This Order is modified/corrected by Speaking to Minutes Order
1 Suit No.4686_1994
jsn IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
SUIT NO.4686 OF 1994
Kantilal Vasanji Chheda - Plaintiff
V/s.
Vrajesh Kantilal Patel & Ors. - Defendants
Mr. Hiralal Thakkar i/b. Motiwala & Co. for the Plaintiff.
Mr. K.J. Presswala for the Defendants
CORAM : MRS. ROSHAN DALVI, J.
Date of reserving the Judgment
Date of pronouncing the Judgment
: 18th July, 2012
: 19th October, 2012
JUDGMENT
1. The Plaintiff has sued for a declaration that the agreement dated 10th April, 1981 is valid, subsisting and binding on the defendants and that the conveyance Exh. h to the Plaint is subject to the Plaintiff's right and for specific performance of the agreement dated 10th April, 1981 as also for recovery of Rs.21,42,827/- and declaration of the statutory charge for repayment of that amount.
2. The Plaintiff and defendant Nos.1 to 7 agreed to purchase the suit property which is an open plot of land called Irani property at village Nagargaon, Lonavla from the owners, the predecessor-in-title of defendant Nos.31,32 & 33 on 10 th April, 1981. Though the agreement is not produced by any party, its execution is not denied. The Plaintiff claims a 15% share in the suit property which is also not denied. The Plaintiff claims to have contributed Rs.34006.64 towards purchase price being 15% of the total consideration which is stated to have been paid by the Plaintiff after the agreement was executed, the ::: Downloaded on - 09/06/2013 19:18:20 ::: This Order is modified/corrected by Speaking to Minutes Order 2 Suit No.4686_1994 total purchase price having been paid by M/s. Eastley Lam & Co., the firm in which the Plaintiff was then a partner. The possession of the suit property was handed over to the purchasers as mentioned in the Power of Attorney which is an admitted fact. The Plaintiff claims to have shown his share and interest in his income tax and wealth tax returns which fact is not proved. The partners were to undertake a joint venture for development of the property purchased and sale thereof. The execution of Joint Ventrue agreement is admitted, but it is contended that it had become infructious as none acted upon it.
3. The vendor executed an irrevocable Power of Attorney in favour of the defendant Nos. 1 and the original defendant No.2 since deceased, on 8th June, 1981 to carry out the terms under the agreement dated 10th April,1981, a fact which is admitted by all the parties and specifically relied upon by the defendant No.1, the real contesting defendant. The said Power of Attorney is stated to have been executed upon consent of all the purchasers including the Plaintiff for carrying out the execution of the agreement. The Power of Attorney is stated to have been acted upon.
4. At the time of the execution of the agreement the Plaintiff was a partner in the firm. He had since retired therefrom. After his retirement from the firm the Plaintiff did not know how defendant No.1 acted on behalf of the purchasers for the development of the suit property under the Power of Attorney. There has been certain correspondence between the parties. It is the case of the Plaintiff that he addressed letters dated 4th June, 1991,8th July, 1991 and 19th July,1991 which were not replied. The receipt of the letters dated 14th June, 1981 and 8th July, 1991 are denied. The receipt of the letter dated 19th July, 1991 is admitted but is not replied. The later letter of the Plaintiff dated 23rd October, 1991 is replied on 31 st ::: Downloaded on - 09/06/2013 19:18:20 ::: This Order is modified/corrected by Speaking to Minutes Order 3 Suit No.4686_1994 October, 1991 denying the Plaintiff's claim for the first time. It is upon the denial that the Plaintiff has sued. The Plaintiff searched the records of the office of the sub registrar and obtained search report on 24th October, 1991. The Plaintiff learnt about various conveyances executed by defendant No.1 as the constituted attorney of the vendor in favour of defendant Nos.8 to 30. The execution of the conveyances is not only admitted, but is relied upon by defendant No.1. The conveyances have been registered. In some of the conveyances the consideration shown therein was rejected by the registrar of sub assurances and it was directed to be revalued for the purpose of stamping which was done and which would reflect the market rate prevalent then. The consideration shown in some of the conveyances has been accepted by the Registrar. The acceptance and rejection of the consideration under deed of conveyances has been on different dates. The conveyances have been executed between January and October, 1989. The Plaintiff has shown the entries of Index II Register in respect of those conveyances. The Plaintiff claims that the conveyances without considering the Plaintiff's right are not valid and has applied for declaration that they were subject to his rights.
5. The right of the Plaintiff to claim the 15% share is under the agreement dated 10th April, 1981 which is sought to be specifically enforced. The Plaintiff has claimed that the agreement of sale is binding upon all the parties and under which the Plaintiff has claimed his 15% share upon payment of 15% of the consideration amount. The alternate reliefs of the Plaintiff are for refund of the purchase price and the 15% share in the market value of the suit property calculated at the rate of Rs.700/- being the market rate at the time of the filing of the suit. The Plaintiff, accordingly, has claimed recovery of Rs.21,42,827/-.
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6. The defendant No.1, the main contesting defendant, has, as aforesaid, admitted most of the aforesaid facts which need not be repeated. Though it is contended that the Plaintiff contributed nothing to the purchase price, it is admitted that the Plaintiff paid Rs.30,407/- after the execution of the agreement for sale. The main defence of defendant No.1, which is adopted by defendant Nos.3 to 7, is that all the purchasers agreed to have defendant No.1 and the original defendant No.2 to be their agent to develop the suit property. The original defendant No.2 is succeeded by the Administrator General and hence defendant No.1 becomes main contesting defendant. He is accepted to be agent of the defendant Nos.3 to 7. The Plaintiff would be bound by the agency created by the execution of the Power of Attorney and by defendant Nos.1 and 2 acting thereunder without any objection by the plaintiff. It is contended by the defendant No.1 that the joint venture, which was contemplated by the partners, was represented by him and the Plaintiff remained out of the joint venture. Defendant No.1 claims that he acted as an agent on behalf of all purchasers, subdivided the plots and conveyed several separate plots to 15 different parties under 15 conveyances duly registered for consideration as agreed by and between the parties and with which the Plaintiff is bound.
7. What is important is that the defendant No.1 has admitted the payments made by the Plaintiff albeit after the transaction was completed on 8th June, 1981 without the Plaintiff's participation in Paragraph 11 (A) of the Written Statement. That amount has not been returned to the Plaintiff. It is, therefore, appropriated by defendant No.1. It was the Plaintiff's amount which remained with the defendants. The suit is for refund of that amount as also for the Plaintiff's 15% share in the conveyances and in the alternative to the ::: Downloaded on - 09/06/2013 19:18:20 ::: This Order is modified/corrected by Speaking to Minutes Order 5 Suit No.4686_1994 specific performance of the agreement dated 10 th April, 1981 after the rights of the Plaintiff's came to be denied on 31st October, 1991.
8. The Written Statement of the other defendants who are purchasers of the suit plot of land upon conveyances and who are the original vendors is of little significance, the main dispute being between the Plaintiff and Defendant No.1 in view of the execution of the Power of Attorney upon which the defendant No.1 has acted and which fact is the main dispute between the parties, though the reliefs are claimed against all the defendants.
9. Upon the aforesaid pleadings the following issues came to be framed by Justice S. K. Shah on 8th October, 2004. .
I S S U E S
1 Whether the suit as filed is barred by No.
limitation, as alleged in paragraph 1 of the
written statement?
2 Whether this Court has jurisdiction to Not pressed.
entertain and try this Suit, as alleged in
paragraph 24 of the Defendant Nos written
statement?
3 Does Plaintiff prove that by an agreement for Admitted and
Sale, dated 10th April, 1981, the deceased hence not required
Meherwan Irani agreed to sell to the Plaintiff to be answered.
and Defendant Nos.1 to 7 the suit property
at Lonavala, as alleged in paragraph No.7 of
the plaint?
3A Does Plaintiff prove that he had paid any Admitted in para purchase price for the suit land to the 11(a) of the W.S.
Vendor as alleged in paragraph Nos.7 and 8 and hence not
of the plaint? required to be
answered.
4 Does the Plaintiff prove that he had 15% Admitted in para
share in the suit property as alleged in 11(a) of the W.S.
paragraph No.9 of the plaint? and hence not
required to be
answered.
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This Order is modified/corrected by Speaking to Minutes Order 6 Suit No.4686_1994 5 Does Plaintiff prove that the deceased Admitted by the Meherwan Irani had executed Power of Plaintiff himself Attorney dated 8th June, 1981 in favour of and hence not the defendant Nos.1 and 2 as alleged in required to be paragraph No.10 of the plaint? answered.
6 Does Plaintiff prove that he was ready and Not required to be
willing to carry out his obligations under the proved in view of
agreement, dated 10th April, 1981 as alleged the execution of
in paragraph 19 of the plaint? the admitted POA
in favour of
Def.No.1
7 Does Plaintiff prove that the said Agreement Not disputed and
dated 10th April, 1981 is binding on hence not required defendant Nos.8 to 20? to be answered 8 Do defendants prove that the Plaintiff, after Not pressed.
executing the Joint Venture Agreement did not contribute his share as alleged in paragraph 11 of the written statement of defendant No.1?
9 Whether the Joint Venture contemplated by Not pressed.
the parties was not acted upon and never came into existence as alleged in paragraph 11 of the written statement of defendant No.1?
10 Does Plaintiff prove that the joint venture Not pressed.
was entered into as alleged in paragraph 1 of the plaint?
11 Does defendant No.1 prove that plaintiff had Not required to be not joined in the application for subdivision proved in view of of the suit land? the execution of the admitted Power of Attorney in favour of Def.No.1.
12 Does Plaintiff prove that he had made any Admitted in para payment towards purchase price to the 11(a) of the W.S. deceased as alleged in Paragraph 19 of the and hence not plaint? required to be answered.
13 Does Plaintiff prove that he is entitled to No. relief of specific performance, as alleged in paragraph 5 and 19 of the plaint?
::: Downloaded on - 09/06/2013 19:18:20 :::This Order is modified/corrected by Speaking to Minutes Order 7 Suit No.4686_1994 14 Is Plaintiff entitled to recover Rs.34,007/- as As per final order. and by way of refund of purchase price and Rs.21,08,820/- as and by way of damages as alleged in paragraph 20 of the plaint?
15 Do defendant Nos.19 to 26,28 and 30 prove Not pressed that they are bonafide purchasers of plots as alleged in their Written Statement for value, without notice of the suit agreement?
16 What order and reliefs? As per final order.
10. Some of the above issues are not pressed and not argued upon. Some need not be answered as they are based upon admitted facts or arising between non-contesting parties. There are some overlapping issues. It would be more appropriate to deal with the issues under the specific heads of the bar of limitation and the Plaintiff's claim to reliefs which would be essentially upon admitted facts.
11. The Plaintiff has led evidence and he has been cross examined. The aforesaid admitted facts need not be repeated.
Issue No.1 regarding the bar of limitation.
12. It is contended that the suit is barred by law of limitation under Article 54 of the Limitation Act, 1963. Article 54 runs thus:
Article 54. Three years The date fixed for the performance, or, if no For specific such date is fixed, when the plaintiff has performance notice that performance is refused. of a contract
13. The Plaintiff contends that the date of refusal is 31 st October, 1991.
14. Indeed it is an admitted fact that no time for performance ::: Downloaded on - 09/06/2013 19:18:20 ::: This Order is modified/corrected by Speaking to Minutes Order 8 Suit No.4686_1994 was fixed under the agreement dated 10 th April, 1981. It is contended on behalf of the defendant that the entire land was subdivided and conveyed to various parties between January to November, 1989 under registered conveyances and the suit has been filed on 24 th October, 1994 well after the Plaintiff had notice of the sale. The execution of the conveyance does not constitute refusal of performance. What is contemplated under article 54 is the notice that performance is refused. That notice would be given only when the letter dated 31st October, 1991 denied the Plaintiff's right of the first time.
15. It is contended on behalf of the defendants that the intimation and information of the conveyance would constitute knowledge. That would be knowledge of the fact of the execution of the conveyance. That itself would not bar a suit being filed for the relief of specific performance. The Plaintiff is stated to have sent his letters dated 4th June, 1991, 8th July, 1991 and 23rd October, 1991 in respect of the land purchased and calling upon the defendants to consider his rights in the agreement for sale dated 10 th April, 1991 and convey the subdivided plot equivalent to his 15% share which claims were first refused under defendants' letter dated 31 st October, 1991. The suit has been filed on 24 th October, 1994 within three years of the date of the refusal of the Plaintiff's demand for specific performance under the said agreement dated 10th April, 1991.
16. Mr. Presswala would contend that since the suit is for specific performance it could have been filed within three years of the notice being received by the Plaintiff that the performance which the Plaintiff wanted from defendants is refused by the defendants. The essential performance that is claimed by the Plaintiff is to act upon the agreement such as to ultimately convey the plots to the third parties ::: Downloaded on - 09/06/2013 19:18:20 ::: This Order is modified/corrected by Speaking to Minutes Order 9 Suit No.4686_1994 to make a profit. The performance is essentially sought against defendant No.1 rather than, as in the usual cases, from the owners.
The owners are not required to specifically perform any part of the agreement since they appointed defendant No.1 as their agent to act on behalf of all the defendants. It is contended that the Plaintiff's notices dated 4th June, 1991 and 8th July, 1991 are not received by Defendant Nos.1 and 2 at all. The receipt of the notice dated 19 th July, 1991 is not refuted but the notice is not replied. It is argued that by the fact that the notice is not replied, the Plaintiff must stand notified that defendants would not perform whatever is claimed by the Plaintiff in that notice and that would tantamount to refusal in the mind of an ordinary prudent man as it would give an apprehension that the defendants would refuse to perform their part under the agreement. The contention is wholly erroneous and completely misconceived.
17. The defendants have relied upon the judgment of the Single Judge of the Calcutta High Court in the case of Manick Lal Seal & Anr. Vs. K.P. Chowdhury, AIR 1976 Calcutta 115 in this regard. The Court held that under article 113 of the Limitation Act, 1908, notice meant intimation, information, cognizance, or observance and implied knowledge even from inference reasonably arising out of facts and circumstances. It held that the notice need not be a substantive notice by the party of what performance is refused. It may be inferred from the surrounding circumstances. The circumstances under which the court inferred that the performance was refused in that case was that two letters were not replied. It is impossible to take the lack of reply to a letter as denial of the contents. Infact it would tantamount to acceptance of the contents under our procedural jurisprudence. The analogy in that judgment ::: Downloaded on - 09/06/2013 19:18:21 ::: This Order is modified/corrected by Speaking to Minutes Order 10 Suit No.4686_1994 cannot be accepted. A non reply, rather than refusal, would tantamount to admission of the facts mentioned in the earlier letters which remained unreplied and hence it can be seen that the allegations in the Plaintiff's letter dated 19th July, 1991 specifically had not been refuted and the Plaintiff's contentions are not refused.
18. Indeed, when the Plaintiff acquires notice, and that may also be by inference, that the performance is refused, time would begun to run. In the case of Shrikrishna Keshav Kulkarni & Ors. Vs. Balaji Ganesh Kulkarni & Ors. AIR 1976 Bombay 342, it was held that when the sale deed was to be executed after the attachment which the creditors had brought was raised, the sale of the house constituted notice as the Plaintiff was posted with the knowledge by virtue of the registered sale deed that the performance was refused. This analogy certainly stands to reason. The registered sale deed is indeed notice to all. The Plaintiff may be imputed knowledge upon the execution of the conveyance that indeed from that date the defendant would not perform his contract. That was the case where the entire property was conveyed.
19. In this case various plots are sold by various conveyances from January to November, 1989. The conveyances are indeed registered. The Plaintiff can be imputed knowledge of the execution of the registered conveyances. However, the Plaintiff cannot be imputed knowledge, simplicitor upon the execution of the conveyances that from that date the defendants would not perform their contract. Indeed the plaintiff would become entitled to his 15% share, as also would defendant Nos.3 to 8, upon the execution of the conveyances, unless his rights, by way of his share, were refused.
20. Similarly, it has been held in the case of Venkappa Gurappa Hosur V. Kasawwa AIR 1997 Supreme Court 2630, that ::: Downloaded on - 09/06/2013 19:18:21 ::: This Order is modified/corrected by Speaking to Minutes Order 11 Suit No.4686_1994 when the vendor filed a suit for possession of the property under the agreement against the purchasers, he must be taken to have denied the existence of the agreement between the vendor and the purchaser starting the period of limitation. This would show that he has asserted to be the owner of the property though it was encumbered by the filing of the suit.
21. It is sought to be shown from the cross examination of the Plaintiff that the Plaintiff learnt about the conveyance in September, 1991 from one Mr D.R. Zaiwala, Senior Counsel of this Court. Hence the suit filed in October, 1994 for specific performance would be barred. That contention also would not apply to the relief of specific performance though it may apply to the relief of declaration that the agreement dated 10th April, 1981 was valid and subsisting and the conveyances to the plot purchasers would be subject to the Plaintiff's rights if the cause of action first accrued to the Plaintiff then. The declaration with regard to the agreement admittedly executed by the parties including the Plaintiff would be required to be sued for when the right to sue first accrued to the Plaintiff under article 58 of the Limitation Act which runs thus:
Article 58. Three years When the right to sue first accrues. To obtain any other declaration
22. If the agreement is valid and subsisting and the defendant Nos.1 and 2 were to act under the Power of Attorney executed by the original owner with consent of all the purchasers, the plots had to be subdivided, developed and conveyed. The profits upon the conveyances would be shared upon accounts being made. Defendant ::: Downloaded on - 09/06/2013 19:18:21 ::: This Order is modified/corrected by Speaking to Minutes Order 12 Suit No.4686_1994 No.1, as the agent of the co-purchasers, including the plaintiff, was obliged to render accounts as shall be seen presently. The Plaintiff would not expect his agents not to do so within reasonable time. It is when the accounts are not rendered and the profits are not shared that the cause of action would first accrue. Hence simplicitor upon the execution of the conveyance the right to sue would not accrue to the plaintiff to claim his 15% share in the profits which would be determined upon rendering accounts. The Plaintiff's right would accrue for the first time only after the accounts are made and not upon the execution of the conveyances themselves or the oral information by a third party. Defendant No.1 has not shown when the accounts were made and rendered by him to the Plaintiff. The period of limitation, therefore, would not begin to run from the date of the conveyances as contended on behalf of defendant No.1.
23. The judgment in the case of Lloyd V. Banks, 1868 V.III, L R Chancery Appeals 488 relied upon by Mr. Presswala to show the bar of limitation has set out the analogy of what constitutes notice since 1868. In that case Llyod applied to be declared an insolvent. A vesting order was made. He was entitled in reversion to the income of the certain trust funds under his marriage settlement on the death of his wife. Banks, who was a qualified solicitor, was the sole surviving trustee of the trust. The wife expired. The insolvent mortgaged his life interest to one Mark Shephard. The Notice of mortgage was given by the mortgagee to the trustee. In the evidence the trustee/solicitor stated that he had read a notice in the newspaper relating to the insolvency of the insolvent which was to come up for discharge on a particular day in Court. He had dealt with the insolvent earlier. He had not paid the annuity to the insolvent. He was held to be having notice of the fact of the insolvency and ::: Downloaded on - 09/06/2013 19:18:21 ::: This Order is modified/corrected by Speaking to Minutes Order 13 Suit No.4686_1994 consequently the mortgagee was held entitled to priority over the assignee of the insolvent in the suit for administration by the trustees of the settlement. It was observed that though the direct and distinct notice could have been given, the trustee could also receive notice which could be inferred dependent upon the facts of the case. The court considered that if the trustee in his mind had an intelligent apprehension of the encumbrances on the property, he, as a reasonable man, would act upon the information and regulate the conduct of the trust accordingly. In that case the trustee was also the solicitor. He was not only a solicitor, but intimately and personally acquainted with the family into which the insolvent had married and aware of his pecuniary difficulties. It was observed that the solicitor reading an advertisement relating to the insolvency of the person whom he knew perfectly well would be imputed notice. His evidence shows that he took particular notice of the advertisement. He held back the annuity payable to the insolvent. Hence it was held that the notice was conclusively proved.
24. In this case it is contended that counsel Mr. D.R. Zaiwala informed the Plaintiff that the property was sold, but Plaintiff did not sue within three years of the information. The information is by an outsider. It is not with regard to particular facts which can be imputed upon the Plaintiff'. It is in the nature of a rumour. It may or may not be corrected. No party is liable to act upon the information provided by a third party that a property is sold. The analogy in the case of Llyods Vs. Banks cannot be imported in the plaintiff's case.
25. The case of Hirachand Himatlal Marwari vs. Kashinath Thakurji Jadhav, AIR (29) 1942 Bombay 339 shows what would not be constructive notice. The Division Bench of this court held that the document which is compulsorily registrable and registered would ::: Downloaded on - 09/06/2013 19:18:21 ::: This Order is modified/corrected by Speaking to Minutes Order 14 Suit No.4686_1994 constitute a constructive notice. But a document which is not compulsorily registrable and still registered would not constitute constructive notice despite registration. In that case an agreement of mortgage, which would not create a charge over the property and which was not hence compulsorily registrable, was held not to constitute constructive notice upon the mere fact that it was registered. However, the defendants relied upon the observation that conveyances were compulsorily registrable and the Plaintiff would be deemed to have received constructive notice in this case since November, 1989.
26. The Plaintiff has sued for refund of the amount paid and recovery of his 15% share. That is not the alternative relief to the relief of specific performance as is the relief of damages. The suit for refund of the amount should be filed within three years from the time the Plaintiff actually received notice of the denial of his claim. The suit for the Plaintiff's 15% share in the profits of the suit property by development and conveyance of the plots must be filed within 3 years when the Plaintiff's right first accrued in respect of such share. This would accrue only when accounts are made and rendered by the Plaintiff's admitted agent which has yet not been done. The Plaintiff was informed that the rights under the agreement for sale as also the conveyances were refused only on 31st October, 1991.
27. It can, therefore, be seen that the Plaintiff has sued for declaration in respect of the conveyances under prayer 'b' of the plaint within three years of the date when the cause of action first accrued to the Plaintiff. The Plaintiff's suit for specific performance under prayer 'c' is whether 3 years from the date when the performance was refused by defendant Nos.1 to 7.
28. Hence, the issue relating to the Law of Limitation being ::: Downloaded on - 09/06/2013 19:18:21 ::: This Order is modified/corrected by Speaking to Minutes Order 15 Suit No.4686_1994 issue No.1 is answered in the negative holding that the suit is not barred by the Law of Limitation.
Issue Nos.13 and 14 in respect of specific performance and other reliefs upon admitted facts.
29. The Plaintiff was one of the 8 joint purchasers. The execution of the agreement for sale on 10 th April, 1981 followed by the execution of the Power of Attorney as also a Joint Venture Agreement on 8th June, 1981 are not denied. Though the rights of the Plaintiff under agreement are denied, the Joint Venture Agreement is claimed to be unregistered and infructuous as no joint venture was undertaken.
30. The Plaintiff has paid consideration in respect of the purchase. The receipt of consideration of Rs.34007/- is admitted albeit made after the initial agreement to purchase executed on 10 th April, 1981. Under the agreement between the parties the firm paid the purchase price and purchasers contributed their share. The court is not concerned with the shares of the other defendants which is not disputed. The court is concerned with the payment of consideration by the Plaintiff as his share. The specific case of the Plaintiff in Paragraph 9 of the plaint is that he paid consideration to the extent of 15% i.e. Rs.34006.64 rounded to 34007 by two cheques of Rs.30,000/- dated 10th June, 1981 and for Rs.4,700/- on 11 th June, 1981 drawn by the Plaintiff in favour of the firm which is stated to have made a lumpsum payment to the owners. That was the arrangement inter se between the purchasers. Paragraph 11(a) of the Written Statement contains the specific admission about the payments made by the Plaintiff with reference to Paragraph 9 of the plaint. It is ::: Downloaded on - 09/06/2013 19:18:21 ::: This Order is modified/corrected by Speaking to Minutes Order 16 Suit No.4686_1994 only contended that they were made after the transaction was completed on 8th June, 1981. How the transaction was completed has not been made known to the Court as the defendant No.1 has not examined himself.
31. A Power of Attorney was executed by the original vendors in favour of defendant No.1 and original defendant No.2 on 8 th June, 1981. The original defendant No.2 has since expired and is represented by the Administrator General. The Power of Attorney is shown to have been executed by consent of all the purchasers including the Plaintiff. The execution of the Power of Attorney is not denied or challenged by the Plaintiff. The consent of the Plaintiff, which has not been refuted, until after the filing of the suit would be implied. The Plaintiff has himself not acted upon the agreement and must be taken to have executed the Power of Attorney to appoint an agent to act on his behalf. The Plaintiff has also not challenged the subdivision of the suit plot of land. All this could be done only by one or two purchasers acting on behalf of all.
32. All the purchasers are not shown to have acted severally or jointly. The land purchased was open land. It was to be developed for the benefit of all the purchasers. It has not even been denied by the Plaintiff that the suit land was meant to be developed and conveyed. It has been subdivided and conveyed. The rights of the Plaintiff would be analogous to the rights of other purchasers being defendant Nos.3 to 7 who would be bound by the acts of defendant Nos.1 and 2, in view of the execution of the Power of Attorney stated to have been made with the consent of all the purchasers. The legal consequences of the execution of the Power of Attorney shall have to be considered.
33. Defendant No.1 and the original Defendant No.2 would act upon the Power of Attorney not only as the agent of the owners but ::: Downloaded on - 09/06/2013 19:18:21 ::: This Order is modified/corrected by Speaking to Minutes Order 17 Suit No.4686_1994 also as the agent of the other purchasers /partners or joint venturists being the Plaintiff and the defendant Nos.3 to 7. Upon that premise the simple and clear provisions relating to the law of agency in the Chapter X of the Indian Contract Act would become applicable to all the parties. The relevant legal provisions by which the Acts would be governed would be Sections 188,196,197,211,213,214,217 & 218 which run thus:
Sec. 188. Extent of agent's authority An agent having an authority to do an act has authority to do every lawful thing which is necessary in order to do such act. An agent having an authority to carry on a business has authority to do every lawful thing necessary for the purpose, or usually done in the course, of conducting such business.
Sec.196 Right of person as to acts done for him without his authority. Effect of ratification Where acts are done by one person on behalf of another, but without his knowledge or authority, he may elect to ratify or to disown such acts. If he ratifies them, the same effects will follow as if they had been performed by his authority.
Sec.197. Ratification may be expressed or implied Ratification may be expressed or may be implied in the conduct of the person on whose behalf the acts are done.
211.Agent's duty in conducting principal's business. An agent is bound to conduct the business of his principal according to the directions given by the principal, or, in the absence of any such directions, according to the custom which ::: Downloaded on - 09/06/2013 19:18:21 ::: This Order is modified/corrected by Speaking to Minutes Order 18 Suit No.4686_1994 prevails in doing business of the same kind at the place where the agent conducts such business. When the agent acts otherwise, if any loss be sustained, he must make it good to his principal, and, if any profit accrues, he must account for it.
Sec.213 Agent's accounts.
An agent is bound to render proper accounts to his principal on demand.
Sec. 214 Agent's duty to communicate with principal It is the duty of an agent, in cases of difficulty, to use all reasonable diligence in communicating with his principal, and in seeking to obtain his instructions.
Sec. 217. Agent's right of retainer out of sums received on principal's account An agent may retain, out of any sums received on account of the principal in the business of the agency, all moneys due to himself in respect of advances made or expenses properly incurred by him in conducting such business, and also such remuneration as may be payable to him for acting as agent.
Sec. 218. Agent's duty to pay sums received for principal S ubject to such deductions , the agent is bound to pay to his principal all sums received on his account.
34. It would have to be seen whether the rights, duties, responsibilities, obligations and liabilities of the agent under the ::: Downloaded on - 09/06/2013 19:18:21 ::: This Order is modified/corrected by Speaking to Minutes Order 19 Suit No.4686_1994 aforesaid sections would merit the payment to the Plaintiff of plaintiff's share.
35. Under the aforesaid provisions of law Defendant No.1 would have authority to subdivide the plot of land purchased by the Plaintiff and defendant Nos.1 to 7 from the owners, incur of legitimate expenses with regard to subdivision and convey the subdivided plots to third parties for profit. Defendant No.1 may have done those acts without the knowledge or authority of the Plaintiff if the Plaintiff ratified those acts by acceptance even impliedly. The Plaintiff has not disowned any acts done by defendant No.1. The Plaintiff has only claimed his share in the consideration received under the conveyances. The acts performed by defendant No.1, therefore, are not and cannot be challenged.
36. It must be appreciated that defendant Nos.1 and 2 sought to act as agents on behalf of the purchasers under the Power of Attorney executed by the vendors which was by the consent of all the purchasers including the Plaintiff. This contention itself lends itself to the duty of defendant No.1 and the original defendant No.2 to subdivide the profits just as they subdivided the suit plots and to themselves pay over the profits to their co-purchasers.
37. Defendant No.1 as the agent could have acted as per the usual norms of subdivision and conveyance. If however, he made profit from the transaction he must account for it to the Plaintiff as also the other defendants. There is no dispute for accounting for it to defendant Nos.3 to 7 as Defendant Nos. 3 to 7 have not claimed any amount of profits from defendant No.1. U/s.211 (Supra) the Plaintiff is entitled to the profits that have accrued upon the conveyances executed by defendant No.1 and the original defendant No.2 in favour of third parties. This would be the Plaintiff's 15% share in the ::: Downloaded on - 09/06/2013 19:18:21 ::: This Order is modified/corrected by Speaking to Minutes Order 20 Suit No.4686_1994 consideration price accepted by the Stamp Authority as the lawful authority.
38. Defendant No.1 as the agent was also bound to render proper accounts to the Plaintiff on demand. The Plaintiff made demands under the aforesaid letters. No accounts have been made or rendered. The defendant No.1 would be liable in that behalf.
39. Defendant No.1 would also be obliged to communicate with the Plaintiff and seek his instructions in case of difficulty. In this case the Plaintiff was admittedly a partner of the firm in which defendant No.1 was also the partner. He claimed to purchase the property along with defendant No.1 and others in that capacity. Thereafter, the firm was dissolved. The Plaintiff was no longer a partner. The Plaintiff was not contacted thereafter. Specific instructions were not taken from the plaintiff. Even if the defendant No.1 acted in the normal course of the conduct of the business and made profits, he was otherwise obliged to share the profits that he made with the Plaintiff in the same proportion.
40. Defendant No.1, ofcourse, would be entitled to reimbursement of the expenses properly incurred by him in conducting the business; in this case for subdivision of the plots and the conveyances, as also for incidental expenses thereto. Defendant No.1, ofcourse, would not be entitled to, nor has claimed any remuneration for acting as such agent.
41. It is contended on behalf of Defendant No.1 that he has incurred expenses in conveying the plots to third parties. Defendant No.1 has claimed to unilaterally deduct a vast amount of expenses incurred in the conveyances. This right is obviously claimed U/s. 217 (Supra). It would have to be seen whether those expenses can be granted to defendant No.1. He has not rendered accounts, much less ::: Downloaded on - 09/06/2013 19:18:21 ::: This Order is modified/corrected by Speaking to Minutes Order 21 Suit No.4686_1994 taken instructions. He has not led evidence. Hence he has not proved that any of expenses were properly incurred. It is not for the Court to deduce what could be a properly incurred expense. It is for the agent, who claims expenses, to prove that they were properly incurred under the specific positive statutory requirement. That has not been done. It is argued that there would naturally be certain specified expenses for such division. They cannot be claimed as having been properly incurred to that extent. Since the defendant No.1 has neither filed any suit nor a counter claim, such expenses cannot even be claimed on the basis of quantum meruit. The defendant No.1 only claims those expenses as deduction. The deductions cannot be allowed for want of proof altogether.
42. It was for defendant No.1 and the original defendant No.2 to account for the expenses, and claim the deductions from the Plaintiff and Defendant Nos.3 to 8. If Defendant No.1 is to be allowed any deduction on the ground of expenses properly incurred by him in the conduct of the business of subdivision or conveying the plots to third parties, he would have been bound to pay the reminder to the Plaintiff and the other defendants whose agent he was.
43 Defendant No.1, on behalf of the firm, sought to adjust the Plaintiff's "deposit" which was the share paid by the Plaintiff towards certain liabilities of the Plaintiff as a partner of the firm prior to his retirement therefrom and claimed that the Plaintiff's share in the "land transaction" would have come to Rs.1,38,750/- had the Plaintiff contributed as a partner therein by his letter dated 18 th June, 1992 which the Plaintiff did not accept or confirm as called upon and infact refuted by his letter dated 13th July, 1992. Defendant No.1 has led no evidence to prove his claim to such adjustments. Hence defendant No.1 cannot be granted any adjustment also.
::: Downloaded on - 09/06/2013 19:18:21 :::This Order is modified/corrected by Speaking to Minutes Order 22 Suit No.4686_1994
44. The contribution of the Plaintiff having been seen and admitted towards the purchase price, it having been paid on 10th June, 1981 and 11th June, 1981 and not having been returned, the Plaintiff would be entitled to his 15% share in the consideration received made by the purchasers being defendant Nos.1 to 7 upon the declaration that the conveyances was made subject to the Plaintiff's rights - the right to receiving his share in the proceeds of the conveyances.
45. All the purchasers acting by themselves or through their agent as per the agreement between the owners and themselves or as per the consent they gave to defendant No.1 and original defendant No.2 to act on their behalf, would be entitled to their respective shares in the amounts received under the conveyances. No purchaser can be denied his share therein. Had defendant No.1 and the original defendant No.2, acting as the agents on behalf of the purchasers, been honest with their co-purchasers, they would have themselves offered the share of each of the other purchasers to them including the Plaintiff. This they failed to do. It is not known whether they gave the share of defendant Nos.3 to 7 to defendant Nos.3 to 7 with which this court is not concerned.
46. The various registered conveyances duly executed by defendant No.1 and or the original defendant No.2 in favour of defendant Nos.8 to 30 show the stamp duty paid upon those conveyances reflecting the market value of the land sold on the date of the sale. Though the consideration shown in some of these conveyances have been accepted by the Stamp Authority, the consideration shown in several of them have been rejected by the Stamp Authority and the stamp duty has been ordered to be paid on what was shown to have been the market value adjudged by the stamp authority. That market value must be taken to be the correct ::: Downloaded on - 09/06/2013 19:18:21 ::: This Order is modified/corrected by Speaking to Minutes Order 23 Suit No.4686_1994 value as on the date of such sales.
47. Defendant No.1 and the original defendant No.2 have made an unjust enrichment by appropriating to themselves the profits from the conveyances at least to the extent of the Plaintiff's 15% admitted share. Aside from the fact that it would tantamount to criminal breach of trust and criminal misappropriation of property, it would require defendant Nos.1 and the original defendant No.2 to pay off the Plaintiff the amounts so misappropriated.
48. Since the consideration amount of the Plaintiff's share has been retained by defendant No.1, the Plaintiff would be entitled to 15% of the total market value shown on each of the 15 conveyances executed by defendant No.1 and original Defendant No.2 as representing market value of the property as on that date which defendant No.1 and original defendant No.2 as the agents of all the purchasers are expected to have received, they having suppressed that true market value as the consideration in some of the conveyances notwithstanding.
49. The Plaintiff himself, as one of purchasers would otherwise be required to subdivide, develop and or to convey the plots to the ultimate purchasers. Nothing prevented the Plaintiff from taking a very active part in developing the suit land. This the Plaintiff has not done. The Plaintiff has not exerted for the development of the suit land or the conveyance of the subdivided plots of land even to the extent of his 15% share therein. Ofcourse, the Plaintiff was a partner in the firm. He since retired from the firm. He was not informed of the actual development of the suit land. The Plaintiff has himself not even sought to make any enquiries until his first letter dated 4 th June, 1991 more than 10 years after the execution of the initial agreement and the Power of Attorney. The conveyances have been executed in ::: Downloaded on - 09/06/2013 19:18:21 ::: This Order is modified/corrected by Speaking to Minutes Order 24 Suit No.4686_1994 year 1989. Had the Plaintiff been diligent he would have known of the conveyances. The discretionary relief specific performance must elude the Plaintiff under the aforesaid circumstances.
50. Aside from claiming the declaration of the conveyances being subject to the Plaintiff's rights and claiming his share of 15% in the proceeds of the conveyances, the Plaintiff has also claimed refund of the amount of Rs.30,007/- paid by him. It needs no elaboration to reject that claim. The Plaintiff's due share must be granted because he had paid 15% of his purchase price. It follows therefrom that the purchase price cannot be refunded. Issue No.13 is, therefore, answered in the negative and Issue No.14 is answered in the affirmative as per order below :
O R D E R
1. The reliefs of Specific Performance as well as refund of amount paid are refused.
2. The Plaintiff shall be entitled to recover 15% of the consideration amounts under the conveyances being the market value fixed and accepted by the stamping authority on the conveyances.
3. Since that amount has been unlawfully and illegally retained and appropriated by defendant No.1 and original defendant No.2 and not given to the Plaintiff, the Plaintiff would be entitled to interest thereon at the normal rate of interest charged by banks which would be an average 12% p.a. during the period from 1989 when the amounts were received until the filing of the suit on 24th October, 1994. The Plaintiff would be further entitled to interest on the aforesaid amounts of 15% of the total market value of the suit property shown in the ::: Downloaded on - 09/06/2013 19:18:21 ::: This Order is modified/corrected by Speaking to Minutes Order 25 Suit No.4686_1994 conveyances also at the same rate which would be a reasonable rate of interest on the principal sum adjudged from the date of the suit till date of this judgment with further interest at the rate of 6% p.a. on the aforesaid principal sum from the date of this judgment until the date of payment.
4. Order and decree accordingly.
( ROSHAN DALVI, J.) ::: Downloaded on - 09/06/2013 19:18:21 :::