SUKHDEV SINGH & ORS.

GRAM SABHA BARI KHAD & ORS.

January 28, 1977

[P. K. GOSWAMI AND p, N. SHJNGl-TAL, JJ.]

Punjab Village Common Lands (Regulation) Act 1961, S. 2(g) proviso (iv), application to land under possession of owners.

The appellants filed a suit for a declaration that the suit land inherited by them was not "shamlat deh" within the meaning of section 2(g) of the Punjab

Village Common Land (Regulation) Act, 1961, because it was excluded by virtue of proviso (iv.) to the clause.

They contended that the revem1e records describing the land as "shamlat deb" also stated it to be "in possession of the

owners", showing that it was not used as "shamlat deh'', and furthermore, that it had been partly purchased and partly received as gift by their ancestor before 26th January, 1950, and thereby came within the scope of s. 2(g) proviso (iv) of the Act. The appellants failed before the Trial Court, Court of first appeal, and the High Court in second appeal.

Dismissing the appeal by special leave, the Court,

HELD : ( 1) The fact that in 1914-15 it was recorded in the 'jamabandi' as "shamlat deh", shows that that particular character of the land was recognised even so far back, and it could not detract from that nature of the land merely because it was further stated in tbe 'jamabandi' that it was in the possession of the owners "as per respective shares in khewat".

[863 F-G]

(2) Proviso (iv) requires that in order to be excluded from the category of "shamlat deb", the land should have been acquired by purchase or in exchange for proprietary land from a co-sharer in the "shamlat deb", which is not so in the case of the appellants. [863 G]

CIVIL .APPELLATE JURISDICTION : Civil Appeal No. 527 of 1975.

Appeal by Special Leave from the Judgment and Order dated the 6-9-74 of the Punjab and Haryana High Court in R.S.A. No. 933 of

1970.

K. L. Gosain, N. N. Goswamy and Arvind Minocha for the Appellant. "

Gokal Chand Mittal, J. D. Jain, Arun Jain and (Miss) K. Migkmi for Respondent.

The Judgment of the Court was delivered by

SHINGHAL, J.-The plaintiffs who have been unsuccessful in the trial court, the court first appeal, and the High Court in second appeal, have filed the present appeal by special leave.

They raised their suit for a declaration that the suit land continued to be in their ownership in spite of the provisions of the Punjab Village Common Lands (Regulation) Act, 1961, hereinafter referred to as the Act.

They pleaded that the land had been purchased by their ancestor Udham Singh, who founded the village, from Raja Sansar Chand of Dholwaha, some time before 1884, and that some other land was

' "

.--{

SUKHDEV SINGH v. GRAM SABHA (Shinghal, J.) 86°3

gifted to him by one Smt. Dhani.

They claimed that what they had thus acquired was not "shamlat deh" within the meaning of clause (g) of section 2 o'f the Act because it was excluded by virtue of subclause (iv) of the proviso to the clause.

That contention has been negatived all through, and the short question for decision is whether :my interference is called for with that view .

It ha, s not been disputed before us that the land in questiolll was described in the revenue records as "shamlat deh'', . and excluded "abadi deh." That has in fact been amply proved by the 'jamabandi' of the year 1914-15 which has been produced by the 'plaintiffs themselves and its genuineness has not been controverted before us.

As such, by virtue of the definition of "shamlat deh" in clause

(g) of section 2, the suit land fall within the definition of "shamlat deh".

The question remains whether it was excluded from that definition by virtue of sub-clause (iv) of the proviso to clause (g) which reads as follows.-

"(iv) having been acquired before the 26th January, 1950, by a person by purchase or in exchange for proprietary land from a co-sharer in the shamilat deh is so recorded in the jamabandi or is supported by a valid deed;"

It has been argued by counsel for the appellants that as the suit land was recorded in the aforesaid Jamabandi as "village shamilat'', in possession of the owners, it should be held that the land was not used as "shamlat deh." Counsel has argued further that as the land was purchased by the plaintiffs' ancestor Udham Singh who had founded the vil1age, from Raja Sansar Chand, and a part of it was .received by way of gift from Smt.

Dhani, before January 26, 1950, and it was so recorded. in the 'jamabandi', the suit land was excluded from the definition of "shamlat deb" by virtue of the aforesaid subclause (iv') of the proviso.

The argument is however untenable because: of two reasons.

Firstly, the entry in the 'jamabandi' of 1914-15 which recorded that the land was in possession of: the owners, was quite innocuous, because it was made for the reason that it was in , nobody'else's possession.· The fact that even then it was recorded in the 'jamabandi' as "sbamlat deh" shows that that particul11r character of the land was recognised even as far back as 1914-15, and it could not detract from that nature of the land merely because it was further stated in the 'Jamabandi' that it. was in the possession of the owners "as per respective shares in khewat".

Secondly, the aforesaid sub-clause (iv) requires that in order to be excluded from the category of "shamlat deh", the land should have been acquired by purchase or in exchange for proprietary land from a co-sharer in the "shamlat deh." It is not in controversy before us, and is not even the case of the appellants, that the suit land was acquired by purchase or in exchange for proprietary land from any co-sharer in the "shamlat deh." Then there is the further fact that the appellants have not been able to prove that the suit 'land was recorded

SUPREME COURT REPORTS [1977] 2 s.c.R.

in the 'Jamabandi' as having been so acquired; and they have not been able to produce any valid deed of purchase or exchange from any such co-sharer.

We are therefore unable to think that th~ view taken in the impugned Judgment of the High Court requires reconsideration.

The appeal fails and is dismissed with costs.

M.R.

Appeal dismissed.

SUKHDEV SINGH & ORS

GRAM SABHA BARI KHAD & ORS

January 28, 1977

P. K. GOSWAMI

S. 2(g)

section 2(g)

26th January, 1950

s. 2(g)

CIVIL .APPELLATE JURISDICTION

K. L. Gosain

N. N. Goswamy

Arvind Minocha

Gokal Chand Mittal

J. D. Jain

Arun Jain

K. Migkmi

SHINGHAL

Udham Singh

Raja Sansar Chand

Dholwaha

Dhani

section 2

section 2

January 26, 1950


• ....

MUNICIPAL BOARD MAUNATH BHANJAN v.

SWADESHI COTTON MILLS CO. LTD. & ORS.

January 28, .1977

(Y. V. CHANDRACHUD AND P. N. SHINGHAL, JJ.]

U.P. Municipalities Act, 1916, Ss. 131(3), 134(1) & (2), 135(2) and 300-Draft rules for levying octroi not changed after publication 11/s 131(3)- Whether their Re-publication necessary on mere reduction of tax rates-Re-publication only of reduced tax rates, whether violateS S. 300 and the General Clauses Act, S. 23-Resolution u/s 134(2), whether rgndered nugatory if passed before publication of rules-Notification u/s 135(2), whether requires specific reference to section.

In 1968-69 the respondent was constructing a textile factory within the area of the appellant Board, and obtained exemption from the levy of octroi on its incoming building material on the ground that it was a new concern. It then

tarted bringing more articles within its premises with the result that octroi was demanded from it.

The Board got permission from the State Government for realising the same. In a writ petition by the respondent to challenge the levy, the High Court struck down the. imposition of octroi on three grounds :

I. The provisions of Ss. 134 (I) and 300 of the Act and S. 23 of the General Clauses Act were violated owing to publication only of the tax rates and not the draft rules for the levy of octroi.

II. The resolution of the Board u/s 134(2) could not authorise imposition of tax as it was passed before the publication of rules.

III. No notification was pJJblished as rquired u/s 135 (2).

Allowing the appeal by special leave, the Court

the the

HELD : 1. The draft rules were once published as required by sub-s. (3) ) of s. 131, and as only the rates hadbeen reduced and the rules had not been modified, it was not necessary to re-publish them. [868 A-Fl

Municipal Board, Hapur v. Raglmvendra Kripal & Ors. [1966] I SCR 950 and Raza Buland Sugar Co. Ltd. v. Municipal Board, Rampur, [1965]

1 SCR 970, referred to. ·

2. The Resolution dated June 20, 1950, could authorise the imposition of the tax from July 15, 1950, although it was passed before the publication of the rules. The resolution was not rendered nugatory and it was not necessary for the Board to pass another one.

[868 0-H]

3. It is the nature of the not, ification which is decisive of the section under 'which it has been issued and it would not matter if it did not make a specific reference to sub-section (2) of section 135 and made a reference to Section 300 instead.

[869 BJ

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 527 of 1976.

Appeal by Special Leave from the Judgment and Order dated the 26-3-1976 of the Allahabad High Court in Civil Misc. Writ No. 6277 cf 1974.

A L. N. Sinha, Sol. General, S. C. Agarwala and V. !. Francis for

the Appellant.

Yogeshwar Prasad and (Miss) Rani Arora for Respondent No. 1.

0. P. Rana for Respondent No. 2.

The Judgment of the Court was delivered by

SHINGHAL, J.

This appeal by special leave is directed against the judgment of the Allahabad High Court dated March 26, 1976. It relates to the validity of the imposition of octroi with effect from July 15, 1950, on certain goods brought within the Maunath Bhanjan Municipality, hereinafter referred to as the Board.

The challenge to the imposition was made by the Swadeshi Cotton Mills Company Ltd., hereinafter referred to as the Company.

The Company started constructing a textile factory, a part of which, at any rate, fell within the area of the Board.

It applied for and obtained exemption from the levy of octroi on its building material on the ground that it was a new concern.

It howeVler started bringing more articles within its premises, and the Octroi Superintendent made a demand for a payment octroi on June 25, 1969.

The Com-· parry tried to avoid the levy on the basis of the order of exemption, but the Executive Officer of the Board repeated the demand on May 30, 1970 and June 16, 1970.

The Board also wrote to the State Government for permission to realise octroi from the Company. The Government gave the permission to realise the tax.

The Company thereupon challenged the levy of the octroi in the High Court by a writ petition.

The High Court took the view that the initial imposition of the octroi was illegal, allowed the writ petition, and issued a mandamus directing the Board not .to realise the tax.

The Board feels aggrieved and has come up in appeal to this Court.

It appears that the Company took four grounds for challenging the levy of octroi, but the High Court examined only the following ground, as it took the view that it was enough for the Company's F . success in the petition, and did not examine the other grounds,-

"that the procedure prescribed for the imposition of taxes by municipal boards under sections 131 to 135 of the U.P. Municipalities Act, 1916, was not followed by the Municipal Board."

Counsel for the parties have accordingly confined their arguments G to the finding of the High Court in favour of the Company on this ground. ·

As the ground on which the Company has succeeded is quite general and vague, we aked counsel for the parties to refer to the precise plea in that respect, in the writ petition.

They could however only invite our attention to ground No. 6 of the writ petition where H the Cc-mpany has merely stated that the imposition of octroi was void -and illegal "because mandatory provisions for imposition of octroi ~-· tax as provided in the U.P. Municipalities Act has not been followed." It is therefore obvious, and has not been disputed before us, that the

MUNICIPAL ~OARD v. SWADESHI COTTON (Shinghal, !.) 867

Company took a very vague ground to challenge the validity of the imposition of octroi, and left it to the High Court to embark on a roving and fishing inquiry, on the off chance of finding some violation of the so-called "mandatory provisions for the imposition of octroi." It has not been disputed be.fore us that the High Court m:1dertook such an inquiry\ and struck down the imposition on the followmg ground,-

( 1) The draft rules for the levy of the tax were not published, and only the rates of octroi were published, so that there was violation of the provisions of section 23 of the General Clauses Act and sections 134 ( 1) and 300 of the Act.

(2) The order of the District Magistrate, which was equivalent to the special resolution of the Board under sub-section (2) of section 134 was invalid as it was passed on .June 20, 1950, while the rules were finalised and published on July 15, 1950. ·

(3) There was no "foundation or basis" of the notification under section 135 (2) and no such notification was published.

 Counsel for the Company however strenuously argued that there was no compliance with the provisions of sections 131 to 133 also, and made a reference to the decisions in, Municipal Board, Hapur v.

Raglmvendra Kripal and others(') and Raza Buland Sugar Co. Ltd. v.

Municipal Board, Rampur('), for the purpose of showing that parts of sections 131 to 134 were mandatory, and had to be followed. We find that the High Court has categorically stated that the Company did not assert that sub-sections (2) and (3) of section 131 had not been complied with, and that there was "no dispute regarding compliance with the provisions of section 131."

The High Court has also stated that the Company "has not asserted! that any of the provisions of section 132 has not been followed." It J1as further stated that there was "no complaint of non-compliance with the provisions of section 133 also." There was thus no challenge to the validity of the imposition of octroi on the ground that there was no compliance with the provisions of sections 131, 132 and 133 and we are not called upon to examine the argument that there was noJJ-compliance with the provisions of those sections.

There was also no dispute in the High Court th•at "the Municipal Board was competent to impose octroi tax." We shall accordingly examine the three grounds, on which the High Court has held the imposi•tion of odroi as invalid, in this background.

Ground No. 1.

The. High Court has held that there was no previous publication of the draft rules for the levy of octroi and

that only the rates of octroi were published.

So that there was breach of the provisions of sections 134 ( 1) and 300 of the United H

(1) [l966j 1 S.C.R. 950.

(2) [1965] 1 S.C.R. 970.

Provinces Municipalities Act, 1916, hereinafter referred to as the Act and seetion 23 of the General Clauses Act.

It will be recalled that

he H~&h Court has. found that the Company had not challenged the imposition of octro1 on the ground that there was non-compliance with the provisions of sections 131 to 133. It cannot therefore be disputed that the draft rules were puolished as required by sub-section ( 3) of section 131.

Moreover we find from the affidavit which has been filed on behalf of the Board that its Officer incharge wrote to the prescribed Authority on January 9, 1950, that the draft rules had been published in the "Sansar" on November 1, 1949, and may be sanctioned.

A copy of that letter has been placed on the record. It may also be mentioned that the Officer Incharge wrote to the Commissioner intimating that only two objections had been received, which were for reduction of the tax, and that after considering them the rate of the tax had been reduced from Rs. 1/8/- to Re. 1/- per maund, and the necessary amendment had been made in the rate chart. An objection was a'lso received from the Shoe Makers' Association, and the Commissioner directed that if the Board wanted to make any modification, it may again publish the modified proposals.

This was done on February 14, 1950, but as only the rates had been reduced, and the rules had not been modified, it wasc not necessary to republish the draft rules.

The Prescribed Authority accordingly sanctioned the same on April 1, 1950, under section 133.

The rules were forwarded to the Prescribed Authority on April 26, 1950, and were published in the State Gazette dated July 7, 1950.

It was stated in the notification that the rules were published under section 300 of the Act, which required their previous publication, but there can be no doubt that it was a notification under sub-section (2) of section 135 as it was issued after receipt of the Board's special resolution in pursuance of the sanction of the Prescribed Authority, and it was directed that the rules shall take effect from July 15, 1950.

It is therefore futile to contend that the rules were not made in accordance with the provisions of sections 134(1) and 300 of the Act and section 23 of the General Clauses Act which requires certain conditions to be observed in regard to the making of rules after previous publication.

Ground No. 2.

It is not in dispute that the, special resolution for the imposition of the tax was sent by the Officer Incharge of the Municipal Board on June 20, 1950, stating that July 15, 1950 had been fixed for the levy of the tax.

It is true that the rules were published under the notification dated July 7, 1950, but that would not necessarily lead to the conclusion that the resolution dated June 20,

1950 was rendered nugatory, or that it was necessary for the Board to pss another resolution.

The notificaion shos tha~ the. authority concerned not only published the resolut10n by its notification dated July 7, 1950, but also stated that they shall take. effect from July 15 1950 which was the date fixed by the resolut10n dated June 20,

l 9SO, fo; the imposition of the tax.

The:e was therefore no justificati'on for taking the view that the resolution dated June 20, 1950 could not authorise the imposition of the tax from July 15, 1950,

merely because it was passed before the publication ?f the rules. At any rate any technical defect in the date of the resolut10n could not have

--- -.

.,,.-- ...

' '

MUNICIPAL BOARD v. SWADESHI COTTON (Shinghal, J.) 8 69

the effect of making the imposition void in the facts and circumstances of this case.

Ground No. 3.

As has been shown, the notification dated July 7, 1950, which was published under section 300 of the Act, was, in fact and substance, issued under the authority of sub-section (2) of

section 133, and it would not matter if it did not make a specific refe- B rence to that sub-section and made a reference to section 300 instead.

The High Court therefore erred in thinking that there was no notification under-sub-section (2) of section 135 at all.

It is the nature of the notification which is decisive of the section under which it has teen issued, and we have no doubt that the impugned notification was really issued under sub-section (2) of section 135.

We have thus no doubt that the notification had really been issued in compliance with the requirement of sub-section (2) of section 135 of the Act.

That would attract the application of sub-section ( 3) of that section which provides as follows,-

"135(3) A notification of the imposition of a tax under subsection (2) shall be conclusive proof that the tax has been imposed in accordance with the provisions of this Act."

So when a probative effect had been given by law making the notification of the imposition of the tax as "conclusivle proof" that the tax had been imposed "in accordance with the provisions of the Act",

no evidence could be allowed to combat that fact, and we have no E hesitation in holding that the impos;'i:ion was according to the law.

It is not disputed that. Maunath Bhanjan is an industrial town, and its Board was collecting octroi since July 15, 1950.

The Company started the construction of its factory in 1968-69, and, as has been stated, it applied for and obtained exemption from the levy of octroi on its building material on the ground that it was a new concern. The F Board granted the exemption on July 21, 1967, for a period of 10 years, and that fact was acknowledged in the Company's fotter dated August 18, 1967.

The Company prayed for the continuance of the exemption even after that time limit.

The State Government however granted the exemption for five years.

The Company started "importing" certain other articles, and the State Government ultimately gave permission to the Board on April 2, 1973 to realise octroi from the G Company with effect from May, 1974.

The Company once again applied for further exemption on August 14, 1973, but without success.

It is thus clear that, far from having any doubts about the validity of the imposition and levy of octroi, the Company accepted the validity thereof and prayed 'for exemption.

It availed of that exemption, for some years, and applied for its extension until as late as August 14, l 973.

It was only when further exemption was refused, that the H Company thought of filing the writ petition.

As has been shown, the Company did not, even then, venture to point out any reason why the imposition could be said to be invalid, and merely stated that the

"procedure" prescrib_ed under sections 131-135 had not been followed.

That was far too vague a plea to justify investigation and interference in the exercise of the extraordinary jurisdiction of the High Court under artic]e 226 of the Constitution.

The appeal is allowed, the impugned judgment of the High- Court dated March 26, 1976, is set aside, and the writ petition is dismissed with costs.

M.R.

Appeal al/owed.

MUNICIPAL BOARD MAUNATH BHANJAN

SWADESHI COTTON MILLS CO. LTD. & ORS

January 28, .1977

Y. V. CHANDRACHUD

Municipalities Act, 1916

Ss. 131(3), 134(1)

s 131(3)

S. 300

General Clauses Act

S. 23

s 134(2)

s 135(2)

Ss. 134

S. 23

General Clauses Act

s 134(2)

s 135

s. 131

[1965]

1 SCR 970

June 20, 1950

section 135

Section 300

L. N. Sinha

S. C. Agarwala

V. !. Francis

Yogeshwar Prasad

Rani Arora

P. Rana

SHINGHAL

July 15, 1950

Maunath Bhanjan Municipality

Swadeshi Cotton Mills Company Ltd.

June 25, 1969

May 30, 1970

June 16, 1970

sections 131 to 135

Municipalities Act, 1916

section 23

General Clauses Act

sections 134

section 134

.June 20, 1950

section 135

sections 131 to 133

sections 131 to 134

section 131

section 131

section 132

section 133

sections 131, 132 and 133

sections 134

[1965] 1 S.C.R. 970

Provinces Municipalities Act, 1916

General Clauses Act

sections 131 to 133

section 131

January 9, 1950

November 1, 1949

Shoe Makers' Association

February 14, 1950

April 1, 1950

section 133

April 26, 1950

July 7, 1950

section 300

section 135

sections 134(1) and 300

section 23

General Clauses Act

June 20,

1950

section 300

section 133

section 300

section 135

section 135

section 135

Maunath Bhanjan

July 21, 1967

August 18, 1967

April 2, 1973

August 14, 1973

August 14, l 973

sections 131

March 26, 1976


CHHAGAN LAL v.

MUNICIPAL CORPORATION, INDORE

January 28, 1977

[A. N. RAY, C.J., M. H. BEG AND P. s. KAILASAM: JJ.]

M.P. Municipal Corporation Act, 1956-House Tax levied under the .Madhya Bliarat Municipalities Act, 1954-0n appeal corporation directed to decide the assessment afresh-Whether tax is payable from tile date of original assessment or after remand .

. Under the Madhya Bharat Municipalities Act, 1954, the Municipal Corporation determined the house tax payable by the appellant in respect of his bouse

with effect .from April 1, 1954.

On appeal by the appellant regarding assess- C ment, the Additional District Judge remanded the case to the Corporation for a fresh decision after due enquiry. Ultimately, by a notice dated October 12, 1965 issued under s. 146 of the Madhya Pradesh Municipal Corporation Act, 1956 (as amended in 1961) the Corporation revised the amount of (ax payable but maintained the date of liability for payment of tax as April 1, 1954.

On appeal by the appellant, the additional District Judge held that the tax was payable with effect from April 1, 1965 and not April 1, 1954 for the reason that the tax was finally fixed after the notice dated October 12, 1965. The Revision Petition of the Corporation was allowed by the High Court holding that tax was D payable from April 1, 1954 because the proceedings were started even before the 1956-Act came into force.

In appeal to this Court the appellant contended that (1) as the fresh notice was issued under s. 146 of the 1956-Act on October 12, 1965 after remand of the case by the District Judge, house tax could be imposed only with effect from April l, 1965 and not retrospectively and (2) the order of the District Judge being final under s. 149(1) of the 1956-Act the High Court had no juris- E diction to interfere with that order and in any event the High Court exceeded its power under s. 115, C.P.C.

Dismissing the appeal.

HELD : The proceeding relating to the house tax was a continuous proceeding relating to the tax payable from April l, 19 54 and the notice issued by the Corporation after remand by the District Judge did not amount to notice of fresh assessment or re-assessment. [87 4 E-F] F

1. There is no force in the contention that under the 1956-Act the municipality had no power to pursue the proceedings regarding the levy of tax for an earlier period. The notice issued by the Corporation to the appellant made it clear that the Commissioner was proceeding to fix the value in pursuance of the remand.

The appellant's plea that the Commissioner was not authorised to determine the value and impose the tax for any period before the date of issue of the notice ignores the fact that the valuation and determination of tax from G 1954 was pending and the proceedings related to that period.

Section 3(3) of the 1956-Act provides that all rates, taxes and sums of money due to the Municipalities when this Act was made applicable shall be deemed to be dne to the Corporation and sub-s. ( 4) states that all suits and other legal proceedings institued by or against a Municipality may be conuinued by or against the Corporation. The proceedings in, the instant case were originally taken under the Madhya Bharat Municipalities Act, 1954 and the proceedings regarding the levy of the house tax were not concluded when under the new Act the Corporation became entitled to pursue the proceedings. [874 F-C, 875 A-DJ H

2. (a) Under s. 115, C.P.C. the High Court has power to revise the order passed by Courts subordinate to it.

The District Court being subordinate to

A the High Court, is liable to the revisional jurisdiction of the High Court. Moreover, the question of want of jurisdiction of the High Court was not raised before that Court and cannot be allowed to be raised in this Court for the first

time. [87 5 F-GJ ·

(b) The principles governing interference by the High Court under s. 115, C.P.C. have been laid clown by this Court in a catena of decisions, the last of which is The Municipal Corporation of Delhi v. S11resh Chandra Jaipuria & Anr. (A.LR. 1976 S.C. 2621). [875 H, 876 A-BJ

Ba/derdas Shiv/al & Anr. v. Fi/111ista11 Distributors (India) (P) Ltd. & Ors. [1970] 1 S.C.R. 435, M/s. D.L.F. Housing and Constmr:tion Co. (P) Ltd. v.

Samp Singh and Ors. A.1.R. 1971 S.C. 2324, The Managing Director (MIG) Hi11dwtan Aeronautics Ltd. Balanagar, Hyderabad and Anr. v. Ajit Prasad

Tanvay, Manager (Purchase and Stores) Hindustan Aeronautib Ltd. Balanagar, Hyderqbad, A.LR. 1973 S.C. 76 and The M1111icipa/ Corporation of Delhi v.

Suresh Chandra Jaip11ria and Anr. A.LR. 1976 S.C. 2621 referred to.

Crv1L APPELLATE JURISDICTION : Civil Appeal No. 1888/68.

Appeal by Special Leave from the Judgment and Order dated 10-1-1968 of the Madhya Pradesh High Court (Indore Bench) in Civil Revision No. 76/67.

D. V. Patel and S. K. Gambhir for the Appellant.

V. P. Raman, Addl. Sol. Genl., Y. S. Chitale and D. N. Mishra for the Respondent.

The Judgment of the Court was delivered by

~JLASAM, J. This appeal i•s by special leave against the judgment and order of the High Court of Madhya Pradesh, Bench at Indore revising the order\ of the Additional District Judge and holding that the appellant is liable to pay tax from April 1, 1954 and not from Aprl.l 1, 1965 only as held by the District Judge.

The appellant is the owner of a factory at No. 1, Shivaji Nagar, Indore.

On January 8, 1954 the rental of the factory was assessed at Rs. 564 per month and the house-tax payable at Rs. 475/14/- with effect from April 1, 19 51.

.The dispute is whether tax is payable from April 1, 1954. By an order dated March 20, 1956 the house-tax was determined at Rs. 891/1/- per annum by the Municipal Corporation with effect from April 1, 1954.

Against the said assessment the appellant preferred an appeal before the Municipal Appeal Committee, Indore.

The Appeal Committee allowed the appeal and remanded the case for deciding it on merits after giving a hearing to the appellant.

After remand, the Municipal Corporation again inquired into the matter and. determined the rental value at Rs. 940/- per month and reduced the tax to Rs. 793 /21per. year by an order dated 11th February, 1957, as payable from April 1, 1954.

The appellant objectedto the assessment and gave notice of objecti'.:m under section 147(1) of the Madhya Pradesh Municipal Corporation Act, 1956, bnt the objection was summarily rejected by the Muni<cipal Commis- • sioner.

The appellant preferred an appeal being Miscellaneous Appeal No. 41 of 1957 to the 1st Additional District Judge, Indore.

By an order dated March 10, 1960, the Additional District Judge

C}JHAGAN LAL v. MUNICIPAL CORP. (Kailasam, J.) 87 3

allowed the appeal and remanded the case for decision afresh after proper inquiry.

On remand, a notice dated February 11, 1963, was i'ssued to the appellant under section 144(1) of the Madhya Pradesh Municipal Corporation Act, 1956, as amended by Act 13 of 1961 calling upon him to furnish the requirsd information.

The Corporation also issued another notice to the appellant on May 7, 1964, informing the appellant that the Junior Overseer had submitted a report that considerable changes have been effected in the factory a11d calling upon him to submit a detailed plan.

The appellant replied asking for details.

Subsequently, the appellant received a notice dated October 12, 1965, under section 146 of the Madhya

Pradesh Municipal Corporation Act whereby he was informed that the annual valuation oLthe property was assessed at Rs. 10,870.:W and Rs. 764.18 was fixed as the annual property tax with effect from April l, 1954.

He was also informed that if he had a9y objection he could file his objections under sectl\m 147 (1) within 30 days from the receipt of the said notice. The appellant filed his objections on November 11, l 965.

The Commissioner rejected fhe objections by his order dated May 26, 1966, and confirmed the valuation of the property and tax imposed by it on October 12, 1965.

The appellant was informed by the Corporation by its letter dated June l, 1966, that the amount of Rs. 764.18 as tax has been fi£ed with effect from April l, 1954, on the basis of the valuation of the annual income of Rs. 10,870.20.

Aggrieved by the. order of the Commissioner the appellant filed Civil Miscellaneous Appeal No. 70 of 1966 before the 2nd Additional District Judge, Indore.

The learned Judge by his order dated December 21, 1966, partly allowed the appeal and held that the appellant would be liable to pay the property tax of Rs. 764.18 with effect from April 1, 1965, only, and not from April 1, 1954.

The respondent Municipality then filed a Revision Petition before the High Court and the High Court by its order dated January 10, 1968, in Civil Revision No. 76 of 1967 allowed the Revision Petition and held that levy of the house-tax at Rs. 764.18 would be payable from April, 1, 1954 itself.

Against the order of tJ1e High Court the appellant filed a petition under Article 136 of the Constitution and on the grant of a special leave by this Court on August 23, 1968, 'chis appealhas come up before us for final .hearing.

' ' The learned counsel for the appellant raised two contentions. He submitted that as a fresh notice was issued under section 144 , of the amended Act on October 12, 1965 no tax could 'be imposed wjth •· • retrospective effect and the order of the High Court directing payment of tax from April 1, 1954, is against law.

It was next contended

tliat the decision of the 2nd Additional District Judge is final and H tlie High Court had no jurisdiction to interfere with 'it.

In any event

1 .- it had exceeded its powers under section 11_5 of the Civil Procedure Code.

A From the facts set out it will be apparent that the order fixing the !<ix at Rs. 891/1/- per annum with effect from April 1, 1954 was made on March 20, 1956.

That order was challenged before yarious forums.

The Municipal Appeal Committee had first allowed an appeal preferred by the appellant and remanded . the case to the Municipal Corporation.

After remand the Municipal Corporation reduced the tax to Rs. 793/2/- by its order dated February 11, 1957.

B Bi.; t again the assessment was objected to under section I 4 7 ( l) of the Madhya Pradesh Municipal Corporation Act.

The Municipal Commissioner dismissed the objections and thereupon there was an appeal to the Additional District Judge who allowed the appeal and remanded the matter for fresh disposal on March 10, 1960.

After remand the Corporation reduced the tax further and fixed it at Rs. 764.18 with effect from April 1, 1954 by its order dated October C 12, 1965.

The appellant filed objections and the objections were rejected by the Commissioner by its order dated May 26, 1966.

Against the order fixing the tax at Rs. 764.18 the appellant filed an appeal to the 2nd Additional District Judge, Indore, who by his order dated December 21, 1966 held that the property tax has to be paid only from April l, 1965 and not from April 1; 1954.

That order was challenged by the Municipality before the High Court which D alJowed the Civil Revision and held that the house-tax at Rs. 764.18 is payable from April 1, 1954.

It will be thus seen that the proceeding related to the tax payable from April 1, '1954.

The point that is taken by the learned counsel is that after the remand by the learned District Judge by his order dated March 10, 1960, the proceedings started by the Municipality by its notice, dated October 12, 1965 were under section 146 of the Madhya Pradesh Municipal Corporation Act E and as the new Act was not retrospective in its effect the tax is payable only from April 1, 1965.

This plea cannot be accepted as from the narration of the facts it can be seen that it was a continuous proceeding relating to the tax payable from April 1, 1954, and there is no substance in the plea that the notice amounted to notice of fresh assessment or re-assessment.

Equally untenable is his plea that the notice given by the Municipality on Ocfober 12, 1965 cannot have the F effect of levying tax for any period earlier than April, 1965. The notice issued by the Municipal Corporation bearing No. 18000 dated February 11, 1963, runs as follows:- -

"Under section 144(1) of the Madhya Pradesh Municipal Corporation Act, you are hereby informed the necessary particulars in the proforma given below, together with the detailed plan of the building of the abovementioned factory i:nay please be furnished within 7 days from the receipt of this letter; for the puqrose of assessment.

As the case has been remanded by the court, it is necessary to make assessment again."

The notice itself specifically states that the assessment was to be made again in pursuance of the order of remand. The notice No. 10195 dated October 12, 1965 is under section 146 of the Municipal Act and it stated that on remand of the matter from the District Court

......

...

CHHAGAN LAL v. MUNICIPAL CORP. (Kailasam, !.) 8 7 5

regarding the assessment of the property No. 1, Shivaji Nagar, the annual tax has been assessed at Rs. 764.18 and called upon the appellant to file any objections if he has within 30 days from th~ r.eceipt of the notice under section 147(1) of the Act.

The notice itself makes it clear that the Commissioner was proceeding to fix the value in pursuance of the remand and called upon him to. file his objections under section 147.

The plea: of the learned counsel for the appellant is that the Commissioner is not authorised to determine the value and impose a tax for any period befo1'e the date of issue of the notice.

This contention ignores the fact that the V1Jcluation and determination of the tax from the yellr 1954 was pending and the proceedings related to that period.

Seetion 3 of the M. P. Munic.ipal Corporation Act, 1956, Act 23 of 1956, amongst other things provides under sub-section (3) that "All rates, taxes and sums of money due to the Municipalities of such city when this Act is made applicable shall be deemed to be due to the Corporation," and under subsection ( 4) of section 3 "All suits or other Legal proceedings, civil or criminal, instituted by or against the Municipality of such city may be continued by or against the Corporation." The proceedings were originally taken under the Madhya Bharat Municipalities Act, 1954and the proceedings regarding the levy of the house-tax were not concluded when under the new Act the Corporation became entitled to pursue the proceedings.

We do not see any basis for the contention that under the new Act the Municipality had no power to pursue the proceedings regarding the levy of the tax for an earlier period.

We therefore reject the first contention as being without any substance.

The secopd contention is based on section 149 tlf the Madhya.., Pradesh Municipal Corporation Act, 1956.

It provides that any E appeal shall lie from the decision of the Municipal Commissicmer to the Di~):rict Court, when any dispute arises as to the liability of any land or building to assessment.

Sub-section ( 1) of section 149 provides that the decision of the District Court shall be final.

It was submitted that the decision of the District Court was therefore final and that the High Court was in error in entertaining a Revision Petition.

This plea cannot be accepted for, under section 1I5 of the Civil Procedure Code the High Court has got a power to revise the order passed by courts subordinate tu.t.

It 'cannot be disputed that the District Coutt is a subordinate court and is liable to the revisional jurisdiction of the, High Court.

That leaves us with the last contention of the appellant that the High Court acted beyond its power as a court of revision.

This point will have to be summarily dismissed as the question of want of jurisdiction of the High Court was not raised before the High Court and therefore cannot be allowed to be raised in this Court for the first time.

The learned> counsel for the appellant pleaded that the question involves total lack of powers of the High Court and this Court should hold that the order of the High Court is without jurisdiction.

This Court has laid down the principles governing interference under section 115 of the Civil Procedure Code is Baldevda:I Shiv/al & Anr. v. Filmistan Distributors (India) (P) Ltd. & Ors., (') M/s. D.L.F. Housing and Construction Co. (P) Ltd. v.

(1) [1970J l S.C.R. 435.

8-206SCI/77

SUPREME COT:/RT REPORTS [1977] 2 s.c.R.

Sarup singh and Ors., (1) and The ManagJng Director (MIG) Hi.ndustan Aeronautics Ltd. Balanagar Hyderabad and Anr. v. Ajit Prasad Tarway, Manager (Purchase and Stores) Hindustan Aeronautics Ltd.

Balangar Hyderabad.(') These cases have been referred to in the recent decision of this Court in The Municipal Corporation of Delhi v.

Suresh Chandra JO!ipuria and Anr .. () 9) and the attention of the learned Judges of the High Court was drawn to the law declared by this Court.

We consider it unnecessary to discuss the law on the subject over again as this appeal is liable to be dismissed on the ground that the point was not taken before the High Court and the discretion of this Court to interfere or not is beyond question.

In the, result we find that there is no substance in this appeal and dismiss the same with costs.

P.B.R.

(!) A.LR. 1971 S.C. 2324.

(2} A.I.R. 1973 S.C. 76, .(3) A.I.R. t9V6 S.C. 262l.

Appeal tNimissed.

...

. ..

. • ' ....

CHHAGAN LAL

MUNICIPAL CORPORATION, INDORE

January 28, 1977

A. N. RAY, C.J.

M. H. BEG

P. s. KAILASAM

Municipal Corporation Act, 1956

Madhya Bliarat Municipalities Act, 1954

Madhya Bharat Municipalities Act, 1954

October 12, 1965

s. 146

s. 146

s. 149(1)

s. 115

C.P.C

Section 3(3)

Madhya Bharat Municipalities Act, 1954

s. 115

C.P.C

s. 115

C.P.C

[1970] 1 S.C.R. 435

D. V. Patel

S. K. Gambhir

V. P. Raman

Y. S. Chitale

D. N. Mishra

~JLASAM

Indore

January 8, 1954

1, 19 51

March 20, 1956

Municipal Appeal Committee, Indore

11th February, 1957

section 147(1)

1st Additional District Judge, Indore

March 10, 1960

section 144(1)

May 7, 1964

section 146

November 11, l 965

May 26, 1966

June l, 1966

2nd Additional District Judge, Indore

December 21, 1966

Article 136

August 23, 1968

section 144

April 1, 1954

section 11

February 11, 1957

October C 12, 1965

April 1, '1954

section 146

April 1, 1965

Ocfober 12, 1965

February 11, 1963

section 144(1)

section 146

section 147(1)

section 147

Corporation Act, 1956

section 3

section 149

Pradesh Municipal Corporation Act, 1956

section 149

section 1I

section 115

Sarup singh


GOVIND PRASAD CHATURVEDI A

\'.

BARI DUTT SHASTRI AND ANOTHER

January 28, 1977

[A. N. RAY, c. J., M. H. BEG AND P. s. KAILASAM, JJ.] B

. Contract Act-contract relating to sale of immovable property -What is the normal presumption regarding stipulation of time-Whether presumption is displacable-Whether the question of time being the essence ef a contract can be raised befor,, the HiJ?h Court for the first time in appeal.

The appellants entered into an agreement with the respondents on March 24, 1964, for purchasing the suit property belonging to the latter. 'The terms C of the agreement provided that the appellant would get the sale deed executed upto May 24, 1964, and in case of his failure to do so, the earnest money paid by him to the respondent would stand forfeited. The sale deed was not executed within the prescribed time, and the appellant filed a suit against the respondents for breach of contract. The trial court granted him the relief of specific performance of the contract. The respondents succeeded in an appeal before the High Court on the ground that time was of the essence of the contract and therefore the relief of specific performance could not be granted, and also that the appellant had not been ready to perform his part of the contract: D

Allowing the appeal by certificate, the Court,

HELD : (1) Fixation of the period within which the contraict has lo be performed does not make the stipulation as to time, the essence of the contract.

When a contract relates to sale of immovable property it will normally be presumed that the time is not the essence of the contract. The intention to treat time as the essence may be evidenced by circumstances which are suffi- E ciently strong to displace the normal presumption. [881 A-CJ

Gomathinarayana Pillai & Ors. v. Pa/aniswamy Nadar [1967] 1 SCR 227, 23\ applied.

( 2) In the absence of specific pleadings or issues raised before the trial court, the question whether the time is of the essence of the contract or not, cannot be raised before the High Court in al?peal. [882 B-C]

( 3) A careful consideration of the evidence and the correspondence between the parties shows that the appellant was always ready to perform his part of the contract and that the respondents were evading their responsibilities. .

[885 F-G]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 696 of 1971.

Appeal from the Judgment and Decree dated the 20-4-1970 of the Allahabad High Court in First Appeal No. 15 of 1966.

A. K. Sen, S. T. Desai and P. P. Juneja for the AppellaJJ.t.

S. V. Gupte and M. V. Goswami for Respondents.

The Judgment of the Court was delivered by

KAILASAM, J. This appeal is filed by the plainti.ff against the judiment1 of. the Allahabad High Court on a certificate dismissing the sillt for specific performance of a contract of sale elated 24th March, 1964.

The facts of the case are briefly as follows : -

The suit property was owned by one Shri Aditya Narain and the plaintiff/appellant became a tenant of the suit property ullder Aditya Narain in the year 1942. On 2nd January, 1961 the respQtldents, the two defendants in the suit purchased the suit property for Rs. 19,000 from Aditya Narain and the appellant became tenant of the respondents.

Soon after the, purchase of the property by the respondents they sought to evict the appellant by filing a petition under section 3 of the U.P. Rent and Evic_tion Act. The appellant resisted and the Rent Control and Eviction Officer rejected the petition holding that the respondents' requirement of the premises was not genuine.

On the mediation of Sri Chand Doneria the parties entered into the suit agreement on 24th March, 1964. In pursuance of the agreement the appellant handed over Rs. 4,000 as earnest money to the respondents. The terms of the agreement will be set out in due course but suffice it at this stage to state that it provided that the appellant should get the sale deed executed within two months i.e. upto 24th May, 1964 and in case the appellant did not get the sale registered within two months the earnest money of Rs. 4,000 shall stand forfeited. From the 5th May, 1964 letters and telegrams were exchanged between the parties but the sale deed was not executed on or before the 24th or on the 25th May as the parties had agreed. The appellant filed a suit, Civil Suit No. 122 of 1964, in the court of Civil Judge, Agra, on 2nd September, 1964 alleging that the appellant has always been ready and willing to perform his part of the contract and he did all that he was bound to do under the agreement but the respondents failed to execute the sale, deed as agreed and therefore committed breach of the contract. The plaintiff prayed for a decree of specific performance of the contract of sale <lated 24th March, 1964 against the respondents and for direction to the respondents to execute the sale deed of the property and get it registered and in default the sale deed may be executed by the court according to law. The respondents filed written statement denying the various allegations made in the plaint and pleaded that the appellant did not perform his part of the contract within the stipulated time and the contract thereafter did not subsist and therefore the suit was misconceived.

On these pleadings the trial court framed five issues of which it is relevant to note only two which are issues 1 and 3. They are as under : -

Issue No. 3. "Whether the contract did not subsist on the date the to perform his part of the contract as alleged in the plaint?"

Issue No. 3. "Whether the contract did not subsist on the date the suit was field ?

fhe trial court found that it was proved beyond a shadow of any doubt that the appellant was always ready and willing to perform his part of the contract and the respondents were not at all anxious o execute the sale deed in his favour and that the respondents were guilty f breach of contract. On issue No. 3 it found that even though the time for g<1tting the :;; ale deed executed expired after the 24th May, 1964 the

~· .

c • •

appellant would not be disentitled to the relief of specific performance A of the contract for sale on the ground of delay as the respondents themselves were respnsible for it. The respondents preferred an appeal to the Allahabad High Court and a Bench of the Court on the arguments set out two points for determination in the appeal.

They are : ( 1) whether the appellant or the respondents committed the breach of contract entered i1:1to between the parties on 24th March, 1964; and

(2) whether the time was of the essence of the contract. If not, its B effect .. 'J!1e High Court fond that the respondents were always ready and .willmg to perform their part of the contract in terms of the agreement dated 24th March, 1964 and it was the appellant who committed the breach of the contract by not getting the sale deed executed by 25th May, 1964 in terms of the agreement dated 24th March, 1964. The High Court on the issue as to whether time was of the essence of the contract held that in the circumstances of the case and in view of the c conduct of the parties of serving on each other notices, counter notices and telegrams they expressed their intention to treat time as of the essence of the contract and that once the time is held to be the essence of the contract the appellant's suit for specific performance must fail.

The High Court also held that even if time is not held .to be of the essence of the contract it was of the opinion that the appellant is not entitled to a decree for specific performance as he had failed to prove D that he was ready to perform his part of the contract.

The appellant applied for a certificate and the High Court by its order dated 22nd February, 1971 granted the certificate under clause

(a) of Article 133 (1) of the Constitution.

In this appeal before us the learned counsel for the appellant sub- E mitted that the High Court was in error in holding that the time was of the essence of the contract and that the High Court's finding that the appellant was not ready and willing to perform his part of the contract while the respondents were. always ready to, perform their part of the contract is opposed to oral and documentary evidence and the probabilities of the case.

The first question that arises for consideration is whether time is of tl1e essence of the contract. In order to determine this question it is necessary to set out the .suit agreement which is marked as Ex. 23 at page 137 of the papers. lt runs as follows :-

"Dear Pandit Govind Prasad Ji Chaturvedi,

Sir, G

A litigation has been going on between y~:m and us with respect to the Kothi of Bima Nagar, of which you ar~ a t€nant on behalf of us.

The said dispute has been decided today through the mediation of Sri Shri <"; hand Doneriya, on the terms and conditions given below which shall be fully binding on you as well as us.

1. That you are agreeable to purhase our Kothi of which you are a tenant and a transact10n between you and

F .

880 SUPREME t:OURT RCPORTS

(1977] 2 S.C.R.

us has been finally settled today; at Rs. 24,000 (rupees twenty-four thousand), with respect to the said Kathi.

2. That you are paying us, at present, a sum of Rs. 4000 in cash, as earnest money, the receipt wher()of has been acknowledged by us by affixing a revenue stamp at the foot of this letter, and that the remaining sum of R~. 20,000 shall be paid by you to us at the time of registration.

3. That the expenses relating registration and cost of stamps etc. shall be borne by you and. we shall be entitled to get a sum of Rs. 24,000 (rupees twenty-four thousand) net.

4. That you must get the sale deed executed within two months i.e. upto 24th May, 1964, and in case you do not get the sale-deed registered within two months then the earnest money amounting to rupees four thousand, paid by you shall stand forfeited without serving any notice; But in case we in some way evade the execution of (he saledee<l, then you will be entitled to compel us to execute the sale deed "legally and W!' shall be liable to pay the costs and damages incurred by . you. . 5. That we shall furnish you a guarariteeof good ti!le in respect of the property which is free and immune from all 'or(~ of disputes ..

6. That you shall be liable to pay the rent till the date you get the sale-deed registered and you shall clear off all amount due to us before registration.

7. That both the parties shall withdraw their respective cases or get the same dismissed and shall bear their own costs.

8. That neither party shall take any fresh legal steps during this period of two months by which any hindrance may be caused in execution. of our sale deed.

In confirmation of the agreement which has been made between you and me through this letter, you too have affixed your signature on this Jetter.

Yours,

Signature of Hari Dutt Shastri .24-3-1964 Signatuce of Bhavbhooti Sharm2

24-3-1964 x:_ x .. x " x x

The relevant clause is clause 4 which provides that the appellant must get the sale deed executed within two months i.e. upto 24th May, 1964, and in case the appellant did n_ot get the sale deed registered within

G. P. CHATURVEDI v. H. D. SHASTRI (Kaila.Yam,!.) 881

two months then the earnest money amounting to Rs. 4000 paid by A the appellant shall stand forfeited without serving any notice.

The clause further provides that in case the respondents in some way evade the execution of the sale. deed then the appellant will be entitled to compel them to execute t.pe ale deed legally and the respondents shall be liable to pay the costs and damages incurred by the appellant.

It is settled law that the fixation of the period ·.vithin which the contract has be peJformed does not make the stipulation as to time B the essence of the contract.

When a contract relates to sale of immovealle property it will normally be presumed that the time is not the e<isence of tho contract. (vide Gomathinayagam, Pillai & Ors. v.

Palaniswami Nadar) ('). It may also be mentioned that the language used in the agreement is not such as to indicate in unmistakable terms that the time is of the essence of the contract.

The i•ntention to treat time as the essence of the contract may be evidenced by circum- C stances which are sufficiently strong to displace the normal presumption that in a contract of sale of land stipulation as to time is not the essence of the contract. ., .,.,.,,_

Apart from the normal presumption that in the case of an agreement of sale of immovable property time is not the essence of the contract and the fact that the terms of the agreement do not unmistakably state that the time was understood to be the essence of the contract neither in the pleadi•ngs nor during the trial the respondents contended that time was of the essence of the contract.

In the plaint the allegation was that the appellant has always been ready and willing to perfOflll his part of the: contract and he did all that he was bound to do under the agreement while the respondents committed breach of the contract.

The respondents did not set up the plea that the time was oil the essence of the contract.

In paragraph 32 of the Written Statement all that was stated v.as that the appellant did not perform his part of the contract within the stipulated time and that the contract thereafter did not subsist and the suit is consequently misconceived.

The parties did not go to trial on the basis tht time was of the essence of the eontract for .no issue was frll:_med regarding tin.e being the essence of the contract.

Neither is there any discussion in the judgment of the trial court regarding this point.

The trial court after considering the evidence came to the conclusion that appellant was always ready and willing to perform his part of the contract while the respondents were not in the circums!n~ therefore th!? gh Court was in error setting as one of the pomts for determma t10n whether time was of the essence of the contract.

The High Court after referring to the agreement was of the view that the agreement was entered into between the parties during the cmrse of a litigation between the appellanJ and the respondents and Ill pursuance of the agreement the parties were directed. to withdraw their cases and were directed further not to take fresh legal steps during the period of two .months within which the sale deed was to be executed.

On taking

(1) (1967] l S.C. R. 227, 233. .,

into account the .circumstances of the case and the conduct of the parties of serving on each other notices, counter notices and telegrams the High Court inferred an intention on the part of the parties to treat the time as of essence of the contract.

We will refer to the terms of the contract and the correspondence between the parties in due course but at this stage it is sufficient to state that neither the terms of the agreement nor the correspondence would indicate that the parties treated time as of essence of the contract.

In fact, according to the agreement the sale deed ought to have been executed by the 24th May but it is the admitted case that both the parties consented to have the document registered on the 25th May.

On the question whether the time is of the essence of the contract or not we are satisfied that the High' Court was in error in allowing the respondents to raise this question in the absence of specific pleadings or issues raised before the trial court and when the case of time being the essence of the contract was not put forward by the respondents in the trial court.

Apart from the absence of pleadings we do not find any basis for the plea of the respondents that the time was of the essence of the contract.

The decision on this issue would be sufficient to allow this appeal and to grant the appellant the decree for specific performance which he has prayed for but as on the question whether the appellant was always ready and willing to perform his part of the contract the courts below have given contrary finding and the High Court has recorded a finding that the appellant was not ready and willing to perform his part of the contract while the respondents were always ready and willing with which finding we are unable to ; agree we will discuss the evidence at some length.

The background to the suit agreement dated 24th March, 1964 is that there was litigation between the parties.

The appellant was a tenant under the previous owner, Aditya Narain, from i 942.

The respondents purchased the property in 1961 and in 1963 filed a petition to evict the appell; lnt.

That petition was resisted and the Rent Control and Eviction Officer dismissed the petition of the respondents.

While the matters stood thus the compromise was entered into.

The appellant having been a tenant of the premises from 1942 would have J?een naturally anxious to contipue in possession while the respondents who had purchased the property in 1961 were anxious to get into possession.

As they wanted to settle their dispute the respondents agreed to s~ the property for which the appellant was willing and which they had purchased oil 2-1-1961 for Rs. 19,000 to the appellant for Rs. 24,000.

Of this Rs. 24,000 the tenant paid Rs: 4000 ini cash as earnest money.

This would indicate that the tenant was keen on purchasing the property in which he was living since 1942.

The agreement provided that the appell:l!lt must get the sale deed executed within two months after 24th March, 1964 and if the appellant failed to get the sale deed registered within two months the earnest money of Rs. 4000 shall stand forfeited.

Normally one would not expect the appellant to forfeit his earnest money.

As the peri<od stipulated was 24th May, 1964 the appellant started prepara-

._, ----~\

tions for getting the sale deed executed.

According to the appellant he wrote Ex. 24 on 5th, May, 1964 calling upon the respondents to come to Agra on the 18th May, 1964 for executing and making registration in pursuance of the contract and to complete the sale deed.

According to the appellant no reply was received to this letter and he sent a notice through his advocate, Ex. 35, on 13th May, 1964 in which he stated that he was ready to pay the balance of the consideration of Rs. 24,000 along with the entire arrears of rent and requested the respondents to execute the sale deed by 18th May and latest by 24th May, 1964.

The lawyer's notice also referred to the letter of the Silii May.

Another lawyer's notice was sent, Ex. 36, on 20th May, 1964 by registered post complainlng that the respondents had not replied to his letter dated 5th May, 1964 and to his lawyer's notice dated 13th May, 1964 and called upon them to get the

sale deed registered by 25th May, 1964 as 24th May is Sunday. Along with the lawyer's notice a draft sale deed was endorsed.

These three letters were followed by telegrams which were sent by the appellant to both the respondents on 20th May, 1964, Ex. 30.

On the 22nd May the appellant attended the office of the Sub-Registrar, Agra and presented an application to the Registrar to the effect that he was at the Registrar's office between the hours 3 and 4 p.m. on that day.

On 22nd May, 1964 the appellant received a reply from the respondents acknowledging the registered notices given on 13th and 20th May by the appellant's counsel.

According to tl1e reply by the advocate on behalf of the respondents the two letters of the 13th and 20th May were received by the respondents only on the 22nd May, 1964.

In this reply of 22nd May, 1 964 the advocate of the respondents denied the allegation in1 the notice dated 20th May, 1964 of the appellant that the draft sale deed has been put in the cover.

It also complained that the draft sale deed has not been sent.

The respondents stated that they were ready to execute the sale deed but the appellant was wanting postponment for reasons best known to him.

It may be noted that the two complaints that are made in the advocate's notice on behalf of the respondents do not bear scrutiny.

The notice complains that the 9raft sale deed has not been enclosed.

It l1as been prove<:f that in one of the hotices sent to the son and which was opened in the court the draft sale deed was found enclosed.

Further without the cooperation of the respondents iti is difficult to prepare a draft sale deed as the date of sale by Aditya Narain in favour of the respondents would not have been available to the appellant.

Jn fact Mr. Gupte the learned counsel for the respondents submitted that the letter stating that a copy of the draft sale deed v.:as enclosed cannot be true as the appellant could not have got particulars about the earlier document of title of the respondents.

The respondents' plea that the draft sale deed was not received, doe5 not show that they were willing or cooperating in the execution of the sale deed.

Wei are unable to give any weight to the contention of the learned counsel that their plea that they sept a draft sale deed cannot be true as they could not have been in possession of particulars about the title deed of the respondents.

In fact no question was asked of the appellant when he was in the box as to how they got information as to the sale deed by Aditya Narain in favour of the respondents.

The letter of the

.A 5th May the receipt of which was not denied by the reply of the ad'.'Oeate for the respondents and the lawyer's notices on behalf of the appellant, Ex. P-35 and P-36, dated 13th May and 22nd May, 1964 would show great anxiety on the part of the appellant to complete the sale deed.

There can be no doubt that they had basis for suspecting that the respondents were not willing to perform their part of the contract.

A considerable volume of evidence has been let in on behalf of the appellant as well as the respondents regarding as to what took place in the Sub-Registrar's office on 25th May, 1964.

It is sufficient to state that both the parties let in oral evidence :i.s well as acknmvledgment by the Sub-Registrar to prove their presence. Though both the rties would aS5ert their presence it is common ground that they did not meet each other. It is difficult for us to comprehend as to how if both the parties were present at the Sub-Registrar's office they did not meet each other. It is obvious therefore that the parties were keen on creating evidence in support of the ensuing litigation.

But on the facts the conclusion is irresistible that it was the appellant who was anxious to get through the sale deed, he having paid Rs. 4000 as the earnest money and living in the premises' for over 25 years.

It is, not necessary for us to refer to the subsequent letters and telegrams exchanged between the parties as that would not alter the position in any event.

On a consideration of the letters and telegrams that passed between the parties the trial court held that it was proved beyond a shadow of doubt that the appellant was always ready and willing to perfrom his part of the contract and that the respondents were not anxious to execute the sale deed.

The trial court accepted the evidence on behalf of the appellant that the appellant was possessed of sufficient funds and in fact he withdrew a sum of Rs. 20,500 from the Central Bank of India Ltd.

As the appellant had paid the respondents Rs. 4000 he had to pay them only Rs. 20,000 towards the balance of sale consideration. The arrears of Rs. 956 due towards rent and a sum of Rs. 2000 was to be spent on getting the sale deed executed.

Jn all a sum of Rs. 22,956 was required. He had withdrawn Rs. 20,500 from the Central Bank of India Ltd.

The trial court accepted the evidence adduced by the appellant.

The trial court also accepted the evidence that the appellant had Rs. 5,000 with him at home and about Rs. 30,000 in deposit with a firm.

This part of the testimony on behalf of the appellant was proved by the evidence of Kailash Nath, P.W.2, Munim of M/s. Chhitar Mal Ram Dayal and the trial court acceptedi the evidence and found that the appellant had suffi- . cient funds for getting the sale deed executed.

This conclusion which we consider is irresistible was not accepted H by the High Court.

The High Court while accepting the evidence that the appellant had a sum of Rs. 4,500 in deposit in tho bank upto 20th May, 1964 and subsequently on 21st May, 1964 he c!eposited a sum of Rs. 14,000 and again a sum of Rs. 2,500 on 22nd May,

• •

1964 and that thus the appellant had Rs 21,000 in bank on 22nd . A May, 1964 found the case of the appellant unworthy of credit.

The High Court further observed that after the appellant had raised his deposit in the bank to Rs. 21,000 hei did not deposit any further amount and therefore the amount fell short of the needed amount by Rs. 2,000.

Conscious of the weakness in his story, the appellant asserted in his statement that he had Rs. 7,000 or 8,000 with him at his house.

We are at a loss to follow the reasoning of the High B Court.

The appellant stated that he deposited the money which was with him in the house in the bank on advice for the purpose of proving that he had money with him.

The Court does not suspect that he did not have Rs. 20,500. The shortage at the most is of Rs 2,000' and it cannot be said that the evidence of the appellant that he had necessary money for expenses of registration is unacceptable.

Fur- C ther the appellan~. examined Kailash Nath, P.W.2,. of M/s. Chhitar Mal Ram Dayal who stated that a sum of Rs. 30,000 belonging to the appellant was lying in deposit with them.

We are unable to accept the conclusion of the High Court that the appellant did not have enough funds for getting the sale deed executed the High Court while not disbelieving the fact that various letters and telegrams were sent by the appellant ha~ remarked that the appellant did not take the [) course of personally going to the resp_ondents and asking for the sale deed.

In our view, the parties were suspecting each other and nothing would have been achieved by the appellant by going in person and requesting the respondents to execute the sale deed.

In fact the respondents set up a story that the appellant approached the respondents and stated that he was not able to perform his part of the contract within the stipulated time.

This evidence cannot be accepted taking E into account the relationship between the parties.

We have carefully considered the evidence and th~ correspondence between the parties and we have no hesitation in accepting the conclusion reached by the trial Judge that; the appellant was always ready and willing to perfrom. his part of the contract and that the respondents were evading their responsibility.

The finding on this issue by the High Court is not supported by evidence or on the probabilities of the case.

F " In .the result we allow the appeal on the ground that the respondents have failed to establish that the time is of the essence of the contract and that the appellant has succeeded in establishing that he was always ready and willing to perform his part of the contract and

the respondents evaded their responsibility.

The judgment of the High Court is set aside and that of the trial court is restored.

The G appeal is allowed with costs.

The appellant will deposit Rs. 20,000/- and the sale documents in the court of the Civil Judge, Agra within six weeks from today and the parties will take further direction in the matter from the Civil Judge, Agra.

M.R.

Appt'al allowed.

GOVIND PRASAD CHATURVEDI

BARI DUTT SHASTRI AND ANOTHER

January 28, 1977

A. N. RAY

M. H. BEG

P. s. KAILASAM, JJ.

May 24, 1964

[1967] 1 SCR 227

Allahabad High Court

A. K. Sen

S. T. Desai

P. P. Juneja

S. V. Gupte

M. V. Goswami

KAILASAM

Aditya Narain

2nd January, 1961

section 3

Chand Doneria

24th March, 1964

24th May, 1964

5th May, 1964

Civil Judge, Agra

2nd September, 1964

25th May, 1964

22nd February, 1971

Article 133

Pandit Govind Prasad Ji Chaturvedi

clause 4

13th May, 1964

20th May, 1964

Agra

22nd May, 1 964

Gupte

13th May and 22nd May, 1964

Central Bank of India Ltd.

Kailash Nath

Munim

Chhitar Mal Ram Dayal