Court denies specific performance due to lack of privity. Defendant entitled to refund with interest.

The court found a valid agreement for sale existed, but there was no privity of contract between the individual plaintiffs and the defendant. Specific performance was denied due to the plaintiffs' failure to form a cooperative society as agreed. Misrepresentation by the plaintiffs led to the agreement being voidable, entitling the defendant to avoid it. The court ordered the defendant to refund the consideration amount of Rs. 4,25,000/- with 6% interest. The appeal was partly allowed, decree modified for refund, and cross-objection dismissed. Each party to bear their costs.

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Issues Involved:
1. Validity of the agreement for sale.
2. Privity of contract between the parties.
3. Specific performance of the contract.
4. Misrepresentation and fraud.
5. Refund of consideration.

Detailed Analysis:

1. Validity of the Agreement for Sale:
The court examined whether there was a valid agreement for the sale of the suit property. The letter dated 27th February 1981 (Exhibit-29) incorporated all the necessary terms and conditions, establishing a contract for sale. The payment of the entire consideration amount of Rs. 4,25,000/- by the plaintiffs further confirmed the acceptance of the offer. Thus, the court concluded that there was a valid agreement for sale.

2. Privity of Contract Between the Parties:
The court scrutinized the privity of contract between the plaintiffs and the defendant. It was established that the defendant had agreed to sell the property to a cooperative society of the sitting tenants, not to the individual plaintiffs. The plaintiffs' failure to form such a society and the subsequent registration of plaintiff No. 6 (a society) after 25 years did not establish privity of contract with the defendant. Therefore, the court found that there was no privity of contract between plaintiff No. 6 and the defendant.

3. Specific Performance of the Contract:
The court evaluated whether the plaintiffs were entitled to specific performance of the contract. It was determined that the defendant had agreed to sell the property to a cooperative society of the sitting tenants, as evidenced by the terms of the letter dated 27th February 1981 (Exhibit-29) and the subsequent correspondence. The plaintiffs' failure to form such a society and their request for conveyance in their individual names led the court to conclude that they were not entitled to specific performance.

4. Misrepresentation and Fraud:
The court examined the allegations of misrepresentation and fraud by the plaintiffs. It was found that the plaintiffs had represented themselves as acting on behalf of the sitting tenants, which was not entirely true. The Girgaum Griha Nirman Mandal, purportedly representing the tenants, was a partnership firm engaged in real estate business. This misrepresentation vitiated the defendant's consent, rendering the agreement voidable at the defendant's option. The court concluded that the defendant was justified in avoiding the agreement due to this misrepresentation.

5. Refund of Consideration:
Although the plaintiffs did not seek the relief of refund of the consideration in their plaint, the court held that under Section 64 of the Indian Contract Act, the defendant was obligated to restore the benefit derived under the voidable contract. Consequently, the court ordered the defendant to refund the amount of Rs. 4,25,000/- to the plaintiffs along with simple interest at the rate of 6% per annum within six weeks. If the amount was not deposited within the stipulated period, it would carry interest at the rate of 9% per annum till payment and/or realization.

Conclusion:
The appeal was partly allowed, and the suit was partly decreed. The court ordered the defendant to refund the consideration amount with interest, modifying the decree to that extent. The cross-objection by the defendant was dismissed, and the parties were directed to bear their respective costs. The decree was to be drawn accordingly, and any interim applications were disposed of.

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