# JAi NARAIN PARASRAMPURIA (DEAD) AND ORS v. PUSHPA DEVI SARAF AND ORS - **Citation:** [2006] Supp. 5 S.C.R. 325 - **Court:** Supreme Court of India - **Decided:** 2006-08-24 - **Bench:** S.B. Sinha, P.P. Naolekar - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/jai-narain-parasrampuria-dead-and-ors-v-pushpa-devi-saraf-and-ors-21923 - **Pages:** 44 ## Headnote A B Specific Relief Act, 1963-Sections l 5(h) and 19 (e)-Transfer of Property ict, 1882-Sections 5 and 54-Acquisition of property by proposed proprietors/Directors for unincorporated company-After incorporation of the C company, property transferred in its favour-By decree of Court Company declared to be owner of the property-Proprietors/Directors representing the company to be the owner-Sale of agreement in favour of the aggrieved party-Further execution of lease and agreement of sale of the same property in favour of some other parties-Suit by aggrieved party seeking specific performance of contract-Dispute between company and its Proprietors/ D Directors as regards ownership of the property-Arbitration-Arbitrator declaring Proprietors/Directors as owners-Subsequent decree-Suit questioning the award and decree withdrawn-Criminal trial at the behest of Proprietors/Directors against the aggrieved party alleging demolition of the structures over the property, pending-Suit for specific performance of contract E by aggrieved party decreed-High Court held the aggrieved party not entitled for the decree-On appeal, held: The aggrieved party was entitled to the decree of specific performance of the contract-The Company being the owner of the property was bound to perform the contract-Proprietors !Directors cannot be held to be owners as they are estoppedfrom denying the title of the company by their conduct-By applying doctrine of lifting of corporate veil of F the company it is found that they were attempting to use the personality of the company for fiirthering their own personal object-The Proprietors/Directors being alter ego of the company, it was not possible for them to take a different stand vis-a-vis interest of the company-The award and decree pursuant thereto was fraudulent, and hence a nullity-Withdrawal of suit questioning the award and decree would not constitute a bar to a second suit questioning the validity of the award and decree-Jn view of blameworthy conduct of both the parties, the grant of specific performance is denied and in its stead a decree of compensation is granted-Company Law-Doctrine of Lifting of Corporate veil-Evidence Act, 1872-Section 44-Code of Civil Procedure, 1908-0rder 325 G H 326 SUPREME COURT REPORTS [2006] SUPP. 5 S.C.R. A 23. Rule I. B Doctrines/Principles: Doctrine of Lifting of Corporate Veil-Applicability of Principle of Eswppel and Acquiescence-Applicability of Evidence-Estoppel and acquiescence-Applicabilil)"-Principles ofHeld: While applying such procedural laws, the court is concerned with the conduct of the party for determining permissibility to take different stand in subsequent proceeding, unless there exists a statutory interdict. C Wordv and Phrases: 'House '-Meaning of Respondent Nos. 1 and 2, acquired the property in question in their capacity as promoters/directors of proposed company by a registered deed D of sale. The sale deed contained a clause of re-cor.veyance of 'the property'. E After incorporation of the Company, the amount of consideration paid to the vendor was repaid by the Company to the 1st and 2nd respondents. In the balance sheets of Company signed by the 2nd respondent, the property was shown to be that of the Company. In order to do away with the clause of re-conveyance, company through its Directors filed a suit against the vendor and the same was decreed declaring the company to be the owner of the land. Respondent Nos. I and 2 resolved to sell the property in favour of F the appellants. After receiving the advance from the appellants, respondents used the amount for redeeming the mortgage of the property which was charged with the State Bank of India. They also adopted a resolution to let out the property in favour of one MKP. Pursuant to the resolution, agreement of sale of the property was executed by respondent G Nos. 1 and 2 in favour of the appellants. A deed of lease was also executed in favour of MKP. Another agreement for sale was purported to ha ## Text _Characters 0–39,343 of 104,221. This is a partial read: ask again with offset=39343 for what follows._ JAi NARAIN PARASRAMPURIA (DEAD) AND ORS. v. PUSHPA DEVI SARAF AND ORS. AUGUST 24, 2006 [S.B. SINHA AND P.P. NAOLEKAR, JJ.] A B Specific Relief Act, 1963-Sections l 5(h) and 19 (e)-Transfer of Property ict, 1882-Sections 5 and 54-Acquisition of property by proposed proprietors/Directors for unincorporated company-After incorporation of the C company, property transferred in its favour-By decree of Court Company declared to be owner of the property-Proprietors/Directors representing the company to be the owner-Sale of agreement in favour of the aggrieved party-Further execution of lease and agreement of sale of the same property in favour of some other parties-Suit by aggrieved party seeking specific performance of contract-Dispute between company and its Proprietors/ D Directors as regards ownership of the property-Arbitration-Arbitrator declaring Proprietors/Directors as owners-Subsequent decree-Suit questioning the award and decree withdrawn-Criminal trial at the behest of Proprietors/Directors against the aggrieved party alleging demolition of the structures over the property, pending-Suit for specific performance of contract E by aggrieved party decreed-High Court held the aggrieved party not entitled for the decree-On appeal, held: The aggrieved party was entitled to the decree of specific performance of the contract-The Company being the owner of the property was bound to perform the contract-Proprietors !Directors cannot be held to be owners as they are estoppedfrom denying the title of the company by their conduct-By applying doctrine of lifting of corporate veil of F the company it is found that they were attempting to use the personality of the company for fiirthering their own personal object-The Proprietors/Directors being alter ego of the company, it was not possible for them to take a different stand vis-a-vis interest of the company-The award and decree pursuant thereto was fraudulent, and hence a nullity-Withdrawal of suit questioning the award and decree would not constitute a bar to a second suit questioning the validity of the award and decree-Jn view of blameworthy conduct of both the parties, the grant of specific performance is denied and in its stead a decree of compensation is granted-Company Law-Doctrine of Lifting of Corporate veil-Evidence Act, 1872-Section 44-Code of Civil Procedure, 1908-0rder 325 G H 326 SUPREME COURT REPORTS [2006] SUPP. 5 S.C.R. A 23. Rule I. B Doctrines/Principles: Doctrine of Lifting of Corporate Veil-Applicability of Principle of Eswppel and Acquiescence-Applicability of Evidence-Estoppel and acquiescence-Applicabilil)"-Principles ofHeld: While applying such procedural laws, the court is concerned with the conduct of the party for determining permissibility to take different stand in subsequent proceeding, unless there exists a statutory interdict. C Wordv and Phrases: 'House '-Meaning of Respondent Nos. 1 and 2, acquired the property in question in their capacity as promoters/directors of proposed company by a registered deed D of sale. The sale deed contained a clause of re-cor.veyance of 'the property'. E After incorporation of the Company, the amount of consideration paid to the vendor was repaid by the Company to the 1st and 2nd respondents. In the balance sheets of Company signed by the 2nd respondent, the property was shown to be that of the Company. In order to do away with the clause of re-conveyance, company through its Directors filed a suit against the vendor and the same was decreed declaring the company to be the owner of the land. Respondent Nos. I and 2 resolved to sell the property in favour of F the appellants. After receiving the advance from the appellants, respondents used the amount for redeeming the mortgage of the property which was charged with the State Bank of India. They also adopted a resolution to let out the property in favour of one MKP. Pursuant to the resolution, agreement of sale of the property was executed by respondent G Nos. 1 and 2 in favour of the appellants. A deed of lease was also executed in favour of MKP. Another agreement for sale was purported to have been executed by respondent Nos. I and 2 in favour of SKM. Appellants filed a suit for injunction seeking relief of decree of specific performance of the agreement of sale and for declaration that the H agreement of sale: in favour of SKM was a sham. > JAi NARAIN PARASRAMPURIA (DEAD)v. PUSHPA DEVI SARAF 32 7 MKP also filed a suit seeking direction to the parties not to interfere A with his possession of the property. Advocate Commissioner appointed in that matter found MKP in possession of the property. Respondent Nos. I and 2 inducted an employee of the company as director of the company. Thereafter the respondents raised a dispute regarding the ownership of the property between Company on one hand B and respondent Nos. I and 2 on the other. Sole arbitrator by his award, held the respondents to be the owners. However, the Arbitrator was not made aware of the decree declaring the company as owner of the property, nor was his attention drawn to the proceedings of pending suit filed by the appellant for specific performance of agreement of sale. The award C was made rule of the Court and a decree dated 21.2.1985 wa~ passed. · Appellants and MKP filed a suit before Delhi High Court for a declaration that decree dated 21.2.1985 was obtained by fraud. Appellants also filed a suit for declaration that in view of the sale deed the respondents did not have any authority to cause damage to the property. Therein D symbolic possession was given to the appellants. However, the suits were withdrawn. Appellants, thereafter also filed two suits praying for restraining the respondents from interfering with their right to manage the property and from causing disturbance in their peaceful possession. These suits were also withdrawn. A caretaker of the property filed a suit against the respondents wherein ex-parte decree was passed in terms of U.P. Rent Control Act. An application for setting aside the ex-parte decree and a Writ Petition for quashing the ex-parte decree were filed respectively by respondent Nos. E 2 and 1. Application was allowed. But the suit was later withdrawn. Writ F Petition was dismissed, but when the appeal thereagainst Was taken to this Court, District Judge was directed to nominate a Receiver for taking charge of the property. In a Writ Petition by respondents, the order granting symbolic possession to appellants was quashed by High Court. Another Writ G Petition was filed by respondents seeking direction that criminal case be registered for protection of life and property of respondents 1 and 2 and for payment of damages for the loss caused to them. The Court directed investigation of the case by CBI. Charge-sheet was filed against the appellants and the trial is pending. H 328 SUPREME COURT REPORTS (2006) SUPP. 5 S.C.R. A Trial Court decreed the appellant's suit for specific performance of contract. Division Bench of High Court allowed the appeal thereagainst holding that trial court wrongly exercised its discretionary jurisdiction under Section 20 of Specific Relief Act, 1963; as the appellants were guilty of demolition of the existing structures on the land, and that in view of B the fact that the appellant had withdrawn the suit questioning the said award and the decree subsequent to passing of the judgment and decree c of trial court, they became disentitled to question the award. Hence the present appeals. Allowing the atJpeals, the Court HELD: I. I. The Company was the owner of the property and at all material times respondent Nos. I and 2 had made representations as such to the appellants as also to others thereabout. The property in suit for all intent and purport was acquired for the benefit of the Company. Only because at the time of acquisition of the property by Sarafs, the Company D was unincorporated, the same would not mean that no title could have been passed in favour of the Company. 1342-F-G; 367-E-FI 1.2. In terms of Section IS(h) of the Specific Relief Act, the Promoters of a company before its incorporation could enter into a contract for the E benefit of the company and such contract may be warranted by the terms of incorporation of the company. The said provision is subject to the proviso that the company should accept the said transaction. In the instant case, the company upon incorporation has accepted the contract and communicated such acceptance to the other party. Section 19(e) of the Act provides for grant of a decree of specific performance of a contract against F a company when the promoters ofa company before incorporation entered into a contract for the purpose of the company and such contract is warranted by the terms of incorporation. The said provision applies herein. 1344-A-DI Shamsu Suhara Beevi v. G. Alex and Anr., 120041 8 SCC 569, G distinguished. Weavers Mills Ltd, Rajapalayam v. Balkis Ammal and Ors., AIR (1969) Mad. 462 and Vali Paltabhirama Rao and Anr. v. Sri Ramanuja Ginning and Rice. Factory (P.) ltd and Ors., AIR (1984) A.P. 176, referred to. H 1.3. Transfer of Property Act does not prohibit an oral transfer. The statute merely provides that if the value of the said property is more than .. - JAi NARAIN PARASRAMPURlA (DEAD)i·. PUSHPA DEVI SARAF 329 Rs. 100/- a registered document is required to be executed. Section 5 of A the Transfer of Property Act provides for transfer in favour of the company which was unincorporated. The effect of the Transfer of Property oi Act, therefore, postulates transfer in favour of unincorporated company. It does not create any bar. (346-A-C) 1.4. Section 54 of the Transfer of Property Act, defines sale and B provides for a procedure as to how the same shall be made. It does not speak of conveyance of ownership. Seetion 54 of the Transfer of Property Act does not lay down a law as to whether in all situations an apparent state of affairs as contained in a deed of sale would be treated to be the real state of affairs. It does not bar a benami transaction. There is no embargo in getting a property registered in the name of one \)erson; C although real beneficiary thereof would be another. (343-B-DJ 2.1. Respondent Nos. 1 and 2, in view of their conduct, were estopped and precluded from denying and disputing the title of the Company over the property in dispute. The High Court overlooked the fact that the plaint was signed by respondent Nos. 1 and 2 and the company was represented D by them. It is they who had made solemn statement before a competent court of law that the company was the owner of the property. Hence, they are bound by the said statement. The principle of estoppel and/or acquiescence would, thus, be applicable. (346-H; 347-A-B) Chhaganlal Keshavlal Mehta v. Patel Narandas Haribhai, [1982( 1 SCC E 223 AIR (1982) SC 121, distinguished. Bank of India and Ors. etc. v. O.P. Swarnakar and Ors. etc., [2003) 2 SCC 721; Indu Shekhar Singh and Ors. v. State of UP. and Ors., (2006) 5 SCALE 107; Pawan Alloys and Casting Pvt. Ltd., Meerut v. UP. State Electricity Board and Ors., (1997) 7 SCC 251 and Sarat Chunder Dey and F Ors. v. Gopal Chunder Laha and Ors., (1892) Vol. XIX Law Report 203, referred to. Gillett v. Holt and Anr., (20001 2 All. E.R.289 and Chap/ea and Wife v. The Brunswick Permanent Building Society and Ors., (1881) QBD 696, referred to. G 2.2. While applying the procedural law like principle of estoppel or acquiescence, the court would be concerned with the conduct of a party for determination as to whethe'r he can be permitted to take a different stand in a subsequent proceeding, unless there exists a statutory interdict. \347-A-BI H 330 SUPREME COURT REPORTS (2006] SUPP. 5 S.C.R. A 2.3. In the instant case, it were respondent Nos. 1 and 2 who represented the company. They had made the representation that the company was the owner of the property. Such a representation had been made to the appellant herein not only in terms of the decree obtained in the suit filed by the company against the vendor, but by reason of execution B of the other documents including creation of mortgage of the property and discharge thereof in favour of the State Bank of India. If by reason of such representation, a third party alters his position, indisputably, the principle of estoppel would apply. Where there exists a statutory embargo, vesting of title in a person shall be subject thereto. In this case there did not exist any statutory embargo in this behalf. (347-E-G( c 2.4. The doctrine of estoppel by acquiescence was not restricted to cases where the representor was aware both of what his strict rights were and that the representee was acting on the belief that those rights would not be enforced against him. Instead, the court was required to ascertain whether in the particular circumstances, it would be unconscionable for D a party to be permitted to deny that which, knowingly or unknowingly, he had allowed or encouraged another to assume to his detriment. Accordingly, the principle would apply if at the time the expectation was encouraged. (348-F-H] Mahboob Sahab v. Syed Ismail and Ors., (1995( 3 SCC 693, referred E to. Taylor Fashions Ltd. v. Liverpool Victoria Trustees Co. Ltd., (1981] 1 All ER 897 and Amalgamated Investment and Property Co. Ltd. v. Texas Commerce International Bank Ltd., (1981 ( I All ER 923, referred to. 3. In a case of this nature, keeping in view the facis and F circumstances of the case, even the doctrine of lifting the corporate veil would be applicable. The application of the said doctrine becomes relevant in view of the fact that in the Memorandum of Association of the company respondent Nos. I and 2 alone were shown to be the subscriber members of the company. In the Articles of Association they were naturally inducted G as the first Directors. Subsequently they included their son as a Director; and it was all the three of the Directors who executed the agreement for sale. There had, thus, been no shareholder except respondent Nos. I and 2 and their son. Since, they had been attempting to use the personality of the company for furthering their own personal object the doctrine of lifting the veil is applicable. They did so lo furtherance of their dishonest and H fraudulent design. They in fact were the alter ego of the company. It was, . .. JAi NARAIN PARASRAMPURIA (DEAD)v. PUS HP A DEVI SARAF 3 3 J therefore, impossible for them to take a different stand vis-a-vis the interest A of the company. [350-F-G; 351-C-FI Kapi/a Hingorani v. State of Bihar, [20031 6 SCC 1; Union of India and Ors. v. Mis. Playworld Electronics Pvt. ltd. and Anr., [198913 SCC 181 AIR (1990) SC 202 and State of U.P. and Ors. v. Renusagar Power Co. and Ors., 119881 4 SCC 59 AIR 1988 SC 1737, referred to. Yukong Line Ltd. of Korea v. Rendsburg Investments Corp of Liberia and Ors., (No. 2) [1998) 4 All ER 82 (QBD), referred to. B 4. Withdrawal of suit against award and decree by the appellants did not create any _embargo in raising a contention that the award of the C arbitrator and the consequent decree passed were void ab initio and of no effect. It cannot be said that withdrawal of the Suit, without obtaining liberty to file a fresh suit would constitute a bar in filing of a second suit under Order 23, Rule 1 of the Code of Civil Procedure, in the factual matrix obtaining herein. The appellant contended that the said award and D the consequent decree passed by the Delhi High Court was a fraudulent and collusive one. The appellants having obtained a decree, it was not necessary for them to obtain another decree. It might not have been able to file another suit, but the same would not mean that they were not entitled to question the validity or otherwise of the said award in the suit E for specific performance of contract. If a judgment or decree is vitiated by fraud, the same would be a nullity. In such an event, Section 44 of the Indian Evidence Act would be attracted. As a plea of fraud can be raised even in a collateral proceeding and the trial court having recorded a specific finding that the jurisdiction of the Delhi Court was created artificially by including a Delhi property, in respect whereof there was F no dispute, the said decree must be held to have been obtained by Sarafs by concealment of material facts and by a collusive and fraudulent exercise. Fraud vitiated all solemn act. Any order or decree obtained by practicing fraud is a nullity. [367-G-H; 352-F-G; 351-F-H; 352-DI Hulas Rai Bai) Nath v. Firm K.B. Bass and Co., [1967) 3 SCR 886, G distinguished. Ram Chandra Singh v. Savitri Devi and Ors., 120031 8 SCC 319; Vice Chairman, Kendriya Vidyalaya Sangathan and Anr. v. Girdhari Lal Yadav, [20041 6 SCC 325; State of A.P. and Anr. v. T. Suryachandra Rao, [2005) 6 H 332 SUPREME COURT REPORTS [2006] SUPP. 5 S.C.R. A sec 149; Ishwar Dutt v. land Acquisition Collector and Anr., (2005( 7 sec 190; Lillykutty v. Scrutiny Committee, SC and ST Ors., (2005) 8 SC 283; Chief Engineer, MS.EB. and Anr. v. Suresh Raghunath Bhokare, (20051 10 SCC 465; Smt. Sat.ya v. Shri Teja Singh, I 197511 SCC 120; Mahboob Sahab v. Sayed Ismail and Ors., 1199513 SCC 693 and Asharji Lal v. Smt. Kaili (Dead) B by LRs., f 199514sec163, referred to. 5. The trial court correctly arrived at an opinion that the agreement in favour of defendant No. 5 was a sham one. The original defendant No.5 did not file any suit for specific performance of contract. The said agreement for sale had not been acted upon by the parties. The agreement C for sale in favour of the appellants was not a transaction for loan. The contention of the respondents that the said agreement was merely one of loan was an afterthought. 1353-E-F; 354-E-FI 6.1. The conduct of respondent Nos. 1 and 2 was condemnable so far as they not only raised false and frivolous pleas but also initiated D frivolous proceedings in courts of law. Not only respondent Nos. 1 and 2 intended to wriggle out of the agreement to sell by appointing their employee as director of the company. They even intended to play fraud on the State Bank of India as 'the property' was charged in its favour and the amount received from the appellant by way of advance, had been E utilized for the purpose of redeeming the mortgage. (355-C-D; 368-Af 6.2. Before the arbitrator, the company was shown to be the claimant and thus, the company itself is said to have appointed the sole arbitrator. Such appointment of the arbitrator, being in the teeth of the decree passed in Suit filed by the Company against the vendor, arbitration award and F the decree passed by the Delhi High Court, had rightly been held by the trial judge as collusive and fraudulent. It was thus a nullity. Even in the proceedings for making the award a rule of the court before the Delhi High Court, there was no opposition on the part of the company. Although a decree for delivery of possession was passed against the company, the lessee MKP or the appellant had not been made parties therein. G (355-G-H; 356-A-BI 7. The subject matter of the agreement was not only the house in question but also the entire lands. The views taken by the High Court were that as the agreement to sell referred to only the house or the bungalow as the parties did not agree to sell the land, were wholly unwarranted. H Apparently the respondents intended to sell what they had purchased. JAi NA RAIN PARASRAMPURIA (DEAD)''· PUSHPA DEVI SARAF 3 3 3 There is nothing in the averments of the agreement to suggest that the A intention of the respondents was restricted to the house alone and not the lands. In any event, expression 'the house' will also include the land appurtenant thereto. The building includes the land on which it stands, unless by express stipulation it is excluded. (356-C-D; 357-B-CI Advanced Law Lexicon by P. Ramanatha Aiyar, Volume 2, (2005), B referred to. T. Lakshmipathi and Ors. v. P. Nithyananda Reddy and Ors., (20031 5 sec 150, referred to. 8. Circumstances prima facie do not lead to a conclusion that C respondent Nos. l and 2 were responsible for demolition of the structures in question. The sequence of events would go to show that the balance in regard to demolition of the said structure tilts against the Appellants, in view of the charge-sheet filed by the Central Bureau of Investigation although the same itself may not be conclusive in nature. There is no reason for this Court as at present, to take a different view from that of D the High Court in this behalf. The circumstances are such which leads the Court to a finding for the purpose of disposal of this case that the Appellants were responsible for demolishing the building. (359-E-F; 359-F-H; 360-A-BI 9. t. The conduct of both the parties are blameworthy. Both the E parties are guilty of serious misconduct. Both of them have abused the process of court. They initiated unnecessary and frivolous proceedings against each other. Both the parties took recourse to abuse of judicial process against the other upon suppression of material fact. It is now well settled that compensation can be awarded in lieu of grant of decree of F specific performance of contract. In view of the law operating in the filed vis-a-vis the conduct of the parties, grant of a decree for specific performance of contract is declined and in its stead and place a decree for compensation is granted. (360-C-D; 365-A-B; 367-BI La/it Kumar Jain and Anr. v. Jaipur Traders Corporation Pit. Ltd., G (20021 5 SCC 383 and Manjunath Anandappa urf Shivappa Hanasi v. Tammanasa and Ors., [2003) tO SCC 390, relied on. P.D'Souza v. Shondrilo Naidu, [2004) 6 SCC 649; Nirmala Anand v. Advent Corpn. (P) Ltd. and Ors., (2002) 5 SCC 481 and Surinder Singh v. Kapoor Singh (Dead) through LRs. and Ors., (20051 5 SCC 142, referred H 334 SUPREME COURT REPORTS [2006] SUPP. 5 S.C.R. A to. Malhotra v. Choudhury, 1197911 All ER 186; Horsier and Anr. v. Zorro, (19751 1 All ER 584 and Gillett v. Holt and Anr., 120001 2 All. E.R. 289, referred to. B 'Equity' by Snell, page 452 and 'Equitable Remedies' by Spry, referred • to. 9.2. It is directed that the amount deposited by the appellant must be refunded to the appellants with interest @15% per annum. Although relief of specific performance of contract is declined, to which the C appellants were otherwise entitled to, but the interest of justice would be met if the respondents are directed to pay a sum of Rs.50,00,000/- to the appellants herein by way of compensation, in addition to the refund amount together with interest at the rate of 12% per annum thereupon. This order shall not preclude MKP to bring an independent action against D the respondents herein, if he so desires. (367-B-DI E CIVIL APPELLATE JURISDICTION : Civil Appeal No. 380 I of I 999. From the Judgment and Order dated 8.9.1998 of the High Court of Judicature at Allahabad in F.A. No. 68 J/92. WITH C.A. No. 3802 of 1999. Rakesh Owivedi, J.C Gupta, Vishwajit Singh, Bijoy Kumar Jain, Bharati Tyagi, Vimla Sinha, Gaurav Bhatia, Abhishek Chaudhary, Piyush Vats and F Niranjana Singh for the Appellants. G Sudhir Chandra, Manoj Swarup, Somiran Sharma, C.S.N. Mohan Rao, Pramod Dayal and Anil Kumar Gupta-II for the Respondents. The Judgment of the Court was delivered by S.B. SINHA, J. Background facts: Kanpur is a metropolitan town. The respondents herein were owners of a house property bearing municipal number 7/169, on a freehold plot bearing No.22, measuring 2978 sq. yards, situate in Block B, Scheme No. 7, Gutaiyya, H Swaroop Nagar in the said town ('the property' for short). The I st respondent- • JAi NARAIN PARASRAMPURIA(DEAD)v. PUSHPA DEVI SARAF[S.B. SINHA,J.) 335 Pushpa Devi Saraf and the 2nd respondent-Mohan Lal Saraf intended to A promote a company in the name of the 5th respondent-Mis. Kanpur Exports (P) Ltd. ('the Company' for short). They filed an application therefor as promoters of the Company on 15.2.1979. They acquired the property in their capacity of promoters or Directors of the proposed company from one Shanti Narain Verma by a registered Deed of Sale dated 24.2.1979 at a price of Rs.2 B lakhs. The said Deed of Sale contained a clause of re-conveyance of 'the property'. The Company was incorporated on 19.6.1979. The amount of consideration paid to said Shanti Narain Verma was repaid by the Company by two cheques of Rs. I, 11,250/- each to Mohan Lal Saraf and Pushpa Devi C Saraf (hereinafter referred to as "Sarafs"). The first balance sheet of the Company was signed by the 2nd respondent herein on 30.6.1980, wherein also 'the property' was shown to be that of the company. With a view to do away with the said clause of re-conveyance, a suit was filed by the Company against the said Shanti Narain Verma. The said suit was decreed. The First Directors' Report dated 15 .11.1980 and the balance sheet of the Company for D the year ending 30.6.198 I, signed by the 2nd respondent herein also disclosed the property to be that of the Company. Directors of the Company, viz., 'Sarafs' resolved to sell the property in favour of the appellants herein. A resolution to let out the property in favour of one Manoj Kumar Poddar was also adopted by it. A General Power of Attorney was also executed by the E Company in favour of one M.M. Aggarwal who had specially been invited to attend the said meeting. Pursuant to or in furtherance of the said resolution, an agreement of sale of the said property was executed by Sarafs as Directors of the Company, wherefor the total consideration was fixed at Rs.I I lakhs. Out of the said amount, a sum of Rs. I 0 lakhs was paid in advance through Bankers' Cheques and Cash Orders dated 11.6.1984 and 12.6.1984. The F remaining amount of Rupees One lakh was to be paid at the time of execution and registration of the Deed of Sale. A registered Deed of Lease pursuant to the said resolution was also executed and registered in favour of said Shri M.K. Poddar, the sister's son of the appellant, on the same day. There exists a dispute, to which we would G advert to at an appropriate stage, as to whether the possession of the property had been handed over to Shri M.K. Poddar or not. Proceeding : H 336 SUPREME COURT REPORTS (2006] SUPP. 5 S.C.R. A The appellants herein issued a notice asking the respondents to execute a Deed of Sale on 5.8.1984. They also got a public notice published in Newspaper notifying the execution of the agreement for sale between the appellants and the contesting respondents. Another Agreement for sale was purported to have been executed on 4.6.1984 by 'Sarafs' in favour of one B Surendra Kumar Mittal stated to be a close relation (brother-in-law) of Mohan Kumar Saraf. The appellants filt:d a suit against the respondents for injunction. Subsequently, a relief by way of decree of specific performance of the agreement for sale was also prayed for. A further prayer was made therein C that the purported Agreement of Sale dated 4.6.1984 executed by the defendant Nos.2 to 4 in favour of the said Surendra Kumar Mittal was a sham. The said M.K. Poddar also instituted a suit for injunction on 25.5.1984, which was numbered as Suit No.612 of 1984, wherein an interim order of injunction, directing the parties not to interfere with his possession was passed. D Jn the said suit, an Advocate Commissioner was also appointed. He found the said M.K. Poddar to be in possession of the property. A purported dispute, however, was raised as regards ownership of the said property by and between the Company on the one hand and the Sarafs on the other. One Shri B.S. Mathur, Advocate was appointed as sole Arbitrator. E He made an Award holding the property to be belonging to Sarafs. They were directed to refund an amount of Rs.2,22,500/- to the Company; they having received the same from the Company. The Award was made Rule of the Court. An Execution Case was filed to execute the decree. In execution of the said decree a warrant of delivery of Possession was issued against the F Company and M.K. Poddar was said to have been dispossessed. M.K. Poddar, indisputably filed an application under Order 21 Rule 99 of the Civil Procedure Code for restoration of possession of the said property. In response to the notice issued thereupon, the respondents contended that they intended to raise a multi-storied building upon demolition of the existing G building. Suits and other proceedings initiated by the appellants : A suit was filed by the appellants and the said M.K. Poddar in the Delhi High Court for a declaration that the Decree dated 21.2.1985 passed by the H said Court was obtained by fraud and thus was a nullity. Another suit was ... JAi NARAIN PARASRAMPURIA(DEAD}r. PUSHPA DEVI SARAF [S.li. SINHA, J.] 33 7 filed by the appellants for declaration and appointment of Receiver before the A Civil Judge, Kanpur Dehat being Suit No.237 of 1989, wherein a declaration was sought for that the defendants therein, in view of the Agreement of Sale dated 12.6.1984, had no authority to cause any damage to the suit property. Symbolic possession was directed to be given in favour of the appellants therein by an order dated 23.10.1989. However, the said suit later on was B withdrawn. Another suit was filed by the appellants in the Court of Munsif, Kanpur praying for an order restraining Sarafs from interfering with their right to manage and maintain the suit property, which was registered as Original Suit No.2256of1989. The said suit was also dismissed as withdrawn by an order dated 26.8.1991. The appellants also filed a suit for permanent injunction, which was registered as Suit No.677/91 for restraining the C respondents from causing any disturbance in their peaceful possession. The said suit was also dismissed. It is furthermore not in dispute that one G.P. Tiv:ari claiming himself to be the caretaker of the property filed a suit against the respondents and by an order dated 13. 7 .1987 an ex-parte decree was passed in terms of the provisions of the U.P. Rent Control Act. An application for setting aside the said ex-parte decree was filed by Mohan Lal Saraf. The D first respondent herein also filed a writ petition for quashing the said ex-parte decree before the Allahabad High Court, which was numbered as Writ Petition No.21985 of 1989. The said ex-parte decree was set aside by an order dated 8.2.1990. The said suit was also withdrawn by G.P. Tiwari. The writ petition filed by respondent No. I herein was also dismissed as having become E infructuous, whereagainst Pushpa Devi Saraf preferred a Special Leave Petition which was also dismissed by an order dated 19.9.1990. However, the said order dated 19.9.1990 was recalled by this Court by an order dated and the petition was disposed of on 14.8.1991, directing the District Judge, Kanpur to nominate a Receiver for taking charge of the property. F Suit and other proceedings initiated by the respondents : On 8.7.1980, the Company through its Directors, Sarafs, filed a suit against Shanti Narain Venna for declaration that the Company was the absolute owner in ~,ossession of the suit premises. However, as noticed hereinbefore, before the Trial Court, the respondents, inter alia, raised a contention that the G Sarafs were the owners of the suit property and not the Company. The learned trial Court negatived the said contention. As noticed hereinbefqre, the said suit questioning the grant of symbolic possession was decreed in favour of the appellants. A writ petition was filed on 9.5.1990 which was numbered as Writ Petition No.24301/89. The order granting symbolic possession was H 338 SUPREME COURT REPORTS [2006] SUPP. 5 S.C.R. A quashed by the High Court by an order dated 23.10.1989 on the premise that there had been no sufficient service and the matter was remanded to the Trial Court for fresh consideration thereof. A Criminal Misc. Writ Petition No.23804/ 89 was filed in the High Court of Judicature at Allahabad for a direction that a criminal case be registered for protection of life and property of the Sarafs B and for payment of damages for damages allegedly caused to them. By an order dated 9.12.1993, the High Court directed investigation into the allegations made by Sarafs by the Central Bureau of Investigation. Upon completion of the investigation by the Central Bureau of Investigation, a charge-sheet was filed against the appellants and the trial against them is pending. C Judgment of the Court : On the backdrop of several litigations between the parties and allegations and counter allegations made by one party against the other therein, the learned Trial Court decreed the Appellants' suit for specific performance of contract. The said judgment and decree came to be challenged before the D High Court. A Division Bench of the High Couii allowed the appeal on the premise that the Trial Court had wrongly exercised its discretionary jurisdiction under Section 20 of the Specific Relief Act, 1963; as the appellants were guilty of demolition of the existing structures on the land. The learned Judge~ of the Division Bench of the High Court, however, differed in their opinion on other issues. E Both the parties are, thus, before us. Submissions : Mr. Rakesh Dwivedi, learned Senior Counsel appearing on behalf of F the appellants raised the following contentions: (i) The High Court committed a serious error in holding that the Sarafs had purchased the property for the bt