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Regular First Appeal No. 22 of 1965, decided on 28th March 1967.

S. 24 (b)‑Specific performance of contract, suit for‑Failure of plaintiff to "express specifically in clear terms" in plaint his readiness and willingness to perform his part of contract‑Does not disentitle plaintiff to specific performance.

Held, that failure of the plaintiff to express specifically in clear terms his readiness and willingness to perform his part of the contract does not disentitle him to specific performance.

There is no express statement of law that in a suit for specific performance the averment of readiness and willingness on plaintiff's part up to the date of decree is necessary as it was always in England. However, it seems invariably to have been recognised that such averment should be made as is always done in England.

What is meant, however, by this requirement of English law is that the plaintiff, in order to get a decree for specific performance, must treat the contract as subsisting. One of the essential factors in the case is that the plaintiff must first allege and then, if the matter is traversed, prove (a) that he has performed all the conditions which under the contract he was bound to perform and (b) that he has been ready and willing at all times from the time of the contract down to the date of suit to perform his part of the contract.

The plaintiff must not only show that he has complied with the terms, so far as they ought to be complied with, at the commencement of the suit; he must also show that he is able, ready and willing to do other future acts which the contract stipulates for as part of its specific performance.

Failure to make an express averment in the plaint that plaintiff has been ready and willing at all times from the time of the contract down to the date of the suit to perform his part of the contract should not militate against him when he had alleged that he was ready to have the transaction completed on payment of the amount due from him. In the circumstances, it would amount to being extremely technical if it were to be held that the plaintiff has not expressed his readiness and willingness to perform his part of the contract.

Court v. The Ambergate, etc. Railway Company (1851) 17 Q B 127 ref.

Ardeshir v. Flora Sassoon A I R 1928 P C 208 considered.

Ss. 12, Explanation, 20 Contract of sale providing for damages in case of default of per formance‑Vendee, nevertheless entitled to have contract specifically, enforced‑‑Whether provision for penalty is an "alternative" contract is a question of construction‑Each case depends upon its own circumstances‑Rule of equity ; if a thing is agreed upon to be done, the thing itself mast be done though there is a penalty annexed‑[Ranger v. Great Western Railway Co. 5 H L C 94; and Hukam Chand v. Nikka Singh 15 P R 1908 ref ].

S. 52‑Doctrine of lie pendens applies to transfers made pendente lite a suit for specific performance‑[Promotha Nath v. Jagan Nath Kishore 16 I C 359; Jahar Lal v. Bhupendra Nath A I R 1922 Cal. 412; Vedachari v. Narasimha Mudali A I R 1924 Mad. 307 and Dicta v. Gujuba A I R 1926 Nag. 95 ref.].

S. 32‑Doctrine of lie pendens‑Application to suit for specific performance Suit alleged to be collusive‑Collusiveness to be properly proved by second transferee‑Compromise of suit or defendant's admission of plaintiff's claim to specific performance, by itself does not render a suit collusive‑[Juthan v. Parasnath Singh A I R 1934 Pat. 270; Gharbhoya Bhimji v. Deodatta Bihari A I R 1937 Nag. 400 ref., and Krishnappa v. Shivappa I L R 31 Born. 393 considered].

S. 52‑Lis pendens Doctrine applies to suit for specific performance‑Suit for specific performance between first vendee and vendor compromised in appeal and vendor conceding vendee's claim to specific performance‑Review of Judgment applied for by subsequent vendee (who alleged decision had been taken in his absence) entertained‑Civil Procedure Code (V of 1908), O. XL VII, r. 1.

Kazi Muhammad Ashraf for Appellant.

Raja Muhammad Muzaffar for Respondent No. 1.

Abid Hassan Minto for Respondent No. 2.

Dates of hearing: 27th and 28th March 1967.

This appeal arises out of a suit for specific performance of a contract by execution of a deed of sale in respect of 100 % Kanals of land, situate in village Alipur Syedan, Tehsil Bhalwal, District Sargodha, which the defendant‑respondent No. 1 is alleged to have agreed to sell to the plaintiff for Rs. 26,000.00. The Administrative Civil Judge did not find the plaintiff entitled to a decree for specific performance of the contract and decreed his suit for the payment of Rs.3,000.00 which amount represented the earnest money which the plaintiff‑appellant had paid to the defendant‑respondent No. 1. This is the regular first appeal.

2. On the 6th of September 1963 the respondent agreed in writing to sell 100 % Kanals of land in village Alipur Syedan, Tehsil Bhalwala District Sargodha, to the appellant for Rs. 26,000.00 and the latter paid Rs. 2,000.00 of this sum as a deposit or an earnest money. The agreement for sale provided that the respondent shall execute a sale‑deed in favour of the appellant and have the registration of the same effected by the 20th of Chait 1964, which corresponded with the 1st of April 1954. It was further agreed that if the vendor committed a breach in the performance of this contract he would be liable to refund the earnest money and to pay penalty to the appellant vendee in the sum of Rs. 5,000.00. It was also agreed that if the vendee made a hr‑ach, he would have his earnest money forfeited. On the lath of October 1963, the respondent‑vendor received another sum of Rs. 1,000 00 and the parties executed another agreement of sale. It was re‑affirmed that the respondent would complete the transaction and have the sale‑deed registered by the 1st of April 1964, and that if the vendor avoided the completion of the transaction or refused to do so by that time, lie would in that case refund the sum of Rs. 3,000.00 received by him as earnest money and also pay penalty to the vender in the sum of Rs. 5,000 00 and in such an eventuality the vendee will be entitled to have the land mutated in his name or to have the compulsory registration. He also agreed that if the vendee made a default in making the purchase, he would be liable to have the earnest money forfeited. On the 31st of March 1964, the appellant sent a telegram to the respondent asking him to have the sale‑deed registered. The respondent has not denied the receipt of this telegram. He, however, did not send any reply. The appellant, therefore, instituted the suit on the 2nd of April 1964, against him for specific performance of the contract and in the alternative for the refund of the earnest money and the payment of Rs. 5,000.00 as the penalty. He also impleaded respondent No. 2 as a party on the assumption that respondent No. 1 had transferred the property in dispute to him. The respondents submitted a joint written statement in which it was alleged that the respandeut vendor gave a notice to the appellant for carrying out the terms of the contract and to pay the balance of the amount, but he committed a default and be, therefore, transferred the property to respondent No. 2. The notice it may be mentioned, was given on the 9th of April 1964. It was given after the insti tution of the suit.

3. The learned Civil Judge held that the plaintiff‑appellant had failed to establish that he was ready and willing to perform his part of the contract. Dealing with the telegrams, he observed: "I do not think it would be proper to suppose that by sending a telegram a day earlier that the last date for performance of the agreement the plaintiff absolved himself of his responsibility to perform his part of the agreement" and that the telegram did not state how and where the document was to be executed. It did not state the place where defendant No. 1 was expected to meet the plaintiffs". He also held that respondent No. 1 had also failed to establish that he was willing to perform his part of the agreement. The to the Judge has referred to the telegram which the respondent.

4. It was agreed between the parties that the respondent vendor was to execute the sale‑deed and have it registered by or before the 1st of April 1964. The appellant paid Rs. 2,000 00 as earnest money to him and he was required to pay the balance of the amount at the time of the registration of the sale‑deed but still he paid another sum of Rs. 1,000.00 to the respondent when he asked for it. This is sufficient to demonstrate that the appellant was desired to purchase the disputed property. It was not necessary for the appellant to have given the telegram on the 31st of March 1964, and yet he gave it. The respondent did not deny its receipt. It is also not his case that he, in response to the telegram, asked the appellant to pay the amount to him to have the sale‑deed registered. He has also not averred that because of the fact that the time and place was not mentioned in the telegram, he could not perform his part of the contract or that he tried to contract the appellant, but failed to do so. There was thus no valid justification for the learned Civil Judge to ignore the telegram for the reason that the time and place was not stated in the telegrams or that it was given on the 31st of March 1964. It is manifest, from the circumstances of the case, that the appellant had all along been willing to perform his part of the contract.

5. The respondent on the other hand alleged that he gave a notice to the appellant on the 9th of April 1964, and asked him to pay the money and to have the sale‑deed executed. It is not disputed that the appellant sent the reply to the respon dent expressing his willingness to purchase the property. It, however, had no effect on him. If the respondent had genuinely desired to complete the transaction, he, instead of giving notice to the appellant, would have appeared in the Court and submitted a written statement that he was even at that time prepared to perform his part of the contract. He did not do so. he had in fact incapacitated himself to perform the contract by transferring the land in dispute to the second respondent during the pendency of the suit. A transaction whereby a vendor disposes of the subject‑matter of the contract has a two‑fold significance (1) as showing an intention on his part to treat the contract as at an end or to abandon the contract; and (2) also that he disabled himself from selling the property to the original vendee. We will be justified to draw both the inferences in the present case. It is evident from the facts that the respondent was not willing to perform his part of the contract.

6. It was next contended that there was no express averment in the plaint to the effect that the plaintiff was ready and willing to perform his part of the contract. There is no express statement of law that in a suit for specific per formance the averment of readiness and willingness on plaintiff's part up to the date of decree is necessary as it was always in England. However, it seems invariable to have been recognised that such averment should be made as is always done in England. Ardeshir v. Flora Sassoon (A I R 1928 P C 208), it was held that it was necessary for the plaintiff not only to allege specifically that he was willing to perform his part of the contract but to establish it and that his failure to do so would bring about the dismissal of the suit for specific perfor mance. Their Lordships of the Privy Council held that though the matter of specific relief is governed in India by the terms of the Specific Relief Act, nevertheless as the Act founded on the English Law it is permissible, on matters with which the Act does not deal specifically, to refer to the English Law.

What we understand by this is that the plaintiff, in order to get a decree for specific performance, must treat the contract as subsisting. One of the essential factors in the case is that the plaintiff must first allege and then, if the matter is traversed, prove (a) that he has performed all the conditions which under the contract he was bound to perform and (b) that he has been ready and willing at all times from the time of the contract down to the date of suit to perform his part of the contract. This principle is based on section 24 (b) of the Specific Relief Act which provides "Specific performance of a contract cannot be enforced in favour of a person who has become incapable of performing, or violates any essential term of the contract that on his part remains to be performed." The plaintiff must not only, show that he has complied with the terms, so far as they ought to be complied with, at the commencement of the suit; he must also show that he is able, ready and willing to do other future acts which the contract stipulates for as part of its specific performance.

In this case, we find that the plaintiff has alleged in paragraph 5 of the plaint that he is prepared to pay Rs. 23,000.00 to have the transaction completed, and he has also referred to his I should complete the sale‑deed in accordance with the agreement. It is true that he has not made an express averment in the plaint that he has been ready and willing at all times from the time of the contract down to the date of the suit to perform his part of S the contract, but that in our opinion, should not militate against him when he has alleged in paragraph 5 that he was ready to have j the transaction completed on payment of the amount due from him. In the circumstances, it would amount to being extremely' technical if we were to hold that the plaintiff has not expressed his readiness and willingness to perform his part of the contract. As observed by the Lord Campbell in Court v. The Ambergate, etc. Railway Company ((1851)17 Q B 127): "in common sense the meaning of such an averment of readiness and willing ness must be that the non‑completion of the contract was not the fault of the plaintiff, and that they were disposed and able to complete it if it had not been renounced by the defendants." The failure of the plaintiff to express specifically in clear terms his readiness and willingness to perform his part of the contract does not disentitle him to specific performance.

7. It was next contended on behalf of the respondent that the compensation in money furnished an adequate relief to the appellant and, therefore, he was not entitled to a decree for the specific performance of the contract. Under section 12 of the Act, "unless and until the contrary is proved, the Court shall presume that the breach of a contract to transfer immovable property cannot be adequately relieved by compensation in money." This rule would prima facie apply here but it is argued that, as there is a condition in the contract for the payment of damages in default of performance, whether by the vendor or by the vendee, it must be held that the parties considered that the enforcement of these damages would be adequate in case the contract is not performed. In section 20 of the Specific Relief Act it is provided: "A contract, otherwise proper to be specifically enforced, may be thus enforced, though a sum be named in it as the amount to be paid in case of its breach, and the party in default is willing to pay the same. This is further explained by illustration to section 20 which reads: "A contracts to grant B an under‑lease property held by A under C, and that he will apply to C for a licence neces sary to the validity of the under‑lease, and that, if the licence is not procured. A will pay Rs. 10,000.00. A refuses to apply for the licence and offers to pay B Rs. 1 0,000.00. B is nevertheless entitled to have the contract specifically enforced if C consents to give licence." In Ranger v. Great Western Railway Co. (5 H L C 94), Lord Granworth explained: "A Court of Equity is in general anxious to treat the penalty as being merely a mode of securing the due performance of the act contracted to be done, and not as a sum of money really intended to be paid." Halsbury has expressed the rule thus: "Where the contract contains a stipulation that in the event of non performance a certain sum of money shall be paid, that fact is not in itself decisive in considering whether or not specific performance should be granted. Nor does the distinction between penalty and liquidated damages affect the answer to this question. The answer is to be found by considering the intention of the parties, that is, whether the party bound to performance has an alternative choice given to him by the contract to perform or to pay the agreed sum, or whether he is bound to do a certain thing, with a penal sum or sum by way of liquidated damages attached as security. In the latter case the Court, notwithstanding the penal clause, enforces performance, if the contract be such that without the penal clause it would have been proper for specific performance. Whether the contract contains a penalty clause, the contracts has his right in law upon the contract for the money payable under the clause, and also his right in equity to specific relief; he can, at his election, obtain either form of relief, but he cannot obtain both forms".

8. It was further argued that the agreement contained alternative contracts and that it was for the vendor either to have fully performed the contract by the payment of the penalty or by the doing of the act. The question whether a contract is alternative or not is a question of constructions, and consequently each case depends upon its own circumstances, though the guide is always the primary intention of the parties. 7 he general rule of equity is that if a thing is agreed upon to be done, though there is a penalty annexed to secure its performance, yet the very thing itself must be done. On the other band it is certainly open to parties entering into contracts to agree that in case of a breach of the contracts only a fixed sum of money shall be paid by way of compensation.

9. In the present case, it is clear by the writing of the two agreements Exhs. P/6 and P/7 that the intention of the parties was that the contract should be. specifically enforced. In the first agreement Exh. P/7 it was only written that if the vendor failed to perform his part of the contract, he shall be liable to refund the earnest money and to pay the penalty in the sum of Rs. 5,000.00. This condition was reiterated in the subsequent agreement Exh. P/6. There is no condition in any of these agreements that the vendee would accept this amount in lieu of his right to specific performance or that he would abandon the said right. On the contrary, it was provided, in the subsequent agreement Exh. P/6 in unmistakable terms that on the default of the respondent, the appellant could compel him that he should specifically perform the contract by the compulsory registration of the deed or through a mutation. In almost similar circumstances it was held in Hukam Chand v. Nikka Singh (15 P R 1908), that as there was no condition that the vendees should abandon their right to specific performance, and there was no understanding by them to accept a certain sum of money in lieu of their rights as purchasers, the contract could be specifically enforced. We are of the opinion that the vendee has nowhere either given up the claim for specific performance or to have agreed in the alternative to claim damages alone in ' case of breach and he in the circumstances of the case is entitled to the specific performance of the contract.

10. We have already, on the merits of the case, come to the finding that the appellant is entitled to a decree for specific performance. However, the appellant is entitled to decree on another ground also. Respondent No. 1, during the pendency of the appeal, made a statement admitting the claim of the plaintiff appellant, and a decree for specific performance was consequently passed in favour of the appellant. Respondent No. 2 filed a review petition against the decree on the ground that the decree had been passed in his absence and without his consent. It was during the pendency of the litigation that respondent No. 1 had sold away his interest to respondent No. 2. Respondent No: 2 was a transferee pendente lite but had been impleaded as a party. The decree was set aside on this ground. The question which falls for determination is whether the parties to an agreement to sell can enter into a valid compromise in respect of the subject‑matter of the suit without the concurrence of a transferree pendente lite. In other words, does the principle of lis pendens apply in suit for specific performance

In section 52 of the Transfer of Property Act, It is provided that pending a litigation nothing new should be introduced and that pendente lite neither party to the litigation, in which any right to immovable property is in question, can alienate or otherwise deal with such property so as to affect his opponent. It is intended to protect the parties to a litigation against alienations by their opponents during the pendency of the suit. In a suit against the vendor of real state for specific performance, his conveyance of the real title, after the suit is brought, cannot suspend the proceedings or defeat the title under the decree of the Court because if it was so, the rights of the persons under such contract may always be frustrated by such devices. If the vendor could deprive the vendee of his interest, there would be no end to litigation and justice would be defeated. Consequently, when such a suit for specific performance is ended by a final decree transferring the title that title relates back to the date of the agreement on which the suit is based, and the Court cannot permit its decree to be rendered nugatory by intermediate conveyances. This was the view taken in Promotha Nath v. Jagannath Kishore (16 I C 359). As observed by Moogerjee, J., in Jahar Lal v. Bhupendra Nath (A I R 1922 Cal. 412), "the obvious reason for this is that if, when the jurisdiction of the Court was once attracted it could be ousted by the transfer of the defendant's interest there would be no end to litigation and justice would be defeated." In Vedachari v. Narasimha hiudali (A I R 1924 Mad. 307) it was held that the doctrine of lis pendens applies to suits for specific performance of agreements to sell immovable properties. The same view was taken in Dina v. Gujuba (A I R 1926 Nag. 95).

11. On behalf of respondent No. 2 it was argued that the principle of Its pendens does not apply to a collusive suit. He relied on Krishnappa v. Shivappa (I L R 31 Bom. 393). The mere fact that the suit ended in a compromise decree, as held in Juthan v. Parasnath Singh (A I R 1934 Pat. 270) or that the defendant admits the plaintiff's claim a, held in Gharbhoya Bhimji v. Deodatta Bihari (A I R 1937 Nag. 400 (402)) does not render a suit collusive one. Respondent No. 2 has failed to bring anything on the record to prove that the suit was collusive or that respondent No. I had acted fraudulently. In these circumstances, the conveyance taken by the second respondent does not afford him effective protection against the claim of the appellant. In this view of the matter, the plaintiff is entitled to the decree for specific performance also on the statement made on behalf of the first respondent who admitted the claim of the appellant for specific performance of the contract. The second respondent being a purchaser pendente lite cannot object to a decree being passed on such a statement.

12. We, therefore, set aside the judgment and the decree of the Court below and decree the suit of the plaintiff for the specific performance of the contract with costs.

A.H. Appeal accepted.

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