RAMESHWAR SWARUP (DEAD) BY LRS.versusSMT. SAROJ TYAGI AND ORS.

A                  RAMESHWAR SWARUP (DEAD) BY LRS.
                                          v.
                         SMT. SAROJ TY AGI AND ORS.

                                OCTOBER 12, 1998

B                [K. VENKATASWAMI AND A.P. MISRA, JJ.]


          Cantonments Act 1924 :

          Cantonment Land Administration Rules, 1937:
c         Cantonment Area-Property-agreement for sale of-Provision
    thereunder-Vendee undertook to get sale permission from Military Estate
    Officer-Permission granted subject to undertaking by vendee that he would
    not challenge resumption proceedings-Held vendee not entitled to rescind
    contract on the ground that condition was unjustified-Suit for refund of
D   earnest money by vendee dismissed.

          The appdlant - vendor and the respondent - vendee entered into an
    agreement for sale of a property situated at the Mall Road in the Cantonment
    Area, Meerut. Under the terms of the agreement the vendee undertook to get
    the permission for the transfer of property from the Military Estate Officer.
E   Clause 5 of the Agreement provided that in case the permission was not
    accorded the vendee would be absolved of her liability to purchase the property
    and will be entitled to get her money back. The Military Estate Officer,
    however, granted conditional permission i.e. subject to a certificate by the
    vendee that he has no intention to represent against the resumption
F   proceedings when decided by the competent authority. The vendee filed a suit
    claiming refund of earnest money contending that as the conditional
    permission amounted to no permission at all, he was not obliged to purchase
    the property. The Trial Court decreed the suit. The Appellate Court allowed
    the vendor's appeal and dismissed the suit filed by the vendee. The Trial
    Court as well as the Appellate Court found that the vendee - being fully aware
G   ofthe legal position with regard to resumption in respect of the property in
    respect of the Cantonment area - entered into an agreement.

          The High Court reversed the judgment of the appellate Court holding
    that Military Estate Officer had no right to impose such a condition so as
H   to take away the right of filing objection by the Vendee whenever resumption
                                           312
         RAMESHWAR SW ARUP v. SMT. SAROJ [VENKATASWAMI, J.]               313
was done; as the said condition was not in accordance with any law and wholly    A
unjustified, the Vendee was entitled to rescind the contract and claim.refund
of the earnest money.

      In appeal to this Court on the question whether the High Court was
right in construing the condition in the manner it did:
                                                                                 B
        Allowing the vendor's appeal, yiis Court

       HELD : The conclusion arrived at by the High Court on the nature of
the condition imposed by Military Estate Officer cannot be sustained. The
High Court erred in holding that the purchaser was prohibited from
challenging any future resumption, even if the resumption proceedings were       C
contrary to the provisions of the Cantonment Act and the Rules. It should
not have construed the condition in a narrow and literal manner. Instead the
condition should have been read down on the facts of the case. If the
authorities proceed for resumption contrary to the express provisions of the
Act and the Rules, it is always open to the aggrieved party to challenge the     D
same. The mere fact that at a future point of time the property in the
Cantonment Area would be liable for resumption in accordance with law, will
not clothe the vendee to repudiate the sale Agreement. If the condition is
construed as not unusual having regard to the situation of the property in
the Cantonment Ar1>a, the necessary corollary would be that the vendee, on
the facts of this case, could not have repudiated the Sale Agreement. The suit   E
filed by the respondent-vendee stands dismissed. (317-E-F-G-H; 318-A-B)

        CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3346 of
1981.

      From the Judgment and Order dated 22.7.81 of the Allahabad High Court      F
in S.A. No. 1103of1973.

     P.S. Mishra, Rajeev Singh, Ms. Ritu Singh and R.P. Singh for the
Appellants.

        R. Sundarvardan, (A. C.) and Ms. Asha G. Nair for the Respondents.       G
        The Judgment of the Court was delivered by

      VENKA T ASWAMI, J. In spite of service of notice, the respondents
remained unrepresented. Hence, we requested Mr. R. Sundarvardan, learned
senior Advocate, to assist the Court as Amicus Curiae.                           H
    314                         SUPREME COURT REPORTS [1998] SUPP. 2 S.C.R.

A         The issue that arises for our consideration out of the judgment dated
    22.7.81 of the Allahabad High Court in S.A. No. 1103173, is : Can a parcy'
    (purchaser) to a sale agreement of a property in Cantonment Area rescind the
    contract on the ground that the permission given by the Military Estate
    Officer (for short 'MEO') .was conditional, when under the contract the
B   purchaser had undertaken to get, the permission.

          Brief facts are as under :-

           The property in question is a bungalow on Plot Nos. 258 and 258A
    situated at old Grant on the Mall Road in the cantonment Area, Meerut. The
C   appellants (hereinafter called the 'Vendors') are the owners of the suit property.
    The first respondent (hereinafter called the 'Vendee') entered into an Agreement
    with the appellants (Vendors) on 3 .11.65 for the purchases of the suit property
    for consideration of Rs. 70,000. In terms of the Agreement, a sum of Rs. 11,000
    was paid as earnest money to the Vendors on 11.10.65. The Vendee filed a
    suit for recovery of the said amount of Rs. 11,000 contending, inter alia, that
D   the understanding was that the Vendors would get unconditional permission
    from the MEO, Meerut, for the transfer; that the Vendors have cunningly
    incorporated in the said Agreement that the permission from the MEO for the
    agreed sale shall be obtained by the Vendees; that there were minors among
    the Vendors and by concealing that factor the Agreement was entered into
    and that there were already proceedings pending for the resumption of the
E   suit property. On the basis of the above allegations, the suit for recovery of
    the earnest money was filed.

          The Vendors resisted the suit denying each and every one of the ,
    allegations in the plaint. According to the Vendors, the express term of the
F   Agreement was that it was for the vendee to obtain the permission for transfer
    of the property from the MEO; that there were no minors among the Vendors
    on the date of the Agreement as alleged; that there were no proceedings
    pending for resumption as pleaded in the plaint and that the Vendee was fully
    aware of the condition that she had to get the permission from the MEO for
    the sale of the property.
G
          The Trial Court, on the basis of the pleadings and evidence, found that
    the Vendee was entitled to get back the money as the conditional permission
    given by the MEO would amount to no permission at all and the Vendee was
    not obliged to purchase the property.

H         The Vendors, aggrieved by the judgment and decree of the Trial Court,
         RAMESHWARSWARUPv. SMT. SAROJ[VENKATASWAMI,J.]                      315
preferred an appeal to the Additional District Judge, Meerut, in Civil Appeal      A
No. 517/70. The First Appellate Court, on reappreciation of the pleadings and
evidence, found that the permission granted by the MEO for the transfer of
the suit property was not conditional and that the Vendee was not entitled
tO wringle out of the Sale Agreement; that there were no resumption
proceedings pending at the time of or prior to the Sale Agreement ; that the       B
Vendee knew that it is for her to get the permission from the MEO and that
the amount paid by the Vendee being the earnest money and she, having
committed a default, cannot ask for refund of the said money. On the basis
of these findings, the First Appellate Court allowed the appeal and dismissed
the suit filed by the Vendee.
                                                                                   c
      Aggrieved by the judgment and decree of the First Appellate Court, the
 Vendee preferred a Second Appeal No. 1103 of 1973 before the Allahabad
 High Court.

         A learned Single Judge of the Allahabad High Court was of the view
 that the Second Appeal could be decided on a single point, namely, whether        D
 the conditional permission given by the MEO would amount to no permission
  at all and, therefore, the Vendee was not obliged to go ahead with the Sale
•Agreement and consequently she can claim for refund of the earnest money
  paid for the purchase of the property. The High Court construed that the
  permission given by the MEO being conditional one, would amount to no            E
  permission and, therefore, the Vendee was entitled to rescind the contract and
  claim for refund of the earnest money. In that view of the matter, the High
 ·court reversed the judgment of the First Appellate Court and restored that
 of the Trial Court, which decreed the suit filed by the Vendee. The present
 appeal by special leave is filed against the said judgment of the Allahabad
  High Court.                                                                      F

       Mr. P.S. Mishra, learned senior counsel appearing for the appellants
 (Vendors), elaborately argued the matter challenging the conclusion of the
 High Court by referring to the provisions of the contract Act, Transfer of
 property Act and the Specific Relief Act. He also cited judgments of the Privy    G
 Council and of this Court in support of his contentions. He contended that
 the earnest money, being part of the sale consideration, cannot be recovered
 when the sale transaction fell through at the instance of the Vendee and that
-the conditional permission given by the MEO was not unusual having regard
 to the situation of the property in the Cantonment Area. He also submitted
 that the parties to the Agreement knew that the property was liable for           H
    316                        SUPREME COURT REPORTS [1998] SUPP. 2 S.C.R.

A resumption in accordance with the provisions of the Cantonment Act and the
    rules framed thereunder.

          Mr. R. Sundarvaradan, learned senior counsel appearing as Amicus
    Curiae, also argued the matter elaborately contending that the conditional
    permission given by the MEO was no permission at all and, therefore, the
B   Vendee was under no obligation to proceed further under the Agreement.
    According to the learned counsel, the contract fell through on account of a
    collateral reason for which the Vendee was not responsible. As the Vendee
    was not responsible for the failure of the contract, she was justified in
    claiming refund of the earnest money paid by her. He also cited several
C   decisions in support of his submissions.

          After considering the rival submissions and perusing the High Court
    judgment, we are of the view that we need not consider all the points raised
    ,by the counsel on both sides when the only question decided by the High
    Court was with reference to the scope of the permission granted by the MEO
D   and the consequences thereof. If we come to the conclusion that the
    permissiori given by the MEO in this case was no permission at all, then the
     Vendee must succeed. If we hold it otherwise, the Vendors should succeed.

          It is common ground that under the Agreement the Vendee unde:-took
    to get the permission from the MEO and the Vendee knew about it. Clause
E   5 of the Agreement provides that in case the MEO did not accord the
    permission, the Vendee will be absolved of her liability to purchase the
    property and will be entitled to get her money back. The condition on which.
    reliance was placed by both the parties ru1d subject to which the permission
    by the MEO was given, reads as follows:-
F          "That the purchaser gives a Certificate to the effect that he has no
           intention to represent against the resumption proceedings when decided
           by the competent authority."

           The High Court held tha~ the above condition was not in accordance
G   with any law and wholly unjustified, and according to the learned Judge, the
    MEO had no right to impose such a condition so as to take away the right
    of filling objection by the Vendee whenever resumption was done. Though
    the resumption itself was to be made under the provisions of the Cantonment
    Act and the Rules framed thereunder, by virtue of the condition imposed,
    according to the learned Judge, the purchaser could not resist the resumption
H   even in a case where the resumption was not in accordance with law. Construing
        RAMESHWARSWARUPv. SMT. SAROJ(VENKATASWAMI,J.]                       317
the condition in the manner stated above, the High Court concluded that such        A
a permission would be no permission in the eye of law and, therefore, the
Vendee was entitled to rescind the contract and claim refund of the earnest
money. Whether the High Court was right in construing the condition in the
manner stated above is the only question to be decided in this appeal.

       The parties knew that the property was situated in the Cantonment            B
Area. The finding of tht First Appellate Court was that the husband of the
Vendee was a graduate and the Vendee herself was literate and they knew
about the terms of the Agreement fully well. Even the Trial Court, which
decreed the suit, found that the Vendee must be presumed to have been aware
of the legal position with regard to resumption in respect of the property in       C
the Cantonment Area. Knowing the legal position of the properties situated
in the Cantonment Area, the Ve11dee had entered into an Agreement. It is also
not in dispute that 't is the V~ndee who had undertaken to obtain the
permission for the purchase of the property from the MEO and the only
obligation on the part of the Vendors was to make available all necessary
papers and assist the Vendee in getting the permission. It is again an undisputed   D
fact that there was no express 01 implied condition that the Vendors must get
an unconditional permission from the MEO. Bearing these factors in mind if
we look into the condition imposed by the MEO, we are unable to sustain
the conclusion of the High Court on the effect of condition referred to above.
The High Court erred in holding that the purchaser was prohibited from              E
challenging any future resumption, even if the resumption proceedings were
contrary to the provisions of the Cantonment Act and the Rules regarding
resumption. The High Court should not have construed the condition imposed
by the MEO by giving a narrow and literal meaning to the condition. Instead
the condition should have been read down on the facts of the case. If the
authorities proceed for resumption contrary to the express provisions of the        F
Act and the Rule, it is always open to the aggrieved party to challenge the
same and the condition imposed, as noticed above, cannot be construed to
mean that even though such resumptions were contrary to the provisions,
cannot be challenged. The mere fact that at a future point of time the property
in the Cantonment Area would be liable for resumption in accordance with            G
law, will not clothe the Vendee to repudiate the Sale Agreement. Except the
plea regarding the nature of the condition imposed by the MEO, the High
Court had not found the other pleas against the Vendor. If we construe the
condition as not unusual having regard to go the situation of the property
in the Cantonment Area, the necessary corollary would be that the Vendee,
on the facts of this case, could not have repudiated the Sale Agreement. The        H
    318                       SUPREME COURT REPORTS (1998) SUPP. 2 S.C.R.

A   only ground which weighed with the High Court to reverse the judgment of
    the First Appellate Court, as noticed earlier, was regarding the nature of
    condition. For the reasons stated above, we hold that the said conclusion
    arrived at by the High Court on the nature of the condition cannot be
    sustained. The appeal has to be and is accordingly allowed with no order as
B   to costs. The suit filed by the first respondent will star1d dismissed.

         We place on record our appreciation to the learned senior counsel, Mr.
    R. Sundaravaradan, for the assistance rendered to this Court.

    T.N.A.                                                     Appeal allowed.