9911796707
TMI Blog2023 (2) TMI 1187X X X X Extracts X X X X X X X X Extracts X X X X ..... uated at New Badam Wadi, V.P. Road, Mumbai standing on a free hold land admeasuring about 3032 sq. mts. (hereinafter referred to as the 'suit property'), owned by the defendant-the Life Insurance Corporation of India, a Public Sector Corporation established under the provisions of Life Insurance Corporation Act, 1956. (b) The defendant Corporation had floated tenders for sale of the suit property. The plaintiff Nos. 1 to 5 claimed to have formed Girgaum Griha Nirman Mandal, an Association of tenants, and submitted an offer to purchase the suit property for a consideration of Rs. 4,25,000/- vide letter dated 20th January, 1981. Along with the said offer the plaintiff Nos. 1 to 5 deposited a sum of Rs. 50,000/- with the defendant which was duly acknowledged by defendant by passing a receipt dated 22nd January, 1981. The said offer was accepted by the defendant vide letter dated 27th February, 1981 incorporating therein the material terms and conditions of sale. (c) It was, inter alia, provided that the suit property was to be purchased for a consideration of Rs. 4,25,000/- on "as is where is basis". A sum of Rs. 50,000/- was already deposited. The balance amount of Rs. 3, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined to accede to the request of the plaintiff Nos. 1 to 5 to execute conveyance. (g) Since the further correspondence, which the plaintiff Nos. 1 to 5 had with defendant, did not yield any positive result, the plaintiffs were constrained to institute the suit for a decree for specific performance of the agreement for sale of the suit property along with consequential reliefs of obtaining Income Tax Certificate under section 230A of the Income Tax Act, 1961 and permission of the competent authority under the provisions of the Urban Land (Ceiling and Regulation) Act, 1976 and, thereafter, execution of conveyance and delivery of possession. (h) The defendant resisted the suit by filing a written statement. The substance of the resistance put forth by the defendant was that the defendant had accepted the offer of the plaintiff Nos. 1 to 5 as it was made to believe that the offer was made for and on behalf of the sitting tenants in the suit property. There was an express representation on the part of the plaintiff Nos. 1 to 5 that they would form a cooperative society of the sitting tenants. It was only on the strength of the said representation, the defendant had agreed to sale th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the suit. By an order dated 19th December, 2006 the Chamber Summons was allowed and plaintiff No. 6 came to be impleaded as defendant No. 2. In the written statement filed on behalf of defendant No. 2 (now plaintiff No. 6), it was, inter alia, contended that defendant No. 2 was the real society of the sitting tenants in the suit property. The claim of the plaintiff Nos. 1 to 5 was thus resisted by defendant No. 2. 5. Subsequently, pursuant to a purported understanding arrived at between the plaintiff Nos. 1 to 5 and defendant No. 2, Chamber Summons No. 2183 of 2014 was taken out to transpose defendant No. 2 as plaintiff No. 6. Pursuant to an order dated 3rd July, 2015 defendant No. 2 came to be transposed as plaintiff No. 6. Thereupon, the defendant No. 1 (now sole defendant) filed an additional written statement. 6. The defendant assailed the claim of plaintiff No. 6 for specific performance of the contract on the ground that there was no privity of contract between plaintiff No. 6 and the defendant as plaintiff No. 6 was never a party to the contract and, therefore, cannot profess to enforce specific performance of the said contract. The defendant also adverted to the written ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt had agreed to sale the suit property to the plaintiffs only upon formation of Co-operative Housing Society of the tenants in the suit property and, so far as plaintiff No. 6, there was no privity of contract between plaintiff No. 6 and the defendant. Since specific performance is an equitable relief, plaintiff Nos. 1 to 5 being guilty of making a false representation that they were the representatives of the sitting tenants in the suit property, in the opinion of the learned Judge, plaintiffs were not entitled to the relief of specific performance of the contract. 11. Being aggrieved and dissatisfied, the plaintiffs have preferred this appeal. The primary challenge to the impugned decree is that having entered findings on all material points in favour of the plaintiffs, the learned Judge committed a manifest error in declining to pass a decree for specific performance, especially when it is incontestable that plaintiff No. 6 is a cooperative society formed by the sitting tenants and the defendant has taken a consistent stand that they had always been ready to execute the conveyance in favour of a Co-operative Society of the sitting tenants. 12. The defendant has also preferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Judge is unsustainable, and, thus, requires to be corrected in appeal. 16. In opposition to this, Mr. Bhave, the learned Counsel for the respondents, submitted with tenacity that the fact that the transaction since its inception was tainted with fraud cannot be lost sight of. Not only under the letter dated 27th February, 1981 (Exhibit-29) the defendant had made it explicitly clear that the property would be conveyed in favour of the Society of the sitting tenants but also in the offers, which were made by plaintiff Nos. 1 to 5, dated 17th January, 1981 and 20th January, 1981 (Exhibit-22), the defendant was made to believe that the offers were for and on behalf of the sitting tenants, who were represented to be the members of Girgaum Griha Nirman Mandal. Mr. Bhave laid emphasis on the fact that there are clear and categorical admissions to the effect that only plaintiff Nos. 1 and 3 were the tenants of the tenements in the suit premises. Moreover, contrary to representation, it has emerged that Girgaum Griha Nirman Mandal was, in fact, a partnership firm and Mr. Harbans Singh Kohli (PW-2) had a domineering role in the said firm. 17. In the backdrop of this nature of evidence, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to deposit with us the entire balance purchase price viz., Rs. 3,75,000/- (Rupees three lakhs seventy five thousand only) within one month from the date of this letter, time being the essence of the contract. 3. You shall enter into an agreement for purchase of the abovementioned property with the Life Insurance Corporation of India as per the draft agreement enclosed, within one month from the date of the acceptance of this letter. .. 7. You shall get the proposed society registered within 3 months from the date of execution of the agreement for purchase and in any event complete the purchase at your cost within 6 months from the date of the agreement for purchase. 8. The conveyance deed in respect of the above mentioned property shall be executed in favour of the cooperative housing society proposed to be formed by the sitting of the above property. 9. If the society is not registered for any reason whatsoever as provided in clause No. 7, the sale deed shall be completed notwithstanding the non-registration of the society and you shall be bound and liable to take the conveyance of the property and complete the sale. Within the stipulated period of 6 months from the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ociety of the sitting tenants was thus a mere subterfuge to avoid the obligation under the contract, urged Mr. Damle. 25. Mr. Bhave joined the issue by canvassing a submission that Clause (9) cannot be read in isolation. It has to be read not only in conjunction with the other stipulations in the letter dated 27th February, 1981 (Exhibit-29) but also the correspondence which preceded and succeeded the letter dated 27th February, 1981 (Exhibit-29) and the attendant circumstances. 26. The aforesaid submission of Mr. Bhave appears impeccable. Upon a meaningful reading of the letter dated 27th February, 1981 (Exhibit-29), as a whole, the intent of the defendant to effect the sale of the suit property in favour of the Society of the sitting tenants becomes manifest. The opening part of the said letter indicates in no uncertain terms that the defendant reckoned that the offer was submitted on behalf of the sitting tenants vide letter dated 20th January, 1981 (Exhibit-22). Clause 7 makes it further clear that the defendant called upon the signatories to the said letter dated 20th January, 1981 (Exhibit-22) to get a Society of the tenants registered within three months from the date of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1981 (Exhibit-34) in response to the letter dated 5th September, 1981 (Exhibit-33), emanating from the defendant to the effect that the defendant had accepted the offer submitted by a group of tenants on behalf of the sitting tenants and not on behalf of five persons whose names were shown in the draft conveyance as purchasers of the said property in their individual capacity. 30. The aforesaid documents, if construed in conjunction with the terms of the letter dated 27th February, 1981 (Exhibit-29), make it explicitly clear that not only there was an offer on the part of the signatories to the letter dated 20th January, 1981 (Exhibit-22) that the suit property was to be purchased for and on behalf of the sitting tenants but the defendant construed the same as an offer on behalf of the sitting tenants. From this standpoint in Clause 9, banked upon by plaintiff Nos. 1 to 5 which stipulated that even in the event of non-formation of the Co-operative Society of the sitting tenants, plaintiff Nos. 1 to 5 shall purchase the property, cannot be construed torn out of context. 31. What is of decisive significance is the representation which was made by the signatories to the offer lette ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceded in the cross-examination that Mr. R.M. Patel, and Mr. Tejprakash Jaiswal, plaintiff Nos. 3 and 5 were not the tenants of any tenements in the suit property. Mr. Bhupinder Shetty joined Girgaum Griha Nirman Mandal in the year 1982 in place of Mr. Tejprakash Jaiswal-plaintiff No. 5. Mr. Shetty took over the rights of Mr. Jaiswal for consideration. Whereas he had taken over the rights of Mr. R.M. Patel-plaintiff No. 3. 35. The situation which thus obtains is that when the offer was made the plaintiffs knew that all of them were not the tenants of the tenements in the suit property. Secondly, they were aware that Girgaum Griha Nirman Mandal was not a society, much less of the sitting tenants in the suit property. Thirdly, it was a firm engaged in the business of builders and contractors. Fourthly, the entire consideration was contributed by plaintiff Nos. 1 to 5 in specific proportion, who also sought the conveyance of the property with the rights corresponding to their share in the consideration. All these factors lead to an inescapable inference that a facade of representing the sitting tenants in the suit property was created and the defendant was made to believe and accept t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not merely as to the contents of the document out as to its character. The authorities make a clear distinction between fraudulent misrepresentation as to the character of the document and fraudulent misrepresentation as to the contents Thereof. With reference to the former, it has been held that the Transaction is void,. while in the case of the latter, it is merely voidable. In Foster v. Mackinon (2) the action was by the endorsee of a bill of exchange. The defendant pleaded that he endorsed the bill on a fraudulent representation by the acceptor that he was signing a guarantee. In holding that such a plea was admissible, the Court observed: "It (signature) is invalid not merely on the ground of fraud, where fraud exists, but on the ground that the mind of the signer did not accompany the signature; in other words, that he never intended to sign, and therefore in contemplation of law never did sign, the contract to which his name is appended. .... The defendant never intended to sign that contract or any such contract. He never intended to put his name to any instrument that then was or thereafter might become negotiable. He was deceived, not merely as to the legal effect, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the defendant was willing to execute the conveyance in favour of the society of the sitting tenants. Therefore, according to Mr. Damle, there is no impleadment in passing a decree for specific performance. 42. I find it rather difficult to accede to this submission which seeks to over-simplify the matter. First and foremost, there was no privity of contract between plaintiff No. 6 and the defendant. Secondly, plaintiff No. 6 was not incorporated on the date the defendant accepted the offer by letter dated 27th February, 1981 (Exhibit-29). Thirdly, it is not the case that the contract was executed by the promoters for and on behalf of plaintiff No. 6 and, therefore, now plaintiff No. 6 can seek enforcement of the contract. Fourthly, plaintiff No. 6 came to be registered as a society after almost 25 years of the acceptance of the offer i.e. on 4th October, 2005. Post incorporation plaintiff No. 6 initially sought to resist the plaintiff Nos. 1 to 5s prayers for specific performance of the contract. Fifthly, it is the case of plaintiff No. 6 that a society namely Panchkanya Co-operative Housing Society was proposed to be formed and, as conceded by Mr. Sunil Newalkar (PW-3), a lett ..... X X X X Extracts X X X X X X X X Extracts X X X X
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