Supreme Court of India

KUMAR DHIRENDRA MULLICK AND ORS.versusTIVOLI PARK APARTMENTS (P) LTD.

Citation: 2004 INSC 629
Decided: 1 November 2004
Disposal: Dismissed
Bench: ASHOK BHAN

Holding

The Supreme Court held that the increase in property value is not a ground for rescission, the decree is a preliminary decree and the court retains jurisdiction under Section 28, and the respondent was ready and willing to perform, so the trial court’s rescission was erroneous.

Summary

The trustees of a trust estate had leased premises to a lessee for 21 years, who later assigned the lease to TIVOLI PARK APARTMENTS (the respondent). An oral agreement was made to renew the lease for 70 years on increased rent and premium, but the trustees failed to execute the transfer deed. The respondent obtained a decree for specific performance, which the trial court later rescinded on the ground that the respondent had not paid the balance premium within a stipulated period, despite the decree lacking a default clause. On appeal, the Supreme Court held that an increase in property value is not a ground for rescission, the decree was a preliminary decree and the court retained jurisdiction under Section 28 of the Specific Relief Act, and the respondent was ready and willing to perform. Consequently, the trial court’s rescission was erroneous and the lease must be executed in favour of the respondent. The appeal was dismissed.

Issues considered

Whether an increase in the value of the immovable property constitutes a ground for rescission of a lease renewal agreement under Section 28 of the Specific Relief Act, 1963.
Whether the trial court could rescind the agreement and recall the decree when the decree did not contain a default clause and the respondent had not abandoned the contract.
Whether the decree for specific performance is a preliminary decree, thereby retaining the court's jurisdiction to order rescission under Section 28.
Whether the respondent was ready and willing to perform his obligations under the decree.
Whether the trustees had authority to enter into the oral lease renewal agreement.

Legislation cited

Code of Civil Procedure, 1908s. 151, s. Order IX Rule 13
Constitution of Indias. Article 142
Specific Relief Act, 1963s. 28(1)

Subjects

Specific performanceSection 28Lease renewalRescissionPreliminary decreeDefaultTrust estateOral agreementJurisdictionEquity

Judgment

A KUMAR DHIRENDRA MULLICK AND ORS.
v.
TIVOLI PARK APARTMENTS (P) LTD.

NOVEMBER 1, 2004

B [ASHOK BHAN AND S.H. KAPADIA, JJ.]

Specific Relief Act, 1963; Section 28:

Trust Estate-Transfer to lessee for a certain period and transfer by
C lessee to assignee for remaining period in terms oflease deed-Oral agreement
for renewal ofthe deed between Trustee and assignee on payment of increased
rent and premiu~-Part payment-Trustee failed to execute the transjer
deed, instead e_ntered into an agreement to transfer the property with another
party-Title Suit-Decreed by Trial Court on ground of default -Application
D for Specific Reliefjiled by Trustees on ground that the assignee not ready and
willing to pay.the balance consideration-Trial Court rescinded the agreement
and recalled the decree-Correctness of-Held: Increase in the value of·
immovable property- is no ground to rescind the lease agreement-Trustees
coulq not enter info an agreement with another party to lease out the· same .
property-In the absence of default clause in the order of the trial Court, the
E agreement cannot be rescinded·on account of non~payment of bala_nce ·
premium before the specific date__;_Trial _Court erred in directing· rescission
of the agreement since decree holder/assignee was ready and_ willing to ·
perform his part of obligation-Trustees also prevented him from filing
execution application in the guise of settlement-Hence, Trustees directed to
F execute the lease· in favour of the respondent/assignee-Directions issued-'-
Civil Procedure Code, 1908-0. IX R.13-Section 15 I-Constitution ofIndia,
1950; Article 142,

Appellants-Trustees transferred certain premises of a Trust Estate in
·favour of lessee for a period of21 years in terms ofa lease deed executed by
G them. Subsequently, the Lessee assigned the suit premises in favour of
respondent-assignee by executing an assignment deed for the remaining
period ~f the lease subject to the same terms and. conditions.as contained in
the lease deed. Trustees had entered into an oral-agree~ent with the assignee
before expiry of the lease to renew/extend the period of lease in his favour on

H 800
KUMAR DHIRENDRA MULLICK v. TIVOLI PARK APARTMENTS (P) LTD. 80}
payment of increased rent and premium. Assignee made part payment of A
premium and agreed to pay the balance at the time of execution of the transfer
· deed. Since Trustees failed to execute the dee~, assignee filed a title suit which
was decreed by the Trial Court. In the meantime, Suit was filed by the trustee
which was dismissed by the Court for non-prosecution. Trustees filed an
application under Section 28(1) of the Specific Relief Act r/w Section 151
CPC. Tria! Court rescinded the agreement and recalled the decree on the B
ground that the respondent had failed to pay the .balance amount within the
stipulated period, thus he was not ready and willing to perform his part of the
obligation under the decree. As such he was not entitled to renewal of the
lease. Appeal preferred by the aggrieved assignee was allowed by the High
Court by setting aside the order of the Trial Court. Hence the present appeal. C

It was cont~nded by the appellants that if the suit premises was allowed
to be leased out to the respondent on the agreed monthly rent and premium in
terms of the agreement, they would lose substantially as market value of the
property would fetch them higher premium and rent; that the agreement for
renewal of lease stood vitiated on account of collusion between the constituted D
attorney appointed by the Trustees and the respondent; and that the respondent
was not witting fo perform his part of the obligation under the decree.

Dismissing th.e appeal, the Court .·
HELD: 1.1. In ~he cir~umstances of the case, increase in the value of E
the immovable property, on account _of inflation, is no ground to rescind the
lease agreement. (808-A-G]

1.2. The Trustees had consented to the Assignment in favour of the
. respondent by the lessee. Pursuant to the said Assignment, the respondent/ F
assignee was put in possession of the suit property. The assignment was
followed by an oral agreement to renew the lease. In the circumstances, one
fails to appreciate the authority of the Trustees to enter into an agreeoient to
lease out the said property in favour of another party. When title suit came
for hearing, no evidence was led on behalf of the Trustees explaining the
circumstances under which the Trust entered into the said agreement. In the G
circumstances, it is not open to the appellants to go behind the said decree.
Since the. trial Court has rescinded the agreement basically on the ground of
alleged breaches thereof, it is not open to the appellants to submit that the
decree was collusive and not binding on the Trust estate. 1808-D-F)

H
802 SUPREME COURT REPORTS [2004] SUPP. 5 S.C.R.

A 2.1. Order of the Trial Court indicates that the respondent was directed
not to put the decree in execution for 90 days from the date of the decree. The
order did not specify the period within which the balance premium amount
was to be paid by the decree holder. There is no default clause in the said
order. It only directs the appellants to execute the lease on or before a certain
date. In the circumstances, there is no merit in the argument of the appellants
B that, impliedly, the balance premium had to be tendered on or before the fixed
date, failing which the agreement was liable to be rescinded. [811-C-D)

2.2. The decree in question is not a self operative final decree. It is a
preliminary decree. It merely directs the Trust to execute the lease on or
C before certain date. It does not prescribe any consequence of non-deposit of
premium. It does not prescribe any consequence of non-tender of rent on or
before the date. Since the decree holder has already paid the premium of Rs.30
lacs and Rs. 96 lacs as rent, it cannot be said that the decree holder intended
to abandon the contract. There is no positive refusal on the part of the
respondent to complete the lease. There is no explanation given by the Trust
D for not moving the application for rescission of the contract for nine years.
[814-H; 815-A-BJ ,r.
Hungerford Investment Trust Limited v. Haridas Mundhra and Ors.,
[1972) 3 SCC 684; K. Kalpana Saraswathi v. P.S.S. Somasundaram Chettiar,
AIR (1980) SC 512; Sardar Mohar Singh v. Mangilal, [1997) 9 SCC 217;
E V.S. Palanichamy Chettiar Firm v. C. Alagappan and Anr., AIR (1999) SC
918; Abdul Shaker Sahib v. Abdul Rahiman Sahib and Anr., AIR (1923)
Madras 284; M Sakuntala Devi v. V. Sakuntala and Ors., AIR (1978) A.P.
337; Vaiyapuri Reddy and Anr. v. Sivalinga Reddiar, (1970) 1 Madras L.J.
92 and Ouseph and Anr. v. Devassy, AIR (2001) Kerala 104, referred to.
F 3. The correspondence between the parties indicate that during this
period of nine years in the guise of negotiations, the decree holder was
prevented from filing execution application. The decree holder was repeatedly
assured of settlement and that lease would be executed in its favour. Attempt
was also made by the Trustees during the interregnum to lease the property
G to other lessee; that the decree holder was put in possession under the deed
of assignment; and that he was not put in possession under the agreement. In
the circumstances, the trial Court erred in directing rescission of the
agreement. [815-D-F)

4. It is observed that the decree holder has already deposited Rs. 96
H. lacs including premium of Rs. 2~ lacs and he undertakes to deposit the balance
KUMAR DHIRENDRA MULLICK v. TIVOLI PARK APARTMENTS (P) LTD. [KAPADIA, J.] 803

amount. He also undertook to deposit the balance amount of Rs. 19,20,000 A
and to pay Rs. 10,00,000 by way of compensation for loss, if any. In the
circumstances, the decree holder is directed to tender a sum of Rs. 29,20,000
within the stipulated time from the date of this order to the Trustees. On
receipt, the Trustees should execute the lease in favour of the respondent for
70 years commencing from 1.5.1981 to 30.4.2051. In case the Trustees refuse B
to accept the said amount, the respondent should deposit the amount of Rs.
29,20,000/- in the Trial Court. On such deposit, the Officer nominated by the
trial Court shall execute the lease in favour of the respondent in terms of the
agreement and as directed by the Trial Court vide its order in the title suit.
In case of default, on the part of the respondent, in tendering/depositing the
aforestated amount within the stipulated period, the agreement shall stand C
rescinded and the title suit shall stand dismissed. 18015-G; 816-A-C)

5. The Statement of Accounts as furnished by the appellant is for
recovery of occupation charges and interest. The items mentioned in the
Statement do not fall within the purview of the oral lease agreement. In the
circumstances, it is not possible for this Court to grant relief under Article D
142 of the Constitution, as prayed. (816-H; 817-AI

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 7234 of I 999.

From the Judgment and Order dated 10.6.1999 of the Calcutta High E
Court in F.M. A. No. 37 of 1997.

Bijan Kumar Ghosh, G.V.R. Choudhary and Brotindra Mullick for the
Appellant.

Sanjiv Sen, Sameer Parekh, Rajeev Mishra, for the M/s. P.H. Parekh for F
the Respondents.

The Judgment of the Court was delivered by

KAPADIA, J. This civil appeal, by grant of special leave, arises out of
judgment and order dated I 0.6.1999 of the High Court of Calcutta in FMA G
No.37 of 1997 allowing the appeal of the respondent herein and setting aside
the order of 2nd Assistant District Judge, Alipore, Calcutta, rescinding the
agreement dated 16.8.1980 under section 28 of the Specific Relief Act, 1963
(hereinafter referred to as "the 1963 Act").

H
804 SUPREME COURT REPORTS [2004) SUPP. 5 S.C.R.

A Briefly, the facts are as follows. Appellants herein are the Trustees of
the Trust Estate of Raja Rajendra Mullick Bahadur owning suit premises
bearing nos. 2258 and 225C, Lower Circular Road, Calcutta with eight cottages
and a main building, more particularly described in the schedule annexed to
the lease dated 25 .11.1960 executed by the Trustees in favour of Mohd. Ismail
B for 21 years commencing from 1.5.1960.

Some of the relevant terms and conditions of the said lease are as
follows:

"(i) The lessee, i.e. Mohammad Ismail, would pay monthly rent at the
C rate mentioned in the said lease;

(ii) The lessee would pay the entire occupiers' share of Corporation
rates and taxes;

(iii) The lessee would be entitled to sublet all or any portion of the
demised premises. The lessee would, however, be liable for regular
D
payment of rents and for due observance and performance of
the terms and conditions of the lease agreement;

(iv) Upon the expiration or sooner determination of the lease, the
lessee would be obliged to deliver quietly and peaceful
E possession of the property to the lessors;

(v) The lessee would not do or suffer to be done anything in or
upon the said property or any part thereof that may cause
nuisance or annoyance to the lessors or the other tenants of the
adjoining premises;
F
(vi) The lease would take effect retrospectively from 1st May, 1960
and would be for a period of 21 years i.e. up to 1st May, 1981.

(vii) The lease would come to an end in the event of the rents being
in arrear for two months after the due date or in case of breach
G of any of the covenants of the lease agreement."

Subsequent to the grant of the above lease, the said Mohd. Ismail
executed a deed of assignment dated 20.8.1970 and assigned the suit premises
fo the respondent-decree holder for the unexpired period and was subject to
the terms and conditions contained in the lease. In the premises, the respondent
H herein was entitled to remain in possession of the said premises up to 1.5.1981
KUMAR DHIRENDRA MULLICK v. TIVOLI PARK APARTMENTS (P) LTD. [KAPADIA,].] 805

when the said lease was due to expire. A
Before expiry of the lease, on 16.8.1980, an agreement was entered into
by the then Trustees and the respondent-decree holder to the effect that
terms and conditions of the said lease would be extended/renewed in favour
of the said respondent for a further period of 70 years from 1.5 .1981 on
payment of increased rent of Rs. 30,000 per month plus premium of Rs.30 lacs. B
Respondent herein paid Rs.4 lacs being part of the total premium ofRs.30 lacs
agreed to be paid at the time of the execution of the Transfer Deed.

Since the Trustees failed to execute the deed, respondent herein filed
Title Suit No.176 of 1981 in the Court of Assistant District Judge, Alipore, C
Calcutta (hereinafter referred to as "the trial Court") for specific performance
of the agreement dated 16.8.1980. On 25.7.1985, the said suit was decreed.

In the said suit, the defendant-Trustees, made an application under
Order IX Rule 13 CPC for recall of the decree. This application was not
pursued, hence, it got dismissed. An appeal was also filed, however, the same D
was dismissed.

To complete the chronology of events, it may be mentioned, that, the
Trustees had instituted suit no.87/81 which got dismissed for non-prosecution.

On 3.10.1994, the Trustees - appellants herein, moved an application E
under section 28(1) of the 1963 Act read with section 151 CPC. It was alleged
that there was a collusion between the two trustees and respondent; that the
said two Trnstees had alone agreed to renew the lease dated 25.11.1960 for
a further period of 70 years; that these two Trustees received Rs.4 lacs from
the respondent; that they did not account for it; that on 23 .12.1980 they p
approved draft deed; that the said draft was in connection with renewal of
lease for 70 years on payment of premium of Rs.30 lacs and increased monthly
rent of Rs.30,000 on and from 1.5 .198 I; that the saiC: Trustees had no authority
to act on behalf of the said Trust; and, therefore, the agreement for renewal
was null and void and not binding on the ~~tate. It was further alleged that
title suit No. I 76/81 was a counterblast to suit no.87/81; that even after passing G
of the decree dated 25.7.1985 in the title suit no.176/81, the respondent did
not tender the deed to be executed by the Trustees nor did it tender the rent
for nine years; that the respondent even failed to pay the balance premium
of Rs.26 lacs as agreed. That the respondent was earning income by letting
out premises for marriages etc. In the circumstances, it was alleged that the H
·806 SUPREME COURT REPORTS [2004) SUPP. 5 S.C.R.

A respondent herein was not ready and willing to discharge its obligations
under the decree dated 25.7.1985. Hence, it was submitted that contract dated
16.8.1980 be rescinded and the decree dated 25.7.1985 in suit no.176/81 be
recalled.

By reply dated .2 l .2.1995, the respondent herein alleged that the Trustees
B were avoiding the decree under various pretexts. In this connection, it was
pointed out that the decree for specific performance was passed on 25.7.1985
in title suit no.176/81; that the said decree was an ex-parte decree and,
therefore, the said Trustees moved an application under Order IX Rule 13 CPC
which was also dismissed. That, being aggrieved, the Trustees carried the
C matter in appeal, which was also dismissed. In the circumstances, it was
alleged that the trustees had repeatedly tried to avoid the decree. Having
failed to have the decree set aside, the trustees now opted for its rescission.
It was further alleged that the respondent was repeatedly assured of the
execution of the lease. In this connection, there were negotiations between
the parties. At the insistence of the Trustees the respondent did not put the
D decree in execution.)n the circumstances, it was submitted that the respondent
was always ready and willing to perform its obligations under the agreement
dated 16.8.1980 and that there was no intention on the part of the respondent
to abandon the contract. In the written statement, the respondent further
alleged that on l .12.1994, the Trustees attempted to lease out the suit pr!!mises
E to one Dilip Kankaria and Smt. Sudha Kankaria. In this connection, the
Trustees moved the High Court and obtained permission to transfer the suit
premises without notice to the respondent herein. Being aggrieved, the
respondent herein applied for setting aside the leave. By order dated 16.12.1994,
the Division Bench of the High Court stayed the above permission on the
condition of deposit of Rs.50 lacs. In the circumstances, the respondent
F submitted that it was ready and willing to perform its obligations under the
decree. In the circumstances, the respondent herein submitted that the
application filed by the Trustees for rescission of the contract dated 16.8.1980
be dismissed.

G By order dated 31. 7.1996, the trial Court rescinded the agreement dated
16.8.1980 and also recalled the decree dated 25. 7.1985.

By order dated 31. 7 .1996, the trial Court held that under the terms and
conditions of the agreement dated 16.8.1980, the respondent had to pay Rs.30
lacs to the Trust at the time of renewal of the lease i.e. by 24. l 0.1985 and since
H the respondent had failed to pay the said amount within the stipulated period,
KUMAR DHIRENDRA MULLICK v. TIVOLI PARK APARTMENTS (P) LTD. [KAPADIA, J.] 807

the respondent herein was not entitled to the said renewal. Further, the said A
respondent had failed to pay the arrears of rent amounting to Rs.39 lacs
towards rent. In the circumstances, according to the trial Court, the respondent
herein was not ready and willing to perform its obligations under the decree.
The trial Court observed that under section 28(1) of the 1963 Act, the Court
had unlimited and unfettered power to grant extension but has no power to
condone the delay, if the period for complying with the terms and conditions B
stood expired. According to the trial Court, the date of payment of the
premium of Rs.30 lacs expired on 24.10.1985 and consequently, the respondent
herein was not entitled to renewal of the lease. The tria! Court further observed
that at no point of time, the respondent had approached the Court, prior to
24. l 0.1985, for execution of the lease through the Court. Nothing prevented C
the respondent from approaching the Court, prior to 24. l 0.1985, seeking
permission to deposit Rs.30 lacs on account of premium and arrears of rent
in Court and in the circumstances, the trial Court allowed the petition filed by
the Trustees-appellants and recalled the decree dated 25.7. l 985 after rescinding
the agreement dated 16.8.1980.
D
Being aggrieved by the order dated 3 l.7. l 996, the respondent herein
carried the matter in appeal to the High Court, being appeal from original order
no.3652 of 1996.

During the pendency of the appeal, vide order dated 18.12.1996, the
High Court directed the respondent to deposit Rs. I crore with the appellants- E
Trustees on account of arrears of rent. By the said order, the High Court also
directed the respondent herein to deposit Rs.40 lacs with the Registrar, High
Court on account of arrears of corporation tax.

Being aggrieved by the order dated 18.12. 1996, the respondent herein F
preferred SLP to this Court. By order dated I 0.3.1997, this Court directed the
respondent herein to deposit in all Rs.83 lacs comprising of Rs.57 lacs towards
arrears of rent up to 31.3.1997 plus Rs.26 lacs towards the balance premium
which the respondent herein has paid. In addition, respondent herein was
asked to deposit Rs.40 lacs towards corporation tax subject to final accounting,
which has also been paid. G
By impugned judgment dated l 0.6.1999, the High Court held that the
order passed by the trial Court dated 31. 7.1996 was contrary to section 28( l)
of the 1963 Act, as there was no default clause in the decree dated 25.7.1985.
According to the High Court, section 28(1) was not applicable as the decree H
808 SUPREME COURT REPORTS (2004] SUPP. 5 S.C.R.

A dated 25.7.1985 did not direct the respondent herein to deposit the amounts
within specific time frame. Acco,rding to the High Court, under section 28,
there was no power vested in the trial Court to set aside the decree. Section
28 contemplated rescission of the agreement. The only power which the Court
has under section 28 is to rescind the agreement if it finds that the decree
holder was a defaulter. The High Court further held that in the present case,
B the decree holder was put in possession under the deed of assignment dated
20.8.1970. The decree holder was never put in possession under the agreement
dated 16.8.1980 for which the decree for specific performance was granted. In
the circumstances, the High Court hdd that the trial Court had erred in
directing the decree holder to restore possession to the Trustees. In the
C circumsta~ces, the appeal preferred by the resp9ndent wlls allowed and the
order of the trial Court rescinding the agreement dated 16.8.1980 was set
aside. Hence, this appeal.

It has been submitted on behalf of the appellants herein that at the time
of the agreement dated 16.8.1980, the value of the property in questio11 was
D about Rs.30 crores. On the basis of the said value, the market rate ought to
have been Rs.30 lacs. It was urged that if the Trust property is allowed to
be leased out to the respondent herein on monthly rent of Rs.30,000/- and at
a premium of Rs.30 lacs, the appellant-Trust will loose substantially. In this
connection, reliance has been placed on the valuation report dated 26.4.2000.

E We do not find any merit in the aforestated arguments. As far back as
20.8.1970, the Trustees allowed the lessee, Mohd. Ismail, to assign the leasehold
rights in favour of the respondent herein. Further, the assignee was allowed
to be put in possession. On 16.8.1980, the Trustees entered into oral agreement
to renew the above lease for 70 years w .e. f. 1.5 .1981 at increased rent of
F Rs.30,000/- per month plus premium of Rs.30 lacs as found by the trial Court
in title suit no.176/81 decided on 25. 7.1985. In the circumstances, increase in
the value of the immovable property, on account of inflation, is no ground
to rescind the agreement dated 16.8.1980. We have to see the circumstances
prevalent as on 16.8.1980 when the parties entered into the oral agreement to
lease.
G
It is next contended on behalf of the appellants that the oral agreement
dated 16.8.1980 for renewal of lease stood vitiated on account of collusion
between Tivoli Court Pvt. Ltd., the constituted attorney appointed by the
Trustees, and the respondent herein. In this connection, it has been alleged
H that the Trust had entered into an agreement dated 29.4.1981 to lease out the
KUMARDIBRENDRA MULLICK v. TIVOLI PARK APARTMENTS (P)LTD. [KAPADIA,J.] 809

property to one Tivoli Court Pvt. Ltd., in whose favour a power of attorney A
was also executed. Under that power of attorney, Tivoli Court Pvt. Ltd. was
authorized to adopt all legal proceedings against the respondent herein for
eviction. It is further alleged that the respondent herein perpetrated fraud on
the Trust by colluding with the Tivoli Court Pvt. Ltd., so that no effective
legal steps could be taken against the respondent herein. It is further alleged B
that the Director of Tivoli Court Pvt. Ltd. was also a Director of the respondent
company. Consequently, the suit for eviction bearing no.87/81 was allowed hJ
be dismissed for default while suit for specific performance was allowed to
be decreed ex-parte. That even the subsequent application under Order IX
Rule 13 CPC was allowed to be dismissed for default. In the circumstances,
it is submitted that the trial Court was right in rescinding the agreement dated C
16.8.1980.

We do not find any merit in the above arguments. At stated above, prior
to the purported agreement dated 29.4.1981 in favour of Tivoli Court Pvt. Ltd.,
the Trustees had consented to the Assignment dated 20.8.1970 by their
lessee, Mohd. Ismail, in favour of the respondent herein. Pursuant to the said D
Assignment, the said respondent was put in possession. This assignment
was followed by oral agreement dated 16.8.1980 to renew the lease. In the
circumstances, one fails to appreciate the authority of the Trustees to enter
into an agreement dated 29.4.1981 to lease out the said property in favour of'
Tivoli Court Pvt. Ltd. On 25.7.1985, when title suit no.176/81 came for hearing, E
no evidence was .led on behalf of the Trustees explaining circumstances under
which the Trust entered into the agreement dated 29.4.1981 with Tivoli Court
Pvt. Ltd. In the circumstances, it is not open to the appellants herein to go
behind the said decree dated 25.7.1985. Lastly, it may be mentioned that the
trial Court has rescinded the agreement dated 16.8.1980 basically on the
ground of alleged breaches thereof. In the circumstances, it is not open to F
the appellants now to submit that the decree dated 25.7.1985 was collusive
and not binding on the Trust estate.

On behalf of the appellants, it was next submitted that the resp:mdent
herein was not serious about performing its obligations under the decree. In
this connection, it was submitted that nothing prevented the respondent from G
applying to the Court for execution of the lease. That, nothing prevented the
respondent from seeking extension of time to deposit the premium/rent. It was
urged that the very fact that the respondent chose to make no such application
and slept on its rights for nine years conclusively proves that it was not ready
and willing to perform its part of the contract and also its obligations under H
810 SUPREME COURT REPORTS [2004] SUPP. 5 S.C.R.

A the decree and in the circumstances, the trial Court had rightly rescinded the
oral lease agreement dated 16.8.1980. It was further submitted that the trial
Court while passing the decree had stated that within 90 days of the decree
dated 25.7.1985, the lease shall be executed i.e. all payments were required to
be made within that period. That without such payments, a lease could not
B be directed to be executed. No steps were taken by the respondent herein to
renew the lease and pay the premium in accordance with the agreement dated
16.8.1980. No rent was offered during the period 25.7.1985 to 3.10.1994 when
the appellants filed their application for rescission of the oral lease agreement
dated 16.8.1980. In the circumstances, it was submitted, that, by implication,
the respondent herein was obliged to pay or tender the amount of premium
C ofRs.30 lacs within 90 days from the date of the decree dated 25.7.1985 .. It
was urged that when the decree fixed 90 days for execution of the lease, it
was implicit in the said direction that the respondent herein shall pay or
tender Rs.30 lacs on or before 24.10.1985. That, since the respondent failed
to pay or tender Rs.30 lacs on or before 24. I 0.1985, the appellants were
entitled to seek rescission of the agreement dated 16.8. I 980. That, when the
D agreement for renewal of the lease dated I 6.8.1930 provided for payment of
monthly rent of Rs. 30,000, it was implicit in the decree datecl '.5.7. I 985 for the
respondent to pay the monthly rent in terms of the agreement dated I 6.8. I 980
and since the decree holder failed to pay, in the aforestated terms, the
appellants were entitled to seek rescission of the decree dated 25.7.1985 under
E section 28(1) of the I 963 Act. In the circumstances, it was urged, that the
respondent herein was never ready and willing to abide by the terms and
conditions of the agreement and consequently, the trial Court was right in
rescinding the oral lease agreement dated 16.8.1980.

We do not find merit in the above arguments. The short question which
F arises for determination in this case is-whether the oral lease agreement dated
16.8.1980 was liable to be rescinded for alleged breaches. Mr. L.N. Rao,
learned senior counsel appearing on behalf of the appellants, at the very
threshold, submitted that he would like to confine his arguments to the
question of rescission only. According to the learned counsel, the power of
G the Court under section 28( l) to order cancellation of the decree and order
restoration of possession to the vendor was a very wide question which need
not to be gone into in the present case.

Jn the light of the above, we may now examine the above arguments
advanced on behalf of the appellants.
H
-KUMARDHIRENDRAMULLICK.v. TIVOLIPARKAPARTMENTS(P)LTD.[KAPADIA,J.] 811

In the present case, the decree for specific perfonnance is dated 25.7.1985 A
in suit no.176/81. On behalf of the plaintiff (respondent herein) PWl was
examined. He tendered evidence indicating that the respondent herein was in
possession. No evidence was led on behalf of the Trustees. In the
circumstances, the trial Court decreed the suit on 25.7.1985 and passed an
order in following terms:
B
" .... Defendants do execute register and deliver the lease in favour of
the plaintiff (respondent herein) in terms of the agreement dated
16.8.1980 within 90 days from the date of the decree, failing which the
decree holder (respondent herein) will be at liberty to get the lease
executed through the Court."
c
A bare reading of the order indicates that the respondent herein was
directed not to put the decree in execution for 90 days from the date of the
decree i.e. 25.7.1985. The said order did not specify the period within which
the balance premium amount of Rs.26 lacs was to be paid by the ·decree
holder. There is no default clause in the said order. It only directs the D
appellants to execute the lease on or before 24.10.1985. In the circumstances,
there is no merit in the argument advanced on behalf of the appellants, that,
impliedly, the balance premium had to be tendered on or before 24.10.1985,
failing which the agreement dated 16.8.1980 was liable to be rescinded.

In the case of Abdul Shaker Sahib v. Abdul Rahiman Sahib and Anr., E
reported in AIR (1923) Madras 284 while construing section 35 of the 1877
Act (similar to section 28 of the 1963 Act) it has been held as follows:

"After the original judgment for specific performance it is the
definite practice in England that all consequential relief by reason of F
any party failing to comply with the terms of the judgment must be
sought by application to the Court by which the judgment was passed.
Such applications are made by motion in the action showing that in
England, after the original judgment the action is by no means ended
but remains under the control of the same Court. Ifthe default is made
by the purchaser in paying the purchase-money there are several G
remedies open to. the vendor. (1) He may on motion in the action
obtain an order fixing a definite time and place for payment and
delivery over of the conveyance and title-deed and can, after the
expiration of that time, levy execution for the amount, if not paid. (2)
He may apply by motion in the action for an order rescinding, not the
H
812 SUPREME COURT REPORTS [2004] SUPP. 5 S.C.R.

A judgment but the contract, and in order to succeed in such a motion
he has to satisfy the Court that there has been a positive refusal to
complete, which it may be observed in the present case, the respondent
has certainly not proved. A similar right is given by Section 35 of the
Specific Relief Act of 1877. (3) He can enforce his unpaid vendor's lien
for the purchase-money and costs. (4) He can by motion in the action
B obtain an order for sale by the Court of the property when he will be
at liberty to bid. The proceeds of the sale are paid into Court and the
vendor gets his contract price, interest and costs and the purchaser
the balance, if any. Where the vendor is in default, the remedies are
even more varied.
c It would seem to be absurd to hold that the mere fact that a date
of completion is fixed in the original decree puts an end to the action
and that the control of the original Court expires on the expiration of
that date and thus substitute in effect for all the known remedies
stated above the simple expedient of treating the action and the
D decree as dead for all purposes and leaving the vendor in undisturbed
possession of property which is not his ..... "

In the case of Hungerford Investment Trust Limitedv. Haridas Mundhra
and Ors., reported in [1972] 3 SCC 684 it has been held that when the Court
passes the decree for specific performance, the contract between the parties
E is not extinguished. That the decree for specific performance is in the nature
of preliminary decree and the suit is deemed to be pending even after the
decree. Hence, the Court retains control over the entire matter even after the
decree. Since the Court retains control over the matter, despite the decree, it
is open to the Court to order rescission of the agreement, when it is found
F that the decree holder is not ready and willing to abide by his obligations
under the decree.

In the case of M Sakunta/a Devi v. V. Sakuntala and Ors., reported
in AIR ( 1978) A.P. 33 7 it has been held that though section 28 does not confer
power on the Court to extend time, it recognizes its power to do so in cases
G of default in payment.

In the case of K. Kalpana Saraswathi v. P.S.S. Somasundaram Chettiar,
reported in [AIR 1980 SC 512] it has been held as follows:

"It is perfectly open to the court in control of a suit for specific
H
KUMARDHIRENDRAMULLICK v. TIVOLI PARKAPARTMENTS(P)LTD. [KAPADIA,J.] 813

performance to extend the time for deposit, and this court may do so A
even now to enable the plaintiff to get the advantage of the agreement
to sell in her favour. The disentitling circumstances relied upon by the
defendant-respondent are off-set by the false pleas raised in the
course of the suit by him and rightly negatived. Nor are we convinced
that the application for consideration and extension of time cannot be
read, as in substance it is, as a petition for more time to deposit. Even B
so, specific performance is an equitable reliefand he who seeks equity
can be put on terms to ensure that equity is done to the opposite
party even while granting the relief. The final end of law is justice, and
so the means to it too should be informed by equity. That is why he
who seeks equity shall do equity. Here, the assignment of the mortgage C
is not a guileless discharge of the vendor's debt as implied in the
agreement to sell but a disingenuous disguise to arm herself with a
mortgage decree to swallow up the property in case the specific
performance litigation misfires. To sterilize this decree is necessary
equity to which the appellant must submit herself before she can
enjoy the fruits of specific performance." D
In the case of Sardar Mohar Singh v. Mangila/ reported in [1997] 9
SCC 217 it has been held that section 28( 1) postulates that the Court does
not lose its jurisdiction after the grant of the decree for specific performance
nor it becomes functus officio. Section 28 gives power to grant order of E
resc!ssion of the agreement which itself indicates that till the sale deed is
executed, the trial Court retains its power and jurisdiction to deal with the
decree of the specific performance. Therefore, the Court has the power to
enlarge the time in favour of the juagment-debtor to pay the amount or to
perform the conditions mentioned in the decree for specific performance,
despite the application for rescission of the agreement/decree. F
In the case of Vaiyapuri Reddy and Anr v. Sivalinga Reddiar, reported
in (1970) I Madras L. J. 92] it has been held that since the Court has, under
section 28, the power to extend the period in cases where it has already fixed
a period of deposit, it should be deemed to have the power to either fix a
period or grant a fresh period to deposit, particularly in cases where no such G
period is fixed by the decree. In that case, the Court found that there were
!aches on the part of the plaintiff in depositing the amount and yet the Court
gave thirty days time to the plaintiff to deposit the amount on the application
made by the defendants for rescission of the contract.

H
814 SUPREME COURT REPORTS [2004] SUPP. 5 S.C.R.

A In the case of Ouseph and Anr v. Devassy, reported in AIR (200 I) Kerala
104 the decree was silent as to the date by which the decree holder was to
pay the balance of the price. Possession was with the decree holder. The
purchaser deposited the balance before filing of the petition for rescission of
the agreement but after expiry of the period fixed by the decree.' The decree
B holder applied for condonation of the delay. The same was granted. In doing
so, the Court observed that section 28 enables the Court to extend the time
which by itself implies that mere failure to deposit the balance need not result
in the rescission of the contract. On facts, it was found that the decree was
silent as to the date by which the decree holder was to deposit the balance
of the sale consideration. On facts, it was found that the decree holder was
C in possession for 18 years. On facts, it was found that the vendor did not
take any steps to get the balance of the sale consideration. That the vendor
failed to seek rescission for 18 years. In the circumstances, the Court allowed
the decree-holder, coridonation of delay in depositing the balance consideration.

In the case of V. S. Palanichamy Chettiar Firm v. C. Alagappan and
D Anr, reported in AIR (1999) SC 918, cited on behalf of the appellants, the
vendee-decree holder filed application for execution of the decree of specific
performance after five years. No reason was given for not putting the decree
in execution for five years. Further, under the decree, there was a specific
direction to the decree holder to deposit the balance pu~chase price within
E the stipulated period. Under the said decree, a further direction was given to
the judgment debtor to execute the sale deed on the vendee's depositing the
balance purchase price. It was a case of a final decree. In the execution
application, the judgment debtor applied for rescission of the agreement of
sale on the ground of default on the part of the vendee in failing to deposit
the balance price. Under the. above circumstances, this Court held that the
F vendee, who had applied for extension of time to deposit the balance price,
was not entitled to such extension. This Court observed that in deciding
application under section 28( I), the Court has to see all the attendant
circumstances including the conduct of the parties. On facts, this Court found
that there was no default on the part of the vendor-judgment debtor. That no
explanation whatsoever came from the vendee-decree holder· for failure to
G deposit the balance price. In the circumstances, on facts, this Court refused
extension of time to deposit the balance price. Therefore, the said judgment
has no application to the facts of the present case.

Applying the above tests to the facts of the present case, the decree
H in question is not a self operative final decree. It is a preliminary decree. It
KUMARDHIRENDRAMULLICK v. TIVOLI PARKAPARTMENTS(P)LTD. [KAPADIA,J.] 815

merely directs the Trust to execute the lease on or before 24.10.1985. It does A
not prescribe any consequence of non deposit of premium. It does not
prescribe any consequence of non tender of rent on or before 24. I 0.1985. Till
date, the decree holder has paid the premium of Rs.30 lacs. It has paid rent
amounting to Rs.96 lacs. In the circumstances, it cannot be said that the
decree holder intended to abandon the contract dated I 6.8.1980. There is no B
positive refusal on the part of the respondent to complete the lease. There
is no explanation given by the Trust for not moving the application for
rescission of the contract for nine years. The decree was passed on 25. 7 .1985
whereas the application for rescission of the agreement is dated 3.10.1994. As
stated above, the Trust did not lead the evidence in suit no.176/8 l. The
corresponding suit no.87 /8 l filed by the Trust was dismissed for non- C
prosecution. The Trust moved under Order IX Rule 13 CPC for setting aside
the decree dated 25.7.1985. That application was dismissed for default vide
order dated 1.8.1987. The Trust moved the application for restoration which
was also dismissed for default on 16.7.1988. The Trust moved in appeal
against the decree dated 25.7.1985. That appeal was also dismissed. The D
decree holder has referred to the entire correspondence between the parties
which indicate that during this period ofnin~ years in the guise ofnegotiations,
the decree holder was prevented from filing execution application. The decree
holder was repeatedly assured of settlement. The decree holder was repeatedly
assured that lease would be executed in its favour. Attempt was also made
by the Trustees during the interregnum to lease the property to Dilip Chand E
Kankaria and Smt. Sudha Kankaria. Lastly, in the present case, the decree
holder was put in possession under the deed of assignment dated 20.8.1970.
The respondent was not put in possession under the agreement dated
16.8.1980. In the circumstances, the trial Court erred in directing rescission of
the said agreement dated 16.8.1980. For the aforestated reasons, we do not F
find any merit in this appeal.

Before concluding, we may point out that till date the decree holder has
deposited Rs.96 lacs including premium of Rs.30 lacs. The decree holder
hereby undertakes to deposit the balance amount of Rs.19,20,000 within 30
days from the date of this judgment. He also undertakes to pay Rs. I 0,00,000 G
by way of compensation for loss, if any.

In the circumstances, we direct the decree holder to tender a sum of
Rs.29,20,000 within 30 days from today to the Trustees. On receipt, the
Trustees shall execute the lease in favour of the respondent herein for 70
years commencing from 1.5.1981 to 30.4.2051. H
816 SUPREME COURT REPORTS [2004] SUPP. 5 S.C.R.

A In case the Trustees refuse to accept the said amount, the respondent
herein shall deposit the aforestated amount ofRs.29,20,000 in the Court of 2nd
Asstt. District Judge, Alipore, Calcutta. On such deposit, the Officer nominated
by the trial Court shall execute the lease in favour of the respondent in terms
of the agreement dated l 6.8.1980 and as directed by the trial Court vi de order
dated 25. 7.1985 in title suit no.176/8 l.
B
In case of default, on the part of the respondent, in tendering/depositing
the aforestated amount within the stipulated period of 30 days, th<'. agreement
dated l 6.8. l 980 shall stand rescinded and the title suit no.176/8 l shall stand
dismissed.
c As regards the payment of corporation tax, learned counsel appearing
on behalf of the respondent has invited our attention to clause 4 of the lease
dated 25. l l.l 960 which reads as under: .r

"The entire occupier's share of Corporation rates and taxes and
D the excess of Owner's share of Corporation rates and taxes over and
above the rental amounts as hereinbefore provided will be paid by the
Lessee in respect of the portions of the properties hereby demised in
addition to the monthly rents hereby reserved."

Relying on clause 4, learned counsel for the respondent submitted that
E the Trust has failed to pay its share of corporation tax in terms of clause 4
quoted above. It was contended that the respondent has till date paid an
amount of Rs.40 lacs towards corporation taxes. That the respondent was
entitled to recover from the Trustees the owners' share of corporation tax.

F In order to put an end to the dispute, we suggested to the learned
counsel appearing on behalf of the respondent not to press its above claim
for contribution of corporation tax from the Trustees. Learned counsel
appearing on behalf of the respondent has accepted our suggestion that for
the past period, the respondent will not make a claim for contribution of
owner's share of the corporation tax. To that extent, the respondent agrees
G not to press its above claim.

In the written arguments dated 25.10.2004, the appellants herein have
filed their Statement of Account. A bare perusal of the said Statement indicates
the claim for interest @ 8.33% per annum on monthly basis. We do not find
H any basis for such claim. The entire Statement is for recovery of occupation
KUMAR DHIRENDRA MULLICK v. TIVOLI PARK APARTMENTS (P) LTD. [KAPADIA,J.] 817

charges and interest. The items mentioned in the Statement do not fall within A
the purview of the oral lease agreement dated 16.8.1980. In the circumstances,
it is not· possible for this Court to grant relief under Article 142 of the
Constitution, as prayed.

Subject to the above, the appeal fails and is dismissed, with no order
as to costs. B

S.K.S. Appeal dismissed.

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