Holding

The English doctrine of conversion cannot be transplanted into Indian law; the deed creates an enforceable obligation annexed to ownership (a trust‑like obligation) that may be specifically performed, and the decree must be modified to comply with the Urban Land (Ceiling and Regulation) Act, 1976.

Summary

Bai Dosabhai, who had received two plots of land as a gift, executed a deed of lease in 1946 granting the lessee (Indu Prasad Dev Shankar Bhatt and successors) a right to purchase the land within seven years for a stipulated price, with provisions for rent, default, and sale by public auction. After repeated notices for unpaid rent, the lessor obtained a decree for possession and rent, which she executed in 1960. The lessee then sued for specific performance of the sale deed or, alternatively, for a public auction with the balance of the purchase price retained. The High Court ordered sale by auction and division of proceeds, invoking the English doctrine of conversion to treat the deed as creating an equitable interest. The Supreme Court held that the English conversion doctrine cannot be directly applied in Indian law; instead, the obligation to sell by auction is an obligation annexed to ownership, enforceable as a trust under the Transfer of Property Act, Indian Trust Act, and Specific Relief Act. The Court affirmed that specific performance was appropriate, rejected the applicability of the Bombay Tenancy Act and other statutes as bars, and modified the decree to conform with the Urban Land (Ceiling and Regulation) Act, 1976. The appeal was dismissed with the modified decree.

Issues considered

The applicability of the English equitable doctrine of conversion to Indian law.
Whether the deed creates an enforceable equitable interest or merely an obligation annexed to ownership.
Whether specific performance of the sale deed is appropriate under the Specific Relief Act.
The effect of the Bombay Tenancy and Agricultural Lands Act, Gujarat Vacant Lands (Prohibition of Alienations) Act, and Urban Land (Ceiling and Regulation) Act on the contract and the decree.
The proper remedy: specific performance versus sale by public auction and division of proceeds.

Legislation cited

Bombay Tenancy and Agricultural Lands Act, 1948
Gujarat Vacant Lands (Prohibition of Alienations) Act
Indian Trust Acts. 94
Land Acquisition Act
Specific Relief Act, 1963s. 12, s. 13, s. 16, s. 21
Transfer of Property Acts. 40, s. 54
Urban Land (Ceiling and Regulation) Act, 1976s. 20, s. 21, s. 5(3)

Subjects

specific performancedoctrine of conversionequitable interesttrust obligationTransfer of Property ActIndian Trust ActSpecific Relief ActBombay Tenancy ActUrban Land Ceiling Actcontract enforcementpublic auction

Judgment

762

A BAI DOSABAI
v.
i
MATHURDAS GOVINDDAS AND 0RS. i
April 21, 1980
8 (R. S. SARKARIA AND 0. CHINNAPPA REDDY, JJ.]

English doctrine of conversi.on, applicability to Fndfan I.nw-Tran.~Jer o~ '\
Property Act. Section 54, ~ndian Trust Act, p. 94, Specific Relief Act, 1963,
Sections 12, 13, 16, 21-Urban Land (Ceiling and Regulation) Act, 1916
Sections 15 and 21, Bombay Tend11cy and Agricultural Lands Act, 11pplicability
of,
c
The appellant Bai Dosabhai obtained two plot• of land in Survey Nos. 59
and 63 at Vastrapur from her father-in-law, Jehangirji~ by way of gift. On:
February 25, 1946, Dosabhai executed a deed styled "a deed of lease" in favour
of Indu Prasad Dev Shankar Bhatt whose successors-in-interest are the respon-
dents to this appeal. The vital terms of the lease were : The lessee was en-
titled to pun:hase the land at any time within seven years by paying the stipu-
D lated price of Rs. 1,29, 111-8-0 a fourth of which was paid in adV<lllCO.
Until the date of sale he was to pay certain stipulated rent. Two year's rent
was paid in advance but if the sale took place within two years of the deed,
the lessor would not be obliged to return a proportionate part of the advance
rent paid by him. If there was default in payment of rent and if _the default

E
continued even after three months• notice had been given or if the lessor failed
to pay the purchase price and get a sale deed executed in his favour, the lessor
was entitled to call upon the lessee, by giving three month&' notice, to pay the
purchase price and take a deed of sale in his favour. If the lessee failed to
comply with the notice the lessor was entitled to take possession of the land
alongwith the .structures thereon. After taking 'possession the lessor was bound
I
to sell the same by public auction at the cost and risk of the lessee. If, at the
auction, a price less than the stipulated price was fetched the lessee was bound
to make good the deficiency to the lessor. If, the price realised was more, -the
F lessor was to pay the surplus to lessee. The amount of Rs. 32,277-14-0 paid
by the lessee to the lessor as advance of one· fourth of the consideration was
to be given credit to the lessor.
Since the lessee, in spite of three notices dated October, 25, 1950, :March 1~
--t'.
1951 and June 19, 1952 issued by the lessor calling upon the lessee to pay the·
balance of price within three months , from the date of receipt of the notice,
failing which a suit would be instituted to recover possession of the property
G and to sell it by public aution at the cost and risk of the lessee remained silent,
the lessor, on November 21, 1952 filed a suit in the Court of the Civil Judge
Senior Division Ahmedabad to recOver rent for the· period from January 2J,
1950 to January 22, 1953 .and for possession· as well as damages in lieu of rent
from January 22, 1953 onwards. The present plaintiff, the successor-in-interest
of the original lessee who was defendant No. 4 in the suit filed a written state-
ment pleading that he was a tenant as defined by the Bombay Tenancy and
}{ Agriw!tural Lands Act 1948, that his possession could not be disturbed and
that the Civil Court bad no jurisdiction to pass a decree ifor possession or for
mesne profits,, This plea was based on the circumstance that an amendment
OOSABAI V. MATHURDAS 76-:l

which came into force on January 1, 1953 made the provisions of the Bombay A
Tenancy and Agricultural Lands Act, applicable to the suit lands. This Act,
however ceased to be· applicable to the suit lands on August 11, 1958, when
the suit lands came to be included within the limits of the Ahmedabad Munici-
pality. The suit filed by the lessor was decreed on December 30, 1955. In
execution of the decree obtained by her, the lessor obtained posse_ssion of the
lands on December 22, 1960.
Immediately on the lessor obtaining possession, the lessee on January, 16, B
1961,. instituted the suit out of which the present appeal arose seeking (a) speci-
fic performance of the agreement dated February 25, 1940 by directing the
lessor-defendant to execute a sale deed in his favour after receiving from him
the balance of sale price of Rs. 96,833-10-0 and (b) in the alternative, to
direct the defendant to sell the land by public auction to retain a sum of
Rs. 96,833-10-0 out of the sale price and to pay the excess amount to the plain-
tiff. The first relief sought was subsequently given up. The lessor who had in c
the meanwhile entered into an agreement of sale in favour of Patel Singhvi &
Co., filed a written statement contesting the suit on various grounds. The City
Civil Court dismissed the suit on July 16, 1965, but on appeal by the plaintiff,
the jlldgment of. the Trial Court was reversed and it was decreed that the suit
land should be sold by public auction, or by private treaty if the parties so
agreed, in one .lot or by consent of the parties in several lots within six months
from the date of the decree. Out of the sale price fetched the defendant was first D
to reimburse herself to the extent o:t the balance· of the original purchase price
of Rs. 96,833-10-0 with interest at 9 per cent from January 23, 1953 and there-
after the remaining amount was to be· equally divided between the plaintiff and
the defendan~ If the price fetclied at the sale was less than Rs. %,833-10-0,
the defendant was to recover the deficit from the plaintiff. The decree in these
terms was so granted by the High Court as it was th<>ught that both parties
had coinmitted default and that the decree if granted in those terms would meet E
the ends of justice. On the basis of the English equitable doctrine of 'conver-
sion' which they held applied in India also, the High Court took the view
that the deed dated February 25, 1946 had created an equitable interest in the
land in fav<>ur of the plaintiff. The High Court also expressed the view that
neither the provisions of the Bombay Tenancy Agricultnral Lands Act nor
the scheme made under the provisions of the Bombay Town Planning Act stood
in the way of the plaintiff. The defendant preferred an appeal to the Supreme F
Court by special leave.
Dismissing the appeal with modifications in the decree the Court,
HELD : 1. The English doctrine of conversion of reality into personality
cannot be bcxlily lifted from its native English soil and transplanted in statute-
bound Indian Law. Many of the principles of English Equ.ity have taken sta· G
tutory form in India and have been incorporated in occasional provisions of
various Indian Statutes such as the Indian Trusts Act, the specific Relief Act.
Transfer of Property Act etc., and where a question of interpretation of such
Equity based statutory provisions arise, the Court will be well justified in seek-
ing aid from the Equity source. [770 H, 771 A-Bl
The concept and creation of quality of ownership, legal and equitable, on
the execution of an agreement to convey immovable property, as understood H
in England is alien to Indian law which recognises one owner, i.e., the legal
owner. [771 B-C]
764 SUPREME COURT REPORTS H980] 3 S.C.R.

A The ultimate paragraph of Section 54 ol Transfer of Property Act .expressly
enunciates that a-contract for the sale of immovable property does not, of itself
create any interest in or charge on such property. But the ultimate and pennlti·
mate paragraphs .of s. 40 of the Transfer of Property Act make it clear that
such a contract creates an obligation annexed to the ownership of immovable
'property, not amounting to an interest in the property, but which obligation may
be enfbrced against a transferee with notice of the contract or a gratuitous
B transferee of the property. Thus the Equitable 'ownership in property recog-
nised by Equity in England is translated into Indian law as an obligation annexed
to the ownership of_ property, not amounting to an interest in the property, but
an obligation which may be enforced against a - transferee with notice or a
gratnitons trallSlferee. [771 C.E]

The Indian Trust Act defines 'trust' and 'beneficial inter..!' and section 94
c finally lays down "In any case not coming within the scope of any of the pre-
ceeding sections, where there is no trust; but the person having posseSiSion of.
property has not the whole beneficial interest therein, be must hold the pro·
perty for the benefit of the persons having such inter..t or the residue thereof
(as the case may be), to the extent necessary to satisfy their just demands".
Section 12(a) of tho Specific Relief Act provides for enforcement of specific
performance of contract, in the discretion of the Court, when the act agreed
D to be done is in tho performance wholly or partly of a trnsi. Section 16 of the
Act prescribes part performance of the contract, when that part of a contract
which taken by itself oan and ought to be specifically performed, stands on a
separate and independent footing rfrom another contract. [771 F-H, 772 B-DJ

Ramboran Prasad v. Ram Mohit Hazra and Ors. [1967) I SCR 293,
Narendas Karsondas v. S. A. Kamtam & Anr., [1977] 2 SCR 341; referred to.
E 2. In the instant case, as seen from the terms of the deed the right of the
lessor basically is to get the full sale price of Rs. 1,29,111·8-0 either from the
lessee or by selling the property by public auction if the lessee does not himoelf
want to buy, the lessee however, making up any deficit. The lessor is under an
obligation to sell the land to the lessee if the latter so desires within a period
of seven years and pays the purchaS'e price and, if he does not so desire, lb
p , sell the land by public auction · and to recoup the balance of the stipulated
price. The lessor is under an obligation to pay the excess price, if any, realized
by the sale by public auction to tlte lessee. To sell the property by public
auction is thus both a right and an obligation. The obligation of the lessee is
to pay one fourth of the stipulated price in advance and to pay the balance
if he desires to purchase the property or to pay the deficit if any, if the le11or
is obliged to sell the property consequent on his failure to purchase. His right
is to obtain a sale deed by paying the balance price or to get any excess amount
G realised at the public auction. Whatever happens, he is not entitled to get a
..
refund of the advance of one fourth of the purchase price paid by him, and
whatever happens, the lessor is bound to sell the property either to the lessee
or by publication. [772 E-H, 773 A]

The obligation of the lessor to sen the land by public auction and pay the
excess price to the lessee is an obligation annexed to the ownership of the pro-
B perty, not amounting to an interest .in the property, it is an obligation in th~
nature of a trast, and, therefore, an obligation which may be specifically en.-
forced. [7/3 A-BJ
OOSABAI V. MATHURDAS 765

3. The contention that the plaintiff could be compensated in terms of money A
and therefore the contract should not be specifically enforced does not appear
from the terms of the contract. It is clear from the very nature and the terms
of the contract and the facts and circumstances of the case that compensation
or damages is not determinable. In fact the defendant, apart from not raising
an appropriate plea, did not offer any evidence to prove what would be suitable
compensation. (773 C-D]
4. The defendant did not commit 'any default in not paying the, balance of
B·
the purchase price and taking a sale deed in his own favour. The defendant
had the option to purchase the property if he so desired, but he was under no
obligation to do so. [773 D-FJ
5. U is true that the defendant ~!aimed the benefits given to a tenant· under
the Bombay Tenancy and Agricultural I.ands Act and resisted giving possession
to the plaintiff. If under a bonafide mistaken belief that the statute had c
stepped in to give him higher rights than under the contract the defendant re-
fused to deliver possession to the plaintiff until it was found by the Court that 1
he had no such higher rights the defendant cannot later be denied even the
rights under the contract on the ground that he had claimed higher statutory
rights. A person claiming the benefits of a beneficient social legislation should
not be denied his contractnal rights, if he is found not to be entitled to the
legislative benefits. [773 F-H] D
6. Bombay Tenancy and Agricultural I.ands Act offered no impediment to
the respondent-plaintiff's seeking to enforce the contract. The ~espondent/
plaintiff became entitled to demand that the property should be sold by public
auction only when the appellant/defendant obtained possession. On the date
when the appellant defendant obta.ined possession of the property the Act was
not applicable to the lands. Similarly the Gujarat Vacant I.ands in Urban Areas
(Prohibition of Alienations) Aci, 1972, was in force for a limited period of one E
year only. While it prohibited alienation of land during that period it did not
render the contract, which was1 earlier in point of time incapabale of being per·
formed after the Act itself expired. (773 H, 774 A-CJ
7. It is true that Section .5(3) of the Urban Land (Ceiling and Regula-
tion) Act 1976 prohibits every person holding vacant land in excess of the
ceiling limit before the commencement of the Act from transferring such F
land or part thereof by way of sale, mortgage, $ift, lease or otherwise until
he has furnished a statement as prescribed by the Act and a notification has
been published after the prescribed procedure has been gone through, The
Act catnc into force subsequent to the passing of the decree by the High
Court. While it is true that events and changes in t1te law occurring during
thC pendency of an appeal require to be taken into consideration in order
to do complete justice between parties and so that a futile decree may not G
be passed. It is also right and necessary that the decree should be so
moulded a8 to accord with the changed statutory situation. The right
obtained by a party under a decree cannot be allowed , to be defeated by
delay in the disposal of the appeal against the decree, if it is possible to
save the decree. by moulding it to conform to the statutes subsequently
coming into force. [774 C-F]
Pasupuleti Venkateswarlu v. The Motor General Troders, AIR 1975 SC B
1409 Rltmeshwar and Ors. v. Jot Ram and Ors. (1976] 1 SCR 847; referr-
ed lo,
766 SUPREME COURT REPORTS [1980] 3 s.c.R.

A [In view of the provisions of sections 20 and 21 of the Urban Land .(Ceil-
ing & Regulation) Act, 1976 the Court gave nocessary directions by way of
, appointment of a Receiver to draw up a scheme to build residential flats· for
·v<'eaker sections, and to take action to obtain exemption under section 20
and 21 of the Urban I.and (Ceiling and Regulation) Act.]

B CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 1!47 of 1978.
and 915of1980.
Appeals by Special Leave from the Judgment and Order dated
19-9-1975 of the Gujarat High Court in FA No. 92/66.
S.B. Vakil and I.N. Shroff for the Appellant in C.A. 1!47/78.
c V.M. Tarkirnde, P.H. Parekh and I. M. Nanavati for R.R. l in
C.A. 1!47/78.
S.K. Dho/kia for R.R. 2 & 3 in C.A. 1147/78.
·P.H. Parekh for the Appellant in C.A. 915/80.

D The Judgment of the Court was delivered by
ClllNNAPPA REDDY, J. The appellant Bai Dosabai obtained two
plots of land in Survey Nos. 59 and 63 of Vastrapur.from her father-
in-law, Jehangirji, by way of gift. On February 25, 1946, '.
Dosabai executed a deed, styled "a deed of lease", in favo11r of Indu
Prasad Dev Shanker Bhatt, whose successors in interest are the
respondents to this appeal. The material terms of the deed were
the following : The lease was to be for a period of seven 'years
from January 23, 1946. As a tenant was already in actual pos-
session of the land, the lessee in whose favour the deed was exe-
cuted was given symbolic possession only. The stipulated rent was
Rs. 4357-8-3 per year. Rent for two years was to be paid in advance.
In fact it had already been paid on January 23, 1946. The future
rent was to be paid in advance every year. If the lessee failed to pay
the rent the lessor was to demand the same by giving notice of three
months. If the lessee continued to default despite the notice, the
lessor was entitled to recover the rent with damages and costs.
G The rent was to be a first charge on the land as well as the structures
that might be constructed on the land, the lessee having been given
the right to raise constructions on the land or to use it as an open
land. On default of payment of rent even after three months'
notice, it was provided by clause (4) of the deed that the lessor
would be further entitled to take steps in the manner provided in
,R clause }7 of the deed, which we shall presently extract. It. was
· also agreed that the lessor :nould sell the land to the lessee withi11the
period specified in clause 15 of the deed, to which we shall ~efer
DOSABAI v. 'MATHURDAS (Chinnappa Reddy, !.) 767

immediately, for a price of Rs. 1,29,111-8-0 out of which a sum of A
Rs. 32,227-14-0 being one-fourth of the amount was paid in
.cash on the very date of the execution of the deed of lease. lt was
.agreed that if the land was acquired under the provision of the
Land Acquisition Act, the lessee should take the entire amount of
compensation and pay to the lessor an amount calculated at the
• irate of Rs. 3-8-0 per square yard whether such amount was more or B
less than the amount of compensation. Clause 15 provided that
if at any time after two years and within seven years from the date
-0f execution of the deed the lessee desired to purchase the land for
the stipulated price of Rs. 1,29,111-8-0 (calculated at the rate of
Rs. 3-8-0 per square yards), the lessor was bound to execute a deed
of sale, in favour of the lessee or his nominees. If the lessee, c
·On calculation, was found to have over paid the rent upto the date
-of sale he was to get credit for the same. If the lessee got the
-deed of sale executed within two years, he would have no claim to
_get credit for any part of the two years' rent paid in advance, the
whole of which was to be retained by the lessor. Clause 17 of the
J)
<leed, the most important clause for our present purpose was as follows :

.. "(17). If the party of the second part fails to get
the sale effected within the specified time, after paying the
sale price agreed to by the parties of both the parts as men-
tioned in para 15 herein above, the party of the first parts -
shall after giving three months notice in writing be law-
fully entitled to force the party of the second part to get
the sale effected. If in spite of giving the notice, the party
-0fthe second part fails to pay the balance of the consideration
amount and get sale deed executed, the party of the first part
~hall be entitled to take possession of the said land to-
gether with whatever structures the party of the second part
may have constructed thereon. After taking such possession,
the party of the first part shall be bound to sell the same by
public auction at the cost and risk of the party of the second
part. If, the amount realised at the public auction mentioned
• above, is less than the price of the land agreed to in this deed,
the party of the first part shall be entitled to recover the defi-
G
ciency from the second part, and if the amount realised is more,
the party of the first part shall pay the surplus to the party of the
second part. In this account Rs. 32,277-14-0 being the one-
fourth the consideration amount already paid shall be given
credit for without interest by one part to other." H
Thus, a conspectus of the relevant provisions of the deed reveals
.certain vital terms which may be summarised thus : . The lessee was
768 SUPREME COURT REPORTS [1980] 3 S.C.R.

A . entitled to purchase the land at any time within seven years by
paying the stipulated price, a fourth of which was paid in advance.I
Until the date of sale he was to pay the rent but if the sale took place
within two years of the deed, the lessor would not be obliged to
return a proportionate part of the advance rent paid by him. If [there ·
was default in payment of rent and if the default continued even
8 after three months' notice had been given or if the lessor failed
to pay the purchase price and get sale deed executed in his
favour, the lessor was entitled to call upon the lessee, by giving
three months' notice, to pay the purchase price and take a deed . ..
of sale in his favour. If the lessee failed to comply with the notice
the lessor was entitled to take possession of the land alongwith the
c structures thereon. After taking possession the lessor was bound
to sell the same by public auction at the cost and risk of the lessee.
If, at the auction, a price less than the stipulated price was feWhed
the lessee was bound to make good the deficiency to the lessor.
If the price realised was more, the lessor was to pay the surplus to·
0 the lessee. The amount of Rs. 32,277-14-0 paid by the lessee to the
lessor as advance of one fourth of the consideration was to be given
credit to the lessor .

. Three peculiar features of the agreement were : (I) Though the
lessor was entitled to obtain possession of the land from the lessee
E on his committing_ default, she was not entitled to retain possession ~..
of the land but was under an obligation to sell the lands by public
auction, (2) the lessor was to be entitled to the originally stipulated
sale price of Rs. 1,29,111-8-0 neither more nor less, under any cir-
cumstances, and (3) the amount of Rs. 32,227-14-0 which was paid by
way of advance of one fourth of the consideration was never to be
F forfeited. Nor was it to be refunded to the lessee. It was to be
given credit to the lessee even if he had defaulted in any respect.
On October 25, 1950 the lessor gave a notice to the lessee (when
we use the expression lessee hereafter we include the successors in
interest of the original lessee also within that term) demanding pay-
G ment of rent for the year 1950-51 which was payable in advance but wa~
in default. On March 7, 1951, the lessor gave a second notice
to the lessee demanding payment of rent due for the years 1950-51,
and 1951-52. The lessee was informed that if the rent demanded
was not paid a suit would be instituted to recover possession of the
property in terms of clauses 15 and 17 of the deed and the pr~perty
II woud be sold thereafter by public auction at the cost and risk of the
Jessee. On June 19, 1952, the lessor issued a third notice to the
lessee demanding payment of rent for the three years 1950-51, 1951-
DOSABAI v. MATHURDAS (Chinnappa Reddy, J.) •
769

52 and 1952-53 and also callinon the lessee pay the balance,
of price within three months from the date of receipt of the notice
and get a deed of sale executed and registered in his favour. \The
lessee was further informed that if he failed to do so, a suit would
be instituted to recover possession of the property and to sell it by pub-
lic auction at the cost and risk of the Jessee. Thereafter, on Novem-
• ber 21, 1952, the lessor filed a suit in the Court of Small Causes B
at Ahmedabad to recover rent for the period from January 23,
1950 to January 22, 1953. The plaint was, however, returned for
• presentation to the proper Court and it was then filed in the Court
· of the Civil Judge, Senior Division, Ahmedabad. The lessor
with the permission of the Court, amended the plaint so as to include
a claim for possession as well as damages in lieu of rent from January c
22, 1953 onwards. The present plaintiff, the successor-in-interest
of the original lessee who was defendant No. 4 in the suit filed a
written statement pleading that he was a tenant as defined by the
Bombay Tenancy and Agricultural Lands Act 1948, that his pos-
session could not be disturbed and that the Civil Court had no
D
jurisdiction to pass a decree for possession or for mesne profits. This
plea was based on the circumstance that an amendment which came
into force on January I, 1953 made the provisions of the Bom-
bay Tenancy and Agricultural Lands Act applicable to the suit
lands. We may also mentiqn here that the Act ceased to be appli-
cable to the suit lands on August 11, · 1958, when the suit lands E
came to be included within the limits of the Ahmedabad Municipality.
To continue the narration, the suit filed by the lessor for pos-
session was decreed on December 30, 1955. It must be mentioned
here that the lessee himself had filed a suit for possession against
the tenant who was ih actual occupation of the lands and obtained
possession from him on April 30, 1955. The lessee filed an appeal to F
the- High Court of Bombay which wttS dismissed on March 19,
1958 and a further appeal to the Supreme Court which was also dis-
missed on March 8, 1965.
In execution of the decree obtained by her, the lessor obtained
• possession of the lands on December 22, 1960. Immediately on the G
lessor obtaining possession, the lessee, on January 16, 1961, instituted
the suit out of which the present appeal arises seeking (a) specific
performance of the agreement dated February 25, 1946 by directing
the lessor-defendant to execute a sale deed in his favour after receiv-
ing from the plaintiff the balance of sale price of Rs. 96,833-10-0,
and, (b) in the alternative, to direct the defendant to sell the land II
by public auction to retain a sum of Rs. 96,833-10-0 out of the sale
price and to pay the excess amount to the plaintiff. The first
•
770' SUPREME COURT REPORTS [1980] 3 S.C.R,
relief sought was subsequently given up. The lessor who had in
A
the meanwhile entered into an agreement of sale in favour of
Patel Singhvi & Co. filed a written statement contesting the ~uit
on various grounds. The City Civil Court dismissed the suit on
July 16, 1965, but on appeal by the plaintiff, the judgment of
the Trial Court was reversed and it was decreed that the suit land
.B should be sold by public auction, or by private treaty if the parties
so agreed, in one lot or by consent of the parties in several lots within
six months from the date of the decree. Out of the sale price
fetched the defendant was first to reimburse herself to the extent
of the balance of the original purchase price of Rs. 96,833-1-0-0
with interest at 9 percent from January 23, 1953 and thereafter
c the remaining amount was to be eGually divided between the plain-
tiff and the defendant. If the price fetched at the sale was less than
Rs. 96,833-10-0, the defel'\dant was to recover the deficit from.the
plaintiff. The decree in these terms was so granted by the High
Court as it was thought that both parties had committed default and
that the decree if granted in those terms would meet the ends of
D
justice. On the basis of the English equitable doctrine of 'conver-
sion' which they held applied in India also, the High Court took
the view that the deed dated February 25, 1946 had created an
equitable interest in the land in favour of the plaintiff. The High
Court also expressed the view that neither the provisions of the
Bombay Tenancy Agricultural Lands Act nor the scheme made
under the provisions of the Bombay Town Planning Act stood in
the way· of the plaintiff. The defendant has preferred this appeal
by special leave of this Court.
Shri Vakil learned counsel for the appellant raised several conten-
tions befote us. He contended that the English Equitable doctrine of
F conversion of reality into personalty had no application in India. He
submitted that the plaintilhvas disentitled to specific performance of
any term of agreement as he Jiad done eyery thing that was poss~e to
prevent the defendant from obtaining possession of the lands thereby
clearly indicating that he had resiled from and was not ready and willing
to perform his part of the agreement. It was further argued t.hat the
G provisions of the Bombay Tenancy and Agricultural Lands Act, 1948, *
and the provisions of the Gujarat Vacant Lands in Urban areas (Pro-
hibition of Alienations) Act, 1972, and the Urban Land (Ceiling and
Regulation) Act, 1976, were a bar to the sale by public auction of the
lands by defendant.
ti We do not wish to go in any detail into the question whether .the
English Equitable doctrine of conversion of reality into personalty is
applicable in India. However, we do wish to say that the English
OOSABAI v. MATHURDAS (Chinnappa Reddy, J.) 7 71

doctrine of conversion of reality into personalty cannot be A
bodily lifted from its native English soil and transplanted in statute-
bound Indian law. But, we have to notice that many of the principles
of English Equity have taken statutory form in India and have been
incorporated in occasional provisions of various Indian statutes such
as the Indian Trusts Act, the Specific Relief Act, Transfer of Property B
Act etc. and where a question of interpretation of such Equity based
statutory provisions arises we will be well justified in seeking aid from
the Equity source. The concept and creation of duality of ownership,
legal and equitable, on the execution of an agreement to convey immo-
veable property, as understood in England is alien to Indian Law which
recognises one owner i.e. the legal owner : vide, Ramboran Prasad v. c
Ram Mohit Hazra & Ors.(1) and Narandas Karsondas v. S. A. Kamtam
& Anr.(2). The ultimate paragraph of s. 54 of the Transfer of Property
Act, expressly enunciates that a contract for the sale of immoveable
property does not, of itself, create any interest in or charge on such
property. But the ultimate and penultimate paragraphs of s. 40 of the
Transfer of Property Act make it clear that such a contract creates an D
obligation annexed to the ownership of immoveable property, not
·amounting to an interest in the property, but which obligation may be
enforced against a. transferee with notice of the contract or a gratuitous
transferee of the property. Thus the Equitable ownership in property
recognised by Equity in England is translated. into Indian law as an
obligation annexed to the ownership of property, not amounting to an E
interest in the property, but an obligation which may be enforced
against a transferee with notice or a gratuitous transferee.
Ifwe now turn to the Indian Trusts Act, we find "trust" defined as
"an obligation annexed to the ownership of property, and arising
out of a confidence reposed in and accepted by .the owner, F
or declared and accepted by him, for the benefit of another,
.. or of another and the owner'',

and "beneficial interest" defined as the interest of the beneficiary
against the trustee as owner of the trust-property. Chapter TX of the
• Trusts Act enumerates. in section after section cases where obligations G
in the nature of trust are created. S. 94 finally provides :
"94. In any case not coming within the scope of any of the
preceding sections, where there is no trust, but the person
having possession of property has not the whole beneficial interest
therein, he must hold the property for the benefit of the persons
II
(I) [1967] I S.C.R. 293
(2) [1977] 2 S.C.R. 341.
772 SUPREME COURT REPORTS [1980) 3 S.C.R.

A having such interest, or the residue thereof (as the case may be),
to the extent necessary to satisfy their just demands".

We may now examine some of the provisions of the Specific Relief
Act, 1877, which though repealed and replaced by Act 47 of 1963.
is the statute with which we are concerned. ''Trust" was defined in
B Section 3 of the 1877 Act as having "the same meaning as in Section 3
of the Indian Trusts_Act" and as "including an obligation in the nature
ofa trust within the meaning of Chapter IX of that Act". Sectionl2(a}
of the Act of 1877 provided, "Except as otherwise provided in this Act,
specific performance of contract may, in the discretion of the Court,
be enforced when the act agreed to be done is in the performance
c wholly or partly of a trust". The other clauses of Section 12 and Sec-
tions 13 to 18 enumerated the other contracts which might be specifi-
cally enforced. S. 21 specified when contracts were not specifically
enforceable. S. 16 is of some relevance. It said :

"when part of a contract which, taken by itself can and
D ought to be specifically performed, stands on a separate and inde-
pendent footing from another part of the same contract which
cannot or ought not to be specifically performed, the Court
may direct specific performance of the former part''.

We may now consider the deed dated February 25, 1946 the im-
E
portant and relevant terms of which we have either summarised or ex-
tracted[earlier. We have also pointedly mentioned some pecnliar fea-
tures of the deed. From the terms 9f the deed we gather that the right
of the lessor, basically is to get the full sale price of Rs. 1,29,111-8-0
either from the lessee or by selling the property by pnblic auction if
the lessee does not himself want to buy, the lessee however, making
F
up 'any deficit. The lessor is under an obligation to sell the land to
the lessee if the latter so desires within a period of seven years ancl
pays the purchase price and, if he does not so desire, to sell the land by
public auction and to recoup the balance of the stipulated price. The
lessor is under an obligation to pay the excess price, if any, realised by
the sale by public auction to the lessee. To sell, the property by public
•
G
auction is thus both a right and an obligation. The obligation of the
le~see is to pay one fourth of the stipulated price in advance and to pay
the balance if he desires to purchase the property or to pay the deficit,
if any, if the lessor is obliged to sell the property consequent on his
failure to purchase. His right is to obtain a sale deed by paying the
H balance price or lo get any excess amount realised at the public auction.
Whatever happens, he is not entitled to get a refund of the advance of
one-fourth of the purchase price paid by him, and whatever happens,
OOSABAI v. MATHURDAS (Chinnappa Reddy, J.) 773

the lessor is bound to sell the property either to the lessee or by public A
auction.

·+ We do not have any doubt, on a consideration of the terms of the
deed and the relevant statutory provisions earlier referred, thatthe ob·
ligation of the lessor to sell the land by public auction and pay the
excess price to the lessee is an obligation annexed to the ownership of B
• the property, not amounting to an interest in the property, that it is an
obligation in the nature of a trust, and, therefore ·an obligation which
may be ~pecifically enforced.

It was contended that the plaintiff could be compensated in terms of
money and therefore, the contract should not be specifically enforced. c
It is obvious from the very nature and the terms uf the contract and the
facts and circumstances of the case that compensation or damages is
not determinable. In fact the defendant, apart from not raising an
appropriate plea, did not offer any evidence to prove what would be
suitable compensation.
D
It was argued thatfthe defendant had throughout committed'default
first by not paying the balance of the purchase price and taking the sale
deed in his favour and next by resisting delivery of possession to the
plaintiff. It was submitted that the defendant was thus never ready
and willing to perform his obligation under the contract. We find no
force in these submissions. As already observed by us the defendant E
had the option to purchase the property if he so desired but he was
under no obligation to do so. The contract itself provided for the
eventuality of the defendant ultimately not desiring to purchase the
property himself. It cannot, therefore, be said that the defendant
committed any default in not paying the balance of the purchase price
and taking a deed of sale in his own favour. Regarding resistance to I'
-~-.· delivery of possession, it is true that he claimed the benefits given to a
tenant under the Bombay Tenancy and Agricultural Land Act and
resisted giving possession to the plaintiff. If under a bonafide mistaken
belief that the statute had stepped in to give him higher rights than under
the contract the defendant refused to deliver possession to the plaintiff
until it was found by the Court that he had no such higher rights, the G
defendant cannot later be denied even the rights under the contract on
the ground that he had claimed higher statutory rights. We do not
subscribe to the proposition that a person claiming the benefits of a
beneficient social legislation should be denied his contractual rights
if he is found not to be entitled to the legislativebenefits.
H
It was said that the contract became void so soon as the Bombay
Tenancy and Agricultural Lands Act, became applicable to the suit
774 SUPREME COURT REPORTS (1980] 3 S.C.R.

lands and that it could not be revived after the act ceased to apply to
the suit lands. We do not see any force in this submission either. The
plaintiff-respondent became entitled to demand that the property
should be sold by public auction only when the defendant-appellant
obtained possession and since on the date when the defendant obtained
+
possession of the property the Act was not applicable to the lands in
B question, we see no impediment in the plaintiff seeking to enforce the
contract. Similarly the Gujarat Vacant Lands in Urban Areas (Pro- •
hibition of Alienations) Act, 1972, was in force forja limited period.of
one year only. While it prohibited alienation of land during that
period it did not render the contract which was earlier in point of time
void so as to render it incapable of being performed after the Act
c itself expired.
Shri Vakil finally submitted that the contract had become impossible
of performance as a result of the enactment of the Urban Land (Ceil-
ing & Regulation) Act 1976. It is true that s. 5(3) of the Act prohibits
every person holding vacant land in excess of the ceiling limit before the
commencement of the Act from transferring such land or part thereof
by way of sale, mortgage, gift, lease or otherwise until he has furnished
a statement as prescribed by the Act and a 'notification has been pub-
lished after the prescribed procedure has been gone through. The
Act came into force subsequent to the passing of the decree by the High
Court. The <iiiestion for our consideration is what is the effect of the
E Urban Land (Ceiling & Regulation) Act, 1976 on the decree passed by
the High Court. While it is true that events and· changes in the law
occurring during the pendency of an appeal require to be taken into
consideration in ordeT to do complete justice between parties and so
that a futile decree may not be passed. It is also right and necessary
that the decree should be so moulded as to accord with the changed
statutory situation. The right obtained by a party under a decree
cannot be allowed to be defeated by delay in the disposal of the appeal
against the decree, if it is possible to save the decree by moulding it to
conform to the statutes subsequently coming into force. Thtcse pro-
positions emerge from the decisions of the Court in Pasupu'eti Venka-
G teswarlu v. The Motor & General Traders,(1) and Rameshwar & Ors: v.
Jot Ram & Or.v.(2). The question, therefore, is how the decree passed
by the High Court can be saved and given effect. S. 21 of the Urban
Land (Ceiling & Regulation) Act, 1976, prcvid<S that where a p<lrnn
holds any vacant land in excess of the ceiling limit and web pl1 son
declares within the pre~cribed time and in the, prescrib<d manner before
R the competent authority that the land is to' be utilised for the con-
(!) A. I. R. 1975 S. C. 1409.
(2) [1976] l S.C.R. 847.

..".
..
DOSABAI v. MATHURDAS (Chinnappa Reddy, J.) 775

A
struetion of dwelling units, for the accommodation of the weaker
section of the society in accordance with any scheme approved by the
specified authority, then the competent authority may after due enquiry
declare such land not to be excess land and permit such person to
continue to hold the land for the said purpose subject to the prescribed
terms and conditions. The Government of Gujarat by various
" orders has prescribed the terms and conditions subject to which exemp-
tion will be granted under s. 21. The last circular dated October 25,
1979 of the Government also specifies that the value of the land for the
purpose of s. 21 and the scheme should not exceed Rs. 50 per square
meter. The last date for submitting a scheme under the rules made by
the Government of Gujarat was January 31, 1980. Realising tha< all
would be lost and none would be the gainer if no scheme was submitted
before January 31, 1980, the· respondent filed Civil Miscellaneous
Petition No. 183 of 1980 for the appointment of a Receiver of the suit
land "with power to apply for seeking exemption from the operation of
the said Act under section 20 and/or 21 of the Act, by taking help of an
organiser and/or builder to build residential premises for weaker
sections of the Society, and/or by joining with the Co-operative Society
m applying for an exemption under the said Act, and in the process after
getting necessary permission, allow buildings to be built, and then per-
mission to sell the tenements, so built either collectively and/or
Individually and/or to a cooperative Scciety and in the process realize
price of suit land at a price not lesser then Rs. 50/- per meter and to
invest the same when realized at prevailing Bank rate, in Fixed Deposit,
in a Nationalised Bank". By our order dated January 18, 1980, we
appointed Shri R. L. Dave, Additional Registrar of the Gujarat High
Court as Receiver and charged him with the duly of submitting a
building scheme and other necessary documents to the Competent
p·
authority under s. 21 of the Urban Land (Ceiling and Regulation)
Act, before January 31, 1980. He was directed to do so in consultation
with the parties or their counsel. The order was made without pre-
judice to the application said to have been made by the appellant under
s. 20 of the Act. As directed by us the Receiver submitted a scheme to
the Competent authority. He also entered into an agreement with a
G
builder as the scheme would not be otherwise received by the Compe·
tent authority. Various objections have been filed before us by the
defendant and some. other parties. We do not desire to adjudicate
upon the objections raised by the plaintiff and other parties. We,
however, affirm the action taken by the Receiver in submitting a scheme
to the Competent authority. Allfurther directions in this matter may
H
be obtained from the Trial Court to whom all the relevant records will
be forwarded. We think that the decree of the High Court s'hould be
776 SUPREME COURT REPORTS [1980] 3 S.C.R.

modified in the following manner in order to bring it in conformity with
the provisipns of the Urban Land (Ceiling and Regulation) Act, 1976.
In the place of the direction to the lessor to sell the land by public
auction or by private treaty and to reimburse himself from the sale
+
price the sum of Rs. 96833-10-0 with interest at 9 per cent from!January
23, 1953 and the balance to be equally divided between the lessor and the
B lessee, a direction will issue for the appointment of a Receiver to take •
all necessary steps to seek exemption from the operation of the Act,
under s. 20 and/or s. 21 of the Act by taking the help of an organiser
and/or builder to build residential premises for weaker section of the
Society, and/or by joining with the co-operative Society in applying for
c an exemption under the said Act and in .the process after getting neces-
sary Pfrmission, allow buildings to be built, and then permission to
sell the tenements, so built either collectively and/or individually and/or
to a Cooperative Society and in the process realize price of suit land at
a price not lesser than Rs. 50 per meter and to invest the same when
realised at prevailing Bank rate, in fixed Deposit, in a Nationalised
D Bank. The Receiver appointed by us in C.M.P. No. 183 of 1980 will
continue to act as Receiver under the decree. Out of the sum realised
after deducting the expenses involved, a sum of Rs. 96833-10-0 together
with interest at 9 percent per annum from January 23, 1953 upto the
date of payment, will be paid in the first instance to the defendant and
the balance will be divided equally between the plaintiff and; the defen-
E dant. If the amount realised by the Receiver after deducting .the'
expenses fall short of sum of Rs. 96833-10-0 with interest at 9 per cent
. per annum from January 23, 1953, the plaintiff shall make good the.
amount to the defendant. The appeal is dismissed but the decree is
modified as indicated above. •
'I . Special Leave Petition No. 4023 of 1980 filed by the defendant is
allowed, leave granted and the appeal disposed of in the same terms as
Civil Appeal No. 1147 of 1978. Delay condoned. There will be no
order regarding costs in both the Appeals.

S.R. Appeal dismiued.