LALIT KUMAR JAIN AND ANR. versus JAIPUR TRADERS CORPORATION PVT. LTD.

Citation: [2002] 3 S.C.R. 445 · Decided: 24-04-2002 · Supreme Court of India · Bench: R.P. SETHI · Disposal: Appeal(s) allowed

Judgment (excerpt)

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LAUT KUMAR JAIN AND ANR. 
A . 
v. 
JAIPUR TRADERS CORPORATION PVT. LTD. 
APRIL 24, 2002 
[R.P. SETHI AND P. VENKATARAMA REDD!, JJ.] 
B 
Specific Relief Act, 1963-Sections 27 and 31-Equitable Relief-
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Entitlement of-On facts, vendor filing suit for cancellation of sale document 
> 
and physical possession of property on the ground that vendee committed c 
breach of contract of sale and the contract stood rescinded-Trial court 
dismissing the suit-However, High Court decreed the suit-On appeal, held, 
since on facts of the case and conduct of the vendor, recession of contract by 
vendor not justified, he is not entitled to equitable relief-Order of High Court 
set aside. 
D 
Respondent-company executed sale deed in favour of appellants. Part 
of the consideration was paid before the Sub-Registrar at the time of 
registration of sale deed and the balance amount was to be paid in two 
instalments. However, before the registration, the Income Tax Certificate 
(ITq was cancelled and registration of the property was stopped till fresh 
certificate was issued by the Income Tax Officer (ITO). Later on, the Officer E 
restored the certificate. Respondent issued several notices to the appellants 
for payment of balance sale price. Appellants averred that one of the Directors 
of the respondent-Company agreed not to demand the balance price unless 
the fresh clearance certificate was obtained and also a settlement was arrived 
at and sum of Rs. 5,000 was paid to the said Director. Respondent in the final F 
notice stated that the Director had no authority to give any assurance or make 
any commitment of behalf of the respondent-Company without any resolution 
of the Board of Directors. Appellant then averred that the respondent was 
legally bound to complete the formalities pertaining to registration and to 
deliver the sale deed before they could ask for the balance sale money. 
Thereafter, Sub-Registrar issued notice to the respondent for furnishing ITC G 
for registrar of the sale deed. Respondent requested the Sub-Registrar to 
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return document without registration, as the sale deed was no longer effective. 
Sub-Registrar refused to register the document, as ITC was not produced. 
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But the District Registrar directed the Sub-Registrar to register the sale deed. 
Income Tax Officer also sent the copy of the clearance certificate to the Sub- H 
445 
446 
SUPREME COURT REPORTS 
[2002) 3 S.C.R. 
A Registrar and formalities of registration of sale deed were completed. 
Meanwhile, respondent filed suit under Section 31/27 of the Specific 
Relief Act for cancellation of sale deed. Trial Court held that the appellants 
did not commit breach of contract in not paying the balance price before the 
registration of sale deed and the respondent had no right to rescind the 
B contract and also that the contract was neither voidable nor terminable by 
the respondent and, therefore, section 27 or 31 of the Specific Relief Act was 
not attracted. Respondent then filed appeal before the High Court, which was 
allowed. 
..... 
C 
In appeal before this Court appellants contended that the requirements 
of section 31 or 27 are not attracted and that rescinding of executed contract 
on account of non-payment of balance sale consideration does not arise as 
the title passed to the appellants with the registration of document and delivery 
of possession since though the formalities of registration were completed four 
years later, the registration must be deemed to have relat.ed back to the date 
D the sale deed was executed. 
Respondent contended that there was no general rule that mere 
registration of the document without reference to other circumstances would 
operate to transfer the title. The clause in the sale deed prohibited transfer 
or assignment by the vendor till the balance money was paid; that the 
E respondent was well justified in rescinding the contract before the actual 
registration of the document and the theory of dating registration to the date 
of sale .cannot be invoked by the appellants. 
F 
Allowing the appeal, the Court 
HELD: 1. High Court failed to address itself to certain factors which 
disentitles the respondent to equitable relief before reversing the order of Trial 
Court. If the alleged recession or termination of contract is not justifiable on 
facts or having regard to the conduct of the respondent, the equitable relief 
under section 27 or 31 of the Specific Relief Act, 1963 has to be denied to the 

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