Gajanan Laxmanrao Pisulkar vs Nagesh Govindrao Durugkar(Dead) ...
2021 Latest Caselaw 4153 Bom

                                1/19                              Judg.sa.449.2012



             IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                       NAGPUR BENCH : NAGPUR

                          SECOND APPEAL NO. 449 OF 2012


        Gajanan Laxmanrao Pisulkar
        Aged about 28 years, Occupation -
        Cultivation; Resident at - Wardha, Tahsil
        and District Wardha.                                     ... APPELLANT


                         VERSUS


1.      Nagesh Govindrao Durugkar (Dead)
        through legal representatives -

[i]     Smt. Chabutai Nagesh Durugkar
        Aged about 75 Years, Occupation - Nil;

[ii]    Sau. Suchitra Rameshrao Soitkar
        Aged about 54 Years, Occupation-
        Household; Resident at - Snehal Nagar,
        Wardha; Tahsil and District Wardha.

[iii] Chandrakant Nagesh Durugkar
      Aged about 52 Years, Occupation -
      Business;

[iv]    Sau. Nanda Diliprao Bhusari
        Aged about 39 Years, Occupation -
        Household;
        Resident at - Goras Bhandar Chowk, Ram
        Nagar, Wardha, Tahsil and District
        Wardha.



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                                     2/19                                   Judg.sa.449.2012



[v]        Shyam Nagesh Durugkar
           Aged about 37 Years, Occupation -
           Business;

           Nos.[i], [iii] and [v] Resident at Sheetal
           Apartments, Wanjari Nagar, Ajni, Nagpur
           Tahsil and District Nagpur.

2.         Anantkumar Satyanarayanji Mishra
           Aged about 67 Years, Occupation -
           Retired; Resident at Wardha, Tahsil and
           District Wardha.

3.         Umesh Anantkumar Mishra
           Aged about 36 Years, Occu - Not known;
           Resident at - Wardha, Tahsil and District
           Wardha.                                                   ... RESPONDENTS


Mr. K. R. Lule, Advocate for Appellant.
Mr. P. R. Agrawal, Advocate for Respondents.


                                   CORAM    :     MRS. SWAPNA JOSHI, J.
                                   DATE     :     MARCH 8, 2021.

JUDGMENT

. The present Appeal has been preferred by the

Appellant/original Plaintiff [for short, 'the plaintiff' for the sake of

convenience] against the Judgment and Decree dated 11/7/2012

delivered by the learned Principal District Judge, Wardha in Regular

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Civil Appeal No. 95/2012, whereby the learned Principal District Judge

has confirmed the findings of the trial court in Special Civil Suit

No.195/1995.

2. The plaintiff has filed a suit for declaration of the sale-deed

as null and void and for specific performance of contract of sale.

3. The facts in brief are that, deceased Respondent No.1 -

Nagesh Govindrao Durugkar/original defendant no.1 [for short, 'the

defendant no.1' for the sake of convenience] was owner of the suit

house. On 12/3/1994 he entered into an Agreement to sell the suit

house for consideration of Rs. 3,71,000/- to the original plaintiff -

Gajanan. The sum of Rs. 21,000/- was paid by the plaintiff to the

vendor Nagesh i.e. defendant no.1 by way of earnest money. The sale-

deed was agreed to be executed on or before 31/3/1995 on payment of

balance consideration before the Sub Registrar. However, the sale-deed

was not executed on 31/3/1995 as per the agreed terms.

4. Thereafter there were exchange of notices between the

plaintiff and defendant no.1. The plaintiff then instituted Special Civil

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Suit No.195/95 against the defendant no.1 for relief of specific

performance of contract dated 12/3/1994. Subsequently, the defendant

no.1 Nagesh executed sale-deed of the suit house on 3/7/1995 in

favour of defendant no.2 - Anantkumar Mishra. Further the defendant

no.2 - Anantkumar Mishra executed the sale-deed of the suit house in

favour of his son Umesh i.e. defendant no.3. Therefore, the plaintiff

impleaded Anantkumar Mishra as defendant no.2 and Umesh Mishra as

defendant no.3 in the Special Civil Suit by way of amendment on the

ground that the transactions were governed by the principles of lis

pendens under Section 52 of the Transfer of Property Act.

5. During the pendency of the suit, defendant no.1 Nagesh

died, hence his legal heirs were brought on record. They further

contested the suit. It is the specific case of the Respondents/original

defendants that the Appellant/original plaintiff was never ready and

willing to perform his part of contract. As the plaintiff has committed

the breach of Agreement to sell, the earnest amount of Rs. 21,000/-

paid by him stood forfeited. The defendant no.2 - Anantkumar and

defendant no.3 - Umesh claimed to be the bona fide purchasers.

5/19 Judg.sa.449.2012

6. The trial court as well as the lower appellate court after

assessing the evidence on record and hearing both the sides dismissed

the claim of the plaintiff. It was observed by the trial court that plaintiff

failed to bear out his case of readiness and willingness to perform his

part of contract. It was observed that the plaintiff was not present in

the office of Sub Registrar to get the sale-deed executed. So also the

plaintiff failed to prove his presence in the office of Sub Registrar. It

was held that there was no obligation for the defendants to secure the

Certificate under Section 230A of the Income Tax Act, 1961, as there

was no such clause in the Agreement as such.

7. As regards defendant nos.2 & 3, both the courts below held

that they are the bona fide purchasers. The defendant no.1 sold suit

house to defendant no.2 only after the cancellation of Agreement of

Sale, which was cancelled due to the fault on the part of plaintiff and

his father Laxman, and therefore, both the sale-deeds dated 3/7/1995

and 18/12/1996 are bona fide transactions binding on the Plaintiff.

Against the aforesaid findings, present Second Appeal has been

preferred by the original plaintiff.

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8. While admitting the present Appeal, following substantial

questions of law were framed by this Court on 18th September, 2012.

"(i) Whether the courts below were right in holding that the plaintiff-appellant has failed to show his readiness and willingness to perform his part of contract on the ground of non production of Income Tax Clearance Certificate under Section 230A of the Income Tax Act (as it then existed)?

(ii) Whether the courts below were right in holding that the defendant no.2 was bona fide purchaser for valuable consideration without notice of the previous transaction?"

9. Mr. Lule, the learned Counsel for Appellant/plaintiff

vehemently contended that the plaintiff and defendant no.1 had

entered into an Agreement to sell (Exh.73) on 12/3/1994 and agreed

date of sale-deed was 31/3/1995. It is submitted that as per the

provisions under Section 230A of the Income Tax Act, it was necessary

for the defendant no.1 to handover the said Income Tax Clearance

Certificate to the plaintiff, however, the defendant no.1 failed to take

any steps in that regard, and therefore, the sale-deed was not executed

7/19 Judg.sa.449.2012

between the parties. It is submitted that the plaintiff showed his

readiness for fulfillment of the contract, however, the defendant no.1

did not respond to it. Therefore, on 4/7/1995 the intimation letter was

sent by the plaintiff to the defendant no.1, however, the defendant no.1

did not respond to the said intimation and sold the house property to

the defendant no.2 and further defendant no.2 sold it to the defendant

no.3.

10. It is submitted that the learned lower appellate court has

wrongly come to the conclusion that under the provisions of Section

230A of the Income Tax Act, registration of the document was barred

and not its execution. It was observed that if the Appellant was really

ready and willing to perform his part of contract by paying the balance

consideration, the sale-deed could have been executed and produced

before the Sub Registrar and it was the duty of the registering Officer

to record his objection and keep in abeyance the sale-deed for

registration, awaiting certificate from the assessing officer. However,

the Appellant failed to appear in the office of Sub Registrar and get the

sale-deed executed. Hence, there is no substance in the case of the

8/19 Judg.sa.449.2012

Appellant that because of the said legal hurdle the document could not

be executed.

11. It is further contended by the learned Counsel for Appellant

that as per the provisions of Section 49 of the Registration Act, no valid

title can be passed unless the document is valid. In these

circumstances, learned Counsel for Appellant contended that both the

courts below have erred in dismissing the suit filed by the plaintiff.

12. Per contra, Mr. Agrawal, the learned Counsel for

Respondents contended that it was necessary for the plaintiff to prove

his readiness and willingness to perform his part of contract by

bringing the evidence on record regarding the availability of fund for

payment of balance consideration. It is submitted that the plaintiff

never entered into the witness-box. The plaintiff's father PW-1 Laxman

Pisulkar failed to depose that at the relevant time he was having such

amount. It is submitted that it was necessary for the plaintiff to enter

into the witness-box and offer himself for cross-examination on the

point of his readiness and willingness to perform his part of contract. It

is submitted that father of the plaintiff was not authorized by the

9/19 Judg.sa.449.2012

plaintiff, and therefore, his evidence failed to prove the readiness and

willingness of the plaintiff to perform his part of contract. It is

submitted that at the relevant time plaintiff was aged about 20 years,

taking education and he was not having any source of income and on

his behalf his father was dealing with the suit transaction. It is

submitted that thus there was no convincing evidence on record in

support of the case of the plaintiff.

13. The learned Counsel for Respondents further contended

that there was no condition or obligation for the defendant no.1 to

secure the Certificate under Section 230A of the Income Tax Act. It is

submitted that admittedly the agreed date of execution of sale-deed

was 31/3/1995. It was agreed that remaining consideration is to be

paid till 31st March, 1995, however, till then there was no intimation

for furnishing the said Certificate under the Income Tax Act. It is

submitted that parties to the Agreement are supposed to comply the

Agreement condition. However, the plaintiff failed to comply the same.

It is contended that on 30/3/1995 defendant no.1 - Nagesh sent a

telegram (Exh.94) to the plaintiff to execute the sale-deed by paying

10/19 Judg.sa.449.2012

balance consideration of amount, which means that the defendant no.1

has shown his readiness before the agreed date of sale-deed, however,

there was no communication by the plaintiff.

14. It is submitted that on the agreed date the defendant no.1

went to the office of Sub Registrar, however, the plaintiff remained

absent. He pointed out the postal acknowledgment (Exh.95). In that

regard, he prepared the Affidavit (Exh.96) before the executing

Magistrate on 31/3/1995 itself. On 8/6/1995 i.e. after a period of

more than two months defendant no.1 issued notice to the plaintiff

stating therein that as the plaintiff failed to attend the office of Sub

Registrar, the Agreement stands cancelled. The said notice is at Exhibit-

74. It is submitted that as the plaintiff failed to communicate to the

defendant no.1, the Agreement stood cancelled. It is submitted that the

plaintiff sent a telegram to the defendant no.1 on 4/7/1995 after

cancellation of the Agreement.

15. On the point of securing the Certificate under Section 230A

of Income Tax Act, it is submitted by the learned Counsel for

Respondents/original defendants that Registrar did not put any

11/19 Judg.sa.449.2012

condition in that regard. Therefore, on 3/7/1995 the defendant no.1

sold the house property to the defendant no.2 and further the

defendant no.2 sold it to the defendant no.3. It is submitted that the

condition to produce the Certificate was not an obligation under the

contract, hence it cannot be said that there was a breach of contract as

such.

16. On the aspect of provisions under Section 230A of Income

Tax Act, the learned Counsel for Respondents has placed reliance on

the Judgment of the Hon'ble Apex Court in the matter of Kalawati (D)

through L.Rs. and Ors. V/s Rakesh Kumar and Ors., reported in AIR

2018 Supreme Court 960.

17. After hearing both the sides and on a perusal of the

Judgments rendered by both the courts below, it is amply clear that

admittedly there was an Agreement dated 12/3/1994 between the

parties. The plaintiff agreed to purchase the suit property for

consideration of Rs.3,71,000/- from defendant no.1. The amount of

Rs.21,000/- was paid by the plaintiff to the defendant no.1 by way of

earnest money and agreed to pay the balance consideration at the time

12/19 Judg.sa.449.2012

of registration of the sale-deed before the Sub Registrar. The sale-deed

was to be executed and registered on 31/3/1995, however, the plaintiff

did not attend the office of Sub Registrar nor there was any

communication by the plaintiff to the defendant no.1 with regard to his

inability to attend the office of Sub Registrar. In fact there was no

communication from the plaintiff to defendant no.1 that he was ready

and willing to perform his part of contract by paying the balance

consideration, however, there was a legal hurdle of Section 230A of the

Income Tax Act, 1961. The plaintiff failed to communicate that since

the value of the suit property was more than 2.00 Lac, registration of

the sale-deed under Section 17 of the Indian Registration Act, 1908

was not permissible without the Certificate of assessing authority under

the Income Tax Act.

18. In this context, it would be beneficial to go through the

provisions under Section 230A of the Income Tax Act, as follows.

"S. 230A. Restrictions on registration of transfer of immovable property in certain cases. - (1) Notwithstanding anything contained in any other law for the time being in force, where any

13/19 Judg.sa.449.2012

document required to be registered under the provisions of clause (a) to clause (e) of sub-section(1) of section 17 of the Indian Registration Act, 1908 (XVI of 1908), purports to transfer, assign, limit or extinguish the right, title or interest of any person to or in any property valued at more than two lakh rupees, no registering officer appointed under that Act shall register any such document, unless the Assessing Officer certifies that -

(a) such person has either paid or made satisfactory provision for payment of all existing liabilities under this Act, the Excess Profits Tax Act, 1940 (XV of 1940), the Business Profits Tax Act, 1947 (XXI of 1947), the Indian Income Tax Act, 1922 (XI of 1922), the Wealth-tax Act, 1957 (XXVII of 1957), the Expenditure-tax Act, 1957 (XXIX of 1957), [the Gift-tax Act, 1958 (XVIII of 1958), the Super Profits Tax Act, 1963 (XIV of 1963), and the Companies (Profits) Surtax Act, 1964 (VII of 1964)], or

(b) the registration of the document will not prejudicially affect the recovery of any existing liability under any of the aforesaid Acts.

(2) The application for the certificate required under sub- section (1) shall be made by the person referred to in that sub- section and shall be in such form and shall contain such particulars as may be prescribed.] [(3) The provisions of sub-section (1) shall not apply in a case where the person referred to in that sub-section is any such

14/19 Judg.sa.449.2012

institution, association or body, or belongs to any such class of institutions, associations or bodies, as the Board may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette.]"

19. From the aforesaid provisions it is clear that the registration

of document is barred by the aforesaid provisions. However, so far as

the execution of the document is concerned, the provision does not bar

the execution of the document. If at all the Appellant was ready and

willing to perform his part of contract by paying the balance

consideration, it would possible to execute the sale-deed and produce it

before the Sub Registrar for registration. It was for the Sub Registrar to

record his objection and keep in abeyance the sale-deed for

registration, awaiting the Certificate from the assessing officer of the

Income Tax department. However, the evidence on record shows that

the Appellant failed to appear in the office of Sub Registrar and get the

sale-deed executed. Thus, the provisions under Section 230A of Income

Tax Act prohibits the registration of the sale-deed and not execution of

the same between the parties.

15/19 Judg.sa.449.2012

20. In the case (cited supra), the Hon'ble Apex Court in

paragraph no.23 has observed as under :

"23. It was submitted that Kalawati and the other vendors did not perform their part of the agreement despite Rakesh Kumar requesting them to do so. The contention of Rakesh Kumar was that the vendors did not obtain a "no objection certificate" from the authorities concerned. We have gone through the agreement to sell dated 29th May, 1986 and the relevant clause of the contract is remarkably vague and reads as follows :

"That the vendors will obtain the "no objection certificate" from the authorities concerned and will inform the vendee by registered post after getting the income tax clearance certificate."

In the case before the Hon'ble Apex Court there was a clause in the

Agreement between the parties regarding obtaining the "no objection

certificate" from the concerned authority. It was, however, held that the

said clause was vague.

21. In the case (cited supra) the Hon'ble Apex Court held that

there is nothing to indicate the nature of "no objection certificate" that

the vendors were required to obtain and who were the authorities from

whom "no objection certificate" was required, nor there is any

16/19 Judg.sa.449.2012

indication of the purpose for which "no objection certificate" was

required. Similarly, there is no indication about the nature of the

Income Tax Clearance Certificate required and for what purpose. In the

instant case in fact neither there was any clause in the Agreement with

regard to the fact that the defendant no.1 was required to obtain "no

objection certificate" from the Income Tax authority or any other

authority nor was there any indication as to for what purpose the

clearance certificate from the Income Tax authority was required. So

also there was no indication about the nature of the income tax

clearance certificate required and for what purpose. Thus the aforesaid

case law assist the case of defendant no.1.

22. In the case of Kalawati (cited supra), the Hon'ble Apex

Court has relied upon (1996) 4 SCC 526 :(AIR 1996 SC 2095) , wherein

it is held that :

" There is a distinction between readiness to perform the contract and willingness to perform the contract. By readiness may be meant the capacity of the plaintiff to perform the contract which includes his financial position to pay the purchase

17/19 Judg.sa.449.2012

price. For determining his willingness to perform his part of the contract, the conduct has to be properly scrutinised.......The factum of readiness and willingness to perform plaintiff's part of the contract is to be adjudged with reference to the conduct of the party and the attending circumstances. The court may infer from the facts and circumstances whether the plaintiff was ready and was always ready and willing to perform his part of the contract."

23. In the instant case, the aforesaid facts clearly demonstrate

that the Appellant/Plaintiff was neither ready nor had the capacity to

perform his part of the contract, and therefore, it appears that the

plaintiff failed to pay the part consideration in cash to the defendant

no.1 on 31/3/1995 as contracted, and therefore, he is disentitled for

relief, as the time is essence of contract.

24. In view of the facts and circumstances, it is amply clear that

there was no obligation for the defendant no.1 to produce the

clearance certificate from the Income Tax authority nor there was any

clause in the Agreement in that regard. Therefore, it cannot be said

that there was any breach of contract on the part of defendant no.1.

Thus, the contract between the parties rightly came to an end on

18/19 Judg.sa.449.2012

8/6/1995. The Plaintiff has failed to show his readiness and

willingness to perform his part of contract on the ground of non

production of Income Tax Clearance Certificate under Section 230A of

the Income Tax Act. Both the courts below have rightly given the

findings in that regard.

25. So far as the substantial question of law with regard to the

fact that defendant no.2 was a bona fide purchaser for a valuable

consideration, without notice of the previous transaction is concerned,

the trial court has rightly observed that the defendant no.3 has been

impleaded after getting executed the sale-deed vide Exhibit-102 on

18/12/1996, from the defendant no.2, who was his father, however,

the plaintiff failed to seek any relief against him. The transaction in

that regard is hit by the principles of lis pendens under Section 52 of

the Transfer of Property Act, 1882. In any case, the defendant nos.2

and 3 are bona fide purchasers. The defendant no.1 has sold suit house

to the defendant no.2 only after the cancellation of the Agreement of

Sale which was cancelled due to the fault on the part of plaintiff, and

therefore, both the sale-deeds dated 3/7/1995 and 18/12/1996 are

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bona fide transactions which are binding on the plaintiff.

26. Thus, in view of the facts and circumstances and position of

law, it is held that both the courts below have rightly given the findings

on the point in dispute. Both the substantial questions of law are

answered accordingly. There is no substance in the present Appeal. No

interference is called for in the Judgments delivered by both the courts

below.

27. The Second Appeal is dismissed. No order as to costs.

[MRS. SWAPNA JOSHI, J.] Yadav VG