Madras High Court
K.Paramasivam vs G.Lakshminarayanan on 15 March, 2012
Equivalent citations: AIR 2012 (NOC) 261 (MAD.)
Author: G.Rajasuria
Bench: G.Rajasuria
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 15.03.2012 C O R A M THE HONOURABLE MR.JUSTICE G.RAJASURIA A.S.No.506 of 2011 K.Paramasivam .. Appellant vs. G.Lakshminarayanan .. Respondent Appeal filed as against the judgment and decree dated 03.08.2011 passed by the learned District Judge, Karaikal in O.S.No.17 of 2009. For Appellant : Mr.S.V.Jayaraman Senior counsel for Mr.V.Sanjeevi For respondent : Mr.Thirugnanam JUDGMENT
This appeal is focussed by the plaintiff as against the judgment and decree dated 03.08.2011 passed by the learned District Judge, Karaikal in O.S.No.17 of 2009, which was filed seeking specific performance of an agreement to sell.
2. The parties, for convenience sake, are referred to here under according to their litigative status and ranking before the trial Court.
3. A r'esume of facts, absolutely necessary and germane for the disposal of this appeal would run thus:
a] The plaintiff filed the suit for specific performance based on Ex.A1 the agreement to sell, emerged between the plaintiff and the defendant, whereby, the latter agreed to sell the property described in the schedule of the plaint, in favour of the former for a total sale consideration of Rs.2,97,255/- and an advance amount of Rs.1,50,000/- was paid by the plaintiff to the defendant. Subsequently, there were as many as 12 endorsements made by the defendant extending the period with effect from 16.06.1994 onwards and the last such endorsement was made on 06.04.2006 extending three more months' period for performance. Even thereafter, the defendant had not come forward to execute the sale deed; whereupon, after issuance of notice by the plaintiff to the defendant, the suit was filed with the following prayer:
- to pass a judgment and decree directing the defendant to receive the balance of sale consideration of Rs.1,47,255/- and execute the sale deed over the suit property in favour of the plaintiff free from all encumbrance and deliver possession of the property to the plaintiff as per the terms of the sale agreement dated 16.03.1994 failing which the plaintiff prays that this court may execute the sale deed in favour of the plaintiff in respect of the schedule of property directly and for costs.
(extracted as such) b] Challenging and impugning the averments/allegations in the plaint, the defendant filed the written statement, the gist and kernel of it would run thus:
(i) The defendant at no point of time entered into such agreement to sell and he did not make any such endorsements as alleged in the plaint.
(ii) The defendant is not the owner of the suit property and there was no occasion for him to sell the property.
Accordingly, he prayed for the dismissal of the suit.
c] The trial court framed the issues and additional issue.
d] During trial, the plaintiff examined himself as P.W.1 and marked Exs.A1 to A13. The defendant examined himself as DW1 along with D.W.2 and no document was marked.
e] Ultimately, the trial court dismissed the suit giving a finding that the suit was barred by limitation.
4. Being aggrieved by and dissatisfied with the judgment and decree of the trial court, the plaintiff has preferred this appeal on various grounds.
5. The learned senior counsel for the appellant/plaintiff placing reliance on the grounds of appeal, would put forth and set forth his arguments, which could pithily and precisely be set out thus:
(i) The trial court fell into error in construing as though the endorsement made by the defendant on 06.04.2006 was long after the endorsement dated 08.12.1997 ; so to say, there was a gap of nearly 8 = years and that such last endorsement was not made within the period of limitation. Accordingly, the trial court wrongly interpreting the endorsements dismissed the suit.
(ii) The endorsement on 6.4.2006 could rightly be taken as a fresh agreement emerged between the plaintiff and the defendant and from that date onwards, if the period of three years and three months is calculated, it is obvious that the suit was filed well within the period of limitation as per Article 54 of the Indian Limitation Act.
(iii) The trial court did not decide anything about the readiness and willingness on the part of the plaintiff to perform his part of the contract.
(iv) The conduct of the defendant in dishing out the false plea that the agreement itself was not executed by him, was not taken into consideration by the trial court.
(v) It is not the law to the effect that only the plaintiff in specific performance suit should be honest and truthful in his pleas as well as in his conduct, but the same rule is also equally applicable with equal force as against the defendant also.
(vi) Here the conduct of the defendant even as per the findings of the trial court was bad because he did choose to brazenly deny such an agreement as though it was a bogus one. The trial court was not justified in simply and cryptically dismissing the suit.
Accordingly the learned senior counsel for the plaintiff prayed for allowing the appeal and for decreeing the original suit.
6. In a bid to make mincemeat and torpedo the arguments as put forth and set forth on the side of the appellant/defendant, the learned counsel for the respondent/plaintiff would advance his arguments, the pith and marrow of them would run thus:
(a) The trial court correctly considered the fact that there was a long gap of nearly 8 = years between the two endorsements, so to say, the one on 8.12.1997 and the latest on 16.04.2006. In such a case, Section 18 of the Indian Limitation Act cannot be pressed into service.
(b) The contention on the side of the plaintiff that the last endorsement dated 6.4.2006 could be construed as the fresh agreement between the plaintiff and the defendant, is not having the back up of the law and the pleadings. Neither in the pre-suit notice nor in the body of the plaint plaint or in the cause of action para, the plaintiff averred that the present suit was based on such fresh agreement allegedly emerged on 6.4.2006 between the plaintiff and the defendant.
(c) No doubt, the trial court decided the additional issue No.1 relating to limitation point as against the plaintiff and ultimately dismissed the suit without deciding on merits the other issues ; but that would not in the peculiar circumstances of this case make any difference. This court as an appellate court is called upon to decide as to whether the limitation point decided by the lower court is correct or not; in the event of this court holding that the trial court correctly decided the limitation point, then the appeal has to be dismissed.
As such, he would pray for the dismissal of the appeal itself confirming the judgment and decree of the trial court.
7. The points for consideration are as under:
1. Whether the trial court was justified in holding that the suit was barred by limitation because the last endorsement dated 6.4.2006 emerged almost 8 = years after the previous endorsement made on 8.12.97 in Ex.A1 the agreement to sell?
2. Whether the trial court was expected to treat the last endorsement dated 6.4.2006 as a fresh agreement emerged between the plaintiff and the defendant?
3. Whether the trial court was justified in not deciding on merits the other issues in view of having decided the limitation point as against the plaintiff and if so, whether this court as the first appellate court can decide the other issues also and dispose of the same on merits?
4. Whether there is any perversity or illegality in the judgment and decree of the trial court?
8. All these points are taken together for discussion as they are inter-linked and inter-woven, inter-connected and entwined with one another.
Point Nos.1 and 2:
9. At the outset itself, I would like to highlight and spotlight the fact that on the plaintiff's side, it is sought to be urged as though the last endorsement dated 6.4.2006 made by the defendant can be construed as a fresh agreement between the plaintiff and the defendant.
10. I recollect and call up the maxim- judicis est judicare secundum allegata et probata - It is the proper role of a judge to decide according to the allegations and proofs. Any amount of evidence without the back up of the pleadings should be eschewed.
11. I would like to extract here under the cause of action para in the plaint :
"Cause of action for the suit arose on 16.03.1994, the date on which the defendant executed the sale agreement in favour of the plaintiff and received advance of Rs.1,50,000/- from the plaintiff on 16.06.1994, 13.09.1994, 18.12.1994, 08.06.1995, 07.09.1995, 08.12.1995, 09.03.1996, 08.06.1996, 08.03.1997, 08.12.1997 and on 06.04.2006 the various dates on which the defendant agreed to execute the sale deed and made endorsements in the sale agreement extending the period to execute the sale deed and on all subsequent dates at Keezhayur Vadakku Village and within the jurisdiction of this Honourable Court."
(emphasis supplied) and also the relevant portion of Ex.A2 the pre-suit notice, "3. My client was ready and willing to perform his part of the sale agreement. But you were postponing the execution of the sale deed due to some personal inconvenience. You made endorsements in the sale agreement on several occasions and the the last such endorsement was made on 06.04.2006. On that day you agreed to execute the sale deed within 3 months from 06.04.2006. Even thereafter, on 03.09.2007 my client along with his property Manager Thiru.Vishwanath Nayak met you with a local mediator Thiru.Rangasamy Mudaliar and requested you to execute the sale deed in favour of my client. In fact my client tendered the balance price to you at that time. You promised to execute the sale deed within 15 days. But you have not kept up your promise. You have been postponing the execution of sale deed under some pretext or other. My client is owning lands on the east and south of your lands. Being a neighbouring landowner my client did not want to spoil the good neighbourly relationship and therefore and did not send any notice earlier and refrained from taking any legal steps. But you have taken undue advantage of my client's patience and magnanimity. Now my client reliably understands that you are taking hectic efforts to sell the property to 3rd parties. My client is not ready to wait any longer and is issuing this notice to you. My client is having sufficient means to pay the balance of price and take out the sale deed at his cost as per the terms of the sale agreement dated 16.03.1994."
(emphasis supplied) A bare running of eye over those excerpts would indicate and exemplify, demonstrate and display that it is not found specified therein, that the last endorsement should be construed as a fresh agreement.
12. In my considered opinion, such a plea has been put forth before this court only for the first time. Even for argument's sake, it is taken that for the first time from the available materials legal pleas can be taken before the appellate court, then again, it is axiomatic that there are no adequate materials in view of the reasons to be discussed infra.
13. The learned senior counsel for the plaintiff inviting the attention of this court to Section 25 of the Indian Contract Act, 1872 which is extracted here under for ready reference :
25. Agreement without consideration, void, unless it is in writing and registered, or is a promise to compensate for something done, or is a promise to pay a debt barred by limitation law An agreement made without consideration is void, unless -
(1) It is expressed in writing and registered under the law for the time being in force for the registration of documents, and is made on account of natural love and affection between parties standing in a near relation to each other; or unless (2) it is a promise to compensate, wholly or in part, a person who has already voluntary done something for the promisor, or something which the promisor was legally compellable to do; or unless (3) it is a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits.
In any of these cases, such an agreement is a contract, would develop his argument that in view of Section 4 of the Transfer of Property Act, which is also extracted here under for ready reference:
"4. Enactments relating to contracts to be taken as part of Contract Act and supplemental to the Registration Act The Chapters and sections of this Act which relate to contracts shall be taken as part of the Indian Contract Act, 1872 (9 of 1872).
the last endorsement could be construed as a fresh agreement. Precisely, it is the contention of the learned senior counsel for the plaintiff that the last endorsement signed by the defendant is the one, which attracts Section 25 of the Contract Act even though on the date of endorsement no amount was paid by plaintiff to defendant afresh or additionally.
14. I am of the considered view that in the facts and circumstances of this case, Section 25 of the Indian Contract Act r/w Section 4 of the Transfer of Property Act is not attracted. There is no quarrel over the law, which got embodied in Section 25 of the Indian Contract Act, which would highlight that an agreement made without consideration even though might be void, it cannot be construed so in all circumstances and those exceptional circumstances are found listed in the said Section 25 itself. Section 4 of the Transfer of Property would envisage that the provisions of the Transfer of Property Act relating to contracts should be treated as part and parcel of the Contract Act, 1872 over which also there could be no quarrel.
15. The key to the learned senior counsel's argument is purely that the last endorsement dated 6.4.2006 need not be rejected on the sole ground that on that day, no amount was paid by the plaintiff to the defendant. Even past consideration is valid consideration over which, there could be no second thought. The contention put forth by the learned senior counsel for the plaintiff that even though the last endorsement was made by the defendant without receiving any consideration from the plaintiff, yet the past consideration in the agreement, even though it is a time barred one, could be taken as sufficient consideration, provided the said last endorsement in stricto sensu could be termed as a fresh agreement. However absolutely there is no evidence or basis much less any clinching reason for holding that the last endorsement dated 6.4.2006 is a fresh agreement.
16. I would also like to point out incidentally that non signing by the plaintiff along with the defendant would not in any way stand in the way of construing the said endorsement as a fresh agreement provided, it was intended to be so. The animus is of utmost importance in a contract. There should be consensus ad idem.
17. In this connection, I would like to refer to the Indian Contract Act, 1872, which defines precisely under Clause (h) of Section 2 of the Act that " an agreement enforceable by law is a contract" and it is obvious and axiomatic that it should be supported by consideration, which might even be a past consideration. The consensus ad idem is the bed-rock of a valid contract.
18. Here, according to the learned senior counsel for the plaintiff the consensus ad idem between the plaintiff and the defendant on 06.04.2006 was to the effect that there should be a fresh agreement to sell.
19. Whereas the learned counsel for the defendant would put forth his argument to the effect that absolutely there is nothing in that endorsement; to demonstrate and proclaim that there was consensus ad idem between the plaintiff and the defendant so as to construe it as a fresh contract of agreement to sell.
20. It is therefore, just and necessary to extract herein under the said endorsement itself which is in similar terms with the earlier endorsements:
"06/04/2006 ? nkw;fz;l epge;jid go kPz;Lk; 3 khj bfLtpy; hp$p!;lh; Koj;J bfhLf;fpd;nwd;/@ The sentence extracted supra, which constituted the last endorsement virtually relied upon all the terms and conditions as found in Ex.A1 the agreement to sell and a fortiori, it is in the form of extending the period of the life of the said Ex.A1, the agreement to sell and does not have the characteristics of a fresh agreement.
21. Hence, in these circumstances, it is just and necessary to refer to the earlier endorsements also starting from 16.06.1994 till 08.12.1997.
VERNACULAR (TAMIL) PORTION DELETED The gist and kernel of those endorsements are in pari materia with the last endorsement dated 6.4.2006. Those endorsements do not connote or denote, convey or portray the idea that each such endorsement should be treated as a fresh agreement. Virtually, if the last endorsement made on 6.4.2006 should be construed as a fresh agreement, then the same logic has to be applied to all other previous endorsements, which in my opinion, may not be correct. Furthermore, in the last endorsement, it has to be seen whether there was animus on the part of the defendant that he intended it as a fresh agreement.
22. Not to put too fine a point on it, the said endorsement cannot be made elastic so as to usher in the concept fresh contract. Accordingly, if viewed, the last endorsement would fall foul of Section 18 of the Indian Limitation Act, which is extracted here under:
"18. Effect of acknowledgement in writing (1) Where,before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgement of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgement was so signed.
(2) Where the writing containing the acknowledgement is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872, oral evidence of its contents shall not be received.
(emphasis supplied) The obvious question that springs in my mind is as to how, if once a contract is allowed to get lapsed then the mere subsequent endorsement will in any way save the limitation period.
23. Wherefore, I am of the considered opinion that the trial court was right in construing that the suit was barred by limitation.
24. A plain reading of the judgment of the trial court relating to other issues would reveal that without deciding on merits those issues, the trial court dismissed the suit abruptly based on limitation point. Throwing to winds, Order 14 Rule 2 of the Code of Civil Procedure, which mandates and empowers the trial court to decide the other issues also on merits, de hors the finding given by it on the additional issue No.1 concerning limitation. The trial court proceeded on the footing as though once the suit is held to be one barred by limitation, it was not duty bound to decide the other issues. To say the least, the course adopted by the trial court was far from satisfactory. As a sequela, the core question arises as to whether the matter has to be remanded back to the trial court for deciding the other issues also.
25. To put it on an even keel, and in in view of the evidence available on record, and that both the parties participated in the trial to the fullest extent and adduced evidence, this court being the last court of facts, could decide the other issues, including the issue relating to readiness and willingness on the part of the plaintiff to perform his part of the contract.
26. The learned senior counsel for the plaintiff would submit that there was no specific denial at all in the written statement as against the averments in the plaint that the plaintiff entreated and implored, the defendant to come forward to execute the sale deed after receiving the remaining part of the sale consideration tendered to him in the presence of one Rangasamy Mudaliar; inasmuch as there was no specific denial as contemplated under Order 8 Rule 5 of CPC, the plaintiff was relieved of his duty to examine the said Rangasamy Mudaliar or to adduce evidence aliunde over and above the plaintiff having examined himself as PW1. Whereas the learned counsel for the defendant would argue that the plaintiff's duty is to prove his readiness and willingness to perform his part of the contract and absolutely there is no justification on the part of the plaintiff to wait for almost 12 long years as per his own version to file the suit.
27. I hark back to the following decisions of the Hon'ble Apex Court:
(i) 2010(10) SCC 512 [Man Kaur (Dead) By L.Rs. v. Hartar Singh Sangha]; certain excerpts from it would run thus:
"40. This contention has no merit. There are two distinct issues. The first issue is the breach by the defendant vendor which gives a cause of action to the plaintiff to file a suit for specific performance. The second issue relates to the personal bar to enforcement of a specific performance by persons enumerated in Section 16 of the Act. A person who fails to aver and prove that he has 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 the terms the performance of which has been prevented or waived by the defendant) is barred from claiming specific performance. Therefore, even assuming that the defendant had committed breach, if the plaintiff fails to aver in the plaint or prove that he was always ready and willing to perform the essential terms of contract which are required to be performed by him (other than the terms the performance of which has been prevented or waived by the plaintiff), there is a bar to specific performance in his favour. Therefore, the assumption of the respondent that readiness and willingness on the part of the plaintiff is something which need not be proved, if the plaintiff is able to establish that the defendant refused to execute the sale deed and thereby committed breach, is not correct. Let us give an example. Take a case where there is a contract for sale for a consideration of Rs.10 lakhs and earnest money of Rs.1 lakh was paid and the vendor wrongly refuses to execute the sale deed unless the purchaser is ready to pay Rs.15 lakhs. In such a case there is a clear breach by the defendant. But in that case, if the plaintiff did not have the balance Rs.9 lakhs (and the money required for stamp duty and registration) or the capacity to arrange and pay such money, when the contract has to be performed, the plaintiff will not be entitled to specific performance, even if he proves breach by the defendant, as he was not "ready and willing" to perform his obligations."
(ii) (2011) 1 SUPREME COURT CASES 429 J.P.BUILDERS AND ANOTHER V. A.RAMADAS RAO AND ANOTHER would run thus:
"27. It is settled law that even in the absence of specific plea by the opposite party, it is the mandate of the statute that the plaintiff has to comply with Section 16(c) of the Specific Relief Act and when there is non-compliance with this statutory mandate, the Court is not bound to grant specific performance and is left with no other alternative but to dismiss the suit. It is also clear that readiness to perform must be established throughout the relevant points of time. "Readiness and willingness" to perform the part of the contract has to be determined/ascertained from the conduct of the parties."
A mere running an eye over those precedents would unambiguously and unequivocally highlight and convey that notwithstanding the plea of the defendant and for that matter even in an exparte matter, the plaintiff should prove the fact that he has been ready and willing to perform his part of the contract throughout.
28. The ratiocination being so, I am of the considered view that simply because the written statement was some what brief and not elaborate, it cannot be taken that the plaintiff was absolved of his responsibility to prove that he had been ready and willing to perform his part of the contract within the meaning of Section 16 of the Specific Relief Act. No doubt, in the plaint the plaintiff in various terms expressed and expatiated that he had been ready and willing to perform his part of the contract but there is nothing to establish and convey as to why time and again, ever since the emergence of the contract on 16.03.1994, he should get endorsement after endorsement of the defendant and wait till the year 2008 for filing the suit.
29. At this juncture, I would like cite the following decisions of the Hon'ble Apex Court and certain excerpts from those decisions would run thus:
(i) (1997) 3 SCC 1 [ K.S.Vidyanadam and others vs. Vairavan]
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 specific 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 no 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 v. Kamal Rani1: (SCC p. 528, para 25) ... 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 look at 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. 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 particularly after 1973*. 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 this 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 agreement. 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 get the tenant vacated and get the sale deed executed until he issued the suit notice on 11-7-1981. It is not the plaintiff's case that within six months', he purchased the stamp papers and offered to pay the balance consideration. The defendants' 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 that 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 circumstance 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 tenant vacated and execute 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 Sivasubramaniam cited the decision of the Madras High Court in S.V. Sankaralinga Nadar v. P.T.S. Ratnaswami Nadar2 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 and 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 5000 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 5000 (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 circumstance but they have also specified six months as 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 nothing could such time-limit would have been prescribed. Can it be stated 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 non-existent? 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).
13. In the case before us, it is not mere delay. It is a case of total inaction on the part of the plaintiff for 2 1/2 years in clear violation of the terms of agreement which required him to pay the balance, purchase the stamp papers and then ask for execution of sale deed within six months. Further, the delay is coupled with substantial rise in prices according to the defendants, three times between the date of agreement and the date of suit notice. The delay has brought about a situation where it would be inequitable to give the relief of specific performance to the plaintiff.
14. Shri Sivasubramaniam then relied upon the decision in Jiwan Lal (Dr) v. Brij Mohan Mehra4 to show that the delay of two years is not a ground to deny specific performance. But a perusal of the judgment shows that there were good reasons for the plaintiff to wait in that case because of the pendency of an appeal against the order of requisition of the suit property. We may reiterate that the true principle is the one stated by the Constitution Bench in Chand Rani1. 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.
(ii) 2011(12) SCC 18 [Saradamani Kandappan vs. S.Rajalakshmi and others]
36. The principle that time is not the essence of the contracts relating to immovable properties took shape in an era when market values of immovable properties were stable and did not undergo any marked change even over a few years (followed mechanically, even when value ceased to be stable). As a consequence, time for performance, stipulated in the agreement was assumed to be not material, or at all events considered as merely indicating the reasonable period within which contract should be performed. The assumption was that grant of specific performance would not prejudice the vendor defendant financially as there would not be much difference in the market value of the property even if the contract was performed after a few months. This principle made sense during the first half of the twentieth century, when there was comparatively very little inflation, in India. The third quarter of the twentieth century saw a very slow but steady increase in prices. But a drastic change occurred from the beginning of the last quarter of the twentieth century. There has been a galloping inflation and prices of immovable properties are no longer stable or steady. We can take judicial notice of the comparative purchase power of a rupee in the year 1975 and now, as also the steep increase in the value of the immovable properties between then and now. It is no exaggeration to say that properties in cities, worth a lakh or so in or about 1975 to 1980, may cost a crore or more now.
37. The reality arising from this economic change cannot continue to be ignored in deciding cases relating to specific performance. The steep increase in prices is a circumstance which makes it inequitable to grant the relief of specific performance where the purchaser does not take steps to complete the sale within the agreed period, and the vendor has not been responsible for any delay or non-performance. A purchaser can no longer take shelter under the principle that time is not the essence in performance of contracts relating to immovable property, to cover his delays, laches, breaches and "non-readiness". The precedents from an era, when high inflation was unknown, holding that time is not the essence of the contract in regard to immovable properties, may no longer apply, not because the principle laid down therein is unsound or erroneous, but the circumstances that existed when the said principle was evolved, no longer exist. In these days of galloping increases in prices of immovable properties, to hold that a vendor who took an earnest money of say about 10% of the sale price and agreed for three months or four months as the period of performance, did not intend that time should be the essence, will be a cruel joke on him, and will result in injustice. Adding to the misery is the delay in disposal of cases relating to specific performance, as suits and appeals therefrom routinely take two to three decades to attain finality. As a result, an owner agreeing to sell a property for rupees one lakh and received rupees ten thousand as advance may be required to execute a sale deed a quarter century later by receiving the remaining rupees ninety thousand, when the property value has risen to a crore of rupees.
41. A correct prospective relating to the question whether time is not of the essence of the contract in contracts relating to immovable property, is given by this court in K.S.Vidyanadam v. Vairavan (by Jeevan Reddy,J.,) who incidentally was a member of the Constitution Bench in Chand Rani. This Court observed:
"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 ...............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 particularly after 1973*.
11.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. ...........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."
42. Therefore, there is an urgent need to revisit the principle that time is not of the essence of the contracts relating to immovable properties and also explain the current position of law with regard to contracts relating to immovable property made after 1975, in view of the changed circumstances arising from inflation and steep increase in prices. We do not propose to undertake that exercise in this case, nor referring the matter to a larger Bench as we have held on facts in this case that time is the essence of the contract, even with reference to the principles in Chand Rani and others cases. Be that as it may.
43. Till the issue is considered in an appropriate case, we can only reiterate what has been suggested in K.S.Vidyanadam.
(i) The Courts, while exercising discretion in suits for specific performance, should bear in mind that when the parties prescribe a time/period, for taking certain steps or for completion of the transaction, that must have some significance and therefore time/period prescribed cannot be ignored.
(ii) The courts will apply greater scrutiny and strictness when considering whether the purchaser was "ready and willing" to perform his part of the contract.
(iii) Every suit for specific performance need not be decreed merely because it is filed within the period of limitation by ignoring the time-limits stipulated in the agreement. The courts will also "frown" upon suits which are not filed immediately after the breach/refusal. The fact that limitation is three years does not mean that a purchaser can wait for 1 or 2 years to file a suit and obtain specific performance. The three-year period is intended to assist the purchasers in special cases, as for example, where the major part of the consideration has been paid to the vendor and possession has been delivered in part-performance, where equity shifts in favour of the purchaser.
(iii) 2011(6) CTC 112 (SC) [Citadel Fine Pharmaceuticals vs. Ramaniyam Real Estates P.Ltd. And another]
45. In K.S. Vidyanadam and others vs Vairavan, 1997 (1) CTC 628 (SC) : 1997 (3) SCC 1, this Court explained how discretion is to be exercised by the Court before granting specific performance. This Court held that in cases of urban properties in India it is well known that prices are going up sharply over the last few decades particularly after 1973. In Vidyanadam (supra) the Court was dealing with a property in Madurai in the State of Tamil Nadu and it was argued before this Court by referring to the Madras High Court judgment in S.V. Sankaralinga Nadar vs P.T.S. Ratnaswami Nadar, AIR 1952 Mad 389, that mere rise in price is no ground for denying the specific performance. This Court did not agree with the decision of the Madras High Court and held that the Court cannot be oblivious of the reality of constant and continuous rise in the value of urban properties. In that context the time limit set in the contract has to be strictly construed. In the case of Vidyanadam (supra) there is no such strict stipulation as time being of the essence of the contract as is in the instant case even then the Court refused to grant the relief of specific performance.
46. In Vidyanadam (supra) reference was made to a Constitution Bench judgment of this Court in Chand Rani (Smt.) (Dead) by Lrs. vs Kamal Rani (Smt.) (Dead) by Lrs., 1993 (1) SCC 519. The same question, whether time was of essence of the contract was discussed in Chand Rani (supra). The Constitution Bench of this Court while dealing with this question referred to another decision of this Court in the case of Hind Construction Contractors by its Sole Proprietor, Bhikamchand Mulchand Jain (Dead) by Lrs. vs State of Maharashtra, 1979 (2) SCC 70. By referring to various judgments, the Constitution Bench in Chand Rani (supra) formulated the proposition that even where parties have expressly provided time to be of the essence of the contract, such a stipulation will have to be read along with other terms of the contract. Such other terms, on a proper construction, may exclude the inference that the completion of work by a particular date was meant to be fundamental. The learned Judges indicated the following circumstances which may indicate a contrary inference; (a) if a contract includes clauses providing for extension of time in certain contingencies, or (b) if there are clauses for payment of fine or penalty for every day or week the work undertaken remains unfinished after the expiry of time. The Constitution Bench held that such clauses would be construed as rendering ineffective the express provision relating to time being of the essence of contract (see para 22 at page 528 of the report).
47. In the instant case, in the said agreement no such clause, as aforesaid, exists. Rather the stipulation as time being of the essence of the contract was specifically mentioned in Clause 10 and the consequences of non-completion are mentioned in Clause 9. So from the express terms of the contract and the commercial nature of the transaction and the surrounding circumstances make it clear that the parties intended time in this case was intended to be of the essence of the contract.
30. The learned senior counsel for the plaintiff would submit that the sale price of the immovable properties are spiralling up in geometrical progression and in biblical proportion and that cannot be a reason for rejecting the prayer for specific performance as per Section 20 of the Specific Relief Act.
31. No doubt, Explanation-1 of sub section (2) of Section 20 of the Specific Relief Act proclaims that merely based on inadequacy of consideration the prayer for specific performance should not be rejected. However, the aforesaid precedents would point out the reality that the sale price of the immovable properties are soaring up, should not be lost sight of and the plaintiff's waiting game should not be allowed to be capitalized by him in a suit for specific performance. The evidence of PW1 remains to be only his ipse dixit. The evidence of P.Ws.2 and 3 are only with regard to proving the emergence of Ex.A1 and not to the plaintiff's readiness and willingness to perform his part of the contract.
32. In my considered opinion, a posteriori and not a priori approach is warranted in this factual matrix. The cumulative reading of the plaint as well as the deposition of PW1 would not proclaim and portray that ever since the emergence of Ex.A1, he was ready and willing to perform his part of the contract. I could even put it this way that absolutely, there is no reason much less valid reason found set out in the plaint or in his deposition as to why for such almost 14 years time, he should have waited for filing the suit for specific performance.
33. The aforesaid precedents of the Hon'ble Apex court referred to supra would spotlight and indicate that simply because the agreement holder may be having three year's limitation period in his favour to file a suit, he would not be justified in simply waiting till the last date of the expiry of the limitation period for filing the suit for specific performance.
34. In view of the discussion supra, I am of the considered opinion that the plaintiff was not at all justified in approaching the court,, after such a long wait, seeking specific performance of the agreement to sell. The trial court no doubt in para No.8 adverted to the fact that the plaintiff was guilty of laches in seeking specific performance of the agreement to sell.
35. In the result, I am of the considered view that the issue No.2 framed by the trial court should be decided that the plaintiff was not ready and willing to perform his part of the contract. As a sequela, the issue No.3 is decided that the plaintiff was not entitled to the relief of specific performance.
36. Accordingly, Point No.1 is decided to the effect that the trial court was justified in construing that the suit was barred by limitation because the last endorsement dated 6.4.2006 emerged almost 8 = years after the previous endorsement dated 8.12.97 in Ex.A1 the agreement to sell.
Point No.2 is decided to the effect that the trial court was not expected to treat the last endorsement dated 6.4.2006 as a fresh agreement emerged between the plaintiff and the defendant.
Point No.3 is decided to the effect that the trial court was not justified in not deciding on merits the other issues in view of having decided the limitation point as against the plaintiff and this court as the first appellate court could decide the other issues also and dispose of the same on merits and accordingly it is being done so.
37. On balance, the aforesaid points are decided in favour of the respondent/defendant and as against the appellant/plaintiff. In the result, the judgment and decree of the trial court are confirmed and the appeal is dismissed. However, in the circumstances, there shall be no order as to costs.
vj2 To The District Judge, Karaikal