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Eldee Velvet and Silk Mills Pvt. Ltd Vs. Anant Ram Whig - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtDelhi High Court
Decided On
Case NumberRegular First Appeal No. 104D of 1961
Judge
Reported inILR1971Delhi249
ActsSpecific Relief Act, 1963 - Sections 20 and 22; Code of Civil Procedure (CPC), 1908 - Order 22, Rule 35
AppellantEldee Velvet and Silk Mills Pvt. Ltd
RespondentAnant Ram Whig
Advocates: V.M. Tarkunde,; Ravnder Narain,; G.L. Sanghvi,;
Cases ReferredArdeshir H. Mama v. Flora Sassoon
Excerpt:
(i) specific relief act (1877),--suit for specific performance--auction purchaser having provisional possession of land--agreement to sell land by the auction purchaser pending grant of final sale certificate---whether can be specifically enforced.; that in a completed contract of sale, the parties to it are bound by the terms of the said contract. if a party was otherwise entitled to specific performance of the agreement, he could not be refused specific performance on the ground that the vendor had not yet become the owner of the lease-hold rights in the plot or on the ground that the permission of the government had yet to be obtained.; (ii) specific relief act (1877) - section 22--vendor contracting to sell land without being granted final sale certificate in his favor--agreement.....t.v.r. tatachari, j.(1) the appellant, messrs eldee velvet and silk mills (p) ltd.. which is a private limited company with its registered office in bombay, has filed this appeal against the judgment and decree of shri r. l. sehgal, commercial subordinate judge first class, delhi, dated 11th april, 1961, dismissing a suit. no. 253 of 1958, filed by it for specific performance of an agreement of sale executed by the respondent herein. shri anant ram whig. (2) the aforesaid suit was originally filed on 21st july, 1958. on a preliminary objection to the plaint raised by respondent (defendant). the trial court passed an order, dated 29th august, 1958, holding that the plaint suffered from prolixity, and directing the plaintiff to amend the plaint by eliminating all unnecessary pleadings from.....
Judgment:

T.V.R. Tatachari, J.

(1) The appellant, Messrs Eldee Velvet and Silk Mills (P) Ltd.. which is a private Limited company with its registered office in Bombay, has filed this appeal against the judgment and decree of Shri R. L. Sehgal, Commercial Subordinate Judge First Class, Delhi, dated 11th April, 1961, dismissing a suit. No. 253 of 1958, filed by it for specific performance of an agreement of sale executed by the respondent herein. Shri Anant Ram Whig.

(2) The aforesaid suit was originally filed on 21st July, 1958. On a preliminary objection to the plaint raised by respondent (defendant). the trial court passed an order, dated 29th August, 1958, holding that the plaint suffered from prolixity, and directing the plaintiff to amend the plaint by eliminating all unnecessary pleadings from it. Accordingly, an amended plaint was filed on 13th September, 1958.

(3) The facts which led to the filing of the suit are as follows: On 9th January, 1955, the Government of India, Ministry of Rehabilitation, put to sale by public auction the lease-hold rights in plot No. 4, Block No. 10. Golf Link Area, New Delhi, measuring 1243 square yards. The respondent herein gave the highest bid of Rs. 68,000.00 for the said plot, and the auction was closed in his name subject to the approval of the Government. The bid of the respondent was subsequently accepted by the Government of India, and thereafter the respondent applied to the Settlement Officer, Ministry of Rehabilitation. Government of India, for adjustment of certain compensation due to him and some other persons for immovable property left by him and them in Pakistan against the purchase price. On 23rd No. vember. 1955, the respondent received a memorandum (Ex. D/1) from the Ministry of Rehabilitation informing him that his bid was accepted, that his compensation application was finalised, that it was decided to deliver the possession of the plot to him provisionally, and that a regular letter of allotment will follow in due course. It was also stated in that memorandum that the issue of the same was only provisional and did not constitute the transfer of complete title in the property, and that the said property cannot be sold or mortgaged until the final letter of adjustment of compensation was issued. The respondent took provisional possession of the plot on the same date.

(4) On 12th April. 1956, the respondent entered into an agreement with the Appellant herein represented by one Mr. K. C. Nayar at Delhi for the sale of his lessee rights in the aforesaid plot for Rs. 55,000.00. He received from the appellant a sum of Rs. 5,000.00 as earnest money by a cheque, dated 11th April, 1956, and executed a receipt (Ex.P.A.). He stated in that receipt that he will execute the sale deed on payment of the balance of Rs. 50,000.00, that the sale will be completed in favor of the appellant (i) after the final letter of adjustment of compensation was received from the Government of India and (ii) after obtaining the necessary permission from the Government for the transfer of the aforesaid plot, and that the appellant will be entitled to have the sale deed executed and registered on payment of the balance of the purchase price within 15 days after the aforesaid sanction for the transfer was obtained from the Government and communicated by the respondent to the appellant. It was also stated in that receipt that the cost of stamp and registration of the sale deed was to be borne by the appellant,

(5) On 8th January, 1957, the respondent sent a note (Ex.D.3/A) to the Assistant Settlement Commissioner (Sales) through his friend Diwan Hari Kishan Dass requesting that the issue of the allotment letter may be expedited.

(6) Then, on 30th January, 1957, the respondent sent a letter (Ex. P.D.) to Mr. K. C. Nayar, as representative of the appellant-company, stating, inter cilia, that about ten months had elapsed since the date of the agreement with the appellant-company but the final letter of adjustment of compensation had not yet been received from the Government of India, that the question of obtaining permission for the transfer from the Government could not, thereforee, arise, that he made incessant efforts to get the letter of adjustment of compensation, but without success, that under the conditions of sale of the lessee rights in his favor a building according to specification had to be completed within two years from the date of delivery of possession of the plot to him, that he was delivered possession on 23rd November, 1955, and only a period of ten months remained to have the plans sanctioned and the requisite building completed, failing which the lease would be forfeited by the Government, that in the circumstances it was not possible to postpone the matter further, and the building arrangement must be started forthwith to avoid the risk of forfeiture by the Government, and that in the circumstances, he had no other option but to refund the amount received as earnest money, and accordingly a cheque for Rs. 4993-12-0 after deducting bank charges was being sent therewith to be forwarded to the appellant-company by Mr. K. C. Nayar.

(7) In reply to the said letter, Mr. K. C. Nayar wrote a letter (Ex.P.H.), dated 15th February, 1957, to the respondent in which he stated that the position taken up by the latter was unjustified and could not be accepted, that the cheque for Rs. 5.000.00 was given to the respondent on account of earnest money on the clear terms that the plot in question was to be sold to the appellant-company after the final letter of adjustment of compensation was received from the Government of India and necessary permission was obtained for transfer of the lessee rights in the plot, that if the Rehabilitation Department had taken time to adjust the amount of compensation it did not give any right or excuse to the respondent to relise from the contract, that the respondent should approach the Rehabilitation Department to have the matter expedited, and that the appellant-company was prepared to pay the balance of the sale price, i.e., Rs. 50,000.00 as soon as the respondent was in a position to execute the sale deed in terms of the receipt (Ex.P.A.). Mr. Nayar further stated that the question of completion of the building within two years does not arise till the full title as lessee is vested in the respondent by the Government and, thereforee, the question of forfeiture of the plot does not also arise. He pointed out that there were several plots in the Government developed colonies where no construction had yet started even after four years, and there was not even a single instance of forfeiture for noncompletion of buildings. He added that the reason advanced by the respondent to get out of the transaction did not and could not hold good, and further there was no clause in the receipt (Ex.P.A.) providing for rescission of the contract on the said ground. Mr. Nayar further stated in that letter that all the delay was due to the fact that the respondent did not take due interest or adequate steps personally to have his claim and the claims of others adjusted and other formalities completed, that the appellant was prepared to pay the balance of Rs. 50,000.00 if the respondent executes a sale deed with the sanction of the Government, that in order to expedite the matter and to avoid the delay, he, in the meanwhile, was prepared to have a plan for the building prepared by the architect which may be submitted by the respondent on behalf of the appellant to the concerned authorities for sanction, and that the respondent should pursue the matter with the Government of India for adjustment of his compensation and for other necessary formalities necessary to execute the sale deed in favor of the appellant as early as possible. Mr. Nayar added that the cheque sent by the respondent was being returned with the letter, and that he wanted to make it absolutely clear that the appellant will fully abide and will enforce the terms of the agreement of sale.

(8) In reply to the above letter, the respondent got a letter (Ex.PE) written to Mr. Nayar by his counsel Mr. Gurbachan Singh. In that letter, Shri Gurbachan Singh pointed out that Mr. Nayar seemed to have mis-understood the real facts and circumstances of the case and the position in which the respondent Mr. Whig, was placed; that Mr. Nayar was well aware of the conditions under which the respondent purchased the plot in question in the auction held by the Government; that the most important conditions were conditions Nos. 17 and 19 which ran as under:-

'17. The purchaser or transferee of plots in Golf Link Area will have to construct within two years of the date of possession, a double-storeyed, residential building consisting of a single or two residential flats in all with a Barsati on the second floor. The design, height lines and set back lines shall be as prescribed by the Land and Development Officer, Scindia House, New Delhi. 19. On any default in the payment within the period mentioned in paragraph 4 or if the highest bidder has furnished any wrong particulars or commits a breach of the conditions specified in this notice the entire deposit or part of it shall be forfeited to the Government of India and the plot or house shall be resold, and the defaulter shall forfeit all claims to the plot or house or to any part of the sum for which it may subsequently be sold. The decision of the Government of India, Ministry of Rehabilitation, in this respect will be final;'

that it was obvious that the respondent was bound to construct a double-storeyed residential building on the plot in question within two years of the date of the possession; that Mr. Nayar was also aware that the possession of the p!ot was delivered to the respondent on 23rd November 1955, and so the construction must be completed by 23rd November, 1957; that in case the respondent did not do so, the Government would be entitled to forfeit the entire deposit of Rs. 6.800.00, and the respondent would forfeit all claims to the plot and also incur other heavy loss for having paid other displaced persons to get their claims adjusted towards the sale price of the plot in question; and that Mr. Nayar could appreciate the drastic nature of the conditions and the risk involved in the matter. Mr. Gurbachan Singh further stated that the sale in favor of the appellant was to be completed after the final letter of adjustment of compensation is received from the Government of India and after obtaining the necessary permission for the transfer of the plot; that the final letter had not been issued till then by the Government inspire of the best efforts made by the respondent as well as by Mr. Nayar, although the respondent had complied with all the formalities necessary for the issue of such a final letter; that the result was that the sale in favor of the appellant cannot be completed in terms of the agreement, dated 12th April, 1956, and since very little time was left to construct and complete the building, the respondent wrote to Mr. Nayar the letter, dated .30th January, 1957, enclosing a cheque for Rs. 4993/12.00 on account of the refund of the earnest money received from Mr. Nayar minus the bank charges; that the reply of Mr. Nayar, dated 15th February, 1957, was wholly misconceived and Mr. Nayar seemed to have forgotten that unless the construction takes place within the a fore said period of two years the right of the respondent to the plot would disappear and he would have nothing to convey to the appellant and the entire deposit amount would be liable to be forfeited; that the respondent did not want to resile from the transaction; that he, to the knowledge of Mr. Nayar, had approached the Rehabilitation Department times out of number to have the matter expedited, and when the respondent failed to achieve any result. Mr. Nayar wa.s good enough to take the necessary papers from the respondent enabling Mr. Nayar to act on behalf of the respondent and get the matter expedited, but like the respondent Mr. Nayar also failed; and that in that situation there was no option left to the respondent but to return the earnest money to the appellant and terminate the arrangement. Mr. Gurbachan Singh further stated that the respondent with a view to avoid any possible objection from Mr. Nayar was prepared to convey to the appellant immediately whatever rights and interests he had in the plot by virtue of the lease from the Government against the payment of the balance of the sale price, and that the respondent will always remain ready and willing to co-operate with the appellant in giving full effect to that transfer and he will be prepared to indemnify the appellant that the compensation papers filed by the former in the department concerned were complete and in order, so that the appellant could immediately start constructing the house according to the terms of the lease. Mr. Gurbachan Singh requested Mr. Nayar to get the transfer effected and registered within a week of the receipt of the letter and pay the balance of the amount before the Sub-Registrar, and stated that otherwise the agreement, dated 12th April, 1956, will cease to be operative and no longer binding on the respondent where after he will be free to proceed to construct a house.

(9) On 7th March, 1957, Mr. Nayar replied (Ex.P.I) to Mr. Gurbachan Singh staling that the whole matter was under consideration of the appellant with their legal adviser, and requesting that a copy of the conditions of sale regarding the auction of the plot in question may be sent immediately so that he could send a reply in detail at an early date. He further stated that Shri Gurbachan Singh had no right whatever to fix any such period as he did in his letter under reply, and that it was absolutely illegal and was not warranted by the contract.

(10) Mr. Gurbachan Singh sent a reply (Ex.P.P.), dated 10th March, 1957, stating that conditions Nos. 17 and 19 relating to the plot in question had been duly reproduced verbatim in his letter, dated 27th February, 1957, that it was, thereforee, unnecessary to send a further copy of the conditions of sale, that Mr. Nayar might recall that a copy of the printed conditions of the auction sale was supplied to one Shri Hussan Lal Khosla at the time of the agreement, and that if it was not with Mr. Nayar, it must be available from Mr. Khosla.

(11) Again, Mr. Nayar wrote a letter (Ex.P.J.) in April, 1957, acknowledging the receipt of the letter, dated 10th March 1957, and staling that the printed conditions of autcion which were supplied by the respondent to Shri H. L. Khosla were handed over to Mr. Nayar and were with him. that according to the said printed conditions clause 17 was as follows:-

'THE plot and house and the premises sold will not be put lo any other use than residential without the prior permission of the Government;'

that there was thus no obligation to construct the house within two years of the date of possession; that Mr. Nayar made personal enquiries from the office of the Assistant Settlement Commissioner (Sales) if any such condition of construction of building existed in. the conditions of auction, and was informed that there was no such condition as stated by Mr. Gurbachan Singh in his letter of 27th February, 1957; that even if any such clause had existed in the terms and conditions of the auction, the question of completion of the building within two years would not arise until the lease deed had been executed by the Government and possession delivered under the lease; that if as alleged by the respondent the final letter was not issued by the Government in spite of the best efforts made by him, the default was that of the Government and there was no reason why the Government should enforce the said alleged condition; that in any case the respondent for removal of any doubt, could have made an application to the Government staling that he had entered into an agreement to sell the lease-hold rights and the building was, thereforee, to be constructed by the transferee after a deed of transfer was executed for which the permission of the Government was necessary, that notwithstanding his best effort and all the formalities having been complied with, the authorities concerned had not so far adjusted the amount of compensarion towards the sale price, that the alleged condition could not apply as the final letter had not been issued and the lease deed had not been executed and possession had not been delivered finally under the lease deed, that in those circumstances the alleged condition could not and in any case should not be enforced, and that in all the circumstances time should be extended; and that the Government could not refuse to agree to the same. He added that such an application could be made even at that time. Mr. Nayar further stated that a few days ago he found on enquiry that the respondent had not submitted the copies of photos and admitted documents which were required by the department concerned for adjustment of claims against the price of the plot, and the same were submitted only four or five days ago, that he also came to know that the respondent had not so far applied for obtaining permission of the Government for transfer of the lessee rights, and that it was thus clear that the respondent had not so far made any serious attempt to get the claims adjusted and obtained the requisite permission. Mr. Nayar reiterated that the respondent was putting forward excuses to relise from the contract, that if the respondent had made a serious effort and had taken a personal interest in the matter the permission could have been obtained long ago, that he should personally meet the proper authorities and impress upon them the urgency of the matter, and that the appellant was always ready and willing to co-operate with the respondent.

(12) Mr. Nayar went on to state that the proposal made in the letter of Mr. Gurbachan Singh to convey to the appellant whatever rights and interests the respondent had in the plot, was not only not warranted by the agreement but was even otherwise open to serious objection in-as-much as clause Ii of the terms and conditions of sale expressly provided that the accepted bidder could transfer the plot after obtaining permission of the Government, that the proposal to sell the rights without obtaining the permission of the Government would clearly amount to a breach of the said condition and would resuit in the forfeiture of the plot by the force of clause 19 of the conditions of sale, that Mr. Gurbachan Singh should consider the matter from the said point of view and let Mr. Nayar know whether the proposed sale was possible or feasible, and that on hearing from him Mr. Nayar would place the matter before the appellant's legal adviser. Lastly, Mr. Nayar stated; 'for the satisfaction of your client we are prepared to indemnify him against the losses which may be incurred by him to the extent of Rs. 55,000.00 the contracted price if notwithstanding best efforts made by him and proper adequate steps speedily taken by him to get the final letter issued and to obtain the permission of the Government for transfer and representations and applications made by him as indicated above, the plot is forfeited by the Government on account of the non-compliance of the said alleged conditions provided further that the total amount of the price got adjusted against compensation or otherwise it is paid in cash by him.' Mr. Nayar also added that he was informed by Mr. H. L. Khosla that the respondent had threatened to submit his plan to the New Delhi Municipal Committee for construction of the building, that the respondent had no right to do so, that the appellant had always been ready to abide by the terms of the agreement, that the respondent cannot be allowed to wriggle out of it, and that if he takes any of the threatened steps in derogation of the appellant's right, the appellant will resort to law courts for enforcement of its rights by specific performance of the contract.

(13) Mr. Gurbachan Singh replied (Ex. P.G.) to the above letter on 5th April 1957. He pointed out in that reply that the printed conditions referred to by Mr. Nayar did not relate to the auction of the plot held on 9th January 1955, nor was any such copy delivered by the respondent to Mr. H. L. Khosia. that the copy delivered to Mr. Khosla related to the relevant auction sale and it contained the relevant clauses Nos. 17 and 19 as stated in his previous letter dated 27th February 1957; that it was not correct to say that the respondent did not submit the copies of the photos and admitted documents which were required by the department; that it was found that one copy of the photo out of the two originally filed by the respondent was missing from the record and immediately another copy of the photo was given by the respondent to Diwan Harkishan Das who filed the same in due course, and thus all the documents relating to adjustment of price had been duly completed and nothing was left to be done; that the question of application for permission of the Government for sale of the lessee rights could arise only after the sale letter had been issued and not earlier; that the suggestion of Mr. Nayar that the respondent was putting forward an excuse to resile from the contract was absolutely incorrect and the same was clear from the offer made in Mr. Gurbachan Singh's letter, dated 27th February 1957; that Mr. Nayar's letter (Ex.P.J.) left no room for doubt that he was not prepared to accept the offer made to him and was putting mere excuses to prolong the matter; that the same could not evidently be allowed in view of the conditions of sale and the respondent was not prepared to take any risk in the matter which involved forfeiture of his deposit; and that under the circumstances the respondent had no option but to proceed with the construction of the premises. Mr. Gurbachan Singh added that the correspondence ended with that letter and the respondent had nothing whatsoever to do with Mr. Nayar or the appellant.

(14) Mr. Nayar replied by a registered letter (Ex.P.K.) dated 25th April 1957, practically reiterating what had been stated in his previous letters. He closed the letter with the statement that the respondent had no right whatever to start any construction or deal with the land in any manner in derogation of the rights of the appellant and that the respondent must understand that he could not take the law in his hands and resile from the contract by concocting flimsy and imaginary grounds, and that the appellant will enforce its rights by specific performance, injunction and other remedies.

(15) On 14th June, 1957, the respondent applied to the New Delhi Municipal Committee for the requisite sanction for construction of a building on the suit plot along with layout plans, but the Municipal Committee rejected the application and plans (Ex. D.25) on 2nd August, 1957, for want of the consent of the Government. He then submitted a fresh application with plans on 14th August, 1957, pointing out that no fresh consent of the Government was required as the conditions of sale had already provided for the construction of the building. But, the Municipal Committee rejected this application and plans also (Ex. D.26) on 27th September, 1957. The respondent then applied (Ex. D.I 1) on 5th November, 1957, to the Additional Settlement Commissioner (1) for formal consent to the construction of the building and (2) for extension of the period of construction (i.e. two years) by one year. On 13th November, 1957, the Land and Development Officer recommended (Ex. D. 23) the plans for sanction and forwarded the said recommendation to the Municipal Committee. On 4th December, 1957, the Municipal Committee sent a communication (Ex. D.24) to the respondent staling, that the plans were sanctioned by the Municipal Committee by resolution No. 97, on 15th November, 1957, and that the construction work be carried out in accordance with the sanctioned plans. There was no reply, however, about the request for extension, of the period for construction. Thereafter, in February, 1958, the respondent entrusted the construction to a contractor who commenced the construction in April, 1958.

(16) It appears that Shri H. L. Khosia came to know about the construction of the building on 9th June, 1958, Then, on 21st July, 1958, the appellant without issuing any previous notice, filed the suit out of which this appeal has arisen (1) for specific performance of the agreement, dated 12th April, 1956; (2) for possession of the suit plot; (3) for a direction to the respondent to get the amount of compensation adjusted against the sale price of the plot or pay in cash the balance of the sale price, and to get the necessary sanction for the sale in favor of the appellant; and (4) for a perpetual injuction restraining the respondent from making any construction or further construction on the plot in question. The appellant also claimed damages in addition to specific performance under section 19 of the Specific Relief Act, and in case the court decides that specific performance ought not to be granted, but that there was a contract between parties which had been broken by the respondent (defendant), compensation or damages may be awarded as provided in the said section 19 to the appellant for the said 'breach. As already stated, an amended plaint was filed on 13th September, 1958, in pursuance of an order of the trial court.

(17) The respondent filed his written statement on 6th October, 1958. He admitted that the plot No. 4, block No. 10, Golf Link, New Delhi, was auctioned by the Government of India on 9th January, 1955. According to him the auction was held on certain terms and conditions which were read over to the persons present at the time of the auction before the auction started, and printed leaflets containing the said terms and conditions were also distributed. A copy of the said leaflet was filed by him, and was subsequently marked as Ex. D.W.I/I. He admitted that he was the highest bidder at that auction, and the amount of his bid was Rs. 68.000.00. He stated that out of the said amount, Rs. 6.800.00 was paid by him in cash at the close of the bid, and the balance was adjustable against claims for compensation, and that he thereafter applied to the Settlement Officer for adjustment of his own claim for compensation and the claims of certain other persons which he had purchased against the purchase price of the plot. He also admitted that he entered into an agreement with the appellant on 12th April, 1956, to sell the lease-hold rights in the plot for a sum of Rs. 55.000.00 and received a cheque for Rs. 5,000.00 from K. C. Nayar. According to him, the agreement was really entered into for the benefit of Mr. Nayar, and a copy of the printed conditions of sale was made over by him (the respondent) to the appellant's attorney, Mr. H. L. Khosia, who was also present at the time of the agreement. He pleaded that the position taken up by the appellant that he was not making necessary efforts for the final adjustment of the compensation by the Government was incorrect, that the appellant as also Diwan Harkishan Das and his sons-in-law Mr. H. L. Khosia and Mr. K. C. Nayar were fully aware of the fact that he had made repeated efforts to obtain the final letter of adjustment of compensation, although under the terms of the agreement he was under no obligation to do so, that he even gave a letter of authority in favor of Diwan Harkishan Das enabling the latter to obtain the final letter of adjustment of compensation, and that Diwan Harkishan Das made use of the said letter and himself made repeated efforts including personal visits to the authorities concerned, but failed to achieve the object. While admitting that he wrote, the letter (Ex.P.D.), dated 30th January, 1957. and his counsel, Mr. Gurbachan Singh, wrote the letter (Ex.P E), dated 27th February, 1957, to Mr. Nayar, he pointed out that he made an offer to the appellant in the said letters that he was prepared to convey immediately whatever rights and interest he had in the plot in question against payment of the balance of the sale price and that he would always remain ready and willing to co-operate in giving full effect to the transfer, that he also offered to indemnify the appellant to the effect that the compensation papers filed by him (the respondent) in the department concerned were complete and in order in every respect, that the same was done by him to enable the appellant to undertake construction immediately so that the term of the auction sale was complied with and the building completed within the specified period, but the appellant refused to accept the same, and that the termination of the agreement was thus inevitable.

(18) The respondent also pleaded that the building operations started in the middle of April, 1958, after the sanction from the New Delhi Municipal Committee and the Delhi Development (Provisional) Authority had been duly obtained, that the said fact was within the knowledge of Diwan Harkishan Das, Mr. H. L. Khosia and Mr. K, C. Nayar, that the construction had been going on openly, and by the date of the written statement the building comprising about 38 rooms was complete almost in all respects and only the finishing touches were in progress, that the construction had cost the respondent over Rs. 1,25,000.00 till then, that the appellant stood by and did not object to the construction being undertaken and did not institute this suit till after a double-storeyed building had been constructed, that the appellant had thus not only been guilty of laches but also disentitled himself to the relief claimed, and that the conduct of the appellant and the persons mentioned in the written statement, of whom Mr. Nayar was the virtual plaintiff in the case, had been such that they were not entitled to the relief of specific performance or any other relief.

(19) The respondent further pleaded that the appellant flatly refused to accept the offer made by him in the letter (Ex.P.E), dated 27th February, 1957, although the said offer on his part was a concession and not what was legally due to the appellant, and that it was, thereforee, wrong to state that the appellant was ready and willing to perform its part of the contract.

(20) Some additional pleas also were taken in the written statement, viz., that the suit was not maintainable; that the agreement of sale was subject to the receipt of the final letter of adjustment of compensation by the respondent from the Government, which was never received, and thus the contract never became capable of specific performance; that the transfer in favor of the appellant could not be effected by the respondent without the concurrence of the Government which concurrence the Government was not bound to give, and the suit for specific performance in such circumstances was not maintainable in law; that the Government expressly stipulated that the issue of the letter (Ex. D-1), dated 23rd November, 1955, giving delivery of possession did not constitute the transfer of complete title in the property and the property could not be sold or mortgaged until the final letter of adjustment of compensation was issued, and the agreement to sell was, thereforee, incapable of being enforced in disregard of the said stipulation; that the jurisdiction of the court was barred under the provisions of the Displaced Persons (Compensation and Rehabilitation) Act; that section 15 of the said Act provided that no property which formed part of the compensation pool and which was vested in the Central Government under the provisions of the Act shall be liable to be proceeded against for any claim in any manner whatsoever in execution of any decree or order or by any other process of any court or authority, and the suit was, thereforee, barred under the said provisions; and that since the plot in question which formed a part of the compensation pool was still under the administrative control of the Government of India, no suit or other proceeding in relation thereto was competent in a civil court.

(21) The appellant filed a replication, dated 16th October, 1958, denying most of the allegations and contentions in the written-statement and reiterating the allegations and contentions in the plaint.

(22) On the aforesaid pleadings, the trial court framed the following issues:-

1. Is the jurisdiction of this Court to take cognizance of the suit claim barred under the provisions of the Displaced Persons (Compensation and Rehabilitation) Act and the rules made there under? 2. Was the plot of land in suit under the administrative control of the Government of India at the time of the institution of this suit? And as such this suit is incompetent? 3. Did the defendant offer to transfer such rights as he had in the suit property to the plaintiff and what is its effect? 4. Was there any legally enforceable agreement between the parties at the time of the institution of the suit? 5. Is the enforcement of specific performance of the suit contract unfair to the defendant and should as such be declined? 6. Whether there was any legal justification for the defendant to decline to perform the original contract? 7. Whether the plaintiff is estopped from claiming specific performance of the contract? 8. Could the lease-hold rights in respect of the plot in suit be transferred and whether the concurrence of the Government could be procured? 9. Is the plaintiff entitled to specific performance of the suit contract? 10. If specific performance cannot be allowed, is the plaintiff entitled to any damages and what is the amount of damages? 11. Whether the plaintiff was ready and willing to perform his part of the contract. 12. Relief.

(23) By his judgment, dated 11thApril, 1961,the learned Commercial Subordinate Judge, 1st Class, Delhi, decided issues Mos. 7 and Ii in favor of, and all the other issues against, the appellant (plaintiff). On issue No. 7, he held that the appellant (plaintiff) was not estopped from claiming specific performance of the contract, and on issue No. 11 that the appellant (plaintiff) was always ready and willing to perform its part of the contract. As regards the other issues, the learned subordinate Judge held on issues Nos. 1 and 2 that no regular sale deed had been executed and registered in favor of the appellant by the Rehabilitation authorities, and as such the appellant had not become the owner of the plot, that the plot continued to be part of the compensation pool and it vested in the Central Government under the provisions of the Displaced Persons (Compensation and Rehabilitation) Act, 1954, and that the plot was thus under the administrative control of the Government of India and, thereforee, the suit for specific performance was incompetent and could not lie in the civil court by reason of the provision in section 15 of the said Act; that on issue No. 3 the respondent (defendant) was at one stage prepared to transfer whatever rights he had in the plot in question to the appellant (plaintiff) who did not seem to agree to the same, that the respondent (defendant) was always ready and willing to complete the contract till a stage arrived when he found that the contract could not be completed within a period of two years from the date of the delivery of provisional possession to him, and that the same made him to write to the appellant (plaintiff) through Mr. Nayar that he could not keep the contract alive and that he would be sending back the earnest money; on issue No. 4, that the respondent (defendant) was not the owner of the suit plot and there was, thereforee, no legally enforceable agreement between the parties at the time of the institution of the suit; on issue No. 5, that the respondent had raised a building prior to the institution of the suit and the same had cost him to the was to order the enforcement of specific performance of the suit contract; on issue No. 6, that the respondent was to construct the building on the plot within two years of the delivery of provisional possession thereof to him in view of condition No. 17 of the conditions of the sale by auction, that in view of condition No.19 of the said conditions the respondent was under the apprehension that if he did not construct the building the plot would be forfeited, and that the respondent had thus legal justification to decline to perform the original contract and to take steps for the construction of the building on the suit plot; on issue No. 8, that there was nothing on the record to prove that the permission of the Government of India for the transfer of the leasehold rights of the respondent (defendant) to the appellant (plaintiff), after he became the owner of the said rights, would have been granted as a matter of course; on issue No. 9, that the appellant (plaintiff) was always ready and willing to perform its part of the contract, but in view of the other findings the appellant (plaintiff) was not entitled to specific performance of the suit contract; and on issue No. 10, that since it was held by him that the appellant (plaintiff) was not entitled to specific performance and that the said specific performance could not be ordered because of the various findings, the question of awarding damages to the appellant (plaintiff) against the respondent (defendant) did not arise. In the result, the learned subordinate Judge dismissed the suit with costs. It is against the said judgment and decree that the present appeal has been filed by the plaintiff, Eldee Velvet and Silk Mills (P) Ltd.

(24) Before dealing with the contentions urged on behalf of the appellant, the main facts have to be referred to. The leasehold rights in the plot in question, measuring 1243 square yards, were sold in public auction on 9th January, 1955, by the Ministry of Rehabilitation, and the respondent gave the highest bid of Rs. 68,000.00. This has been proved by Mr. A.N. Khanna (Public Witness .1), Assistant Managing Officer, Office of the Settlement Commissioner, Ministry of Rehabilitation, Government of India, as well as by Mr. Madan Lal Chadha (DW.1), Government Auctioneer, who conducted the aforesaid auction. The evidence of Mr. Chadha shows that posters containing the terms and conditions of the auction sale were published under the authority of the Ministry of Rehabilitation, that the conditions in posters like 'B' issued in the first instance were changed and posters like 'A' were published under the authority of the Ministry, and that as the conditions were thus altered to the conditions mentioned in 'A', they obtained the signatures of all the bidders present at the auction on a poster like 'A' with the remarks that they had read the area, terms and conditions in poster like 'A', in order to safeguard against possible confusion on account of issue of posters like 'B', followed by posters like 'A'. The respondent (DW6) deposed that after the auction was completed, his signatures were obtained on a document similar to 'A', and that the said document is Ex.D.W.1/1, produced by him. It is thus clear that the final terms and conditions on which the plot in question was sold in auction to the respondent on 9th January, 1955, are those stated in Ex.DW. 1/1, as held by the learned Subordinate Judge.

(25) According to the said terms and conditions in Ex.D.W.I/l, only displaced persons from West or East Pakistan whether or not having verified claims, and others having verified claims could bid at the auction, and the accepted bidder had to pay 10^ of his bid in cash immediately at the fall of the hammer, and the balance was to be paid in cash or by adjustment of compensation payable in respect of verified claims of the bidder or of others purchased by him. The respondent as DW. 6, deposed that he accordingly deposited Rs. 6,800.00, i.e., 100 of his bid in cash, and submitted necessary applications for adjustment of the verified claims of himself, his sons and of some others purchased by him. On 23rd November, 1955, he was informed by the Ministry of Rehabilitation (Ex.D.I) that his application had been finalised provisionally and possession of the plot had been decided to be given to him provisionally. The respondent deposed that he took provisional possession on the same day.

(26) The aforesaid letter (Ex.D.I) from the Ministry made it clear, that the issue of the said letter was only provisional and did not constitute a transfer of complete title in the plot which could not be sold or mortgaged until the final letter of adjustment of compensation was issued. The respondent however, entered into the suit agreement, to sell his lease-hold rights in the plot to the appellant for Rs. 55,000.00. The respondent explained in his statement as DW.6 that he wanted to get rid of the plot as he intended to purchase some other property in Civil Lines, and that the amount of Rs. 55,000.00 was arrived at bycalculating the amount deposited by him in cash at the time of the auction and, thereafter to the Rehabilitation Department, the face value of the compensation of himself and his sons and the actual price which he had paid to his associates. He received Rs. 5,000.00 as earnest money and executed the receipt. Ex. P.A, on 12th April, 1956. It is common ground between the parties in the trial court and in this court that the agreement to sell is contained in the said receipt, Ex.P.A. As stated earlier, it was recited in the said document that the respondent agreed to sell his 'lessee right pertaining to the plot' in question, measuring 1243 square yards for Rs. 55,000.00, and execute the sale deed on payment of Rs. 50,000.00, being the balance of the purchase price, and that the sale will be completed in favor of the purchaser, after the final letter of adjustment of compensation was received from the Government of India, and after obtaining the necessary permission from the Government for the transfer of the plot. It was also recited that the purchaser will be entitled to have the sale deed executed and registered on payment of the balance of the money within 15 days after the afore- said sanction for the transfer was obtained from the Government and communicated by the vendor to the purchaser.

(27) Mr. Tarkunde, learned counsel for the appellant, contended firstly that the trial court erred in holding that the appellant was not entitled to specific performance of the contract on the ground that the respondent had not become the owner of the leasehold rights in the plot, as the regular lease deed had not been executed and registered in his favor by the Government.

(28) The learned Subordinate Judge pointed out that it was clear from the various rules framed by the Central Government under the Displaced Persons (Compensation and Rehabilitation) Act and the decisions in M/s Bombay Salt and Chemical Industries v. L.J. Johnson and others : AIR1958SC289 Depty Lal v. Collector of Nilgiris : AIR1959Mad460 and Manohar Lal v. Rent Control and Eviction Officer, Bareilly, : AIR1959All388 that till a regular document is executed a successful bidder for the property sold out of the compensation pool does not become its owner, that no regular document transferring the lease-hold rights in the plot had been executed in favor of the respondent by the Government, and as such the respondent had not, even by the date of the judgment, become the owner of the lease-hold rights in the plot in question, and held that there was, thereforee, no enforceable agreement between the parties at the time of the institution of the suit, that the suit was consequently incompetent, and that the question of conferring proprietory rights on the appellant (plaintiff) by awarding a decree for specific performance did not arise.

(29) It is true that even till the date of the judgment of the lower court, no regular document or certificate had been executed or issued in favor of the respondent by the Ministry of Rehabilitation or the Government. Before he could claim title in the plot it was necessary for the respondent to obtain a final adjustment of the compensation in respect of his verified claims and a certificate under the Displaced Persons (Compensation and Rehabilitation) Rules in respect of the plot from the Government. That was why it was provided in the agreement (Ex.P.A) between the appellant and the respondent that the sale will be completed in favor of the appellant after the final order of adjustment of compensation was received from the Government and after obtaining the necessary permission from the Government for transfer of the respondent's lease-hold rights in the plot, and it was only thereafter that a sale deed was to be executed and registered in favor of the appellant. The learned Subordinate Judge was thus quite right in holding that the respondent had not become an owner of the lease-hold rights in the plot.

(30) But, it does not necessarily follow from it, and the learned Subordinate Judge was not right, in our opinion, in holding, that there was no enforceable agreement, that the suit was incompetent and that there could be no question of granting a decree for specific performance.

(31) There was an agreement or contract between the parties, and the suit was filed by the appellant for the specific performance of the said contract. The specific performance prayed for by him was not for a direction to the respondent to execute a sale deed in its favor straightway. The prayer was for a direction to the respondent to get the amount of compensation adjusted against the sale price of the plot or pay the balance of the sale price in cash, to get the necessary permission of the Government for the transfer in favor of the appellant, and then to execute and get registered the sale deed in favor of the appellant. In other words, the appellant was asking for specific performance of all that the respondent had agreed to do under the contract. The question, thereforee, is whether the respondent could be directed to specifically perform the contract by getting the compensation finally adjusted by the Government and obtain the permission of the Government for the transfer to the appellant, as agreed to by him in the contract, and then to execute the deed of transfer in favor of the appellant.

(32) Mr. Tarkunde referred to the decision in Mrs. Chandnee Widya Vau Madden v. M/s. C.L.Kafial, : [1964]2SCR495 . In that case, a deed of agreement for sale of a house built on a lease-hold plot granted by the Government provided that the vendor shall obtain the permission of the Chief Commissioner to the transaction of sale within two months of the agreement, and if the said permission was not forthcoming within that time, it was open to the purchasers to extend the date or to treat the agreement cancelled. As the necessary permission was not forthcoming within the stipulated time, the purchasers extended the time by a month. The vendor, who had made an application to the proper authorities for the necessary permission, however, withdrew that application. Despite repeated requests by the purchasers, the vendor failed to perform her part of the agreement, and the purchasers filed a suit for specific performance, or in the alternative for damages. The trial court refused the main relief of specific performance of the contract on the ground that the agreement was inchoate in view of the fact that the previous sanction of the Chief Commissioner to the proposed transfer had not been obtained, and granted a certain sum by way of damages. On appeal by the purchasers, the High Court came to the conclusion that the agreement was a completed contract for sale of the house in question subject to the sanction of the Chief Commissioner before the sale transaction could be concluded. and that the trial court was in error in holding that the agreement was inchoate. In coming to that conclusion, the High Court relied mainly on the decision of the Privy Council in Motilal v. Nanhelal (1930) LR.57 1.A 333 In the result, the High Court passed a decree for specific performance. The vendor, thereupon, preferred an appeal to the Supreme Court. The main contention before the Supreme Court was that the contract was not enforceable being of a contingent 17 nature and the contingency not having been fulfillled. Rejecting the said contention, B.P. Sinha C.J. observed as follows:-

'IN our opinion, there is no substance in this contention. So far as the parties to the contract are concerned, they had agreed to bind themselves by the terms of the document exwilted between them. Under that document it was for the defendant-vendor to make the necessary application for the permission to the Chief Commissioner. She had as a matter of fact made such an application but for reasons of her own decided to withdraw the same. On the findings that the plaintiffs have always been ready and willing to perform their part of the contract, and that it was the defendant who willfully refused to perform her part of the contract, and that the time was not of the essence of the contract, the court has got to enforce the terms of the contract and to enjoin upon the defendant-appellant to make the necessary application to the Chief Commissioner. It will be for the Chief Commissioner to decide whether or not to grant the necessary sanction. In this view of the matter, the High Court was entnely correct in decreeing the suit for specific performance of the contract. The High Court should have further directed the defendant to make the necessary application for permission to the Chief Commissioner which was implied in the contract between the parties.'

(33) Accordingly, the Supreme Court directed the addition of a clause in the decree to the .effect that the defendant in that case, within one month from the date of the judgment, shall make the necessary application to the Chief Commissioner or to such other competent authority as may have been empowered to grant the necessary sanction to transfers like the one in question and further that within one month of the receipt of that sanction she shall convey to the plaintiffs the property in suit, and that in the event of the sanction being refused, the plaintiffs shall be entitled to the damages as decreed by the High Court.

(34) The ratio of the above decision applies, in our opinion, to the present case. No doubt, the vendor in the aforesaid case had title to the lease-hold plot, while the respondent in the present case had yet to get the. title to the plot in question. But, that does not, in our opinion, make any difference. So far as the appellant and the respondent are concerned, the agreement for sale of the plot was a completed contract as between them, and they had agreed to bind themselves by the terms of the said agreement. The fact that the sale deed was to be executed after the compensation was finally adjusted and permission was granted by the Government for the transfer, did not render the contract any the-less a completed contract. The learned Subordinate Judge was, thereforee, in error in holding that there was no enforceable agreement and that the suit for specific performance of the agreement was incompetent for that reason. If the appellant was otherwise entitled to specific performance on the agreement (Ex .P.A.), he could not be refused specific performance on the ground that the respondent had yet not become the owner of the lease-hold rights in the plot or on the ground that the permission of the Government had yet to be obtained.

(35) Mr. Tarkunde also referred to the decision of the Supreme Court in Kamala Ranjan Roy v. Baijnath Bajo

(36) Another contention in that case was that by directing the specific performance of the agreement the lower appellate court had exposed K to the risk of an action for damages for breach of covenant. Dealing with the said contention, S.R. Das J. (as his Lordship then was) observed as follows in paragraph 14 at page 5:-

'IF the assignment of the lease by the defendant to the plaintiff without the Lesser's consent amounted to a breach of covenant, the Lesser could forfeit the lease and sue for possession. Such a course would affect only the plaintiff but not the defendant, for he had already parted with the lease for valuable consideration. It is said that the Lesser could sue the defendant for damages for breach of that covenant and the court should not, by decreeing specific performance, have put the defendant in that perilous position. There appears to us to be two answers to this argument, namely, (1) that the defendant should have, by proper language, made his obligation to transfer defendant or conditional upon his being able to obtain the Lesser's consent which he did not do and (2) that the plaintiff being a respectable and responsible person of means, the measure of damages could only be a problematic conjecture. Indeed, it may have been precisely for this very consideration that the defendant had unconditionally agreed to obtain the consent of the Lesser and to assign his interest in the lease. That the plaintiff was a respectable and responsible person cannot, on the evidence before the Court, be denied or disputed and, indeed, learned counsel for the appellant did not so contend. We find ourselves in agreement with the High Court that in the circumstances and on the evidence on record the Lesser had unreasonably withheld his consent so as to enable the defendant to assign the lease without such consent. In the circumstances, we are satisfied that both the trial court and the appeal court exercised their discretion properly and no ground has been made out for interfering with the judgment of the High Court.'

(37) It has to be noticed firstly that in the above case the agreement was held to be not, for its coming into being, contingent or conditional on the obtaining of the Lesser's consent, and the obligation to obtain the said consent was cast upon the vendor as a term of the agreement; and secondly that the Supreme Court held that in such a case the consequences of an assignment of the lease without the consent of the Lesser would affect only the purchaser, and would not by itself be a ground for refusal of relief of specific performance to the purchaser. It has, thereforee, to be seen whether in the present case the agreement (Ex. P.A.) was a completed agreement or whether it was, for its coming into being, contingent or conditional on the issuance of the final letter of C adjustment and the obtaining of the permission of the Government or the concerned authorities.

(38) As stated earlier, it was recited in the agreement that the respondent received a sum of Rs. 5,000.00 as earnest money for the sale of his 'lessee right' pertaining to the plot in question which he had agreed to sell to the appellant for Rs. 55,000.00 and execute a sale deed on payment of the balance of Rs. 50,000.00. It was added that the sale would be completed in favor of the purchaser (appellant) after the final letter of adjustment of compensation was received from the Government of India and after obtaining the necessary permission for the transfer of the plot from the Government. It was further recited that the purchaser (appellant) would be entitled to have the sale deed executed and registered on payment of the balance of the money within fifteen days after the aforesaid sanction for the transfer was obtained from the Government and communicated by the vendor (respondent) to the purchaser (appellant). The said recitals clearly show that the respondent agreed to sell the plot and the appellant agreed to purchase the same, and that some earnest money was paid by the appellant and the same was received by the respondent as such earnest money for the sale. The said recitals, in our opinion, clearly amount to a completed agreement of sale between the parties, although the sale deed was to be executed after receiving the final letter of adjustment from the Government and obtaining the necessary permission for the transfer from the Government. The agreement was not, for its coming into being, contingent or conditional on receiving of the final letter of adjustment and the obtaining of the permission of the Government, which were only terms of the completed agreement.

(39) Further, although it was not expressly stated in the agreement (Ex. P.A.), there was, in our opinion, an implied covenant on the part of the respondent to do all things necessary to give effect to the agreement, which include an effort to obtain the final letter of adjustment of compensation and the permission for the transfer to the appellant. In this context, reference has to be made to the decision of the Privy Council in Motilal v. Nanhelal (1930) L.R.57 Ap 333 .(s) In that case, a proprie1.or of a land subject to the Central Provinces Tenancy Act, 1920, entered into a contract to sell a share of the said land with sir and khlul. kasht. The purchaser filed a suit for specific performance of the said contract. The Privy Council held that the contract was one for a transfer of sir land without reservation of the rights of occupancy, and that the sanction of the Revenue Officer to the transfer was necessary under section 50(1) of the Act. It was contended before the Privy Council that a decree for specific performance of the apreement of sale should not be made. because such performance would necessitate an application by or on behalf of the vendor to the Revenue Officer for sanction to transfer the cultivating rights in the sir land, and that the Court had no jurisdiction to require the vendor to make such an application. Dealing with that contention, the Privy Council observed that in view of their construction of the agreement, namely, that the vendor agreed to transfer the cultivating rights in the sir land, there was, in their Lordships' opinion, an implied covenant on the part of the vendor to do all things necessary to effect such transfer, which would include an application to the Revenue Officer to sanction the transfer. It was further observed that it was not necessary for their Lordships to decide whether in that case the application for sanction to transfer must succeed, but that it was material to mention that no facts were brought to their Lordships' notice which would go to show that there was any reason why such sanction should not be granted. After making the said observations, their Lordships held that in those circumstances the Court had jurisdiction to enforce the contract under the Specific Relief Act, 1877, and Order 21 Rule 35(5) of the Code of Civil Procedure by a decree ordering the vendor to apply for sanction and to execute a transfer on receiving it.

(40) As to when term may be implied in a contract, reference may be made to the decision of the Supreme Court in K. L. Kapur v. Delhi Cloth and General Mills Ltd., C. A. No. 39 of 1959 (7) pronounced on 30th August, 1961. In that decision, the Supreme Court observed that the principles on which a term may be implied in contracts are well settled and that it was enough to refer to Halsbury's Laws of England, Volume Viii, Third Edition, p. 121, where the said principles were summarised as follows:-

'IN construing a contract, a term or condition not expressly stated may, under certain circumstances be implied by the Court, if it is clear from the nature of the transaction or from something actual found in the document that the contracting parties must have intended such a term or condition to be part of the agreement between them. Such an implication must in all cases be founded on the presumed intention of the parties and upon reason, and will only be made when it is necessary in order to give the transaction that efficacy that both parties must have intended it to have, and to prevent such a failure of consideration as could not have been within the contemplation of the parties....'

(41) In Chitly on Contract, Volume 1,23rd Edition, the learned author pointed out in paragraphs 694-695 that a term will be implied if it is necessary in the business sense, to give efficacy to the contract.

(42) In the present case, by the date of the agreement (Ex. P. A.), the Government had informed the respondent that his compensation application had been provisionally finalised, and that a final letter of adjustment of compensation would follow in due course. Also, Clause 11 of the printed pamphlet (advertisement) issued at the time of the auction (Ex. D. W. 1/1) states that an accepted bidder could transfer the plot after obtaining the permission of the Government, and the permission of the Government would be necessary for each transfer of the plot. That was why it was provided in the agreement (Ex. P. A) that the sale deed was to be executed 'after the final letter of adjustment of compensation is received from the Government of India and after obtaining the necessary permission for the transfer of the aforesaid plot from the Lesser, i. e. the Government.' It is clear from the tenor of and the words used in the agreement that the parties intended that the respondent was to obtain the final letter of adjustment of the compensation and the necessary permission, and in the circumstances the same may be regarded as an implied term of the agreement. In this connection, Mr. H. R. Sawhney, learned counsel for the respondent sought to contend that the intention of the parties was the other way viz., that Mr. Nayar and Mr. Harkishan Das were to make the necessary efforts to get the issuance of the final letter of adjustment and the grant of permission expedited. The learned counsel sought to rely upon certain statements made by the witnesses in the course of their evidence. We consider that such a plea is not open to the respondent as it was not specifically taken in the written-statement of the respondent. Thus, the agreement (Ex. P. A) being a completed agreement, and the obligation to obtain the final letter of adjustment of compensation and the permission to make the transfer in favor of the appellant having been. cast upon the respondent as an implied term of the agreement, the agreement E is one which can be specifically enforced under the Specific Relief Act and Order 21 Rule 35(5) of the .Code of Civil Procedure by a decree ordering the respondent to apply for the aforesaid .final letter and the permission and to execute a sale deed on receiving the same, provided, of course, the appellant is not otherwise disentitled to & decree for specific performance of the agreement. No doubt, it is for the Government to decide whether they would or would not issue the final letter of adjustment of compensation and grant permission for the transfer. But, as pointed out by the Supreme Court in Kamala Rajan Roy's case (supra), it would affect only the appellant who insists on specific performance of the contract.

(43) We may also mention that Mr. Takunde referred to the provision in section 25(a) of the Specific Relief Act, 1877, which provides that a contract for the sale of property cannot be specifically enforced in favor of a vendor who, knowing himself not to have any title to the property, has contracted to sell the same, and sought to argue that the present case is a converse case, that the purchaser can obtain specific performance and the provision in section 25 does not preclude the grant of specific performance in favor of the purchaser, and that the vendor (respondent) having entered into the contract cannot plead that he has no title. The learned counsel relied on a passage in the commentary on the section by Sir D. F. Mulla in the 8th Edition of his book 'Indian Contract and Specific. Relief Acts'. It is, however, not necessary to go into this contention in the view taken by us above regarding the enforceability of the agreement between the parties.

(44) It follows from the above discussion that the learned Subordinate Judge was in error in taking the view that there was no enforceable agreement between the parties at the time of the institution of the suit, that the suit was consequently incompetent, and that the question of conferring proprietary rights to the appellant (plaintiff) by awarding a decree for specific performance did not arise.

(45) The second contention of Mr. Tarkunde was that the trial court was wrong in holding that the suit was barred by the provisions in section 15 of the Displaced Persons (Compensation and Rehabilitation) Act, 1954. This question does not arise since, as explained above, the suit filed by the appellant was not for specific performance of the agreement (Ex. P. A.) by executing a sale deed straightway, but was for specific performance of the said agreement after the final letter of adjustment of compensation is issued and the necessary permission for the transfer is granted. When once the letter of final adjustment of compensation is issued and the permission for the transfer is granted, the property would no longer form part of the compensation pool or vest in the Central Government, and in such a case, the question of any bar under section 15 of the aforesaid Act does not arise. It is, thereforee, not necessary to go into the question whether a suit like the present one is barred by section 15 of the aforesaid Act.

(46) The third contention of Mr. Tarkunde was that the trial court was wrong in holding that the respondent was entitled to put an end to the contract because of the requirement regarding construction of a building on the plot within two years from the date of the delivery of possession of the plot contained in clause 17 of the terms of auction. As held by us earlier, the terms and conditions on which the plot in question was sold in auction to the respondent on 9th January, 1955, are those stated in Ex. D. W. 1/1.

(47) There is a controversy between the parties as to whether the respondent had at the time of the execution of the agreement (Ex. P. A) handed over to Mr. Nayar and Mr. Khosia a copy of Ex. D. W. 1/1 or whether he handed over to them the copy, Ex. P. C. produced by the appellant. According to the appellant, it was Ex. P. C. that was handed over, while according to the respondent he handed over Ex. D.W.I/I. In support of the version of the appellant, three witnesses, Mr. Tarlok Chand Chopra (Public Witness . 3.), who is stated to be the broker who arranged the sale, Mr. K. C. Nayar (Public Witness . 6) and Mr. H. L. Khosia (PW. 7) were examined. While Mr. Tarlok Chand Chopra stated that he did not remember as to whether a copy of the terms and conditions was or was not given to Mr. Khosia, Mr. Nayar and Mr. Khosla deposed that it was Ex. P.C. that was handed over by the respondent to Mr. Nayar and Mr. Khosla at the time of the execution of the agreement (Ex. P(r)A.). As against the said evidence, the respondent as DW.6, swore that it was a copy of Ex. D. W. I/I that was handed over by him, and that Dewan Harkishan Das was also present at that time. He was not cross-examined on this point. Mr. Nayar (PW.6) and Mr. 'Khosia (Public Witness . 7) stated in their evidence that Dewan Harkishan Das was not present at the time of the execution of the agreement. But, it was admitted in paragraph 3 of the replication which was signed by Mr. Khosia that Dewan Harkishan Das was present, and the statements of Public Witness s. 6 and 7 were contrary to the same. When Mr. Khosia was asked about the said admission, he tried to explain by saying that the admission was made by oversight. The learned Subordinate Judge was not prepared to believe the said Explanationn.

(48) Further, while the area of the plot was mentioned in Ex. D. W. 1/1 as 1243 square yards, and in Ex. P. A. as 1243 square yards approximately, the area was mentioned in Ex. P. C. as 1234,7 square yards. The learned Subordinate Judge referred to the discrepancy between the measurements given in Ex. P. C. and Pa, and commented that the discrepancy shows that Ex. P. C. was not with the parties at the time of the execution of the agreement and, thereforee, could not have been handed over by the respondent to Mr. Nayar and Mr. Khosia. In view of the cotradiction about the presence of Dewan Harkishan Das and the variance between the area mentioned in Ex. P. A. and that mentioned in Ex. P. C., the learned Subordinate Judge was not also prepared'to believe the version that it was Ex. P. C. that was handed over by the respondent and beheld that it was a copy of Ex. D.W. 1/1 that was handed over as deposed by the respondent. The learned Subordinate Judge also pointed out that Dewan Harkishan Dass, who is the father in-law of Mr. Nayar, a shareholder of the appellant-company, and who, according to the respondent took a part in the sale transaction, was not examined as a witness. It appears that the name of Dewan Harkishan Das was shown in the appellant's (plaintiff's) list of witnesses, and yet he was not produced as a witness. The learned Subordinate Judge took the view that he was intentionally withheld, and inferred from the non-production of Dewan Harkishan Das as a witness that if he had been produced as a witness, he would not have supported the case of the appellant that the respondent had handed over Ex.P. C. and not Ex. D. W. I/I at the time of the execution of agreement (Ex. P.A.). In view of the contradiction regarding the presence of Dewan Harkishan Das and his non-production as a witness,, the variance between the area mentioned in Ex. P..A. and that mentioned in Ex.P. C.. and the fact that the respondent was not cross-examined about his statement on oath that he handed over a copy of Ex. D. W. 1/1 and not Ex.' P. C., we are inclined to agree with. the conclusion of the learned Subordinate Judge that' it .was a copyofEx. D. W. 1/1 and not Ex. P. C. that was handed over by the respondent to Mr. Nayar and Mr. Khosla.

(49) Coming now to the terms and conditions in Ex. D. W 1/1, clause 17 therein 'which has been set out earlier stipulates that the purchaser or transferee of the plot has to construct within two years of the date of possession. a double storeyed residential building consisting of a single or two residential flats in all with a Barsati on the second floor, and that the design, height lines and set back lines should be as prescribd by the Land and Development Officer.' Clause .19 provides that if the highest bidder commits a breach of the conditions specified in this notice, the entire deposit or part of it shall be forfeited to the Government of India and the plot shall be re-sold, that the defaulter shall forfeit all claim to the, plot or to any part of the sum for which it may subsequently be sold, and that the decision of the Government of India, Ministry of Rehabilitation, in this respect, will be final.

(50) According to the respondent the date of delivery of provisional possession of the plot to him on 23rd November, 1955, was the date of possession referred to inclause 17 of the terms and conditions in Ex. D. W. 1/1. In his letter (Ex. P. D), dated 30th January, 1957, to Mr. Nayar, he stated that under the terms and conditions of sale of the lease-hold rights in his favor, abuilding according to specification was to he completed within two years from the date of the delivery of possession, that he.was delivered possession of the plot on 23rd November, 1955, and a period of about ten months only remained to have the plans sanctioned and the requisite building completed, failing which the lease would be forfeited by the Government, and that in the circumstances it was not possible to postpone the matter further, and to avoid the risk of forfeiture the construction of the building must be started forthwith. He concluded the letter by staling that in the circumstances he had no other option but to refund the amount received by. him as earnest money, and that he was sending with the letter acheque for Rs.4,993/12.00, being the amount recovered by him against the cheque for Rs. 5'000.00 given to him as earnest money. In paragraph 20 of his written-statement. he also pleaded that it was .known to the parties at the time of the agreement of sale that according to the conditions of sale the building on the plot, in accordance with the specifications approved by the Government, had to be completed within two years from the date of the delivery of possession to him, i. e., from 23rd November, 1955, and that in case of default the deposit of Rs. 6,800.00 made by him would be liable to forfeiture and the lease in his favor to cancellation. He also pleaded that besides the Said forfeiture and cancellation, the amount paid by him to persons from whom he had acquired compensation claims would become wasted and he would suffer irreparable loss to the extent of a major portion of the purchase money. He added that the time spent incorrespondence with the appellant (plaintiff) necessitated his applying for extension of time to complete the construction, and that he did so apply in November, 1957, for extension of time for the completion of the construction by November, 1958. lthas to be recalled here that the aforesaid letter (Ex. P. D.) was followed by correspondence-between the parties (Exs. P.H., P.E, P.I.P.F. , J.P.G, and P.K) which ended with .the last letter (Ex. P. K), dated 25th April, 1957. He then applied to the New Delhi Municipal .Committee on 14th June, 1957, for the requisite sanction for the .construction of the building on the suit plot, but the same was rejected on 2nd August, 1957. He applied again on 14th August, 1957, and that application also was rejected on 27th September, 1957. Then, on 5th November, 1957, he applied for extension of time as the period of two years would expire on 23rd November, 1957. In the meantime, the Land and Development Officer recommended the sanction of the plans on 13th November, 1957, and the Municipal Committee gave its sanction on 4th December, 1957. The respondent entrusted the construction to a contractor in February, 1958, and the construction was commenced in April, 1958, and was completed in October, 1958, subsequent to the filing the present suit on 21st July, 1958.

(51) On the other hand, it is the case of the appellant that the date of possession contemplated by clause 17 was the date of legal possession to be given to the respondent after the full title to the lease-hold rights in the plot vested in him, and that the question of construction of a building within two years or the question of any forfeiture of the plot did not arise till the date of such legal possession. Both parties asserted their respective views in the correspondence that passed between them. The terms and conditions set out in the pamphlet (DW. 1/1) do not refer to provisional possession. Mr. Tarkunde pointed out that the terms and conditions set out in the pamphlet (DW. 1/1) referred to the date of 'possession' and not to the date of 'provisional possession'. According to him, the sequence of the terms and conditions set out in the aforesaid pamphlet shows that the provision in clause 17 occurs after the provision in clause 15 for execution and registration of the agreement for the lease of the plot, and, thereforee, the date of possession mentioned in clause 17 meant the date of legal possession to be given to the respondent after the execution and registration of the agreement for the lease of the plot between him and the Government. In our opinion, no such inference can be drawn from the mere position of clause 17 or the sequence of the terms and conditions. The word 'possession' used in clause 17 is wide enough to include 'provisional possession'. Although none of the terms and conditions refers to delivery of provisional possession, the fact remains that the respondent was given provisional possession of the plot. There is nothing on the record to show the object with which the provisional possession was given. Mr. Tarkunde suggested that. it might have been given to enable the bidder, a displaced person to erect some temporary structures on the plot for the purpose of his use as residence until the agreement of lease is executed and legal possession is given to him. Though the said suggestion sounds plausible, we cannot base our decision on the said suggestions as it was just a conjecture and not based on any evidence. In the circumstances, it cannot be said that the view of the respondent that a building was to be constructed within two years from the date on which provisional possession was given to him can be regarded as baseless. A perusal of the letters written by the respondent to Mr. Nayar and his evidence as D. W. 6 shows that the respondent understood and believed that under clause 17 of the terms and conditions the building was to be constructed within two years from 23rd November, 1955, the date on which provisional possession was given to him. There is nothing on the record to show that the said understanding was not justified or that the belief was not genuine.

(52) Mr. Tarkunde next contended that even if the respondent had genuinely believed that the construction was to be made within two years from the date on which provisional possession was given to him, he was not entitled to repudiate or put an end to the contract, and that by doing so he committed a breach of the contract. As stated earlier, the respondent got possession of the plot on 23rd November, 1955, and entered into the suit agreement with the appellant on 12th April, 1956. But, on 30th January, 1957, he wrote the letter (Ex. P. D) to Mr. Nayar staling that the final letter of adjustment of compensation was not received till then from the Government of India, that he had made incessant efforts to get the letter of adjustment of compensation issued by the Department but without success, that under the terms and conditions of the sale a building according to the specification was to be completed within two years from the date of delivery of possession viz., 23rd November, 1955, that a period of about ten months only remained to have the plans sanctioned and the requisite building completed, failing which the lease would be forfeited by the Government, that the construction of the building must, thereforee, be commenced forthwith, and that in those circumstances he had no other option but to refund the earnest money. He also enclosed a cheque for the said amount of earnest money. The question for consideration is whether he had thereby committed a breach of the contract. The refund of the earnest money and the statement of the respondent in the aforesaid letter that the construction of the building must be started by him forthwith clearly show that he repudiated the contract, and thereby committed a breach of the same. It is true that he gave reasons for his repudiation viz., his failure to get, in spite of his efforts, the final letter of adjustment of commpensation issued by the department, and the necessity for the immediate commencement of the construction of a building on the plot. All the same, the fact remains that he repudiated the contract and in effect informed Mr. Nayar that he would not perform his part under the same. That clearly amounts to a breach of the contract by him. Mr. Tarkunde contended that m view of the breach of the contract by the respondent the appellant was entitled to a decree for specific performance of the contract. The question is whether in the circumstances of this case specific performance ought to be granted. Clause 17 of the terms and conditions of sale (Ex. DW. 1/1) required the bidder, i.e., the respondent to construct a building on the plot within two years of the date of delivery of possession. The respondent was informed by a memorandum (Ex. D. 1), dated 23rd November, 1955, from the office of the Regional Settlement Commissioner that his compensation application had been finalised, and that it had been decided to deliver provisional possession of the plot to him. He was also informed by the said memorandum that the finalisation of the compensation application was only provisional and did not constitute a transfer of the complete title in the plot, and that the final letter of compensation would follow in due course. He could not, thereforee, apply immediately for permission to transfer the plot to the appellant. He took provisional possession of the plot on 23rd November, 1955, itself. As held by us above, he genuinely believed that the building was to be constructed within two years from the said date, failing which the monies paid by him and the plot ilself were liable to be forfeited. . Mr. Tarkunde referred to the evidence of Mr. R. N. Khanna (PW. 1), that a lease deed was executed in favor of one Parmanand in respect of another plot No. 129, and the said Parmanand was required to build upon the plot within two years of the lease The learned counsel also pointed out that there was no evidence of even a single instance of forfeiture by the Government, and that the respondent admitted in his cross-examination that he did. not know whether there was any such instance. Mr. Tarkunde also pointed out that the respondent had deposed that Mr. Nayar and Mr. Khosla were told at the time of the execution of the agreement (Ex. P. A.) that a building was to be constructed within two years of the date of delivery of provisional possession and in default the plot itself was liable to be forfeited, and contended that there was no such term in the agreement and, thereforee, it could not be introduced by extraneous oral evidence as it would be in contravention of section 92 of the Evidence Act. But, all the above aspects mentioned by Mr. Tarkunde are, in our opinion, beside the point. Other cases or instances are immaterial and beside the point as we are concerned only with the conduct of the respondent and how he understood the terms and conditions. As already pointed out by us above, the respondent understood the clauses 17 and 19 of the terms and conditions in the manner stated earlier and honestly believed that he had to construct the building within two years of the date of his provisional possession, and in default the monies paid by him and the plot itself were liable to forfeiture.

(53) In these circumstances, as pointed out by the learned Subordinate Judge, the respondent after he entered into the contract with the appellant, had been making every possible effort to obtain the final letter of adjustment of compensation. The correspondence,' Exhibits D.2, D. 15, D. 27 and D. 28 with and by the Rehabilitation Ministry as well as the evidence of the respondent as DW.6 and that of Mr. Amarnath Arora, Advocate, as DW.3, proves the said efforts made by him. He also gave a letter of authority, Ex. D. 3/1-A on 12th January, 1957, to Dewan Harkishan Daswho pursued the said matter, but without success. The statement of Mr. Nayar and Mr. Khosia Public Witness s. 6 and 7 to the contrary were not accepted by the learned District Judge, in our opinion, rightly, in view of the aforesaid documentary evidence. When he thus failed to obtain the final letter of adjustment, and being of the bona fide view that possession of the plot having been delivered to him under the memorandum (Ex. D.1) dated 23rd November, 1955, he had to construct a building an the plot. within aperiod of two years from the said date, he wrote the letter (Ex. P. D), dated 30th January, 1957, to Mr. Nayar stating the actual position and refunding the earnest money. Though technically it was a breach, of the contract, it cannot betaken to be the act of a vendor who deliberately and willfully Wanted not to perform his part of the contract.

(54) In his reply (Ex. PH), dated 15th February, 1957, Mr. Nayar insisted upon the respondent to obtain the final letter of adjustment of compensation and the permission for the transfer from the Government, whereupon only the appellant was prepared to pay the balance of the price at the time of the execution of the sale deed in its favor. Mr. Nayar also maintained that the question of the construction of the building would not arise till the expiry of two years from the date when full title as lessee vested in the respondent. He denied the existence of any such condition in the terms and conditions of the auction. Thereupon, the respondent sent his reply (Ex. P. E), dated 27th February, 1957, through his counsel, quoting the relevant clauses Nos. 17 and 19 and pointed out that possession having been delivered to him on 23rd November, 1955, the construction of the building had to be completed by 23rd November, 1957. In view of the stand taken by Mr. Nayar. the respondent asserted that he did .not want to resile from the contract, but that against payment of the balance price by the appellant he was prepared to convey whatever right or interest he had in the plot, and he assured that he will remain willing and ready to co-operate in giving full effect to the transfer infavor of the appellant and also indemnify the appellant that the compensation papers submitted by him were complete and in order. Apparently, the respondent made the said offer in order to enable the appellant to immediately start construction of the house in terms of the conditions of auction as understood by him. In the subsequent letters exhibits P. J, P. F and P. J, which passed between the parties, there was dispute between the parties as to whether condition No. 17 was as in Ex. DW.1/1 or as in Ex. P. C. In the last mentioned letter (Ex. P. J), written by Mr. Nayar in April, 1957, he stated that the appellant was prepared to indemnify the respondent against the losses which might beincurred by the latter to the extent of Rs. 55,000.00,

'IF notwithstanding best efforts made by him and proper adequate steps speedily taken by him to get the final letter issued and to obtain the permission of the Government for transfer and representations and applications made by him, as indicated above, the plot is forfeited by the Government on account of the non-compliance of the said alleged conditions provided further that atotal amount of the price is got adjusted against compensation or otherwise it is paid in cash.'

(55) Mr. Nayar concluded the letter with a warning that the respondent should not start construction. Inreply to the said letter, the respondent's counsel, sent the letter (Ex: P. G, dated 5th April, 1957, stating that Mr. Nayar's letter. Ex. P. J., left no room for doubt that he was not prepared to accept the offer made to the appellant and was putting mere excuses to prolong the matter, that the same could not evidently be allowed in view of the conditions of auction, that the respondent was not prepared to take any risk in the matter as it involved the forfeiture of his deposits, and that in the circumstances the respondent had no option but to proceed with the construction of the building, in answer thereto, Mr. Nayar wrote the letter (Ex. P.K:), dated 25th April, 1957, reiterating the stand taken by him in his previous letters. With that, the correspondence between the parties ended. It was then that the respondent applied to the New Delhi Municipal Committee on 14th June, 1957, for the requisite sanction to the proposed construction annexing the necessary plans, and as stated earlier, the sanction was ultimately given on 4th December, 1957 (Ex. D. 24). In the meantime, as the period of two years was going to expire by 23rd November, 1957, the respondent applied on 5th November, 1957 (Ex. D. II) for extension of the period by one year. He, however, did not receive any reply regarding the extension asked for by him, and after waiting till February, 1958, he entrusted the construction to a contractor. The construction was commenced in April, 1958, and completed in October, 1958. It will thus be seen that it was only when the respondent found that the appellant would not itself undertake the construction of the building that he commenced the construction. Mr. Tarkunde contended that the respondent's offer to transfer whatever rights he had was not a genuine one as the said offer itself, if accepted and given effect to, would have violated clause Ii of the terms and conditions of auction according to which the prior permission of the Government was necessary for the transfer, and the said violation would have become a ground for forfeiture by virtue of clause 19. It is possible that the offer to transfer whatever rights he had, if given effect to, might have had the consequence mentioned by the learned counsel. But, that is beside the point, as we are concerned only with the bona fide nature of the conduct of the respondent in commencing the construction. Mr. Tarkunde also contended that the respondent should have been satisfied with the indemnity which had been offered by the appellant. But, the indemnity offered by the appellant was so much hedged in by qualifications and conditions that it was not, in our opinion, an indemnity which would carry conviction with a vendor that he would be able to realise the amount mentioned in the indemnity in case of forfeiture by the Government.

(56) Taking all the circumstances set out above into consideration, we are of the view that it cannot be. said that the respondent deliberately and willfully commenced and completed the construction of the building with the object of avoiding the contract which he had entered into with the appellant. His entire conduct shows, in our opinion, that he did all that he could do in the circumstances, and was ready and willing, as held by the learned Subordinate Judge, to perform his part of the contract till a stage arrived when he bone fide felt that he had to repudiate the contract and commence the construction of the building to save his money and the plot from forfeiture. It was only then that he repudiated the contract and constructed the building. Thus, the change in the circumstances of the plot had been brought about by compelling circumstances beyond the control of the respondent and to compel him to perform the contract specifically, would involve considerable hardship on him.

(57) Mr. Tarkunde also contended that before actual forfeiture by the Government, it could not be said that the contract became impossible of performance. As pointed out above, it is not a question of impossibility of performance, but one of hardship involved in compelling the respondent to perform the contract specifically in the changed circumstances of the plot.

(58) Section 22 of the Specific Relief Act, 1877, and even the corresponding section 20 of the Act of 1963, makes it clear that the jurisdiction to decree specific performance is discretionary, and a court is not bound to grant such relief merely because it is lawful to do so. The discretion, however, is to be sound and reasonable and not arbitrary. But, as provided in case Ii in the said section, it would be a proper exercise of discretion not to decree specific performance 'where the performance of the contract would involve some hardship on the defendant which he did not foresee, whereas its non-performance would involve no such hardship on the plaintiff'. In the present case, provisional possession of the plot was given to the respondent (defendant) prior to the date of the agreement (Ex. P.A.) with the appellant, and it was stated in the letter (Ex. D. 1) by which the respondent was offered delivery of provisional possession by the Ministry of Rehabilitation that his application for adjustment of compensation had been finalised and the regular letter of allotment would follow in due course. The agreement (Ex. PA) was entered into about four and a half months, thereafter. Obviously, there was every reason for the respondent to think at the time of entering into the agreement that the final letter of adjustment of compensation would be issued and the permission for the transfer could be obtained within a short time, and that there would be sufficient time left for the appellant to construct the building within the period of two years as per the terms of the auction. It is equally obvious that he could not have foreseen that the issuance of the letter would be delayed by the authorities concerned, and that he would have to take upon himself the task of constructing the building to save the plot and the money spent by him from forfeiture. In the circumstances, the performance of the contract by transferring the plot on which he has since constructed a building would clearly involve great hardship on him. On the other hand, the appellant beyond paying the sum of Rs. 5,000.00 as earnest money at the time of the agreement, did nothing more in the matter. It may here be re-stated what is apparent from the correspondence between the parties which has been adverted to earlier that in one of the letters (Ex. PH), dated 15th February, 1957, the appellant had offered to have the building plan in respect of this plot prepared by its own architect so that the respondent could submit the same on behalf of the appellant to the authorities concerned for sanction. But, the appellant did not get any such plan prepared. Further, the statement in the aforesaid letter that the respondent was to submit the plan on behalf of the appellant shows that the appellant understood that the construction of the building on the plot within the period of two years as per the terms and conditions of auction was really its own concern and not that of the respondent. Yet, the appellant made no effort in that direction and even declined, for whatever reasons it might have been, to accept the offer of the respondent to transfer whatever rights in the plot he had to the appellant upon payment of the balance of the amount which was payable. It is not unreasonable to conclude from the aforesaid conduct of the appellant that it had no intention either to construct the building on the plot or to pay to the' respondent the amount payable under the contract before the final letter of adjustment was issued by the authorities concerned and permission for transfer was obtained by the respondent. It is, thereforee, A clear that non-performance of the contract would not involve any such hardship on the appellant as it would on the respondent in case of performance of the contract. We are, thereforee, of the opinion, that the principle underlying clause It in section 22 of the Specific Relief Act, 1877, applies to the present case, and that, in the circumstances, the specific performance of the contract prayed for by the appellant cannot be granted.

(59) At this stage, we may deal with some contentions urged by Mr. sawhney on behalf of the respondent. Mr. sawhney contended firstly that the appellant was guilty of laches in that the construction of the building was commenced in April, 1958, that the appellant knew about the same and yet waited till July, 1958, for filing the suit allowing the building operations to go on, and that in the circumstances the appellant should not be granted specific performance on that ground. In paragraph 10 of his written-statement, the respondent pleaded that the building operations started in the middle of April, 1958, and the same was within the knowledge of Dewan Harikishan Das, Mr. H. L. Khosla and Mr. K. C. Nayar, that the construction had been going on openly, and by the date of the written-statement about 38 rooms had been almost completed and only the finishing touches were in progress, that the construction had cost him over a lakh and quarter rupees by that time, that the appellant (plaintiff), stood by and did not institute the suit till after a double storeyed building had been constructed, and that the appellant was thus guilty of laches in the matter and disentitled itself of the relief of specific performance. The said allegation was denied in the replication. Mr. Nayar, as Public Witness . 6, stated that the construction was started in June, 1958, and that he went to the spot in July, 1958. Mr. Khosia, as Public Witness . 7, stated that he saw the construction in the beginning of June, 1958. There is no evidence that Mr. Nayar or Mr. Khosia was aware of the commencement of the building operations in April, 1958. Even otherwise, the plea of the respondent was only that the appellant stood by without filing the suit. In Madamsetty Satyanarayana v. G. Yellogi Rao and two others, : [1965]2SCR221 , the Supreme Court held that while in England mere delay or laches may be a ground for refusing to give a relief of specific performance, in India mere delay without such conduct on the part of the plaintiff as would cause prejudice to the defendant does not empower a court to refuse such a relief, and that it is not possible or desirable to lay down the circumstances under which a court can exercise its discretion against the plaintiff, but they must be such that the representation by or the conduct or neglect of the plaintiff is directly responsible in inducing the defendant to change his position to his prejudice or such as to bring about a situation when it would be inequitable to give him such a relief. In the present case, there was no averment, and much less proof, that any act or conduct of the appellant had induced the respondent to put up the building at a heavy cost. Mere standing by would not be sufficient to disentitle the appellant to get the relief of specific performance. Even the plea of standing by has not, to our mind, been proved in this case. As stated earlier, the correspondence between the parties terminated in April, 1957, with a warning by the appellant that construction, as proposed by the respondent should not be undertaken. The oral evidence adduced on behalf of the appellant shows that it came to know of the construction in June, 1958. when the subordinate courts were closed, and filed the suit shortly after their re-opening in July, 1958. As stated earlier, no proof had been adduced by the respondent as to his allegation in the written-statement that Dewan Harkishan Das, Mr. Nayar and Mr. Khosla were aware of the commencement of the construction in April, 1958. The contention of Shri Sawhney cannot, thereforee, be accepted.

(60) His second contention was that the appellant (plaintiff) claimed specific performance of the agreement, Ex. P.A., supplemented by the terms and conditions contained in Ex. P.C., and he was not, thereforee, entitled to a decree for specific performance of the agreement, Ex. P.A., supplemented by the terms and conditions contained in Ex. D.W. 1/1, as the appellant did not allege the latter and did not express its readiness and willingness to perform the said agreement, i.e. Ex. P.A. read with Ex. D.W. 1/1. There is no substance in this contention. The appellant referred in the original plaint, dated 21st July, 1958, to the agreement. Ex. P.A., and set out in paragraph 7 the details of the letters written by Mr. Nayar and the respondent. In doing so, reference was made to the contents of the letter written by Mr. Nayar wherein Mr. Nayar stated that the condition in clause 17 regarding the construction of a building within two years of possession mentioned by the respondent in his earlier letter did not exist in the copy given to Mr. Khosia, and that even if any such clause had existed, as alleged, the question of construction of a house could not arise until a lease had been executed by the Government and possession delivered under the lease. In paragraph 7 of the amended plaint, after referring to the letter of Mr. Nayar, it was again stated that even if the aforesaid condition was there, extension could be obtained, but the respondent could not resile from the contract. Thus, both the documents were referred to in the plaint, before and after the amendment, and it is not as if the appellant (plaintiff), pleaded only one of them and not the other. In paragraph 12 of the plaint, both before and after its amendment, the appellant (plaintiff) pleaded that he was and had always been ready and willing to perform his part of the contract. We, thereforee, do not find any substance in the contention of Mr. Sawhney.

(61) Another contention of Mr. Sawhney was that Mr. Nayar was not duly authorised by the appellant-company by passing a resolution to enter into the agreement with the respondent. There was no specific plea in the written-statement about the absence of the authority or the resolution. Mr. Nayar stated that he had oral authority, and that he did not know whether there was a resolution. Mr. Ram Rattan Iyer (Public Witness . 5), Secretary of the appellant-company, was not asked about the resolution. It is not, thereforee, open to the respondent to raise this contention.

(62) The appellant prayed in the plaint for damages in addition to specific performance under section 19 of the Specific Relief Act. In the view taken by us that specific performance ought not to be granted to the appellant (plaintiff), the question of damages under section 19 does not arise.

(63) The appellant also prayed for damages in the alternative for breach of the contract in case it was held by the court that there was a breach of the contract but specific performance ought not to be granted, The respondent denied in his written-statement the claim of the appellant for damages for breach of contract. On those pleadings, a specific issue (No. 10) was framed. On this issue, the trial court held that in as much as the appellant was held by it not to be entitled to specific performance, damages also could not be granted. For this conclusion, the trial court relied upon the decision of the Privy Council in re: Ardeshir H. Mama v. Flora Sassoon, Air 1928 P C 208. This decision does not apply to the facts of the present case, because in the cited case the appellant (plaintiff) had at the hearing debarred himself by his own action from asking for specific performance.

(64) The question then is whether the appellant is entitled to damages in view of our finding that the respondent had committed a breach of the contract between the parties. Mr. Tarkunde contended that the parties, notwithstanding the issue, have not led their evidence on the question of damages, and thereforee, if damages are to be ascertained, a preliminary decree may be passed by this court declaring the appellant's right to damages and directing ascertainment of the damages by the trial court allowing the parties to adduce evidence regarding the same. We are unable to agree to adopt this course for the reason that the appellant (plaintiff) alleged the date of breach, and claimed damages for breach of the contract. The parties went to trial on the specific issue framed, viz., issue No. 10. When the parties were at issue on the question of damages, it was for the appellant (plaintiff) to prove the damages suffered by it. The only evidence led by the appellant is that the price of the plot started rising after 1958. According to the case of the appellant, the respondent committed breach by his letter (Ex. P.D.), dated 30th January, 1957, and finally in or about April 1957, when the correspondence between the parties terminated. Mr. Tarkunde argued that the date of the breach will be somewhere in September, 1959. because the Government adjusted the compensation somewhere in March, 1959, and a further period of six months should be added for the obtaining of permission and the execution of the sale deed. We do not agree. As stated earlier, it is the appellant's case that the respondent resoled from the contract when he wrote the letter (Ex. P.D.), dated 30th January, 1957. In our opinion, the said date should be held to be the date of the breach. There is no evidence on the record to prove the value of the plot on that date. Having gone to trial on the issue, the appellant should have adduced the evidence necessary for the assessment of the damages suffered by it. When it had ommitted to do so, it cannot ask for remand for the purpose, as such a course would only be to allow the appellant to fill up the lacuna in its evidence, which would be unfair to the respondent. We, thereforee, hold that the appellant has failed to prove any damages, and consequently no damages can be awarded for breach of the contract.

(65) For the above reasons, the appeal fails and is dismissed with costs.


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