Bangalore District Court
Flextronics Software Systems vs Millennia Realtors Pvt. Ltd on 13 April, 2016
Govt. Of Karnataka
C.R.P.67] TITLE SHEET FOR JUDGMENTS IN SUITS
Form No.9(Civil) AT MAYOHALL UNIT, BANGALORE.
Title sheet for
Judgment in suits
(R.P.91)
Present: Sri. B.Venkatesha, B.Sc., LL.B.,
(Name of the presiding judge)
Original suit No.25312/2007
(CCCH-29)
Plaintiff:- Flextronics Software Systems
Limited, (formerly known as
Hughes Software Systems
Limited), A Company
incorporated under the
Companies Act, 1956 and having
its registered office at No.5, Jain
Mandir Marg, (Annexe),
Connaught Place, New Delhi- 100
001.
(By Pleader M/s King & Patridge)
V/s
Defendants:- 1. Millennia Realtors Pvt. Ltd.,
Level 12-4, Tower B,
The Millennia,
No.1 & 2, Murphy Road,
Ulsoor, Bengaluru- 560 008.
2. Rani Rasamani Construction
Pvt. Ltd., Flat No.S-001,
Prestige Le Promenade,
No.37, Promenade Road,
Frazer Town (near Thomas
Bakery), Bengaluru- 560005.
2 O.S.No.25312/2007
(By Pleaders : M/s Dua Associates Advs
For D-1)
Date of Institution of the suit: 05-02-2007
Nature of the (Suit or pro-note, suit for Suit for Specific
declaration and possession, suit for Performance
injunction, etc.)
Date of the commencement of recording of 15-02-2012
the Evidence
Date on which the Judgment was 13-04-2016
pronounced
Year/s Month/s Days
Total duration 09 02 08
XXVIII ADDL.CITY CIVIL JUDGE
BANGALORE
3 O.S.No.25312/2007
JUDGMENT
This is a suit filed by the plaintiff directing the 1st and 2nd defendants to execute a registered sale deed in favour of the plaintiff company in respect of piece and parcel of the lands comprising Sy.Nos.18/1, 18/2, 18/5A, 18/5B and portions of 20/2B and 20/3 of Kadabeesanahalli village, Varthur hobli, Bengaluru East taluk measuring 6 acre 20 guntas bounded on the East by Marathalli-Sarjapur Ring road, West by partly by Nala and partly by Sy.No.20/2B, North by partly by road and partly by Sy.No.20/2A and 20/2B and South by Sy.No.17 of Kadabeesanahalli village and Nala as more fully described in schedule A and Phase I Development piece and parcel of land measuring 2 acres and buildings constructed thereon being a portion of A schedule property which comprises of 3 blocks of buildings called as Block A, Block B and Block C having basement, ground, first and second floors together and measuring 1,12,405 sq.ft. in the project known as "RMZ Ecozen" as more fully described in schedule B (hereinafter wards referred to as suit A and B schedule properties respectively) and restraining the defendants from in any way alienating or encumbering the suit A and B schedule properties in favour of third parties in any manner and for costs, etc. 4 O.S.No.25312/2007
2. The plaintiff's case in brief is that the plaintiff and the 1st defendant are the Companies incorporated under the provisions of the Companies Act, 1956. The plaintiff company was in urgent need of a large development centre to meet its various projects at B'Luru City. The 1st defendant is engaged in the business of real estate development. The 2nd defendant was earlier a partnership firm known as M/s.Rani Rasamani Constructions, formerly known as RRR Estates and Constructions. The plaintiff came to know that the 2nd defendant was entitled to suit A schedule property. The 1st and 2nd defendants have entered into a Development agreement dated 3.5.2003 for development of the suit A schedule property. As per terms of the development agreement the 1st and 2nd defendants had agreed to hold and enjoy the developmental area in the ratio of 73 : 27 respectively. It is further pleaded that the defendants No.1 and 2 on 19.5.2003 executed agreement for development of land, construction of building and subsequent lease with purchase option to the plaintiff (herein afterwards referred to as suit agreement) towards fulfillment of the plaintiff's various projects. In pursuance of the suit agreement, the defendants have constructed the Phase-1 Development as shown in the suit B schedule property. It is further pleaded that as per the 5 O.S.No.25312/2007 agreement dt.19.5.2003, the said lease in respect of suit B schedule property is initially for a period of 5 years commencing from 30.10.2003 with an option in favour of the plaintiff to renew the same for a further period of 5 years on expiry of initial period of 5 years. The defendants No.1 and 2 have delivered the entire suit B schedule property to the plaintiff on 15.11.2003 although it had been agreed to hand over on 30.10.2003. Therefore, the plaintiff is a lessee and has been in peaceful possession and enjoyment of the suit B schedule property from 15.11.2003 under the 1st and 2nd defendants. The defendants No.1 and 2 had agreed and undertaken to obtain conversion of 1 acre 27 guntas of land out of the suit A schedule property for non agriculture purpose within a period of 1 ½ years from 15.11.2003, the date of commencement of the lease. But, the defendants have obtained such conversion order only in respect of 1 acre 16 guntas of land out of 1 acre 27 guntas of land out of the suit A schedule property. Plaintiff is liable to pay rent and security deposit amounts to the defendants as shown in Clauses 5.2 and 5.3 of the suit agreement subject to the defendants executing a registered deed of lease in favour of the plaintiff in respect of suit B schedule property. In spite of repeated requests, the defendants 1 and 2 have 6 O.S.No.25312/2007 singularly failed and neglected to execute and register the Deed of lease in respect of suit B schedule property in favour of the plaintiff for a period of 5 years. But, on 10.1.2005 the defendant No.1 has issued notice to the plaintiff stating that he has terminated tenancy of the plaintiff and has requested the plaintiff to quit and deliver vacant possession of the suit B schedule property to him. The said notice is contrary to the various clauses of the suit agreement and that it is illegal, unsustainable and non-est in the eye of law. Despite the detailed reply notice issued by the plaintiff to the 1st defendant, the 1st defendant has filed a suit in O.S.16735/2005 before this Court for eviction of the plaintiff from the suit B schedule property. The plaintiff has deposited a sum of Rs.1,41,80,562/- being the reduced rent due from 15.11.2003 to 31.1.2006 and Rs.22,68,038/- towards balance of the reduced security deposit and Rs.43,77,026-64ps towards reduced rent for the period from 1.2.2006 to 31.12.2006 as per clause 3.1(a) and 3.1(b) of the suit agreement with permission of this Court. The said suit is pending for adjudication. It is further pleaded that the plaintiff has paid total amount of Rs.45,32,327-78ps, i.e Rs.39,04,137/- through cheque No.008145 dt.19.10.2006, Rs.4,67,814-52ps through cheque No.008723 dt.8.1.2007 and 7 O.S.No.25312/2007 Rs.1,60,376-26ps through cheque bearing No.008741 dt.8.1.2007 all drawn on Citi bank N.A, Bengaluru towards security deposit at the reduced rate. It is further pleaded that as per Clauses No.15.1 and 15.2 of the suit agreement, without prejudice to the lease agreement referred to in the suit agreement and in consideration of the plaintiff agreeing to take Phase I Development on lease, the plaintiff has the option and right to purchase suit schedule A and B schedule properties free and clear of all liens, charges and encumbrances at the price agreed to in the suit agreement and that this sole and exclusive option to purchase is valid and exercisable by the plaintiff on and from the 2nd anniversary of the lease upto and inclusive of the 6th anniversary of the lease. Sale consideration amount is fixed at Rs.270/- per sq.ft with an increase at the rate of 12% p.a. excluding the land occupied by the plinth of the buildings in the suit A schedule property. Sale price for the buildings excluding service areas, including the plinth is at Rs.1627-50ps per sq.ft. Sale price for the service area situated in the basement of A block is Rs.542-50ps per sq.ft. Clause 15.2 of the Suit Agreement provides for determination of the sale price in the event of the plaintiff exercising purchase option after any further construction of the buildings on the 8 O.S.No.25312/2007 remaining land in the suit A schedule property. As per Clause 15.4 of the Suit Agreement the plaintiff shall pay a holding cost of Rs.2,16,000/- per month to the defendants until the plaintiff exercises the purchase option or until the expiry of 6 years from the date of lease whichever is earlier, unless before expiry of 6 years the plaintiff decides not to exercise purchase option in which event the obligation to pay holding cost would cease from such date the plaintiff would communicate it in writing with defendants 1 and 2 its decision not to exercise purchase option. If the plaintiff exercises purchase option payment of the holding cost if made shall be set off towards part consideration amount. The plaintiff as per letter dated 2.11.2006 sent a cheque for Rs.54,45,216/- bearing No.008199 dt.2.11.2006 drawn on Citi bank, NA Bengaluru in favour of the 1st defendant being its share of the holding cost. The 1st defendant has not accepted the said cheque on the ground that the suit agreement has stood frustrated and is not in force due to various reasons. The stand taken by the defendant in his letter dated 29.11.2006 is contrary to facts and law and that it is unsustainable. The plaintiff also has sent a cheque No.008144 dated 19.10.2006 for Rs.10,62, 640/- to the 2nd defendant towards its share of holding cost for the period from 9 O.S.No.25312/2007 15.11.2003 to 30.9.2006. It is further pleaded that the plaintiff's option and the right to purchase the suit A and B schedule properties and Phase I Development is unconditional and unqualified and assuming that without admitting that there was some delay in paying holding cost. Such delay would not defeat the plaintiff's right to purchase suit A and B schedule properties. The plaintiff has always been ready and willing to pay holding cost. Therefore, on 15.1.2007 the plaintiff has issued notice to the defendants No.1 and 2 exercising its option to purchase suit A and B schedule properties as per Clause 15.1 read with Clause 5.4 of the Suit Agreement and informed the defendants that the plaintiff shall tender to the defendants the sale price calculated as per Clause 15.1 of the Suit agreement on 31.1.2007 at about 11 am and calling upon the defendants 1 and 2 to execute the sale deed conveying the suit A and B schedule properties to the plaintiff. Along with the said notice, the plaintiff has sent the cheques for Rs.54,45, 216/- and Rs.4.73,040/- to the defendants respectively towards their respective share of holding cost for the period from 1.10.2006 to 31.12.2006. He also has sent a cheque for Rs.1,74,960/- on 2.1.2007 towards holding cost for the period from 1.10.2006 to 31.12.2006. The said notices have been duly served to the defendants. They sent reply notices on 25.1.2007 10 O.S.No.25312/2007 and 27.1.2007 respectively with incorrect and untenable contentions and have unjustly and unjustifiably returned the said cheques to the plaintiff. As per Clause 15.6 of the Suit agreement, the plaintiff shall have all rights to enforce specific performance of the purchase option in a Court of law if the defendants failed or neglected to perform their contractual obligations. As the defendants 1 and 2 failed to execute the sale deed in favour of the plaintiff in respect of A and B schedule property in terms of the suit agreement, the plaintiff has constrained to file this suit for specific performance. Hence, the plaintiff has sought for grant of judgment and decree as prayed against the defendants.
3. On service of suit summons, the defendants No.1 and 2 have put their appearance through their respective learned counsels and have filed their separate written statements contending that this suit is not maintainable either in law or on facts. They have not specifically admitted the plaint averments. The defendants have admitted the execution of the suit agreement in favour of the plaintiff in respect of lease of the suit B schedule properties to the plaintiff with purchase option to the plaintiff in respect of the suit A and B schedule properties. They have specifically admitted 11 O.S.No.25312/2007 that the suit B schedule property is a portion of suit A schedule property. The 1st defendant in his written statement has pleaded that the suit agreement was an agreement for creation of a lease in future. The 2nd defendant has pleaded that the plaintiff has no right to exercise purchase option as M/s.Hughes Software Systems limited had that option provided the agreement was subsisting and the holding costs and rents were paid. The Plaintiff has not produced any documents to satisfy that it has stepped into the shoes of M/s.Hughes Software Systems Limited with whom the defendants had executed the frustrated and terminated agreement. The 1st defendant has specifically pleaded that as per the suit agreement, the execution of the lease deed was necessary for creation of a lease period of 5 years. The 1st defendant specifically admits that the defendants owned jointly in the ratio of 73 : 27. The 1st defendant specifically admits that suit B schedule properties were delivered to the plaintiff on 15.11.2003. But, in view of non execution of the lease deed for a period of five years, the lease in favour of the plaintiff is automatically considered as a tenancy from month to month terminable by a notice of 15 days. Therefore, the plaintiff was a tenant from month to month till January 2005. The said tenancy was terminated by way of notice dtd.10.1.2005 12 O.S.No.25312/2007 that issued by the 1st defendant. In spite of that, the plaintiff is continuing in possession of the said property and has failed to vacate and hand over vacant possession of the same to the 1st defendant. Therefore, after January 2005, the plaintiff's possession over the said property is illegal. Therefore, the 1st defendant has filed the suit in O.S.16735/2005 before this Court for eviction of the plaintiff from the said property and that the same is pending for disposal. The 1st defendant has further pleaded that the plaintiff has failed to take appropriate steps to have said lease executed and registered on or before 30.10.2003. Therefore, the suit agreement has been frustrated and therefore it is unenforceable. The 1st defendant has specifically admitted that the plaintiff has deposited certain amounts in O.S.16735/2005. Option of right to purchase suit A schedule property by the plaintiff was to be only in consideration of the plaintiff to take the suit B schedule property on lease for 5 years commencing under a registered lease deed proposed to be executed between the plaintiff and defendants. The 1st defendant has further pleaded that a portion of the Sy.Nos.20/2B and 20/3 of Kadabeesanahalli village measuring 1 acre 27 guntas and 30 guntas of land in Sy.No.18/2 is notified for acquisition u/s.28(4) KIADB Act. The 1st defendant has challenged the same 13 O.S.No.25312/2007 by filing Writ petition before the Hon'ble High Court of Karnataka, Bengaluru and that the said writ petition is pending for disposal. He also has specifically denied that the plaintiff is and always ready and willing to perform its part of contract under the suit agreement. Cause of action would have arisen only on 19.5.2003 and when the plaintiff was inducted as monthly tenant of the said property on 15.11.2003 and not subsequently. Therefore, this suit is barred by limitation. The 2nd defendant in his written statement has specifically pleaded similar pleadings as pleaded in the written statement of defendant No.1. Both defendants have pleaded that there was no cause of action to file this suit. The 2nd defendant has further pleaded that the plaintiff has willfully committed persistent breach leading to its frustration/termination and filing of suit in OS.16735/2005 by defendant No.1 directing the plaintiff to quit and deliver vacant possession of suit B schedule property. He has further pleaded that the plaintiff is liable to pay a sum of Rs.2,37,81,558-50/- till April 15th as arrears of rent and holding costs with a sum of Rs.88,56,000/- interest at 24% p.a. on delayed payment. Therefore, the plaintiff has no manner of right over the suit agreement dt.19.5.2003. Therefore, the defendants have sought for dismissal of this suit with their costs.
14 O.S.No.25312/2007
4. Based on the aforesaid pleadings, this Court has framed the following issues:-
1. Whether the plaintiff proves that defendant No.2 entered into an agreement of development of land construction of building and subsequent lease with purchaser option to the lessee (plaintiff) and executed an agreement on 19.5.2003?
2. Whether the plaintiff proves that he had an option and right to purchase A schedule properties as per the price agreed to in the suits?
3. Whether the plaintiff further proves that D.1 & 2 agreed to sell the A schedule property for the land at the rate of Rs.27/-
per square feet with increase at 12% p.a., Rs.1627-50 per sq.ft. for buildings, Rs.542.50ps per sq.ft. for service area?
4. Whether plaintiff was ever ready and willing to perform his part of contract?
5. Whether the defendants prove that the agreement dt.19.5.2003 is frustrated and terminated?
6. Whether the defendant No.1 proves that the plaintiff is estopped from invoking the purchaser options in view of breach committed in non payment of holding costs every month?
7. Whether suit is time barred?
8. What order or decree?
15 O.S.No.25312/2007
5. In support of the case of the plaintiffs, the plaintiff got examined as P.W.1. They got exhibited 34 documents as Ex.P-1 to P-34 and closed evidence to substantiate their claim. The defendants examined one of their Director Mr.Raj Menda as D.W.1. They got exhibited 20 documents as Ex.D-1 to D-20 and closed evidence to substantiate their defence.
6. Heard the arguments of the learned counsels appeared for the plaintiffs as well as the defendants. Perused the facts and circumstances of this case. Perused the plaint, WS, evidence placed before the Court. Perused the arguments urged by both the sides before this Court.
7. The learned counsel for the plaintiff has argued in length by way of taking this Court to the various terms of the suit agreement, evidence, and pleadings of both sides. He has argued that the plaintiff company had invested more than 25 crores of rupees to improve the suit B schedule property and that thousands of employees are working in the plaintiff company. He has further argued that if this suit is not decreed, the plaintiff & it's employees will put to greater hardship. The learned counsel for the 1st defendant has argued that 5 year contractual lease by way of a registered lease is a precondition to exercise purchase option in terms of Clause 15 of Ex.P-3. Execution and 16 O.S.No.25312/2007 registration of a separate lease deed is necessary as per Clause 12 of Ex.P-3. He has argued that the option to purchase suit A schedule property by the plaintiff has to be made only in consideration of the plaintiff's agreement to take Phase-I development on lease. 2nd and 6th anniversary of lease as per Clause 15 of Ex.D-3/Ex.P-34 can occur only if a registered lease deed comes in to existence for 5 years and it is renewed thereafter for another term of 5 years as per Clause 4(b) of the draft lease deed at Annexure VI. Therefore, the learned counsel for the 1st defendant has argued that since no lease deed has been executed and registered, the plaintiff is merely a month to month tenant. Therefore, he contended that the purchase option never came into force since 2nd and 6th anniversary of lease never came into force.
8. The learned counsel for the 1st defendant further argued that the lease deed was not executed due to the following defaults of the plaintiff.
(a) the plaintiff took possession of the suit B schedule property as a lessee voluntarily without any compulsion. (b) Prior to taking possession, the plaintiff did not request for execution of the registered lease deed. (c) The plaintiff did not pay the rents.
(d) The 2nd defendant refused to sign the lease deed since no 17 O.S.No.25312/2007 rents were paid. (e) As per clause 12 of Ex.P-3, the lease deed must be executed and registered only as per the terms contained in Annexure VI. But, the plaintiff has sought for modification of the lease deed in September 2004. (f) The plaintiff was not willing to execute the lease deed as agreed under Clause 12 of Ex.P-3. The learned counsel for the 1st defendant has further argued that monthly payment of holding cost as per Clause 15 is a pre condition to keeping the purchase option alive, for the following reasons :-
(a) By reserving an option to purchase the property in favour of any third party under whatsoever circumstances since the stipulation is extremely unilateral. The plaintiff was under an obligation to pay holding cost to keep its option to purchase alive. (b) The option to purchase is not only restraining the 1st defendant from exercising its ownership rights over the property, but also compelling the defendants to sell the property at a determined price which is the market value of the property as of the year 2003 not withstanding that the property would be purchased between the years 2005-2009. (c) Therefore, the plaintiff was under an unconditional obligation to pay holding cost every month as a consideration to bind the defendants into keeping the purchase option alive. Therefore, the learned 18 O.S.No.25312/2007 counsel for the 1st defendant has contended that the option to purchase is merely a concession/conditional offer and not an agreement of sale wherein either party can compel the performance by the other. In view of nature of purchase option, the 1st defendant is entitled to retain the holding costs paid by the plaintiff, if he is failed to exercise the purchase option after the 6th anniversary of lease. He has further contended that Clause-15 clearly shows that timely payment of the holding cost was the essence of contract. It is only by timely payment of the holding cost every month, the plaintiff could bind the defendants to extend the concession/the privilege of purchase option. He has further argued that the plaintiff did not pay holding cost because it did not intend to purchase the property and it did not forego the holding cost in favour of the defendants. After witnessing the steep rise in the market value of the property during the year 2007, the plaintiff wants to enjoy the privilege of purchase of the property at a price fixed in the year 2003 and that therefore the plaintiff wanted to retain its illegal possession over the property without paying rents. He has further argued that the plaintiff wants to exercise the purchase option to harass the defendants and that exercise of purchase option is an after 19 O.S.No.25312/2007 thought and is an obvious counter blast to the eviction suit filed in O.S.16735/2005.
9. The learned counsel for the 1st defendant about ready and willingness of the plaintiff to exercise its purchase option has further argued that the plaintiff has not produced documents to show its financial strength to purchase the property as on the date of exercise of the option to purchase. It is after merger of the plaintiff Company i.e. M/s.Flextronics Software Systems Pvt. Ltd. with M/s.Aricent Technologies, the plaintiff gained the financial strength. He has further argued that M/s.Flextronics Software Systems Pvt. Ltd is not in existence any more and that title to 11 guntas of land is yet to be acquired by the 2nd defendant, this suit for specific performance is not maintainable. The learned counsel for 1st defendant has further argued that as per Article 54 of the Limitation Act, the limitation for filing this suit begins on the date fixed for performance or if no such date is fixed, when the plaintiff has noticed that performance is refused. He has argued that the purchase option would come into force only upon commencement of a contractual lease for five years by execution and registration of the registered lease deed. It is for the plaintiff's default, the registered lease deed was not executed. He has contended that 20 O.S.No.25312/2007 the plaintiff's case is that owing to the defendants default, the lease deed was not registered and executed on 31.10.2003. Therefore, it is clear that the plaintiff contends that the defendants refused for execution and registration of lease deed on 31.10.2003. Therefore, he has contended that cause of action to file this suit arose on and from 31.10.2003. The 3 years limitation period to file this suit for specific performance expired on 1.11.2006. He has argued that this suit was filed on 5.2.2007 i.e after three years from 31.10.2003. Therefore, the learned counsel for the 1st defendant has argued that this suit is barred by limitation. Therefore, the learned counsel for the 1st defendant has sought for dismissal of this suit with costs.
10. The learned counsel for the plaintiff has relied the following reported decisions in support of his arguments.
AIR 1968 SC 496 Tolarave Relumal and another Vs. The State of Bombay. 2010(10) SCC 512 Man Kaur (dead) by LRs v/s. Hartar Singh Sangha. AIR 2002 SC 2290 Nirmal Anand Vs. Advent Corp. Ltd. and other, 1987(2) SCC 555 Ramswarup Gupta (dead by LRs Vs. Bishun Narain inter college and others). 2005(12) SCC 508 BDA and others Vs. R.Hanumaiah and others. 2004(2) SCC 712 FCI & others V/s Babulal Agarwal. AIR 2003 SC 578 B.L.Sreedhar and others Vs. K.M.Munireddy. 2011(1) SCC 21 O.S.No.25312/2007 429 J.P.Builders and others Vs. A.Ramadas Rao and another. (1977) 4 SCC 324 M/s.Technicians Studio Private Ltd V/s Smt.Lila Ghosh and another). (1973) 1 SCC 273 (M/s.Hindustan Steel Limited V/s Smt.Kalyani Banerjee and others. (2004) 1 SCC 191 Bibi Zubaida Khatoon Vs Nabi Hassan Saheb and another. (1999) 3 KLJ 677 Y.N.Gopala Rao V/s D.R.Laxminarayana and others. 2000(4) KLJ 187 (DB) B.R.Rangaswamy V/s D.Syed Younous and others. AIR 1997 SC 2630 Venkappa Gurappa Hosur V/s Kasawwa c/o.Rangappa Kulgod.
11. The Hon'ble Apex Court (Five Judges Bench) in a case reported in AIR 1954 SC 496 Tolarave Relumal and other Vs. The State of Bombay, at para 6, has held that "an instrument is usually construed as a lease if it contains words of present demise. It is construed as an executing agreement, notwithstanding that it contains words at present demise. Where certain things have to be done by the lessor before the lease is granted, such as the completion or repair or improvement of the premises or by the lessee, such as obtaining sureties it amounted to an agreement to grant a lease in future..." The Hon'ble Apex Court, in a case reported in 2010(10) SCC 512 Man Kaur (dead) by LRs v/s. Hartar Singh Sangha case has held that "power of attorney holder who has no personal knowledge 22 O.S.No.25312/2007 cannot be examined in place of plaintiff. It was further held that"
where a party to the suit does not appear in witness box and states his own case on oath and does not offer himself to be cross-examined by the other side, a presumption would arise that case set up by him is not correct..." The Hon'ble Apex Court at para 17 has further held that "To succeed in a suit for specific performance, the plaintiff has to prove (a) that a valid agreement of sale was entered into by the defendant in his favour and the terms thereof (b) that the defendant committed breach of the contract and (c) that he was always ready and willing to perform his part of the obligations in terms of the contract. To prove that the plaintiff was always ready and willing to perform his part of the obligations in terms of the contract, necessarily he should set up into the witness box and give evidence that he has all along been ready and willing to perform his part of the contract and subject himself to cross-examination on the said issue. A plaintiff cannot obviously examine in his place, his PA holder who did not have personal knowledge either of the transaction or of his readiness and willingness. Readiness and willingness refer to the state of mind and conduct of the purchaser as also his capacity and preparedness on the other one without the other is not sufficient. Therefore, a third party who has no personal 23 O.S.No.25312/2007 knowledge cannot give evidence about such readiness and willingness even if he is an attorney holder of the person concerned..."
12. The Hon'ble Apex Court in Nirmal Anand Vs. Advent Corp. Ltd. and other, a case reported in AIR 2002 SC 2290 has held that "in a case where lease has been terminated and that there was possibility of renewal of lease and that the purchaser who was ready and willing to perform contractual obligations, specific performance cannot be refused. In a case reported in 1987(2) SCC 555 Ramswarup Gupta (dead by LRs Vs. Bishun Narain inter college and others) the Hon'ble Apex Court has held that "pleadings need not contain the exact statutory language or expression in order to attract the statutory provisions. If plea relates to terms and conditions of an oral agreement, absence of written deed of the agreement not fatal to the plea as the terms can be gathered from the circumstances and conduct of the parties. The Hon'ble Apex Court has held that the parties by agreement can make licence irrevocable even if it is not covered by Clauses (a) and (b), of Sec.60 of Easements Act, 1882. In a case reported in 2005(12) SCC 508 BDA and others Vs. R.Hanumaiah and others, the Hon'ble Apex Court has held that "Doctrine of promissory estoppel can not be invoked to permit or 24 O.S.No.25312/2007 can done a breach of law or to compel the Government to do an act prohibited by law..."
13. In a case reported in 2004(2) SCC 712 FCI & others Vs. Babulal Agarwal at para 7 has held that "Even a monthly lease may last for more than a year and for any longer period. In the absence of lease deed or registered lease deed, the nature of the lease would be only be that a monthly lease.." The Hon'ble Apex Court at paras 8 and 10 has further held that "agreement for securing another agreement or deed in future for the creation of the rights (lease in this case) in immovable property is not a document which compulsorily requires registration. It is an executory agreement by which no right in the property created prasenti. At para 7 the Apex Court has further held that "According to which the parties had to execute a registered lease deed but the same was never done. We find that the High Court has rightly dealt with the question while holding that the plaintiff had not filed the suit for enforcement of agreement of lease. It was suit filed for damages for the breach of contract. It was not a suit for specific performance of the contract. A promise was definitely held out by the defendant to the appellant for occupying the premises for a period of three years at a given rate of rent. The premises were in fact 25 O.S.No.25312/2007 constructed in accordance with the instructions and specifications of the defendant. Therefore, the Hon'ble Apex Court has held that "non execution of the contract in terms of Article 299 of the COI does not militate against the applicability of the doctrine of promissory estoppel against the Government. The proposition of liability of a party on backing out of a promise held out, after making the other party alter his position.
14. In a case reported in AIR 2003 SC 578 B.L.Sreedhar and others Vs. K.M.Munireddy the Hon'ble Apex Court has held that "Though estoppel is described as a rule of evidence, it may have the effect of creating substantive rights as against the person estopped and that therefore it is capable of enforced or defended as against the person precluded from denying it". In a case reported in 2011(1) SCC 429 J.P.Builders and others Vs. A.Ramadas Rao and another, the Hon'ble Apex Court has held that "contract contingent upon collateral events dependant on performance of provisions obligations." Vendor could not take advantage of his own in action. Doctrine of impossibility cannot be applied to assist a party unwilling to fulfill its obligations under the contract. The Hon'ble Apex Court has further held that "readiness and willingness on the part of the plaintiff to perform his part of 26 O.S.No.25312/2007 contract is a condition precedent for obtaining relief. In case of non compliance therewith, suit has to be dismissed even in the absence of specific pleading to that effect by opposite party..." The Hon'ble Apex Court in (2004) 1 SCC 191 (Bibi Zubaida Khatoon Vs. Nabi Hassan Saheb and another) case at para 10 has held that there is no absolute rule that the transferee pendente lite without leave of the Court should in all cases be allowed to join and contest the pending suits. The Hon'ble Apex Court in (1999) 3 KLJ 677 (Y.N.Gopala Rao Vs. D.R.Laxminarayana and others) case at para 28 has held that it is one of the well settled principles of law that the discretionary powers have to be exercised judiciously in such cases where the discretion in the matter of granting of decree for specific performance is exercised arbitrarily by refusing to grant the decree for specific relief without being applying mind to the legal and judicial principles. The Hon'ble High Court of Karnataka in 2000(4) KLJ 187 (DB) (B.R.Rangaswamy V/s D.Syed Younous and others) case at para 23 and 24 held that ordinary rule is that relief of specific performance should be granted. It is to be denied only when equitable considerations point out its refusal and circumstances show that damages would be adequate relief. Appreciation in value of property over years since agreement is 27 O.S.No.25312/2007 no ground to deny specific performance when party itself is responsible for delay in execution of sale. The Hon'ble Apex Court in a case reported in AIR 1997 SC 2630 (Venkappa Gurappa Hosur Vs. Kasawwa c/o.Rangappa Kulgod) has held that specific performance of agreement for sale - cause of action - Accrual - alleged vendor under agreement filing suit for possession of property under agreement - Amounts to denial of existence of agreement by vendor - Cause of action for suit (limitation) starts from date of vendors suit for possession - notice issued by plaintiff purchaser after vendor's suit was decree
- would not stop limitation from running - suit filed beyond 3 years from date of vendors suit is barred by law of limitation.
15. The learned counsel for the 1st defendant has placed reliance of the cases reported in (i) AIR 1968 SC 1028 (Kollipara Sriramulu (D) by LRs Vs Aswathnarayana (D) by LRs and others). (ii) AIR 1963 SC 1182 (K.Sirmathmull Vs.Nanjalingaiah Gowda). (iii) 2001(7) SCC 617 (V.Pechimuthu Vs. Gowrammal and (iv) (1998) 2 SCC 226 (Bismillah Begum Vs. Rahmatullah Khan). He also has relied extract of page No.49 from pollock & Mulla on the Indian Contract & Specific Relief Acts, 14th edition 2012 in support of his arguments. He has 28 O.S.No.25312/2007 supplied the emphasis and that the same placed along with the record of this suit.
16. In a case reported in AIR 1968 SC 1028 Kollipara Sriramulu's case, at para 3, the Hon'ble Apex Court has held that "It is well settled that a mere reference to a future formal contract will not prevent a binding bargain between the parties. The fact that the parties refer to the preparation of an agreement by which the terms agreed upon are to be put in a more formal shape does not prevent the existence of a binding contract." If the documents or letters relied on has constituting a contract contemplate the execution of a further contract between the parties, it is a question of construction whether the execution of the further contract is a condition or term of the bargain or it is a a mere expression of the desire of the parties as to the manner in which the transaction already agreed to will in fact go through. In the former case, there is no enforceable contract either because the condition is unfulfilled or because the law does not recognize a contract to enter into a contract. In the latter case, there is a binding contract and the reference to the more formal document may be ignored. In a suit filed for specific performance of contract dt.19.2.1948, in a case reported in AIR 1962 SC 1182 K.Simrathmull's case, the Hon'ble Apex Court at 29 O.S.No.25312/2007 para 5 has accepted the majority decision of the Federal Court rendered in Shanmugam Pillai Vs. Annalakshmi (AIR 1950 FC 38) and it was held that "where under an agreement an option to a vendor is reserved for repurchasing the property sold by him, the option is in the nature of a concession or privilege and may be exercised on strict fulfillment of the conditions of which it is made exercisable. The Hon'ble Court has further held that "If the original vendor fails to act punctually according to the terms of the contract, the right to repurchase will be lost and cannot be specifically enforced. In a suit filed for specific performance of the agreement, in a case reported in 2001(7) SCC 617 V.Pechimuthu's case at para 14, the Hon'ble Apex Court has held that "Whether an agreement is an option to purchase simplicitor or an ordinary" agreement would depend on the interpretation of its provisions. The right to obtain sale is subject to the fulfillment of certain conditions by the purchaser, the agreement would in effect be an option to purchase, as the right to purchase would only accrue upon the voluntary performance of the conditions specified by the owner. The vendor cannot compel the performance of the conditions by the purchaser and then ask for the contract to be specifically performed. In another case reported in 1998(2) SCC 226 30 O.S.No.25312/2007 Bismillah Begum's case filed for specific performance of contract dt.8.2.1955, the Apex Court has held that "time is always the essence of contract for reconveyance of the property. Repayment having not been made by the plaintiff within the stipulated time, option of reconveyance in her favour must be deemed to have lapsed..." It was further held that "An option for the renewal of a lease, or for the purchase or repurchase of the property, must in all cases be exercised strictly within the time limited for the purpose, otherwise it will lapse..."
17. Several recitals of page 49 from Pollock & Mulla on the Indian Contract & Specific relief Acts, 14th edition 2012 is summed up as under for convenient reference.
"A contract of option is one whereby the grantor of the option offers to enter into what may be called a major contract with a second person and makes a separate contract to keep his offer open. A lease with an option in the lessee (of land) to renew the lease or buy the reversion; a sale with an option of repurchase granted to either the seller or the buyer; a sale with an option for the buyer to make further purchases on similar terms; a service or agency agreement with an option in either party to renew. The effect of the contract of option is to create an irrevocable offer and a power of acceptance, such that it is a 31 O.S.No.25312/2007 breach of the contract of option to revoke it. The exercise of the option may be subject to certain conditions precedent, such as time limit, or the occurrence of a certain event, or the duration of a major contract of which is forms a part, or the mode in which it may be exercised. An option by its very nature is dependent entirely on the volition of the person granted the option. He may or may not exercise it. It is a privilege or concession. It's exercise cannot be compelled by the person granting the option. It is because of this one sidedness or "unilaterality" as it were, that the right is strictly construed. The conditions entitling the option holder to exercise the option must be strictly fulfilled. A promise to reconvey the property within a specified period at the option of the promisor is an option which becomes enforceable when the offeree exercises his option. Whether a statement is an agreement or an option is a matter of construction.
18. Perused the plaint, written statements of the defendants, evidence of the PW-1 & DW-1 and the documents placed before this Court for both parties to this suit. Perused the facts and circumstances of this suit with the facts and circumstances of the afore stated reported cases and the ratio of law laid down in the afore stated reported cases. 32 O.S.No.25312/2007
19. My answer to the aforesaid issues is as follows:-
Issue No.1 : As in the affirmative.
Issue No.2 : As in the affirmative.
Issue No.3 : As in the affirmative Issue No.4 : As in the negative Issue No.5 : As in the affirmative Issue No.6 : As in the affirmative Issue No.7 : As in the negative Issue No.8 : As per final order for the following :-
REASONS
20. Issues No.1 to 3 :- These issues are inter-linked to each other. Therefore, these issues are taken up together for joint discussion to avoid repetition of facts. It is the case of the plaintiff that on 19.5.2003 the defendants entered into an agreement of development of land, construction of building and subsequent lease with purchase option to the plaintiff to purchase the suit A schedule property for the land at the rate of Rs.27/- per sq.ft with increase at 12% p.a., Rs.1627.50 per sq.ft. for buildings and Rs.542.50 per sq.ft for the service area. In this regard, in the plaint as well as in the evidence of P.W.1, the plaintiff has specifically pleaded and deposed that on 19.5.2003 33 O.S.No.25312/2007 the defendants have executed the suit agreement in his favour in respect of the suit A schedule property for its development, construction of buildings and subsequent lease with purchase option to the plaintiff at the rates as specified above. In this regard, the plaintiff has relied the suit agreement dated 19.5.2003 that marked as per Ex.P-34. In the written statement and in the evidence of D.W's.1 and 2, the defendants have specifically admitted the execution of Ex.P-34 the suit agreement in favour of the plaintiff in respect of the suit A schedule property for its development, construction of buildings therein, for subsequent lease of the suit B schedule property with purchase option to the plaintiff as per the terms and conditions specified in the said agreement. A content of Ex.P-34 the suit agreement dt.19.5.2003 specifically supports the pleadings of the plaintiff as well as evidence of P.W.1 and D.W.1 in respect of the aforesaid issues. In fact, framing of the aforesaid issues are not necessary since contents of these issues as well as pleadings of the plaintiff about these facts are all specifically admitted by the defendants No.1 and 2. Considering the pleadings, evidence of both sides and contents of Ex.P-34, I am of the view that the plaintiff has proved the Issues No.1 to 3. Therefore, I answered the Issues No.1 to 3 as in the affirmative.
34 O.S.No.25312/2007
21. Issues No.4 to 6 :- These issues are inter-linked with each other. Therefore, these issues are taken up together for joint discussion to avoid repetition of facts. It is the case of the plaintiff that he is/was ever ready and willing to perform his part of contract dt.19.5.2003 (Ex.P-34). It is the case of the defendants that Ex.P-34 suit agreement dt.19.5.2003 is frustrated and terminated and that therefore the plaintiff is estopped from invoking the purchase option in view of breach committed by him since he failed to pay holding cost amount every month to the defendants as per the terms of the said contract. In the plaint as well as in the evidence of P.W.1, it was specifically pleaded and deposed that the plaintiff is/was always ready and willing to perform his part of the said agreement. In the written statement and in the evidence of D.W.1, the defendants have specifically pleaded and deposed that the plaintiff was not paid the holding cost or agreed rent every month to the defendants as specified in Ex.P-34. Therefore, the defendants have contended that in view of the plaintiff's failure in payment of agreed rent and holding cost every month, the suit agreement dt.19.5.2003 has become frustrated and terminated and that therefore the plaintiff is estopped from invoking the purchase option. In the course of arguments, the learned 35 O.S.No.25312/2007 counsel for the plaintiff has argued that no such provision is made in the suit agreement that the suit agreement became frustrated or terminated in case of failure of the plaintiff in payment of the agreed rent or holding cost every month to the defendants. He has argued that payment of agreed rent or holding cost every month to the defendants is not mandatory. Therefore, the learned counsel for the plaintiff has vehemently argued that right to exercise purchase option to the plaintiff is still in existence and that therefore the plaintiff has decided to exercise its purchase option as per terms of the suit agreement.
22. Ex.P-1, CC of the resolution passed by the Board of Directors of Aricent Technologies (Holdings) Limited in its meeting held on 20.7.2011 discloses that P.W.1 Manoj Kumar Vaish, Asst.Vice President & Admn. Of the Company is authorized to represent the Company and depose evidence in this suit and the suits filed in O.S.16735/2005 and O.S.26660/2010 before this Court. Ex.P-2, order copy dated 16.5.2007, passed by the Hon'ble High Court of Delhi in Company petitions No.49/2007, 50/2007 & 51/2007 and in Company Application No.201/2006, 202/2006 and 203/2006 filed by the plaintiff and other two companies, discloses that the plaintiff Company and future Software company and Kappa investments companies are all 36 O.S.No.25312/2007 merged with each other. Certificate dt.18.2.2005 issued by the Registrar of Companies discloses that M/s.Hughes Software Systems Ltd. has changed its name as Flextronics Software Systems Limited. Ex.P-3, the letter dt.12.2.2002 of Arcop Associates Pvt. Limited addressed to M/s.Hughes software Systems Pvt. Ltd. discloses that the Arcop Associates Pvt. Limited has offered to provide full services including interior design work of M/s.Hughes Co. Ex.P-4, letter dt.4.3.2003 of Bovi's and lease discloses that it has proposed to M/s.Hughes Co. the average cost of estimation between different places within India. Ex.P-5, the letter dt.27.5.2003 of M/s.Hughes Co. addressed Bovis lend lease India Pvt. Ltd. that M/s.Hughes appoint the Bovi's lend lease India Pvt. Ltd. company for project management services of Hughes campus at Bengaluru including campus facility, all interior design, engineering services and project execution. Ex.P-6 the work order dt.7.7.2003 discloses that the Hughes had issued the same to Arcop Associates Pvt. Ltd. to provide professional services to the Hughes, Bengaluru campus. Ex.P-7, work order dt.7.7.2003 discloses that the Hughes had issued the same to Bovis lend lease India Pvt. Ltd. to provide project management services to the Hughes at its Bengaluru campus. Ex.P-8 discloses the campus facility infrastructure details of the total value of 37 O.S.No.25312/2007 Rs.25, 86,43, 596/-. Ex.P-9, letter dt.20.11.2003 of the 1st defendant discloses that it had submitted the quotation of Rs.8,39, 549-00 etc. to provide designing to Hughes at its Bengaluru campus. Ex.P-10, invoice discloses that the Bovis lend Lease India Pvt. Ltd. Company had issued the same to Hughes for payment of Rs.1,500,000-00 on 11.11.2003 towards contract value and Tax amount of Rs.144,000,00.
23. Ex.P-11, purchase order dt.30.10.2003 discloses that the Hughes had issued the same to Carrier China Ltd., Hongkong with a request to provide water cooled screw chiller of 150 tons of 84000.00 US$ to its Bengaluru campus. Ex.P-12, letter dt.19.11.2003 of the Hughes discloses that it has paid Rs.8,57, 250/- to the 1st defendant through cheque No.257250 dt.18.11.2003 drawn on City Bank towards the refundable security deposit. Ex.P-13, work order dt.3.12.2003 of the Hughes discloses that it has placed the same before the 1st defendant to carry out additional works i.e. lifts, etc. to its Bengaluru campus and that value of the same is Rs.39,70,698/-. Ex.P-14, the purchase order dt.3.12.2003 discloses that the Hughes had requested the 1st defendant for supply of several electrical machineries of Rs.13,41,668 to its Bengaluru campus. Ex.P-15, the invoice dt.16.1.2004 of the 1st defendant discloses that the 38 O.S.No.25312/2007 1st defendant has placed the bill for additional works of the Hughes for Rs.2,81,6048. Ex.P-16, invoice dt.4.3.2004 of the 1st defendant discloses that it has placed the bill for additional work of the Hughes for Rs.42,18,4223/-. Ex.P-17, work order dt.13.3.2004 of the Hughes discloses that it has placed the said work order before the 1st defendant to carry out additional landscaping etc. for its Bengaluru campus and its total value is Rs.36,36,175-00. Ex.P-18 discloses that e-mail was sent to P.W.1 to know about status of the occupancy certificate. Ex.P- 19, various e-mail copies addressed to Hughes by its Administrative Manoranjan Mohapatra to Manish about development of suit B schedule property etc. Ex.P-20 the fresh certificate of incorporation consequent upon change of name issued by the Registrar of Companies of Delhi & Haryana discloses that Kappa Investments Ltd. changed to Aricent Technologies (Holding) Limited with effect from 28.5.2007. Ex.P- 21 discloses that the plaintiff has filed the certificate of declaration under Sec.65B(4) of the Indian Evidence Act about the e-mails marked at Ex.P-19 and P-20.
24. Ex.P-22, the letter dt.31.10.2006 discloses that the plaintiff had sent a cheque of Rs.10,62,640/- dt.19.10.2006 drawn on City Bank, N.A. Bengaluru to the 2nd defendant towards 39 O.S.No.25312/2007 payment of 27% of the holding cost from 15.11.2003 to 30.9.2006. Ex.P-23 is the true copy of the bill and the cheque dt.19.10.2006 of Rs.10.62,640/- addressed to the 2nd defendant. Ex.P-24 letter dt.12.1.2007 discloses that the plaintiff had send cheque No.008723 dt.2.1.2007 drawn on Citi Bank for Rs.4, 67,814-52 to the 2nd defendant towards payment of rent for the period from 1.10.2006 to 31.12.2006. Ex.P-25, letter dt.18.1.2007 discloses that the plaintiff has sent cheque No.008741 dt.8.1.2007 drawn on Citi bank for Rs.1.60.376.26 towards payment of rent for January 2007 to the 2nd defendant. Ex.P-26, letter dt.2.11.2006 discloses that the plaintiff has sent cheque No.008199 dt.2.11.2006 drawn on Citi bank N.A., Bengaluru for Rs.54.45.216/- being the 73% of the holding cost from 15.11.2003 till 30.9.2006 to the 1st defendant. Ex.P-27, letter dt.29.11.2006 discloses that the 1st defendant has refused to accept the cheque No.008199 dt.2.11.2006 and has returned the said cheque to the plaintiff. Ex.P-28, letter dt.31.10.2006 discloses that the plaintiff has sent cheque No.008145 dt.19.10.2006 for Rs.39.04.137 to the 2nd defendant towards its rent share for the period from 15.11.2003 till 30.9.2006. The same further discloses that the plaintiff also sent cheque No.008139 dt.19.10.2006 for Rs.20.19.825/- to the 2nd defendant 40 O.S.No.25312/2007 towards its share of refundable security deposit. Ex.P-29, letter dt.15.1.2007 discloses that the plaintiff has expressed its decision to exercise its purchase option as provided under Ex.P-34 agreement and has sent two cheques for Rs.54.45.216/- and Rs.4.73.040/- to the 1st defendant towards payment of its share of holding cost and rent respectively for the period from 15.11.2003 to 30.9.2006 and 1.10.2006 to 31.12.2006. Ex.P-30, similar letter addressed to the 2nd defendant discloses that the plaintiff has also intimated its decision to exercise its purchase option and sent cheque No.008722 dt.2.1.2007 for Rs.1.74.960/- being its share of holding cost from 1.10.2006 to 31.12.2006. Ex.P-31, legal notice copy dt.25.1.2007 issued by the 1st defendant to the plaintiff discloses that the 1st defendant has intimated to the plaintiff that the Ex.P-34, agreement has stood frustrated and unenforceable in view of the plaintiff's failure to execute and register lease deed as well as for non-payment of holding cost and rent amount every month and also in view of the fact that the tenancy was terminated vide notice dt.10.1.2005. Ex.P-32, notice dt.27.1.2007 discloses that the 2nd defendant also issued the notice to the plaintiff and requested the plaintiff to pay mesne profits with interest at 24% p.a. from due dates till payment. Ex.P-33, the 11th Annual report 2002- 41 O.S.No.25312/2007 2003 of the Hughes Software Systems Pvt. Ltd. Same discloses that it has earned profit of 379.252.165 U.S. GAAP.
25. As discussed on Issues No.1 to 3 and also as well as on perusal of the pleadings, evidence and the document marked at Ex.P-34, it is clear that the defendants No.1 and 2 and the plaintiff have entered into the agreement marked at Ex.P-34/ Ex.D-3 on 19/21.5.2003 with a purchase option to the plaintiff to purchase the suit A and B schedule properties for the rates as specified in the said agreement. In order to know whether the plaintiff is/was always ready and willing to perform his part of the agreement marked at Ex.P-34, what are all the obligations that casted on both the parties to this suit to complete the said contract with respect to exercise of the purchase option conferred on the plaintiff, it is necessary to go through the some important contents of Ex.P-34/Ex D-3 that summed up as under
for reference:-
As per Clause 1.1 of Ex.P-34, the 1st defendant was agreed that the phase-1 development will be constructed on or before 30.10.2003 strictly in accordance with the sanctioned plans and in compliance with all laws, statutes, ordinances, administrative orders or Governmental rules, regulations and requirements of any duly constituted public authority having 42 O.S.No.25312/2007 jurisdiction. Clause 2 of the said agreement provides that the 1st defendant agreed to deliver vacant possession of the Phase- 1 development to the plaintiff on or before 30.10.2003 and that the lease for Phase-1 development shall commence from 30.10.2003. As per Clause 2.1 of Ex.P-34 initial lease of the suit B schedule property is for a term of 5 years from 30.10.2003 with a sole and exclusive option to the plaintiff to renew the same for a further term of 5 years immediately following the initial 5 year term on the terms and conditions stated in the said document. The said Clause further discloses that if delay in delivery of completed Phase-1 development on or before 30.10.2003, the commencement date shall commence on such other date as the plaintiff may at its option, accept the vacant and physical possession of the completed Phase-1 development and accordingly the ensuing 5 year lease term shall be computed for such new date without prejudice to any of its other rights. The said Clause further discloses that during the entire term of the said lease, the plaintiff shall have the exclusive use and enjoyment of the remaining land in suit A schedule property duly landscaped as per plaintiff's requirements. Clause 2.3 provides that the plaintiff shall deposit at the time of execution of the lease deed with the defendants an interest free security deposit 43 O.S.No.25312/2007 equivalent to fifteen months rent, refundable at the expiry of the lease or on it's sooner determination. Clause 2.4 of Ex.P-34 provides that there shall be a lock-in period of first 4 years of the lease term, during which time plaintiff shall not terminate the said lease. The said lock in term for 4 years shall not apply in the event plaintiff elects to exercise its option to purchase as per the terms of the said contract. The plaintiff may at its option terminate the lease at any time after the lock-in time by giving 3 months notice in writing. Clause 3 of Ex.P-34 agreement provides that the defendants are agreed and undertaken to obtain conversion of 1 acre 27 guntas in land No.20/3 from agriculture to non-agricultural purposes and permission for conversion from residential to industrial software purpose before commencement of the lease. Clause 3.1(b) provides that change of land use from residential to industrial software purpose within a period of 1 ½ years from the date of commencement of lease. Clause 4 of Ex.P-34 agreement provides that the plaintiff shall deposit with the 1st defendant a sum of Rs.30, 00,000/- at the time of signing on Ex.P-34 document. Clause 4.2 of the said agreement provides that the said Rs.30, 00,000/- shall be applied towards part of the security deposit payable by the plaintiff as provided under Clause 2.3. Clause 4.3 of Ex.P-34 provides that 44 O.S.No.25312/2007 the plaintiff shall pay the balance amount of the security deposit at the time of commencement of the lease. Clause 5 of the said agreement provides that if the lease of the suit B schedule property does not commence on 30.10.2003 on account of failure of the defendants to complete phase-1 development or to obtain the occupancy certificate, the plaintiff may at its sole and exclusive option to terminate the agreement by way of issuing notice in writing and on such termination, the 1st defendant shall refund to the plaintiff all monies received under the Ex.P-34 agreement together with interest at the rate of 24% p.a. As per Clause 5. 2 to 4 if the defendants fail to obtain conversion in respect of 1 acre 27 guntas of land comprising Sy.No.20/3 and vesting of the title, change of land use within time stipulated in Clause 3.1(a) & (b) before commencement of the lease, payment of the rent, the security deposit amount and the price payable in respect of 1 acre 27 guntas of land in Sy. N0. 20/3 that is payable to the defendants shall stand reduced by 50% until the defendants shall obtain the conversion of the land in Sy.No.20/3. Clause 12 of Ex.P-34 provides that upon completion of Phase-1 development, the defendants and the plaintiff are agreed to execute and register at the cost of the plaintiff, a Deed of lease in favour of the plaintiff in the form Annexure-6 and on the terms 45 O.S.No.25312/2007 and conditions set out therein and that the lease deed format shall not be altered or modified except by mutual consent.
26. Clause 15 of Ex.P-34 provides that without prejudice to the lease arrangements as mentioned above and in consideration of the plaintiff agreeing to take Phase-1 development on lease, the plaintiff shall also have the option and right to purchase the suit A schedule property with the buildings and improvements free and clear of all lien, charges and encumbrances at the price agreed therein. This sole and exclusive option to purchase shall remain valid and exercisable from the 2nd anniversary of the lease up to and inclusive of the 6th anniversary day. Clause 15.1 of the said agreement provides that the purchase option may be exercised by the plaintiff by giving written notice to the defendants of its intention to exercise its option and specify in the said notice the date and time when the sale price collected will be tendered to the defendants. In that event, the plaintiff decides to exercise the purchase option, the price payable for free and clear title to suit A schedule property and Phase-1 development shall be collected (a) or the land at the rate of 270/- per sq.ft with increase at 12% for the building excluding service area including plinth area at the rate of 1.627.50 per sq.ft and for the service area situated in the 46 O.S.No.25312/2007 basement of A block at the rate of Rs.545.50 per sq.ft. Clause 15.2 provides that if the purchase option is exercised after any further construction of the buildings on the remaining land in the A schedule property, the rates for the building is Rs.1100/- per sq.ft and Rs.220/- for phase I development and Rs.37.50 sq.ft. for additional development and the same be divided through mutual consent between the plaintiff and the defendants and if they failed to mutually agreed, then the increase payable for development shall be determined by the Indian Project management expert C.B.Richard Ellis South Asia private limited. Clause 15.3 provides that sale price calculated as option shall be reduced by the security deposit due to plaintiffs under the lease deed and the sum total holding cost received by plaintiff as per Clause 15.4 of the Agreement.
27. Clause 15.4 of the suit agreement provides that ''in consideration of the purchase option to the plaintiff, the plaintiff shall pay each month to the 2nd defendant holding cost of Rs.2,16,000/- until plaintiff exercises the purchase option or until the expiry of 6 years whichever is earlier unless before the expiry of 6 years, the plaintiff shall have decided not to exercise the purchase option in which event the obligation to pay the holding cost shall cease from such date as 47 O.S.No.25312/2007 the plaintiff shall communicate in writing to the defendant its decision not to exercise the purchase option. In the event the plaintiff exercising the purchase option, the holding cost paid by the plaintiffs to defendants 1 and 2 until the exercise of the purchase option shall be set off towards a part of the sale price. In the event of plaintiff not exercising purchase option, the defendants shall after expiry of the above 6 years period, the Phase-I development and remaining land in such manner as they may deem it fit and the defendants shall be entitled to retain the entire amount received by them towards holding cost, till then and shall be under no obligation to refund any portion of the same to the defendant. Clause 15.5 provides that the defendant shall execute one or more Deed or Deeds of sale conveying the schedule A property with Phase I development and all other developments and improvements to the plaintiff or any of its nominee or nominees and admit execution of the Deed or Deeds of sale before the registration authorities. Upon the execution and registration of the Deed of sale, the lease of Phase I development shall determine absolutely and Hughes obligation to pay the rent shall cease. As per Clause 15.6 the plaintiff shall have all the rights to enforce specific performance of the purchase option in a Court of law of 48 O.S.No.25312/2007 appropriate jurisdiction and if the defendants fail or neglect to perform their obligations under the plaintiff's purchase option.
28. Clause 17 of Ex.P-34 provides that subject to the survival clause 18 below, unless terminated earlier by the plaintiff, this Agreement shall remain in force from the date of its execution until (i) construction of Phase I development is completed, (ii) possession of Phase I is handed over to plaintiff as per the terms of this Agreement, (iii) the commencement of the lease and the execution and registration of the lease deed and (iv) If plaintiff issues a written notice of termination, until return to plaintiff of the funds pursuant to clause 5. Clause 18 of the said agreement provides that Clauses 5, 4, 15, 15.1, 15.2, 15.3, 15.4, 15.5, 15.6, 15.7, 16, 16.1, 21 and 22 shall survive the execution of the lease deed by the defendants in favour of plaintiff until the expiry of original term of the lease and the first one year of the renewed term or the exercise by plaintiff of its purchase option and consequent execution and registration of the Deed of sale in favour of plaintiff, whichever is earlier. Clause 19 provides notwithstanding the foregoing, all representations, warranties and indemnifications made by the defendants in Ex.P- 34 shall survive the termination of the suit Agreement. 49 O.S.No.25312/2007
29. Ex.D-1, the CC of the board resolution extract of the 1st defendant Company discloses that it has authorized the D.W.1 to depose evidence for defendant No.1 in this suit. Ex.D-2, the copy of development agreement dt.3.5.2003 discloses that the 1st and 2nd defendants had entered into an agreement agreeing to jointly develop the suit A and B schedule properties of this suit. The said document further discloses that the defendants No.1 and 2 agreed to share the saleable area in the buildings and the benefit of the development in the suit A and B schedule properties in the ratio of 73:27. The contents of Ex.D-2 agreement are not in dispute between the parties to this suit. Ex.D-4, the copy of sale deed dt.13.5.2004 discloses that the 2nd defendant has sold its saleable area in the buildings to the 1st defendant that shown as C schedule property in the said document. Ex.D-5, copy of the letter dt.22.5.2003 discloses that the Hughes software Systems sent the said letter to the 1st defendant by expressing its intention to take 9.305 sq.ft. out of 1.12.405 sq.feet of development area on lease. Ex.D-6, the copy of letter dt.27.10.2003 of the 2nd defendant discloses that it has requested the BBMP, Bengaluru for issue of occupancy certificate in respect of the suit B schedule property. Ex.D-7, copy of letter dt.23.3.2004 discloses that the BDA has permitted the 2nd 50 O.S.No.25312/2007 defendant to occupy the suit B schedule property and has issued the occupancy certificate as approved by the Commissioner vide No.14263 dt.22.3.2004. Ex.D-8, copy of the letter dt.20.9.2003 discloses that the Deputy Commissioner, Bengaluru District has permitted to convert the land bearing Sy.No.20/3 measuring 01 acre 04.5 guntas of Kadubeesanahalli village for non-agricultural purposes. Ex.D-9 and 10, copies of the letters dtd.20.9.2003 and 31.12.2003 discloses that the Dy.Commissioner, Bengaluru district has permitted to convert 1.01½ guntas of land in Sy.No.20/1B, 20/2A, 20/2B and 20/3 of Kadubeesanahalli village for non agricultural purposes. Ex.D-11 supports that the permission granted to convert 1.02 acres of land in Sy.No.20/1B, 20/2A, 20/2B and 20/3 of Kadubeesanahalli village for non agricultural purposes.
30. Ex.D-12, notification copy dt.9.3.2004 discloses that total 8 acres 11 guntas of land in Sy.No.18/2, 19/1, 29/1A, 20/1B, 20/2A, 20/2B, 20/3 and 20.4 of Kadubeesanahalli village is applicable with Chapter 7 of Karnataka Industrial area development Act, 1950. Ex.D-13, copy of notification dt.9.3.2004 discloses that the aforesaid 8 acres 11 guntas of land has been declared as Industrial area. Ex.D-14, copy of notification dt.9.3.2004 discloses that the Government of Karnataka 51 O.S.No.25312/2007 proposed to acquire afore stated land for development of the same for industrial purposes. Ex.D-15, copy of gazette notification dt.7.9.2004 also supports the contents of Ex.D-14 notification. Ex.D-16, copy of endorsement dt.19.1.2013 of KAIDB, Bengaluru, discloses that it has supplied copy of the notification relating to Kadubeesanahalli village to the 1st defendant. Ex.D-17, copy of notice dt.10.1.2005 discloses that the 1st defendant has terminated the tenancy of the plaintiff in respect of the suit B schedule property with effect from 31.1.2005. Ex.D-18, similar notice cum reply copy dt.27.1.2007 issued by the 2nd defendant to the plaintiff and that the 2nd defendant had returned the cheques to the plaintiff. Ex.D-19, copy of sale deed dt.2.4.2010 executed by the 2nd defendant to the 1st defendant discloses that the 2nd defendant has sold 24.089.08 sq.ft of land in Sy.18/1, 18/2, 18/5A, 18/5B of Kadubeesanahalli village to the 1st defendant for Rs.6.64.35.000. The said property is shown as E schedule in the said sale deed. Ex.D-20, copy of notice dt.20.7.2010 discloses that the 1st defendant has issued the said notice to the plaintiff and M/s.Aricent Technologies (Holdings) Ltd. by terminating the tenancy in respect of premises of 30.350 sq.ft of built up area of the land in Sy.No.18/1, 18/2, 18/5A and 18/5B of 52 O.S.No.25312/2007 Kadubeesanahalli village with effect from expiry of 15 days from the date of receipt of the said notice.
31. But as stated supra admittedly vacant possession of Phase-1 development i.e. B schedule property has not been given to the plaintiff on or before 30.10.2003. Admittedly possession of suit B schedule property has been delivered to the plaintiff on 15.11.2003. It is admitted fact that the plaintiff has deposited Rs.30, 00,000/- with the 1st plaintiff on 19.5.2003 itself.
32. Section 15(g) of the Specific Relief Act, 1963 provides that except as otherwise provided by this chapter, the specific performance of a contract may be obtained by (g) when a company has entered into a contract and subsequently becomes amalgamated with another company, the new company which arises out of the amalgamation. Admittedly, the Hughes software systems Pvt.Ltd was amalgamated as Flextronics' software systems Pvt.Ltd, Hence, the plaintiff has right to file this suit for specific performance of the ExP-34 the suit agreement. Section 16 (c) of the Act provides that specific performance of a contract cannot be enforced in favour of a person who fails to aver and prove that he has performed or has always been ready and willing to perform the essential terms of the contract which 53 O.S.No.25312/2007 are to be performed by him, other than the terms of contract or which has been prevented or waived by the defendant. This Section mandates "readiness and willingness" on the part of the plaintiff and it is a condition precedent for obtaining relief of grant of specific performance. This means, in a suit for specific performance, the plaintiff must allege and prove a continuous readiness and willingness to perform the contract on his part from the date of contract. The onus is on the plaintiff. Section 17(1)(a) of the Act provides that A contract to sell or let any immovable property cannot be specifically enforced in favour of vendor or lessor who knowing not to have any title to the property has contracted to sell or let the property. Section 17(1)(b) of the Act provides that a contract to sell or let any immovable property cannot be enforced in favour of a vendor or lessor, who, though he entered into the contract believing that he had a good title to the property, cannot at the time fixed by the parties or by the Court for the completion of the sale or letting, give the purchaser or lessee a title free from reasonable doubt. Section 20(3) of the Act provides that the Court may properly exercise discretion to decree specific performance in any case where the plaintiff has done substantial acts or suffered losses in consequence of a contract capable of specific 54 O.S.No.25312/2007 performance. As per Section 55(5)(b) of T.P.Act 1882, the buyer is bound to pay or tender, at the time and place of completing the sale, the purchase money to the seller or such person as he directs.
33. About his readiness and willingness, the P.W.1, during the course of his cross-examination, has deposed as under
"£ÁªÀÅ zÁªÉ ¸ÀévÀÄÛ ¸Áé¢üãÀ ¥ÀqÉAiÀÄĪÀ ¥ÀǪÀðzÀ°è ªÁ¢UÉ £ÉÆAzÁ¬ÄvÀ °Ã¸ï rÃqï §gÉzÀÄ PÉÆqÀÄ JAzÀÄ MvÁ۬ĹzÉÝêÉ. £ÁªÀÅ ¸Áé¢üãÀ ¥ÀqÉAiÀÄĪÀ ¥ÀǪÀðzÀ°è £ÉÆAzÁ¬ÄvÀ rÃqï ªÀiÁqÀĪÀÅzÀÄ condition precedent DVvÀÄÛ. ¤¦.3 gÀ°èAiÀÄ PÁèeï £ÀA§gÀÄ 5 ªÀÄvÀÄÛ 5.01gÀ°è PÁtô¹zÀ £ÀªÀÄä ºÀPÀÄÌUÀ¼À£ÀÄß £ÁªÀÅ dÁjUÉƼÀ¹®è..."
P.W.1 has further deposed at page 28 & 29 and 26 as under:-
"I was aware of the fact that holding costs should be paid before exercising purchase option. After filing O.S.16735/2005, we have taken necessary action to get the lease deed executed. We did not filed any suit against the defendants to get the least deed executed. It is true that a part of schedule A property shown in this plaint was acquired by KIADB". 55 O.S.No.25312/2007
About performance of his obligation under Ex P-34, the D.W.1 has deposed as under :-
"µÉqÀÆå¯ï © LlA £ÀA§gï 1 ¸ÀévÀÄÛ 1 JPÀgÉ 27 UÀÄAmÉUÉ gÁtô gÀ¸ÀªÀÄtô EªÀgÀÄ EA¢£ÀªÀgÉUÀÄ ªÀiÁ°ÃPÀvÀé ºÉÆA¢®è JAzÀgÉ ¤d. F ªÀgÉUÀÆ © ¥ÉëqÀÄå¯ï£À LlA £ÀA§gï 1 ªÀÄvÀÄÛ 2 ¸ÀévÀÄÛUÀ¼À£ÀÄß gÁtô g¸Àª À ÀÄtô EªÀgÀÄ PÀæAiÀĪÀiÁr PÉÆAr®è JAzÀgÉ ¤d. F ªÀgÉUÀÆ ¥ÀæwªÁ¢AiÀÄ ¥Àgª À ÁV £ÁªÀÅ £ÉÆAzÁ¬ÄvÀ °Ã¸ï CVæªÉÄAmï §gÉzÀÄ PÉÆlÖ®è JAzÀgÉ ¤d. gÁtô gÀ¸ÀªÀĤ EªÀgÀÄ 1 JPÀgÉ 27 UÀÄAmÉ d«ÄãÀÄ RjâªÀiÁrPÉÆAqÀÄ ¨ÀsÆ ¥ÀjªÀvÀð£É ªÀiÁrzÀ £ÀAvÀgÀ °Ã¸ï CªÀ¢ ¥ÁægÀA¨Às DUÀ®Ä PÀgÁgÀÄ EvÀÄÛ JAzÀgÉ ¤d. PÁèeï £ÀA.17.3 ¥ÀæPÁgÀ ¸ÀzÀj PÀgÁgÀÄ ¥ÀvÀæ ¥ÀæPÁgÀ PÀlÖqÀªÀ£ÀÄß ¸ÀA¥ÀÇtð PÀnÖ ¸Áé¢üãÀ PÉÆlÄÖ °Ã¸ï rÃqï £ÉÆAzÀtô ªÀiÁqÀĪÀªgÀ ÉUÀÆ ¤¦.3 G¨ÀsAiÀiÁ¥ÀgÀ ªÀÄzÀsåzÀ°è eÁjAiÀÄ°è EgÀvÀPÀÌzÀÄÝ JAzÀÄ PÁtô¹zÉ JAzÀgÉ ¤d. PÁèeï £ÀA. 18gÀ ¥ÀæPÁgÀ CzÀgÀ°è PÁtô¹zÀ G½zÀ PÁèeïUÀ¼ÀÄ °Ã¸ï rÃzï £ÉÆAzÀtôAiÀiÁzÀ £ÀAvÀgÀ CxÀªÀ ¤¦.3 gÀgÁÝzgÀ ÀÄ ¸ÀºÀ CªÀÅ ¸ÀvÀvÀ eÁjAiÀÄ°ègÀÄvÀÛzÉ JAzÀÄ PÁtô¹zÉ JAzÀgÉ ¤d. DzÉ® PÁèeï £À°è ¥ÀæwªÁ¢ purchase option £ÀÄß eÁjUÉƽ¼ÀĪÀªgÀ ÉUÀÆ ªÀÄvÀÄÛ PÀæAiÀÄ¥ÀvÀæ £ÉÆAzÀtô ªÀiÁr¹PÉƼÀÄîªÀªgÀ ÉUÀÆ AiÀiÁªÀÅzÀÄ ªÉÆzÀ¯ÉÆ C°èAiÀĪÀgÉUÉ ¤¦.3 56 O.S.No.25312/2007 eÁjAiÀÄ°ègÀÄvÀÛzÉ JAzÀgÉ ¤d. PÁèeï £ÀA.15 gÀ°è ¥ÀæwªÁ¢ °Ã¸ï rÃqï£ÀÄß £ÉÆAzÁ¬Ä¹zÀ £ÀAvÀgÀªÉà purchase option exercise ªÀiÁqÀ¨ÉÃPÉAzÀÄ PÁtô¹®è..."
At page 34 of his deposition, it is true that the D.W.1 has specifically deposed that "In Clause 15.4 there is no specific word pre condition is used for payment of holding costs before exercising purchase option. He also has deposed that there is no specific clause in Ex.D-3 that non payment of holding costs would frustrate the contract and it would constitutes breach of contract."
34. From the aforesaid evidence and contents of Ex.P-34 or Ex.D-3, Clause 12 of suit agreement it is clear that the plaintiffs and the defendants agreed to execute and register lease deed at the cost of the plaintiff in favour of the plaintiff upon completion of Phase-I development in the form attached as Annexure VI. As per Clause 15 of suit agreement, it is clear that the plaintiff has sole and exclusive option to purchase the suit A schedule property with the buildings and improvements free and clear of all liens charges and encumbrances at the price agreed and that the said option to purchase shall remain valid and 57 O.S.No.25312/2007 exercisable on and from the 2nd anniversary of lease upto and inclusive of the 6th anniversary day thereof. It is clear that as per Clause-15 first part, exercising of purchase option is without prejudice to the lease arrangement as stated in Clause 2.1 and 2.2 of the suit agreement. As per Clause 15.4, in consideration of the purchase option, the plaintiff shall pay each month to the 2nd defendant a holding cost of Rs.2,16,000-00 until plaintiff exercises the purchase option or untill the expiry of six years whichever is earlier unless before expiry of six years. The plaintiff shall have decided not to exercise the purchase option in which the obligation to pay the holding cost shall cease from such date as the plaintiff shall communicate it in writing to the defendants its decision not to exercise the purchase option. Clauses 5.4, 15, 15.1 to 15.7 shall survive the execution of the lease deed by the defendants in favour of the plaintiffs until the expiry of original term of the lease and the first one year of the renewed term on the plaintiff exercises its purchase option and consequent execution and registration of the deed of sale in favour of the plaintiff whichever is earlier.
35. Admittedly, the defendants have not signed on the lease deed duly signed on behalf of the plaintiff that is sent to them for their signatures. But, the evidence of the PW-1that 58 O.S.No.25312/2007 recorded during the course of his cross-examination at page-10 discloses that the plaintiff has not requested the defendants to sign on the lease deed prior to 15-11-2003 since they have not obtained the occupancy certificate. Page 18 of cross-examination of the PW-1discloses that in the month of September 2004, the plaintiff has sought for modification of some the terms of the draft lease deed. Therefore, it is clear that the suit agreement shall remain in force from the date of its execution i.e. From 21.5.2003 till the commencement of the lease and execution and registration of the sale deed or if the plaintiff issues a written notification of termination or until return to plaintiffs of the funds pursuant to Clause 5. Admittedly no lease deed is executed till this date. Evidence placed before the Court discloses that the plaintiff also was not serious in getting the registered lease deed. Therefore, it is clear that tenancy of the plaintiff in the suit B schedule property is a month to month tenancy that terminable on issuance of notice by the defendants to the plaintiff in view of section 106 of T.P.Act. The exercise of plaintiff's option to purchase the suit A schedule property is subject to taking the lease of the suit B schedule property for the periods as mentioned in the suit agreement with compliance of Clause 15.4 of the suit agreement. As stated supra, it is admitted by the 59 O.S.No.25312/2007 D.W.1 during his cross-examination that payment of holding cost is not a condition precedent to exercise plaintiff's option to purchase suit A schedule property. But, Clause 15.4 mandates that the plaintiff shall pay holding cost of Rs.2,16,000/- per month until the plaintiff exercises its option to purchase the suit A schedule property or until expiry of six years which ever is earlier or unless before the expiry of six years till the day when the plaintiff shall communicate in writing its decision not to exercise its purchase option. This fact is not disputed by the plaintiff.
36. Admittedly, the plaintiff has paid only Rs.30,00, 000/- to the defendants on 19.5.2003 towards part of security deposit. The said amount is not paid towards part sale consideration amount or towards holding cost. It is not a disputed fact that the 1st defendant has filed a suit during the year 2005 for eviction of the plaintiff from portion of the suit B schedule property alleging that the plaintiff has not been paid/paying admitted rent amount every month to the defendant/s. Admittedly, the plaintiff has not paid rent dues amount and balance security deposit amount to the defendants from 15.11.2003 till 2.11.2006, 2.1.2007, 15.1.2007 and 19.10.2006. The cheques sent to the defendants on the 60 O.S.No.25312/2007 aforesaid dates have been returned to the plaintiff. The plaintiff has not deposited the sale consideration amount of Rs.23, 25, 29,598.27/- in spite of its obtaining permission of this Court as per order dated 15-12-2007 to deposit the same before this Court. Instead of depositing the said balance consideration amount, the plaintiff has filed IA under section 151 CPC sought permission of this Court to him to file security/indemnity bond to the extent of the afore said amount. This Court as per order dated 20-09-2-11 has dismissed the said IA. Admittedly, the plaintiff has not paid the holding cost amount of Rs.2,16,000/- every month from 15.11.2003 till 2.11.2006, 2.1.2007, 15.1.2007 and 19.10.2006 before exercise of its purchase option.
37. It may be true that the plaintiff has invested more than 25 crores of rupees to have suitable infrastructure for its convenience to run a software company. Admittedly, the plaintiff agreed to take bare-shell building only on lease. Therefore, expenditure of 25 crores of rupees and construction canteen cannot be accepted that the plaintiff has done something in part performance of the suit agreement. Possession of the suit schedule property was not delivered to the plaintiff towards part performance of its exercise of purchase option. It is admitted that it should be given first on registered lease basis. Evidence of 61 O.S.No.25312/2007 PW-1 recorded during his cross-examination discloses that the defendants have not forced to the plaintiff to obtain possession of the suit B schedule property on 15-11-2003. Oral evidence of D.W.1 that payment of holding cost before exercising plaintiff's purchase option is not a precedent condition can be excluded in view of Sec.92 of the Indian Evidence Act, 1872 since admittedly Clause 15.4 of suit agreement provides that the plaintiff shall pay holding cost of Rs.2, 16,000/- per month to the defendants in addition to payment of agreed rent per month till he exercises his purchase option. Payment of the same every month to the defendants is mandatory because the word 'shall' is existed therein. In addition to that, the plaintiff shall also has to obtain the suit B schedule property on lease for a period of 5 years from 15-11-2003.
38. Since the plaintiff has failed to pay holding cost and admitted rent every month to the defendants from 15.11.2003 till 10.1.2005 the date of termination of month to month tenancy or till 15-01-2007 the date of plaintiffs decision to exercise its purchase option as well as plaintiff's failure to take the suit B schedule property on lease for a period of 5 years from 30-10- 2003 or 15-11-2003, I am of the view that it is clear that the plaintiff is not ready and willing to perform his part of contract 62 O.S.No.25312/2007 from 15.11.2003 till 15.1.2007. It appears that the plaintiff has decided to exercise its purchase option after lapse of nearly two years from the date when the 1st defendant has instituted the suit against him for eviction during the year 2005. It is clear that the plaintiff may not exercise its option to purchase the suit A schedule property or he may not wanted to pay admitted rent and holding cost every month to the defendants if the 1st defendant was not instituted a suit for eviction during the year 2005. It may be that there was some delay in obtaining occupancy certificate etc. by the defendants. But the same shall not defeat the plaintiff's obligation to pay holding cost and rent dues since he occupied the suit B schedule property on 15-11- 2003 even without obtaining the registered lease deed or without any demand from the defendants. Why the plaintiff has taken possession of the suit B schedule property on 15-11-2003 from the defendants without obtaining the registered lease deed from the defendants is not properly explained either in the plaint or in the evidence of PW-1. If the defendants failed to execute and register lease deed, why the plaintiff has not taken any action as per law against the defendants to have the lease deed executed and registered in its favour before taking possession of the suit B schedule property is also not properly explained either in the 63 O.S.No.25312/2007 pleadings or in the evidence of P.W.1. He also was not taken any steps to terminate the suit agreement if the defendants failed comply clauses 3, (a) and (b) of the suit agreement. Therefore, it appears that the plaintiff was happy to continue in the said property as tenant from month to month.
39. As per the decisions of the Hon'ble Apex Court in the reported cases in K.Simratulla's case, Pichimuthu's case, Bismillah Begum's case and as per recitals of page 49 of Pollock & Mulla on the Indian Contract & Specific Relief Acts, 14th edition 2012, the exercise of purchase option is subject to fulfillment of certain conditions by the purchaser, the agreement would be in effect be an option to purchase, as the right to purchase would only accrue upon voluntary performance of the conditions specified by the owner. The conditions entitling the option holder to exercise the option must be strictly fulfilled. Therefore, it cannot be accepted that the plaintiff is/was always or ever ready and willing to perform his part of the obligations under the suit agreement. Though it is not specifically mentioned that the suit agreement would be frustrated, if holding cost is not paid, but in view of plaintiff's failure to fulfill the conditions specified therein i.e. payment of holding cost, rent, balance security deposits and to create a lease for the periods as mentioned the suit agreement 64 O.S.No.25312/2007 etc., the suit agreement becomes frustrated or lapsed so for as it relates to plaintiff's right to exercise his purchase option. Therefore, no grounds to accept the evidence of PW-1and the arguments urged in this regard on behalf of the plaintiff. No grounds to reject the evidence of DW-1and the arguments urged in this regard on behalf of the defendants. Hence, I answered the issue No.4 as in the negative. I answered the issues No.5 & 6 as in the affirmative.
40. Issue No.7 :- It is the case of the defendants that this suit is time barred. In the written statement at para 29 the 1st defendant has specifically pleaded that the plaintiff was inducted as tenant of the suit B schedule property on 15.11.2003 and not subsequently. It was also specifically pleaded by the 1st defendant in his written statement at para 29 that the cause of action to file this suit would have been arisen only on 19.5.2003 the date of suit agreement. Therefore, the 1st defendant has submitted that this suit is barred by limitation. For the reasons as mentioned in para g of his written arguments, the learned counsel for the 1st defendant has vehemently argued that this suit is barred by limitation. The learned counsel for the plaintiff has argued that this suit is well within the period of limitation. As discussed above, the plaintiff has taken possession of the suit B 65 O.S.No.25312/2007 schedule property from the defendants on 15.11.2003. Plaintiff's exercise of purchase option is to be on and from 15.11.2005 or before the expiry of six years from 15.11.2003 if he has complied the terms of the suit agreement. Till 15.1.2007, the plaintiff was not exercised its purchase option. Suit in O.S.16735/2005 for eviction of the plaintiff from the suit B schedule property was filed on 27.6.2005 stating that the suit agreement became frustrated and that therefore the defendant No.1 has sought for eviction of the plaintiff. In view of instituting the said suit, it can be presumed that the 1st defendant has specifically denied the plaintiff's option of purchase as contemplated under the suit agreement. This suit is filed on 5.2.2007 for specific performance. Therefore, it is clear that cause of action to file this suit arose on the date when the suit in O.S.16735/2005 was filed view of the ratio of law laid down by the Hon'ble Apex Court in a case reported in AIR 1997 SC 2630 Venkappa Gurappa Hosur Vs. Kasawwa c/o.Rangappa Kulgod. Article 54 of the Limitation Act provides that suit for specific performance of a contract shall be filed within three years from the date fixed for the performance or if no such date is fixed, when the plaintiff has notice that performance is refused. It is clear that on 27.6.2005 the 1st defendant has refused that performance by way of 66 O.S.No.25312/2007 instituting this suit. As per suit agreement, time fixed for specific performance of the contract i.e., to exercise plaintiffs option of purchase is on and from the day of 2nd anniversary of the lease or on or before the 6th Anniversary of lease. 2nd Anniversary of lease is admittedly on 15.11.2005. By taking into consideration these two dates i.e. 15.11.2005 & 27.6.2005, this suit was filed within 3 years. Therefore, this suit is well within the period of limitation. Therefore, no grounds to accept the pleadings of the 1st defendant or arguments of his counsel that this suit is barred by limitation. Therefore, I answered the No 7 as in the negative.
41. Issue No.8 :- In view of aforesaid findings on issues No 1 to 7, this Court proceed to pass the following :-
ORDER The suit of the plaintiff is hereby dismissed. No costs Draw up decree accordingly.
(Dictated to the Judgment-Writer directly through computer, computerized transcript thereof corrected, signed and then pronounced by me in the open Court on this the Wednesday the 13th day of April 2016).
[ B.VENKATESHA ], XXVIII Addl. City Civil & Sessions Judge, Mayohall, Bangalore.67 O.S.No.25312/2007
Schedule Schedule A :-All that piece and parcel of the land comprising Sy.Nos.18/1, 18/2, 18/5A, 18/5B and portions of 20/2B and 20/3 of Kadabeesanahalli village, Varthur hobli, Bengaluru East taluk measuring 6 acre 20 guntas bounded on the East by Marathalli-Sarjapur Ring road, West by partly by Nala and partly by Sy.No.20/2B, North by partly by road and partly by Sy.No.20/2A and 20/2B and South by Sy.No.17 of Kadabeesanahalli village and Nala.
Schedule B :- All that piece and parcel of land measuring 2 acres and buildings constructed thereon known as Phase I Development being a portion of Schedule A property and comprising of three blocks of buildings viz., Block A, Block B and Block C having basement, ground, first and second floors together measuring 1,20,405 sq.ft. in the project known as "RMZ Ecozen" constructed on the schedule A property above referred to.
ANNEXURE
1. List of witnesses examined for the plaintiffs :-
P.W.1 : Manoj Kumar Vaish
2. List of documents marked marked for the plaintiff :-
Ex.P 1 : Board resolution.
Ex.P 2 Merger order of Hon'ble High Court.
Ex.P 3 Sale deed.
Ex.P 4 Sale deed.
Ex.P 5 Sale deed dt.27.3.2005.
Ex.P 6,7 Work orders.
Ex.P 8 Campus facility infrastructure details.
Ex.P 9 Quotation of defendant No.1
Ex.P 10 Invoice.
Ex.P 11 Purchase order.
Ex.P 12 Letter dt.19.3.2003.
Ex.P 13 Work order dt.3.12.2003.
Ex.P 14 Purchase order dt.3.12.2003.
68 O.S.No.25312/2007
Ex.P 15 Invoice.
Ex.P 16 Invoice dt.4.3.2004.
Ex.P 17 Work order dt.13.3.2003.
Ex.P 18 Email communication letters.
Ex.P 19 Email communication letters.
Ex.P 20 Fresh incorporation certificate.
Ex.P 21 Certificate of declaration.
Ex.P 22 Letter dt.31.10.2006 of plaintiff to the 2nd
defendant.
Ex.P 23 Payment advice.
Ex.P 24 Letter dt.12.1.2007 of plaintiff to the 2nd
defendant.
Ex.P 25 Another letter dt.18.1.2007 of plaintiff to
2nd defendant.
Ex.P 26 Letter dt.2.11.2006 of plaintiff to the 1st
defendant.
Ex.p 27 Reply notice of 1st defendant.
Ex.P 28 Letter dt.31.10.2006 of plaintiff to the 2nd
defendant.
Ex.P 29 Letter dt.15.1.2007 of plaintiff to the 1st
defendant.
Ex.P 30 Letter dt.15.1.2006 of plaintiff to the 2nd
defendant.
Ex.P 31 Another reply notice of 1st defendant to
the plaintiff dt.25.1.2007.
Ex.P 32 Notice cum reply.
Ex.P 33 Annual report of Hughes Software
Systems.
Ex.P 34 Agreement dt.19.5.2003.
3. List of witnesses examined for the defendants :-
D.W.1 : Raj Menda
4. List of documents marked for the defendants :-
Ex.D 1 : Copy of Board resolution. Ex.D 2,3 CC of development agreements. Ex.D 4 CC of sale deed dt.13.5.2004. Ex.D 5 CC of letter dt.22.5.2003 Ex.D 6 Letter to BDA Commissioner. Ex.D 7 Letter of BDA dt.22.3.2004. 69 O.S.No.25312/2007 Ex.D 8 to Notifications signed by 11 Commissioner. Ex.D 12 Notification dt.9.3.2004. Ex.D 13 to Gazette notifications. 15 Ex.D 16 Endorsement of KAIDB dt.19.1.2013. Ex.D 17 Copy of legal notice. Ex.D 18 Notice cum reply. Ex.D 19 Sale deed dt.2.4.2010. Ex.D 20 Copy of legal notice. Ex.C 1 I.A filed u/S.151 CPC dt.15.4.2006. [ B.VENKATESHA ], XXVIII ACC & S.J. 70 O.S.No.25312/2007
Case called. Pltff. Pre/abs. Defts. Pre/abs. Their Counsels Pre/abs.
Judgment pronounced in open court as under :-
The suit of the plaintiff is hereby dismissed. No costs Draw up decree accordingly.
(Separate judgment is kept in the file.) (B.Venkatesha), XXVIII ACC & SJ.71 O.S.No.25312/2007
1994(2) SCC 497 State of Maharastra Vs Athor India Ltd. and AIR 1968 SC 496 Tolarave Relumal and another Vs. The State of Bombay. AIR 1968 SC 1418 (3 Judges bench) in Gopala Krishnoji Ketkar Vs. Mohammed Haji Lathif'. 2010(10) SCC 512 Man Kaur (dead) by LRs v/s. Hartar Singh Sangha. AIR 2002 SC 2290 Nirmal Anand Vs. Advent Corp. Ltd. and other, 1987(2) SCC 555 Ramswarup Gupta (dead by LRs Vs. Bishun Narain inter college and others). 1996(6) SCC 373 SK.Sattar, SK.
K.Mohammed Chowdhuri Vs. Gundappa Ambadas Bukate. 2005(12) SCC 508 BDA and others Vs. R.Hanumaiah and others. 2004(2) SCC 712 FCI & others V/s Babulal Agarwal. AIR 2003 SC 578 B.L.Sreedhar and others Vs. K.M.Munireddy. 1994(1) SCC 1 S.P.Chengalraya Naidu (dead) by LRs vs. Jagannath (dead) by LRs. 2011(1) SCC 429 J.P.Builders and others Vs. A.Ramadas Rao and another. AIR 1968 SC 438, Ms.S.Sanyal Vs. Gian Chand. (1977) 4 SCC 324 M/s.Technicians Studio Private Ltd Vs. Smt.Lila Ghosh and another). (2000)3 SCC 312 (Subhra Mukherjee and another Vs. Bharat Coking coal Ltd. & others. (1973) 1 SCC 273 (M/s.Hindustan Steel Limited Vs. Smt.Kalyani Banerjee and others. (2004) 1 SCC 191 Bibi Zubaida Khatoon Vs Nabi Hassan Saheb and another. (2008) 8 SCC 564 (K.B.Saha and Sons Pvt. Ltd. Vs Development consultant Limited. (1999) 3 KLJ 677 72 O.S.No.25312/2007 Y.N.Gopala Rao Vs. D.R.Laxminarayana and others. 2000(4) KLJ 187 (DB) B.R.Rangaswamy Vs. D.Syed Younous and others. AIR 1997 SC 2630 Venkappa Gurappa Hosur Vs. Kasawwa c/o.Rangappa Kulgod. (2013) 5 SCC 397 Thomson Press (India) Limited Vs. Nanak Builders and Investors pvt. Ltd. AIR 2015 Karnataka 128 M/s.Auto World, Bengaluru Vs. Smt.K.V.Sathyavathi
12. The Hon'ble Apex Court in a case reported in 1994(2) SCC 497 in State of Maharastra case has held that "lease does not include 'agreement to lease' executable at a future date without immediately bringing into effect lessor-lessee relationship and actual demise. Therefore, 'agreement to lease' not subject to stamp duty..." The Hon'ble Apex Court (Five Judges Bench) in a case reported in AIR 1954 SC 496 Tolarave Relumal and other Vs. The State of Bombay at para 6 has held that "an instrument is usually construed as a lease if it contains words of present demise. It is construed as an executing agreement, notwithstanding that it contains words at present demise. Where certain things have to be done by the lessor before the lease is granted, such as the completion or repair or improvement of the premises or by the lessee, such as obtaining sureties it amounted to an agreement to grant a lease in future..."
73 O.S.No.25312/2007
The Hon'ble Apex Court, in a case reported in AIR 1968 SC 1418 (3 Judges bench) in Gopala Krishnoji Ketkar Vs. Mohammed Haji Lathif's case at para 5 has held that "A party in possession of best evidence which would throw light on the issue in the controversy with holding it, Court ought to draw an adverse inference against him notwithstanding that onus of proof does not lie on him. Party cannot rely on abstract doctrine of onus of proof or on the fact that he was not called upon to produce it..."
The Hon'ble Apex Court, in a case reported in 2010(10) SCC 512 Man Kaur (dead) by LRs v/s. Hartar Singh Sangha case has held that "power of attorney holder who has no personal knowledge cannot be examined in place of plaintiff. It was further held that" where a party to the suit does not appear in witness box and states his own case on oath and does not offer himself to be cross-examined by the other side, a presumption would arise that case set up by him is not correct..." The Hon'ble Apex Court at para 17 has further held that "To succeed in a suit for specific performance, the plaintiff has to prove (a) that a valid agreement of sale was entered into by the defendant in his favour and the terms thereof (b) that the defendant committed breach of the contract and (c) that he was always ready and 74 O.S.No.25312/2007 willing to perform his part of the obligations in terms of the contract. To prove that the plaintiff was always ready and willing to perform his part of the obligations in terms of the contract, necessarily he should set up into the witness box and give evidence that he has all along been ready and willing to perform his part of the contract and subject himself to cross-examination on the said issue. A plaintiff cannot obviously examine in his place, his PA holder who did not have personal knowledge either of the transaction or of his readiness and willingness. Readiness and willingness refer to the state of mind and conduct of the purchaser as also his capacity and preparedness on the other one without the other is not sufficient. Therefore, a third party who has no personal knowledge cannot give evidence about such readiness and willingness even if he is an attorney holder of the person concerned..."
The Hon'ble Apex Court in Nirmal Anand Vs. Advent Corp. Ltd. and other, a case reported in AIR 2002 SC 2290 has held that "in a case where lease has been terminated and that there was possibility of renewal of lease and that the purchaser who was ready and willing to perform contractual obligations, specific performance cannot be refused.
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In a case reported in 1987(2) SCC 555 Ramswarup Gupta (dead by LRs Vs. Bishun Narain inter college and others) the Hon'ble Apex Court has held that "pleadings need not contain the exact statutory language or expression in order to attract the statutory provisions. If plea relates to terms and conditions of an oral agreement, absence of written deed of the agreement not fatal to the plea as the terms can be gathered from the circumstances and conduct of the parties. The Hon'ble Apex Court has held that the parties by agreement can make licence irrevocable even if it is not covered by Clause (a) and (b), of Sec.60 of Easements Act, 1882.
In a case reported in 1996(6) SCC 373 SK.Sattar, SK. K.Mohammed Chowdhuri Vs. Gundappa Ambadas Bukate, the Hon'ble Apex Court at para 37 has held that "a co-sharer cannot initiate action for eviction of the tenant from the portion of the tenanted accommodation nor can he be sued for his part of the rent. The tenancy can not be split up either in estate or in rent or in any other obligation by unilateral act of one of the co- owners. If, however, all the co-owners or the co-lessors agree among themselves and split by partition the demised property by metes and bounds and come to have definite, positive and identifiable shares in that proper, they become separate 76 O.S.No.25312/2007 individual ow2ners of each severed portion and can deal with that portion as also the tenant thereof as individual owner/lessor.."
In a case reported in 2005(12) SCC 508 BDA and others Vs. R.Hanumaiah and others, the Hon'ble Apex Court has held that "Doctrine of promissory estoppel can not be invoked to permit or can done a breach of law or to compel the Government to do an act prohibited by law..."
In a case reported in 2004(2) SCC 712 FCI & others Vs. Babulal Agarwal at para 7 has held that "Even a monthly lease may last for more than a year and for any longer period. In the absence of lease deed or registered lease deed, the nature of the lease would be only be that a monthly lease.." The Hon'ble Apex Court at paras 8 and 10 has further held that "agreement for securing another agreement or deed in future for the creation of the rights (lease in this case) in immovable property is not a document which compulsorily requires registration. It is an executory agreement by which no right in the property created prasenti. At para 7 the Apex Court has further held that "According to which the parties had to execute a registered lease deed but the same was never done. We find that the High Court has rightly dealt with the question while holding that the plaintiff 77 O.S.No.25312/2007 had not filed the suit for enforcement of agreement of lease. It was suit filed for damages for the breach of contract. It was not a suit for specific performance of the contract. A promise was definitely held out by the defendant to the appellant for occupying the premises for a period of three years at a given rate of rent. The premises were in fact constructed in accordance with the instructions and specifications of the defendant. Therefore, the Hon'ble Apex Court has held that "non execution of the contract in terms of Article 299 of the COI does not militate against the applicability of the doctrine of promissory estoppel against the Government. The proposition of liability of a party on backing out of a promise held out, after making the other party alter his position.
In a case reported in AIR 2003 SC 578 B.L.Sreedhar and others Vs. K.M.Munireddy the Hon'ble Apex Court has held that "Though estoppel is described as a rule of evidence, it may have the effect of creating substantive rights as against the person estopped and that therefore it is capable of enforced or defended as against the person precluded from denying it..."
In a case reported in 1994(1) SCC 1 S.P.Chengalraya Naidu (dead) by LRs vs. Jagannath (dead) by LRs and others the Hon'ble Apex Court has held that a non disclosure of relevant and 78 O.S.No.25312/2007 material documents with a view to obtain advantage amounts to fraud. Decree obtained by non disclosure of the release deed amounted to fraud on Court and hence decree liable to be set aside..."
In a case reported in 2011(1) SCC 429 J.P.Builders and others Vs. A.Ramadas Rao and another, the Hon'ble Apex Court has held that "contract contingent upon collateral events dependant on performance of provisions obligations.." Vendor could not take advantage of his own in action. Doctrine of impossibility cannot be applied to assist a party unwilling to fulfill its obligations under the contract. The Hon'ble Apex Court has further held that "readiness and willingness on the part of the plaintiff to perform his part of contract is a condition precedent for obtaining relief. In case of non compliance therewith, suit has to be dismissed even in the absence of specific plead to that effect by opposite party..."
The 3 Judges Bench of the Hon'ble Apex Court in a case reported in AIR 1968 SC 438, Ms.S.Sanyal Vs. Gian Chand at para 3 and 6 has held that "The contract of tenancy is a single and indivisible contract, and in the absence of any statutory provision to that effect it is not open to the Court to divide it into two contracts - One of letting for residential purposes and the other 79 O.S.No.25312/2007 for non-residential purposes, and to grant relief to the landlord under Sec.13(1)(e) of Delhi and Ajmer Rent Control Act limited to the portion of the demised property which is being used for residential purposes.
In a case reported in (1977) 4 SCC 324 (M/s.Technicians Studio Private Ltd Vs. Smt.Lila Ghosh and another) the Hon'ble Apex Court at para 4 has held that it does not mean however that there cannot be a relationship of landlord and tenant in any case where the transferee has taken possession of the property under a void lease or in part performance of a contract and is entitled to protection under Sec.53A of T.P.Act. Whether the relationship of landlord and tenant exists between the parties depends on whether the parties intended to create a tenancy, and the intention has to be gathered from the facts and circumstances of the case.
The Hon'ble Apex Court in a case reported in (2000)3 SCC 312 (Subhra Mukherjee and another Vs. Bharat Coking coal Ltd. & others) has held that Party that makes allegation must prove that it is sham and bogus transaction. But held, where the question before the Court was whether the transaction in question was a bonafide and genuine one, the party relying on the transaction had to prove its genuineness first in view of 80 O.S.No.25312/2007 Sec.101 of Evidence Act. Only thereafter would the defendant be required to dislodge such proof and prove that the transaction was sham and fictitious.
The Hon'ble Apex Court in (1973) 1 SCC 273 (M/s.Hindustan Steel Limited Vs. Smt.Kalyani Banerjee and others) case has held that possession of lessee's land by A - lessee failing to conclusively prove original lessor's proprietory rights - whether A's possession can be disturbed in the circumstances.
The Hon'ble Apex Court in (2004) 1 SCC 191 (Bibi Zubaida Khatoon Vs. Nabi Hassan Saheb and another) case at para 10 has held that there is no absolute rule that the transferee pendente lite without leave of the Court should in all cases be allowed to join and contest the pending suits.
The Hon'ble Apex Court in (2008) 8 SCC 564 (K.B.Saha and Sons Pvt. Ltd. Vs. Development consultant Limited) case has held that a document required to be registered if found unregistered is not admissible in evidence under Sec 49. However, it can be used as an evidence for collateral transaction as provided in proviso clause of Sec.49.
The Hon'ble Apex Court in (1999) 3 KLJ 677 (Y.N.Gopala Rao Vs. D.R.Laxminarayana and others) case at para 28 has held 81 O.S.No.25312/2007 that it is one of the well settled principles of law that the discretionary powers have to be exercised judiciously in such cases where the discretion in the matter of granting of decree for specific performance is exercised arbitrarily by refusing to grant the decree for specific relief without being applying mind to the legal and judicial principles.
The Hon'ble High Court of Karnataka in 2000(4) KLJ 187 (DB) (B.R.Rangaswamy Vs. D.Syed Younous and others) case at para 23 and 24 held that ordinary rule is that relief of specific performance should be granted. It is to be denied only when equitable considerations point out its refusal and circumstances show that damages would be adequate relief. Appreciation in value of property over years since agreement is no ground to deny specific performance when party itself is responsible for delay in execution of sale.
The Hon'ble Apex Court in a case reported in AIR 1997 SC 2630 (Venkappa Gurappa Hosur Vs. Kasawwa c/o.Rangappa Kulgod) has held that specific performance of agreement for sale
- cause of action - Accrual - alleged vendor under agreement filing suit for possession of property under agreement - Amounts to denial of existence of agreement by vendor - Cause of action for suit (limitation) starts from date of vendors suit for possession 82 O.S.No.25312/2007
- notice issued by plaintiff purchaser after vendor's suit was decree - would not stop limitation from running - suit filed beyond 3 years from date of vendors suit is barred by law of limitation.
In a case reported in (2013) 5 SCC 397 (Thomson Press (India) Limited Vs. Nanak Builders and Investors pvt. Ltd. and others) the Hon'ble Apex Court has held that transferee/purchaser pendente lite, held, may be impleaded in pending suit for specific performance of prior agreement to sell/contract for sale, filed by buyer under said CFS against original owner/transferor/seller pendente lite. The Hon'ble Apex Court has further held that Court is empowered to add any person as party at any state of the proceedings if such person's presence is necessary for effective adjudication of issues involved in the suit. Such person as appellant is permitted to take only such defences that are available to original owner/vendor.
16. The Hon'ble High Court of Karnataka in a case reported in AIR 2015 Karnataka 128 (M/s.Auto World, Bengaluru Vs. Smt.K.V.Sathyavathi) has held that if a lessee or under-lessee of property remains in possession thereof after the determination of the lease granted to the lessee, and the lessor or his legal representative accepts rent from the lessee or under-lessee, or 83 O.S.No.25312/2007 otherwise assents to his continuing in possession, the lease is in the absence of an agreement to the contrary, renewed from year to year, or from month to month, according to the purpose for which the property is leased, as specified in Sec.106. The Hon'ble High Court has further held that earlier notice issued for termination of tenancy stood waived if the second notice of the tenancy is issued. In this case our Hon'ble High Court has relied on the judgment of the Federal Court in a case reported in AIR 1949 FC 124.
17. The learned counsel for the 1st defendant has placed reliance of the cases reported in (i) AIR 1968 SC 1028 (Kollipara Sriramulu (D) by LRs Vs Aswathnarayana (D) by LRs and others).
(ii) 2003(66) DRJ 191 (Sohan Singh and others Vs. State Bank of Patiala). (iii) AIR 1963 SC 1182 (K.Sirmathmull Vs.Nanjalingaiah Gowda). (iv) 2001(7) SCC 617 (V.Pechimuthu Vs. Gowrammal.
(v) AIR 1969 SC 405 (Caltex (India) Ltd. Vs. Bhagwan Devi Marodia and (vi) (1998) 2 SCC 226 (Bismillah Begum Vs. Rahmatullah Khan). He also has relied extract of page No.49 from pollock & Mulla on the Indian Contract & Specific Relief Acts, 14th edition 2012 in support of his arguments. He has supplied the emphasis and that the same placed along with the record of this suit.
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18. In a case reported in AIR 1968 SC 1028 Kollipara Sriramulu's case, at para 3, the Hon'ble Apex Court has held that "It is well settled that a mere reference to a future formal contract will not prevent a binding bargain between the parties. The fact that the parties refer to the preparation of an agreement by which the terms agreed upon are to be put in a more formal shape does not prevent the existence of a binding contract." If the documents or letters relied on as constituting a contract contemplate the execution of a further contract between the parties, it is a question of construction whether the execution of the further contract is a condition or term of the bargain or it is a a mere expression of the desire of the parties as to the manner in which the transaction already agreed to will in fact go through. In the former case, there is no enforceable contract either because the condition is unfulfilled or because the law does not recognize a contract to enter into a contract. In the latter case, there is a binding contract and the reference to the more formal document may be ignored.
In a case reported in 2003(66) DRJ 191 Sohan Singh's case for ejectment and decree for damages, the Hon'ble Delhi High Court at para 14 has held that "unregistered lease deed executed for 5 years with option to the lessee to renew when no 85 O.S.No.25312/2007 demand for renewal from lessee and no case for specific performance was filed, then the lessee is to be treated as month to month at sufferance whose lease can be terminated by serving a valid notice under Sec.106 of T.P.Act. In a suit filed for specific performance of contract dt.19.2.1948, in a case reported in AIR 1962 SC 1182 K.Simrathmull's case, the Hon'ble Apex Court at para 5 has accepted the majority decision of the Federal Court rendered in Shanmugam Pillai Vs. Annalakshmi (AIR 1950 FC 38) wherein it was held that "where under an agreement an option to a vendor is reserved for repurchasing the property sold by him, the option is in the nature of a concession or privilege and may be exercised on strict fulfillment of the conditions of which it is made exercisable. The Hon'ble Federal Court has further held that "If the original vendor fails to act punctually according to the terms of the contract, the right to repurchase will be lost and cannot be specifically enforced. In a suit filed for specific performance of the agreement, in a case reported in 2001(7) SCC 617 V.Pechimuthu's case at para 14, the Hon'ble Apex Court has held that "Whether an agreement is an option to purchase simplicitor or an ordinary" agreement would depend on the interpretation of its provisions. The right to obtain sale is subject to the fulfillment of certain conditions by the purchaser, 86 O.S.No.25312/2007 the agreement would in effect be an option to purchase, as the right to purchase would only accrue upon the voluntary performance of the conditions specified by the owner. The vendor cannot compel the performance of the conditions by the purchaser and then ask for the contract to be specifically performed. In another case, the Hon'ble Apex Court in a case reported in AIR 1969 SC 405 Caltex (India) Ltd.'s case the Hon'ble Apex Court has held that "no relief can be granted to the tenant if he fails to file application for renewal to be made within the time filed under lease deed..." The Hon'ble Apex Court has further held that "equity will not relieve tenant from consequences of his neglect..." In another case reported in 1998(2) SCC 226 Bismillah Begum's case filed for specific performance of contract dt.8.2.1955, the Apex Court has held that "time is always the essence of contract for reconveyance of the property. Repayment having not been made by the plaintiff within the stipulated time, option of reconveyance in her favour must be deemed to have lapsed..." It was further held that "An option for the renewal of a lease, or for the purchase or repurchase of the property, must in all cases be exercised strictly within the time limited for the purpose, otherwise it will lapse..." The Hon'ble Apex Court in this case has referred to the decisions 87 O.S.No.25312/2007 of the Federal Court and the Apex Court rendered in the aforesaid Shanmugam Pillai and Caltex (India) Ltd's cases respectively.
Several recitals of page 49 from Pollock & Mulla on the Indian Contract & Specific relief Acts, 14th edition 2012 is summed up as under for convenient reference.
"A contract of option is one whereby the grantor of the option offers to enter into what may be called a major contract with a second person and makes a separate contract to keep his offer open. A lease with an option in the lessee (of land) to renew the lease or buy the reversion; a sale with an option of repurchase granted to either the seller or the buyer; a sale with an option for the buyer to make further purchases on similar terms; a service or agency agreement with an option in either party to renew. The effect of the contract of option is to create an irrevocable offer and a power of acceptance, such that it is a breach of the contract of option to revoke it. The exercise of the option may be subject to certain conditions precedent, such as time limit, or the occurrence of a certain event, or the duration of a major contract of which is forms a part, or the mode in which it may be exercised. An option by its very nature is dependent entirely on the volition of the person granted the option. He may 88 O.S.No.25312/2007 or may not exercise it. It is a privilege or concession. It's exercise cannot be compelled by the person granting the option. It is because of this one sidedness or "unilaterality" as it were, that the right is strictly construed. The conditions entitling the option holder to exercise the option must be strictly fulfilled. A promise to reconvey the property within a specified period at the option of the promisor is an option which becomes enforceable when the offeree exercises his option. Whether a statement is an agreement or an option is a matter of construction. As per the said page, it is clear that the aforestated recitals of the said book are extracted from the cases reported in AIR 1950 FC 38 Shanmugam Pillai's case, AIR 1963 SC 1182 K.Simratmull's case and in 2001(7) SCC 617, AIR 2001 SC 2446 V.Pechimuthu's case respectively.