Mr. Devender Singh Mehta Thr. Lrs & ... vs Shri Rakesh Kumar Jain & Ors.
2009 Latest Caselaw 767 Del

*            IN THE HIGH COURT OF DELHI AT NEW DELHI


                                               Reserved on : 02.02.2009
%                                           Date of decision : 06.03.2009


+                        RFA (OS) No.19 of 2000


MR. DEVENDER SINGH MEHTA thr. LRs & ANR. ...APPELLANTS
                   Through:    Mr. Rakesh Tiku &
                               Mr. Aditya Bhardwaj, Advocates.


                                   Versus


SHRI RAKESH KUMAR JAIN & ORS.                       ...RESPONDENTS
                    Through:           Mr. A.P. Agarwal, Mr. A.S. Mathur
                                       & Ms. Shruti Verma, Advocates
                                       for R-1, 2(a), 3 & 4.
                                       Mr. Rajesh Benati & Mr. Hari
                                       Mohan, Advocates for R-2 (b), (c)
                                       & (d).


CORAM:

HON'BLE MR. JUSTICE SANJAY KISHAN KAUL
HON‟BLE MR. JUSTICE SUDERSHAN KUMAR MISRA

1.        Whether the Reporters of local papers
          may be allowed to see the judgment?            Yes

2.        To be referred to Reporter or not?             Yes

3.        Whether the judgment should be                 Yes
          reported in the Digest?


SANJAY KISHAN KAUL, J.

1. A suit for specific performance and in the alternate for

damages was filed by the plaintiffs (respondents herein) in

respect of the property bearing No. 35, Babar Road, Bengali

Market, New Delhi (hereinafter referred to as, „the suit

property‟). The suit was decreed for the claim for specific

performance vide judgment and decree dated 01.12.1999.

Hence, this appeal.

2. The plaintiffs in the suit are four brothers. The plaintiffs

entered into an Agreement for Sale dated 08.09.1978 (Ex.

P-1) (hereinafter referred to as, „the said Agreement‟) with

the defendants in respect of the suit property for a total

consideration of Rs.4,90,000/-. The said Agreement was

executed by the plaintiffs on the one side and defendant

No. 1 on the other side (for himself and for and on behalf of

defendant No. 2 as his duly constituted attorney).

Defendant Nos. 1 & 2 are also brothers.

3. In terms of the said Agreement, the defendants had

received a sum of Rs.30,000/- and the balance had to be

paid in two installments, i.e., Rs.2,60,000/- to be paid at the

time of possession of the property and execution of the

Sale Deed and Rs.2,00,000/- to be paid within 2 years from

the date of possession together with interest @ 10% p.a. on

completion of the transaction in all respects. It was further

covenanted and agreed between the parties that actual

physical possession would be handed over within 3 months

from the date of the said Agreement. It was also

mentioned in the said Agreement that the defendants

would, before registration, obtain permission in favour of

the plaintiffs from the Competent Authority under Urban

Land (Ceiling & Regulation) Act, 1976 (for short, „the ULCR

Act‟) apart from obtaining permission from L&DO to sell the

suit property as also the income-tax clearance certificate.

It is the case of the plaintiff, as averred in the plaint, that

these obligations were not fulfilled by the defendants as

envisaged in the said Agreement and the excuse given by

them was the ill-health of the sister of the defendants. The

plaintiffs after waiting for sometime wrote the letter dated

05.04.1979 (Ex. PW-2/1) to the defendants thereby

requesting them to inform when possession shall be

handed over as also to complete the transaction. The letter

was sent to two addresses - one being at 3-C/31, Rohtak

Road and the second at 35 Babar Road. The letter further

stated that the plaintiffs were ready and willing to fulfill

their part of the contract subject to handing over of

physical possession of the building complete in all respects

as per the said Agreement. This letter was received back

with endorsement that the defendants were out of India /

out of station. The plaintiffs again wrote a letter dated

02.05.1979 (Ex. PW-2/2), which was also unserved but this

time the postal endorsement in respect of Rohtak Road

address was "avoiding to take delivery" and in respect of

the address of 35, Babar Road was "that in spite of going

several times, addressee has not met and the kothi is lying

vacant".

4. It is further stated that on learning of the defendant‟s

return, the plaintiffs approached him to complete the

transaction. A notice by telegram dated 21.12.1979 (Ex.

PW-2/3) was sent as also a registered notice dated

23.12.1979 (Ex. PW-2/4) was sent. Both these notice‟s

remained undelivered.

5. The plaintiffs thereafter received a letter dated 08.01.1980

(Ex. P-3) from defendant No. 1 stating that it was not

possible to register the sale as the required permissions

could not be obtained. The letter further stated that the

money paid was being refunded, i.e., Rs. 30,000/-. The

plaintiffs sent the letter dated 21.1.1980 (Ex. PW-2/5) to the

effect that they did not accept that sale permission could

not be obtained or that the transaction could not be

completed and further stated that they were not encashing

the draft and the same could be taken back. The said letter

was stated to have been sent under postal certificate (UPC).

It is averred in the plaint that since the letter was not

returned, it must have been delivered. The plaintiffs

further submitted that reminders dated 15.2.1980 (Ex. PW-

2/6) and 12.5.1980 (Ex. PW-2/7) were sent under postal

certificate and no reply to the same was received. Finally, a

legal notice dated 05.07.1980 (Ex. PW-2/9) was sent by the

plaintiffs to the defendants. This letter was returned back

with the endorsement "not available".

6. In the Written Statement, the following preliminary

objections were raised :

a. that the said Agreement is "voidable, not executable and inoperative" on the ground that the Plaintiffs were debarred by Section 5 of the Foreign Exchange Regulation Act, 1973 from making payment to the defendants since they were British Nationals. b. that since the plaintiffs owned another immovable property, they could not and did not sign and supply the necessary application and affidavits for the L&DO permission as well as the clearance under the Urban Land (Ceiling & Regulation) Act, 1976. c. that the Agreement stood exhausted, no longer operative and in force and binding upon the parties for the reason that Rs.30,000/- was returned.

d. that the plaintiffs were not financially in a position to pay the sale consideration.

e. that the relief claimed by the plaintiff, i.e., decree directing the defendants to execute the sale deed in favour of the plaintiffs‟ nominee is wrong, unsustainable, beyond the terms and conditions of the Agreement dated 08.09.1978.

f. that the claim for damages of Rs.4,50,000/- was wrong, voidable and misconceived.

g. that only Rs.10,000/- at most, could be claimed as damages.

h. that the agreement between the plaintiffs and defendants is invalid and cannot be acted upon since the same is hit by Section 47 read with Section 31 of Foreign Exchange Regulation Act, 1973. i. that it is otherwise not equitable to grant specific performance.

j. that the specific performance of the Agreement to Sell could not be granted having regard to the fact that the defendant had been restrained by the High Court in WP(C) No. 2659/1984 titled as "Devinder Singh Mehta Vs. L&DO" from alienating, encumbering or disposing of the property in question in any manner.

7. It was also pleaded by the defendants that the defendants

could not apply for the requisite clearance(s) /

permission(s) due to the failure of the plaintiffs and that the

letters/notices were never received.

8. The learned Single Judge on the basis of the pleadings

framed the following issues :-

1. Whether defendant Nos. 1 and 2 are British National and are debarred from making any payment and/or receiving any payment in consideration of the sale of the suit property and the agreement is voidable/ inoperative for that reason?

1A. Whether the agreement dated 8th September, 1978 is invalid and hit by Sections 31 and 47 of the Foreign Exchange Regulation Act, 1973?

2. Whether the parties had agreed to cancel the sale agreement dated September 8, 1978 as alleged in para 8 (on merits) of the written statement?

2A. Whether it is not equitable to grant specific performance of the Agreement to Sell dated 8th September, 1978?

3. What is the effect of defendants returning Rs. 30,000/- by means of bank draft to the plaintiffs?

3A. Whether specific performance of the agreement cannot be granted for the pleas raised in para 11 of the preliminary objections?

4. Whether the plaintiffs were called upon to sign the necessary application and affidavits for obtaining permission for sale from the Government Authorities concerned and they failed to do so? If so, its effect?

5. Whether the plaintiffs were ready and willing to perform their part of the contract?

6. Whether the plaintiffs are not entitled to specific performance of the contract even if breach on the part of the defendant is proved?

7. To what amount, if any, the plaintiffs are entitled to damages?

8. Reliefs.

9. The plaintiffs in support of their case examined plaintiff No.

2 as PW-2. Seven other witnesses were also examined by

the plaintiffs, namely, (i) Mr. Harish Chander Bajaj, Clerk,

Punjab National Bank as PW-1; (ii) Mr. Hari Singh, Jr.

Engineer (Meters), NDMC as PW-3: and (iii) Mr. Kadag

Singh, Record Keeper, NDMC as PW-4. The three remaining

witnesses were Mr. Mehar Chand as PW-5; Mr. Satinder Jain

as PW-6 and Mr. Padam Chand Jain as PW-7. These three

witnesses are relatives of the plaintiffs. The last witness

examined by the plaintiffs was Mr. Ghansham Vashist,

Advocate as PW-8. PW-8 was appointed as a Local

Commissioner. The defendants in support of their case only

examined two witnesses, namely, Shri Bir Sen Singh, UDC,

L&DO as DW-1 and Mr. Lok Nath Grover, power of attorney

of the defendants as DW-2.

10. The learned Single Judge after considering the pleadings

and perusing the evidence led by the parties has given

categorical findings and the consequent decree of specific

performance. The learned Single Judge has dealt with Issue

Nos. 1 & 1A together. The learned Single Judge held that

the defendants have failed to prove that they were British

Nationals. The learned Single Judge has taken note of the

fact that the address given of defendant No. 1 in the said

Agreement was of Rohtak Road, Delhi and moreover,

photocopy of the passport of the defendants had not been

filed. It has been further held that even if the defendants

were British Nationals, there would not have been an

infraction of Section 31 nor Section 47 of the Foreign

Exchange Regulation Act, 1973. The fact that the

defendants admittedly maintained bank accounts in Delhi

and had encashed the sum of Rs. 30,000/- in New Delhi was

taken note of and, thus, it was held that there was no

impediment in the defendants receiving sale consideration

in India. Issue Nos. 1 & 1A were, thus, held against the

defendants.

11. In so far as Issue No. 2, the learned Single Judge has taken

note of the fact that the onus of proving this issue was upon

the defendant and he failed to produce any evidence to

prove his assertion. Accordingly, Issue No. 2 has also been

held against the defendants by the learned Single Judge.

12. Issue No. 2A has also been held against the defendant by

the learned Single Judge while observing that the plaintiffs

are not guilty of laches and hence, no case has been made

out that it is not equitable to grant specific performance.

The learned Single Judge has noted that it was the

defendants who had sought adjournments from time to

time and had delayed the final adjudication of the suit by

amending their pleadings twice. It was also noted that

defendant No. 1 had died in the United Kingdom on

24.05.1991 leaving behind his widow Smt. Surjit Kaur

Mehta and two sons, namely, S/Shri Mehrban Singh and

Harsharan Singh. The legal heirs had filed affidavits to this

effect as well as vakalatnamas in favour of Mr. Vivekanand,

but since these documents had not been authenticated by

the Indian High Commission, the same were consequently

inadmissible. None of the heirs had entered the witness

box to affirm the averments in the Written Statement. The

counsel for the defendants had been engaged by Shri Lok

Nath Grover, Power of Attorney (Ex. DW-2/1) holder of the

Defendants. It has been taken note of by the learned

Single Judge that the said Power of Attorney did not

empower Shri Lok Nath Grover to appoint an Advocate on

behalf of the defendants nor authorized him to give

evidence on their behalf.

13. As regards Issue No. 3, the learned Single Judge has

returned a categorical finding that the defendants had

attempted to unilaterally resile from their obligations under

the contract by returning the part payment of Rs.30,000/-.

It has been held that by returning Rs.30,000/- by way of

bank draft to the plaintiffs, the defendants could not

terminate the said Agreement dated 08.09.1978. The

learned Single Judge has taken note of the fact that the

plaintiffs had tried to contact the defendants repeatedly,

but to no avail as the defendants were not available in India

at least during the period from March, 1980 to December,

1980.

14. With respect to Issue No. 3A, the learned Single Judge has

observed that the issue has arisen on account of the second

amendment sought to be carried out in the written

statement by including preliminary objection No. 11. The

learned Single Judge has noted that the Written Statement

on record does not conform to the requirements of Rules 14

and 15 of Order VI of the Code of Civil Procedure, 1908

(hereinafter referred to as, „the Code‟) as it has not been

signed by the defendants‟ Advocate and the verification

does not state the place and the date of signing. The

learned Single Judge has even considered this plea on

merits and rejected the same. The defendants did not lead

any evidence to prove this issue and it was consequently

decided against the defendants.

15. The learned Single Judge has decided Issue No. 4 against

the defendants and held that the plaintiffs were not called

upon by the defendants to sign any application or affidavit

for obtaining necessary permission for sale from the

concerned authorities. The learned Single Judge has also

taken note of the fact that a controversy arose in Crl. M. No.

3/86 on the question of cancellation, under the initials of

defendant No. 1, of the words "their nominees" in Ex. P-1.

Ex. P-1/B as also the certified copy (photocopy) did not

contain this cutting. Ex. PW-2/10 has been taken note of,

which is an Agreement between the plaintiffs nominating

plaintiff No. 1 to be owner of the suit property. The learned

Single Judge has also concluded that the scoring out of the

words "their nominees" under the signature of Defendant

No. 1 in Ex. P-1 was carried out in a surreptitious and illegal

manner to subvert the understanding between the parties

whereby the vendees were authorized to appoint their

nominees.

16. The learned Single Judge has dealt with Issue Nos. 5 & 6

together. Issue No. 5 has been held in favour of the

plaintiffs and Issue No. 6 has been decided against the

defendants. The learned Single Judge has appreciated the

evidence and dealt with the statutory provisions as well as

the case-law on the subject to come to the aforementioned

findings. The learned Single Judge observed that in a suit

for specific performance, each case has to be decided on its

own facts. It has also been observed that, "It is often

argued, especially since damages are invariably claimed in

the alternative in suits for specific performance of an

agreement, that the discretionary relief of specific

performance ought not to be granted and the alternative

relief of damages should instead be considered. This is

clearly a misnomer and is contrary to various decisions of

the Apex Court including the case of Prakash Chandra v.

Angadlal & Ors., AIR 1979 SC 1241... ". It has been

observed by the learned Single Judge that the plaintiffs

possessed the capacity to pay the sale consideration. The

plaintiffs have produced evidence in the said regard. The

learned Single Judge has also noted that as per the said

Agreement, the plaintiffs were granted the liberty to pay

the sale consideration even after execution of the sale

deed.

17. So far as Issue No. 7 is concerned, the learned Single has

not given a finding in respect thereof as the question of

damages would only arise if the decree of specific

performance was not being granted.

18. In respect of Issue No. 8, the learned Single Judge has

granted the relief of specific performance of the said

Agreement in favour of the plaintiffs and against the

defendants.

19. There is another aspect to the matter as contempt of court

proceedings were initiated against Mr. Lok Nath Grover

during the pendency of this appeal. The Order dated

25.09.2001 records the fact that Mr. Lok Nath Grover had

written a letter to Devinder Gupta, J. It was recorded that

an attempt had been made to influence the course of

judicial proceedings. It was also recorded that Mr. Lok Nath

Grover had been proceeded against for having committed

contempt of court in Criminal Contempt Petition No. 25/98

titled „Sports Authority of India vs. Lok Nath Grover‟.

Pursuant to the aforesaid Order dated 25.09.2001, Cont.

Cas. (Crl.) No. 16/2001 was registered, which has been

heard along with the present appeal. The suit as well as

the appeal has been prosecuted by Mr. Lok Nath Grover

being the holder of power of attorney of the defendants.

20. The learned counsel of the appellants has sought to assail

the findings of the learned Single Judge on the following

grounds :-

Appellants are Foreign Nationals

21. Learned counsel for the appellants pleaded that the

appellants herein are British Nationals, and though their

British passports were not formally proved, a copy of the

same has now been filed and the same being a public

document can be taken into consideration. Learned

counsel also sought to rely upon the cross-examination of

PW-2 where the said witness only expressed an

unawareness of the nationality of the appellants but did not

dispute the same. Learned counsel also submitted that the

reliance placed on Ajit Prasad Jain v. N.K. Widhani & Ors.,

AIR 1990 Del 42 by the learned Single Judge is misplaced,

and hence the suit ought to have been dismissed at the

initial stage itself.

Effect of undertaking given to Court in WP (C) No.2659/1984

22. In regard to Issue No. 3A, it is submitted by learned counsel

for the appellants that the respondents never disputed the

factual position except for saying that it was in the form of

an undertaking given in the year 1987. Learned counsel for

the appellants further submitted that no further evidence

was required to be given and, thus, the issue ought to have

been decided in favour of the appellants.

Respondents were not ready and willing to perform their obligations under the said Agreement

23. Learned counsel for the appellants further submitted that

the respondents were not ready and willing to discharge

their obligations, which as per the appellants also included

their facilitating the obtaining of requisite permissions from

the government authorities. In this regard, reliance is

placed upon Clause 2(a) of the said Agreement which

stipulated a payment of Rs.2,60,000/- by the vendee, i.e.,

the respondents herein to the vendor, i.e., the appellants

herein at the time of possession of the property and

execution of the sale deed. Learned counsel further

submitted that since as per Clause 4 of the said Agreement,

actual physical possession was also to be given in three (3)

months, therefore, it would follow that the payment of

Rs.2,60,000/- also had to be made within the same period

of time. It was also urged by learned counsel for the

appellants that the permissions in favour of the vendee

(respondents herein) or their nominee(s) were to be taken

by the appellants before execution of the sale deed and

upon failure of the vendee (respondents herein) to get the

requisite permission, which was the condition precedent for

execution of the sale deed, the bargain was to be treated

as cancelled.

24. Learned counsel for the appellants further submitted that

the respondents could not furnish the requisite certificates /

affidavits as plaintiff Nos. 2 and 3 along with their mother in

August, 1979 had bought a house bearing No. 41, Bengali

Market, New Delhi and also assigned their rights in favour

of plaintiff No. 1 by virtue of an internal arrangement /

agreement. It was submitted that the said Agreement was

correctly cancelled on 08.01.1980. Learned counsel for the

appellants also placed reliance upon Sections 51 to 53 of

the Indian Contract Act, 1872 (for short, „the Contract Act‟)

and Ex. PW-2/5, PW-2/6, PW-2/7 & PW-2/9 wherein the

respondents had only demanded possession of the property

without offering any money to contend that if the promisee

is not ready and willing to perform his reciprocal promise,

the promisor need not perform his promises. It was further

submitted that once a disability had been incurred by

plaintiff Nos. 2 and 3 on account of having bought property

No. 41, Bengali Market as a result of which affidavits were

not given, therefore, their unilateral assignment in favour of

plaintiff No. 1 had no meaning as affidavits had to be filed

by all the plaintiffs. Learned counsel for the appellants has

relied upon the judgment of Full Bench of this Court in

Daulat Ram v. Lt. Governor, AIR 1982 Del 470 to put forth

the proposition that a nominee cannot acquire a status

better than the principal.

25. Learned counsel for the appellants also sought to urge that

the respondents were not in a financial capacity to pay the

sale consideration as they had acquired property bearing

No. 41, Bengali Market. Learned counsel further sought to

disregard the evidence of the relations of the plaintiffs as it

was stated to be too remote and full of contradictions.

26. Learned counsel for the appellants relied upon the

judgment of the Apex Court in N.P. Thirugnanam (Dead) by

LRs. v. Dr. R. Jagan Mohan Rao and Ors., (1995) 5 SCC 115,

which was followed in the case of Umabai & Anr. v. Nilkanth

Dhondiba Chavan (Dead) by Lrs. & Anr., 2005 IV AD (S.C.)

587 to support the proposition that mere capacity to raise

funds is not adequate to meet the parameters set in

Section 16 of the Specific Relief Act, 1963.

Relief

27. Learned counsel for the appellants further submitted that

the relief of specific performance was a discretionary one

and the increase in prices of the property would result in

inequities between the parties. In this behalf, learned

counsel relied upon the judgment of the Apex Court in

Kanshi Ram v. Om Prakash Jawal & Ors., JT 1996 (4) S.C.

733 to urge that the alternative relief of damages may be

granted when there has been a manifold increase in the

price of the property in question. Learned counsel also

relied upon the judgment of the Apex Court in K. Narendra

v. Riviera Apartments (P) Ltd., (1999) 5 SCC 77 to submit

that the specific performance can be declined when the

agreement has become incapable of performance.

Reliance was also placed upon the judgment of a learned

Single Judge of this Court in Ravi Sood and Anr. v. Vir Bala

Sharma, 71(1998) DLT 254 to contend that if there was a

denial of requisite permission by the competent authorities,

specific performance could not be granted.

28. Lastly, learned counsel for the appellants submitted that

since requisite permissions had not been taken, decree of

specific performance would be contrary to public policy.

29. Learned counsel for the respondents, at the outset itself,

brought to our notice that the respondents had filed an

application under Section 340 of the Criminal Procedure

Code, 1973 against the appellants for trying to erase the

words "or nominees" from the said Agreement. A reference

is also made to the Order dated 20.08.1986 where the

learned Single Judge has directed a reply be filed to the

application within one month.

30. In support of his case learned counsel for the respondents

submitted that the payment clause in the said Agreement

as well as page 49 of the impugned judgment clearly

mention that the covenant in the agreement evidences the

defendants‟ complete faith in the financial reliability and

creditworthiness of the plaintiffs. It was further submitted

by the learned counsel that the appellants have admitted

that steps were not taken and the work to be done as per

the said Agreement was not complete. Reliance is also

placed upon page 8 of the impugned judgment to contend

that no permission was obtained from any authority.

31. In support of his case, learned counsel for the respondents

also argued that the fact that two of the plaintiffs had

entered into an Agreement to purchase property No. 41,

Bengali Market, does not frustrate the performance of the

contract, and that the nominee clause inserted in the said

Agreement was for this specific purpose and no disability

was caused with respect to the said Agreement. It was also

submitted that the occasion for giving affidavits did not

arise at all. Learned counsel also relies upon the

Agreement dated 01.06.1979 (Ex. PW-2/10) which mentions

the said Agreement and further nominates Mr. Rakesh

Kumar Jain (plaintiff No. 1) as their nominee.

32. Learned counsel for the respondents in respect of the legal

notice dated 23.12.1979 (Ex. PW-2/4) submitted that the

same was dispatched on 09.01.1980 before receipt of the

letter dated 08.01.1980 (Ex. P-3). The same is stated to

have been received on 13.01.1980. It was further

submitted that as per the said Agreement, all the

permissions and clearances had to be obtained by the

appellants only.

33. Learned counsel for the respondents also submitted that

there was no talk of cancellation of the said Agreement and

the same is proved by sending of the legal notice dated

23.12.1979 (Ex. PW-2/4). It was submitted that the learned

Single Judge while giving findings on Issue No. 3 has

mentioned regarding the tenor of the letter dated

08.01.1980 (Ex. P-3) and has also noticed that the demand

draft of Rs.30,000/- has not been encashed, which fact

clearly shows that the respondents did not agree to

cancellation of the said Agreement and that the act of

cancellation was a unilateral one.

34. Learned counsel for the respondents further submitted that

the learned Single Judge has gone into great details as to

the sufficiency of funds with the respondents to buy the

property and the same has to be read along with clause (2)

of the said Agreement.

35. Learned counsel for the respondents also submitted that

the present case is a fit one for grant of discretionary relief

of specific performance and that the drastic change in

market prices has no relevance as the matter is at an

appellate stage. It was also submitted that the appellants

were allowed to rent the premises and that the power of

attorney holder, Mr. Lok Nath Grover came into possession

of the said property in 1981 as a tenant.

36. In our considered view, the first plea of the learned counsel

for the appellants that the appellants herein are foreign

nationals has to be negated, as has been rightly done by

the learned Single Judge. No evidence has been led in that

behalf nor has any leave been sought either from this Court

or from the trial court to produce additional evidence in this

regard. Once the same has not been done, no new

documents can be taken on record at this stage. The onus

to prove the fact that the appellants were foreign nationals

was on the appellants and they failed to do so. The learned

Single Judge has correctly appreciated the observations

made in Ajit Prasad Jain‟s case (supra). The relevant portion

has been quoted in para 7 of the impugned judgment,

which reads as under :-

"7. ... ... ... ... ... ... ... ...

In support of the objection under this issue defendants have relied upon Section 31 of the Foreign Exchange Regulation Act, 1973. The contention of defendants is that defendant No. 2 is not a citizen of India and as such he could not transfer or dispose of by sale, settlement or otherwise any immoveable property situate in India without prior permission of the Reserve Bank of India and as such the agreement to sell is void. In support of the contention that defendant No. 2 has acquired citizenship of German Democratic Republic reliance is placed on citizenship certificate dated 17.7.1970 (Ex.D6/1). It does appear from the said certificate that defendant No.2 had acquired citizenship of German Democratic Republic but in my view that has no effect on the validity of the agreement in question. Section 31 of the Foreign Exchange Regulation Act on which reliance has been placed by the defendants only places a restriction on a foreign citizen on transfer or sale, mortgage, lease, gift, settlement or otherwise of any immoveable property situate in India except with the previous general or special permission of the Reserve Bank of India. The said provisions do not place any restriction on entering into agreement like Ex.PW2/1. The said provisions also do not place an absolute bar to the transfer or sale of any property and as such it cannot be said that the agreement itself will become void. It is well settled that a contract for sale by itself does not create any interest in or charge on such property (See: Section 54 of the Transfer of Property Act). Thus it cannot be held that the agreement is void on the objection raised in preliminary objection No.4 based on Section 31 of the Foreign Exchange Regulation Act. The said provisions do not bar grant of relief of specific performance to the plaintiff and the question of permission of the Reserve Bank of India will arise if at all, at the stage of execution of the sale deed."

37. The second plea of learned counsel for the appellants is

only stated to be rejected. In our considered view, the

learned Single Judge has correctly appreciated the fact that

the said Agreement was executed on 08.09.1978, whereas

the undertaking was given in a subsequently filed writ

petition, concerning issues not connected with the

plaintiffs. In our considered view, the said undertaking

given subsequently cannot defeat the rights of the

plaintiffs.

38. The third plea raised by learned counsel for the appellants

was that the plaintiffs were not ready and willing to perform

their obligations under the contract, i.e., the said

Agreement. The submission of learned counsel for the

appellants with respect to the payment which, as per

Clause 2(a) had to be given within 3 months, i.e., the time

stipulated under Clause 4 of the said Agreement for

handing over of physical possession, is without any merit.

Clause 2(a) of the said Agreement reads as under :-

"2. ... ... ... ... ... ... ... ...

(a) Rs.2,60,000/- (Rupees Two Lacs Sixty thousand only) at the time of possession of the property and execution of the Sale Deed".

Thus, the clause itself stipulates that the payment was to

be made once the sale deed is executed and possession

handed over. The occasion for the same did not arise as

the appellants herein did not execute the requisite

documents and hand over possession.

39. Furthermore, the reliance placed upon Sections 51 to 53 of

the Contract Act and Ex. PW-2/5, PW-2/6 PW- 2/7 & PW-2/9

is wholly misplaced. The respondents had sent legal notice

dated 23.12.1979 (Ex. PW-2/4) stating that they were ready

and willing to perform their obligations under the contract.

The occasion to pay the consideration would only arise once

the possession is handed over and sale deed executed.

The respondents were always ready to perform their

obligations under the said Agreement and, thus, Sections

51 to 53 of the Contract Act would not apply. The essential

pre-requisite, which needs to be satisfied under Section 51,

is that the promisee is not willing to fulfill his obligations

under the contract, which fact is wholly absent in the

present case.

40. It was also urged on behalf of the appellants that once the

requisite permissions could not be obtained within the

stipulated and/or reasonable time, the bargain was to be

treated as cancelled. In our considered view, this plea is

without any merit as in terms of Clause 7 of the said

Agreement, the bargain could only be cancelled if the

respondents failed to get the sale deed registered. The

occasion for the same never arose as the requisite

permissions were not obtained. It may also be noted in

terms of Clause 5 of the said Agreement, an obligation had

also been imposed upon the appellants to obtain the

requisite permissions from the L&DO and Income-tax

clearance certificate. Once the same had been obtained,

the appellants were to inform the respondents as per

clause 6 of the said Agreement and only thereafter, were

the respondents supposed to get the sale deed registered.

41. Learned counsel for the appellants also submitted that

since the respondents had bought another property, they

could not furnish the requisite certificates / affidavits.

Reliance was placed upon the judgment in Daulat Ram‟s

case (supra) to support the contention that a nominee

cannot acquire a better status than the principal. The facts

of that case are very different from the facts of the present

one. In Daulat Ram‟s case (supra), it has held that unless

the petitioner could first establish or lay a claim / right to be

allotted a plot, he could not exercise any right with regard

to non-existing title. In the present case, the said

Agreement itself provided that the property could be

transferred in the name of "nominees" and accordingly, the

plaintiffs entered into an agreement / arrangement dated

01.06.1979 (Ex. PW2/10) thereby nominating Mr. Rakesh

Kumar Jain (plaintiff No. 1). In our considered view, there

was no bar on transfer of the said property in favour of

plaintiff No. 1 as a valid arrangement / agreement had been

entered into between the plaintiffs. Plaintiff No. 1 could

have given the requisite affidavits / undertakings if he had

been called upon to do so. At the time when the plaintiffs

entered into the said Agreement, they did not face any

disability and once the nomination was made in favour of

plaintiff No. 1, a subsequent transaction of buying a house

by some of the plaintiffs and their mother cannot defeat

their rights. It has been emphasized by learned counsel for

the respondents that the words "nominees" had been

inserted for such a contingency only. We are in agreement

with the said submission.

42. Learned counsel for the appellants also urged that the

respondents were not in a financial capacity to pay the sale

consideration. Reliance was also placed upon N.P.

Thirugnanam (Dead) by LRs.‟s case (supra), which was

followed in the case of Umabai & Anr.‟s case (supra) to

support the proposition that mere capacity to raise funds is

not adequate to meet the parameters set in Section 16 of

the Specific Relief Act. In our considered view, the learned

Single Judge has correctly appreciated the evidence on

record as well as the depositions on behalf of the plaintiffs

to conclude that the plaintiffs were possessed of means to

pay the balance sale consideration either on their own or

through financial assistance of relatives such as Mr. Mehar

Chand (PW-5) and Mr. Satinder Jain (PW-6). The learned

Single Judge has referred to the judgment in N.P.

Thirugnanam (Dead) by LRs.‟s case (supra) to illustrate the

significance to be attached to the facts in cases of specific

performance. In the said case, it was observed that the

continuous readiness and willingness on the part of the

plaintiff is a condition precedent for grant of specific

performance. The relevant observations in para 4 and 5

are as under :-

"4. It is next contended that the plaintiff was always ready and willing to perform his part of the contract. To buttress it, counsel placed strong reliance on the evidence of PW 2, who had testified that he was willing and prepared to lend a sum of Rs.2,00,000/- to the plaintiff on the foot of a promissory note. It is not necessary for the plaintiff that he should keep ready the money on hand. What is relevant and material is that he should have the necessary capacity to raise the funds and was ready and willing to perform his part of the contract which has been demonstrated by the evidence of PW-2. We do not accede to the contention. The trial Judge had pointed out that on an application filed by the defendants, a direction was given to the plaintiff by order dated 11-2-1991 to deposit the amount of Rs.2,00,000/- or furnish bank guarantee giving time up to 11-3-1991. He neither deposited the amount nor has given bank guarantee. It was also found that the plaintiff was dabbling in real estate business. He had a house on hire purchase agreement with the T.N. Housing Board. He paid only Rs.7,750/- up to 1980. A sum of Rs. 29,665/- was further payable. He had an agreement wide one Annamma Philip for Rs.49,500/- to sell the said house after purchase from the Board. Obviously, he had obtained advance and sold the house to his vendee on 7-2- 1980 after getting a sale deed executed in his favour. He entered into an agreement (Ex. P-1) on 9-4-1979 to purchase the suit house for Rs.2,30,000/-. He was not

able to pay the loans and he adjusted Rs.20,000/-, which was paid towards arrears of rent and paid only Rs.1,975/- under Ex. P-30 for the sale consideration of his house. He was unable to pay the rent to the respondents and had deposited huge amount towards arrears of rent pursuant to the orders of the courts. PW-2, though professed to be willing to advance a sum of Rs.2,00,000/- did not have cash and admitted that he had to obtain Rs.2,00,000/- by hypothecating his property and at the same time was willing to lend on a pro-note to the plaintiff a sum of Rs.2,00,000/-, which was hard to believe. These circumstances were taken into consideration by the trial Judge as well as the Division Bench in concluding that the plaintiff was not ready and willing to perform his part of the contract.

5. It is settled law that remedy for specific performance is an equitable remedy and is in the discretion of the court, which discretion requires to be exercised according to settled principles of law and not arbitrarily as adumbrated under Section 20 of the Specific Relief Act, 1963 (for short "the Act"). Under Section 20, the court is not bound to grant the relief just because there was a valid agreement of sale. Section 16(c) of the Act envisages that plaintiff must plead and prove that he had performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than those terms the performance of which has been prevented or waived by the defendant. The continuous readiness and willingness on the part of the plaintiff is a condition precedent to grant the relief of specific performance. This circumstance is material and relevant and is required to be considered by the court while granting or refusing to grant the relief. If the plaintiff fails to either aver or prove the same, he must fail. To adjudge whether the plaintiff is ready and willing to perform his part of the contract, the court must take into consideration the conduct of the plaintiff prior and subsequent to the filing of the suit along with other attending circumstances. The amount of consideration which he has to pay to the defendant must of necessity be proved to be available. Right from the date of the execution till date of the decree he must prove that he is ready and has always been willing to perform his part of the contract. As stated, the factum of his readiness and willingness to perform his 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."

43. In our considered opinion, the aforesaid judgment does not

really apply to the facts of the present case. The plaintiffs,

i.e., respondents herein have averred and also produced

evidence to prove that they were always ready and willing

to perform their obligations under the contract. Evidence

has also been produced to prove that the plaintiffs

possessed sufficient means. It is not a case where the

respondents / plaintiffs had been asked to tender the sale

consideration and they had refused to do the same, but

rather a case where the appellants unilaterally resiled from

the contract.

44. The last aspect to be considered is the relief of specific

performance granted by the learned Single Judge. In our

considered view, the reliance placed by learned counsel for

the appellants upon the judgment of the Apex Court in

Kanshi Ram‟s case (supra) does not really benefit the

appellants. It has been observed in the said judgment itself

that the rise in prices of the property during the pendency

of the suit may not be the sole consideration for refusing to

decree the suit for specific performance. It may also be

noted that Kanshi Ram‟s case (supra) was decided on its

own facts; the respondent had only claimed Rs.12,000/- as

damages; and the appellant was willing to pay Rs.10 lakhs

as damages. Reliance was also placed upon the decision of

in the case of K. Narendra‟s case (supra) to submit that

specific performance can be declined when the agreement

has become incapable of performance. In the said case, a

part of the land was acquired by the State and a part of the

plot was excess land under ULCR Act. There can be no

dispute regarding this well-settled legal position, but what

has to be examined is whether the same will apply to the

facts of the present case. No such facts have arisen in the

present case, which would make the agreement impossible

to perform. Lastly, reliance was placed upon Ravi Sood‟s

case (supra) to contend that if there was a denial of

requisite permission by the competent authority, the relief

of specific performance could not be granted. Once again,

there can be no qualms with this proposition of law, but the

same is inapplicable to the facts of the present case. The

question of denial of permission would only arise if

permission was sought. The appellants never sought

permission from the concerned authorities and hence,

neither was any permission granted nor denied. It may also

be taken note of that the appellants have been enjoying

rents from the suit property for a long period of time. In our

considered view, the learned Single Judge has, in the facts

and circumstances of the case, rightly granted the relief of

specific performance in favour of the respondents.

45. Another aspect which may be noted is that the defendant

no.1 never entered the witness box. Defendant no. 1 had

entered into the said agreement (for himself and for and on

behalf of defendant no. 2 as his duly constituted attorney)

with the plaintiffs. It was only the power of attorney holder

of the defendants who was a tenant in the suit property,

who deposed on behalf of the defendants. Since, the

attorney holder was not a party to the said agreement all

evidence tendered by him would be in the nature of

hearsay evidence and cannot be taken note of. Facts of

which the principal has personal knowledge cannot be

deposed on by an attorney holder. The observations of the

Apex Court in this regard in Janki Vashdeo Bhojwani v.

Indusind Bank Ltd.,(2005) 2 SCC 217 are as under :

"13. Order 3 Rules 1 and 2 CPC empower the holder of power of attorney to "act" on behalf of the principal. In our view the word "acts" employed in Order 3 Rules 1 and 2 CPC confines only to in respect of "acts" done by the power-of-attorney holder in exercise of power granted by the instrument. The term "acts" would not include deposing in place and instead of the principal. In other words, if the power-of-attorney holder has rendered some "acts" in pursuance of power of attorney, he may depose for the principal in respect of such acts, but he cannot depose for the principal for the acts done by the principal and not by him. Similarly, he cannot depose for the principal in respect of the matter of which only the principal can have a personal knowledge and in respect of which the principal is entitled to be cross-examined."

46. In view of the aforesaid, the appeal is without any merits

and dismissed with costs of Rs.50,000/-.

SANJAY KISHAN KAUL, J.

MARCH 06, 2009                             SUDERSHAN KUMAR MISRA, J.
mk/b'nesh