Case: Kumar Dhirendra Mullick  Vs. Tivoli Park Apartments (P) Ltd

mentioned in the decree for specific performance, despite the application for rescission of the agreement/ decree. 31. In the case of Vaiyapuri Reddy and another vs. Sivalinga Reddiar reported in (1970) 1 Madras L.J. 92) it has been held that since the Court has, under section 28, the power to extend the period in cases where it has already fixed a period of deposit, it should be deemed to have the power to either fix a period or grant a fresh period to deposit, particularly in cases where no such period is fixed by the decree. In that case, the Court found that there were laches on the part of the plaintiff in depositing the amount and yet the Court gave thirty days time to the plaintiff to deposit the amount on the application made by the defendants for rescission of the contract. 32. In the case of Ouseph & another vs. Devassy reported in [AIR 2001 Kerala 104] the decree was silent as to the date by which the decree holder was to pay the balance of the price. Possession was with the decree holder. The purchaser deposited the balance before filing of the petition for rescission of the agreement but after expiry of the period fixed by the decree. The decree holder applied for condonation of the delay. The same was granted. In doing so, the Court observed that section 28 enables the Court to extend the time which by itself implies that mere failure to deposit the balance need not result in the rescission of the contract. On facts, it was found that the decree was silent as to the date by which the decree holder was to deposit the balance of the sale consideration. On facts, it was found that the decree holder was in possession for 18 years. On facts, it was found that the vendor did not take any steps to get the balance of the sale consideration. That the vendor failed to seek rescission for 18 years. In the circumstances, the Court allowed the decree-holder, condonation of delay in depositing the balance consideration. 33. In the case of V.S. Palanichamy Chettiar Firm vs. C. Alagappan and another reported in [AIR 1999 SC 918 ], cited on behalf of the appellants, the vendee-decree holder filed application for execution of the decree of specific performance after five years. No reason was given for not putting the decree in execution for five years. Further, under the decree, there was a specific direction to the decree holder to deposit the balance purchase price within the stipulated period. Under the said decree, a further direction was given to the judgment debtor to execute the sale deed on the vendees depositing the balance purchase price. It was a case of a final decree. In the execution application, the judgment debtor applied for rescission of the agreement of sale on the ground of default on the part of the vendee in failing to deposit the balance price. Under the above circumstances, this Court held that the vendee, who had applied for extension of time to deposit the balance price, was not entitled to such extension. This Court observed that in deciding application under section 28(1), the Court has to see all the attendant circumstances including the conduct of the parties. On facts, this Court found that there was no default on the part of the vendor - judgment debtor. That no explanation whatsoever came from the vendee - decree holder for failure to deposit the balance price. In the circumstances, on facts, this Court refused extension of time to deposit the balance price. Therefore, the said judgment has no application to the facts of the present case. 34. Applying the above tests to the facts of the present case, the decree in question is not a self operative final decree. It is a preliminary decree. It merely directs the Trust to execute the lease on or before 24.10.1985. It does not prescribe any consequence of non deposit of premium. It does not prescribe any consequence of non tender of rent on or before 24.10.1985. Till date, the decree holder has paid the premium of Rs. 30 lacs. It has paid rent amounting to Rs. 96 lacs. In the circumstances, it cannot be said that the decree holder intended to abandon the contract dated 16.8.1980. There is no positive refusal on the part of the respondent to complete the lease. There is no explanation given by the Trust for not moving the application for rescission of the contract for nine years. The decree was passed on 25.7.1985 whereas the application for rescission of the agreement is dated 3.10.1994. As stated above, the Trust did not lead the evidence in suit no. 176/81. The corresponding suit no. 87/81 filed by the Trust was dismissed for non-prosecution. The Trust moved under Order IX Rule 13 CPC for setting aside the decree dated 25.7.1985. That application was dismissed for default vide order dated 1.8.1987. The Trust moved the application for restoration which was also dismissed for default on 16.7.1988. The Trust moved in appeal against the decree dated 25.7.1985. That appeal was also dismissed. The decree holder has referred to the entire correspondence between the parties which indicate that during this period of nine years in the guise of negotiations, the decree holder was prevented from filing execution application. The decree holder was repeatedly assured of settlement. The decree holder was repeatedly assured that lease would be executed in its favour. Attempt was also made by the Trustees during the interregnum to lease the property to Dilip Chand Kankaria and Smt. Sudha Kankaria. Lastly, in the present case, the decree holder was put in possession under the deed of assignment dated 20.8.1970. The respondent was not put in possession under the agreement dated 16.8.1980. In the circumstances, the trial Court erred in directing rescission of the said agreement dated 16.8.1980. For the aforestated reasons, we do not find any merit in this appeal. 35.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]been submitted on behalf of the appellants herein that at the time of the agreement dated 16.8.1980, the value of the property in question was about Rs. 30 crores. On the basis of the said value, the market rate ought to have been Rs. 30 lacs. It was urged that if the Trust property is allowed to be leased out to the respondent herein on monthly rent of Rs. 30,000/- and at a premium of Rs. 30 lacs, the appellant-Trust will loose substantially. In this connection, reliance has been placed on the valuation report dated 26.4.2000.18. We do not find any merit in the aforestated arguments. As far back as 20.8.1970, the Trustees allowed the lessee, Mohd. Ismail, to assign the leasehold rights in favour of the respondent herein. Further, the assignee was allowed to be put in possession. On 16.8.1980, the Trustees entered into oral agreement to renew the above lease for 70 years w.e.f. 1.5.1981 at increased rent of Rs. 30,000/- per month plus premium of Rs. 30 lacs as found by the trial Court in title suit no. 176/81 decided on 25.7.1985. In the circumstances, increase in the value of the immovable property, on account of inflation, is no ground to rescind the agreement dated 16.8.1980. We have to see the circumstances prevalent as on 16.8.1980 when the parties entered into the oral agreement to leasenext contended on behalf of the appellants that the oral agreement dated 16.8.1980 for renewal of lease stood vitiated on account of collusion between Tivoli Court Pvt. Ltd., the constituted attorney appointed by the Trustees, and the respondent herein. In this connection, it has been alleged that the Trust had entered into an agreement dated 29.4.1981 to lease out the property to one Tivoli Court Pvt. Ltd., in whose favour a power of attorney was also executed. Under that power of attorney, Tivoli Court Pvt. Ltd. was authorized to adopt all legal proceedings against the respondent herein for eviction. It is further alleged that the respondent herein perpetrated fraud on the Trust by colluding with the Tivoli Court Pvt. Ltd., so that no effective legal steps could be taken against the respondent herein. It is further alleged that the Director of Tivoli Court Pvt. Ltd. was also a Director of the respondent company. Consequently, the suit for eviction bearing no. 87/81 was allowed to be dismissed for default while suit for specific performance was allowed to be decreed ex-parte. That even the subsequent application under Order IX Rule 13 CPC was allowed to be dismissed for default. In the circumstances, it is submitted that the trial Court was right in rescinding the agreement dated 16.8.1980.20. We do not find any merit in the above arguments. At stated above, prior to the purported agreement dated 29.4.1981 in favour of Tivoli Court Pvt. Ltd. the Trustees had consented to the Assignment dated 20.8.1970 by their lessee, Mohd. Ismail, in favour of the respondent herein. Pursuant to the said Assignment, the said respondent was put in possession. This assignment was followed by oral agreement dated 16.8.1980 to renew the lease. In the circumstances, one fails to appreciate the authority of the Trustees to enter into an agreement dated 29.4.1981 to lease out the said property in favour of Tivoli Court Pvt. Ltd. On 25.7.1985, when title suit no. 176/81 came for hearing, no evidence was led on behalf of the Trustees explaining circumstances under which the Trust entered into the agreement dated 29.4.1981 with Tivoli Court Pvt. Ltd. In the circumstances, it is not open to the appellants herein to go behind the said decree dated 25.7.1985. Lastly, it may be mentioned that the trial Court has rescinded the agreement dated 16.8.1980 basically on the ground of alleged breaches thereof. In the circumstances, it is not open to the appellants now to submit that the decree dated 25.7.1985 was collusive and not binding on the Trust estatenext contended on behalf of the appellants that the oral agreement dated 16.8.1980 for renewal of lease stood vitiated on account of collusion between Tivoli Court Pvt. Ltd., the constituted attorney appointed by the Trustees, and the respondent herein. In this connection, it has been alleged that the Trust had entered into an agreement dated 29.4.1981 to lease out the property to one Tivoli Court Pvt. Ltd., in whose favour a power of attorney was also executed. Under that power of attorney, Tivoli Court Pvt. Ltd. was authorized to adopt all legal proceedings against the respondent herein for eviction. It is further alleged that the respondent herein perpetrated fraud on the Trust by colluding with the Tivoli Court Pvt. Ltd., so that no effective legal steps could be taken against the respondent herein. It is further alleged that the Director of Tivoli Court Pvt. Ltd. was also a Director of the respondent company. Consequently, the suit for eviction bearing no. 87/81 was allowed to be dismissed for default while suit for specific performance was allowed to be decreed ex-parte. That even the subsequent application under Order IX Rule 13 CPC was allowed to be dismissed for default. In the circumstances, it is submitted that the trial Court was right in rescinding the agreement dated 16.8.1980.20. We do not find any merit in the above arguments. At stated above, prior to the purported agreement dated 29.4.1981 in favour of Tivoli Court Pvt. Ltd. the Trustees had consented to the Assignment dated 20.8.1970 by their lessee, Mohd. Ismail, in favour of the respondent herein. Pursuant to the said Assignment, the said respondent was put in possession. This assignment was followed by oral agreement dated 16.8.1980 to renew the lease. In the circumstances, one fails to appreciate the authority of the Trustees to enter into an agreement dated 29.4.1981 to lease out the said property in favour of Tivoli Court Pvt. Ltd. On 25.7.1985, when title suit no. 176/81 came for hearing, no evidence was led on behalf of the Trustees explaining circumstances under which the Trust entered into the agreement dated 29.4.1981 with Tivoli Court Pvt. Ltd. In the circumstances, it is not open to the appellants herein to go behind the said decree dated 25.7.1985. Lastly, it may be mentioned that the trial Court has rescinded the agreement dated 16.8.1980 basically on the ground of alleged breaches thereof. In the circumstances, it is not open to the appellants now to submit that the decree dated 25.7.1985 was collusive and not binding on the Trust estateOn behalf of the appellants, it was next submitted that the respondent herein was not serious about performing its obligations under the decree. In this connection, it was submitted that nothing prevented the respondent from applying to the Court for execution of the lease. That, nothing prevented the respondent from seeking extension of time to deposit the premium/rent. It was urged that the very fact that the respondent chose to make no such application and slept on its rights for nine years conclusively proves that it was not ready and willing to perform its part of the contract and also its obligations under the decree and in the circumstances, the trial Court had rightly rescinded the oral lease agreement dated 16.8.1980. It was further submitted that the trial Court while passing the decree had stated that within 90 days of the decree dated 25.7.1985, the lease shall be executed i.e. all payments were required to be made within that period. That without such payments, a lease could not be directed to be executed. No steps were taken by the respondent herein to renew the lease and pay the premium in accordance with the agreement dated 16.8.1980. No rent was offered during the period 25.7.1985 to 3.10.1994 when the appellants filed their application for rescission of the oral lease agreement dated 16.8.1980. In the circumstances, it was submitted, that, by implication, the respondent herein was obliged to pay or tender the amount of premium of Rs. 30 lacs within 90 days from the date of the decree dated 25.7.1985. It was urged that when the decree fixed 90 days for execution of the lease, it was implicit in the said direction that the respondent herein shall pay or tender Rs. 30 lacs on or before 24.10.1985. That, since the respondent failed to pay or tender Rs. 30 lacs on or before 24.10.1985, the appellants were entitled to seek rescission of the agreement dated 16.8.1980. That, when the agreement for renewal of the lease dated 16.8.1980 provided for payment of monthly rent of Rs. 30,000/-, it was implicit in the decree dated 25.7.1985 for the respondent to pay the monthly rent in terms of the agreement dated 16.8.1980 and since the decree holder failed to pay, in the aforestated terms, the appellants were entitled to seek rescission of the decree dated 25.7.1985 under section 28(1) of the 1963 Act. In the circumstances, it was urged, that the respondent herein was never ready and willing to abide by the terms and conditions of the agreement and consequently, the trial Court was right in rescinding the oral lease agreement dated 16.8.198022. We do not find merit in the above arguments. The short question which arises for determination in this case is - whether the oral lease agreement dated 16.8.1980 was liable to be rescinded for alleged breaches. Mr. L.N. Rao learned senior counsel appearing on behalf of the appellants, at the very threshold, submitted that he would like to confine his arguments to the question of rescission only. According to the learned counsel, the power of the Court under section 28(1) to order cancellation of the decree and order restoration of possession to the vendor was a very wide question which need not to be gone into in the present case. In the case of V.S. Palanichamy Chettiar Firm vs. C. Alagappan and another reported in [AIR 1999 SC 918 ], cited on behalf of the appellants, the vendee-decree holder filed application for execution of the decree of specific performance after five years. No reason was given for not putting the decree in execution for five years. Further, under the decree, there was a specific direction to the decree holder to deposit the balance purchase price within the stipulated period. Under the said decree, a further direction was given to the judgment debtor to execute the sale deed on the vendees depositing the balance purchase price. It was a case of a final decree. In the execution application, the judgment debtor applied for rescission of the agreement of sale on the ground of default on the part of the vendee in failing to deposit the balance price. Under the above circumstances, this Court held that the vendee, who had applied for extension of time to deposit the balance price, was not entitled to such extension. This Court observed that in deciding application under section 28(1), the Court has to see all the attendant circumstances including the conduct of the parties. On facts, this Court found that there was no default on the part of the vendor - judgment debtor. That no explanation whatsoever came from the vendee - decree holder for failure to deposit the balance price. In the circumstances, on facts, this Court refused extension of time to deposit the balance price. Therefore, the said judgment has no application to the facts of the present case34. Applying the above tests to the facts of the present case, the decree in question is not a self operative final decree. It is a preliminary decree. It merely directs the Trust to execute the lease on or before 24.10.1985. It does not prescribe any consequence of non deposit of premium. It does not prescribe any consequence of non tender of rent on or before 24.10.1985. Till date, the decree holder has paid the premium of Rs. 30 lacs. It has paid rent amounting to Rs. 96 lacs. In the circumstances, it cannot be said that the decree holder intended to abandon the contract dated 16.8.1980. There is no positive refusal on the part of the respondent to complete the lease. There is no explanation given by the Trust for not moving the application for rescission of the contract for nine years. The decree was passed on 25.7.1985 whereas the application for rescission of the agreement is dated 3.10.1994. As stated above, the Trust did not lead the evidence in suit no. 176/81. The corresponding suit no. 87/81 filed by the Trust was dismissed for non-prosecution. The Trust moved under Order IX Rule 13 CPC for setting aside the decree dated 25.7.1985. That application was dismissed for default vide order dated 1.8.1987. The Trust moved the application for restoration which was also dismissed for default on 16.7.1988. The Trust moved in appeal against the decree dated 25.7.1985. That appeal was also dismissed. The decree holder has referred to the entire correspondence between the parties which indicate that during this period of nine years in the guise of negotiations, the decree holder was prevented from filing execution application. The decree holder was repeatedly assured of settlement. The decree holder was repeatedly assured that lease would be executed in its favour. Attempt was also made by the Trustees during the interregnum to lease the property to Dilip Chand Kankaria and Smt. Sudha Kankaria. Lastly, in the present case, the decree holder was put in possession under the deed of assignment dated 20.8.1970. The respondent was not put in possession under the agreement dated 16.8.1980. In the circumstances, the trial Court erred in directing rescission of the said agreement dated 16.8.1980. For the aforestated reasons, we do not find any merit in this appeal