P. PURUSHOTTAM REDDY AND ANR. versus M/S PRATAP STEELS LTD.

Citation: [2002] 1 S.C.R. 586 · Decided: 21-01-2002 · Supreme Court of India · Bench: R.C. LAHOTI · Disposal: Appeal(s) allowed

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Judgment (excerpt)

A 
P. PURUSHOTTAM REDDY AND ANR. 
v. 
MIS PRATAP STEELS LTD. 
JANUARY 21, 2002 
B 
[R.C. LAHOTI AND BRIJESH KUMAR, JJ.] 
Code of Civil Procedure, I 908: 
Order 41Rules23, 23A & 25-Section 151-Agreement of sale of suit 
C property-Cancellation of the agreement by vendor for failure to get requisite 
permission under the Urban Land (Ceiling and Regulation) Act, 1976 within 
stipulated time-Suit for specific performance by purchaser-Suit decreed by 
trial court-Happening of subsequent events during pendency of appeal before 
High Court-Remand by High Court to trial court after framing additional 
D issues-Propriety and legality of remand-Inherent power of High Court-
Held, remand by High Court under the provisions of the Code and on facts 
not proper-Inherent powers can be exercised only in absence of express 
provisions in the Code-Hence, order of remand made by High Court set 
aside and case sent back to High Court for fresh disposal after considering 
E subsequent events-Specific Relief Act, 1963-Sections 16(e) & 28. · 
Appellant entered into an agreement of sale of the suit property with 
respondent-company for a consideration of Rs. 40,25,000 in October 1987. 
Earnest money of Rs. 8,00,000 was paid by the respondent and the 
remaining amount was to be paid on execution and registration of the 
F 1 sale deed. The agreement of sale provided that the appellant would obtain 
the requisite permission from the Competent Authority under the Urban 
Land (Ceiling and Regulation) Act, 1976 by June 1998. The agreement 
further ;:>rovided for refund of the earnest money if the requisite 
permission was not forthcoming by June 1998 or such extended time as 
may be mutually agreed to. In December 1998, the appellant cancelled 
G the agreement of sale on the ground of not obtaining the requisite 
clearance from the competent authority within the stipulated time and 
refunded a part of the earnest money to the respondent and promised to 
repay the balance by the end of the month. 
H 
586 
... 
P. PURUSHOTTAM REDDYv. PRAT AP STEELS LTD. 
587 
The respondent filed a suit for specific performance of agreement A 
to sell, against the appellant. The trial court decreed the suit. The appellant 
filed an appeal before High Court against the decree of the trial court. 
When the appeal w.as pending, two subsequent eve11ts occurred i.e. (i) 
communication of the order of the competent authority (Urban Land 
Ceiling) holding the land of the appellants to be within ceiling limits, and B 
(ii) order of BIFR holding the respondent-company to be a sick company 
under the Sick Industrial Companies (Special Provisions) Act, 1985. The 
appellant filed an application before the trial court under Section 28 of 
the Specific Relief Act, 1963 for cancellation of the agreement of sale due 
to failure of the respondent to comply with trial court decree by non-
payment of the balance purchase money. On rejection by the trial court, C 
the appellant filed a civil revision petition before the High Court. 
The High Court, by a common order, set aside the judgment and 
decree of the trial court and remanded the case back to the trial court to 
decide the case afresh on three additional issues viz. (i) whether the suit D 
for specific performance by the respondent is maintainable; (ii) whether 
the respondent was ready and willing to perform his part of the contract; 
and (iii) whether the respondent was entitled for specific relief of the 
contract. High Court held that time was not the essence of the contract 
and therefore the factum of not obtaining the clearance under the Urban 
Land Ceiling Act by the appellant within the stipulated time did not render E 
the agreement inoperative and unenforceable. Hence the appeals by the 
appellants. 
Remanding the appeals to the High Court, the Court 
HELD: 1.1. After the amendment in 1976 introducing Rule 23A to 
Order 41 CPC, all the cases of wholesale remand are covered by Rules 
23 and 23A of Order 41 CPC. High Court cannot have recourse to its 
inherent powers under Section 151 CPC to make a remand because it is 
F 
well settled that inherent powers can be availed of ex debito justitiae only G 
in the absence of express provisions in the Code. It is only in exceptional 
cases where the court may now exercise the power of remand de hors Rules 
23 and 23A CPC. An appellate court should be circumspect in ordering a 
remand when the case is not covered either by Rule 23, 23A or 25 CPC. 
An unwarranted order of reman

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