IMPORTANT POINT
The suit for specific performance of contract was rightly established where the evidence clearly established that the plaintiff was ready and willing to pay the balance price and the absence of the material to show that the defendant was not acting in unauthorised manner.

Headnote:Contract Act, 1872 — Sections 23 and 24 — Specific Relief Act, 1963 — Sections 16, 20 — Suit for specific performance — Principles relating to enforcement of a tainted transaction — Term ‘public policy’ — Meaning — Plaint schedule property belonged to appellant company — A school was being run in the property and there were also two other buildings in the property used by the company — Defendant 2 was constituted as the Power of Attorney for selling the property — Defendant 2 allegedly negotiated with plaintiff for sale of property — Defendant 2 admitted receipt of a sum of Rupees Three Lakhs as advance towards the sale price — Plaintiff had the capacity to pay the balance amount — Whether High Court was justified in passing decree in favour of plaintiff — (Yes).
       Held : 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.(Para 15)
       The doctrine of public policy may be summarized thus: Public policy or the policy of the law is an illusive concept: it has been described as "untrustworthy guide". "variable quality", "uncertain one", "unruly house", etc., the primary duty of a Court of a law is to enforce a promise which the parties have made and to uphold the sanctity of contract which form the basis of society, but in certain cases, the Court may relieve them of their duty on a rule founded on what is called the public policy, but the doctrine is extended not only to harmful cases but also to harmful tendencies. This doctrine of public policy is only a branch of common law, and just like any other branch of common law it is governed by precedents. The principles have been crystallized under different heads and though it is permissible for Courts to expound and apply them to different situations, it should only be invoked in clear and incontestable cases of harm to the public. (Para 18)
       Section 24 provides that if any part of a single consideration for one or more objects, or any one or any part of any one of several considerations for a single object, is unlawful, the agreement is void. (Para 19)
       In view of the findings recorded by the High Court more particularly mention of all the relevant details relating to Exhibits A-4 and A-5 and the evidence clearly establishing that plaintiff had capacity to pay and was ready and willing to pay the balance amount and the absence of any material to show that the defendant No.2 was not acting in unauthorized manner in view of the clear resolution of the appellant No.1, the judgment of the High Court cannot be faulted.(Para 20)

JUDGMENT

Arijit Pasayat, J. — Challenge in this appeal is to the judgment rendered by a Division Bench of the Kerala High Court allowing the appeal by the respondent who was the plaintiff. It is to be noted that the suit was dismissed by the trial court.

2. Background facts in a nutshell are as follows :

The plaint schedule property belonged to the appellant No.1 i.e. Indian Financial Association of Seventh Day Adventists, a Company incorporated under the Companies Act, 1956. The Company was impleaded as defendant No.1 in the suit and the defendant No.2 was its Power of Attorney. A school was being run in the property and there were also two other buildings in the property used by the Company. On 15.4.1985, the defendant No.1 Company passed a resolution deciding to sell the property. A Power of Attorney was executed in favour of defendant No.2 conferring 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 Rs.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:-

"Received a sum of Rupees ten thousand (Rs.10,000/-) as earnest money from Mr. M.A. Uneerikutty, Calicut towards the advance of the sale of land bearing R.S. No. 27/1 having 30 cents of extent which costs 8 lakhs of rupees."

3. This was followed by another agreement dated 21.5.1985, executed by defendant No.2, in his capacity as the Power of Attorney Holder of the defendant No.1, and the plaintiff. In that agreement, after reciting the title of the defendant No.1- Company represented by its Power of Attorney, it was stated that it had been decided to sell the property to the plaintiff for a consideration of Rupees Eight Lakhs and the plaintiff had agreed to purchase the same. The document also recites that on that day, the defendant No.1 acting through its Power of Attorney, had received a sum of Rupees Three Lakhs as advance towards the sale price. The document was to be registered on or before 30.9.1985. The Company was to hand over all the title deeds relating to the property, including the encumbrance certificate, within one month before registration of the sale deed. All expenses for registration had to be met by the plaintiff and if the Company failed to complete the registration of the sale deed within the agreed period, the plaintiff had the power to take the necessary legal steps for getting the sale deed registered and in that event, the Company would be liable for the expenses and loss incurred in that behalf. The sum of Rupees Three Lakhs paid as advance was liable to be recovered as charge on the property. If the plaintiff fails to pay the balance consideration of Rupees Five Lakhs to the Company within the agreed period, the plaintiff was liable to the Company for all the losses incurred and the company had the full power to recover all the losses from the plaintiff. As noticed supra, the Power of Attorney signed this agreement on behalf of the defendant No.1 company and the witnesses to this agreement wer

Click Here to Read the rest of this document

2006 Supreme(SC) 643

IMPORTANT POINTThe suit for specific performance of contract was rightly established where the evidence clearly established that the plaintiff was ready and willing to pay the balance price and the absence of the material to show that the defendant was not acting in unauthorised manner.

Cases Referred (4)

IMPORTANT POINT
The suit for specific performance of contract was rightly established where the evidence clearly established that the plaintiff was ready and willing to pay the balance price and the absence of the material to show that the defendant was not acting in unauthorised manner.