REPORTABLE                                                        

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.7021 OF 2003

Coromandel Indag Products (P) Ltd.               .... Appellant(s)

Versus

Garuda Chit & Trading Co. P. Ltd. & Anr.   .... Respondent(s)

J U D G M E N T

P.Sathasivam,J.

1) This  appeal  is  directed against  the final  judgment  and  

decree dated 17.02.2003 passed by the Division Bench of the  

High Court of Judicature at Madras in O.S.A. No. 163 of 1994  

whereby  the  appeal  filed  by  the  respondents  herein  was  

allowed.   

2) Brief facts:

(a) The appellant is a Private Limited Company (hereinafter  

referred to as “the appellant-Company)  registered under the  

Companies  Act,  1956  and  is  carrying  on  the  business  of  

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manufacturing, selling, exporting, trading in and distribution  

of Pesticides, Chemicals and Agro Chemicals.  Respondent No.  

1 is also a Private Limited Company (hereinafter referred to as  

“the  respondent-Company”)  registered under  the  Companies  

Act, 1956 in which Mr. T.P. Narayanan – respondent No.2 is  

the  Chairman  and  Director  and  appeal  against  him  stood  

dismissed vide this Court’s order dated 19.07.2004.  Mr. T.K.  

Gopinath (since died) was the Managing Director – respondent  

No.3 and his legal representatives are on record.  In the year  

1981,  the  appellant-Company  required  a  property  around  

Mount Road Area near  Mylapore,  Madras for  establishing a  

Research and Development Centre.  Respondent-Company, on  

coming  to  know  about  the  said  requirement,  offered  its  

property  measuring 12 grounds 33 sq.  ft.  with buildings at  

Door  No.  46,  Cathedral  Road,  Madras.   The  officials  of  the  

appellant-Company inspected the property and after getting it  

evaluated  by  an  Authorized  Valuer  offered a  price  of  Rs.82  

lakhs for the entire property and the Respondent Nos. 2 & 3  

herein accepted the same.  Thereafter, an Agreement for Sale  

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was executed between the parties on 28.08.1981 and a sum of  

Rs. 2 lakhs was paid by way of cheque as advance.  

(b)  Pending investigation of title of the respondent-Company  

to the suit property, the appellant-Company entered into the  

said  agreement  since  the  respondents  desired  a  firm  

commitment  to  be  made.   Clauses  3  and  4  of  the  said  

Agreement put the vendor under an obligation to produce all  

documents of title in its possession or control relating to the  

suit  property  for  the  investigation  and  approval  of  the  

appellant-Company.   Besides,  getting  other  necessary  

clearances,  the  respondents  were  also  required  to  get  the  

Income Tax Clearance Certificate as specified under Section  

230-A of the Income Tax Act, 1961.   

(c) In  accordance  with  the  above,  the  appellant-Company  

called upon the respondents to furnish the documents of title,  

the details of the encumbrances on the property, if any, and  

also  Income  Tax  Clearance  Certificate  and  other  necessary  

clearances  to  complete  the  sale.   On  09.09.1981,  the  

respondents  furnished the  Income Tax Clearance  Certificate  

dated 07.09.1981 and promised to furnish the other required  

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documents very soon.  They also demanded a further payment  

of Rs. 10 lakhs as advance pending finalization of the sale to  

which the appellant-Company did not agree.

(d) As  the  respondents  did  not  furnish  the  required  

documents,  the  appellant-Company  issued  a  letter  dated  

14.09.1981  calling  upon  them  to  furnish  the  required  

documents.  Instead of furnishing all the required documents,  

as sought for, the respondents, vide letter dated 15.09.1981,  

called  upon  the  appellant-Company  to  expedite  the  sale.  

Thereafter,  on  19.09.1981,  the  appellant-Company  again  

requested the respondents to furnish the solvency certificate.  

In response to the above-said letters, the respondents orally  

apologized for the delay and promised to furnish the required  

details at the earliest and respondent No.2 also requested for a  

further payment of Rs.10 lakhs as advance to enable them to  

discharge the mortgage subsisting in favour of Bank of India.  

The appellant-Company paid Rs. 5 lakhs to respondent No.2  

on 21.09.1981 on the undertaking that the documents called  

for  would be sent by 30.09.1981.   Again on the  request  of  

respondent No.2, the appellant-Company paid a further sum  

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of Rs. 5 lakhs to meet the Urban Land Ceiling Clearance.  A  

total sum of Rs. 12 lakhs was paid to the respondents.  On  

19.10.1981, respondent No.2 again requested a sum of Rs. 2  

lakhs  to  meet  certain  statutory  compliance  which  was  a  

charge on the property.  Taking full details of such liabilities,  

the appellant-Company paid a sum of Rs.1,10,000/-.  As the  

respondents did not furnish the required documents till  the  

end  of  1981,  the  appellant-Company  sent  a  notice  dated  

19.01.1982  calling  upon  them  to  perform  their  obligation  

under the agreement dated 28.08.1981 as also to fulfil their  

personal undertakings.  Notice was served only on respondent  

No.2 but the notice on respondent Nos. 1 and 3 were returned  

back with the remarks “unserved”. In reply to the said notice,  

respondent No.2 said that he is not personally liable for the  

payment made by the appellant-Company.   

(e) In the said circumstances, the appellant-Company was  

compelled to file a suit for specific performance on 10.05.1982  

in the High Court of Judicature at Madras and the same was  

numbered as C.S. No. 287 of 1982.  The learned single Judge  

of the High court by judgment dated 01.06.1993 decreed the  

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suit and directed the respondents herein to execute the sale  

deed in favour of  the appellant-Company and granted three  

months’ time to the appellant-Company to pay the balance of  

the sale consideration.   

(f) Challenging  the  judgment  of  the  learned  single  Judge,  

the respondents preferred O.S.A. No. 163 of 1994 before the  

High  Court.  By  impugned  judgment  dated  17.02.2003,  the  

Division  Bench  of  the  High  Court  allowed  the  appeal.  

Aggrieved  by  the  said  judgment  of  the  Division  Bench,  the  

appellant-Company  preferred  this  appeal  by  way  of  special  

leave petition before this Court.

3) Heard Mr. K.V. Viswanathan, learned senior counsel for  

the  appellant-Company  and  Mr.  K.K.  Venugopal,  learned  

senior counsel for respondent No.1 and Mr. V. Giri,  learned  

senior counsel for LRs of respondent No.3.

Points for consideration:

4) The only question for consideration is whether the decree  

granted  by  the  learned  single  Judge  of  the  High  Court  for  

specific performance based on the Agreement for Sale dated  

28.08.1981 is sustainable, or the Division Bench is justified in  

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concluding  that  the  appellant-plaintiff  has  not  made  out  a  

case for a decree of specific performance in allowing the appeal  

and  setting  aside  the  decree  passed  by  the  trial  Court  by  

dismissing the suit.

Discussion as to Agreement for Sale

5) In order  to consider  the  rival  claims,  it  is  desirable  to  

verify the relevant clauses from the Agreement for Sale dated  

28.08.1981.   In  the  beginning,  the  Vendor-Respondents  

herein,  specifically  asserted  that  they  are  the  sole  and  

absolute owner and in exclusive possession and enjoyment of  

all the land mentioned in the Schedule together with a multi-

storey  building,  sheds,  garages,  outhouses,  fixtures  and  

fittings  thereon  situated  at  Cathedral  Road,  Teynampet,  

Madras  bearing  present  Door  No.  46,  Old  No.  31,  T.S.  No.  

1238/1A, R.S. No. 1233/1 and 1233/5 measuring 12 grounds  

33 sq. ft.  The Agreement clearly stipulates that the Vendor  

requires substantial  cash for  meeting its  business purposes  

and, therefore, decided to sell the said property.  It makes it  

clear  that  by  resolution  dated  16.07.1981,  the  Board  of  

Directors  of  the  Vendor  have  authorized  Shri  K.S.  Hari,  

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General Manager, to negotiate and sell the said property and  

to execute the sale deed.  It also makes it clear that the Vendor  

has agreed to sell and the purchaser has agreed to purchase  

the said property at a price consideration of Rs. 82 lakhs free  

from all  encumbrances and claims whatsoever on the terms  

and conditions set out in the agreement.   

6) Among the various clauses, we are concerned with the  

following clauses in the Agreement for Sale.  They are:

“3. The Vendors shall produce or cause to be produced to  the purchaser all the documents of title in their possession  or  control  or  relating  to  the  said  property  for  the  investigation of the Vendor’s title thereto.

4. The sale shall be subject to the approval of the title of  the vendor to the said property agreed to be sold herein by  the advocate for the Purchaser and the Vendor shall at its  own costs and expenses get in all outstanding estates and  clear all defects in title and encumbrance and claims on or  to the said property.

6. The sale shall be completed on or before 05.09.1981 or  within one week from date of furnishing a Certificate under  section 230-A of the Income Tax Act of 1981 by the Vendor  whichever is later, upon the payment of Rs. 48 lakhs out of  the said purchase money by the purchaser to the Vendor,  the  balance  being  payable  as  hereinafter  provided,  the  vendor and all other necessary parties if any shall execute a  proper conveyance of  the said property  in one piece of  in  several  portions  in favour  of  the  purchaser  or  such other  person or persons the Purchaser shall nominate.

7. The Purchaser shall pay at any time of the Registration  of the sale deed a sum of Rs. 48 Lakhs out of the said price  and the balance in the following manner:-

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1. Rs. 10 lakhs on or before 07.10.1981 2. Rs. 11 lakhs on or before 07.11.1981 3. Rs. 11 lakhs on or before 07.12.1981

The  said  balance  of  Rs.  32  lakhs  payable  in  three  installments as aforementioned shall not carry any interest.  If  the  purchaser  fails  to  pay  the  amounts  as  stipulated  above, the balance amount shall carry interest at 18% per  annum till date payment.

10. The  Vendor  shall  at  its  cost  obtain  the  required  clearance certificate under Section 230-A of the Income Tax  Act and obtain requisite permission or sanctions from any  authorities as may be necessary for the purpose of effectual  competition of the sale of the property.”

The above Agreement to Sell entered into on 28.08.1981 has  

certain  important  provisions  which  provide  a  clear  

understanding  of  motivation  of  both  the  parties.   Clause  3  

extracted above  provides that  the  Vendor/respondents  shall  

produce or cause to be produced all the documents relating to  

title of the property to the purchaser.  Clause 4 provides that  

the sale shall  be subject  to the approval  of the purchaser’s  

advocate.  Clause 6 makes the completion of sale incumbent  

on  the  date  of  furnishing  the  Income-tax  Certificate  by  the  

Vendor and payment of Rs. 48 lakhs by the purchaser.  Clause  

10 makes it clear that it is the responsibility of the Vendor to  

obtain the required clearance certificate under Section 230-A  

of the Income-tax Act and also obtain requisite permission or  

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sanction from other authorities, as may be necessary, for the  

purpose of completion of the sale of the property.  Clause 13  

provides that if the title of the Vendor is not approved by the  

Purchaser’s  advocate,  the  Purchaser  would  be  entitled  to  

cancel the Agreement.  Clause 14 entitles the Purchaser for a  

suit for specific performance in the event of breach of any of  

the terms of the Agreement by the Vendor or the return of the  

amount taken as advance by the Vendor together with a sum  

of Rs. 1 lakh as liquidated damages.  Clause 15 ensures that  

the Agreement shall come to an end if there is a breach by the  

Purchaser.  With these clauses and understanding by both the  

parties, we have to analyze their claim and decide the case one  

way or the other.   

Whether time is essence of the contract:

7) If we verify the various clauses from the Agreement for  

Sale, it is clear that the Vendor-Respondent Company herein  

was in need of money for meeting its business purposes.  The  

appellant-Company has very much relied on Clauses 3 and 4  

of  the  Agreement  which  we  have  already  extracted.   Those  

clauses mandate the Vendor to produce all the documents of  

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title  in  their  possession  and  hand  over  the  same  to  the  

Purchaser for investigation by the Purchaser.  It also makes it  

clear that all those documents be placed before the advocate of  

the Purchaser for scrutiny and approval and, thereafter, the  

Vendor at its own costs and expenses clear all defects in title  

and encumbrances and claims on or to the said property.        

8) In order to strengthen their claim that time is essence of  

the contract, the respondents have heavily relied on Clauses 6  

and 7 which are extracted in the paragraphs supra.  It is clear  

from Clause 6 that the sale shall be completed on or before  

05.09.1981 or within a period of one week from the date of  

furnishing a Certificate under Section 230-A of the Income-tax  

Act, 1981 by the Vendor.  It is clear from Clause 7 that on the  

date of the Registration of the Sale Deed, the Purchaser has to  

pay Rs. 48 lakhs out of the amount of Rs. 82 lakhs.  According  

to  the  vendor,  the  balance  being  payable  in  the  following  

manner:    

1. Rs. 10 lakhs on or before 07.10.1981 2. Rs. 11 lakhs on or before 07.11.1981 3. Rs. 11 lakhs on or before 07.12.1981

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It is also clear from Clause 7 that the balance of Rs. 32 lakhs  

payable  in  3  instalments  shall  not  carry  any  interest.  

However,  if  the  Purchaser  fails  to  pay  the  amounts  as  

stipulated above, the balance amount shall  carry interest  @  

18% p.a. till date of payment.  It is clear that when there was a  

specific understanding between the parties as reflected in the  

above-mentioned  clauses  in  the  Agreement  within  which  

period the sale was to be completed, it has to be construed  

that  the  intention  of  the  parties  was  to  treat  the  time  as  

essence of the contract.  Though the respondents had agreed  

to  receive  the  balance  of  Rs.  32 lakhs in instalments  for  a  

period of 3 months after the registration of the sale deed which  

also makes it clear that both parties have agreed to complete  

the entire transaction as early as possible which prove that  

time  is  essence  of  the  contract.   Though  the  appellant-

Company  relying  on  Clauses  3  and  4  of  the  Agreement  

contended  that  the  respondents  failed  to  produce  all  the  

required  documents  including  the  documents  pertaining  to  

title and encumbrances and claims on or to the property, there  

is no basis for such a claim.

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9) It is also relevant to point out the stand of the parties as  

reflected in their pleadings and evidence.  In terms of Section  

16(c) of the Specific Relief Act, 1963, it is incumbent on the  

party,  who  wants  to  enforce  the  specific  performance  of  a  

contract,  to  aver  and  prove  that  he  has  performed  or  has  

always been ready and willing to perform the essential terms  

of the contract.  Explanation appended to this sub-section (c)  

makes  it  clear  that  if  a  contract  involves  the  payment  of  

money, it is not essential for the plaintiff to actually tender to  

the defendant or to deposit in Court any money except when  

so  directed by the  Court.   However,  the  plaintiff  must  aver  

performance of, or readiness and willingness to perform, the  

contract according to its true construction.  It is seen from the  

pleadings that necessary averments have been made in terms  

of sub-section (c) of Section 16.  On the side of the plaintiff,  

James  Fadric  was  examined  as  PW-1.   He  explained  the  

urgency and the need to sell the property.  He also explained  

that the company had a cash crunch problem.  No doubt, he  

also  referred  that  the  company  was  facing  liquidity  

proceedings before the High Court of Bombay and necessary  

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application  had  been  filed  before  the  Company  Court  at  

Bombay  for  settlement  of  the  scheme  to  avoid  liquidation  

which we are not concerned.   The fact  remains that at the  

relevant time, Vendor/Respondent-Company was in dire need  

of money for their commercial transactions and decided to sell  

the property in question, particularly, to meet the immediate  

need  of  their  creditors.   We  have  already  adverted  to  the  

payment of Rs. 2 lakhs as advance on the date of execution of  

the agreement dated 28.08.1981.  On 21.09.1981, a further  

sum of Rs. 5 lakhs was paid and by mutual consent, the time  

was extended to 30.09.1981.  On 06.10.1981, another sum of  

Rs. 5 lakhs was advanced by the appellant-Company and the  

time for completion of the Sale Agreement was extended up to  

14.10.1981.  Again, for the third time, that is on 19.12.1981,  

time was extended for the completion of the transaction up to  

31.12.1981 on payment of Rs.1,10,000/-.  As rightly pointed  

out by Shri K.K. Venugopal and Shri V. Giri, learned senior  

counsel appearing for the respondents, the payment of money  

in short intervals and also the extension of time for completion  

of the transaction within the prescribed period clearly show  

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that both the parties wanted to complete the transaction as  

early as possible without further extension.  Inasmuch as the  

Vendor was in dire need of money at every occasion and the  

need  for  such  short  term extension  clearly  shows  that  the  

parties intended to treat the time as essence of the contract.  It  

is also relevant to point out that Clause 7 of the Agreement,  

which we have already extracted, makes it clear that at any  

time of registration of the sale deed, the appellant shall pay a  

sum of  Rs.  50 lakhs,  after  deducting the  advance  amounts  

already paid and the balance of Rs. 32 lakhs is to be paid after  

registration  of  the  sale  deed  in  three  installments  as  

mentioned above.  This would also reveal the intention of the  

parties to treat the time as essence of the contract.  From the  

various  clauses  in  the  Agreement  for  Sale  which  we  have  

referred to, pleadings, evidence and the conduct of the parties,  

we hold that parties have agreed that the time is essence of  

the contract and the same has to be adhered to strictly.  

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Readiness and willingness:

10) Learned counsel for the respondents urged that several  

requests  by  the  appellant-Company  for  various  documents  

which are not provided in the terms of the Agreement show  

their intention that they wanted to delay the proceedings. On  

the other hand, learned counsel appearing for the appellant-

Company  submitted  that  they  were  justified  in  asking  for  

those documents in order to satisfy the title of the property.  It  

is true that in the Agreement, it is stated that Vendor has to  

produce all the documents of title in their possession relating  

to the property to the Purchaser for investigation relating to  

title.   In  Clause  10,  there  is  a  specific  reference  to  the  

production of clearance certificate under Section 230-A of the  

Income-tax Act and obtain permission or sanction from any  

authorities that may be necessary for the purpose of sale of  

the  property.   It  is  true  that  when  the  appellant-Company  

being a Purchaser investing a huge sum of Rs. 82 lakhs, they  

are entitled to clear all their doubts in respect of the title.  In  

terms of Clause 6 of the Agreement, sale has to be completed  

on or before 05.09.1981 or within one week from the date of  

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furnishing the certificate under Section 230-A of the Income-

tax Act whichever is later and upon payment of Rs. 48 lakhs  

out  of  the  agreed  amount  of  Rs.  82  lakhs  to  the  Vendor.  

Admittedly,  the respondents  produced Income-tax Clearance  

Certificate even on 09.09.1981. It is to be noted that only after  

production  of  I.T.  Clearance,  the  appellant-Company,  vide  

letter dated 14.09.1981, addressed to Mr. K. S. Hari, General  

Manager  of  the  Respondent-Company  sought  further  

particulars relating to mortgage on the Bank of India, arrears  

of urban land tax, property tax, exemption certificate from the  

urban land ceiling authorities, encumbrance certificate, latest  

audited  balance-sheet,  list  of  creditors,  solvency  certificate,  

details  of  attachment  and  particulars  about  winding  up  

proceedings alleging that they have not received the same to  

be forwarded to their advocates.  The said letter is available as  

Annexure-P2.  In pursuance of the said letter, the respondents  

sent  a  reply  on  15.09.1981  “by  hand  delivery”  to  the  

appellant–Company specifically  stating  that  after  being fully  

satisfied about the title, the appellant-Company prepared the  

draft sale deed and after a combined discussion at their office  

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on 07.09.1981,  the  same was  approved  and  thereafter,  the  

respondents obtained necessary certificate dated 09.09.1981  

under Section 230-A of the Income-tax Act and the same was  

also intimated to them.  In the same letter, it was pointed out  

that as per the Agreement of Sale and consensus arrived at  

between the parties, the appellant-Company has to complete  

the sale within one week from 09.09.1981. It was also pointed  

out  that  in  spite  of  several  promises  and  assurances,  the  

appellant-Company  could  not  fulfill  their  promise  and  also  

that because of this delay, they are suffering heavy loss and  

the very object of sale is being defeated.  It was also pointed  

out that so far they have spent heavy sums and satisfied all  

their  requirements  and  finally  requested  to  do  the  needful  

immediately for completion of the sale transaction.  The said  

letter is marked as Annexure-P3.  

11) It is not in dispute, more particularly, from the evidence  

of  PW-1  that  the  legal  advisor  of  the  appellant-Company  

scrutinized  the  title  deeds  before  entering  into  Agreement.  

They also visited the site along with their lawyers and finally  

after  satisfying  all  the  materials,  their  lawyers gave  opinion  

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with regard to the clear title of the property.  As stated earlier,  

only after getting their clearance, draft sale deed was prepared  

to enable the respondents to get certificate under Section 230-

A of the Income-tax Act.  Curiously, in his evidence, P.W.1 has  

stated  that  the  matter  got  delayed  only  due  to  the  non-

production  of  exemption  certificate  from urban  land  ceiling  

authorities.  It is true that as per Clause 3 of the Agreement,  

respondents have to produce all the documents pertaining to  

the  title  of  the  suit  property.   We  have  already  extracted  

Clause 4 of the Agreement which speaks about the approval of  

title by the appellant’s advocate.  

12) It is further seen that after payment of Rs. 2 lakhs as  

advance on the date of execution of the Agreement, monies to  

the extent of Rs. 11,10,000/- were paid on various dates in  

order to satisfy and comply with all statutory requirements.  It  

is  relevant  to  point  out  in  the  Agreement  that  there  is  no  

specific  reference  to  the  production  of  an  order  from  the  

competent authority under the Urban Land Ceiling Act with  

regard  to  exemption.   From  the  materials  placed,  we  are  

satisfied  that  the  appellant-Company  was  not  justified  in  

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calling for several documents when admittedly, their lawyers  

perused all the relevant documents and on their advise, draft  

sale deed was prepared and that too after proper inspection of  

the site and building.  In other words, production of clearance  

certificate from the competent authority under the Urban Land  

Ceiling Act was not specifically intended at any point of time.  

We  are  satisfied  that  as  rightly  argued  by  learned  senior  

counsel for the respondents that the information sought for by  

the appellant-Company was only to delay the transaction and  

it  was not  always  ready and willing to  perform in terms of  

Section 16(c) of the Specific Relief Act, 1963.  

Conduct of the parties:

13) We  have  already  stated  that  the  Agreement  for  Sale  

includes land and building.  The building stands on more than  

500  sq.  mts.  of  land  in  addition  to  the  plinth  area.   The  

building is a five-storeyed one for which building permission  

had  been obtained  as  per  the  provisions  of  Town Planning  

Authority and as per the orders of the Corporation of Madras.  

It is also seen that the building was under construction at the  

time the Urban Land (Ceiling and Regulation) Ordinance, 1976  

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was passed.  Section 3(h) of the Act defines “land appurtenant”  

which reads thus:

“(h) “land appurtenant”, in relation to any building means an  extent of five hundred square metres contiguous to the land  occupied by such building and includes,-

(i) in the case of any building constructed before or under  construction  on  the  commencement  of  this  Act  with  a  dwelling unit therein, or  

(ii)  in the case of any building proposed to be constructed  with a dwelling unit therein and in respect of which the plan  for  such  building  has  been  approved  by  the  appropriate  authority before the commencement of this Act,  

an  additional  extent  not  exceeding  five  hundred  square  metres of land, if any, contiguous to the said extent of five  hundred square metres of land:

Provided that in relation to a multi-storeyed building,  the extent of land contiguous to the land occupied by such  multi-storeyed  building  permitted  according  to  the  plan  approved by the appropriate authority shall be deemed to be  the land appurtenant;”

It is not in dispute that the plan had been approved by the  

Competent Authority.   

14) As rightly pointed out by learned senior counsel for the  

respondents,  the proviso to the definition states that in the  

case of multi-storeyed building, the extent of land contiguous  

to  the  land  occupied  by  such  multi-storeyed  building  

permitted according to the plan approved by the appropriate  

authority shall be deemed to be the land appurtenant.  In view  

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of the same, the entirety of the land in and around the five-

storeyed building would come outside the vacant land under  

Section 3 (p) of the Act which reads as under:  

“(p) “Vacant land” means land, not being land mainly used  for  the  purpose of  agriculture,  in  an urban agglomeration  but does not include-

(i) …..

(ii) in an area where there are building regulations—

(a)  the land occupied by any building constructed before, or  under construction on the commencement of this Act with  the  approval  of  the  appropriate  authority  and  the  land  appurtenant to such building. …. …..”

It  is clear that in the case of multi-storeyed building which  

was under construction at the date of commencement of the  

Act  with building plans duly  approved,  no part  of  the  land  

attached to the building would come within the scope of the  

Act.  By refusing to pay the balance consideration to purchase  

the property by getting the sale deed registered, the appellant-

Company has not only committed a breach of the Agreement  

but also showed that it was not ready and willing to complete  

the  Agreement.   In  those  circumstances,  the  argument  

assailing the judgment of the Division Bench of the High Court  

is liable to be rejected.   

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About title inspection by the lawyers:

15) It is relevant to narrate the actual question and answers  

by P.W.1 during cross-examination which reads as under:  

“Q: Did you inspect the title deeds through your lawyer?

A: Yes.

Q: Did you examine the title deeds before entering into  the agreement?

A: We did get the title deeds examined by the lawyer.

Q: I asked you did you get any legal opinion from your  lawyer prior to entering into the agreement.

A: Yes.

Q: Have you got the legal opinion?

A: Not in writing asked him to examine the title deed and  let us know whether the title deed is in order.

Q: What did he say?

A: He said, the title deed normally could be in order, but  he  had asked for  certain  other  information  such as  encumbrance  certificates,  Urban  Land  Ceiling  Clearance  from  the  Government  of  India  and  Government of Tamil Nadu, etc.

Q: Your office prepared any report on title.

A: My legal department always traces title, it is good and  competent to peruse the title deeds.

Q: Your legal department is your staff?

A: Yes.

Q: Was any report on title obtained from the lawyer?

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A: Yes. Q: When was that obtained?

A: Somewhere between 20th to 28.8.1981

Q: Have you produced the legal opinion before this Court?

A: No, it is internal affair and we felt it is not necessary.

Q: Have you got the opinion?

A: I am not sure, I am able to find out.

Q: Did they produce all documents of title for approval?

A: Yes.  They fulfilled clause No.3

Q: Clause No.4 that also the defendant did not?

A: No.

Q: What do you mean by saying no?

A: Because they have not provided encumbrance to the  title deeds,  which is part of the title deed, they had  applied for Urban Land Ceiling exemption, which they  have not disclosed.

Q: Is  there  any  mention  about  Urban  Land  Ceiling  Clearance?

A: It is not mentioned in the agreement, but I would like  to and it is obligatory on the part of the defendant to  go through the implications of Section 6 of the Urban  Land Ceiling Act.

Q: According to you, unless they do not furnish details of  obtaining Urban Land Ceiling clearance, you are not  prepared to purchase?

A: No.   This  is  the  condition  of  the  negotiation.   The  vendor has always been acknowledging to produce the  documents required by us before we put through the  sale.   This  is  also  seen  in  all  stamped  receipts  for  

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which  monies  were  paid  even  after  230-A clearance  obtained.”

16) It is also brought to our notice that the State Government  

in 1995 nearly 10 years after the filing of the suit, claimed 872  

sq.mts.  as being the  excess land above the  ceiling limit  for  

which the appellant-Company had filed a writ petition being  

No. 6312 of 2000 before the High Court.  Though the filing of  

the said writ  petition and the ultimate order on 04.08.2005  

were not brought to our notice by filing appropriate petition  

inasmuch as the said fact was not in dispute, we referred to  

the said decision of the High Court rendered in Writ Petition  

No. 6312 of 2000.  That writ petition came to be filed by the  

respondent Company for issuance of a writ of  mandamus to  

forebear  the  State  and  the  competent  authority  under  the  

Urban Land Ceiling from enforcing the provisions of the Act  

which has been repealed by Tamil Nadu Act No. 20 of 1999  

w.e.f. 16.06.1999 insofar as the land of the petitioner therein  

(respondents herein at Door No. 46, Cathedral Road, Chennai  

in R.S. No. 1238/9 Mylapore, Village) is concerned.   

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17) It is true that despite the fact that there was no provision  

in the Act laying down the process for seeking an exemption  

from  its  operation,  the  respondent-Company  wrote  to  the  

Deputy Secretary, Revenue Department, Government of Tamil  

Nadu on 26.12.1979 seeking such exemption.  As there was  

no response, as rightly pointed out, it was understood that as  

the proviso to Section 3 applies to the land and no further  

exemption was needed.  It  is  relevant to point  out that the  

appellant-Company made further applications on behalf of the  

respondents  but  to  no  avail.   The  entire  land  is  in  the  

enjoyment and possession of the respondent-Company and no  

part of the land has been taken over by the Government.  

18) In the light  of  the above discussion,  we are  unable  to  

agree with the claim of the appellant-Company, on the other  

hand we are in entire agreement with the conclusion arrived at  

by the Division Bench of the High Court.  Consequently, the  

appeal fails and the same is dismissed.  However, parties are  

directed to bear their own costs.  

 ...…………….…………………………J.  

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         (P. SATHASIVAM)                               

 .…....…………………………………J.    (H. L. GOKHALE)  

NEW DELHI; AUGUST 16, 2011.   

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