P L D 1965 Supreme Court 37 (PLP)

CORNELIUS, C. J.‑In a suit brought by the respondent to this appeal, Baitulmal Karkhana Ltd., for specific performance of a contract for sale of land, against the appellant Joydeb Agarwala, the trial Court awarded a decree as prayed on the 3rd November 1951. The price had been agreed to be paid in the form of shares in the plaintiff‑Company and the decree contained certain direc tions as to the procedure to be followed for making good the transfer of such shares. There was an appeal in the High Court, by the defendant which was dismissed on the 6th February 1958. The judgment shows that the point of consideration was not raised before the Court. 1t proceeds on the basis that the Company was ready, able and willing at all times to perform its part of the contract. The points raised before the High Court were that Joydeb Agarwala was not by himself competent to enter into the contract as the properties belonged to the Joint Family of which he was a member, that this fact was within the knowledge of the Company, and that it rendered the contract unenforceable. The argument was rejected and the appeal was accordingly dismissed. No further appeal (to this Court) was attempted. The contract for sale was made on the 30th September 1947, on which date ten shares in the Company were made over to the vendor in lieu of earnest money of Rs.

100. Further, the defendant put the Company in possession of the lands contracted to be sold, and the Company has been in possession ever since until the occurrence of an incident which led to a part of the land being lost to the Company. This occurred on the 13th December 1958, when the land was compulsorily acquired by the Govern ment, and a sum of Rs. 17,331‑6‑3 was assessed as the compensation. Later, however, the Government released a part of this land measuring, it is said, 7,99 of an acre and for the rest which was retained by the Government, a compensation of Rs. 8,666‑6‑3 was assessed. In May 1959, the Company filed a petition under section 151/153, C. P. C. for amendment of the decree for the purpose of "getting a Kabala in respect of the compensation money". The Court of first instance after notice to the judgment‑debtor held that the decree holder was entitled "to his prayer for amendment of the decree" to which the following paragraph was added on the 9th September 1959 :‑ "This decree is amended to this effect that the defendant shall execute the Kabala in respect of the award money of Rs. 8,666‑6‑3 as fixed by the Government on account of compensation for ‑334 acres of land out of Plots Nos. 1206 and 1204 and 505 acres out of Plot No. 1205 and the remaining decretal land." An appeal was preferred against this order in the High Court which was summarily rejected on the ground that it was incom petent. An application for leave to appeal to the Supreme Court was also rejected, but eventually on the 12th September 1961, special leave was granted by this Court to consider "a substantial question of law of general importance" which appeared to b e raised, namely, whether a decree for specific performance of a contract for sale of land could be modified as had been done in the case. We have heard Mr. T. H. Khan for the appellant Joydeb Agarwala and Mr. Ruhul Islam for the respondent Baitulmal Karkhana Ltd. Certain contentions raised by Mr. T. H. Khan may be very briefly disposed of. He contended that the trial Court lacked jurisdiction to interfere with the decree because it had become final through being upheld in appeal in the High Court and no having been appealed against further, and secondly, that only the High Court could alter the decree which had become merged in the decree of the High Court. The mere fact of the decree having become immune to further appeal by the dismissal of the: appeal in the High Court and the lack of further appeal does not render the decree a decree of any other Court except that of firs instance. No modification was made in the decree by the High Court, and the argument of merger is rendered of no weight the consideration that in fact the High Court rejected the appeal. Mr. T. H. Khan next argued that the contract had become frustrated in respect of the land which had been compulsorily acquired by the Government and could not be enforced to that extent. He was unable to cite any authority on the 7 point, although the case had been considered in a number of judgments in the English jurisdiction from which the Courts in Pakistan have adopted the jurisdiction in equity which they exercise. One of the latest cases on the subject is cited as Hillingdon Estates Co. v. Stonefield Estates Ltd. (1952 Ch. D 627). There are points of close resemblance between the present case and this particular precedent. A con tract had been made in 1938 for sale of two plots of land, described as `Section A' and `Section C'. The price per acre had been fixed as well as dates upon which the transfers were to be completed. As to section `A' the contracts were completed by payment of price and transfer of possession. With reference to section `C' lands, the purchaser had done nothing more than to make a payment of interest up to the 31st January 1949, on the price fixed, when in the meantime the local County Council on the 11th October 1948, made a compulsory purchase order‑v, rich was confirmed on the 10th March 1949 by the Ministry o Education. On the 30th March 1949, the County Council ‑gave notice of the purchase order to the vendees and on the 14th July 1949, called upon them, as required by the law, to "great" I.e., negotiate as to price and other conditions. Thereupon, the vendees sued for a declaration that the contract as to the section `C' lands had been automatically and completely discharged as a result of the purchase order. They claimed refund of the interest paid. The vendors counter‑claimed in the suit for specified performance of the contract or damages in lieu. The counter claims succeeded, the Judge making the following observations which are relevant to the consideration of the present case :‑‑‑ "I have always understood (and indeed it is a common‑place) that when there is a contract by A to sell land to B at a certain price, B becomes the owner in equity of the land, subject, of course, to his obligation to perform his part of the contract by paying the purchase‑money ; but subject to that, the land is the land of B, the purchaser . . . . . . the effect of this notice to treat and this compulsory purchase process is merely to place an obligation on those who are already the owners of the land in question . . .. I agree that this compulsory purchase order very much altered the situation, but I cannot appreciate that it has altered it in such a fundamental and catastrophic manner as to justify the Court in holding that the whole contract has been frustrated Undoubtedly, the whole of the compensation money under the compulsory purchase order in the present case will have to go to the purchasers . . . . . . the vendors are under no obligation to do anything except to convey the property subject to, among other things, this compulsory purchase order . . . . . I cannot hold that the contract here has been frustrated fundamentally, or indeed, at all." These propositions are unexceptionable, and we are not aware that they have been questioned at any higher level in the English Courts. We adopt them, with respect to the learned Judge. In that case as well, the vendor had ample opportunity to complete the purchase before the intervention by the Government, leading to loss of a part of the property contracted to be sold. In the present case, the occasion for consideration of the question of frustration arises at a somewhat later stage than in the precedent case, for here there was already in existence a decree for specific performance, which had been standing for some seven years before the acquisition, and the proceedings in the acquisition up to the stage of fixation of compensation were completed before steps were taken to incorporate that fact in the decree of the Court. In the English case, the compulsory purchase order had been made, but the amount of compensation still remained ‑to be settled by nagotiations between the County Council and the vendees in that case. This point of difference, if it weighs in respect of the relief to be given, certainly does so strongly in favour of the vendees. An observation made by the learned Judge in the English case cited above, at the conclusion of his judgment is also relevant for the present purpose. In giving judgment for the defendants on the counter‑claim, the learned Judge said :‑ "They (i.e. the vendees) are entitled to a decree for specific performance in the form which is usual when the title has been accepted. It will, of course; be quite clear (and some words indicating it must be put into the order) that the vendors, the defendants, have no right to or interest in the compensa tion money payable under the compulsory purchase order." In the present case what was sought by the decree‑holder Company, by its application under section 151/153, C. P. C. was to have words put into decree to make it clear that the right to the compensation money would belong to it, in the capacity of vendee, and that the vendor, Joydeb Agarwala would have no right to or interest in that compensation money. It was questioned whether there was power of amendment of the decree in the manner, and the Judge of the trial Court found support for his view in a judgment of the Madras High Court cited as Ramaswami Chettiar and others v. Chidambaram Chettiar (A I R 1954 Mad. 1040). It is not easy to see how this case can avail to support the action taken by the trial Court. After a decree for specific performance of a contract for sale of land had become final, by being confirmed in appeal, and leave to appeal further to the Federal Court being refused, and after the vendee had complied with the Court's order to deposit a large sum as the purchase price, the land was notified under an Estates Abolition Act and became vested in the Government which took possession. The executing Court directed conveyance and payment of the purchase price, at the instance of the vendor, the circumstance having arisen that the statutory valuation was to be less than the purchase price. In appeal, a Division Bench of the High Court exercised the discretionary power of the Court, under section 35 of the Specific Relief Act, to rescind the contract "as the justice of the case may require". Justification for this course of action appears to have been found in two principal circumstances, viz. (1) the same principle could not apply as where acquisition was under the Land Acquisition Act, and compensation was by market value, to a case of statutory expropriation for much less than true value, (2) the principle `caveat emptor' was avoided by the con sideration that the vendor had deliberately, by resistance through the Courts, avoided giving the conveyance within a reasonable time, and could not be permitted, when the expropriation occurred to turn around and demand that the conveyance should take place and (3) the contract had become incapable of performance. The learned Judges deprecated a tendency "to delve deep into authorities in English law for guidance", and impressed upon Advocates of their Court "the need to avoid the temptation of citing in abundance English and Indian law in a domain specifically provided for by statute". With respect, the statutory power under section 35 is expressed to be exercised within the discretion of the Court, but "as the justice of the case may require", and in a case of transfer of property, considerations of profit and loss resulting therefrom cannot govern the delicate question whether in equity, which forms an essential element in the dispensation of justice, the transfer should be enforced. The element of discretion in equity is to be applied judicially, that is, in accordance with settled principles, and in relation to relevant factors. The Specific Relief Act represents a codification of a number of principles derived from a long series of precedents, and the established practice of the English Courts of Equity for several centuries. These principles are not to be regarded as being foreign to the Act, merely because it is the statute law of a country other than England. They are to be treated as of the essence of the Act, in its application to cases arising thereunder. One of these principles, of respectable antiquity, and universally accepted, is that of the creation of an equitable estate, by the making of a contract for sale of immovables. The ascertainment and enforcement of such equit able estates forms the main burden of the Specific Relief Act. A decree for specific performance, made for the purpose of such enforcement, cannot but have the effect of confirming the equitable estate in question, for the due ordering of the rights and obligations of the parties, under the authority of the Courts of law. The view that the statutory acquisition of the land rendered the contract incapable of enforcement is one which, with respect, we are unable to accept. Such an event raises an issue, namely, whose title is it that statutorily acquired, and that is easily answered on the principle of the equitable estate. The position is made even simpler where that estate has been pronounced upon, at proper adjudication, and ordered to be enforced. Other matters in equity, arising for adjustment between the parties, in accordance with justice and good conscience, and the settled practice of the Courts, are fully within the judicial competence. But, speaking again with respect, the situation in these respects can rarely, if at all, be of such intractable difficulty, as to justify the Courts in reaching back to the contract itself, and destroying rights in law which have had a concrete and tangible existence since the contract was made, rights moreover which the Courts themselves have judicially ascertained and attested by a formal and final decree, obliging implementation. Therefore, we are clearly of opinion that we cannot accept any of the grounds which prevailed with the learned Judges in the Madras case as valid for the resolution of a case such as the present case. The Specific Relief Act contemplates the possibility in certain circumstances, one of which is that the unperformed part of a contract in fact "admits of compensation in money", that a decree may be made awarding compensation in money for the deficiency while granting specific performance as to the rest. This is made clear by the wording of section 14 of the Act. In the present case, the question of awarding a compensation for deficiency in the area of the land contracted to be sold has arisen after the making of the decree for specific performance in respect of the whole of such land. In equity jurisdiction, it has often been said that equity may treat land as money or money as land for the purpose of doing justice in the case. Where the Act itself contemplates compensation in money for deficiency in the land contracted to be sold, we can see no ground for regarding the trial Court's action, which is plainly calculated to do full and complete justice between the parties, as being ultra vires the powers of a Court of equity. There being no frustration of the contract, and it being clear that at least after the making of the decree, the land vested in the purchaser‑Company which had already gone into possession, and had satisfied the conditions of being ready, able and willing to make good its part of the contract, the right to the compensation money for the land lost by reason of the acquisition by Government clearly vested in the purchaser Company, and it was in all respects just and proper that the decree to be executed should make it clear that the purchaser should have exclusive claim to this compensation money. We may usefully refer also to a recent case of a similar nature decided by this Court on the 17th March 1964, in Civil Appeal No. 30‑D of 1961, Mrs. Anwara Chowdhury v. M. Majid and others. There, the trial Court in making the decree for specific performance of a contract for sale of land, of which a part had been acquired by Government, had directed that after the conveyance had been registered in the vendee's favour, he would be entitled to take the compensation for the compulsorily acquired part. The High Court had varied this direction so as to confine the plaintiff's right to compensation to a half share, in accordance with the facts and circumstances of the case, and the High Court's decree was upheld by the Supreme Court. The action taken by the Court of first instance in the present case would appear thus to be clearly in accordance with the practice of the Courts in Pakistan acting as Courts of equity in cases of the present kind. For these reasons, we dismiss this appeal and direct also that the appellant should bear the costs of the respondent. A. H. Appeal dismissed.