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2009 Supreme(Mad) 3336
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE M. CHOCKALINGAM & THE HONOURABLE MR. JUSTICE R. SUBBIAH
Kalash Properties Pvt.Ltd., represented by its Chairman and Managing Director G. Kaliasundaram
Versus
Lilly Pushpam & Others
Original Side Appeal Nos.297 and 298 of 2008 and M.P.Nos.1 and 2 of 2009
Decided on : 26-08-2009
For the Appellant:T.V. Ramanujam, Senior Counsel, T.V. Krishnamachari, Advocate. For the Respondents:R1 to R3, R. Krishnamoorthy, K.V. Venkatapathy, Senior Counsels, R4, K.V. Sundararajan, Advocate.
The provisions of Sections 269 UC and 269 UD of Income Tax Act are mandatory and not directory.
Headnote:
CONTRACT - SPECIFIC PERFORMANCE - SUIT FOR - ORAL AGREEMENT - CONCLUDED CONTRACT - READINESS AND WILLINGNESS - ORDER II RULE 2 C.P.C. - BAR OF - SECTIONS 269 UC AND 269 UD OF INCOME TAX ACT - MANDATORY OR DIRECTORY - SALE TRANSACTION - THIRD PARTY PURCHASER - BONA FIDE PURCHASER - SALE DEED - EXECUTION - DELIVERY OF POSSESSION - MESNE PROFITS - RATE OF.
Fact of the Case:
Plaintiff filed a suit for specific performance of an oral agreement for sale of a property. The defendant resisted the suit on the ground that there was no concluded contract, the plaintiff was never ready and willing to perform his part of the contract, the relief of specific performance could not be granted since the alleged contract was in violation of the provisions under Sections 269 UC and 269 UD of Income Tax Act, that apart from that, the suit was hit and barred under Order II Rule 2 C.P.C. and that the plaintiff has also suppressed the material facts.
Finding of the Court:
The court held that there was no concluded contract between the parties, the plaintiff was not ready and willing to perform his part of the contract, the suit was hit and barred under Order II Rule 2 C.P.C., the provisions of Sections 269 UC and 269 UD of Income Tax Act were mandatory and not directory, the sale transaction entered into between the defendants and the third party purchaser could not be set aside, the mesne profits were to be fixed at Rs.7,50,000/- out of which, after adjusting Rs.2,50,000/-, the balance of Rs.5 lakhs which the plaintiff is liable to pay within a period of two months.
Issues: 1. Whether the appellant (plaintiff) was entitled to a decree for specific performance? 2. To what relief the parties are entitled to?
Ratio Decidendi: 1. The court held that there was no concluded contract between the parties as the receipts marked as Exs.P-1 and P-2 did not contain the salient features requisite to term them as an agreement for sale, and apart from that it was specifically pleaded by the plaintiff/appellant that there was an oral agreement and the terms of the agreement were not even finalised. 2. The court held that the plaintiff was not ready and willing to perform his part of the contract as he had not sent any communication, expressing his readiness and willingness from the time of the alleged oral agreement in the month of January, 1995 till the instant suit was filed in the month of October 1996, he had not produced any document to show that he had means to pay the balance of sale consideration and he had failed to deposit the amount within the stipulated time despite the direction of the Court. 3. The court held that the suit was hit and barred under Order II Rule 2 C.P.C. as the causes of action in both the suits were based on the very same and identical facts. 4. The court held that the provisions of Sections 269 UC and 269 UD of Income Tax Act were mandatory and not directory as the Legislature has employed the word "agreement for transfer" under the provisions and hence, this permission could be obtained after the decree is passed for specific performance within a stipulated time. 5. The court held that the sale transaction entered into between the defendants and the third party purchaser could not be set aside as the third party purchaser was a bona fide purchaser who had purchased the property without notice.
Final Decision: The court dismissed the plaintiff's suit for specific performance and decreed the defendant's suit for recovery of possession. The court also modified the trial court's order regarding mesne profits and directed the plaintiff to pay the defendants Rs.5 lakhs within two months.
M. Chockalingam, J.
These two appeals have arisen from a common judgment dated 08.04.2008 rendered by a learned single Judge of this Court in C.S.Nos.13 of 1997 and 559 of 1996 respectively.
2. The plaintiff in C.S.No.559 of 1996 sought for delivery of vacant possession of the plaint schedule property and for other relief’s with the following averments;
.(a) The plaintiff is the owner of the house, ground and premises bearing door No.F 188, IX Street, Anna Nagar East, Madras-102. The Director of the defendants company approached the plaintiff to purchase the property and pursuant to negotiation, it was agreed that the defendant would obtain permission from this Court by paying the sum of Rs.12, 85,013.08 towards security for the release of title deeds which were given as security. Apart from that, the defendant shall pay a sum of Rs.59 lakhs as consideration to purchase the said property. Thus, the total consideration was fixed at Rs.71, 85,013.08. The defendant also agreed to evict the tenant, who was occupying the house. The plaintiff received a total advance of Rs.2 lakhs on 30th January, 1995 and on 17th February, 1995. In the receipts issued by the plaintiff, all the above conditions have not been incorporated since they were receipts. The plaintiff had signed in the agreement even without going through the recitals because the signatures were obtained by the Director of the defendants company while the plaintiff was boarding the train for Coimbatore. In the agreement, a clause has been included to the effect that the tenant shall vacate and hand over possession to the defendants Director. In the said agreement, there was nothing to authorise the defendant to pay any amount to the tenant for evicting him. Pursuant to the agreement, the defendant got the tenant vacated and later on, the defendant brought some documents to show as if a sum of Rs.75, 000/- was paid to the tenant in considerion of vacating the premises. The defendant also brought a draft sale deed to the plaintiff showing the sale consideration as Rs.59 lakhs, which was not acceptable to the plaintiff and hence, the transaction was not proceeded. No mention was made in the said draft sale deed with regard to the deposit of Rs.12 lakhs and odd to the Court for getting the permission and release of the documents.
.(b) The defendant filed a suit in C.S.No.1063 of 1995 on the file of this Court, claiming to be in possession of the said property and praying for the relief of a permanent injunction restraining the plaintiff from interfering with his possession and enjoyment till vacated under due process of law. He also filed an application in O.A.No.767 of 1995 and obtained ex parte interim injunction. In the said application, the defendant made it clear that the defendant did not seek any protection under Section 53-A of the Transfer of Property Act, but claimed that the possession should be protected and the same should not be invaded by unlawful means. In the said application, interim injunction was granted on a finding that the defendant was not a trespasser and was entitled for the interim injunction. Even though it was originally agreed for sale of the property to the defendant, under law, the defendant was not entitled to enforce any right to purchase the property as there was no concluded contract. As there was no written agreement, the appropriate authority cannot issue no objection certificate and thereby, the same is hit by Section 269 UC of the Income Tax Act. Further, the actual total sale consideration has not been clearly mentioned. Further more, the defendant adopted illegal tactics to obtain possession, by colluding the then tenant and by obtaining interim injunction by suppressing the facts. Apart from the above, in view of the encumbrance of attachment ordered by this Court, the property cannot be alienated. In AAO No.1039 of 1992, this Court, by judgment dated 212. 1995, has confirmed the attachment made by the trial court in I.A.N
