Case: Panchanan Dhara &amp; Others Vs. Monmatha Nath Maity (dead) thr. L.Rs. &amp; Another

2. The basic fact of the matter is not much in dispute. Respondent No. 2 herein (the company) is a company registered and incorporated under the Companies Act, 1956. The said company held and possessed the suit property situated in the District of Midnapur in the State of West Bengal. It intended to sell the said property. Respondent Nos. 1 and 2 having came to know of the said intention on the part of the company entered into an agreement for sale thereof, wherefor a sum of Rs. 6000/- was paid to the Company by way of advance. The balance amount was to be paid within a period of fourteen months. As the title of the Respondent No. 2 in respect of the said property was not clear, the Company instituted a suit against some persons who were claiming title thereover on or about 22.05.1971. The said suit was marked as Title Suit No. 110 of 1971. In the said suit a compromise petition was filed on 3.4.1979 which having been accepted by the concerned court, a consent decree was passed on the basis thereof on 3.5.1979. Respondent No. 1 thereafter issued several letters being dated 12.11.79, 11.01.80, 05.01.81 and 08.10.84 asking the Company to execute and register a sale deed in his favour. The Company in response thereto had all along been assuring the Respondent No. 1 that it would do so3. By a letter dated 16.3.1985, one of the Directors of Respondent No. 2 assured Respondent No. 1 that no apprehension should be entertained by Respondent No. 1 that the contract between him and the company would not be honoured. However, on 21.8.1985, the company refused to execute and register a deed of sale in favour of Respondent No. 1 on the plea that the same became barred by limitation4. A suit for specific performance of the said agreement for sale dated 18.04.1971 was filed in the Court of Munsif, Ghatal, District Midnapore, West Bengal which was marked as Title Suit No. 133 of 1985. It is not in dispute that not only the Appellant herein had filed a caveat in the said suit, it purchased the said property on 13.11.1985, i.e., during pendency thereof. Even in the deed of sale executed in favour of the Appellant by the Company the factum of the said suit being pending in the court had specifically been mentioned5. Before the learned Trial Judge, inter alia the following contentions were raised on behalf of the Appellant:(i) the agreement for sale was not enforceable as the provisions of Sections 46 and 48 of the Companies Act had not been complied with(ii) It was not established that the Respondent No. 1 had all along been and ready and willing to perform his part of contract(iii) The suit was barred by limitation6. As regards the contention that in executing the said agreement the provisions of Sections 46 and 48 of the Companies Act had not been complied with, the learned Trial Judge held that as all the Directors of the Company were parties to the said agreement, the said provisions are not attracted. The plea that the Respondent No. 1 was not ready and willing to perform his part of contract was also held to have been waived. The plea of limitation was also negatived7. The appeal preferred thereagainst was also dismissed by the First Appellate Court8. In the Second Appeal preferred by the Appellant herein, it does not appear that any substantial question of law was framed by the High Court as was mandatorily required under Section 100(4) of the Code of Civil Procedure. However, a learned Single Judge of the court dealt with all the contentions raised on behalf of the Appellant and dismissed the suit.

Court's reasoning:
are of the opinion that the plea raised by the learned counsel for the Appellant that the suit was barred by limitation cannot be accepted as all the courts have arrived at a finding of fact that the period for execution of the deed of sale had been extendedSimilarly, the applicability of the provisions of Section 29 of the Indian Contract Act having not been raised, the same cannot be permitted to be raised for the first time before this Court. Even otherwise we do not see, on a plain reading of the said agreement of sale deed 18.4.1971, that the terms thereof were uncertain or vague so as to attract the provisions of Section 29 of the Indian Contract ActSection 46 merely lays down the mode an signing contract on behalf of the company. Once a deed is executed on behalf of the company, it is company and not the persons signing can sue or be sued on the contract if the evidence is clear that the signature was only that of the companyAn oral agreement for sale is permissible in law. There is furthermore no dispute that the agreement for sale was entered into by three directors of the company. The subsequent letters written on behalf of the Company clearly demonstrate that all the directors were aware of the said agreement. The company before the Trial Court never chose to file any written statement or dispute the contentions raised in the plaint. The Company, thus, never denied or disputed the correctness or otherwise of the contents of the said agreementThe Company never denied or disputed the terms of the agreement nor raised any plea that the agreement was not binding on the company or the same was illegal. In fact in the deeds executed in favour of the agreement, it had clearly been stated that the suit for specific performance of contract filed by Respondent No.1 was pending. 36It is not in dispute that the contract was executed in the name of the company. It has furthermore not disputed that all the five directors executed the agreement. The Company was a private limited company. The Trial Court held:"As all the directors of the company took part in execution of ext. - 3 there was not necessity of giving any special authorization either u/s 46 or u/s 48 of the Companies Act for entering into or for execution of the contract. It is true that at the time of execution of the documents in favour of the party defendants (ext. A series) there was a resolution of the company. The copy of the said resolution was marked (ext. 1). On plain reading of Ext. (1) it is found that as 4 directors out of the 5 directors of the company were empowered to execute those documents said resolution was necessary u/s 48. of the Companies Act."Before the courts below, execution of the agreement was not denied. Thus, even in the absence of resolution the contract could not have been held to be invalid or illegal