The plaintiff there sued for damages for breach of contract to sell immoveable property, and though T held that the defendant had been deliberately trying to get out of his agreement and therefore, was guilty of conduct which would presumably come under the head of "wilful default" on his part, yet in the circumstances of the case, namely, certain delay on the part of the plaintiff, I thought the plaintiff was not entitled to recover any damages other than the taxed costs of and incidental to the agreement for sale, plus the forfeiture of the defendant's earnest money. In my opinion no hard and1 fast rule can be laid down in these cases, and if it were necessary for the purposes of this case to decide whether the rule laid down in Bain v. Fothergill (1874) 7 H.L. 158 : 43 L.J. Ex. 243 : 31 L.T. 387 : 23 W.R. 261 should be applied as an invariable rule of law, then I agree with my learned brother that it would be desirable to have a reference about it to a Full Bench. But I think we agree that the circumstances of each case have to be considered in deciding what is reasonable and proper compensation for the damage caused by a breach of contract under Section 73 of the Indian Contract Act; that the Court is not bound in every case to-award damages on the basis of a difference between the price at the date of the contract and the market price at the date of the breach; and that the rule laid down in Bain v.: Fothergill (1874) 7 H.L. 158 : 43 L.J. Ex. 243 : 31 L.T. 387 : 23 W.R. 261 is not necessarily excluded and can be properly applied if the circumstances justify it.
Print Page
Bombay High Court
Dhanrajgirji Narsinggirji vs Tata Sons Ltd. on 10 July, 1924
Equivalent citations: 92 Ind Cas 225,ILR1925 49 Bom 1,
Bench: L Shah, Fawcett
1. This appeal arises out of a suit filed by the plaintiffs for recovery of the deposit money, and for damages in respect of a contract entered into between them and the deceased Raja Bahadur Narsinggirji with reference to certain immoveable property in Bombay which has been described as "Watson's Annexe." The contract was entered into on January 12, 1920, There was no formal contract between the parties, but it is evidenced by the two letters written on January 12, 1920, to the parties by their common broker (Exs. A2and'l). The price of this property was fixed at Rs. 18,00,000 (eighteen lacs). The plaintiffs paid Rs. 1,00,000 as earnest money on January i3.
2. The plaintiffs' case is that Raja Bahadur Narsinggirji broke the contract on November 20, 1920, the final date by which performance of the contract was insisted upon on their behalf. It appears that the plaintiffs entered into a contract for the sale of this very property with another person for twenty-three lacs of rupees within a fortnight from the date of the agreement in question. The plaintiffs ultimately claimed the return of the deposit money and damages to the extent of five lacs of rupees by way of lo3S which they suffered on account of their having been unable to carry out their contract with their purchaser.
3. The defendant denied having broken, the contract, and in effect contended that he had a good title to the property which he was always ready and willing to convey to the plaintiffs, and that the difficulty which arose in consequence of a suit filed by one Dr. Billimoria, who was in possession of this property as a lessee from him, was one for which he was not in any sense responsible. He made a counter claim for the specific performance of the contract in his favour, and contended that the plaintiffs had forfeited the deposit money.
4. On these pleadings the necessary issues were raised, and the evidence adduced principally consisted of the correspondence between the parties. The oral evidence in. the case is not of much importance, so far as the principal issues in the case are concerned.
5. On a consideration of the facts disclosed in the correspondence and of the oral evidence the learned Judge came to the conclusion that there was a representation by the defendant to plaintiffs that Dr. Billimoria was in occupation under a lease which was shortly to expire, and that the plaintiffs agreed to buy the property on the faith of such representation. He also found that the plaintiffs were justified in rescinding the contract on November 20, 1920, and that the defendant had committed a breach of the contract. On these findings the learned Judge passed a decree in favour of the plaintiffs for the return of one lac of rupees paid as earnest money, and for costs incidental to the investigation of the title in reference to this contract. As regards damages the learned Judge made a reference to the Commissioner for inquiry as to the amount of damages. He did not decide any question as to the basis upon which damages were to be assessed in the case. The learned Judge thought that there was a good deal to be said in favour of the rule laid down in Bain v. Fothergill (1874) 7 H.L. 158 : 43 L.J. Ex. 243 : 31 L.T. 387 : 23 W.R. 261 that normally, apart from deliberate carelessness or known want of title by a vendor, a purchaser cannot recover damages for loss of his bargain under a contract for the sale of real estate, apart from costs of investigating the title. But he held that the rule in India was different from that laid down in Bain v. Fothergill (1874) 7 H.L. 158 : 43 L.J. Ex. 243 : 31 L.T. 387 : 23 W.R. 261 and made this reference to the Commissioner for the determination of damages.
6. The legal representative of the original defendant, Raja Narsinggirji, who died during the pendency of the suit, has appealed from this judgment. In appeal the claim for specific performance has not been pressed, and nothing remains to be said with reference to that part of the defendant's claim.
7. Principally two points have been raised in support of the appeal. First, it is argued that the lower Court is wrong in directing a return of the deposit money. It is Contended that the plaintiffs had really kept the contract open up to the end of October 1920; that they knew perfectly well since June 1920 that Dr. Billimoria had filed a suit against the defendant to enforce specific performance of an agreement to lease this very property for a further period of six years; that that suit between Dr. Billimoria and the defendant was pending; and that with full knowledge of that fact they kept the contract alive with a view to secure ,if possible the profit which they were likely to make on account of their contract with that S.R. Bomanji. It is further urged that when they gave notice on November 8 that they would treat the contract as cancelled if it was not performed by November 20, and when they made time of the essence of the contract they were not justified in doing so and the notice was not reasonable under the circumstances. The contention is that the defendant was trying his best to have the suit of Dr. Billimoria expedited, and it was not under his control to get the decision of the suit on of before any particular date. It is urged that if the notice is not reasonable under the circumstances, the plaintiffs have no right to recover this earnest money. The second point relates to the question of damages.
8. I shall first deal with the question as to the right of the plaintiffs to recover the earnest money. In connection with this point, it is necessary to remember at the start that this property which formed the subject-matter of the agreement between the parties was a lease-hold property. The terms of the lease are to be found in Ex. D in the case. The land was leased out by trustees of the Port of Bombay for fifty years from January 1, 1886, and at the date" of this contract, i.e., in January 1920 nearly thirty-three years had elapsed, and the lease was still to run for about seventeen years. As regards the buildings put up by the lessee on this land, unless the lease was renewed, under the terms of the lease the lessee had only aright to remove the building at the termination of the lease. That was the nature of the property for which the plaintiffs had agreed to pay eighteen lacs of rupees. On January 12, 1920, the contract was entered into through a firm of brokers who were not familiar with. transactions in land and immoveable property. We find that after Narsinggirji made the offer on December 30, 1919, two letters were written by the brokers on January 12, 1920, one to the plaintiffs and the other to the deceased defendant Narsinggirji. The letter to the plaintiffs was in these terms: "We have this day bought by your order and for your account from Raja Bahadur Narsinggirji Gyangirji Watson's Annexe Building situated at Apollo Bunder, Fort, Bombay, admeasuring about 7,400 square yards of Bombay Port Trust Land (the present Port Trust lease is to run for about sixteen years further) for Rs. 18,00,000. Title deeds to be marketable. The purchaser is to pay Rs. 1,00,000, as earnest money. Legal charges to be paid half by you and half by the seller. The sale to be completed within six months from the date of this contract."
9. We find substantially the same terms in the letter to the defendant. On January 13, the earnest money, Rs. one lac, was paid by the plaintiffs to the defendant. It appears that on January 22, the plaintiffs agreed to sell this very property for twenty-three lacs of rupees to S.R. Bomanji, and the letter refers to the payment of Rs. 50,000 by way of earnest money to the plaintiffs.
10. Before the end of January it came to be known that Dr. Billimoria, who was in possession of this property under a lease, which was to expire shortly, was putting forward a claim to a further lease of this, property for six years against the defendant. This fact came to be known to the plaintiffs by a letter of January 29, written by the Solicitors of Dr. Billimoria to the plaintiffs. The defendants wrote to the broker, on January 30, saying that it was a misrepresentation to say that the present lessee was entitled to a new lease. That must hare been communicated to the plaintiffs.
* * * * * *p
11. It may be mentioned that in Dr. Billimoria's suit a consent decree was passed according to which Dr. Billimoria was to vacate the, premises on or before February 28, ly23. The allegation of Dr. Billimoria as to his right to have a furtherlease for six years from Narasingirji was not investigated. In the first place there was his claim for specific performance of this agreement for a further lease, and, secondly, the defendant had to meet the possible plea of the tenant in possession based on the provisions of the Rent Act (Bom. Act II of 1918). In that state this consent decree was obtained on February 24, 1921.
12. The present suit was filed on August 3, 1921. I have stated the correspondence between the parties at some length, as the facts appearing in the correspondence have a bearing upon both the points arising in the appeal. With regard to the question of the right of the plaintiffs to claim the earnest money, it depends upon the view which the Court takes of the letters of Augu3t 12 and of November 8 written by the plaintiffs' Solicitors to the defendant's Solicitors. It is quite true that on August 12 they did not in terms make time of the essence of the contract. Apparently they were not unwilling to keep the contract alive then, if by any chance the contract could be completed by November 1, as that was the date fixed by the plaintiffs with reference to the fulfilment of their agreement with S.R. Bomanji. But they intimated in clear terms #in that letter that if the sale was not completed by that time, they would lose the benefit of their contract with S.R. Bomranji, and that they would claim the difference of rupees five lacs byway of damages. The suit of Dr. Bilimoria which had really created a difficulty in the way of the fulfilment of this contract was then pending. It appears that the summons of the suit was served on the defendant on June 10, and the written statement was filed on August 5. Apparently in accordance with the suggestion made by the defendant's Solicitors the plaintiffs' Solicitors had called for the title-deeds after April 12. Nothing appears to have been done, and the plaintiffs were waiting for the completion, of the contract by November 1. There was practically no correspondence from August 16 to October 28, 1920. At any rate on November 8, 1920, the plaintiffs' Solicitors definitely intimated to the defendant's Solicitors that they could not possibly wait beyond November 20. It is true that if by any chance the contract could be fulfilled by that date they were anxious to see it fulfilled as that would put them in a position to fulfil their contract with their purchaser. But the terms of the letter of November 8 are very clear, and the whole question is whether on November 8 the plaintiffs were justified in making time of the essence of the contract, and whether the notice given by them is reasonable under the circumstances. It is urged on behalf of the defendant that it is not a reasonable notice because it was not within their power to get the suit disposed of before that date. In fact they male some effort after November 20 to expedite the hearing of that suit, and as a result of that effort apparently the hearing was expedited. Ultimately a consent decree was obtained in February 1921.
13. The question as between the plaintiffs and the defendant is whether the plaintiffs were bound to wait until the disposal of the suit. That really is the contention A the defendant. According to the defendant the plaintiffs having elected is August 1920, to keep the contract alive, they could not ask him on November 8 to complete the contract within twelve days from that date. As between the plaintiffs and the defendant the original agreement was to fulfil the contract within six months. That period expired on June 12, and thereafter having regard to the nature of the property it is clear that the plaintiffs could not be expected to wait for any indefinite length of time. It is true that as between the plaintiffs and the defendant the contract which the plaintiffs had entered into with S.R. Bomanji is not material. Leaving alone that contract, it is clear that the plaintiffs themselves were entitled, without any reference to the particular reason for their doing so, to insist upon the fulfilment of the contract within a reasonable time. After June 1920 they were in a position to make time of the essence of the contract in view of the difficulty about getting immediate vacant possession. On August 12 they intimated fairly clearly to the defendant that they would insist upon the fulfilment of the contract by November 1. It is quite true that they did not state that they were making time of the essence of the contract; and that letter cannot be taken as notice making time of the essence of the contract. But in fact a definite intimation was given thereby that, they would insist on the fulfilment of the contract by November 1. I do not take that as election on the part of the plaintiffs that they were going to wait until the disposal of the suit, whatever time the suit may take. It only indicates a desire to wait up to November 1. In fixing November 1, it seems tome, that the plaintiffs gave the defendant sufficient time in view of the pendency of Dr. Billimoria's claim; but when it became evident that they could not allow the contract to remain outstanding any longer without risk to themselves, they made it clear on November 8 that at the most they would wait up to November 20. It seems to me that they were justified in doing so, and the time they gave was under the circumstances reasonable.
14. The dispute between the vendor and his sub-lessee was a matter with which the plaintiffs were not directly concerned. If the defendant wanted to have the benefit of this contract, it was his duty to see the dis (sic) between him and his vendee settled in such a manner as to put him in a position, to fulfil his part of the contract. Having regard to the nature of the property the,, plaintiffs were perfectly justified in insisting upon the fulfilment of the contract by November 1, and when they realised that the contract was not fulfilled by November 1, they made it perfectly clear to the defend, ant-that they could not wait in any case beyond November 20. That is a position which, it seems to me, they were justified in taking up. The time given was reasonable. They could have no control over the proceedings in the suit between Dr. Billimoria and the defendant, and the result in that case shows that the defendant could not have completed this contract in any reasonable time. It is in view of the result in that suit that possibly the claim for specific performance is not pressed by the defendant now. But whatever the reason may be for not pressing the claim for specific performance, 1 am satisfied that the view taken by the the lower Court as to the return of the deposit money to the plaintiffs is right. I do not think under the circumstances that the defendant could forfeit this money for his own benefit.
15. The next question in the case relates to damages. As regards the measure of damages in a case of this kind, the test to be applied is not easy to lay down. No doubt Section 73 of the Indian Contract Act would apply to this contract, as it would apply to any other contract. Under Section 73 the plaintiffs would be entitled to claim, any loss or damage caused to them, which naturally arose in the usual course of things from such breach, of which the parties knew, when they made the contract, to be likely to result from the breach of it.
16. The question that we have to consider is whether the rule of English Law laid down in Bain v. Fothergill (1874) 7 H.L. 158 : 43 L.J. Ex. 243 : 31 L.T. 387 : 23 W.R. 261 is necessarily excluded by the terms of Section 73 of the Indian Contract Act. I am assuming for the moment that the rule might otherwise apply to the facts in this case. I shall deal separately with the question as to whether in the present case the breach on the part of the defendant could be said to be due to wilful default on his part, or on account of some difficulty in the way of making out a title for which he cannot be held justly responsible. The question is whether under the circumstances the plaintiffs are entitled only to the return of the deposit money, and all the costs of the investigation of title, or whether they are entitled to damages on the footing of the difference between the contract price and the market value of the property on the date of the breach.
17. The decisions on this point have been somewhat conflicting. I may mention that in Pitamber Saubhagyadas v. Cassibai 11 B. 272 : 6 Ind. Dec. (N.S.) 178 the view taken by Mr. justice Scott was that the English rule on this point would apply here. In Nagardas Saubhagyadas v. Ahmed khan 21 B. 175 : 11 Ind. Dec. (N.S.) 118 there are observations of Farran, C.J., to the effect that the Legislature has not prescribed a different measure of damages in the case of contracts dealing with land from that laid down in the case of contracts relating to commodities. That was the decision of a Division Bench on the Appellate Side of this Court; and on the facts of that case it was not essential to decide the question as to whether the application of the English rule was necessarily excluded in India in virtue of the provisions of Section 73 of the Indian Contract Act. Then Macleod, (Unconsidered this question in Ranchhod Bhawan v. Manmohandas Ramji 32 B. 165 : 9 Bom. L.R. 1087 and held that Section 73 imposed no exception on the ordinary law as to damages whatever the subject matter of the contract, and in effect he held that the English rule would not apply in India unless it could be shown that the parties to the contract expressly or impliedly contracted that this should not render the vendor liable in damages. In Hasan Premji v. Jerbai O.C.J. Appeal No. 41 of 1920, decided by Macleod, C.J., and Shah, J, on December 17, 1920, (Unrep ), the question came up for consideration on the Original Side before, the Court of Appeal, and it was dealt with as follows:
Therefore, it must follow that the defendants have committed a breach of their agreement, and under Section 73 of the Indian Contract Act, they would be liable to damages. What the measure of damages would be must depend entirely on a contract of this description on the facts of this case. In an ordinary contract for the purchase and sale of land in which the defendant contracts to make out a marketable title, the usual result would be if without any default on the part of the vendor he was unable to make out a marketable title, that the bargain would be off and the vendor would have to pay the purchaser's costs of the agreement and of the inspection of the title deeds. But if the conduct of the vendor in committing the breach shows that he has been guilty of any default of a wilful nature, then the damages would be calculated on a higher scale, and the measure1 of damages would be the difference between the contract price and the market price of the property at the date of the breach. In any event, the defendants would have to pay the costs of the plaintiff up to the time they found they could not complete the bargain.
18. In that case it was held on the facts that the defendants had been guilty of wilful default, and accordingly the order directing an inquiry as to the amount of damages on the footing of the difference between the contract price and the market price was upheld. The same Bench had occasion to consider the same point again in Vallabhdas Tulri Das v. Nagar Juthabidas Juthabai 92 Ind. Cas. 143 : 23 Bom. L.R. 1213 when Macleod, C.J., observed as follows page 1223 Page of 23 Bom. L.R.--[Ed.]:
It is, therefore, a case of a vendor contracting to sell property to which he knew that his title was defective; and the only question at issue is whether he should pay damages calculated according to the ordinary rule in the case of a breach of contract, or whether he is only bound to pay the purchaser's costs of the agreement and of the investigation of title. I do not wish to exclude the possibility of there being cases in which it may be found there was an implied contract that in the event of the title proving to be defective without any default of the vendor, he should not be liable to pay damages according to the ordinary rule.
19. In that particular case the Court found that it was a case in which the defendant should be held liable in damages on the footing of wilful default.
20. The question now is whether the application of the English rule is necessarily excluded in all cases, and whether there should be a reference to the Commissioner to determine the amount of damages on the basis of the difference between the contract price and the market value of the property on the date of the breach. On a careful perusal of the judgments in Bain v. Forthergill (1874) 7 H.L. 158 : 43 L.J. Ex. 243 : 31 L.T. 387 : 23 W.R. 261 which affirmed the rule in Flureau v. Thornhill (1776) 2 W.M. Bl. 1078 : 96 E.R. 635, and the terms of Section 73 of the Indian Contract Act, it seems to me that the application of the rule is not necessarily excluded. The question must be answered on the facts and circumstances of each case whether that rule would apply to that particular case. That is the view which was taken practically in. the unreported judgment in Hasan Premji v. Jerbai, O.C.J. Appeal No. 41 of 1920, decided by Macleod, C.J., and Shah, J., on December 17, 1924 (Unrep) and in Vallabhdas Tulsi Das v. Nagardas Juthabai 92 Ind. Cas. 143 : 23 Bom. L.R. 1213. On the present state of the authorities that is the view which I am still inclined to take. I am aware of the view taken by the Calcutta High Court in Nabinchandra Saha Pramanick v. Krishna Barana Dasee 9 Ind. Cas. 523 : 38 C. 458 : 15 C.W.N. 420 and by the Full Bench of the Madras High Court in Adikesavan Naidu v. Gurunatha Chetti 39 Ind. Cas. 358 : 40 M. 338 : 32 M.L.J. 180 : (1917) M.W.N. 171 : 5 L.W. 425 : 22 M.L.T. 300. I have referred in detail to the opinions which have been expressed on different occasions in this Court. As I read the judgment of the Chief Justice in the case of Vallabhdas Tulsi Das v. Nagardas Juthabai 92 Ind. Cas. 143 : 23 Bom. L.R. 1213 it seem to me that in a proper case the rule in Bain v. Forthergill (1874) 7 H.L. 158 : 43 L.J. Ex. 243 : 31 L.T. 387 : 23 W.R. 261 can be and may be applied in India. It is possible that it may become necessary hereafter to have this question of recurring importance considered and decided by a Full Bench. But having regard to the circumstances of this case, it seems to me that under the present state of the authorities the application of the English rule is not excluded. I, therefore, proceed to consider whether on the facts of this case that rule could be properly applied.
21. As regards the facts it is clear that from the beginning the defendant's position was that the representation of Dr. Billimoria that he was entitled to a lease for a further period of six years was false, and that he was otherwise in a position to fulfil the contract. If the allegation of Dr. Billimoria had been dealt with in the suit filed by him on its merits, we would have been in a better position to know what the real fact was. But there were conflicting considerations in that suit. On the one hand, there was the plea of Dr. Billimoria that there was an agreement to give him a lease for a further period of six years. Even if that allegation was not proved, the defendant had to face a further plea on account of the provisions of the Rent Act. If Dr. Billimoria could not be evicted from the premises, he would not be in a position to give vacant possession of the property in fulfilment of his contract with the plaintiffs. Under the circumstances the parties compromised the matter, and in February 1921, the compromise arrived at was that Dr. Billimoria was to vacate the premises by February 28, 1923. That compromise does not indicate how far the allegation as to the contract between him and the defendant for a further lease was true. Narsinggirji died before the suit came on for hearing.
22. On the present record, therefore, my view is that the defendant's contention, that it is the improper claim on the part of Dr. Billimoria that has really come in the way of his fulfilling his contract with the plaintiffs, cannot be rejected. There is nothing on the record to show that the defendant was otherwise not in a position to fulfil the contract or that he was unwilling to fulfil the contract. In fact before any investigation of the title took place, the plaintiffs also realised that the contract could not be put through unless this difficulty which arose in consequence of the claim by Dr. Billimoria was removed. That difficulty could not be removed within the time fixed, by the plaintiffs and, therefore, the contract could not be fulfilled. Then we should have regard to the informal manner in which the terms of the contract are evidenced in this case. The usual agreement which we find in such cases between the parties was not executed. The terms are evidenced by the two letters which are written by the broker, and it is sufficiently indicated in these letters that the defendant agreed to deduce a marketable title though the expression used in the letter is very inapt. In fact a marketable title could not be deduced by the defendant under the circumstances which I have indicated. There is nothing in the circumstances of the case nor in the terms of the contract, to show that the plaintiffs were not alive to the reasonable possibility, which exists in such cases, of the vendor being unable to make a good title without any default on his part. It appears to me that this case falls clearly within the rule of Flureau v. Thornhill (1776) 2 W.M. Bl. 1078 : 96 E.R. 635 as explained and affirmed by the House of Lords Bain v. Fothergill (1874) 7 H.L. 158 : 43 L.J. Ex. 243 : 31 L.T. 387 : 23 W.R. 261.
23. I am, therefore, of opinion that under (he circumstances of this case it is not necessary to make any reference to the Commissioner for any inquiry into the quantum of damages. The plaintiffs will get damages by way of costs incidental to the investigation of title. This would, in my opinion, meet the justice of the case. I would, therefore, affirm the decree appealed from so far as it relates to the return of the earnest money, the dismissal of the counter-claim, and the cost of the investigation of title. But I would set aside the decree so far as it relates to the reference to the Commissioner for inquiry into the question of damages, and dismiss the rest of the plaintiffs' claim for damages.
24. Taking all the circumstances of the case into consideration, including the fact that the plaintiffs' claim for damages on the higher scale has been disallowed, we direct that the plaintiffs should get their costs in the lower Court from the defendant, and that each party should bear his own costs of appeal.
Fawcett, J.
25. I agree that there was a breach of contract on the part of the defendant on November 20, 1920. I think, however, that the breach is not so much due to a failure to show a marketable title, as a failure to show a title, subject only to a lease expiring on March 1, 1920, and not to any longer or other lease. On the oral evidence that was adduced, and accepted by the learned Judge in the Court below, there was a representation by the original defendant that the only lease to which the property was subject was one expiring on March 1, 1920, and the learned Judge has held that that was a material representation, and the plaintiffs were justified in rescinding the contract. That finding is not disputed before us, and the difficulty that really prevented the performance of the contract in this case was the failure of the defendant to pass the property, subject only to this particular lease, there being in fact a claim by Dr. Billimoria that he was entitled to a longer lease. This claim was not a negligible one, for in May 1920 he brought a suit asking that the defendant should be ordered specifically to perform the agreement to lease the property for six years, and also that he should be restrained by an injunction from selling or completing the sale of the premises to the plaintiffs, except subject to the six years' lease that he had set up. The original date fixed for performance was in August 1920, and I agree with the learned Chief Justice that in the circumstances of the case the plaintiffs were entitled on November 8, 1920, to give notice to the defendant that they did. I also agree that in the circumstances there was a reasonable time fixed in the notice for the defendant to remove the hitch about this claim of Dr. Billimoria. It is no doubt true that there would be great difficulties in getting the suit decided before November 20, 1920. But there were other ways of removing the impediment, such as an amicable settlement; and it is quite clear that the law in a case of this kind is that the intending purchaser is not bound to wait indefinitely until a claim has been got rid of in the ordinary course of litigar tion. The defendant had due notice from the plaintiffs to get rid of this claim, and I do not accept the contention of the learned Counsel for the appellant that they misled the defendant and so were disentitled to give their notice of November 8, 1920.
26. The next question is as to the alleged right of the defendant to retain the deposit made by the plaintiffs. On this point, it seems to me clear that there being, as I have held, a breach of the contract on the part of the defendant, the plaintiffs were entitled to recover their deposit, and no facts are shown which make it inequitable that the plaintiffs should so recover it, or make it equitable that the defendant should retain it. The difficulty that arose was not in any way due to any default on the part of the plaintiffs, and so far as there was any conduct conducive to Dr. Billimoria's claim, it must have arisen on the part of the defendant rather than on the part of the plaintiffs.
27. Next as to the question of damages. The plaintiffs claimed the sum of five lacs, being the difference of the price at which they had agreed to purchase from the defendant and the price at which they had entered into a contract to sell to S.R. Bomanji. But that claim can be disposed of very shortly by a reference to illustration (o) to Section 73 of the Indian Contract Act, which shows that it is not the profit which would have arisen to the plaintiff, which is to be taken into account, but the market price of the property on the date of the breach. At the same time, as ruled in Engell v. Fitch (1869) 4 Q.B. 659 : 10 B. & S. 738 : 38 L.J.Q.B. 304 : 17 W.R. 804 the profit which the plaintiffs could have made on a re-sale, if un-contradicted by other evidence, is evidence, of the latter value.
28. The main question is whether in the circumstances of this case the plaintiffs should be allowed damages under what may be called the ordinary rule of the difference between the price which they agreed to pay the defendant and the market price on the date of the breach, namely, November 20, 1920. That is not a definite rule which is laid down in the text of Section 73, and it is not the law, as I understand it, that in every case where a contract of this kind has been broken the party who suffers from the breach is entitled to get compensation in that particular manner. There can be exceptions, and the illustrations to Section 73 merely lay down what is expressed in Section 51(3) of the English Sale of Goods Act, viz., that the measure of damages in such a case is prima facie to be ascertained in that manner. Each case, in my opinion, depends upon its own particular circumstances, and I agree with the opening remark of the Chief Justice Sir Norman Macleod in the passage quoted in Vallabhdas Tulsi Das v. Nagar Das Juthabai 92 Ind. Cas. 143 : 23 Bom. L.R. 1213 from his judgment in another case Hasan Premji v. Jerbai O.C.J. Appeal No. 41 of 1920, decided by Macleod, C.J., and Shah J., on December 17, 1920 (Unrep.) that "what the measure of damages would be must depend entirely in a contract of this description on the facts of each case." He then goes on to say that:
In an ordinary contract for the purchase and sale of land in which the defendant contracts to make out a marketable title, the usual result would be, if without any default on the part of the vendor, he was unable to make out a marketable title, that the bargain would be off and -the vendor would have to pay the purchaser's costs of the agreement and of the inspection of the title-deeds.
29. That is practically applying the rule adopted in England in the leading case of Bain v. Fothergill (1874) 7 H.L. 158 : 43 L.J. Ex. 243 : 31 L.T. 387 : 23 W.R. 261 and if the Chief Justice intended to go back on his previous decision in Ranchhod Bhawan v. Manmohandas Ramji 32 B. 165 : 9 Bom. L.R. 1087. I should certainly feel great difficulty in following it. The view taken in Ranchhod Bhawan. v. Manmohandas Ramji 32 B. 165 : 9 Bom. L.R. 1087 has been followed in the Calcutta and Madras High Courts, as already mentioned in my learned brother's judgment, as well as in the Lahore High Court in Jai Kishen Das v. Arya Priti Nidhi Sabha 58 Ind. Cas. 757 : 1 L. 380 at p. 385 : 80 P.W.R. 1920 : 55 P.L.R. 1921 and in my opinion the discretion which a Court has under Section 73 cannot properly be restricted by any Judge-made rule that every case of a particular kind must be dealt with in a particular manner, such as the rule laid down in Bain v. Fothergill (1874) 7 H.L. 158 : 43 L.J. Ex. 243 : 31 L.T. 387 : 23 W.R. 261 I think ea.ch case depends upon its own facts, and I may, for instance, refer to a case which I had before me last year, viz. Shamsuddin Tajbhai v. Dahyabhai 84 Ind. Cas. 947 : 26 Bom. L.R. 105 : 18 D. 368 : (1924) A.I.R. (B.) 357. The plaintiff there sued for damages for breach of contract to sell immoveable property, and though T held that the defendant had been deliberately trying to get out of his agreement and therefore, was guilty of conduct which would presumably come under the head of "wilful default" on his part, yet in the circumstances of the case, namely, certain delay on the part of the plaintiff, I thought the plaintiff was not entitled to recover any damages other than the taxed costs of and incidental to the agreement for sale, plus the forfeiture of the defendant's earnest money. In my opinion no hard and1 fast rule can be laid down in these cases, and if it were necessary for the purposes of this case to decide whether the rule laid down in Bain v. Fothergill (1874) 7 H.L. 158 : 43 L.J. Ex. 243 : 31 L.T. 387 : 23 W.R. 261 should be applied as an invariable rule of law, then I agree with my learned brother that it would be desirable to have a reference about it to a Full Bench. But I think we agree that the circumstances of each case have to be considered in deciding what is reasonable and proper compensation for the damage caused by a breach of contract under Section 73 of the Indian Contract Act; that the Court is not bound in every case to-award damages on the basis of a difference between the price at the date of the contract and the market price at the date of the breach; and that the rule laid down in Bain v.: Fothergill (1874) 7 H.L. 158 : 43 L.J. Ex. 243 : 31 L.T. 387 : 23 W.R. 261 is not necessarily excluded and can be properly applied if the circumstances justify it.
30. In this particular case, the circumstances are somewhat peculiar. The contract-was entered into at a time when the Rent Act was in force in Bombay, and when undoubtedly there were difficulties in the way of an owner obtaining possession of land which had been leased to a tenant. These difficulties were within the knowledge of both the parties to this suit. The case. is thus a very different one from that of Engell v. Fitch (1869) 4 Q.B. 659 : 10 B. & S. 738 : 38 L.J.Q.B. 304 : 17 W.R. 804 which was another case where the trouble arose on account of a failure to get vacant possession. The vendors were mortgagees who sold with vacant possession, and it was held that they had deliberately failed to eject the mortgagor, and therefore, there had been a "wilful default" on their part which took the case out of the rule in Bain v. Fathergill (1874) 7 H.L. 158 : 43 L.J. Ex. 243 : 31 L.T. 387 : 23 W.R. 261. But this cannot apply in the present case where the defendant would, quite, apart from the question whether he had or had not given to Dr. Billimoria a fresh, lease of the premises, not necessarily get vacant possession by August 1920, even although Dr. Billimoria's lease expired on March 1, 1920. I bear in mind the remark of the learned Judge that the same difficulties would not have confronted the plaintiffs, who could, he says, have alleged that they wanted the land for their own occupation or for building operations. But they could hardly have alleged that they wanted it for their own occupation in view of the admission that they had bought it for a syndicate, and as regards building operations, it has to be shown under the Rent Act that the property is reasonably required for such operations. It. is not by any means certain that the plaintiffs would have got an order for delivery of possession by Dr. Billimoria, if he had contested the matter, within any specific period of time, and these peculiar difficulties can, I think, be fairly taken into consideration in regard to the question of damages.
31. Another circumstance which I think may be taken into consideration in this case is the fact that this was a contract in Bombay, where conveyancing work and negotiations in regard to purchase and sale of property are carried on in a very similar manner to that followed in England. The House of Lords have laid down, for reasons connected with conveyancing difficulties, that the rule in Bain v. Fothergill (1874) 7 H.L. 158 : 43 L.J. Ex. 243 : 31 L.T. 387 : 23 W.R. 261 is a reasonable one to apply in certain circumstances, and, therefore, in a case where the plaintiff has no very outstanding circumstances to support his claim to damages on a higher scale, the fact of the contract being made under conditions similar to those obtaining, in England is, I think, a factor which can reasonably be taken into account.
32. Then there is the further fact that the suit brought by Dr. Billimoria was compromised, and that in the circumstances it is impossible to say with certainty that his claim was due to some conduct of the defendant which should enhance the damages otherwise awardable. It seems to me that, having regard to the special circumstances of the case, the difficulty which arose was not entirely due to defendant's conduct, but can also be reasonably ascribed -to the difficulties of the kind that I have mentioned, and that substantial justice is done by putting the parties back in the position from which they originally started, that is to say, that the plaintiffs should merely recover their deposit and get their costs of investigating the title.
33. I, therefore, agree with the decree proposed by my learned brother.
No comments:
Post a Comment