Case Study n Reference Study

8/7/2019 Case Study n Reference Study

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.X AnnexuresCASE STUDY NO.1CARLILL Vs CARBOLIC SMOKE BALL CO. (1894) 2QB484The Carbolic Smoke Ball Company offered to pay 1000 Pounds as compensation to any personwho even after using its smoke ball as prescribed by it for two weeks suffered from Influenza

and stated that it had deposited 1000 Pounds in its bank to meet such claims.Mrs. Carlill used the companys products as advertised by it and she suffered from influenza.She claimed the compensation advertised by the Company. When the company refusedpayment, Mrs.Carlill sued the company for payment of the compensation. The Court ruled that:an offer made to the public at large can be accepted by a person who performs the conditionsspecified in the offer.The company displayed its intent to enter into the contract by stating that it had deposited1000 Pounds in its bank to meet such claims andMrs. Carlills consideration was the undergoing of the extreme inconvenience of inhaling thesmokeball of the companys product for the prescribed two week period.

CASE STUDY NO.2

HADLEY Vs BAXENDALE (1854) 9EXCH341H was running a flour mill and the crank-shaft of the mill broke. H hired B, a common carrier, tocarry the broken shaft to the mill manufacturer as a pattern to fabricate the new shaft. B wasnegligent in delivering the shaft late and, as a consequence, H also sued B for the loss of profitsduring the period of delay caused by Bs negligence.The Court ruled that Where two parties have made a contract which one of them has broken,the damages which the other party ought to receive in respect of such breach of contract shouldbe such as may fairly and reasonably be considered either arising naturally, i.e., according tothe usual course of things, from such breach of contract itself, or such as may reasonably besupposed to have been in the contemplation of both parties, at the time, they made the contract,as the probable result of the breach of it One the application of the above principle, H was heldto be not entitled to recover the loss of profits unless the special circumstances regarding loss of

profits had been indicated to B in clear terms.

CASE STUDY NO.3TAYLOR VS. CALDWELL(1863) 3 B&S, 826; 129 R.R.573When because of supervening event, the performance of the contract becomes impossible, thepromisor is excused from the performance of the contract. This is known as the doctrine offrustration under the English law and us covered under Sec.56, Indian Contract Act. In thiscase, it has been held that when the contract is not positive and absolute, but subject to anexpress or an implied condition, for example, a particular thing shall continue to exist, then inr567isuch case, if the thing ceases to exist, the performance of the contract is deemed to beimpossible and the parties are excused from performing the contract. In this case, A agreed togive B, the use of the music hall and the gardens for holding concerts on four different dates,

against a payment of 100 pounds sterling for each day. Before the date of performance arrived,the music hall was destroyed by fire. It was held that the perishing of the hall without any faulton the part of A had made the performance of the contract impossible, and therefore, A was notliable for the non-performance of the contract impossible, and therefore, A was not liable for thenon-performance of the contract.

CASE STUDY NO.4SOLOMON Vs SOLOMON & CO. LTD. (1897) A.C. 22


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Salomon was a reasonably successful businessman in leather goods. He formed a companywith his wife, their only daughter and four sons called Salomon & Co. Ltd. The companypurchased Salmons business for 40,000 Pounds which was paid as follows:20,000 shares allotted to Salomon for 1 Pound each.10,000 Pounds paid in cash10,000 Pounds in debentures having first change on the assets of the company.

One share was issued to each of the other members of Salomons family who were the othermembers of the company.The business of the company collapsed during the depression and the company went intoliquidation after a year. The company then had assets of the value of 6000 Pound and it owed10,000 Pounds to Salomon who was a secured creditor and 7,000 Pounds to its otherunsecured creditors.The unsecured creditors sued Salomon and they contended that Salomon & Co. Ltd was afraud and contrary to the meaning and intent of the Companies Law.The Court ruled that Salomon & Co. Ltd. was a real company fulfilling all the legal requirementsand it must be treated as a distinct and independent corporation a distinct entity from themembers who incorporated it.

CASE STUDY NO.5ASHBURY RAILWAY CARRIAGE & IRON COMPANY Vs. RICHE (1875) LR.7HL653The Company was formed with the object of to make and sell, or lend or hire railway carriagesand wagons of all kinds of railway plants, to carry on the business of mechanical engineers andgeneral contractors. The company contracted with Riche to finance the construction of arailway line in Belgium.Riche contended that (i) The contract came well within the meaning of general contractors and(ii) the contract was ratified by the majority of the shareholders of the company.The Court ruled that (i) The term general contractors must be taken to indicate the making generally of suchcontracts as are connected with the business of mechanical engineers, otherwise it would

authorise the making of contracts of any kind, and of any description, and would, therefore, beunmeaningful and(ii) The contract was entirely beyond the scope of the objects of the Memorandum ofAssociation of the Company.

CASE STUDY No.6Bacha F.Guzdar Vs. Commissioner of Income Tax, Bombay (AIR 1955 SC74).1. This appeal raises an interesting point of law under the Indian Income-tax Act.2. The question referred by the Tribunal to the High Court of Judicature at Bombay was statedthus :"Whether 60% of the dividend amounting to Rs. 2,750 - received by the assessee from the twoTeacompanies is agricultural income and as such exempt under section 4(3)(viii) of the Act."

3. Chagla, C.J. and Tendolkar J., who heard the reference, answered the question in thenegative by two separate but concurring judgments dated 28, March, 1952.4. The facts lie within a narrow compass. The appellant, Mrs. Bacha F. Guzdar, was, in theaccounting year 1949-50, a shareholder in two Tea : companies, Patrakola Tea Company Ltd.,and Bishnauth Tea Company Ltd., and received from the aforesaid companies dividendsaggregating to Rs. 2,750. The two companies carried on business of growing andmanufacturing tea. By rule 24 of the Indian Income-tax Rules, 1922, made in exercise of thepowers conferred by section 59 of the Indian Income-tax Act, it is provided that "income derivedfrom the sale of tea grown and manufactured by the seller in the taxable territories shall be


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computed as if it were income derived from business and 40% of such income shall be deemedto be income, profits and gains, liable to tax."It is common ground that 40% of the income of the Tea companies was taxed as income fromthe manufacture and sale of tea and 60% of such income was exempt from tax as agriculturalincome.According to the appellant, the dividend income received by her in respect of the shares held by

her in the said Tea companies is to the extent of 60% agricultural income in her hands andtherefore pro tanto exempt from tax while the Revenue contends that dividend income is notagricultural income and therefore the whole of the income is liable to tax. The Income-tax Officerand, on appeal, the Appellate Assistant Commissioner both concurred in holding the whole ofthe said income to be liable to tax. The Income-tax Appellate Tribunal confirmed the view thatthe dividend income could not be treated as agricultural income in the hands of the shareholderand decided in favour of the Revenue, but agreed that its order gave rise to a question of lawand formulated the same as set out above and referred it to the High Court. The High Courtupheld the order of the Tribunal but granted leave to appeal to this Court.5. The question, we comprehend, is capable of an easy solution and can best be answered byreference to the material provisions of the Income-tax Act. Under section 2(1) 'agriculturalincome' means : "(a) any rent or revenue derived from land which is used for agricultural

purposes, and is either assessed to land-revenue in the taxable territories or subject to a localrate assessed and collected by officers of the Government as such;6. Sub-section (15) of section 2 defines "total income" as total amount of income, profits andgains, referred to in sub-section (1) of section 4 computed in the manner laid down in this Act.Section 3 authorises income-tax to be charged upon a person in respect of the total income ofthe previous year.Section 4 lays down that the total income of any previous year of any person to be chargedmust include all income, profits and gains, from whatever source derived and defines the scopeof its application for purposes of tax. Sub-section (3) of the same section enacts certainexemptions upon the chargeability of the income and clause (iii) includes agricultural income inthe category of exemptions. Section 6 mentions the various heads of income, profits and gains,chargeable to incometax including in that category clause (v) 'income from other sources'. It is

common ground that dividend falls under this category.7. In order, however, that dividend may be held to be agricultural income it will be incumbentupon the appellant to show that, within the terms of the definition, it is rent or revenue derivedfrom land which is used for agricultural purposes. Mr. Kolah, for the appellant, contends that it isrevenue derived from land because 60% of the profits of the company out of which dividendsare payable are referable to the pursuit of agricultural operations on the part of the company. Itis true that the agricultural process renders 60% of the profits exempt from tax in the hands ofthe company from land which is used for agricultural purposes but can it be said that when suchcompany decides to distribute its profits to the shareholders and declares the dividends to beallocated to them, such dividends in the hands of the shareholders also partake of the characterof revenue derived from land which is used for agricultural purposes ? Such a position ifaccepted would extend the scope of the vital words 'revenue derived from land' beyond its

legitimate limits. Agricultural income as defined in the Act is obviously intended to refer to therevenue received by direct association with the land which is used for agricultural purposes andnot by indirectly extending it to cases where that revenue or part thereof changes hands eitherby way of distribution of dividends or otherwise. In fact and truth dividends is derived from theinvestment made in the shares of the company and the foundation of it rests on the contractualrelations between the company and the shareholder. Dividend is not derived by a shareholderby his direct relationship with the land. There can be no doubt that the initial source which hasproduced the revenue is land used for agricultural purposes but to give to the words 'revenuederived from land' the unrestricted meaning apart from its direct association or relation with


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the land, would be quite unwarranted. For example, the proposition that a creditor advancingmoney on interest to an agriculturist and receiving interest out of the produce of the lands in thehands of the agriculturist can claim exemption of tax upon the ground that it is agriculturalincome within the meaning of section 4, sub-section (3)(viii), is hardly statable. The policy of theAct as gathered from the various sub-clauses of section 2(1) appears to be to exemptagricultural income from the purview of Income-tax Act. The object appears to be not to subject

to tax either the actual tiller of the soil or any other person getting land cultivated by others forderiving benefit therefrom, but to say that the benefit intended to be conferred upon this class ofpersons should extend to those into whosoever hands that revenue falls, however remote thereceiver of such revenue may be, is hardly warranted.8. It was argued by Mr. Kolah on the strength of an observation made by Lord Anderson inCommissioners of Inland Revenue v. Forrest ((1924) 8 T.C. 704, 710), that an investor buys inthe first place a share of the assets of the industrial concern proportionate to the number ofshares he has purchased and also buys the right to participate in any profits which the companymay make in the future. That a shareholder acquires a right to participate in the profits of thecompany may be readily conceded but it is not possible to accept the contention that theshareholder acquires any interest in the assets of the company. The use of the word 'assets' inthe passage quoted above cannot be exploited to warrant the inference that a shareholder, on

investing money in the purchase of shares, becomes entitles to the assets of the company andhas any share in the property of the company. A shareholder has got no interest in the propertyof the company though he has undoubtedly a right to participate in the profits if and when thecompany decides to divide them. The interest of a shareholder vis-a-vis the company wasexplained in the case of Chiranjitlal Chowdhuri v. The Union of India and Others ([1950] S.C.R.869, 904). That judgment negatives the position taken up on behalf of the appellant that ashareholder has got a right in the property of the company. It is true that the shareholders of thecompany have the sole determining voice in administering the affairs of the company and areentitled, as provided by the Articles of Association, to declare that dividends shouldbedistributed out of the profits of the company to the shareholders but the interest of theshareholder either individually or collectively does not amount to more than a right to participatein the profits of the company. The company is a juristic person and is distinct from the

shareholders. It is the company which owns the property and not the shareholders. The dividedis a share of the profits declared by the company as liable to be distributed among theshareholders. Reliance is placed on behalf of the appellant on a passage in Buckley'sCompanies Act, 12th Ed., page 894, where the etymological meaning of dividend is given asdividendum, the total divisible sum but in its ordinary sense it means the sum paid and receivedas the quotient forming the share of the divisible sum payable to the recipient. This statementdoes not justify the contention that shareholders are owners of a divisible sum or that they areowners of the property of the company. The proper approach to the solution of the question is toconcentrate on the plain words of the definition of agricultural income which connects in nouncertain language revenue with the land from which it directly springs and a stray observationin a case which has no bearing upon the present question does not advance the solution ofthe question. There is nothing in the Indian law to warrant the assumption that a shareholder

who buys shares buys any interest in the property of the company which is a juristic personentirely distinct from the shareholders. The true position of a shareholder is that on buyingshares an investor becomes entitled to participate in the profits of the company in which heholds the shares if and when the company declares, subject to the Articles of Association, thatthe profits or any portion thereof should be distributed by way of dividends among theshareholders. He has undoubtedly a further right to participate in the assets of the companywhich would be left over after winding up but not in the assets as a whole as Lord Andersonputs it.9. The High Court expressed the view that until a dividend is declared there is no right in a


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shareholder to participate in the profits and according to them the declaration of dividend by thecompany is the effective source of the dividend which is subject to tax. This statement of the lawwe are unable to accept. Indeed the learned Attorney-General conceded that he was notprepared to subscribed to that proposition. The declaration of dividend is certainly not thesource of the profit.The right to participation in the profits exists independently of any declaration by the company

with the only difference that the enjoyment of profits is postponed until dividends are declared.10. It was argued that the position of shareholders in a company is analogous to that of partnersinterse. This analogy is wholly inaccurate. Partnership is merely an association of persons forcarrying on the business of partnership and in law the firm name is a compendious method ofdescribing the partners. Such is, however, not the case of a company which stands as aseparate juristic entity distinct from the shareholders. In Halsbury's Laws of England, Volume 6(3rd Ed.), page 234, the law regarding the attributes of shares is thus stated : "A share is a rightto specified amount of the share capital of a company carrying with it certain rights and liabilitieswhile the company is a going concern and in its winding up. The shares or other interest of anymember in a company are personal estate transferable in the manner provided by its articles,and are not of the nature of real estate."11. In Borland's Trustee v. Steel Brothers & Co. Ltd. (L.R. [1901] 1 Ch. 279), Farwell, J. held

that "a share in a company cannot properly be likened to a sum of money settled upon andsubject to executory limitations to arise in the future; it is rather to be regarded as the interest ofthe shareholder in the company, measured, for the purposes of liability and dividend, by a sumof money............." It was suggested that the dividend arises out of the profits accruing from landand is impressed with the same character as the profits and that it does not change its charactermerely because of the incident that it reaches the hands of the shareholder. This argument runscounter to the definition of agricultural income which emphasizes the necessity of the recipientof income having a direct and an immediate rather than an indirect and remote relation withland. To accept this argument will be tantamount to saying that the creditor recovering intereston money debt due from the agriculturist who pays out of the produce of the land is equallyentitled to the exemption. In fairness to Mr. Kolah it must, however, be stated that the contentionwas not so broadly put but there is no reason why one should stop at a particular stage and not

pursue the analogy to its logical limits.12. English decisions resting upon the peculiarities of the English Income-tax law can hardly bea safe guide in determining upon the language of the Indian Income-tax Act the true meaning ofthe words 'agricultural income'. A few cases of the Privy Council decided with reference to theprovisions of the Indian Income-tax Act, however, deserve notice. The first case, viz.,Commissioner of Incometax, Bihar and Orissa v. Raja Bahadur Kamakshya Narayan Singh andOthers ([1948] 16 I.T.R. 325), dealt with the question whether interest on arrears of rent payablein respect of land used for agricultural purposes is agricultural income and therefore exemptfrom Income-tax. It was held that it was neither rent not revenue derived from land within themeaning of section 2(1) of the Income-tax Act. Lord Uthwatt who delivered the judgment of thePrivy Council used the following piquant language in coming to that conclusion : "The word'derived' is not a term of art. Its use in the definition indeed demands an enquiry into the

genealogy of the product. But the enquiry should stop as soon as the effective source isdiscovered. In the genealogical tree of the interest land indeed appears in the second degree,but the immediate and effective source is rent, which has suffered the accident of non-payment.And rent is not land within the meaning of the definition."13. The second case, viz. Premier Construction Co. Ltd. v. Commissioner of Income-tax,Bombay City ([1948] 16 I.T.R. 380), dealt with the nature of the commission of a managingagent of the company a part of whose income was agricultural income. The assesseeclaimed exemption from tax on the ground that his remuneration at 10 per cent. of theprofits was calculated with reference to the income of the company part of which was


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agricultural income. It was held that the assessee received no agricultural income asdefined by the Act but that he received a remuneration under a contract for personalservice calculated on the amount of profits earned by the employer, payable not inspecie out of any item of such profits, but out of any moneys of the employer availablefor the purpose, and that the remuneration therefore was not agricultural income andwas not exempt from tax. Sir John Beaumont in the above case observed : "In their

Lordships' view the principle to be derived from a consideration of the terms of theIncome-tax Act and the authorities referred to is that where an assessee receivesincome, not itself of a character to fall within the definition of agricultural incomecontained in the Act, such income does not assume the character of agricultural incomeby reason of the source from which it is derived, or the method by which it is calculated."14. In the third case, viz., Maharajkumar Gopal Saran Narain Sing v. Commissioner ofIncome-tax, Bihar and Orissa ([1935] 3 I.T.R. 237), an annual payment for life to theassessee was not held to be agricultural income and therefore not exempt from taxwhere the annuity arose out of a transfer made by the assessee of a portion of his estatefor discharging his debts and for obtaining an adequate income for his life it being heldthat it was not rent or revenue derived from land but money paid under a contractimposing personal liability on the covenantor the discharge of which was secured by a

charge on land. But reliance was placed upon another judgment of the Privy Council inthe same volume at page 305 in Commissioner of Income-tax, Bihar and Orissa v. SirKameshwar Singh ([1935] 3 I.T.R. 305). That was a case of a usufructuary mortgagee theprofits received by whom were exempt from income-tax on the ground that they wereagricultural income in his hands. LordMacmillan, after referring to certain sections of the Act, observed that "the result of thosesections is to exclude agricultural income altogether from the scope of the Acthowsoever or by whomsoever it may be received." These observations must be held tobe confined to the facts of that particular case which was a case of usufructuarymortgagee who had received profits directly from the land. The obvious implication ofthe words used by Lord Macmillan was that whosoever receives profit from the landdirectly is entitled to the exemption.

15. Reference was also made to some English decisions but they have no bearing upon thepresent case as they were founded on the English Income-tax law and the provisions of theparticular statute.16. The learned Attorney-General also contended that the conclusion that dividend is notagricultural income also follows from the provisions of section 16, sub-section (2) and theproviso to the Act.According to him, this section compels the assessee to show in his return the whole dividendincluding the portion which is excluded on the ground of agricultural income. We do not considerit necessary to express any opinion upon this contention as our conclusion reached as a resultof the foregoing discussion is sufficient to dispose of the appeal. We accordingly dismiss theappeal with costs.

CASE STUDY NO.7LEE VS. LEE AIR FARMING LIMITED (1960) All ER 429 PCA company was formed for the purpose of manufacturing aerial top-dressing. Lee, a qualifiedpilot, held all but one of the shares in the company and by the articles was appointed governingdirector of the company and the chief pilot. Lee was killed while piloting the company's aircraftand his widow claimed compensation for his death under the Workmen's Compensation Act.The company opposed the claim on the ground that Lee was not a 'worker' in the strict meaningof the word, as the same person could not be the employer and the employee. Held: There was


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a valid contract of service between Lee and the company and Lee was, therefore, a worker.Mrs.Lee 's contention was upheld.

CASE STUDY No.8FOSS VS. HARBOTTLEThe principle of rule by majority is made applicable to the management of affairs of the

company. F and T brought an action on behalf of themselves and all other shareholders againstthe defendants who consisted of 5 directors, a solicitor and an architect of the company allegingthat by concerted and illegal transactions they had caused the company's property to be lost tothe company. It was also alleged that there was no qualified Board. F and T claimed damagesfrom the defendants to be paid to the company. The court held, that the action could not bebrought by the minority shareholders. The wrong done to the company was one which could beratified by the majority of the members. The company was the proper plaintiff for wrongs done tothe company and the company can act only through its majority shareholders. The majority ofthe members should be left to decide whether to commence proceedings against the directors.The principle of majority rule has since then been applied to a number of cases. Foss V.Harbottle also gave an obiter dicta that the minority shareholders rights should not besuppressed in the rule for majority.

CASE STUDY NO. 9Ghaziabad Development Authority vs. Balbir Singh Appeal (civil) 7173 of 2002(03/12/2004)This appeal is directed against the judgment and award passed by the National ConsumerDisputes Redressal Commission (in short `the Commission') awarding interest @ 18% perannum. In view of the order that we propose to pass, necessary facts leading to the filing of thepresent appeal are obviated. In fact, the appellant has deposited/paid the entire amount of 18%interest and in that view of the matter the appeal is virtually rendered infructuous in view of theorder rendered by this Court in Ghaziabad Development Authority v. Balbir Singh (2004) 5 SCC65:24."We clarify that in all cases where interest has already been paid @ 18% irrespective ofthe above order, the authority will not be entitled to call upon the party to refund the amount

which has already been paid." This Court after threadbare consideration of the submissions inBalbir Singh's case (supra) in paragraphs 8, 9, 22 and 23, by way of illustrations, as to underwhat circumstances interest @ 18% would be justifiable.8. "However, the power and duty to award compensation does not mean that irrespective offacts of the case compensation can be awarded in all matters at a uniform rate of 18% perannum. As seen above, what is being awarded is compensation i.e. a recompense for the lossor injury. It therefore necessarily has to be based on a finding of loss or injury and has tocorrelate with the amount of loss or injury. Thus the Forum or the Commission must determinethat there has been deficiency in service and/or misfeasance in public office which has resultedin loss or injury. No hard-and-fast rule can be laid down, however, a few examples would bewhere an allotment is made, price is received/paid but possession is not given within the periodset out in the brochure. The Commission/Forum would then need to determine the loss. Loss

could be determined on basis of loss of rent which could have been earned if possession wasgiven and the premises let out or if the consumer has had to stay in rented premises then onbasis of rent actually paid by him. Along with recompensing the loss the Commission/Forummay also compensate for harassment/injury, both mental and physical. Similarly, compensationcan be given if after allotment is made there has been cancellation of scheme without anyjustifiable cause.9. That compensation cannot be uniform and can best be illustrated by considering cases wherepossession is being directed to be delivered and cases where only monies are directed to bereturned.


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In cases where possession is being directed to be delivered the compensation for harassmentwill necessarily have to be less because in a way that party is being compensated by increasein the value of the property he is getting. But in cases where monies are being simply returnedthen the party is suffering a loss inasmuch as he had deposited the money in the hope of gettinga flat/plot. He is being deprived of that flat/plot. He has been deprived of the benefit ofescalation of the price of that flat/plot. Therefore the compensation in such cases would

necessarily have to be higher. Further if the construction is not of good quality or not complete,the compensation would be the cost of putting it in good shape or completing it along with somecompensation for harassment. Similarly, if at the time of giving possession a higher price orother amounts are collected unjustifiably and without there being any provision for the same thedirection would be to refund it with a reasonable rate of interest.If possession is refused or not given because the consumer has refused to pay the amount,then on the finding that the demand was unjustified the consumer can be compensated forharassment and a direction to deliver possession can be given. If a party who has paid theamount is told by the authority that they are not in a position to ascertain whether he has paidthe amount and that party is made to run from pillar to post in order to show that he has paid theamount, there would be deficiency of service for which compensation for harassment must beawarded depending on the extent of harassment. Similarly, if after delivery of possession, the

sale deeds or title deeds are not executed without any justifiable reasons, the compensationwould depend on the amount of harassment suffered. We clarify that the above are mereexamples. They are not exhaustive. The above shows that compensation cannot be the same inall cases irrespective of the type of loss or injury suffered by the consumer.22. In Civil Appeal No. 7224 of 2002 the respondent had applied for a house in a schemefloated in 1992. He had paid the entire cost. He had been allotted a flat and issued a reservationletter. Yet no possession was given. Thereafter, in 1996 the respondent was informed that forunavoidable reasons the house has been allotted to somebody else and if he desires, he canobtain an alternate flat at a much higher price. This, therefore, is also a case where there isabsolutely no justifiable reason why the party has not been delivered possession of the flatwhich had been allotted to him nor has any offer been made to return his money with interest.Instead the body has asked the party to apply for an alternate flat at a higher rate. In our view,

on these facts the award of interest at the rate of 18% is justified. It is not just interest on theamount invested but is also compensation for the harassment and agony caused to the allottee.We have given these two instances only by way of illustrations.23. As stated above, the interest, in both these cases will be payable from the date the monieswere paid till they are retained or deposited in court/tribunal. We, however, clarify that merelybecause we are maintaining awards of interest, it must not be taken to mean that in future theCommission/Forum must not work out compensation under various heads and that they cancontinue to grant interest only by way of damages/ compensation."Mr. Vijay Hansaria, learned Senior counsel, however, contended that interest should bereckoned from the "date" of deposit to the "date" of offer of possession and not actual taking ofpossession.He, therefore, contended that when the body offers to the allottee for taking of possession and if

the allottee does not take possession without assigning any reasons nor reply to the offer ofpossession, no interest from the date of offer would be accrued on the amount deposited by theallottee. There is some substance in this contention. Now the consumers are aware that interestare being awarded for belated delivery of possession/non-delivery of possession andunscrupulous consumer may, on one pretext or the other, deliberately avoid taking ofpossession with a design to earn more interest. In the present case, possession was offered on26.2.1996. The allottee did not take the possession nor furnished any reply to the offer ofpossession. He filed a complaint on 28.2.1996 before the District Forum and ultimately,possession was delivered on 14.8.1996. In our view, in such a situation, if there is no reply filed


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by the allottee assigning the reasons for not being able to take possession, the rate of interestwould be reckoned from the date the amount is deposited to the date the offer for possession ismade by the body. Similarly, if the allottee replies to the offer stating thereunder the reason fornot taking over the possession, as offered by the body, and the reason assigned is reasonablyacceptable the Commission may then examine the reasons assigned by the allottee and maypass necessary order. In the present case, the offer of possession was made on 26.2.1996.

Instead of taking possession or filing reply to the offer, the allottee filed a complaint before theDistrict Forum on 28.2.1996. Thereafter, the allottee took the possession only on 14.8.1996.There is nothing on record to show that the allottee has replied to the letter of offer of 26.2.1996.This being the position, the allottee would not be entitled to the interest from 26.2.1996 tillpossession was delivered on 14.8.1996. As explained above, the position would have beendifferent had the allottee filed reply to the letter of offer. As this type of litigation is recurring innature, we are of the view that other contentions of Mr. Vijay Hansaria also deserveconsideration. Learned Senior counsel submits that in case of delivery of possession, albeitbelatedly, the rate of interest could be different from non-delivery of possession/ cancellation ofscheme/ offer of alternative plots/flats at higher price which has already been dealt with by thisCourt in Balbir Singh's case (supra). Normally, a case of delivery of possession, thoughbelatedly, stands on a different footing from non-delivery of possession at all because in case of

delivery of possession, though belatedly, the allottee also enjoys the benefit of plot/flat.Generally, in such a situation the rate of interest should not exceed 12%.However, as already observed by this Court in Balbir Singh's case (supra) no hard-and-fastrules can be laid down. In a specific case where it is found that delay was culpable and there isno contributory negligence by the allottee resulting in harassment/injury, both mental andphysical, the Forum/Commission would not be precluded from making an award in excess of12% interest per annum. Such order must, however, be supported with reasons. There is yetanother contention of the learned counsel for the appellant, which requires consideration. Mr.Hansaria submits that the period the stay granted by the High Court/Court remains operativeshould not be counted towards the award of interest. In the present case, the stay order wasoperative from 24.4.1991 to 16.12.1993. This Court in Balbir Singh's case (supra) has dealt withthis contention and held that after the enquiry if it was found that the authority was prevented

from delivery of possession to anybody by the stay order the interest for the period for which thestay was operative could be refused. We reiterate the view that in such a situation the authoritycould make an inquiry and if the enquiry report discloses that the developmentalactivities/construction of the plot/flat comes to a standstill by reason of interim order therebyprevented the body from delivery of possession, the interest for the period the stay wasoperative could be refused. Similarly, if the inquiry report shows that despite the operation of theinterim order the developmental activities/construction continued and the body was notprevented from delivery of possession, the interest could be awarded during such period also.As the appellant has already deposited/paid 18% interest amount, they are precluded fromcalling upon the party to refund the same. The appeal is, accordingly, disposed of in theabove terms.


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Ronaq purchased a second hand car from yashraj and used the same for same for severalmonths.Yashraj had no title to the car and therefore Ronaq was compelled to return the car to

the true owner.Ronaq filed a suit on Yashraj to recover the whole of the price paid by him

despite the fact that he had used the car.Discuss n give case reference?

Answer is the Title of goods act pg 537 reference case in that page

Abhinav Kaul Previous Year questions

Q 1:-Jane offered to sell her house to dave for RS 2500000.zITA WHO WAS OVERHEARING CAMEFORWARD AND SAID THAT HE IS READY TO BUY JANE'S HOUSE ON HER TERMS.IS IT A CONTRACT ?

no its nt a contract.........

Justify with reason

no, it isn't. Offer nahi kiya!!!

because contract is complete wen promisory makes d offer/proposal nd promisee accepts it.. bt in dis

jane never made any offer to zita........ i dnt knw its correct or nt........

its is definetly an offer by Zita,, which is subject to Janes acceptance.. it both aggree and have legal

consideration then yes it can form a contract

its jane house den y he'l sell his house to zita's on her term..........nd jane has offered his house to dave

nt zita...

Chiranjeev Brahma @ritika-- my lord-- jane is a female and zita is a guy,l so sita agrees to accept her(jane's) terms!!

iT IS A CONTRACT... :) as Zita conveyed the acceptance to offer (general) made by jane...

Case Study n Reference Study

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