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Issues involved:
1. Declaration of title from 1.12.1981. 2. Requirement of Reserve Bank of India (RBI) approval under the Foreign Exchange Regulation Act (FERA). 3. Confidential relationship and unfair advantage. 4. Discretionary nature of specific relief. Issue-wise detailed analysis: 1. Declaration of title from 1.12.1981: The plaintiff claimed that he became the owner of the property from 1.12.1981 based on an alleged understanding with the defendant's husband. The court found this claim "preposterous" as no sale deed had been executed, and the plaintiff had not paid the sale price. The court noted that the plaintiff's conduct, including his refusal to pay rent from 1.12.1981, indicated a mala fide intention to evade rent payments. This conduct was deemed a significant factor in denying the discretionary relief of specific performance. The court emphasized that a plaintiff seeking specific performance must come with clean hands and that the plaintiff's false allegations and ulterior motives disentitled him from such relief. 2. Requirement of RBI approval under FERA: The defendant, being a foreign national, required RBI approval to sell the property under Section 31 of FERA. The court highlighted that any sale of immovable property by a non-citizen without RBI approval is prohibited and subject to penalties under FERA. The court referred to various judgments, including those of the Supreme Court, which underscored the mandatory nature of FERA provisions and their alignment with public policy. The court concluded that granting specific performance without RBI approval would be against public policy and the provisions of Section 23 of the Indian Contract Act. The court also disagreed with a contrary view held by the Delhi High Court, emphasizing that no court should pass an unenforceable decree. 3. Confidential relationship and unfair advantage: The court found that the plaintiff, who had a confidential relationship with the defendant, exploited this relationship to his advantage. The defendant, residing abroad and unfamiliar with local property values, relied on the plaintiff for property valuation. The plaintiff obtained valuation reports from appraisers associated with his former company, which the court found questionable. The court noted that the plaintiff failed to provide evidence that the valuations represented the true market value. The defendant's acceptance of the plaintiff's offer was based on these valuations, which the court found to be a result of the plaintiff's undue influence and breach of fiduciary duty. The court held that there was no valid contract as the defendant was not fully informed about the market value. 4. Discretionary nature of specific relief: The court reiterated that specific performance is a discretionary remedy, not an automatic right. The court must consider the plaintiff's conduct, the fairness of the transaction, and compliance with statutory requirements. Given the plaintiff's mala fide intentions, exploitation of the defendant's trust, and the requirement of RBI approval, the court found it inappropriate to grant specific performance. The court emphasized that the plaintiff had not come to court with clean hands and had filed the suit as a counterblast to the eviction suit filed by the defendant. Conclusion: The court allowed the appeal, set aside the trial court's judgment, and dismissed the suit for specific performance. The plaintiff was ordered to pay costs to the defendant, reinforcing the principle that equitable relief requires equitable conduct.
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