1933 (12) TMI 33 - Other - Indian Laws

Summary

Issues Involved:
1. Construction of the agreement dated 26th November 1926.
2. Applicability of Section 27(b) of the Specific Relief Act, 1877.
3. Onus of proof regarding good faith and notice under Section 27(b).
4. Consideration of the benefit to minors in the contracts.

Issue-wise Detailed Analysis:

1. Construction of the Agreement Dated 26th November 1926:
The appellant sought specific performance of an agreement dated 26th November 1926, alleging that defendant 1 agreed to sell certain joint family property for Rs. 13,000. The High Court judges were divided on whether the agreement affected the joint family interest or only the individual interest of defendant 1. The Privy Council held that the agreement clearly affected the joint family interest, as the sale was intended to meet legal necessities and the price agreed upon was the fair value of the whole property.

2. Applicability of Section 27(b) of the Specific Relief Act, 1877:
The second main question was whether defendant 4 was a transferee for value who had paid his money in good faith and without notice of the prior contract, thus excluding the appellant's claim for specific relief under Section 27(b). The Subordinate Judge found that defendant 4 did not provide satisfactory evidence to show he had no notice of the plaintiff's contract or that he was a bona fide purchaser for consideration. The High Court, however, held that the onus of proof under Section 27(b) was on the appellant and found no sufficient evidence on the questions of notice and payment.

3. Onus of Proof Regarding Good Faith and Notice Under Section 27(b):
The Privy Council disagreed with the High Court's view on the burden of proof. It held that Section 27(b) lays down a general rule that the original contract may be enforced against a subsequent transferee unless the transferee can prove he paid in good faith and without notice of the original contract. The onus is on the transferee to establish these circumstances. The Privy Council cited several cases supporting this view and concluded that the High Court erred in its interpretation. The evidence presented did not satisfactorily prove that defendant 4 paid the consideration or lacked notice of the prior contract.

4. Consideration of the Benefit to Minors in the Contracts:
An argument was made that the court should consider which contract was more beneficial to the minors and prefer that one. However, the Privy Council noted that the Subordinate Judge's decision on the minors' case, which found no appeal, made this contention not open for consideration. Therefore, the appellant was entitled to specific relief.

Conclusion:
The Privy Council allowed the appeal, set aside the High Court's decree dated 12th June 1930, and restored the Subordinate Judge's decree dated 31st March 1928. The appellant was entitled to specific performance of the contract, with the costs of the appeal and the High Court appeal to be paid by respondent 1 (defendant 4). The judgment left open any questions of restitution to be dealt with by the lower court.