Indira Devi vs. Veena Gupta: Right of Repurchase is Assignable
Case: Indira Devi (Appellant) versus Veena Gupta & Ors. (Respondents)
Court: The Supreme Court of India.
Jurisdiction: Supreme Court of India Civil Appellate Jurisdiction
Civil Appeal No. 9833 of 2014
Judgement Date: July 4 2023.
Bench: Honorable Justice Abhay S. Oka & Honorable Justice Rajesh Bindal
Concepts this case deals with –
Assignability of Right of Repurchase.
Transfer of Right in Immovable Property through Gift Deed.
Who shall perform the considerations?
Interdependent contingent considerations.
Mr. Kishori Lal Sahu: Exclusive Owner of Property ‘A’.
Smt. Veena Gupta: Daughter in Law of Kishori Lal Sahu. (Respondent)
Mr. Kaleshwar Prasad Singh: Tenant on Property ‘A’.
Smt. Indira Devi: Daughter of Kaleshwar Prasad Singh. (Appellant)
Conditional Sale Deed b/w Kishori Lal Sahu & Indira Devi concerning Property ‘A’.
Gift Deed by donor Kishori Lal Sahu to donee Veena Gupta, gifting number of properties including right/interest in Property ‘A’.
Original Suit: Trial Court 1983 - Civil Suit was Filed in 1983 by Veena Gupta & Kishori Lal Singh (at the time not deceased) for Special Performance as well as non-payment of rent against Indira Devi. (Suit Dismissed)
First Appeal: Lower Appellate Court 2000; Veena Gupta appeals against the dismissal of the suit. (Appeal is Dismissed)
Second Appeal: High Court Patna (Bihar): Second Appeal No. 123 of 2000; Veena Gupta appeals against the dismissal by lower appellate court. (Appeal admitted and adjudged on)
Supreme Court: Civil Appeal No. 9833 of 2014; Indira Devi appeals against the order of High Court. (Appeal is dismissed)
Kishori Lal Sahu is the owner of property ‘A’ and Kaleshwar Prasad Singh is a tenant on the said property.
On 5th August 1977 Kishori Lal Singh the Owner & His Son due to dire need of funds executed a conditional sale deed in favour of Indira Devi (Vendee) d/o Kaleshwar the tenant. The condition was that the Vendee would pay Rs. 5000 as consideration to the Vendor, and if this Rs. 5000 is not returned by the Vendor by July 1984, the Vendee will become the owner of the property, and if the money is paid back, the Vendee will have to execute a sale deed of the property in favour of the Vendor that is to return the property.
On 14th February 1983 Kishori Lal executed a registered gift deed whereby he gifted number of properties to Veena Gupta (Respondent No. 1) the Daughter in Law of Kishori Lal and Wife of Gopal Prasad. The number of properties gifted contained the property in question where it was mentioned that the said property was transferred to Indira Devi, which can be retrieved by fulfilling conditions, that is to pay Rs. 5000 by July 1984. The Gift Deed was executed in 1983.
The Vendors that is Kishori Lal was ready to pay Rs. 5000, but the Vendees didn't agree and a civil suit was filed in 1983 in a Trial Court.
Plea by Respondent (Plaintiff in that suit) in Trial Court 1983: Special Performance Decree requiring Indira Devi/Kaleshwar (Defendant there) to accept Rs. 5000 and return the property, and if there is no performance, a decree directing appellant to register the sale deed in favour of Veena Gupta (Kishori Lal 2nd Plaintiff) with possession.
Representations in the Supreme Court:
Appellants (Indira Devi):
Kishori Lal executed the conditional deed in favour of Indira. And thus the right of repurchasing the property lies with Kishori Lal as the said right is personal. Stating he had no right to assign the right to third party.
Gift Deed executed is not valid as it contains consideration to be paid for obtaining the said property.
Judgements in the following cases: Bhoju Mandal v. Debnath Bhagat, Kapilaben vs. Ashok Kumar Jayantilal Sheth; were cited for supporting the case.
Respondents (Veena Gupta):
In the Gift Deed it is specifically mentioned that how donee may obtain the property by performing the promise of the contract/deed. 'She will have all the rights which Kishori Lal had'.
When as per the contract the vendor (Kishori Lal, non-deceased at the time of original suit of 1983 / Veena Gupta) was to give Rs. 5000 for repurchase, the vendor was willing to give but the consideration was not accepted by Indira Devi, thus to complete their part of promise Vendor deposited Rs. 5000 with Court of Original Suit with its permission.
The condition precedent for the repurchase was thus completed, and Kishori Lal assigned the right to repurchase to Veena Gupta through Gift deed.
To counter that the right of repurchase was personal, following judgements were cited for support: T.M. Balakrishna Mudaliar vs. M. Satyanarayana Rao, Shyam Singh vs Daryao Singh. It was contested that the right was assignable and not personal. And even if the Court would deal with the issue sensitively, the party assigned to was not any third party rather it was a party from the family of Kishori Lal himself.
Following are the Issues to be answered by us on the basis of facts of the case, representations made, and previous judgements:
Is the right of repurchase assignable or personal?
1. Will first begin with the validity of Gift Deed:
Gift is defined under Section 122 of Transfer of Property Act, 1882 as: Gift is the transfer of certain existing moveable or immoveable property made voluntarily and *without consideration*, by one person, called the donor, to another, called the donee, and accepted by or on behalf of the donee.
Under the Transfer of Property Act Immovable Property is defined to mean anything except standing timber, growing crops or grass. Further interpretation of other definitions of other acts include Land, Things attached to earth and benefits , Benefits to arise from land. If further studied a Right if related to movable or immovable properties then a Right related to Immovable Property becomes a immovable property. Even if we consider it a movable property it can still be gifted through a gift deed.
Thus it is agreeable that in this case in the gift deed the Property 'Physical' in Question is not gifted, rather the right to repurchase to same is transferred. The consideration comes in question when dealing with the physical actual property in question. The donee didn't have to pay any consideration for the right which was transferred.
2. Is the right to repurchase personal or can be assigned?
To begin with, we must look into the contract itself that is its clauses, content and intention of the parties which may be based of the language of the contract or the circumstances preceding or at the time when the contract was executed.
- In our case on the basis of the part of the sale deed presented before the High Court the deed didn't specifically contain any clauses prohibiting the assignment of the right of repurchase.
- At first, although it is not strictly related to our case, but we must look at Section 40 of the Indian Contracts Act to ascertain whether a promise or performance is personal: 'If it appears from the nature of the case that it was the intention of the parties to any contract that any promise contained in it should be performed by the promisor himself, such promise must be performed by the promisor. In other cases, the promisor or his representatives may employ a competent person to perform it.' Thus if a promise is of a nature that only the promisor has the ability to perform or skills then it can be performed only by the promisor.
Assignability of Contractual Rights or Obligations:
Under Indian Law any type of contract can be assigned except those specifically prohibiting the same or which are of personal nature. In the case of Kapilaben v. Ashok Kumar Jayantilal Sheth the Supreme Court observed that when entire promise or perfomance of one party towards the other are transferred to third party, then the consent of the promisee is required but when assigning just the rights or obligations to another doesn't require consent except when it is not of personal nature or if it is not specifically prohibited.
To stress on this point we will look at some of the cases cited by the counsels of the present case:
1. T.M. Balakrishna Mudaliar vs. M. Satyanarayana Rao –
The Court refered to the judgement in the case of Sakalaguna Nayadu v. Chinna Munuswami Naykar where in the Privy Council held that if the contract of repurchase did not specifically say that such benefit was only for the parties contracting, then the contract can be assigned and would be enforceable by law.
2. Shyam Singh vs Daryao Singh –
The facts of the stated case were somewhat similar to those of the present case. Lower courts opined that if there is no clause in the sale deed permitting assignment, then prohibition of the same can be read into the contract. When the matter came to Supreme Court the issue at point was considered whether such a prohibition can be read into the document by implication. The court by citing Section 15(b) of the Specific Relief Act, 1963 held that in absence of words indicating prohibition in the contract, then such prohibition cannot be read into the terms of documents.
Section 15 (b) of Specific Relief Act, 1963 stipulates that specific performance of a contract may be obtained by the representative in interest or the principal thereto: Except if it is of personal nature.
The Court was fortified with the view stated in the above cases by the Justices.
3. Bhoju Mandal v. Debnath Bhagat –
The Court considered this case, but the case primarily was concerned with the question whether document was mortgage or sale deed with condition of repurchase.
4. Kapilaben v. Ashok Kumar Jayantilal Sheth –
In this case issue was transfer/assignment of contract was without the consent of the promisee. The Court referred to judgement in Khardah Co. Ltd v. Raymon & Co. wherein the Court held that there was a well-recognized distinction between two classes of assignments which are assignment of rights in a contract and assignment of obligations in a contract. While the total assignment of contract that is substituting a party by a new party with consent/agreement of both original parties is called novation, where on novation there is no link between the old party and the new/amended contract, in such a case as said consent is required.
But when considering assignment of just the rights under a contract consent of the promisee is not strictly required that is the rights are freely assignable unless the contract prohibits it.
The Court in the present case also referred to a commentary on The Indian Contract Act & Special Relief Act by authors Pollock and Mulla, wherein the authors opine that the benefits of contract can be assigned where it makes no difference to the person on whom the obligation lies to which of two person (original or asignee) he is to discharge it. That is where the identity of the party on which the obligation is to be discharged makes no difference to the promisee (one who has obligations), provided the original promisor has effected such assignment willingly, then such contract is prima facie assignable, except in case of personal consideration. Of course payment of money does not involve personal consideration/skills.
Thus, the Court in this present case held that the right was not personal rather freely assignable in absence of bar in contract.
We can conclude simply that:
1. Non-assignability cannot be implied into contract if it doesn't specifically mention it.
2. Rights under a contract when not of a personal nature can be assigned freely without consent, except barred.
3. Gift of a interest in immovable property irrespective of consideration involved in further exercise of the right is valid as there is no apparent consideration for the right itself.
Thankyou for reading! Connect with me on LinkedIn Soham Sane.
