Case: Jai Narain Parasrampuria(Dead)  Vs. Pushpa Devi Sarraf

Kanpur is a metropolitan town. The respondents herein were owners of a house property bearing municipal number 7/169, on a freehold plot bearing No.22, measuring 2978 sq. yards, situate in Block B, Scheme No.7, Gutaiyya, Swaroop Nagar in the said town (the property for short). The 1st respondent-Pushpa Devi Saraf and the 2nd respondent-Mohan Lal Saraf intended to promote a company in the name of the 5th respondent-M/s. Kanpur Exports (P) Ltd. (the Company for short). They filed an application therefor as promoters of the Company on 15.2.1979. They acquired the property in their capacity of promoters or Directors of the proposed company from one Shanti Narain Verma by a registered Deed of Sale dated 24.2.1979 at a price of Rs.2 lakhs. The said Deed of Sale contained a clause of re-conveyance of the property2. The Company was incorporated on 19.6.1979. The amount of consideration paid to said Shanti Narain Verma was repaid by the Company by two cheques of Rs.1,11,250/- each to Mohan Lal Saraf and Pushpa Devi Saraf (hereinafter referred to as Sarafs). The first balance sheet of the Company was signed by the 2nd respondent herein on 30.6.1980, wherein also the property was shown to be that of the company. With a view to do away with the said clause of re-conveyance, a suit was filed by the Company against the said Shanti Narain Verma. The said suit was decreed. The First Directors Report dated 15.11.1980 and the balance sheet of the Company for the year ending 30.6.1981, signed by the 2nd respondent herein also disclosed the property to be that of the Company. Directors of the Company, viz., Sarafs resolved to sell the property in favour of the appellants herein. A resolution to let out the property in favour of one Manoj Kumar Poddar was also adopted by it. A General Power of Attorney was also executed by the Company in favour of one M.M. Aggarwal who had specially been invited to attend the said meeting. Pursuant to or in furtherance of the said resolution, an agreement of sale of the said property was executed by Sarafs as Directors of the Company, wherefor the total consideration was fixed at Rs.11 lakhs. Out of the said amount, a sum of Rs.10 lakhs was paid in advance through Bankers Cheques and Cash Orders dated 11.6.1984 and 12.6.1984. The remaining amount of Rupees One lakh was to be paid at the time of execution and registration of the Deed of Sale4. The appellants herein issued a notice asking the respondents to execute a Deed of Sale on 5.8.1984. They also got a public notice published in Newspaper notifying the execution of the agreement for sale between the appellants and the contesting respondents. Another Agreement for sale was purported to have been executed on 4.6.1984 by Sarafs in favour of one Surendra Kumar Mittal stated to be a close relation (brother-in-law) of Mohan Kumar Saraf5. The appellants filed a suit against the respondents for injunction. Subsequently, a relief by way of decree of specific performance of the agreement for sale was also prayed for. A further prayer was made therein that the purported Agreement of Sale dated 4.6.1984 executed by the defendant Nos.2 to 4 in favour of the said Surendra Kumar Mittal was a sham6. The said M.K. Poddar also instituted a suit for injunction on 25.5.1984, which was numbered as Suit No.612 of 1984, wherein an interim order of injunction, directing the parties not to interfere with his possession was passed. In the said suit, an Advocate Commissioner was also appointed. He found the said M.K. Poddar to be in possession of the property7. A purported dispute, however, was raised as regards ownership of the said property by and between the Company on the one hand and the Sarafs on the other. One Shri B.S. Mathur, Advocate was appointed as sole Arbitrator. He made an Award holding the property to be belonging to Sarafs. They were directed to refund an amount of Rs.2,22,500/- to the Company; they having received the same from the Company. The Award was made Rule of the Court. An Execution Case was filed to execute the decree. In execution of the said decree a warrant of delivery of Possession was issued against the Company and M.K. Poddar was said to have been dispossessed8. M.K. Poddar, indisputably filed an application under Order 21 Rule 99 of the Civil Procedure Code for restoration of possession of the said property. In response to the notice issued thereupon, the respondents contended that they intended to raise a multi-storied building upon demolition of the existing buildingSuits and other proceedings initiated by the appellants:9. A suit was filed by the appellants and the said M.K. Poddar in the Delhi High Court for a declaration that the Decree dated 21.2.1985 passed by the said Court was obtained by fraud and thus was a nullity. Another suit was filed by the appellants for declaration and appointment of Receiver before the Civil Judge, Kanpur Dehat being Suit No.237 of 1989, wherein a declaration was sought for that the defendants therein, in view of the Agreement of Sale dated 12.6.1984, had no authority to cause any damage to the suit property. Symbolic possession was directed to be given in favour of the appellants therein by an order dated 23.10.1989. However, the said suit later on was withdrawn. Another suit was filed by the appellants in the Court of Munsif, Kanpur praying for an order restraining Sarafs from interfering with their right to manage and maintain the suit property, which was registered as Original Suit No.2256 of 1989. The said suit was also dismissed as withdrawn by an order dated 26.8.1991. The appellants also filed a suit for permanent injunction, which was registered as Suit No.677/91 for restraining the respondents from causing any disturbance in their peaceful possession. The said suit was also dismissed. It is furthermore not in dispute that one G.P. Tiwari claiming himself to be the caretaker of the property filed a suit against the respondents and by an order dated 13.7.1987 an ex-parte decree was passed in terms of the provisions of the U.P. Rent Control Act. An application for setting aside the said ex-parte decree was filed by Mohan Lal Saraf. The first respondent herein also filed a writ petition for quashing the said ex-parte decree before the Allahabad High Court, which was numbered as Writ Petition No.21985 of 1989. The said ex-parte decree was set aside by an order dated 8.2.1990. The said suit was also withdrawn by G.P. Tiwari. The writ petition filed by respondent No.1 herein was also dismissed as having become infructuous, whereagainst Pushpa Devi Saraf preferred a Special Leave Petition which was also dismissed by an order dated 19.9.1990. However, the said order dated 19.9.1990 was recalled by this Court by an order dated and the petition was disposed of on 14.8.1991, directing the District Judge, Kanpur to nominate a Receiver for taking charge of the propertySuit and other proceedings initiated by the respondents :10. On 8.7.1980, the Company through its Directors, Sarafs, filed a suit against Shanti Narain Verma for declaration that the Company was the absolute owner in possession of the suit premises. However, as noticed hereinbefore, before the Trial Court, the respondents, inter alia, raised a contention that the Sarafs were the owners of the suit property and not the Company. The learned trial Court negatived the said contention. As noticed hereinbefore, the said suit questioning the grant of symbolic possession was decreed in favour of the appellants. A writ petition was filed on 9.5.1990 which was numbered as Writ Petition No.24301/89. The order granting symbolic possession was quashed by the High Court by an order dated 23.10.1989 on the premise that there had been no sufficient service and the matter was remanded to the Trial Court for fresh consideration thereof. A Criminal Misc. Writ Petition No.23804/89 was filed in the High Court of Judicature at Allahabad for a direction that a criminal case be registered for protection of life and property of the Sarafs and for payment of damages for damages allegedly caused to them. By an order dated 9.12.1993, the High Court directed investigation into the allegations made by Sarafs by the Central Bureau of Investigation. Upon completion of the investigation by the Central Bureau of Investigation, a charge-sheet was filed against the appellants and the trial against them is pending11. On the backdrop of several litigations between the parties and allegations and counter allegations made by one party against the other therein, the learned Trial Court decreed the Appellants suit for specific performance of contract. The said judgment and decree came to be challenged before the High Court. A Division Bench of the High Court allowed the appeal on the premise that the Trial Court had wrongly exercised its discretionary jurisdiction under Section 20 of the Specific Relief Act, 1963; as the appellants were guilty of demolition of the existing structures on the land. The learned Judges of the Division Bench of the High Court, however, differed in their opinion on other issues12. Both the parties are, thus, before us.

Court's reasoning:
17. We have noticed hereinbefore that a suit was filed by the company through Sarafs against Shanti Narayan Verma praying for a declaration that the property belonged to the company. The said suit was decreed by a judgment dated 19.8.1982 declaring that the company is the absolute owner thereof. It is also not in dispute that the Board of Directors of the company adopted a resolution on 6.9.1984 for sale of the said property in favour of the appellant herein for a sum of Rs.. The agreement for sale was signed by the Directors, namely, Pushpa Devi Saraf and Mohan Lal Saraf and their son Sandeep Saraf. The company also discharged a part of the debts of State Bank of India, out of the amount of the advance of Rs.10,00,000/received by it from the appellants herein. The company had also adopted another resolution for leasing out the property to Manoj Kumar Poddar. The deed of lease in favour of Manoj Kumar Poddar was also signed by Sarafs. In the said documents it was clearly and unequivocally stated that the property belonged to the company18. It is the company again which executed a general power of attorney in favour of Shri M.M. Agarwal for executing the deed of sale of the disputed property in favour of the appellants, upon getting the property released from the Bank. In the said power of attorney also, the company had been described as owner of the property19. There cannot, therefore, be any doubt whatsoever that for all intent and purport the Company was the owner of the property and at all material times Sarafs had made representations as such to the appellants as also to others thereabout20. At the time when the property was released from the charge held by the State Bank of India, a notice in terms of Section 138 of the Companies Act was issued by Shri Mohan Lal Saraf. In the registers maintained by the Registrar of the Companies under Section 132 of the Companies Act, it was shown that a charge of the said property had been made in favour of the State Bank of India21. Under the English Common Law, an unincorporated corporation could not have become an owner of the property. The law in India, however, is different22. Before we advert to the statutes operating in the field, in passing we may notice a wholly untenable submission of Shri Sudhir Chandra that an unregistered deed of sale only having been executed in favour of the company by Sarafs, no title passed to the company in view of Section 54 of the Transfer of Property Act. Section 54 of the Transfer of Property Act, defines sale and provides for a procedure as to how the same shall be made. It does not speak of conveyance of ownership. Section 54 of the Transfer of Property Act does not lay down a law as to whether in all situations an apparent state of affairs as contained in a deed of sale would be treated to be the real state of affairs. It does not bar a benami transaction. There is no embargo in getting a property registered in the name of one person; although real beneficiary thereof would be another33. It may be true that no issue as regards title between Sarafs and the said S.N. Verma having been framed in O.S.No.267 of 1980, the principle of res judicata is not applicable. In the said proceedings, however, Sarafs as also the said S.N. Verma being parties, there cannot be any doubt or dispute whatsoever that a claim was laid by the company that it was the owner of the property which was accepted not only by Verma but also by Sarafs. The Sarafs or Verma did not deny or dispute the same. In fact company spoke only through Sarafs. The High Court overlooked the fact that the plaint was signed by Sarafs and the company was represented by them. It is they who had made solemn statement before a competent court of law that the company was the owner of the property. Hence, they are bound by the said statement. The principle of estoppel and/or acquiescence would, thus, be applic While applying the procedural law like principle of estoppel or acquiescence, the court would be concerned with the conduct of a party for determination as to whether he can be permitted to take a different stand in a subsequent proceeding, unless there exists a statutory interdict. If principle of estoppel applies, Sarafs will not be permitted by a court of law to raise the contention that the company was not the owner of the property34. It is one thing to say that the property did not vest in the company as there was a statutory embargo in that behalf; but it is another thing to say that a person is estopped from raising a question of title. The provisions of the Indian Evidence Act are clear like Section 116, whereby in certain situation a person may be estopped from pleading a title in himself35. We are, however, not oblivious of the principle of law that mere admission does not create title but while determining such a question that intention of the parties as to in whom the title of the property shall vest, the conduct of the parties assumes significance36. In the instant case, it was Sarafs who represented the company. They had made the representation that the company was the owner of the property. Such a representation had been made to the appellant herein not only in terms of the decree obtained in the said O.S. No.267 of 1980, but by reason of execution of the other documents including creation of mortgage of the property and discharge thereof in favour of the State Bank of India. If by reason of such representation, a third party alters his position, indisputably, the principle of estoppel would apply. We may, however, hasten to add that where there exists a statutory embargo, vesting of title in a person shall be subject thereto. We have, however, in this case, no doubt whatsoever that there did not exist any statutory embargo in this behalf44. As in this case, we have already held that the principle of res judicata may not have any application, it is not necessary to advert thereto. It is also not a case where fraud was alleged, as was the fact involved therein45. Reliance placed on Chhaganlal Keshavlal Mehta vs. Patel Narandas Haribhai [(1982) 1 SCC 223 : AIR 1982 SC 121 ] was misplaced. Therein it was held that a person is entitled to plead estoppel in his individual character and not as a representative of his assignee. In this case ingredients constituting an estoppel and in particular the representation made by Sarafs that it was the company which was the owner of the property, were raised specifically67. It is interesting to note that before the arbitrator, the company was shown to be the claimant and thus, the company itself is said to have appointed Shri Mathur as sole arbitrator. Such appointment of the arbitrator, being in the teeth of the decree passed in Suit No.267 of 1980, arbitration award and the decree passed by the Delhi High Court, had rightly been held by the learned trial judge as collusive and fraudulent. It was thus a nullity. Even in the proceedings for making the award a rule of the court before the Delhi High Court being SuitA of 1984, there was no opposition on the part of the company. Although a decree for delivery of possession was passed against the company, the lessee Shri Manoj Kumar Poddar or the appellant had not been made parties therein. We would have occasion to deal with the effect of our discussions hereafterSubject matter of the agreement:68. One of the learned Judges of the High Court also opined that as the agreement to sell referred to only the house or the bungalow, the parties did not agree to sell the land. We have gone through the agreement for sale and are of the opinion that the views taken by the learned judge were wholly unwarranted. Apparently the respondents intended to sell what they had purchased. There is nothing in the averments of the agreement to suggest that the intention of the respondents was restricted to the house alone and not the lands. There was no basis for arriving at the said findings. In any event, expression the house will also include the land appurtenant theretoBefore adverting to the said question, we may, at the cost of repetition, notice the contentions, which, according to Mr. Dwivedi, sufficiently indicate that Sarafs alone were responsible thereforOn the basis of the Award of the Arbitrator, a decree was passed by the Delhi High Court on 21.2.1985. Sarafs executed the said decree. A warrant of delivery of possession was issued against the Company. Pursuant thereto or in furtherance thereof Manoj Kumar Poddar was said to have been dispossessed, despite an order of interim injunction passed in Suit No.612 of 1984 on 19.10.1984 operating in this behalf. An application for restoration of possession was filed by the said Manoj Kumar Poddar under Order 21 Rule 99 of the Code of Civil Procedure in the said execution case, which was registered as Miscellaneous Case No.184/74 of 1985. In the said application, Sarafs were sought to be restrained from damaging and destroying any portion of the suit property and from parting with the possession. An order of injunction restraining Sarafs from causing any damage or destruction and parting with the possession of the suit property was passedThe said findings by itself, as was submitted by Mr. Dwivedi, in our opinion, would not be sufficient to draw an inference that Sarafs were responsible for demolition of the building. We are not oblivious of the fact that thereafter G.P. Tiwari instituted Rent Case numbered as Rent Case No.99/87 against the Sarafs. The appellants were not impleaded as parties therein. G.P. Tiwari was allegedly the caretaker of the building. An exparte order was passed on 25.8.1989 directing eviction of Sarafs and granting possession of the premises in his favour. The said order was implemented and possession of the said premises was delivered on 23.9.1989. It is not in dispute that the building was demolished on the same day. It is furthermore not in dispute that Mohan Lal Saraf filed an application for setting aside the saide order dated 23.9.1989. On 24.9.1989, in relation to the said order, Smt. Pushpa Devi Saraf also filed a Writ Petition being W.P. No.21985/89 for quashing of thee order dated 25.8.1989. Thee order was recalled. The writ petition was dismissed only on the premise that thee order had been recalled. In fact, the Rent Case itself was withdrawn by G.P. Tiwari on 8.2.1990. The respondents contended that G.P. Tiwari was the man of the appellants. We have, in this behalf, hereinbefore noticed the conduct on the part of the appellants. One of the appellants and G.P. Tiwari filed a special leave petition together. They had also engaged the same counsel for defending themselves in the proceedings before this courtIt has been found by the High Court while determining the writ petition that Sarafs had represented before various authorities, Government functionaries and police complaining about the said unauthorized demolition of the structure. Collusion of the police authorities with the appellants had also been alleged, although not substantiated. Only on 23.9.1989 a First Information Report was lodged.s were filed against the appellants in terms of an order dated 9.12.1993 in Criminal Writ Petition No.23804/89, in terms whereof the Central Bureau of Investigation was directed to record a First Information Report against the appellants and others. It is not disputed that in April, 1994, the Central Bureau of Investigation, after investigation filed at against the appellants for demolition of the said building and for alleged commission of other offences relating to theft, criminal conspiracy, trespass, etc. It is also not in dispute that in the said proceedings, charges have been framed and a large number of witnesses have already been examinedIt is true that Sudhir Parasrampuria filed a suit in the Court of Civil Judge, Kanpur Dehat against Sarafs and also against the said G.P. Tiwari for a declaration that they had no right to damage the property and for its preservation through a Receiver contending that the Sarafs had got the house demolished through G.P. Tiwari who was their dummy. An interim order was passed in the said suit on 23.10.1989 permitting grant of symbolic possession to the appellants. But the said order, admittedly, had been set aside by the High Court by an order dated 9.5.1990 in Writ Petition No.21985/89 on the ground that service of notice had not been properly effected upon Sarafs and the matter was remanded to the competent court, but, in the meantime, the suit itself was withdrawn by an order dated 30.5.1990. G.P. Tiwari, in response to the application for recalling the exparte order passed in Rent Case No.99/87, stated that he had been appointed as caretaker by Manoj Kumar Poddar. It is not in dispute that Manoj Kumar Poddar is a cousin of Sudhir Parasrampuria. We may moreover notice that against the order dated 9.12.1993 passed by the Allahabad High Court, special leave petitions were filed by G.P. Tiwari and also by A.C. Verma, Civil Judge, Kanpur, which were dismissed. Circumstances pointed out hereinbefore prima facie do not lead to a conclusion that Sarafs were responsible for demolition of the structures in questionIn view of the pendency of the criminal case, we do not intend to express a definite opinion on one way or the other on the said issue. The sequence of events noticed hereinbefore would go to show that the balance in regard to demolition of the said structure tilts against the Appellants, in view of thet filed by the Central Bureau of Investigation although the same itself may not be conclusive in nature. There is no reason for us, as at present advised, to take a different view from that of the High Court in this behalfThere are other circumstances too which cannot be ignoredThe possession of the land in question was directed to be delivered by the Civil Court in favour of G.P. Tiwari. On the same date, the buildings were demolished. The respondents, therefore, on the said date were armed with the orders of the court; the Appellants were not. The circumstances are such which lead us to a finding for the purpose of disposal of this case that the Appellants were responsible for demolishing the buildingFor the aforementioned reasons, we would uphold the findings of the High Court that the Appellants were responsible for demolition of the structures standing on the land in questionso far as the principle relating to assessing damages in substitution for an order of specific performance is concerned, the learned Judge opined that a court of equity should follow law and address itself to find the proper substitute, stating that the equitable remedy of specific performance has features markedly different from damages at common law for breach of contract. [See also Horsler and another v Zorro, 1975 (1) All ER 584.]Having noticed the law operating in the filedvis the conduct of the parties, we decline to grant a decree for specific performance of contract and opine that in its stead and place a decree for compensation should be grantedWhat should be the amount of compensation is now the questionLaw as declared by this Court is that the quantum and measure of damages would vary from case to case. We may notice a few of themAs noticed hereinbefore, the conduct of both the parties are blameworthy. The value of the property is now said to be a few crores. The appellants had deposited a sum of Rs.10 lakhs as far back as on 12.6.1984. The said amount must be directed to be refunded to the appellants with interest @15% per annum. Although we decline to grant any relief of specific performance of contract to which the Appellants were otherwise entitled to, we are of the opinion that it is a fit case where the respondents should be asked to compensate the Appellants. In view of the fact that the Sarafs are also responsible for bringing out such a situation, we are of the opinion that interest of justice would be met if the respondents are directed to pay a sum of Rs.50,00,000/to the Appellants herein by way of compensation. Such amount should be in addition to the sum of Rs.10,00,000/deposited by the Appellants together with interest at the rate of 12% per annum thereupon. This order shall not preclude Manoj Kumar Poddar to bring an independent action against the respondents herein, if he so desires.