Andhra HC (Pre-Telangana)
Sardar Amarjeet Singh vs Nandu Bai And Ors. on 18 August, 1998
Equivalent citations: 1998(5)ALD697, 1998(5)ALT412
Author: P. Venkatarama Reddi
Bench: P. Venkatarama Reddi, Ramesh Madhav Bapat
ORDER P. Venkatarama Reddi, J.
1. The plaintiff in the suit -- O.S. No.514 of 1974, on the file of the First Additional Judge, City Civil Court, Hyderabad is the appellant herein. The suit was filed for specific performance of an agreement of sale (Ex.A1), dated 5-12-1971, executed by defendant Nos.l and2 in favour of the plaintiff. The agreement of sale relates to vacant land of an extent of 6240 sq. yards in S.No.157, etc., situated at Ameerpet, Hyderabad city. The sale price as per the agreement is Rs.70,280/-. Defendant Nos.3 to 7 are those who purchased the same property under an alleged prior agreement of sale i.e., Ex.B-8, dated 20-6-1968. The suit for specific performance was dismissed by the trial Court mainly on the ground that the vendee failed to establish that he was ready and willing to fulfil his part of the obligations under the agreement and his conduct in not taking any steps for considerable time disentitled him to the specific relief sought for in the suit.
2. One appeal, the teamed single Judge affirmed the judgment of the lower Court. The learned Judge, while affirming the finding of the trial Court on the question of readiness and willingness, concurred with the view of the trial Court that in the facts and circumstances of the case the relief of specific performance cannot be granted. The learned single Judge also came to the conclusion that the in action on the part of the vendee - Plaintiff was such that there was an abandonment of the rights under the agreement. The learned single Judge also took the view that the agreement was not really intended to be an agreement of sale but it was meant to be a security for the money lent to defendant Nos. 1 and 2 by the plaintiff. In other words, Ex.A-1 was treated to be a document executed in relation to a money lending transaction. To this extent the learned single Judge differed with the view taken by the trial Court and answered the additional issue No.9(1) in favour of the defendants. It may also be mentioned at this stage that the agreement of sale set up by defendant Nos.3 to 7 was disbelieved by the trial Court and the learned single Judge did not reverse that finding. The defendant Nos.3 to 7 made permanent constructions on the land in question during the pendency of the suit and after obtaining the exemption under the provisions of the Urban Land (Ceiling and Regulation) Act, 1976. However, an undertaking was also given by the said defendants to remove the structure in case the decree is granted in favour of the plaintiff.
3. We shall briefly refer to the relevant clauses in the agreement, Ex.A-1. The sale price and the extent of the land have already been mentioned. Rs.23,000/- was paid by way of advance on earnest money on the date of the agreement. As per clause 2, the purchaser was required to pay the balance of sale consideration of Rs.47,280/- at the time of execution and registration of the sale-deed. Clause 3 obliges the vendors to execute and register the sale deed in favour of the purchaser or his nominee within nine months from the date of the agreement. The land agreed to be sold shall actually be measured one week prior to the date of registration and the correct boundaries shall be fixed. The vendors undertake to leave 30 feet wide road on the Northern side of the land. Clause 9 of the agreement says that the vendors shall hand over the original or the certified copies of all the documents relating to title and possession of the vendors within on month from the date of the agreement. The possession of the land was agreed to be delivered free from all encumbrances on the date of registration of the sale-deed. Clause 12 reads as under :
"That in case the vendors fail to execute the sale deed on or before the stipulated period of nine months referred to above, the purchaser shall be at liberty either to file a suit against the vendors for the specific performance or to cancel the agreement and to recover the advance money of Rs.23,000/- (Rupees Twenty three thousand only) paid by him together with further sum of Rs.23,000/- (Twenty three thousand only) by way of liquidated damages."
4. In the written statement filed by defendant Nos.l and 2, a plea was taken that the agreement of sale was only nominal and not intended to be acted upon as it was executed to enable the plaintiff to fake steps against the vendees of defendant Nos. 1 and 2. It is alleged that the plaintiff., having got the agreement of sale, did not evince any interest for getting the vendees of defendant Nos. 1 and 2 evicted. Defendant Nos. I and 2 stated that they received only Rs.18,000/-from the plaintiff. The defendants have also taken the stand that the suit schedule land was sold away under an agreement of sale to defendant Nos,3 to 7 even before Ex.A-1 was executed. However, in the additional written statement, dated 13-7-1979, filed by the defendant No.4 a plea was taken that, "the suit transaction appears to be one of money lending and not really one of sale". Substantiating this plea, defendant No.4 stated that the brother of the plaintiff (PW5) got two agreements executed earlier in respect of the same land for the same consideration but they were not enforced because the money lent was repaid. The said agreements executed by defendant Nos. 1 and 2 are marked as Exs.B-13 and B-14. After the additional written statement was filed an additional issue No. 9(1) was framed as stated above.
5. The learned Counsel for the appellant has contended with much force that there is no basis for the finding of the learned single Judge that the agreement of sale was an integral part of a money lending transaction because there was no plea to that effect by defendant Nos. 1 and 2 nor any evidence let in in support of that plea by any of the defendants. The best witnesses who can speak to the nature of the transaction are defendant Nos. I and 2 who not only refrained from taking such plea but also set up an altogether different plea. It is pointed out that the learned single Judge was merely carried away by the fact that the plaintiff and his brother are licensed money lenders and that there were earlier agreements in similar terms between the plaintiffs brother and defendant Nos. 1 and 2 which were not acted upon. The learned Counsel for the appellant has, therefore, submitted -- not without justification -- that the finding on this aspect of the case is more in the realm of suspicion or doubt. However, having regard to the view we propose to take on the second aspect of the case this point does not deserve further consideration.
6. We are of the view that the concurrent finding of the trial Court and the appellate Court that the important requirement of readiness and willingness to perform the terms of the contract and the facts and circumstances of the case do not justify the grant of relief of specific performance, need not be disturbed. As already noticed, the terms of the agreement contemplate handing over of the original or the certified copies of the relevant documents within one month from the date of the Agreement and the vendors executing and registering the sale deed within nine months from the date of the agreement. There is a corresponding obligation on the part of the purchaser to pay the balance of sale consideration of Rs.47,280/- on the date of the execution and registration of the sale-deed which was scheduled to take place within a period of nine months. The plaintiff --vendee got a legal notice issued on 12-8-1974 (Ex.A3) expressing his readiness to go ahead with the transaction and calling upon the vendors to execute the sale deed. That means, nearly for two years after the expiry of the nine months period, the vendee did nothing to act in furtherance of the agreement. Excepting a bald and vague assertion that he was contracting the vendors but they were dodging, nothing more is brought on record to satisfy the Court that the plaintiff was at all material times interested in finalising the deal and showing his readiness and willingness to perform the essential terms of the agreement. It is true that the suit was filed well within the period of limitation. But, that is not enough. In assessing the question of readiness and willingness of the party to perform his/ her part of the contract, the Court can legitimately take into account the long, unexplained silence and inaction on the part of the plaintiff. If any authority is needed for this view, it could be found in the recent decision of the Supreme Court in K.S. Vidyanandam v. Vairavan, .
The Supreme Court observed :
"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 tiling 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.... 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....."
7. After referring to the decision of the Madras High Court in S.V. Sankaraltnga Nadar v. P.T.S. Ratnaswanti Naidu, , the learned Judges observed:
"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 obvious 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......."
It was then said:
"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....."
8. Adverting to the arguments that rise in prices cannot be a ground to deny specific performance, their Lordships observed:
"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 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)."
The correct principle to be applied is stated thus:
"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 properly."
9. In the case dealt with by the Supreme Court, just as here, there was a total inaction on the part of the plaintiff for 2-1/2 years which was not consistent with the terms of the Agreement. Further, the delay, just as in this case, must be viewed in the context of substantial rise in prices. The conclusion reached by the Supreme Court that the delay brought about a situation where it would be inequitable to give the relief of specific performance, equally applies to the facts of the present case. The other observations in the judgment of the Supreme Court which deserve notice are these :
"... The above findings 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."
The fact situation is more or less the same here.
10. It is true that in Ex.A-1, there is no specific provision which calls upon the vendee to tender the balance amount and call upon the defendant Nos. 1 and 2 to execute the sale deed within the stipulated time (in that case, the prescribed time was six months). But, such obligation on the part of the vendee is necessarily implied from clauses 2 and 3. The rights and obligations flowing from the agreement are necessarily bilateral and it is not possible to countenance the argument that the obligation is cast on the vendors to take steps for the completion of the transaction within nine months, but not on the vendee. It may be that the vendors, for their own reasons, remained reticent and allowed the passage of time without calling upon the vendee to finalise the deal. It is also true that they set up an ante-dated agreement of sale in favour of defendant Nos.3 to 7. But, we are more concerned here with the conduct of the vendee who approaches the Court to grant the equitable relief of specific performance. The readiness and willingness on the part of the plaintiff cannot be inferred merely because at the fag end of the period of limitation a notice was issued calling upon the vendors to execute the sale deed. Readiness and willingness must have an element of continuity as pointed out by the Supreme Court in N.P, Thirugnanam v. Dr. R. Rajan Mohan Rao, .
The Supreme Court observed:
"The continuous readiness and willingness on the part of the plaintiff is a condition precedent to grant the relief of specific performance. Right from the date of the execution till date of the decree he must prove that he is ready and has always been willing to perform his part of the contract. This circumstances is material and relevant and is required to be considered by the Court while dranting or refusing to grant the relief. If the plaintiff fails to either aver or prove the same, he must fail. To adjudge whether the plaintiff is ready and willing to perform his part of the contract, the Court must take into consideration the conduct of the plaintiff prior and subsequent to the filing of the suit along with other attending circumstances,"
11. As already noticed, there is no iota of explanation coming from the side of the appellant-plaintiff as to why he kept quiet without taking any steps or without making known liis readiness and willingness to the other party. Mere averment in the plaint or pre-suit notice that he was at all material times ready and willing to perform his part of the contract is not sufficient. But, such averment should be supported by satisfactory evidence. That is utterly lacking in this case. As indicated by the Supreme Court, though time may not be the essence in a contract of sale of immovable property, the performance of obligations cannot be postponed for an unreasonably long length of time unless there is a satisfactory explanation for such delay.
12. In the view we have taken, it is not necessary for us to express any view on the question whether there was abandonment of the Agreement.
13. For all these reasons, we are of the view that the findings of the trial Court and that of the learned single Judge do not call for any interference and that the facts and circumstances of the case do not justify the grant of equitable relief of specific performance. We, therefore, dismiss the Letters Patent Appeal. No costs.