TMI Blog1972 (3) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... son. John Geoffrey Turner and Nigel Frederic Turner, both since deceased, were the owners of the 100 per cent shares of Hungerford. The entire share capital of Turner Morrison consisted of 4,500 fully paid up ordinary shares of ₹ 1,000/each. By exchange of letters it was agreed that Haridas Mundhra, hereinafter called 'Mundhra' would purchase from 'Hungerford, 49 per cent shares of Turner Morrison. The agreement also provided for an option to Mundhra to purchase from Hungerford, the balance of 51 per cent shares of Turner Morrison within 5 years. A formal agreement dated October 30, 1956, was 'executed between Hungerford, John Geoffrey Turner and Nigel Frederic Turner on the one hand, and British India Corporation and Haridas Mundhra on the other, embodying the terms of the agreement. Pursuant to this agreement, 49 per cent of the shares in Turner Morrison was sold and transferred to Mundhra and his nominee British India Corporation. Thereafter, Mundhra exercised his option to purchase, the 51 per cent shares. But the shares were not sold or transferred to him. So, on April 19, 1961, Mundhra filed a suit. against Hungerford, Turner Morrison and others for s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5, 1968. Before the dismissal of appeal No. 69 of 1964 filed against the decree for specific performance in suit No. 600 of 1961, the Certificate Officer, 24 Parganas had attached that decree, as Mundhra failed to satisfy six certificates then pending against him. In pursuance to a Memorandum issued by the Certificate Officer.Ray, J. made an order dated March 2, 1964, staying the execution of the decree until cancellation of the notice by the Certificate Officer or until the Certificate Officer or the debtor applied for execution of the decree. The decree in suit No. 600 of 1961 was also attached in execution of three other decrees, namely the decree obtained by Champaran Sugar Co. Ltd. and B British India Corporation Ltd. in suit No. 179 of 1960 of the Court of Civil Judge, Kanpur and those obtained by Kanpur Sugar Works Ltd. and British India Corporation Ltd. in suit No. 178 of 1960 in the Court of Second Civil Judge, Kanpur and the Life Insurance Corporation of India in special. appeal No. 299 of 1961 of the High Court of Allahabad. The effect of these orders of -attachment was that the decree-holder Mundhra was prohibited and restrained from alienating, transferring or ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise of their lien on those shares under Article 22 of the Articles of Association of the Company. Mundhra was not a party to the suit. Turner Morrison made an ex-parte application in the suit on July 8, 1966, for appointment of a receiver in respect of the 2,295 shares. Mr. K. B. Bose was appointed receiver, and he took possession of 1,588 shares from the First National City Bank. and 707 shares from the Police. On July 13, 1966, Sen J. passed an order confirming the order of appointment of the receiver and directing that the receiver will be at liberty to deliver the 51 per cent of shares to Mundhra on payment of ₹ 86,60,000/- in performance of his part of the obligation under the decree, if so required by the Court hearing appeal No. 286 of 1965. The order also provided that if Mundhra takes the shares on payment of the price directed to be paid by the decree, or in direction of the Court of appeal, the lien if any, as claimed by Turner Morrison will shift on to the money which the receiver would get from Mundhra. Turner Morrison preferred an appeal against the order and applied for stay of the order. The stay was refused but the appeal was partly allowed on September 2, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liver the shares free from encumbrance, he held that there was no bona-fides in the claim of Turner Morrison : firstly because the lien was not set up by Turner Morrison in its written statement in the suit filed by Mundhra for specific performance, secondly because in the suit filed by Turner Morrison claiming,the lien, Mundhra, who was interested in the shares upon which the lien was claimed was not made a party and thirdly for the reason that by his letter dated November 29, 1955, Mundhra had agreed that Turner Morrison would pay the income tax liabilities of Hungerford to the extent of ₹ 46 lakhs. The learned Judge found it impossible to believe that Mundhra had no knowledge about the suit filed by Turner Morrison claiming the lien as he was in complete control of Turner Morrison at the time the suit was filed and said that Turner Morrison and Mundhra were colluding with each other to defeat the appellant in its attempt to get the purchase money from Mundhra and that suit No. 2005 of 1965 was instituted with the connivance, of Mundhra. The learned judge also found that even if Turner Morrison had a lien on those shares, since there was no covenant for tide, Mundhra was :n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mination in his, favour, will not fritter away the benefit under the decree except for a higher or superior advantage and that advantage Mundhra got under the decree in suit No. 600 of 1961. The Court then held that application filed by the appellant for rescission of the contract and the decree was _not main- tainable. The reasoning of the Court was two-fold. no Court said that the appellant had no accrued, right to apply for rescission under section 35 of the Specific Relief Act, 1877, which would survive the repeal of that Act by the Specific Relief Act, 1963, and so, no application for rescission would lie under section 35 of the old Act read with section 6 of the General Clauses Act, 1897. It then,held that since section 28 of the Specific Relief Act, 1963, only provided for rescission of a decree for specific performance of a contract for the sale or lease of immovable property, the application was incompetent under the section and allowed the appeal and cross-objection in part. We do not think that the appellant had an accrued right for rescission of the contract or the decree for specific performance under section 35 of the Specific Relief Act, 1877, when the Act was re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n- able under any other provision of the law. The Specific Relief Act, 1963, is not an exhaustive enactment. It does not consolidate the whole law on the subject. As the preamble Would indicate, it is an Act to define and amend the law relating to certain kinds of specific relief . It does not purport to lay down the law relating to specific relief in all its ramifications. In Ramdas Khatau Co. v. Atlas Mills Co. Ltd.(A.I.R.1931 Bombay 151.) it was held that the Specific Relief Act, 1877, was not exhaustive. In Rahmath Unnissa Begum v. Shimoga Co-operative Bank Ltd. another(A.I.R. 1951 Mysore 59.) the Court said that the Specific Relief Act, 1877, is founded on English equity jurisprudence and that it is permissible to refer to English Law on the subject wherever the Act did not deal specifically with any topic [see also Firm Kishore Chand Shiva Charan Lal and another v. Budaun Electric Supply Co. Ltd.( A.I.R. (31) 1944 Allahabad 66 at p. 77.)]. Although a matter on which the Act defines the law it might generally be exhaustive, the Act as a whole cannot be considered as exhaustive of the whole branch of the law of specific performance. It is settled by a long course of decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t may, in a proper case, avail himself : (i) He may obtain (on motion in the action) on order appointing a definite time and place for the completion of the contract by payment of the un-paid purchase-money and delivery over of the executed conveyance and title deeds, or a period within which the judgment is to be obeyed, and, if the other party fails to obey the order, may thereupon at once issue a writ of sequestration against the defaulting party's estate And effects........ (ii) He may apply to the Court (by motion in the action) for an order rescinding the contract. On an application of kind, if it appears that the party moved against has positively refused to complete the contract, its immediate rescission may be ordered; otherwise, the order will be for rescission default of completion within a limited time...... In Halsbury's laws of England(Halsbury's Laws of England 3rd Ed,, Vol, 36. 351-52.) the law is stated as under Ancillary relief may be obtained after judgment in an action for, specific performance where such further relief becomes necessary........ Either party may also obtain an order rescinding the contract in default of completion with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t period after the exercise of the option the appellant should convey the shares against the payment of the purchase money. But it was open to either party to make time essential by intimating the other party after a reasonable period about it after expressing its or his readiness and willingness to perform its or his obligation under the contract. That liberty was not taken away because a decree has been passed for specific performance of the contract without fixing the time for the performance. The appellant could, therefore, have called upon Mundhra to pay the purchase money and take delivery of the shares within reasonable time. The fact that the decree did not fix a time for completing the contract did not prevent either party from demanding performance from other party within a reasonable time and thus make time essential, as the parties had that liberty before the decree was passed and the decree did not abrog ate that liberty in any way, and if the party 'from whom performance was demanded evinced by his conduct that he was unwilling to perform his part, then it was open to the party claiming performance to rescind the contract and obtain an ,order from the Court adjudg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, Mundhra was not in default in paying the purchase money. It will be recalled that on July 13, 1966, Son J. passed the order in suit No. 2005 of 1965 directing Mundhra to pay the purchase price and take delivery of the shares from the receiver. The learned judge further directed that the lien, if any, of Turner Morrison would shift to the purchase money to be paid to the receiver. This order, though passed in suit No. 2005 of 1965 in which Mundhra was not a party, was communicated to him by the letter of the appellant dated January It, 1967. Even before that, two letters had been sent on July 28 and July 29, 1966, by the appellant's solicitors to Mundhra asking him to be ready with the sum to take delivery of the shares before the Court hearing appeal No. 286 of 1965. This was refused by Mundhra by his letter dated' August 2, 1966. In the reply of Mundhra dated January 25, 1967, to the letter dated January 11, 1967, from the appellant, he raised the objection that the appellant was not in a position to give delivery of the shares and that the order dated July 13, 1966, was not binding on him, as he was not a party to the suit in which the order was passed. As the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of a contract or a decree, it is only concerned with the question whether the person rescinding it was justified in doing so. The Court does not create any right which parties did not possess when it makes a declaration that a contract has been validly rescinded. Merely because it is necessary for the Court to pass an order of rescission, when a controversy arises, it does not follow that it is the Court that rescinds the contract. The Court is only passing upon the validity of the rescission already made by the party. In Abram Steamship Company Ltd. and another v. Westville Shipping Company Ltd.(1), their Lordships of the House of Lords said Where one party to a contract expresses by word or art in an unequivocal manner that by reason of fraud or essential error of a material kind inducing him to enter into the contract he has resolved to rescind it, and refuses to be bound by it, the expression of his election, if justified by the facts, terminates the contract, puts the parties in status quo ante and restores things, as between them, to the position in which they stood before the con-, tract was entered into. It may be that the facts impose upon the party desiring to rescind t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the appellant to have executed the decree and realised the purchase money from Mundhra instead of resorting to the remedy of rescission. Order 21, rule 30 provides for execution of a decree for money. That rule can possibly have no application to the execution of a decree for specific performance, firstly for the reason that a specific mode for execution of a decree for specific performance is provided by Order 21, Rule 32 and secondly, because no decree for money is passed in a suit for specific performance. Order 21, Rule 32 provides as follows :- (1) Where the party against whom a decree for the specific performance of a contract, 'or for restitution of conjugal rights, or for an injunction, has been passed, has had an opportunity of obeying the decree and has wilfully Red to obey it, the decree may be enforced in the case of a decree for restitution of conjugal rights by the attachment of his property or, in the case of a decree for the specific performance of a contract or for an injunction by his detention in the civil prison, or by the attachment of his property or by both. (2) Where the party against whom a decree for specific performance or for an injunctio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one may be done by the decree-holder or some other person appointed by the craft can only refer to an act other than an act of payment of money. We do not think that the appellant could have executed the- decree against Mundhra as a money decree and realised the purchase money from him. Therefore, it Mundhra refused to pay the purchase money, there was nothing which prevented the appellant from applying for rescission of the decree. It was then contended that the attachments of the decree in suit No. 600 of 1961 by the creditors of Mundhra prevented him from tendering the purchase money to the appellant and take delivery of the shares as the attachments prevented him from obtaining satisfaction of the decree by paying the purchase money and obtaining delivery of the shares. In other words, the contention was that because of the attachments Mundhra could not have paid the purchase money to the appellant as that would have been in contravention of the orders of the Court attaching the decree. We do not think that there is any substance in this contention. If the creditors of Mundhra attached the decree and he was prevented from tendering the money because of the attachment, he has ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
