HUNGERFORD INVESTMENT TRUST LIMITED (IN VOLUNTARY LIQUIDATION) versus HARIDAS MUNDHRA & OTHERS

Citation: [1972] 3 S.C.R. 690 · Decided: 09-03-1972 · Supreme Court of India · Bench: K.S. HEGDE · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

690 
HUNGERFORD 
INVESTMENT 
TRUST 
LIMITED (IN 
VOLUNTARY LIQUIDATION) 
'V. 
HARIDAS MUNDHRA & OTHERS 
March 9, 1972 
[K. S. HEGDE AND K. K. MATHEW, JJ.] 
Specific Relief Act (1 of 1877) repealed 
by Specific Relief Act (47 
of 1963)-.A.pplication jor rescission of convact 
and decree in 1967 
.wuier s. 35 of 1877 Act-When dight to rescission can be said to have 
uccrued under s. 6 of General Clauses Act, 1897. 
Specific Relief Act (4~ of 1963) s. 28-Scope of. 
Power of Court tip order rescission under the law relating· to specific 
relief-No time fixed in decree for specific performance -Effect of-
··Order of ,-escis~ion by Court-Nature of. 
Decree for specific performance-If could be executed. by defendant 
as mone,v decree. 
The appellant was the owner 
of 
100% 
shares in Company 'A' 
·By an agreement iiated October 30, 1956, between the appellant and 
the respondent, the respondent purchased 49% of the shares with an 
option to purchase 
the balance 
of 
51 % 
shares. The 
respon-
. dent exercised his option but as the shares welre not transferred to him 
he filed a suit. The suit was decreed and the decree for specific perfor-
mance provided that the 51 % shares should be delivered to the respondent 
against payJrent by him ~o the appellant of their value; and an injunc-
tion was '!llso granted restraining the appellant from voting except in aci-
cordance with the instructions of the respondent. 
Except as regards the 
injunction, the trail court, however, stayed execution of the . decree and 
the stay was continued by the appellate court till the appeal was dismis· 
sed in 1965. 
The appellant filed an appfioation in 1965 praying that the respon-
·dent may be directed to pay the consideration amount. within such time as 
the Court may direct, but the application was, dismissed. 
Meanwhile, there were certain orders of atta<;bment of the decree, 
who3e effeclt was that the respondent was prohibited and restrained from 
alienating, transferring or charging his right, title and interest in the decree 
or from obtaining satisfactio~ thereof. Further, in February 1965, a 
·~pany 'B' .which had Obtained a decree against a holding company 
of the appellant, '3pplied for execution and got the 51 % shares of the 
. appellant attached. The executing court ordered that those shares should 
oo produced for delivery to the respondent against payment of the ~nsi­
·deration mentioned in the specific perfonnance dectete. 
The 'A' Company also instituted a ,.suit against the '3ppellant in respect 
.of payment made by 'A' -to the Income-tax authorities on behalf of the 
;appellant and prayed for possession and sale of the 51% shares in the 
I 
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D 
E 
F 
G 
B 
c 
D 
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F 
H 
HUNGERFORD INVESTMENT v. H. MUNDHRA (Mathtw, J.) 
691 
exercise of their lien on those shares. 
A rec.eiwr woas appointed in res· 
pect of those shares oand the Court directed that the Receiver wOuld be 
at liberty deliver the 51% shares to the respondent on payment of the 
consideration. This orO::r was communicated by the appellant to the 
respondent on January, 11, 1967, and even before that date the appel~ 
lant wrote two letters.··to the respondent ':lsking him to be ready with the 
amount to be paid by him and to take delivery of the shares. Those 
letters were refused by the respondent and in·rcply to the letter 'dated, 
January 11, 1967, the respondent raised the o~'j,ection that the appellant 
was not in a position to give de.livery of the shares and t~t the order 
of tm Court ~as not binding on him because he was not a party to the 
suit in which, tha~ order was pa~Sted. By a letter dated February 11, 
1967, addressed tO the respondent, the appellant sbted that the respon-
dent had forfeired his right to purc:hase the 51 % shares umier the specific 
perfonnance decree as he had failed to fulfil his obligation in pursuance 
of the notice of the appellant dated January 11, 1967. Thereafter, in 
M&eh 1967, the appellant filed an application for rescission of the agree-
ment of sale of 1956 as also the decree for specific performance of the 
agreement. 
-
The trial court held that the respondent was not keen on paying the 
purchase money and get the transfer of 51 % shares for the reason that 
the injunction granted by the Court restraining the appelhnt from voting 
except under the instructions of the respondent made the r~pondent vir-
tually the owner of tic 100% shares in 'A' company, with full control, 
that therefolre, the respondent had commit

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