Delhi High Court
Chet Ram Vashisht vs Ram Chander Goel And Another on 9 September, 1999
Equivalent citations: 2000IAD(DELHI)275, AIR2000DELHI96, 82(1999)DLT557, 1999(51)DRJ694, AIR 2000 DELHI 96, (1999) 51 DRJ 694 (1999) 82 DLT 557, (1999) 82 DLT 557
JUDGMENT Dr. M.K. Sharma, J.
1. By the present judgment and order, I propose to dispose of the second ppeal filed by the appellants arising out of the suit filed by the reance seeking for a decree of specific performance of an agreement to sell.
2. The plaintiffs/respondents instituted a suit being Suit No.363/80 praying for decree of specific performance of the agreement to sell dated 21.12.60 in favour of plaintiff No.1 with costs on the ground that late Amin Chand, father of the defendants/appellants sponsored a colony known as Ganga Ram Vatika situated at Najafgarh Road, New Delhi of which he was the sole owner. It was alleged in the plaint that before the actual development of the colony such as laying of roads, installation of electric poles and water pipes etc. the predecessor in interest of the appellants agreed to sell a plot of land bearing No.10, Jiwni Block in the said Ganga Ram Watika to the plaintiff No. 2 and that the said plot measured 330 sq. yards at the time of booking and measured 353.1/3 at the time of payment of fourth and final instalment on 6.2.1966. It was stated that the terms and conditions of sale were defined in the agreement - cum - receipt dated 21.12.1960 which was issued by said late Amin Chand in favour of plaintiff No. 2 when the latter paid a sum of Rs. 2,000/- to him as an advance in part payment of the price of the said plot @ Rs. 20/- per sq. yards and the total price to be paid to late Amin Chand was Rs. 6660/- but ws later on increased to Rs. 7066.67 on account of increase in the area of plot by the time of payment of fourth and final instalment of Rs. 7066.67. The plaintiff No.1 became the nominee of plaintiff No. 2 for the aforesaid plot. It was stated that even after payment of the fourth and final instalment the aforesaid plot was not transferred in the name of the plaintiff No.1 and that the plaintiff No.1 visited the defendant on number of occaf and requested for transfer of the plot in the name of plaintiff No.1 and that although the said defendant had been promising to do so but was avoiding the same on some pretext or the other for which the plaintiff No.1 served a legal notice on 31.5.66 on the defendant. As no steps were taken to transfer the plot by the defendant, the present suit was instituted.
4. The defendant contested the suit by filing a written statement. It was stated in the said written statement that after the payment of the last instalment on 6.2.1966, the plaintiffs never paid and placed the cost for stamp duty and the registration fee of sale deed at the disposal of the defendant and thus did not comply with the terms and conditions in the agreement - cum - receipt. It was pleaded that the suit was barred by limitation. It was stated that time was the essence of the contract and that it was specifically agreed between the parties that in case of failure of the purchaser to pay any instalment within the stipulated time, he would cease to have any legal interest in the said plot and the owner would be entitled to forfeit all payments made by the purchaser before that date and would be at liberty to re-book and re-sell it to any other person.
5. On the pleadings of the parties six issues were framed. The trial court after recording evidence of the witnesses produced by the parties decreed the suit with costs. The plaintiff was granted a decree for specific performance of the agreement to sell and the defendant was directed to execute the sale deed in respect of the said plot in favour of plaintiff No.1 and also to get the registration done within two months from the date of payment of the charges for stamp duty and registration by the plaintiff No.1.
6. The defendant filed an appeal which was registered as RCA No.107/1983. The Appellate Court dismissed the appeal and upheld the judgment and decree passed by the trial court, by his order dated 26.10.84. Being aggrieve by the said order the appellant filed the aforesaid appeal in which this court framed two questions of law amongst others, which are as follows :-
1. Whether the suit was barred under Article 54 of the Limita-
tion Act?
2. Whether in view of the provisions of the Land Ceiling Act, there is a legal bar to make a sale deed in favour of the respondent?
7. Mr. Adarsh B. Dial, learned counsel apearing for the appellant urged that on the admitted facts of the case, first part of the provisions of Article 54, of the Limitation Act applies inasmuch as the date for performance was fixed with reference to the event of payment of the fourth and final instalment and thus, the performance date was 6.2.96 and the period of limitation started running from that date. In this connection he also submitted that the language of Clause - (C) of Ex. P-2, which is agreement - cum - receipt, is imperative and mandatory. The said Clause - (C) when read with Clause - (D) require the purchaser to bear the charges for stamp duty, registration charges and brokerage of 2%. He submitted that the scheme of the agreement clearly indicated that the payment of last instal-ment and submission of stamp duty papers and execution of the sale deed were to be concurrent events and, therefore, the period of limitation started running from the date of payment of the last instalment i.e. 6.2.96 and thus the suit was barred by limitation.
8. Mr. Dial further submitted that even if it is assumed that only the Second Part of Articles 54 of the Limitation Act applies, then also the agreement was to be performed within a reasonable time keeping in view the implication and connotation of the word 'on' used in Clause (C) of the agreement - cum -receipt which would mean that at the most it was to be performed within a month or two of the date of payment of final instalment i.e. 6.2.1996 and even otherwise, usually in such cases the time for performance is 30 to 45 days at the most and, therefore, the period of ten years taken by the plaintiffs to institute the suit cannot be construed and considered as reasonable time. According to him even considering the matter from the aforesaid angle, the suit was barred by time. In support of his contention, the counsel appearing for the appellant relied upon the decisions of the Supreme Court in Ramzan Vs. Hussaini , K. Narendra Vs. Riviera Apartments (P) Ltd. reported in 1999 (6) AD (S.C.) 256 = (1999) 5 S.C.C. 7, K.S. Vidyanadam & Ors. Vs. Viaravan , the decision of Calcutta High Court in Manick Lal Seal & Anr. Vs. K.P. Chowdhury and the decision of Gauhati High Court in Md. Mohar Ali Vs. Md. Mamad Ali & Ors., reported in AIR 1998 Gauhati 92.
9. Mr. Chakrabarty appearing for respondents, on the other hand, submitted that in the receipt - cum - agreement to sell no time limit was fixed and as provided by Section 54 of the Limitation Act, the suit could be filed within three years from the date of refusal to perform the contract. He submitted that the date of refusal in this particular case was the date on which the reply to the notice was received by the plaintiffs. The reply to the notice was received by the plaintiffs. The reply of the said notice is Ex. PW-2/6 which is dated 4.6.1976. According to him computing from the said date the suit instituted is within the period of limitation. Thus, the only issue that I am called upon to consider and decide in the present appeal is as to whether the suit is barred by any of the provisions of the Article 54 of the Limitation Act.
10. Article 54 of the Limitation Act prescribes three years as the period of limitation within which a suit for specific performance can be filed. The period of three years is to be calculated from the date specified in the agreement for the performance or in the absence of any such stipulation within three years from the date the performance was refused. Article 54 of the Limitation Act, therefore, has two parts. According to the first part, the period of three years is to be calculated from the date specified in the agreement for performance. In order to appreciate the contention of the counsel appearing for the parties, it would be relevant to refer to relevant clauses of the receipt - cum - agreement to sell which Ex. PW-2/1. The first part of the receipt recites receipt of the first instalment of advance being 30% of the total value of Rs. 6660/- for the suit property which is subject to the conditions which are detailed thereafter. The said document further stipulates that the total value of the plot is due and payable by the purchaser in four instalments. The first instalment of advance equal to 30% of the total value of the plot was payable at the time of booking of plot. Second instalment of advance equal to 25% of the total value of the plot was payable on laying roads touching the above said plot whereas the third instalment equal to 25% of the total value of the plot was similarly payable on laying sewage on roads touching the above said plot and fourth and final instalment of payment of the balance amount equal to 20% of total value of the plot on installation of electric poles and water pipes on roads touching the said plot.
Clause - (B) thereof stipulates that all instalments as detailed would be paid by the purchaser within fifteen days of receipt of notice from the owner asking for the payment of due instalment. Clause - (C), on the other hand, stipulates that the owner would transfer the plot in favour of the purchaser or his/her nominee if nay named by him/her on receipt of the total value of the plot and Clause - (D) stipulates that all costs of stamp fee and registration charges etc. and brokerage of 2% on total value of the plot will be borne by the purchaser.
11. Clauses - (C) & (D) which are relevant and material for the purpose of deciding the present case are extracted below :-
"(C) The owner shall transfer the plot in favour of the purchaser or his/her nominee if any named by him/her on receipt of the total value of the plot."
(D). All costs of stamp fee and registration charges etc. and brokerage of 2% on total value of the plot will be borne by the purchaser".
12. In the light of the aforesaid stipulations in the receipt - cum - agreement to sell, the point to be examined is as to whether a date was fixed for the performance of the agreement. The agreement clearly stipulated the manner in which total value of the plot is ayable y the purchaser. Fourth and final instalment of the payment of the balance amount equal to 20% of the total value of the plot was payable on installation of electric poles and water pipes on roads touching the said plot. Under Clause - (C) of the said agreement the owner was obliged to transfer the plot in favour of the purchaser or his nominee on receipt of total value of the plot. Thus, in the present case in accordance with the terms and conditions of the agreement the defendant was obliged to transfer the plot either in favour of the plaintiff No.1 or to plaintiff No. 2 on receipt of total value of the plot i.e. on payment of fourth and final instalment on 6.2.1966. Had the purchaser deposited costs of stamp fee and registration charges and the brokerage as stipulated even on 6.2.1966 the defendant was bound to transfer the plot in favour of the purchaser, the plaintiff even on 6.2.1966.
13. The expression "on receipt" as now in in Clause - (C), in my considered opinion, is relevant and material for the purpose of interpreting the intention of the parties. The use of the aforesaid expression would clearly indicate that it was intended by the parties that immediately on payment of the fourth and final instalment which comprises the total value of the plot, the defendant would transfer the plot in favour of the purchaser or his nominee.
14. In this connection, reference may be made to the decision of the Supreme Court in the Ramzan's case (supra) wherein the Supreme Court held that the requirement of Article 54 of the Limitation Act is not that the actual day should necessarily be ascertained upon the face of the deed but that the basis of the calculation which was to make it certain should be found therein. In the facts of the said case, the Supreme Court held that under the agreement the date for the defendant to execute the sale deed was fixed although not by mentioning a certain date but by a reference to the happening of a certain event, namely, the redemption of the mortgage; and immediately after the redemption by the plaintiff, the defendant became liable to execute the sale deed which the plaintiff was entitled to enforce and the period of limitation thus started running on that date. It was further held that the doctrine of id certum est quod certum reddi potest is clearly applicable to the case which is that certainty need not be ascer-tained at the time; for if, in the fluxion of time, a day will arrive which will make it certain, that is sufficient and in such a case the case is, therefore, covered by the first part of Article 54 and not the Second Part.
While coming to the aforesaid conclusion the Supreme Court posed a question as to whether if the plaintiff had, immediately after the redemption, filed the suit, could it be thrown out on the ground that she was not entitled to the specific performance asked for? The Supreme Court answered the aforesaid question stating that the suit could not have been thrown out. It held that she would have been within her rights to assert that she had performed her part of the contract and was entitled to insist that her brother should complete his part. The Supreme Court also held that the aforesaid doctrine is clearly applicable to the said case which in the language of Herbert Broom is that certainty need not be ascertained at the time; for if, in the fluxion of time, a day will arrive which will make it certain, that is sufficient.
15. In the present case also in the aforesaid receipt - cum - agreement a particular date from the calendar was not fixed in the documents and a particular date was not ascertainable but on the date of fourth and final instalment of the balance payment, the purchaser created a right in his favour to get the plot transferred in his name on payment of all costs of stamp fee, registration charges and brokerage of 2% on total value of the plot. Therefore, similar question as posed by the Supreme Court could also be posed here as to whether if the plaintiff had, immediately on payment of the fourth and final instalment payment i.e. on 6.2.1966 filed a suit seeking for specific performance of the contract, could the said suit be thrown out on the ground that he was not entitled to the specific performance asked for. The answer in my considered opinion would be emphatic no in the present case. Therefore, in my considered opinion, First Part of Article 54 of the Limitation Act clearly applies to the facts and circumstances of the case and I hold that the date for performance was fixed with reference to payment of fourth and final instalment which was paid in the in-stant case on 6.2.1966 and, therefore, that date became as certained and fixed in the fluxion of time. The doctrine as referred to above, is also applicable to the facts and circumstances of the present case also although certainty could not be ascertained at that time but in the fluxion of time a day came to be ascertained with certainty and definiteness, which is 6.2.1966 making it certain, which is sufficient. Therefore, the period of limitation started running from 6.2.66 and the suit filed in the year 1978 is clearly barred by limitations.
16. Although on the basis of the aforesaid findings the present appeal could be allowed, I proceed to consider the other submission of the learned counsel for the appellant as both the parties have advanced lengthy arguments on the same. Counsel for the appellant submitted that even assuming that First Part of Article 54 of the Limitation Act does not apply, then also the suit is barred by limitation even because of the Second Part of the Article 54 of the Limitation Act. He submitted that the agreement was to be performed within a reasonable time keeping in view the connotation of the word "on" used in Clause - (C) of the agreement which would mean that at the most it was to be performed within a month or two of the date of payment of the final instalment i.e. 6.2.1966 and in any case, relying on the own evidence of the plaintiffs, he submitted that the plaintiff No.1 visited the defendant many times after payment of last instalment on 6.2.1966 and was put off by the defendant. It is therefore, submitted that the plaintiffs would be deemed to have got notice of refusal of performance in 1966 itself and computing the period of limitation from that date the suit is barred by limitation.
17. The plaintiff has stated in his evidence that he had visited the defendant many times starting from 10-12 days after 6.2.1966 and he was put off by the defendant on one pretext or the other. In my considered opinion, even the aforesaid putting off by the defendant amounted to refusal of the performance of the agreement.
18. In K.S.Vidyanandam's case (Supra) the Supreme Court has held thus:-
"10. It has been consistently held by the courts in India, following certain early English decisions, that in the case of agreement of sale relating to immovable property, time is not of the essence of the contract unless specifically provided to that effect. The period of limitation prescribed by the Limitation Act for filing a suit is three years. From these two circumstances, it does not follow that any and every suit for ic performance of the agreement (which does not provide specifically that time is of the essence of the contract) should be decreed provided it is filed within the period of limitation notwithstanding the time-limits stipulated in the agreement for doing one or the other thing by one or the other party. That would amount to saying that the time-limits prescribed by the parties in the agreement have not significance or value and that they mean nothing. Would it be reasonable to say that because time is not made the essence of the contract, the time-limit(s) specified in the agreement have no relevance and can be ignored with impunity? It would also mean denying the discretion vested in the court by both Sections 10 and 20. As held by a Constitution Bench of this Court in Chand Rani Vs. Kamal Rani.
"........It is clear that in the case of sale of immovable property there is no presumption as to time being the essence of the 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 (evident): (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".
In other words, the court should took at all the relevant circumstances including the time-limit(s) specified in the agreement and detertmine whether its discretion to grant specific performance should be exercised Now in the case of urban properties in India, it is well-known that their prices have been going up sharply over the last few decades - partic-
ularly after 197. In this case, the suit property is the house property situated in Madurai, which is one of the major cities of Tamil Nadu. The suit agreement was in December, 1978 and the six months' period specified therein for completing the sale expired with 15.6.1979. The suit notice was issued by the plaintiff only on 11.7.1981, i.e., more than two years after the expiry of six months' period. The question is what was the plaintiff doing in the interval of more than two years? The plaintiff says that he has been calling upon Defendants 1 to 3 to get the tenant vacated and execute the sale deed and that the defendants were postponing the same representing that the tenant is not vacating the building. The defendants have denied this story. According to them, the plaintiff never moved in the matter and never called upon them to execute the sale deed. The trial court has accepted the defendants' story whereas the High Court has accepted the plaintiff's story. Let us first consider whose story is more probable and acceptable. For this purpose, we may first turn to the terms of the agree-
ment. In the agreement of sale, there is no reference to the existence of any tenant in the building. What it says is that within the period of six months' the plaintiff should purchase the stamp papers and pay the balance consideration whereupon the defendants will execute the sale deed and that prior to the registration of the sale deed, the defendants shall vacate and deliver possession of the suit house to the plaintiff. There is not a single; letter or notice from the plaintiff to the defendants calling upon them to the get the tenant vacated and get the sale deed executed until he issued the suit notice on 11.7.81. It is not the plaintiff's case that within six months he purchased the stamp papers and offered to pay the balance consideration. The defendant's case is that the tenant is their own relation, that he is ready to vacate at any point of time and that the very fact that the plaintiff has in his suit notice offered to purchase the house with the tenant itself shows hat the story put forward by him is false. The tenant has been examined by the defendant as DW-2. He stated that soon after the agreement, he was searching for a house but could not secure one. Meanwhile (i.e. on the expiry of six months from the date of agreement), he stated, the defendants told him that since the plaintiff has abandoned the agreement, he need not vacate. It is equally an admitted fact that between 15.12.1978 and 11-7-1981, the plaintiff has purchased two other properties. The defendants' consistent refrain has been that the prices of house properties in Madurai have been rising fast, that within the said interval of 2 1/2 years, the prices went up three times and that only because of the said circumstances has the plaintiff (who had earlier abandoned any idea of going forward with the purchase of the suit property turned round and demanded specific performance. Having regard to the above circumstances and the oral evidence of the parties, we are inclined to accept the case put forward by Defendants 1 to 3. We reject the story put forward by the plaintiff that during the said period of 2 1/2 years, he has been repeatedly asking the defendants to get the tenants vacated and exe-cute the sale deed and that they were asking for time on the ground that tenant was not vacating. The above finding means that from 15.12.1978 till 11-7-1981 i.e. for a period of more than 2 1/2 years, the plaintiff was sitting quiet without taking any steps to perform his part of the contract under the agreement though the agreement specified a period of six months within which he was expected to purchase stamp papers, tender the balance amount and call upon the defendants to execute the sale deed and deliver possession of the property. We are inclined to accept the defendants' case that the values of the house property in Madurai town were rising fast and this must have induced the plaintiff to wake up after 2 1/2 years and demand specific performance.
11. Shri Siva subramaniam cited the decision of the Madras High Court in S.V. Sankaralinga Nadar Vs. P.T.S. Ratna swami Nadar holding that mere rise in prices is no ground for denying the specific performance. With great respect, we are unable to agree if the said decision is understood as saying that the said factor is not at all to be taken into account while exercising the discretion vested in the court by law. We cannot be oblivious to the reality - and the reality is constant and continuous rise in the values of urban properties - fuelled by large scale migration of people from rural areas to urban centres and by inflation. Take this very case. The plaintiff had agreed to pay the balance consideration, purchase the stamp papers and ask for the execution of sale deed nd delivery of possession within six months. He did nothing of the sort. The agreement expressly provides that if the plaintiff fails in performing his part; of the contract, the defendants are entitled to forfeit the earnest money of Rs. 5,000/- and that if the defendants fail to perform their part of the contract, they are liable to pay double the said amount. Except paying the small amount of Rs. 5,000/- (as against the total consideration of Rs. 60,000/-) the plaintiff did nothing until he issued the suit notice 2 1/2 years after the agreement. Indeed, we are inclined to think that the rigor of the rule evolved by courts that time is not of the essence of the contract in the case of immovable properties - evolved in times when prices and values were stable and inflation was unknown - requires to be relaxed, if not modified, particularly in the case of urban immovable properties. It is high time, we do so. The learned counsel for the plaintiff says that when the parties entered into the contract, they knew that prices are rising; hence, he says, rise in prices cannot be a ground for denying specific performance. May be, the parties knew of the said circumstances but they have also specified six months was the period within which the transaction should be completed. The said time-limit may not amount to making time the essence of the contract but it must yet have some meaning. Not for as a rule of law or rule of prudence that where time is not made the essence of the contract, all stipulations of time provided in the contract have no significance or meaning or that they are as good as nonexistent? All this only means that while exercising its discretion, the court should also bear in mind that when the parties prescribe certain time-limit(s) for taking steps by one or the other party, it must have some significance and that the said time-limit(s) cannot be ignored altogether on the ground that time has not been made the essence of the contract (relating to immovable properties).
19. In K. Narendra's case (Supra), the Supreme Court after referring to the decisions of the Supreme Court in K.S. Vidyandam (Supra) and Chand Rani Vs. Kamal Rani held on the facts of the said case that there has been a default on the part of the respondents in performing their obligations under the contract and that the period lost between 25.7.1972 i.e. the date of the agreement and the years 1979 and 1980 when the litigation commenced, cannot be termed a reasonable period for which the appellant could have waited awaiting performance by the respondents though there was not a defined time limit for performance laid down by the agreement. It was held in the facts and circumstances of the said case that the same is not a case where the discretionary jurisdiction to decree the specific performance ought to be exercised in favour of the respondents. Consequently, the court set aside the concurrent findings of fact of two courts below and directed the appellant to return the amount of consideration paid by the respondents to the appellant with interest and also pay a particular some by way of compensation in lieu of specific performance.
20. From the aforesaid decisions of the Supreme Court, it would follow that in each and every suit for specific performance of the agreement which does not provide specifically that time is essence of the contract, the court is also to find out whether the suit was filed within a reasonable time or not. In Chand Rani's case (supra) the Supreme Court held that "in the case of sale of immovable property there is no presumption as to time being the essence of the contract but 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 (evident): (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". Thus, the court is given power to look into all the relevant circumstances including the time-limit(s) specified in the agreement and determine whether its discretion to grant specific performance should be exercised. It is thus, by now well-settled that the court in decreeing the suit for specific performance of the contract must look into the fact that the suit must be filed within a reasonable time and if such suit is filed beyond a reasonable time, it could be dismissed on that ground alone.
21. The fourth and final instalment in the present case was admittedly paid on 6.2.1966 and the suit came to be filed in the year 1978, after a long gap of 12 years. Therefore, filing of the suit by the plaintiffs herein could not be said to have been filed within a reasonable time and since the aforesaid suit was filed beyond a reasonable time, the suit should have been dismissed on that ground alone in terms of the aforesaid decisions of the Supreme Court. Therefore, considering the facts of the present case from the aforesaid corner also and in the light of the decision of the Supreme Court in K.S. Vidyanandam's case (Supra) which applies with full force to the facts of the present case, it could reasonably be held that the suit in the present case, was also not instituted within a reasonable time. The suit, therefore, was liable to be dismissed and both the courts below erred in law in decreeing the aforesaid suit.
22. Accordingly, I allow the appeal and set aside the judgment and decree passed by the trial court and confirmed in appeal. I dismiss the suit holding that the suit for specific performance of agreement to sell dated 21.12.1960 filed by the respondent was barred by limitation and also because it was filed beyond reasonable time. The appellant, however, shall return the amount of consideration paid by the respondent to the appellant with interest calculated @ 12% p.a. from the date of payment to the appellant till the date of return by the appellant to the respondent. Possession shall be delivered to the appellant by removing structure, if any raised by the respondent. The cost shall be borne by the parties as incurred through out.