JAGESHWAR PARSHAD SHARMA Vs. RAGHUNATH RAI

JUDGEMENT

(1.) The Appellant challenges a judgment and order of a learned Single Judge of this Court, decreeing OS No. 1394/79. The appellant was arrayed as defendant in the respondents suit which sought decree of specific performance of the agreement to sell (hereafter "the agreement") dated 6.6.1977 (executed by the appellant in their favour) and consequential decree for possession (of ground floor part) and also for damages.

(2.) The plaintiffs had contended that the Defendant No. 1 (hereafter "the appellant") executed the agreement to sell the property No. 227 in Block E, Greater Kailash, New Delhi measuring 208 sq. yards in their favor for a consideration of Rs. 2,00,000/-. They had paid Rs.1,00,000/- (Rs. 21,000/- as earnest money and Rs.79,000/- as advance part payment) to him on 9.6.1977 at the time of execution and presentation for registration of the agreement before the Sub-Registrar. The appellant had delivered vacant physical possession of the first and second floors of the said property to them. The sale was to be completed by the appellant within 81 days of obtaining the No Objection Certificate from the competent authority under the Urban Land (Ceiling and Regulation) Act (for short "ULCRA") and from the Income Tax authorities. This was not done; on 15.11.1977 he sought extension of time for 90 days for completing the sale which was consented to by the plaintiffs vide their letter dated 19.11.1977, but still sale had not been completed. The suit also alleged that under the agreement, he had to furnish documents to enable them to raise a loan from the Life Insurance Corporation of Rs.1,00,000/- to pay the balance sale consideration. The Appellant agreed to clear the water and electricity dues and property taxes and convey to the plaintiffs a clear title free from encumbrance/liabilities whatsoever. The plaintiff respondent expressed their readiness and willingness to perform their part of the obligations. They alleged that the Appellant, however defaulted and breached his obligations.

(3.) The Defendants filed separate written statements. The Second defendant (the Punjab National Bank, hereafter "PNB") claimed that the Appellant had created an equitable mortgage in its favor in respect of the suit property for credit facilities given to M/s. Anil Industries of which the appellant and his brother S.K. Sharma were partners and there was an outstanding liability amounting to Rs.12,95,889.02 as on 31.12.1979 towards that facility, that the suit is bad in law, plaintiffs have no locus standi to file the suit and the agreement was null and void and not binding, being in violation of the mortgage created in its favor. The plaintiffs, however, claimed ignorance of such mortgage and asserted that what was represented to it was that the property was free from encumbrances.