Nathulal Vs. Phoolchand - Court Judgment

Excerpt:
- subordinate/delegated legislation:[d.k. jain & r.m. lodha, jj] banks -voluntary retirement scheme, 2000 (vrs 2000) - held, the amendment in regulation 28, as is reflected from communication dated 5.9.2000, was intended to cover employees who had rendered 15 years service but not completed 20 years service. it was not intended to cover optees who had already completed 20 years service as the provisions contained in regulation 29 met that contingency. even if it be assumed that by insertion of proviso in regulation 28 (in the year 2002 with retrospective effect from 1.9.2000), all classes of employees under vrs 2000 were intended to be covered, such amendment in regulation 28, needs to be harmonised with regulation 29, particularly regulation 29(5) which provides for addition of qualifying service by five years. this would be in tune and consonance with the explanatory note appended to the amendment in regulation 28 wherein it is stated that the amendment with retrospective effect would not adversely affect any employee or officer of the respondent bank. that would also meet the test of fairness. weightage of five years under regulation 29(5) is applicable to the optees having service of 20 years or more. merely because the employees who have completed 15 years of service but not completed 20 years of service are not entitled to weightage of five years for qualifying service under regulation 29(5), the employees who have completed 20 years of service or more cannot be denied such benefit. it is also not correct to say that by taking recourse to regulation 29, the amendment to regulation 28 is rendered otiose. labour & services pension: [d.k. jain & r.m. lodha, jj] banks -employees pension regulations, 1995-regulations 29(5) and 28 proviso (added in 2002 retrospectively from 1.9.2000) - benefit of five years additional qualifying service under regulation 29(5) - availability of benefit to employees taking retirement under voluntary retirement scheme, 2000 (vrs 2000) on completion of 20 years service - held, the benefit is available notwithstanding that such employees had received ex gratia payments under vrs 2000. further regulation 28 which was amended subsequently by adding a proviso retrospectively, could not be applied to such employees. pension: [d.k. jain & r.m. lodha,jj] bona fide delay in payment - inadmissibility of interest - delay due to litigation wherein genuine issue of law needed to be resolved in view of difference of opinion between high courts. besides, stand taken by appellant banks was also not frivolous though ultimately rejected by supreme court. grant of interest, under these circumstances is not warranted. pension: [d.k. jain & r.m. lodha,jj] scope, object and applicability of banks employees pension regulations, 1995- regulation 28, proviso (added in 2002 retrospectively from 1.9.2000) and regulation 29(5) - held, the purpose of the proviso is to confer benefit of pension to those employees who sought voluntary retirement after completion of 15 years but before completion of 20 years of service. proviso cannot be interpreted to deprive benefit of five years additional qualifying service to those employees who took retirement after 20 years of service under vrs 2000. labour & services voluntary retirement scheme: [d.k. jain & r.m. lodha,jj] banks -voluntary retirement scheme, 2000 (vrs 2000) - the appellant public sector banks framed a scheme known as voluntary retirement scheme, 2000 (vrs 2000) under which all permanent employees of bank who had put in minimum 15 years of service or completed 40 years of age were eligible to seek voluntary retirement. the scheme was framed for optimizing the staff strength by shedding excess employees. vrs 2000 provided that an employee whose application for voluntary retirement was accepted, would inter alia be entitled to pension in terms of the employees pension regulations, 1995, in case of those who have opted for pension and have put in 20 completed years of service in the bank. besides, there was also a parallel provision in regulation 29 of the pension regulations, under which an employee with 20 years qualifying service could take voluntary retirement. such an employee was entitled to benefit of five years additional qualifying service under regulation 29(5). the issue involved was, whether an employee with 20 years service, who had taken retirement under vrs 2000 (and not under regulation 29) was entitled to benefit of five years additional qualifying service as provided in regulation 29(5) of the pension regulations. contention of appellant banks was that benefit of five years additional qualifying service was admissible only to an employee who took voluntary retirement under regulation 29, and not to an employee who took retirement under vrs 2000. the employees however relied on ministry of finance communication dated 5.9.2000 (reproduced in para 38 of the judgment) to support their contention that proviso was added to regulation 28 for the purpose that an employee who takes vrs on completing 15 years of service but before 20 years service, also gets pension. held, the employees who had completed 20 years of service and offered voluntary retirement under vrs 2000 are entitled to addition of five years of notional service in calculating the length of service for the purposes of that scheme as per regulation 29(5) of the pension regulations. if the intention was not to give pension as provided in regulation 29 and particularly sub-regulation (5) thereof, the banks could have said so in the scheme itself. much though had gone into formulation of vrs 2000 and it came to be framed after great deliberations. the only provision that could have been in the mind while providing for pension as per the pension regulations was regulation 29. the employees too had the benefit of regulation 29(5) in mind when they offered for voluntary retirement as regulation 28, as was existing at that time, was not applicable at all. vrs 2000 was an attractive package for the employees as they were getting special benefits in the form of ex gratia payments and in addition thereto, inter alia, pension under the pension regulations which also provided for weightage of five years of qualifying service for the purposes of pension to the employees who had completed 20 years service. it would be unreasonable if amended regulation 28 is made applicable, which had not seen the light of the day and which was not the intention of the banks when the scheme was framed. the banks are public sector banks and are state within the meaning of article 12 of the constitution. their action even in contractual matters has to be reasonable, lest, it must attract the wrath or article 14 of the constitution. any interpretation of the terms of vrs 2000, although contractual in nature, must meet the test of fairness. it has to be construed in a manner that avoids arbitrariness and unreasonableness on the part of public sector banks which brought out vrs 2000 with an objective of rightsizing their manpower. the scheme was oriented to lure the employees to go in for voluntary retirement. in this background, the consideration that was to pass between the parties assumes significance and a harmonious construction to the scheme and the pension regulations, therefore, has to be given. contention of the appellant banks were rejected and it was declared that the employees who took retirement under the vrs 2000 are entitled to benefit of five years additional qualifying service under regulation 29(5). voluntary retirement scheme: [d.k. jain & r.m. lodha,jj] banks-voluntary retirement scheme, 2000 (vrs 2000) - effect of employees pension regulations, 1995 having been made part of vrs 2000 held, the precise effect of pension regulations, for the purposes of pension, having been made part f the scheme, is that the pension regulations, to the extent, these are applicable, must be read into the scheme. interpretation clause of vrs 2000 states that the words and expressions used in the scheme but not defined, and defined in the rules/regulations shall have the same meaning respectively assigned to them under the rules/regulations. the scheme does not define the expression retirement or voluntary retirement. therefore the definition of retirement given in regulation 2(y) whereunder voluntary retirement under regulation 29 is considered to be retirement, has to be taken into consideration. regulation 29 uses the expression, voluntary retirement under these regulations. for the purposes of the scheme, it has to be understood to mean with necessary changes in points of details section 23 of the contract act, 1872 has no application to the present fact situation. it cannot be accepted that vrs 2000 did not envisage grant of pension benefits under regulation 29(5) to the optees of 20 years service along with payment of ex-gratia. indian evidence act, 1872 section 115; [d.k. jain & r.m. lodha, jj] estoppel - held, bank employees who had taken retirement under the voluntary retirement scheme, 2000 (vrs 2000) and claimed benefit of additional qualifying service under employees pension regulations, 1995, were not resiling from vrs 2000, rather were enforcing the scheme. question of estoppel therefore does not arise. - 2. on the plea that phoolchand had failed to pay on the due date the balance of price, nathulal rescinded the contract on october 8, 1951 and commenced an action in may, 1954 in the court of the district judge, nimar, for a decree for possession of the land and the factory and for mesne profits from the date of delivery till possession was restored to him, alleging that phoolchand was a trespasser because he had contrary to the express terms of the agreement made default in payment of the balance of the purchase price on or before may 7, 1951. phoolchand contended that nathulal had failed to get the name of chittarmal 'deleted' from the revenue record according to the terms of the agreement, that he, phoolchand, was ready and willing to pay the balance of rs. 3. the trial court decreed the suit holding that phoolchand committed breach of contract in that he failed to pay the balance due by him on or before the due date. the trial court and the high court have held that phoolchand failed to pay the amount on or before may 7, 1951. the have also held that he had not made the tender as pleaded by him. in the absence of any specific clause dealing with this matter, a condition that nathulal will secure the sanction under section 70(4) after paying the appropriate fee must be implied in the agreement for it is well-settled that whereby statute property is not transferable without the permission of the authority, an agreement to transfer the property must be deemed subject to the implied condition that the transferor will obtain the sanction of the authority concerned: the first three conditions for the defence of part performance to be effectively set up by phoolchand exist.j.c. shah, j.1. nathulal-appellant in this appeal-was, the owner of a ginning factory constructed on a plot of agricultural land bearing khasra no. 259/1. the land stood entered in the revenue records in the name of chittarmal-brother of nathulal. on february 26, 1951, nathulal agreed to sell to phoolchand the land and the ginning factory for rs. 43,011/-. he received in part payment rs. 22,011/-, and put phoolchand in possession of the property. phoolchand agreed to pay the balance on or before may 7, 1951. the terms of the agreement were reduced to writing in counter-part and were duly signed by the parties.2. on the plea that phoolchand had failed to pay on the due date the balance of price, nathulal rescinded the contract on october 8, 1951 and commenced an action in may, 1954 in the court of the district judge, nimar, for a decree for possession of the land and the factory and for mesne profits from the date of delivery till possession was restored to him, alleging that phoolchand was a trespasser because he had contrary to the express terms of the agreement made default in payment of the balance of the purchase price on or before may 7, 1951. phoolchand contended that nathulal had failed to get the name of chittarmal 'deleted' from the revenue record according to the terms of the agreement, that he, phoolchand, was ready and willing to pay the balance of rs. 21,000/-, that he had sent a telegram on may 7, 1951, offering to pay the balance against execution of the sale deed, that the agreement had been unlawfully altered by nathulal after execution by adding a clause by which the possession of phoolchand in default of payment of money on or before may 7, 1951, was declared unlawful.3. the trial court decreed the suit holding that phoolchand committed breach of contract in that he failed to pay the balance due by him on or before the due date. in appeal the high court of madhya pradesh reversed the decree. the high court declared that nathulal was entitled to the balance of the consideration as also 'mesne profits' at the rate of rs. 1,500/- per annum from may 7, 1951 till the date on which rs. 21,000/- were deposited by phoolchand within two months of the passing of the decree. subject to this direction phoolchand was allowed to retain possession of the entire property, i.e., land khasra no. 259/1 including the ginning factory and structures standing on the land. it was directed that if phoolchand, committed default nathulal may claim possession of the entire property with mesne profits at the rate of rs. 3,000/- per annum from the date he was out of possession and till the date on which possession was delivered. the cross-objections filed by nathulal relating to mesne profits were disposed of in the light of the directions given in the decree. with certificate granted by the high court this appeal has been preferred by nathulal.4. in the view of the trial court phoolchand was unable to procure the amount of rs. 21,000/- which he had agreed to pay on or before may 7, 1951 and on that account he had committed breach of the contract. the high court held that nathulal was not guilty of breach of contract, for, phoolchand had arranged with a bank to borrow upto rs. 75,000/-, when needed by him, and phoolchand had on that account sufficient resources at his disposal to enable him to pay the amount due. the trial court and the high court have held that phoolchand failed to pay the amount on or before may 7, 1951. the have also held that he had not made the tender as pleaded by him.5. under the terms of the agreement nathulal had undertaken to get the name of his brother chittarmal removed from the revenue records and to get his own name entered, but the lands continued to stand recorded in the name of chittarmal till october 6, 1952, and before that date nathulal rescinded the contract. again by virtue of section 70(4) of the madhya bharat land revenue and tenancy act 66 of 1950, phoolchand not being an agriculturist the land could not be sold to him without the sanction of the state government. in the absence of any specific clause dealing with this matter, a condition that nathulal will secure the sanction under section 70(4) after paying the appropriate fee must be implied in the agreement for it is well-settled that whereby statute property is not transferable without the permission of the authority, an agreement to transfer the property must be deemed subject to the implied condition that the transferor will obtain the sanction of the authority concerned:see motilal and ors. v. nanhelal and anr. l.r. 57 indap 333 and mrs. chandhee widya vati madden v. dr. c. l. katial nad ors. : [1964]2scr495 .6. phoolchand could be called upon to pay the balance of the price only after nathulal performed his part of the contract. phoolchand had an outstanding arrangement with his banker to enable him to draw the amount needed by him for payment to nathulal. to prove himself ready and willing a purchaser has. not necessarily to produce the money or to vouch a concluded scheme for financing the transaction: bank of india ltd. and ors. v. jamsetji a. h. chinoy and messrs. chinoy and company, l.r.77 indap767. the high court proceeded to decide the case largely upon the view that nathulal committed breach of contract. but the question whether nathulal had committed the breach is not of much significance. nathulal was the owner of the land:he had executed no conveyance in favour of phoolchand in the land or the factory. nathulal had sued for possession relying upon his title, and phoolchand could defeat that claim if he established his; defence of part-performance under section 53a of the transfer of property act.8. the argument raised by counsel for nathulal, that by virtue of section 70(8) of the madhya bharat land revenue and tenancy act, the plea of part performance is not available to a person put in possession of the property under a contract of sale, has, in our judgment, no force. section 70(8) provides :no sale under this section shall be deemed to be valid until the sale deed effecting such a sale has been registered in accordance with the law of registration in force for the time being.but this clause only requires that not only the conditions prescribed by section 70, but registration of sale deed in accordance with the law of registration for the time being in force is a condition required to be complied with before a sale is deemed valid. there is no sale in the present case, and phoolchand is not relying upon any sale. he is relying upon a contract of sale and equity which he may set up to defend his possession against the claim made by nathulal. to the making of such a claim, relying upon the doctrine of part performance in section 53a of the transfer of property act, there is nothing in section 70(8) of the madhya bharat land revenue and tenancy act 66 of 1950 which may operate as a bar.9. the conditions necessary for making out the defence of part performance to an action in ejectment by the owner are(1) that the transferor has contracted to transfer for consideration any immoveable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty;(2) that the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession continues in possession in part performance of the contract;(3) that the transferee has done some act in furtherance of the contract; and(4) that the transferee has performed or is willing to perform his part of the contract.if these conditions are fulfilled then notwithstanding that the contract, though required to be registered, has not been registered, or, where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefore by the law for the time being in force, the transferor or any person claiming under him is debarred from enforcing against the' transferee any right in respect of the property of which the transferee has taken or continued in possesion, other than a right expressly provided by the terms of the contract.10. there is in this case a contract to transfer for consideration immoveable property by writing signed by nathulal from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty. in part performance of the contract, phoolchand has taken possession of the property and he had in pursuance thereof paid an amount of rs. 22,011/-. the argument raised by counsel for nathulal that the act done in pursuance of the contract must be independent of the terms of the contract cannot be accepted. the first three conditions for the defence of part performance to be effectively set up by phoolchand exist. mr. shroff for nathulal however contends that phoolchand was not willing to perform his part of the contract.11. nathulal had expressly undertaken to have the revenue records rectified by securing the deletion of chittarmal's name, and it was an implied condition of the contract that nathulal will secure the sanction of the collector to the transfer under section 70(4) of the madhya bharat land revenue and tenancy act 66 of 1950. the first condition was not fulfilled till october 6, 1952 and the second condition was never fulfilled. we are unable to agree with mr. shroff that the repeal of the madhya bharat act 66 of 1950 by the madhya pradesh land revenue code, 1959, has retrospective operation.12. in considering whether a person is willing to perform his part of the contract the sequence in which the obligations under a contract are to be performed must be taken into account. the argument raised by mr. shroff that nathulal was bound to perform the two conditions only after the amount of rs. 21,000 was paid is plainly contrary to the terms of the agreement. by virtue of section 4 of the transfer of property act the chapters and sections of the transfer of property act which relate to contracts are to be taken as part of the indian contract act, 1872. if, therefore, under the terms, of the contract the obligations of the parties have to be performed in a certain sequence, one of the parties to the contract cannot require compliance with the obligations by the other party without in the first instance performing his own part of the contract which in the sequence of obligations is performable by him earlier.13. in view of the arrangement made by phoolchand it was clear that he had at all relevant times made necessary arrangements for paying the amount due, but so long as nathulal did not carry out his part of the contract, phoolchand could not be called upon to pay the balance of the price. it must, therefore, be held, that phoolchand was at all relevant times willing to carry out his part of the contract.14. the appeal fails and is dismissed with cost.