the agreement, the plaintiff preferred to intervene in the MHA proceedings.
However, it abandoned its interim application on 23.04.2001. Perusal of the
orders passed in the said proceedings reveals that on at least 10 occasions,
the counsel representing the plaintiff was not present and on 6 occasions,
he/she did not press the interim application.
28.The Court also finds merit the argument of the defendants that while
instituting the suit, the plaintiff never preferred an application under Order
XXXIX, CPC since the same would have resulted in the plaintiff
paying/depositing the balance sale consideration or at least a substantial partof it. It is settled law that the plaintiff must, at all times, be ready and willing
to pay the sale consideration to be entitled to the discretionary relief of
specific performance
IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 01.09.2015
CS(OS) 335/2005
SEWA INTERNATIONAL
versus
KALAWATI MATHRANI & ORS.
CORAM:
HON'BLE MR. JUSTICE NAJMI WAZIRI
Citation;AIR 2016 (NOC)163 Delhi
1. This suit seeks specific performance of an agreement to sell dated
24.04.2000 (hereafter ‘agreement’) in respect of property bearing No. 16,
Poorvi Marg, Vasant Vihar, New Delhi-110057 (for short ‘suit property’),
admeasuring 1219 sq. yds. It is not in dispute that Rs.1.125 crores, i.e., 15%
out of the total sale consideration of Rs. 7.50 crores stands paid.
2. Although the suit was instituted against one Mrs. Kalawati Mathrani
(hereafter ‘deceased defendant’), she passed away on 25.08.2005. Hence,
her Legal Representatives (for short LRs) namely Mr. Ranjit Mathrani, Mr.
Nirmal Mathrani, Ms. Aparna Choudhary and Ms. Sheila Mathrani were
brought on record and impleaded as defendant Nos.1 to 4. Issues were
framed on 08.10.2007.
Issue wise contentions and findings
Issue No. (i): Whether the plaintiff was ready, willing and able to perform
its obligations under the Agreement to Sell dated 24.04.2000? OPP
3. Mr. Anil Sapra, the learned Senior Advocate appearing for the plaintiff drew
the attention of the Court to a letter dated 10.08.2000 (Ex. PW-1/G) whereby
the deceased defendant’s son (defendant No.1) intimated the plaintiff that
one of the two requisite permissions, i.e., under Section 269 UC of the
Income Tax Act, 1961 (for short ‘IT Act’) in Form 37-I had been obtained.
The deceased defendant was stated to be ill and hospitalised and further, that
she would execute the necessary documents the moment she recoups from
her illness. He submitted that the said letter was responded to by a letter
dated 25.08.2000 (Ex. PW-1/H) whereby the plaintiff showed its eagerness
to complete the formalities apropos sale of the suit property as soon as
possible. He further submitted that no progress being had been made, hence,
the plaintiff served a legal notice dated 19.9.2000 upon the deceased
defendant (Ex. PW-1/I) whereby readiness and willingness to perform its
part of the agreement was reiterated; the deceased defendant was asked to
furnish Income Tax Clearance Certificate in Form 34-A under Section
230A(1) of the IT Act; and the deceased defendant was also requested to
take appropriate steps for concluding the sale as per the agreement.
4. It was further submitted that in August 2000, an application under the
Mental Health Act, 1987 (hereafter ‘MHA proceedings’) was moved by
defendant Nos. 1, 2 and 3 wherein the deceased defendant, inter alia, was
stated to be comatose; she briefly opened her eyes but was unable to
communicate and showed little signs of recognition; she had no control over
her bodily functions; and she was unable to comprehend or write. Other
relevant averments made in the MHA proceedings are reproduced as under:
“However, since there was no improvement by the evening of
the 2nd July, 2000, the 2nd petitioner i.e. Mr. Ranjit Mathrani
arrived in Delhi on 3.7.2000 and personally spoke to the
attending physician and was advised to move his mother to
Escorts Hospital at New Delhi, which he did. Ultimately on
4.7.2000, the said Mrs. Kalawti Mathrani was moved by the
petitioners to the Indraprastha Apollo Hospital at Mathura
Road, Sarita Vihar, New Delhi. At that hospital it was
diagnosed that the said Mrs. Kalawti Mathrani was suffering
from the ailment Herpes Simplex Encephalities, a serious
inflammation of the brain leading to mental disorder. She has
been in that hospital ever since........ That the said Mrs. Kalawti
Mathrani is possessed of property both movable and
immovable, the details of which are annexed as Annexure B. I
might be mentioned that by an Agreement to Sell dated
24.4.2000, the said Smt. Kalawati Mathrani has agreed to sell
her immovable property to M/s. Sewa International Fashion
Ltd., 5 Furniture Block, Kirti Nagar, New Delhi for a sum of
Rs.7,50,00,000/- (Rupees Seven Crores Fifty Lakhs Only). She
has also received a sum of Rs.1,12,50,000/- (Rupees One Crore
Twelve Lakhs Fifty Thousand Only) towards part payment of
the Sale consideration from vendee. A copy of the said
agreement is annexed as Annexure C.”
5. The following reliefs were sought in the said MHA proceedings:
(i) To hold an Inquisiton into the mental condition of the
aforesaid Smt. Kalawati Mathrani and for that purpose to;
(a) Issue notice to Maj. Gen. B.M.Aiyanna,
Director Medical Services, Indraprastha Apollo
Hospital, Sarita Vihar, New Delhi, to submit a
report concerning the mental state of the aforesaid
Mrs. Kalawati Mathrani, widow of Late Shri
Kewalram Pribhdas Mathrani, currently
undergoing treatment as an impatient in the
Medical ICU 2121 at the said hospital.
(b) For the purpose of the inquisition applied for, to
appoint Dr. Mukul Varma, M.D., D.M., Senior
Consultant Neurologist and Dr. G.K. Ahuja,
visiting Consultant Neurophysician at the same
hospital, or such person or persons that this
Hon‟ble Court deems fit in the facts and
circumstances of the case, to act as assessors.
(ii) On completion of the inquisition, to record a finding
under Section 51 of the Mental Health Act 1987, that the
aforesaid Smt. Kalawati Mathrani is in fact mentally ill and that
she is incapable of taking care of herself and of managing her
property.”
6. It was submitted that defendant Nos. 1, 2 and 3 had acknowledged the
agreement and had made substantial averments about it in the MHA
proceedings; they sought a declaration to the effect that the deceased
defendant would be unable to take care of her interests and consequently, for
appointment of a guardian; however, it remained pending and nothing came
about; a medical certificate dated 8th August, 2000 (Ex.P-4) from Dr. Mukul
Verma certifies that the deceased defendant was under his care with a
serious illness as a result of which she was mentally incapacitated and was
unable to manage her affairs; hence, on 26th September 2000, the plaintiff
filed an interim application (Ex. D-1) in the MHA proceedings for
appointment of a Manager to conclude the transaction and execute a sale
deed in terms of the agreement, however, the said application was objected
to by the present defendants (Ex. D-2); in the meantime, the MHA
proceedings had become infructuous because the deceased defendant passed
away during its pendency; and before her death, the suit was filed.
7. The legal notice sent by the plaintiff was replied to by defendant No.1 vide a
letter dated 21.10.2000 whereby he reiterated that complete disclosure
apropos the agreement was made in the MHA proceedings; defendant No.4
was contesting the said proceedings while challenging the agreement; and
that the plaintiff was free to take appropriate legal recourse.
8. In view of the aforesaid, the learned Senior Advocate for the plaintiff
submitted that the plaintiff’s conduct shows that it has all along been ready
and willing to perform its part of the agreement; the agreement stipulates
payment of balance sale consideration simultaneous with execution of the
sale deed; and since the deceased defendant passed away without appointing
anyone as the Manager or Executor of her estate, the only way out was to
obtain appropriate orders in the MHA proceedings.
9. In reply, Mr. Mukul Talwar and Dr. Arun Mohan, the learned Senior
Advocates appearing for defendant Nos. 1 to 3, defendant No.4 respectively
submitted that for the grant of discretionary relief under Section 16 of the
Specific Relief Act, the plaintiff has to show that it was ready and willing, at
all times, to perform its part of the contract. They submit that the plaintiff
never tendered the balance sale consideration although the same was
payable within 30 days of approval(s) being given by the appropriate
authority; the approval having been granted was intimated to the plaintiff by
a letter dated 10.08.2000; the plaintiff should have at least tendered the
amount; neither was it done prior to the expiry of the limitation period of
three years, i.e., 1.6.2004 nor till date despite a lapse of nearly 15 years;
therefore, the plaintiff’s conduct shows that it was not serious about
pursuing the matter and was not ready and willing to perform its part of the
agreement.
10.They drew the attention of the Court to a certificate dated 14.07.2009 issued
by the plaintiff’s Chartered Accountant (for short ‘CA’) which enlists the
amounts held by the plaintiff as FDRs and margin money in banks as on
31.03.2001, 31.03.2002, 31.03.2003 and 31.03.2004. According to the
learned Senior Advocates, the said certificate would not be sufficient proof
to show readiness and ability to make payments to the tune of
Rs.6,37,50,000/- since it only contains details of FDRs and margin money in
banks; it does not reflect the liabilities and other assets of the plaintiff
Company; upon cross examination of the said CA, he admitted that the
statement was trucked and did not reveal the true financial position of the
plaintiff Company; hence, the said document is wholly unreliable. The
relevant deposition of the said witness is reproduced as under:
“we have nowhere stated that the certificate states the total
financial position of the company. The only thing that we are
mentioning is that „M/s. Sewa International Fashions Limited
had the following financial details for the period mentioned
against each figure”
11.Dr. Arun Mohan, the learned Senior Advocate had taken the Court through
the records of the MHA proceedings to show the manner in which the
interim application filed by the plaintiff was pursued. A perusal of the same
would show that the plaintiff had abandoned its application on 23.04.2001
and this suit was filed in November, 2004, i.e., after more than three years.
12.The learned Senior Advocate for defendant No.4 relied upon the judgment
of a co-ordinate Bench of this Court in Ved Parkash Kharbanda v. Vimal
Bindal, (2013) 198 DLT 555 to contend that the plaintiff is not entitled to
the relief of specific performance when it itself is in breach of the
agreement, i.e., it did not pay the balance sale consideration after having
been informed of the necessary approval being granted.
13.He further relied upon an order of the Supreme Court in N. P. Thirugnanam
v. Dr. R. Jagan Mohan Rao, (1995) 5 SCC 115 which held thus:
“To adjudge whether the plaintiff is ready and willing to
perform his part of the contract, the court must take into
consideration the conduct of the plaintiff prior and subsequent
to the filing of the suit alongwith other attending circumstances.
The amount of consideration which he has to pay to the
defendant must of necessity be proved to be available. Right
from the date of the execution till date of the decree he must
prove that he is ready and has always been willing to perform
his part of the contract. As stated, the factum of his readiness
and willingness to perform his part of the contract is to be
adjudged with reference to the conduct of the party and the
attending circumstances.”
14.He further submitted that the plaintiff never tendered the amounts and relies
upon Syed Dastagir v. T. R. Gopalakrishnasetty, AIR 1999 SC 3029 to
contend that to be entitled to the discretionary relief of specific performance,
the plaintiff ought to have tendered the amounts. Insofar as the said
judgment is relevant, it reads as under:
“This does not mean that unless the court directs the plaintiff
cannot tender the amount to the defendant or deposit in the
Court. Plaintiff can always tender the amount to the defendant
or deposit it in court, towards performance of his obligation
under the contract. Such tender rather exhibits willingness of
the plaintiff to perform his part of the obligation. What is 'not
essential' only means need not do but does not mean he cannot
do so.”
15.He further relied upon the judgment of a learned Single Judge of the High
Court of Andhra Pradesh in B. R. Koteswara Rao v. C. Rameswari Bai,
(2002) 3 ALD 337 which held thus:
“20. In another case the Supreme Court has also laid down that
the readiness and willingness of the party should be evident at
every stage right from the execution of the agreement. It is in
this context that it needs to be examined as to whether the
defendant was ready and willing to perform his part of the
contract.
23. One of the circumstances to verify as to the readiness and
willingness of the party claiming specific performance is the
plea taken before the Court and the steps taken to prove his
bona fides. Normally, in addition to taking the plea as to the
readiness and willingness the parties also make deposit of the
balance of the sale consideration. Though that act by itself will
not entitle the party for the relief, it is a circumstance to be
taken into account in recording a finding on the issue.”CS(OS)
16.Dr. Arun Mohan, the learned Senior Advocate further submitted that the
unwillingness of the plaintiff to perform its part of the agreement is evident
from the fact that along with the plaint, an application for interim injunction
under Order XXXIX, Rules 1 & 2 was not filed; and an interim injunction in
its favour would mean it being directed to deposit the balance sale
consideration. He drew the attention to the cross examination of PW-1,
which to the extent relevant, reads as under:
“Q. I put it to you that the Plaintiff did not even file any
application interim injunction purposely because they were not
ready with the finds and any application for interim injunction
would have required the Plaintiff to deposit the balance sale
consideration in the Court?
A. I cannot answer whether such an application was filed by the
counsel or not as I have not got much knowledge about this. It
is incorrect to suggest however that we did not have funds to
pay the balance sale consideration.”
17. He further submitted that on .9.11.2000, the plaintiff transferred monies to
the extent of Rs. Rs.6.43 crores to its subsidiary company Teletech
Industries Pvt. Ltd., which in return purchased a property bearing Plot No.
19, Sector-18, Udyog Vihar, Gurgaon, Haryana, admeasuring 11,223.60 sq.
mts.; yet again on 06.05.2002, the plaintiff purchased a commercial plot
bearing No. 7, Shivaji Place District Centre, Raja Garden, New Delhi for a
consideration of Rs.9.35 crores; therefore, the plaintiff did not have the
requisite monies to purchase the suit property and was not able, ready and
willing to perform its part of the agreement.
18.Finally, it was argued on behalf of the defendants that since the requirement
of permission under Section 230A(1) of the IT Act in Form 34-A was done
away with w.e.f 1st June, 2001, the balance sale consideration was payable
by 30th June, 2001, i.e., within 30 days as stipulated in the agreement and
that time was the essence of the agreement.
19.However, Mr. Sapra, the learned Senior Advocate for the plaintiff submitted
that the only thing which needs to be established is whether the plaintiff was
ready and willing to perform its part of the agreement and in case there was
any delay, whether the same could be attributed to it. He submitted that in a
suit seeking specific performance of a contract, it first needs to be seen that
the requirement of readiness and willingness to perform the contract is
satisfied. In support of his contention, he relied upon a judgment of the
Supreme Court in Syed Dastagir v. T.R. Gopalakrishna Setty AIR 1999 SC
3029, wherein it was observed as under:
“8. On the other hand, learned counsel for the respondent
submits, in the absence of averment of the actual words by the
plaintiff in his pleading, i.e., ready and willing to perform his
part under the contract, which is mandatory in nature, the
plaintiff disentitles himself to any relief in view of Section 16(c).
His submission with reference to the explanation of Section
16(c) is, even if any balance amount as in the present case
Rs.120/- had been tendered by the plaintiff in Court, that
cannot be construed to comply with the provisions of the
aforesaid Section. He emphasised, the use of word except when
so directed by the Court used in the explanation (i) of the
aforesaid Section, means such payment could only be construed
to be such, if he deposit this amount only under the direction of
the court, which is not in the present case.”
20.He further relied upon Ramesh Chandra Chandiok & Anr. v. Chuni Lal
Sabharwal (Dead) by his Legal Representatives & Ors. AIR 1971 SC
1238, wherein it was observed as under:
“2. On July 18, 1955, the appellants entered into an
agreement with the respondents for the purchase of plot No.8
measuring 1500 Sq. Yds in Jangpura B, New Delhi for
Rs.22,500/-. The contract was evidenced by receipt Exhibit P-6
which was in the following terms:
"Received with thanks from Messrs. Ramesh Chander
Chandiok and Kailash Chandra Chandiok the sum of Rs.7,500/-
(Rupees Seven thousand and five hundred only) as earnest
money of the purchase money of Rs. 22,500/- (Rupees Twenty
two thousand and five hundred) for the sale of Plot No.8
measuring 1500 sq. yds in Jangpura B., purchased from the
Rehabilitation Ministry and owned by us. The balance of
Rs.15,000 (Rupees Fifteen Thousand only) shall be paid to us
by them within one month of the execution of this receipt on the
execution of the sale deed by us in their favour."
It is common ground that the aforesaid plot had been allotted
by the Rehabilitation Ministry to the respondents and that its,
possession was to be delivered after payment of rent of lease
money up-to-date and after execution of the lease deed. The
lease deed was actually executed in favour of the respondents CS(OS) 335/2005 Page 12 of 39
oil April 21, 1956. Meanwhile on August 11, 1955 the
respondents wrote a letter to the appellants as follows:
"With reference to the receipt dated 18.7.1955 execute by us in
your favour, acknowledging receipt of Rs.7,500/- as earnest
money for the sale of Plot No.8 measuring 1500 sq. yds in
Jungpura B. owned by us, and agreed to be sold to you by us,
since it will take about a month more to obtain sanction of the
Rehabilitation Ministry, the execution of the sale deed by us
cannot be complete without the said sanction, it is hereby
mutually agreed between us or orally that the period for
execution of the sale deed shall remain extended till the time of
the receipt of the said sanction and we hereby confirm the said
oral agreement. We will inform you as soon as the said
sanction is received and within a week thereof, we will execute
the necessary sale-deed in your favour and get the same
registered against payment of the balance money. Please sign
the duplicate of this letter in confirmation of the said oral
arrangement."
A notice dated June 15, 1956 was served by counsel for the
respondents on the appellants saying that the balance of
consideration according to the terms of the agreement dated
July 18, 1955 was to be paid by the appellants and the sale
deed was to be got registered within one month of July 18,
1955. It was further stated that extension had been given as
desired by the appellants but the balance amount had not been CS(OS) 335/2005 Page 13 of 39
paid. In para 3 it was stated "my clients are not prepared to
wait indefinitely and therefore cancel your agreement for want
of certainty and hereby give you an offer, without prejudice to
their legal rights, to receiver back the sum of Rs. 7,500/- paid
by you as earnest money less the amount of loss suffered by
them on account of lease and interest etc. within one week of
the, receipt of this letter, failing which my clients would be
entitled to forfeit the earnest money and treat the agreement
cancelled."
.... .... .... .... .... .... .... .... .... ....
5. The High Court found that both the respondents were
bound by the letter Exhibit P-7 dated August 11, 1955 to which
reference has already been made. It was noticed that sanction
of the Rehabilitation Ministry was required before the sale
could be, completed but it was held that there was nothing to
indicate that the absence of such a sanction invalidated the
transfer ab initio, or rendered it void. In agreement with the
trial court the High ,Court held that oven a defeasible interest
could be the subject matter of sale; in other words the sale
could be effected without the sanction having been previously
obtained. The view of the High Court was that Exhibit P-7 did
not contain any such language which would justify the
importing of a condition that until the respondents obtained
sanction for the transfer of the property the appellants were not
bound to get the sale completed. It was, also decided that the
appellants had not satisfactorily shown that they had sufficient CS(OS) 335/2005 Page 14 of 39
funds to pay the balance amount of Rs.15,000/- from which it
could be concluded that they were not ready and willing to
perform their part of the contract. Yet another point was
decided against the appellants on the basis of, certain execution
proceedings stated at the Bar to have been taken during the
pendency of the appeal. According to the High Court once the
appellants had obtained satisfaction of the decree for
Rs.7,500/- they became disentitled to a decree for specific
performance.
6. We are unable to concur with the reasoning or the
conclusions of the High Court on the above main points. It is
significant that the lease deed was not executed in favour of the
respondents by the Government until April 21, 1956. So long as
their own title was incomplete there was no question of the sale
being completed. It is also undisputed that according to the
conditions of the lease the respondents were bound to obtain
the sanction of the Rehabilitation Ministry transferring the plot
to any one else. The respondents were fully aware and
conscious, of this situaion much earlier and that is the reason
why on August 11, 1955 it was agreed while extending the
period for execution of the sale deed that the same shall be got
executed after receipt of the sanction. The statement contained
in Exhibit P-7 that the execution of the sale deed "by us cannot
be complete without the said sanction" was unqualified and
unequivocal. The respondents further undertook to inform. the
appellants as soon as sanction was received and thereafter the CS(OS) 335/2005 Page 15 of 39
sale deed had to be executed within a week and got registered
on payment of the balance amount of consideration. We are
wholly unable to understand how in the presence of Exhibit P-7
it was possible to hold that the appellants were bound to get the
sale completed even before any information was received from
the respondents about the sanction having been obtained. It is
quite obvious from the letter Exhibit P-8 dated June 15, 1956
that the respondents were having second thoughts and wanted
to wriggle out of the agreement because presumably they
wanted to transfer it for- better consideration to some one else
or to transfer it in favour of their own relation as is stated to
have been done later. The respondents never applied for any
sanction after August 11, 1955 and took up the position that
they were not prepared to wait indefinitely in the matter and
were therefore cancelling the agreement "for want of
certainty". We are completely at a loss to understand this
attitude nor has any light been thrown on the uncertainty
contemplated in the aforesaid letter. It does not appear that
there would have been any difficulty in obtaining the sanction if
the respondents had made any attempt to obtain it. This is
obvious from the fact that when they actually applied for
sanction on November 11, 1956 it was granted after a week.
The statement contained in Exhibit P-10 dated July 4, 1956 that
the sanction was not forthcoming has not been substantiated by
any cogent evidence as no document was placed on the record
to show that any attempt was made to obtain sanction prior to CS(OS) 335/2005 Page 16 of 39
November 11, 1956. Be that as it may the respondents could not
call upon the appellants to complete the sale and pay the
balance money until the undertaking given in Exhibit P-7 dated
August 11, 1955 had been fulfilled by them. The sanction was
given in November, 1956 and even then the respondents did not
inform the appellants about it so as to enable them to perform
their part of the agreement of safe. There was no question of
time having ever been made the essence of the contract by the
letters sent by the respondents nor could it be said that the
appellants had failed to perform their part of the agreement
within a reasonable time.”
21.Insofar as the other defences set up by the defendants such as (i) the
agreement was entered into when the value of the suit property was
depreciated (ii) and time was the essence of the agreement are concerned,
Mr. Sapra, the learned Senior Advocate submitted that there is no such
clause in the agreement and in the absence of any such stipulation, the same
cannot be inferred simply because of the passage of time. He relied upon the
dicta of the Supreme Court in Balasaheb Dayandeo Naik (Dead) Through
LRs & Ors. v. Appasaheb Dattatraya Pawar AIR 2008 SC 1205.
22.The learned counsel for the plaintiff submitted that clearance in Form 34A
was essential as per Clause 4 of the agreement. He drew the attention of the
Court to the cross examination of PW-1 which reads as under:
“Q. Mr. Chauhan I Put it to you that with effect from 1st June,
2001, a permission under Section 230A(1) of the Income Tax
Act in form No. 34A was not required?
A. Our agreement with Mrs. Kalawati Mathrani took place in CS(OS) 335/2005 Page 17 of 39
year 2000 in which this requirement was mentioned. If any
change in law occurred after that the same was not brought to
our notice.”
23. He also relied upon an extract from the 11th Edition of Pollock and Mulla,
Indian Contract and Specific Relief Acts, which in Volume II at Page No.
1287 reads as under:
Readiness and willingness of a person seeking performance in a
case where time is provided for performance means that the
person claiming performance has kept the contract subsisting
with preparedness to fulfil his obligations and accept
performance when the time for performance arrives. But it
does not mean that he had command of necessary money
throughout the existence of the contract. But to prove readiness
and willingness a purchaser has not necessarily to produce the
money or vouch a concluded scheme for financing the
transaction. Failure to find money or prove possession of
money before time for performance cannot entitle the vendor to
refuse performance. The plaintiff does not have to go about
jingling money to demonstrate his capacity to pay the purchase
price. Thus, even where the plaintiff had stated that she did not
have the means to pay the Court fees but did in fact pay the full
Court fees before the time for claiming specific performance
expired, the Court held that it could not be said that she was
not ready and willing to perform her obligation. Clause (1) of
Explanation of Section 16(c) clearly enacts that money need be
produced only when directed by the Court.”CS(OS) 335/2005 Page 18 of 39
24.Furthermore, he relied upon a judgment of the Privy Council reported as
AIR (37) 1950 Privy Council 90 in The Bank of India Ltd. And others v.
Jamsetji A.H. Chinoy and Messrs. Chinoy and Co., in particular para 21
whereof which reads as under:
“21. (4) What plaintiff 1 entitled to relief by way of specific
performance as ordered by the appellate Court? The matter
raised by this question have narrowed considerably during the
course of proceedings. Specific performance was sought
against the additional appellants under S. 27(b), Specific Relief
Act, 1977. As it was admitted that they took their transfers of
the shares in question with notice of the contract sued upon, the
applicability of this enactment is not in doubt. It is also the
opinion of the Board that, having regard to the nature of the
company and the limited market for its shares, damages would
not be an adequate remedy. This leaves as the matter for
decision under this head whether plaintiff 1 was ready and
willing to perform his obligations under the contract. On this
aspect of the case, the defendants, up to a point, followed two
lines of attack. In the first place they said that Jassetji had
taken no step to procure the permission of the Reserve Bank to
payment under R. 92A (2) or to acquisition under R. 93(2), and
was thus never in a position to implement the contract, and
secondly they urged that on his own showing he was financially
incapable of finding the price. The first of these contentions no
longer raises a live issue. The learned trial Judge found and at
their Lordships Bar counsel for the parties agreed, that if the CS(OS) 335/2005 Page 19 of 39
contract was made a reasonable period for its completion
would be two months, that would have made the date for
completion of 9th September, 1942. But the Dinshaws had
repudiated long before that and the course of events thereafter
produced a situation which enabled the parties consenting to
the order of 9th October, 1947, to take the steps directed thereby
without reference to the Reserve Bank. The second contention,
however, remains to be considered. The learned Trial Judge
upheld it. His views thereon were obiter for he had already
found that Jamsetji had not agreed to purchase; and for the
same reason and on account of the theory of conspiracy which
he had formed he would obviously have experienced difficulty
in holding otherwise. The appellate Court found on the
evidence that Jamsetji was ready and willing to fulfil his
financial obligation s under the sale. Their lordships agreed
with this conclusion and the grounds on which it was based. It
is true that plaintiff 1 stated that he was buying for himself, that
he had not sufficient ready money to meet the price and that no
definite arrangements had been made for finding it at the time
of repudiation. But in order to prove himself ready and willing
a purchaser has not necessarily to produce the money or to
vouch a concluded scheme for financing the transaction. The
question is one of fat and in the present case the appellate
Court had ample material on which to found the view it
reached. Their Lordships would only add in this connection
that they fully concur with Chagla A.O.J. when he says:CS(OS) 335/2005 Page 20 of 39
“in my opinion, on the evidence already on record it was
sufficient for the Court to come to the conclusion that plaintiff 1
was ready and willing to perform his part of the contract. It was
not necessary for him to work out actual figures and satisfy the
Court what specific amount a bank would have advanced on the
mortgage of his property and the pledge of these shares. I do
not think that any jury if the matter was left to the jury in
England – would have come to the conclusion that a man, in the
position in which the plaintiff was, was not ready and willing to
pay the purchase price of the shares which he had bought from
defendants 1 and 2.”
25.The learned counsel for the plaintiff submitted that it is not necessary for the
plaintiff to prove availability of funds to show it’s readiness and willingness;
in any case, the plaintiff has shown that there were sufficient funds available
by way of FDRs and other investments should the need for payment had
arisen; therefore, the defendants’ argument that monies which were due
towards the balance sale consideration were used for the purchase of other
properties is meaningless; rather, it shows the plaintiff’s financial soundness.
He relied on a sale deed dated 7.8.2001 (Ex. PW1/K) to show that half of the
purchase price of Rs.6.00 crores was paid for by the plaintiff; however, this
money was lent from the plaintiff’s sister concern; this fact has been
admitted by Mr. Subhash Chauhan, PW-1; and the second property was
purchased by the plaintiff for Rs.9.35 crore on 6.2.2002 in Delhi but this
money too was not available with the plaintiff as has been admitted by PW-
1.
26.Having heard the learned counsel for the parties and on a perusal of the CS(OS) 335/2005 Page 21 of 39
evidence, the Court is of the view that the plaintiff was not ready and willing
to perform its part of the agreement. The plaintiff was intimated by a letter
dated 10.08.2000 (Ex. PW-1/G) that the requite permission under Section
269 UL of the IT Act in Form 37-I had been received. It was also intimated
that the sale deed could be executed as soon as the deceased defendant
recovered from her illness. Pertinently, there was no mention of receiving
any clearance under Section 230A(1) of the IT Act. Hence, the plaintiff
ought to have taken steps to pay the balance sale consideration and get a sale
executed in its favour. In any event, it is not is dispute that obtaining the said
clearance had been dispensed with w.e.f. 1st June, 2001. Therefore, the
balance sale consideration became due at least on 30th June, 2001 in terms of
the agreement. Accordingly, the argument made on behalf of the plaintiff
that the change in law was not brought to its notice and that it was an
essential condition for performance of the agreement are untenable and
ought to be rejected. It is settled that a party cannot plead ignorance of law
and a party cannot be forced to perform an act which is impossible.See Section 54 of the Indian Contract Act,
27.The Court finds that instead of instituting a suit for specific performance of
the agreement, the plaintiff preferred to intervene in the MHA proceedings.
However, it abandoned its interim application on 23.04.2001. Perusal of the
orders passed in the said proceedings reveals that on at least 10 occasions,
the counsel representing the plaintiff was not present and on 6 occasions,
he/she did not press the interim application.
28.The Court also finds merit the argument of the defendants that while
instituting the suit, the plaintiff never preferred an application under Order
XXXIX, CPC since the same would have resulted in the plaintiff
paying/depositing the balance sale consideration or at least a substantial part
of it. It is settled law that the plaintiff must, at all times, be ready and willing
to pay the sale consideration to be entitled to the discretionary relief of
specific performance. Hence, the contention of the learned counsel for the
plaintiff that the plaintiff need not show availability of funds at all times for
proving readiness and willingness, is without merit and is accordingly,
rejected. Moreover, the plaintiff never tendered any amount towards
payment of balance sale consideration both before and after institution of the
suit. Therefore, as held in Koteswara Rao (supra), the plaintiff ought to
have tendered amounts towards payment of balance sale consideration to
prove its bona fides which has not been done. Furthermore, while a sale
deed apropos the suit property had not been executed, the plaintiff
admittedly purchased two properties, one in Gurgaon, Haryana and the other
in Raja Garden, New Delhi; that too in 2001 and 2002, i.e., within two years
of the agreement being entered into. Where the monies which could have
been expended for purchase the suit property is otherwise utilized, an
adverse inference shall be drawn against the plaintiff. Right from the day the
agreement to sell is entered into, the plaintiff must show that it is ready and
capable of performing its part of the contract. Its conduct, prior to and after
institution of the suit necessarily needs to considered keeping in mind the
attending circumstances.
29.The Court would also note that no cogent evidence has been led by the
plaintiff to prove that it had sufficient monies to pay the balance sale
consideration. Insofar as reliance on the certificate issued by the CA is
concerned, the Court is of the view that the said document is wholly
unreliable since it only enlists the FDRs and margin money held by the CS(OS) 335/2005 Page 23 of 39
plaintiff in banks. Furthermore, the CA categorically deposed that the said
certificate does not disclose the true and correct financial position of the
company. The Court would also note that PW-1 was repeatedly asked why
FDRs held by the plaintiff were not produced. However, he gave evasive
answers. The relevant depositions are reproduced as under:
“Q. Can you give details to the Court about the money which
was available with the Plaintiff before issuance of legal notice
dated 19.09.2000 (Exhibit PW-1/I) i.e. from the date of
agreement Exhibit P-1 to the date of issuance of the said legal
notice?
A. I have already filed the copies of the record made available
duly certified by the CA and certified copies of the documents of
purchase of properties. Volunteered- we had arrangements for
the money as we had stocks, duty draw back and advances from
the buyers to meet the purchase price of the property and this is
why we had issued the legal notice.
Q. Can you give details of these FDRs?
A. I will furnish whatever details are available with us.
Q. Have you brought the details of FDRs of your Company?
A. I have already filed the certificates etc. by the Auditors.
Q. I put it to you that you are deliberately not giving the details
of money in the Bank account of your Company from 19.9.2000
to 8.10.2000 because the details would show that your
Company did not have sufficient amount in the Bank for
purchasing the suit property.
A. We have already provided the certificate from the C.A. as CS(OS) 335/2005 Page 24 of 39
also the balance sheets to prove that we had the necessary
funds.”
30.In view of the above discussion, the Court is of the view that the plaintiff
was not ready, willing and able to perform its obligations under the
agreement. This issue is returned in favour of the defendants and against the
plaintiff.
Issue No. (ii) Whether late Smt. Kalawati Mathrani suffered from any
mental infirmity making her incapable of entering into the Agreement to
Sell dated 24.04.2000? OPD
31.Mr. Sapra, the learned Senior Advocate for the plaintiff submitted that the
Written Statement (for short WS) has been filed by the attorney of defendant
Nos.1 to 3 and he has also deposed on behalf of the said defendants; an
attorney cannot depose for his principal on issues of which he has no
personal knowledge; and this issue stands settled in view of the dicta of the
Supreme Court in Janki Vashdeo Bhojwani & Anr. v. Indusind Bank Ltd.
& Ors., AIR 2005 SC 439. He relies upon paras 20, 21, 24, 28 & 29 of the
said judgement, which read as under:
“20. However, in the case of Humberto Luis & Anr. Vs.
Floriano Armando Luis & Anr. reported in 2002 (2)
Bom.C.R.754 on which the reliance has been placed by the
Tribunal in the present case, the High Court took a dissenting
view and held that the provisions contained in order III Rule 2
of CPC cannot be construed to disentitle the power of attorney
holder to depose on behalf of his principal. The High Court
further held that the word "act" appearing in order III Rule 2 of
CPC takes within its sweep "depose". We are unable to agree
with this view taken by the Bombay High Court in Floriano
Armando (supra).
21. We hold that the view taken by the Rajasthan High Court
in the case of Shambhu Dutt Shastri (supra) followed and
reiterated in the case of Ram Prasad (supra) is the correct
view. The view taken in the case of Floriano Armando Luis
(supra) cannot be said to have laid down a correct law and is
accordingly overruled. In the view that we have taken we hold
that the appellants have failed to discharge the burden that they
have contributed towards the purchase of property at 38,
Koregaon Park, Pune from any independent source of income
and failed to prove that they were co- owners of the property at
38, Koregaon Park, Pune. This being the core question, on this
score alone, the appeal is liable to be dismissed.
32.In view of the above, it was argued that the defendants’ attorney could not
have deposed apropos the mental incapacity of the deceased defendant in
entering into the agreement since he had no personal knowledge about the
same; on the contrary, the letter dated 8.8.2000 as well as paragraph 14 of
the application filed by defendant Nos.1 to 3 in the MHA proceedings quite
clearly admit to the agreement; indeed, they sought appointment of a
guardian since she was not in a position to take care of her interests. Finally,
Mr. Sapra submitted that since the agreement was always admitted by
defendant Nos. 1 to 3, the plea regarding competence of the deceased
defendant in entering into the agreement is only an afterthought and ought to
be rejected.
33.It appears that this issue was framed since the defendants have
contested/challenged the competence/capacity of the deceased defendant in
entering into the agreement. However, it is noted that no cogent evidence
has been led by the defendants. In fact, defendant Nos. 1 to 3 had all along
been acknowledging the agreement and further, that the deceased defendant
would execute a sale deed once she recovers from her illness. No challenge
was ever made apropos the deceased defendant’s competence/capacity to
enter into the agreement due to any mental infirmity.
34.Insofar as defendant No.4 is concerned, it would be pertinent to refer to her
evidence. In paragraph 10 thereof, she deposes that the deceased defendant
was bedridden due to a fracture of her right femur and that she was not able
to walk on her own. There is only a vague reference to her mental incapacity
in entering into the agreement. In the absence of any cogent evidence on
record, it is to be held that the defendants have not discharged their burden
to prove this issue.
35.The Court also finds merit in the submission advanced by Mr. Sapra that the
attorney of defendant Nos. 1 to 3 could not have deposed to this effect since
he had no personal knowledge of the same. The Supreme Court in Janki
Vashdeo (supra) while affirming the dicta of the Rajasthan High Court held
thus:
“On the question of power of attorney, the High Courts have
divergent views. In the case of Shambhu Dutt Shastri v. State
of Rajasthan, 1986 2 WLL 713it was held that a general power
of attorney holder can appear, plead and act on behalf of the
party but he cannot become a witness on behalf of the party. He
can only appear in his own capacity. No one can delegate the
power to appear in witness box on behalf of himself. To appear
in a witness box is altogether a different act. A general power
of attorney holder cannot be allowed to appear as a witness on
behalf of the plaintiff in the capacity of the plaintiff.”
36.In view of the discussion hereinabove, this issue is accordingly, returned in
favour of the plaintiff and against the defendants.
(iii) Whether the suit is barred by time? OPD
37.It was argued on behalf of the defendants that the suit is barred by limitation.
According to them, the period of limitation at best would commence from
30th June, 2001 i.e., after 30 days after the day whence approval in Form
34A was no longer required; and three years as prescribed under Article 54
of the Schedule to the Limitation Act, 1963 expired on 30th June, 2004.
However, according to the learned Senior Advocate for plaintiff, this
argument is untenable because the plaintiff’s interim application in the
MHA proceedings seeking appointment of a Manager was pending; the
balance consideration could not be paid since the deceased defendant was
certified to be incapacitated by the Doctor concerned; defendant Nos. 1 to 3
themselves admitted to the agreement in the MHA proceedings; and the
balance sale consideration could not have been paid till the time of
execution of the sale deed.
38.It was further submitted on behalf of the plaintiff that there was no fixed
date for execution of the sale deed; it was contingent upon receiving
clearances under Form 37I and Form 34 A from the Income Tax
Department; once clearance under Form 34A had become redundant as of 1st
June, 2001, the plaintiff should have been called upon to pay the balance
sale consideration; however, the deceased defendant had become
incapacitated; hence, the occasion for payment of balance consideration
never arose; at no point of time, was performance of the agreement refused,
either by the deceased defendant or defendant Nos. 1, 2 and 3; therefore, the
suit is within the period of limitation. The learned Senior Advocate relied
upon Article 54 of the Schedule to the Limitation Act, 1963 which reads as
under:CS(OS) 335/2005 Page 28 of 39
“The date fixed for the performance, or, if no such date is fixed,
when the plaintiff has notice that performance is refused”.
39.In support of his contentions, he relied upon the dicta of the Supreme Court
in Ahmmadsahab Abdul Mulla (deceased by LRs) v. Bibijan & Ors. AIR
2009 SC 2193 which held inter alia as under:
“7. The inevitable conclusion is that the expression „date
fixed for the performance‟ is a crystallized notion. This is clear
from the fact that the second part "time from which period
begins to run" refers to a case where no such date is fixed. To
put it differently, when date is fixed it means that there is a
definite date fixed for doing a particular act. Even in the second
part the stress is on `when the plaintiff has notice that
performance is refused'. Here again, there is a definite point of
time, when the plaintiff notices the refusal. In that sense both
the parts refer to definite dates. So, there is no question of
finding out an intention from other circumstances. Whether the
date was fixed or not the plaintiff had notice that performance
is refused and the date thereof are to be established with
reference to materials and evidence to be brought on record.
The expression `date' used in Article 54 of the Schedule to the
Act definitely is suggestive of a specified date in the calendar.
We answer the reference accordingly. The matter shall now be
placed before the Division Bench for deciding the issue on
merits.”
40.Dr. Arun Mohan, the learned Senior Advocate for defendant No.4 submitted
that the legal notice dated 19.09.2000 issued by the plaintiff required the
deceased defendant to adhere to the terms of the agreement and
consequently, execute a sale deed within two weeks therefrom; it was also
stated that the plaintiff would take action for specific performance if the
notice was not complied with; however, no steps to file a suit was taken by
the plaintiff. He draws the attention of the Court to the cross examination of CS(OS) 335/2005 Page 29 of 39
PW-1 which reads as under:
“Q. Is it correct that Mrs. Kalawati Mathrani did not comply
with your legal notice dated 19.9.2000 (Exhibit PW-1/I)
(The witness is shown the notice from the court file)
A. It is correct that she did not comply.
Q. Is it correct that despite your legal notice dated 19.9.2000
(Exhibit PW-1/I) whereby you informed the recipients that you
would take action for specific performance of the Agreement
(Exhibit P-1) after the expiry of notice period, you did not
institute any litigation for specific performance till filing of the
present suit?
A. It is correct that we did not immediately file any suit.
Volunteered- as no decision could be taken because proceedings
were pending in the MHA court, therefore, we did not file the
suit immediately and we thereafter file the present suit.”
41.Dr. Arun Mohan would further submit that at the first instance, the period of
limitation commenced from 09.09.2000, i.e., after 30 days of
communication about receipt of permission from Appropriate Authority;
secondly, the period of limitation commenced from 4/10.10.2000, i.e., after
14 days of issuance/receipt of legal notice. He submits that admittedly, no
reply was sent by the deceased defendant, therefore, it amounts to refusal;
hence, the second part of Article 54 of the Schedule to the Limitation Act,
1963 would be applicable. According to him, the plaintiff’s argument that
the deceased defendant had been mentally incapacitated and hence, the
period of limitation would not commence till she recovered or died and her
LRs were brought on record, would be an incorrect reading of Section 6 of CS(OS) 335/2005 Page 30 of 39
the Limitation Act. In support of his contentions, he relied upon a judgment
of the Rajasthan High Court in Smt. Kanchan Prasad v. Khetidas, 1990 (5)
Civil CC (RAJASTHAN), which held thus:
“I may here state that a refusal of performance of a contract of
sale need not be in writing or expressed in so many words.
Refusal can always be inferred from circumstances of the
case.”
42.He further relied upon Laxmi Prasad v. Seth Ramdayal Jat, (2008) 2
MPLJ 166 wherein the Madhya Pradesh High Court held as under:
“The notice (Ex.P-1) was sent on 12.5.98 and the same was
received by the Defendant on 14.5.98 as per plaint para 3 and
because no reply was sent by Defendant it would amount to
refusal.”
43.He then relied upon a judgment of the Andhra Pradesh High Court in Kota
Sivaram Prasad v. Nagandla Veera Brahmam and others, (2012) 3 ALT 5
which to the extant relevant, reads as under:
“Even if the 1st respondent can be said to have, indeed,
demanded Venkateswarlu to execute sale deed after expiry of
three years, suit ought to have been filed within three years
from the date of inaction on the part of Venkateswarlu. It is not
necessary that refusal must be specific or in any particular
form. If a demand was made and nothing positive is
forthcoming, refusal can be implied.” ` ,
44.Lastly, he relied upon Wasim Ahmad v. Haji Shamsuddin, (2012) 3 ADJ
187, wherein the Allahabad High Court held thus:
“If twice or thrice executant of agreement for sale on being CS(OS) 335/2005 Page 31 of 39
asked to execute the sale-deed defers the execution on one
pretext or other, it amounts to refusal.”
45.Mr. Mukul Talwar, the learned Senior Advocate for defendant Nos. 1 to 3
supported the arguments advanced by Dr. Mohan. Additionally, he
submitted that the suit was filed on 10.11.2004; it remained pending under
objections for a very long time; the objections were removed and the case
was numbered on 15.03.2005; an application bearing I.A. No. 1967/2005
was moved seeking condonation of delay in refilling the plaint but only a
vague reason was given, i.e., the plaintiff was out of station. Therefore, he
submitted that even the application itself was not specific as to how many
days of delay were to be condoned.
46.It was also submitted on behalf of the defendants that instead of filing a suit
for specific performance, the plaintiff preferred to file an application for
appointment of a Manager for concluding the sale in the MHA proceedings;
the said application was not pursued bonafidely and was later abandoned;
and therefore, the said period cannot be excluded for the purposes of
limitation.
47.In rebuttal, Mr. Anil Sapra, the learned Senior Advocate for the plaintiff
submits that the defendants’ arguments are a total misconstruction of the
agreement inasmuch as the balance sale consideration of Rs.6,37,50,000/-
was payable within 30 days of communication of the approval by the
authority. He further submitted that most importantly, Clause 5 of the
agreement provides that the balance sale consideration shall be paid
simultaneously at the time of execution of a sale deed. It is reproduced as
under:
“That the vendor shall execute the sale deed of the said CS(OS) 335/2005 Page 32 of 39
property viz. GPA, Will Codicil etc. In favour of the Vendee or
its nominee(s) simultaneously at the time of receiving the full
and final sale consideration by the Vendor from the Vendee.
The Vendor shall execute an Indemnity Bond satisfactory to the
Vendor to keep the Vendor indemnified as a precondition to the
Vendor being required to execute a GPA and Will Codicil”.
48.It is submitted that in the interim, the plaintiff was informed by defendant
No.1 that the deceased defendant had become seriously ill and was not in
position to execute the sale deed. The letter dated 10th August, 2000
(Ex.PW1/G) reads as under:
“This is to apprise you that we have received permission from
Appropriate Authority under Section 269 UC in Form 37, with
regard to proceed further in respect of the sale agreement
executed by our mother against property bearing No.16, Poorvi
Marg, Vasant Vihar, New Delhi.
Our Mother is seriously ill and confined to bed due to
indisposition in Apollo Hospital, Delhi.
We request you to bear with us till she is in a position to
execute the necessary documents, in favour of you.(emphasis
supplied)”
49.Mr. Sapra submits that a reply to the aforesaid letter was promptly sent by
the plaintiff by a letter of 25th August stating that it was eager to complete
the transaction as early as possible and make the balance payment which
was lying ready with it; it also showed its eagerness to know about the
recovery of the deceased defendant so that the necessary formalities could
be completed. The letter dated 25th August, 2000 reads as under:CS(OS) 335/2005 Page 33 of 39
“To
Smt Kalawati Marthani
C/o Sh. Ranjit Marthani
16, Poorvi Marg, Vasant Vihar,
New Delhi.
Dear Madam/Sir,
We are in receipt of your letter dated 10/8/2000, with
regard to sale of property No. 16, Poorvi Marg, Vasant Vihar,
New Delhi, we are sorry to learn regarding hte illness of your
mother (Smt. Kalawati Marthani) and wish her an earliest
recovery.
We also understand that the permission under 37(I) from
appropriate authority has been received by you.
We would like to complete the transaction as early as
possible and make the balance payment which is lying ready
with us. Kindly inform us as soon as she recover, so that we
can complete the formalities.
Thanking you,
For Sewa International Fashions (P) Ltd.”
50.He further submitted that there were inter se disputes between the
defendants, i.e., the children of the deceased defendant and hence, there was
no substantial progress in the MHA proceedings; perhaps because of their
inter se disputes, the defendants did not pursue the MHA proceedingsCS(OS) 335/2005 Page 34 of 39
diligently which ultimately become infructuous upon the demise of the
deceased defendant. He further submitted that the application field by the
plaintiff was never abandoned but just that there was lack of progress in the
MHA proceedings.
51.In view of the above, Mr. Sapra submitted that quite clearly, the plaintiff
was not called upon to pay the balance sale consideration since the deceased
defendant was not in a position to execute the sale deed. He further
submitted that limitation begins to start from the date so specified in the
agreement or from the date when a party refuses to perform its part of the
contract; in terms of Article 54 of the Schedule to the Limitation Act, 1963,
time was to start running from the date when the plaintiff would have notice
of refusal apropos performance of the agreement; the plaintiff had filed an
application in the MHA proceedings seeking appointment of a Manager due
to the mental incapacity of the deceased defendant; in fact, the MHA
proceedings to the same effect had been filed by defendant Nos. 1 to 3 in
which they had stated that their mother was not in a position to take care of
her interests and therefore, for executing a sale deed under the agreement, a
guardian need to be appointed. Therefore, he submitted that till the time the
application was decided, there was no refusal either by the deceased
defendant or any of her successors.
52.Section 3 of the Limitation Act places an obligation on Courts to examine
whether the suit was filed within the period of limitation as stipulated under
the Act. However, it is subject to the other provisions contained therein, i.e.,
Sections 4 to 24. If the averments in the plaint indicate that the suit was filed
beyond the stipulated period of limitation, the suit must be held to be not
maintainable or in other words, barred by limitation. CS(OS) 335/2005 Page 35 of 39
53.From a reading of the plaint, it is evident that the suit was not filed within
three years from the three crucial dates as aforementioned, i.e. (i)
09.09.2000 or (ii) 4/10.10.2000 or (iii) 30.06.2000. Hence, the plea of the
plaintiff that (i) it was pursuing the MHA proceedings; (ii) there was never
any refusal from the deceased defendant or her heirs needs; and (iii) till such
time the MHA proceedings were decided, limitation would not commence,
cannot be considered and are otherwise not tenable.
54.Perusal of the legal notice dated 19.09.2000 (PW-1/I) reveals that the
plaintiff was aggrieved since considerable time had elapsed and a sale deed
had not been executed thus far. It was made clear that if the needful was not
done within two weeks therefrom, the plaintiff would be constrained to seek
specific performance of the agreement. The relevant part of the notice is
reproduced as under:
“Since the considerable has elapsed and you have not yet taken
steps to register the sale deed after obtaining the above said
Income Tax Clearance Certificate, I call upon you to do the
needful immediately but not later than 2 weeks from the receipt
of this notice, failing which my clients shall be constrained to
seek specific performance of the said agreement for sale in a
court of law as also claim damages, entirely at your risk and
cost.”
55.It is not in dispute that the legal notice was not replied to by the deceased
defendant. It is also not in dispute that the plaintiff took no steps to file a
suit. Accordingly, in view of the dicta in Laxmi Prasad, Kota Sivaram
Prasad and Wasim Ahmad (supra), the Court is of the view that the action
of the defendant in not replying to the legal notice would amount to refusal.
Therefore, according to the second part of Article 54 of the Schedule to the
Limitation Act, the limitation period commenced from 4/10.10.2000, i.e.,
after expiry of 14 days of the issuance/receipt of the said legal notice. In any
event, the limitation period commenced from 30.06.2001 when the
requirement of clearance in Form 34A was dispensed with. Although Clause
4 of the agreement would have then required the deceased defendant to
obtain clearance in Form 34A, the change in law w.e.f. 01.06.2001 has since
removed this requirement. Hence, the said clause had become void in view
of Section 54 of the Indian Contract Act, 1872.
56.Insofar as the contention that the plaintiff was pursuing the MHA
proceedings and hence, the limitation period would not commence till the
same was finally adjudicated is concerned, the argument on the face of it is
entirely untenable. It is evident on a perusal of the orders passed in the said
proceedings that from the years 2001 to 2005, there was no effective
representation by the plaintiff. It also reveals that on at least 10 occasions,
the counsel representing the plaintiff was not present and on 6 occasions,
he/she did not press the interim application. It is not even the case of the
plaintiff that it is entitled to exclusion of time under Section 14 of the
Limitation Act, 1963 for having proceeded in a Court without jurisdiction.
57.In view the above discussion, the Court is of the view that the suit has not
been filed within the period of limitation and is barred under Section 3 of the
Limitation Act, 1963.
Issue No. (iv) Whether the plaintiff is entitled to specific performance of
the Agreement to Sell dated 24.04.2000? OPP
58.In view of the findings arrived at under issue Nos. (i) and (iii), this issue is
returned in favour of the defendants and against the plaintiff.
Issue No. (v) If Issue No. (iv) is answered against the plaintiff, whether
the plaintiff is entitled to any alternative relief for damages? OPP
59.At the outset, it would be apposite to refer to judgment of the Supreme Court
in Banarsi & Ors. v. Ramphal, (2003) 9 SCC 606, which to the extent
relevant, reads as under:
“In a suit seeking specific performance of an agreement to sell
governed by the provisions of the Specific Relief Act, 1963 the
court has a discretion to decree specific performance of the
agreement. The plaintiff may also claim compensation under
Section 21 or any other relief to which he may be entitled
including the refund of money or deposit paid or made by him
in case his claim for specific performance is refused. No
compensation or any other relief including the relief of refund
shall be granted by the court unless it has been specifically
claimed in the plaint by the plaintiff.”
60.Perusal of the plaint reveals that the plaintiff has not sought any
compensation/damages in terms of Section 21 of the Specific Relief Act,
1963. Consequently, no evidence qua the same has been led. It is not even
the case of the plaintiff that the deceased defendant or the defendants have
breached the agreement which has resulted in the plaintiff suffering any
injury for which it is entitled to claim compensation/damages. In the
circumstances, this issue is returned in favour of the defendants and against
the plaintiff.
(vi) Relief
61.At the time of final arguments, Dr. Arun Mohan, the learned Senior
Advocate submitted that with prejudice to the defendants’ rights and
contentions, and with the intent of settling the matter, the plaintiff could be
repaid the earnest money along with interest @ 12% per annum till date,
totalling to Rs. 3.15 crores.
62.The Court would note that the plaintiff has not specifically sought refund of
earnest money as provided under Section 22(2) of the Specific Relief Act,
1963. However, proviso to the said provision obligates the Court, at any
stage of the proceeding, to allow the plaintiff to amend the plaint so as to
include such relief. Perusal of the record shows that the plaintiff has not
been allowed to amend the plaint and at this stage, when final arguments
have been heard, it would not be in the fitness of things to allow the plaintiff
to amend the plaint so as to include the relief of refund of earnest money.
63.In view of the fact that (i) the plaintiff has not been allowed to amend the
plaintiff; (ii) the suit being barred by time; (iii) the plaintiff was not ready
and willing to perform its part of the agreement; but (iv) an offer to refund
the earnest money has been made by Dr. Arun Mohan; accordingly the
interest of justice would persuade the Court to direct that the plaintiff be
refunded the earnest money of Rs.1.125 crores along with interest @ 12%
per annum.
64.In conclusion, the Court holds:
1. The suit is barred by limitation;
2. Even otherwise, the plaintiff has not shown that it was ready and
willing to perform its part of the agreement;
3. The plaintiff is not entitled to the relief of specific performance of the
agreement;
4. However, lest the plaintiff be rendered remediless, it would be in the
interest of justice that the plaintiff shall be refunded the earnest
money of Rs.1.125 crores along with interest @ 12% per annum from
the date it was paid till realisation of the same.
65.Let the decree sheet be drawn up accordingly.
NAJMI WAZIRI, J
SEPTEMBER 01, 2015
Date of decision: 01.09.2015
CS(OS) 335/2005
SEWA INTERNATIONAL
versus
KALAWATI MATHRANI & ORS.
CORAM:
HON'BLE MR. JUSTICE NAJMI WAZIRI
Citation;AIR 2016 (NOC)163 Delhi
1. This suit seeks specific performance of an agreement to sell dated
24.04.2000 (hereafter ‘agreement’) in respect of property bearing No. 16,
Poorvi Marg, Vasant Vihar, New Delhi-110057 (for short ‘suit property’),
admeasuring 1219 sq. yds. It is not in dispute that Rs.1.125 crores, i.e., 15%
out of the total sale consideration of Rs. 7.50 crores stands paid.
2. Although the suit was instituted against one Mrs. Kalawati Mathrani
(hereafter ‘deceased defendant’), she passed away on 25.08.2005. Hence,
her Legal Representatives (for short LRs) namely Mr. Ranjit Mathrani, Mr.
Nirmal Mathrani, Ms. Aparna Choudhary and Ms. Sheila Mathrani were
brought on record and impleaded as defendant Nos.1 to 4. Issues were
framed on 08.10.2007.
Issue wise contentions and findings
Issue No. (i): Whether the plaintiff was ready, willing and able to perform
its obligations under the Agreement to Sell dated 24.04.2000? OPP
3. Mr. Anil Sapra, the learned Senior Advocate appearing for the plaintiff drew
the attention of the Court to a letter dated 10.08.2000 (Ex. PW-1/G) whereby
the deceased defendant’s son (defendant No.1) intimated the plaintiff that
one of the two requisite permissions, i.e., under Section 269 UC of the
Income Tax Act, 1961 (for short ‘IT Act’) in Form 37-I had been obtained.
The deceased defendant was stated to be ill and hospitalised and further, that
she would execute the necessary documents the moment she recoups from
her illness. He submitted that the said letter was responded to by a letter
dated 25.08.2000 (Ex. PW-1/H) whereby the plaintiff showed its eagerness
to complete the formalities apropos sale of the suit property as soon as
possible. He further submitted that no progress being had been made, hence,
the plaintiff served a legal notice dated 19.9.2000 upon the deceased
defendant (Ex. PW-1/I) whereby readiness and willingness to perform its
part of the agreement was reiterated; the deceased defendant was asked to
furnish Income Tax Clearance Certificate in Form 34-A under Section
230A(1) of the IT Act; and the deceased defendant was also requested to
take appropriate steps for concluding the sale as per the agreement.
4. It was further submitted that in August 2000, an application under the
Mental Health Act, 1987 (hereafter ‘MHA proceedings’) was moved by
defendant Nos. 1, 2 and 3 wherein the deceased defendant, inter alia, was
stated to be comatose; she briefly opened her eyes but was unable to
communicate and showed little signs of recognition; she had no control over
her bodily functions; and she was unable to comprehend or write. Other
relevant averments made in the MHA proceedings are reproduced as under:
“However, since there was no improvement by the evening of
the 2nd July, 2000, the 2nd petitioner i.e. Mr. Ranjit Mathrani
arrived in Delhi on 3.7.2000 and personally spoke to the
attending physician and was advised to move his mother to
Escorts Hospital at New Delhi, which he did. Ultimately on
4.7.2000, the said Mrs. Kalawti Mathrani was moved by the
petitioners to the Indraprastha Apollo Hospital at Mathura
Road, Sarita Vihar, New Delhi. At that hospital it was
diagnosed that the said Mrs. Kalawti Mathrani was suffering
from the ailment Herpes Simplex Encephalities, a serious
inflammation of the brain leading to mental disorder. She has
been in that hospital ever since........ That the said Mrs. Kalawti
Mathrani is possessed of property both movable and
immovable, the details of which are annexed as Annexure B. I
might be mentioned that by an Agreement to Sell dated
24.4.2000, the said Smt. Kalawati Mathrani has agreed to sell
her immovable property to M/s. Sewa International Fashion
Ltd., 5 Furniture Block, Kirti Nagar, New Delhi for a sum of
Rs.7,50,00,000/- (Rupees Seven Crores Fifty Lakhs Only). She
has also received a sum of Rs.1,12,50,000/- (Rupees One Crore
Twelve Lakhs Fifty Thousand Only) towards part payment of
the Sale consideration from vendee. A copy of the said
agreement is annexed as Annexure C.”
5. The following reliefs were sought in the said MHA proceedings:
(i) To hold an Inquisiton into the mental condition of the
aforesaid Smt. Kalawati Mathrani and for that purpose to;
(a) Issue notice to Maj. Gen. B.M.Aiyanna,
Director Medical Services, Indraprastha Apollo
Hospital, Sarita Vihar, New Delhi, to submit a
report concerning the mental state of the aforesaid
Mrs. Kalawati Mathrani, widow of Late Shri
Kewalram Pribhdas Mathrani, currently
undergoing treatment as an impatient in the
Medical ICU 2121 at the said hospital.
(b) For the purpose of the inquisition applied for, to
appoint Dr. Mukul Varma, M.D., D.M., Senior
Consultant Neurologist and Dr. G.K. Ahuja,
visiting Consultant Neurophysician at the same
hospital, or such person or persons that this
Hon‟ble Court deems fit in the facts and
circumstances of the case, to act as assessors.
(ii) On completion of the inquisition, to record a finding
under Section 51 of the Mental Health Act 1987, that the
aforesaid Smt. Kalawati Mathrani is in fact mentally ill and that
she is incapable of taking care of herself and of managing her
property.”
6. It was submitted that defendant Nos. 1, 2 and 3 had acknowledged the
agreement and had made substantial averments about it in the MHA
proceedings; they sought a declaration to the effect that the deceased
defendant would be unable to take care of her interests and consequently, for
appointment of a guardian; however, it remained pending and nothing came
about; a medical certificate dated 8th August, 2000 (Ex.P-4) from Dr. Mukul
Verma certifies that the deceased defendant was under his care with a
serious illness as a result of which she was mentally incapacitated and was
unable to manage her affairs; hence, on 26th September 2000, the plaintiff
filed an interim application (Ex. D-1) in the MHA proceedings for
appointment of a Manager to conclude the transaction and execute a sale
deed in terms of the agreement, however, the said application was objected
to by the present defendants (Ex. D-2); in the meantime, the MHA
proceedings had become infructuous because the deceased defendant passed
away during its pendency; and before her death, the suit was filed.
7. The legal notice sent by the plaintiff was replied to by defendant No.1 vide a
letter dated 21.10.2000 whereby he reiterated that complete disclosure
apropos the agreement was made in the MHA proceedings; defendant No.4
was contesting the said proceedings while challenging the agreement; and
that the plaintiff was free to take appropriate legal recourse.
8. In view of the aforesaid, the learned Senior Advocate for the plaintiff
submitted that the plaintiff’s conduct shows that it has all along been ready
and willing to perform its part of the agreement; the agreement stipulates
payment of balance sale consideration simultaneous with execution of the
sale deed; and since the deceased defendant passed away without appointing
anyone as the Manager or Executor of her estate, the only way out was to
obtain appropriate orders in the MHA proceedings.
9. In reply, Mr. Mukul Talwar and Dr. Arun Mohan, the learned Senior
Advocates appearing for defendant Nos. 1 to 3, defendant No.4 respectively
submitted that for the grant of discretionary relief under Section 16 of the
Specific Relief Act, the plaintiff has to show that it was ready and willing, at
all times, to perform its part of the contract. They submit that the plaintiff
never tendered the balance sale consideration although the same was
payable within 30 days of approval(s) being given by the appropriate
authority; the approval having been granted was intimated to the plaintiff by
a letter dated 10.08.2000; the plaintiff should have at least tendered the
amount; neither was it done prior to the expiry of the limitation period of
three years, i.e., 1.6.2004 nor till date despite a lapse of nearly 15 years;
therefore, the plaintiff’s conduct shows that it was not serious about
pursuing the matter and was not ready and willing to perform its part of the
agreement.
10.They drew the attention of the Court to a certificate dated 14.07.2009 issued
by the plaintiff’s Chartered Accountant (for short ‘CA’) which enlists the
amounts held by the plaintiff as FDRs and margin money in banks as on
31.03.2001, 31.03.2002, 31.03.2003 and 31.03.2004. According to the
learned Senior Advocates, the said certificate would not be sufficient proof
to show readiness and ability to make payments to the tune of
Rs.6,37,50,000/- since it only contains details of FDRs and margin money in
banks; it does not reflect the liabilities and other assets of the plaintiff
Company; upon cross examination of the said CA, he admitted that the
statement was trucked and did not reveal the true financial position of the
plaintiff Company; hence, the said document is wholly unreliable. The
relevant deposition of the said witness is reproduced as under:
“we have nowhere stated that the certificate states the total
financial position of the company. The only thing that we are
mentioning is that „M/s. Sewa International Fashions Limited
had the following financial details for the period mentioned
against each figure”
11.Dr. Arun Mohan, the learned Senior Advocate had taken the Court through
the records of the MHA proceedings to show the manner in which the
interim application filed by the plaintiff was pursued. A perusal of the same
would show that the plaintiff had abandoned its application on 23.04.2001
and this suit was filed in November, 2004, i.e., after more than three years.
12.The learned Senior Advocate for defendant No.4 relied upon the judgment
of a co-ordinate Bench of this Court in Ved Parkash Kharbanda v. Vimal
Bindal, (2013) 198 DLT 555 to contend that the plaintiff is not entitled to
the relief of specific performance when it itself is in breach of the
agreement, i.e., it did not pay the balance sale consideration after having
been informed of the necessary approval being granted.
13.He further relied upon an order of the Supreme Court in N. P. Thirugnanam
v. Dr. R. Jagan Mohan Rao, (1995) 5 SCC 115 which held thus:
“To adjudge whether the plaintiff is ready and willing to
perform his part of the contract, the court must take into
consideration the conduct of the plaintiff prior and subsequent
to the filing of the suit alongwith other attending circumstances.
The amount of consideration which he has to pay to the
defendant must of necessity be proved to be available. Right
from the date of the execution till date of the decree he must
prove that he is ready and has always been willing to perform
his part of the contract. As stated, the factum of his readiness
and willingness to perform his part of the contract is to be
adjudged with reference to the conduct of the party and the
attending circumstances.”
14.He further submitted that the plaintiff never tendered the amounts and relies
upon Syed Dastagir v. T. R. Gopalakrishnasetty, AIR 1999 SC 3029 to
contend that to be entitled to the discretionary relief of specific performance,
the plaintiff ought to have tendered the amounts. Insofar as the said
judgment is relevant, it reads as under:
“This does not mean that unless the court directs the plaintiff
cannot tender the amount to the defendant or deposit in the
Court. Plaintiff can always tender the amount to the defendant
or deposit it in court, towards performance of his obligation
under the contract. Such tender rather exhibits willingness of
the plaintiff to perform his part of the obligation. What is 'not
essential' only means need not do but does not mean he cannot
do so.”
15.He further relied upon the judgment of a learned Single Judge of the High
Court of Andhra Pradesh in B. R. Koteswara Rao v. C. Rameswari Bai,
(2002) 3 ALD 337 which held thus:
“20. In another case the Supreme Court has also laid down that
the readiness and willingness of the party should be evident at
every stage right from the execution of the agreement. It is in
this context that it needs to be examined as to whether the
defendant was ready and willing to perform his part of the
contract.
23. One of the circumstances to verify as to the readiness and
willingness of the party claiming specific performance is the
plea taken before the Court and the steps taken to prove his
bona fides. Normally, in addition to taking the plea as to the
readiness and willingness the parties also make deposit of the
balance of the sale consideration. Though that act by itself will
not entitle the party for the relief, it is a circumstance to be
taken into account in recording a finding on the issue.”CS(OS)
16.Dr. Arun Mohan, the learned Senior Advocate further submitted that the
unwillingness of the plaintiff to perform its part of the agreement is evident
from the fact that along with the plaint, an application for interim injunction
under Order XXXIX, Rules 1 & 2 was not filed; and an interim injunction in
its favour would mean it being directed to deposit the balance sale
consideration. He drew the attention to the cross examination of PW-1,
which to the extent relevant, reads as under:
“Q. I put it to you that the Plaintiff did not even file any
application interim injunction purposely because they were not
ready with the finds and any application for interim injunction
would have required the Plaintiff to deposit the balance sale
consideration in the Court?
A. I cannot answer whether such an application was filed by the
counsel or not as I have not got much knowledge about this. It
is incorrect to suggest however that we did not have funds to
pay the balance sale consideration.”
17. He further submitted that on .9.11.2000, the plaintiff transferred monies to
the extent of Rs. Rs.6.43 crores to its subsidiary company Teletech
Industries Pvt. Ltd., which in return purchased a property bearing Plot No.
19, Sector-18, Udyog Vihar, Gurgaon, Haryana, admeasuring 11,223.60 sq.
mts.; yet again on 06.05.2002, the plaintiff purchased a commercial plot
bearing No. 7, Shivaji Place District Centre, Raja Garden, New Delhi for a
consideration of Rs.9.35 crores; therefore, the plaintiff did not have the
requisite monies to purchase the suit property and was not able, ready and
willing to perform its part of the agreement.
18.Finally, it was argued on behalf of the defendants that since the requirement
of permission under Section 230A(1) of the IT Act in Form 34-A was done
away with w.e.f 1st June, 2001, the balance sale consideration was payable
by 30th June, 2001, i.e., within 30 days as stipulated in the agreement and
that time was the essence of the agreement.
19.However, Mr. Sapra, the learned Senior Advocate for the plaintiff submitted
that the only thing which needs to be established is whether the plaintiff was
ready and willing to perform its part of the agreement and in case there was
any delay, whether the same could be attributed to it. He submitted that in a
suit seeking specific performance of a contract, it first needs to be seen that
the requirement of readiness and willingness to perform the contract is
satisfied. In support of his contention, he relied upon a judgment of the
Supreme Court in Syed Dastagir v. T.R. Gopalakrishna Setty AIR 1999 SC
3029, wherein it was observed as under:
“8. On the other hand, learned counsel for the respondent
submits, in the absence of averment of the actual words by the
plaintiff in his pleading, i.e., ready and willing to perform his
part under the contract, which is mandatory in nature, the
plaintiff disentitles himself to any relief in view of Section 16(c).
His submission with reference to the explanation of Section
16(c) is, even if any balance amount as in the present case
Rs.120/- had been tendered by the plaintiff in Court, that
cannot be construed to comply with the provisions of the
aforesaid Section. He emphasised, the use of word except when
so directed by the Court used in the explanation (i) of the
aforesaid Section, means such payment could only be construed
to be such, if he deposit this amount only under the direction of
the court, which is not in the present case.”
20.He further relied upon Ramesh Chandra Chandiok & Anr. v. Chuni Lal
Sabharwal (Dead) by his Legal Representatives & Ors. AIR 1971 SC
1238, wherein it was observed as under:
“2. On July 18, 1955, the appellants entered into an
agreement with the respondents for the purchase of plot No.8
measuring 1500 Sq. Yds in Jangpura B, New Delhi for
Rs.22,500/-. The contract was evidenced by receipt Exhibit P-6
which was in the following terms:
"Received with thanks from Messrs. Ramesh Chander
Chandiok and Kailash Chandra Chandiok the sum of Rs.7,500/-
(Rupees Seven thousand and five hundred only) as earnest
money of the purchase money of Rs. 22,500/- (Rupees Twenty
two thousand and five hundred) for the sale of Plot No.8
measuring 1500 sq. yds in Jangpura B., purchased from the
Rehabilitation Ministry and owned by us. The balance of
Rs.15,000 (Rupees Fifteen Thousand only) shall be paid to us
by them within one month of the execution of this receipt on the
execution of the sale deed by us in their favour."
It is common ground that the aforesaid plot had been allotted
by the Rehabilitation Ministry to the respondents and that its,
possession was to be delivered after payment of rent of lease
money up-to-date and after execution of the lease deed. The
lease deed was actually executed in favour of the respondents CS(OS) 335/2005 Page 12 of 39
oil April 21, 1956. Meanwhile on August 11, 1955 the
respondents wrote a letter to the appellants as follows:
"With reference to the receipt dated 18.7.1955 execute by us in
your favour, acknowledging receipt of Rs.7,500/- as earnest
money for the sale of Plot No.8 measuring 1500 sq. yds in
Jungpura B. owned by us, and agreed to be sold to you by us,
since it will take about a month more to obtain sanction of the
Rehabilitation Ministry, the execution of the sale deed by us
cannot be complete without the said sanction, it is hereby
mutually agreed between us or orally that the period for
execution of the sale deed shall remain extended till the time of
the receipt of the said sanction and we hereby confirm the said
oral agreement. We will inform you as soon as the said
sanction is received and within a week thereof, we will execute
the necessary sale-deed in your favour and get the same
registered against payment of the balance money. Please sign
the duplicate of this letter in confirmation of the said oral
arrangement."
A notice dated June 15, 1956 was served by counsel for the
respondents on the appellants saying that the balance of
consideration according to the terms of the agreement dated
July 18, 1955 was to be paid by the appellants and the sale
deed was to be got registered within one month of July 18,
1955. It was further stated that extension had been given as
desired by the appellants but the balance amount had not been CS(OS) 335/2005 Page 13 of 39
paid. In para 3 it was stated "my clients are not prepared to
wait indefinitely and therefore cancel your agreement for want
of certainty and hereby give you an offer, without prejudice to
their legal rights, to receiver back the sum of Rs. 7,500/- paid
by you as earnest money less the amount of loss suffered by
them on account of lease and interest etc. within one week of
the, receipt of this letter, failing which my clients would be
entitled to forfeit the earnest money and treat the agreement
cancelled."
.... .... .... .... .... .... .... .... .... ....
5. The High Court found that both the respondents were
bound by the letter Exhibit P-7 dated August 11, 1955 to which
reference has already been made. It was noticed that sanction
of the Rehabilitation Ministry was required before the sale
could be, completed but it was held that there was nothing to
indicate that the absence of such a sanction invalidated the
transfer ab initio, or rendered it void. In agreement with the
trial court the High ,Court held that oven a defeasible interest
could be the subject matter of sale; in other words the sale
could be effected without the sanction having been previously
obtained. The view of the High Court was that Exhibit P-7 did
not contain any such language which would justify the
importing of a condition that until the respondents obtained
sanction for the transfer of the property the appellants were not
bound to get the sale completed. It was, also decided that the
appellants had not satisfactorily shown that they had sufficient CS(OS) 335/2005 Page 14 of 39
funds to pay the balance amount of Rs.15,000/- from which it
could be concluded that they were not ready and willing to
perform their part of the contract. Yet another point was
decided against the appellants on the basis of, certain execution
proceedings stated at the Bar to have been taken during the
pendency of the appeal. According to the High Court once the
appellants had obtained satisfaction of the decree for
Rs.7,500/- they became disentitled to a decree for specific
performance.
6. We are unable to concur with the reasoning or the
conclusions of the High Court on the above main points. It is
significant that the lease deed was not executed in favour of the
respondents by the Government until April 21, 1956. So long as
their own title was incomplete there was no question of the sale
being completed. It is also undisputed that according to the
conditions of the lease the respondents were bound to obtain
the sanction of the Rehabilitation Ministry transferring the plot
to any one else. The respondents were fully aware and
conscious, of this situaion much earlier and that is the reason
why on August 11, 1955 it was agreed while extending the
period for execution of the sale deed that the same shall be got
executed after receipt of the sanction. The statement contained
in Exhibit P-7 that the execution of the sale deed "by us cannot
be complete without the said sanction" was unqualified and
unequivocal. The respondents further undertook to inform. the
appellants as soon as sanction was received and thereafter the CS(OS) 335/2005 Page 15 of 39
sale deed had to be executed within a week and got registered
on payment of the balance amount of consideration. We are
wholly unable to understand how in the presence of Exhibit P-7
it was possible to hold that the appellants were bound to get the
sale completed even before any information was received from
the respondents about the sanction having been obtained. It is
quite obvious from the letter Exhibit P-8 dated June 15, 1956
that the respondents were having second thoughts and wanted
to wriggle out of the agreement because presumably they
wanted to transfer it for- better consideration to some one else
or to transfer it in favour of their own relation as is stated to
have been done later. The respondents never applied for any
sanction after August 11, 1955 and took up the position that
they were not prepared to wait indefinitely in the matter and
were therefore cancelling the agreement "for want of
certainty". We are completely at a loss to understand this
attitude nor has any light been thrown on the uncertainty
contemplated in the aforesaid letter. It does not appear that
there would have been any difficulty in obtaining the sanction if
the respondents had made any attempt to obtain it. This is
obvious from the fact that when they actually applied for
sanction on November 11, 1956 it was granted after a week.
The statement contained in Exhibit P-10 dated July 4, 1956 that
the sanction was not forthcoming has not been substantiated by
any cogent evidence as no document was placed on the record
to show that any attempt was made to obtain sanction prior to CS(OS) 335/2005 Page 16 of 39
November 11, 1956. Be that as it may the respondents could not
call upon the appellants to complete the sale and pay the
balance money until the undertaking given in Exhibit P-7 dated
August 11, 1955 had been fulfilled by them. The sanction was
given in November, 1956 and even then the respondents did not
inform the appellants about it so as to enable them to perform
their part of the agreement of safe. There was no question of
time having ever been made the essence of the contract by the
letters sent by the respondents nor could it be said that the
appellants had failed to perform their part of the agreement
within a reasonable time.”
21.Insofar as the other defences set up by the defendants such as (i) the
agreement was entered into when the value of the suit property was
depreciated (ii) and time was the essence of the agreement are concerned,
Mr. Sapra, the learned Senior Advocate submitted that there is no such
clause in the agreement and in the absence of any such stipulation, the same
cannot be inferred simply because of the passage of time. He relied upon the
dicta of the Supreme Court in Balasaheb Dayandeo Naik (Dead) Through
LRs & Ors. v. Appasaheb Dattatraya Pawar AIR 2008 SC 1205.
22.The learned counsel for the plaintiff submitted that clearance in Form 34A
was essential as per Clause 4 of the agreement. He drew the attention of the
Court to the cross examination of PW-1 which reads as under:
“Q. Mr. Chauhan I Put it to you that with effect from 1st June,
2001, a permission under Section 230A(1) of the Income Tax
Act in form No. 34A was not required?
A. Our agreement with Mrs. Kalawati Mathrani took place in CS(OS) 335/2005 Page 17 of 39
year 2000 in which this requirement was mentioned. If any
change in law occurred after that the same was not brought to
our notice.”
23. He also relied upon an extract from the 11th Edition of Pollock and Mulla,
Indian Contract and Specific Relief Acts, which in Volume II at Page No.
1287 reads as under:
Readiness and willingness of a person seeking performance in a
case where time is provided for performance means that the
person claiming performance has kept the contract subsisting
with preparedness to fulfil his obligations and accept
performance when the time for performance arrives. But it
does not mean that he had command of necessary money
throughout the existence of the contract. But to prove readiness
and willingness a purchaser has not necessarily to produce the
money or vouch a concluded scheme for financing the
transaction. Failure to find money or prove possession of
money before time for performance cannot entitle the vendor to
refuse performance. The plaintiff does not have to go about
jingling money to demonstrate his capacity to pay the purchase
price. Thus, even where the plaintiff had stated that she did not
have the means to pay the Court fees but did in fact pay the full
Court fees before the time for claiming specific performance
expired, the Court held that it could not be said that she was
not ready and willing to perform her obligation. Clause (1) of
Explanation of Section 16(c) clearly enacts that money need be
produced only when directed by the Court.”CS(OS) 335/2005 Page 18 of 39
24.Furthermore, he relied upon a judgment of the Privy Council reported as
AIR (37) 1950 Privy Council 90 in The Bank of India Ltd. And others v.
Jamsetji A.H. Chinoy and Messrs. Chinoy and Co., in particular para 21
whereof which reads as under:
“21. (4) What plaintiff 1 entitled to relief by way of specific
performance as ordered by the appellate Court? The matter
raised by this question have narrowed considerably during the
course of proceedings. Specific performance was sought
against the additional appellants under S. 27(b), Specific Relief
Act, 1977. As it was admitted that they took their transfers of
the shares in question with notice of the contract sued upon, the
applicability of this enactment is not in doubt. It is also the
opinion of the Board that, having regard to the nature of the
company and the limited market for its shares, damages would
not be an adequate remedy. This leaves as the matter for
decision under this head whether plaintiff 1 was ready and
willing to perform his obligations under the contract. On this
aspect of the case, the defendants, up to a point, followed two
lines of attack. In the first place they said that Jassetji had
taken no step to procure the permission of the Reserve Bank to
payment under R. 92A (2) or to acquisition under R. 93(2), and
was thus never in a position to implement the contract, and
secondly they urged that on his own showing he was financially
incapable of finding the price. The first of these contentions no
longer raises a live issue. The learned trial Judge found and at
their Lordships Bar counsel for the parties agreed, that if the CS(OS) 335/2005 Page 19 of 39
contract was made a reasonable period for its completion
would be two months, that would have made the date for
completion of 9th September, 1942. But the Dinshaws had
repudiated long before that and the course of events thereafter
produced a situation which enabled the parties consenting to
the order of 9th October, 1947, to take the steps directed thereby
without reference to the Reserve Bank. The second contention,
however, remains to be considered. The learned Trial Judge
upheld it. His views thereon were obiter for he had already
found that Jamsetji had not agreed to purchase; and for the
same reason and on account of the theory of conspiracy which
he had formed he would obviously have experienced difficulty
in holding otherwise. The appellate Court found on the
evidence that Jamsetji was ready and willing to fulfil his
financial obligation s under the sale. Their lordships agreed
with this conclusion and the grounds on which it was based. It
is true that plaintiff 1 stated that he was buying for himself, that
he had not sufficient ready money to meet the price and that no
definite arrangements had been made for finding it at the time
of repudiation. But in order to prove himself ready and willing
a purchaser has not necessarily to produce the money or to
vouch a concluded scheme for financing the transaction. The
question is one of fat and in the present case the appellate
Court had ample material on which to found the view it
reached. Their Lordships would only add in this connection
that they fully concur with Chagla A.O.J. when he says:CS(OS) 335/2005 Page 20 of 39
“in my opinion, on the evidence already on record it was
sufficient for the Court to come to the conclusion that plaintiff 1
was ready and willing to perform his part of the contract. It was
not necessary for him to work out actual figures and satisfy the
Court what specific amount a bank would have advanced on the
mortgage of his property and the pledge of these shares. I do
not think that any jury if the matter was left to the jury in
England – would have come to the conclusion that a man, in the
position in which the plaintiff was, was not ready and willing to
pay the purchase price of the shares which he had bought from
defendants 1 and 2.”
25.The learned counsel for the plaintiff submitted that it is not necessary for the
plaintiff to prove availability of funds to show it’s readiness and willingness;
in any case, the plaintiff has shown that there were sufficient funds available
by way of FDRs and other investments should the need for payment had
arisen; therefore, the defendants’ argument that monies which were due
towards the balance sale consideration were used for the purchase of other
properties is meaningless; rather, it shows the plaintiff’s financial soundness.
He relied on a sale deed dated 7.8.2001 (Ex. PW1/K) to show that half of the
purchase price of Rs.6.00 crores was paid for by the plaintiff; however, this
money was lent from the plaintiff’s sister concern; this fact has been
admitted by Mr. Subhash Chauhan, PW-1; and the second property was
purchased by the plaintiff for Rs.9.35 crore on 6.2.2002 in Delhi but this
money too was not available with the plaintiff as has been admitted by PW-
1.
26.Having heard the learned counsel for the parties and on a perusal of the CS(OS) 335/2005 Page 21 of 39
evidence, the Court is of the view that the plaintiff was not ready and willing
to perform its part of the agreement. The plaintiff was intimated by a letter
dated 10.08.2000 (Ex. PW-1/G) that the requite permission under Section
269 UL of the IT Act in Form 37-I had been received. It was also intimated
that the sale deed could be executed as soon as the deceased defendant
recovered from her illness. Pertinently, there was no mention of receiving
any clearance under Section 230A(1) of the IT Act. Hence, the plaintiff
ought to have taken steps to pay the balance sale consideration and get a sale
executed in its favour. In any event, it is not is dispute that obtaining the said
clearance had been dispensed with w.e.f. 1st June, 2001. Therefore, the
balance sale consideration became due at least on 30th June, 2001 in terms of
the agreement. Accordingly, the argument made on behalf of the plaintiff
that the change in law was not brought to its notice and that it was an
essential condition for performance of the agreement are untenable and
ought to be rejected. It is settled that a party cannot plead ignorance of law
and a party cannot be forced to perform an act which is impossible.See Section 54 of the Indian Contract Act,
27.The Court finds that instead of instituting a suit for specific performance of
the agreement, the plaintiff preferred to intervene in the MHA proceedings.
However, it abandoned its interim application on 23.04.2001. Perusal of the
orders passed in the said proceedings reveals that on at least 10 occasions,
the counsel representing the plaintiff was not present and on 6 occasions,
he/she did not press the interim application.
28.The Court also finds merit the argument of the defendants that while
instituting the suit, the plaintiff never preferred an application under Order
XXXIX, CPC since the same would have resulted in the plaintiff
paying/depositing the balance sale consideration or at least a substantial part
of it. It is settled law that the plaintiff must, at all times, be ready and willing
to pay the sale consideration to be entitled to the discretionary relief of
specific performance. Hence, the contention of the learned counsel for the
plaintiff that the plaintiff need not show availability of funds at all times for
proving readiness and willingness, is without merit and is accordingly,
rejected. Moreover, the plaintiff never tendered any amount towards
payment of balance sale consideration both before and after institution of the
suit. Therefore, as held in Koteswara Rao (supra), the plaintiff ought to
have tendered amounts towards payment of balance sale consideration to
prove its bona fides which has not been done. Furthermore, while a sale
deed apropos the suit property had not been executed, the plaintiff
admittedly purchased two properties, one in Gurgaon, Haryana and the other
in Raja Garden, New Delhi; that too in 2001 and 2002, i.e., within two years
of the agreement being entered into. Where the monies which could have
been expended for purchase the suit property is otherwise utilized, an
adverse inference shall be drawn against the plaintiff. Right from the day the
agreement to sell is entered into, the plaintiff must show that it is ready and
capable of performing its part of the contract. Its conduct, prior to and after
institution of the suit necessarily needs to considered keeping in mind the
attending circumstances.
29.The Court would also note that no cogent evidence has been led by the
plaintiff to prove that it had sufficient monies to pay the balance sale
consideration. Insofar as reliance on the certificate issued by the CA is
concerned, the Court is of the view that the said document is wholly
unreliable since it only enlists the FDRs and margin money held by the CS(OS) 335/2005 Page 23 of 39
plaintiff in banks. Furthermore, the CA categorically deposed that the said
certificate does not disclose the true and correct financial position of the
company. The Court would also note that PW-1 was repeatedly asked why
FDRs held by the plaintiff were not produced. However, he gave evasive
answers. The relevant depositions are reproduced as under:
“Q. Can you give details to the Court about the money which
was available with the Plaintiff before issuance of legal notice
dated 19.09.2000 (Exhibit PW-1/I) i.e. from the date of
agreement Exhibit P-1 to the date of issuance of the said legal
notice?
A. I have already filed the copies of the record made available
duly certified by the CA and certified copies of the documents of
purchase of properties. Volunteered- we had arrangements for
the money as we had stocks, duty draw back and advances from
the buyers to meet the purchase price of the property and this is
why we had issued the legal notice.
Q. Can you give details of these FDRs?
A. I will furnish whatever details are available with us.
Q. Have you brought the details of FDRs of your Company?
A. I have already filed the certificates etc. by the Auditors.
Q. I put it to you that you are deliberately not giving the details
of money in the Bank account of your Company from 19.9.2000
to 8.10.2000 because the details would show that your
Company did not have sufficient amount in the Bank for
purchasing the suit property.
A. We have already provided the certificate from the C.A. as CS(OS) 335/2005 Page 24 of 39
also the balance sheets to prove that we had the necessary
funds.”
30.In view of the above discussion, the Court is of the view that the plaintiff
was not ready, willing and able to perform its obligations under the
agreement. This issue is returned in favour of the defendants and against the
plaintiff.
Issue No. (ii) Whether late Smt. Kalawati Mathrani suffered from any
mental infirmity making her incapable of entering into the Agreement to
Sell dated 24.04.2000? OPD
31.Mr. Sapra, the learned Senior Advocate for the plaintiff submitted that the
Written Statement (for short WS) has been filed by the attorney of defendant
Nos.1 to 3 and he has also deposed on behalf of the said defendants; an
attorney cannot depose for his principal on issues of which he has no
personal knowledge; and this issue stands settled in view of the dicta of the
Supreme Court in Janki Vashdeo Bhojwani & Anr. v. Indusind Bank Ltd.
& Ors., AIR 2005 SC 439. He relies upon paras 20, 21, 24, 28 & 29 of the
said judgement, which read as under:
“20. However, in the case of Humberto Luis & Anr. Vs.
Floriano Armando Luis & Anr. reported in 2002 (2)
Bom.C.R.754 on which the reliance has been placed by the
Tribunal in the present case, the High Court took a dissenting
view and held that the provisions contained in order III Rule 2
of CPC cannot be construed to disentitle the power of attorney
holder to depose on behalf of his principal. The High Court
further held that the word "act" appearing in order III Rule 2 of
CPC takes within its sweep "depose". We are unable to agree
with this view taken by the Bombay High Court in Floriano
Armando (supra).
21. We hold that the view taken by the Rajasthan High Court
in the case of Shambhu Dutt Shastri (supra) followed and
reiterated in the case of Ram Prasad (supra) is the correct
view. The view taken in the case of Floriano Armando Luis
(supra) cannot be said to have laid down a correct law and is
accordingly overruled. In the view that we have taken we hold
that the appellants have failed to discharge the burden that they
have contributed towards the purchase of property at 38,
Koregaon Park, Pune from any independent source of income
and failed to prove that they were co- owners of the property at
38, Koregaon Park, Pune. This being the core question, on this
score alone, the appeal is liable to be dismissed.
32.In view of the above, it was argued that the defendants’ attorney could not
have deposed apropos the mental incapacity of the deceased defendant in
entering into the agreement since he had no personal knowledge about the
same; on the contrary, the letter dated 8.8.2000 as well as paragraph 14 of
the application filed by defendant Nos.1 to 3 in the MHA proceedings quite
clearly admit to the agreement; indeed, they sought appointment of a
guardian since she was not in a position to take care of her interests. Finally,
Mr. Sapra submitted that since the agreement was always admitted by
defendant Nos. 1 to 3, the plea regarding competence of the deceased
defendant in entering into the agreement is only an afterthought and ought to
be rejected.
33.It appears that this issue was framed since the defendants have
contested/challenged the competence/capacity of the deceased defendant in
entering into the agreement. However, it is noted that no cogent evidence
has been led by the defendants. In fact, defendant Nos. 1 to 3 had all along
been acknowledging the agreement and further, that the deceased defendant
would execute a sale deed once she recovers from her illness. No challenge
was ever made apropos the deceased defendant’s competence/capacity to
enter into the agreement due to any mental infirmity.
34.Insofar as defendant No.4 is concerned, it would be pertinent to refer to her
evidence. In paragraph 10 thereof, she deposes that the deceased defendant
was bedridden due to a fracture of her right femur and that she was not able
to walk on her own. There is only a vague reference to her mental incapacity
in entering into the agreement. In the absence of any cogent evidence on
record, it is to be held that the defendants have not discharged their burden
to prove this issue.
35.The Court also finds merit in the submission advanced by Mr. Sapra that the
attorney of defendant Nos. 1 to 3 could not have deposed to this effect since
he had no personal knowledge of the same. The Supreme Court in Janki
Vashdeo (supra) while affirming the dicta of the Rajasthan High Court held
thus:
“On the question of power of attorney, the High Courts have
divergent views. In the case of Shambhu Dutt Shastri v. State
of Rajasthan, 1986 2 WLL 713it was held that a general power
of attorney holder can appear, plead and act on behalf of the
party but he cannot become a witness on behalf of the party. He
can only appear in his own capacity. No one can delegate the
power to appear in witness box on behalf of himself. To appear
in a witness box is altogether a different act. A general power
of attorney holder cannot be allowed to appear as a witness on
behalf of the plaintiff in the capacity of the plaintiff.”
36.In view of the discussion hereinabove, this issue is accordingly, returned in
favour of the plaintiff and against the defendants.
(iii) Whether the suit is barred by time? OPD
37.It was argued on behalf of the defendants that the suit is barred by limitation.
According to them, the period of limitation at best would commence from
30th June, 2001 i.e., after 30 days after the day whence approval in Form
34A was no longer required; and three years as prescribed under Article 54
of the Schedule to the Limitation Act, 1963 expired on 30th June, 2004.
However, according to the learned Senior Advocate for plaintiff, this
argument is untenable because the plaintiff’s interim application in the
MHA proceedings seeking appointment of a Manager was pending; the
balance consideration could not be paid since the deceased defendant was
certified to be incapacitated by the Doctor concerned; defendant Nos. 1 to 3
themselves admitted to the agreement in the MHA proceedings; and the
balance sale consideration could not have been paid till the time of
execution of the sale deed.
38.It was further submitted on behalf of the plaintiff that there was no fixed
date for execution of the sale deed; it was contingent upon receiving
clearances under Form 37I and Form 34 A from the Income Tax
Department; once clearance under Form 34A had become redundant as of 1st
June, 2001, the plaintiff should have been called upon to pay the balance
sale consideration; however, the deceased defendant had become
incapacitated; hence, the occasion for payment of balance consideration
never arose; at no point of time, was performance of the agreement refused,
either by the deceased defendant or defendant Nos. 1, 2 and 3; therefore, the
suit is within the period of limitation. The learned Senior Advocate relied
upon Article 54 of the Schedule to the Limitation Act, 1963 which reads as
under:CS(OS) 335/2005 Page 28 of 39
“The date fixed for the performance, or, if no such date is fixed,
when the plaintiff has notice that performance is refused”.
39.In support of his contentions, he relied upon the dicta of the Supreme Court
in Ahmmadsahab Abdul Mulla (deceased by LRs) v. Bibijan & Ors. AIR
2009 SC 2193 which held inter alia as under:
“7. The inevitable conclusion is that the expression „date
fixed for the performance‟ is a crystallized notion. This is clear
from the fact that the second part "time from which period
begins to run" refers to a case where no such date is fixed. To
put it differently, when date is fixed it means that there is a
definite date fixed for doing a particular act. Even in the second
part the stress is on `when the plaintiff has notice that
performance is refused'. Here again, there is a definite point of
time, when the plaintiff notices the refusal. In that sense both
the parts refer to definite dates. So, there is no question of
finding out an intention from other circumstances. Whether the
date was fixed or not the plaintiff had notice that performance
is refused and the date thereof are to be established with
reference to materials and evidence to be brought on record.
The expression `date' used in Article 54 of the Schedule to the
Act definitely is suggestive of a specified date in the calendar.
We answer the reference accordingly. The matter shall now be
placed before the Division Bench for deciding the issue on
merits.”
40.Dr. Arun Mohan, the learned Senior Advocate for defendant No.4 submitted
that the legal notice dated 19.09.2000 issued by the plaintiff required the
deceased defendant to adhere to the terms of the agreement and
consequently, execute a sale deed within two weeks therefrom; it was also
stated that the plaintiff would take action for specific performance if the
notice was not complied with; however, no steps to file a suit was taken by
the plaintiff. He draws the attention of the Court to the cross examination of CS(OS) 335/2005 Page 29 of 39
PW-1 which reads as under:
“Q. Is it correct that Mrs. Kalawati Mathrani did not comply
with your legal notice dated 19.9.2000 (Exhibit PW-1/I)
(The witness is shown the notice from the court file)
A. It is correct that she did not comply.
Q. Is it correct that despite your legal notice dated 19.9.2000
(Exhibit PW-1/I) whereby you informed the recipients that you
would take action for specific performance of the Agreement
(Exhibit P-1) after the expiry of notice period, you did not
institute any litigation for specific performance till filing of the
present suit?
A. It is correct that we did not immediately file any suit.
Volunteered- as no decision could be taken because proceedings
were pending in the MHA court, therefore, we did not file the
suit immediately and we thereafter file the present suit.”
41.Dr. Arun Mohan would further submit that at the first instance, the period of
limitation commenced from 09.09.2000, i.e., after 30 days of
communication about receipt of permission from Appropriate Authority;
secondly, the period of limitation commenced from 4/10.10.2000, i.e., after
14 days of issuance/receipt of legal notice. He submits that admittedly, no
reply was sent by the deceased defendant, therefore, it amounts to refusal;
hence, the second part of Article 54 of the Schedule to the Limitation Act,
1963 would be applicable. According to him, the plaintiff’s argument that
the deceased defendant had been mentally incapacitated and hence, the
period of limitation would not commence till she recovered or died and her
LRs were brought on record, would be an incorrect reading of Section 6 of CS(OS) 335/2005 Page 30 of 39
the Limitation Act. In support of his contentions, he relied upon a judgment
of the Rajasthan High Court in Smt. Kanchan Prasad v. Khetidas, 1990 (5)
Civil CC (RAJASTHAN), which held thus:
“I may here state that a refusal of performance of a contract of
sale need not be in writing or expressed in so many words.
Refusal can always be inferred from circumstances of the
case.”
42.He further relied upon Laxmi Prasad v. Seth Ramdayal Jat, (2008) 2
MPLJ 166 wherein the Madhya Pradesh High Court held as under:
“The notice (Ex.P-1) was sent on 12.5.98 and the same was
received by the Defendant on 14.5.98 as per plaint para 3 and
because no reply was sent by Defendant it would amount to
refusal.”
43.He then relied upon a judgment of the Andhra Pradesh High Court in Kota
Sivaram Prasad v. Nagandla Veera Brahmam and others, (2012) 3 ALT 5
which to the extant relevant, reads as under:
“Even if the 1st respondent can be said to have, indeed,
demanded Venkateswarlu to execute sale deed after expiry of
three years, suit ought to have been filed within three years
from the date of inaction on the part of Venkateswarlu. It is not
necessary that refusal must be specific or in any particular
form. If a demand was made and nothing positive is
forthcoming, refusal can be implied.” ` ,
44.Lastly, he relied upon Wasim Ahmad v. Haji Shamsuddin, (2012) 3 ADJ
187, wherein the Allahabad High Court held thus:
“If twice or thrice executant of agreement for sale on being CS(OS) 335/2005 Page 31 of 39
asked to execute the sale-deed defers the execution on one
pretext or other, it amounts to refusal.”
45.Mr. Mukul Talwar, the learned Senior Advocate for defendant Nos. 1 to 3
supported the arguments advanced by Dr. Mohan. Additionally, he
submitted that the suit was filed on 10.11.2004; it remained pending under
objections for a very long time; the objections were removed and the case
was numbered on 15.03.2005; an application bearing I.A. No. 1967/2005
was moved seeking condonation of delay in refilling the plaint but only a
vague reason was given, i.e., the plaintiff was out of station. Therefore, he
submitted that even the application itself was not specific as to how many
days of delay were to be condoned.
46.It was also submitted on behalf of the defendants that instead of filing a suit
for specific performance, the plaintiff preferred to file an application for
appointment of a Manager for concluding the sale in the MHA proceedings;
the said application was not pursued bonafidely and was later abandoned;
and therefore, the said period cannot be excluded for the purposes of
limitation.
47.In rebuttal, Mr. Anil Sapra, the learned Senior Advocate for the plaintiff
submits that the defendants’ arguments are a total misconstruction of the
agreement inasmuch as the balance sale consideration of Rs.6,37,50,000/-
was payable within 30 days of communication of the approval by the
authority. He further submitted that most importantly, Clause 5 of the
agreement provides that the balance sale consideration shall be paid
simultaneously at the time of execution of a sale deed. It is reproduced as
under:
“That the vendor shall execute the sale deed of the said CS(OS) 335/2005 Page 32 of 39
property viz. GPA, Will Codicil etc. In favour of the Vendee or
its nominee(s) simultaneously at the time of receiving the full
and final sale consideration by the Vendor from the Vendee.
The Vendor shall execute an Indemnity Bond satisfactory to the
Vendor to keep the Vendor indemnified as a precondition to the
Vendor being required to execute a GPA and Will Codicil”.
48.It is submitted that in the interim, the plaintiff was informed by defendant
No.1 that the deceased defendant had become seriously ill and was not in
position to execute the sale deed. The letter dated 10th August, 2000
(Ex.PW1/G) reads as under:
“This is to apprise you that we have received permission from
Appropriate Authority under Section 269 UC in Form 37, with
regard to proceed further in respect of the sale agreement
executed by our mother against property bearing No.16, Poorvi
Marg, Vasant Vihar, New Delhi.
Our Mother is seriously ill and confined to bed due to
indisposition in Apollo Hospital, Delhi.
We request you to bear with us till she is in a position to
execute the necessary documents, in favour of you.(emphasis
supplied)”
49.Mr. Sapra submits that a reply to the aforesaid letter was promptly sent by
the plaintiff by a letter of 25th August stating that it was eager to complete
the transaction as early as possible and make the balance payment which
was lying ready with it; it also showed its eagerness to know about the
recovery of the deceased defendant so that the necessary formalities could
be completed. The letter dated 25th August, 2000 reads as under:CS(OS) 335/2005 Page 33 of 39
“To
Smt Kalawati Marthani
C/o Sh. Ranjit Marthani
16, Poorvi Marg, Vasant Vihar,
New Delhi.
Dear Madam/Sir,
We are in receipt of your letter dated 10/8/2000, with
regard to sale of property No. 16, Poorvi Marg, Vasant Vihar,
New Delhi, we are sorry to learn regarding hte illness of your
mother (Smt. Kalawati Marthani) and wish her an earliest
recovery.
We also understand that the permission under 37(I) from
appropriate authority has been received by you.
We would like to complete the transaction as early as
possible and make the balance payment which is lying ready
with us. Kindly inform us as soon as she recover, so that we
can complete the formalities.
Thanking you,
For Sewa International Fashions (P) Ltd.”
50.He further submitted that there were inter se disputes between the
defendants, i.e., the children of the deceased defendant and hence, there was
no substantial progress in the MHA proceedings; perhaps because of their
inter se disputes, the defendants did not pursue the MHA proceedingsCS(OS) 335/2005 Page 34 of 39
diligently which ultimately become infructuous upon the demise of the
deceased defendant. He further submitted that the application field by the
plaintiff was never abandoned but just that there was lack of progress in the
MHA proceedings.
51.In view of the above, Mr. Sapra submitted that quite clearly, the plaintiff
was not called upon to pay the balance sale consideration since the deceased
defendant was not in a position to execute the sale deed. He further
submitted that limitation begins to start from the date so specified in the
agreement or from the date when a party refuses to perform its part of the
contract; in terms of Article 54 of the Schedule to the Limitation Act, 1963,
time was to start running from the date when the plaintiff would have notice
of refusal apropos performance of the agreement; the plaintiff had filed an
application in the MHA proceedings seeking appointment of a Manager due
to the mental incapacity of the deceased defendant; in fact, the MHA
proceedings to the same effect had been filed by defendant Nos. 1 to 3 in
which they had stated that their mother was not in a position to take care of
her interests and therefore, for executing a sale deed under the agreement, a
guardian need to be appointed. Therefore, he submitted that till the time the
application was decided, there was no refusal either by the deceased
defendant or any of her successors.
52.Section 3 of the Limitation Act places an obligation on Courts to examine
whether the suit was filed within the period of limitation as stipulated under
the Act. However, it is subject to the other provisions contained therein, i.e.,
Sections 4 to 24. If the averments in the plaint indicate that the suit was filed
beyond the stipulated period of limitation, the suit must be held to be not
maintainable or in other words, barred by limitation. CS(OS) 335/2005 Page 35 of 39
53.From a reading of the plaint, it is evident that the suit was not filed within
three years from the three crucial dates as aforementioned, i.e. (i)
09.09.2000 or (ii) 4/10.10.2000 or (iii) 30.06.2000. Hence, the plea of the
plaintiff that (i) it was pursuing the MHA proceedings; (ii) there was never
any refusal from the deceased defendant or her heirs needs; and (iii) till such
time the MHA proceedings were decided, limitation would not commence,
cannot be considered and are otherwise not tenable.
54.Perusal of the legal notice dated 19.09.2000 (PW-1/I) reveals that the
plaintiff was aggrieved since considerable time had elapsed and a sale deed
had not been executed thus far. It was made clear that if the needful was not
done within two weeks therefrom, the plaintiff would be constrained to seek
specific performance of the agreement. The relevant part of the notice is
reproduced as under:
“Since the considerable has elapsed and you have not yet taken
steps to register the sale deed after obtaining the above said
Income Tax Clearance Certificate, I call upon you to do the
needful immediately but not later than 2 weeks from the receipt
of this notice, failing which my clients shall be constrained to
seek specific performance of the said agreement for sale in a
court of law as also claim damages, entirely at your risk and
cost.”
55.It is not in dispute that the legal notice was not replied to by the deceased
defendant. It is also not in dispute that the plaintiff took no steps to file a
suit. Accordingly, in view of the dicta in Laxmi Prasad, Kota Sivaram
Prasad and Wasim Ahmad (supra), the Court is of the view that the action
of the defendant in not replying to the legal notice would amount to refusal.
Therefore, according to the second part of Article 54 of the Schedule to the
Limitation Act, the limitation period commenced from 4/10.10.2000, i.e.,
after expiry of 14 days of the issuance/receipt of the said legal notice. In any
event, the limitation period commenced from 30.06.2001 when the
requirement of clearance in Form 34A was dispensed with. Although Clause
4 of the agreement would have then required the deceased defendant to
obtain clearance in Form 34A, the change in law w.e.f. 01.06.2001 has since
removed this requirement. Hence, the said clause had become void in view
of Section 54 of the Indian Contract Act, 1872.
56.Insofar as the contention that the plaintiff was pursuing the MHA
proceedings and hence, the limitation period would not commence till the
same was finally adjudicated is concerned, the argument on the face of it is
entirely untenable. It is evident on a perusal of the orders passed in the said
proceedings that from the years 2001 to 2005, there was no effective
representation by the plaintiff. It also reveals that on at least 10 occasions,
the counsel representing the plaintiff was not present and on 6 occasions,
he/she did not press the interim application. It is not even the case of the
plaintiff that it is entitled to exclusion of time under Section 14 of the
Limitation Act, 1963 for having proceeded in a Court without jurisdiction.
57.In view the above discussion, the Court is of the view that the suit has not
been filed within the period of limitation and is barred under Section 3 of the
Limitation Act, 1963.
Issue No. (iv) Whether the plaintiff is entitled to specific performance of
the Agreement to Sell dated 24.04.2000? OPP
58.In view of the findings arrived at under issue Nos. (i) and (iii), this issue is
returned in favour of the defendants and against the plaintiff.
Issue No. (v) If Issue No. (iv) is answered against the plaintiff, whether
the plaintiff is entitled to any alternative relief for damages? OPP
59.At the outset, it would be apposite to refer to judgment of the Supreme Court
in Banarsi & Ors. v. Ramphal, (2003) 9 SCC 606, which to the extent
relevant, reads as under:
“In a suit seeking specific performance of an agreement to sell
governed by the provisions of the Specific Relief Act, 1963 the
court has a discretion to decree specific performance of the
agreement. The plaintiff may also claim compensation under
Section 21 or any other relief to which he may be entitled
including the refund of money or deposit paid or made by him
in case his claim for specific performance is refused. No
compensation or any other relief including the relief of refund
shall be granted by the court unless it has been specifically
claimed in the plaint by the plaintiff.”
60.Perusal of the plaint reveals that the plaintiff has not sought any
compensation/damages in terms of Section 21 of the Specific Relief Act,
1963. Consequently, no evidence qua the same has been led. It is not even
the case of the plaintiff that the deceased defendant or the defendants have
breached the agreement which has resulted in the plaintiff suffering any
injury for which it is entitled to claim compensation/damages. In the
circumstances, this issue is returned in favour of the defendants and against
the plaintiff.
(vi) Relief
61.At the time of final arguments, Dr. Arun Mohan, the learned Senior
Advocate submitted that with prejudice to the defendants’ rights and
contentions, and with the intent of settling the matter, the plaintiff could be
repaid the earnest money along with interest @ 12% per annum till date,
totalling to Rs. 3.15 crores.
62.The Court would note that the plaintiff has not specifically sought refund of
earnest money as provided under Section 22(2) of the Specific Relief Act,
1963. However, proviso to the said provision obligates the Court, at any
stage of the proceeding, to allow the plaintiff to amend the plaint so as to
include such relief. Perusal of the record shows that the plaintiff has not
been allowed to amend the plaint and at this stage, when final arguments
have been heard, it would not be in the fitness of things to allow the plaintiff
to amend the plaint so as to include the relief of refund of earnest money.
63.In view of the fact that (i) the plaintiff has not been allowed to amend the
plaintiff; (ii) the suit being barred by time; (iii) the plaintiff was not ready
and willing to perform its part of the agreement; but (iv) an offer to refund
the earnest money has been made by Dr. Arun Mohan; accordingly the
interest of justice would persuade the Court to direct that the plaintiff be
refunded the earnest money of Rs.1.125 crores along with interest @ 12%
per annum.
64.In conclusion, the Court holds:
1. The suit is barred by limitation;
2. Even otherwise, the plaintiff has not shown that it was ready and
willing to perform its part of the agreement;
3. The plaintiff is not entitled to the relief of specific performance of the
agreement;
4. However, lest the plaintiff be rendered remediless, it would be in the
interest of justice that the plaintiff shall be refunded the earnest
money of Rs.1.125 crores along with interest @ 12% per annum from
the date it was paid till realisation of the same.
65.Let the decree sheet be drawn up accordingly.
NAJMI WAZIRI, J
SEPTEMBER 01, 2015
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