Avadh Behari Rohatgl, J.
(1) This is a tortuous. litigation. It seems unending. I will briefly outline its chequered career in the course of the judgment.
(2) Way back in 1968 a compromise was entered into between An and Finance Company Private Limited on one hand and Bank of Baroda on the other. Since 1959 the company was enjoying cash credit facilities with the bank. In 1965 a sum of about rupees ten laes became due to the bank from the company. The bank asked for security. Ram Lal Anand who was the managing director of the company at that time deposited the title deeds of property No. 88, Sundar Nagar, New Delhi, in January 1966 and thereby created an equitable mortgage in favor of the bank.
(3) The company, it seems, had fallen on evil days. It was heavily indebted. Apart from the Bank of Baroda which had become a. secured creditor, the company had a large number of unsecured creditors. Awinding up petition was filed in 1966 against the company. In April 1968 an application under s. 443(2) read with Ss. 391 and 392 of the Companies Act (the Act) was presented to the company judge for sanction of a compromise. Before him the company admitted that the bank was a secured creditor and that Rs. 9.97,048.50 were due to the bank as on May 11, 1966. The equitable mortgage in its favor was also admitted. The company was unable to pay the whole amount. It was, thereforee, settled that the bank will accept 50 per cent of the amount due, namely, Rs. 4,98,524 in full and final settlement of their claim. If all the unsecured creditors are paid 50 per cent and a surplus still remained, the bank might get 15 per cent more, that is, Rs. 1,49,556. But this was con-tingent on the surplus remaining. If nothing remained the bank was to be satisfied with Rs. 4,98,524. This was the compromise between the company and the bank.
(4) On May 10, 1968, S. N. Shankar J. thought that this arrangement was in the larger interest of the body of creditors. He, thereforee. sanctioned the scheme.
(5) There were unsecured creditors also. Again a scheme was framed. It was sanctioned on July 29, 1968 by S. N. Andley J. One of the important clauses of the scheme is clause 4 :
'THEDirectors of the Company claim that residential Kothi known as 88, Sundar Nagar, belongs in law and equity to the company and that Shri R. L. Anand had no beneficial interest in the same. Accordingly, they have sometime back made a transfer entry in the books of account crediting an amount of Rs. 2,05,000 to Messrs Veer Finance Co. On the other hand Shri R. L. Anand claims that the above property belongs to him and that he was required to purchase it in view of the objections raised by the Registrar of Companies and that he has paid the full consideration for the same. With a view to avoid this dispute, Shri R. L. Anand agreed in the interest of the general body of creditors to give up all his rights in respect of the said property and to hand over the vacant possession thereof and the fixtures and furniture therein to the Directors of the Company forthwith, and the Company agrees to pay a sum of Rs. 2,05,000 in such manner as the Chairman of the Board of Directors of the Company may consider fit, unless the same is adjusted in the manner nrovided hereafter. The credit of Rs. 2.05,000 made in favor of Veer Finance shall be reversed accordingly.'
(6) The dispute before me is about this property-88, Sundar Nagar. New Delhi. Anand claims the property to be his. Company claims the property as belonging to it.
(7) The bank was naturally interested in getting its money. They wanted to be paid Rs. 4,98,524 as was admittedly due to them under the scheme from the company as a secured creditor. This property was mortgaged with them. This was their claim.
(8) On March 5, 1973, the bank made an application for the enforcement of the compromise dated May 10, 1968. They claimed that the property be sold and they be paid Rs. 4,98, 524. This application was heard in the first instance by Sachar J. By order dated October 8, 1973, he directed the sale of the property by auction. He also directed Anand to execute a conveyance in favor of the bank This was his decision.
(9) Anand appealed. A division bench (P.N. Khanna and M. R. A. Ansari JJ) allowed the appeal on May 14, 1974. This judgment of the division bench is the starting point for future litigation.
(10) As will be seen from clause 4 of the compromise there arc two parts of the settlement which was sanctioned by Andley, J. The first part is that Anand agreed to give up all his rights in respect of the said property and to hand over vacant possession thereof etc. to the directors of the company 'forthwith'. The second part of the settlement was that the company agreed to pay his sum of Rs. 2,05,000 in such manner as Chairman of the Board of Directors of the company may consider fit unless the same is adjusted.
(11) After the compromise received the sanction of the court on July 29, 1968, nothing much happened until the application was moved by the bank on March 5, 1973. When the application was made Anand took a different stand. His stand was that this compromise was not binding on him as he was not a party to it. On this aspect his objections were two-fold. Firstly, that he was not a party to the compromise and, thereforee, not bound by it. In a word he claimed to be the sole owner of the property. Secondly, as Rs. 2,05,000 which the company had agreed to pay to him in lieu of his giving up his rights in the property had not been paid to him he remained the owner of the property as before.
(12) In this very form these two arguments were advanced before Sachar J. He rejected them. They were again advanced before the judges of the division bench. They also rejected them. Yet they have again been advanced before me much in the same form.
(13) On both these objections the division bench was held-and that is the judgment which is binding on the parties as well as this court as no appeal there from was taken-that (1) Anand was a party to the settlement or compromise. He gave up his personal rights in the property. He was bound in his pensonal capacity; (2) avalid equitable mortgage had been created in favor of the bank; and (3) the contract between Anand and the company was 'reciprocal in nature' and the right to get Rs. 2,05,000 was a consideration for giving up of his rights by Anand in the property. The division bench clearly held that though it was a reciprocal contract, two sets of promises were not to be performed simultaneously as this was 'a case involving peculiar circumstances'. But they pointed out that all the same the company was bound to perform it. 'The two parts of the promises shall have to be performed by the parties concerned, though not simultaneously' as they put it.
(14) In substance what the division bench held was that the property could not be ordered to be sold as had been done by Sachar J. without investigating and examining the claim of Anand as the compromise was binding as much on the company as on him. In the result the division bench said :
'WEaccordingly allow this appeal, set aside the order of the learned Company Judge and remand the case back to him for final disposal in accordance with law, after taking into consideration the observations made therein.'
(15) After the decision of the division bench on May 14, 1974. Rangarajan J. on September 30, 1974, ordered Anand to file his claim. He filed the claim. The bank and the company submitted their replies. On February 5, 1975, Chawla J. framed the following issues: 1. Whether the company performed its promise or any part thereof to pay a sum of Rs. 2,05,000 'to Mr. R. L. Anand 2. Further, and in the alternative, whether the company offered to perform the part of the contract requiring it to pay a sum of Rs. 2.05,000 to Mr. R. L. Anand 3. Has any amount been paid by the company to Mr. R. L. Anand towards the amount of Rs. 2,05,000 either by adjustment or otherwise 4. If issue No. 3 be decided against the company is it still ready and willing to perform this part of the contract to pay the amount of Rs. 2,05,000 to Mr. R. L. Anand? And, if .so, how and in what manner 5. Whether the alleged claim by Mr. R. L. Anand for Rs. 2,05,000 is barred by time (Note :-Mr. R. M. Lal states that Mr. R. L. Anand is not making a claim or praying for a payment order in respect of Rs. 2,05,000 in these proceedings and thereforee the question of the same being barred by time does not arise. Since the plea of limitation has been raised in the reply filed on behalf of the company, I am framing an issue and will leave it for decision at the time of final hearing). 6. Whether an order for sale of the property situate at 88 Sundar Nagar ought, in the circumstances, to be made or not ?'
(16) Chawla J. fixed March 28, 1975, for evidence of the parties. The case was then adjourned to August 26, 1975, for evidence. On September 19, 1975 the parties' counsel appeared before him. They stated that they had no evidence to give. The Judge closed the evidence and set down the case for arguments on October 9, 1975.
(17) When the case came up before Chawla J. on July 16, 1976, he expressed his inability to hear it since his Lordship was sitting in the division bench. This is how the case has come before me under the orders of the Chief Justice.
(18) The principal question is about the enforcement of the scheme. The bank claims a right under the scheme to be paid Rs. 4,98,524 by sale of the property by public auction. The company supports the claim of the bank. This is the stand of Mr. K. K. Mehra, the chairman of the company. An and opposes the claim of the bank on several grounds.
(19) Mr. R. M. Lal on behalf of Anand has submitted that Anand is the owner of the property and he never transferred the same to the company. The company has acquired no rights in property. Nor had it any right to mortgage it in favor of the bank. It is said that Anand is not bound by the compromise sanctioned on July 29, 1968. He did appear in court, it is said, on that date before the com- pany judge but that was marely in the capacity of a representative on behalf of the share-holders and not in his individual capacity. This is the burden of the counsel's argument. A careful reading of the judgment of the division bench shows, as I have said, that these very arguments were advanced before the learned judges as before Sachar J. They said :
'IThad been contended by the appellant, as has been con-tended on his behalf even before us, that he was not a party to the said agreement and compromise and was, thereforee, not bound by it. It was also contended that he was the owner of the property and the company had nothing to do with it. His property, according to him, could not be sold to satisfy the indebtedness of the company. The learned Company Judge rightly brushed aside this objection of the appellant by noticing that the title deeds were admittedly in the Bank's possession. The appellant himself was the managing director of the company. There is no suggestion that the title deeds were not given voluntarily or of free will.'
(20) The Judges, thereforee, clearly held that Anand was a party I to the settlement. They rejected the argument that he appeared in the company case as a representative of the share-holders and not in his personal capacity. They said :
'IT is mentioned in para 4 reproduced above that Mr. R. L. Anand agreed to give up all his rights in respect of the 9 H CD 77 said property and to hand over vacant possession thereof. This was an undertaking given by the appellant in his personal capacity. He was not giving up his rights in the property as a shareholder, as it is not the appellant's case that he possessed any rights in the property in his capacity as a shareholder.'
(21) This is a clear finding of the division bench on the first part of the compromise. thereforee, on this aspect of the case nothing remains to be decided after the division bench has settled the controversy, at least in so far as this part of the case of Anand is concerned.
(22) Now we come to the second part of the compromise. Under this part Anand is entitled to be paid Rs. 2,05,000. The possession of the property was to be handed over to the company by him 'forthwith'. He was entitled to Rs. 2,05,000. But that payment was not to be made forthwith. This was the view of the division bench. But all the same he was entitled to get this money. Sachar J. had not investigated the claim of Anand. He had left him to pursue his remedy such as was open to him. On this point the division bench took a view different from the learned single judge. They held that this part of the case must be investigated before sale is ordered. They said :
'WHETHERthe company performed its promise or any part thereof, or whether it even offered to perform its part of the contract Has anything been paid by the company by adjustment or otherwise If not, whether the company is still ready and willing to perform its part of the contract and, if so, how and in what manner it proposes to pay the sum of Rs. 2,05,000.00 which was to be paid to the appellant Answers to these questions shall have to be ascertained in all fairness to the parties concerned, in order to find out, if this part of the compromise was still enforceable. It may not be fair to exercise powers under section 392, to enforce merely a part of the com-promise, by ignoring altogether the other part.'
(23) In the light of these observations of the division bench Chawla J. framed the above issues. They reflect this part of the enquiry and investigation which I have now to make.
(24) Mr. R. M. Lal on behalf of Anand has argued that since the judgment of Sachar J. was set aside in appeal the whole matter is at large. According to him there is no finding which cannot be reopened at this stage. He, thereforee, started his case from the very beginning. I do not think he is right. In my opinion all that the court is now called upon to decide is about the validity of Anand's right to get Rs. 2,05,000 to which he lays claim under the second part of the compromise.
(25) Mr. R. M. Lal submits that the proper remedy of the company in order to secure the property is to bring a suit for specific performance. He says that it is a case of reciprocal promises under s. 51 of the Contract Act and, thereforee, as the company has never paid the money to Anand they cannot claim any title to the property which remains vested in Anand. He said that though it is recorded in the compromise yet title cannot pass by mere admission. In this connection he referred me to Ambika Prasad v. Ram Ekbal Rai, Air 1966 S.C. 605 and to the various other provisions of the Transfer of Property Act and Registration Act under which a property can be conveyed only by means of a properly executed, stamped and registered conveyance.
(26) I am afraid I cannot agree with Mr. Lal. All that has to be done now is to enforce the compromise according to its letter and spirit. That is the function of the court under s. 392. Clause 4 set out above leaves no manner of doubt that at one time the directors claimed that this property belonged to the company both ''in law and equity' and. their assertion was that Anand had no beneficial interest in it. Anand, on the other hand, made his rival claim denying the claim of the company. This was the state of affairs when the matter reached the stage of compromise. In the compromise Anand agreed to give up his interest in the property 'in the interests of the general body of creditors' as the compromise says. He also agreed to hand over vacant possession of the property 'forthwith'. The company, on the other hand agreed to pay him Rs. 2,05,000. After he had agreed to the compromise there remained not a vestige of title in Anand. The company became the owner of the property. The beneficial ownership was always in the company, though the property stood in the individual name of Anand. This appears to be clear from the fact that Anand himself as the managing director created an equitable mortgage in favor of the bank and deposited the title deeds. If the property is of the company, as I hold it to be, all that Anand is entitled to and can make claim is the sum of Rs. 2,05,000.
(27) Mr. K. K. Mehra on behalf of the company frankly admitted that the sum of Rs. 2,05,000 has not been paid to Anand. He has filed his affidavit dated September 27, 1974. All that is said in this affidavit is that the company is entitled to recover damages on account of the unauthorised occupation of Anand in the property and the amount of damages the company is entitled to set-off against the claim of Rs. 2,05,000. Though this is pleaded, I find there is no proof about damages, its quantum and so forth.
(28) At this stage I may notice another argument. This is about limitation. Both Mr. R. M. Lal and Mr. K. K. Mehra have in their turn advanced the argument that the claim of the opposite party is barred by limitation. Mr. R. M. Lal says that the company's claim has become barred by limitation. Similarly Mr. Mehra says that Anand's claim to money is barred by time : I have no hesitation in rejecting their argument. Under s. 392 of the Act all that the court has to do is to enforce the compromise. In the enforcement of the compromise no question of limitation arises as it does in a suit. S. 392(1)(b) uses the words 'at the time of making such order' or 'at any time thereafter'. The court is empowered to give directions for the proper working of the scheme and to enforce it so long as any part of it remains unenforced. The matters remain pending for years in such cases as has been the usual experience. This does not mean that the claim becomes barred by time under the scheme sanctioned by the court.
(29) I now turn to the issues and record my findings on them as under :- On the first issue the answer ought to be that the company has not so far performed its promise to pay a sum of Rs. 2,05,000. On the second issue the answer is that the company never offered to perform its part of the contract, as they never made an offer to Anand of this amount. On the third issue the answer is that it is not the case of the company that they have paid this amount to him. Nor has any adjustment been proved before me. On the fourth issue, Mr. Mehra has today made a statement before me that the company is ready and willing to perform its part of the contract and they are willing to pay Rs. 2,05,000 to Mr. Anand to which he is entitled under the compromise. On the fifth issue I have already recorded my finding that the claim of Anand is not barred by time. July 28,1976
(30) Now only the sixth issue remains and that is the crucial Why should there be not an order for the sale of the property The bank has a right to sell under the compromise sanctioned on May 10, 1968, by S. N. Shankar J. That order is the foundation of the bank's right to have the property sold. The order recognises (1) that the bank is 'a secured creditor to the extent of about Rs. 10 lakhs against the security of house bearing No. 88, Sunder Nagar, New Delhi'; (2) that the bank agreed to accept 50 per cent of their claim subject to the other term of 15 per cent more if surplus is available; and (3) the bank shall have the right to sell the property. This property was under attachment at the instance of certain creditors of Anand. In October, 1970 attachment was raised. The scheme provided that within three months after the attachment is raised the bank will be entitled to have the property sold. The bank did not make the application for the enforcement of the scheme till March 5, 1973. The bank's prayer in the application is that the property be sold.
(31) Mr. R. M. Lal on behalf of Anand says that the property cannot be put to sale. His argument is twofold. Firstly, he says that Anand is the owner. Secondly, he says that the doctrine of specific performance requires that there should be a conveyance of this property from Anand to the company if it is held that the compromise is binding on Anand. I do not agree. These two arguments were raised throughout, as I have said. Throughout they have been rejected. Firstly as I have held, Anand is not the owner of the property though ostensibly the sale deed is in his favor. The company is the beneficial owner. Once it is held that it is the property of the company then it can be sold straightway.
(32) As regards the second argument of specific performance what has to be remembered is that the court is enforcing not an ordinary contract but a scheme sanctioned by the court under a statute. The analogy of a suit for specific performance is out of place in the scheme of things under s. 392 of the Act. It is a part of the scheme that the property will be sold. No conveyance is required from an ostensible owner to the beneficial owner for the real title to the property always remains in the beneficial owner. At best Anand can be asked to be a confirming party to the sale deed. This is what the bank has claimed in this case. He who seeks equity must do equity. Anand appealed to the division bench for his claim of Rs. 2,05,000 to which he said he was entitled under the scheme. His claim has now been upheld. If that is so there should be no objection by him in executing the sale deed as a confirming party for the completion of the sale. Of course if he does not do so it does not mean that the court is powerless to convey a perfect title to the purchaser.
(33) The sale of the property has to be made for the benefit of the creditors. There is an equitable mortgage in favor of the bank which was created by Anand himself as the managing director. He deposited the title deeds. This transaction has been throughout upheld. The bank gave up its claim to 50 per cent. Now that Anand's claim has been upheld to Rs. 2,05,000 there ought to be no impediment to the sale. All that the division bench required the single judge to do was that the claim of Anand should be investigated. This has now been done. I hold that Anand is entitled to Rs. 2,05,000.
(34) I thereforee, order that the property 88, Sundar Nagar, New Delhi be sold by public auction. I fix the reserve price at Rs. 5,00,000. Out of the sale price of the property Rs. 2,05,000 will be kept aside for payment to Anand. That amount will remain in deposit in this court till further orders. Mr. B. R. Aggarwal on behalf of the bank agrees to this. Counsel says that the bank wants this long drawn litigation to end soon and thereforee is agreeable to the order. What can be fairer than this
(35) Counsel for the bank and the company are agreed that the court auctioneer be ordered to pirt the property to sale by public auction after giving publicity of the sale in two newspapers-one in English and one in Hindi. The bank will be at liberty to make a minimum bid of Rs. 5,00,000. In case the bank's bid is accepted the bank will deposit the sale price in Court.
(36) One final word. That is about delay. The division bench thought that there has been considerable delay in this case. 'In view of the delay which has already been caused we are sure the proceedings will be expedited'. This is the hope they expressed. After D. K. Kapur, J. and Chawla, J. had declined to hear the case it was sent to me on July 23, 1976. I immediately heard it. Now that I have ordered that the property be sold by public auction there will be, one can only hope, no further delay.
(37) If any further directions are necessary in connection with the sale the same can be sought by the parties. In the circumstances of the case I, however, leave the parties to bear their own costs.