Andhra HC (Pre-Telangana)
C. Manohar Reddy And Ors. vs Alopi Shanker And Ors. on 15 September, 2006
Equivalent citations: 2007(2)ALD496, 2007(3)ALT40
JUDGMENT P. Lakshmana Reddy, J.
1. As these two appeals are directed against the same judgment and decree passed in O.S. No. 409 of 1988, dated 9-9-1996 on the file of the Additional Subordinate Judge, Ranga Reddy District, we consider it expedient to dispose of both these appeals by way of this common judgment.
2. A.S. No. 2860 of 1996 is filed by the plaintiffs having been aggrieved by the refusal to grant decree for specific performance and A.S. No. 672 of 1997 is filed by the defendants aggrieved by a direction to pay a sum of Rs. 1,00,000/-towards development charges with interest thereon at 18% per annum.
3. The parties to these two appeals will hereinafter be referred in this judgment as plaintiffs and defendants, for the purpose of convenience.
4. The facts which are relevant for the purpose of disposal of these two appeals in brief, are as follows:
The defendants 1 to 5 are brothers and they entered into an agreement of sale, dated 2-10-1987 with the plaintiffs who are relatives and friends inter se agreeing to sell Ac.135-00 of land covered by Sy. Nos. 152, 153 and 181 to 194 situated at Tummaloor Village and also the lands covered by Sy. Nos. 461, 478 and 479 situated at Mankhal Village @ Rs. 10,000/- per acre. On the date of agreement, the plaintiffs paid Rs. 1,00,000/- as earnest money and further agreed to pay a sum of Rs. 9 lakhs towards 75% of the agreed sale consideration in six monthly instalments commencing from 1-11-1987 and the remaining balance amount of 25% at the time of execution of registered sale deed or deeds. In pursuance of the said agreement, the plaintiffs paid the first instalment of Rs. 1,00,000/- on 2-11-1987. On the same day, the plaintiffs through their advocates got published in the newspapers Eanadu and Deccan Chronicle under Exs.A-4 and A-5 informing the general public that they intend to purchase the said Ac. 135-00 of land and inviting objections if any for their proposed purchase. In response to the said publication, one K. Rajeshwar Rao addressed a letter Ex.A-7 to the advocates of the plaintiffs on 5-11-1987 stating that the defendants have no right whatsoever in the lands and that he is the inamdar having right over the property and that there is a suit pending in O.S. No. 128 of 1987 between him and the defendants on the file of the Additional Subordinate Judge, Ranga Reddy District in respect of those lands. Further, on 7-11-1987 the said K. Rajeshwar Rao issued paper publication also under Ex.A-8 to the same effect informing the general public that he is the rightful owner of the said lands of Thummaloor Village and the defendants have no right whatsoever in the said lands. In response to the said notice Ex.A-8, the defendants issued rejoinder publication under Ex.A-9 dated 20-11-1987 through their Counsel stating that Sri K. Rajeshwar Rao misrepresented the facts and misguided the plaintiffs who entered into an agreement of sale with the defendants and that Rajeshwar Rao and his mother Yadgiramma have no concern with the above said lands and that the defendants' father was the protected tenant and also purchased the same from Yadagiramma, the mother of Sri K. Rajeshswar Rao and Smt. Rambai and that after abolition of inams, the defendants obtained the 'occupancy certificate' under the provisions of the Andhra Pradesh (Telangana Area) Abolition of Inams Act and thus the defendants are the owners and possessors of the lands and that when Sri K. Rajeshwar Rao and his mother tried to interfere through some unsocial elements, the defendants have filed O.S. No. 128 of 1983 against the said Rajeshwar Rao and his mother and that the said Rajeshwar Rao though contested initially, remained ex parte and an ex parte decree was passed in favour of defendants herein favour on 25-9-1984 and that subsequently an application in I.A. No. 416 of 1984 was filed by Sri K. Rajeshwar Rao and his mother for setting aside the ex parte decree and it is pending. It is further stated in the rejoinder publication Ex.A-9 that Rajeshwar Rao with mala fide intention issued publication under Ex.A-8 with a view to extract amounts from the defendants as well as from the intending purchasers by making false claims and by misguiding the intending purchasers.
5. While the matters stood thus, the plaintiffs did not pay the subsequent instalments payable on 1-12-1987 of Rs. 2 lakhs, on 1-1-1988 of Rs. 2 lakhs, on 1-2-1988 of Rs. 2 lakhs, on 1-3-1988 of Rs. 1 lakh and on 1-4-1988 of another Rs. 1 lakh. But, on 25-6-1988 the plaintiffs got issued legal notice under Ex.A-10 through their Counsel to the defendants that the defendants did not inform about the pendency of the litigation between them and Sri K. Rajeshwar Rao at the time of entering into the agreement of sale and that they were surprised when Rajeshwar Rao addressed a letter to them informing about the litigation and that after such objection raised by Sri K. Rajeshwar Rao, the defendants represented that they would settle the claim of Sri K. Rajeshwar Rao, but failed to settle the matter with Sri K. Rajeshwar Rao who created cloud over the title of the defendants and that the defendants are liable to clear the cloud over the title of the defendants created by Sri K. Rajeshwar Rao and then obtain lay out map by an approved surveyor, permission to sell the lands from the ceiling authorities and title deeds pertaining to the portion of the land covered by agreement for sale situated in Mankhal Village for their verification. It is further pleaded in the said notice that they were always ready and willing to pay the balance of sale consideration and obtain the due execution and registration of sale deed in their favour or their nominees, provided the defendants settle the litigation between them and Rajeshwar Rao.
6. The defendants through their Counsel issued reply notice Ex.A-11 dated 27-7-1988 to the said notice Ex.A-10 stating that as per the terms of the agreement the plaintiffs were satisfied prima facie over the title of the defendants and then entered into agreement agreeing to pay Rs. 75% of the total sale consideration within six months and to pay the balance of 25% sale consideration at the time of registration and execution of sale deeds and that there was nothing to settle with the said Rajeshwar Rao as they obtained occupancy certificates which were shown to the plaintiffs at the time of entering into agreement of sale and that the plaintiffs were never ready and willing to perform their part of contract and they committed default in payment of the amount agreed to be paid within six months and that in order to cover up their default, they are taking advantage of the notice got published by Sri K. Rajeshwar Rao which was promptly replied by rejoinder publication by the defendants. The plaintiffs further stated in that notice that the defendants cancelled the agreement of sale, dated 2-7-1987 and that as they received an amount of Rs. 2 lakhs from the plaintiffs, out of which Rs. 1 lakh is forfeited for the violation of the terms of the agreement and they are prepared to refund the balance of Rs. 1 lakh within a period of two months.
7. In response to that reply the plaintiffs issued another notice under Ex.A-12 on 7-9-1988 contending that they were always ready to perform their part of contract in terms of the agreement, afterall the terms and conditions in the agreement including the demands contained in their original legal notice dated 25-6-1988 are complied with and that if the defendants failed to comply with the demands contained in their earlier legal notice and also further reply notice within two months, the plaintiffs will be constrained to institute appropriate legal proceedings against the defendants including the specific performance of the agreement of sale.
8. For that notice also, the defendants through their Counsel gave reply under Ex.A-13 on 23-9-1988 stating that the defendants have already clarified their position in their reply notice dated 27-7-1988 and that the defendants have already cancelled the sale agreement dated 2-7-1987 and expressed their readiness to refund an amount of Rs.one lakh and if it is not agreeable for the plaintiffs, they are at liberty to take any legal action at any time and they need not wait for two months.
9. Thereafter, the plaintiffs filed the present suit in O.S. No. 409 of 1988 seeking a direction to the defendants 1 to 5 to execute the registered sale deed in favour of the plaintiffs for specific performance of agreement of sale, dated 2-10-1987 in respect of Ac. 135-00 of land covered by Sy. Nos. 152, 153 and 181 to 194 situated at Tummaloor Village and also the lands covered by Sy. Nos. 461, 478 and 479 situated at Mankhal Village @ Rs. 10,000/- per acre after obtaining necessary exemptions from the authorities concerned.
10. In the plaint the plaintiffs took the same pleas as they took in their notices issued to the defendants. They asserted that they were always ready and willing to perform their part of agreement and that the defendants failed to comply with the conditions mentioned in the agreement and therefore they are entitled for a decree for specific performance.
11. The defendants 1 to 5 contested the suit and filed written statements asserting that the plaintiffs violated the agreement of sale and they failed to pay 75% of the sale consideration as agreed upon within six months and that the plaintiffs were never ready and willing to perform their part of contract and on account of their failure to comply with the terms of the agreement, they lost their rights to enforce the agreement of sale and that they are not entitled to seek for specific performance of agreement of sale which was cancelled by the defendants on account of the failure of the plaintiffs to comply with the terms of the agreement.
12. On the said pleadings, the learned Additional Subordinate Judge, Ranga Reddy framed the following issues for trial:
(1) Whether the plaintiffs paid Rs. 1,00,000 on 2-11-1987 to the defendants and the defendants inducted the plaintiffs over the suit land?
(2) Whether the plaintiffs developed the suit lands by engaging labourers and spending money?
(3) Whether the defendants are unlawfully refused to fulfil their part of contract with mala fide intention?
(4) Whether the plaintiffs are entitled for specific performance of contract?
(5) To what relief?
13. During the trial, the plaintiffs examined themselves as PWs. 1 to 5 besides examining one witness as PW-6 and exhibited 41 documents as Exs.A-1 to A-41. On the other hand, the first defendant examined himself as DW-1 besides examining one Danaiah as DW-2 on behalf of the defendants. The defendants did not file documents on their behalf.
14. Considering the evidence adduced on behalf of both sides, the learned Trial Judge found on issues 1 and 2 that the plaintiffs admittedly paid Rs. 1,00,000/- on 2-11-1987 and that on 2-11-1987 the defendants did not deliver the possession of the lands to the plaintiffs but only permitted the plaintiffs to develop the lands. On issues 3 and 4 the trial Judge found that the plaintiffs who contend that they did not pay the balance consideration on account of cloud created by Sri K. Rajeshwar Rao over the title of the defendants cannot be permitted to insist the defendants to execute conveyance and that when the defendants suspects that the title of the defendants are not clear, they could have repudiated the agreement and could have demanded the money back paid under the agreement. The learned Trial Judge further found that the cloud over the title is still there as O.S. No. 128 of 1983 is pending and the final result cannot be anticipated in the said suit and therefore the agreement is frustrated and no relief of specific performance can be granted. The learned Trial Judge found that there was no wilful default on the part of the plaintiffs to pay the amount as mentioned in the schedule and therefore the amount paid by them is not liable for forfeiture and that the defendants are liable to return the said amount of Rs. 2,00,000/- with interest thereon @ 18% per annum from the date of filing of the suit. The learned trial Judge further found that the plaintiffs spent Rs. 1,00,000/- towards development of the land and therefore the defendants are liable to pay the same with interest at 18% per annum from the date of the filing of the suit. On such findings, the learned Trial Judge decreed the suit directing the defendants to pay Rs. 3,00,000/- to the plaintiffs with interest thereon at 18% per annum. Curiously enough, the learned Trial Judge though refused to grant the relief sought for in the suit, did not record the dismissal of the suit at least partly and instead decreed the suit with a direction to pay a sum of Rs. 3,00,000/-. However, the fact remains that the relief of specific performance is negatived and in the alterative the defendants were directed to refund the amounts paid by the plaintiffs along with the amount of Rs. 1,00,000/- said to have been spent by the plaintiffs for development of the land.
15. Aggrieved by the refusal to grant decree for specific performance, the plaintiffs filed appeal in A.S. No. 2860 of 1996 and the defendants preferred another appeal in A.S. No. 672 of 1997 challenging the direction given to them to return the amount of Rs. 1,00,000/- with interest.
16. During the course of hearing, the earned Counsel appearing on behalf of both sides reiterated their contentions raised in the grounds of appeal.
17. The learned Senior Counsel appearing on behalf of the plaintiffs filed written submissions in the form of synopsis. In the said synopsis it is submitted that the legal right of a purchaser under a contract of sale is recognized under Section 55(1) of the Transfer of Property Act as well as under Section 13 of the Specific Relief Act.
Sub-clauses (a) to (g) of Section 55(1) of the Transfer of Property Act empowers the purchaser to demand from the seller, various documents and information relating to the title and the seller is bound to satisfy the purchaser about all the aspects covered under Section 55(1)(a) to (g) of the Transfer of Property Act and that similarly Section 13(1)(a) to (d) of the Specific Relief Act also entitles the purchaser to enforce the contract and compel the vendor to procure concurrence or conveyance from other person, if necessary to validate the title. In this regard the earned Counsel relied upon the Full Bench decision of this Court in Nannapaneni Subayya Chowdary and Anr. v. Garikapati Veerayya and Anr. 1955 An. WR. 502. He further submitted that in the present case, Clause 3 of the agreement-Ex. A-1 imposes a duty on the defendants to furnish as early as possible such documents, material and information at the request of the purchaser and the said obligation has necessarily to be discharged before the sale transaction culminates into a sale deed and that it is the duty of the vendor to give title, free from any encumbrances and free from reasonable doubt. The learned senior Counsel further submitted that the stand of the defendants that their obligation to satisfy the plaintiffs about their title arises only after receipt of 75% of the consideration is not justified and it is contrary to clause 3 of the agreement and also the admission made by DW-1 to the effect that he has to show all the documents of his title to the plaintiffs on demand and that the documents for Sy. Nos. 461, 478 and 479 were not shown to the plaintiffs at the time of the agreement. He further submitted that in spite of the demand by the plaintiffs to remove the clog on the title by the defendants, instead of satisfying the purchasers and clarifying the said clog on title, the defendants unilaterally cancelled the agreement of sale and the defendants were not justified in law in insisting payments of the instalments notwithstanding the adverse claim made by Sri Rajeshwar Rao. In this regard also the earned Counsel relied upon the Full Bench decision of this Court in Nannapaneni Subayya Chowdary's case (supra). He also relied upon the decision in Florrie Edridge and Ors. v. Rustomji Danjibhoy Sethna AIR 1933 PC 233, wherein it is held that wrongful repudiation of a contract does not put an end to the obligation of the repudiating party and that the contract is to be construed as per the intentions of all the parties when it was made. The earned Counsel further submitted that the plaintiffs have all through specifically maintained and reiterated that they are ready and willing to complete the transaction by paying the balance consideration and that the readiness and willingness of the purchasers and their financial capacity cannot be doubted, in view of Exs.A-15 to A-41 which are in the nature of income tax and wealth tax assessments of each of the plaintiffs for the relevant point of time. He further submitted that the plaintiffs were put in possession of the property and they have spent substantial amount towards development of the property, which shows that the purchasers are not guilty of inaction and hence the discretion under Section 20 of the Specific Relief Act ought to have been exercised in favour of the plaintiffs as against them.
18. Besides the above said contentions raised in the synopsis, the earned Counsel raised the following contentions also:
Firstly, there was suppression of material fact i.e., the pendency of application LA. No. 416 of 1984 in O.S. No. 128 of 1983, filed by one K. Rajeshwar Rao, who raised objections to the public notification, issued by the plaintiffs in Exs.A-4 and A-5, dated 1-11-1987. He further contended that what all the plaintiffs required from the defendant Nos. 1 to 5 was to clear that litigation and register the plaint schedule property by way of executing a registered sale deed. Secondly, the defendant Nos. 1 to 5 have to perform their part of obligation first by way of clearing the pending litigation to enable the plaintiffs to have the plaint schedule property registered in their favour; Thirdly, as contemplated under Section 55 of the Transfer of Property Act, the defendant Nos. 1 to 5 have to produce all the relevant material showing their title. He further contended that Clause (15) of the agreement of sale is relevant in this regard and that the said clause had not been complied with by the defendant Nos. 1 to 5. Fourthly, the plaintiffs can doubt the title of the defendant Nos. 1 to 5, notwithstanding the same, the relief of specific performance can also be sought for, after clearing all the clouds by the defendant Nos. 1 to 5.
19. Per contra, Sri A. Pulla Reddy, the earned Counsel appearing for the defendant Nos. 1 to 5, contends that there are certain obligations to be performed by both parties. Firstly, the main and only obligation on the part of the defendant Nos. 1 to 5 is to execute a regular sale deed in favour of the plaintiffs, subject to their readiness and willingness and also subject to compliance of the conditions stipulated in the agreement of sale, particularly Clause (2)(a) of the agreement of sale. Secondly, there was no suppression of any material fact at all. He further contended that the plaintiffs have been furnished with all the patta certificates etc., in order to show the title of the defendant Nos. 1 to 5 and the plaintiffs, having been satisfied with the said material, have entered into agreement of sale. He further contended that this is obvious from Clause (3) of the agreement of sale, wherein it was stated that the purchasers (plaintiffs) were prima facie satisfied with the title of the defendant Nos. 1 to 5. Thirdly, the question of execution of regular sale deed arise only when 75 per cent of the amount, as stipulated under Clause (2) of the agreement of sale is complied with. It is his further contention that there was a clear payment schedule mentioned in Clause (2) of the agreement of sale with regard to the amounts to be paid periodically and that except the initial payment of Rs. 1,00,000/-, as advance of sale consideration, on 2-10-1987, and another sum of Rs. 1,00,000/-, towards first instalment commencing from 1-11-1987, the time schedule mentioned in Clause (2) of the agreement of sale has not been complied with by the plaintiffs. The very fact that the payment schedule is incorporated in the agreement itself shows that the time is essence of the contract and as the plaintiffs have not complied with the said schedule, on that ground itself, the defendant Nos. 1 to 5 can resile from the contract. Fourthly, even otherwise, the plaintiffs did not express their readiness and willingness, even in their legal notice issued nine months after the execution of the agreement of sale, to get a regular sale deed executed, instead they insisted the defendant Nos. 1 to 5 to clear the alleged pending litigation though there was no suit pending in respect of the title of the defendant Nos. 1 to 5 regarding the plaint schedule property. He further contended that mere pendency of application I.A. No. 416 of 1984, filed by one K. Rajeshwar Rao, under Order 9 Rule 13 of the Code of Civil Procedure, seeking to set aside the ex parte decree, passed against him and his mother, in the suit O.S. No. 128 of 1983, filed by the defendants seeking to grant permanent injunction, cannot and shall not be considered as a cloud on the title of the defendant Nos. 1 to 5 and that the defendant Nos. 1 to 5 have already obtained a decree for permanent injunction, against the said K. Rajeshwar Rao and his mother, in the said suit.
20. In the light of the above mentioned respective contentions of either party, the points that fall for consideration, in both the appeal suits are thus:
(1) Whether the plaintiffs have always been ready and willing to perform their part of contract?
(2) Whether the plaintiffs are entitled to demand the defendants to settle the claim of Sri K. Rajeshwar Rao as a condition precedent for compliance of Clause 2 of the agreement of sale wherein the payment schedule is incorporated?
(3) Whether the Clause 3 overrides the Clause 2 of the agreement?
(4) Whether the time is essence of contract of agreement-Ex-A-1?
(5) Whether the defendants are entitled to resile the contract on account of the plaintiffs imposing the condition precedent of settling the matter with Sri K. Rajeshwar Rao for compliance of Clause 2 of the agreement?
(6) Whether the plaintiffs are entitled for discretionary relief of specific performance of suit agreement of sale?
(7) Whether the trial Court erred in directing the defendants to pay Rs. 1,00,000/- said to have been spent towards development of the land with interest thereon at 18% per annum?
(8) Whether the judgment and decree passed by the trial Court is sustainable in law?
(9) To what relief?
Point Nos. 3 and 4:
21. The contention of the earned Counsel for the plaintiffs is that Clause 3 of the agreement overrides the Clause 2, whereas the earned Counsel for the defendants contended that Clause 2 is not subject to Clause 3 and that Clause 2 is only subject to Clause 14 as mentioned in Clause 2 itself and that on the other hand, Clause (3) is subject to Clause (2) and not vice versa.
22. For better appreciation of the rival contentions, it is useful to extract Clauses 2, 3 and also 14 of the agreement of sale.
Clause (2) - Subject to clause No. 14 herein set out, the purchasers, have this day paid (by way of Syndicate Bank, Basheerbagh Branch, Pay Order No. 300881, dated 1-10-1987 in favour of Shri Alopi Shanker) to the vendors the sum of Rs. 1,00,000/- (Rupees one lakh only) as earnest and advance and the balance of the sale consideration shall be paid by the purchasers to the vendors in the following manner:
(a) the balance of 75% of the total sale consideration within six months as under:
(i) 1-11-1987 Rs. 1,00,000/-(Rupees one
lakh only)
(ii) 1-12-1987 Rs. 2,00,000/- (Rupees two
lakhs only)
(iii) 1-1-1988 Rs. 2,00,000/- (Rupees two
lakhs only)
(iv) 1-2-1988 Rs. 2,00,000/- (Rupees two
lakhs only)
(v) 1-3-1988 Rs. 1,00,000/- (Rupees one
lakh only)
(vi) 1-4-1988 Rs. 1,00,000/- (Rupees one
lakh only)
_______________________________________________________
Rs.9,00,000/-
_______________________________________________________
(b) the final part payment of 25% of the total sale consideration at the time of execution and registration of the sale deed/sale deeds.
Clause 3 : The purchasers are satisfied about the prima facie title of the vendors in the said lands. Before the execution and registration of the sale deed/sale deeds and at the request of the purchasers, the vendors shall furnish, as early as possible, such documents, material and information as may be found necessary by the purchasers to fully satisfy the vendors in the said land and the same being free of any claim of encumbrances.
Clause 14 : The vendors agreed to register the said land piecemeal (divided into convenient plots by the purchasers) in the name of the purchasers or their nominees on receipt of full payment for those particular plots without waiting for the full payment for the entire land.
23. As seen from the above said clauses, it is not mentioned in Clause No. 2 that it is subject to Clause No. 3. On the other hand, it is specifically mentioned in Clause No. 2 that it is subject to Clause No. 14. If really the intention of the parties at the time of entering into agreement of sale was that Clause No. 2 is subject to Clause No. 3, the parties would not have failed to incorporate the same in Clause No. 2 while mentioning that it is subject to Clause No. 14. Clause No. 2 precedes Clause No. 3 in the agreement. Further after referring to the payment of 75% within six months and the balance at the time of execution and registration of sale deed in sub-clauses (a) and (b) of Clause No. 2 it is referred in Clause No. 3 that the purchasers are satisfied about the prima facie title of the vendors in the said lands and before execution and registration of the sale deed/sale deeds and at the request of the purchasers, the vendors shall furnish, as early as possible, such documents, material and information as may be found necessary by the purchasers to fully satisfy the vendors in the said land and the same being free of any claim of encumbrances. It clearly shows that what the parties intended at the time of execution of the agreement was that 75% of the sale consideration has to be paid within six months as the purchasers are satisfied about the prima facie title and that before the execution and registration of the sale deed i.e. before payment of 25%, the vendors are obligated to furnish such documents as may be found necessary by the purchasers at the request of the purchasers to fully satisfy about the vendors' title in the said land.
24. The earned Counsel invited our attention to Clause (7) of the agreement as per which the purchasers are entitled to duly advertise their proposed purchase, invite objections from any person for the proposed sale by the vendors of the said lands, and contended that Clause (3) shall be read along with Clause (7) and also Clause (10) of the agreement and that if it is so read, it would be clear that Clause (3) of the agreement overrides Clause (2) of the suit agreement. We are unable to agree with this contention. Clause (7) is the usual clause, which invariably finds place in all the agreements of sale relating to properties, situate in or around urban areas. It is only a clause to enable the purchasers to resile from the contract and to demand return of the amounts paid as advance in case any objections raised by third parties. From such clause it cannot be inferred that the parties intended that in the event of any objections received in pursuance of the publication that the plaintiffs need not comply the terms of the agreement which they are required to comply till the objections if any are cleared. If such was the intention of the parties, they would have definitely got mentioned the same in the agreement itself to the effect that in case any objections are received in pursuance of the publication issued as per Clause (7), the plaintiffs need not comply with the payment schedule given in Clause (2) till the objections raised are cleared by the vendors. In fact, it is not even spoken to by the plaintiffs in their evidence. The plaintiffs who are examined as PWs. 1 to 5 did not state that at the time of entering into agreement, the understanding was that in case any objections are received, they need not comply with the payment schedule given in Clause (2) till the objections are cleared. On the other hand, in Clause (3) it is categorically stated that the purchasers are satisfied about the prima facie title of the vendors in the said lands. In the absence of specific mention to that effect in the agreement and in the absence of evidence adduced on behalf of the plaintiffs, it cannot be said that the purchasers need not comply with the payment schedule given in Clause (2)(a) of the agreement. The plaintiffs now relied upon the later portion of Clause (3) wherein it is mentioned that before the execution and registration of the sale deed/sale deeds, the vendors shall furnish all the information as may be found necessary by the purchasers to fully satisfy about the title of the vendors. But, even in that clause, it is specifically mentioned that such information to satisfy the purchasers is to be furnished only at the request of the purchasers. Here in the instant case, admittedly no notice has been issued by the purchasers/plaintiffs before the expiry of time fixed under Clause (2)(a) of the agreement to furnish any documents or even to clear the alleged cloud created by Sri K. Rajeshwar Rao. During the course of evidence, the plaintiffs stated that after Rajeshwar Rao raised his objection, the defendants promised them that they would settle the matter with Rajeshwar Rao and therefore, they did not pay the amounts agreed to be paid within six months. The plaintiffs have gone further and stated that after Rajeshwar Rao raised objection, the defendants demanded more sale consideration on the ground that they have to pay something to Rajeshwar Rao to settle the matter for which they did not agree. PWs. 1 to 5 admitted that this fact has not been stated in the plaint. Therefore, the evidence of PWs. 1 to 5 in this regard is a clear development to cover up their failure to pay the amounts agreed to be paid as per Clause (2) of the agreement. Further it is improbable to believe that the defendants who promptly issued rejoinder publication on 20-11-1987 wherein it is categorically stated that Rajeshwar Rao has nothing to do with he property and he made false claim in order to extract some amounts from the defendants and also from the intending purchasers, approached the purchasers and promised to settle the matter with Rajeshwar Rao. It is not as if that even after receipt of rejoinder publication dated 20-11-1987 Rajeshwar Rao did not keep quite but asserted his claim and further informed the plaintiffs not to purchase the lands from the defendants. Further according to the plaintiffs on 2-11-1987 itself they were inducted into possession of the land for development of the land and they developed the land by spending a sum of Rs. 1,00,000/-. Rajeshwar Rao never objected for their possession or for their doing development work in the lands, nor did Rajeshwar Rao issue any notice to the defendants asserting his title. Under those circumstances, it is improbable to believe that the defendants required the plaintiffs to grant time for settlement of the dispute with Rajeshwar Rao. It is not the case of the plaintiffs that the defendants stated that they need not pay the amounts mentioned in Clause (2) till the dispute is settled with Rajeshwar Rao. Further as seen from the admissions in the cross-examination of PW-1 that Rajeshwar Rao did not produce his title deeds either before them or their lawyer and they did not ask Rajeshwar Rao to substantiate his claim. Further PW-1 stated that he does not know the nature of the suit alleged to have been pending between Rajeshwar Rao and the defendants. In fact, as seen from the notice Ex.A-10 issued on 25-6-1988 i.e. seven months after their failure to pay the second and subsequent instalments, it is stated as if Rajeshwar Rao had filed the suit claiming title over the properties against the defendants and the defendants have to get that suit dismissed on merits or to get the suit withdrawn after settling out of the Court. It is not disputed that there is no suit filed by Rajeshwar Rao. On the other hand, suit referred to in the publication is a suit for permanent injunction filed by the defendants against Rajeshwar Rao and his mother and the said suit was also decreed ex parte as long back as in the year 1984; whereas the agreement of sale was in the year 1987. The plaintiffs did not at all make any enquiry about the genuineness or otherwise of the claim of Rajeshwar Rao. Had the plaintiffs made any enquiries, they would have known that there was no suit pending as such filed by Rajeshwar Rao and on the other hand, the defendants had filed the suit and it was decreed ex parte and only the application filed for setting aside the ex parte decree was pending. The plaintiffs admitted that they did not issue any notices to Rajeshwar Rao to produce his title deeds to substantiate his claim. The plaintiffs admitted in their cross-examination that the defendants produced occupancy certificate in respect of the suit lands and they were satisfied with pritna facie title of defendants before entering into agreement of sale. The claim of Rajeshwar Rao is that he is the inamdar in respect of those lands. It is true that he was an inamdar. Once the enquiry under Inam Abolition Act is over and occupancy certificate is issued in favour of the cultivators, the inamdar will have no right whatsoever in the lands. It is also not the case of the plaintiffs that Rajeshwar Rao filed any suit or appeal before the concerned authorities challenging the issuance of occupancy certificate in favour of the defendants. It is not as if that the plaintiffs were not aware about the said position of law in respect of the inam lands. Because the plaintiffs are well educated and they had legal advise. The very fact that it is mentioned in Clause (3) that they are satisfied with the prima facie title indicates that the plaintiffs had taken legal advise before entering into the agreement of sale.
25. Of course, the plaintiffs have stated in their evidence that Ex.A-2 occupancy certificate is shown only in respect of Thummaloor Village lands and no documents have been shown in respect of Mankhal Village lands. It is in the evidence that out of Ac. 135-00 agreed to be sold only Ac. 10-00 is situated in Mankhal Village. Further as seen from the agreement-Ex.A-1, the averments made in the unnumbered paragraphs disclose that the defendants agreed to sell Ac. 135-00 out of Ac.247-12 guntas of land in Sy. Nos. 152, 153, 181 to 194 situated in Thummaloor Village, Maheshwaram Mandal @ Rs. 10,000/-per acre and not the lands in Mankhal Village. The perusal of Clause 12 also discloses that by the date of agreement the defendants were not the owners of the lands bearing Sy. Nos. 461, 478 and 479 of Mankhal Village and that they only agreed to sell or arrange to sell the land in Mankhal Village covering Sy. Nos. 461, 478 and 479 to suit the purchaser's convenience for plotting, bunding, laying etc. It is also in the evidence that the defendants are not the owners of those lands and they only promised to arrange for sale of those lands by the rightful owners. Therefore, it is clear that the defendants are the owners of the lands in Thummaloor Village and they agreed to sell Ac. 135.00 of land of Thummaloor Village and they never represented that they are the title holders of the lands of Mankhal Village. So the plaintiffs cannot contend that the defendants did not produce title deeds relating to lands of Mankhal Village. Therefore, the said evidence of plaintiffs in this regard is of no avail.
26. The conduct of the plaintiffs in not making any enquiries about the falsity or otherwise of the cloud created by Rajeshwar Rao and not making any request in writing to the defendants to produce any documents to fully satisfy about their perfect title over the lands indicate that the plaintiffs were satisfied with the stand taken by the defendants in their rejoinder public notice dated 20-11-1987. The contention of the plaintiffs that they were making oral requests cannot be believed. If at all they wanted to rely on Clause 3 of the agreement of sale, they ought to have issued a notice requesting the defendants to produce specific documents to fully satisfy them about the title over the lands. Here in the instant case, there is no documentary evidence or independent oral evidence to show that the plaintiffs made any request to the defendants to produce any documents or to clear off the alleged cloud over the title. A notice was issued only after 8 months i.e. long after the expiry of the payment time schedule given in clause 2. Even in that notice, the plaintiffs made unreasonable demand of getting the suit dismissed as if Rajeshwar Rao had filed a suit. As already observed supra, there was no suit pending as such much less in respect of title over the suit lands. The said suit filed for permanent injunction was also decreed in favour of the defendants. Merely because Rajeshwar Rao filed a petition to set aside the ex parte decree, it cannot be said that such litigation amounts to dispute regarding title over the lands. If at all Rajeshwar Rao had dispute over the title, nothing prevented him from filing a suit for declaration of his title against the defendants despite a decree against him regarding the injunction. No such suit has been filed. However, ex parte decree has been passed in the year 1984 and three years had elapsed by the date of the suit agreement and the ex parte decree was not set aside. Under those circumstances, even if it is assumed that the defendants did not inform about the pendency of the interlocutory application filed by Rajeshwar Rao to set aside the ex parte decree in an injunction suit filed by the defendants at the time of entering into agreement of sale, it does not amount to suppression of any material fact relating to the title of the defendants over the lands agreed to be sold to the plaintiffs. The undisputed fact is that even after issuance of rejoinder publication by the defendants on 20-11-1987 asserting that Rajeshwar Rao had no right whatsoever over the land and he is making a false claim, the plaintiffs did not pay the subsequent instalments payable on 1-12-1987, 1-1-1988, 1-2-1988, 1-3-1988 and 1-4-1988 and it is only on 23-8-1988 for the first time notice was given expressing their readiness and willingness to perform their part of contract subject to defendants settling the matter with Rajeshwar Rao. Therefore, we have no hesitation to hold that the plaintiffs have violated the terms of the contract incorporated in clause 2(a) of the agreement of sale.
27. The plaintiffs very much relied on Section 55(1) of the Transfer of Property Act and Section 13 of the Specific Relief Act. As per Section 55(1)(a), (b) and (c) of the Transfer of Property Act, the seller is bound : (a) to disclose to the buyer any material defect in the property or in the seller's title thereto of which the seller is, and the buyer is not, aware, and which the buyer could not, with ordinary care discover; (b) to produce to the buyer on his request for examination all documents of title relating to the property which are in the seller's possession or power; and (c) to answer to the best of his information all relevant questions put to him by the buyer in respect to the property or the title thereto. Here in the instant case there is no material defect in respect of the sellers title over the property because admittedly the lands are inam lands and the defendants obtained occupancy certificate which had become final. It is also admitted by the plaintiffs that the defendants produced the occupancy certificate and the plaintiffs were satisfied about the prima facie title over the lands proposed to be sold by the defendants. Merely because the earlier inamdar raised an objection without challenging the occupancy certificate, it cannot be said that it amounts to a defect in title. Further, as observed supra, the defendants promptly gave rejoinder reply for which Rajeshwar Rao did not give any reply nor did he take any action to challenge the occupancy certificate. Further, as already stated the plaintiffs did not make any request for examination of the title documents relating to the property and did not ask for any information. Further as seen from Section 55 of the Transfer of Property Act, which deals with rights and liabilities of seller and buyer, starts with the sentence 'in the absence of a contract to the contrary'. So the rights and liabilities of buyer and seller mentioned in Section 55(1)(a) to (g) are subject to the absence of contract to the contrary. Therefore, the buyer and seller are at liberty to alter their rights and liabilities in the agreement itself. In this case both parties i.e. plaintiffs and defendants have specified the obligations of each party in the agreement itself. Therefore, Clauses (a) to (c) of Section 55 of the Transfer of Property Act do not come to the aid of the plaintiffs to justify their non-compliance of Clause 2 of the agreement of sale. Clauses (d) to (g) of the Transfer of Property Act are not relevant to the facts of this case. In this regard, the earned Counsel very much placed reliance on the Full Bench decision of this Court in Nannapaneni Subayya Chowdary's case (supra). The facts of the cited case are not similar to the facts of the instant case. The facts of the cited case are that "A" executed a contract of sale in favour of 'B' agreeing to sell the landed property of an extent of Ac.6.60 cents for a sum of Rs. 1 1,400/- and received Rs. 1,500/-as an advance on the date of his execution and delivered the possession of the land. In the agreement of sale it is mentioned thereunder that if any dispute arises from any one, 'B' shall settle it on his own expenses and that the balance of sale consideration has to be paid within a month of the contract, in default to pay interest. After the agreement of sale 'B' paid Rs. 2,000/- on 14-2-1948, but subsequently 'B' failed to pay the balance and take the sale deed and demanded 'A' to discharge mortgage over the suit lands or to produce the discharge of mortgage receipt. Thereafter on 16-11-1948 'B' entered into agreement of sale in favour of 'C and then on 3-10-1948 'A' informed 'B' by telegram that if the balance outstanding on his contract of sale was not paid on or before 4-11-1948, he will file a suit for specific performance for which 'B' issued reply notice asking 'A' to show the documents of title to the property and also the vouchers to prove that the mortgage on the property standing in favour of 'B' was discharged. But, at the same time 'B' informed 'A' that he is ready and willing to perform his part of contract and within 15 days of the receipt of the notice if "A" failed to show the documents, 'B' would not be liable to pay interest from that date. On 22-10-1948 'A' gave reply to 'B' calling upon him to fulfil the terms of the suit agreement within a week by payment of balance consideration and taking a conveyance or otherwise the contract would stands rescinded. On 16-11-1948 'A' issued notice to 'B' stating that the suit agreement stood cancelled. In that case there was a mortgage on the property agreed to be sold and the purchaser failed to produce any evidence to show that the mortgage was discharged. Under those circumstances it was held that the purchaser therein is entitled to demand the vendor to show that the property agreed to be sold is free of encumbrances and he has got absolute title over the property and on such failure on the part of the vendor the purchaser is entitled to sue for specific performance. Under those circumstances it was held that 'B' is entitled to file a suit for specific performance against 'A' impleading 'D' as second defendant. But, in the instant case, there is no such mortgage over the property. The alleged cloud over the title is not a real cloud and it is only a cloud taken as mere excuse by the plaintiffs to cover up their failure to comply with the payment schedule given under clause 2 of the agreement. The plaintiffs kept quite for a period of nine months without issuing notice to the defendants asking for any information or to produce any documents. Further, in the cited case Their Lordships held that if there is any dispute regarding the title which came to light subsequent to entering into agreement, the purchasers can file a suit for specific performance of the agreement impleading the rival claimants as the parties and to declare the title of their vendor and direct the vendor to execute sale deed. In this regard, a decision of the Madras High Court in Madhurai Chetty v. Babu Saheb (1919) 52 IC 97, was quoted wherein at page 974 observed as follows:
If the title is found to be doubtful so as to require investigation he cannot be compelled either to rescind the contract or to accept without investigation the doubtful title. He may, it is well settled in England, sue for specific performance of the contract and ask for an enquiry into the title by the result of which he will be bound.
Relying on the said observation His Lordship Justice K. Subba Rao, the Chief Justice, (as he then was), observed that this authority clearly shows that a purchaser is entitled to ask for information to satisfy himself on the question of title as well as on the question of discharge of the mortgages. Instead of giving the information asked for, or, getting a release deed from the mortgagee or any voucher or letter from him indicating that the mortgage was satisfied, the first defendant took the attitude that the first plaintiff was not entitled to ask for any particulars, or, for evidence of the discharge of the mortgage and hence the plaintiff therein is entitled for a decree for specific performance. Relying on the said observations of the Full Bench decision of this Court, the earned Counsel for the plaintiffs contended that in the instant case also the plaintiffs are entitled to seek for specific performance of the contract, though they demanded the defendants to clear the cloud over the title before registration of the lands. In the instant case, there is no material to show that there is a genuine dispute in respect of the title between the defendants and Rajeshwar Rao over the suit lands in respect of which the plaintiffs prima facie satisfied at the time of entering into agreement. Moreover, if really, the plaintiffs had apprehension regarding the title of the defendants, they ought to have filed the suit for specific performance in December, 1987 itself with a prayer to declare the title and then to direct the defendants to execute the sale deed in case their title is clear by making Sri Rajeshwar Rao who disputed the title also as defendant in the suit. But, the plaintiffs did not do so nor did they comply with the payment schedule mentioned in Clause 2 of the agreement. Further in the instant case it is not the case of plaintiffs that the suit lands are burdened with mortgage and the defendants failed to redeem the same whereas in the cited case there was a subsisting mortgage over the lands agreed to be sold and the plaintiffs demanded to satisfy them that the lands are free from encumbrances. As per Section 55(1)(g) of Transfer of Property Act the seller is bound to clear the encumbrances over the property agreed to be sold. Under these circumstances the Full Bench of this Court relied on Section 55(1) of the Transfer of Property Act and decreed the suit. Thus, the facts of this case are not similar to the facts of the cited case. Therefore, we are of the considered view that the Full Bench decision of this Court cited supra does not come to the aid of the plaintiffs in this case.
28. The learned Counsel for the plaintiffs submitted that in case of immovable property there is no presumption that time is the essence of the contract. In support of his contention, he relied upon several decisions of the Apex Court and also various High Courts including this Court. Earned Counsel appearing on behalf of both sides have relied upon the five Judges Bench of the Apex Court in Smt. Chand Rani (dead) by LRs. v. Smt. Kamal Rani (dead) by LRs. . As the Apex Court in the cited decision considered the proposition of law regarding this aspect and the said decision has been followed in other decisions of various High Courts and the Apex Court relied on by the Counsel for plaintiffs, we consider it unnecessary to refer to other decisions cited by the learned Counsel, other than this five Judges Bench decision of the Apex Court in this judgment. The facts of the cited case are that on 26-8-1971 an agreement of sale was entered into between one Kamal Rani and Chand Rani and under the terms of the agreement, Kamal Rani agreed to sell her house property comprising of a freehold plot measuring 311 square yards with a double storeyed residential building constructed thereon along with fittings and fixtures for a sum of Rs. 1,78,000/- in favour of Chand Rani and on the date of execution a sum of Rs. 30,000/- was paid by way of e?Tiest money and the agreement stipulated that a further sum of Rs. 98,000/- was payable within 10 days of the execution of the agreement and the balance of Rs. 50,000/-was to be paid at the time of registration of sale deed. The property had been mortgaged with the Life Insurance Corporation of India and it was agreed between the parties that Kamal Rani, the vendor would redeem the mortgage by paying a loan of Rs. 25,000/- out of a sum of Rs. 30,000/- paid at the time of execution of the agreement. It was also agreed that the vendor has to obtain the income tax clearance certificate and the sale deed was to be executed on or before 31-10-1971. Based on that agreement Chand Rani filed suit O.S. No. 463 of 1971 for specific performance alleging that though the Kamal Rani was called upon to complete the sale through various letters and notices, she failed to perform her part of the contract. Kamal Rani, the defendant contended that as the plaintiff failed to pay a sum of Rs. 98,000/-within 10 days i.e. by 6-9-1971 from the date of the agreement in which time was the essence of the contract, the agreement stood annulled and the sum of Rs. 30,000/-stood forfeited and that the defendant was entitled to treat the contract as having become null and void. To that effect, the defendant addressed a letter on 15-9-1971 and in reply to that letter, the plaintiff wrote to the defendant calling upon her to execute the sale deed offering to pay the remaining consideration at the time of the execution of the sale deed. Since the defendant failed to comply with this demand Grand Rani filed the suit claiming specific performance of the agreement or in the alternative, damages in the sum of Rs. 1,50,000/- including the refund of Rs. 30,000/-. On such facts, the learned Single Judge after due trial held that the payment of Rs. 98,000/- by 6-9-1971 was not the essence of the contract and that the plaintiffs were always ready and willing to perform their part of the contract and it was the defendant who was trying to resile from the terms of the contract. With such findings, the learned Single Judge decreed the suit. The said decision was challenged before the Division Bench of the High Court and the Division Bench held that non-payment of Rs. 98,000/- on or before 6-9-1971 would entitle the defendant to treat it as a breach of contract and the insistence of the plaintiffs to obtain income tax clearance certificate and redemption of the property before the payment of Rs. 98,000/- was unjustified and such an insistence could only be regarded as trying to vary the terms of the agreement. As such, the Division Bench set aside the judgment of the learned Single Judge. Against that judgment the plaintiffs with special leave to appeal approached the Apex Court. The Division Bench of the Apex Court by noticing the earlier decision of the Apex Court observed that the position of law so decided deserves reconsideration by the Apex Court. The Division Bench of the Apex Court directed that the appeal be placed before the Chief Justice for directions to be heard by Larger Bench. Under those circumstances, the civil appeal came up for hearing before the Five Judges Bench of the Apex Court.
29. The Apex Court after discussing case-law on the subject at length held that though in the case of immovable property there is no presumption as to the time being the essence of contract, even if it is not of the essence of the contract, the Court may infer that it is to be performed in a reasonable time, if the conditions are : (1) from the express terms of the contract; (2) from the nature of the property; and (3) from the surrounding circumstances, for example : the object of making the contract. The law laid down by the five Judges Bench of the Apex Court in this regard is that even in respect of agreement of sale of immovable property, it can be inferred that time is the essence of the contract from express terms of the contract or from the surrounding circumstances. Here in the instant case, time schedule has been incorporated in the agreement itself in the form of Clause No. 2 and both parties agreed to the time schedule fixed for payment of 75% of the agreed sale consideration. Thus, the express terms mentioned in the contract are specific and not vague or general. So the intention of the parties at the time of entering into contract is crystal clear that the time schedule shall be adhered to. Further object of selling such a large extent of land by its owners is obviously to invest the same in some other property. In fact, the earned Counsel contended that the defendants wanted to purchase a house in the city at Hyderabad and for that purpose they intended to sell their lands. Moreover, as the lands in question are adjoining the urban area viz. the City of Hyderabad, rates of the lands will be increasing day by day and in those circumstances it is natural for the parties to expressly incorporate the time schedule in the agreement of sale. If these circumstances and also the express terms in the contract are taken into consideration, the only inference that can be drawn is that the intention of the parties at the time of entering into contract was that the time is the essence of the contract. The facts of the present case are also similar to the facts of the case before the five Judges Bench of Apex Court. The Apex Court considered the above narrated facts of the case and held that wherein an agreement to sell the immovable property it was stipulated that the amount in part was to be paid within 10 days of the execution of the agreement and balance has to be paid at the time of registration of the sale deed, it must be held that the intention of the parties was to make the time as essence of the contract. In tin's case also the sale consideration was agreed to be paid in instalments payable at specified dates within six months viz. Rs. 1,00,000/-on 1-1-1987, Rs. 2,00,000/- on 1-12-1987, Rs. 2,00,000/- on 1-1-1988, Rs. 2,00,000/- on 1-2-1988, Rs. 1,00,000/- on 1-3-1988 and another Rs. 1,00,000/- on 1-4-1988 towards 75% of the sale consideration and the remaining 25% at the time of execution of the registration of the sale deed. Therefore, from this conduct of the defendants incorporating payment schedule in Clause 2(a) of the agreement, it can be safely concluded that the intention of the parties at the time of execution of agreement was to make the time as essence of the contract. In view of the law laid down by the five Judges Bench of the Apex Court in Smt. Chand Rani's case (supra), we are unable to agree with the contention of the earned Counsel for the plaintiffs that time was not the essence of the contract. On the other hand, we entirely agree with the earned Counsel for the defendants that the time was the essence of the contract in this case.
30. The facts concerned in other decisions relied upon by the plaintiffs are not similar to the facts of this case. Therefore, the decisions rendered therein are not applicable to the facts of this case.
31. In the Division Bench decision in Rameshchandra Chandiok and Anr. v. Chuni Lai Sabharwal (dead) by his Legal Representatives and Ors. , rendered in the year 1970, the facts of that case are that 'A' agreed to purchase on 18-7-1955 a leasehold plot from 'R' which was not in his possession and has not obtained a lease deed from the Government and it was agreed that the balance consideration was to be paid within a month at the time of execution of the registered sale deed and one of the conditions of lease deed which was executed in favour of 'R' on 21-5-1956 was that the lease was required to obtain Section of the Government before transfer of the lease hold plot and 'R' being aware of this condition informed 'A' by a letter dated 11-8-1955 that the sale deed would be executed by him only after obtaining the required Section and further undertook to inform 'A' as soon as Section was obtained. However, 'R' never took any steps till 11-11-1956 to apply for Section but on the other hand informed 'A' that he was not willing to wait indefinitely for want of Section and that if rest of the consideration was not paid within a week, the earnest money would be forfeited and the agreement will be cancelled. Further 'R' had applied for and obtained the required Section on 20-11-1956, but did not inform 'A' about it and cancelled the contract. On such facts, it was held that 'A' is entitled for specific performance. But, the facts of the present case are entirely different from the facts of the cited case and hence it does not come to the aid of the plaintiffs in this case.
32. Similarly the facts of another decision of Apex Court in Prakash Chandra v. Angadlal and Ors. , relied on by the plaintiffs are also entirely different from the facts of this case as in that case the appellant therein executed a further document wherein it was agreed that in case the suit filed for declaration and recovery of possession resulted in a settlement confirming vendors' ownership and allowing him possession of the site, the appellant would pay the remaining balance and would obtain a sale deed from him according to the earlier agreement for sale, but in case the settlement did not so result, he would be entitled to the refund of the amount already paid by him. Here in the instant case, even after Rajeshwar Rao raised objection stating that there is a suit pending, the plaintiffs did not choose to enter into separate agreement or to alter the terms of prior agreement. Therefore, the facts of that case are also not similar to the facts of this case. Hence, the said cited decision cannot be applied to the facts of this case.
33. In the other decisions relied on by the plaintiffs i.e. P.D. Souza v. Shondrilo Naidu 2004 AIR SCW 4653, the Apex Court held that time was not the essence of the contract. In that case the vendor herself failed to produce original documents and to redeem the mortgage in respect of the suit property and the vendor was seeking extension of time for registration of sale deed and under those circumstances the sale deed could not be executed. On such facts it was held that the question of vendee's readiness and willingness to perform her part of contract would not arise and that the time was not the essence of the contract. The facts of the cited case are entirely different from the facts of this case.
34. The learned Counsel for the plaintiffs also relied upon a decision of Division Bench of this Court in Dr. T.M. Jayarama Reddy and Ors. v. Bingi Sreeramaiah Chetty and Ors. , wherein this Court held that there were no laches on the part of the plaintiff and the suit was rightly decreed for specific performance by the trial Court. As seen from the facts of that case the plaintiffs paid an advance of Rs. 3,00,000/-at the time of agreement and soon after also paid Rs. 3.5 lakhs when asked by the defendants and the time for performance of the contract was being extended from time to time and further the defendants did not disclose all the debts due by them to others and they could not also secure the clearance from the Municipal, sales tax and income tax authorities and in those circumstances it was held that there were no laches on the part of the plaintiff. Whereas in the instant case, payments as agreed upon have not been paid. Thus, the facts of the cited case are not at all similar to the facts of this case. As already observed supra, the facts in the five Judges Bench decision of the Apex Court are exactly similar to the facts of the instant case and therefore the decision rendered therein is very much applicable to the facts of this case. Hence, we are of the considered view that the decisions relied on by the earned Counsel for the plaintiffs do not come to the aid of the plaintiffs in this case. Thus, both the points are held accordingly.
Point Nos. 1, 2, 5 and 6:
35. Nextly it has to be seen whether the plaintiffs were always been ready and willing to perform their part of contract. In Smt. Chand Rani's case (supra), the five Judges Bench of the Apex Court considered whether in the facts of that case the plaintiffs have always been ready and willing to perform their part of contract, and held that as the plaintiffs were not prepared to pay Rs. 98,000/- within ten days as agreed upon and insisted for delivery of possession and income tax clearance certificate and also redemption of the mortgage as a condition precedent for payment of Rs. 98,000/-, it cannot be said that the purchaser was ready and willing to perform her part of contract and that putting forth such condition precedent for payment of Rs. 98,000/- are contra to the terms of the agreement and therefore it cannot be said that the purchaser was ready and willing to perform her part of contract. In the instant case, it is not disputed that the plaintiffs at the time of entering into agreement of sale, agreed to pay 3/4th of the sale consideration in six instalments within six months and they paid only one instalment of Rs. 1,00,000/- and failed to pay the remaining five instalments within six months. The contention of the plaintiffs is that as there was a cloud created over the title of the defendants by Rajeshwar Rao, they wanted the defendants to settle the matter with Rajeshwar Rao. In other words, the plaintiffs put a condition precedent for payment of those instalments the condition being the settlement of claim of Rajeshwar Rao. The earned Counsel contended that as it came to light subsequent to the date of agreement about the litigation between the defendants and Rajeshwar Rao and his mother in respect of the agreement schedule lands, the plaintiffs are not bound to pay the remaining instalments even before that litigation is cleared, and therefore, from the non-payment of the instalments, it cannot be said that the plaintiffs were not ready and willing to perform their part of contract and they have violated the conditions of the contract. We have already observed supra while discussing the point No. 3 that Clause No. 3 does not override clause No. 2 and that only after compliance of Clause No. 2, Clause No. 3 comes into play. In Smt. ChandRani's case (supra), the five Judges Bench of the Apex Court held that unless the part payment of Rs. 98,000/- was paid within ten days as agreed upon in the agreement, the question of delivery of possession and obtaining income tax certificate or redemption of mortgage etc. does not arise and if the purchaser puts up such condition as precedent for payment of such amount which was agreed to be paid within ten days, it amounts to variation of the terms of the agreement which is not permissible under law and that the purchasers will be disentitled to specific performance. In the instant case also it is clearly stated that 75% of the amount of sale consideration has to be paid within six months and the balance of 25% has to be paid at the time of execution and registration of sale deed and that registration has to be completed within 9 months from the date of the agreement. As per Clause No. 3 before the execution and registration of the sale deed, the vendors shall furnish such documents, material and information as may be found necessary by the purchasers to fully satisfy the vendors' title over the lands covered under the agreement. The earned Counsel attempted to justify the action of the plaintiffs in not complying with payment schedule incorporated in Clause No. 2 taking aid of Section 55(1) of the Transfer of Property Act. But Section 55 is only subject to the absence of a contract to the contrary. Here in the instant case, the rights and liabilities of both buyer and seller are mentioned in the agreement in the form of several clauses. Both parties agreed that the plaintiffs are satisfied with the prima facie title of the vendors over the land agreed to be sold, and then agreed to pay 75% of sale consideration within six months from the date of agreement in six instalments and to pay the remaining balance at the time of execution of the registration of sale deed. They further agreed that before the execution of the sale deed, in the event of request by the plaintiffs, the defendants have to furnish the necessary documents to fully satisfy the plaintiffs about the title of the defendants over the land. We have also found supra that in the instant case, the plaintiffs never made any request to the defendants to produce any documents within six months period. It is only after eight months, the plaintiffs got issued legal notice Ex.A-10 dated 25-6-1988 demanding the defendants to furnish within one week the documents referred to therein and also to settle the litigation between the defendants and Rajeshwar Rao. In the said notice Ex.A-10 in Paragraph 9 it is stated that the question of agreement becoming unenforceable after a period of 9 months does not arise at all and despite this legal notice, the defendants make any attempt to enter into any arrangement by way of sale or otherwise in respect of'the said lands or any part thereof, the defendants shall be exposed to all costs and risks and consequences thereof. From those averments in the notice, it is evident that when the defendants wanted to sell the lands to others on account of failure of the plaintiffs to perform their part of contract, the plaintiffs got issued the notice Ex.A-10. Even in that notice Ex.A-10 the plaintiffs did not make unconditional offer to pay 75% of the sale consideration immediately and the balance of 25% at the time of execution of the registration of the sale deed. On the other hand, the plaintiffs put a condition that the defendants shall settle the dispute with Rajeshwar Rao, in spite of the defendants issuing rejoinder publication to the effect that Rajeshwar Rao has nothing to do with the lands and that they have obtained occupancy certificate and that Rajeshwar Rao made a false publication with a view to extract lands from the plaintiffs and also from the intending purchasers. When the defendants asserted that Rajeshwar Rao or his mother have no rights whatsoever over the lands in question, there is absolutely no justification for the plaintiffs to demand the defendants to settle the matter with Rajeshwar Rao. They wanted to create a stalemate and then take advantage of it. It appears that the plaintiffs have used it as a ruse to cover up their failure to comply with the terms of the agreement. The very fact that the plaintiffs have given up the condition of settlement with Rajeshwar Rao while filing the suit for specific performance lends support to our view that the plaintiffs have put forth the objection of Rajeshwar Rao only to cover up their failure to pay the amounts agreed to be paid within six months. The plaintiffs have paid a paltry sum of Rs. 2,00,000/- out of agreed sale consideration of Rs. 13,50,000/- and wanted to keep the agreement alive and thereby to prevent the defendants from alienating their lands to others to secure amounts for their necessities. The earned Counsel contended that all the plaintiffs are very sound parties and they are capable to pay amount at any time and that they could not pay the amount as there was a dispute and therefore it cannot be said that they were not always ready and willing to perform their part of contract. It is true that evidence has been adduced on behalf of the plaintiffs to show that four of the plaintiffs are income tax assessees and they are in a sound financial position. But, merely because the plaintiffs are sound parties and are capable to pay the amounts, it cannot be said that they are always ready and willing to perform their part of the contract. As already observed supra, after Rajeshwar Rao raised objection, the plaintiffs did not choose to make any enquiries whether Rajeshwar Rao had any valid claim and as to what is the nature of the litigation pending between the defendants and Rajeshwar Rao. In the notice Ex.A-10 the plaintiffs have stated that Rajeshwar Rao had filed suit in respect of the title against the defendants and therefore the defendants have to see that the said suit is settled outside the Court or dismissed on merits. It shows that the plaintiffs did not at all make any enquiries about the claim of Rajeshwar Rao even after issuance of rejoinder publication by the defendants and they simply took it as a ruse for their failure to pay the balance sale consideration as agreed upon within six months.
36. Recently, the Division Bench of this Court to which one of us is member in Nalamathu Venkaiya (died) by L.R. v. B.S. Neelkanta and Anr. , discussed about the readiness and willingness and held that in a suit for specific performance of agreement to sell, the oral assertion that the plaintiffs persistently requested the defendant to perform his part of contract and reiterated that they are ready and willing to pay the amount is not sufficient to say that the plaintiff and ready and willing to perform his part of contract and that the said plea has to be supported by proof as pronounced by the Apex Court in Pushparani S. Simdaram v. Pauline Manomani James . In that case, the Apex Court held that mere pleading that they are always ready and willing to perform their part of contract by itself is not sufficient to hold that that the appellants were ready and willing in terms of Section 16(c) of the Specific Relief Act and that it requires not only such plea but also proof of the same, and Section 16(c) of the Specific Relief Act makes it clear that mere plea is not sufficient and it has to be proved. The Division Bench of this Court following the said decision of the Apex Court held that mere claim of readiness and willingness in plaint and deposition and even depositing amount under Court order are not sufficient to prove readiness and willingness, when the part consideration agreed to be paid was not paid, and in such a case, the plaintiffs cannot claim discretionary relief under Section 16(c) of the Specific Performance Act. Very recently also the Apex Court in Mst. Sugani v. Rameshwar Das and Anr. 2006 (4) ALD 41 (SC) : 2006 (5) ALT 10 (SC), held that the basic principle behind Section 16(c) read with Explanation (ii) is that any person seeking benefit of the specific performance of contract must manifest that his conduct has been blemishless throughout entitling him to the specific relief and the Court is to grant relief on the basis of the conduct of the person seeking relief and that the meaning of such an averment of readiness and willingness must be that the non-completion of the contract was not the fault of the plaintiffs and that they were disposed and able to complete it had it not been renounced by the defendant. In the instant case, admittedly the plaintiffs did not comply with the terms of the agreement and only on account of their failure to make payment as agreed upon in Clause No. 2 of the agreement, the defendants refused to abide by the contract and treated the contract as cancelled. The conduct of the plaintiffs in this case is not blemishless. The excuse for their failure to comply with the terms of the agreement is not bona fide and it is not at all tenable. The conduct of the plaintiffs goes to show that they wanted to keep the agreement alive without paying 75% of the sale consideration and to search for the prospective purchasers of the plots and to collect the amounts from them and to pay the same to the defendants and till then to deprive the defendants from enjoyment of the money agreed to be paid and also depriving their right to search for new purchasers. This type of conduct on the part of the real estate developers shall not be encouraged. The earned Counsel for the plaintiffs contended that the defendants did not issue any notice demanding the plaintiffs to pay the amounts as agreed in Clause 2 of the agreement and on the other hand, the defendants were promising to settle the matter with Rajeshwar Rao. The self-serving evidence adduced on behalf of the plaintiffs in this regard is not supported by any independent evidence and it is also not in accordance with the probabilities of the case. It is improbable to believe that the defendants did not insist for payment of the amounts as mentioned in Clause 2 of the agreement. DW-1 stated that in spite of the demands, the plaintiffs did not comply with the terms of Clause No. 2 of the agreement. His evidence is in accordance with probabilities. Even otherwise as the time schedule is fixed for payments in the agreement, it is for the plaintiffs to make payments as per the terms of the agreement in order to show that they were always ready and willing to perform their part of contract. It is not the case of the plaintiffs that they offered those amounts and the defendants did not receive those amounts. Therefore, if really the plaintiffs wanted to keep the agreement alive, they ought to have made payments or at least they ought to have deposited the amounts in any bank and inform the defendants that they have deposited the amounts in a bank and the moment the cloud created is cleared, the defendants can withdraw those amounts. As already found supra, there is absolutely no cloud over the suit lands and that it is only taken as an excuse by the plaintiffs to cover up their failure. In the given facts and circumstances of the case, we are of the considered view that the plaintiffs were not ready and willing to perform their part of contract and they violated the terms of the contract though the time was the essence of the contract and that the defendants are entitled to resile the contract on account of the plaintiffs imposing the condition precedent of settling the matter with K. Rajeshwar Rao for compliance of Clause No. 2 of the agreement. Therefore, the plaintiffs are not entitled for discretionary relief of specific performance of suit agreement of sale. All these points are found against the plaintiffs.
Point No. 7:
37. The case of the plaintiffs is that on the date of the payment of first instalment of Rs. 1,00,000/- on 1-11-1987 they were given possession of the land for development, thereafter they developed the land by spending an amount of Rs. 1,00,000/-. PWs. 1 to 5 have stated the same in their evidence. The learned trial Judge believed their evidence and directed the defendants to pay Rs. 1,00,000/- spent towards the development of the land with interest thereon at 18% per annum along with Rs. 2,00,000/-paid towards sale consideration with interest at 18% per annum. During the course of hearing, the learned Counsel for the defendants did not seriously challenge said portion of the judgment of the trial Court. As the development is found on the land and it accrued to the benefit of the defendants, we do not find any reason to interfere with the said portion of the judgment of the trial Court. Thus, this point is found against the defendants.
Point No. 8:
38. In view of the findings on points 1 to 7, the judgment and decree passed by the trial Court is sustainable in law, though for different reasons. For the reasons stated supra, the judgment and decree of the trial Court have to be confirmed and both the appeals are liable to be dismissed.
Point No. 9:
39. In the Result, both the appeals are dismissed. There shall be no order as to costs.