' Ghulam Muhammad respondent No, 2 entered into an agreement to sell an area of 10 kanals 8 marks situated in village Bhiko Chhohar Tehsil Sialkot to Hayat Muhammad appellant. On the 18th of June 1952, however, he sold that land to Muhammad Hussain respondent No,
3. Hayat Muhammad appellant filed a suit on the 5th of December 1952, for specific performance of his contract of sale against Ghulam Muhammad as well as Muhammad Hussain. This suit was decreed on the 23rd of December 1953, with a direction to Ghulam Muhammad and Muhammad Hussain defendants to execute the sale-deed in favour of the plaintiff, The appeals of Muhammad Hussain against this decree failed before the District Judge as well as in the High Court. Ultimately, on the 12th of October 1961, a sole deed was executed by the Court in favour of Hayat Muhammad on behalf of both the defendants.
2. Muhammad Shafi son of Ghulam Muhammad respondent No, 1 filed a suit against Hayat Muhammad appellant on the 23rd of October 1962, for possession of this area in exercise of his superior right of pre-emption. He based his superior claim on ground of his being a son and an expected heir of Ghulam Muhammad. This suit was contested by the appellant inter alia on the ground that Ghulam Muhammad having sold all his rights to Muhammad Hussain in the year 1952, vender of the property in dispute was actually Muhammad Hussain and not Ghulam Muhammad.
The learned trial Court disagreed with this assertion and ducted the suit holding Ghulam Muhammad to be the vendor. This decree was maintained in appeal by the learned District Judge, Sialkot, on the 17th of December 1963.
3. The learned District Judge relied upon Kall Charan Singh v. Janak Deo Singh (1), The facts of that case were that defendant No, 1 therein entered into a contract for sale of Zamindari property with defendant No, 20 who was a stranger in the Mahal. Subsequently, defendant No, 4 took a sale deed from defendant No, 1 with knowledge of the previous contract. A suit for specific contract was brought and the claim was referred to Arbitration. The Arbitrator held the flea of defendant No, 4 that he had a preferential claim for pre-emption to be no defence to the suit and preserved that right for a separate suit. The Court passed a decree in terms of the
(1) AIR 1932 All. 694 award and got the sale deed executed on behalf of defendant No, 4 in favors of the plaintiff. A suit for pre emption was brought later by defendant No,
4. It was contended teat the defendant being the real vendor could not file such a suit. This contention was repelled by a Division Bench of the High Court of Allababad. It was held that "Where a person with knowledge of a previous contract of sale, purchases the property, the purchase is voidable at the option of the prior promise and the contract with him can be enforced specifically against the subsequent purchaser. In such a suit tee Court should declare the purchase as null and void and cancel it and order the original promisor to carry out his contract by executing a sale deed in favour of the plaintiff."
4. The course adopted by the Court for holding in favour of defendant No, 4 is contrary to the dictum h Subhiha Pilly and others v. Velappa Noicken (1). It was held in that case that the proper form of the decree to be passed in case of plaintiff's success, is not to declare the subsequent sale void but to direct the subsequent purchaser to execute a conveyance to the plaintiff, It was further held that the sale in favour of defendants Nos. 2 to 4 was good in law subject to the plaintiff's right.
5. I respectfully agree with the latter authority since it appears to me that both section 27-B of the Specific Relief Act and section 91 of the Trusts A Act make the sale to the prier purchaser subject to the contract to sell or the plaintiff in a suit for specific performance of the contract. None of these provisions render such a sale liable to be declared as void.
6. Section 27 of the Specific Relief Act deals with relief against parties and persons claiming under them by subsequent title. It provides for the enforcement of a contract by specific performance against the party to the contract and inter alio any other person claiming under him by a title arising subsequently to the contract (vide clause (b). This clause, however, excepts a transferee for value who has paid his money in good faith and without notice of the original contract. The object of this section is clear and as will be seen later, is in accord with the object of section 91 of the Trust Act. It provides that any person who holds the property except a person holding it in good faith and without notice c the original contract is subject to liability of enforcement of the contract to sell executed by the person under whom he holds the title. It does not disturb the relationship as between the verder and the vendee and as between them the previous vendee would be considered to be the owner of the property. Though undoubtly this right will be subject to the right of the plaintiff on the basis of the agreement to sell in his Payout executed by the vendor. The effect of section 27 is that the Court list call upon the previous vendee to execute the sale deed in specific performance of the earlier contract to sell executed by his vendor.
7. The other provision is, as stated above, section 91 of the Trusts Act which provides that :- "Where a person acquires property with notice that another person has entered into an existing contract affecting that property, of which specific performance could be enforced, the former must hold the property for the benefit of the latter to the extent necessary to give effect to the contract."
(1) 13 I C 176 ' The section is based upon the principle of English Law that "if the alienee be a purchaser of a legal estate at its full value, then if he take with notice of the trust, whether the notice be actual or constructive he is bound to the same extent and in the same manner as the person from whom he purchased". Dunbar v. Tredennick (1), Pawlett v. Att.-Gen. (2), Burgess v. Wheate (3), Mead v. Lord Orrery (4), Phayre v. Peree (5), Mansell v. Mansell (6), Willoughby v. Willoughby (7), Pearce v. Newlyn
(8) and Heath v. Crealock (9). It is evident from this that the purchaser with notice remains vested with and possessed of full legal estate for so long as the specific performance of the contract b not enforced. The specific performance is against him since he instead of his vendor holds the property for the benefit of the promisee under the agreement to sell and is in a position to give effect to it. It is for this reason that he is a necessary party to the suit under section 27(b) of the Specific Relief Act since the contract cannot be enforced in his absence or all practical purposes the earlier vendee stands substituted for the vendor in the agreement to sell but as between him and the vendor he remains an owner of the property. Madhavarapa Sathijraju v. Madhavarapu Venkanna (10). In Mathai Thommen v. Thomas Mathew and others (11) it was held that :- "When a person buys land with notice that another has already contracted to buy it the former stands in the position of a trustee for the latter of the land purchased by him and he could not profit by the conveyance to him except to stand in the shoes of the vendor and receive the purchase money from him, on payment of which he would have to convey the land to the latter."
' In Mohiuddin Mona v. The Province of East Pakistan (12) the joint effect of section 27 of the Specific Relief Act and section 91 of the Trusts Act was summed up as follows :- "Section 91 of the Trusts Act uses very wide language. It comes into operation whenever a person 'acquires' property. To the applicability of this section in fact learned counsel for the appellant had no answer and all that he could urge was that the appellant had no notice. Section 27 of the Specific Relief Act makes the contract enforceable against a person claiming under the party to the agreement. A purchaser at a Court sale, though he may not be a representative of the judgment-debtor for all purposes does not claim his title under the judgment-debtor."
8. There has been some divergence of opinion on the question whether the conveyance should be executed by the vendor or by the prior purchaser or by both, In Chunder Kant Roy v. Krishna Sunder Roy (13) and Kannan v. Krlshan (14) the Courts held, the view that the decree must be against the contracting party. The Bombay High Court in Ganga Ram v. Taxman (15) and
(1) 2 Ball & B 319 (2) Hard. 469
(3) 1 Eden 195 (4) 3 Atk. 288
(5) 3 Dow 129 (6) 2 P. Wms. 681
(7) 1 I T R 771 (8) 3 Mad. 186
(9) L R 10 Ch. 22 (10) AIR 1935 Mad. 1056
(11) AIR 1952 Tra. Co. 199 (12) PLD 1962 SC 119
(13) I L R 10 Cal. 710 (14) I L R 13 Mad. 324
(15) I L R 4J Bom. 498 ' Ibrahim Faki v. Faki Ghulam Mohidin (1) held that the decree must be against the subsequent purchaser, The Courts in England passed decrees against both. Daniels v. Danison (2), Potter v.
Sanders (3) and Lighfoot v. Hem (4). In view of the provisious of section 27(b) that the contracting party as well as the subsequent purchaser are necessary parties to the suit this view was adopted by the Court in India and Pakistan too. Gaffur,volad Ibrahim Faki v. Bhikji Govind and others (5), Himitlal Motilal end others v. Vasadey Ganesh and others (6) Kafiladdin v. Samiradain (7), Ranga Reddi v. Pitchi Reddi (8), Medhavarappa Sathiraju v. Maahavarapu Venkanna (9) and Mamtazul Karim v. Abdul Hassan (10). But the principle that the contracting party as well as the prior purchaser both should be made to execute the conveyance does not amounts to holding that the contracting party remains vested with the legal estate despite sale to the prior purchaser. Its object was discussed in Kafiluddin v. Samiraddin. The apparent reason found in view of this principle was that unless both the contracting pities and the subsequent purchaser join in the conveyance it is possible that subsequently difficulties may arise with regard to the plaintiff's title e.g., the original vendor way subsequently raise an objection that his title has not passed on for want of consideration or otherwise to the subsequent purchaser and consequently the conveyance executed by the subsequent purchaser did not pass the title.
9. Applying these principles to the facts of the present case it will be clear that although the decree for specific performance was against the contracting party as wed as the prior purchaser and the sale deed was also executed on their behalf but the contracting party had deprived itself of all the rights in the property after its sale in favour of the prior purchaser in 1952. Thereafter the legal estate vested in the prior purchaser who as a (matte under section 91 of the Trusts Act passed it on to Muhammad Hayat appellant. For the purpose of the Pre-emption Act therefore, the vendor is Muhammad Hussain and not Ghulam Muhammad. Consequently the plaintiff-respondent could not claim to have any right of preemption. He had a right of pre-emption only against the sale of 1952 in favour of Muhammad Hussain which her lost by expiry of the period of limitation. The ant of the plaintiff is, therefore, liable to fail.
10. I accept this appeal, set aside the judgments and decrees or the learned Courts below and dismiss the plaintiff's suit. In view of the difficulty of the question involved in this appeal, I leave the parties to bear their own costs.
(1) AIR 1921 Bom. 459 (2) (1809) 16 Yes. 219=34 E R 165
(3) (1846) Hare 1=67 E R 1067 (4) 3 Y& Coll. 585=160 E R 835
(5) I L R 26 Bom. 159 (c) I L R 36 Born. 446
(7) AIR 192i Cal. 67 (8) AIR 1915 Mad. 37
(9) AIR 935 Mad. 1056 (13) 1970 D L C 211