R.R.K. Trivedi, J.@mdashAggrieved by the judgment and decree dated 23101992 passed by learned 5th Additional District Judge, Kanpur Nagar, in Original Suit No. 537 of 1984, four defendants have preferred this appeal. By the impugned decree, the aforesaid suit seeking specific performance of the agreement to sell dated 1261984 has been decreed against defendants appellant Nos. 1 to 4 and defendant respondent No. 4 M/s. Kanpur Exports (Pvt.) Ltd., hereinafter referred to as the Company (which was defendant No. 1 in the suit). The subjectmatter of dispute was a house bearing municipal number 7/169, constructed over a freehold plot No. 22, measuring 2978 sq. yards, situate in block B, Scheme No. 7, Gutaiyya, Swaroop Nagar, Kanpur.
2. Pleadings of the parties and the facts of the case have already been mentioned in detail in the impugned judgment. However, certain facts which appear necessary to appreciate the most contentious issues between the parties are being detailed hereunder :
3. Kanpur Improvement Trust, Kanpur, on 23121936 allotted a plot of land bearing No. 22, situate in Block B, in Guttaiyya Scheme No. 7, in favour of one Kanhaiyalal Mishra. The allotment was on lease for 99 years with an .... (sic)of the plot of land by payment of double the rent therein reserved for 12 consecutive years. Aforesaid Kanhaiyalal Mishra transferred the plot by registered saledeed dated 2341937 in favour of Shanti Narain Verma. Option to purchase had already been exercised by the previous owner. The full price including interest was paid by Shri Shanti Narain Verma and an endorsement to this effect was made on 1761949. Shanti Narain Verma thereafter got a plan approved and constructed various buildings on the aforesaid plot. Shanti Narain Verma in his turn transferred this property in favour of appellant Nos. 1 and 2 with a condition and stipulation that he may have the property reconveyed in this very condition after paying the amount of sale consideration and expenses of the saledeed together with interest at the rate of 15% per annum and the cost of improvement, if any, incurred by the vendees within a period of one year, vide saledeed dated 24th February, 1979. In the saledeed appellant Nos. 1 and 2 described themselves in the following words:
"In favour of Smt. Pushpa Devi Saraf, adult wife of Sri Mohal Lal Saraf and Shri Mohan Lal Saraf, adult son of late Shri Rameshwar Das Saraf, resident of 24/53, Bairahna Road, Kanpur, as promoter/director of M/s. Kanpur Exports (Pvt.) Ltd., (Proposed), hereinafter called the Vendees, which expression, unless repugnant to the context, shall include and mean their respective heirs, successors, representatives, administrators, executors and assigns of the party of the second part."
4. The company actually came in existence on being registered under the Companies Act on 1961979. The Company thereafter filed Original Suit No. 267 of 1980 against Shanti Narain Verma. In this suit the plaintiff Company filed plaint through its directors Mohan Lal Saraf and Smt. Pushpa Devi Saraf, appellant Nos. 2 and 1 respectively (in this appeal) and the relief sought was as under : A decree declaring that the plaintiff are the absolute owner in possession of the entire premises No. 7/169, Swaroop Nagar, Kanpur, fully described and detailed at the foot of the plaint and also at the foot of the saledeed dated 2421979 and defendants their heirs, representatives etc. have no right, title or interest of any sort in the aforesaid property nor they have any right to get the property reconveyed as per terms of the saledeed dated 2421979. In this suit Shanti Narain Verma filed written statement wherein he admitted execution of the saledeed and he further expressed that he wants to live with his son residing in U.S. A and further he does not want to exercise his option to get the property reconveyed. Mohan Lal Saraf appeared as a witness and corroborated the case of the Company. The suit was decreed on 1981982. It appears that the aforesaid decree was not challenged by the defendant or any body else and it became final.
5. At this stage, it is also relevant to mention that the Company filed annual return under Section 159 of the Companies Act for the period ending 15121980 in the Schedule annexed to this return showing fixed assets. In this Schedule freehold land valuing Rs. 1,02,500 and building including additions valuing Rs. 1,20,000 has been shown; The address of the Company has been shown7/169, Swaroop Nagar, Kanpur. In the annual return of 1981 the value of the freehold land has been shown the same but the value of the building has been shown as Rs. 1,35,043.00 showing additions to the extent of Rs. 15,043.71 p. In 1982 thevalue of the freehold land has been shown the same but thevalue of the building has been shown as Rs. 1,55,018.87 p. In 1983, the value of the freehold land has been shown as the same but the value of the building has been shown as Rs. 5,71,324.37 p., thus showing addition of Rs. 4,16,305.50p. in that year alone. In 1984, a further addition of Rs. 55,466.37p. has been shown. Thus, the value of the building became Rs: 6,26,790.74p. The total value of the property in dispute as per records of the Company was thus Rs, 7,29,290.74p. There is one more important aspect of the matter worth noticing at this stage, that the Company paid each appellant Nos. 1 and 2 an amount of Rs. 1,11,250.00 (total amount Rs. 2,22,500.00) on 5101979, which was towards payment of consideration of the saledeed and expenses incurred in payment of stamp duty and registration charges in execution of the saledeed dated 2421979. The Company also created a charge on the property in dispute by way of equitable, mortgage in favour of bank.
6. On 1261984 the Company through its directors appellant Nos. 1, 2 and 4, entered into an agreement to sell in respect of the property in dispute with plaintiff respondent Nos. 1 to 3. In this agreement the Company has been described as absolute owner in possession of the property in dispute. It has also been described that the Company took loan from the State Bank of India Cooperative Industrial Estate Branch, Kanpur, by mortgaging the property in dispute and created an equitable mortgage in favour of the bank and further the said Company stood as guarantor for the liabilities of M/s. Prahlad Rai Dalmia (Textile Manufacturing (P) Ltd., Kanpur). The terms and conditions of the agreement have been detailed. However, the important paragraphs relevant to be mentioned at this '' stage for deciding this suit are: paragraph 10 which says that the first party has leased out the entire house property to Shri Manoj Kumar Poddar; paragraph 12 says that the possession of the aforesaid house property has not been delivered to the second party under this agreement. The agreement was duly registered. Total consideration agreed was Rs. eleven lacs, out of which Rs. ten lacs were paid by plaintiff respondents. Upto this stage things moved smoothly. However, the events which followed thereafter show that both the parties proceeded with inherent distrust against each other which resulted in various proceedings. The suit from which this appeal has arisen was filed on 781984. It was decided on 23101992. During this period of eight years, there were number of proceedings between the parties. The palatial building which existed on the land in dispute was demolished. Both the parties did their best to complicate the case. However, under the direction of Hon''ble Supreme Court the suit could be decided within a specified time, but this case is a glaring example how the Courts and Court proceedings can be misused and abused by the parties to serve their ends. Every side felt free to initiate any kind of proceedings or suit in any Court. During this period of eight years there were more than twenty proceedings between the parties relating to the property in dispute which, it appears, were initiated with design to create complication in deciding the suit. Both bar and bench failed to check the parties from entering into reckless proceedings wasting valuable time of the Courts which are already working under great pressure of time. In our opinion, it is high time to think about measures to prevent such misuse and abuse of the process of the Courts as has. been done in the present case.
7. After Original Suit No. 537 of 1984 was filed by plaintiff respondent No. 781984, Manoj Kumar Poddar, proposed lessee mentioned in the agreement to sell dated 1261984, filed Original Suit No. 612 of 1984 on 2781984 for a permanent injunction restraining appellant Nos. 1,2 and 4 from interfering in the peaceful enjoyment of the property. In this suit, the case of Manoj Kumar Poddar was that a registered leasedeed dated 1261984 has been executed in his favour and he has been put in possession of the entire house bearing municipal number 7/169, Swaroop Nagar, Kanpur, including its lawns, set backs and open land together with all rights, easements, pertinents and fixtures thereof. The initial period of this leasedeed shall be five years with covenant that after expiry of the said period, the lease, shall further be renewed for another period of five years on execution of fresh lease subject to enhancement of rent by Rs. 100 per month. The monthly rent agreed was Rs. 1,000. In para 4 of the affidavit dated 2581984 filed in support of the injunction application main terms and conditions of the leasedeed have been mentioned which are very relevant, hence are being reproduced hereunder:
(a) That in consideration of the rent hereinafter reserved and all the convenants and conditions hereinafter contained and on the part of the lessee to be paid, observed and performed the lessors doth hereby demise unto the lessee all the entire house bearing Municipal No. 7/169, Swarup Nagar, Kanpur, including its lawn, setback, open land situated at Swarup Nagar, Kanpur more particularly detailed and described at the foot of this leasedeed. Together with all the rights, easement pertinents and fixtures thereof hereinafter referred to as the said demised premises.
(b) That the lessee hereby convenants with the lessors that shall pay unto lessors a sum of Rs. 1,000 per month towards rent of the demised premises. Rent shall be paid against proper receipts to be issued by the lessors regularly.
(c) That initial period of this lease deed shall be five years with convenant that after expiry of the said period the lease shall further be renewed for further period of five years on execution of fresh lease deed subject to enhancement of rent by Rs. 100 p.m.
(d) That the lessee shall keep the demised premises wind proof and water proof and shall carry out necessary annual repairs and white washing at his own cost.
(e) That lessors shall pay house tax, water tax, and drainage tax to Nagar Mahapalika, Kanpur and Kanpur Jal Sansthan, respectively and all other statutory taxes.
(f) That the lessee shall have right to sublet the demised premises to any other person of his choice.
(g) That lessee shall be entitled to make alteration, constructions and additions to the demised premises and fix and install fixtures and furnitures. It is agreed that lessee at the time of vacation of the demised premises shall be entitled to the cost of such aiterations, constructions and additions fixtures and furnitures from the lessors.
(h) That it is further agreed that the lessors shall pay their liabilities and in case any amount is recovered from the lessee then he shall be entitled to recover the same from rent of the demised premises.
(i) That it is agreed that the lessee shall entitled to quiet enjoyment of the demises premises during full tenure and extended period of lease without any hinderance from the side of lessors and they will not be entitled to seek eviction of lessee prematurely.
8. In this suit filed by Manoj Kumar Poddar, learned IIIrd Additional Civil Judge, Kanpur, passed an order on 19th October, 1984 restraining the defendants from causing any interference in possession of the plaintiff over the property in dispute, otherwise except by due process of law, till the disposal of the suit. The plaintiff was also restrained from demolishing, altering or changing the building in dispute. Appellant Nos. 1 and 2, on the other hand, initiated arbitration proceedings on the basis of the arbitration agreement dated 661984. This arbitration agreement was between M/s. Kanpur Exports (P) Ltd. through its Director Vijai Kumar on one hand and Pushpa Devi Saraf and Mohan Lal Saraf on the other hand. The dispute was referred to one Shir B.S. Mathur of Delhi for adjudication of the dispute pertaining to title over the property in dispute and also dispute arising out of the amount advanced by the Company to appellant Nos. 1 and 2. Dismite was also referred about the amount spent on the repairs of the property in dispute, alleged equitable mortgage and for possession of the property. Arbitrator Shri B.S. Mathur, after hearing the parties, gave his award on 20111984. The relevant part of the award is being reproduced below:
"I have considered the pleadings filed in the case and the arguments advanced by both the parties. I do hereby make my award and publish it as stated below:
(a) I declare that the Respondents Smt. Pushpa Devi Saraf and Shri Mohan Lal Saraf are the owners of the property having 20 feet road in West, 60 feet road in North, Bungalow No. 7/168 in South and boundry of Bungalow in East, situated at 7/169, Sarup Nagar, Kanpur and M/s. Kanpur Exports Pvt. Ltd. have nothing to do with the said property.
(b) That the Claimants Kanpur Exports Pvt. Ltd. are entitled to the refund of Rs. 2,22,500 from the Respondents, which was paid by the claimants to the Respondents vide two cheques of Rs. l,11,250 each.
(c) That the Respondents Smt. Pushpa Devi Saraf and Shri Mohan Lal Saraf shall be entitled to the possession of the property situated at 7/169, Sarup Nagar, Kanpur, free from all interferences from the claimants M/s. claiming through the claimants.
(d) That I further declare that there exists no equitable mortgage in respect of property at 2797, Gali Matawali, Chandni Chowk, Delhi in favour of the claimants M/s. Kanpur Exports Pvt. Ltd. and as such, they are not entitled to recover any amount from the said property.
Parties shall bear their respective cost.
IN WITNESS WHEREOF I HAVE SIGNED THIS AWARD THIS 20th DAY OF NOVEMBER, 1984."
9. The aforesaid award was filed before Delhi High Court for being made Rule of the Court in Suit No. 1857A of 1984. The award was thereafter made Rule of the Court by judgment dated 2121985 and decree was passed in terms of the said award which formed part of the decree. The judgment was passed by Hon''ble Mr. Justice D.P. Wadhwa (as his Lordship then was). On the basis of the decree dated 2121985 in the aforesaid suit by the Delhi High Court appellant Nos. 1 and 2 filed Execution Case No. 11 of 1985 at Kanpur. In execution of this decree appellants were given possession on 841985.
10. Challenging the aforesaid action of delivery of possession in favour of appellants. Manoj Kumar Poddar (plaintiff of Original Suit No. 612 of 1984) filed an application under Order XXI, Rule 99, C.P.C. praying for being put back in possession. This application was filed on 1041985. The application remained pending. An order was passed on 1351986 by IX Additional District Judge, Kanpur Nagar, staying the proceedings till the pendency of Original Suit No. 1252 of 1985 pending in Delhi High Court.
11. Challenging the delivery of possession to appellant Nos. 1 and 2 in pursuance of the decree passed in Suit No. 1857A of 1984 by the Delhi High Court, Jai Narain Parasram Puria Sudhir Kumar Parasrampuria, Parvati Parasrampuria and Manoj Kumar Poddar filed suit No. 1252 of 1985 before Hon''ble Delhi High Court. The relief claimed in this suit was as under:
"(i) declaring that the decree of this Hon''ble Court dated 21st February, 1985 in Suit No. 1857A of 1984 has been obtained by fraud and is null and void and not binding on the plaintiffs and that the award dated 20th November, 1984 made by defendant No. 6 is also nullity having been obtained by collusion and fraud and the same be set aside and/or cancelled.
(ii) for restraining the defendants from, in any manner whatsoever, acting in pursuance of and/or in furtherance of and/or enforcing and or executing the said decree dated 21st February, 1985 against the plaintiffs.
(iii) costs.
(iv) grant such reliefs and pass further order or orders as this Hon''ble Court deems just and necessary in the facts and circumstances of the case."
12. In the plaint the plaintiffs mentioned above raised all possible pleas for challenging the decree of Delhi High Court dated 2121985. In this suit an interim order was passed on 2271985 restraining the defendant Nos. 1 to 5 from selling or in any way alienating, disposing of or even parting the possession of the property bearing No. 7/169, Swarup Nagar, Kanpur. Issues were framed on 2531986. The suit was, however, got dismissed as withdrawn on 21111984 and all the interim orders were vacated. During the pendency of Suit No. 1252 of 1985 in Delhi High Court and suit No. 537 of 1984 at Kanpur, an application was filed on 1341987 (registered as case No. 99 of 1987) before th6 Prescribed Authority under Section 2A(5) of UP. Act No. 13 of 1972 by one G.P. Tiwari claiming himself to be caretaker appointed by owner (name not disclosed) against the alleged licensees Mohan Lal Saraf, Pushpa Devi Saraf and Sandeep Saraf. The case set up was that they had taken the property on licence witheffectfroml31985.Thisapplicatiori was allowed by the Prescribed Authority on 2581989 and eviction of the aforesaid alleged licensees was ordered. The warrant for delivery of possession was issued in Misc. Case No. 102/23 of 1989, under Section 23 of U.P. Act No. 13 of 1972, with police help, in pursuance of which appellants were dispossessed. On 2391989 a huge palatial residential building bearing No. 7/169, Swarup Nagar, Kanpur, was mercilessly demolished. The appellants filed an application on 3101989 for recall of the order dated 2581989. After hearing the parties on 821990 the order dated 2581989 was recalled being ex parte and without knowledge of the appellants. Same day, i. e. 821990 the application was got dismissed as not pressed.
13. After demolition of the building on 2391989, Original Suit No. 237 of 1989 was filed on 13101989 in the Court of Civil Judge, Kanpur Dehat by Sudhir Kumar Parasram Puriya against the Company, Mohan Lal Saraf, Pushpa Devi Saraf, Sandeep Saraf and G.P. Tiwari for declaration that defendants have no authority to cause any damage to the property in dispute. In this suit a strange order was passed on 23101989 by Civil Judge, Kanpur Dehat on an application moved by the plaintiff of the suit purporting to be under Order XLI, Rule 1, C.P.C. and Order XXXIX, Rule 7 read with Section 151, C.P.C. The operative part of the order is being re produced below:
"The Counsel has been heard about application C5. The plaintiffs hold a registered agreement to sell in his favour and has as such vested interest. The properties are allegedly being demolished. The provisions of Order XXXIX, Rule 7 of C.P.C. require that suit properties should be preserved till disposal of suit. Hence, I order the plaintiffs to have a symbolic possession over suit property."
14. Though the Court''s order was for symbolic possession, plaintiff respondents claimed that on 27101989, they took actual possession from G.P. Tiwari under the orders of the Court. Thereafter suit was got dismissed as withdrawn on3051990.
15. Appellants filed writ petition No. 21985 of 1989 in this Court in which interim order was passed on 20ll1989staying dispossession, if already not dispossessed. This interim order was extended from time to time. On 2021990 it was extended till further orders.
16. Appellants filed Criminal Misc. Writ Petition No. 23804 of 1989 in this Court challenging the action of the various officers of the district in not providing him protection and also for prosecution of the guilty persons. A Division Bench of this Court after taking into account in detail the facts and circumstances of the case, passed an order on 9121993 to the following effect:
"The incident dated 2391989 is directed to be registered as an offence only visavis accused Sudhir Kumar Parasrampuria, Jai Narain Parasrampuria and G.P. Tiwari for the time being and the Central Bureau of Investigation is directed to investigate the case and submit its report in accordance with law keeping in view the observations made above within six months from today.
The writ petition consequently stands allowed with the aforesaid directions. No costs."
17. The Court also directed for disciplinary action against the two Judicial Officers.
18. Plaintiffs respondents Sudhir Kumar Parasrampuria and G.P. Tiwari filed review petitions against the order dated 9121993. The applications were dismissed by a detailed order dated 20121993.
19. Against the order dated 9121993, Special Leave to Appeal No. 876 of 1994 was filed before Hon''ble Supreme Court which was dismissed by order dated 1831994. Along with this Special Leave to Appeal Criminal Misc. Petition No. 204 of 1994 was also dismissed. Appellants filed Civil Misc. Writ Petition No. 24301 of 1989 challenging the order dated 23101989 passed in Original Suit No. 237 of 1989 filed by Sudhir Kumar Parasrampuria in which symbolic possession was directed in his favour. The writ petition was allowed by Division Bench of this Court and the order dated 23101989 was quashed and the parties were directed to appear before the Court on 2151990 but as observed earlier, the suit was got dismissed as withdrawn on 3051990 but under the garb of the order actual possession was taken. By another order of the same day, writ petition No. 21985 of 1989 in which the order dated 2581989 directing eviction of appellants under the provisions of U.P. Act No. 13 of 1972 has been directed, was also disposed of in view of the fact that the order was already recalled by the Prescribed Authority on 821990.
20. During the period the aforesaid writ petitions were pending, Sudhir Kumar Parasrampuria filed Original Suit No. 2256 of 1989 against Mohan Lal Saraf in the Court of Munsif City, Kanpur, claiming relief of injunction against the defendant and his family members, representatives and employees not to interfere in his right to manage and carry out the cleaning etc. of the property in dispute, namely, 7/169, Swarup Nagar, Kanpur. This suit was filed on 23121989. The valuation of the suit was shown only Rs. 1,000. Duringpendencyofthesuit, amendment applications were filed. However, when plaintiff failed to obtain any interim order, the suit was got dismissed as not pressed on 2681991. However, during pendency of the above suit, Sudhir Kumar Parasrampuria filed another suit registered as Original Suit No. 677 of 1991 against Mohan Lal Saraf, Smt. Pushpadevi Saraf and Sandeep Saraf in the Court of Civil Judge. This suit was filed on 561991. The relief claimed in the suit was for permanent injunction restraining defendants and their employees, associates etc. from causing any disturbance in the peaceful possession of the plaintiff over premises No. 7/169, Swarup Nagar, Kanpur. In this suit learned Civil Judge passed an order on 1261991. It would be appropriate to reproduce the order hereunder:
"The plaint with an application under Order XXXIX, Rules 1 and 2 and Section 151, C.P.C. and application under Rule 13 of G.R. (Civil) to entertain the plaint and application have been moved by the plaintiff. The Court is closed for summer vacation. Therefore, let the plaint be put up with Munsarim''s report on 171991 for orders. Civil Judge, Kanpur Nagar 1261991."
"The plaintiff prayed that the relief is of urgent nature and the purpose of the suit will be frustrated if no interim order is passed on the application of temporary injunction."
"Taking into consideration the provisions of Rule 13,1 heard arguments of Counsel for the plaintiff and perused the record. The plaintiff claimed himself in peaceful possession of the disputed property since 27101989 on the basis of the agreement to sell dated 1261984. It is alleged that the defendants are trying to dispossess the plaintiff and interfere in his possession unlawfully. Taking into consideration the facts and circumstances of the case and evidence on record filed in support of the plaintiff''s case, the defendants are restrained from dispossessing or interfering in possession of the plaintiff over the disputed property in illegal manner except in due course of law till the date fixed, Le. 171991. The plaintiff is directed to comply with the provisions of Order XXXIX, Rule 3, C.P.C. immediately."
21. Appellants put in appearance on 2961991. The interim order was extended from time to time. The suit was ultimately got dismissed as not pressed on 2681991.
22. Sudhir Kumar Parasrampuria also filed Writ Petition No. 5550 of 1990 in this Court and obtained interim order from the Division Bench. He filed another writ petition No. 5928 of 1990 which was disposed of on 1531990 with directions to the learned Civil Judge to decide the suits. Fortunately to all concerned, the matter reached before Apex Court in shape of Civil Appeal Nos. 360 of 1991 and 3167 of 1991 filed against the order dated 951990 in Writ Petition No. 21985 of 1989 and Writ Petition No/24301 of 1989 mentioned above. Hon''ble Supreme Court after hearing Counsel for the parties passed the following order on 1481991:
"Having heard Counsel at some length, we are of the view that the property in dispute should be in the hands of receiver. The District Judge of Kanpur (Urban) is directed to nominate an appropriate receiver to the incharge of this property, being preferably a retired Judicial Officer not below the rank of Chief Judicial Magistrate. The receiver would get the property in his possession by entering upon the property forthwith and will ensure that it is kept in an appropriate condition for the rightful owner of the property to be adjudicated in the suit for specific performance. That suit being No. 537 of 1984 is pending in the Court of 7th Additional District Judge and shall be taken up expeditiously for disposal. The trial shall begin in the month of October according to the convenience of the Court and it has to proceed day to day until it is over. The said Court shall not handle any other matter until this suit is over excepting on such occasions as and when on account of some unforeseen circumstances, the Court is not in a position to continue with this dispute. In case the Court where it is pending is not free, the suit may be transferred to a Court where the District Judge feels that our direction can work out. The report of compliance shall be furnished in this Court. Our order may not affect any proceedings pending in the High Court. With these observations, the appeal is disposed of. No order is necessary in contempt petition in view of the order we have made above."
23. In pursuance of the aforesaid direction of Hon''ble Supreme Court dated 1481991, 5th Additional District Judge, Kanpur Nagar, decreed the suit. The operative part of the judgment is being reproduced below:
"The suit is decreed with costs against all the defendants. It is, however, decreed ex pane against defendant No. 3. Defendant Nos. 1 to 5 are directed to execute the saledeed in respect of house No. 7/169, Swarup Nagar, Kanpur, in favour of the plaintiffs or their nominees within one month of receipt of the balance sale consideration of Rs. 1,00,000 (Rs. one lakh only) to be paid by plaintiffs at the time of execution and registration of the saledeed and the costs and expenses including stamp duty and registration charges on the saledeed to be borne by defendant Nos. 1 to 4 and further to get the saledeed registered failing which the saledeed shall be executed and got registered by this Court and the plaintiff will be entitled to realise the costs and expenses of the saledeed including stamp duty and registration charges from the defendant Nos. 1 to 4. The plaintiff shall get possession , of the house from Shri V.C. Jain, receiver in view of the orders dated 1481991 passed by the Hon''ble Supreme Court."
24. It appears that after pronouncement of the judgment dated 23101992, the trial Judge also directed the receiver to hand over possession to the plaintiffrespondents in pursuance of which the plaintiffrespondents have been put in possession and are still continuing.
25. Aggrieved by the aforesaid judgment and decree, this first appeal has been filed by the defendants.
26. We have heard Shri Siddheshwari Prasad, learned Senior Advocate appearing for the appellants, Shri S.P. Gupta, learned Senior Advocate for plaintiffrespondents and Shri Navin Sinha, learned Counsel appearing for the Company, defendant respondent No. 4.
27. Shri Navin Sinha, on behalf of the Company, filed Civil Misc. Application No. 29631 of 1994 on 9111994 and it has been prayed that name of the applicant Company as respondent No. 4 may be deleted from the array of parties and it may be transposed as appellant No. 5 in the above appeal. This application has been supported by an affidavit of Shri Babu Lal Singh who claims himself to be director of the Company. Shri Navin Sinha has stated before us that the Company is not the owner of the property in dispute. Averments to the aforesaid effect have also been made in paras 5 and 6 of the affidavit with reference to the decree dated 2121985 passed by Hon''ble Delhi High Court in Suit No. 1857A of 1984. It has also been said that applicant Company was not directly affected by the impugned judgment and decree, hence it was not advised to file an appeal but grievance has been shown against the findings recorded by the trial Court which are against the pleadings and evidence of the Company. It has been stated that as it may cause some complication in settling the account between the Company and the appellant Nos. 1 and 2 as well as complications in proceedings under the Wealth Tax Act and the Income Tax Act, it is expedient and desirable and in the interest of justice that the Company may also be transposed as appellant.
28. Shri S.P. Gupta, learned Counsel appearing for the other respondents, has vehemently opposed this application. It has been submitted that as the appeal has not been filed by the Company and the decree impugned has become final against it, a right has accrued in favour of plaintiffrespondent Nos. 1 to 3. The reasons given in the application and affidavit for the prayer of transposition are wholly inadequate. So far respondent No. 4 is concerned, its stand was throughout the same that it is not owner of the property in dispute. No change has been brought about during this period. The application has no merit and is liable to be rejected.
29. In our opinion, in the peculiar facts and circumstances of the case it is desirable and in the interest of justice that the Company may be allowed to be transposed as appellant. In the facts of the case it is difficult to distinguish the conduct of the appellants and the Company: Appellant Nos. 1 and 2 have throughout been acting as directors of the Company. In normal course the Company should have also been arrayed as appellant in the appeal. If the Company is allowed to be transposed as appellant, no serious prejudice is likely to be caused to the plaintiffrespondent. On the other hand, the transposition of the Company as appellant will facilitate the determination of the questions in the appeal and the liabilities of the parties. The application is accordingly allowed. The respondent No. 4 shall be transposed as appellant No. 3. The office shall make necessary correction in the memo of appeal in red ink.
30. Before the trial Court both sides have filed voluminous documentary evidence and have also adduced oral evidence. It does not appear feasible to mention all the evidence m this judgment at this stage. However, the evidence oral and documentary adduced by, the parties, shall be considered and referred to at the appropriate places while deciding the questions involved. For the sake of clarity for which brevity is necessary in the present case, we also do not propose to mention the submissions made by the Counsel for the parties. Instead, we proceed to formulate the questions which are required to be determined by us on the basis of the submissions made by learned Counsel for the parties. Various authorities have also been cited by Counsel for the parties in support of their submissions which shall also be considered at the relevant places while deciding the question in respect of which they have been cited. The questions for determination in this appeal are as under:
(1) Whether the Company, defendantrespondent No. 4, or defendantappellant Nos. 1 and 2 are owners of the property in dispute and the impact of the award dated 20111984 passed by the Arbitrator in Arbitration proceedings on the rights of the parties ?
(2) Effect of the order dated 21111994 dismissing Suit No. 1252 of 1985 filed by plaintiff respondent for cancelling the decree dated 2121985 in Original Suit No. 1857Aof 1984 ?
(3) Whether the agreement to sell dated . 1261984 signed by the defendant appellant Nos. 1 and 2 could not be binding on them in personal capacity as they signed the agreement only as directors?
(4) Whether the agreement dated 1261984 and the payment of Rs. ten lakhs thereunder was by way of loan and for other considerations and there was no agreement to sell in respect of the property in dispute ?
(5) Whether on account of the demolition of House No. 7/169, Swarup Nagar, Kanpur, the decree of specific performance could not be legally granted in view of the provisions contained in the Specific Relief Act?
(6) Whether on the basis of the evidence and material on record plaintiffrespondent Nos. 1 to 3 could be held responsible for demolition of the building?
(7) Whether plaintiffsrespondent Nos. 1 to 3 misconducted themselves and thus rendered themselves disentitled for a decree of specific performance from the Court?
(8) Whether the trial Court committed a serious illegality in directing the receiver to deliver possession of the property in dispute to plaintiffrespondents who could not be termed owners of the property at that stage ?
(9) To what relief, if any, the defendantsappellants are entitled to this appeal ?
QUESTION OF TITLE:
31. Question of title over the property in dispute is very important and is a substantial question for deciding this appeal. Learned trial Judge struck as many as 27 issues on the basis of the pleadings of the parties. Question of ownership has been decided while recording findings on issues Nos. 9, 13, 15, 16, 17 and 18. The findings on the aforesaid issues recorded by the trial Court are contained in paragraphs 1 to 31 under the heading ''findings''. The trial Court has found that the Company is the owner of the disputed property and defendant Nos. 2 to 4 are not its owners. Issue No. 13 which is to the effect as to whether the defendants have created imaginary mutual dispute of ownership of the disputed premises in collusion with each other after executing the disputed agreement to sell dated 1261984 and obtained fraudulent award and decree ? If so, its effect, has been decided in the affirmative and it has been held that the award dated 20111984 and decree of suit No. 1857A of 1984 will have no effect on the relief of specific performance sought by the plaintiffs. Issue No. 15 which is to the effect that judgment and decree dated 2121985 passed in Suit No. 1857A of 1984 by Hon''ble Delhi High Court will have the effect of resjudicata has been recorded in the negative. Issue No. 16 which is to the effect that decree was obtained in Suit No. 1857A of 1984 by fraud and is illegal, without jurisdiction and is barred by principle of lis pendens has been decided in the affirmative except with respect to jurisdiction which is recorded in the negative. Issue No. 17 which was to the effect that plaintiffs defendants are barred by principles of resjudicata in view of the decree passed in Suit No. 267 of 1980 has been recorded in the affirmative to the effect that defendant No. 1 has been held to be the owner of the disputed properties. Issue No. 18 which is to the effect as to whether the pleadings of plaintiffs and defendants are barred by principles of estoppel and admission has been recorded partly in the affirmative and partly in the negative.
32. Learned Counsel for the appellants has assailed the findings of the Court below that they are against the evidence on record. It has been submitted that under Section 5 of the Transfer of Property Act, a transfer of immovable property could take place between living persons. Living person includes a Company or association or body of individuals whether incorporated or not. It is submitted that the saledeed in favour of appellant Nos. 1 and 2 was executed on 2421979 whereas the Company was registered on 1961979. Thus, on the date of the saledeed the Company was nonexistent and there was no question of conveyance of title in favour of a nonexistent person. It has also been submitted that there is no pleading or evidence on record to show that any association or body of individuals had come into existence which was later on incorporated on which the property in dispute could vest on 2421979. It has also been submitted that the title in favour of the Company could not be created in law only on the basis of admissions or payment of money as found by the trial Court. It has further been submitted that for creation of title provisions have been made under the Transfer of Property Act and as such in the absence of a saledeed executed in favour of Company it could not be held owner of the property in dispute. It has also been submitted that it is admitted position that the amount of consideration for purchasing the property was paid by appellant Nos. 1 and 2 and not by the Company. The subsequent acts of the company of mortgaging the property with the bank showing the same in the balance sheets and making additions to the property and appointing attorney to deal with the property are not such acts which may create title in favour of the Company. Such acts could only show that appellant Nos. 1 and 2 permitted the Company to enjoy the property in dispute for running the day to day business. The learned trial Court illegally inferred title in favour of the Company on the basis of the aforesaid facts. So far as the decree passed in Original Suit No. 267 of 1980 is concerned, it has been submitted that it was only to close the right of reconveyance reserved in favour of Shanti Narain Verma, the vendor. In this suit appellant Nos. 1 and 2 were not party in their individual capacity and no issue was involved for deciding the question of title between appellant Nos. 1 and 2 and the Company. Learned trial Court has illegally held that the decree passed in Suit No. 267 of 1980 was resjudicata. It has also been submitted that the Company came with a specific pleading that it is not owner of the property in dispute and in the facts and circumstances of the case there was no reason to reject the aforesaid pleading. Learned Counsel has also submitted that the property in dispute has been assessed in the name of appellant Nos. 1 and 2 in the municipal records and they have paid the tax and not the Company. The property in dispute has also been shown in the Wealth Tax Return and Income Tax Return which have been accepted by the authorities under the aforesaid Wealth Tax Act and Income Tax Act. The assessment orders could not be rejected merely on the ground of delay. There was no contrary evidence. Learned Counsel has further submitted that in the agreement dated 1261984, in Condition No. 5, it was specifically contemplated that the first party shall also satisfy the parties of the second part to show the absolute ownership of the said Company and also that the said property is free from all encumbrances. Learned Counsel has submitted that ignoring this portion of the agreement learned Court below wrongly assumed an admission on the part of appellant Nos. 1 and 2. For drawing any such inference the document ought to have been read as a whole. The language used in para 5 of the agreement clearly suggests that the plaintiffs respondents themselves were not satisfied with the title of the Company. Learned Counsel has further submitted that the question of title stands closed in favour of appellant Nos. 1 and 2 on the basis of the decree dated 2121985, passed by the Delhi High Court in Original Suit No. 1857A of 1984 by which the award dated 20111984 was made the Rule of the Court.
The decree in favour of the appellants could not be legally questioned in the present suit in view of the bar created under Sections 31, 32 and 33 of the Arbitration Act. The learned trial Court committed a serious illegality in ignoring the aforesaid decree passed by a competent Court of law after holding that Hon''ble Delhi High Court had jurisdiction to decide the suit. It has also been submitted that the decree could not be ignored under Section 44 of the Evidence Act as Sections 40, 41 and 42 of the Evidence Act were not applicable. It has been further submitted that under the decree dated 2121985 passed by Delhi High Court, the Company has been made entitled to receive back the amount of Rs. 2,22,500 paid to the appellants which the Company under the decree can always realise from the appellants. Learned Counsel has further submitted that the approach of the trial Court was also based on misconception in applying Section 43 of the Transfer of Property Act and Section 13 of the Specific Relief Act. These Sections could be applied in respect of the Company and not against appellant Nos. 1 and 2 who acted only as agents of the Company. There was no pleading or evidence on record that the appellant Company fraudulently or erroneously represented to the plaintiffs respondents that the Company is authorised to transfer. The doubt about the title of the Company was in full knowledge of the plaintiffs respondents as clear from the contents of the agreement to sell dated 1261984. Lastly, it has been submitted that if the decree passed in Original Suit No. 267 of 1980 was about title in favour of the Company, there was a subsequent decree of 2121985 passed by Hon''ble Delhi High Court specifically deciding the issue and in the facts and circumstances of the case only the subsequent decree could prevail. It has also been submitted that the learned trial Court illegally proceeded under the misconception that the decree of Hon''ble Delhi High Court could not come in the way of plaintiffs respondents in seeking specific performance of the agreement to sell dated 1261984. It is submitted that the plaintiffs respondents are claiming specific performance through the Company and if the company has been divested of the alleged title, the decree of specific performance on the basis of the agreement to sell could not be legally granted. Learned Counsel has submitted that the findings of the Court below are against the weight of evidence on record and are illegal and cannot be sustained. Learned Counsel has further submitted that the plaintiffs respondent Nos. 1 to 3 and Manoj Kumar Poddar filed Original Suit No. 1252 of 1985 challenging the decree dated 2121985 passed in Suit No. 1857A of 1984. The aforesaid suit was pending when the impugned decree had been passed. The suit was ultimately got dismissed as withdrawn on 21111994 during the pendency of this appeal. Thus the award dated 201184 and decree dated 2121985 in favour of appellant Nos. 1 and 2 have become final. In view of this subsequent development also the finding of the learned Court below holding the Company as owner of the property in dispute cannot be sustained. Learned Counsel has further submitted that the trial Court illegally placed reliance in case of Vali Pattabhirama Rao & Anr. v. Sri Ramanuja Ginning and Rice Factory (Pvt.) Ltd. & Ors., (1986) 60 Company Cases 568; and The Weavers Mills Ltd., Rajapolayam v. Blikis Animal & Ors., A.I.R. 1969 Madras 462. It is submitted that both the cases are distinguishable on facts and they could not be applied in the present case.
33. Learned Counsel for the plaintiffrespondents, on the other hand, submitted that the saledeed dated 2421979 though ostensibly executed in favour of appellant Nos. 1 and 2, was in fact in their capacity as promoters and directors of the proposed Company. Thus, it is not open to them to say that they purchased it in their individual or personal capacity. Learned Counsel has referred to the balance sheets of the Company for the years 1980 to 1984 and has submitted that immediately on incorporation of the Company, the property in dispute was shown as fixed assets of the Company and an amount of Rs. 2,22,500 which represented the consideration and expenses incurred towards payment of stamp duty and registration charges was paid to appellant Nos. 1 and 2. This payment has been shown in the records of the Company. These facts amply show that the property in dispute was purchased for and on behalf of the Company, yet to be born and appellant Nos. 1 and 2 cannot now claim title in themselves. It has been further submitted that after the decree dated 1981982 passed in Original Suit No. 267 of 1980, the title in favour of the Company was finally adjudicated. Appellants Nos. 1 and 2 were party in this suit as directors of the Company but they did not raise any objection. Learned Counsel has placed before us para 11 of the written statement filed by the defendants in the above suit wherein it has been stated that the defendants themselves have no desire to get the property reconveyed and it is admitted to the defendants that the plaintiff as of 2421979 are the absolute owner of the premises house No. 7/169 Swarup Nagar, Kanpur Nagar, described and detailed at the foot of the plaint on the basis of the saledeed dated 2421979 executed by the defendants. Learned Counsel has submitted that the aforesaid averment in the written statement by the vendor of saledeed dated 2421979 also corroborates that the saledeed was in favour of the Company. It has been further submitted that Director''s report dated 15111980 to shareholders reiterated the fact of execution of freehold land of the value of Rs. 1,02,000. The Company thereafter mortgaged the property in dispute in favour of the bank and submitted report of this fact in Form No. 8, as required under Section 125 of the Companies Act read with Rule 6. The Registrar of the Companies certified this fact vide certificate dated 21121982 that the property in dispute was mortgaged for Rs. 3 lakhs in favour of the State Bank of India. The fact was registered in the office of the Registrar on 1441983. The annual returns were submitted under Section 159 of the Companies Act in which also the property in dispute was shown as assets of the Company. So far as the arbitration proceedings and the decree passed by Delhi High Court on 2121985 is concerned, it has been submitted that papers were antedated and were prepared after filing of the present suit for referring the dispute to the arbitrator. Substantial facts were concealed and the decree was obtained fraudulently without notice to the plaintiffrespondents. The learned trial Court has rightly ignored such a decree and the findings recorded are legal and valid. Learned Counsel has submitted that dismissal of Suit No. 1252 of 1985 on 21111994 as withdrawn does not effect in any way the rights of the plaintiffsrespondents in this appeal as the decree has already been ignored. The plaintiffs respondents could legitimately challenge the decree passed by the Delhi High Court in the present suit and it could not be held binding on them as they were not party in the suit. Learned Counsel has further submitted that the plaintiffrespondents are estopped under Section 115 of the Evidence Act. They were party in the agreement dated 1261984 and on their representation respondents paid Rs. Ten Lakhs to the Company. The amount was paid by the plaintiffs on l he representation and declaration made by the appellant Nos. 1, 2 and 4 and now they cannot be permitted to deviate and deny the truth of the representation made by s hem to the plaintiffsrespondents. The learned Counsel has submitted that the findings recorded are based on evidence on record and do not suffer from any illegality.
34. Shri Siddheshwari Prasad, in rejoinder, submitted that there is no pleading on record that appellants represented at any time that not they but the Company is the owner of the property in dispute. There is also no evidence on record to this effect. It has been submitted that Section 115 of the Evidence Act is not at all applicable. It has also been submitted that the evidence in absence of pleading could not be looked into. It has been submilted that title does not pass on admissions. The balancesheets are not relevant for determining the title to property. The entries on such records are for fiscal purposes and not for establishing title.
35. We have thoroughly considered the submissions made by learned Counsel for the parties and have also gone through the evidence on record. Before we enter into the discussion on the submissions made by the Counsel for the parties, it is necessary to be clear about the Company as a legal person and its relationship with shareholders and directors. Hon''ble Supreme Court in the case of R.C. Cooper v. Union of India, AIR 1970 SC 564, in para 13 of the judgment held as under:
"A company registered under the Companies Act is a legal persons, separate and distinct from its individual members. Property of the Company is not the property of the shareholders. A shareholder has merely an interest in the Company arising under its Articles of Association measured by a sum of money for the purpose of liability and by a share in the profit. Action of director of a company is merely its agent for the purpose of management. The holder of a deposit account in a company is its creditor; he is not the owner of any specific fund lying with the company. A shareholder, a depositor or a mortgagor may not, therefore, be entitled to move a petition for infringement of the rights of the company unless by the action impugned by him, his rights are also infringed."
36. Thus, while considering the actions of the Company, it has to be kept in mind that a limited company and the individuals forming it are separate and distinct legal entities. The company is not the same as its shareholders but is distinct from them. It is also not the same as its directors but is different from them. Its separate character is recognized by law. Thus, the actions of the company through its directors as its agents are to be considered as distinct and separate from individual actions of its shareholders and directors. If this clear cut distinction is not kept in mind, mistake is likely to occur in properly appreciating the actions of the company and actions of individuals. We feel that the Court below while deciding this important issue has not been able to maintain this distinction.
37. Hon''ble Supreme Court in case of Alapali Vyankata Ramayya v. Commissioner of Income Tax, Hyderabad, 1965 ITR 185, while considering the applicability of Section 12A of the Income Tax Act, in respect of capital gains in categorical terms held as under:
"We are unable to sustain the contention before Section 12A can be attracted title must pass to the Company by way of the modes mentioned in Section 12B, i.e., sale, exchange or transfer. It is true that the word transfer is stated in addition to word sale hut even so in the context transfer must mean affective conveyance of the capital assets to the transferee. Delivery of possession of immovable property cannot by itself be treated as equivalent, to conveyance of the immovable property."
"The High Court has relied on the entries made in the account books of the assessee and the Company on March 20,1948 but the date of sale or transfer according to Section 12B is the date when the sale or transfer takes places and it seems to us that the entries in the account books are irrelevant for the purpose of determining such a deed."
38. Similarly in the case of Commissioner of Income Tax Calcutta v. M/s. Associated Clothiers Ltd. Calcutta, AIR 1973 Cal 629, a Division Bench while considering position of two companies having the same shareholders, same directors and almost same memorandum of association, refused to accept the transfer of property by one company to other company as self same transfer. In Para 8 of the judgment the Division Bench observed as under:
"The significant fact in the case is that these two companies Phelps and Company Ltd. and the Associated Clothiers Ltd. continued to exist side by side as two separate limited companies for at least ten years from 1952to 1962whenthe Associated Clothiers Ltd. went into voluntary liquidation. This is not a case where one company completely effaces itself by amalgamation with another company as a part of a read justmen or reorganisation. It is not a case again where a partnership completely effaces itself and converts into a limited company by transfer of all assets of the partnership to the limited company. It is also not a case where an individual converts himself to a limited company by transfer of all his properties and assets to the limited company. These three main significant features must be borne in mind in its particular reference in order to avoid wrong application of certain decisions to the facts of this case."
39. In case of Mrs. Bacha F. Guzdar v. Commissioner of Income Tax, Bombay, AIR 1955 SC 74, Hon''ble Supreme Court refused to accept the contention that position of shareholders in a company is analogous to that of partners inter se in the following words
"It was argued that the position of shareholders in a company is analogous to that of partners inter se. This analogy is wholly inaccurate. Partnership is merely an association of person''s for carrying on the business of partnership and in law the firm name is a compendious method of describing the partners. Such is, however, not the case of company which stands as a separate juristic entity distinct from the shareholders."
40. Hon''ble Supreme Court in the case of Bhim Singh v. Kna Singh, AIR 1980 SC 727, held that a transfer is prima facie assumed to be for benefit of the person who supplied the purchase money, unless there is evidence to the contrary. Para 18 of the judgment which deals with the question is being reproduced below:
"The principle governing the determination of the question whether a transfer is a benami transfer or not may be summed up thus
(1) the burden of showing that a transfer is a benami transfer lies on the person who asserts that it is such a transfer;
(2) if it is proved that the purchase money came from a person other than the person in whose favour the property is transferred, the purchase is prima facie assumed to be for the benefit of the person who supplies the purchase money, unless there is evidence to the contrary;
(3) the principal character of the transfer is governed by the intention of the person who has contributed the purchase money; and
(4) the question as to what his intention was has to be decided on the basis of the surrounding circumstances, the relationship of the parties, the modes governing their actions in bringing about the transactions and their subsequent conduct etc."
41. For deciding the intricate question of title in this case the aforesaid principles are to be kept in mind. There is no dispute about the fact that on 2421979 purchase money was paid by appellant Nos. 1 and 2 and they were put in possession. The company came into existence on 1961979. There is no pleading or evidence on record that appellant Nos. 1 and 2 converted themselves to a limited company by transfer of all their properties and assets to the limited company. Contrary to it, the material on record shows that there were number of shareholders who, it is alleged, were mostly relations of appellant Nos. 1,2 and 4 and a few others. '' There is also no evidence on record that the company mentioned the property in dispute as fixed assets of the company at the time of incorporation. So far the saledeed dated 2421979 is concerned, it only describes appellant Nos. 1 and 2 as promoters/directors of the proposed company but except for the above, there is no mention in whole of the saledeed that the property is being purchased for raising the company or that the funds have been provided by the association of persons who propose to form company and they authorised appellant 1 and 2 for purchasing the property. In our opinion, in absence or such clear cut averments, it is difficult to hold that the property was purchased by appellant Nos. 1 and 2 for and on behalf of the company. It is true that they allowed the Company to use the property in dispute for running its business. The . property was also shown in the balance sheets of the company as fixed assets and the amount of Rs. 2,22,500 was paid to the appellant Nos. 1 and 2. But, merely on the basis of the aforesaid actions the company could not be held owner of the property in dispute. For conveying the title a deed under the provisions of the Transfer of Property Act was required which has not been done at any stage. Intention of appellant Nos. 1 and 2, from the evidence on record, appears that they permitted projection of company as owner only for the purpose of business but they never intended to accept the company as owner of the property in dispute. It has already been seen above in case of Bhim Singh (supra) and in case of Alapali Vyankata Ramayya (supra) that Hon''ble Supreme Court held that the transfer shall beprima facie assumed in favour of the person who supplied the purchase money.
In the present case on the basis of the fact that purchase money was paid by appellant Nos. 1 and 2, they are to be held to be owners and not the company. Merely because the property in dispute was alleged to be used by the company and the amount was paid to appellant Nos. 1 and 2, the company could not be held to be owner. So was the position with regard to the entries in the account books etc. which are irrelevant for the purpose of determining title. As appellant Nos. 1 and 2 were purchasers in their own right, in our opinion, for a title to be conveyed in favour of the company, another deed of conveyance in favour of the company was required in the present case. The title could not be created by admissions etc. and by the aforesaid facts as argued by the learned Counsel for the plaintiffs respondents and accepted by the Court below. Much reliance was placed in case of Vali Pattabhirama Rao (supra) and Weavers Mills Ltd. (supra). However, both the cases are clearly distinguishable on facts and are not of any help so far as the present case is concerned. In the first case a partnership firm with all its assets converted itself into a limited company. The property in dispute in that case was already included as assets of the partnership firm and there could be no difficulty in accepting that the property became assets of the company on its incorporation. So far as the second case is concerned, the transfer deed by which the property in dispute was acquired on lease expressly stated that the promoters did so as representatives of the company to be formed and that the funds paid did not belong to them and that on incorporation the company assumed possession and delivered upon them. Thus the Court below could not properly appreciate the distinguishable features which made the aforesaid two cases nonapplicable to the present case. Every case has to be decided on its own facts.
42. The second important fact relied .on by the plaintiff respondents is filing of Original Suit No. 267 of 1980 by the Company against Shanti Narain Verma which was decreed on 1981982 and the Company was declared owner in possession of the property in dispute. Learned Counsel for respondent Nos. 1 to 3 has submitted that the appellants are bound by the aforesaid decree. It has also been submitted that appellant No. 2 Mohan Lal Saraf appeared as a witness and admitted the title of the company.
43. Learned Counsel for the appellants, on the other hand, submitted that appellants were mentioned only as directors of the company and they were not party in the suit as defendants. There was no issue involved in the suit as to whether the company or appellant Nos. 1 and 2 were the owners of the property in dispute.
44. We have perused the plaint, written statement and the statement of appellant No. 2 in the above suit. In para 1 of the plaint it has been stated that the plaintiff is a registered company duly incorporated under the provisions of the Indian Companies Act and Shri Mohan Lal Saraf and Smt. Pushpa Devi Saraf are its directors and are authorised to sign, verify and file this suit on behalf of the plaintiff company. Thus, the presence of appellant Nos. 1 and 2 was only in the capacity of directors and not individuals. Appellant No. 2 in his statement has said as under:
45. From the aforesaid statement it is clear that appellant No. 2 nowhere admitted that the saledeed dated 2421979 was in favour of the company. There was no issue about the dispute of title between the company and appellant Nos. 1 and 2. In these facts and circumstances, the only inference which can be drawn is that the filing of the suit and obtaining decree dated 1981982 was to close the right of Shanti Narain Verma regarding reconveyance of the property as contemplated in the saledeed and further to have a document in favour of the company for showing it as owner for purposes of loan etc. Action of appellant Nos. 1 and 2 cannot be appreciated but if the position of shareholders and directors visavis the company is taken into account as discussed earlier it is difficult to say that the decree could be binding on appellant Nos. 1 and 2 in the personal capacity. The Court below said that the decree passed in Original Suit No. 267 of 1980 was a judgment in ran and was binding on all concerned. However, in our opinion, this observation of the Court below was not the correct position of law. The decree could be binding only on the parties to the suit. Appellants Nos. 1 and 2 who signed the plaint as directors could not be said to be parties to the suit. In these circumstances, in our opinion, if appellant Nos. 1 and 2wereownersofthepropertyin dispute on the basis of the saledeed dated 2421979, their rights could not be effected on the basis of the aforesaid decree.
46. The aforesaid decree can also not be accepted in view of the award dated 20111984 given by arbitrator in arbitration proceedings. As already discussed above, by an arbitration agreement dated 661984 a dispute between the Company and appellant Nos. 1 and 2 with regard to the title of the property in dispute and the payment of Rs. 2,22,500 alongwith some other disputes was referred to the arbitrator. The arbitrator gave his award on 20111984. The award was filed before Delhi High Court for being made Rule of the Court in Suit No. 1857A of 1984 which was decreed on 2121985 in terms of the award which formed part of the decree. It is not disputed that the aforesaid award and decree became final as Suit No. 1252 of 1985 filed by plaintiffsrespondent Nos. 1 to 3 and one Manoj Kumar Poddar challenging the aforesaid award has been dismissed on 21111994 as withdrawn. The aforesaid award dated 20111984 has been challenged in the present suit also by filing replication dated 2531988. In paragraph 3 of the replication the challenge is against the award and the decree and also the arbitration proceedings. It has been alleged that as a matter of fact there were no disputes or differences between defendant No. 1 and defendant Nos. 2 and 4 and the fraudulent award and decree were obtained by defendants in order to fabricate defence in the suit and also to secure possession of the premises in the suit. In para 16 it has been said that the award and decree were obtained by fraud and misrepresentation and are, therefore, illegal and without jurisdiction and are barred by principles of lis pendens as well. It has also been said that it is wrong to say that the plaintiffs are underclaimants of the defendants. It has also been alleged that plaintiffs were not party to the aforesaid agreement of arbitration, hence they could not challenge the award or decree under Section 33 of the Arbitration Act. The plaintiffs have instituted regular suit in Delhi High Court for setting aside the said decree which is pending decision. The impugned decree is not binding on the plaintiffs. In para 13 again it has been said that the suit instituted by plaintiffs in Delhi High Court is still pending. In any case the said decree has nothing to do and has no effect on the present suit for relief of specific performance of the contract. Every issue raised in the present suit can be tried by this Court and this Court has got full jurisdiction to adjudicate the rights of the parties.
47. On the pleadings of the parties the Court below struck issues Nos. 13,15 and 16 which were to the following effect:
"13. Whether the defendants have got imaginary mutual dispute of ownership of the disputed premises in collusion with each other, after executing the disputed agreement to sell dated 1261984 and obtained fraudulent award and decree ? If so, its effect ?
"15. Whether the judgment anc decree dated 2121985 passed in Suit No. 1857A of 1984 by the Hon''ble Delhi High Court will have the effect of resjudicata as alleged in para 26 of the written statement of defendants Nos. 2 and 4? If so, its effect?
16. Whether the decree was obtained in suit No. 1857A of 1984 by fraud and is illegal, without jurisdiction and is barred by principles of lis pendens ?
48. From the aforesaid it is clear that the challenge before the Court below was against the entire arbitration proceedings including the award. The Court below though on question of jurisdiction has negatived the contention of the plaintiffrespondents, but has ignored the award and decree on the ground that the plaintiffsrespondents were not party to it and that it was obtained by concealment of facts and by fraud and collusion. The question is whether the award passed in arbitration proceedings and the decree passed by Delhi High Court in pursuance thereof could be legally avoided in the present suit ? It cannot be disputed that the award dated 20111984 given by the arbitrator and the decree dated 2121985 passed by Delhi High Court were under the Arbitration Act, 1940 and for deciding the question it is necessary to consider the provisions contained in Sections 31, 32 and 33 of the Arbitration Act, which are being reproduced below:
"31. Jurisdiction. (1) Subject to the provisions of this Act, an award may be filed in any Court having jurisdiction in the matter to which the reference relates.
(2) Notwithstanding anything contained in any other law for the time being in force and save as otherwise provided in this Act, all questions regarding the validity, effect or existence of an award or an arbitration agreement between the parties to the agreement or persons claiming under them shall be decided by the Court in which the award under the agreement has been or may be filed and by no other Court.
(3) All applications regarding conduct of arbitration proceedings or otherwise arising out of such proceedings shall be made to the Court where the award has been, or may be filed, and to no other Court.
(4) Notwithstanding anything contained elsewhere in this Act or in any other law for the time being in force where in any reference any application under this Act has been made in a Court competent to entertain it, that Court alone has jurisdiction over the arbitration proceedings and all subsequent applications arising out of that reference and the arbitration proceedings shall be made in that Court and no other Court.
32. Bar to suits contesting arbitration agreement or award. Notwithstanding any law for the time being in force, no suit shall lie on any ground whatsoever for a decision upon the existence, effect or validity of an arbitration agreement or an award, nor shall any arbitration agreement or award be set aside, amended, modified or in any way affected otherwise than as provided in this Act."
33. Arbitration agreement or award to be contested by application. Any party to an arbitration agreement or any person claiming under him desiring to challenge the existence or validity of an arbitration agreement or an award or to have the effect of either determined shall apply to the Court and the Court shall decide the question on affidavit :
Provided that whether the Court deems it just and expedient, it may set down the application for hearing on other evidence also and it may pass such orders for discovery of any particulars as it may do in a suit."
49. From Section 31(2) of the Arbitration Act, it is clear that all questions regarding the validity, existence or effect of an award or an arbitration agreement between the parties to the agreement or persons claiming under them shall be decided by the Court in which the award was filed and by no other Court. Thus, Section 31(2) completely bars the challenge against the award made in any other Court and, in our opinion, the bar will apply in the present suit also. Section 32 further prohibits a suit for contesting arbitration agreement or award and all such challenges could only be made by means of application under Section 33 before the same Court.
50. Hon''ble Supreme Court in case of Jawahar Lal v. Union of India, AIR 1962 SC 378, considered the scope and object of Sections 31, 32 and 33 and concluded as under in para 6:
"....................Therefore, said broadly it would be correct to assume that main object of introducing the new sections of Sections 31, 32 and 33 was to entrust the decision of the relevant disputes to the specified Court and to require the parties to bring the said disputes for the decision of the said Court in the form of petitions. Remedy by a regular suit is intended to be excluded."
51. Thus, in our opinion, the plaintiffrespondents could challenge the existence, legality and validity of the award dated 20111984 before the same Court in which it was filed and not in the present suit. The fact that they were not party to the proceedings was immaterial for this purpose as the Company through which they are claiming rights over the property in dispute was party in the proceedings. The approach of the Court below was not correct while dealing this question. Interest of the plaintiffsrespondent Nos. 1 to 3 in the property in dispute is based on the agreement to sell dated 1261984 executed in their favour by the Company. As provided in Section 54 of the Transfer of Property Act, contract of sale by itself does not create any interest in or charge on the property. Thus, for fulfilment of the agreement executed in their favour, it is necessary that the Company continued to have a subsisting interest and title over the property in dispute. A transferee always claims through his transferors which position cannot be disputed. The position of an intended transferee on the basis of the agreement to sell cannot be different. The plaintiffsrespondents can get from the Company only that Tight which it possessed. Thus, the plaintiffsrespondents are the persons claiming through the Company. The bar contained under Sections 31,32 and 33 of the Arbitration Act were thus applicable to the present suit also. It was not open to Court to ignore the award and the decree passed in pursuance thereof.
52. Learned Counsel for the plaintiffsrespondents, however, placed reliance on a judgment of a learned Single Judge of this Court in case of Vineet Kumar v. Smt. Bhagwandei, AIR 1977 Alld 403. In the case before the learned Single Judge the challenge was confined to decree only. The learned Single Judge has held that the bar contained in Section 32 applies in challenging the award by filing a suit and it does not apply to a decree which has been fraudulently obtained. However, as seen above, the challenge by the plaintiffrespondents is not confined to decree but it is against the award, arbitration agreement and the entire arbitration proceedings.
53. On behalf of the plaintiffs respondents reliance has also been placed in case of Vineet Kumar v. Bhagwandei, AIR 1978 Alld 312, in which review application in the same case was rejected. However, the legal position stated in the main judgment was reiterated. In our opinion, the aforesaid cases do not help plaintiffsrespondents in the present case.
54. Reliance has also been placed in the case of Shri Patanjali & Anr. v. M/s. Rawalpindi Theatres (P) Ltd., AIR 1970 Delhi 19. In this case the question involved was about the enforcement of the arbitration agreement by a third party. We are not able to find anything touching the question involved in the present case. At this stage, we may also take notice that it would not be in the interest of the public policy that a decree passed by the Court having jurisdiction may be allowed to be ignored in another suit. The law prescribes certain limitations and conditions under which a decree passed by one Court maybe ignored or set aside by another Court. For example, such limitations and conditions may be seen in Sections 40 to 44 of the Evidence Act. See judgment of Hon. Supreme Court in Ittyavira Mathai v. Varkey Varkey & Anr., AIR 1964 SC 907.
55. On behalf of the plaintiffs respondents a challenge has also been raised based on Section 115 of the Evidence Act and Section 43 of the Transfer of Property Act and it has been said that appellants are estopped from raising the plea that the Company, defendant respondent No. 4, is not owner of the property in dispute. Number of authorities have also been cited in support of this submission. However, in our opinion, in the present case the plea of estoppel cannot be applied against appellant Nos. 1 and 2. It cannot be lost sight of that the agreement dated 1261984 was executed by the Company in favour of the plaintiffsrespondents. The amount has also been paid to the Company. Appellants Nos. 1 and 2 signed the agreement, only as directors. We do not find anything in the agreement on which basis it may be said that they made any representation before plaintiffrespondents in their individual and personal capacity. Though the learned trial Judge has interpreted the description of the parties in the agreement to include appellant Nos. 1 and 2 in personal capacity also, however, we do not agree with the conclusion drawn. Appellants Nos. 1 and 2 both have been mentioned in the agreement as directors only and there is nothing on which basis their involvement in personal capacity may be inferred. Learned Court below on the basis of the word ''parties'' used in the agreement has tried to stretch the description to include appellant Nos. 1 and 2 personally also. In our opinion, for involving appellant Nos. 1 and 2 personally, the language used would have been altogether different. Had the intention been so they could be very well mentioned as directors and also in their personal capacity which we find missing in the agreement. Thus, the plea of estoppel cannot be raised against appellants, specially appellant Nos. 1 and 2.
56. There is yet another aspect of the matter in this respect worth noticing at this stage. In para 5 of the agreement there is a specific stipulation that the plaintiff respondents shall be satisfied about the absolute title of the Company over the property in dispute. It makes amply clear what was prevailing in the minds of the parties at the time they entered into the agreement to sell. It clearly demonstrates that plaintiffrespondents were doubtful about the title of the Company. However, they filed this suit without compelling the defendants to satisfy them about the absolute title of the Company. If the doubt was already prevailing, it is not open to the plaintiffsrespondents now to say that they were represented to accept the title of the Company as absolute. We have not been referred to any correspondence between the plaintiffs respondents and appellants and defendant respondent No. 4 about this aspect of the matter after execution of the agreement and before filing the suit. In our opinion, in the facts and circumstances narrated above, the plea of estoppel raised on behalf of the plaintiffsrespondents cannot be accepted. Section 115 of the Evidence Act and Section 43 of the Transfer of Property Act have no application in the facts and circumstances of the present case.
57. Thus, for the reasons stated above, question Nos. 1, 2 and 3 framed earlier are determined and it is found that appellant Nos. 1 and 2 were and are still owners of the property in dispute. There was no question of any privity of contract between appellant Nos. 1 and 2 in their personal capacity and the plaintiffs respondent Nos. 1 to 3 on the basis of the agreement dated 1261984. Questions Nos. 1 to 3 are decided accordingly.
Whether the amount of Rs. Ten lakhs was given on 1261984 by way of loan and there was no agreement to sell ?
58. This question has been decided by the Court below alongwith issues Nos. 1,2, 3 and 22. The findings have been recorded from paragraphs 32 to 54. The Court below has found that the agreement dated 126. 1984 was executed by defendant Nos. 1 to 4 and defendant Nos. 2 and 4 have not only executed it as directors of defendant No. 1 but also in their individual capacity. Finding on issue No. 1 is recorded accordingly. The said agreement was for sale of the disputed property and earnest money was taken in consideration thereof. Issue No. 2 has been decided accordingly. Issues No. 3 and 22 have been decided in the negative.
59. We have considered the submissions of the learned Counsel for the parties on this question. It cannot be disputed that the real nature of the transaction can be ascertained from the facts and circumstances in which the amount was given and the attending circumstances have to be looked into. However, we have no hesitation in saying that the Court below has miserably missed to take into consideration some very important facts and circumstances which indicate that the purpose behind executing the agreement to sell dated 1261985 and payment of Rs. Ten Lakhs was not for the purchase of the property. The circumstances are being detailed below:
(1) No period was stipulated in the agreement dated 1261984 for executing the sale deed. In our opinion, in a transaction in which Rs. Ten Lakhs were paid as earnest money, it is difficult to imagine that an intending purchaser will not put condition for the vendor to execute the saledeed within a stipulated time. If this factor is considered in isolation it may be said that it could be an inadvertent slip but things did not stop here;
(2) In the agreement itself in para 10, it has been mentioned that the first party has leased out the entire house property to Sri Manoj Kumar Poddar. It is admitted fact that a registered lease deed was executed on 1261984 in favour of Manoj Kumar Poddar which stipulated that the lease shall be for an initial period of five years with the covenant that after expiry of the said period, the lease shall further be renewed for further period of five years on execution of fresh lease deed subject to enhancement of rent by Rs. 100 per month. The amount of rent agreed for the period of first five years was Rs. 1,000 per month. It is also alleged by the plaintiffsrespondents that possession was delivered to Manoj Kumar Poddar on 1361984 though not accepted by defendants appellants. Now, at this stage it is necessary to think as to how a prudent purchaser could agree for such a condition in the agreement to sell that he shall be kept deprived of the property for a period of ten years though he has paid Rs. Ten Lakhs for purchase of the house. This fact coupled with the fact that no period was stipulated in the agreement for execution of the saledeed is a sufficient indication that the agreement to sell dated 1261984 was a sham transaction and in fact was by way of collateral security for the loan of Rs. Ten Lakhs given to defendant respondent No. 4 for removing the locks which were put by the bank. Manoj Kumar Poddar filed Original Suit No. 612 of 1994 in the Court of Civil Judge claiming decree of a permanent injunction against the appellants from interfering in his possession. This suit was filed within few days of the filing of the suit from which this appeal is arisen. Manoj Kumar Poddar also obtained the interim order dated 19101984 from the Court which gave rise to series of litigations between the parties. In our opinion, the Court below ought to have taken into consideration the aforesaid vital facts which have been ignored.
(3) There is one more factor, Just before the suit was filed by the plaintiffsrespondents, appellant No. 2 Mohan Lal Saraf wrote a letter dated 681984. This letter was written when plaintiffsrespondents published an advertisement in Dainik "Aaj" on 581984. This letter has been proved by him and is paper No. 307/28. By this letter appellant No. 2 complained that plaintiffsrespondents are adopting devices to give shape of a transaction of deemed loan and the agreement to sellcumloan was executed by way of security under express understanding that no incident would exist or could arise for agreement to sell or for sale. It has also been stated in the letter that even till three days before Sudhir Kumar Parasrampuria pressed for return of money advanced to the Company but when arrangements are being made to pay back the loan, advertisement has been published in Dainik "Aaj". It has also been complained that all this has been done to damage the public image or to scuttle the efforts to raise finances to pay off the advances. It has been requested in the letter not to precipitate the crisis at the time when the Company is facing difficulty and not to commit breach of faith. A willingness has been shown to make efforts to pay the advances. In our opinion, it was also a valuable piece of evidence to establish the intention of the parties.
(4) It is not disputed that the amount of Rs. Ten Lakhs was deposited in the account of the company by the plaintiffrespondents. Out of this amount, a substantial amount of Rs. 2,24,000 was transferred to P.R.D. Company. The amount to the extent of more than Rs. 1,50,000 remained with the bank. Liabilities of the company towards the bank were only to the extent of Rs. 6,75,000. On these facts it was argued before the Court below that the transaction was not for sale but it was by way of security to the amount advanced. The bank official who was examined before the Court could not show any authority for transfer of the amount of Rs. 2,24,000. The Court below has simply left this question saying that any other director of the Company may have authorised the transfer of the amount but its impact on the present case has not been considered which clearly demonstrates that some underhand dealing was going on between the parties which was not allowed to come on surface.
60. In our opinion, the aforesaid uncontroverted facts fully established that the motive behind the execution of the agreement to sell in question was to secure payment of the amount. The findings contrary to it recorded by the Court below cannot be sustained.
61. While dealing with the questions Nos. 1,2 and 3 posed by us, though we have already said that the agreement to sell could be held to be executed only by the Company and not by defendant Nos. 2 to 4, however, as while deciding issues Nos. 1,2, 3 and 22, the Court below has again recorded this finding, we have considered the finding and find ourselves unable to agree with the view taken by the Court below. On behalf of the defendants appellants it was pointed out that in the agreement as many as at eleven places words "first party" have been used and only at few places it has been said "parties of the first part". The submission on their behalf was that for coming to the correct conclusion, the agreement as a whole should be read and not in piecemeal for drawing an inference that the agreement was signed by defendant Nos. 2 to 4 in their personal capacity also. They further placed reliance in para 11 of the replication dated 1631988 and para 2 of the second replication dated 1291991 in which plaintiffs respondents clearly admitted that defendant Nos. 2 to 4 signed as directors. In the advertisement published in the newspaper on 581984 also it was stated that the agreement was only with the company. The last document on which they placed reliance was plaint of Original Suit No. 1252 of 1985 filed in Delhi High Court in para 9 whereof it was admitted that the agreement was only with the company. The Court below has, however, brushed aside these submissions in the following words:
"So far as the above contention of defendants is concerned that is not accepted and the point raised by the plaintiffs is a little different. The plaintiffs advanced arguments and have alleged that the dispute in fact was between the plaintiff and defendant Nos. 1 to 4. Only defendant Nos. 2 to 4 have signed over that agreement and they have admitted company''s absolute ownership in the agreement. Therefore, they are bound by those admissions and secondly, if in the alternative the property is found to be of defendant Nos. 2 to 4, they cannot get rid of the agreement because they have signed it and entered into that agreement in their personal capacity also on the basis of mentioning the words "parties of the first part". It is, however, to be mentioned that this fact is not very material in this case because there is overwhelming evidence that the property in dispute belongs to defendant No. 1 and it does not belong to defendant Nos. 2 to 4 though they have obtained an award and decree from Hon''ble High Court for the reasons mentioned with respect to that decree."
62. Thus, the Court below has not decided the submissions raised on behalf of the defendants. We have seen the agreement in question. While describing the Company it reads as under:
"(1) M/s. Kanpur Exports (Pvt.) Ltd., 7/169, Swarup Nagar, Kanpur, through its directors ; (1) Smt. Pushpa Devi Saraf, wife of Shri Mohan Lal Saraf, resident of 24/53, Bairahna Road, Kanpur;
(2) Sri Mohan Lal Saraf, son of late Sri Rameshwar Das Saraf, resident of 24/53, Bairahna Road, Kanpur;
(3) Sandeep Saraf, son of Sri Mohan Lal Saraf, r/o 24/53, Bairahna Road, Kanpur, hereinafter referred to as ''first party'' (which expression unless repugnant to the context of the meaning thereof be deemed to include heirs, executors, administrators, successors and assigns of the ''first part''."
63. The expression is very simply and uncomplicated. Appellants Nos. 1,2 and 4 have been mentioned only as directors and nowhere there is any indication that they are party in the agreement in their individual capacity. Three directors have been serially mentioned against Nos. 1, 2 and 3. Different conclusion could only be drawn if they were mentioned as independent parties numbering 2, 3 and 4. Paragraph 2 of the agreement reads as under:
"And whereas parties of the first part are the only directors of M/s. Kanpur Exports (P) Ltd."
The aforesaid paragraph only describes that the company has only three directors mentioned above. Similarly, in para 4 again word "parties" has been used for directors as they are more than one. In our opinion, in the two paragraphs the word "parties" has been only used to say that the number of directors is more than one and not involving the directors in any way in their personal capacity. The expression "parties of the first part" used thereafter in the agreement only refers to the directors. The interpretation given by the Court below to the document in question is not correct. The description of the parties has been given at the beginning and only company has been shown as first party. Had the intention been otherwise, there could have been no difficulty to mention appellant Nos. 1, 2 and 4 as independent parties along with the Company. The findings of the Court below on issues Nos. 1,2,3 and 22 thus cannot be sustained as they are against the material on record. Question No. 4 posed by us is determined and it is held that the amount of Rs. Ten Lakhs given by the plaintiffsrespondents to the Company was byway of loan and the agreement to sell was executed only to secure the payment of the amount.
DEMOLITION OF THE BUILDING AND ITS EFFECT
64. This painful aspect of this case has been dealt with by the Court below while deciding issues Nos. 6, 12 and 23. It has been held that there is no convincing evidence to prove that the structure was demolished and the alleged dacoity and loot was committed at the instance of the plaintiffs. The statement of D. W. 1 Mohan Lal Saraf has been rejected on the ground that he is interested witness. Report of C.B. C.I.D., First Information Report and charge sheets have been rejected as not evidence in this case. It has also been said that the plaintiff respondents are prospective purchasers and they have paid the price of the house in dispute including the price of the structure, therefore, they cannot be alleged to be guilty of the offences. It has also been said that as the plaintiffs are still willing to purchase the property and they have not claimed any compensation, the agr�ement in question can be enforced.
65. We have no hesitation in saying that the Court below has just brushed aside this vital question without considering the very material evidence on record and conduct of the plaintiffs respondents. It is not disputed that the defendantsappellant Nos. 1 and 2 were put in possession over the property in dispute on 841985 in the Execution Case No. 11 of 1985. The application under Section 2A(5) of U.P. Act No. 13 of 1972 was filed by one G.P. Tiwari who claimed himself to be caretaker and alleged appellant Nos. 1, 2 and 4 as licensees. The order of eviction was passed on 2581989. On 2091989 warrant for delivery of possession with police help was issued and on 2391989 possession was given to alleged G.P. Tiwari and same day a palatial building was mercilessly demolished. This application under Section 2A(5) of U.P. Act No. 13 of 1972 was filed through Nand Lal Jaiswal, Advocate. The appellants were taken unawares. They were residing in the building in dispute with their families. They were thrown out and the building was demolished. They filed an application for recall of the order dated 2581989. The finding was recorded that no notice was ever given to them. The order dated 2581989 was recalled and . same day the application was dismissed as not pressed. The substantial question is who has set up G.P. Tiwari for obtaining such order in the garb of which the building was demolished. The following material on record will demonstrate that G.P. Tiwari was set up by nobody else but the plaintiffrespondents No. 1 and 3. In the application under Section 2A(5) initially G.P. Tiwari did not disclose as to who appointed him as caretaker of the building in dispute, but later on during the proceedings on the application filed by the appellants for recall of the order dated 2581989, he stated that Manoj Kumar Poddar had appointed him as caretaker. Manoj Kumar Poddar is cousin (son of maternal uncle of Sudhir Kumar Parasrampuria). Thus he was very closely related to the plaintiffs respondents. He was the alleged lessee mentioned in the agreement in question. Immediately after demolition of the building Sudhir Kumar Parasrampuria filed Original Suit No. 237 of 1989 in the Court of Civil Judge, Kanpur Dehat. For creating jurisdiction one totally unconcerned property about which there was no dispute was also included. On 23101989 an order was passed by Civil Judge directing that the plaintiffs will have symbolic possession over the property in dispute. On 27101989 instead of symbolic possession plaintiffsrespondents took actual possession from G.P. Tiwari. Such help could be expected from and rendered by his own man. This suit was also ultimately got dismissed as withdrawn. How the Court below could ignore these facts for saying that plaintiffs respondents are not responsible for demolition of the structure ? On record, photographs are available showing the position of the building before demolition and after demolition. A huge and beautiful bungalow was demolished. Defendants appellants faced with the aforesaid difficult situation approached this Court and filed writ petitions. In Writ Petition No. 23804 of 1989 a detailed order was passed by the Division Bench on 9121993 in which plaintiffsrespondents and G.P. Tiwari were found prima facie responsible for, demolition of the building. The Division Bench directed investigation by C.B.I. The aforesaid order was passed after hearing the parties. An application was filed for review of the order which was dismissed on 20121993. The S.L.P. was filed before Hon''ble Supreme Court which was dismissed on 1831984. It may be noticed here that same Nand Lal Jaiswal, Advocate, represented G.P. Tiwari in rent control case and also represented plaintiff respondents in the present case. The fact was admitted by Sudhir Kumar Parasrampuria, D.W. 1, in his statement on oath. In Original Suit No. 677 of 1991 file by Sudhir Kumar Parasrampuria also Nand Lal Jaiswal was his advocate. In suit No. 2256 of 1989 filed by Sudhir Kumar Parasrampuria also, Nand Lal Jaiswal was his advocate. Both the aforesaid suits were got dismissed as not pressed on 2681991. All these documents are on record which fully establish that G.P. Tiwari was none else but own man of the plaintiffs respondents. The Court below illegally rejected the statement of Mohan Lal Saraf, appellant No. 2, only on the ground of his interestedness. Naturally he was most affected person by demolition of the building.
He proved by categorical statement that plaintiffrespondents G.P. Tiwari with the help of police and several other persons demolished the building. The documents mentioned above fully corroborated the statement of D.W. 1 that the plaintiffs respondents were responsible for demolition of the building on 2391989 and thereafter. In pursuance of the order of the Division Bench of this Court, the C.B.I. investigated the matter and filed chargesheet against nine persons in Court under Sections 120B/380/427/451, I.P.C. In the chargeSheet the accused persons are Sudhir Kumar Parasrampuria, Jai Narain Parasrampuria, G.P. Tiwari, Harendra Kumar Gupta, Manoj Kumar Poddar and others. In this chargesheet entire incident has been detailed how the building was demolished, how the entire material was taken away in four trucks with registration numbers, which belonged to transport companies having close business relations with the plaintiffs'' company. The entire goods were kept in the godown of the transport companies. The building was razed to the ground. The costly building materials like bricks, marvel, wooden and iron materials etc. valued at Rs. Ten Lakhs were stolen by the accused persons who removed the same in vehicles including D.C.M. Toyota. The C.B.I, has also filed an application in the Court of the Civil Judge, Kanpur Dehat for lodging a complaint against Sudhir Kumar Parasrampuria in the Court of competent jurisdiction for having committed offences under Sections 420/468/471, I.P.C. This was relating to suit No. 237 of 1989. Details have been mentioned how the documents have been forged for obtaining orders. One application has been filed in the Court of Civil Judge/Prescribed Authority for filing complaint against Nand Lal Jaiswal, Advocate, under Section 193, I.P.C. for obtaining order dated 2581989 on the basis of the forged documents. In our opinion, with the help of the aforesaid documents the Court below could easily fix the responsibility as to who demolished the building. Plaintiffs respondents were not owners of the building at the time they demolished it. They could only have a chance of their suit being decreed for specific performance. We are sorry to observe that the Court ''below has taken this matter very lightly and has said that as plaintiffs have paid money and they are not aggrieved by the demolition of the building, appellants should not have any grievance. Such ridiculous approach on the part of a judicial Court is not expected. The plaintiffs respondents misused and abused the process of the Court for doing an act which could not be appreciated by any body. Our impression is that they were not in fact interested in purchasing the property in dispute but somehow wanted to cause as much harm to the appellants as they could do. A prudent purchaser interested in purchasing the property could never have even thought of demolishing such a beautiful building. In our opinion, the statement of D.W. 1 sufficiently proved the fact and his statement was fully corroborated by the documents on record. In civil suit an issue is to be decided on preponderance of evidence. The Court below was not called upon to record a finding fixing guilt of the plaintiffsrespondents for committing an offence beyond all reasonable doubts. The issue could be decided on the basis of the material found on record. The C.B.I, investigated the matter and filed chargesheet in pursuance of the order of the Court. Copies of the chargesheets and reports could be relevant documents related to relevant facts and could be seen under Sections 8, 9 and 10 of the Evidence Act. We are of the firm opinion that from the material on record it has been fully established that the plaintiffs respondents demolished the building on 2391989. However, at this stage we make it clear that the finding is for the purpose of deciding the questions involved in this suit and these findings will not have any impact in any other criminal case or proceedings pending against respondents which should be decided on the basis of the material available in those proceedings.
66. Now, it has to be seen what shall be the impact of demolition of the house by the plaintiffsrespondents on their claim seeking specific performance of the agreement to sell dated 1261984. Hon''ble Supreme Court in case of P.B. Josephs Methew v. N. Kuruvila''s son, AIR 1987 SC 2328, held that Court should see that the litigation is not used as instrument of oppression to have unfair advantage to plaintiff. The Apex Court also opined that Section 20 preserves the judicial discretion to Courts as to decreeing specific performance. The Court should meticulously consider all facts and circumstances of the case. Court is not bound to grant specific performance merely because it is lawful to do so. The motive behind the litigation should also enter into the judicial verdict. The relevant paragraph 14 of the above judgment is being reproduced below:
"Section 20 of the Specific Relief Act, 1963, preserves judicial discretion to Courts as to decreeing specific performance. The Court should meticulously consider all facts and circumstances of the case, the Court is not bound to grant specific performance merely because it is lawful to do so. The motive behind the litigation should also enter into judicial verdict. The Court should take care to see that it is not used as an instrument of oppression to have an unfair advantage to the plaintiffs. The High Court has failed to consider motive with which Verghese instituted the suit. It was instituted because Kuruvila could not get the estate and Methew was not prepared to part with it. The sheet anchor of the suit by Verghese is the agreement for sale, Ex. A1. Since Chettiar had waived his rights thereunder, Varghese as assignor could not get a better right to enforce that agreement. He is, therefore, not entitled to a decree for specific performance."
67. Again in the case of Laurdu Mary David & Ors. v. Louis Chinnaya Arogia Swamy& Ors., AIR 1996 SC 2814, Hon''ble Supreme Court held that under Section 20 of the Specific Relief Act the decree for specific performance is in the discretion of the Court but the discretion should not be refused arbitrarily. The discretion should be exercised on sound principles of law capable of correction by an appellate Court. It has been further said that it is settled law that the party who seeks to avail the equitable jurisdiction of the Court specific performance being equitable relief must come to the Court with clean hands. In other words, the party who makes false allegations does not come with clean hands and is not entitled to the equitable relief.
68. If the conduct of the plaintiffsrespondents in demolishing the house is considered in the light of the aforesaid judgments and Section 20 of the Specific Relief Act, the unescapable conclusion will be that decree of specific performance cannot be granted in their favour. It cannot be disputed that decree of specific performance is passed in exercise of equitable jurisdiction and it cannot be claimed as a matter of right. The plaintiffs should come with clean hands and must maintain equity throughout the litigation. The equitable or sound human conduct in such a proceeding is not a thing to be observed at any one single stage of the suit but should be maintained throughout the proceedings. It is the requirement as provided in Section 20(2) (b) read with Explanation 2 of the Specific Relief Act. Subsection (2) of Section 20 illustrates the cases in which the Court may properly exercise discretion not to decreespecific performance. Clauses (a), (b) and (c) deal with such circumstances where specific performance should not be granted, (b) reads as under :
"Where the performance of the contract would involve some hardship on the defendant which he did not foresee, whereas its nonperformance would involve no such hardship on the plaintiff;"
(c) xxx
Explanation 1. xxx
Explanation 2. The question whether the performance of a contract would involve hardship on the defendant within the meaning of clause (b) shall, except in cases where the hardship has resulted from any Act of the plaintiff, subsequent to the contract, be determined with reference to the circumstances existing at the time of the contract."
69. Thus, from Explanation it is clear that action of the plaintiffsrespondents which resulted in hardship to the defendant may be taken into consideration. In our opinion, there could not be a worst hardship caused to the defendants, specially defendantappellant Nos. 1 and 2 than the demolition of the palatial construction. We have .already found that plaintiffsrespondents are responsible for demolition of the building which is an Act subsequent to the execution of the agreement. The hardships caused to the defendants are being enumerated below:
(A) by demolition of the palatial building mercilessly.
(B) caused hardship by initiating frequent frivolous legal proceedings with the object to harass the defendants appellants. This hardship was not on the appellants alone but even to the entire judicial system as a whole. The Division Bench by order dated 9121993 directed disciplinary action against the two judicial officers.
(C) Illegally obtained actual possession on 27101989 on the basis of the order dated 23101989 which permitted symbolic possession. The plaintiffs respondents could not claim possession in view of the condition in para 12 of agreement that they have not been given possession. They were consenting party in the property being leased out in favour of a third person for a period of ten years.
(D) The illegal possession they have retained till date resulting in serious hardship to the appellants in the rightful enjoyment of the possession of the property. They could not have any interest in the property in dispute merely on the basis of the disputed agreement to sell as provided in Section 54 of the Transfer of Property Act. The manoeuvring by plaintiffs respondents through legal process to take possession can only be termed a mala fide action and nothing else.
70. In our opinion, the plaintiffs respondents disentitled themselves for any equitable consideration and the decree of specific performance could not be granted in their favour. Learned Court below committed a serious illegality in decreeing the suit for specific performance of the agreement.
71. There is yet another aspect of the matter in view of which the decree of specific performance could not be granted to plaintiffsrespondents. From a reading of para 1 of the agreement it is clear that plaintiffs respondents agreed to purchase the house bungalow bearing municipal number 7/169, situate at Swarup Nagar, Kanpur, constructed over plot No. 22, Block B, Scheme No. 7, Gutaiyya, Swarup Nagar, Kanpur. Para 1 reads as under:
"That the parties of the first part hereby agree to sell and parties of the second part agree to purchase house bungalow bearing municipal No. 7/169, situated at Swarup Nagar, Kanpur, over plot No. 22, Block B, Scheme No. 7, Gutaiyya, Kanpur, more particularly detailed and described at the foot of this agreement."
72. At the bottom of the agreement, only boundaries have been mentioned. In subsequent paragraphs only the aforesaid property has been mentioned. Thus, from reading of the aforesaid paragraph it is clear that the agreement in question for sale was with regard to the construction over the land. If the house has been demolished, in our opinion, the consideration for the agreement became nonexistent. The Court below was not correct in decreeing the suit for specific performance with regard to the open land. The findings of the lower Court on issues Nos. 6,12 and 23 cannot be sustained and are set aside. Thus, questions Nos. 5, 6 and 7 are determined in favour of the appellants and it is held that the decree of specific performance could not be granted in favour of the plaintiffs respondents.
DELIVERY OF POSSESSION TO PLAINTIFFS RESPONDENTS BY THE COURT BELOW:
73. Discussion by the Court below on this question can be seen while deciding issue No. 21 regarding relief to which the plaintiff respondents may be entitled. While deciding this issue the Court below has also considered other submissions raised on behalf of the appellants. We have already discussed while determining other questions about the conduct of the parties and we do not see any useful purpose in overburdening this judgment by repeating the same here. However, some criticism about the conduct of appellant No. 2 has been made by the Court below while deciding issue No. 21. We have ourselves said in the earlier part of the judgment that conduct of defendantsappellant Nos. 1 and 2 can also not'' be appreciated. Even if the criticism which has been made by the Court below is taken to be true, on its basis the decree of specific performance could not be passed in favour of the plaintiffs respondents. Even if the conduct of both the sides is weighed during the proceedings, the defendantappellants could not be of any match to plaintiffsrespondents but the unfortunate part of the story is that the Court below has completely ignored the same. It is strange to observe that the Court held that the conduct of the defendants Nos. 1 to 4 is mala fide and against it is he held that there are no mala fides on the part of the plaintiffs. In our opinion, the findings of the Court below are not based on record. For long drawn litigation only plaintiffs respondents could be blamed which is apparent on the face of the record. We have already held that the plaintiffs respondents were not interested in purchasing the property. We have narrated the circumstances in the earlier part of this judgment which stand fully corroborated by the conduct of the plaintiffs respondents in demolishing the palatial building.
74. The strange part of the judgment of the Court below is para 92 in which it has been said that plaintiffs are entitled to take possession of the property in suit from the receiver in view of the order dated 1481991 passed by the Hon''ble Supreme Court. In our opinion, this part of the order was wholly based on misconception. Hon''ble Supreme Court in its order dated 1481991 only said that the receiver would get the property in his possession by entering upon the property forthwith and will ensure that it is kept in an appropriate condition for the rightful owner of the property to be adjudicated in the suit for specific performance. The Court below adjudicated that the company, defendantrespondent No. 4, was rightful owner of the property. The plaintiffs respondents could not be said owners of the property merely because a decree of specific performance was passed in their favour. They could get title over the property in dispute only on payment of balance of consideration and on execution of the saledeed in their favour in pursuance of the decree and delivery of possession in consequence thereof under the provisions of the Code of Civil Procedure. The Court below passed orders to hand over possession to the plaintiffsrespondents immediately. A Full Bench of this Court in Mehendra Nath &Anr. v. Smt. Baikunthi Devi & Ors., AIR 1976 Alld 150 (FB), held as under:
"On a careful consideration of the cases cited above, we find ourselves in agreement with the view taken in Shri Ram v. Dhani Ram Gupta, AIR 1974 All 358 (supra). In view of Section 30 of the U.P. Consolidation of Holdings Act, a tenureholder gets the same rights, interests and liabilities in the chaks allotted to him which he had in the original holding and his interests and liabilities in the original holding cease after the allotment of the Chak. But a person who has got only a contract for sale or has got a decree for specific performance of the contract, has got no interest in the land. He can only enforce the contract compelling the other side to execute the saledeed failing which the Court might execute a saledeed for the defendant, but the rights and liabilities under the contract do not attach to the land. The key words in Section 30 of the U.P. Consolidation of Holdings are "rights, title, interests and liabilities in their respective holdings shall cease." The question of ceasing of the interests would arise only when the plaintiff had an interest in the land, but till the saledeed was executed, the plaintiff could not get any right in the land. There is absolutely no warrant for holding that the agreement for sale stands on the same footing as sale and the lower appellate Court has erred in holding to the contrary."
75. In our opinion, the Court below committed a serious illegality in directing premature delivery of possession in favour of plaintiffs respondents on the basis of the decree passed by him. He wrongly took shelter of the order of Hon''ble Supreme Court which never meant such a consequence. The plaintiffs respondents had already entered into an illegal actual possession on 27101989 on the basis of the order dated 23101989 which was regarding symbolic possession. The order dated 23101989 has already been quashed by this Court as mentioned earlier in Writ Petition No. 24301 of 1989. Thus, the possession of plaintiffs respondents was throughout illegal and without authority. In pursuance of the impugned judgment and decree possession was delivered to plaintiffs respondents on the date of judgment itself, i.e. on 23101992. The receiver could remain in possession for a short period between August, 1991 to 22nd October, 1992. On behalf of the plaintiffs respondents protest applications were lodged on 28101992 but nothing could be done. Everything was surreptitiously done in a strange manner which raises serious doubts against the presiding officer of the Court also. In our opinion, serious injustice was done to the defendantsappellants.
76. The findings recorded on issue No. 21 thus cannot be sustained and are set aside. Question No. 8 is decided accordingly.
77. In view of our findings on questions Nos. 1 to 8, the plaintiffs respondents have already been found not entitled for the decree of specific performance. The Court below struck as many as 27 issues. The other issues which could not be hereinbefore considered are also being dealt with separately.
78. Issues Nos. 7 and 8 are with regard to the readiness and willingness. Findings of the Court below can be seen in paras 55 and 56 of the impugned judgment. Both the issues were decided in favour of the plaintiffsrespondents. However, the findings recorded have been rendered redundant as plaintiffs respondents are not entitled for the decree of specific performance and no further discussion is required on these issues. Issues Nos. 4,5 and 24 are with regard to the agreement to sell dated 461984 executed in favour of defendantappellant No. 3 by appellant Nos. 1 and 2. As determination of these issues for deciding the suit is not necessary, the findings recorded by the Court below in paras. 57 to 65 have also been rendered redundant and no further discussion is required on these issues by this Court. Issue No. 14 is regarding the facts of Suits No. 237 of 1989, 2256 of 1989 and 677 of 1991 filed by Sudhir Kumar Parasrampuria in different Courts. They were filed with mala fide objects to obtain some order and after obtaining orders and gaining advantage, the suits were got dismissed. In view of the findings recorded by us on other issues, the finding of the Court below has become redundant and no further discussion is required. Findings on issues Nos. 10, 11, 19 and 20 have been recorded together by the Court below which are in paras 73 to 76. Issue No. 10 was with regard to the misjoinder of parties, issue No. 11 was about misjoinder of causes of action, issues Nos. 19 and 20 were on the point of payment of Court fee and valuation. The findings of the Court below have not been assailed before us, hence no discussion is required. On issues Nos. 23, 26 and 27 findings have been recorded by the court below in paras 77 to 84. All the issues have been decided in the negative. Issue No. 23 was with regard to the frustration of contract as provided under Section 56 of the Indian Contract Act. Issue No. 26 was with regard to the bar against the transfer provided under the provisions of Urban Land (Ceiling and Regulation) Act, 1976. Issue No. 27 was as to whether State Bank of India and M/s. Prahlad Rai Dalmia (Textiles Manufacturing) (P) Ltd. were necessary parties to the suit. In view of our findings on questions 5,6 and 7, finding on issue No. 23 recorded by the Court below can not be sustained and is reversed. Findings on issues No. 26 and 27 have been rendered redundant in view of our findings recorded on major questions and no further discussion is required.
79. Now, the last question remains about the relief to which defendants appellants are entitled in this appeal. We have already found that plaintiffs respondents are not entitled for decree of specific performance. In the suit plaintiffsrespondents have only claimed for the decree of specific performance. They have not prayed for the refund of the earnest money. Unlike other cases, we cannot suo motu mould the relief in order to do complete justice by decreeing the suit for refund of the amount of earnest money. Section 22 of the Specific Relief Act mandates that no relief for refund of the earnest money can be granted by Court unless it has been specifically claimed. For advantage, Section 22 of the Specific Relief Act is being reproduced below:
"22. Power to grant relief for possession, partition, refund of earnest money, etc. (1) Notwithstanding anything to the contrary contained in the Code of Civil Procedure, 1908 (5 of 1908), any person suing for the specific performance of a contract for the transfer of immovable property may, in an appropriate case, ask for
(a) possession, or partition and separate possession, of the property, in addition to such performance; or
(b) any other relief to which he may be entitled, including the refund of any earnest money or deposit paid or made by him, in case his claim for specific performance is refused.
(2) No relief under clause (a) or clause (b) of subsection (1) shall be granted by the Court unless it has been specifically claimed:
Provided that where the plaintiff has not claimed any such relief in the plaint, the Court shall, at any stage of the proceedings, allow him to amend the plaint, on such terms as may be just for including a claim for such relief.
(3) The power of the Court to grant relief under clause (b) of subsection (1) shall be without prejudice to its powers to award compensation under Section 21."
80. However, under Section 22, Court has been given a discretion to allow the plaintiff to amend the plaint to include such a relief. The present litigation between the parties is pending for the last 14 years. The agreement in question was executed in the year 1984. In order to do complete justice and to avoid future litigation between the parties, we give opportunity to the plaintiffs respondents to amend their plaint and seek relief for refund of the earnest money. If such an application is filed in this Court within one week from today, reply thereto may be filed by the appellants within one week thereafter. As evidence of the parties is already on record, if the aforesaid condition is satisfied, for the reasons already stated in the judgment, we grant the following reliefs:
(a) The appeal is allowed and the judgment and decree dated 23101992 is set aside.
(b) Original Suit No. 537 of 1984 is dismissed so far as the decree of specific performance on the basis of the agreement dated 1261984 is concerned. The suit is, however, decreed for recovery of the amount of Rs. Ten lacs with interest at the rate of 18% per annum from the date of filing of the suit till the date of actual payment to the plaintiffrespondent against the appellants. The Court fee would be paid on the amended plaint at the time of filing of the amendment application claiming relief for refund of the money.
(c) The plaintiffrespondent shall hand over possession of the property in dispute to defendantsappellants within a month from the date of payment of Rs. Ten lacs with interest, provided above necessary amendment is sought as mentioned failing which the defendantsappellants would be entitled to recover possession through Court.
(d) The payment of the amount under the decree and the delivery of possession shall be through the Court.
81. Considering the conduct of both the parties, there will be no order as to costs.
