VERY IMPORTANT POINT
Trial Court rightly dismissed the plaintiff s suit for cancellation of sale deed and recovery of possession as conduct of the plaintiff was very blame worthy. High Court committed on error in not noticing this important aspect which disentitled the plaintiff to equitable relief under Section 31 of Specific Relief Act, 1963. However, defendant is also blameworthy in withholding balance sale consideration and using the property to his advantage for several years hence Court directed him to pay substantial amount over and above the balance sale consideration to do justice to the parties.

Headnote:(i) Specific Relief Act, 1963-Sections 27 or 31-Suit for cancellation of indenture (sale deed) dated 22.2.71, possession and damages-Dismissed by Trial Court in 1980-Reversed in appeal in 1996 by High Court-Appeal to Supreme Court-Plaintiffs conduct found blame worthy between the date of presentation of sale deed for registration and date of filing of the suit including the exchange of correspondence-He did not produce ITC which was essential for registration-Did not honour the agreement embodied in the letter dated 12.8.1971-Unexplained delay in filing the suit of 3 years after exchange of notices-Result-Plaintiff was disentitled to equitable relief of cancellation of instrument and for recovery of possession (Paras 9 to 14) High Court set aside-(Income Tax Act, 1961-Section 230A-I.T. clearance certificate). (Para 9)
       Held : We are of the view that the High Court failed to address itself to certain crucial factors which disentitles the plaintiff to equitable relief. The High Court reversed a well considered judgment of trial Court without adverting to the reasoning of trial Court except in a cursory manner. In the view we are taking, it is not necessary for us to dilate on various legal issues debated before us. We shall proceed on the basis that in law the plaintiff could annul the contract of sale before the act of registration got completed and title passed to the appellants. We shall further assume that the plaintiff in fact rescinded the contract with effect from the date of expiry of the time stipulated in the 4th and final notice dated 3.7.1973. If such rescission or termination of contract is not justifiable on facts or having regard to the conduct of the plaintiff, the equitable relief under Section 27 or 31 of the Specific Relief Act has to be denied to the plaintiff, no further question arises for consideration. In such a case, the appellants plea has to be accepted and the suit is liable to be dismissed. (Para 9)
       Before we proceed further, we would like to make it clear that it is not our endevour to re-appreciate the evidence on record and to disturb the findings of fact, had they been arrived at on a consideration of all the relevant matters and the evidence on record. Let us now take stock of those relevant and important aspects. (Para 10)
       The plaintiff cannot on the one hand withhold the production of I.T.C. which was essential for registration and on the other hand take the stand that the defendants committed breach of contract. (Para 10)
       The other important aspect which did not receive due consideration from the High Court is the agreement or understanding arrived at between the Director of the plaintiff -Company-Shri R.K. Meattle and the defendants on 12.8.1971. (Para 11)
       All this would show that the plaintiff consciously agreed to honour the understanding arrived at between the Director of the Company Shri R.K. Meattle and the defendants which was reduced into writing in the form of a letter. If that agreement is true and binding, as has been held by the Trial Court, the plaintiff could not have rescinded the contract in September 1973, despite the fact that the suit filed by Seth Shanti Lal Jain was pending and the formalities requisite for completion of registration were not completed. It may be an imprudent act on the part of Shri R.K. Meattle, going by the tenor of arrangement, but, in the absence of any allegations of collusion and mis-representation, the Court cannot disregard the agreement embodied in the letter dated 12.8.1971 which was believed by the trial Court. We are, therefore, of the view that reversal by the High Court of the trial Court s finding on this aspect is unwarranted and as already noted, is vitiated by non-consideration of the relevant material on record. This Court has, therefore, no option but to disturb the factual finding reached by the High Court. (Para 12)
       One more fact which disentitles the plaintiff to the equitable relief under Section 27/31 of the Specific Relief Act is the un-explained delay in filing the suit after the exchange of notices in September 1973. Almost three years later, the suit was filed. This inaction has its own revelation. Either the plaintiff did not stand by his declaration to rescind the contract, as held by the trial Court, or the plaintiff was sitting on the fence and waiting to see whether the turn of events would be to his advantage or disadvantage. (Para 13)
       If the above facts and circumstances are cumulatively considered, the plaintiff has no legitimate ground to seek the equitable remedy. While these are the factors that can be put against the plaintiff, the defendants-appellants are not free from blame. We cannot lose sight of the fact that their conduct is also open to question. The defendants, in the initial stages, insisted on income-tax clearance certificate. When the defendants were informed of the readiness of the plaintiff to hand over the ITC subject to payment of balance money within 15 days, the defendants then raised the plea of pendency of the suit of Seth Shanti Lal which was by then dismissed for default. The factum of dismissal of suit was intimated to the defendants through the notice dated 3.7.1973, though the suit was subsequently restored and was finally dismissed in the year 1978. The fact remains that the defendants who, in the initial stages, were prepared to pay the balance sale price on receipt of ITC, for reasons best known to them, dodged to make the payment on the ground of pendency of suit. Though this conduct on the part of the defendants is not above board, the conduct of the plaintiff, who has sought equitable remedy, should be kept uppermost in the mind of the Court. The plaintiff seeking equitable remedy cannot approach the Court with unclean hands or be guilty of laches. Irrespective of the conduct of the defendants we must hold that the plaintiff has, for various reasons discussed above, disentitled himself to the relief of cancellation of instrument and for recovery of possession from the defendants that too after the property was substantially developed. (Para 14)
       (ii) Specific Relief Act, 1963-Sections 27 or 31-Suit under Section 31 for cancellation of indenture and recovery of possession and damages-Dismissed by trial Court-Reversed by High Court-Supreme Court reversing High Court and restoring trial Court-Considerable time passing-Appellants-defendants also found blameworthy in not paying balance sale consideration to plaintiff-respondents-Used the property to the best of their advantage -Suggestion by Apex Court to pay substantial amount over and above the balance sale price (1,45,000/-) already deposited in Court-Appellant agreed to pay Rs. 40 lacs in lump sum within six months to respondents-Appeal allowed-Suit dismissed with direction to pay Rs. 40 lakhs within six months-Decree of trial Court modified accordingly.
       Held : The result of the foregoing discussion is that the suit is liable to be dismissed and it has been rightly dismissed by the trial Court. However, in view of the fact that the defendants are not free from blame as discussed above and they have utilised the property to the best of their advantage right from day one without, at the same time, paying the balance sale price for several years we put it to the counsel for the appellants whether they are willing to pay to the plaintiff a substantial amount over and above the sale price already deposited in the Court, in order to do justice to the parties. In fact, in the course of arguments by the learned counsel for the appellants, there was an indication that the appellants were prepared to offer a reasonable amount, without prejudice to their contentions. The learned counsel for the appellants has filed a letter dated 18.04.2002 stating that "the appellants can pay and agree to pay a further sum of Rs. 35 lacs (Rupees thirty five lacs) in 3 instalments of Rs. 15 lacs and Rs. 10 lacs and Rs. 10 lacs," in three weeks, by the end of August and by the end of November, 2002 respectively. When we suggested to the learned counsel that it would be fair if some more amount is offered, the learned counsel for the appellants agreed on behalf of his clients for payment of Rs. 40 lacs in lump sum within a period of six months commencing from today. Having regard to the offer made in the letter coupled with the oral representation made today and to mete out justice to the parties, we direct that the undertaking to pay the sum of Rs. 40 lacs within six months should form part of the decree in the suit. This shall be in addition to the sale price already deposited in the Court. The same shall be deposited in the Court within a period of six months and the appellants are entitled to withdraw the same in addition to the amount already deposited. The judgment of the High Court is set aside and the appeal is allowed subject to the direction as given above. With regard to the deposit of the said additional sum of Rs. 40 lacs, the decree of the trial Court shall stand modified accordingly. Parties are left to bear their own costs. (Paras 15 and 16)

JUDGMENT

P. Venkatarama Reddi, J.-By the impugned judgment, the High Court at Allahabad allowed the first appeal filed by the respondent-plaintiff, decreed the suit and ordered that the plaintiff should be put in physical possession of the suit properties and the indenture (sale deed) dated 22.2.1971 should be deemed to be void and cancelled and therefore be delivered up to the plaintiff-vendor. A decree was also granted for a sum of Rs. 95,000/- being the value of properties wrongfully demolished and sold, after adjustment of Rs. 55,000/- received by the plaintiff towards the sale consideration. The suit was ostensibly filed under Section 31 of the Specific Relief Act for cancellation of indenture dated 22.2.1971 and also for physical possession of the property in dispute and for recovery of Rs. 95,000/- being the value of property wrongfully demolished alter adjusting an amount of Rs. 55,000/-. The Trial Court dismissed the suit. At the same time, it granted a decree in favour of the plaintiff for a sum of Rs.1,45,000/- representing the balance sale consideration.

2. The facts giving rise to the suit and the appeal are these :

The plaintiff-Company executed a sale deed on 22.2.1971 in favour of the defendants in respect of an oil mill located at Khurja in UP State with the structures, open land, machinery and fixtures, leasehold rights in the land etc. for a consideration of Rs.2 lakhs. A sum of Rs. 50,000/- was to be paid before the Sub-Registrar at the time of registration and it was stipulated in the sale deed that the balance amount will be paid in two instalments falling on 15.3.1971 and 30.4.1971. It was further stipulated that the transferee shall not be entitled to deal with, sell transfer or assign the property sold, till such time as the entire balance sale price of Rs.1.50 lakhs was paid to the transferor. A sum of Rs. 50,000/- was accordingly paid to the transferor on the date of registration. Possession was admittedly handed over to the defendants. The respondent-plaintiff produced the income tax clearance certificate on the date of registration i.e. 22.2.1971. However, before the formalities of registration viz., copying out the deed was completed, the Sub-Registrar received a communication from the Income Tax Officer that the I.T.C. was cancelled and therefore the Sub-Registrar should stop registration of the property till a fresh certificate was issued by him. Therefore, the Sub-Registrar did not take further steps in the matter. Moreover, the sale deed was impounded on the ground of insufficient stamp and it was sent to the District Registrar for adjudication. By an order dated 4 1.1972, the Income Tax Officer revoked his earlier order and restored the certificate issued by him earlier. On appeal by plaintiff, the Commissioner of Income Tax directed the Income Tax Officer to issue a fresh I.T.C. instead of validating the earlier one. On 13.6.1972, a fresh I.T.C. was issued. The document which was sent for assessment of deficient stamp duty was received back by the Sub-Registrar on 3.5.1973. When there was a notice from the Sub-Registrar in August 1973 to furnish the I.T.C. for the purpose of registration, the plaintiff in its reply dt. 28.8.1973 maintained that the document was no longer effective as the contract stood rescinded on account of the breach committed by the defendants in declining payment of balance sale price. Sub-Registrar was requested to return the document without registration. The Sub-Registrar, by his order dated 19.9.1973, refused to register the document as ITC was not produced. An appeal was filed against the said order by the appellants-defendants before the District Registrar. On 16.10.1973 the appellants also filed a civil suit impleading the respondent, Sub-Registrar and also the I.T.O. for a direction that I.T.C. should be issued and the Sub-Registrar should register the sale deed. On 3.7.1976, the suit out of which the present appeal arises was filed seeking the relieves as stat

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