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TMI Blog2006 (7) TMI 699X X X X Extracts X X X X X X X X Extracts X X X X ..... nferring on him the right to negotiate, enter into an agreement to sell, and sell and dispose of the property for a price acceptable to the Power of Attorney. It may be noted that this Power of Attorney, defendant No.2, was the Chairman of the North Kerala Section of the defendant No.1 Company and he had control and management over 70 churches. Thus, defendant No.2, who was constituted the Power of Attorney, was a prominent person in the defendant No.1 company and in the Association for whose welfare the company had been incorporated. Defendant No.2 negotiated with the plaintiff for the sale of the property. Negotiations were done with the help of Mr. P.V. George, who was attached to the school run by defendant No.1 and who was a member of the Association. Defendant No.2, for and on behalf of defendant No.1, agreed to sell the property to the plaintiff for a price of rupees eight lakhs. On 17.5.1985 a sum of ₹ 10,000/- was paid as a token of the coming into existence of the agreement and receipt was issued. The receipt was admittedly signed by defendant No.2 and the witnesses to it are one Sarathchandra and P.V. George referred to earlier. The receipt reads as follows:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the purchaser, the plaintiff, had paid a sum of ₹ 10,000/- by cash and a sum of ₹ 40,000/- by way of cheque dated 31.5.1985 as advance, the receipt of which the Company and the Power of Attorney acknowledged. The balance sale price was to be paid on or before 30.9.1985. The agreement stated that time was of the essence of the contract. Clause 5 of this agreement stated that the Company and its Power of Attorney were to demolish the existing buildings in the schedule property, salvage the same and deliver possession of the land only to the plaintiff at the time of registration of the sale deed. The company was to obtain the Clearance Certificate in terms of Section 230A of the Income Tax Act, 1961. The cost of registration was to be borne by the plaintiff and in the event of default on the part of the company to sell the schedule property after complying with the conditions, the company was liable to return the advance of ₹ 50,000/- as liquidated damages to the plaintiff. In the event of default on the part of the plaintiff to buy the schedule property as per the conditions set out, the plaintiff was to forfeit the advance of ₹ 50,000/- to the company. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e other premises. The plaint further proceeded to state that for reasons best known to them, the defendants wanted modification of the deed by re-fixing the sale consideration to Rupees Five Lakhs and giving liberty to the defendants to pull down and remove the buildings existing in the property, so that the material could be used to build, at another site proposed to be purchased by the defendant No.1 Company. This agreement was also entered into on the same day and this was the latter agreement and the second agreement. It was asserted that the total consideration paid by the plaintiff to the first defendant as advance came to ₹ 3,50,000/-. If the defendants were to be permitted to remove the buildings and take away the materials, the balance amount payable by the plaintiff to the first defendant company would be ₹ 1,50,000/-. If on the other hand, the defendants did not want to remove the school building and the church building and would have them retained in the property, the plaintiff was ready and willing to pay a further sum of ₹ 4,50,000/- to make the total consideration of Rupees Eight Lakhs for sale of the entire property including all the improvements. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Articles of Association of the Company. The conditions of Article 19A(i) of the Articles and Memorandum of Association had not been complied with. All actions pursuant to the resolution of the Company dated 15.4.1985 deciding to sell the property were invalid in law and were otherwise ineffective and void. The agreements referred to in the plaint were thus void ab initio and were not enforceable under law. It transpires that the sale agreements referred to in the plaint were drawn up at the same time and place as parts of the same transaction with the plaintiff conspiring with Mr. P.V. George, who was at that time attached to the school of the defendant No.1. There was a conspiracy to commit fraud and to cheat the defendant No.1 and deprive the State Government of the legitimate stamp duty payable. The sale agreements were set up and devised by the plaintiff with objects which were opposed to public policy and were prohibited by statutes like Kerala Stamp Act and Income Tax Act, 1961 and were void under Section 24 of the Indian Contract Act, 1872 (in short the Contract Act ). The three buildings in the property were solid constructions. The demolition of the buildings was inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Stamp duty and the Income Tax and it was opposed to public policy in the background of Section 23 of the Contract Act, is not tenable. It was noted that the suit was one for specific performance of contract and there was full disclosure of both Exhibits A-4 and A-5 in the plaint. It was noted that there was no case of inadequacy of price, on the facts, Section 20 of the Specific Relief Act, 1963 (in short Specific Relief Act ) was not applicable. The agreement was for sale of the property for a price of ₹ 8 lakh and the substantial portion of the amount has been paid as advance. The evidence clearly established that the plaintiff was already ready and willing to pay the balance. The suit for specific performance of contract was decreed. Direction was also given for payment of the balance court fee on the plaint as well as in the appeal on the basis that the consideration for sale is ₹ 8 lakh and not ₹ 5 lakhs. Learned counsel for the appellant questioned correctness of the judgment rendered by the Division Bench on the ground that the agreements were pre-planned and executed simultaneously as one integrated inseverable transaction. Stamp papers were purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing executed. It was clearly stated in the plaint about the statement in the earlier written statement. If there was any dispute amongst the members of the Association, the plaintiff is not a party to the same and that cannot be a ground to deny the decree for specific performance of the contract. Trial Court disbelieved the evidence of DW1 who was the defendant No. 2 and if that evidence is kept out of consideration, nothing further was brought on record by the defendants. Principles relating to enforcement of a tainted transaction have been dealt with by this Court in various cases. In A.C. Arulappan v. Ahalya Naik (Smt.) [2001(6) SCC 600] it was noted as follows : In Parakunnan Veetill Joseph s Son Mathew v. Nedumbara Kuruvila s Son Ors. [1987 Supp. SCC 340] this Court cautioned and observed as under: Section 20 of the Specific Relief Act, 1963 preserves judicial discretion to Courts as to decreeing specific performance. The Court should meticulously consider all facts and circumstances of the case. The Court is not bound to grant specific performance merely because it is lawful to do so. The motive behind the litigation should also enter in the judicial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a multi-storeyed complex as is proposed and planned by the respondents appears to be an impracticality. If the respondents would not be able to construct and deliver to the appellant some of the flats as contemplated by the novated agreement how and in what manner the remaining part of consideration shall be offered/paid by the respondents to the appellant is a question that defies answer on the material available on record. Added to all this is the factum of astronomical rise in the value of the land which none of the parties would have fore contemplated at the time of entering into the agreement. We are not in the least holding that the consideration agreed upon between the parties was inadequate on the date of the agreement. We are only noticing the subsequent event. Possession over a meagre part of the property was delivered by the appellant to the respondents, not simultaneously with the agreement but subsequently at some point of time. To that extent, the recital in the agreement and the averments made in the plaint filed by the respondents are false. On a major part of the property, the appellant has continued to remain in possession. As opposed to this, the respondents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d., p. 362 seq.; Crawford Statutory Construction, Interpretation of Laws, p. 523 and Seth Bikhraj Jaipuria v. Union of India [AIR 1962 SC 113] The High Court said that the provisions contained in Section 108 of the Act are directory because noncompliance with Section 108 of the Act is not declared an offence. The reason given by the High Court is that when the law does not prescribe the consequences or does not lay down penalty for noncompliance with the provision contained in Section 108 of the Act the provision is to be considered as directory. The High Court failed to consider the provision contained in Section 629(A) of the Act. Section 629(A) of the Act prescribes the penalty where no specific penalty is provided elsewhere in the Act. It is a question of construction in each case whether the legislature intended to prohibit the doing of the act altogether, or merely to make the person who did it liable to pay the penalty. Where a contract, express or implied, is expressly or by implication forbidden by statute, no court will lend its assistance to give it effect. (See Mellis v. Shirley L. B. ([1885] 16 QBD 446 : 55 LJQB 143 : 2 TLR 360)). A contract is void if prohibi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e plaintiff to actually tender to the defendant or to deposit in Court any money except when so directed by the Court; ( ii) the plaintiff must aver performance of, or readiness and willingness to perform, the contract accordingly to its true construction. The basic principle behind Section 16(c) read with Explanation (ii) is that any person seeking benefit of the specific performance of contract must manifest that his conduct has been blemishless throughout entitling him to the specific relief. The provision imposes a personal bar. The Court is to grant relief on the basis of the conduct of the person seeking relief. If the pleadings manifest that the conduct of the plaintiff entitles him to get the relief on perusal of the plaint he should not be denied the relief. Section 23 of the Contract Act lays down that the object of an agreement becomes unlawful if it was of such a nature that, if permitted, it would defeat the provisions of any law. The term public policy has an entirely different and more extensive meaning from the policy of the law. Winfield defined it as a principle of judicial legislation or interpretation founded on the current needs of the comm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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