AI Drafter 
TaxTMI 
TaxTMI 
2004 (11) TMI 599
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....ain building, more particularly described in the schedule annexed to the lease dated 25. 11.1960 executed by the Trustees in favour of Mohd. Ismail for 21 years commencing from 1.5.1960. 3. Some of the relevant terms and conditions of the said lease are as follows: "(i) The lessee, i.e. Mohammad Ismail, would pay monthly rent at the rate mentioned in the said lease;- (ii) The lessee would pay the entire occupiers' share of Corporation rates and taxes; (iii) The lessee would be entitled to sublet all or any portion of the demised premises. The lessee would, however, be liable for regular payment of rents and for due observance and performance of the terms and conditions of the lease agreement; (iv) Upon the expiration or sooner determination of the lease, the lessee would be obliged to deliver quietly and peaceful possession of the property to the lessors; (v) The lessee would not do or suffer to be done anything in or upon the said property or any part thereof that may cause nuisance or annoyance to the lessors or the other tenants of the adjoining premises; (vi) The lease would take effect retrospectively from 1st May, 1960 an....
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....the said draft was in connection with renewal of lease for 70 years on payment of premium of Rs. 30 lacs and increased monthly rent of Rs. 30,000/- on and from 1.5.1981; that the said Trustees had no authority to act on behalf of the said Trust; and, therefore, the agreement for renewal was null and void and not binding on the estate. It was further alleged that title suit No. 176/81 was a counterblast to suit no. 87/81; that even after passing of the decree dated 25.7.1985 in the title suit no. 176/81, the respondent did not tender the deed to be executed by the Trustees nor did it tender the rent for nine years; that the respondent even failed to pay the balance premium of Rs. 26 lacs as agreed. That the respondent was earning income by letting out premises for marriages etc. In the circumstances, it was alleged that the respondent herein was not ready and willing to discharge its obligations under the decree dated 25.7.1985. Hence, it was submitted that contract dated 16.8.1980 be rescinded and the decree dated 25.7.1985 in suit no. 176/81 be recalled. 10. By reply dated 21.2.1995, the respondent herein alleged that the Trustees were avoiding the decree under various pretexts....
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....ondent had failed to pay the arrears of rent amounting to Rs. 39 lacs towards rent. In the circumstances, according to the trial Court, the respondent herein was not ready and willing to perform its obligations under the decree. The trial Court observed that under section 28(1) of the 1963 Act, the Court had unlimited and unfettered power to grant extension but has no power to condone the delay, if the period for complying with the terms and conditions stood expired. According to the trial Court, the date of payment of the premium of Rs. 30 lacs expired on 24.10.1985 and consequently, the respondent herein was not entitled to renewal of the lease. The trial Court further observed that at no point of time, the respondent had approached the Court, prior to 24.10.1985, for execution of the lease through the Court. Nothing prevented the respondent from approaching the Court, prior to 24.10.1985, seeking permission to deposit Rs. 30 lacs on account of premium and arrears of rent in Court and in the circumstances, the trial Court allowed the petition filed by the Trustees- appellants and recalled the decree dated 25.7.1985 after rescinding the agreement dated 16.8.1980. 13. Being aggr....
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....t the time of the agreement dated 16.8.1980, the value of the property in question was about Rs. 30 crores. On the basis of the said value, the market rate ought to have been Rs. 30 lacs. It was urged that if the Trust property is allowed to be leased out to the respondent herein on monthly rent of Rs. 30,000/- and at a premium of Rs. 30 lacs, the appellant-Trust will loose substantially. In this connection, reliance has been placed on the valuation report dated 26.4.2000. 18. We do not find any merit in the aforestated arguments. As far back as 20.8.1970, the Trustees allowed the lessee, Mohd. Ismail, to assign the leasehold rights in favour of the respondent herein. Further, the assignee was allowed to be put in possession. On 16.8.1980, the Trustees entered into oral agreement to renew the above lease for 70 years w.e.f. 1.5.1981 at increased rent of Rs. 30,000/- per month plus premium of Rs. 30 lacs as found by the trial Court in title suit no. 176/81 decided on 25.7.1985. In the circumstances, increase in the value of the immovable property, on account of inflation, is no ground to rescind the agreement dated 16.8.1980. We have to see the circumstances prevalent as on 16.8.....
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....t has rescinded the agreement dated 16.8.1980 basically on the ground of alleged breaches thereof. In the circumstances, it is not open to the appellants now to submit that the decree dated 25.7.1985 was collusive and not binding on the Trust estate. 21. On behalf of the appellants, it was next submitted that the respondent herein was not serious about performing its obligations under the decree. In this connection, it was submitted that nothing prevented the respondent from applying to the Court for execution of the lease. That, nothing prevented the respondent from seeking extension of time to deposit the premium/rent. It was urged that the very fact that the respondent chose to make no such application and slept on its rights for nine years conclusively proves that it was not ready and willing to perform its part of the contract and also its obligations under the decree and in the circumstances, the trial Court had rightly rescinded the oral lease agreement dated 16.8.1980. It was further submitted that the trial Court while passing the decree had stated that within 90 days of the decree dated 25.7.1985, the lease shall be executed i.e. all payments were required to be made w....
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....ants. 24. In the present case, the decree for specific performance is dated 25.7.1985 in suit no. 176/81. On behalf of the plaintiff (respondent herein) PW1 was examined. He tendered evidence indicating that the respondent herein was in possession. No evidence was led on behalf of the Trustees. In the circumstances, the trial Court decreed the suit on 25.7.1985 and passed an order in following terms:- ".... Defendants do execute register and deliver the lease in favour of the plaintiff (respondent herein) in terms of the agreement dated 16.8.1980 within 90 days from the date of the decree, failing which the decree holder (respondent herein) will be at liberty to get the lease executed through the Court...." 25. A bare reading of the order indicates that the respondent herein was directed not to put the decree in execution for 90 days from the date of the decree i.e. 25.7.1985. The said order did not specify the period within which the balance premium amount of Rs. 26 lacs was to be paid by the decree holder. There is no default clause in the said order. It only directs the appellants to execute the lease on or before 24.10.1985. In the circumstances, there is no merit in t....
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.... leaving the vendor in undisturbed possession of property which is not his...." 27. In the case of Hungerford Investment Trust Limited v. Haridas Mundhra and Ors. : , it has been held that when the Court passes the decree for specific performance, the contract between the parties is not extinguished. That the decree for specific performance is in the nature of preliminary decree and the suit is deemed to be pending even after the decree. Hence, the Court retains control over the entire matter even after the decree. Since the Court retains control over the matter, despite the decree, it is open to the Court to order rescission of the agreement, when it is found that the decree holder is not ready and willing to abide by his obligations under the decree. 28. In the case of M. Sakuntala Devi v. V. Sakuntala and Ors. AIR1978AP337 , it has been held that though section 28 does not confer power on the Court to extend time, it recognizes its power to do so in cases of default in payment. 29. In the case of K. Kalpana Saraswathi v. P.S.S. Somasundaram Chettiar [1980]2SCR293 , it has been held as follows:- "It is perfectly open to the court in control of a suit for specific perf....
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....es on the part of the plaintiff in depositing the amount and yet the Court gave thirty days time to the plaintiff to deposit the amount on the application made by the defendants for rescission of the contract. 32. In the case of Ouseph and Anr. v. Devassy AIR2001Ker104 , the decree was silent as to the date by which the decree holder was to pay the balance of the price. Possession was with the decree holder. The purchaser deposited the balance before filing of the petition for rescission of the agreement but after expiry of the period fixed by the decree. The decree holder applied for condonation of the delay. The same was granted. In doing so, the Court observed that section 28 enables the Court to extend the time which by itself implies that mere failure to deposit the balance need not result in the rescission of the contract. On facts, it was found that the decree was silent as to the date by which the decree holder was to deposit the balance of the sale consideration. On facts, it was found that the decree holder was in possession for 18 years. On facts, it was found that the vendor did not take any steps to get the balance of the sale consideration. That the vendor failed t....
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....te the lease. There is no explanation given by the Trust for not moving the application for rescission of the contract for nine years. The decree was passed on 25.7.1985 whereas the application for rescission of the agreement is dated 3.10.1994. As stated above, the Trust did not lead the evidence in suit no. 176/81. The corresponding suit no. 87/81 filed by the Trust was dismissed for non- prosecution. The Trust moved under Order IX Rule 13 CPC for setting aside the decree dated 25.7.1985. That application was dismissed for default vide order dated 1.8.1987. The Trust moved the application for restoration which was also dismissed for default on 16.7.1988. The Trust moved in appeal against the decree dated 25.7.1985. That appeal was also dismissed. The decree holder has referred to the entire correspondence between the parties which indicate that during this period of nine years in the guise of negotiations, the decree holder was prevented from filing execution application. The decree holder was repeatedly assured of settlement. The decree holder was repeatedly assured that lease would be executed in its favour. Attempt was also made by the Trustees during the interregnum to lease ....