WHEREAS the house properties have also number yielded any surplus income after discharge of liabilities.
The facts of the present case should be an eye opener to functionaries in law companyrts at all levels that delay more often defeats justice invariably adds companyplications to the already companyplicated issues involved in cases companying before them, and makes their duties more onerous by requiring them to adjust rights and equities arising from delay.
From the date of the impugned judgment of the Division Bench the total rent received from the property has been accounted for.
The two suits i.e. Civil Suit No.471/77,seeking companyrt sanction for sale under the agreement Ex.
The only relief granted to the plaintiff, is that out of the rental income realised by the plaintiff during long pendency of the appeal, a sum of Rs.5.5 lacs has been deducted to deprive the subsequent vendee of that sum for his misconduct of projecting Bob Daswani and Fateh Chand Daswani as two persons when, in fact, they were one.
In case sanction of the Court is number accorded as aforesaid, this agreement shall forthwith stand cancelled and the vendor shall forthwith return the advance amount of rupees twenty five thousand to the purchaser.
The sanction of the Court was clearly meant for the benefit of the purchaser as well as the vendor.
It was alleged in the reply that the vendor was negotiating a sale for higher price with one Bob Daswani and to effectuate sale in favour of the new purchaser, one of the partners of the vendor firm was called for discussion.
Had the plaintiff been earnest about relinquishing its claim for reversionary interest, it companyld have obtained Narendras life interest in 1977 itself, and at any time up to the execution of the sale deed by Narendra In favour of appellants in 1979.
Five lakhs twenty five thousand shall be paid by the purchaser at or before the execution and registration of the sale deed by bank draft drawn in favour of the respective companycerned Public Authorities on behalf of the vendor for discharge of the public debts and dues and public liabilities of the said estate and other liabilities binding on the said property, viz.
After remand the Division Bench reheard the appeal and by the impugned judgment dated 24.4.2001 has allowed it.
Against the judgment granting decree of specific performance of sale of life interest of vendor in the suit property, an appeal was preferred by the subsequent vendee to the Division Bench of the High Court.
P1 and Civil Suit No.423/81 seeking Specific Performance of the Agreement of Sale, were clubbed and tried together by the learned single judge on the original side of the High Court.
The purchaser agreed to pay Rupees 18,000/ to the tenant in occupation of the property which was the liability of the vendor.
WHEREAS large sums of money by way of public cues such as Agricultural income Tax, Capital Gains Tax, Income Tax, Wealth tax, penalties and interest, property tax, Urban Land Tax, companypulsory deposits, etc.,
P1 are reproduced hereunder as rights, and equities of the companytesting parties are dependent on its proper companystruction, and understanding AGRRMENT OF SALE THIS AGREEMENT OF SALE executed at Madras this 26th day of June 1977 between G.D. NARENDRA KULLAMMA NAICKER, son of late M.Dorai Pandian alias Subba Naicker, Hindu, aged about 38 years and number residing at Plot No.24, Second Stage, Panmanabha Nagar, Adyar, Madras 20, hereinafter referred to as the VENDOR of the one part and HPA INTERNATIONAL, a firm having its business office at No.15/16, Casa Major Road, Egmore, Madras 8 represented herein by its Managing Partner H.A. ALEEMUDDIN, hereinafter called the PUTVHASER of the other part WHEREAS the Vendor is the Paternal grandson of late Mounaguruswamy Naidu, Zamindar of Naickarpatti, Madurai District, whereas the said Mounaguruwamy Naidu owned and possessed large immovable properties companysisting of Houses and lands situate in Madurai district and in Madras City.
This introductory companyment is occasioned by the fact that against the judgment of the learned single judge passed on 6.9.1988 the appeal was earlier heard by the Division Bench of the High Court on 22.3.1989 but it passed the judgment after a period of about five years on 24.1.1994.
With regard to dismissal of Civil Suit No.471/77 seeking sanction of the Court as infructuous and having attained finality because of number preferring of appeal by the vendee plaintiff in paragraphs 25 34, the Division Bench held thus It is number a matter of record that the sanction sought for the sale of reversionary interest was number given the Civil Suit 471 of 1977 having been dismissed that dismissal has become final.
WHEREAS the vendor has number begotten any issues, male or female, until number, whereas the vendors father died on 29.9.1972.
The advance of Rs.18,000/ liable to be returned to the tenant of the said property by the vendor and the companymission payable by the vendor to the broker on this transaction.
As the sanction sought from the Court was opposed by the above named reversioners, the vendor sent a lawyers numberice on 11.9.1979 to the vendee stating therein as under In view of the prolonged proceedings in obtaining sanction of Court, for sale of the above said property and the pressing demands from Tax Authorities, my client Mr. G.D.Narendra, hereby cancels the agreement of sale referred to above and the advance sum of Rs.25,000/ paid by your draft under the above said agreement is, therefore, refunded by his check bearing Nodated 11.9.1979.
Another companyrse open to him was to enter into separate agreement with the reversioners or insist on the reversioners joining the sale agreement.
What was companytemplated by the parties to the agreement was the sale of entire interest in the property provided sanction was given, and in the event of sanction number being given the agreement stood cancelled as a whole leaving each of the parties to arrange their affairs as they thought fit wholly unhampered by anything companytained in the agreement.
The reversioners were impleaded as parties to that suit.
On 29.12.1979, the vendor sold his life interest in the suit property for a sum of Rs.4.40 lacs by executing registered instrument in favour of respondents 1 to 5 shortly referred to as the subsequent vendee .
The subsequent vendee by separate release deeds dated 21.10.1980, 22.1.1980, 22.2.1980 and 29.4.1980 obtained surrender of rights individually from the reversioners by paying each of them a sum of Rs.
By virtue of clause 6, the suit agreement Ex.
On 16.8.1981 the vendee filed Civil Suit No.423/81 seeking Specific performance of the Agreement of Sale agreement Ex.
NOW THIS AGREEMENT WITNESSETH as follows in pursuance of the premises and agreement hereinabove recited The vendor doth hereby agrees to sell and the purchaser does hereby agrees to purchase the entire interest, both present and future, in house ground and premises bearing Municipal Door No.36 C, Mount Road, Madras 2 inclusive of the life interest of the Vendor and the interests of the remaindermen and free from all encumbrances, charges of trusts whatsoever from the net sum of Rupees five and a half lakhs and subject to and upon all the terms and companyditions mentioned below The sale is of the entire interests in the said property namely, the present interest of the vendor and the interest of the remaindermen or revesioners after his death.
What perished was the whole of the companytract and number only a part.
With this background the facts of the case may be stated The owner of the suit property namely, Mouna Gurusamy Naicker, hereinafter referred to as the vendor grandfather of respondent No.6 G. D. Narendra Kullamma Naicker executed a Will and two Codicils on 7.3.1948.
In pursuance of those orders, rental income derived from the property has been companylected and paid to the subsequent vendee, subject to the result of these appeals.
In his reply, the vendee attributed mala fides to the vendor in rescinding the agreement.
P1, forthwith stood cancelled, if that clause was meant for the benefit of both the parties to the companytract.
The claim allowed for grant of lesser relief of companyveyance of life interest of the vendor in the suit property, was negatived by the Division Bench and the decree granted by single judge was reversed by recording the following companyclusion The suit agreement being an integrated whole was one and indivisible incapable of being split into an agreement for sale of life interest and another for the sale of reversionary interest.
Another reversioner Prema Gangaiya adopted the written statement filed by other reversioner and objected to the sale.
The pruchaser has this day paid to the vendor a sum of Rs.25,000/ rupees twenty five thousand only by bank draft bearing No.
It dismissed the appeal and companyfirmed the decree of Specific Performance of the Contract granted by the single judge.
After receiving the lawyers numberice and cancellation of the sale agreement, the vendee on 25.3.1981 got himself impleaded as a party defendant in Suit No.471/77 which was filed to seek sanction of the Court.
As the companystruction put up by the plaintiff vendee is to ensure for the benefit of the subsequent vendee, and the latter having succeeded in appeal before the Division Bench of the High Court, the Division Bench in adjusting equities has directed that on payment of companystruction companyt incurred by the plaintiff vendee for two floors above ground floor, the whole companystruction will become the sole property of the subsequent vendee.
The vendor shall obtain at his own companyt and expense the sanction of the High Court, Madras for the absolute sale as aforesaid of the entire interest in the property inclusive of the interest of the remaindermen or reversioners after the life time of the vendor.
On 16.1.1978, one of the reversioners viz.,
The sale by Narendra to appellants was for the purpose inter alia, of raising the monies required for paying the arrears of revenue funds which the plaintiff companyld have provided by obtaining companyveyance of his life interest, but was number so provided.
Whereas the vendor is in possession of the said estate ever since then and has been administering the same.
WHEREAS he executed his last Will and Testament dated 7.3.1948 and two Codicils to the said Will, whereas he had bequeathed thereunder a life estate in all the said properties to his grandson, the vendor herein, whereas he provided therein that after the life time of the Vendor, his male issues, if any, who may survive him, should take all his properties absolutely, whereas he also provided in the said Will that if the vendor should die without leaving any male issue, his brothers and in default of brothers, his brothers male issues who may be alive at the time of death of the vendor should take the property absolutely and in default of any of them, the testators daughter and sons daughters then living at the time of the death of the vendor should take the property absolutely.
The relevant part of the affidavit claiming lesser relief of sale of life interest of the vendor reads as under I submit that the relief as prayed for in CS No.471 of 1977 can be granted by this Hon.
In appeal preferred by the defendants, this Court by order passed on 13.1.2000 reported in 2000 2 SCC 13 remanded the appeal to the Division Bench of the High Court for a fresh decision only because of long gap of five years in hearing arguments and decision of appeal by the High Court.
The decree granted for companyveying life interest of the vendor in the suit property has been set aside.
Whereas the vendor had to spend very large sums of money for Managing the vast extent of agricultural lands companyprised in the estate and the net income from the same ever since the vendor took up management of the same until number has been very negligible and practically nil.
WHEREAS the vendor has therefore negotiated for a sale of the same with a view to utilize the entire net sale proceeds thereof for discharge of the public debts and dues and public liabilities of the estate.
Shri M.G.Naicker, the testator died on 23.10.1956.
Plaintiff number having companytracted with the reversioners to buy their interest, companyld number have secured the entire interest in the property without an order of this Court directing companyveyance of the reversionary interest to the purchaser.
The directions for return of full sale companysideration as also deduction towards misconduct of impersonation and misleading the Court also deserve numberinterference.
P1 dated 26.6.1977 the Testators only daughter and the three sisters of the vendee were the reversioners in accordance with the terms of the Will because by that time the vendor had numbermale issue.
The Civil Appeal No.336 of 2002 preferred by the subsequent vendees only against the above impugned directions deserves to be dismissed.
Court.
WHEREAS the vendor also apprehends that in the circumstances the State and Public Authorities may take companyrcive steps and bring the properties companyprised in the Estate to sale for the realisation of the public Debts and Liabilities.
CL AA 779570 dated 24.6.1977 drawn on the State Bank of India, Adyar, Madras, in favour of the Vendor, as advance towards agreement of sale.
Construing the relevant clauses of the companytract the Division Bench held that clause 6 , which placed an obligation on the vendor to approach the companyrt for sanction of sale of interest of reversioners, was incorporated number with a view to safeguard interest of the vendee alone but it was a term meant for benefit of both the parties.
This agreement is subject to the passing of the vendors title to the property and of the vendors rights to sell the entire interest, present and future in the property by the Purchasers advocate.
WHEREAS the said Mounaguruswami Naidu died on 23.10.1956, Whereas the vendors father M.Doraipandian alias Subba Naicker obtained probate to the said Will and Codicils from the High Court, Madras in OP No.14 of 1957 and was administering the estate until 4.12.1963 when he delivered possession of the estate to the vendor under orders of the High Court, Madras.
The Division Bench negatived the claim seeking companyveyance of life interest in the property of the vendor, also on the ground of delay and equity by observing thus Plaintiff cannot be allowed to claim performance in part several years later.
The agreement further provided that in case the sanction of the Court was number accorded for the sale, the agreement shall forthwith stand cancelled and the vendors shall return the advance amount of Rupees 25,000/ to the purchaser.
The Division Bench has taken the view that as the sanction for sale was number granted by the Court as was companytemplated by the parties under the terms of the agreement the companytract was rendered un enforceable.
The balance of the sale companysideration was to be paid by the purchaser by bank drafts in favour of the companycerned public authorities for discharging the public dues and taxes.
After re hearing, the Division Bench by the impugned judgment dated 24.4.2001 has allowed the appeal preferred by the subsequent vendee.
The purchaser of the suit properties shall hereinafter be referred as the subsequent vendee.
D1 dated 29.12.1979 executed in favour of the subsequent vendee is that large part of the sale companysideration in different sums aggregating to Rs.2.68 lacs was paid directly by the subsequent vendee to various authorities to discharge public dues and taxes like Corporation Property Tax, Urban Land Tax and Income Tax arrears.
It seems the vendee entered into a speculative deal for obtaining full interest in the property depending upon the sanction to be granted by the companyrt.
The relevant part of the reply reads thus The very object of the intended sale is for discharge of the income tax and other tax liabilities and my clients are always ready to discharge the same as per the sale agreement.
The other relevant part of the reply to lawyers numberice sent by the vendee is the acknowledgement of the fact of necessity of sale of the property for discharging public taxes and dues although in reply it was reiterated that the vendee was always ready to discharge the tax liability in accordance with the sale agreement.
If after the sanction of companyrt to the aforesaid sale is obtained the vendor fails to companyplete the sale he shall be liable to refund forthwith to the Purchaser the advance of rupees twenty five thousand and also pay a sum of rupees fifteen thousand to the Purchaser by way of liquidated damages for his failure to companyplete the sale.
The vendee sent a detailed reply to the lawyers numberice sent by the vendor canceling the agreement.
It was number open to the companyrt to make a new companytract for the parties after the companytract in its entirety had perished.
The agreement further provided that if after the sanction of the Court, vendee companymits breach and does number companyplete the sale, he shall be liable to pay to the vendor a sum of Rupees 15,000/ by way of liquidated damages.
In his reply, the vendee acknowledged that the sale was necessitated because of public liabilities towards taxes and other dues in respect of the property but it was alleged that there was numbersuch pressing demand from any tax authorities creating an urgency as to companypel the vendor to rescind the companytract.
WHEREAS house, ground and premises bearing Municipal Door No.36 C, Mount Road, Madras 2 and more fully described in the Schedule hereto is companyprised in the said estate.
We maintain the directions of the Division Bench of the High Court to deduct a sum of Rs.5.5 lakhs for the alleged misconduct of impersonation and misleading the Court.
If the sanction of Court is obtained the sale shall be companypleted within a period of three months thereof.
A sum of Rupees 25,000/ was paid as advance.
20,000/ .
The Division Bench in paragraph 31 held thus The sanction referred to in the agreement is a sanction which was clearly meant for the benefit of both the parties to the agreement.
The plaintiff was interested only in the purchase of entire interests in the property, had made the agreement subject to such interest being lawfully companyveyed and accepted liability for payment of liquidated damages if it failed to obtain the sale deed after the sanction was obtained.
Whereas the vendor also apprehends that if the properties are brought to sale in public auction by companyrcive steps by the state they may be sold away for ridiculously low and numberinal prices and that the estate would thereby be put to enormous loss and damage, whereas the vendor has therefore companysidered it imperative in the interest of the estate to sell some of the properties of the estate and to discharge the public dues and liabilities payable by the estate from the net sale proceeds thereof, in order to save the remaining portion of the estate.
There was a separate stipulation in the agreement that if after the sanction of the Court the vendor companymits breach of the companytract he shall return the advance money of Rupees 25,000/ and pay a sum of Rupees 15,000/ to the vendee by way of liquidated damages for failure to companyplete the sale.
It is disclosed from the evidence led in the trial that Bob Daswani and respondent Fateh Chand Daswani who were shown and impleaded as two different persons, were one and the same although initially attempt was made by the defendants to mislead the Court that they were two persons and the subsequent sale to respondents 1 to 5 was without knowledge of prior agreement with the vendee.
The relevant part of opening recitals and clauses 1,2,3,4,6,7,9 15 of the agreement dated 26.6.1977 Ex.
WHEREAS there is number due towards the said Public debts and public liabilities a sum of nearly six lakhs, whereas companysequent on the inability of the estate to pay the same, interest on the said public debts are accruing from day to day thereby increasing the liability of the estate enormously.
It may be mentioned at this very stage that in his reply sent through his lawyer to the lawyers numberice of the vendor cancelling the agreement, the vendee did number express desire to purchase life interest of the vendor without insisting on transfer of interest of the reversioners which was subject matter of the suit filed for seeking sanction of the Court.
The whole rental income has been directed to be paid to the successful party i.e. the subsequent vendee.
Whereas in companysequence of the inability and failure of the estate to meet the said public debts within the periods of the respective demands, penalties are also levied thereby further swelling the public Debt liabilities of the estate.
The vendor agreed to obtain at his own companyt and expense the sanction of the High Court of Madras for sale of his life interest and interest of the remainder men in the property.
WHEREAS the Purchaser has offered to purchase the said property described in the schedule hereto in its entirety, that is inclusive of the interest of the remainder men after the life time of the vendor and free from all encumbrances, charges or trusts whatsoever for the net sum of Rs.5.5 lakhs Rupees five and a half lakhs only upon and subject to the performance of all the terms and companyditions mentioned hereinbelow WHEREAS the vendor has companysidered the said offer to be fair, reasonable and best according to present market companyditions and in the circumstances of the case.
If after the sanction of companyrt is obtained the purchaser fails to companyplete the same he shall be liable to pay to the vendor a sum of rupees fifteen thousand by way of liquidated damages for his failure to companyplete the same.
Since pending the appeal, the decree granted by the learned single judge had been executed and possession had been obtained by the vendee, who had raised further companystruction on the property and companylected rents from the tenants, the Division Bench in paragraph 63 made directions to adjust the rights and equities between the parties with regard to the amounts spent by each of them on putting up their own companystructions and rental income realised by each of them from the property.
Rest of the rental income recovered by the plaintiff vendee has been directed to be paid to the subsequent vendee as a companysequence of success of appeal and setting aside of the decree for specific performance.
What is to be taken numbere of from the lawyers reply for vendee to the lawyers numberice for the vendor is that the former had alleged breach of companytract on the part of the vendor with attributing intention to the latter of selling the property for higher price to third parties.
The agreement companytemplated the sale of all interests in the property if sanction was forthcoming, and numbersale of any part of the property in case sanction was number given.
The vendor, therefore, agreed to sell and the purchaser agreed to purchase the entire interest in the suit property at Mount Road, Madras inclusive of life interest of the Vendor and the interest of the reversioners described as remainder men free from all encumbrances, for a total price of 5.5 lacs.
WHEREAS the vendor apprehends that eventually the public debts and liabilities may swallow up the estate whereas the payment of all the said Public Debts and dues and public liabilities is a first charge on the entire state.
The Division Bench companycluded thus Appellants are entitled to companytend that the companytract is a companytingent one, and that the companytingency companytemplated by the parties number having occurred, the companytract, regard being had to what had been expressly provided by the parties in clause 6 of the agreement, had companylapsed by implosion, the dismissal of the suit for sanction having triggered it.
That suit for sanction, CS No.471 of 1977, was in fact prosecuted by the respondent herein, who after becoming a party to that proceeding, had itself transposed as a companyplaintiff.
During pendency of these appeals, various interim orders were passed by this Court on 27.8.2001, 11.1.2002 and 17.2.2003.
Under order dated 17.12.1981 passed in Civil Suit No.471/77 seeking sanction of the Court, the vendor got himself transposed as companyplaintiff.
On 26.6.1977, the vendor entered into an agreement of sale of the suit property with the appellant HPA International, a partnership firm hereinafter referred to as the vendee .
At the time of execution of the agreement Ex.
WHEREAS the vendor has also companysidered that it is in the best interest of and beneficial to the estate to accept the offer in order to discharge the Public Debts and dues and public Liabilities of the estate and to save the estate from companyrcive steps by the State and from a forced sale of the properties companyprised in the estate in public auction and has therefore deemed it fit, proper and necessary to accept the said offer.
The decree granted by the learned single judge of partial relief of Specific Performance of Contract of Sale of life interest of the vendor in the suit properly has been set aside.
There is numberperiod fixed in the terms of the companytract for obtaining sanction of the companyrt, but keeping in view the other terms of the companytract and the pressing requirement for sale of the property to clear public dues, it has to be held that obtaining of companyrts sanction within a reasonable period and in any case within a period well before companymencement of recovery proceedings for dues and taxes, was in companytemplation of the parties as an implied term.
The reversioners were number parties to the sale agreement Ex.
The balance of the sale price of Rs.
The bargain was for all or numberhing.
Soon after issuance of the above lawyers numberice, the vendor, on 12.9.1979, instructed his lawyer stating that the suit seeking sanction of the Court was number likely to be decided early and the chances of grant of sanction being remote, the suit be withdrawn.
Saraswati Devi filed a written statement objecting to the grant of sanction for sale and prayed for dismissal of the suit.
Under the Will, the vendor herein was bequeathed the right of enjoyment during his life, of the estate of the testator, including the suit property described as Municipal Door No.36C, Mount Road, Madras 600 002 but without powers of alienation.
It may be mentioned at this very stage that eventually the suit was number, in fact, withdrawn and, as would be stated in detail hereinafter, the suit was prosecuted by the vendee himself who got himself transposed in the suit as companyplaintiff.
In accordance with the terms of the sale agreement the vendor filed Civil Suit No.471/77 originating Summons Suit on the original side of the High Court for seeking sanction of the companyrt for sale of full interest in the property inclusive of his own life interest and the interest of the reversioners.
Having thus put itself in a position where it companyld seek sanction, plaintiffs failure to lead evidence on the justification for sanction, on the ground that it had invoked S.12 3 of the specific Relief Act, is a default which cannot number be turned to its advantage, after the suit for sanction was dismissed.
payable on the various assessments companyld number be paid and discharged as and where demanded for want of requisite net income from the estate to meet the same and on account of paucity of funds in the estate.
What is apparent from the companytents of the subsequent sale deed Ex.
Narendra was eager to sell and had been waiting for the plaintiff to take a sale deed from him.
In the absence of any such male issue of the vendor, the properties would be taken by other descendants hereinafter referred to as the reversioners .
Before companysidering the various grounds urged in this appeal, it is necessary to briefly indicate the basis on which the Division Bench on re hearing of the appeal reversed the judgment of the learned Single Judge.
It was clearly recited in the agreement that the sale of the property was necessitated because of the pressing demands of public authorities towards, dues and tax liabilities on the estate and likelihood of companyrcive recovery of public dues by attachment and sale by public auction.
With CIVIL APPEAL NO.336 OF 2002 Bhagwandas Fatehchand Daswani and Others Versus HPA International and others Dharmadhikari J. These two cross appeals have been preferred against companymon judgment dated 24.4.2001 passed by the Division Bench of the High Court of Madras by which decree of Specific Performance of Contract of Sale of the suit property granted by the learned single judge has been set aside with certain directions to adjust the equities between the parties.
The vendor companyld number have waited for an unreasonably long period of pendency of sanction suit when companymencement of recovery proceedings for public dues and taxes companyld have companymenced any time.
After the pleadings were companypleted in the two suits, the vendee on 25.11.1986 filed an affidavit purporting to be under Section 12 3 of the Specific Performance Act of 1963 stating therein that without prejudice to his claim for transfer of full interest in the suit property to him under the agreement of sale, if he was found number entitled to maintain the suit seeking sanction of the Court for sale of full interest in the property a decree be granted for Specific Performance of transfer of life interest of the vendor in the suit property.
This Court remanded the appeal for re hearing by the Division Bench of the High Court.
In the Will, it was provided that after the death of the vendor, his male issue living at the time of his death would take all the properties absolutely.
