TaxTMI 
TaxTMI 
2010 (11) TMI 858
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....nt of 30 acres 86 cents of land in Senthamangalam Village, Sriperumbadur Taluk, Kancheepuram District comprised in 38 items. M/s J.P. Builders-Appellant No. 1 and Shri J.P. Paramanandam-Appellant No. 2 herein are the owners of the suit property which they acquired under various sale deeds. The sister concern of M/s J.P. Builders viz., M/s Anand Agency has availed certain financial assistance from the Indian Bank, (hereinafter referred to as `the Bank') and for the said assistance Appellant Nos. 1 and 2 herein offered their various properties including the suit property as security for the principal as well as interest amount payable by M/s Anand Agency of which Appellant No. 2 is the sole proprietor. (b) On 15.08.2005, the appellants entered into a Memorandum of Understanding (MoU) (Ex. A-2) with Respondent No. 1 herein for sale of the suit property at a sale consideration of Rs. 14 lakhs per acre and a sum of Rs. 1 lakh was paid as advance by way of cheque on the same day. Balance sale consideration was to be paid within three months from the date of obtaining confirmation letter from the Bank. (c) On 10.10.2005, M/s J.P. Builders, by a letter addressed to the AGM, Indian Bank,....
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....ised doubt that the first respondent is no longer interested to buy the suit property, therefore, a legal notice was sent calling upon Respondent No. 1 to pay a sum of Rs. 1 crore as liquidated damages. (g) On 07.08.2006, Respondent No. 1 filed O.S. No. 336 of 2006 before the Principal District Judge, Chengalpet against the appellants and the Bank. By judgment and decree dated 30.04.2008, the Principal District Judge, Chengalpet decreed the suit partly, granting the relief of specific performance directing appellant Nos. 1 &2 herein to specifically perform their part of the obligations arising out of the agreement for sale (Ex. A-3) dated 03.02.2006 by executing the sale deed in favour of Respondent No. 1 on receipt of the balance sale consideration of Rs. 4,80,48,000/- subject to the mortgage of the Bank. Further the relief in respect of permanent injunction restraining the appellants from alienating or encumbering or dealing with the subject property was granted. The prayer for mandatory injunction for directing the appellants to discharge the loan in respect of DRT proceedings pending on the file of DRT-I, Chennai, thereby retrieve the documents and deliver the same to Respond....
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....overy Officer, DRT-I, Chennai praying for release of the scheduled property and stay of auction sale. On 23.11.2009, the Recovery Officer, DRT-I, Chennai dismissed the said applications. On 24.11.2009, Respondent No. 1 filed SLP (C) No. 31358 of 2009 before this Court challenging the order dated 16.11.2009 passed by the Division Bench of the High Court in M.P. No. 1 of 2009 in W.P. No. 23405 of 2009. Respondent No. 1 also filed another SLP (C) Nos. 19154-55 of 2009 challenging the order dated 18.04.2009 passed by the Division Bench of the High Court in M.P. No. 1 of 2008 and M.P. No. 1 of 2009 in A.S. No. 708 of 2008 and order dated 16.11.2009 in M.P. Nos. 2 &3 of 2009 in A.S. No. 708 of 2008. On the very same day, i.e. on 24.11.2009, this Court passed an order to continue auction but not to declare the result. On 11.12.2009, this Court dismissed the SLPs filed by Respondent No. 1. (k) On 23.02.2010, the Division Bench, by impugned judgment, partly allowed A.S. No. 708 of 2008 filed by Respondent No. 1 herein directing him to deposit the balance sale consideration of Rs.4,80,48,000/- with 18% interest from the date of filing of the suit and also directed the appellants herein to e....
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....sel for the first respondent, by drawing our attention to all the relevant materials relied on by the trial Court and the appellate Court supported the ultimate decision of the High Court. He submitted that - i) The plaintiff has established his readiness and willingness all along and the same was rightly accepted by the trial Court and confirmed by the High Court. ii) The contract in question is not a contingent contract in terms of Sections 31 and 32 of the Indian Contract Act, 1872. iii) In view of the fact that the plaintiff has prayed for larger relief and the trial Court has confined to lesser relief of decree for specific performance, the plea of marshaling being a question of law and taking note of equity and justice, the High Court rightly applied the said principle and there is no error warranting interference on this ground. iv) The subject matter of the appeals and the relief prayed for in the writ petition were interconnected, hence the High Court is justified in disposing of the writ petition along with the appeals. v) Inasmuch as the plaintiff has succeeded partial relief at the hands of the trial Court after paying substantial court fee, the High Court is just....
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....d the latter to the conduct of the plaintiff wanting performance. Generally, readiness is backed by willingness. 10) In N.P. Thirugnanam vs. Dr. R. Jagan Mohan Rao &Ors., (1995) 5 SCC 115 at para 5, this Court held: ".....Section 16(c) of the Act envisages that plaintiff must plead and prove that he had performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than those terms the performance of which has been prevented or waived by the defendant. The continuous readiness and willingness on the part of the plaintiff is a condition precedent to grant the relief of specific performance. This circumstance is material and relevant and is required to be considered by the court while granting or refusing to grant the relief. If the plaintiff fails to either aver or prove the same, he must fail. To adjudge whether the plaintiff is ready and willing to perform his part of the contract, the court must take into consideration the conduct of the plaintiff prior and subsequent to the filing of the suit alongwith other attending circumstances. The amount of consideration which he has to pay to the defendant must of ne....
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....must be established throughout the relevant points of time. "Readiness and willingness" to perform the part of the contract has to be determined/ascertained from the conduct of the parties. 13) In the light of the above principles, let us consider whether the plaintiff has established his case for decree for specific performance. 14) Mr. L.N. Rao and Mrs. Nalini Chidambaram vehemently contended that the plaintiff has miserably failed to prove that he has fulfilled his obligation both under Ex. A-2 (MoU) and Ex. A-3 - Agreement for Sale and in those circumstances, defendants 1 &2 are not bound to convey the suit property in favour of the plaintiff. It is not in dispute that on 15.08.2005, the defendants entered into a MoU with respondent No.1 for sale of the suit property at a sale consideration of Rs. 14 lakhs per acre and a sum of Rs. 1 lakh was paid as advance. Balance sale consideration was to be paid within three months from the date of obtaining confirmation letter from the second respondent-Bank. It is seen from the materials that on 10.10.2005, M/s J.P. Builders, by a letter addressed to the AGM, Indian Bank Assets Recovery Management Branch II, offered a sum of Rs. 100 la....
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....o pay for Rs. 148 lakhs since the bank has expressed its inability to consider, by letter dated 15.05.2006, the bank has conveyed that OTS will be accepted if the offer is given for Rs. 629.60 lakhs by working out compound interest at 11%. In the plaint, there is a specific averment that the plaintiff even on 18.4.2006 has paid a further advance of Rs. 50 lakhs. 17) In his oral evidence before the Court, the plaintiff - PW-1 had reiterated and in fact asserted that he was always ready with the money and duly pursuing the OTS along with Defendant Nos. 1 &2. Insofar as readiness and willingness on the part of the plaintiff is concerned, apart from the specific plea in the plaint about the payment and advance of substantial amount, he also placed the relevant materials in the form of letters to show that he was corresponding with the Bank for early settlement of the dues. In other words, the assertion in the form of specific plea in the plaint and correspondence in the form of letter, his assertion in the witness box at the time of trial, the Courts below are right in arriving at a conclusion that the plaintiff has proved and complied with the mandates provided under Section 16 (c) o....
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....s Bank for Rs. 2,45,00,000 with date of maturity as 18.07.2006. Ex. A-12 is the certificate issued by the Indian Bank, Alwarpet Branch, Chennai stating that the plaintiff is maintaining Savings Bank Account No.726244658 in their bank and the balance as on 20.04.2007 is Rs. 1,50,00,444/- Ex. A-13 is the Certificate issued by Indian Overseas Bank stating that credit balance of plaintiff's savings bank account No. 6874 is Rs. 304,12,574.08 as on 21.04.2007. If we analyse Ex. A-11 to Ex.A-13 coupled with assertion made in the oral evidence of PW-1, it would amply show that plaintiff was having sufficient cash and financial capacity to complete the transaction. Further the plaintiff is required to pay the balance amount of consideration only on the event of a demand made for payment of further amount by the defendants on the basis of the confirmation letter to be obtained from the bank as per the agreement for sale under Ex. A-3. Absolutely, there is no evidence as to any demand made by defendant Nos. 1 &2 from the plaintiff for further payment of sale price. Inasmuch as under Ex. A-4, he had intimated that he is prepared to get the sale executed while perusing the aforesaid bank deposi....
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....on which date the plaintiff has also paid a further advance of Rs. 25 lakhs. These facts have been clearly explained by PW-1 in his evidence and he also asserted that the same fact was orally informed to Defendant Nos. 1 &2. We have already pointed out that there is no reason to disbelieve the assertion of PW-1. As rightly pointed out by Mr. R.F. Nariman, learned senior counsel for the first respondent-plaintiff that after receipt of Ex. B-2 Defendant Nos. 1 &2 have not raised any protest but on the other hand they proceeded to further advance of Rs. 50 lakhs from the plaintiff on 18.04.2006 and made endorsement in Ex. A-3 agreement for sale. In those circumstances, as rightly pointed out and correctly appreciated by the High Court, withdrawal of Rs. 10,01,000 from "No-lien account" of M/s Anand Agency by the plaintiff would not lead to the conclusion that the plaintiff had committed breach and was not ready to perform his part of the contract. 19) With the materials placed, specific assertion in the plaint, oral and documentary evidence as to execution of agreement, part-payment of sale consideration, having sufficient cash and financial capacity to execute the sale deed, bank st....
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....the contract, according to Ms. Nalini Chidambaram are (a) a letter specifying the balance due to the bank (b) an undertaking later from the Bank that it will receive the said balance amount (c) they will handover the original documents directly to the plaintiff. While elaborating the said points, learned senior counsel highlighted that for executing the sale deed, getting confirmation or clearance letter from the Indian Bank on payment of the dues to the Bank and getting original documents have been emphasized in various clauses in the MoU (Ex. A-2). Among various clauses, she highlighted Clauses 4, 6, 7 in the MoU (Ex. A-2). No doubt, those conditions have been enumerated in the above referred clauses. She also brought to our notice that the Indian Bank not only declined the OTS offer of Rs 148 lakhs but got a decree for Rs. 8,51,825.29 from the DRT. The very same contentions were raised before the High Court. Mr. R. F. Nariman, by drawing our attention to Ex. A-3 contended that Agreement for Sale dated 03.02.2006 is a fresh agreement hence clause 4, 6 and 7 of the MoU (Ex. A-2) would not govern the parties. We have once again perused various clauses in Ex. A-2 as well as subseque....
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....ses referred above in Ex A-3 do not insist the sale deed is to be executed only after the acceptance of OTS proposal by the Bank. It is true that the first OTS offered by defendant Nos. 1 and 2 was not acceptable by the Bank. When the Bank offered OTS for Rs. 629.60 lakhs, it was not acceptable by the defendant Nos 1 and 2. Clause 4 of Ex. A-3, makes it clear that to discharge the loans of the Bank, the vendors are free to make a request to the purchaser, namely, the plaintiff, to make further advance and after getting the amount from the plaintiff, defendant Nos. 1 and 2 have to secure documents from the Bank. The trial Court as well as the High Court held that there is no material to show that the defendant Nos. 1 and 2 made any attempt to comply with Clause 4 in Ex. A-3 by requiring the plaintiff to make further advance. In the earlier paragraphs, we have also highlighted the conduct of the plaintiff in keeping the required money, no doubt, in their SB account for the purpose of meeting the demand of the defendant Nos. 1 and 2. Even otherwise, the agreement to discharge the loans of the Bank and handover the original title deeds to the plaintiff cannot be construed as impossible....
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....of Rs. 1 Lakh. We also hold that plaintiff has proved his readiness and willingness and financial ability to complete the sale transaction. Accordingly, we reject the second contention also. Marshalling 26) It is the claim of the plaintiff before the High Court that having secured a decree for specific performance as per Section 56 of the T.P. Act, 1882, by applying the principles of Marshalling, directions may be issued to the Bank to exhaust its remedy from other items of property which are located in the prime places in Chennai before bringing the properties covered in the agreement of sale. 27) In order to understand the claim of the plaintiff and the stand taken by the defendant Nos. 1 and 2, it is useful to refer Section 56 of the T. P. Act. "56. Marshalling by subsequent purchaser.--If the owner of two or more properties mortgages them to one person and then sells one or more of the properties to another person, the buyer is, in the absence of a contract to the contrary, entitled to have the mortgaged-debt satisfied out of the property or properties not sold to him, so far as the same will extend, but not so as to prejudice the rights of the mortgagee or persons claiming....
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.... and applicability of Section 56 of the T.P. Act was not raised before the trial Court. However, if we consider the entire plaint, which is available in the appeal paper-book, the plaintiff has claimed a larger relief. In para 12 of the plaint, the plaintiff has prayed for the following reliefs. (i) "directing the Defendant Nos. 1 and 2 to specifically perform the Agreement for Sale Deed dated 03.02.2006 in respect of the suit schedule mentioned property which is more fully described in the schedule hereunder, by executing a Deed of Sale or Deeds of Sale and register a valid conveyance in favour of the Plaintiff or his nominee or nominees on a date to be fixed by this Court and/or in default, direct the officer of this Court to convey the suit schedule mentioned property on behalf of the Ist and 2nd Defendants herein in favour of the plaintiff or his nominee or nominees on a date to be fixed by this Court on receipt of the balance sale consideration of Rs. 4,80,48,000/- payable by the Plaintiff to them. (ii) For a mandatory injunction directing the 1st and 2nd Defendants to discharge the loan payable to the 3rd Defendant Bank in respect of DRT proceedings pending on the file of D....
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.... extract the principles enunciated in para 23 of the judgment which are as follows. "23. It is fundamental that in a civil suit, relief to be granted can be only with reference to the prayers made in the pleadings. That apart, in civil suits, grant of relief is circumscribed by various factors like court fee, limitation, parties to the suits, as also grounds barring relief, like res judicata, estoppel, acquiescence, non-joinder of causes of action or parties, etc., which require pleading and proof. Therefore, it would be hazardous to hold that in a civil suit whatever be the relief that is prayed, the court can on examination of facts grant any relief as it thinks fit. In a suit for recovery of rupees one lakh, the court cannot grant a decree for rupees ten lakhs. In a suit for recovery possession of property `A', court cannot grant possession of property `B'. In a suit praying for permanent injunction, court cannot grant a relief of declaration or possession. The jurisdiction to grant relief in a civil suit necessarily depends on the pleadings, prayer, court fee paid, evidence let in, etc." In those circumstances, while reiterating the principles laid down above, we hold that th....
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....in O.S. No 336 of 2006 on the file of the Principal District Judge, Chengalpet by way of auction. He also prayed for certain other directions. Objections were raised by the appellants about the hearing of the writ petition along with the appeals. We have already adverted to the facts leading to the filing of two regular First Appeals before the High Court. It is not in dispute that the parties in those appeals as well as in the writ petition are one and the same except Union of India against whom the writ petitioner has not sought any relief. It is also not in dispute that the subject matter of the lis and properties are one and the same in both the appeals and the writ petition. There is no bar for the Division Bench which has jurisdiction to hear appeal, to hear writ petition when the same is connected with the main issue. In fact, no serious objection was raised before the High Court for hearing the writ petition along with the appeal. On the other hand, on the earlier occasion, when the parties have filed special leave petitions against certain interim orders, this Court requested the High Court to dispose of all the matters together. It is relevant to point out that no clarifi....
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.... the said principle considering the larger relief prayed for in the suit and the plaintiff was having a decree for specific performance subject to clearance of mortgage loan with the Bank. 37) In Sain Ditta Mal vs. Bulagi Mal &Sons and others, AIR (34) 1947 Lahore 230, the High Court after adverting to Section 56 of the Transfer of Property Act has held that this equitable doctrine exists for the benefit of the buyer alone. Following the said decision of the Lahore High Court, Karam Singh Sobti vs. Smt Shukla Bedi, AIR 1962 Punjab High Court at Delhi 477 reiterated the same principle. 38) The principle laid down in Brahm Parkash vs. Manbir Singh & Ors., [1964] 2 SCR 324 at 335 is also relevant to quote:. "The other submission of learned counsel was that the learned Judges failed to give effect to the last portion of Section 56 under which marshalling is not to be permitted so as to prejudice the rights inter alia of the mortgagees or other persons claiming under him i.e. under the original mortgagor. Learned counsel pointed out that the appellant having proved his mortgage and the fact that it was subsisting, the learned Judges of the High Court ought to have held that any direc....
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....valuing the suit paid a substantial court fee of Rs. 41,66,326.50 and ultimately he secured a decree for specific performance though he could not secure a relief in its entirety, the plaintiff is entitled for his cost. It is not in dispute that the court has granted the major relief, namely, decree for specific performance subject to clearance of the mortgage debt. In those circumstances, the High Court having noticed the payment of substantial court fee ordered cost payable by the contesting defendant Nos. 1 and 2 to the plaintiff. We agree with the said direction. Direction to the Recovery Officer/Tribunal 41) Learned senior counsel for the appellants contended that the jurisdiction of Recovery officer/Tribunal is exclusive and no other Court can go into their order for which they relied on Allahabad Bank vs. Canara Bank &Anr., (2000) 4 SCC 406, State Bank of India vs. Allied Chemical Laboratories &Anr., (2006) 9 SCC 252, India Household and Healthcare Ltd. vs. LG Houshold and Healthcare Ltd., (2007) 5 SCC 510. We are conscious of the principles enunciated in these decisions. However, in our case, the High Court taking note of the fact that it had considered various connected i....
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....in the circumstances, we should refuse to interfere with the order of the High Court dismissing the writ petition of the appellant. We accordingly dismiss the appeal, but having regard to the peculiar circumstances of the case which we have referred to above we order that each party will bear its own costs of this appeal." 44) In Balvantrai Chimanlal Trivedi vs. M.N. Nagrashna and Others, AIR 1960 SC 1292, the Constitution Bench of this Court, while considering the jurisdiction of this Court under Article 136, has held: "....It is necessary to remember that wide as are our powers under Article 136, their exercise is discretionary; and if it is conceded, as it was in the course of the arguments, that this Court could have dismissed the appellant's application for special leave summarily on the ground that the order under appeal had done substantial justice, it is difficult to appreciate the argument that because leave has been granted this Court must always and in every case deal with the merits even though it is satisfied that ends of justice do not justify its interference in a given case. In the circumstances we are of opinion that this Court was not bound to decide the questio....
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....ars in 1974 and she filed suit in 1975. These two rooms have been there for the last 30 years. In those circumstances, we declare the law by holding that the High Court while dealing with a second appeal under Section 100 CPC erred in not framing a substantial question of law and that it also erred in interfering with a pure question of fact relating to the genuineness of the agreement. We declare that this was not permissible in law. Even while so declaring, we hold that in the peculiar circumstances referred to above, this is not a fit case for interference and that in exercise of our discretion under Article 136, -- a discretion which continues with us even after the grant of special leave, -- the decree passed by the High Court dismissing the suit for possession need not be interfered with and the two rooms need not be demolished. The plaintiff could be adequately compensated by way of damages......" 46) In Chandra Singh and Ors. vs. State of Rajasthan and Anr. (2003) 6 SCC 545, a three-Judge Bench, after following the principle in Taherakhaton (supra), held: "42. In any event, even assuming that there is some force in the contention of the appellants, this Court will be just....