Case Note & Summary
The suit pertained to an agreement for sale of a flat and garage at 'Asha Mahal', Pedder Road, Bombay. The plaintiff, Yuvrani Hansa Devi, had initially granted leave and licence to the defendants' father, Mohammed Farooq Vohra, through three successive 11-month agreements starting 13.08.1969, which expired on 14.05.1972. Before the amendment to the Bombay Rent Act regarding licences came into force on 01.02.1973, the licence had already expired, and the licensee was holding over. The plaintiff gave a notice to vacate on 04.05.1972, but the licensee did not vacate. On 14.08.1973, the plaintiff and the licensee entered into an agreement for sale of the suit flat for Rs.1,35,250, with part payment of Rs.85,000. The licensee died on 08.10.1974. Subsequently, the plaintiff and the defendants (sons of the deceased) entered into a fresh agreement on 18.10.1977 for sale of the same flat at an enhanced price of Rs.1,75,350, acknowledging the earlier part payment of Rs.85,000. Under the 1977 agreement, a further Rs.25,000 was paid, leaving a balance of Rs.65,350, which the defendants agreed to pay by three post-dated cheques due on 18.11.1977, 03.12.1977, and 15.01.1978. All three cheques were dishonoured upon presentation. The defendants claimed they sent Rs.10,000 later which was refused, but no further payment was made. The plaintiff terminated the agreement by notice dated 31.07.1980 and filed the suit seeking declaration of termination and recovery of possession, along with damages and mesne profits. The defendants resisted the suit, claiming they became protected tenants under the Bombay Rent Act due to continued possession since before May 1972, and that the agreement had been performed by transfer of share certificates and society resolution. They also raised the plea of part performance under Section 53-A of the Transfer of Property Act, asserting readiness and willingness to pay. The court framed fifteen issues. On evidence, it found that the defendants did not prove any transfer of flat or society resolution in their favour. The court held that the agreement dated 18.10.1977 was the governing contract, and the payment by post-dated cheques made time of the essence; the dishonour of cheques rendered performance impossible, justifying termination. The defendants' claim of protected tenancy under the Bombay Rent Act was found to be without basis as the licence had expired before the statutory amendment, and the issue was outside the court's jurisdiction. The plea under Section 53-A of Transfer of Property Act was rejected because the defendants had not performed their obligation to pay. Consequently, the court decreed the suit, declaring the agreement terminated, directing possession to the plaintiff, and ordering mesne profits to be determined. The judgment thus upheld the plaintiff's right to evict the defendants and recover the property.
Headnote
A) Contract Law - Termination of Agreement - Dishonour of Post-Dated Cheques - Indian Contract Act, 1872 - The plaintiff and defendants entered into an agreement for sale of flat on 18.10.1977, the balance consideration to be paid by three post-dated cheques; all cheques were dishonoured and no further payment made. Held, the agreement became impossible of performance and was validly terminated by the plaintiff's notice dated 31.07.1980, entitling the plaintiff to declaration and possession (Paras 4, 5, 8, 9). B) Property Law - Part Performance - Transferee's Obligation to Perform - Transfer of Property Act, 1882, Section 53-A - The defendants claimed protection of possession under part performance, having been in occupation since before the agreement; however, they failed to pay the balance consideration. Held, Section 53-A does not protect a transferee who is not ready and willing to perform his part of the contract, and the defendants cannot resist ejection (Paras 8, 9). C) Rent Law - Protected Tenancy - Expiry of Licence Before Amendment - Bombay Rent Act - The defendants' predecessor was a licensee under three successive leave and licence agreements, the last of which expired on 14.05.1972, prior to the amendment of the Bombay Rent Act on 01.02.1973. Held, the question of protected tenancy did not arise and was outside the court's jurisdiction; the subsequent agreements for sale novated and rescinded any licence rights (Paras 2, 11, Issue 2).
Issue of Consideration
Whether the agreement dated 18 October 1977 was validly terminated by the plaintiff for non-payment of balance consideration and whether the plaintiff is entitled to possession of the suit flat.
Final Decision
Suit decreed. Agreement dated 18.10.1977 held validly terminated; plaintiff entitled to possession; defendants in wrongful occupation; mesne profits to be determined as per final order.
Law Points
- Time essence of contract when payment specified by post-dated cheques
- novation by subsequent agreement rescinds earlier contract
- part performance under Section 53-A Transfer of Property Act requires willingness to perform
- protected tenant status under Bombay Rent Act not available when licence expires before amendment
