1950 (12) TMI 28 - SC - Indian Laws

Summary

Issues Involved:
1. Whether the agreement for the assignment of the lease was contingent on obtaining the lessor's consent.
2. Whether the lessor unreasonably withheld consent to the assignment of the lease.
3. Whether the plaintiff was entitled to specific performance of the agreement.
4. Whether the appeal court appropriately allowed additional evidence.
5. Whether the term requiring the lessor's consent was for the plaintiff's benefit.
6. Potential liability of the defendant for damages due to breach of covenant.

Detailed Analysis:

1. Contingency of Agreement on Lessor's Consent:
The defendant argued that the agreement was contingent on obtaining the lessor's consent, and without it, no effective agreement existed. The court analyzed the correspondence between the parties. The plaintiff's offer on January 27, 1945, included terms that required the defendant to obtain the lessor's consent before transferring the lease. The defendant's response on January 28, 1945, was a counter-offer, not an unconditional acceptance. The plaintiff made a fresh offer on January 29, 1945, which the defendant accepted with a slight reservation on February 1, 1945. The plaintiff unconditionally accepted this reservation on February 2, 1945, forming a concluded agreement. The court held that the agreement was not contingent on obtaining the lessor's consent but required the defendant to obtain such consent as a substantive term of the agreement.

2. Lessor Unreasonably Withholding Consent:
The court examined whether the lessor unreasonably withheld consent to the assignment of the lease. The lease contained a covenant that the lessor's consent "not to be unreasonably withheld in the case of respectable or responsible person." The court found that these words limited the lessee's covenant and relieved the lessee if the lessor unreasonably withheld consent. The plaintiff argued that he was a respectable and responsible person, and the lessor unreasonably withheld consent. The court agreed, noting that the lessor's refusal to consent without assigning any reason was unreasonable, thereby relieving the defendant from the burden of the covenant.

3. Entitlement to Specific Performance:
The plaintiff sought specific performance of the agreement. The defendant contended that the plaintiff should not have been allowed to argue that the lessor's consent was unreasonably withheld. The court found no element of surprise since the plaintiff relied on facts admitted and proved by the defendant. The court held that the plaintiff was entitled to specific performance as the lessor unreasonably withheld consent.

4. Allowance of Additional Evidence:
The appeal court allowed the plaintiff to adduce further evidence by examining the Maharaja of Cossimbazar. The defendant objected, arguing that this should not have been permitted. The court noted that the appeal court required the evidence "in order to clear up the matter" and "for the purpose of enabling it to come to a proper decision." This was covered by Order XLI, rule 27 of the Code of Civil Procedure, and the court found no reason to interfere with the appeal court's discretion.

5. Term for Lessor's Consent Benefiting Plaintiff:
The court examined whether the term requiring the lessor's consent was for the plaintiff's benefit. The term was introduced by the plaintiff and was not expressed to protect the defendant. The defendant could not use the absence of the lessor's consent to avoid performing the agreement if the plaintiff waived the objection. The court held that the term was for the plaintiff's benefit, allowing the plaintiff to insist on performance despite the lack of consent.

6. Defendant's Liability for Damages:
The defendant argued that specific performance exposed him to the risk of damages for breach of covenant. The court noted two points: (1) the defendant should have made his obligation to transfer conditional on obtaining the lessor's consent, which he did not do, and (2) the plaintiff being a respectable and responsible person made the measure of damages speculative. The court found that the lessor unreasonably withheld consent, enabling the defendant to assign the lease without such consent. The court agreed with the lower courts' discretion in granting specific performance.

Conclusion:
The Supreme Court dismissed the appeal, affirming the High Court's judgment and decree for specific performance. The defendant was ordered to pay the costs of the appeal.