Ramankutty Guptan Vs. Avara - Court Judgment

Excerpt:
contract - specific performance - section 28 of specific relief act, 1963 - if in any suit decree for specific performance of any contract for sale of immovable property has been made and time has been prescribed for performance then it should be complied with - in default court which passed said decree has power to extend further time - if performance is not effected even within extended time consequences depend on terms of decree. - [s.m. sikri, c.j.,; d.g. palekar,; m.h. beg,; a.n. ray and; s.n. dwivedi, jj.] the first petitioner was a public limited company incorporated under the indian companies act. the second and third petitioners were shareholders and directors of the first petitioner. up to the end of march, 1971 the petitioner company was registered under the indian insurance act, 1938. the registration authorised it to carry on the business of general insurance comprising fire and miscellaneous insurance. on september 17, 1970 its board of directors resolved that it would cease to underwrite any insurance business as from the close of business on september 30, 1970. on that very date it informed the controller of insurance of the resolution and returned its certificate of registration for the year 1970 to the controller of insurance. after-the close of business on september 30. 1970 it stopped doing any kind of general insurance business. on october 3, 1970 the controller of insurance returned the registration certificate to it with the remark that there was no provision in the insurance act for return of certificate. the controller advised it not to ,apply for renewal of certificate for the year 1971. on february 2, 1971 the board of directors of the company passed a resolution canceling all policies with effect from march 10/12, 1971 after giving due notice to the policy- holders. another resolution was passed terminating all re- insurance treaties, both inward and outward, with effect from december 31. 1971. the company refunded to the policy- holders a sum of rs. 48.000 on cancellation of their policies. the uncollected refund amount came to rs. 2013.98. on february 16, 1971 the controller of insurance cancelled the registration of the company with effect from april 5, 1971 under section 3(4)(f) of the insurance act. the company reduced its staff from the month of september 1970. by the end of february 1971 the total staff consisted of one officer, one clerk, one typist and one peon. in respect of some of the policies cancelled cases were pending in court. the union of india, the first respondent, appointed a custodian over the undertaking of the company under s. 4 of the general insurance(emergency provisions) ordinance 1971 on may 13, 1971, the said ordinance was eventually reenacted as general insurance (emergency provisions) act. 1971. the union of india issued also certain directions on may 13, 1971 to regulate the management of the undertaking by the custodian. the company filed petitions under article 32 of the constitution claiming that the act of 1971 was not applicable to it because it was an insurer whose business was being voluntarily wound up in terms of section 15(a) of the act and therefore it could not be taken over by the central government under s.. 3 of the act. it was contended that the words "whose business is being voluntarily wound up" in section 15(a) also meant "whose business is being voluntarily brought to a close or final settlement". the company also challenged the constitutionality of part of section 2(e) as also of section 15(a) of the act, under art. 14 of the constitution of india. held : per majority (palekar, beg and dwivedi, jj.) (i) the appellant company could not get the benefit of s. 15(e) and was subject to the provisions of s. 3 of the act which provides for the take over of insurance companies. [966 h] section 2c of the insurance act has limited the denotation of the word 'insurer' from the date of the commencement of the insurance (amendment) act 1950. section 2c(1) provides that "no person shall,, after the commencement of the insurance (amendment) act 1950 begin, to carry on any class of business in india and no insurer carrying on any class of insurance business in india shall, after the expiry of one year from such commencement, continue to carry on any such business unless he is a public company incorporated in or out of india or a society registered under any law relating to co-operative societies act, 1972. in the result at the commencement of the ordinance and the act,'insurer' included a public company either incorporated under the companies act or under a foreign company law and a cooperative society. although according to the proviso to s. 2c(1) the central government may by a gazette notification exempt from the operation of s. 2c(1) any person or insurer for the purpose of carrying on general insurance business for not more than three years at a time, no such notification was shown to have been in fact issued. cooperative societies are under the various state laws relating to cooperative societies wound up by an order of the registrar of cooperative societies. therefore the word insurer in s. 15(a) of the act includes only two classes of persons : (a) public limited company incorporated under the companies act; (b) a public company incorporated under a foreign company law. [960 h; 961 bcrf] the twin expressions "being voluntarily wound up" and "being wound up by a court" have acquired a crystallised meaning in the company and 'insurer' included a public company either incorporated under the companies act and the insurance act. in the companies act the expression " voluntary winding up means a winding up by a special resolution of the company to that effect. section 54 of the insurance act provides its own procedure for the winding up of an insurance company. according to it, an insurance company shall not be wound up voluntarily "except for the purpose of effecting amalgamation or reconstruction of a company on the ground that by reason of its liability it cannot continue its business". parliament will be presumed to know that the expression, " voluntary winding up" and "winding up by the court" have acquired a technical meaning in our company and insurance jurisprudence [961 h; 962 a-d] sections 433(c), 560, 583(4) (a) & 584 of the companies act and sections 2e, 3(5d), 53 of the insurance act make a clear distinction between the cessation of business of a company and its voluntary winding up or winding up by an order of the court. parliament will be presumed to be aware of the distinctions between the cessation of business by an insurance public company and its voluntary winding up or winding up by an order of the court. there is nothing unequivocal in s. 15(a) of the act to show that parliament intended to depart from the technical meaning of these expressions and to bid good-bye to the aforesaid distinction. [963 d-e] the appellant company did not claim that it was being wound up, under s. 54 or s. 58 of the insurance act. it could not voluntarily be wound up otherwise than in accordance with s. 54 of the insurance act. it was accordingly difficult to comprehend the argument that the cessation of business by the appellant company means voluntary winding up of its business. this kind of voluntary winding up of business is unknown to the insurance act. [964 e] the winding up of a foreign company by an order of the court in india really means the winding up of its business in india. the word business' is not therefore redundant in s.15 (a). if parliament really meant that the first limb of s. 15(e) should also apply to as insurer who is in the process of closing its business it should have expressed the first limb in some such manner as any insurer "whose business is being closed" or "is being wound up". the construction put forward by the appellant company assigns little significance to the word "voluntarily" and makes it a surplus age. [965 e-f] regina v. board of trade, [1965] 1 q.b. 603 and rajah of vizinagram v. official receiver, vizianagaram, [1962] supp. 1 s.c.r. 344, referred to. sections 15(b) and 2(e) of the act both refer to an insurance company which has ceased to do business for a certain period. section 15(a) should be construed in the setting of s. 15(b) and 2(e). so construed it is difficult to believe that parliament has not used the expression "whose business is being voluntarily wound up" in the technical sense. [966 d] one of the professed objects of the act is "to protect the interest of the policy-holders pending nationalisation of the general insurance business". the interpretation suggested by the appellant company would defeat that object. assuming that s. 15(a) is susceptible of two meanings-the wider and the narrower (the technical), the one which fructifies the said legislative object should be preferred. [966 f-g] (ii) the challenge to sections 2(e) and 15(a) of the act based on article 14 of the constitution must fail. [968 e] when the registration of a company has remained wholly cancelled for six months from the appointed day, the controller may apply to the court for its winding up under s. 3(5d). as soon as the judicial process is set in motion, the company comes under the control of the court. the court's control will protect those policy holders who have got unsatisfied claims against the company. on the other hand the company whose registration has remained wholly cancelled for less than six months can revive itself. it cannot be wound up by the court at the instance of the ,:controller. the claims of the policy-holders against such a company will remain unprotected., the takeover of the undertaking of the company under the act improves, by reason of the government's management, the prospects of their claims satisfaction. it is also calculated to protect all interests by applying after the takeover, if that course is deemed necessary, to revive the business of the company. section 2(e) is therefore not discriminatory. for the same reasons s. 15(a) also is not discriminatory. [968 b-e] [as the attack based on art. 14 did not succeed, the court found it unnecessary to deal with the respondents' contention based on art. 31a(b) (d) of the constitution.] per sikri c.j. and ray, j. (dissenting). on the language of section 15(a) the company in the present case was an insurer whose business was being voluntarily wound up. therefore the ordinance and the act did not apply to the petitioner company. [955 g] it is important to notice that the act uses the word 'insurer' and not the words 'insurance company'. the insurance act has throughout the act used the words 'insurer' as well as 'insurance company'. the appropriate section in each instance will indicate as to why the act uses the word 'insurer' in one, section and the words 'insurance company' in the other. an insurer under the definition of the insurance act is of wider amplitude than an insurance company. it is an individual or any un- incorporated body of individuals or a body corporate incorporated under the law of a foreign country. from section 2c of the insurance act it follows that an insurer as an individual may be allowed by the government to carry on general insurance business under the government exemption. [948 de & 949 c] the legislature knows the distinction between voluntary winding up of an insurance company or winding up of it by a court and an insurer whose business is being voluntarily wound up or is wound up by court. full effect is to be given to the words used in a legislative measure. the words which are not found in the present legislative measure cannot be substituted by words which are used in other statutes. that would be defeating the purpose of the act. the word 'insurer' cannot be read in place of insurance company. l952 g-h] the provisions in the insurance act relating to voluntary winding up and partial winding up of insurance companies indicate the difference between the concepts of voluntary winding up under the insurance act ,and the indian companies act and the business of an insurance company being voluntarily wound up. a voluntary winding up under the insurance act occurs for the purpose of effecting a reconstruction or amalgamation or on the ground that a company cannot continue its business be-cause it cannot meet its liabilities. none of these contingencies is the same as voluntarily winding up business. a partial winding up of an insurance company is winding up of a particular type of business. that company does not cease to do business. nor is the company voluntarily wound up in such a case. [953 d- e] in the present case the company resolved to wind up its business. the company discontinued to do insurance business. the company cancelled all outstanding policies in the month of february, 1971. the company had not undertaken any new business after 30 september, 1970. [953 h] after 30 september 1970 the company had taken steps to wind up voluntarily all insurance business., the company informed the controller of its decision to stop doing insurance business. the company returned its registration certificate. all these features lead to the inescapable conclusion that the business of the insurer was being voluntarily wound up. therefore the provisions contained in section 15(a) will apply to the company whose business is being voluntarily wound up.. [954 a-b] (ii) in the bank nationalisation case this court said that the court will not, concentrating merely upon the technical objection of the action, deny itself jurisdiction to grant relief to the share holders when the rights of the shareholders as well as of the company are impaired. the locus, standi of the petitioners could not be challenged. [957 c-d] r. c. cooper v. union of india, [1970] 3 s.c.r. 530, referred to. - under the contract of sale the respondent was put in possession and on failure of the vendor to execute the sale deed the respondent filed the suit for specific performance. 4. a bare reading itself clearly mentions that in a suit a decree for specific performance of a contract for the sale of immovable property has been made and time has been prescribed for performance, it should be complied within time. when the decree specifies the time for performance of the conditions of the decree, on its failure to deposit the money, section 28(1) itself gives power to the court to extend the time on such terms as the court may allow to pay the purchase money or other sum which the court has ordered him to pay. since the execution application has been filed in the same court in which the original suit was filed, namely, the court of first instance, instead of treating the application on the execution side, it should have as well been numbered as an interlocutory application on the original side and disposed of according to law.order1. leave granted.2. the appellant judgment-debtor filed a petition in the executing court to rescind the contract dated january 16, 1976 on the plea that the respondent-plaintiff had committed default in depositing the balance consideration of rs. 4,351/- within one month from january 27, 1982 made by the appellate decree in a.s. no. 213 of 1979. the executing court dismissed the application on the ground that the deposit was made within the time though the application on the execution side was maintainable. on revision, the high court in c.r.p. no. 593/90 dismissed the petition by judgment dated august 11, 1992 holding it not maintainable on the execution side.3. the only question that arises for consideration is whether an application under section 27 of the specific relief act, 1963, for short 'the act' is maintainable on the execution side in a decree passed in the same suit by the appellate court. the facts are not in dispute. under the contract of sale the respondent was put in possession and on failure of the vendor to execute the sale deed the respondent filed the suit for specific performance. the trial court dismissed the suit. on appeal, while granting the decree for specific performance, the court granted one month time to deposit the balance consideration. the appellant carried the matter in second appeal to the high court. the respondent deposited the amount after the time fixed by the appellate court but before the second appeal was dismissed. while the decree was in execution the appellant filed the petition under section 28 of the act. the original suit and the execution application is in the same court.section 28(1) of the act reads thus:28. rescission in certain circumstances of contract for the sale or lease of immovable property, the specific performance of which has been decreed -(1) where in any suit a decree for specific performance of a contract for the sale or lease of immovable property has been made and purchaser or lessee does not, within the period allowed by the decree or such further period as the court may allow, pay the purchase money or other sum which the court has ordered him to pay, the vendor or lessor may apply in the same suit in which the decree is made, to have the contract rescind and on such application the court may, by order, rescind the contract either so far as regards the party in default or altogether, as the justice of the case may require.4. a bare reading itself clearly mentions that in a suit a decree for specific performance of a contract for the sale of immovable property has been made and time has been prescribed for performance, it should be complied within time. on its default, power has been given to the court that passed the decree to further extend the time as the court may allow and the purchase money or any other sum be paid within the extended time. if the payment is not made even within the time originally fixed or extended time, what would be the consequences depends on the terms of the decree with which we are not concerned in this appeal.5. there appears to be difference of opinion among the high courts in this behalf. the bombay high court in maruti vishnu kshirsagar v. bapu keshav jadhav : air1970 bom398 held that the application, though made on the execution side, may be transferred to the original side or may be treated as an application made on the original side and time may be extended under section 28 of the act. the andhra pradesh high court in ibrahim shariff v. masthan shariff (1967 (2) andhra weekly reporter 60, at p. 65) took the contra view that an application does not lie on the execution side and it should be filed on the original side.6. sri nambiar, learned counsel appearing for the respondent, contended that the meaning of the word 'same suit' in section 28(1) of the act should not be construed to be the original court in which the decree was made. therefore, the application would lie for extension of time, or for rescinding the contract, only in the appellate court and not in the trial court, that too on execution side. we find no force in the contention.section 37, c.p.c. enumerates that:37. definition of the court which passed a decree-the expression 'court passed a decree', or words to that effect, shall, in relation to the execution of decrees, unless there is anything repugnant in the subject or context, be deemed to include-(a) where the decree to be executed has been passed in the exercise of appellate jurisdiction, the court of first instance, and xxx xxx xxx therefore, it is clear that the decree of the appellate court would be construed to be the decree passed by the court of first instance. it is settled law that an appeal is a continuation of the suit. therefore, where a decree for specific performance has been dismissed by the trial court, but decreed by the appellate court, it should be construed to be in the same suit. when the decree specifies the time for performance of the conditions of the decree, on its failure to deposit the money, section 28(1) itself gives power to the court to extend the time on such terms as the court may allow to pay the purchase money or other sum which the court has ordered him to pay. in k. kalpana saraswathi v. p.s.s somasundaram chettiar : [1980]2scr293 this court held that on an oral prayer made by the counsel for the plaintiff for permission to deposit the entire amount as directed by the trial court this court directed the appellant to deposit the amount within six months from that date together with interest and other conditions mentioned therein. an application for extension of time for payment of balance consideration may be filed even in the court of first instance or in the appellate court in the same suit as the decree of the trial court stands merged with that of the appellate court which decree is under execution. it is to be seen that the procedure is the handmaid for justice; and unless the procedure touches upon jurisdictional issue, it should be moulded to subserve substantial justice. therefore, technicalities would not stand in the way to subserve substantive justice. take a case where the decree is transferred for execution to a transferee executing court, then certainly the transferee court is not the original court and execution it is not the 'same court' within the meaning of section 28 of the act. but when an application has been made in the court in which the original suit was filed and the execution is being proceeded with, then certainly an application under section 28 is maintainable in the same court.7. the question then emerges is whether it should be on the original side or execution side. section indicates that it should be 'in the same suit'. it would obviously mean in the suit itself and not in the execution proceedings. it is equally settled law that after passing the decree for specific performance, the court does not cease to have any jurisdiction. the court retains control over the decree even after the decree has been passed. it was open to the court to exercise the power under section 28(1) of the act either for extension of time or for rescinding the contract as claimed for. since the execution application has been filed in the same court in which the original suit was filed, namely, the court of first instance, instead of treating the application on the execution side, it should have as well been numbered as an interlocutory application on the original side and disposed of according to law. in this view, we feel that the judgment of the bombay high court laid down the law correctly and that of the andhra pradesh high court is not correct. the high court, therefore, is not right in dismissing the application treating it to be on execution side, instead of transferring it on the original side for dealing with it according to law.8. the question then is whether it is a fit case for our interference. it is seen that the decree for specific performance became final. while the second appeal was pending, the balance consideration was deposited and no steps have been taken to bring it to the notice of the high court that the respondent had committed default in compliance of the appellate decree of depositing within the given time the balance consideration. more over, the respondent has been in possession of the land for a long time. the execution is on mid-way. under these circumstances, the command of article 136 of the constitution is to draw the curtain and allow the application to lie in quietus where it was laid and dismiss the appeal. we pay heed to and do accordingly, but without costs.

Judgment:
ORDER

1. Leave granted.

2. The appellant judgment-debtor filed a petition in the executing Court to rescind the contract dated January 16, 1976 on the plea that the respondent-plaintiff had committed default in depositing the balance consideration of Rs. 4,351/- within one month from January 27, 1982 made by the appellate decree in A.S. No. 213 of 1979. The executing Court dismissed the application on the ground that the deposit was made within the time though the application on the execution side was maintainable. On revision, the High Court in C.R.P. No. 593/90 dismissed the petition by judgment dated August 11, 1992 holding it not maintainable on the execution side.

3. The only question that arises for consideration is whether an application under Section 27 of the Specific Relief Act, 1963, for short 'the Act' is maintainable on the execution side in a decree passed in the same suit by the appellate Court. The facts are not in dispute. Under the contract of sale the respondent was put in possession and on failure of the vendor to execute the sale deed the respondent filed the suit for specific performance. The trial Court dismissed the suit. On appeal, while granting the decree for specific performance, the Court granted one month time to deposit the balance consideration. The appellant carried the matter in Second Appeal to the High Court. The respondent deposited the amount after the time fixed by the appellate Court but before the second appeal was dismissed. While the decree was in execution the appellant filed the petition under Section 28 of the Act. The original suit and the execution application is in the same court.

Section 28(1) of the Act reads thus:

28. Rescission in certain circumstances of contract for the sale or lease of immovable property, the specific performance of which has been decreed -(1) Where in any suit a decree for specific performance of a contract for the sale or lease of immovable property has been made and purchaser or lessee does not, within the period allowed by the decree or such further period as the Court may allow, pay the purchase money or other sum which the Court has ordered him to pay, the vendor or lessor may apply in the same suit in which the decree is made, to have the contract rescind and on such application the Court may, by order, rescind the contract either so far as regards the party in default or altogether, as the justice of the case may require.

4. A bare reading itself clearly mentions that in a suit a decree for specific performance of a contract for the sale of immovable property has been made and time has been prescribed for performance, it should be complied within time. On its default, power has been given to the Court that passed the decree to further extend the time as the Court may allow and the purchase money or any other sum be paid within the extended time. If the payment is not made even within the time originally fixed or extended time, what would be the consequences depends on the terms of the decree with which we are not concerned in this appeal.

5. There appears to be difference of opinion among the High Courts in this behalf. The Bombay High Court in Maruti Vishnu Kshirsagar v. Bapu Keshav Jadhav : AIR1970 Bom398 held that the application, though made on the execution side, may be transferred to the original side or may be treated as an application made on the original side and time may be extended under Section 28 of the Act. The Andhra Pradesh High Court in Ibrahim Shariff v. Masthan Shariff (1967 (2) Andhra Weekly Reporter 60, at p. 65) took the contra view that an application does not lie on the execution side and it should be filed on the original side.

6. Sri Nambiar, learned Counsel appearing for the respondent, contended that the meaning of the word 'same suit' in Section 28(1) of the Act should not be construed to be the original court in which the decree was made. Therefore, the application would lie for extension of time, or for rescinding the contract, only in the appellate court and not in the trial Court, that too on execution side. We find no force in the contention.

Section 37, C.P.C. enumerates that:

37. Definition of the court which passed a decree-The expression 'Court passed a decree', or words to that effect, shall, in relation to the execution of decrees, unless there is anything repugnant in the subject or context, be deemed to include-(a) Where the decree to be executed has been passed in the exercise of appellate jurisdiction, the Court of first instance, and xxx xxx xxx Therefore, it is clear that the decree of the appellate court would be construed to be the decree passed by the Court of first instance. It is settled law that an appeal is a continuation of the suit. Therefore, where a decree for specific performance has been dismissed by the trial court, but decreed by the appellate court, it should be construed to be in the same suit. When the decree specifies the time for performance of the conditions of the decree, on its failure to deposit the money, Section 28(1) itself gives power to the court to extend the time on such terms as the court may allow to pay the purchase money or other sum which the court has ordered him to pay. In K. Kalpana Saraswathi v. P.S.S Somasundaram Chettiar : [1980]2SCR293 this Court held that on an oral prayer made by the counsel for the plaintiff for permission to deposit the entire amount as directed by the trial Court this Court directed the appellant to deposit the amount within six months from that date together with interest and other conditions mentioned therein. An application for extension of time for payment of balance consideration may be filed even in the court of first instance or in the appellate court in the same suit as the decree of the trial Court stands merged with that of the appellate court which decree is under execution. It is to be seen that the procedure is the handmaid for justice; and unless the procedure touches upon jurisdictional issue, it should be moulded to subserve substantial justice. Therefore, technicalities would not stand in the way to subserve substantive justice. Take a case where the decree is transferred for execution to a transferee executing court, then certainly the transferee court is not the original court and execution it is not the 'same court' within the meaning of Section 28 of the Act. But when an application has been made in the court in which the original suit was filed and the execution is being proceeded with, then certainly an application under Section 28 is maintainable in the same court.

7. The question then emerges is whether it should be on the original side or execution side. Section indicates that it should be 'in the same suit'. It would obviously mean in the suit itself and not in the execution proceedings. It is equally settled law that after passing the decree for specific performance, the Court does not cease to have any jurisdiction. The court retains control over the decree even after the decree has been passed. It was open to the court to exercise the power under Section 28(1) of the Act either for extension of time or for rescinding the contract as claimed for. Since the execution application has been filed in the same court in which the original suit was filed, namely, the court of first instance, instead of treating the application on the execution side, it should have as well been numbered as an interlocutory application on the original side and disposed of according to law. In this view, we feel that the judgment of the Bombay High Court laid down the law correctly and that of the Andhra Pradesh High Court is not correct. The High Court, therefore, is not right in dismissing the application treating it to be on execution side, instead of transferring it on the original side for dealing with it according to law.

8. The question then is whether it is a fit case for our interference. It is seen that the decree for specific performance became final. While the second appeal was pending, the balance consideration was deposited and no steps have been taken to bring it to the notice of the High Court that the respondent had committed default in compliance of the appellate decree of depositing within the given time the balance consideration. More over, the respondent has been in possession of the land for a long time. The execution is on mid-way. Under these circumstances, the command of Article 136 of the Constitution is to draw the curtain and allow the application to lie in quietus where it was laid and dismiss the appeal. We pay heed to and do accordingly, but without costs.