1998 (8) TMI 605 - SC - Indian Laws

Summary

Issues Involved:
1. Breach of Agreement and New Contract
2. Absence of Reference to Agreement for Reconveyance
3. Effect of Annulment of Adjudication
4. Time as Essence of Contract
5. Limitation for Filing Suit

Summary:

Point 1: Breach of Agreement and New Contract
The High Court erred in holding that the sale-deed dated 15.7.1964 was traceable to a new agreement. The defendant admitted there was no fresh agreement between the Official Receiver and the defendant at or before the execution of the sale-deed. The sale was made pursuant to the Court order dated 22.11.1963, not a new contract. The High Court exceeded its jurisdiction u/s 100 CPC by making findings on an issue not pressed in the trial court. Thus, Point 1 is held in favor of the plaintiff.

Point 2: Absence of Reference to Agreement for Reconveyance
The absence of a reference to the agreement for reconveyance in the Court order dated 22.11.1963 or in the sale-deed dated 15.7.1964 does not imply that the agreement of reconveyance was superseded. The defendant cannot approbate and reprobate by contending that the reconveyance agreement need not be implemented. Point 2 is held in favor of the appellant.

Point 3: Effect of Annulment of Adjudication
Upon annulment of adjudication, the property and rights of the insolvent revert to him with retrospective effect from the date of the insolvency petition. All acts done by the undischarged insolvent between the date of the insolvency petition and the date of annulment get retrospectively validated. Thus, the plaintiff's actions of exercising the option for repurchase on 12.7.1968 and filing the suit on 6.10.1969 stand retrospectively validated. Point 3 is decided in favor of the plaintiff.

Point 4: Time as Essence of Contract
Time is the essence of a reconveyance contract. The plaintiff exercised his option on 12.7.1968 within five years from the date of the sale deed (15.7.1964), binding the defendant to reconvey the property. Point 4 is held in favor of the plaintiff.

Point 5: Limitation for Filing Suit
Under Article 54 of the Limitation Act, 1963, the suit for specific performance must be filed within 3 years from the date of refusal to perform the contract. The defendant refused on 22.7.1968, and the suit was filed on 6.10.1969, within the limitation period. Point 5 is held in favor of the plaintiff.

Conclusion:
The Civil Appeal is allowed. The judgment and decree passed by the High Court are set aside, and the judgment and decree passed by the trial Court, as affirmed by the first appellate Court, are restored. There will be no order as to costs.