TMI Blog1952 (6) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... O. S. No. 4/17 was for specific performance of a contract for sale of property executed by Natesa Iyer who was the managing director in conjunction with one Seetharama Iyer, a member of the company, both of whom were authorised by a resolution dated 12th May, 1935, (Exhibit 1A) and confirmed on 26th May, 1935 (Exhibit XVIII) to sell the property. It was pursuant to that authority that they executed the contract sought to be enforced which is dated 16th January, 1935, and marked as Exhibit Q. A period of two months is fixed in the contract for the completion of the sale. The sale was not effected pursuant to Exhibit Q, for reasons which will appear hereafter. On 11th March, 1936, a notice was issued on behalf of the plaintiff to the executants of the contract. The reply thereto was dated 14th March, 1936, which is marked as Exhibit IX in the case. There was a rejoinder issued on behalf of the plaintiff which bears the same date as Exhibit IE and which is marked as Exhibit X in the case. On 29th October, 1935, a notification was published in the Government Gazette by the Registrar of Joint Stock Companies stating that the company had not been working for some time and that if no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the property (which was in the possession of the plaintiff) or to pay the balance consideration for the sale. This conduct of the transferee second defendant led to the issue of the notice on 22nd April, 1938 (Exhibit V) by the 1st defendant. The 1st defendant also made an application to the court under section 217 of the Travancore Companies' Act corresponding to section 216 of the Indian Companies Act which is Company Petition No. 12/1113 on the file of the court below. The prayer in that petition was for a cancellation of the assignment in favour of the 2nd defendant and for directions to execute a deed of assignment to the plaintiff pursuant to Exhibit Q. That petition was resisted by the 2nd defendant and was dismissed on 12-7-1113. On 27-7-1114 the plaintiff filed Company Petition No. 14/1114 in the court praying for directions to the liquidator to execute a deed of assignment in his favour pursuant to Exhibit Q. The transfer in favour of the 2nd defendant was impeached therein. That petition was also dismissed on 12-1-1117. Within four days thereafter, that is, on 16-1-1117 the plaintiff filed O. S. 4/1117 for specific performance as already mentioned. That suit was decreed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded. We gave a full hearing to the case on that basis until it was pointed out to us by learned counsel for the respondent that the only ground taken in the appeal before us is ground No. 4 which runs as follows: "4. The lower court ought to have held that the first defendant was not entitled to enter into Exhibit Q agreement with the plaintiff when proceedings were pending for removing the name of the company from the register." That having been mentioned, learned counsel for the appellant pointed out to us ground No. 11 in the memorandum of appeal which is as follows: "11. The court below ought not to have relied upon subsequent conduct of the parties in order to interrupt the prior notice sent by the plaintiff repudiating the contract." The questions proposed to be argued as the first two points in appeal are not thus clearly raised in the memorandum of appeal nor are these points seen raised in the court below. The relevant paragraphs in the written statement of the 2nd defendant are paragraphs 4 and 6. The relevant part of paragraph 4 states: " .But those persons had no right to enter into any agreement for sale and agreement is invalid. Subsequently the plain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he competence of Natesa Iyer and Seetharama Iyer under the authority conferred upon them by the resolution, Exhibit IA. Exhibit IA is as follows : "Resolved that in view of the finances of the company the cardamom belonging to the company be sold as early as possible for the best price available from now and that M/s V. Seetharamier and S. Natesa Iyer be authorised jointly to negotiate and effect the sale and sign the necessary documents, receive the purchase money and out of the money so received resolved that the debts of the company be immediately discharged and the balance be utilised to return to the shareholders with a view to the winding up of the company. This was confirmed, as already stated by resolution dated 26th May 1935, marked as Exhibit IB. The contention is that when these persons were authorised to sell, the sale must be for cash down, that is, for prompt payment of the full consideration. In support of this argument, learned counsel relied upon a decision in Jumma Dass v. Eckford. Of the two learned Judges who participated in that decision, Sir Richard Garth, Chief Justice, disposed of the matter on the ground that in giving the document in question it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a tea estate which the company owned and which had been sold for 1 lakh and 80 thousand rupees, from out of which the debts of the company to the tune of Rs. 70,000 had been discharged, leaving a balance of over a lakh of rupees. This amount was available and pending distribution among the members of the company. There is nothing to indicate that the company was indebted at that time to any extent anywhere near this amount which was available with the company. Debts of a company have precedence and must first be paid before distributing or thinking of distributing the assets of the company among its members. It is no doubt true that a resolution of the company at about the time of Exhibit IA authorised the borrowing of money for paying the tax of the property whose payment had been overdue. It is also provided in that resolution that the loan so taken would be a first charge upon the proceeds of the sale of the property which remained in the company and which formed a cardamom estate with an extent of over a hundred acres. Besides the loan thus authorised to be taken and which may have been taken for the payment of the land revenue which could not in any event be in excess of what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreed to pay Rs. 5,650 for the property. In our judgment the persons who executed Exhibit Q were well within their powers under the authority conferred upon them by the resolutions of the company, Exhibits IA and IB. We may mention that the point that is specifically taken in the court below in the written statement, namely, that Natesa Iyer and Seetharamier who were authorised to sell under the resolution, were not competent to enter into an agreement to sell, whatever be the nature of that agreement, has not been pressed before us. We are of the opinion that an authority to sell must certainly include an authority to agree to sell. The circumstances that the agreement to sell was in the shape of a separate document reduced to writing some time before the actual execution of the deed of sale, will not matter or affect the authority to sell. The second point urged is that by his conduct the plaintiff has given up his right for specific performance. Reliance is placed upon Exhibit X to sustain this argument. Exhibit X refers to the fact that the plaintiff obtained information that there had been a notification in the Gazette by the Registrar of Joint Stock Companies to the effe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "please take notice that legal steps will be taken against your client" is significant as reserving to the plaintiff whatever rights and remedies the law will give him. There is no election between the remedies of claiming specific performance and claiming damages which an obligee under a contract to sell is entitled to. It may be stated that on the date of the notice, the basis was that in the estimate of the plaintiff the company had been removed from the register. It is not possible to think of the claim for specific performance having been expressly reserved in the notice. A company which is struck off the register may be directed to be and be restored to the register by an order of court. Section 247, clause (6), of the Indian Companies Act provides for such a case. It reads thus: "If a company or any member or creditor thereof feels aggrieved by the company having been struck off the register, the court on the application of the company or member or creditor, may, if satisfied that the company was at the time of the striking off carrying on business or in operation, or otherwise it is just that the company be restored to the register, order the name of the company to be r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e retains them, by demanding the addressee to make out a clean title. Assuming that Exhibit X constitutes a repudiation neither the 2nd defendant nor the company can avail of that circumstance for more reasons than one. So far as the company is concerned the repudiation has not been accepted by it. On the other hand, the proposal to bring the company back to life and in that manner make out a clean title was accepted by the company, and an application was made to the court for the restoration of the company. In Exhibit BG which is a certified copy of the application, the company relied upon the necessity to implement an arrangement for sale of the cardamom estate of the company as one of the grounds in support of the prayer for restoring the company back to the register. In paragraphs 4 and 5 of Exhibit BG after referring to the notification in the Gazette dated 29th October, 1935, published by the Registrar of Joint Stock Companies threatening the striking off of the company from the register within 3 months, it is stated that the company was not aware of that notice and it was due to ignorance thereof that steps were not taken to avoid the striking off. Paragraph 5 states that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er clear because it is stated in Exhibit IV that the only reason for transferring the property in favour of the 2nd defendant was that the plaintiff had not until then taken the assignment. Upon this point the argument urged by learned counsel for the appellant is that a time of two months is fixed for the completion of the transaction in Exhibit Q and that time is the essence of contract. This contention must be repelled. In a contract for sale of immovable property the presumption is that time is not the essence. No doubt it is competent for the parties by contract to make time the essence. That has not been done here. The facts mentioned above will show that on the due date the company stood struck off the register. It was due to no fault on the part of the plaintiff. The company may also not be at fault because though the Registrar of Joint Stock Companies issued the notification it was not served on account of a change in the office of the company from Travancore to a place in Madura as indicated in Exhibit BG. For no fault of the contracting parties, the transaction was not effected within the period mentioned in Exhibit Q. Both parties are agreeable to have the defect, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fere, cannot be bona fide. The court has got wide and, varied powers even in a case of voluntary liquidation. It may be the court may not interfere and pass orders affecting the rights of a third, party in the absence of that third party or except at the instance of that third party. It may have been supposed that notwithstanding the dismissal of Company Petition No. 12/13, the court might give relief to the plaintiff in his own application. The wording of section 216 of the Indian Companies Act is not such as to make it absolutely clear that no relief should in any event be granted to the plaintiff by the court acting under that section. We are satisfied that the plaintiff was prosecuting with due diligence the claim that he prosecutes in this suit by presenting Company Petition No. 16/1114 and that he is entitled to have the exclusion of the period of pendency of that petition before the court. Even apart from the exclusion of the aforesaid period, in our judgment, the claim is not barred by limitation because the period of limitation for a suit for specific performance is three years from the date fixed for the performance or when no time is fixed the date when the plaintiff h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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