2004 (1) TMI 372 - SC - Companies Law

Whether the agreement to sell was for total consideration of Rs. 1 lac or Rs. 5 lacs ? Whether Sanchaita Investments had any title to the property before it could be called upon to execute a Conveyance Deed with respect to the property in favour of Biswajeet Ghosh or his nominee? Held that - Appeal allowed. High Court in its impugned judgment has proceeded on wrong assumptions and most important question regarding title to the property was never gone into. Assuming Raja Mallo was an agent of Sanchaita Investments had entered into the agreement to sell with Sangeeta Chowdhury on behalf of the said firm the title to property could not pass to Sanchaita Investments merely on basis of an agreement to sell. Title to immovable property of such value can pass only on the basis of a registered Deed of Conveyance. What right Sanchaita Investments had to further sell the property? These questions needed to be considered before Deed of Conveyance could be ordered to be executed. The objections to attachment of property filed on behalf of Sangeeta Chowdhury were rejected on technical grounds and were never considered on merits.

Summary

Issues Involved:
1. Deprivation of property without a hearing.
2. Validity of the agreement to sell and consideration amount.
3. Attachment of property by the Commissioner of Sanchaita Investments.
4. Rejection of objections on technical grounds.
5. Execution of a conveyance deed without determining title.
6. Contradictory stands by Biswajeet Ghosh.
7. Non-consideration of title to the property by the High Court.

Issue-wise Detailed Analysis:

1. Deprivation of Property Without a Hearing:
The appellant claimed deprivation of her property located at Premises No. 662/B, Tollygunge Circular Road, Calcutta, without being afforded an opportunity of being heard. The property was purchased through a registered conveyance deed dated 28-11-1969. The appellant contended that she remained the owner as the agreement to sell with Raja Mallo was not fully executed, and the earnest money was forfeited when Mallo disappeared.

2. Validity of the Agreement to Sell and Consideration Amount:
There was a dispute regarding the consideration amount under the agreement to sell between the appellant and Raja Mallo. The appellant claimed the agreement was for Rs. 5 lakhs with Rs. 1 lakh paid as earnest money, while the respondents claimed the agreement was for Rs. 1 lakh, fully paid. Neither party produced the original agreement, making it impossible to ascertain the true consideration without further evidence.

3. Attachment of Property by the Commissioner of Sanchaita Investments:
The Commissioner of Sanchaita Investments attached the property on 3rd January 1989, based on the Supreme Court's order authorizing attachment of assets prima facie owned by the firm. However, the attachment was questioned as there was no clear evidence of the Commissioner forming a prima facie opinion before attaching the property. The High Court did not investigate whether the attachment had a valid basis.

4. Rejection of Objections on Technical Grounds:
The High Court rejected the objections filed by the appellant on technical grounds, specifically the lack of a proper Vakalatnama. Although a fresh Vakalatnama was filed within the allowed time, the objections were still dismissed without being considered on merits, leading to the assumption that the property belonged to Sanchaita Investments.

5. Execution of a Conveyance Deed Without Determining Title:
The High Court directed the Commissioner to execute a conveyance deed in favor of Biswajeet Ghosh's nominee without determining the title to the property. The title question was left unresolved despite repeated observations that it should be independently considered. The conveyance deed was executed based on the offer of Rs. 4.5 lakhs by Biswajeet Ghosh, without verifying the title of Sanchaita Investments.

6. Contradictory Stands by Biswajeet Ghosh:
Biswajeet Ghosh took contradictory positions regarding the property. In a suit for specific performance, he claimed Sangeeta Chowdhury was a benamidar for Sanchaita Investments. However, in objections against the attachment, he stated that Sanchaita Investments had no connection to the property. The suit for specific performance was dismissed, and the dismissal became final as it was not appealed.

7. Non-consideration of Title to the Property by the High Court:
The High Court failed to address the core issue of the title to the property. It proceeded on assumptions and technical grounds, ignoring the appellant's claims and the need for a registered deed of conveyance to transfer title. The High Court's focus was on securing funds for Sanchaita Investments' depositors, leading to the erroneous conclusion that the property belonged to Sanchaita Investments.

Conclusion:
The Supreme Court found that the High Court's judgment was flawed due to the non-consideration of the appellant's objections on merits, the wrongful assumption of property ownership by Sanchaita Investments, and the execution of a conveyance deed without determining the title. The judgment was set aside, and the matter was remanded to the High Court for a fresh consideration of the objections filed by the appellant on merits, ensuring an independent conclusion without influence from the Supreme Court's observations.

Outcome:
The appeal was allowed, and the High Court's judgment dated 20th September 1996 was set aside, with the matter remanded for reconsideration. The parties were instructed to bear their respective costs.