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TMI Blog2005 (2) TMI 535X X X X Extracts X X X X X X X X Extracts X X X X ..... dant No. 3 is one of the Directors of the defendant No. 1-company and also one of the partners of the defendant No. 2-firm. The defendant No. 4 is the Manager of the defendant No. 2-firm and defendant No. 5 is one of the Directors of the defendant No. 1-company. 3. In the year 1974, the Plaintiffs had purchased on ownership basis from the Defendant No. 2 firm the Dalamal Chambers flat. Since then, the Plaintiffs are known to the partners of defendant No. 2. 4. Messrs Harishlal T. Bhatia, Manoharlal T. Bhatia and Kumari Sundari T. Bhatia are the partners of the Plaintiffs firm. 5. It is alleged by the Plaintiffs that somewhere in November, 1977, the Plaintiffs learnt that the Defendant No. 1 Company were interested in selling the Basement- cum -Godown as described in Exhibit A annexed to the Plaint (hereinafter referred to as the suit premises ). Since the Plaintiffs were interested in the suit premises, they approached the defendant No. 1 through the defendant Nos. 2, 3 and 4. The defendant Nos. 3 and 4 expressed their willingness to sell the suit premises to the Plaintiffs on behalf of the defendant No. 1. They, however, requested the Plaintiffs partner, Harishlal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-1977, paid to the Defendant No. 5 a sum of Rs. 2,00,000 in cash by way of earnest money in the presence of the Defendant Nos. 3 and 4 and the said R.T. Sharma, the Accountant of Defendant No. 2. The Plaintiffs, therefore, alleged that the deal in respect of the purchase and sale of the suit premises was completed on the aforesaid terms. The Plaintiffs further alleged that a further sum of Rs. 1,00,000 was paid by Manoharlal Bhatia, the Plaintiffs partner, to Defendant No. 5 on 28-12-1977 in the presence of the Defendant No. 4 and Mr. R.T. Sharma. 7. The Plaintiffs further alleged that in January, 1978, Defendant Nos. 3, 4 and 5 informed the Plaintiffs that they had already approached the said Co-operative Society for the purpose of getting No Objection Certificate and asked Harishlal Bhatia to pay a further sum towards the agreed consideration. Accordingly, on 3-1-1978, the Plaintiffs handed over to the Defendant Nos. 3, 4 and 5 a Bank Draft for Rs. 1,00,000. However, the defendants represented to the Plaintiffs that the Municipal Corporation was not agreeable to use the suit premises as godown, but they were pressing to use the suit premises for the purpose of parking. As s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for sale of the suit premises. In the alternative, they claimed refund of earnest money of Rs. 3,00,000 with interest and a charge to be kept on the suit premises. 9. The Defendant No. 1 Company resisted the suit by the Written State-ment dated 30-1-1995. While denying the entire allegations of the Plaintiffs with regard to the concluded agreement of sale of the suit premises with the Defendant No. 1, they contended that none of the Defendant Nos. 3 to 5 had authority to enter into such agreement on behalf of the Defendant No. 1 Company which is required as per the provisions of section 46 of the Companies Act. They further contend that the Defendant No. 1 Company was owned by two families, viz., the Melwani Family and the Dalamal Family and two members of each family were Directors. They contend that H.H. Melwani was the Managing Director and J.H. Melwani, Defen-dant No. 5, was the Director representing Melwani family and the other two Directors were Nari Dalamal and Hiranand Hassamal, both directors representing the Dalamal Family. The suit premises being the property of the Defendant No. 1 Company could be sold only with due authority from the Board of Directors which con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed any Bank draft being handed over to him by the Plaintiffs on 3-1-1978. As such, he claimed dismissal of the suit. 13. The Defendant No. 4 has also resisted the suit by his Written Statement dated 22-4-1980, is contention, in short, is of total denial of any suit agreement having been entered into with the Plaintiffs. 14. The Defendant No. 5 has expired. He has not filed any written statement. 15. In view of these pleadings, the following issues are framed against which I have recorded the findings for the reasons stated below : Issues Findings 1. Whether plaintiffs firm is regis- tered under the Indian Partner- ship Act? If not what is its effect? In the affirmative. 2. Do plaintiffsprovethat there was a concluded contract of sale of the suit property for Rs. 8,85,000 as stated in paragraph 3 of the plaint? In the negative. 3. Do they prove to have paid Rs. 2 lakhs on 30-11-1977 to defendant No. 5? In the negative. 4. Do they prove payment of Rs. 1 lakh on 29-12-1977 and further sum of Rs. 1 lakh on 3-1-1978 to defendant No. 5 towards the suit transaction? In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Director of the Defendant No. 1 Company as well as partner of Defendant No. 2 firm. Defendant No. 4 is the Manager of Defendant No. 2 firm. At this stage, it is to be noted that there is no dispute that the suit premises belong to the Defendant No. 1 Company and the Defendant No. 2 firm had no concern with the suit premises. 20. Harishlal (PW-1) further states that when he approached the Defendant Nos. 2, 3 and 4, the Defendant Nos. 3 and 4 expressed their readiness and willingness to sell the suit premises to the Plaintiff-firm. However, they requested him to meet Defendant No. 5, Director of the Defendant No. 1 Company for the purpose of finalising the terms and conditions of the sale. He further states that as the Defendant Nos. 3 and 4 are asking to meet the defendant No. 5 being the Director of the defendant No. 1 for finalising the terms, he believed that the Defendant No. 5 was authorised by the defendant No. 1 Company for the said purpose. Then he adds in his evidence that on 30-11-1977, a meeting was held in the office of the Defendant Nos. 1 and 2 (the common office for the Company and the firm). The meeting was attended by himself, his partner, Manoharlal and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him to encash the Bank draft before getting clearance from the Municipal Corporation. He further states that in October, 1978, the Defendant No. 5 contacted him and represented to him that the transfer of the premises could be made at any time and he should keep balance of consideration ready. He further states that accordingly, he issued two Bank drafts, one for Rs. 75,000 and another for Rs. 2,25,000 both dated 30-10-1978 and handed over the same to Defendant No. 5. Subsequently, however, Defendant No. 5 fell ill and those Bank drafts also could not be encashed and they were got cancelled by the Plaintiffs. Then it is stated by Harishlal (PW-1) in December, 1978, the Defendant No. 5 started attending the office and when he contacted the Defendant No. 5, the defendant No. 5 told him that there were large amounts of dues payable to the Municipal Corporation on account of Municipal taxes and other charges and said that the Plaintiffs could retain the sum of Rs. 3,00,000 from the balance consideration and make payment of the remaining amount. However, they issued six cheques on different dates between 20th December, 1978 and 27th December, 1978 total value of Rs. 5,85,000 equal to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority to enter into such transaction or sale of the premises belonging to the Defendant No. 1 Company. In this regard, the Defendant No. 1 has produced on record the Minute Books of the Board Meetings as well as the Annual General Meetings held during the relevant period of 30-11-1977 to show that no such resolution ever was passed either in the Board Meeting or in the Annual General Meeting of the Defendant No. 1 Company to sell the suit premises or to authorise the Defendant Nos. 3 and 5 to enter into an agreement for sale of the suit premises to the Plaintiff-firm. 27. All that pleaded in the Plaint as also brought in the evidence of Harishlal Bhatia, is that since the Defendant Nos. 3 and 4 asked Harishlal Bhatia and his partner, Manoharlal to meet Defendant No. 5 for finalising the agreement to sell the suit premises to the Plaintiff-firm; that the two partners of the Plaintiff-firm believed that the Defendant No. 5 who was the Director of the Defendant No. 1 Company had an authority to sell the suit premises belonging to the Defendant No. 1 Company. What is to be noted is that Harishlal (PW-1) and his partner Manoharlal have not stated that Defendant No. 5 also repre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 and 5 could call a Board Meeting and such meeting could be held even without prior notice or by a shorter notice and, therefore, the meeting which was held on 30-11-1977 at which the defendant Nos. 3 and 5 were present constituted a meeting of the Board of Directors and thereby Defendant Nos. 3 and 5 got an authority to dispose of the Company s property. However, this submission is not acceptable. Clause 35 speaks about quorum for the General Meeting of the Company providing that 2 or more entitled to vote and present in person shall be quorum for a general meeting. Clause 36 provides that such meeting could be convened by shorter notice than 21 days or without notice as the members may approve. However, such a meeting without notice has to be with the approval of the members and with the consent of all the members entitled to receive notice of a meeting. The shareholders were the members and they were four two from Melwani Family and two from the Dalamal Family. There is nothing to indicate that the meeting held on 30-11-1977 was with the approval and consent of all the four members. Clause 37 speaks that the meeting will not be invalidated if there is accidental omission to gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s assumed to have been proved that there were some talks between the two partners of the Plaintiff-firm and the Defendant Nos. 3 to 5 with regard to the sale of the suit property fixing the consideration of Rs. 8,85,000, that cannot be said to be a concluded contract. As such an act done by the Defendant Nos. 3 and 5 cannot be said to be with authority of the Defendant No. 1 Company and such act should have been got ratified by the Defendant No. 1 Company by a suitable resolution passed by it either in the General Body Meeting or in the meeting of the Board of Directors. 31. To see whether there was really a concluded contract, the fact of payment of Rs. 3,00,000 by way of earnest money would corroborate that aspect. However, at the outset, it should be mentioned that the payment of earnest money of Rs. 3,00,000, i.e., Rs. 2,00,000 on 30-11-1977 and Rs. 1,00,000 on 29-12-1977 is not established. In this regard, although Harishlal (PW-1) and the witness - R.T. Sharma (PW-2) have stated about such payment having been made, their evidence is not reliable. This is so because, Harishlal (PW-1) has admitted in cross-examination that the purchase of the suit property was by the firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perties were bought by proper documentation and there was no case of cash payment having been made. If this was so, there should have been some special reason to make cash payment without having any receipt and there is no such reason assigned. On the contrary, when the earlier transactions were with proper documentation, the present transaction should also have been with proper documentation, at least a receipt for the two payments made. Admittedly, both partners of the Plaintiff-firm are businessmen and it is beyond comprehension that they would make such a large payments of Rs. 2,00,000 and Rs. 1,00,000 in cash without any documentary evidence. Moreover, for about a year, the transaction was not materialised. Therefore, in normal course of conduct, a businessman like the Plaintiffs, would have put on record the agreement as well as the two payments made in cash by writing letter to the Defendant No. 1 Company or a letter written to the Chairman of the Co-operative Society for getting No objection. However, nothing of the sort was done. It is pertinent to note that at one point of time, as alleged by the Plaintiffs, the Defendant No. 5 had expressed uncertainty about finalisation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Again there was no acknowledgement taken about handing over these drafts to the Defendant No. 5. These drafts were also returned and no contemporary evidence which could have been available from the Bank is produced. 35. Lastly, Harishlal states that on demand made by the Defendant No. 5, he handed over those cheques to the Defendant No. 5 totally worth Rs. 5,85,000 as per the details given in Exhibit E annexed to the Plaint. Five cheques were each of Rs. 1,00,000 and the sixth cheque was for Rs. 85,000. The cheque numbers are given and the dates of the cheques are given. Four cheques dated 20-12-1978 and the two cheques dated 27-12-1978. No counter-foils of these cheques are produced nor was there any acknowledgement about handing over of these cheques to the Defendant No. 5 obtained. Even the statement at Exhibit E annexed to the Plaint is not admitted in evidence and, therefore, the same cannot be relied upon. It is undisputed that none of the cheques was encashed. As such, even this tender cannot be relied on. 36. Certain legal submissions were tried to be made with regard to the Defendant Nos. 3 and 5 having authority to enter into a transaction regarding sale of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act. The letter, Exhibit P-3 , also does not mention that the Plaintiffs had indicated that they were ready and willing to perform their part of the contract. All that stated was that there was scores of meeting with Defendant No. 5 for possession, but evasive replies were given and, therefore, they had no alternative but to ask for refund of Rs. 3,00,000. The letter does not call upon the Defendant No. 5 to whom the letter is addressed or the Defendant No. 1 for that matter to perform their part of the contract of getting No Objection Certificate nor does the letter indicate that they were ready and willing to pay part of the consideration. Under these circumstances, the Plaintiffs cannot be held to be ready and willing to perform their part of the contract in case a view is taken that there was a concluded contract which, in fact, is not, as discussed above. Under the above circumstances, there is no question of defendants having committed breach of the contract. Therefore, the Issue Nos. 6 and 7 can be answered in the negative. Issue No. 9 : 39. In the aforesaid circumstances, there is no question of the Plaintiffs being entitled to the specific performance of the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X
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