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CASE NO.:

Appeal (civil) 2957 of 1997

PETITIONER:

LALIT KUMAR JAIN & ANR.

Vs.

RESPONDENT:

JAIPUR TRADERS CORPORATION PVT. LTD.

DATE OF JUDGMENT: 24/04/2002

BENCH:

R.P. Sethi & P. Venkatarama Reddi

JUDGMENT:

P.VENKATARAMA REDDI, J.

By the impugned judgment, the High Court at Allahabad

allowed the first appeal filed by the respondent-plaintiff, decreed the

suit and ordered that the plaintiff should be put in physical possession

of the suit properties and the indenture (sale deed) dated 22.2.1971

should be deemed to be void and cancelled and therefore be delivered

up to the plaintiff-vendor. A decree was also granted for a sum of

Rs.95,000/- being the value of properties wrongfully demolished and

sold, after adjustment of Rs.55,000/- received by the plaintiff towards

the sale consideration. The suit was ostensibly filed under Section 31

of the Specific Relief Act for cancellation of indenture dated

22.2.1971 and also for physical possession of the property in dispute

and for recovery of Rs.95,000/- being the value of property

wrongfully demolished after adjusting an amount of Rs.55,000/-.

The Trial Court dismissed the suit. At the same time, it granted a

decree in favour of the plaintiff for a sum of Rs.1,45,000/-

representing the balance sale consideration.

The facts giving rise to the suit and the appeal are these :

The plaintiff-Company executed a sale deed on 22.2.1971 in

favour of the defendants in respect of an oil mill located at Khurja in

UP State with the structures, open land, machinery and fixtures, lease-

hold rights in the land etc. for a consideration of Rs.2 lakhs. A sum

of Rs.50,000/- was to be paid before the Sub-Registrar at the time of

registration and it was stipulated in the sale deed that the balance

amount will be paid in two instalments falling on 15.3.1971 and

30.4.1971. It was further stipulated that the transferee shall not be

entitled to deal with, sell, transfer or assign the property sold, till such

time as the entire balance sale price of Rs.1.50 lakhs was paid to the

transferor. A sum of Rs.50,000/- was accordingly paid to the

transferor on the date of registration. Possession was admittedly

handed over to the defendants. The respondent-plaintiff produced the

income tax clearance certificate on the date of registration i.e.

22.2.1971. However, before the formalities of registration viz.,

copying out the deed was completed, the Sub-Registrar received a

communication from the Income Tax Officer that the I.T.C. was

cancelled and therefore the Sub-Registrar should stop registration of

the property till a fresh certificate was issued by him. Therefore, the

Sub-Registrar did not take further steps in the matter. Moreover, the

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sale deed was impounded on the ground of insufficient stamp and it

was sent to the District Registrar for adjudication. By an order dated

4.1.1972, the Income Tax Officer revoked his earlier order and

restored the certificate issued by him earlier. On appeal by plaintiff,

the Commissioner of Income Tax directed the Income Tax Officer to

issue a fresh I.T.C. instead of validating the earlier one. On

13.6.1972, a fresh I.T.C. was issued. The document which was sent

for assessment of deficient stamp duty was received back by the Sub-

Registrar on 3.5.1973. When there was a notice from the Sub-

Registrar in August 1973 to furnish the I.T.C. for the purpose of

registration, the plaintiff in its reply dt. 28.8.1973 maintained that the

document was no longer effective as the contract stood rescinded on

account of the breach committed by the defendants in declining

payment of balance sale price. Sub-Registrar was requested to return

the document without registration. The Sub-Registrar, by his order

dated 19.9.1973, refused to register the document as ITC was not

produced. An appeal was filed against the said order by the

appellants-defendants before the District Registrar. On 16.10.1973

the appellants also filed a civil suit impleading the respondent, Sub-

Registrar and also the I.T.O. for a direction that I.T.C. should be

issued and the Sub-Registrar should register the sale deed. On

3.7.1976, the suit out of which the present appeal arises was filed

seeking the relieves as stated above. In that suit, a disclosure was

made as to obtaining the fresh I.T.C. On 24.12.1976, the District

Registrar allowed the appeal and directed the Sub-Registrar to register

the sale deed. In view of this subsequent event, the Income Tax

Officer also sent a copy of I.T. clearance certificate to the Sub-

Registrar. The formalities of registration of sale deed were then

completed on 28.12.1976. The suit filed by the appellants therefore

became infructuous. The appellants amended the plaint in the

present suit questioning the legality of the order of Dy.Registrar and

the consequential action of Sub-Registrar in registering the sale deed.

On 27.08.1979, offer was made to pay the balance consideration by

issuing a notice but the respondent refused to accept payment taking

the stand that the matter was sub-judice. The suit in question was

dismissed on 2.5.1980 subject to the direction as to the payment of

balance of sale money. The money was deposited in court thereafter.

The first appeal to the High Court filed by the respondent herein was

allowed by the impugned judgment dated 5.7.1996.

It is now necessary to advert to certain other events that

happened between the date of presentation of sale deed for registration

and the date of filing of the suit including the exchange of

correspondence. On 16.3.1971, plaintiff issued notice to defendants

to pay Rs.50,000/- towards the first instalment specified in the

indenture of sale. The defendants expressed their willingness to pay

the amount provided that the plaintiff obtained a fresh ITC. On

12.1.1972, a second notice was issued from the plaintiff's side

informing the defendants that they have illegally withheld the

payment due under the terms of sale for which they were liable to pay

interest and further protesting against the demolition of portions of

building and sheds and disposing of the building material and

machinery. This was replied to by the defendants stating that in the

absence of valid Income Tax Clearance Certificate the sale deed could

not be delivered after due registration and therefore they were not

liable to pay the balance sale price. Moreover, the defendants referred

to the fact that one of the Directors of the plaintiff-Company by name

Raj Kumar Meattle agreed not to demand the balance unless the fresh

clearance certificate was obtained and other formalities connected to

the sale were fulfilled. The alleged settlement took place on

17.1.1972 on which date a sum of Rs.5,000 was paid to the said

Director. One more fact, which according to the defendants justified

the withholding of payment, was the suit filed by one Seth Shanti Lal

questioning the validity of the sale. In the concluding para it is stated

: "I would request you not to stick to your unreasonable demand for

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the balance money and let the clear picture emerge". I again assure

you that the balance will be paid the moment these formalities are

complied". A third notice was issued by the plaintiff on 25.5.1973.

By that time it may be noted that a fresh ITC was issued to the

plaintiff and the document which was impounded for assessment of

deficient duty was received back in the office of the Sub-Registrar,

Khurja. By the notice dated 25.5.1973, the plaintiff found fault with

the defendants in declining payment of balance money on the ground

of cancellation of ITC and alleged that the defendants committed

breach of contract by wrongfully withholding the payment and also

demolishing and dealing with the property quite contrary to the

prohibition contained in the sale deed. The plaintiff then gave last

opportunity 'to make the balance sale price together with interest at

the rate of one per cent per month within a period of 15 days upon

which the requisite certificate under Section 230-A of the Income Tax

Act will be produced'. The defendants were further warned that in

case of failure to make the payment, the contract of sale dated

22.2.1971 will stand rescinded and the defendants will be liable to

restore the possession of all the properties covered by the sale deed

and to compensate the plaintiff for the damage done to the properties.

The defendants sent a reply reiterating that there was a clear

agreement on 17.6.1971 arrived at on the intervention of plaintiff's

Director Shri Raj Kumar Meattle and the payment of Rs.5,000/- made

pursuant to such agreement. The defendants once again referred to

the suit filed by Seth Shanti Lal Jain impleading both the plaintiff and

the defendants. The defendants also called upon the plaintiff to bear

the amount of Rs.2,980/- on account of extra stamp expenses. In the

concluding para it is stated, "I hope you will wait for the payment till

the formalities are completed and the suit of Seth Shanti Lal is

decided finally". A month later, i.e. on 3.7.1973, the 4th and final

notice came to be issued by the plaintiff. In that notice it was stated

that Shri Raj Kumar Meattle had no authority to give any assurance or

make any commitment on behalf of the plaintiff-Company, that too

without any resolution of the Board of Directors. The plaintiff offered

to give credit to the additional stamp duty said to have been paid by

the defendants of Rs.2,980/-. The defendants were then informed of

the dismissal of the suit filed by Shanti Lal Jain for default.

Moreover, the plaintiff took the stand that the suit of Shanti Lal Jain

was a frivolous suit and that the pendency of the suit ought not to be a

ground to withhold the payment. The plaintiff was even willing to

waive the claim for interest and handover the requisite certificate

under Section 230-A of the Income Tax Act, provided that balance

consideration of Rs.1.50 lakhs subject to adjustment of Rs.5,000 and

the excess stamp duty, was paid to it within 15 days. The defendants

were warned that if they failed to make the payment as aforesaid

within the stipulated time which is of essence, the contract of sale

dated 22.2.1971 shall stand rescinded in which case the defendants

will have to restore all the properties to it within 15 days thereafter.

On 19.7.1973, the defendants sent a reply through their lawyers

wherein it was asserted that the plaintiff was legally bound to

complete the formalities pertaining to registration and to deliver the

sale deed before they could ask for the balance sale money. Further,

the plaintiff was notified that the demand of balance money even

before the suit of Seth Shanti Lal was finally decided, was unjustified.

An assurance was given that the entire balance amount will be paid

when all the formalities are completed and the title was proved in the

pending litigation. The plaintiff was called upon to produce the ITC

before 3.9.1973 as per the requisition made by the Sub-Registrar.

Thereafter, the plaintiff sent a letter on 28.8.1973 to the Sub-Registrar

stating that the defendants committed breach of contract of sale and

therefore, the contract stood rescinded. The Sub-Registrar was

informed that the document was no longer effective and the question

of registration of that document on the production of ITC as required

in his letter did not arise at all. The Sub-Registrar was requested to

return the document without registration. It appears that the suit of

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Seth Shanti Lal Jain which was filed on 7.4.1971 was finally

dismissed on 10.4.1978. It was dismissed for default earlier and

restored.

The Trial Court held that the defendants did not commit breach

of the contract in not paying the balance price before the registration

of the sale deed and the plaintiff had no right to rescind the contract.

In fact, there was no rescission because the plaintiff did not send

specific intimation of rescission of contract with effect from a

particular date. The learned trial Judge further held that the contract

was neither voidable nor terminable by the plaintiff and therefore

Section 27 or 31 of the Specific Relief Act was not attracted.

According to the trial court, the sale was complete and title passed

irrespective of non-payment of balance sale price. The following were

the circumstances relied upon by the Trial Court for reaching the

conclusion that no breach was committed by the defendants and the

plaintiff was not entitled to put an end to the contract are :-

1. The plaintiff got the I.T.C. cancelled by setting up his relative

by name Shri R.K. Meattle to file a complaint;

2. After the certificate was restored on 4.1.1972, the plaintiff

instead of filing the order of I.T.O., challenged that order on

the ground that fresh certificate should have been issued, for

which there was no bona fides on the part of the plaintiff.

Moreover, the factum of restoration or issuance of fresh

clearance certificate was not intimated to the Sub-Registrar;

3. The plaintiff having knowledge of the fact that the document

has not been registered for want of I.T.C. was not justified in

making demand for payment of balance money;

4. On the intervention of Shri R.K. Meattle one of the Directors

of the plaintiff-Company, a binding agreement came into being

according to which the terms of the contract as to the payment

of balance money got altered. The undertaking given by Shri

R.K. Meattle on 17.8.1971 was binding on the plaintiff and in

fact the plaintiff acted according to that undertaking by not

demanding the payment for about a year; and

5. On account of the suit filed by Seth Shanti Lal Jain in the year

1971 claiming to be the co-owner of the properties, there was a

bona fide doubt in the mind of the defendants as regards title

and that is the reason why a commitment was made by the

plaintiff through its Director, Shri R.K. Meattle.

6. In the circumstances of the case the time for payment stipulated

in the sale deed cannot be regarded as the essence of the

contract.

The learned trial Judge observed thus :-

"In fact, it was a breach of the contract from the

side of the plaintiff, who deliberately did not

manage the affairs in such a way that the clearance

certificate may be produced before the Sub

Registrar, Khurja, at an earliest and the registration

of the document could be completed. It appears to

me that the plaintiff was only interested in the

payment of balance sale consideration of Rs. One

lac fifty thousand and he was not interested in the

registration of the document. The circumstances

and conduct of the plaintiff are as such which go

against the plaintiff and show that it was the

plaintiff on whose account the document could not

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be registered. The non payment on the stipulated

dates by the defendants was justifiable because the

time was not the essence of the contract."

The High Court was of the view that under the contract title to

the property would pass only on the payment of the entire sale

consideration, that the Trial Court committed an error of law by

holding that time was not essence of the contract and title had passed

even before the payment of balance money. The High Court then

observed that Section 47 of the Registration Act does not come to the

aid of the defendants because the contract was terminated for valid

reason before the document was registered. Referring to the suit of

Seth Shanti Lal jain, the High Court observed that the defendants

having enjoyed property after taking possession should have made the

payment first and sue the plaintiff for indemnification, if necessary.

Referring to the alleged agreement entered into between Shri R.K.

Meattle and the defendants, the High Court observed that the alleged

agreement was not believable. The High Court then observed that

the appellant should have made the payment at least after the final

notice sent in July, 1973, wherein it was mentioned that I.T.C. was

procured and the sale deed could be got registered on payment of

balance money. The High Court was therefore of the view that the

defendants failed to fulfil the contractual obligation on their part and

therefore the contract was voidable and could be repudiated by the

plaintiff. The appeal was therefore allowed and the suit was decreed.

It is the contention of the appellants that the requirements of

either Section 31 or 27 are not attracted to the present case and

therefore the suit itself is misconceived. It is contended that the

rescission of executed contract on account of non-payment of balance

sale consideration does not arise as the title passed to the appellants

with the registration of document and delivery of possession. Though

the formalities of registration were completed on 24.12.1976, the

registration, by virtue of Section 47 of Indian Registration Act must

be deemed to have related back to the date the sale deed was executed

i.e. 22.2.1971. Therefore, the so-called rescission for the alleged

breach of the terms of the contract subsequent to its execution has no

legal sanctity. The only remedy of the plaintiff was to recover the

balance sale price for which a statutory charge is provided in respect

of the property. It is pointed out that the view taken by the High

Court that the payment of balance money on the stipulated dates was a

condition precedent for passing the title is erroneous in law. The

restriction against sale, transfer or assignment offends Section 10 of

the Property Act; moreover, such a condition does not detract from the

irrevocable nature of sale transaction. It is submitted that the contract

is neither voidable nor terminable by the plaintiff and therefore the

conditions requisite for seeking relief under Section 27 or 31 of the

Specific Relief Act are not attracted. The plaintiff could not

unilaterally put an end to the contract under Section 39 of the Contract

Act on the ground that the defendants refused to perform the promise

to pay the balance money within the stipulated time as Section 39 is

wholly inapplicable to the contract which was complete and which

had been acted upon. In any case, it is submitted that there was no

breach of the contractual terms by the appellant and there was ample

justification for non-payment of balance sale price within the time

stipulated in the sale deed or in the notice issued by the plaintiff.

Reliance in this connection is based on the findings of the Trial Court.

On the other hand, it is contended on behalf of the respondents

(defendants) that there was no general rule that mere registration of

the document without reference to other circumstances would operate

to transfer the title. The clause in the sale deed prohibiting transfer or

assignment by the vendor till the balance money was paid spells out

an intention to make the passing of title conditional on payment

thereof. In any case, it is submitted that the plaintiff was well justified

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in rescinding the contract in the year 1973 before the actual

registration of the document and therefore the registration does not

impart any sanctity to the purported sale. Section 47 of the

Registration Act has no application in this fact situation and the theory

of dating back cannot be invoked by the defendants. The refusal to

pay the balance sale consideration on the ground of pendency of suit

of Seth Shanti Lal and the alleged agreement with one of the Directors

of the plaintiff-Company is wholly untenable and amounts to refusal

to perform the contract within the meaning of Section 39 of the

Contract Act. The contract, it is submitted, is voidable on account of

persistent refusal by the defendants to pay the balance sale

consideration even after the notice was given by the plaintiff making

the time the essence of contract. Having thus clarified the legal

position, the learned senior counsel for the respondents have taken us

through the correspondence and the findings of the High Court in

support of his argument that the plaintiff was amply justified in

putting an end to the contract when it became apparent that the

defendants were in no mood to fulfil the essential promise under the

contract. Finally, the learned senior counsel contended that the

conduct of the defendants was most reprehensible. Having taken

possession and started enjoying the property soon after the execution

of the sale deed and even gone to the extent of demolishing the

structures, failed to pay the balance money. On these grounds, the

judgment under appeal is sought to be supported by the learned

counsel for the respondents.

We are of the view that the High Court failed to address itself to

certain crucial factors which disentitles the plaintiff to equitable relief.

The High Court reversed a well considered judgment of trial Court

without adverting to the reasoning of trial Court except in a cursory

manner. In the view we are taking, it is not necessary for us to dilate

on various legal issues debated before us. We shall proceed on the

basis that in law the plaintiff could annul the contract of sale before

the act of registration got completed and title passed to the appellants.

We shall further assume that the plaintiff in fact rescinded the contract

with effect from the date of expiry of the time stipulated in the 4th and

final notice dated 3.7.1973. If such rescission or termination of

contract is not justifiable on facts or having regard to the conduct of

the plaintiff, the equitable relief under Section 27 or 31 of the

Specific Relief Act has to be denied to the plaintiff, no further

question arises for consideration. In such a case, the appellants' plea

has to be accepted and the suit is liable to be dismissed.

Before we proceed further, we would like to make it clear that

it is not our endevour to re-appreciate the evidence on record and to

disturb the findings of fact, had they been arrived at on a

consideration of all the relevant matters and the evidence on record.

Let us now take stock of those relevant and important aspects. The

first aspect which needs to be adverted to is the conduct of the

plaintiff vis--vis the production of Income Tax clearance certificate.

On a petition filed by the nephew of one of the Directors of plaintiff-

Company, the ITC was cancelled when the document was about to be

registered. This fact was admitted by Shri B.D. Meattle, Director of

the plaintiff-Company, who was examined as a witness for the

plaintiff. The finding of the trial Court is that the complaint was filed

at the instance of the plaintiff. This part of the finding of the trial

Court is based on probabilities, though not positive evidence, coupled

with the fact that the circumstances in which the nephew filed the

petition were not explained by the plaintiff's witness. The second

aspect which evoked adverse comments of the trial Court is the fact

that after the ITC was restored by the Income Tax Officer, the

plaintiff challenged the order of the ITO contending that it was an

illegal order and a fresh certificate should have been issued. This

move on the part of the plaintiff was evidently meant to delay the

process of registration and casts any amount of doubt on the bona

fides of plaintiff. Moreover, even after obtaining a fresh certificate

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pursuant to the order passed by the higher authority, the plaintiff did

not make the defendants or the Sub-Registrar aware of this fact for

more than a year. It was only in the letter dated 3.7.1973, an

indication was given that the certificate under Section 230(A) of

Income Tax Act was available. What is more surprising is that the

plaintiff returned the certificate to Income Tax Office on 10.9.1974

(vide paras 34 and 35 of trial Court's judgment). These facts noticed

and commented upon by the Trial Court were not at all adverted to by

the High Court. The plaintiff cannot on the one hand withhold the

production of I.T.C. which was essential for registration and on the

other hand take the stand that the defendants committed breach of

contract.

The other important aspect which did not receive due

consideration from the High Court is the agreement or understanding

arrived at between the Director of the plaintiff-Company - Shri R.K.

Meattle and the defendants on 12.8.1971. By that time, a suit was

filed by one Shri Shanti Lal Jain claiming rights over the suit schedule

property. The plaintiff and the defendants in the present suit were

also impleaded therein. At that juncture, informal agreement was

reached.

Tfhoellaogwrse:e-ment couched in the form of a letter reads as

Dear Sir,

Yesterday Shri R.K. Meattle, a Director of

your firm came to us and requested to pay a sum of

Rs.5,000/- against the arrears of the sale deed

executed by your firm in our favour for the

expenses to get the dispute decided so that

formality of sale deed may be completed soon with

the assurance that your firm will not claim further

any amount, out of arrears till all the formalities

are finally completed.

Yours faithfully

(Raj Kr. Poddar)

(Lalit Kumar Jain, Khurja)

Yes, this is our proposal and

our firm agrees on this

settlement

(Sd) 12.8.1971

Director

For Jaipur Trading Corp. (P) Ltd.

The commitment made in this letter was construed by the trial

Court as a change in the terms of the contract by reason of which the

demand for the payment of balance sale consideration was deferred

till all the formalities were completed and the litigation was settled.

The contention that Shri R.K. Meattle acted without authority and

therefore the commitment made by him was not binding on the

plaintiff-Company was not accepted by the Trial Court. The High

Court reversed this finding on the ground that no prudent person

would agree to such arrangement which had the effect of postponing

the demand of balance sale price till the dispute was settled and/or the

formalities of registration were completed. The High Court observed

that in the absence of proper authorisation by the Company, the

alleged undertaking was not believable. Whether the alleged

agreement is true and binding is no doubt primarily a question of fact.

But for the fact that the High Court overlooked certain material

factors which have vital bearing in arriving at a finding on this point,

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this Court would not have though of probing into a factual aspect.

The averments in the plaint and the material portion of the deposition

of the plaintiff's witness were not adverted to while reaching a finding

in this regard. In the plaint, the factum of sending Shri R.K. Meattle

to the defendants and Shri R.K. Meattle signing the letter are

admitted. But, what is stated in the plaint is that Shri Meattle was not

authorised to do so. When we come to the deposition of Shri B.D.

Meattle examined as P.W.1, a version was put forward that the letter

was got forcibly written by the defendants. If that is so, and if the

private limited company having two Directors at the relevant point of

time (R.K. Meattle and B.N. Ahuja) did not approve of the action of

R.K. Meattle, why did the plaintiff keep silent for nearly two years

without questioning the authority of Shri Meattle? This question

remained practically un-answered. Shri B.D. Meattle merely stated

that the defendants had no money and therefore they sought time. It is

needless to say that this explanation is vague and irrelevant. Another

important fact is that the bank draft for the amount of Rs.5,000/-

received from the defendants was not returned and it is not the case of

the plaintiff that the draft was not credited to their account. When

Shri B.D. Meattle (P.W.1) was confronted with this fact, he came

forward with a peculiar explanation that the relationship was not so

much strained and therefore the bank draft was not returned. If at all,

this is a factor which goes in favour of the defendants rather than the

plaintiff. All this would show that the plaintiff consciously agreed to

honour the understanding arrived at between the Director of the

Company Shri R.K. Meattle and the defendants which was reduced

into writing in the form of a letter. If that agreement is true and

binding, as has been held by the Trial Court, the plaintiff could not

have rescinded the contract in September 1973, despite the fact that

the suit filed by Seth Shanti Lal Jain was pending and the formalities

requisite for completion of registration were not completed. It may be

an imprudent act on the part of Shri R.K. Meattle, going by the tenor

of arrangement, but, in the absence of any allegations of collusion

and mis-representation, the Court cannot disregard the agreement

embodied in the letter dated 12.8.1971 which was believed by the trial

Court. We are, therefore, of the view that reversal by the High Court

of the trial Court's finding on this aspect is unwarranted and as

already noted, is vitiated by non-consideration of the relevant material

on record. This Court has, therefore, no option but to disturb the

factual finding reached by the High Court.

One more fact which disentitles the plaintiff to the equitable

relief under Section 27/31 of the Specific Relief Act is the un-

explained delay in filing the suit after the exchange of notices in

September 1973. Almost three years later, the suit was filed. This

inaction has its own revelation. Either the plaintiff did not stand by

his declaration to rescind the contract, as held by the trial Court, or the

plaintiff was sitting on the fence and waiting to see whether the turn

of events would be to his advantage or disadvantage.

If the above facts and circumstances are cumulatively

considered, the plaintiff has no legitimate ground to seek the equitable

remedy. While these are the factors that can be put against the

plaintiff, the defendants-appellants are not free from blame. We

cannot lose sight of the fact that their conduct is also open to question.

The defendants, in the initial stages, insisted on income-tax clearance

certificate. When the defendants were informed of the readiness of the

plaintiff to hand over the ITC subject to payment of balance money

within 15 days, the defendants then raised the plea of pendency of the

suit of Seth Shanti Lal which was by then dismissed for default. The

factum of dismissal of suit was intimated to the defendants through

the notice dated 3.7.1973, though the suit was subsequently restored

and was finally dismissed in the year 1978. The fact remains that the

defendants who, in the initial stages, were prepared to pay the balance

sale price on receipt of ITC, for reasons best known to them, dodged

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to make the payment on the ground of pendency of suit. Though this

conduct on the part of the defendants is not above board, the conduct

of the plaintiff, who has sought equitable remedy, should be kept

uppermost in the mind of the Court. The plaintiff seeking equitable

remedy cannot approach the Court with unclean hands or be guilty of

laches. Irrespective of the conduct of the defendants we must hold

that the plaintiff has, for various reasons discussed above, disentitled

himself to the relief of cancellation of instrument and for recovery of

possession from the defendants that too after the property was

substantially developed.

The result of the foregoing discussion is that the suit is liable to

be dismissed and it has been rightly dismissed by the trial Court.

However, in view of the fact that the defendants are not free from

blame as discussed above and they have utilised the property to the

best of their advantage right from day one without, at the same time,

paying the balance sale price for several years we put it to the counsel

for the appellants whether they are willing to pay to the plaintiff a

substantial amount over and above the sale price already deposited in

the Court, in order to do justice to the parties. In fact, in the course of

arguments by the learned counsel for the appellants, there was an

indication that the appellants were prepared to offer a reasonable

amount, without prejudice to their contentions. The learned counsel

for the appellants has filed a letter dated 18.04.2002 stating that "the

appellants can pay and agree to pay a further sum of Rs. 35 lacs

(Rupees thirty five lacs) in 3 instalments of Rs. 15 lacs and Rs. 10 lacs

and Rs. 10 lacs," in three weeks, by the end of August and by the end

of November, 2002 respectively. When we suggested to the learned

counsel that it would be fair if some more amount is offered, the

learned counsel for the appellants agreed on behalf of his clients for

payment of Rs.40 lacs in lump sum within a period of six months

commencing from today. Having regard to the offer made in the letter

coupled with the oral representation made today and to mete out

justice to the parties, we direct that the undertaking to pay the sum of

Rs.40 lacs within six months should form part of the decree in the

suit. This shall be in addition to the sale price already deposited in the

Court. The same shall be deposited in the Court within a period of six

months and the appellants are entitled to withdraw the same in

addition to the amount already deposited.

The judgment of the High Court is set aside and the appeal is

allowed subject to the direction as given above. With regard to the

deposit of the said additional sum of Rs.40 lacs, the decree of the trial

Court shall stand modified accordingly. Parties are left to bear their

own costs.

J.

(R.P. Sethi)

J.

(P.Venkatarama Reddi)

April 24, 2002.