2004 (11) TMI 599 - SC - Indian Laws

Summary

Issues Involved:
1. Validity of the rescission of the agreement dated 16.8.1980 under Section 28 of the Specific Relief Act, 1963.
2. Allegations of collusion and fraud between the respondent and certain trustees.
3. Compliance with the terms of the decree dated 25.7.1985.
4. Authority of the trustees to enter into subsequent agreements.
5. Payment of corporation tax and other dues.

Detailed Analysis:

1. Validity of the Rescission of the Agreement Dated 16.8.1980:
The trial court rescinded the agreement dated 16.8.1980 and recalled the decree dated 25.7.1985, citing the respondent's failure to pay Rs. 30 lacs by 24.10.1985 and arrears of rent amounting to Rs. 39 lacs. The trial court held that under Section 28(1) of the Specific Relief Act, 1963, it had unlimited power to grant extensions but no power to condone the delay if the period for complying with the terms had expired. The High Court, however, overturned this decision, stating that the decree dated 25.7.1985 did not specify a time frame for the respondent to deposit the amounts. The High Court emphasized that under Section 28, the court could only rescind the agreement if the decree holder was a defaulter, and there was no default clause in the decree. The Supreme Court upheld the High Court's view, noting that the decree was not self-operative and did not prescribe consequences for non-deposit of the premium or rent by 24.10.1985.

2. Allegations of Collusion and Fraud:
The appellants alleged collusion between the respondent and Tivoli Court Pvt. Ltd., claiming that the Trust had entered into an agreement dated 29.4.1981 to lease the property to Tivoli Court Pvt. Ltd., which allegedly colluded with the respondent to prevent effective legal steps against the respondent. The Supreme Court found no merit in these allegations, noting that the Trustees had previously consented to the assignment of leasehold rights to the respondent and had entered into the oral agreement to renew the lease on 16.8.1980. The court found no evidence of collusion or fraud that would invalidate the decree dated 25.7.1985.

3. Compliance with the Terms of the Decree Dated 25.7.1985:
The appellants argued that the respondent was not serious about performing its obligations under the decree, as it did not apply for execution of the lease or seek an extension of time to deposit the premium or rent. The Supreme Court rejected this argument, stating that the decree did not specify a time frame for the respondent to deposit the amounts and that the respondent had paid the premium of Rs. 30 lacs and rent amounting to Rs. 96 lacs. The court noted that the Trust had not moved for rescission of the contract for nine years and had not provided any explanation for this delay.

4. Authority of the Trustees to Enter into Subsequent Agreements:
The appellants questioned the authority of the Trustees to enter into the agreement dated 29.4.1981 with Tivoli Court Pvt. Ltd., given the prior assignment and oral agreement with the respondent. The Supreme Court found that the Trustees had no authority to enter into the subsequent agreement, as they had already consented to the assignment and the oral agreement for lease renewal with the respondent. The court emphasized that the Trustees had not led any evidence to explain the circumstances under which the subsequent agreement was made.

5. Payment of Corporation Tax and Other Dues:
The respondent claimed that the Trust had failed to pay its share of corporation tax as per the lease agreement dated 25.11.1960. The Supreme Court suggested that the respondent not press this claim for past periods, and the respondent agreed. The court also found no basis for the appellants' claim for interest at 8.33% per annum on monthly occupation charges, as these items did not fall within the purview of the oral lease agreement dated 16.8.1980.

Conclusion:
The Supreme Court dismissed the appeal, directing the respondent to tender Rs. 29,20,000 within 30 days to the Trustees, failing which the agreement dated 16.8.1980 would stand rescinded. The court also addressed the payment of corporation tax and other dues, concluding that the respondent would not press claims for past contributions from the Trustees.