- (1.)By the impugned judgment, the high Court at Allahabad allowed the first appeal filed by the respondent-plaintiff, decreed the suit and ordered that the plaintiff should be put in physical possession of the suit properties and the indenture (sale deed) dated 22/2/1971 should be deemed to be void and cancelled and therefore be delivered up to the plaintiff vendor A decree was also granted for a sum of Rs. 95,000. 00 being the value of properties wrongfully demolished and sold, after adjustment of Rs. 55,000. 00 received by the plaintiff towards the sale consideration the suit was ostensibly filed under Section 31 of the Specific Relief Act for cancellation of indenture dated 22/2/1971 and also for physical possession of the property in dispute and for recovery of Rs. 95,000. 00 being the value of property wrongfully demolished alter adjusting an amount of Rs. 55,000. 00 The trial Court dismissed the suit At the same time it granted a decree in favour of the plaintiff for a sum of Rs. 1,45,000. 00 representing the balance sale consideration.
(2.)The facts giving rise to the suit and the appeal are these: the plaintiff-Company executed a sale deed on 22/2/1971 in favour of the defend ants in respect of an oil mill located at Khurja in UP State with the structures open land machinery and fixtures leasehold rights in the land etc for a consideration of Rs 2 lakhs A sum of Rs. 50,000. 00 was to be paid before the sub-Registrar at the time of registration and it was stipulated in the sale deed that the balance amount will be paid in two instalments falling on 15/3/1971 and 30/4/1971 It was further stipulated that the transferee shall not be entitled to deal with, sell transfer or assign the property sold, till such time as the entire balance sale price of Rs 1.50 lakhs was paid to the transferor A sum of Rs. 50,000. 00 was accordingly paid to the transferor on the date of registration. Possession was admittedly handed over to the defendants. The respondent-plaintiff produced the income tax clearance certificate on the date of registration i. e. 22/2/1971. However, before the formalities of registration viz. , copying out the deed was completed, the sub-Registrar received a communication from the Income Tax Officer that the I. T. C was cancelled and therefore the Sub-Registrar should stop registration of the property till a fresh certificate was issued by him. Therefore, the Sub-Registrar did not take further steps in the matter moreover, the sale deed was impounded on the ground of insufficient stamp and it was sent to the District Registrar for adjudication by an order dated 4/1/1972, the Income Tax officer revoked his earlier order and restored the certificate issued by him earlier. On appeal by plaintiff, the Commissioner of Income Tax directed the Income Tax Officer to issue a fresh i. T. C instead of validating the earlier one On 13/6/1972, a fresh I. T. C. was issued The document which was sent for assessment of deficient stamp duty was received back by the Sub-Registrar on 3/5/1973 When there was a notice from the Sub-Registrar in August 1973 to furnish the I. T. C. for the purpose of registration, the plaintiff in its reply dt 28/8/1973 maintained that the document was no longer effective as the contract stood rescinded on account of the breach committed by the defendants in declining payment of balance sale price Sub-Registrar was requested to return the document without registration The Sub-Registrar, by his order dated 19/9/1973, refused to register the document as itc was not produced An appeal was filed against the said order by the appellants-defendants before the district Registrar On 16/10/1973 the appellants also filed a civil suit impleading the respondent, sub-Registrar and also the I. T. O for a direction that I. T. C. should be issued and the sub-Registrar should register the sale deed. On 3/7/1976, the suit out of which the present appeal arises was filed seeking the relieves as stated above. In that suit, a disclosure was made as to obtaining the fresh I. T. C On 24/12/1976, the District Registrar allowed the appeal and directed the Sub-Registrar to register the sale deed. In view of this subsequent event, the Income tax Officer also sent a copy of I. T. clearance certificate to the Sub-Registrar. The formalities of registration of sale deed were then completed on 28/12/1976. The suit filed by the appellants therefore became infructuous. The appellants amended the plaint in the present suit questioning the legality of the order of dy. Registrar and the consequential action of sub-Registrar in registering the sale deed. On 27/08/1979, offer was made to pay the balance consideration by issuing a notice but the respondent refused to accept payment taking the stand that the matter was sub-judice the suit in question was dismissed on 2/5/1980 subject to the direction as to the payment of balance of sale money The money was deposited in court thereafter. The first appeal to the High Court filed by the respondent herein was allowed by the impugned judgment dated 5/7/1996.
(3.)It is now necessary to advert to certain other events that happened between the date of presentation of sale deed for registration and the date of filing of the suit including the exchange of correspondence On 16/3/1971. plaintiff issued notice to defendants to pay rs. 50,000. 00 towards the first instalment specified in the indenture of sale The defendants expressed their willingness to pay the amount provided that the plaintiff obtained a fresh ITC on 12/1/1972, a second notice was issued from the plaintiff's side informing the defendants that they have illegally withheld the payment due under the terms of sale for which they were liable to pay interest and further protesting against the demolition of portions of building and sheds and disposing of the building material and machinery. This was replied to by the defendants stating that in the absence of valid Income Tax Clearance Certificate the sale deed could not be delivered after due registration and therefore they were not liable to pay the balance sale price. Moreover, the defendants referred to the fact that one of the directors of the plaintiff-Company by name Raj kumar Meattle agreed not to demand the balance unless the fresh clearance certificate was obtained and oilier formalities connected to the sale were fulfilled. The alleged settlement took place on 17/1/1972 on which date a sum of rs. 5,000. 00 was paid to the said Director. One more fact, which according to the defendants justified the withholding of payment, was the suit filed by one Seth Shanti Lal questioning the validity of the sale. In the concluding para it is stated : "i would request you not to stick to your unreasonable demand for the balance money and let the dear picture emerge". I again assure you that the balance will be paid the moment these formalities are complied". A third notice was issued by the plaintiff on 25/5/1973. By that time it may be noted that a fresh ITC was issued to the plaintiff and the document which was impounded for assessment of deficient duty was received back in the office of the Sub-Registrar, Khurja. By the notice dated 25/5/1973, the plaintiff found fault with the defendants in declining payment of balance money on the ground of cancellation of ITC and alleged that the defendants committed breach of contract by wrongfully withholding the payment and also demolishing and dealing with the property quite contrary to the prohibition contained in the sale deed. The plaintiff then gave last opportunity 'to make the balance sale price together with interest at the rate of one per cent per month within a period of 15 days upon which the requisite certificate under Section 230-A of the Income Tax Act will be produced'. The defendants were further warned that in case of failure to make the payment, the contract of sale dated 22/2/1971 will stand rescinded and the defendants will be liable to restore the possession of all the properties covered by the sale deed and to compensate the plaintiff for the damage done to the properties. The defendants sent a reply reiterating that there was a clear agreement on 17/6/1971 arrived at on the intervention of plaintiff's Director Shri Raj Kumar Mittal and the payment of Rs. 5,000. 00 made pursuant to such agreement. The defendants once again referred to the suit filed by Seth Shanti Lal Jain impleading both the plaintiff and the defendants. The defendants also called upon the plaintiff to bear the amount of Rs. 2,980. 00 on account of extra stamp expenses. In the concluding para it Is stated, "i hope you will wait for the payment till the formalities are completed and the suit of Seth Shanti Lal is decided finally". A month later, i. e. on 3/7/1973, the 4th and final notice came to be issued by the plaintiff. In that notice it was stated that Shri raj Kumar Mittal had no authority to give any assurance or make any commitment on behalf of the plaintiff-Company, that too without any resolution of the Board of Directors. The plaintiff offered to give credit to the additional stamp duty said to have been paid by the defendants of Rs. 2,980. 00. The defendants were then informed of the dismissal of the suit filed by Shanti lal Jain for default. Moreover, the plaintiff took the stand that the suit of Shanti Lal Jain was a frivolous suit and that the pendency of the suit ought not to be a ground to withhold the payment. The plaintiff was even willing to waive the claim for interest and handover the requisite certificate under Section 230-A of the Income Tax Act, provided that balance consideration of Rs. 1.50 lakhs subject to adjustment of Rs. 5,000 and the excess stamp duty, was paid to it within 15 days. The defendants were warned that if they failed to make the payment as aforesaid within the stipulated time which is of essence, the contract of sale dated 22/2/1971 shall stand rescinded in which case the defendants will have to restore all the properties to it within 15 days thereafter. On 19/7/1973, the defendants sent a reply through their lawyers wherein it was asserted that the plaintiff was legally bound to complete the formalities pertaining to registration and to deliver the sale deed before they could ask for the balance sale money. Further, the plaintiff was notified that the demand of balance money even before the suit of Seth Shanti Lal was finally decided, was unjustified. An assurance was given that the entire balance amount will be paid when all the formalities are completed and the title was proved in the pending litigation. The plaintiff was called upon to produce the ITC before 3/9/1973 as per the requisition made by the Sub-Registrar. Thereafter, the plaintiff sent a letter on 28/8/1973 to the Sub-Registrar stating that the defendants committed breach of contract of sale and therefore, the contract stood rescinded. The Sub-Registrar was informed that the document was no longer effective and the question of registration of that document on the production of itc as required in his letter did not arise at all. The Sub-Registrar was requested to return the document without registration. It appears that the suit of Seth Shanti Lal Jain which was filed on 7/4/1971 was finally dismissed on 10/4/1978. It was dismissed for default earlier and restored.