2002 (4) TMI 972 - SC - Indian Laws

Issues Involved:
1. Validity of the sale deed dated 22.2.1971.
2. Entitlement to physical possession of the suit properties.
3. Recovery of Rs. 95,000 for demolished and sold properties.
4. Applicability of Sections 27 and 31 of the Specific Relief Act.
5. Conduct of the plaintiff and defendants regarding the sale contract.
6. Equitable relief under the Specific Relief Act.

Issue-wise Detailed Analysis:

1. Validity of the Sale Deed Dated 22.2.1971:
The plaintiff-Company executed a sale deed on 22.2.1971 in favor of the defendants for an oil mill and associated properties for Rs. 2 lakhs. Rs. 50,000 was paid at registration, with the balance due in two installments. The sale deed included a clause preventing the transferee from dealing with the property until full payment. The Sub-Registrar halted the registration due to a canceled Income Tax Clearance (ITC) certificate. Despite obtaining a fresh ITC on 13.6.1972, the plaintiff did not inform the Sub-Registrar until much later, leading to registration completion on 28.12.1976. The High Court deemed the contract voidable due to the defendants' failure to pay the balance, but the Supreme Court found the plaintiff's conduct questionable, particularly the delay in producing the ITC.

2. Entitlement to Physical Possession of the Suit Properties:
The High Court ordered the plaintiff to be put in physical possession of the properties, deeming the sale deed void due to non-payment of the balance. The Trial Court, however, had dismissed the suit, holding that the defendants did not breach the contract and that the plaintiff had no right to rescind it. The Supreme Court noted the plaintiff's conduct in delaying the ITC production and found no legitimate ground for seeking possession.

3. Recovery of Rs. 95,000 for Demolished and Sold Properties:
The High Court granted a decree for Rs. 95,000, the value of properties demolished and sold by the defendants, after adjusting Rs. 55,000 received by the plaintiff. The Supreme Court, however, emphasized the plaintiff's delay and questionable conduct, ultimately denying equitable relief.

4. Applicability of Sections 27 and 31 of the Specific Relief Act:
The High Court applied Sections 27 and 31, allowing the plaintiff to annul the contract and cancel the sale deed. The Supreme Court, however, found that the plaintiff's conduct and delay in filing the suit disentitled them to relief under these sections. The Court noted that the plaintiff's actions, including the delay in producing the ITC and the agreement with a Director, indicated a lack of bona fides.

5. Conduct of the Plaintiff and Defendants Regarding the Sale Contract:
The plaintiff's conduct, including the delay in producing the ITC and the agreement with a Director to defer payment, was found questionable. The defendants were also criticized for not paying the balance despite taking possession and benefiting from the property. However, the Supreme Court emphasized the plaintiff's conduct in seeking equitable relief, ultimately denying their claims.

6. Equitable Relief Under the Specific Relief Act:
The Supreme Court found that the plaintiff's conduct, including the delay in producing the ITC and the agreement with a Director, disentitled them to equitable relief. The Court emphasized that a party seeking equitable relief must approach the Court with clean hands, which the plaintiff failed to do.

Conclusion:
The Supreme Court set aside the High Court's judgment and restored the Trial Court's dismissal of the suit. However, considering the defendants' conduct, the Court directed the defendants to pay an additional Rs. 40 lakhs to the plaintiff within six months, in addition to the sale price already deposited. This decision aimed to balance justice between the parties, acknowledging both the plaintiff's questionable conduct and the defendants' benefit from the property.

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