MORAM VENKATARATNAM Vs. GOTHIMUKKALA JAGANNADBARAJU

JUDGEMENT

(1.) The plaintiff in O. S. No. 29 of 1960 on the file of the Court of the Subordinate Judge, Amalapuram is the appellant in this appeal. On 13-5-1956 his wite, Srimathi Gopalamma sold land of the extent of Ac. 1-57 cents in Edarapalli village to the 1st respondent for a sum of Rs. 6000/- under Ex. B-1. The land was purchased by the 1st defendant-1st respondent for the purpose of constructing a cinema theatre. On the same day the 1st respondent executed an agreement Ex. A-8 stvled as a business agreement in favour of the plaintiff-appellant. The gist of agreement was that the 1st respondent should take necessary steps to raise necessary capital for construction of a theatre estimated to cost about Rs. 2 lakhs by taking suitable persons as partners to construct the cinema hall in the premises purchased from the plaintiff and to convert the cinema business into a private limited company with himself as Managing proprietor initially and later as Managing Director for a period of twenty years. It was recited that the plaintiff had a sum of Rs. 6000/- towards his share of the capital and it was agreed that he would be allotted shares to the tune of the amount standing to his credit on taking of accounts at the time of commencement of the cinema business. It was also agreed that if for any reason a company was not formed within one year or within a period of anoher year if extended by consent the 1st respondent should, in lieu of the sum of Rs. 6000/- paid by him, reconvey and execute a deed of sale in respect of Ac. 1-57 cents of land. Since the questions involved in this appeal turn mainly on the terms of the agreement, it is just as well that the whole of the agreement is set out at this juncture itself. It runs as follows: (The translation was furnished to us by the learned counsel for the appellant):

(2.) According to the plaintiff the 1st defendant did not promote any company within the period of one year or within the period of another year by which he and the 1st defendant agreed to extend the time. The 1st defendant was continously putting the plaintiff on the wrong scent telling him that he would promote a company shortly. M. Venkataratnam v. G. Jagannadharaju (Chinnappa Reddy,J.) 6 The theatre was constructed, the 1st defendant fully utilising the services of the plaintiff who helped him in obtaining necessary licences and in transporting the articles required for the theatre. The plaintiff came to learn that the 1st defendant had taken defendants 2 to 7 as partners in the cinema business. As the 1st defendant had failed to carry out his obligations under the agreement dated 13-5-56 the plaintiff filed the suit out of which the appeal arises for reconveyance of the suit land and for damages. The plaintiff claimed that he was entitled to damages of RSI 6000/- as, according to him. he would have got a price of Rs. 12,000/- for the land if it had been sold in the market for the purpose of constructing a cinema hall. All the defendants contested the suit. The 1st defendant in his written statement stated that the term relating to reconveyance of land though mentioned in the agreement was neither talked about nor agreed upon between the parties. It was not in the agreement in the first instance, but was inserted after completion of the agreement by way of an after thought at the instance of the scribe who thought that there should be a penal clause. The 1st defendant stated that at the time of exe cution of the agreement Ex. A-8, none of them had any clear idea of what was meant by a limited company. They did not have any but the vaguest ideas as to how and when the private limited company was to be formed, what were to be the rights and liabilities of the shareholders etc. It was further averred in the written statement that the "company" referred to in the penal clause failure to form which within the stipulated period was to entitle the plaintiff to claim reconveyance of the land was not the private limited company which was to be formed only on completion of the construction of the theatre, but the 'business company' which was to be formed for the purpose of raising funds for construction etc. According to the defendants such a business company was formed and, therefore, the suit which was based on the failure to form a private limited company was not maintainable. The 1st defendant further pleaded that shortly after the execution of the agreement it became apparent that capital could not be readily found and people were not. willing to come forward readily to invest their money in the cinema business, The plaintiff who was being appraised of the situation immediately became lukewarm, and finally, on the advice of the friends and relatives, made it plain to the 1st defendant that he was no longer interested in the cinema business and wanted to be excused from the agreement. He gave up all his interest in the contract and did not want to be either a partner or a shareholder in the proposed venture. According to the 1st defendant "thus the plaintiff waived and abandoned the suit contract and it was put an end to", The 1st defendant further stated in the written statement that he borrowed monies from several people and could commence construction from February 1957 when the foundation stone was laid Later he was successful in persuading the other defendants to invest monies in the construction of the same. The theatre could finally be opened on 12-6-1960 after a sum of more than Ks, 3 lakhs had been invested- The 1st defendant averred that the plaintiff was fully aware of all these facts. He kept quite during all the time when the construe tion was in progress and there was thus acquiescence on the part of the plaintiff. The plaintiff never gave the defendant the slightest cause to think that he had any mental reservations in the matter. On the other hand, the plaintiff by his conduct attitude and representations made the 1st defendant believe that he would not claim any right Under the suit agreement. The plaintiff was therefore, estopped from claiming any rights under the suit agreement. The 1st defendant also pleaded that the Court should exercise its discretion and refuse to grant the relief asked by the plaint tiff as it would cause considerable hardship to the defendant owing to the change of circumstances such as the investment of more than Rs. 3 lakhs the introduction of partners, the construction of the cinema etc.

(3.) The learned Subordinate Judge found that the word 'company' nsed in the default clause referred to 'the business company' which was to raise the capital necessary for the construction and not to 'the private Limited Company'. He found that there was no waiver o' the contract by the plaintiff as pleaded by the 1st defendant I.e, by asking to be relieved from the agreement' but there was an abandonment in the sense of acquiescence by the plaintiff, estopping him from claiming specific performance. On those findings be dismissed the suit for specific performance of the agreement to reconvey the land He however, granted a decree for a refund of the amount of Ks. 6000 with interest at 12 percent from the date of agreement to the date of decree. He disallowed the claim of damages, The decree thus granted was for a sum of Rs. 13110/- with future interest at 6 percent on Rs, 6000/- from the date of decree.