Madras High Court
Devchand M. Shah And Anr. vs P. Sivapragasa Mudaliar (Died), And ... on 29 April, 1998
Equivalent citations: (1998)2MLJ751, AIR 1998 MADRAS 304, (1999) 1 LANDLR 154, (1998) 2 MAD LJ 751, (2000) 2 CIVLJ 103
JUDGMENT S.M. Abdul Wahab, J.
1. The appeal arise out of the judgment and decree dated 3.3.1981 in O.S. No. 2352 of 1978, on the file of the VIth Additional Judge, City Civil Court, Madras.
2. The plaintiffs are the appellants. The plaintiffs have filed the suit for specific performance of a sale agreement dated 31.3.1973 for Rs. 36,000., According to the plaintiffs, the first plaintiff was a tenant under the first defendant, on a monthly rent of Rs. 150 in respect of the suit property, namely, the premises bearing door No. 300, Sydenhams Garden, Madras-7. Rs. 5,000 was paid as advance, the period for the completion of the sale agreement was three months, however extended from time to time. The first plaintiff hired the machineries from the premises to the second defendant. Hence, the first defendant filed H.R.C. No. 1847 of 1974 for eviction from the premises on the ground of subletting. The proceeding ended in a compromise. The eviction petition was withdrawn and it was agreed that the first plaintiff has to complete the sale transaction on or before 31.5.1977. Thereafter the first defendant negotiated with the 1st plaintiff with reference to the details of the transaction. Meanwhile, the Land Ceiling Act came into force, therefore became impossible to register the sale deed without obtaining clearance from the competent authority under the Urban Land Ceiling Act. There was also additional difficulty of obtaining income tax clearance certificate. The first defendant was fighting shy of complying with the formalities for obtaining the income tax clearance certificate. The plaintiff, therefore sent a draft sale deed along with the letter dated 26.10.1977. He called upon the first defendant to obtain the certify date from the Income Tax Authorities and the Land Ceiling Department. Thereafter the first defendant started raising untenable objections contending that the period for performing the contract expired.
3. The defendants 1 and 2 colluded together and the first defendant sold the property for Rs. 35,000 to the second defendant. The first plaintiff was always ready and willing to perform his part of the contract. Since the property was sought to be purchased in the name of the second plaintiff as the nominee of the first plaintiff, he has been impleaded in the suit.
4. The first defendant filed a written statement mainly contending that as he had no male issues, he wanted to sell the property and set apart the sale proceeds in favour of his daughters. As per the agreement dated 31.3.1973, the first plaintiff should complete the transaction within a period of three months. There was a default clause also. After paying only Rs. 5,000 as advance and taking the agreement, the first plaintiff did not complete the sale transaction and committed default. The correspondence passed between the respective counsel on 9.3.1974, 19.3.1974 and 28.3.1974 will be read as part and parcel of the written statement. During the pendency of the rent control proceedings, the plaintiff requested the first defendant to excuse him and requested for some more indulgence. The first plaintiff did not have any funds to purchase the suit property and complete the sale transaction. The compromise was arrived at on 21.11.1975. Under the compromise among other terms there was an agreement to complete the transaction on or before 31.5.1977. It was specifically understood in the compromise that the sum of Rs. 5,000 already advanced to be forfeited if in spite of the extension of time, the plaintiff committed default to complete the transaction within the time. But the first plaintiff was not in a position to complete the transaction as he was not possessed of requisite funds. The first defendant wrote to the first plaintiff on 29.1.1977, two months before the expiry of the agreement period. There was no positive response. The defendant wrote letters to the Advocate also on 26.2.1977 and 5.4.1977. The first plaintiff's son pretended that his father was away from the station. On 9.5.1977, this defendant wrote another letter to his counsel. There was no response. The first plaintiff failed to fulfil his part of the agreement dated 31.3.1977. On 19.7.1988 also i.e., after the expiry of the period, namely, the expiry of the date 31.5.1977, to complete the transaction, he called upon the first plaintiff to complete the transaction within three days. It was also mentioned in the said letter dated 19.7.1977 that if there was no completion within three days, the transaction would be cancelled. As the first plaintiff failed even thereafter to complete the transaction, he sent only a letter dated 22.7.1977 giving false excuse. There was further correspondence from 5.8.1977 to 4.9.1977. Finally, on 11.9.1977, the defendant sent a lawyer's reply to the first plaintiff bringing notice that the transaction was already closed.
5. The first defendant was old and sick, he was anxious to sell the property and distribute the sale proceeds to his daughter. There were good offers from outside. When the first defendant advertised in "The Hindu" daily on 18.1.1978 and after getting about five to six offers, ultimately he sold to the second defendant, who was the partner of Ganesh Timber Traders, and who was actually carrying on business in the suit premises, for Rs. 35,000 only. Even after the advertisement for sale, the first plaintiff never moved his little finger and showed any intention to complete the transaction. Only on 27.2.1978, the sale transaction in favour of the second defendant was completed. The first plaintiff was also intimated about the sale by a letter dated 2.3.1978. Only thereafter, he started the proceedings. The plaintiff is not entitled for specific performance. He has never been ready and willing to complete the transaction. It is also stated in the written statement that the defendant was ready to obtain necessary certificates. The Urban Land Ceiling Certificate was obtained and similarly Income Tax Clearance Certificate was also, obtained within two weeks. Therefore, the allegation with reference to the ceiling law and income tax certificate were only for the purpose of delaying the completion of the transaction.
6. The second defendant also filed a written statement. Though, he has adopted the written statement of the first defendant, however, he has added that he was a partner of M/s. Ganesh Timber Traders Limited and he was in actual possession and enjoyment of the suit property as a sub-lessee under the first defendant from the year 1973. Though, he was not interested in purchasing the suit property, when the first plaintiff gave up his claims over the superstructure and he did not purchase the property, even though maximum indulgence was granted in his favour, on account of his strained finance position, the second defendant wanted to secure his possession, so he offered to purchase the suit property. However, before that he enquired the first plaintiff also about his intention, but he was evasive. However, he openly expressed that he was not keen in purchasing the property. Hence, he entered into an agreement with the first defendant on 30.1.1978 to purchase the suit property within three months. The first plaintiff was fully aware of this and he did not rise any objection. After all necessary orders were obtained from the Urban Land Ceiling Authorities and Income Tax Department, the sale document was executed on 27.2.1978. After the registration of the document on 27.2.1978, by a letter dated 2.3.1978 the first plaintiff was informed about it. Only after the said intimation, the suit has been filed with a view to intimidate and get some monies from the second defendant. He also claimed to be the bona fide purchase for value.
7. A reply statement was also filed by the plaintiff, in the reply, the first plaintiff denied that the second defendant was in possession. M/s. Ganesh Timber Traders was different. The rent was paid by the M/s. Ganesh Timber Traders. The allegation that the financial position of the plaintiff was strained was denied. It was admitted that the second defendant enquired the first plaintiff about his ready and willingness to purchase the property. The first plaintiff also informed that nobody else had right to purchase the property. The plaintiff denied about an agreement of sale in favour of the second defendant.
8. The trial court framed three issues. The main issues were as to whether the plaintiffs are entitled for specific performance and whether he abandoned the agreement. On a consideration of all the facts and circumstances of the case, the trial court dismissed the suit with costs. Aggrieved by the same, the plaintiffs have preferred the appeal.
9. In this appeal, we are mainly concerned with the aforesaid two points, namely, as to whether the plaintiffs are entitled for specific performance and whether the first plaintiff has abandoned the agreement.
10. The learned Counsel for the appellants Thiru P.S.Raman contended that the plaintiffs were entitled for specific performance and there was no question of abandoning the agreement. On the other hand, the delay was only on account of the first defendant's failure to obtain the certificates from the Urban Land Ceiling Authorities and the Income Tax Department. When the first plaintiff made the request to the first defendant to arrange for getting the permission from the Urban Land Ceiling Authorities and the Income Tax Department, he did not take steps to do so. On the other hand, he neglected it. Therefore, the default was only on the part of the first defendant. The learned Counsel for the appellants further, contended that in this particular case, the time was not the essence of the contract and therefore, the delay should not be put against the plaintiffs and the specific performance cannot be refused on that ground.
11. The learned Counsel for the respondents, Thiru. R. Desabandu, on the other hand contended that from the beginning the first plaintiff was not interested in the purchase of the property, as he was not having sufficient funds. Even after he was given indulgence by extending the time, he could not complete the transaction and finally after giving all chances to him he failed to avail them. The sale was put through in favour of the second defendant. Hence, the trial court was justified in dismissing the suit. The correspondence exchanged between the first plaintiff and the first defendant gives a clear picture as to who was at default.
12. Ex.B-1 is the agreement dated 31.3.1973. The consideration fixed is Rs. 36,000. The advance paid is Rs. 5,000. The time given for performance is three months from 31.3.1973. The most important clause contained in the said agreement is Clause No. 3. It specifically states that time is the essence of the contract.
13. On 18.6.1973 the first defendant has written to the first plaintiff and has stated in the said letter Ex.B-2 as follows:
....You have not made arrangement for inspection of the title deeds of the property. In spite of his intimating you orally and by writing a letter, you are aware that the time for performance of the contract is 3 months from 31st March, 1973. There is hardly 10 days left for finishing the transaction. You are fully aware that time has been made essence of the contract and you are also aware of the penal clause set out in the agreement.
In spite of this letter, there is no response. On 23.7.1973 the first defendant sent another letter Ex.B-3. In the said letter it is stated that the first plaintiff met him and pleaded his inability to complete the transaction in view of the financial difficulties. As the period as already expired on 30.6.1973 on more opportunity was given to him to pay Rs. 5,000 and get extens'ion. Though the first plaintiff agreed for the same, there is no response for the last two weeks. In the said letter itself, it is stated that if there was no response, it would be inferred that the first plaintiff was not willing to finalise the transaction. In Ex.B-5 also, one week time was given and it was mentioned that the first plaintiff was not interested to complete the transaction as he was not having sufficient funds. Even after the documents were given for inspection by the advocate of the first plaintiff, there was no positive response from the first plaintiff. Hence, under Ex.B-8, dated 17.1.1974 it was informed that if the first plaintiff did not have requisite funds, he should drop the transaction. It is worth-while to mention that Ex.B-9 is a letter from the advocate for the defendant.
14. As the transaction was not completed by the first plaintiff, the first defendant filed H.R.C. No. 1847 of 1974 for evicting the first plaintiff and the sub-tenant from the suit building. That apart, in the Rent Control proceedings, he set up a claim for superstructure. However, it was given up and a compromise was arrived as per Ex.B-12, dated 21.11.1975. In the compromise, time was granted till 31.5.1977. In Ex.B-12 there is also a penalty clause that if the transaction was not completed within the extended time i.e., till 31.5.1977, the advance amount would be forfeited on the expiry of that period. In Ex.B-13 there was a warning to be ready for implementation of the agreement before the due date. For this warning, the son of the first plaintiff has sent Ex.B-14. The said reply is very important, I indicates the position of the first plaintiff. In the said reply Ex.B-14, it is stated that the father was out of station and he would contract the first defendant after his return. Again, another warning is sent under Ex.B-15, dated 26.2.1977. For this also, the son alone sent a reply under Ex.B-16. In Ex.B-17 it is stated that even after the return of the first plaintiff to Madras city long also, there was no response from him to the first defendant with reference to the completion of the sale. Again a warning was issued stating that if the transaction was not completed within a week, it would be taken that the first plaintiff was not really to take the sale deed. Even for this letter, there is only a reply from the son under Ex.B-18. Even though the first plaintiff himself was in Madras admittedly on that date, he has not chosen to send the reply. That indicates that the first plaintiff was not in a position to face the first defendant as he was not in a position to complete the transaction. In spite of all these warnings, the first plaintiff has not chosen to complete the transaction before 31.5.1977.
15. On 19.7.1977, the first defendant sent a lawyer's notice under Ex.B-19, informing the first plaintiff that the transaction was cancelled, as he failed to complete the transaction before 31.5.1977. From the aforesaid correspondences, it is very clear that the first plaintiff was not in a position to perform his part of the agreement even within the extended time of 31.5.1977. The documents mentioned above alone are sufficient to arrive at a definite conclusion that the first plaintiff failed to perform his part of the agreement and hence, he is not entitled to specific performance therefore.
16. After having failed to perform his part of the agreement and after learning about the cancellation of the transaction, the first plaintiff has chosen to write a letter dated 22.7.1977 under Ex.B-20. Curiously in the said letter written to the first defendant lawyer, it is stated that the first defendant had to draw the papers and get the approval of his lawyer and that was a reason given for the delay. This Ex.B-20 adds to the confusion that the first plaintiff was not at all ready and willing to perform the contract and he was seeking to take shelter under some invented but untenable pretext. However, even after the failure on the part of the first plaintiff, the first defendant has chosen to give another chance under Ex.B-21. But there was no proper response for the said letter. Once again on 18.8.1977 under Ex.B-22, the first plaintiff was informed that the transaction was closed as he committed default. It was also informed that on account of the default and the closure of the transaction, the first defendant would be free to deal with the property.
17. After the intimation by the first defendant twice that the transaction was closed as the first plaintiff informed him that he was ready to take the sale deed, another chance is also given under Ex.B-26, dated 25.8.1977 to complete the transaction by paying Rs. 31,000 before 31.8.1977. In the said letter, it was also mentioned that another chance would be given for reopening the already closed issue, if there was a favourable response for the suggestion of the first defendant before 31.8.1977. But cleverly on 4.9.1977, the first plaintiff sent the letter Ex.B-27, informing him about the clearance etc. Thereafter, the matter was closed once for all. This intimation was given to him under Ex.B-28, dated 11.9.1977. After the matter was closed with some ulterior object the first plaintiff has sent the draft sale deed on 26.10.1977. The counsel for the first defendant has clearly informed him under Ex.B-32, that he should not contact him any more, as the matter was already closed. Thus, it is seen that after giving sufficient opportunity to the first plaintiff to complete the transaction within the specific time, the transaction was closed as the first plaintiff could not avail of the chances.
18. The learned Counsel for the appellants contends that no doubt there was delay, but the delay was on account of the fact that the first defendant did not make any arrangement to get the Income Tax Clearance Certificate as the value of the property exceeded Rs. 15,000 and the production of the certificate was made compulsory before the registering authority. For this, answer is given in the letter dated 11.9.1977 under Ex.B-28. Under Ex.B-28 the counsel for the first defendant informed the first plaintiff itself that the question of getting a clearance certificate from the Income Tax Department did not arise, as the value of the property being less than Rs. 50,000. Even otherwise he was ready to produce the same in case he was asked to produce. We have already seen that the transaction was cancelled. A final intimation was also given under Ex.B-19, dated 19.7.1977, informing the first plaintiff that if the transaction was not completed on or before 31.5.1977, the first defendant did not propose to extend it. In Ex.B-27, the first plaintiff himself has admitted that his advocate has delayed the matter. In Ex.B-18, the sudden demise of the brother-in-law is mentioned. In Ex.B-14, it is stated that the first plaintiff suddenly left Madras for fmalisation of the marriage of his daughter. In Ex.B-16, the son again states that his father, the first plaintiff has gone to his native place, and returned only in the second week of March. In the aforesaid letters, there is no mention that the delay is being caused on account of the first defendant failing to get the Income Tax Clearance Certificate. Therefore, the contention of the learned Counsel for the appellants cannot be taken as having any substance.
19. After the failure on the part of the first plaintiff to complete the transaction, the first defendant took steps to sell the property to another person. The sale to the second defendant was not a secret one. From the evidence, it can be inferred that the sale transaction was known to the first plaintiff himself. Ex.B-35 is the advertisement given in "The Hindu" English daily dated 18.1.1978 calling for the offers. After the publication number of persons write to the first defendant to give particulars about the property, as is evidenced from Ex.B-36 series. After the sale was completed, immediately, the first plaintiff was informed about it under Ex.B-33 dated 2.3.1978 informing him that the suit property was sold on 27.2.1978.
20. From the documentary evidence itself, we have to reach the conclusion that the first plaintiff was not ready and willing to perform the contract of sale as he was not possessed of sufficient funds.
21. As regards the oral evidence also, P.W.1 has admitted that the Nehru Timber Mart owned by him was given as security to Indian Overseas Bank for a loan of Rs. 60,000. The said firm itself was run on loss. Further his case that he had left Rs. 20,000 with P.W.2 and the same would have been returned to him whenever demanded is also not believable. It is admitted that this Rs. 20,000 was advanced to Jemini Metal Mart at 12% interest. P.W.2, to whom, the amount was advanced, has stated that he is a distant relation connected through his wife. Further P.W.2 has not stated that he received the sum of Rs. 20,000 from the first plaintiff, on the other hand, what he says is that he has received Ex.A-20. It shows that the amount was borrowed by him from P.W.1.
22. When we come to the evidence of D.W.1, the first defendant has cogently spoken about the transaction by producing the documents. He has also asserted in the cross-examination that the plaintiff was not financially solvent. He has also stated that the people in the business told him about it. He has further stated that he was a heart patient as he apprehended that he may collapse at any time, he wanted to sell the property. He has stated that the Advocate Hairdos, inspected the documents, even then the transaction was not completed. In his evidence, he has further stated that before 31.5.1977, he has not applied for Income Tax Clearance Certificate. There was no talk about it also. The evidence of D.W.1 is corroborated by the documents.
23. The learned Counsel for the appellants contended that from the fact that the time was extended from time to time the time cannot be treated to be the essence of the contract, and relied upon the Apex Court Judgment reported in Bibi Jaibunisha v. Jagdish Pandit and Ors. (1997)2 Supreme 639. In the said case, the Apex Court has held that it was well settled legal position that in the matter of enforcement of the agreement or agreement of reconveyance, time is not always the essence of the contract unless the agreement specifically stipulates and there are special facts and circumstances in support thereof. It must be specifically pleaded and issue raised so that the. other party has a right to lead evidence. But in my view, we need not go into that question at all in this case, because, even though three months time was granted in the agreement for completing the transaction, there was subsequent extention in the compromise order passed in the Rent Control proceedings. Under Ex.B-12 Compromise the time was extended upto to 31.5.1977. But the first plaintiff failed to complete the transaction. The first defendant has given sufficient time to complete the transaction, even after the expiry of 31.5.1977. Only after sending sufficient reminders and warning, the matter was closed by the first defendant as per Ex.B-22 letter dated 18.8.1977. In that it is clearly mentioned that the first plaintiff has committed default. The transaction was closed not unilaterally or abruptly but after giving chances from time to time and issuing warnings also as mentioned earlier. Even though the time is not the essence of the agreement or the contract that does not mean that the vendor has to go on extending the time externally and must always be ready to receive the money and execute the sale deed after the lapse of any amount of time. What we have to see in this case is that whether the first plaintiff was ready to take the sale deed within a reasonable time after the agreement was entered into At the first instance the time was extended by two months, then it was extended upto 31.5.1977. Even thereafter, after giving sufficient time, the first plaintiff has not been showing any genuine interest to complete the transaction. On the other hand, the letters written by his son and the excuse contained therein clearly indicate that the first plaintiff was not in a position to take the sale deed by paying the amount. His case that he was keeping Rs. 20,000 with P.W.2 to be returned immediately as and when required is unbelievable. The evidence of P.Ws.1 and 2 appear to be very artificial on this aspect. As we have seen above, P.W.2 has not asserted that he received the money from P.W.1. He is related to P.W.1 through his wife. Therefore, even though the time may not be construed to be the essence of the agreement, the plaintiff was not ready to take the sale deed within the reasonable time from the date of the original agreement, in spite of the long extension given to the original agreement. Therefore, we have no other go except to find that the plaintiff was not ready and willing to take the sale deed.
24. The learned Counsel for the respondents cited the following decisions:
1. Chand Rani v. Kamal Rani and 2. Vidyanadam, K.S. v. Vairavan .
In the first cited decision the Apex Court in paragraph 21, the Learned Judges have approved the statement in paragraph 1179, in the 4th edition of Halsbury's Laws of England, which runs as follows:
Where time has not been made of the essence of the contract or, by reason of waiver, the time fixed has ceased to be applicable, the employer may by notice fix a reasonable time for the completion of the work and dismiss the contractor on a failure to complete by the date so fixed." The aforesaid statement clearly applies to the facts of the present case.
25. In the second cited decision, the Apex Court has stated as follows:
Even where time is not of the essence of the contract, the plaintiffs must perform his part of the contract within a reasonable time and reasonable time should be determined by looking at all the surrounding circumstances including the express terms of the contract and the nature of the property.
26. From the aforesaid discussion. We have to necessarily answer the point that the first plaintiff was not entitled for specific performance and he has abandoned the agreement itself by his conduct. In the circumstances, I have no hesitation to hold that the appellants are not entitled to any relief in the appeal and it has to be dismissed. Accordingly, it dismissed with costs of the respondents.