P. Sathasivam, J. - (1.) This appeal is directed against the final judgment and decree dated 17.02.2003 passed by the Division Bench of the High Court of Judicature at Madras in O.S.A. No. 163 of 1994 whereby the appeal filed by the Respondents herein was allowed.
(2.) Brief facts: (a) The Appellant is a Private Limited Company (hereinafter referred to as "the Appellant-Company) registered under the Companies Act, 1956 and is carrying on the business of manufacturing, selling, exporting, trading in and distribution of Pesticides, Chemicals and Agro Chemicals. Respondent No. 1 is also a Private Limited Company (hereinafter referred to as "the Respondent-Company") registered under the Companies Act, 1956 in which Mr. T.P. Narayanan - Respondent No. 2 is the Chairman and Director and appeal against him stood dismissed vide this Courts order dated 19.07.2004. Mr. T.K. Gopinath (since died) was the Managing Director - Respondent No. 3 and his legal representatives are on record. In the year 1981, the Appellant-Company required a property around Mount Road Area near Mylapore, Madras for establishing a Research and Development Centre. Respondent-Company, on coming to know about the said requirement, offered its property measuring 12 grounds 33 sq. ft. with buildings at Door No. 46, Cathedral Road, Madras. The officials of the Appellant-Company inspected the property and after getting it evaluated by an Authorized Valuer offered a price of Rs. 82 lakhs for the entire property and the Respondent Nos. 2 & 3 herein accepted the same. Thereafter, an Agreement for Sale was executed between the parties on 28.08.1981 and a sum of Rs. 2 lakhs was paid by way of cheque as advance. (b) Pending investigation of title of the Respondent-Company to the suit property, the Appellant-Company entered into the said agreement since the Respondents desired a firm commitment to be made. Clauses 3 and 4 of the said Agreement put the vendor under an obligation to produce all documents of title in its possession or control relating to the suit property for the investigation and approval of the Appellant-Company. Besides, getting other necessary clearances, the Respondents were also required to get the Income Tax Clearance Certificate as specified under Section 230A of the Income Tax Act, 1961. (c) In accordance with the above, the Appellant-Company called upon the Respondents to furnish the documents of title, the details of the encumbrances on the property, if any, and also Income Tax Clearance Certificate and other necessary clearances to complete the sale. On 09.09.1981, the Respondents furnished the Income Tax Clearance Certificate dated 07.09.1981 and promised to furnish the other required documents very soon. They also demanded a further payment of Rs. 10 lakhs as advance pending finalization of the sale to which the Appellant-Company did not agree. (d) As the Respondents did not furnish the required documents, the Appellant-Company issued a letter dated 14.09.1981 calling upon them to furnish the required documents. Instead of furnishing all the required documents, as sought for, the Respondents, vide letter dated 15.09.1981, called upon the Appellant-Company to expedite the sale. Thereafter, on 19.09.1981, the Appellant-Company again requested the Respondents to furnish the solvency certificate. In response to the above-said letters, the Respondents orally apologized for the delay and promised to furnish the required details at the earliest and Respondent No. 2 also requested for a further payment of Rs. 10 lakhs as advance to enable them to discharge the mortgage subsisting in favour of Bank of India. The Appellant-Company paid Rs. 5 lakhs to Respondent No. 2 on 21.09.1981 on the undertaking that the documents called for would be sent by 30.09.1981. Again on the request of Respondent No. 2, the Appellant-Company paid a further sum of Rs. 5 lakhs to meet the Urban Land Ceiling Clearance. A total sum of Rs. 12 lakhs was paid to the Respondents. On 19.10.1981, Respondent No. 2 again requested a sum of Rs. 2 lakhs to meet certain statutory compliance which was a charge on the property. Taking full details of such liabilities, the Appellant-Company paid a sum of Rs. 1,10,000/-. As the Respondents did not furnish the required documents till the end of 1981, the Appellant-Company sent a notice dated 19.01.1982 calling upon them to perform their obligation under the agreement dated 28.08.1981 as also to fulfil their personal undertakings. Notice was served only on Respondent No. 2 but the notice on Respondent Nos. 1 and 3 were returned back with the remarks "unserved". In reply to the said notice, Respondent No. 2 said that he is not personally liable for the payment made by the Appellant-Company. (e) In the said circumstances, the Appellant-Company was compelled to file a suit for specific performance on 10.05.1982 in the High Court of Judicature at Madras and the same was numbered as C.S. No. 287 of 1982. The learned single Judge of the High court by judgment dated 01.06.1993 decreed the suit and directed the Respondents herein to execute the sale deed in favour of the Appellant-Company and granted three months time to the Appellant-Company to pay the balance of the sale consideration. (f) Challenging the judgment of the learned single Judge, the Respondents preferred O.S.A. No. 163 of 1994 before the High Court. By impugned judgment dated 17.02.2003, the Division Bench of the High Court allowed the appeal. Aggrieved by the said judgment of the Division Bench, the Appellant-Company preferred this appeal by way of special leave petition before this Court.
(3.) Heard Mr. K.V. Viswanathan, learned senior counsel for the Appellant-Company and Mr. K.K. Venugopal, learned senior counsel for Respondent No. 1 and Mr. V. Giri, learned senior counsel for L.Rs. of Respondent No. 3. Points for consideration:;