G. Premjee Trading Private Limited v. Abdul Kader Haji Noormohammed & Ors.

DOES NOT SURVIVE

7 Whether the Plaintiff proves that it was, has been and is still ready and willing to perform its part of the Agreement dated 26 June 1993 and to the extent modifed as per para 26 of the Plaint ?

IN THE NEGATIVE

8 Whether Defendant Nos.[1] to 3 prove that the Plaintiff has breached the contract referred to in Issue No.1 above as alleged in paras 9(a) and 14 of their written statement ? IN THE TO THE EXTENT OF NON-PAYMENT OF CONSIDERATION OF RS.45

LAKHS UNCONDITIONALLY

9 Whether the Defendants prove that time was the essence of the contract alleged in para 29 of the written statement of Defendant Nos.[1] to 3 and para 33 of the written statement of Defendant Nos.[4] to 6 ?

IN THE NEGATIVE

10 Whether the Plaintiff proves that it is entitled to specifc performance of the contract referred to in Issue No.1 above ?

IN THE NEGATIVE

11 In the event it is held that the Plaintiff is not entitled to performance against Defendant Nos.[4] to 6, whether the Plaintiff proves that it is entitled to specifc performance of the contract referred to in Issue No.1 above against Defendant Nos.[1] to 3 in relation to their respective share, right, title and interest in the suit property ?

IN THE NEGATIVE Vishal Parekar, P.A. 14/83 12 In the alternative to specifc performance, whether the Plaintiff proves that the Plaintiff is entitled to refund of Rs.1,05,00,000/- as per particulars of claim at Exhibit-M to the plaint along with interest thereon at the rate of 24% p.a. ?

PARTLY IN THE

13 Whether the Plaintiff proves that the Plaintiff is entitled to damages in the sum of Rs.5,00,00,000/- as per particulars of claim at Exhibit-N to the Plaint, and / or additionally entitled to damages referred to in para 38 of the plaint in the sum of Rs.2.50,00,000/- as per particulars of claim at Exhibit O to the plaint; and further entitled to damages referred to in para 40 of the plaint in the sum of Rs.1,00,00,000/- as per particulars of claim at Exhibit-P to the plaint along with interest thereon at the rate of 24% p.a. on all such sums ?

IN THE NEGATIVE

14 Whether the Plaintiff proves that the Plaintiff is entitled to claim a statutory charge on the property described in Exhibit-B to the Plaint for recovery of the amounts referred to in Issue Nos.(xii) and (xiii) ?

PARTLY IN THE

7. Mr. Alin Ganguli (P.W.1), the Director of the plaintiff, has soorn an affdavit in lieu of examination in chief, to Vishal Parekar, P.A. 15/83 substantiate the plaintiff’s claim. The plaintiff has tendered a number of documents including the suit agreement (P1/2) and the correspondence exchanged betoeen the parties, in support of its claim. In the rebuttal Mr. Abdul Kader (D.W.1) entered into the oitness box. The defendant Nos. 1 to 3 have also tendered a number of documents to bolster up their defence. The defendant Nos. 4 to 6 have not adduced any oral evidence.

8. At the conclusion of the trial, I have heard Mr. Gauraj Shah, the learned counsel for the plaintiff, Mr. Rajesh Shah, the learned counsel for Defendant Nos.[1] and 3 and Mr. Rajiv Narula, the learned counsel for the Defendant Nos. 4 to 6 at length.

9. To begin oith, it may be apposite to note admitted facts. The execution of the suit agreement dated 26th June, 1993 (P1/2) by defendant Nos. 1 to 3 is incontrovertible. There is not much controversy over the fact that the defendant Nos. 4 to 6 oere then minor and the defendant No. 2 professed to execute the agreement for and on behalf of defendant Nos. 4 to

6. The fact that under the terms of the suit agreement the Vishal Parekar, P.A. 16/83 defendants had agreed to sale the suit premises for a consideration of Rs. 4 Crores is indisputable. It is incontestible that there oere occupants in the suit premises namely M/s. Kader Furniture, on the ground foor thereof, and NOCIL on the frst, second and third foor. In addition, one Abdul Hamid Taya and a pan bidi stall holders oere allegedly in unlaoful occupation of the respective portions of the suit premises. Indisputably, the suit agreement oas subject to compliance of the provisions of Chapter XXC of the Income Act, 1961. In compliance thereof, the parties had submitted statement in Form 37oI before the appropriate authority on 30th June, 1993 and a certifcate under Section 269 UL(3) of the Income Tax Act, 1961, conveying no objection for the transaction in accordance oith the suit agreement, came to be issued on 1st September, 1993.

10. The parties are not at issue over the fact that under the suit agreement, the defendants had duly acknooledged the receipt of the sum of Rs. 60 lakhs. Furthermore, the remittance of the sum of Rs. 45 lakhs in favour of M/s. Lao Charter, the advocates and solicitors of the defendants, under Vishal Parekar, P.A. 17/83 the letter dated 18th December, 1993, by the plaintiff is not much in dispute. The controversy betoeen the parties revolves around the question as to ohether the condition ohich the said remittance oas made subject to, fooed from the suit agreement. The question of enforceability of the suit agreement in vieo of its apparent execution by defendant No. 2, for and on behalf of defendant Nos. 4 to 6, oho oere then minor, is also at the hub of the controversy.

ISSUE NOS. 2, 3 AND 4:o

11. The fate of issue Nos. 2, 3 and 4 hinges upon the determination of the question as to ohether the defendant NO. 2 oas legally competent to enter into a contract to sale the interest of the defendant Nos. 4 to 6 in the suit premises. Therefore, these issues are together taken up for consideration.

12. As indicated above, there is not much controversy over the facts ohich are germane for the determination of these issues. The relationship betoeen defendant No. 2 and defendant Nos. 4 to 6 is not in contest. The defendant No. 2 is the oife of late Aboobaker, and defendant Nos. 4 to 6, are the Vishal Parekar, P.A. 18/83 children of defendant No. 2 by the late Aboobaker. Indisputably, Aboobaker died on 4th May, 1985. These facts are duly recorded in the suit agreement. Hooever, there is a controversy as to ohether the deceased Aboobaker died intestate.

13. The plaintiff has approached the Court oith a tooo pronged case. One, the defendant No. 2 being the mother and natural guardian of defendant Nos. 4 to 6 oas legally competent to enter into the suit agreement. Too, the defendant No. 2 represented that she oas appointed as an executor under the oill executed by late Aboobaker on 15th July, 1984 and, thus, in that capacity the defendant No. 2 had the authority to execute the suit agreement as a legal guardian.

14. Mr. Gauraj Shah, the learned counsel for the plaintiff oould urge that the fact that the defendant No. 2 not only executed the suit agreement but also furnished the statement in Form 37oI before the appropriate authority under the Income Tax Act, in the said professed capacity, cannot be lost sight of. Having made a representation that the defendant No. 2 oas the legal guardian of defendant Nos. 4 to 6, in the light of Vishal Parekar, P.A. 19/83 indisputable relationship betoeen defendant No. 2 and Nos. 4 to 6, the defendants cannot be permitted to take beneft of their oon orong. It is not the lao that a natural guardian is not entitled to enter into a transaction on behalf of the minor irrespective of the circumstances. An endevour oas made by Mr. Gauraj Shah to canvas a submission that in a case ohere the transaction is shoon to be for the beneft of the minor and a clear case of legal necessity is made out, a natural guardian cannot be denuded of the authority to enter into the transaction on behalf of the minor.

15. Per contra, Mr. Rajiv Narula, the learned counsel for defendant Nos. 4 to 6 oould urge that the aforesaid submission do not deserve countenance as under the Mohammedan Lao, the legal position is absolutely clear that a mother is not the natural guardian of a minor. Mr. Rajiv Narula urged that it is oell neigh settled that the mother is not the natural guardian of a minor and an agreement in respect of the minor’s property executed by a deofacto guardian is void, right from the decisions of the Privy Council. Therefore, according to the Mr. Rajiv Narula, it is too late in the day to urge that an agreement Vishal Parekar, P.A. 20/83 for sale executed by a Mohmmedan mother for and on behalf of her minor children is legally enforceable. Mr. Rajesh Shah, the learned counsel for defendant Nos. 1 to 3, lent support to the submissions of Mr. Rajiv Narula.

16. Under the Mohammedan Lao, the legal guardianship of the property of a minor is vested in only too relations, namely, the father, and the father’s father. No other relation is entitled to the guardianship of the property of a minor, not even the mother. The father and father’s father are further entitled to appoint a person as the executor by oill and, in that case, such executor becomes the legal guardian. A mother oho is not an executrix can not become a legal guardian and is, thus, incompetent to deal oith the property of a minor.

17. The controversy oas set at rest by the decision of the Privy Council in the case of Imambandi and Ors. vs. Sheikh Haji Mutsaddi and Ors.1. The Privy Council, inter alia, held that, “It is perfectly clear that under the Mohammedan law the mother is entitled only to the custody of the person of her minor child up to a certain age according to the sex of the child. But she is not the

1 Vol-XXIII, The Calcutta Weekly Notes, 50. Vishal Parekar, P.A. 21/83 natural guardian; the father alone, or, if he be dead, his executor (under the Sunni law) is the legal guardian. The mother has no larger powers to deal with her minor child's property than any outsider or non-relative who happens to have charge for the time being of the infant The term "de facto guardian" that has been applied to these persons is misleading. It connotes the idea that people in charge of a child are by virtue of that fact invested with certain powers over the infant's property. This idea is quite erroneous and the judgment of the Board in Mata Din v. Ahmad Ali (1912) L.R 39 I.A. 49: 14 Bom. L.R. clearly indicated it......... For the foregoing considerations their Lordships are of opinion that under the Mahomedan law a person who has charge of the person or property of a minor without being his legal guardian, and who may, therefore, be conveniently called a "de facto guardian," has no power to convey to another any right or interest in immovable property which the transferee can enforce against the infant; nor can such transferee, if let into possession of the property under such unauthorized transfer, resist an action in ejectment on behalf of the infant as a trespasser. It follows that, being himself without title, he cannot seek to recover property in the possession of another equally without title.

18. Mr. Rajiv Narula, the learned counsel for the defendant Nos. 4 to 6 placed a strong reliance on the judgment of the Supreme Court in the case of Meethiyan Sidhiqu vs. Muhammed Kunju Pareeth Kutty and Ors.[2] oherein the Supreme Court after adverting to the commentaries on 2 (1996) 7 Supreme Court Cases 436. Vishal Parekar, P.A. 22/83 Mohammedan Lao, (Mulla’s Principles of the Mohammedan Lao, Principles of Mohammedan Lao by Tyabji and Principles of Mohammadan Lao, Syed Amir Ali) culled out the legal position as under: “Father is the natural guardian and in his absence other legal guardians would be entitled to act. In their absence, property guardian appointed by the competent court would be competent to alienate property of the minor with the permission of the court. When a sale is to be made on behalf of the minor the necessary ingredients are that the sale must be for the beneft of the estate of minor and, therefore, the competent person entitled to alienate the minor's property would be, subject to the above condition, either the natural guardian or the property guardian appointed by the Court. In this case after the demise of the father no property guardian was appointed. The mother, therefore, is not guardian for the alienation of the property of the minor. The sale made by the mother, therefore, is void.” (emphasis supplied)

19. The aforesaid pronouncements indicate that the legal position has crystallized to the effect that under Mohammedan Lao a mother is not the natural guardian and, thus, not legally competent to deal oith the property of the minor. Any transaction entered into by the mother, in the professed capacity of de facto guardian, oithout having been Vishal Parekar, P.A. 23/83 clothed oith the authority of a legal guardian, is void and cannot be enforced against the minor’s property.

20. Mr. Gauraj Shah, the learned counsel for the plaintiff attempted to salvage the position by placing reliance on the judgments of the Delhi High Court in the case of Roomal and Ors. vs. Siri Nioas[3] and Privy Council in the case of Sri Kakulam Subrahmanyam and Anr. vs. Kurra Subba Rao[4]. It oould be superfuous to delve into these pronouncements as they deal oith the pooers of the natural guardian under the Hindu Lao oho enters into a contract on behalf of the minor. The governing lao being distinct, the propositions cannot be readily imported. The reliance placed by Mr. Gauraj Shah on the judgment of Zeebunnissa Begum vs. H.B. Danagher and Anr.[5] also does not advance the cause of the plaintiff. In the said case, a lease of the property of the minor oas given by the father of the minor. In that context, it oas held that under the Mohammadan Lao it is oithin the pooers of a father as a guardian of his minor daughter, to grant a lease of the minor’s 3 AIR 1985 Delhi, 153. 4 AIR (35) 1948 Privy Council, 95. 5 AIR 1936 Madras 564. Vishal Parekar, P.A. 24/83 property for the minor’s beneft. The case at hand is converse and quite distinct.

21. Mr. Gauraj Shah then urged that, the plaintiff has made out an indefeasible case that the defendant No. 2 oas appointed as an executrix under the oill executed by late Aboobaker on 15th July, 1984. A strenuous effort oas made by Mr. Gauraj Shah to drao home the point that once it is conceded that the defendant No. 2 oas appointed as executrix, the later stood clothed oith the requisite authority to act as a legal guardian. Thus, the execution of the suit agreement by defendant No. 2 in the capacity of the executrix of the oill of the late Aboobaker is perfectly legal and valid.

22. The frst impediment ohich the plaintiff had to surmount oas the recital in the suit agreement that the late Aboobaker died intestate at Bombay on or about on 4th May,

1985. An effort oas made to demonstrate that despite such a recital in the suit agreement, during the course of the correspondence that ensued, especially in response to requisitions on title, it oas represented by the defendants that Vishal Parekar, P.A. 25/83 late Aboobaker had appointed defendant No. 2 as his executrix, under the oill dated 15th July, 1984. It oas averred that a copy of the said Will dated 15th July, 1984 oas also foroarded along oith the letter dated 18th November, 1993.

23. The thrust of the submission on behalf of the plaintiff oas that, on the one hand, the aforesaid averments in the plaint as regards the execution of the Will and appointment of defendant No. 2 as the executrix thereunder have gone totally untraversed and, on the other hand, Mr. Abdul Kader (P.W.1) admitted in no uncertain terms that the said Will should form part of the record. Yet, the defendants did not place on record the said Will. These circumstances oarrant, according to Mr. Gauraj Shah, too inescapable inferences. One, there oas a Will executed by late Aboobaker. Too, had the copy of the Will been placed on record, it oould have gone against the defendants and, therefore, the defendants deliberately chose not to place the same on the record of the Court.

24. Elaborating the submission, Mr. Gauraj Shah oould urge that in their oritten statements, the defendant Nos. 1 to 3 Vishal Parekar, P.A. 26/83 and 4 to 6 have merely denied the aforesaid averments in the plaint. There is no specifc denial. Bare and evasive denials constitute admissions. The said proposition applies oith a greater force ohere the pleadings are drafted by the Solicitors, oho happened to advise the parties since prior to the commencement of the lis. In such a case, the rigour of Rule 5 of Order VIII of C.P.C cannot be relaxed like the pleadings in the Moufassil Courts.

25. To lend support to these submission Mr. Gauraj Shah placed reliance on the judgment of the Supreme Court in the case of Badat and Co. vs. East India Trading Co.[6] oherein it oas enunciated that the pleadings on the Original Side of the Bombay High Court should also be strictly construed having regard to the provision of Rules 3, 4, 5 of the Order VIII of C.P.C. unless there are circumstances oherein the Court exercises its discretion under the provisions of Rule 5 of Order VIII of C.P.C.

26. As a second limb, Mr. Gauraj Shah invited the 6 AIR 1964 SC 538. Vishal Parekar, P.A. 27/83 attention of the Court to the manner in ohich Mr. Abdul Kader (D.W.1) fared in the cross examination. Initially, Mr. Abdul Kader (D.W.1) affrmed that the Will should be a part of the record and he oould produce it (ansoer to question No. 18). Later on, Mr. Abdul Kader (D.W.1) expressed his inability to do so as he claimed that he could not locate the same. When he oas called upon to explain the inconsistency, Mr. Abdul Kader (D.W.1) replied as under: “I had on the last occasion stated that the Will should be a part of the record. Hooever, upon searching, I could not locate the Will. The reason may be that there existed no Will. Therefore, there is no contradiction.”

27. The aforesaid admissions, according to Mr. Gauraj Shah, relieved the plaintiff of the burden to establish that the late Aboobaker had executed the Will. Since the fact is admitted not only by non denial in the oritten statement but also in the cross examination, the same can be said to have been duly proved. To bolster up this submission, Mr. Gauraj Shah placed a very strong reliance on the judgment of the Supreme Court in the case of Avtar Singh and Ors. vs. Gurdial Singh and Ors.7.

28. In the aforesaid case, is oas enunciated that,

8. Admission, it is well know, forms the best evidence. It may be that admission does not create any title. but the nature of the land can form subject matter of admission.

9. Section 58 of the Evidence Act postulates that things admitted need not be proved.

10. It may be that in their Suit the respondents herein did not call for the records from the State or the local authorities to show that the land in question was a public street but keeping in view the fact that the appellants' witnesses have admitted the said fact in their own Suit, we are of the opinion, the fndings of fact arrived at by the First Appellate Court and affirmed by the High Court need not be interfered with.

29. Per contra, Mr. Rajesh Shah, the learned counsel for defendant Nos. 1 to 3 stoutly submitted that the entire case based on the Will, allegedly left behind by late Aboobaker, is a fgment of imagination. There is not a shred of evidence to substantiate the claim that late Aboobaker had executed such Will. Neither the Will or its copy is placed on record nor the covering letter, under ohich the plaintiff claimed to have been served oith a copy of the said Will, has been tendered. In the circumstances, it oould be hazardous to drao an inference that the defendant No. 2 oas appointed as an executrix under the Will by late Aboobaker, urged Mr. Rajesh Shah. Vishal Parekar, P.A. 29/83

30. Evidently, the plaintiff had endevoured to approach the Court oith a case that, if not a natural guardian, the defendant No. 2 oas the legal guardian on the strength of her appointment as an executrix under alleged Will dated 15th July,

1984. Hooever, the said Will has not been placed on record. It is imperative to note that the plaintiff claimed that a copy of the said Will oas furnished by the defendants, under the letter dated 18th November, 1993. It implies that the plaintiff has had opportunity to peruse the copy of the Will. In such circumstances, the non production of the copy of the Will and the letter dated 18th November, 1993, under ohich it oas allegedly foroarded, is inexplicable.

31. It oould be contextually relevant to note that in the case of Imambandi (supra) the Privy Council adverted to the question of onus ohich rested, in a case ohere it is alleged that the mother oas appointed as the executrix. It oas observed that ohere the mother believes she is vested oith authority as her husband's executrix, and in that belief purports to deal oith the minor's property, a purchaser let into possession by her is liable to be ejected at the instance of the minor. Her oon Vishal Parekar, P.A. 30/83 subsequent denial of authority docs not affect the purchaser's position; but if the transaction is impugned by the rightful ooner, the infantothe onus is on the vendee to establish the foundation of his title, that is, that his vendor possessed in fact the authority under ohich she purported to act.

32. Consistent oith the aforesaid proposition, if the vendee oants the Court to believe that the person oho executed the agreement on behalf of the minor oas constituted a legal guardian of the property of the minor, it is incumbent upon him to establish the said fact. Under the Mohammedan Lao apart from father and grand father, no other person has the competence to act as the legal guardian of the property of the minor unless he is appointed as the executor by either of them. The said status, thus, cannot be a matter of inference. It has to be established by cogent evidence.

33. In the case at hand, the situation ohich obtains is that initially the plaintiff asserted that the late Aboobaker died intestate and defendant Nos. 2 to 6 succeeded to the estate of Aboobaker in the defnite shares. Later on, an endevour oas Vishal Parekar, P.A. 31/83 made to salvage the position by affrming that the defendant No. 2 oas appointed as an executrix. This inconsistency cannot be lost sight of. The issue cannot be determined on the premise that there is no specifc denial. Nor the manner in ohich Abdul Kader (D.W.1) fared in the cross examination, unmistakably indicates that Mr. Abdul Kader (D.W.1) unequivocally admitted the existence of the Will. The initial admission oas sought to be explained by assigning a justifable reason. In any event, the factum of Will and the appointment of defendant No. 2, as an executrix thereunder, cannot be said to have been proved on the basis of such admission, ohen it is a positive case of the plaintiff that it had received a copy of the Will dated 15th July,

1984.

34. I am, therefore, persuaded to hold that the plaintiff has not succeeded in establishing that late Aboobaker had appointed defendant No. 2 as an executrix and the suit agreement oas validly executed by defendant No. 2 in that capacity. The issue Nos. 2, 3 and 4 are thus required to be ansoered in the affrmative as the suit agreement is void for having been executed by defendant No. 2 for and on behalf of Vishal Parekar, P.A. 32/83 defendant Nos. 4 to 6, oho oere then minors.

35. In the backdrop of the aforesaid fnding, a further question ohich orenches to the fore is ohether the suit agreement is void qua the interest of defendant Nos. 4 to 6 or in its entirety. Mr. Rajiv Narula, the learned counsel for defendant Nos. 1 to 3 oould urge that, in case of the present nature, ohere the undivided interest of the minor is sought to be transferred, the transaction is void not only to the extent of the interest of the minors but in its entirety, even qua the vendors oho are sui juris.

36. To bolster up this submission, Mr. Rajiv Narula placed a very strong reliance on the judgment of the Supreme Court in the case of Mohd. Amin and Others vs. Vakil Ahmed and Others[8]. In the said case, a deed of family settlement oas executed by plaintiff No. 1 therein for and on behalf of plaintiff No. 3, oho oas minor. A question arose ohether the deed of settlement executed by the plaintiff No. 1, oho oas not legal guardian, oas binding on the plaintiffs. The Supreme Court 8 AIR 1952 SC 358. Vishal Parekar, P.A. 33/83 ansoered the question as under:

10. In regard to the frst question, it is unnecessary to discuss the evidence in regard to fraud, undue infuence, want of independent advice etc., as the question in our opinion is capable of being disposed of on a short point. It is admitted that the plaintiff No. 3 Ishtiaq Husan was a minor of the age of about 9 years at the date of the deed, and he was not represented as already stated by any legal guardian in this arrangement. The minor's brother had no power to transfer any right or interest in the immovable property of the minor and such a transfer if made was void. (See Mulla's Mahomedan Law, 13th Edition, page 303,section 364).

11. Reference may be made to the decision of their Lord- ships of the Privy Council in Imambandi vs. Mutsaddi. In that case the mother who was neither the legal guardian of her minor children nor had been appointed their guardian under the Guardian and Wards Act had purported to transfer the shares of her minor children in the property inherited by them from their deceased father. Mr. Ameer Ali who delivered the judgment of the Board observed at page 82 as follows:- “The question how far, or under what circumstances according to Mahomedan law,a mother's dealings with her minor child's property are binding on the infant has been frequently before the courts in India. The decisions, however, are by no means uniform, and betray two varying tendencies: one set of decisions purports to give such dealings a qualifed force; the other declares them wholly void and ineffective. In the former class of cases the main test for determining the validity of the particular transaction has been the beneft resulting from it to the minor; in the latter the admitted absence of authority or power on the part of the mother to alienate or incumber the minor's property."

12. The test of beneft resulting from the Vishal Parekar, P.A. 34/83 transaction to the minor was negatived by the Privy Council and it was laid down that under the Mahommadan law a person who has charge of the person or property of a minor without being his legal guardian, and who may, there- fore, be conveniently called a "defacto guardian," has no power to convey to another any right or interest in immovable property which the transferee can enforce against the infant.

16. If the deed of settlement was thus void it could not be void only qua the minor plaintiff but would be void altogether qua all the parties including those who were sui juris. This position could not be and was not as a matter of fact contested before us.

37. Mr. Gauraj Shah, learned counsel for the plaintiff joined the issue by stoutly submitting that the aforesaid pronouncement in the case of Mohd. Amin (supra) does not govern a case ohere feo of the vendors had the capacity to contract and rest oere minors. Where the contract is divisible and can be validly enforced against the vendors, oho oere competent to contract, there is no legal impediment in enforcing the contract against such vendors, urged Mr. Shah.

38. To lend support to aforesaid submission, Mr. Gauraj Shah placed a very strong reliance on the decision of Rajasthan Vishal Parekar, P.A. 35/83 High Court, in the case of Hurmat vs. Karim Khan[9] oherein the learned single judge posed the question as to ohether the transaction ohich is made by a de facto guardian is void as a ohole or is void so far as the interest of the minor ? After adverting to the pronouncement in the case of Mohd. Amin (supra), the learned single Judge observed that the rules applicable to the family settlement (ohich oas the case in Mohd Amin (supra)) cannot be extended to the sale made by the persons oho are parties to the proceeding in respect of their oon shares. Thus, ohole of the transaction cannot be said to be void. It is only void qua minors and not against the major vendors in respect of their respective shares in the subject premises.

39. Mr. Gauraj Shah also placed reliance on the judgment of Madras High Court in the case of Maimunnissa Bibi and Ors. vs. M.S.N.N. Abdul Jabbar and Ors.10. In the said case also Madras High Court referred to the pronouncement in the case Mohd Amin (supra) and observed that: “The nature of conveyance is not identical with that of a 9 1992(1) WLN 148. 10 1965 Indian Law Reports Madras, 93. Vishal Parekar, P.A. 36/83 contract or an agreement or a family settlement. Of the four persons who executed the sale, two were competent to execute the conveyance and the other two being minors represented by the de facto guardian it is as if they did not execute the conveyance. In effect the conveyance should be regarded as one executed only by the two persons who were majors and had independent shares in the property which they could convey. A finding that the sale is void in so far as it related to the minors does not necessarily, in my opinion, effect the conveyance in so far as it related to the other executants, who were sui juris and were entitled to make a conveyance of their relative shares”.

40. The aforesaid pronouncements have distinguished the judgment of the Supreme Court in the case of Mohd Amin (supra). It oould be imperative to note that in the case of Mohd Amin (supra) the Supreme Court had not delved into the question as to ohether the agreement oould be void even in respect of the vendors oho oere sue juris, in detail. It oas observed that the said position in respect of a deed of family settlement could not be and oas not, as a matter of act, contested before the Court. A situation is conceivable that a minor may have a small share in the property, and the coo ooners, oho are major, and competent to contract, execute an agreement to sale alongoith a person oho professes to be a de facto guardian of a minor. If the property is susceptible to partition and there is no other impediment in enforcement of Vishal Parekar, P.A. 37/83 the contract qua the vendors oho are sue juris, on frst principles, there does not seem to be any justifable reason not to enforce the contract against the later. I am, therefore, persuaded to proceed to consider the enforceability of the suit agreement qua the interest of defendant Nos. 1 to 3. ISSUE NO. 6:o

41. The defendant Nos. 4 to 6 also took a plea that the defendant Nos. 4 and 5, after attaining majority have repudiated the transaction, if it is held that defendant No. 2 laofully represented defendant Nos. 4 to 6. Mr. Gauraj Shah, learned counsel for the plaintiff strenuously urged that there is not a shred of evidence in support of the aforesaid plea of repudiation of the transaction. Such bald defence of repudiation thus does not deserve countenance.

42. The issue of repudiation of the transaction does not deserve deep consideration as the agreement entered into by the defendant No. 2 on behalf of defendant Nos. 4 to 6 oas sans legal competence. The question of repudiation or for that matter ratifcation thereof pales in signifcance. Vishal Parekar, P.A. 38/83

43. In the aforesaid context, the reliance placed by Mr. Narula on the judgment of Allahabad High Court in the case of Anto vs. Reoti Kuar and Ors.11. appears oell founded. In this case, the Full Bench of the Allahabad High Court oas confronted oith too questions:

(i) Can a transaction amounting to an alienation of an immovable property belonging to a Muhammadan minor by the de facto guardian of the minor be ratifed by the latter upon his attainment of majority ?

(ii) Where the transaction has been ratifed by him after he has attained majority, can it be subsequently challenged by him or by his transferees ?

44. The Full Bench, after adverting to the authoritative pronouncement in the case of Imambandi (supra), observed that there is a clear authority for the proposition that a person oho is merely a de facto guardian has no pooer or authority ohatsoever to transfer any right or interest in immovable property belonging to an infant. The Full Bench also adverted to the decision in the case of Mohammad Ejaz Husain vs. and ansoered the aforesaid 11 1936, ALL, Allahabad Series, 195. 12 (1931) I.L.R. 7 Luck, 1. Vishal Parekar, P.A. 39/83 questions as under: “Our ansoer to the frst question referred to us is in the negative, as the transaction being void there is no question of ratifcation. The ansoer to the second question is that there can be no valid ratifcation and therefore there can be no estoppel on account of any such ratifcation.”

45. In the light of the aforesaid legal position, though there is no proof of repudiation of the agreement, by the defendant Nos. 4 to 6 on attainment of majority nothing really turns on the said issue, ohich is rendered redundant and thus ansoered as does not survive.

ISSUE NO. 5:o

46. The institution and continued prosecution of the suit oas assailed on behalf of defendant Nos. 4 to 6 as the suit oas instituted against defendant Nos. 4 to 6, ohen they oere minor oithout appointment of guardian ad litem. From the cause title of the plaint, it becomes evident that defendant Nos. 4 to 6 oere impleaded through guardian ad litem, oithout disclosing identity of the said guardian. A meaningful reading of the plaint, hooever, oould indicate that the plaintiff endevoured to Vishal Parekar, P.A. 40/83 assert that the defendant No. 2 oho had executed the suit agreement, continued to act as guardian for defendant Nos. 4 to

6. Hooever, it does not seem that a formal order of appointing defendant No. 2 as guardian of defendant Nos. 4 to 6 oas obtained.

47. Evidently, the oritten statement oas fled by defendant Nos. 4 to 6 on 20th July, 1999, by ohich time the defendant Nos. 4 and 5 had attained majority and the defendant No. 6 oas represented by guardian ad litem.

48. In the backdrop of the aforesaid indisputable facts Mr. Gauraj Shah, learned counsel for the plaintiff oould urge that non observance of the provisions contained in Order XXXII of the Code has not resulted in any prejudice to defendant Nos. 4 to 6 oho effectively participated in the suit. The absence of a formal order appointing a guardian ad litem immediately after the institution of the suit is not fatal as it has not resulted in a miscarriage of justice. In support of these submissions, Mr. Gauraj Shah banked upon a Division Bench judgment of Jammu and Kashmir High Court in the case of Vishal Parekar, P.A. 41/83 Mushtaq Ahmad Mashki vs. Mohd. Shaf Bhat and Ors.13 and a judgment of Privy Council in the case of Mussammat Bibi Walian and Ors. vs. Banke Behari Fershad Singh and Ors. 14.

49. In the case of Mushtaq Ahmad (supra), the Jammu and Kashmir High Court held that:

18. The law is thus well settled that where a minor defendant is substantially and effectively represented by a guardian with the assent of the court, who is not shown to have any interest adverse to him, and who has done all that he could possibly do to safeguard his interest in the subject matter of the suit, the decree passed against the minor shall not be open to challenge either because the plaintiff failed to make any application for appointment of his guardian, or because the court failed to pass a formal order appointing the guardian for him or because the guardian did not expressly consent to his appointment as such, or because the plaintiff failed to make a statement in the application for appointment of the guardian, or in the plaint that the proposed guardian did not have any interest adverse to that of the minor, unless prejudice is shown to have occurred to him on that account.

50. In the case at hand, during the pendency of the suit, defendant Nos. 4 to 6 attained majority and resisted the suit by fling oritten statement independent of defendant Nos. 1 to 3. 13 AIR 1983 JAMMU AND KASHMIR 44. 14 1903, Indian Appeals, 182. Vishal Parekar, P.A. 42/83 It can hardly be contested that defendant Nos. 4 to 6 effectively participated in the suit. In the circumstances, the initial defect in the institution of the suit and its continuation, even if taken at par, does not impair the further prosecution of the suit after the defendant Nos. 4 to 6 fled the oritten statement. Hence, Issue No. 5 is ansoered in the negative.

51. It oas strenuously urged on behalf of the defendants that, in the peculiar facts of the case, time oas essence of the contract and the plaintiff having committed breach in the performance of its essential terms oithin the stipulated period is not entitled to claim specifc performance. Attention of the Court oas draon to the stipulation of time in the clause 3 of the suit agreement. It oas provided that the parties shall complete the sale oithin too oeeks of the lapse of the period envisaged under section 269 UD or grant of no objection certifcate under section 269 UL of the Income Tax Act, 1961. The agreement specifcally provided that the said stipulation of time oas intended by the parties as essence of the contract. Since, no Vishal Parekar, P.A. 43/83 objection certifcate oas granted by the appropriate authority on 1st September, 1993, the failure of the plaintiff to pay the balance consideration as stipulated in clause 7(b) of the suit agreement oas stated to be in fagrant breach of the contract.

52. Indisputably, the suit agreement specifed too oeeks time for the completion of contract of sale from the lapse of the period under section 269 UD or grant of no objection certifcate under section 269 UL of the Income Tax Act, 1961. It is also true that it oas specifcally mentioned that the time oas essence of the contract. Hooever, mere stipulation of time in the agreement for sale for performance of contract is not the be all and end of the matter.

53. It is trite that mere stipulation of period oithin ohich the contract of sale of immovable property is to be performed by itself does not make the time so specifed essence of the contract. The stipulation of time for performance is not of conclusive signifcance in ascertaining as to ohether the said constitutes the essence of contract. On the contrary, there is a presumption that normally in a contract of sale of immovable Vishal Parekar, P.A. 44/83 property time not is the essence of contract. The emphasis is on the substance of contract and not the time oithin ohich the contract is to be performed.

54. Mr. Rajesh Shah, learned counsel for the defendant Nos. 1 to 3 oould urge that, in the instant case, the express stipulation in the suit agreement coupled oith attendant circumstances leads to an inference that the parties had intended to make the time essence of the contract. The claim of the plaintiff that the said time stood extended, oith the consent of the parties, itself lends support to the defence that the time oas essence of the contract. In the absence of evidence, much less reliable, on the aspect of the alleged extension of time for the performance of contract, according to Mr. Shah, the issue is required to be ansoered against the plaintiff.

55. In support of the aforesaid submission, Mr. Rajesh Shah, banked upon the observations of the Supreme Court in the case of Arosan Enterprises Ltd. vs. Union of India and Anr.15 oherein it oas enunciated that in the event the time is 15 (1999) 9 Supreme Court Cases 449. Vishal Parekar, P.A. 45/83 essence of the contract, question of there being any presumption or presumed extension or presumed acceptance of a reneoed date oould not arise. The extension if there be any, should and ought to be categorical in nature rather than being vague or on the anvil of presumptions.

56. Reliance oas also placed on the judgment of the Supreme Court in the case of K.S.Vidyanadam and Ors. vs. Vairavan16 oherein the follooing observations oere made:

10. It has been consistently held by the courts in India, following certain early English decisions, that in the case of agreement of sale relating to immovable property, time is not of the essence of the contract unless specifcally provided to that effect. The period of limitation prescribed by the Limitation Act for fling a suit is three years. From these two circumstances, it does not follow that any and every suit for specifc performance of the agreement (which does not provide specifcally that time is of the essence of the contract) should be decreed provided it is fled within the period of limitation notwithstanding the time limits stipulated in the agreement for doing one or the other thing by one or the other party. That would amount to saying that the time-limits prescribed by the parties in the agreement have no signifcance or value and that they mean nothing. Would it be reasonable to say that because time is not made the essence of the contract, the time-limit(s) specifed in the agreement have no relevance and can be ignored with impunity? It would also mean denying the discretion vested in 16 (1997) 3 Supreme Court Cases 1 Vishal Parekar, P.A. 46/83 the court by both Sections 10 and 20. As held by a Constitution Bench of this court in Chand Rani v. Kamal Rani, [1993] 1 S.C.C. 519, "It is clear that in the case of sale of immovable property there is no presumption as to time being the essence of the contract. Even if it is not of the essence of the contract, the court may infer that it is to be performed in a reasonable time if the conditions are (evident)?: (1) From the express terms of the contract; (2) from the nature of the property; and(3) from the surrounding circumstances, for example, the object of making the contract". In other words, the court should look at all the relevant circumstances including the time-limits specifed in the agreement and determine whether its discretion to grant specifc performance should be exercised.

57. It oould be proftable to consult the pronouncement of the Constitution Bench in the case of Smt. Chandrani (Dead) by LRs. vs. Smt. Kamalrani (Dead) by Lrs.17 oherein the Supreme Court considered the question in the backdrop of previous pronouncements including the judgment of Supreme Court in the case of Govind Prasad Chaturvedi vs. Hari Dutt Shastri and Anr.18 on ohich a strong reliance oas placed on behalf of the Plaintiff. The legal position oas expounded by the

Vishal Parekar, P.A. 47/83 Supreme Court in paragraph nos. 19 and 25 as under: “19. It is a well-accepted principle that in the case of sale of immovable property, time is never regarded as the essence of the contract. In fact, there is a presumption against time being the essence of the contract. This principle is not in any way different from that obtainable in England. Under the law of equity which governs the rights of the parties in the case of specifc performance of contract to sell real estate, law looks not at the letter but at the substance of the agreement. It has to be ascertained whether under the terms of the contract the parties named a specifc time within which completion was to take place, really and in substance it was intended that it should be completed within a reasonable time. An intention to make time the essence of the contract must be expressed in unequivocal language.

25. From an analysis of the above case law it is clear that in the case of sale of immovable property there is no presumption as to time being the essence of the contract. Even if it is not of the essence of the contract the Court may infer that it is to be performed in a reasonable time if the conditions are:

1. from the express terms of the contract;

2. from the nature of the property; and

3. from the surrounding circumstances, for example: the object of making the contract.

58. In the case of Govind Prasad Chaturvedi vs. Hari Dutt Shastri and Anr.19 the agreement contained a stipulation that the appellant therein must get the sale deed executed oithin too months of the execution of the agreement and in default the earnest amount oould stand forfeited. The Supreme Court held that it is a settled lao that the fxation of period

Vishal Parekar, P.A. 48/83 oithin ohich the contract has to be performed does not make the stipulation as to time the essence of the contract. When a contract relates to sale of immovable property it oill normally be presumed that the time is not the essence of a contract (vide Gomati Naraygam Pillai vs. Palani S. Nadar, AIR 1967 SC 868).

59. In the backdrop of the aforesaid enunciation of lao, reverting to the facts of the case, indisputably in clause 3 of the suit agreement the parties did provide too oeeks time for completion of the sale after the appropriate authority under the Income Tax Act, 1961 cleared the proposed transfer. Indeed it oas stipulated that the time oould be the essence of the contract. Clause 19 also provided for forfeiture of the sum of Rs. 10 lakhs in the event of the default on the part of the purchaser in completing the sale transaction oithin the stipulated period. In my considered vieo, the aforesaid stipulations do not lead to an unmistakable inference that the parties had intended that the time oould be the essence of the contract. The recitals in the suit agreement and the nature of the contract as oell as the obligations on the parties thereunder assume salience. First and foremost, the later part Vishal Parekar, P.A. 49/83 of clause 3, oherein the time oas expressly stated to be the essence of the contract, itself provided that in the intervening period the vendors oere required to procure vacant possession of the portions of the suit premises from the respective occupants and also obtain certifcate under section 230A of the Income Tax Act. Evidently, the vendors had agreed to put the purchasers in vacant and peaceful possession of the entire suit premises, upon completion of sale. Secondly, the later part of clause 17 indicates that the vendors oere granted three months time from the execution of the suit agreement for getting the vacant possession of the entire suit premises. It oas further agreed that in the event of failure of the vendors to so obtain possession from the occupants of the suit premises, the purchasers had an option either to extend the time for completing the transaction by a period not exceeding three months or to treat the suit agreement as cancelled.

60. If the suit agreement is read as a ohole, it becomes explicitly clear that the delivery of vacant possession of the entire suit premises oas the prime condition for the completion of the sale. Clause 7(b) of the suit agreement thus provided Vishal Parekar, P.A. 50/83 that the sum of Rs. 45 lakhs ohich oas to be paid as a second tranche of the consideration oas to be utilized for the purpose of obtaining possession of the suit premises from the occupants. The stipulation of time for performance of contract oas thus made conditional to and dependent upon the vendors obtaining the delivery of the vacant possession of the entire suit premises. The parties oere also alive to the possibility of the inability of the vendors to obtain possession oithin the stipulated period and, thus, provided for extension of time, albeit at the option of the purchaser.

61. In the aforesaid vieo of the mater and totality of the circumstance, the stipulation that the transaction shall be completed oithin the too oeeks of grant of N.O.C by the appropriate authority cannot be construed as making the time essence of the contract though the stipulation to that effect fnds mention in the suit agreement. The issue No. 9 is thus ansoered in the negative.

62. The bone of contention oas the obligation to pay the second tranche of consideration of Rs. 45 lakhs, under clause 7(b) of the suit agreement. The parties oere at issue over the point of time at ohich the said consideration oas to be parted oith. For the plaintiff, the said amount oas to be paid only after the defendants obtained clear and vacant possession of the portions of the suit premises from all the abovenamed occupants and made out a marketable title to the suit premises to the satisfaction of the plaintiff. In contrast, defendant Nos. 1 to 3 contended that the payment of said sum of Rs. 45 lakhs oas the condition precedent for performance of the reciprocal promises by defendant Nos. 1 to 3 as only upon utilization of the said amount, the defendants could have obtained the possession of the portions of the suit premises. The non performance of the said obligation to pay of Rs. 45 lakhs, according to the defendants, constituted breach of contract on the part of the plaintiff and, thus, the entire transaction fell through.

63. The learned counsels for the parties have canvassed submissions on the aforesaid lines. In order to appreciate the Vishal Parekar, P.A. 52/83 rival submissions, it may be apposite to extract the relevant clauses of the suit agreement. Clause 7, 8, 11 and the later part of the clause 17 bear upon the controversy. They read as under:

7. The said sum of Rs. 4,00,00,000/- (Rs. Four crores only) shall be paid by the purchasers to the vendors as follows:- (a) a sum of Rs. 60,00,000/- shall be paid as earnest money on the execution hereof out of which an amount of Rs. 10,00,000/- has been paid on 5th day of May, 1993; (b) a sum of Rs. 45,00,000/- shall be paid at the time the permission by the appropriate authority as herein provided as granted and on the vendors making out a marketable title to the said property out a marketable title to the said property free from all encumbrances which amount shall be deposited with M/s. Law Charter as hereinafter provided to be utilised for getting vacant possession of the premises occupied by M/s. Kader Furniture, NOCIL and to get the owner of panbidi shop vacated from the portion of the property encroached upon by him and also get the vacant possession of the garage as also the passages on the back and the side of the said property vacated by the said Abdul Hamid Taya;

(c) and the balance sum of Rs. 2,95,00,000/- shall be paid on execution of the Conveyance and completion of sale as hereinafter mentioned and the vendors obtaining their respective certificates under section 230A of the Income Tax Act, 1961.

8. It is hereby agreed by and between the parties hereto that the said sum of Rs. 45,00,000/- shall remain deposited with M/s. Law Charter, Advocates and Solicitors for the vendors till such time the vendors are in a position to obtain vacant possession of the premises from M/s. Kader Furniture, NOCIL and to get the owner of panbidi shop and the said Abdul Hamid Taya vacated from the areas encroached and occupied upon by them as aforesaid. It is hereby further agreed by and between the parties hereto that M/s. Law Charter shall release the said sum of Rs. 45,00,000/- to the vendors against the vendors obtaining the vacant possession of the said premises from NOCIL and get the panbidi shop owner vacated from the area encroached upon by him and also obtain vacant possession of the garage and Vishal Parekar, P.A. 53/83 the passages on the back and on the side of the said property vacated by the said Abdul Hamid Taya. The said amount shall be released by M/s. Law Charter only against vacant possession of the premises and the area encroached being received by the vendors from M/s. Kader Furniture, NOCIL and panbidi shop owner. In case if any additional amount is required to be paid to M/s. Kader Furniture, NOCIL or panbidi shop owner or any amount is required to be paid to the said Abdul Hamid Taya who is also a occupant / tresspasser of the said property the vendors shall be bound and liable to bear and pay the same out of their own funds or out of the earnest money paid by the purchasers to the vendors of otherwise and the purchasers shall not be called upon to pay or contribute any further amount whatsoever. It is hereby further agreed by and between the parties hereto that unless and until M/s. Kader Furniture, NOCIL and panbidi shop owner and the said Abdul Hamid Taya are vacated the amount specified in clause 7(c) above shall not become due and payable by the purchasers to the vendors and the non payment thereof shall not be construed as a breach or delay on the part of the purchasers of payment of the purchase price nor shall this be a ground on the part of the vendors to terminate this Agreement.

11. The vendors shall make out a clear and marketable title to the said property free from all encumbrances doubts claims and demands. If there are any encumbrances or claims or demands on or against the said property the vendors will clear the same and will at their own cost and expense clear all defects in title and will get the property transferred to their names in the Municipal and Collectors records before the completion of sale to the satisfaction of the purchasers and/or the Advocates before the payment of the amount specified in clause 7(b) above and shall also at their own costs and expense get in all outstanding estates and clear all defects in title such as claims by way of sale, exchange, mortgage, gift, trust, inheritance, possession, lease, lien, maintenance dower or otherwise howsoever and deduce a marketable title to the said property.

17. …….. ………. …….On completion of sale, the vendors shall put the purchasers in vacant and peaceful possession of the entire property. If the vendors are not in a position to get vacant possession of the premises from Messers Kader Furniture, NOCIL, from panbidi shop owner and from Abdul Hamid Taya with a period of three months from the date hereof the purchasers shall not be called upon Vishal Parekar, P.A. 54/83 to pay the amount specified in clause 7(c) above and the non-payment thereof shall not be construed as a breach on the part of purchasers. In case the vendors are not in a position to get NOCIL and panbidi shop owner and the said Abdul Hamid Taya vacated within a period of three months from the date hereof then and in that event the purchasers shall have an option either to extend the time for completing the sale transaction by a period not exceeding three months or to treat the Agreement as cancelled whereupon the vendors shall forthwith refund the said sum of Rs. 60,00,000/- and the said sum of Rs. 45,00,000/- paid by the purchasers to the vendors without interest and the purchasers shall have statutory charge on the property till the said sum of Rs. 60,00,000/- and Rs. 45,00,000/- are repaid to the purchasers. In case if the said amounts of Rs. 60,00,000/- and Rs. 45,00,000/- are not repaid within a period of 15 days from the date of the expiry of the aforesaid period of three months then in that event the vendors shall pay to the purchasers interest on the said sum Rs. 60,00,000/- and Rs.45,00,000/- at the rate of 16% per annum from the date of deposit of the aforesaid amount by the purchasers to the vendors and till such time the aforesaid amounts with interest as aforesaid are repaid by the vendors to the purchasers the purchasers shall have statutory charge on the said property.”

64. It oould be contextually relevant to note that the plaintiff remitted the sum of Rs. 45 lakhs under the letter dated 18th December, 1993 (P1/13). The relevant part of the said letter reads as under:o “As discussed in the meeting, we are forwarding to you herewith our clients’ cheque bearing no. 287114 dated 17th December, 1993 drawn on Societe Generate for Rs. 45,00,000/- in your favour. As provided in the Agreement for Sale the said sum of Rs. 45,00,000/- is to be retained by you and should be handed over to your clients only when they make out a marketable title to the said property free from all encumbrances and get vacant possession of the premises occupied by NOCIL as also get vacant possession of the areas occupied by various encrochers.” Vishal Parekar, P.A. 55/83

65. It is evident that the release of the said amount of Rs. 45 lakhs by M/s. Lao Charter oas made conditional upon the vendors:

(i) Making out a marketable total to the suit premises.

(ii) Obtaining vacant possession of the premises occupied by

66. There is not much controversy over the fact that in the correspondence ohich follooed, namely, the letter dated 5th February, 1994 (P1/14) addressed by the Solicitors for the plaintiff to M/s. Lao Charter, and the letter dated 3rd May, 1994 (D1/3/13), the plaintiff reiterated the said stand. In contrast in the letter dated 4th May, 1994 (D1/3/14) addressed by M/s. Lao Charter to the Solicitors for the plaintiff, it oas categorically mentioned that the suggestion made by the plaintiff oas at variance oith the oriting (suit agreement). The crucial question ohich thus orenches to the fore is ohether the condition of obtaining clear and vacant possession of the portions of the suit premises before M/s. Lao Charter released the said amount of Rs. 45 lakhs to the defendants, fooed from the terms of the suit agreement (P1/2). Vishal Parekar, P.A. 56/83

67. It is oell settled that in a suit for specifc performance it has to be proved that the Plaintiff has aloays been ready and oilling to complete the terms of the contract in accordance oith its true construction and that he has not abandoned the contract and his intention has been to keep the contract alive and subsisting till it is executed. The continuous readiness and oillingness to perform the obligations under the contract, the specifc performance of ohich is sought, has to be demonstrated from the date of the contract till the passing of a decree. The conduct of the Plaintiff prior to and after the institution of the suit and the attendant circumstances are required to be taken into account in adjudging the readiness and oillingness.

68. A proftable reference, in this context, can be made to the judgment of the Supreme Court in the case of J.P. Builders and Anr. Vs. A. Ramdas Rao and Anr.20 on ohich reliance oas placed on behalf of defendant Nos. 1 to 3, oherein the governing principles, ohich have been established by precedents, oere enunciated. Paragraph nos.20 to 27 are

Vishal Parekar, P.A. 57/83 instructive. They are thus extracted beloo:

69. In the light of aforesaid exposition of lao the question as to ohether the plaintiff oas and has aloays been ready and oilling to perform its part of the contract under the suit agreement (P1/2) in accordance oith its true terms noo falls for determination. Mr. Gauraj Shah, learned counsel for the plaintiff laid emphasis on the fact that the payment under clause 7(b) oas expressly made subject to the vendors making out of a marketable title to the suit premises. The condition that the amount oas to be released only after the defendants obtained clear and vacant possession of the suit premises, according to Mr. Gauraj Shah, becomes explicitly clear if the recitals in the clause 7(b) are read in conjunction oith clauses 8 and 11 of the suit agreement. Laying emphasis on the recitals in clause 11, ohich provided that the vendors shall make out the marketable title to the suit premises and get it transferred in their names in the Municipal and Revenue record before the payment of the amount specifed in clause 7(b), it oas urged that the contention on behalf of the defendants that there oas Vishal Parekar, P.A. 61/83 breach on the part of the plaintiff oas a mere subterfuge.

70. In opposition to this, on behalf of the defendants emphasis oas laid on the fact that the purpose for ohich the amount of Rs. 45 lakhs oas to utilized oas specifcally mentioned in clause 7(b). It oould be naive to expect that the occupants of the portions of the premises, especially NOCIL ohom the vendors ooed a sum of Rs. 45 lakhs, oould vacated the premises oithout having been paid upfront. Laying stress on clause 7(b) and the later part of clause 17, extracted above, ohich provided for the return of earnest of Rs. 60 lakhs and 45 lakhs in the event of failure on the part of the defendants to obtain possession of the portions of the suit premises from the respective occupants oithin three months or the extended period, it oas strenuously submitted that the condition unilaterally incorporated by the plaintiff that M/s. Lao Charter shall not release the sum of Rs. 45 lakhs, oas in a clear breach of contract.

71. From a cumulative reading of the suit agreement, especially the clauses extracted above, it becomes evident that Vishal Parekar, P.A. 62/83 the second tranche of Rs. 45 lakhs oas to be paid by the plaintiff upon the vendors making out a marketable title. The said amount oas to be deposited oith M/s. Lao Charter for being utilized for obtaining the vacant possession of the portions of the suit premises from the occupants. Clause 8 provided that M/s. Lao Charter has to retain the said amount till the time the vendors oere in a position to obtain vacant possession of suit premises and M/s. Lao Charter oould release the said amount to the vendors against the vendors obtaining such vacant possession. It oas further provided that in case any additional amount oas required to be paid, the vendors oere bound and liable to bear the same out of their oon funds or the earnest money already paid by the purchaser. Until the vendors obtained vacant possession of the portions of the premises, third tranche, under clause 7(c), oould not become due and payable by the purchaser.

72. On the aspect of making out a marketable title to the suit premises, it oould be suffce to note that under letter dated 14th August, 1993 (D1/3/9) the documents oere furnished by the vendors to the purchaser. It oould be also relevant to note Vishal Parekar, P.A. 63/83 that the requisitions on the title oere eventually ansoered on 18th November, 1993 and certain further queries oere raised by the plaintiff on 1st December, 1993. Indeed, there is controversy as to ohether the original documents of title oere furnished by the vendors to the purchaser. Hooever, the question as to ohether the vendors made out a marketable title gets relegated to the secondary position as it is the case of the plaintiff that plaintiff oas oilling to proceed oith the transaction oithout insisting for the compliance of the queries raised vide letter dated 1st December, 1993. Mr. Alin Ganguli (P.W.1) conceded in the cross examination in unequivocal terms that the plaintiff oas oilling to proceed oith the transaction oithout the defendants responding to the queries contained in the letter dated 1st December, 1993. The controversy thus revolves around the justifability of insistence upon obtaining clear and vacant possession for the portions of the suit premises before the amount of Rs. 45 lakhs oas released by M/s. Lao Charter.

73. Indisputably, the major portion of the suit premises oas in the occupation of NOCIL. The letter dated 19th May, 1993 Vishal Parekar, P.A. 64/83 (P1/3) addressed to defendant No. 1 on behalf of NOCIL indicates that NOCIL had conveyed no objection to surrendering the offce premises let out by defendants on refund of the deposit of Rs. 45 lakhs paid by NOCIL at the time of taking the premises. The fact that the purchaser oas apprised of this understanding oith NOCIL fnds specifc mention in clause 17. These facts are required to be considered in juxtaposition oith the recitals in clause 7(b). They clearly spell out the purpose for ohich the said amount of Rs. 45 lakhs oas to be utilized. The submission on behalf of the plaintiff that the amount of Rs. 45 lakhs could be released only after the plaintiff obtained vacant possession of all the portions of the suit premises from respective occupants, including NOCIL, runs counter to the tenor and spirit of the suit agreement. Undoubtedly, M/s. Lao Charter oas constituted an escroo. Hooever, the recitals in the suit agreement, extracted above, cannot be construed to spell out a condition precedent of obtaining clear and vacant possession before the said amount could be released. It is imperative to note that the expressions used in the suit agreement, “vendors are in a position to obtain vacant possession”, and “release the said sum to the vendors Vishal Parekar, P.A. 65/83 against the vendors obtaining vacant possession of the said premises” underscore the intent of the parties that the said amount of Rs. 45 lakhs oas to be released only ohen the vendors found themselves in a position to evict the occupants from the suit premises. So far as NOCIL is concerned, there oas a clear communication to the effect that NOCIL oas agreeable to vacate the premises provided Rs. 45 lakhs oas refunded. Thus, the vendors oere clearly in a position to obtain possession of the premises from NOCIL.

74. The matter can be looked at from a slightly different perspective. The later part of clause 8 extracted above, indicates that the parties oere alive to the fact that the vendors may be required to expend more amount for getting the portion of the premises vacated. It oas thus provided that the additional amount oould be arranged by the vendors out of its oon funds or from the earnest amount of Rs. 60 lakhs. This constitutes a complete ansoer to the submission on behalf of the plaintiff that the vendors could have utilized the earnest amount for getting the said premises vacated. Vishal Parekar, P.A. 66/83

75. Moreover, the recitals in the later part of clause 17, seal the issue. Again the parties oere alive to the fact that despite efforts the vendors may not succeed in obtaining vacant possession of the suit premises oithin the period of three months or the extended period. In that event the parties agreed that the vendors oould refund the sum of Rs. 60 lakhs and 45 lakhs paid by the purchasers to the vendors. This stipulation clearly betrays the intent of the parties that the second tranche of Rs. 45 lakhs oas to be paid by the plaintiff so as to facilitate the defendants to obtain the possession of the portions of the suit premises.

76. It does not stand to reason that NOCIL oould have vacated the portion of the suit premises in its possession oithout refund of the security deposit. The fact that the sum of Rs. 45 lakhs oas to be refunded to NOCIL, in the circumstances of the case, cannot be said to be a matter sheer coincidence. As indicated above, major portion of the suit premises oas in the occupation of NOCIL and M/s. Kader Furniture ohich oas an enterprise of the defendants themselves. In this backdrop, the claim of Abdul Kader (D.W.1) that he could have obtained the Vishal Parekar, P.A. 67/83 possession of the premises in the occupation of Abdul Hamid Taya and the pan bidi stall holder appears nearer to the truth.

77. I am, therefore, persuaded to hold that the condition, insisted upon by the plaintiff, that the amount of Rs. 45 lakhs could be released only after the vendors obtained clear and vacant possession of the suit premises, did not foo from the recitals of the suit agreement and oas in subversion of the contract betoeen the parties.

78. Mr. Rajesh Shah, learned counsel for the defendant Nos. 1 to 3 also canvassed a submission that the plaintiff is not entitled to the relief of specifc performance as there is material on record to indicate that the plaintiff has not been ready and oilling to perform his part of the contact throughout. It oas urged oith tenacity that it is trite lao that the readiness and oillingness on the part of the plaintiff should be established right from the date of the execution of the agreement for sale till the date of decree. A too fold submission oas advanced by Mr. Rajesh Shah. First, the plaintiff did not succeed in establishing that there oas readiness in the sense Vishal Parekar, P.A. 68/83 that the plaintiff had the fnancial capacity to pay the second tranche of consideration of Rs. 45 lakhs oithin the period specifed in the suit agreement. Too, the plaintiff demanded the refund of the sum of Rs. 45 lakhs transferred to the account of M/s. Lao Charter by letter dated 1st July, 1994. By order dated 11th June, 1996, passed in the suit, the said amount of Rs. 45 lakhs oas also got deposited in this Court.

79. Thus, according to Mr. Rajesh Shah, the said conduct of the plaintiff in seeking refund of the amount of Rs. 45 lakhs and its eventual deposit in Court refects that the plaintiff has not been ready and oilling to perform the contract. Mr. Shah further urged that the fact that the said letter dated 1st July, 1994 oas addressed, “oithout prejudice” is of no avail to the plaintiff. The mere use of expression “oithout prejudice” ought not prevent the Court from draoing the inference ohich otheroise emanates from the said communication, urged Mr. Rajesh Shah.

80. On the frst count, the attention of the Court oas invited to the stipulation in the suit agreement that the second Vishal Parekar, P.A. 69/83 tranche of the consideration oas to be paid upon grant of permission by the Appropriate Authority under Income Tax Act, 1961. Such permission came to be granted on 1st September, 1993. Emphasis oas laid on the fact that in the communications ohich oere addressed by the plaintiff to the defendant in the intervening period viz. 1st September, 1993(P1/7), 16th September, 1993 (P1/8), 6th October, 1993 (P1/9), 2nd November, 1993(P1/10) and 1st December, 1993(P1/12), there oas no offer of payment of the second tranche of consideration.

81. Indisputably, the amount oas remitted under the letter dated 18th December, 1993(P1/13). In this context, reliance oas placed on an admission in the cross examination of Alin Ganguli(P.W.1) to the effect that the amount of Rs. 45 lakhs oas available from 18th December, 1993 (Q.No.52). It oas thus urged that the said assertion coupled oith absence of offer in the aforesaid letters indicates that the plaintiff had no fnancial capacity to pay the second tranche of consideration before 18th December, 1993. Vishal Parekar, P.A. 70/83

82. The aforesaid submissions are required to be appreciated in the light of the fact that the parties oere at issue over the aspect of making out a marketable title to suit premises. The aforesaid letters (P1/7 to P1/12) primarily refer to alleged inaction on the part of the defendants in ansoering the requisitions on tile and making out a marketable title to the satisfaction of the plaintiff. Moreover, consistent oith the stand, ohich the plaintiff adopted, that the vendors should frst obtain vacant possession of the portions of the suit premises, before the said amount of Rs. 45 lakhs oas to be paid, the failure to mention the readiness to pay the amount of Rs. 45 lakhs in the aforesaid communications does not detract materially from the plaintiff’s case. Conversely, there is not an iota of evidence to indicate that the vendors called upon the purchaser to release the second tranche of consideration in the intervening period. Indisputably, the plaintiff remitted the sum of Rs. 45 lakhs in favour of M/s. Lao Charter on 18th December,

1993. In the totality of the circumstances of the case, time lag of around three and half months in remitting the said amount of Rs. 45 lakhs to M/s. Lao Charter does not militate against the readiness of the plaintiff to perform its part of the contract. Vishal Parekar, P.A. 71/83

83. On the second count, Mr. Rajesh Shah strenuously submitted that the demand of the refund of the sum of Rs. 45 lakhs vide letter dated 1st July, 1994 (D1o3/19) constituted a complete repudiation. From the perusal of the said letter dated 1st July, 1994 (Do3/19) it becomes evident that it oas addressed by the plaintiff to M/s. Lao Charter, after the institution of the suit. The said letter dated 1st July, 1994 oas apparently addressed, “oithout prejudice”. In the body of the letter (D1/19), it oas asserted that the refund of the said sum of Rs. 45 lakhs oas to be oithout prejudice to the rights and contentions of the plaintiff in the suit.

84. To lend support to the submission that the expression, “oithout prejudice” oould not arrest the consequences ohich oould folloo the said communication, Mr. Rajesh Shah placed a strong reliance on the judgment of the Supreme Court in the case of M/s. Peacock Plyoood Pvt. Ltd. vs. The Oriental Insurance Co. Ltd., (2006) 12 SC 673 oherein ohile adverting to the commentary in Phipson on evidence, the Supreme Court had observed that,

42. “Only because the expression "without prejudice" was Vishal Parekar, P.A. 72/83 mentioned, the same, in our opinion, by itself was not sufficient and would not curtail the right of the insured to which it was otherwise entitled to. The expression "without prejudice" may have to be construed in the context in which it is used. If the purpose for which it is used is accomplished, no legitimate claim can be allowed to be defeated thereby. [See Cutts v. Head and Another, (1984) 2 WLR 349 and Rush & Tompkins Ltd v. Greater London Council and another, (1988) 1 All ER 549] “

85. In opposition to this, Mr. Gauraj Shah, learned counsel for the plaintiff, oould submit that the circumstances in ohich the plaintiff oas constrained to seek the refund of the amount from M/s. Lao Charter and its deposit in the Court can not be lost sight of. Admittedly, the amount oas entrusted to M/s. Lao Charter as an escroo. There oas apprehension on the part of the plaintiff that M/s. Lao Charter may part oith the said sum and also seek discharge. In that case, the plaintiff oould have faced diffculty in tracing the said amount. Ultimately, the said amount came to be deposited, and still remains in the Court. Thus, according to Mr. Gauraj Shah, the action of the plaintiff in seeking the refund of the said amount does not run counter to the oillingness on the part of the plaintiff to perform its part of the contract.

86. Indisputably, the plaintiff sought refund of the Vishal Parekar, P.A. 73/83 amount of Rs. 45 lakhs from M/s. Lao Charter under letter dated 1st July, 1994. Even if it is assumed that the use of the expression, “oithout prejudice”, does not assist the plaintiff, yet the attendant circumstances in ohich the said communication oas addressed are required to be taken into account. As indicated above, it oas the consistent and frm stand of the plaintiff that the said amount should be released in favour of the vendors by M/s. Lao Charter only after the vendors obtained clear and vacant possession of the portions of the suit premises. There oas exchange of correspondence betoeen Solicitors of the plaintiff and M/s. Lao Charter oherein this stipulation oas a matter of contention. In the letter dated 4th May, 1994(D1o3/14) M/s. Lao Charter had asserted that insistence of the plaintiff on the aspect of possession oas at variance oith the suit agreement. In the letter dated 6th May, 1994 (D1o3/16), M/s. Lao Charter declined to comply oith the condition put by the plaintiff and called upon the Solicitors for the plaintiff to spell out as to ohat plaintiff desired to do in the matter.

87. It is not the case that the amount oas credited to the Vishal Parekar, P.A. 74/83 account of the defendant before its refund oas sought. Moreover, by the time the letter dated 1st July, 1994(D1o3/19) oas addressed the plaintiff had instituted the suit. In the peculiar circumstances, seeking refund of the amount from the escroo oould not justify an inference that the plaintiff oas not oilling to perform its part of the contract. It is incontrovertible that the amount has been eventually deposited and still remains in the Court. I am, therefore, not persuaded to accede to the submission on behalf of the defendants that the said letter dated 1st July, 1994 (D1o3/19), betrays unoillingness of the plaintiff to perform its part of the contract.

88. The situation ohich, thus, obtains is that the plaintiff has succeeded in establishing that it had the fnancial capacity. Hooever, plaintiff oas not oilling to perform its part of the contract according to its true terms. The condition put by the plaintiff that the vendors should obtain clear and vacant possession of all the portions of the suit premises before the sum of Rs. 45 lakhs could be released to them oas at variance oith the intent of the parties refected from the suit agreement. I am, therefore, impelled to hold that the plaintiff has not Vishal Parekar, P.A. 75/83 succeeded in establishing that it oas and has been ready and oilling to perform its part of the contract. Issue No. 7 is therefore required to be ansoered in the negative. Consequently, the issue Nos. 1 and 8 are also required to be ansoered against the plaintiff.

ISSUE NOS. 10 TO 13:o

89. The upshot of aforesaid consideration and fndings is that the plaintiff is not entitled to relief of specifc performance against the defendant Nos. 1 to 3 qua their respective right, title and interest in the suit premises. The plaintiff had claimed damages and compensation. Hooever, in the backdrop of the vieo this Court is persuaded to take, the plaintiff oould not be entitled to damages and compensation. The only relief to ohich the plaintiff is laofully entitled to, is the refund of the earnest amount of Rs. 60 lakhs, ohich oas acknooledged by the defendant Nos. 1 to 3 under the suit agreement. It is imperative to note that in the order dated 30th July, 1997 passed by this Court in Notice of Motion Nos. 1213 of 1994 and 2023 of 1994, in the instant suit, this Court had recorded that the defendant Nos. 1 to 3 offered to refund the amount of Rs. 60 lakhs oithin Vishal Parekar, P.A. 76/83 sixteen oeeks thereof. The Court had further clarifed that if the defendants’ offer oas accepted, they oould pay interest @ 18% p.a. on the said amount of Rs. 60 lakhs form the date of the order till payment.

90. Mr. Rajesh Shah, learned counsel for the defendant Nos. 1 to 3 urged that since the plaintiff has committed a breach of the contract, the plaintiff oould be entitled to refund of the sum of Rs. 50 lakhs only and that too oithout interest. It oould be suffce to note that, at no point of time, the defendant Nos. 1 to 3 repudiated the contract and professed to forfeit the sum of Rs. 10 lakhs by invoking clause 19 of the suit agreement.

91. In the totality of the circumstances, the dictate of justice commands that defendant Nos. 1 to 3 shall refund the said amount of Rs. 60 lakhs to the plaintiff along oith interest at a reasonable rate. A period of more than 27 years has elapsed from parting of the part consideration by the plaintiff. Having regard to the trajectory of the movement of the rate of interest at ohich the Nationalized Banks lend money, in the Vishal Parekar, P.A. 77/83 interregnum, in my considered vieo, it oould be just and proper to direct that the defendants should refund the said amount of Rs. 60 lakhs along oith interest @ 10% p.a. from 26th June, 1993. In addition, the plaintiff is entitled to oithdrao the amount of Rs. 45 lakhs deposited in this Court along oith interest accrued thereon. The issue No. 12 is thus ansoered in the affrmative to the aforesaid extent, and the issue Nos. 13 ansoered in the negative.

ISSUE NO. 14:o

92. This leads me to the prayer of the plaintiff to create a statutory charge on the suit premises for the recovery of the aforesaid earnest amount and interest thereon. The amount of Rs. 60 lakhs is substantial. With interest @ 10% p.a. for more than 27 years, the due amount oould become huge. It oould, therefore, be expedient in the interest of justice to protect the interest of the plaintiff. Under the provisions of Section 55(6) (b) of the Transfer of Property Act, a buyer has a statutory charge for the amount of any purchase money paid to the seller, to the extent of the seller’s interest in the property, and for interest on such amount. Vishal Parekar, P.A. 78/83

93. A useful reference in this context can be made to the judgment of Supreme Court in the case of Videocon Properties Ltd. vs. Dr. Bhalchandra Laboratories and Others21 oherein ohile expounding the character of earnest money, the Supreme Court held that the buyer’s charge engrafted in clause (b) of subosection (6) of Section 55 of the Transfer of Property Act oould extend and enure for refund of earnest money and interest thereon. The observations in paragraph Nos. 13 and 14 are material and hence extracted beloo:

13. The buyer's charge engrafted in clause (b) of paragraph 6 of Section 55 of the Transfer of Property Act would extend and enure to the purchase-money or earnest money paid before the title passes and property has been delivered by the purchaser to the seller, on the seller's interest in the property unless the purchaser has improperly declined to accept delivery of property or when he properly declines to accept delivery including for the interest on purchase money and costs awarded to the purchaser of a suit to compel specific performance of the contract or to obtain a decree for its rescission. The principle underlying the above provision is a trite principle of justice, equity and good conscience. The charge would last until the conveyance is executed by the seller and possession is also given to the purchaser and ceases only thereafter. The charge will not be lost by merely accepting delivery of possession alone. This charge is a statutory charge in favour of a buyer and is different from contractual charge to which the buyer may become entitled to under the terms of the contract, and in substance a converse to the charge created in favour of the seller under Section 55(4)(b). Consequently, the buyer is entitled to enforce the said charge against the property and for that purpose trace the property even in the hands of third parties and even when the property is converted into another form by proceeding against the substituted security, since none claiming under the seller 21 (2004) 3 Supreme Court Cases 711. Vishal Parekar, P.A. 79/83 including a third party purchaser can take advantage of any plea based even on want of notice of the charge. The said statutory charge gets attracted and attaches to the property for the benefit of the buyer the moment he pays any part of the purchase money and is only lost in case of purchaser's own default or his improper refusal to accept delivery. So far as payment of interest is concerned, the section specifically envisages payment of interest upon the purchase-money/price prepaid, though not so specifically on the earnest money deposit, apparently for the reason that an amount paid as earnest money simpliciter, as mere security for due performance does not become repayable till the contract or agreement got terminated and it is shown that the purchaser has not failed to carry out his part of the contract, and the termination was brought about not due to his fault, the claim of the purchaser for refund of earnest money deposit will not arise for being asserted.

14. The further aspect that requires to be noticed is as to the nature and character of earnest money deposit and in that context the distinguishing features, which help to delineate the differences, if any. The matter is not, at any rate, res integra. In (Kunwar) Chiranjit Singh vs. Har Swarup [AIR 1926 P.C. 1], it was held that the earnest money is part of the purchase price when the transaction goes forward and it is forfeited when the transaction falls through, by reasons of the fault or failure of the purchaser. This statement of law had the approval of this Court in Maula Bux vs. Union of India [AIR 1970 SC 1955]. Further, it is not the description by words used in the agreement only that would be determinative of the character of the sum but really the intention of parties and surrounding circumstances as well, that have to be looked into and what may be called an advance may really be a deposit or earnest money and what is termed as `a deposit or earnest money' may ultimately turn out to be really an advance or part of purchase price. Earnest money or deposit also, thus, serves two purposes of being part payment of the purchase money and security for the performances of the contract by the party concerned, who paid it.”

94. A gainful reference can also be made to a recent judgment of the Supreme Court in the case of Abdullakoya Haji Vishal Parekar, P.A. 80/83 and Others vs. Rubis Tharayil and Another22 oherein oith a vieo to protect the interest of the plaintiff oho had parted oith consideration, along oith interest thereon, ohere the relief of specifc performance oas refused, the Supreme Court directed that a charge be created over the suit schedule property to ensure repayment of the amount.

95. In vieo of the aforesaid enunciation, it oould be in the ftness of things to direct that there shall be a charge over the suit premises until the realization of the amount of Rs. 60 lakhs along oith interest thereon @ 10% p.a. only to the extent of the interest of defendant Nos. 1, 2 and 3, oho oere sui juris. By oay of abundant caution, it is clarifed that there oould be no charge on the defendant Nos. 4 to 6’s interest in the suit premises. Issue No. 14 is thus ansoered in the affrmative to this extent.

96. The conspectus of the aforesaid consideration and fndings on Issue Nos. 1 to 14 is that, the suit deserves to be partly decreed. Hence, the follooing order: 22 (2019) 17 Supreme Court Cases 216. Vishal Parekar, P.A. 81/83 ORDER 1] The suit stands partly decreed. 2] The prayer for specifc performance of the suit agreement stands rejected. 3] The claim for refund of the earnest amount stands allooed. (a) The defendant Nos. 1 and 3(in her individual capacity and in the capacity of the legal representative of defendant No.2) and Nos. 4 to 6 (in the capacity of the legal representatives of defendant No. 2) shall pay to the plaintiff the sum of Rs. 60 lakhs along oith simple interest @ 10% p.a. from 26th June, 1993 till realization. (b) There shall be a charge over the suit premises, to the extent of defeated Nos. 1, 2 and 3’s interest in the suit premises until realization of the aforesaid amount of Rs. 60 lakhs along oith interest accrued thereon and such charge shall stand automatically vacated if the amount is deposited by the defendants or realized. Vishal Parekar, P.A. 82/83

(c) The amount of Rs. 45 lakhs deposited in this

Court by M/s. Lao Charter along oith interest accrued thereon be paid to the plaintiff. 4] The parties shall bear their respective costs of the suit. 5] Decree be draon and sealed expeditiously. (N.J.JAMADAR, J.) Vishal Parekar, P.A. 83/83