PHOOL SINGH Vs. BALAJI RICE MILL

JUDGEMENT

(1.) The appellants in A.S. No. 1650/85 are the defendants in the suit, initially numbered as OS 228/80 but on transfer on point of territorial jurisdiction, re-numbered as OS No. 350/83. The respondents sought specific performance of the agreement of reconveyance Ex. A-7, dated October 17, 1977. AS No. 1649/85 arises from the suit of the appellants/plaintiffs for recovery of possession and arrears of rents, initially numbered as OS No. 77/80, and re-numbered as OS No. 353/83. The result of one impinges upon the other arising out of the same facts and law necessitating to have disposed by a common judgment.

(2.) One S P. Sukhlal, the husband of the fourth respondent, had a site in Macha Bolaram, Hyderabad East. He entered into a transaction with the appellants to advance money to start rice mill business in the said site and, as a result thereof, Sri Balaji Rice Mill came to be established When disputes cropped up, they were settled by a nrivate arbitration, dated November 24, 1974 in which Sukhlal had Rs. 30,000/- interest and the appellants Rs. 50,000/- interest; the appellants were directed to pay Rs. 30,000/- to Sukhlal and obtain a sale-deed from him of the entire business. The appellants should also execute an agreement to convey the property to Sukhlal on his repaying Rs. 80,000/-within three years. Sukhlal should be in possession and enjoyment of the rice mill as lessee and he should pay every month Rs. 1,200/- to the appellants as rent. Accordingly, Sukhlal conveyed Sri Balaji Rice Mill with the land on which the mill is situated under a saledeed Ex. B-1, dated January 3, 1975 to the appellants who, in turn, executed Exs. A-6/B-6, dated January 28, 1975 agreeing to reconvey the same within three years from that day. Sukhlal, in this turn, executed Ex. B-2 lease-deed, dated January 28, 1975 for ten months effective from January 6, 1975 in favour of the appellants on his paying Rs. 1,200/- per month towards rent.

(3.) On April 26, 1976, under Ex. A-9, Sukhlal received a notice under Section 226 (3) of the Income Tax Act, 1961. from the Income-tax Officer stating that the appellants were due of Rs. 65,000/- towarde income-tax and directed him to pay the lease amount to the Income-tax Department. On receipt thereof, Sukhlal informed the appellants of the same by notice dated. September 6, 1976. In the meanwhile, Sukhlal entered into a partnership with respondents 1 to 3 on September 9,1976 under Ex. A-23 so as to discharge the debt and to run the mill. On October 8, 1976, the appellants under Ex. A-10 informed Sukhlal that they appealed to the Assistant Appellate Commissioner, Income-Tax and is likely to be allowed and requested Sukhlal to pay the rent to them. On October 19, 1976, under Ex. B-7, Sukhlal informed them that he is bound to pay the rent to the Income Tax Officer, unless the appellants adjust the dispute with the Income-Tax Officer. Penalty proceedings were initiated against the appellants. On December, 27, 1976, the Income Tax Officer, under Ex, A-12, directed Sukhlal to pay three months rent. Pursuant thereto, on February 7, 1977, under Ex. A-ll, Sukhlal paid a sum of Rs. 3,.600/- to the Income Tax Department. On October 17, 1977, the appellants and respondents 1 to 3 and Sukhlal entered into an another agreement Ex. A-7, in continuation of Ex. A-6, dated January 28, 1975 whereunder the respondents paid a sum of Rs. 30,.000/- under Ex. A-2 receipt towards part consideration and also Rs. 18,000/- towards arrears of rent and the appellants agreed to execute the sale deed on or before the January 28, 1978 on payment of the balance consideration.