THE HONOURABLE SRI JUSTICE B.PRAKASH RAO AND THE HONOURABLE SRI JUSTICE G.BHAVANI PRASAD A.S.No.1472 of 2000 JUDGMENT: (Per BPR,J) The defendant herein is the appellant who filed this appeal against the judgment and decree dated 18-02-20000 in O.S.No.323 of 19977, on the file of the I Additional Senior Civil Judge, Ranga Reddy District. The respondent/plaintiff filed the suit for a decree for specific performance of the contract of sale dated 8-12-1992 by directing the defendant to execute a sale deed and get it registered at the expense of the plaintiff and in default the Court to execute the sale deed on behalf of the defendant. The parties are referred to as arrayed in the suit in this appeal. Plaintiff filed the suit stating that it is a manufacturer of Communication Antenna, STD-PCD Monitoring units and I a distributor for the products of leading manufacturers in the field of Electronics. The plaintiff approached the defendant for grant of a long term lease of Ac.10.00 for its proposed unit for manufacture of communication equipment and Antenna but the defendant insisted on purchase of land. The defendant allotted Ac.7-40 cent at Rs.2,20,000/- per acre with an incentive discount of 10% in the event of full payment. The land was allotted in the Industrial Estate at Cherlapally subject to the condition stated in the letter dated 1-12-1992 of the defendant. The plaintiff paid the entire cost of the land of Rs.14.8 lakhs availing the 10% discount and possession was delivered on 7-12-1992 evidenced by the possession certificate. The defendant had executed agreement of sale dated 8-12-1992 which was signed by both the parties. The plaintiff after taking possession of the land made improvements by leveling the land which was uneven by digging bore well, obtaining power connection at huge cost. The defendant issued a letter dated 7-5-1993 calling upon the plaintiff not to take up any construction activity on the suit schedule land and simultaneously sought police protection. The plaintiff convinced the police with the documents under which it had been inducted into possession. That the defendant sent legal notice dated 10-6-1993 not to enter upon the land alleging inter alia that the sale is vitiated by collusion between the plaintiff and the official of the defendant which are false allegation. The reversal stand taken by the defendant appear to be due to rivalry of the new Managing Director of the defendant with the previous Managing Director and the undervaluation alleged i only an after thought. The plaintiff contended that the attempts of the defendant to back out of the contract is with a malafide intention and legally untenable. Hence, the suit. The defendant filed written statement resisting the suit with the following averments. That while considering the proposal of the plaintiff and agreeing to sell the suit schedule land, the Board of Director of the defendant was never appraised of the value of the land. In February 1992, one M/s.Advance Radio Masts Limited had agreed to purchase the said land at Rs.100/- per sq. yard though the Board accepted the proposal initially. The collusion between some of the officers of the defendant and the plaintiff is clear from the fact that even before the Board of Directors of the defendant passed resolution on 7-12-1992 agreeing to sell the suit schedule land to the plaintiff, the sale price had been deposited and possession was handed over on 7-12-1992 and that the Executive Engineer of the defendant had no power to hand over possession. The Andhra Pradesh Industrial Infrastructure Corporation (for short” the A.P.I.I.C”), which owns the adjacent land informed that it is willing to sell an extent of Ac.1-329 acres at Rs.250-/ sq. meter to the defendant, by its letter dated 8-9-1992 and that the market value of the land for the purpose of stamp duty is Rs.120/- per sq. yard. The entire transaction is vitiated by fraud resulting in financial loss to the defendant which is a public undertaking. The stamp duty paid on the suit agreement is inadequate, and the Board of Directors of the defendant resolved to rescind the agreement and that action is being initiated against erring officials of the defendant. The alleged rivalry between the previous and present Managing Directors has been denied. The Board of the defendant revised the price of the land to Rs.175/- per sq yard in its meeting dated 7-7-1993 and resolved to cancel the decision taken on 7-12-1992 in respect of the sale of land to the plaintiff. The Board authorized the V.C and Managing Director to negotiate with the plaintiff for higher price and register the land if plaintiff is agreeable for the higher sale price. The land could not have been sold by the defendant without prior approval of the competent authority under the Urban Land (Ceiling & Regulation) Act 1976 and that the suit is not maintainable as no notice was given to the defendant prior to the institution of the suit. On considering the submissions made on both sides, the trial Court framed the following issues: i) Whether the suit transaction is vitiated by fraud? ii) Whether the suit is not maintainable for want of notice to the defendant prior to the institution of the suit? iii) Whether the plaintiff is entitled for specific performance of the agreement of sale dt. 8-12-1992? iv) To what relief? During the course of trial, on behalf of the plaintiff, the Managing Director of the plaintiff Company was examined as PW.1 and Exs.A.1 to A.3 were marked. On behalf of the defendant, its manager and Assistant Manager were examined as DWs 1 and 2 respectively and Exs.B.1 to B.33 were marked. On issue No.1 the trial Court held that the suit agreement is not vitiated by fraud. On issue No.2, the trial Court held that the suit is maintainable. Issue No.3 has been answered in favour of the plaintiff, and the suit was decreed for specific performance of the agreement of sale dated 8-12-1992, but without costs. The learned Advocate General appearing on behalf of the defendant/appellant as well as the liquidator representing the Second Respondent contended that much prior to the suit agreement, M/s. Advance Radio Must Private Limited agreed to purchase the same land to an extent of Ac.1.329 at Rs.100/- per sq yard, but the Board of Directors passed resolution to ell at s.140/- per sq. yard, and the valuation at concerned Sub-Registrar’s office was Rs.120/- per sq. yard, and the defendant Corporation agreed to purchase adjacent land from A.P.I.I.C at Rs.250/- per sq. yard. But these facts were suppressed before the Board of Directors by the officials. According to him the fact that the land was agreed to be sold to plaintiff at Rs.40/- per sq. yard goes to show that there was collusion between the plaintiff and the officials of the defendant and that fraud was played by the officials of the defendant Corporation in obtaining approval of the Board of Directors for sale. The suit note was given before filing of the suit. The learned Advocate General further contended that there is no pleading that the plaintiff was ready and willing to perform his part of the contract and therefore the relief of specific performance ought not to have been granted. He contended that the suit agreement of sale is deficiently stamped and the original sale agreement has not been produced by the plaintiff. On the other hand, the learned counsel for the plaintiff/respondent Sri P.Girikrishna contended that the plaintiff initially approached the defendant for long lease of land at Industrial Estate of Cherlapally and it is the defendant which had allotted the land on an outright sale basis offering 10% discount in the event of payment of the entire sale consideration at once. Therefore, the question of plaintiff prevailing upon the defendant to ell the land in collusion with the defendant’s officials do not arise. Learned counsel denied that the land in question fetches higher value. Alternatively, he contended that mere inadequacy of price is no ground to refuse the relief of specific performance. It is his further contention that the plaintiff is not aware of the internal happenings of the defendant Board of Directors, and no case of fraud has been made out nor proved. The original of sale agreement is not only undisputed but is within the custody of the defendant and no objection was taken when the Xerox copy of the sale agreement was marked. He contended that the plaintiff had fully paid the consideration and performed his part of the contract and it is the defendant which had to perform its part of executing and registering sale deed. As the defendant indicated its refusal to perform their part of the contract giving rise to cause of action for filing the suit and that the plaintiff had already performed its part under the contract. Admittedly, the facts of the case in brief are that by letter dated 24-11- 1992, the JMD of the plaintiff company requested the defendant to consider their request for allotment of leasehold land to an extent of ac.10-00 for 99 years at Rs.500/- per acre (Ex.A.5). With reference to this letter and discussions held in the chambers of the CMD on 24-11-1992, the defendant by letter dated 1-12-1992 (Ex.A.6) informed that the defendant agreed to allot the land at Rs.2,20,000/- per acre, an extent of ac.7-40 cents subject to the conditions set out therein. Once of such conditions offered was 10% concession in the land cost if the entire sale consideration is remitted before execution of sale agreement. In this letter the plaintiff has been asked to deposit Rs.14,80,000/-. On 2-12-1992 the plaintiff paid to the defendant Rs.14,80,000/- towards total sale consideration by way of two Demand Drafts, one for Rs.1.00 lakh and another for Rs.13,80,000/-, which is evidence by defendant’s letter dt. 2-12-1992 (Ex.A.4) and receipts (Exs.A.2 and A.3). Through letter dt. 3-12-1992 (Ex.A.4), the defendant sent to the plaintiff a draft sale deed. On 7-12-1992 possession of the Ac.7-40 of land was delivered by the defendant to the JMD of the plaintiff mentioning the boundaries (Ex.A.7) along with ketch. On 8-12-1992, the suit agreement of ale was executed between the parties, Ex.A.8. On 7-5-1993, the defendant sent a letter, Ex.A.9, to the plaintiff stating that their Board has reviewed the matter and decided to keep the matter pending till consideration by the Board and requested plaintiff not to proceed with any construction activity. The defendant also sought police protection by its letter dated 7-5-1993 (Ex.A.10) marking a copy to the plaintiff. The defendant got issued a legal notice dated 10-6-1993 (Ex.A.11) virtually going back upon the sale agreement. Ex.B.7 is the extract from the Minutes of the 60th Board meeting held on 7-12-1992, of the defendant Corporation approving the allotment of land to the plaintiff. Ex.B.9 is the extract from the Minutes of the 61st Board meeting of the defendant held on 30-3-1993 wherein it was resolved not to registered the sale deed in favour of the plaintiff till the matter is reconsidered by the Board. Ex.B.13 is the extract from the minutes of the 62nd Board meeting held on 7-7-1993 to the effect that if the plaintiff is willing to pay at Rs.175/- per sq yard, sale deed may be registered, if not, the sale deed be rescinded. After considering the submissions of the learned counsel and on perusal of the material placed before us, the points that arise for consideration are as follows: i) Whether the agreement of sale dated 8-12 -1992 is vitiated by fraud? ii) Whether the plaintiff is entitled for specific performance of the agreement of sale dated 8-12-1992? iii) Whether the suit is not maintainable for want of notice prior to institution of suit? Point (i) Whether the agreement of sale dated 8-12-1992 is vitiated by fraud? The learned counsel for the defendant/appellant contended that the deal was clinched at a very low price which smacks of collusion and fraud on the part of the plaintiff/respondent while the counsel for plaintiff/respondent on the other hand strongly denied any collusion or fraud on the part of the plaintiff and claimed that as the price was acceptable the sale agreement was executed. The counsel for the plaintiff submitted that it is the defendant which proposed the rate and sale while in fact plaintiff approached the defendant with an idea to take the land on long lease. Hence, he submitted that even assuming for the sake of argument that the officials of the defendant did not properly appraise the Board of the defendant of the price, the plaintiff is no way responsible for the same and specific performance of the agreement cannot be denied. At this stage, the evidence adduced by the defendant in support of their contention that the suit schedule property was undervalued is to be noted. It is the specific pleading of the defendant that the Board of Directors were not appraised of the relevant facts for fixing the price and that subsequently the Board decided to review the decision to sell the land to the price fixed in the sale agreement. The defendant has not examined the Managing Director or members or any member of the Board to speak to the facts as pleaded. Admittedly, the Board is the competent authority which has allotted the land and which later decided to rescind from the agreed price. But, none of the Board members got into the witness box which is a fatal omission. The defendant should have examined the Managing Director or members of the Board to explain what the fraud is and when and how it was detected and what measures have been taken to rectify the same. The defendant Corporation examined as DW.1 its Manager. In cross- examination he admitted that he is the Manager of Training & Administration since 1994 and that he worked as Manager on the Marketing side. In between 1992 to 1994 he stated to have worked as Manager Projects “for some period for about 6 months” but cannot give the exact period. According to him he does not know personally about the alleged fraud played by the defendant Corporation or the collusion of the defendant Corporation’s employees. He admitted that he does not know when the application was received, how it was received and he did not make any personal note on the said application. He does not know whether there was any discussion on the application of the plaintiff as he was not working at that time. He admitted that he was not present in the Board meeting wherein the sale in favour of the plaintiff had been approved. He admitted that he was not present in the Board meeting wherein the sale in favour of the plaintiff had been approved. He admitted that till the day on which he was deposing no action was taken against the employees of the defendant corporation though departmental action was initiated. He stated that whatever he deposed was on the basis of record but not with any personal knowledge. DW.1 stated that the Executive Engineer who delivered possession of the land to the plaintiff company was not the competent, but failed to mention as to who else was the competent person. However, he admitted that as per record he was the competent person. In Ex.A.7, possession certificate, it is stated tht possession handed over in pursuance of the orders by C & M in letter No.APEDC/EIE/4536/92 and note of Manager (P &A &L) dt. 2-12-1992. DW.1 does not appear to be deposing even as per record. The Executive Engineer did not hand over possession on his own personal decision. DW.1 stated that the Board rescind the agreement by way of resolution dt. 7-7-1993. But the resolution says if the plaintiff does not agree for the price of Rs.175/- per sq yard then appropriate steps be taken to rescind the agreement. His evidence does not help the case pleaded by the defendant. DW.2 is the Asst. Manager of the defendant Corporation. He commenced his deposition stating that he is aware of the suit subject matter through records. Obviously, he too had no personal knowledge of the alleged fraud, how it occurred and when and how it was detected. In his anxiety to support the case of the defendant he went to the extent of saying that the suit agreement was signed by the officer, i.e., the Then Deputy Manager, who was not authorized to sign. It is not even the pleading of the defendant. Hence, no importance can be given to his statement. DW.2 stated that the then Managing Director had taken the decision to sell the land without proper confirmation from the Board. This statement runs counter to the Board Resolution dt. 7-12-1992. In cross-examination he stated that the charges leveled against Mr.Mallikarjun Rao were dropped. His evidence is also of no use to support the case of the defendant. The defendant filed the following documentary evidence to support their plea that the price at which land is agreed to be sold to plaintiff does not reflect the true market value. Ex.B.2 is an extract from the Minutes of the 56th Board Meeting of the defendant dated 22-2-1992, which approved the allotment proposal of Ac.3.40 to M/s. Advanced Radio Masts Private Limited at Rs.100/- per sq yard. The total sale consideration comes to Rs.16,45,600. Ex.B.3 is a letter addressed by the defendant to M/s. ARM (P) Limited dated 11-3-1992 and Ex.B.4 is another letter dated 17-3-1992 wherein the ARM (P) Limited was asked to remit the balance cost of Rs.13,03,840/-. Ex.B.5 is a letter dated 18-3-1992 of the defendant corporation to M/s.ARM (P) Limited from which it is clear that the cheque given towards “toke” advance tendered by M/s.ARM (P) Limited was returned unpaid due to “stop payment” instruction and that the further cheque of Rs.10 lakhs given by M/s. ARM (P) Ltd., also could not be returned along with Ex.B.5 cancelling the provisional allotment of the land. Ex.B.7, which is the extract from the Minutes of 60th Board meeting dated 7-12-1992 also noted that M/s ARM (P) Limited went back on the deal to purchase. Far from supporting the case of the defendant regarding the market value the above documents negative the case of the defendant. The sale did not fructify with ARM (P) Limited. Hence it points to the inference that ARM (P) Limited backed out because the price was too high and unrealistic as none from ARM IP) Limited had been examined to say that they backed out due to reason other than the price factor. At any rate, these documents cannot be relied upon to come to a conclusion that the market value of the land proposed to be sold to plaintiff was on the lower side as the price demanded by the defendant was never paid and the allotment was cancelled. The contention of the defendant in its Written Statement that M/s.ARM (P) Limited agreed to purchase land at Rs.100/- per sq. yard, but the Board went back on the initial proposal and demanded Rs.140/- is not borne out by any document. Ex.B.7 is the extract from the Minutes of the 60th Board Meeting. It reveals tht out of ac.22.40 “procured’ from the defendant had allotted Ac.15 to the Department of Electronics, Government of India, for their project, at a cost of Rs.1,40,625/- per acre. Considering thus, the price of land to be given to the plaintiff has been worked out at 2,20,000/- per acre and Rs.2 lakhs per acre, if entire sale consideration in one installment. Hence, the contention of the defendant tht the land was sold to plaintiff at an abnormally low price is not established by their own documents. Ex,.B.6 is a letter dated 31-10-1992 by way of reply given by the defendant to the APIIC that the defendant is willing to offer Rs.250/- per sq meter for allotment of additional land. But this document cannot be given any weight in the absence of evidence showing that the defendant had in fact purchased at that price. The other document filed by the defendant regarding price is the certificate of market value of property issued by the Sub-Registrar of Uppal, R.R. District, dated 4-5-1995 marked as ex.B.37, for the purpose of court fees and suits valuation. It does not reflect the rate that is being or has been actually paid in a given transaction. Even the defendant is obviously of the view that it does not reflect the market value actually receivable because in the Board’s meeting dated 7-7-1993 the defendant decided to demand Rs.175/- per sq. yard while the Sub-Registrar’s valuation for the period 17-8-1992 to 31-8-1993 for industrial purpose is Rs.200/- per sq. yard. The case of the defendant is that the price at which the land in question was agreed to be sold by it to the plaintiff is very much on the lower side. On this premise the defendant raised the plea that such low price is the result of fraud and collusion on the part of plaintiff and the officials of the defendant. In order to substantiate its plea that the price was low, the defendant relied upon three instances, which are discussed above. But, there is no instance of any completed transaction as stated above. If the suit schedule land really commanded a higher price and the suit agreement of sale was vitiated by fraud, the normal conduct of a public undertaking where public money is involved, would have been to return the money paid by the plaintiff, cancel the agreement and sell for the higher price. But the defendant did not adopt such a course which only indicates that the land did not command any higher price or demand. Hence the defendant failed to establish that the sale price was undervalued. The defendant failed to establish under valuation and fraud or collusion. Point (i) therefore to be held in favour of the plaintiff. The suit agreement of sale dt. 8-12-1992 is valid and not vitiated by fraud. Learned Advocate General for the defendant (appellant) relied upon the Judgment in P.Pandit Rao (died) per LRs & Others Vs. K.Damodar[1] wherein the trial Court decreed the suit for specific performance of an agreement of sale. On appeal, the judgment was reversed and the suit has been dismissed. The agreement of sale was alleged to have been executed in favour of a Special Power of Attorney Holder of the purchasers. But one of the purchasers denied having executed the Special Power of Attorney at all. Considering the evidence in that case, it was held that the agreement of sale was executed by the vendors in favour of the Special Power of Attorney holder who had lent money to the vendors to secure payment of money. It was also the evidence on behalf of the vendors that earlier there was an agreement of sale prior to the suit agreement where under they had received part payment but that could not be gone ahead and they had to return the part payment. Taking advantage of their inability to return the money the suit agreement was compelled to be executed at a later point of time. For the part payment, the entire property was sought to be knocked away. It was in these circumstances, the suit for specific performance had been dismissed. The judgment in P.Pandit Rao (died) per LRs & Others (supra 1) has no application to the facts of the present case. Learned Advocate General also relied upon the judgment of Hon’ble Supreme Court in Parakunnan Vettill Joseph’s Son Mathew Vs. Nedumbara Kurmilla’s Son & Others [2] wherein it was held that the assignee from the first agreement holder had no better right than the later and dismissed his plea for specific performance of the first agreement of sale. On the facts of that case it was found that the second agreement of sale was entered into by different parties with the knowledge of the first respondent holder and who was held to have waived his right