Point of law: Specific performance of Agreement - where the relief of specific performance was refused, a charge be created over the suit schedule property to ensure repayment of the amount.

JUDGMENT :

This is a suit for specific performance of a contract for sale of a premises consisting of freehold land bearing final plot No. No. 257, Town Planning Scheme No. III, City Survey No. F/751 admeasuring 580 sq.yards together with the structure standing therein, situated at Bandra, Mumbai (“the suit premises”) contained in the agreement dated 26th June, 1993 and, in the alternative, for refund of the earnest amount paid thereunder along with compensation and damages.

2. The material averments in the plaint can be stated in brief as under:

a) The plaintiff is a private limited company registered under the Companies Act, 1956. The suit premises was acquired by Abdul Kader Haji Noormohammed and his sons under a Conveyance Deed dated 22nd April, 1960. The suit premises was treated as an asset of the partnership “M/s. Noor Sons” formed by the members of the family of Abdul Kader Haji Noormohammed. Over a period of time, the constitution of the firm suffered changes and Abdul Kader Haji Noormohammed, the defendant No. 1, and late Aboobaker Haji Noormohammed were its partners before the firm stood dissolved, with the death of Aboobaker on or about 4th May, 1985. The late Aboobaker left behind the defendant Nos.2 to 6 as his heirs and legal representatives. The defendant Nos. 2 to 6 thus succeeded to the half share of late Aboobaker in the suit premises in definite shares.

b) The defendant Nos. 1 to 6 executed an agreement dated 26th June, 1993 (“the suit agreement”) and thereunder agreed to sale the suit premises to the plaintiff for a consideration of Rs.4 crores subject to compliance of the provisions contained in Chapter XXC of the Income Tax Act, 1961, as then stood. The defendant Nos. 4 to 6 were minor on the date of the execution of the suit agreement and, thus, the defendant No. 2 had represented the defendant Nos. 4 to 6 and executed the suit agreement for and on behalf of defendant Nos. 4 to 6 in the capacity of their natural guardian.

c) The ground floor of the suit premises was in exclusive use, occupation and possession of M/s. Kader Furniture. The rest of the premises was let out to National Organic Chemical Industries Limited (NOCIL) under an agreement dated 16th January, 1986 in respect of which, the defendant had received interest free deposit of Rs. 45 lakhs. One Abdul Hamid Taya was in unlawful occupation of one garage on the ground floor and the passage at the backside of the suit premises and another person had committed encroachment over a portion of the suit premises and ran a pan-bidi stall.

d) The suit agreement, inter alia, provided that the sale was to be completed within too weeks of the lapse of the period specified in Section 269UD or the grant of N.O.C. under Section 269UL of the Income Tax Act, 1961. This stipulation as to time was made essence of the contract. It was, However, contingent upon the fact that the vendors shall procure vacant possession of the ground floor premises from M/s. Kader Furniture, first, second and third floor premises from NOCIL, remove encroachment made by pan-bidi stall holder and obtain vacant possession of the garage and passage from Abdul Hamid Taya and also obtain requisite certificate under section 230A of the Income Tax Act, 1961.

e) The agreed consideration of Rs. 4 crores was to be paid in three installments. First, a sum of Rs. 60 lakhs was paid by way of earnest on execution of suit agreement, out of which an amount of Rs. 10 lakhs had already been paid on 5th May, 1993. Second, a sum of Rs. 45 lakhs was to be paid at the time the permission was granted by the appropriate authority under the Income Tax Act and upon vendors making out a marketable title to the suit premises free from all encumbrances. It was agreed that the said amount of Rs. 45 lakhs shall be deposited with M/s. Law Charter, the Solicitors of the vendors, as it was to be utilized for getting va