Case Note & Summary
The Appellant, M/s. Imageads and Communications Pvt. Ltd., filed a suit for specific performance of an agreement dated 22 April 1977, claiming that Respondent no.1, Bajaj Leathers Private Limited, agreed to sell suit premises at Mittal Chambers, Nariman Point, Mumbai, for Rs.3,55,250. The Appellant paid earnest money of Rs.71,500 and took possession, paying monthly maintenance charges. The balance of Rs.2,84,200 was to be paid within three years. On 18 April 1980, the Appellant sent a cheque for the balance, which Respondent no.1 encashed without objection. However, Respondent no.1 did not transfer the premises, leading to the suit in 1981. Respondent no.1 contended that the agreement was a sham and bogus document, actually a leave and licence agreement. The learned Single Judge dismissed the suit, holding that the Appellant failed to prove the agreement was for sale and that they were ready and willing to perform their obligations. The Division Bench affirmed, noting that the Appellant did not pay the balance within three years and the cheque sent in 1980 was not accompanied by a demand for transfer. The court upheld the finding that the agreement was a sham document and not an agreement for sale.
Headnote
A) Specific Performance - Agreement for Sale - Sham Transaction - The court considered whether the agreement dated 22 April 1977 was a genuine agreement for sale or a sham document intended to create a leave and licence arrangement. The learned Single Judge held that the Plaintiff failed to prove the agreement was for sale, and the Division Bench affirmed, noting that the conduct of the parties and the terms of the agreement indicated it was a leave and licence. (Paras 2-5)
B) Specific Performance - Readiness and Willingness - Section 16(c) Specific Relief Act, 1963 - The Appellant failed to prove readiness and willingness to perform their part of the contract, as the balance consideration was not paid within the stipulated three years and the cheque sent in 1980 was not accompanied by a proper demand for transfer. (Paras 3-5)
C) Evidence - Burden of Proof - The burden was on the Appellant to prove the agreement was for sale, which they failed to discharge. The court upheld the finding that the agreement was a sham document. (Paras 4-5)
Issue of Consideration
Whether the agreement dated 22 April 1977 between the Appellant and Respondent no.1 was an agreement for sale or a sham/leave and licence agreement, and whether the Appellant was entitled to specific performance.
Final Decision
Appeal dismissed. The judgment and order dated 12 January 2009 passed by the learned Single Judge dismissing the Suit for specific performance is upheld.
Law Points
- Specific performance
- Agreement for sale
- Leave and licence
- Sham transaction
- Burden of proof
- Section 16(c) Specific Relief Act
- 1963
Case Details
2011 LawText (BOM) (06) 33
APPEAL NO. 168 OF 2009 IN SUIT NO. 697 OF 1981
D.K. Deshmukh, Anoop V. Mohta
Mr. A. Y. Bookwala, Sr. Advocate with Mr. P. G. Lad for the Appellant; Mr. Pradip Sancheti, Sr. Advocate with Mr. Pranav Desai, Parvathy Kaushik i/by B. S. Chandnani for the Respondents
M/s. Imageads and Communications Pvt. Ltd.
Bajaj Leathers Private Limited & Anr.
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Nature of Litigation
Civil appeal against dismissal of suit for specific performance of an agreement for sale.
Remedy Sought
Appellant sought specific performance of the agreement dated 22 April 1977 for sale of suit premises.
Filing Reason
Respondent no.1 did not transfer the suit premises despite payment of balance consideration.
Previous Decisions
Learned Single Judge dismissed the Suit on 12 January 2009, holding that the Plaintiff failed to prove the agreement was for sale and that they were ready and willing to perform their obligations.
Issues
Whether the agreement dated 22 April 1977 was an agreement for sale or a sham/leave and licence agreement?
Whether the Appellant was entitled to specific performance of the agreement?
Submissions/Arguments
Appellant argued that the agreement was for sale, earnest money was paid, possession was taken, and balance consideration was sent via cheque which was encashed by Respondent no.1.
Respondent no.1 contended that the agreement was a sham and bogus document, actually a leave and licence agreement, and that the Appellant failed to pay the balance within three years.
Ratio Decidendi
The Appellant failed to prove that the agreement dated 22 April 1977 was an agreement for sale; the evidence indicated it was a sham document and a leave and licence arrangement. Additionally, the Appellant did not demonstrate readiness and willingness to perform their part of the contract as required under Section 16(c) of the Specific Relief Act, 1963.
Judgment Excerpts
The Appellant, original Plaintiff, has challenged the judgment and order dated 12 January 2009 passed by a learned Single Judge, thereby, dismissed the Suit for specific performance, based upon agreement dated 22 April 1977.
Respondent no.1’s specific case is that the agreement in question is sham and bogus document and it is a Leave and Licence Agreement and not the agreement for sale.
The learned Single Judge dismissed the Suit by holding that the Plaintiff failed to prove that they have carried out the obligations as per the agreement.
Procedural History
Suit No. 697 of 1981 filed on 2 April 1981 for specific performance. Written statement filed on 5 February 1982. Issues framed and evidence led. Learned Single Judge dismissed suit on 12 January 2009. Appeal No. 168 of 2009 filed against that judgment. Judgment reserved on 18 April 2011 and pronounced on 9 June 2011.
Acts & Sections
- Specific Relief Act, 1963: Section 16(c)
