified way, or even in the light of reason and natural justice, but had the power arbitrarily to decide whether or not it would accept the objection. The paramount consideration would appear to be the public interest, to which all mere individual rights, whatever their magnitude, must be subordinated. The Act goes on to require that the Improvement Trust shall submit its scheme, whether modified or otherwise in accordance with the objections received, to the Provincial Govern ment for its sanction, and its power of putting the scheme into operation is made dependent upon sanction of the Provincial Government thereto, with or without modifications. This is provided by section 42 of the Act and the argument was advanced that no property included in a scheme notified under section 36 could be regarded as having been affected or encumbered thereby until the sanction under section 42 of the Act was forthcoming. This argument found favour with the learned judges in the High Court, and will be considered in due course. The sole question on which the decision in the case turns being as to the effect of the Improvement Trust's notice in relation to the vendee's undertaking to buy the property, the relevant findings recorded in the Courts below may be reproduced here conveniently The trial Court viz. the Senior Sub‑Judge, Lahore, in his judgment of the 14th March, 1949, decreeing the vendee's claim in full recorded his finding in the following words :‑ "I am of the view that as a result of the notice under section 36 Punjab Improvement Act (sic), the purchaser became entitled to terminate the contract, as there was a reasonable apprehension created in his mind that he will not get what he contracted to buy. It may also be added that the Court has to judge the state of the mind of the purchaser and see whether as a reasonable and prudent man he should have repudiated the contract. In the present case, the bargain was to the tune of over half a crore of rupees and in my view the risk involved in the transaction was so great that no prudent man would have in the ordinary course of business faced it." The vendee's anxiety to get what he had contracted to buy is certainly in point, but the further observations regarding the calculation of risk and whether a reasonable prudent man would have undertaken it, do not in my opinion fall within the scope of relevancy, in a matter of this kind. The law is not devoid of guidance on the question which party in a transaction of the present' kind is obliged to carry a risk of the kind which arose in the present case, and in importing considerations such as would guide a "reasonable prudent man" in making a decision whether or not he should enter into a bargain of a particular kind, the trial Court appears to have lost sight of the obligations created by the existing contract viz, the agreement to buy. In the High Court, where the decree of the trial Court was reversed, the views recorded by the learned judges of the Division Bench were as follows. Kayani, J. stated his conclusions in the following words :‑ " ....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 entered 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." Muhammad Sharif, J. expressed the same conclusion in the following words :‑ "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 factnm 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 in 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 way 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." Both the learned judges thought that the effect of the Improve ment Trust's notice in relation to the property was such that, had the transaction of sale been carried through and completed by both parties, each being ignorant of the existence of the notice, then on the subsequent discovery of the notice, it would have been open to the vendee to move to have the agreement declared void, under section 20 of the Contract Act 1872. Such a result would also accrue if there was fraud on the part of the vendor i.e., that knowing of the existence of such a notice, he did not communicate the fact to the vendee as required by section 55, Transfer of Property Act 1882. It seems clear enough that both the learned judges were persuaded that the existence of the notice constituted a material disadvantage to the vendee. They agreed however in thinking that because this disadvantage accrued after the conclusion of the agreement of sale, the risk, or as it is termed by Kayani J. "the misfortune", fell entirely on the vendee. Yet, as to the effect of a notice under section 36 Punjab Town Improvement Act, the learned judges have minimised it in certain observations occurring earlier in their judgments. Kayani, J. thought that the effect was merely to raise "a possibility of acquisition which is removed from ultimate fulfilment by several hurdles, not the least of which is the sanction of Government", and Muhammad Sharif, J. observed as follows on the point :‑‑ "The final decision that a particular land is to be acquired is proclaimed by a notification under section 6 of the Land Acquisition 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." (By statute the effect of a notification under section 42 Punjab Town Improve ment Act is declared to be equivalent to that of a notification under section 6 of the Land Acquisition Act 1894). The view of the learned Judges that the notice under section 36 was a matter of fact essential to the formation of the contract, such that if the vendee entered into the contract, in ignorance of the notice, he would be entitled to repudiate it even after completion, is plainly (I say so with respect) correct, and appears to have been influenced to a considerable extent by certain observations by Judges of Indian High Courts, in cases where the facts were very similar. For example, in the case of Ramlal Sen (I L R 63 Cal 125.) where the purchaser discovered in the process of scrutiny of title of a property which he had contracted to buy, that a part of it lay within a street alignment prescribed under the Calcutta Municipal Improvement Act 1899 and immediately claimed to set aside the sale and demanded refund of his deposit, the Court observed that the existence of the street alignment was "a very material burden or liability" and further that while the purchaser believed himself to be buying an unrestricted freehold, he was actually buying "a freehold subject to a substantial and material disadvantage". Accordingly, refund of his deposit was ordered. In the case of Narsingdas (I L R 50 Cal 615.), the purchaser under an agreement of sale discovered in the course of scrutiny of title that a portion of the premises he had contracted to buy lay within the plan of a public street which had been notified, and he forthwith repudiated the contract and subsequently sued for return of his deposit. It was held that while it was true that the Improvement Trust might not do any thing further in the matter, it was also true that the Trust might in fact carry out the proposed improvements and the premises would then be affected with the result that the purchaser " would not be getting property he contracted to get" for which reason the notification of the proposed street constituted "a matter of fact essential to the agreement". The suit was decreed. The third case is that of Lallubahi Rupchand (I L R 59 Bom 83.), where a purchaser finding in the course of scrutiny of title that inter alia, the property which he bad agreed to buy bad been notified by Government for compulsory acquisition some 15 years earlier, refused to complete the contract whereupon the vendor sued for specific performance, while the vendee sued for return of his earnest money. It was held that "the liability of this property to be compulsorily acquired may fairly be said to amount to a material defect", and further that "when once there has been a notification by Government that certain properties are to be acquired there must always be likelihood of steps being taken in that direction sooner or later". It is true that in all these cases the question of material defect was raised in consequence of the discovery, after the execution of the agreement for sale, that by reason of certain facts which were in existence prior to the agreement, material disadvantage accrued or was likely to accrue to the vendee. Muhammad Sharif, J. has observed that "not a single decided case was quoted for the plaintiff where the effect of a notification to acquire a property for the first time after the contract of sale was considered". In the absence of such guidance, the learned judges, in deciding the case, adopted the principle that a risk arising in these circumstances falls to be carried by the purchaser. The duty of this Court in the present case is there fore to determine whether in adopting this principle, the learned Judges of the High Court have directed themselves rightly, and in doing so to ascertain and declare the law applicable to the conditions found to exist in this case. A neat statement of the nature of the problem may be found in the classic definition enunciated by the philosopher Kent:‑ "Law is the totality of the conditions under which the arbitrary will of one person can be brought into accord with the arbitrary will of another person in accordance with a general law of freedom . For the purposes of determination by a Court, the standard of accordance may be more specifically stated as the "general law of justice, equity and good conscience, applied in conformity with relevant statutes". The view that in the circumstances of the present case, the misfortune or risk to which the Improvement Trust's notice gave rise fell on the purchaser is clearly inconsistent with the statutory provisions applicable to the case. It might have been otherwise if on some basis of law or legal principle, it could have been held that by reason of the agreement of sale, the purchaser became invested with or entitled to some kind of interest in the property. The law in England on that point is that from the date of the contract the purchaser is in enquity the owner of the property sold, though not absolutely but subject to the condition that the contract is specifically enforceable (Williams on Vendor and Purchaser, 4th edition, p. 547). The matter is put from a different point of view by Fry in his commentary on specific per formance, 8th edition, at p. 429 :‑ "In the case of contracts for the sale of land, it has been laid down with regard to events happening after their being signed, that the question on whom the advantage or loss result ing from them would fall, and whether, therefore, the Court would enforce specific performance without reference to them

or whether, on the other hand, they might determine the contract, is to be decided by whether or not the title had then been actually accepted. But the more correct doctrine appears to be that the equitable estate passes on the signature of the contract if there be a good title, though that may not be shown till afterwards". In Pakistan, no such equitable estate passes to the purchaser, in view of the plain provisions of section 54, Transfer of Property G Act 1882, which is applicable to the case. The following extracts from the section make this abundantly clear :‑ " A contract for the sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties .. ...... It does not, of itself, create any interest in or charge on such property." . (Section 54 Transfer of Property Act, 1882). This principle would appear to be reinforced and supplemented by a provision in the following section of the same Act viz section 55, subsection (5), clause (c), reading as follows :‑ "The buyer‑is bound where the ownership of the property has passed to the buyer, to bear any loss arising from the destruc tion, injury or decrease in value of the property not caused by the seller". To determine the time from which ownership of the property in the present case would have passed to the buyer it is necessary to refer to section 54 of the Transfer of Property Act, and to sections 17, 47, and 49 of the Registration Act, 1908. In order that such transfer should take place, the requisites are that a con veyance should be executed and thereafter registered. No interest in the property accrues in favour of the buyer until the conveyance is registered, but upon registration, the transfer of ownership takes effect as from the date of the conveyance. In the present case, the contract was repudiated before the conveyance was even drafted. The buyer had consequently acquired no interest of any kind in the property at the time when the Improvement Trust's notice was issued. In these circumstances, it would appear to be difficult to make him liable for any risks or "misfortunes" affecting the property prior to completion of the sale. These would naturally fall upon the vendor who still retained all interests appertaining to ownership in the property. While conceding that the statutory law of transfer of property, as in force in Pakistan, supported this conclusion, counsel for the vendor attempted to import the English principle by reference to section 13, Specific Relief Act, 1877, and in particular, to illustration (a) thereunder. It is, in my opinion, perfectly clear that such an attempt cannot succeed. Section 13 Specific Relief Act, state a general proposition, of a positive nature, in the form of a double negative, in declaring that "a contract is not wholly impossible of performance because a portion of the subject‑matter, existing at its date, has ceased to exist at the time of the performance". Clearly, the principle is stated by way of overture to the three succeeding sections, which direct the Court in respect of enforcement of parts of contracts, on the ground of impossibility or separability of the remainder. This group of five sections is rounded off by section 1.7, laying down in clear terms that specific performance of part of a contract shall not be enforced "except in cases coming under one or other of the three last preceding sections". I am unable to extract from the words "a contract is not wholly impossible etc." in section 13, any such sense as can operate to import the English doctrine of transfer of the equitable interest to the vendee into Pakistan Law, and if this effect was ever felt, with or without the aid of the illustration. I feel no doubt that it has been eliminated alto gether by the enactment of section 54, and the portion thereof already cited, which being in the negative form, must be regarded as absolute :‑ "It does not, of itself, create any interest in, or charge on, such property". As for the illustration, it is perhaps sufficient to say that it fails of its purpose as an aid to understanding of the section. This maybe due to excess of brevity in the statement of the facts, and too positive a declaration of the obligation of the vendee, for the illustration appears to be based on the well‑known case of Paine v. Meller (31 ER1088.) in which two matters were brought out prominently which find no mention in the illustration, viz (1) that, in certain circumstances, the land on which the freehold house stood, might be much more valuable than the superstructure; and (2) that the vendee's obligation to complete turned on whether or not he bad accepted the title before the calamity occurred in which the house was destroyed. It is, in any case, impossible to regard the illustration as a legal enactment, independently of the section which it purports to but does not properly, illustrate; the more so as the result soughs from such a construction conflicts with a clear prohibition in statute of later date. The law must therefore be ascertained irrespective of any considerations of transference of risk as between the parties to the transaction. Several principles laid down in standard text‑books on the law of vendor and purchaser, and based on authority are however, available for the purpose. The first such principle is that where a vendor of land sues the vendee for specific performance of the contract, the defendant is entitled to have the action dismissed if it appears that the plaintiff cannot make out a good title to the land. This principle is embodied in section 25, clause (b) of the Specific Relief Act, and there is the high authority of the Privy Council for declaring that even in a suit by a rescinding purchaser for recovery of his deposit, the same test is to be applied. In the case H. V. Low & Co. v. Jyoti Prasad Dec which was a suit of this nature, the judicial Committee observed an under :‑ "The action is not one by an intending lessor for specific performance, but in their Lordships' opinion, the test of the appel lant company's right to recover the salami (earnest) is whether an action for specific performance at the instance of the respondent could have been successfully resisted by the appellant company on the ground that the respondent's title was defective The Specific Relief Act (I of 1877) formulates the test section 25 of that statute it is enacted that a contract for the letting of property cannot be specifically enforced in favour of a lessor who cannot give the lessee "a title free from reasonable doubt" ............................. The real question at issue therefore is whether the appellant company has shown that the respondent's title to grant a lease of the mineral right in the two villages is not free from reasonable doubt, or may be fairly described as imperfect. It is obvious that the question is one of degree. The doubt suggested must be reaosnable doubt; the imperfection must be material." Another principle which has been adopted by Courts of Equity in cases of this kind is stated by Fry (p. 412) in the following words :‑ " If 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 ". The dictum goes to the right of the vendee to quiet enjoyment of the property he buys. Where this is liable to be disturbed, and even more, where the manner of the disturbance is likely to be such that the vendee will be left without resource in law for the purpose of resisting it, there the Court would undoubtedly incline against enforcing the contract, provided that the circumstance of disadvantage arises out of the property itself, i.e., the nature of the vendor's own rights in respect of the property, which he purported to transfer. The three cases of Ramlal Sen (I L R 63 Cal. 125.); 1Varsing Das (I L R 50 Cal. 615.), and Lallubhai (I L R 59 Bom. 83.), already cited may be adduced in support of this proposition. Many other cases which proceed on the same principle are to be found in the law reports. I select for mention two from the English Chancery Court. The first is the case of Maskell and Goldineh's Contract ((1895) 2 Ch. D 525.). The vendor in that case had acquired an estate from a widow and her sons, two of whom were minors. He entered into a contract of sale of this property, and upon scrutiny, the vendee raised the objection that the share which the mother had purported to sell was in excess of that to which she was entitled under the law. The result was that the minor sons, who were taking advantage of the contract, were entitled to a greater share of the purchase money than they actually received, and upon the principle that they were not competent to release their right until majority, it was held by the Court that it was perfectly possible that they might assert a claim in respect of their shares of the purchase money upon attaining 21, and conse quently that the vendor "had not made out such a title as a purchaser can be called upon to accept." The danger of disturbance was in this case by no means actual, it was not even a potential danger ; the apprehension rested on a bare possibility, but it was nevertheless sufficient to cast a doubt over the title and conse quently to induce the Court to support the rescinding purchaser. The second case is that of the Hollis' Hospital and Hague's Contract ((1899) 2 Ch. D 540.). There the trustees of the hospital had contracted to sell certain immovable property of the trust, and matters had gone so far that the purchaser was satisfied to accept the title and bad even approved the draft conveyance prepared by the vendor's solicitor, when a threat to the property appeared, in the shape of a letter from a person claiming to be heir‑at‑law of the original settlers of the trust ; the letter declared that this person was no party to the sale of the property, and he wished to call the attention of the purchaser to a clause in the deed of trust providing for the property to revert to the heir‑at‑law in case of its being devoted to any other purpose than that intended by the settlors. The purchaser thereupon took out a summons for the purpose of determining whether or not a good title had been shown. The Court held that the clause which had been cited by the alleged heir‑at‑law was "obnoxious to the rule against perpetuities" and therefore in law of no effect. Nevertheless, considering that the point was one of some obscurity and difficulty, and bearing in mind that the objector had given notice of his rights and had declined to become a party to the proceedings before the Court, the Court regarded the title as one which should not be forced upon an unwilling purchaser. As a particular instance of the same principle, the following may be cited from Dart (p. 112) :‑ "If the vendor's interest is in any way determinable, the fact should appear, for when a redeemable annuity was offered for sale simply as an annuity, and lease hold houses were sold without any mention being made of a private Act of Parliament which gives a company the right to purchase them, the sales were held invalid." In elaboration of this proposition, mention may be made of the two cases cited therein, namely, Coverley v. Burrell (1821 Sug. 14 Edition, p. 27‑24 R R p. 350.), and Ballard v. Way (150 E R 540.), as well as the case of Weston v. Savage ((1879) 10 Ch. D 736.), which has been mentioned already. In coverlay v. Burrell (supra), an annuity which had been purchased at an auction occured on certain tolls, and a deposit had been paid. By the deed of grant, however, the grantor reserved a right to redeem the annuity, and thereupon the purchaser repudiated the contract and sued for return of his money. It was held that he was entitled to recover, on the ground that he would naturally expect that he was buying an absolute right, but in the result it proved that his right to the annuity was to be redeemable. This was liable to happen at the option of the grantor which the grantee, i.e., the purchaser would be powerless to control. The case of Ballard v. Way (supra) has received treatment at the hands of both the learned judges in the High Court. There the purchaser had contracted to buy certain property which was described in the bill of sale as a "good investment." Before completion of the conveyance, it was discovered that the premises were liable to be compulsorily acquired by a certain private company, under statutory provisions contained in a private Act of Parliament relating to the company. In other words, there was a unilateral option of purchase vested in the company by force of statute, which the title‑holder would be helpless to resist. Thereupon, the purchaser declined to complete the contract, and in subsequent legal proceedings the Courts declared that they were " strongly of the opinion that this contract may be rescinded on the ground that these premises are liable to be taken under the Act of Parliament for the purposes of the Act and further observed that the plaintiff had taken the property as a good investment secured on the premises, but in fact it appeared that the transaction was not so secured and was no investment at all. The fact that compensation would be paid under the Act in question, if the premises were eventually acquired, was not thought to effect the matter, for in the view of the Court, the plaintiff " never intended to contract, and did not contract, to purchase the mere right to compensation ". This decision is in direct conflict with a single Bench decision of the Allahabad High Court in the case of Gangabux Singh (A I R 1.926 All. 469.). There a contract to buy certain land in relation to which a notification of acquisition by an improvement Trust had been issued, was forced upon an unwilling purchaser, on the grounds, firstly, that the land might or might not be so acquired ; secondly, that the parties were bound by the contract ; and thirdly, that in case of compulsory acquisition the purchaser would get compensation. With respect, this decision, which binds no Court in Pakistan, would appear not to take account of a number of important considerations directly bearing upon the exercise of the power to enforce a contract, which considerations have been elucidated and given their due effect in the case of Ballard v. Way (150 E R 540.). In Weston v. Savage ((1879) 10 Ch. D 736.) the agreement of sale was in respect of the residue of the lease of a public house of which the duration was stated to be " at least 121 years ". When the abstract of title was furnished to the vendee, it appeared that the lease was determinable at the option of either the lessor or the lessee upon six months' notice before the expiry of the first seven or fourteen years of the term. The vendee on making this discovery at once repudiated the contract and latter sued for return of his deposit. In the course of the action the vendor offered to get rid of the original lessor's option but the Court held that the vendee was right to determine the contract as soon as he discovered the blot on the title. The vendee's suit was decreed, it being held that " it cannot be considered that a contract which stipulates for a 121 years term will be satisfied by giving an assignment of what, if the lessors exercise their option, will be only five years." That was not a case in which compensation might have been claimed by the vendee in case the option was exercised, but it was not certain by any means that the option would be exercised, and yet the fact that it might be exercised, and if it were exercised, the vendee could do nothing about it, was sufficient to induce the Court to relieve the vendee of his obligations under the contract. From this point of view, there seems to me to be little to choose between the reservation or appropriation for acquisition by the Improvement Trust effected by virtue of the notice issued by it, in the present case, and the various options which arose in the three cases just considered. As I have already pointed out, once the notice was issued under the Punjab Town Improve ment Act, declaring that a scheme had been framed and that the intention of the scheme was no other than the compulsory acquisition of titles in a large area of land including this suit property, a proceeding was set on foot which, in the eye of law, reduced the title‑holders to the position of mere spectators, whilst it was decided between the authorities whether or not a proposal, presumably framed by the Improvement Trust after mature con sideration, that their titles should be compulsorily acquired, would or would not be carried out. Certainly, the threat to those titles would become more acute as the proceedings matured to the stage at which acquisition was in fact directed by the competent authorities, but the liability to be compulsorily acquired commenced from the time when the notice under section 36 was issued, and that liability was nonetheless real on account of its being at that stage contingent upon the conclusion 61 certain further formalities. I say "real" from the point of view of the title‑holders, for, as I have observed already, the title‑holders did not in law possess the slightest locus standi, much less any right, to assert their titles against the expressed intention of the Improve ment Trust that they should be taken away. It was, of course, still open to the Improvement Trust not to proceed with the scheme or even to exclude from the scheme properties belonging to particular persons, but this was dependent entirely upon the arbitrary will of the Trust itself, and the title‑holders were in law, completely devoid of resource whereby to influence the Trust to act in this particular way. As has been seen, the objection raised by the vendor in this case in reply to the notice was brushed aside without a vestige of reason shown, and nothing can indicate more clearly the futility in law of any effort which any title holder affected by the notice could possibly have made to divert the course of the proceedings thereby initiated so as to save his own property. In this view of the matter, it seems to me to be immaterial whether the action which gave rise to the doubt regarding the vendor's title in the vendee's mind was taken early or late during the course of the proceedings requisite under the statute for carrying out the Improvement Trust's intention. The initial notice under section 36 being clearly sine qua non, eventual acquisition, and therefore the liability to acquisition might clearly be traced to it, and though the passage of time and the taking of further proceedings might have had the effect of rendering enforcement of the liability more imminent, the fact of the liability would not thereby become traceable to these later incidents, but would in my opinion, still derive its origin from the issue of the original notice. From that time onwards, the title‑holder's right to retain his property against the world, suffered a material derogation. It became a matter of conjecture, a precarious prospect whether he would or would not be preserved in his proprietorship of the property, because circumstances had arisen which tended to render his title terminable, and were wholly outside any power of resistance vested in himself. This was the nature of the title which, on and after the 7th December 1946 and up to the material date, the vendor was capable of transfer ring to the vendee. It was markedly different from the title which the vendee had contracted to get. The question whether the title had become subject to "reasonable doubt" being one of degree, I am clearly of the opinion that the answer must be in the affirmative ; a material imperfection had appeared and the title had become defective. Does it make a difference to the enforceability of the contract that the cause of this liability came into existence on a date subsequent to the contract ? I apprehend that the answer must be in the negative. Since in the Pakistan jurisdiction, no rights and interests. and correspondingly, no obligations, in relation to the property inhere in the purchaser until the sale is completed (by registration, if necessary), the question may be resolved by considering the principles governing the vendor's duty to make a good title, with particular reference to time. What is the limit of time up to which the vendor remains under a duty to make a good title ? Under the general law, it is clear that the title which is transferred is not the title as at the date of the contract of sale, but as at the time of the completion. In the words of Dart (p. 525) " until the convey ance is executed by all necessary parties, the vendor remains liable in respect of all defects in title." That liability may be varied by express contract, and here there is a clear stipulation viz " that the duty to make a good title extended up to the time of registration of the sale‑deed, i.e., a date ordinarily subsequent to its execution by all parties. As the defect in the case appeared while the stipulation was still in force, and it being accepted that removal of the defect by the due date was impracticable, I find no escape from the conclusion that the vendee was entitled to rescind the contract. I see no ground in reason why, in order that the vendee should obtain a right of rescission, the doubt should have arisen from some cause which existed prior to the making of the contract, or that there should be any element of mistake or fraud. The conclusions thus reached, on examination of principles, are not without support in authority. I need cite only two cases. One which has already been mentioned, is the case of Hollis' Hospital and Hague's Contract ((1899) 1

0. B. 710.). There the title had been accepted and a conveyance had been drawn and was ready for signature, when the factor of doubt supervened. The trust was created some 165 years prior to the proposed sale, and it did not appear that any question had ever been raised of the kind which was raised by the alleged heir‑at‑law. Moreover, that objection was found to be in its essence illegal and of no effect. If the vendee in that case had raised the question of the relevant clause himself, the case might have fallen in the category of cases where the doubt arises from a cause antecedent to the contract, but it is plain that the circumstance which gave rise to the doubt was the letter of the alleged heir‑at‑law putting forward a threat which can only be described as empty in the eye of law. Nevertheless, effect was given to the doubt created by this threat although the threat and the doubt were both subsequent in point of time to the making of the contract. In a bankruptcy case reported as Powell v. Marshall Parkes & Co. ((1899) 2 Ch. D. 540.), the vendee received a notice during the period pending completion of his contract of purchase from the vendor, that the latter had committed an act of bankruptcy within that period and he immediately repudiated the contract and moved to recover his deposits. Under the Bankruptcy Act, a transaction effected prior to the making of a receiving order, and without knowledge of the act of bankruptcy, is protected, but nevertheless it was held that the rescission of the contract by the vendee was within his legal rights, for the reason that the consequential acts following upon the agreement of purchase viz. the conveyance and the payment of the purchase money would not be protected' The judgments in the Court of Appeal indicate clearly that if, after having knowledge of the act of bankruptcy the vendee had gone on with the contract, in the event of adjudication, the title in the property would have vested in the assignee from the date of the, act of bankruptcy, and the vendee, if be had paid the money to the vendor, might have been under the necessity of paying for the property twice over. These contingencies did not arise in that case and they do not of course arise in this case, but what is important to note is that the Courts of Equity in England have not hesitated to support a rescission by the purchaser when the doubt in his vendor's title has resulted from some event occurring during the period provided for comple tion of the contract. As a result of this examination of legal principles and relevant authorities, it becomes possible to declare what is the law that is applicable for the purpose of resolving the rights of the parties to the contract of the 2nd October 1946, as it stood conditioned by the action of the Improvement Trust on the 7th December 1946, followed by the repudiation of the contract by the purchaser on the 13th January 1947, and the forfeiture of the earnest money by the vendor four days later. Each of these actions was " arbitrary " in the sense of being free of control by any other party. The law is determined by the following conditions, viz. the nature and effect of the Trust's action, in relation to the vendor's title, and the duty of the vendor to make a good title up to the date of completion of the sale, and not on any prior date. In my opinion, by the issue of the notice a material defect was created in the title which the vendor was capable of passing on the due date. Time being clearly of the essence of the contract, the purchaser was within his rights to rescind the contract at once, and the forfeiture of his earnest money is therefore not in accordance with the relevant stipulation in the contract. Having thus found the answer to the main question aris ing in the case, 1 need only deal very briefly with certain authorities which have been examined at considerable length in the judgments delivered in the High Court, and which counsel for the vendor sought to reinforce by further citations in this Court. Great reliance was placed on the case of Forsey Hollebone's Contract ((1927) 2 Ch. D. 379.) and counsel sought to strengthen it by reference to a recent decision of the Madras High Court in the case of S. Ahmad Hussain Sahib v. K. K. Genii Veeri Chettiar and others ((1952) 2 M. L. J. 567.). In each of these cases, the property sold was affected by a town planning scheme. In the English case, the effect would have been at the most to take off ten feet from the front garden and drive of the house sold, and it was observed that even if the degree of interference had been twice as much, yet the property would not have been altered so as to found the claim that the buyer would not be getting that property which he contracted to get. Express mention was made of the fact that should the property be injuriously affected as was feared, the Trust would be liable to pay compensation. In the Madras case also, divestment of the entire property was not to be feared. The following extract from the judgment will indicate how far that case is from the facts of the present case :‑ It has not been shown that these lands were directly sought to be acquired under the scheme and that the plaintiff would therefore be entitled only to compensation and not the land." In both these cases, it was held that the vendee took the property with either actual or constructive knowledge of the scheme. That being the case, any observations made in these cases as to the nature of the threat raised to the property for sale by virtue of the action under the town planning scheme, appear to me to have but little relevancy, even as guidance, in relation to the present case, and this would be so even if the threatened injury in these cases had not been so entirely dissimilar from the apprehension created in the present case. Next I may mention three recent cases from the Chancery Division which were cited on behalf of the vendor, namely, the Winslow Hall Estates Cease ((1941) 1 Ch. D. 503.), Cook v. Taylor ((1942) 2 Ch. D. 349), and the Hillingdon Estate Company's case. ((1952) 1 Ch. D. 627.) In the first of these cases, the purchaser attempted to repudiate the contract on account of a notice received from a requisitioning authority that it was intended to take immediate possession of the property under the Defence Regulations. His suit was dismissed on two grounds, firstly, that at the material date possession could have been given, and secondly, that in law the notice issued by the requisitioning authority was not a sine qua non, but , on the other hand, the legal position was that owing to the emergency, anyone's land was liable to be taken peremptorily without notice. That is certainly not the case here. The action con templated in respect of the present property was not under the Defence of India, but under a peace‑time regulation which required that notice should issue before further action for acquisition would be competent. I am not prepared to minimise the effect of the notice in the manner adopted in the High Court where Muhammad Sharif J., observed that " 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". To take a parallel which comes easily to mind, the mere fact that all men are mortal, does not render each man subject to a danger of death at all times. The danger arises from visible and easily recognised signs, and in the case before us, the danger to the title took a concrete shape only when the notice of acquisition was issued. Without such a notice there was no such liability. Cook v. Taylor ((1942) 2 Ch. D. 349.) is a case very similar to that of the Winslow Hall Estates ((1941) 1 Ch. D 503.), but there the purchaser was saved from enforcement of the contract of purchase by the fact that the vendor could not deliver possession as required by his contract, because he had already delivered the keys to the requisitioning authority. This case might be thought not to go in favour of the vendor, but it has, in any case, no bearing upon the present discussion. As for the Hillingdon Estates Company's case ((1952) 1 Ch. D 627.), where the purchaser was obliged to go through with a contract for purchase of a certain property, although since the agreement it had been brought under a compulsory purchase order by a statutory authority, the position was that the title of the vendor bad been accepted by the purchaser. The decision proceeds upon the ground that the contract was not frustrated by reason of the compulsory purchase order ; that would obviously be the case if the equitable owner ship had already passed to the purchaser and such a result accrues in English law, as we have seen, where the purchaser accepts the title. Lastly, reliance was placed on an Australian case Fletcher v. Manion (64 Commonwealth Law Reports 37.) where the property which was the subject of the sale, was demolished under peremptory orders of a Slum Clearance Authority, before the sale was completed. It was held that the liability to demolition had supervened after the property had already passed to the purchaser, and this finding is clearly based upon the English law on the subject, which is in force in Australia. It only remains for me to express my gratitude for the very able assistance afforded to the Court in the elucidation of the intricate matters arising in this case by the learned counsel, namely, Mr. Pritt, Q. C. for the appellant and Messrs. Niamat Ullah and Raja Iyer for the respondents. I agree that this appeal should be allowed and that the decree of the trial Court should be restored with costs throughout. A. H. Appeal allowed.