Civil Procedure - Specific performance of agreement - Decree - Entitlement of - Held, Plaintiffs were not entitled to a decree at this stage on the admission of Defendant No. 1 that the agreement as it originally stood was performed by the Plaintiffs in 2006-07, when the defence was that the agreement as it originally stood was later, i.e. on 1-2-2008, modified, and the Plaintiffs were not ready to perform the modified agreement - Claim as laid down in the plaint was of the Plaintiffs' entitlement to specific performance of the original agreement - That claim was by no means admitted by Defendant No. 1 - What was admitted was the existence of the original agreement (till it was said to be modified) and receipt of full payment thereunder, and not the Defendant's liability to perform the agreement as it originally stood - Plaintiff submitted that the admissions were made not only before the alleged writing of 1-2-2008, but even after the alleged writing - That, however, was a matter of trial - Admissions, if any, made after the execution of the writing, might at the most weaken the defence based on the writing, but these admissions certainly could not be called 'unambiguous, unconditional and clear' admissions intended to be read and construed as admissions of the Plaintiffs' claim in the suit.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
NOTICE OF MOTION NO. 3806 OF 2011
IN
SUIT NO. 1975 OF 2011
Pankaj Unit No.1 Housing Development Company
Private Limited & Anr.
vs.
Oshiwara Land Development Company Private
Limited & Anr.
CORAM : S.C. GUPTE, J.
05 FEBRUARY 2014
The Notice of Motion applies for a decree on admission. The facts
of the case may be briefly set out as follows.
2 Plaintiff Nos. 1 and 2 are companies under Part IX of the
Companies Act, 1956 incorporated as such upon conversion of two co-operative
societies, which themselves came into existence on account of de-merger of
Pankaj Co-operative Housing Development Society Ltd. (“Principal Society”).
3 Defendant No. 1 was the owner inter alia of land forming part of
Survey No. 41 at Oshiwara in Mumbai, which was reserved as No Development
Zone (“suit property”). By a registered Deed of Lease of 17 September 1981,
Defendant No. 1 demised the suit property unto the Principal Society for 98
years. Clause 6 of the Lease Deed provided that the Lessee shall have a right to
purchase the reversionary rights in respect of the suit property from the Lessor at
the rate of Rs. 9.95 per sq. ft. In 1981 and 1983 development agreements were
entered into in respect of the suit property between the Principal Society and
Defendant No. 2 (who was originally Plaintiff No. 3 in the present suit and later
transposed as a defendant as mentioned below). The suit property was surveyed
and measured in the year 1999 and its boundaries were fixed. The property
admeasured about 9,01,983.9 sq. mtrs. or 224 acres. In 2001, the Principal
Society was demerged and two societies (the predecessors of the present
Plaintiffs) came into being. The leasehold rights of the Principal Society thus
came to be jointly vested in the predecessors of the Plaintiffs. In 2011, the two
societies were converted to Joint Stock Companies under Part IX of the
Companies Act and thus became successors in interest of the leasehold rights in
the suit property.
4 In December 2005, by an arrangement between the two societies
and Defendant No. 2, the development agreements of 1981 and 1983 were
confirmed and it was inter alia provided that a part of the consideration payable
by Defendant No. 2 would be paid to Defendant No. 1 for purchase of
reversionary rights of the latter in the suit property as well as its other dues. It is
the case of the Plaintiffs that between December 2005 and August 2007, a sum
of Rs. 11,86,83,843/- was paid by Defendant No. 2 on behalf of the Plaintiffs to
Defendant No. 1, which included the total consideration of Rs. 9,70,86,528/-
towards the purchase of reversionary rights in the suit property in accordance
with Clause 6 of the Lease Deed as well as ground rent and interest payable to
Defendant No. 1. It is the case of the Plaintiffs that with the payment of Rs.
11,86,83,843/-, the total consideration for reversionary rights was paid to
Defendant No. 1 and the latter was bound to convey the suit property to the
Plaintiffs. It appears that draft conveyance was exchanged between the parties,
but no conveyance was eventually executed. The Plaintiffs, therefore, filed the
present suit.
5 The Plaintiffs have taken out the present Notice of Motion for a
decree on admission under Order XII Rule 6 of the Code of Civil Procedure. The
Plaintiffs rely on admissions of Defendant No. 1 contained in various statements
of the Defendants both in and outside the pleadings. These admissions are said
to be contained in the following statements:
(i) In a statement made under Section 133 A of the Income Tax Act,
the Director of Defendant No. 1 confirmed that an amount of about
Rs. 9 crores was received towards sale of reversionary rights in the
suit property and was retained as deposit in the account of Defendant
No. 1 according to a consistent practice of accounting;
(ii) In a letter dated 23 December 2009 addressed to the Additional
Commissioner of Income Tax, Defendant No. 1 stated that the sum
of Rs. 9,70,86,528/- received by Defendant No. 1 on behalf of the
Plaintiffs was the total consideration for purchase of reversionary
rights and the deal was through and treated as concluded during F.
Y. 2006-07 and that accordingly the payment was treated as
income of Defendant No. 1 in the return of income submitted for
that year, and the tax liability due thereon was paid;
(iii) In the Directors' report for the year ended on 31 March 2007,
Defendant No. 1 admitted that the Plaintiffs had exercised the right to
purchase reversionary rights in the suit property and the full
consideration for such purchase along with the rent and interest due
thereon had been received by Defendant No. 1, and that accordingly
the profit was worked out and tax paid by Defendant No. 1 pending
execution of conveyance;
(iv) In the Notes on Account forming part of Balance Sheet for the year
ended on 31 March 2007, Defendant No. 1 stated that as per a
change in the accounting procedure, the profit was worked out on the
sale of reversionary rights of the suit property in the accounting year
during which the full consideration was received by Defendant No. 1
(that year being 2006-07);
(v) The Directors' Report for the year ended on 31 March 2008 also
admits that full consideration of the reversionary rights had been
received by Defendant No. 1 in the previous year, i.e. 2006-07; and
(vi) The Balance Sheet of Defendant No. 1 as at 31 March 2008
showed the entry of 'Loans and Advances' from the Plaintiffs as nil as
against the entry of Rs. 9,70,86,528/- of the previous year (showing
thereby appropriation of the amount earlier held in deposit towards
the full consideration of reversionary rights).
The Plaintiffs submit that even in the pleadings, Defendant No. 1
has admitted (i) the existence and validity of the agreement to purchase
reversionary rights, (ii) exercise of the right to purchase the reversionary rights by
the Plaintiffs, and (iii) receipt of the total consideration mentioned in the suit
agreement for such purchase.
6 In its Written Statement as well as reply to the Notice of Motion,
Defendant No. 1 submits that the agreement to transfer the reversionary rights
contained in the Lease Deed was altered or modified by a writing executed by
Defendant No. 2 on behalf of the Plaintiffs on 1 February 2008; that such
alteration or modification required that for the TDR which would be availed of in
respect of land admeasuring 44 acres from out of the suit property (reserved as
Sewerage Lagoon), Defendant No. 1 would receive a consideration of Rs. 400/-
per sq. ft.; and that the Plaintiffs were never ready and willing to perform the
agreement to buy reversionary rights as altered or modified by the writing of 1
February 2008.
7 Incidentally, it may be noted that upon Defendant No. 1 taking the
stand as above, Defendant No. 2, who was till then Plaintiff No. 3 in the suit, was
transposed as Defendant No.2 on the application of the Plaintiffs.
8 The learned Counsel for the Plaintiffs submit that Defendant No. 1
has admitted the Plaintiffs' right to transfer of reversionary rights to the suit
property admeasuring 224 acres vesting in Defendant No. 1; that these
admissions are contained in the pleadings and also correspondence and
communications of Defendant No. 1; that these admissions cannot be explained
away by Defendant No. 1; that the purported communication of 1 February 2008
does not amount to any modification of the suit agreement; that in any event,
even if it does, such modification relates only to the property of 44 acres which is
clearly identifiable and can be separated from 180 acres of the balance suit
property, and thus does not show any defence to the Plaintiffs' right to
reversionary interest in respect of 180 acres; and that accordingly, a decree on
admission for transfer of 180 acres of suit land can be passed in the alternative.
9 The learned Counsel for Defendant No. 1, on the other hand,
submits that the claim in the suit is for specific performance of the suit agreement
and not for refund of money paid; that an admission that full payment due under
the suit agreement, as it originally stood, was received, is no admission of the
Plaintiffs' entitlement to specific performance of the suit agreement as claimed in
the suit; that it is an express case of Defendant No.1 that the suit agreement
stood modified by a writing dated 1 February 2008 and that the Plaintiffs were
neither ready nor willing to perform the modified agreement; and that the case
ought to go to trial before any decree can be claimed by the Plaintiffs.
10 The object of the provisions of Order XII Rule 6 of the Code of Civil
Procedure and their effect is discussed by the Supreme Court in the case of
Uttam Singh Duggal & Co. Ltd. Vs. United Bank of India1
in the following
words (paras 12 and 13):
“12. As to the object of the Order XII Rule 6, we need
not say anything more than what the legislature itself has
said when the said provision came to be amended. In the
objects and reasons set out while amending the said
rule, it is stated that “where a claim is admitted, the
court has jurisdiction to enter a judgment for the plaintiff
and to pass a decree on admitted claim. The object of
the Rule is to enable the party to obtain a speedy
judgment at least to the extent of the relief to which
according to the admission of the defendant, the plaintiff
is entitled”. We should not unduly narrow down the
meaning of this Rule as the object is to enable a party to
obtain speedy judgment. Where other party has made
a plain admission entitling the former to succeed, it
should apply and also wherever there is a clear admission
of facts in the face of which, it is impossible for the party
making such admission to succeed.
13. The next contention canvassed is that the
resolutions or minutes of meeting of the Board of
Directors, resolution passed thereon and the letter sending
the said resolution to the respondent bank cannot
amount to a pleading or come within the scope of the
Rule as such statements are not made in the course of
the pleadings or otherwise. When a statement is made
to a party and such statement is brought before the Court
showing admission of liability by an application filed
under Order XII Rule 6 and the other side has sufficient
opportunity to explain the said admission and if such
explanation is not accepted by the Court, we do not think
the trial court is helpless in refusing to pass a decree.
We have adverted to the basis of the claim and the
manner in which the trial court has dealt with the same.
When the trial judge states that the statement made in the
proceedings of the Board of Directors' meeting and the
letter sent as well as the pleadings when read together,
1 (2000) 7 SCC 120
leads to unambiguous and clear admission with only
the extent to which the admission is made is in dispute,
and the court had a duty to decide the same and grant a
decree, we think this approach is unexceptionable.”
11 The Supreme Court in that case distinguished its decision in the
case of Nagubai Ammal Vs. B. Sharma Rao2
, which is termed as locus
classicus on the subject. In the case of Nagubai Ammal the Supreme court
observed that merely because a written admission is made in a different context,
such admission may not become relevant if the party making it has a reasonable
explanation for that. The court held that on facts in Duggal's Case (supra) that
was not the position. The admission in Duggal's Case was unambiguous and
clear. The Supreme Court also noted the decision of Madhya Pradesh High Court
in Shikharchand Vs. Bari Bai3
to the effect that the rule is wide enough to afford
relief not only in cases of admissions in pleadings but also in cases of admissions
de hors pleadings.
12 Later, in the case of Karam Kapahi vs. Lal Chand Public
Charitable Trust4
, the Supreme Court reiterated this position as follows (para 45)
:
“45. Order 12 Rule 6 of the Code has been very lucidly
discussed and succinctly interpreted in a Division Bench
judgment of the Madhya Pradesh High Court in the case of
Shikharchand v. Bari Bai. G.P. Singh, J. (as His Lordship
then was) in a concurring judgment explained the aforesaid
Rule, if we may say so, very authoritatively at p. 79 of the
Report. His Lordship held: (AIR para 19)
“...I will only add a few words of my own. Rule 6 of
Order 12 of the Code of Civil Procedure corresponds to
2 AIR 1956 SC 593
3 AIR 1974 Madhya Pradesh 75 (V 61 C 18)
4 (2010) 4 SCC 753
Rule 5 of Order 32 of the Supreme Court Rules
(English), now Rule 3 of Order 27, and is almost
identically worded (see Annual Practice 1965 Edn.,
Part I. p. 569). The Supreme Court Rule came up for
consideration in Ellis v. Allen (1914) 1 Ch 904 : (1911-
13) ALL ER Rep 906. In that case a suit was filed for
ejectment, mesne profits and damages on the ground
of breach of covenant against sub-letting. Lessee's
solicitors wrote to the plaintiff's solicitors in which fact
of breach of covenant was admitted and a case was
sought to be made out for relief against forfeiture. This
letter was used as an admission under Rule 5 and as
there was no substance in the plea of relief against
forfeiture, the suit was decreed for ejectment under that
rule. Sargant, J. rejected the argument that the Rule is
confined to admissions made in pleadings or under
Rules 1 to 4 in the same order (same as ours) and
said:
'The rule applies wherever there is a clear
admission of facts in the face of which it is
impossible for the party making it to succeed.'
Rule 6 of Order 12, in my opinion, must bear the same
construction as was put upon the corresponding English
rule by Sargent, J. The words 'either on the pleadings or
otherwise' in Rule 6 enable us not only to see the
admissions made in pleadings or under Rules 1 to 4 of the
same order but also admissions made elsewhere during
the trial.”
13 Having regard to the law so laid down, it cannot be doubted that for
the purpose of an application for a decree on admission, admissions in pleadings
as well as admissions in correspondence or communications outside the
pleadings can be relied on. But the salutary principle is that such admissions
must be unambiguous, and clear. If there is any ambiguity in the admission or
any reasonable explanation for such admission, a decree may not be passed by
the court on the basis of such admission.
14 A decree on admission is not a matter of right, but rather a matter of
discretion of a court. This discretion must be exercised in accordance with known
judicial canons. A division bench of the Delhi High Court in the case of Vijay
Gupta Vs. Ashok Kumar Gupta
stated the law thus:
“8. It is also a settled principle of civil jurisprudence that
judgment on admission is not a matter of right and rather
is a matter of discretion of a Court. Where the defendant
has raised objection which will go to the very root of the
case, it would not be appropriate to exercise this
discretion. The use of the words 'May' and 'make such
orders' or 'give such judgment' spells out that power under
these rules are discretionary and use of discretion would
have to be controlled in accordance with the known judicial
canons. The cases which involves questions to be decided
upon regular trial and the alleged admissions are not clear
and specific, it may not be appropriate to take recourse to
these provisions. In the case of Pariwar Sewa Sansthan v.
Dr.(Mrs) Veena Kalra, AIR 2000 Delhi 349 the Court
examined at length the provisions and the need for an
admission to be unequivocal and positive. The admission
would obviously have the consequences of arriving at that
conclusion without determination of any question and
evidence. The Court while relying upon the case of Balraj
Taneja and Anr. v. Sunil Madan, AIR 1999 SC 3381 and
Dudh Nath Pandey v. Suresh Chandra Bhattasali, AIR
1986 SC 1509 held as under:
In Razia Begum v. Sahebzadi Anwar Begum, (AIR
1958 SC 886) it was held that Order 12, Rule 6 has to be
read along with the proviso to Rule 5 of Order 8. That is to
say, notwithstanding the admission made by the defendant
in his pleading, the Court may still require the plaintiff to
prove the facts pleaded by him in the plaint.
Thus, in spite of admission of a fact having been
made by a party to the suit, the Court may still require the
plaintiff to prove the fact which has been admitted by the
defendant.”
15 That said, it may now be considered, where do the purported
5 AIR 2007 Delhi 166
admissions in our case fall – whether they can be said to be unambiguous and
clear and should the court exercise its discretion to pass a decree on their basis.
The Plaintiffs substantially rely upon admissions outside the pleadings in the
present case and submit that these admissions have to be seen in the context of
clause 6 of the suit agreement. Clause 6 is as follows:
“6. And it is hereby further agreed and declared by and
between the parties that the lessees shall be entitled to
purchase the reversion in respect of such portion or
portions of the demised land as the lessees may in their
absolute discretion from time to time decide and the
lessees shall thereupon purchase the reversion in respect
of the minimum area of 10,000 square feet F.S.I.
Provided also and it is hereby agreed and declared that
the purchase price for the reversion payable by the
lessees shall be Rs.9.95 (Rupees Nine and Paise Ninety
Five only) per square feet of F.S.I. and on payment of
such amount the lessors shall execute the conveyance or
conveyances in respect of the portion in respect of which
the lessees shall have expressed their desire to purchase
the reversion in favour of the lessees and/or their
nominee or nominees provided also and it is hereby
agreed and declared that the lessees shall be entitled to
purchase the reversion as aforesaid only upto 15th
September 1981 and that on purchase of the reversion on
oath occasion as aforesaid the ground rent payable
hereunder shall reduce proportionately and the lessees
shall pay such reduced ground rent.”
16 The purported admissions are to be found, as noted above, in (i) the
statements of the directors of Defendant No. 1 under Sections 131 and 133 A of
the Income Tax Act, (ii) Letter dated 23 December 2009 of Defendant No. 1
addressed to the Additional Commissioner of Income Tax, (iii) the Directors'
Report for the year ended 31 March 2007 forming part of the accounts of
Defendant No. 1, (iv) notes on account of Defendant No. 1 for the year ended 31
March 2008. These documents do contain the following admissions:
(a) Defendant No. 1 was the owner of 224 acres of the suit land which
fell under 'No Development Zone' / 'Coastal Regional Zone' / 'Forest
Land';
(b) In 1981 Defendant No. 1 leased out the said land to the Plaintiffs
(such lease having clause 6 quoted above);
(c) The Plaintiffs exercised their right to purchase the reversionary
interest of Defendant No. 1 in the suit land under clause 6;
(d) Defendant No. 1 received full consideration for such reversionary
right along with rent and interest due thereon; and
(e) The deal was through and treated as concluded during Financial
Year 2006-07, though the suit land was still to be conveyed and the
matter was pending at the level of the solicitors of the parties.
The pleadings of Defendant No.1 do not dispute the above admissions and on
the contrary support these.
17 As against the aforesaid admissions, what Defendant No. 1 claims
in its written statement (and amended Written Statement), as noted above, is as
follows :
(i) The agreement for transfer of reversionary interest stood altered or
modified by letter dated 1 February 2008 executed by Defendant
No. 2 (who was originally Plaintiff No. 3 and was later transposed as
mentioned above) representing himself and the Plaintiffs;
(ii) The modification required that TDR in respect of 44 acres of the suit
land reserved for sewerage lagoon would be obtained and
Defendant No. 1 would receive a sum of Rs. 400 per sq. ft. for the
area;
(iii) The Plaintiffs have still not paid the said consideration in respect of
TDR benefit for 44 acres under the sewerage lagoon area; and
(iv) The Plaintiffs were never ready and willing to perform the
agreement as modified.
18 Now, the question is whether the abovementioned admissions, in
the backdrop of averments in the Written Statement noted above, warrant a
decree on admission. At the outset, it may be noted that the suit is for specific
performance of the suit agreement and not for refund of money admittedly
received by Defendant No. 1 in performance of that agreement. The main issues
in such a suit are (a) existence of a contract, (b) the Defendant's refusal to
perform the contract and (c) the Plaintiffs' readiness and willingness to perform
the contract. The defence of Defendant No. 1 in the Written Statement is that the
suit agreement was modified by a writing executed by Defendant No. 2 on behalf
of the Plaintiffs; and that the Plaintiffs were not ready and willing to perform the
agreement as modified. On the other hand, the Plaintiffs' case is that there was
no modification of the suit agreement; that Defendant No. 2 had no authority to
execute any writing on behalf of the Plaintiffs; that the Plaintiffs had fully
performed the agreement as it originally and always stood. These pleadings do
raise the issues:
(i) Whether the writing of 1 February 2008 was executed by Defendant
No. 2 on behalf of the Plaintiffs?
(ii) Whether the writing had the effect of modifying the suit agreement?
(iii) Whether the Plaintiffs are ready and willing to perform the
agreement as modified?
19 These issues ought to be decided at the trial. The Plaintiffs are not
entitled to a decree at this stage on the admission of Defendant No. 1 that the
agreement as it originally stood was performed by the Plaintiffs in 2006-07, when
the defence is that the agreement as it originally stood was later, i.e. on 1
February 2008, modified, and the Plaintiffs are not ready to perform the modified
agreement. The claim as laid down in the plaint is of the Plaintiffs' entitlement to
specific performance of the original agreement. This claim is by no means
admitted by Defendant No. 1. What is admitted is the existence of the original
agreement (till it was said to be modified) and receipt of full payment thereunder,
and not the Defendant's liability to perform the agreement as it originally stood.
20 The learned Counsel, in this behalf, submitted that the admissions
were made not only before the alleged writing of 1 February 2008, but even after
the alleged writing. That, however, is a matter of trial. The admissions, if any,
made after the execution of the writing, may at the most weaken the defence
based on the writing, but these admissions certainly cannot be called
'unambiguous, unconditional and clear' admissions intended to be read and
construed as admissions of the Plaintiffs' claim in the suit.
21 A learned Single Judge of this Court in the case of Vaijayanti w/o.
Amar Vazalwar vs. Chandrakant s/o. Odhavji Thakker6
held as follows (para
8) :
“8. “Facts”, which need to be admitted for passing a
decree under Rule 6 of Order 12 of Civil Procedure Code,
have to be “facts jurisdictional to the grant of decree” and
not the facts on which the transaction commenced, and
isolated reading of admission cannot be done.”
22 The admissions in our case are not of “facts jurisdictional to the
grant of decree”. These admissions by themselves do not cover all material
propositions of fact which the Plaintiffs are called upon to prove in the present
suit. No decree can, therefore, be passed on these admissions.
23 The judgment of Delhi High Court in the case of Vijaya Myne vs.
Satya Bhushan Kurya
cited by Mr.Chagla, the learned Senior Counsel for the
Plaintiffs, is clearly distinguishable. In that case, the facts established from
admissions of the Appellant were sufficient to pass a decree in favour of the
Respondent.
24 Alternatively, it was submitted on behalf of the Plaintiffs that the
writing of 1 February 2008 relates to 44 acres of identifiable land and a decree on
admission can still be granted for 180 acres of the suit land for which there is no
defence. That depends on whether the writing of 1 February 2008 was a separate
agreement with respect to 44 acres unconnected with the original agreement or a
modification of the original agreement. If it is a modification, the question is of
performance as a whole of the modified agreement. There is no scope in such a
6 2007 (4) ALL MR 593
7 142 (2007) Delhi Law Times 483 (DB)
case to grant performance of a part of the modified agreement. As discussed
above, the effect of the writing of 1 February 2008 is a matter of trial and hence,
the alternative submission cannot be accepted.
25 The learned Counsel for the Plaintiffs, in support of the claim for a
part decree, relied upon the judgment of the Supreme Court in the case of Firm
Sriniwas Ram Kumar vs. Mahabir Prasad8
and the judgment of Calcutta High
Court in the case of Premsuk Das Assaram vs. Udairam Gungabux9
. In the
case of Firm Sriniwas Ram Kumar (supra), the subordinate court had
dismissed the plaintiff's claim for specific performance, but granted a money
decree on the basis of the defendant's admission of receipt of an advance
payment. The Supreme Court upheld this decree on the ground inter alia that
there was no question of adducing evidence on a fact expressly admitted by the
defendant. The case of Firm Sriniwas Ram Kumar (supra) was a case where a
decree was passed at the conclusion of the trial and not under Order XII Rule 6.
That case has no application to the facts of our case. In Premsuk Das Assaram
(supra), the Judgment was delivered under Order XII Rule 6. That was a suit for a
money claim based on accounts. There was an admission of a part of the
amount. A judgment was entered for that part of the suit claim and the plaintiff
was permitted to proceed to prove the rest of the claim at the trial. The Calcullta
High Court refused to restrict the operation of Order XII Rule 6 only to cases
where the defendant's admission pertains to the whole claim. The decree for the
part which was admitted was upheld. But then, in the Calcutta case the claim was
severable into distinct portions and the defendant admitted his liability in respect
8 AIR (38) 1951 Supreme Court 177
9 Indian Law Reports (Vol.XLV.) Calcutta Series Page 138
of one portion of such claim. In our case, the two parts, namely, reversionary
rights with respect to 44 acres and 180 acres, cannot be so separated.
26 For all these reasons, Notice of Motion No.3806 of 2011, which
prays for a decree on admission, is rejected. There shall be no order as to costs.
(S.C. Gupte, J.)
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