Madras High Court
Embar Naidu vs Rathnam Chettair And Anr. on 18 March, 2003
Equivalent citations: 2003(2)CTC385, (2003)2MLJ115
Author: R. Jayasimha Babu
Bench: R. Jayasimha Babu
ORDER N.V. Balasubramanian, J.
1. This Letters Patent Appeal is directed against the judgment and decree in A.S.No. 774 of 1984 dated 16.8.1999 rendered by a learned Single Judge of this Court.
2. This appeal arises out of a suit for specific performance. The first defendant, who is the appellant herein (hereinafter referred to as 'the appellant') is the owner of the property. According to the plaintiff, on 23.2.1975, the appellant in the appeal has agreed to sell the suit property to one Gopal Chettiar, who is the second respondent herein, the second defendant in the suit, free from all encumbrances for a consideration of Rs. 53,000 and he also received a sum of Rs. 2,000 towards advance on that day. It was agreed that the balance of sale consideration should be paid by Gopal Chettiar within a period of six months. As per the plaint averments, Gopal Chettiar was always ready and willing to pay the balance of sale price and get the sale deed executed and he approached the appellant for the same personally and through his friends, but the appellant refused to execute sale deed. It is stated that Gopal Chettiar also telegraphically contacted the appellant to get the sale deed executed and ultimately he issued a notice on 17.8.1975 for the said purpose, but the appellant did not send a reply. It is stated that on 22.2.1978, Gopal Chettiar assigned all his rights under the sale agreement dated 23.2.1975 in favour of the plaintiff, first respondent herein for a valuable consideration and hence, the plaintiff is entitled to enforce the sale agreement. It is stated that the plaintiff was ready and willing to pay the balance of sale consideration and get the sale deed executed. It is also stated that Gopal Chettiar informed the appellant about the assignment in favour of the plaintiff and since the appellant refused to execute a sale deed, the plaintiff filed the suit for specific performance of the agreement dated 23.2.1975.
3. The second respondent, Gopal Chettiar remained absent and he was set ex parte in the suit. The appellant who figured as the first defendant in the suit, in his written statement, has questioned the right of the first respondent herein to maintain the suit. According to the written statement, the plaintiff is a tenant and he wanted to retain the property under the guise of the said agreement. The appellant has denied the case of the plaintiff that time was not the essence of contract, and according to him, at no point of time, Gopal Chettiar was ready with funds and Gopal Chettiar has come forward with a false case in his notice dated 17.8.1975 as if the appellant had refused to receive a sum of Rs. 10,000. According to him, the assignment in favour of the plaintiff is false and invalid and the plaintiff was not ready and willing to perform his part of the contract.
4. The trial Court on the basis of pleadings and evidence, held that Gopal Chettiar has not performed his part of the contract and therefore, not entitled to enforce the agreement. The trial Court also held that the plaintiff got the assignment from Gopal Chettiar and the assignment was not valid and the plaintiff could not enforce the agreement and there was no cause of action for the suit. In this view of the matter, the trial Court dismissed the suit. Aggrieved by the judgment and decree, the plaintiff filed an appeal.
5. Learned Single Judge of this Court, in his judgment, held that the plaintiff was having sources to pay the balance of sale consideration and it is not necessary that the money should be actually tendered or deposited in the Court except by the directions of the Court. Learned Single Judge held that the trial Court was not correct in holding that there is no documentary evidence to show that the plaintiff was not having money and the view of the trial Court could not be sustained. Learned Single Judge also held that the fact that the suit was filed on the last date of expiry of limitation would not preclude the plaintiff from maintaining the suit. In this view of the matter, learned Single Judge allowed the appeal preferred by the plaintiff. It is against the judgment and decree, the present Letters Patent Appeal has been filed.
6. We heard Mr.T.R.Rajagopalan, learned senior counsel for the appellant and Mr.S.Parthasarathi, learned counsel for the first respondent. The main terms of the agreement dated 23.2.1975 are that the total agreed sale consideration for the property is Rs. 53,000 and a sum of Rs. 2,000 was received as advance and Gopal Chettiar had agreed to pay the balance of sale consideration of Rs. 51,000 and to get the sale deed executed by purchasing the necessary stamp papers and paying registration charges within a period of six months from the date of agreement and if there is any violation to perform his part of the contract within the period of six months, Gopal Chettiar would forfeit the money paid as advance of a sum of Rs. 2,000 and he should also pay an additional sum of Rs. 5,000 and get the sale deed executed and if there is any violation on the part of the appellant, he should deduct a sum of Rs. 5,000 from the balance of sale consideration and execute the sale deed on receiving a sum of Rs. 46,000 in favour of Gopal Chettiar. It is also provided in the deed that the sale deed should be executed in favour of Gopal Chettiar or his nominees and the appellant was also required to obtain the signature of his mother and the appellant should also execute the sale deed not only for himself but also for his three minor children. It is stated that the appellant had agreed to give residential house as a security for minors' share and execute the deed free from all encumbrances. The agreement also provides that on the date of execution of sale deed, one shop would be handed over by the appellant and the possession of other two shops should be taken by Gopal Chettiar himself. The agreement provides that within one month from the date of agreement, Gopal Chettiar has to pay a sum of Rs. 10,000 as second advance and it is not a condition for the agreement.
7. As already stated, the agreement has been entered into on 23.2.1975 and Gopal Chettiar has issued a lawyer's notice dated 17.8.1975 (Ex.A-1) wherein it is stated that the appellant has refused to receive a sum of Rs. 10,000 being the second advance and the appellant was called upon to receive the balance of sale consideration of Rs. 51,000 and execute a proper sale deed in accordance with the terms and conditions of the sale agreement. Thereafter nothing had happened till 22.2.1978 when Gopal Chettiar has assigned his rights under the sale agreement in favour of the plaintiff by a deed (Ex.A-7) for consideration which was followed by a notice dated 23.2.1978 (Ex.A-2) issued by Gopal Chettiar to the appellant informing him of the assignment of the agreement in favour of the plaintiff. There was a notice dated 27.3.1978 (Ex.A-4) issued by the plaintiff to the appellant for which the appellant sent a reply on 29.3.1978 (Ex.A-5). In the reply notice, the appellant has taken a specific stand that Gopal Chettiar was not ready and willing to pay the balance of sale consideration and get the sale deed executed in his name. The appellant, in the said notice, has taken a specific stand that Gopal Chettiar was not ready with funds to pay the balance of sale consideration and he had no money to pay the balance of sale price and he failed to fulfil his obligations under the contract.
8. In the plaint, it was stated that Gopal Chettiar was ready and willing to pay the balance of sale consideration of Rs. 51,000. There is no pleading to the effect that Gopal Chettiar offered a second advance of Rs. 10,000 to the appellant which was refused by the appellant as stated in the notice dated 17.8.1975 (Ex.A-1). Gopal Chettiar, who was examined as P.W.4, in his evidence has admitted that he has not paid a sum of Rs. 10,000. Hence, the stand taken by Gopal Chettiar in his notice dated 17.8.1975 that the appellant refused to receive the second advance of Rs. 10,000 is palpably false. Further, Gopal Chettiar admitted that he did not have the cash of Rs. 51,000 and he had only the jewellery belonging to his wife, but he has not produced any evidence to show that his wife was willing to accommodate him for the use of her jewellery by Gopal Chettiar to raise a sum of Rs. 51,000. Gopal Chettiar, in his cross-examination, has stated that that he met the appellant with cash which was known to P.W.2 and one Perumal Naidu. P.W.2 in his deposition has not stated that Gopal Chettiar came with cash and he has not deposed anything to that effect in his evidence. P.W.2 has stated that he was an attesting witness to the suit agreement. It is relevant to notice here that Gopal Chettiar had also deposed that when he approached the appellant, he had some cash, but he was not able to say as to the amount of cash in his possession and the value of the jewels he was holding, and it is relevant to notice that he had admitted that he did not have the cash of a sum of Rs. 51,000. The evidence of the plaintiff, who has examined himself as P.W.1, shows that Gopal Chettiar had only jewels, but the jewels belonged to his wife. P.W.1 has deposed that there is no evidence to show that Gopal Chettiar had cash of Rs. 51,000. He has also stated that Gopal Chettiar did not have any property of his own. Gopal Chettiar, in his cross-examination, has stated that he had certain properties of his own, but except his oral statement, which is contrary to the evidence of P.W.1, no evidence was let in by Gopal Chettiar to show that he had properties. On the other hand, Ex.A-4 notice issued by the plaintiff proceeded on the basis that Gopal Chettiar was ready to pay the balance of sale consideration, but there is no acceptable evidence to show that he offered the sum of Rs. 51,000 to the appellant.
9. A careful reading of the evidence of various witnesses examined on behalf of the plaintiff show that Gopal Chettiar was not having cash of Rs. 51,000. He has not established his financial capacity to pay the sum of Rs. 51,000. According to his evidence, he had certain jewellery belonging to his wife, the value of which was not stated by him. Gopal Chettiar has also not stated that his wife had consented for the transfer of the jewels to raise a sum of Rs. 51,000. We find that except the ipsi dixit of Gopal Chettiar that he had his wife's jewels, there is no evidence to show that he had the financial capacity to pay the sum of Rs. 51,000.
10. Learned Single Judge proceeded on the basis that Gopal Chettiar was ready and willing to perform his part of the agreement, but the appellant delayed the execution of the sale deed. Learned Single Judge held that the evidence of Gopal Chettiar showed that he had money to pay the balance of sale consideration. We are unable to agree with the conclusion arrived at by the learned Single Judge as the plaintiff himself has admitted that Gopal Chettiar did not show any document to establish that he had Rs. 51,000 and he did not own any property, but had 150 sovereigns of jewels belonging to his wife. Though Gopal Chettiar has admitted that the source of money was the jewels belonging to his wife, he has not stated that his wife has 150 sovereigns of jewels and further there would be no occasion for Gopal Chettiar to show his wife's jewels to the plaintiff. Hence, the statement of the plaintiff that Gopal Chettiar was having 150 sovereigns of jewels belonging to his wife can only be regarded as imaginary in the absence of positive evidence. We find that there are inner-contradictions in the evidence of the plaintiff and Gopal Chettiar when they tried to explain the financial capacity of Gopal Chettiar to raise the sum of Rs. 51,000.
11. It is true that it is not necessary for the plaintiff to produce the actual cash before the Court, but the means of Gopal Chettiar to perform his part of the contract and his readiness and willingness must be established by the plaintiff. In this state of evidence, we hold that the learned Single Judge was not correct in holding that Gopal Chettiar had the enough resources to pay the balance of sale consideration. In fact, Gopal Chettiar had kept quiet and not taken any action for a period of nearly three years from the date of agreement which shows that he was not having resources to pay the balance of sale consideration. We therefore hold that there is absolutely no evidence to show that Gopal Chettiar was continuously and willing to perform his part of the contract as there is a specific denial by the appellant in the written statement that Gopal Chettiar was not in a position to perform his part of the contract.
12. Learned senior counsel for the appellant relied upon the decision of the Supreme Court in N.P. Thirugnanam v. R. Jagan Mohan Rao, and the Supreme Court held as under:
"It is not necessary for the plaintiff that he should keep ready the money on hand. What is relevant and material is that he should have the necessary capacity to raise the funds and was ready and willing to perform his part of the contract.... Section 16(c) of the Act envisages that plaintiff must plead and prove that he had performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than those terms the performance of which has been prevented or waived by the defendant. The continuous readiness and willingness on the part of the plaintiff is a condition precedent to grant the relief of specific performance. This circumstance is material and relevant and is required to be considered by the Court while granting or refusing to grant the relief. If the plaintiff fails to either aver or prove the same, he must fail. To adjudge whether the plaintiff is ready and willing to perform his part of the contract, the Court must take into consideration the conduct of the plaintiff prior and subsequent to the filing of the suit along with other attending circumstances. The amount of consideration which he has to pay to the defendant must of necessity be proved to be available. Right from the date of the execution till date of the decree he must prove that he is ready and has always been willing to perform his part of the contract. As stated, the factum of his readiness and willingness to perform his part of the contract is to be adjudged with reference to the conduct of the party and the attending circumstances. The Court may infer from the fact and circumstances whether the plaintiff was ready and was always ready and willing to perform his part of the contract."
13. He also referred to the decision of the Supreme Court in Swami Ganesh Dassji v. Sita Ram Thapar, wherein the Supreme Court held as under:-
" There is a distinction between readiness to perform the contract and willingness to perform the contract. By readiness may be meant the capacity of the plaintiff to perform the contract which includes his financial position to pay the purchase price. For determining his willingness to perform his part of the contract, the conduct has to be properly scrutinised. There is no documentary proof that the plaintiff had ever funds to pay the balance of consideration. Assuming that he had the funds, he has to prove his willingness to perform his part of the contract. According to the terms of the agreement, the plaintiff was to supply the draft sale deed to the defendant within 7 days of the execution of the agreement, i.e., by 27.2.1975. The draft sale deed was not returned after being duly approved by the petitioner. The factum of readiness and willingness to perform plaintiffs part of the contract is to be adjudged with reference to the conduct of the party and the attending circumstances. The Court may infer from the facts and circumstances whether the plaintiff was ready and was always ready and willing to perform his part of the contract. The facts of this case would amply demonstrate that the petitioner/ plaintiff was not ready, nor capacity to perform his part of the contract as he had no financial capacity to pay the consideration in cash as contracted and intended to bite for the time which disentitles him as time is the essence of the contract."
14. We are of the view that the two decisions of the Supreme Court support the case of the appellant. According to the Supreme Court, it is not necessary for the plaintiff to prove that he had money on hand, but Gopal Chettiar or the plaintiff should have the necessary capacity to raise the funds and was continuously ready and willing to perform his part of the contract. We are not concerned with the financial capacity of the plaintiff, as he is only an assignee who came into the picture later. As far as Gopal Chettiar is concerned, he was a broker and his evidence clearly shows that he had no necessary capacity to raise funds and he was continuously not ready and willing to perform his part of the contract from the date of the agreement. Though in the notice (Ex.A-1), he has stated that he paid a sum of Rs. 10,000 to the appellant within the time stipulated in the agreement, in cross-examination, he has admitted that he has not offered to pay Rs. 10,000. The conduct of the second respondent clearly shows that he was not willing to perform his part of the contract. He has also not proved that he had the capacity to pay the money to perform his part of the contract and in other words, he has not established his financial capacity.
15. As far as willingness of Gopal Chettiar is concerned, after issuing the notice under Ex.A-1 on 17.8.1975, he kept quiet and there was a total inaction on his part till he assigned his rights under the agreement in favour of the plaintiff. We hold that the trial Court was therefore right in holding that since Gopal Chettiar and the plaintiff are close relatives and the plaintiff is a tenant and he was not paying the rent regularly and eviction proceedings were also taken against the plaintiff under the provisions of the Rent Control Act and due to the enmity between the tenant and the landlord/appellant, the assignment was obtained. The conduct of Gopal Chettiar also clearly shows that even after the expiry of six months period or within a reasonable time thereafter, he has not taken any steps to perform his part of the contract. Since the facts clearly show that Gopal Chettiar was neither ready, nor willing to perform his part of the contract, the plaintiff, on the basis of assignment of the agreement, at the fag end of the limitation period, is also not entitled to the relief of specific performance of the contract assigned in his favour.
16. Though the appellant, in the written statement, has stated that Gopal Chettiar was not ready to perform his part of the contract, Gopal Chettiar has not explained the delay. His evidence was that he met the appellant within six months and he showed the cash and jewels to the appellant in the presence of P.W.2 and one Perumal. But, P.W.2, in his evidence, has not stated anything about the readiness of Gopal Chettiar within six months from the date of agreement, nor he supported the statement of Gopal Chettiar that he showed cash and jewels to the appellant. Moreover, Gopal Chettiar in his evidence has not explained as to why he kept quiet after the issue of Ex.A-1 notice, nor he has stated the reason for his total inaction when he was of the view that the appellant had refused to perform his part of the contract. There is an unexplained delay on the part of Gopal Chettiar and the trial Court was therefore correct in its finding that if Gopal Chettiar was ready to pay the balance of sale consideration and for registration, he would have taken steps against the appellant and completed the transaction and despite that, he waited for three years. It is a case where the trial Court found that there was an unexplained delay on the part of Gopal Chettiar and the plaintiff as an assignee cannot have any better right than the assignor in getting a decree for specific performance.
17. Learned counsel for the respondents relied upon several decisions and we have gone through the same and the decisions do not support the case of the respondents.
18. We hold that the plaintiff has not established that the original agreement holder, the second respondent herein, was ready and willing to perform his part of the contract, and he kept quiet for nearly three years and thereafter assigned his right under the agreement to the plaintiff. We therefore hold that the learned Single Judge was not correct in holding that the plaintiff would be entitled to the relief of specific performance. Accordingly, we set aside the judgment of the learned Single Judge and the judgment and decree of the trial Court is restored and the Letters Patent Appeal stands allowed. However, in the circumstances, there will be no order as to costs. Connected C.M.P.No. 157 of 2000 is dismissed.