JAI NARAIN PARASRAMPURIA (DEAD) AND ORS. versus PUSHPA DEVI SARAF AND ORS.

Citation: [2006] SUPP. 5 S.C.R. 325 · Decided: 24-08-2006 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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questioning the award and decree withdrawn-Criminal trial at the behest of 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 of-
Held: 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 DE

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