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CASE NO.: Appeal (civil) 2522 1992

PETITIONER: BISHANDAYAL AND SONS

       Vs.

RESPONDENT: STATE OF ORISSA & ORS.

DATE OF JUDGMENT:       07/12/2000

BENCH: V.N.Khare, S.N.Variava

JUDGMENT:

L.....I.........T.......T.......T.......T.......T.......T..J       J U D G M E N T S.  N.  VARIAVA, J.

     This  Appeal  is  against a Judgment dated  15th  May, 1992.   Briefly  stated  the facts are as  follows:   In  an auction  sale held by the Court Receiver, the 1st Respondent purchased,  for  a sum of Rs.  2.32 lacs, all the assets  of one  Mayurbhanj  Spinning and Weaving Mills including  plant and  machinery  and  land measuring Ac.  419.14,.   The  1st Respondent  then  proposed  to  sell   off  the  Mill.   The Appellant  by a letter dated 14th November, 1992 offered  to purchase the Mill with all its assets for consideration of a sum  of  Rs.   2.31 lacs.  During this period the  State  of Orissa  was under the President’s Rule.  The Appellants thus had  a meeting with the Governor of Orissa wherein they were asked  to enhance the consideration to Rs.  2.32 lacs.   The Appellants  by the letter dated 17th Marcy, 1973,  addressed to  the Governor, conveyed their acceptance to purchase  the Mill  with  all its assets for Rs.  2.32 lacs.  By a  letter dated  9th April, 1973, addressed by the Deputy Secretary to the  Government to the Director of Industries, the  Director of  Industries was informed that the Government had  decided to  sell  the Mill to the Appellants for a sum of Rs.   2.32 lacs.   It  was,  however,  stated   that  the  Director  of Industries  was  to ensure that correct assessment,  of  the land  required to run the unit by the Appellants, was  made. This  was  an internal communication, not addressed  to  the Appellants  yet  the  Appellants came to know  of  it.   The Appellants,  obviously with a view to pressurize, address  a letter  dated 18th April, 1973 to the Governor stating  that they had accepted the offer to purchase the Mill at the cost of Rs.  2.32 lacs and purported to forward a Demand Draft in a  sum of Rs.  1,32,000/-.  The 2nd Respondent by his letter dated  21st  April,  1973,   addressed  to  the  Appellants, informed  them that the Government had approved the proposal to  sell  the Mill to the Appellant for a cost of Rs.   2.32 lacs  and that they would be allotted land actually required for  running  the Mill.  By their letter dated  23rd  April, 1973,  the Appellants informed the 2nd Respondent that  they were  surprised to learn that the land was to be allotted to the extent actually required.  They insisted that the entire assets  including the entire land was to be sold to them for a  sum of Rs.  2.32 lacs.  The 2nd Respondent by the  letter

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dated  5th  July,  1973  informed the  Appellants  that  the Government was willing to sell the entire land provided they paid  the  full market value of the land and entered into  a lease  and  paid  the premium and abided by  the  terms  and conditions of that lease.  The Appellants on 17th July, 1973 gave an undertaking to apply to the local Tehsildar.  On 2nd August,  1973 the Appellants undertook to pay full value  of land  and other charges and to abide by terms and conditions of  lease.  As till date no agreement had been finalised  by letter  dated 22nd October, 1973 the 2nd Respondent returned the  Demand  Draft  of  Rs.  1.32 lacs  to  the  Appellants. Thereafter  some  correspondence was carried on between  the parties.  Ultimately the Appellants gave a notice dated 26th October, 1974, purporting to be a notice under Section 80 of the  Civil  Procedure Code where under they claimed  that  a complete  contract had been arrived at to sell the Mill with all  lands  to the Appellants for a sum of Rs.   2.32  lacs. The  Appellant then filed Suit No.  108 of 1976 in the Court of  Sub-Judge,  Cuttack, claiming that a concluded  contract had  been  arrived at to sell the Mill and all  its  assets, including  Ac.  419.14 of land to the Appellants for a price of  Rs.   2.32 lacs.  The Appellants claimed that  they  had acquired  valid  right  and title to the properties  of  the Mill.   The  Appellants also claimed that  the  undertakings given   by  them  were  void  as  they  were   obtained   by misrepresentation, fraud, undue influence and coercion.  The Appellants also sought an injunction against the Respondents from  selling  away  the Mill and its properties.   At  this stage  itself  it is to be seen that the Appellants and  the Respondents  were  at cross purposes.  Whilst the  Appellant was insisting on purchasing the Mill with all its land for a price  of  Rs.   2.32  lacs only, the  Government  was  only offering  the  mill with such land as would be required  for running  the  Mill.  Thus upto this stage there had been  no concluded  contract  or agreement.  At the  Appellate  stage counsel  for Appellants fairly conceded that the prayers  in the  Original  Suit could not have been granted and that  he was  not pressing for the same.  This is recorded in paras 8 & 9 of the impugned Judgment.  Thus we are not now concerned with  the  Original  Suit but with events which  took  place thereafter.   After the suit was filed a meeting was held in the  Chamber  of  Minister of Industries on  29th  December, 1978.   Minutes of the meeting of 29th December, 1978, inter alia,  records  as  follows  :  "3.   After  discussion  the following decision were taken :

     (a)  M/s.  Bishandayal & Sons would pay the previously fixed  price  of Rs.  2.32 lakhs towards plant, machinery  & building.

     (b)  They  will  be leased out an area of Ac.   40  of land.

     (c) They would pay premium @ 1/3rd of the market value of land as prevailing in 1972.

     (d) The suit will be withdrawn by the firm.

     (e)  After  sale,  the  unit will be  revived  by  the party."

     Copy  of  those minutes were given to the  Appellants. The  Appellants  applied for and were allowed to  amend  the plaint  on 11th September, 1981.  It was now claimed that  a fresh  agreement to sell had been arrived at on the basis of

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the  decision  taken in the meeting of 29th December,  1978. The  Appellants  now  sought Specific  Performance  of  this agreement.   The  Respondents  filed an  additional  Written Statement  wherein  they  denied  that there  was  any  such agreement.  On 19th March, 1982 this suit was decreed by the trial  court.  It was held by the trial court that there was a   completed  contract  between   the  Appellants  and  the Respondents and that the Appellants had acquired rights over the  mill and its lands.  Having come to that conclusion the trial  court  still  directed the Appellants to pay  for  40 acres  of land at the rate of Rs.  300 per acre.  The  trial Court  concluded that the Appellant was ready and willing to perform  its  part of the contract and that the decision  in agreement  arrived at on the meeting of 29th December,  1978 were mere confirmations of the previous contract.  The trial court  also held that the condition regarding withdrawal  of suit  was not a condition precedent and that there was valid notice under Section 80 of the Code of Civil Procedure.  The Respondents  then filed First Appeal No.  261 of 1992 in the High  Court of Orissa.  This Appeal has been allowed by  the impugned Judgment dated 15th May, 1992.  As has been set out herein  above,  before the Appellate Court counsel  for  the Appellant  fairly and correctly conceded that the prayers in the original plaint were not maintainable and could not have been  granted.   As stated above counsel for the  Appellants fairly  conceded that he was not pressing the prayers in the original plaint.  Thus clearly the decree of the trial court holding  that  there was a concluded contract was wrong  and unsustainable,  not only in law, but also on facts.   Before the  Appellate Court the question was whether the Appellants were  entitled  to  specific performance  of  the  agreement alleged  to  have  been arrived at in the  meeting  of  29th December, 1978.  The Respondents herein contended that there was  no  agreement.  They also contended that even if  there was  an  agreement the same was unenforceable in law as  the provisions  of Article 299 of the Constitution of India  had not  been complied with.  It was also contended that by  the amendment  of  the  plaint, an entirely new  case  had  been incorporated  and  no fresh notice under 80 of the  Code  of Civil  Procedure having been given the amended suit was  not maintainable.   It was also contended that even if there was an  agreement  one of the pre-conditions was that  the  suit should  be withdrawn and as the Appellants had not withdrawn the  suit,  it  could not be said that they were  ready  and willing  to perform their part of the contract and no relief should  have  been granted to them on this count also.   The Appellate  Court has, in the impugned Judgment held that  an agreement  was arrived at.  The Appellate Court has  however held that the agreement is not enforceable in law as it does not  comply  with  the  provisions of  Article  299  of  the Constitution  of India.  The Appellate Court has also upheld the  contentions  of the Respondents herein, on  Section  80 Code of Civil Procedure and on precondition of withdrawal of Suit.   Before us the Respondents have not disputed that, at the  meeting  of  29th  December,   1978,  an  agreement  as reflected in the minutes had been arrived at.  Thus there is no  challenge  to the findings in this behalf.  However,  it has  been  contended  that this is an  agreement,  which  is unenforceable in law as the provisions of Article 299 of the Constitution  of  India  have not been complied  with.   The contentions  regarding  Section 80, Code of Civil  Procedure and  precondition  of withdrawal of suit have been  pressed. On  behalf of the Appellants it is contended that it is  not open  to  the  Respondents  to  take  up  the  plea  of  non compliance  with  Article 299, Constitution of India  as  no

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such plea was taken in the written statement.  In support of this reliance was placed on the case of Kalyanpur Lime Works Ltd.   v.  State of Bihar and other reported in AIR 1954  S. C.   165.   In  this  case  the  question  was  whether  the concerned  contract conformed with the provision of  Section 30  of the Government of India Act, 1915 Such a plea had not been  raised in the pleadings or in the memorandum of appeal to  the  High Court but was taken for the first time  during arguments  in  this  Court.   This Court held  that  such  a question  could  not be allowed to be raised at the time  of the  arguments,  as it was a mixed question of law and  fact and no opportunity to adduce evidence was given to the other side.   Reliance  was also placed upon the case of Union  of India  vs.   Surjit Singh Atwal reported in 1979 (1)  S.C.C. 520.   In  this case there was a concluded contract for  the construction  of  a hard runway, taxi tracks  and  dispersal roads The work under the contract had been completed and the dispute  between the parties was whether the Contractor  was entitled to special rates in respect of certain stone, which were  not  available at the site.  It was claimed that at  a meeting  it  had  been agreed that the  Plaintiff  (therein) would  be  entitled  to  extra price.   The  plea  regarding illegality  of  the  contract  had not been  raised  in  the written statement.  In the written statement there was total denial  regarding  the agreement to make payment of  special price.   Thereafter  an  application for  amendment  of  the written  statement was made to plead that there was  failure to  comply  with  the provisions of Section  175(3)  of  the Government  of  India  Act,   1935.   That  application  was dismissed  but it was observed that the plea could be raised even  without  an amendment.  The suit then went  to  trial. The  trial court dismissed the suit on the ground that there was a new agreement in November 1947 and that this agreement did  not  comply with the requirements of Section 175(3)  of the  Government of India Act, 1935.  In Appeal the  Division Bench  held that there was no new agreement.  The  Appellate Court  held that the trial court was wrong in entertaining a plea which had not been taken in the written statement.  The Appeal  was  accordingly allowed.  This Court dismissed  the appeal  to  this  Court on the ground that such a  plea  not having  been  taken  in the written statement could  not  be raised after several years after the institution of the suit as  it  would greatly prejudice the plaintiff.   This  Court held if such a plea had been taken at the earlier stage, the plaintiff  could have come out with a certain alternate case or  raised certain other pleas, which right he had now lost. This  Court  also held that such a plea was a mixed plea  of fact  and  law.  Reliance was also placed upon the  case  of Nirod  Baran  Banerjee vs.  Dy.  Commissioner of  Hazaribagh reported  in  1980 (3) S.C.C.  5.  In this case it was  held that the question whether Article 299 of the Constitution of India  was complied with is not a pure question of law but a question  depending  on  facts and since the point  was  not pleaded  either before the trial court or the High Court, it cannot  be  raised in this Court for the first time.   There can be no dispute with the preposition of law.  The question whether  a  contract  complies  with   Article  299  of  the Constitution  of India or not is a mixed question of law and fact.   Undoubtedly in this case the plea has not been taken in the written statement and not been urged before the trial court.   However, it was squarely urged before the Appellate Court.   At  the  stage i.e.  when it was urged  before  the Appellate  Court,  a contention could have been  taken  that such  a plea cannot be raised.  Instead the Appellants  took out  an  application under Order 41, Rule 27, Code of  Civil

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Procedure, for a direction to the Respondents to produce the original  minutes in Court.  That application was allowed by the  Appellate  Court and the Respondents were  directed  to produce  the original minutes in Court.  Thus the  Appellate Court  made  sure that no prejudice was being caused to  the Appellants.   The Appellate Court made sure that  Appellants were  not deprived of an opportunity to lay all facts before the Court.  The minutes were then produced in Court.  It was found  that  the  original  minutes   did  not  contain  the signatures  of either of the parties.  The original  minutes were  shown to the counsel for the Appellants and they  were satisfied  that  the  minutes  had not been  signed  by  the parties.   Thus  the Appellants themselves, on such  a  plea being  raised,  called for the additional evidence  and  the Appellate  Court permitted it.  The original minutes clearly indicated  that  the provisions of Article 299 had not  been complied  with.   Further the witness of the Appellant  had, during  his cross examination, admitted that apart from  the minutes  there  was no other written agreement  between  the parties.   It  is  not the case of the Appellants  that  the agreement  arrived at in the meeting of 29th December,  1978 had  thereafter  been approved or sanctioned either  by  the President  or  the Governor.  It is, therefore,  clear  that even  though there may have been some agreement the same was not  in compliance with the constitutional requirement under Article  299  of the Constitution of India and is  therefore unenforceable  in  law.  In a case such as this there is  no alternate  plea  that could be taken.  None has been  taken. For  this  reason  the Appellants would not be  entitled  to specific  performance of such an agreement.  It must be seen that  all the cases relied upon by the Appellants were cases where  such a plea was not allowed to raised, for the  first time in this Court or in the Appeal Court on the ground that the concerned party did not have an opportunity to meet such a  case.  In this case the Appellants, on their application, were  permitted  to  have  brought  in  Court  the  original minutes.   Unfortunately this did not assist them.  Now they can  not be permitted to argue that such a plea could not be raised.   The next question for consideration is whether the amended  suit was not maintainable for want of notice  under Section  80 of the Code of Civil Procedure.  In this  behalf the Appellants have relied upon the cases of Amar Nath Dogra vs.  Union of India reported in AIR 1963 S.C.  424, State of Punjab vs.  M/s.  Geeta Iron & Brass Works Ltd.  reported in 1978  (1)  S.C.R.   746,  Ghanshyam   Dass  and  others  vs. Dominion of India and others reported in 1984 (3) S.C.C.  46 and  Vasant Ambadas Pandit vs.  Bombay Municipal Corporation and  others reported in AIR 1981 Bombay 394.  In these cases it  has been held that a notice under Section 80 C.P.C.   or equivalent notices under Section 527 of the Bombay Municipal Corporation  Act are for the benefit of the Respondents  and the  same  can  be waived as they do not go to the  root  of jurisdiction  in a true sense of the term.  There can be  no dispute  to  the proposition that a notice under Section  80 can  be waived.  But the question is whether merely  because in the amended written statement such a plea is not taken it amounts  to  waiver.  This contention was argued before  the Appellate  Court.   Even otherwise we find that in the  suit itself  Issue  No.  4 had been raised as to whether  or  not there  was a valid and appropriate notice under Section  80. Such  a  point  having been taken in  the  original  written statement  and  an  issue  having been raised,  it  was  not necessary  that in the amended written statement such a plea be  again taken.  On behalf of the Respondents, reliance has been  placed on the case of Gangappa Gurupadappa Gugwad  vs.

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Rachawwa  and others reported in AIR 1971 S.C.  442, wherein it  has been held that where the plaintiff’s cause of action is  against  a Government and the plaint does not show  that notice  under Section 80 was served, it would be duty of the Court  to  reject  the plaint.  In this  case  the  original notice was only in respect of a claim under the plaint as it originally  stood.   That claim was on the basis that  there was a concluded contract and that the Appellants had already acquired  rights  in  the mill and the lands.  As  has  been fairly conceded those reliefs were not maintainable and were given up before the Appellate Court.  The amended plaint was on  an entirely new cause of action.  It was based on  facts and events which took place after the filing of the original plant.  It was a fresh case.  Now the claim was for specific performance  of  the agreement alleged to have been  entered into  on  29th December, 1978.  Admittedly no  notice  under Section  80  CPC was given for this case.  As there  was  an Issue pertaining to Notice under Section 80, the trial court should  have dealt with this aspect.  The trial court failed to  do so.  It was then pressed before the Appellate  Court. In  our  view the finding in the impugned Judgment that  the suit based on this claim was not maintainable is correct and requires no interference.  If a new cause of action is being introduced  a  fresh  notice under Section 80 CPC  would  be required  to be given.  The same not having been given,  the suit  on this cause of action was not maintainable.  We also find  ourselves  in  agreement  with  the  findings  in  the impugned judgment that the condition regarding withdrawal of the  suit was a condition precedent.  As the Appellants  did not withdraw the suit they could not be said to be ready and willing to perform their part of the agreement arrived at on 29th  December,  1978.  For this reason also the  claim  for specific  performance could not have been enforced.  In this view  of the matter, we see no reason to interfere with  the impugned  Judgment.   The  Appeal stands  dismissed.   There will, however, be no order as to costs.