TMI Blog2002 (4) TMI 972X X X X Extracts X X X X X X X X Extracts X X X X ..... g an amount of ₹ 55,000/-. The Trial Court dismissed the suit. At the same time, it granted a decree in favour of the plaintiff for a sum of ₹ 1,45,000/- representing the balance sale consideration. The facts giving rise to the suit and the appeal are these : The plaintiff-Company executed a sale deed on 22.2.1971 in favour of the defendants in respect of an oil mill located at Khurja in UP State with the structures, open land, machinery and fixtures, leasehold rights in the land etc. for a consideration of ₹ 2 lakhs. A sum of ₹ 50,000/- was to be paid before the Sub-Registrar at the time of registration and it was stipulated in the sale deed that the balance amount will be paid in two instalments falling on 15.3.1971 and 30.4.1971. It was further stipulated that the transferee shall not be entitled to deal with, sell, transfer or assign the property sold, till such time as the entire balance sale price of ₹ 1.50 lakhs was paid to the transferor. A sum of ₹ 50,000/- was accordingly paid to the transferor on the date of registration. Possession was admittedly handed over to the defendants. The respondent-plaintiff produced the income tax cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me infructuous. The appellants amended the plaint in the present suit questioning the legality of the order of Dy.Registrar and the consequential action of Sub-Registrar in registering the sale deed. On 27.08.1979, offer was made to pay the balance consideration by issuing a notice but the respondent refused to accept payment taking the stand that the matter was sub-judice. The suit in question was dismissed on 2.5.1980 subject to the direction as to the payment of balance of sale money. The money was deposited in court thereafter. The first appeal to the High Court filed by the respondent herein was allowed by the impugned judgment dated 5.7.1996. It is now necessary to advert to certain other events that happened between the date of presentation of sale deed for registration and the date of filing of the suit including the exchange of correspondence. On 16.3.1971, plaintiff issued notice to defendants to pay ₹ 50,000/- towards the first instalment specified in the indenture of sale. The defendants expressed their willingness to pay the amount provided that the plaintiff obtained a fresh ITC. On 12.1.1972, a second notice was issued from the plaintiff s side informing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es covered by the sale deed and to compensate the plaintiff for the damage done to the properties. The defendants sent a reply reiterating that there was a clear agreement on 17.6.1971 arrived at on the intervention of plaintiff s Director Shri Raj Kumar Meattle and the payment of ₹ 5,000/- made pursuant to such agreement. The defendants once again referred to the suit filed by Seth Shanti Lal Jain impleading both the plaintiff and the defendants. The defendants also called upon the plaintiff to bear the amount of ₹ 2,980/- on account of extra stamp expenses. In the concluding para it is stated, I hope you will wait for the payment till the formalities are completed and the suit of Seth Shanti Lal is decided finally . A month later, i.e. on 3.7.1973, the 4th and final notice came to be issued by the plaintiff. In that notice it was stated that Shri Raj Kumar Meattle had no authority to give any assurance or make any commitment on behalf of the plaintiff-Company, that too without any resolution of the Board of Directors. The plaintiff offered to give credit to the additional stamp duty said to have been paid by the defendants of ₹ 2,980/-. The defendants were then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laintiff did not send specific intimation of rescission of contract with effect from a particular date. The learned trial Judge further held that the contract was neither voidable nor terminable by the plaintiff and therefore Section 27 or 31 of the Specific Relief Act was not attracted. According to the trial court, the sale was complete and title passed irrespective of non-payment of balance sale price. The following were the circumstances relied upon by the Trial Court for reaching the conclusion that no breach was committed by the defendants and the plaintiff was not entitled to put an end to the contract are :- 1. The plaintiff got the I.T.C. cancelled by setting up his relative by name Shri R.K. Meattle to file a complaint; 2. After the certificate was restored on 4.1.1972, the plaintiff instead of filing the order of I.T.O., challenged that order on the ground that fresh certificate should have been issued, for which there was no bona fides on the part of the plaintiff. Moreover, the factum of restoration or issuance of fresh clearance certificate was not intimated to the Sub-Registrar; 3. The plaintiff having knowledge of the fact that the document has not been reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... njoyed property after taking possession should have made the payment first and sue the plaintiff for indemnification, if necessary. Referring to the alleged agreement entered into between Shri R.K. Meattle and the defendants, the High Court observed that the alleged agreement was not believable. The High Court then observed that the appellant should have made the payment at least after the final notice sent in July, 1973, wherein it was mentioned that I.T.C. was procured and the sale deed could be got registered on payment of balance money. The High Court was therefore of the view that the defendants failed to fulfil the contractual obligation on their part and therefore the contract was voidable and could be repudiated by the plaintiff. The appeal was therefore allowed and the suit was decreed. It is the contention of the appellants that the requirements of either Section 31 or 27 are not attracted to the present case and therefore the suit itself is misconceived. It is contended that the rescission of executed contract on account of non-payment of balance sale consideration does not arise as the title passed to the appellants with the registration of document and delivery of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted sale. Section 47 of the Registration Act has no application in this fact situation and the theory of dating back cannot be invoked by the defendants. The refusal to pay the balance sale consideration on the ground of pendency of suit of Seth Shanti Lal and the alleged agreement with one of the Directors of the plaintiff-Company is wholly untenable and amounts to refusal to perform the contract within the meaning of Section 39 of the Contract Act. The contract, it is submitted, is voidable on account of persistent refusal by the defendants to pay the balance sale consideration even after the notice was given by the plaintiff making the time the essence of contract. Having thus clarified the legal position, the learned senior counsel for the respondents have taken us through the correspondence and the findings of the High Court in support of his argument that the plaintiff was amply justified in putting an end to the contract when it became apparent that the defendants were in no mood to fulfil the essential promise under the contract. Finally, the learned senior counsel contended that the conduct of the defendants was most reprehensible. Having taken possession and started enj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petition were not explained by the plaintiff s witness. The second aspect which evoked adverse comments of the trial Court is the fact that after the ITC was restored by the Income Tax Officer, the plaintiff challenged the order of the ITO contending that it was an illegal order and a fresh certificate should have been issued. This move on the part of the plaintiff was evidently meant to delay the process of registration and casts any amount of doubt on the bona fides of plaintiff. Moreover, even after obtaining a fresh certificate pursuant to the order passed by the higher authority, the plaintiff did not make the defendants or the Sub-Registrar aware of this fact for more than a year. It was only in the letter dated 3.7.1973, an indication was given that the certificate under Section 230(A) of Income Tax Act was available. What is more surprising is that the plaintiff returned the certificate to Income Tax Office on 10.9.1974 (vide paras 34 and 35 of trial Court s judgment). These facts noticed and commented upon by the Trial Court were not at all adverted to by the High Court. The plaintiff cannot on the one hand withhold the production of I.T.C. which was essential for registr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The averments in the plaint and the material portion of the deposition of the plaintiff s witness were not adverted to while reaching a finding in this regard. In the plaint, the factum of sending Shri R.K. Meattle to the defendants and Shri R.K. Meattle signing the letter are admitted. But, what is stated in the plaint is that Shri Meattle was not authorised to do so. When we come to the deposition of Shri B.D. Meattle examined as P.W.1, a version was put forward that the letter was got forcibly written by the defendants. If that is so, and if the private limited company having two Directors at the relevant point of time (R.K. Meattle and B.N. Ahuja) did not approve of the action of R.K. Meattle, why did the plaintiff keep silent for nearly two years without questioning the authority of Shri Meattle? This question remained practically un-answered. Shri B.D. Meattle merely stated that the defendants had no money and therefore they sought time. It is needless to say that this explanation is vague and irrelevant. Another important fact is that the bank draft for the amount of ₹ 5,000/- received from the defendants was not returned and it is not the case of the plaintiff that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clearance certificate. When the defendants were informed of the readiness of the plaintiff to hand over the ITC subject to payment of balance money within 15 days, the defendants then raised the plea of pendency of the suit of Seth Shanti Lal which was by then dismissed for default. The factum of dismissal of suit was intimated to the defendants through the notice dated 3.7.1973, though the suit was subsequently restored and was finally dismissed in the year 1978. The fact remains that the defendants who, in the initial stages, were prepared to pay the balance sale price on receipt of ITC, for reasons best known to them, dodged to make the payment on the ground of pendency of suit. Though this conduct on the part of the defendants is not above board, the conduct of the plaintiff, who has sought equitable remedy, should be kept uppermost in the mind of the Court. The plaintiff seeking equitable remedy cannot approach the Court with unclean hands or be guilty of laches. Irrespective of the conduct of the defendants we must hold that the plaintiff has, for various reasons discussed above, disentitled himself to the relief of cancellation of instrument and for recovery of possession f ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
