GLOBE FINANCE Vs. RADHAKISHAN

JUDGEMENT

(1.) THE claim of the Company is clearly unsustainable for a variety of reasons. In the first instance, it is established on the records that the Company, which admittedly secured perpetual lease of the plot on payment of Rs. 15600.00 on July 26, 1954 and in terms thereof was under an obligation to put up a building on the plot within a specified period, had neither the intention nor the funds for the purpose and was interested in outright sale or transfer by other mode of all its interest in the lease to save the premium and if possible to make some profit on the investment. This is exactly what the company did when it entered into the construction contract with the respondent no. 1 by the agreement of March 19, 1956, Ex.RW 1/2. It was clearly intended to be an agreement to transfer the company's interest in the plot. THEse facts and circumstances are fully borne out by the sworn testimony of its former Director, B.K.. Bedi, who was examined as RW1. THE oral testimony of the former Director is confirmed by a number of contemporaneous documents of unimpeach table veracity. By his letter of March 19, 1956 Ex. RW1/1, the respondent sent his cheque to the Company towards the payment of Rs. 17 300.00, claimed by the company to be the "earnest money". THE letter, however, describes the payment as "full price" and the letter bears the confirmation of the former Director, who stood by it in his testi mony. THE two powers of attorneys, Ex. Rl and R2, executed by the Company on 18.7.56 and 19.11.56 in the widest terms leaves no manner of doubt as to the real nature of the transaction and the intention of the parties in relation to the property. It was not disputed that since the agreement the respondent has been paying all taxes leviable on the properly whether by one authority or the other, and whether on the land or the construction that was put up on it by the respondent. It was also not disputed that the resolution passed in the meeting of the Board of the Company in its meeting held on Nov. 15, 1957, described the transaction as "Sale of the plot" and this was confirmed further by the assertion in the statement of affairs, filed by the former Director, after the winding up order was made. THE Company wrote successive letters to the respondent asking him to expedite the issue of the completion certificate so that the Company "may show the transaction formally in its records as sale". THEse letters are RWl/4 and RW1/5. Ex. RW 4/1 to 7 are copies of the tax records of the respondents which treat the land and the construction on it as the property of the respondent. In the face of all this material there is no escape from the conclusion that the agreement of construction was a mere device adopted to gel over the prohibition contained in the lease regarding transfer and the arrangement was an agreement of sale for the consideration paid and received in full by the Company. True, the transaction was inconsistent with the terms of the lease and its true nature was concealed by the apparent form of construction contract but the Company having taken advantage of the arrangement was clearly estopped from resiting from the arrangement. Secondly, the Company has no rights in the properly even on the assumption that it was a construction contract simplicitor because in terms of the agreement the Company was bound to pay the sum of Rs. 120,000.00 to the respondent on receipt of his notice of demand failing which the respondent became entitled to dispose of the property for any amount not less than the amount. It was not disputed and is even otherwise established by the Company's letter, Ex.RW1/8, that the Company informed the respondent on receipt of his requisition for the amount that it was not able to pay it and that in terms of the agreement the respondent was free to sell the property for any amount not less than the amount spent by the respondent on the construction. THEre was no stipulation with regard to the payment of any amount in excess of the said amount to the Company and that being so the respondent could continue to hold the property if he was entitled to dispose it of provided the sale proceeds did not involve any "shortfall" and this is exactly what the respondent seems to have done. In this view of the matter no right of the Company survived on its failure to pay the amount. Lastly, the respondents clearly perfected their title to the property by adverse possession. THE agreement was entered into between the parties in 1956. THE respondents have since been in possession of property have been dealing with it as full owners thereof for more than 12 years before the winding up order was made in 1969. Even after the winding up order the Official Liquidator raised the matter with the respondents for the first time in 1977 and when the respondents denied the claim of the Company the present proceedings were filed by the Company only in 1978. It follows, therefore, that with the lapse of time the company lost not only the remedy but also the right as envisaged by Section 27 of the Limitation Act.

(2.) THE only justification for the claim can be said to be the circumstances that the property has, by efflux of time, become very valuable and there -are creditors of the Company, who have to be paid. None of these circumstances are, however, capable of reviving the right which has since been irretrievably lost. Claim dismissed.