Andhra HC (Pre-Telangana)
Palika Satyavathi vs Singireddy Ramana Murthy on 13 February, 2002
Equivalent citations: 2002(4)ALT400
ORDER L. Narasimha Reddy, J.
1. In this appeal the defendant challenges the decree and judgment of the Court of II Additional Subordinate Judge, Kakinada in O.S. No. 152 of 1982.
2. The respondent filed the suit for the relief of specific performance of an agreement of sale dated 15-11-1977 or in the alternative for refund of an amount of Rs. 11,000/- paid towards part of sale consideration together with damages of Rs. 9,000/-. The respondent pleaded that the appellant approached him offering to sell the suit schedule property for an amount of Rs. 13,500/-and an agreement of sale dated 15-7-1978 was executed, and an amount of Rs. 5,000/- was paid towards advance on the same day. According to the terms of the agreement, the balance consideration was to be paid and sale deed was to be executed on or before 15-2-1978. However the appellant refused to execute the sale deed but went on receiving the amounts of Rs. 1,000/-, Rs. 500/- etc., upto June 1979. The last payment was made on 15-6-1979 being Rs. 4,000/-and as on that date Rs. 11,000/-stood paid. When the respondent offered to pay the balance of consideration and required the appellant to execute the sale deed, she did not come forward. Accordingly the respondent got issued notice dated 30-6-1981 calling upon the appellant to receive the balance of consideration and execute the sale deed. Since the said request was not complied with the suit is filed for the relief as referred to above.
3. The appellant filed a written statement admitting the factum of execution of agreement of sale as well as the receipt of the various amounts totalling to Rs. 11,000/-. However, it was her case that she wanted to sell the property to meet the family expenses and to clear the debts, but the respondent was not at all paying the balance of consideration in spite of demands and the time was extended for the third time. The time for payment of balance of consideration was extended ultimately upto 1-10-1980 and even by that time, the balance of sale consideration was not paid. It was her case that the respondent was never ready and willing to perform his part of the contract and as such was not entitled for the relief sought for in the suit.
4. The trial court framed the following issues on the basis of the pleadings before it.
(1) Whether the plaintiff has always been ready to perform her (sic. his) part of contract?
(2) Whether the defendant is not liable to give a marketable title subsequent to the date of suit agreement of sale and date first fixed for taking the said deed?
(3) Whether the time is essence of the suit contract?
(4) Whether plaintiff committed breach of contract?
(5) Whether the defendant is entitled to forfeit the amount paid under suit contract as a result of breach of contract?
(6) Whether the plaintiff is entitled to specific performance or the alternative for refund of advance paid?
(7) To what relief?
5. On behalf of plaintiff, P.Ws.1 and 2 were examined and documents Exs.A-1 to A-7 were marked, while the appellant examined herself as D.W.1 and examined two other witnesses as D.Ws.2 and 3 and documents Ex.B-1 to B-6 were marked. On an appreciation of oral and documentary evidence, the trial court decreed the suit through its judgment dated 23-7-1980. The same is challenged in this appeal.
6. Sri T. Bheemsen, the learned counsel for the appellant-defendant submits that the appellant had to offer the suit schedule property for sale to the respondent-plaintiff virtually in a distressed condition. Though, the respondent was under obligation to pay the entire consideration within three months from the date of agreement of sale i.e., by 15-2-1978, he did not pay the same, taking advantage of the financial weakness of the appellant and the respondent went on paying small amounts like Rs. 500/-Rs. 1,000/- etc., and even after the lapse of time of about 2 years, he paid only Rs. 11,000/-. The learned counsel submits that the pattern of payment upto 15-6-1979, the failure to pay the balance consideration within the stipulated time and non-deposit of the balance of consideration in the court are sufficient to disentitle the respondent for the discretionary relief of specific performance.
7. Sri V.L.N.G.K. Murthy, learned counsel for the respondent on the other hand submits that once the appellant had accepted the payment after the date stipulated in the agreement, the plea of time being the essence of contract is not at all available to the appellant. Having accepted the payments at various points of time it was not open to the appellant to take advantage of the delay. He further submits that the respondent was always ready and willing to perform his part of the contract and the delay in the entire transaction was attributable only to the appellant.
8. In this case the factum of execution of the agreement and payments of various amounts from time to time are not in dispute. In a suit for specific performance one important aspect that has a bearing on the type of relief to be granted is the readiness and willingness of the plaintiff. In the recent past, several concepts came to be laid down by the Supreme Court as to how the discretion of the court while granting or refusing the relief of specific performance is to be guided. One such principle is that the plaintiff should not only establish his readiness and willingness at the time of filing of the suit but the same should be evident from the stage of date of agreement till the hearing of the suit In Jagraj Singh and Anr. v. Labh Singh and Ors., AIR 1995 SC 945 the Supreme Court held as under:
"Section 16 (c) of the Specific Relief Act, 1963 provides that the plaintiff must plead and prove that he has always been ready and willing to perform his part of the essential terms of the contract. The continuous readiness and willingness at all stages from the date of the agreement till the date of the hearing of the suit need to be proved. The substance of the matter and surrounding circumstances and the conduct of the plaintiff must be taken into consideration in adjudging readiness and willingness to perform the plaintiffs part of the contract."
9. As regards the concept of the time being essence of the contract, the Hon'ble Supreme Court took the view that even where there is no stipulation in the contract as to time being the essence of contract and even though, the time stipulated for institution of suit for specific performance is three years under the Limitation Act, still, if it can be gathered from the conduct of the parties that the matter was unduly delayed, the court will be entitled to refuse the relief. A reference in this context may be made to the judgment of the Supreme Court reported in K.S. Vidyanadam v. Vairavan, and K. Narendra v. Riviera Apartments (P) Ltd, .
10. The observation of the Supreme Court in K.S. Vidyanadam's case is as under:
"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."
11. Special emphasis was laid in respect of urban properties in K. Narendra's case as under:
"Where though the agreement to sell the land did not specifically provide for a time limit within which the agreement was to be performed, however, intrinsic evidence was available in the agreement itself spelling out the intention of the parties to perform the contract within a reasonable time i.e., within period of about 2 1/2 years to 3 1/2 years from date of agreement for example, a cheque which was post-dated was given by the purchasers to the buyers with the stipulation that the same was to be encashed by the seller after the plans of multi-storeyed buildings as submitted by the purchaser were passed and cleared for construction by the authorities or earlier by a mutual agreement and the cheque was not undated but to expire after six months from the prescribed date, meaning thereby the sanction of the plans and clearance from the authorities, the obligation to secure which was on the purchaser, were expected by the parties to be secured within the period of six months, so also it was provided for completion of the construction of the building within a period of two to three years from the date of the plans being sanctioned and released by the appropriate authority, and the purchasers failed to perform their obligations within the reasonable time and also there was astronomical rise in the value of land, which none of the parties could have fore contemplated at the time of entering into agreement, it was held that discretionary jurisdiction to decree specific performance ought not to be exercised in favour of the purchasers in such a case. R.F.A. Nos. 9-10 of 1991, dated 18-12-1992 (Delhi), Reserved".
12. This principle was reaffirmed by the Supreme Court in Smt. Chand Rani v. Kamal Rani, .
13. Now it needs to be seen whether the appellant had brought this case within the legal principles referred to above.
14. From the agreement of sale as well as the plaint it is abundantly clear that the appellant offered the suit schedule property for sale to the respondent to clear the debts and to meet the other expenses. Obviously that was the reason why time of three months was stipulated for completion of the entire transaction. In this background if we see the pattern of payments made by the respondent-plaintiff, it would clearly demonstrate that he was either not willing or not ready to make the payments. After paying Rs. 500/- towards advance on the date of agreement, the following are the payments made by him.
10-7-1978 Rs. 1,000/- 15-8-1978 Rs. 3,000/- 18-8-1978 Rs. 1,000/- 26-8-1978 Rs. 500/- 17-9-1978 Rs. 1,000/- 15-6-1979 Rs. 4,000/-
15. Except the amount of Rs. 500/- , the rest of the amount was paid after the last date stipulated for payment of the balance of consideration. While receiving the payment of Rs. 4,000/- on 15-6-1979 it was clearly stipulated that the time is extended up to 1-10-1980. Neither there is pleading nor evidence from the respondent to show that he offered to pay the balance of consideration within that time i.e., on or before 1-10-1980.
16. Now it needs to be seen as to what was the seriousness of the effort made by the respondent to pay the balance of consideration through his notice Ex.A-5. In this notice, after referring to the factum of execution of agreement of sale and payment made from time to time, he made three significant statements.
(a) That the appellant made him to believe that the property is free from any encumbrance and the title for the same is very clear.
(b) On verification, it was found that third party claims are existing in respect of said property and litigation is pending.
(c) The appellant should transfer and convey the property "free from encumbrances and without any litigation" within two months.
The intention of the respondent in issuing this notice was not too far to see. He was having in mind a suit O.S. No. 189 of 1979 which was filed by some persons against the appellant herein in respect of said property and says that as long as that suit is pending the property cannot be said to be free from litigation. At the same time he wanted the appellant to convey the property free from litigation within two months. It is a matter of record that O.S.No. 189 of 1979 referred to by the respondent, was filed much subsequent to the dates stipulated for payment of the balance of consideration. It is also a matter of record that the said suit ended in favour of the appellant only on 24-7-1989. The decree was marked as Ex. B-4. The appellant as well as respondent were parties to the said suit. Even on the showing of the respondent, as long as the said suit was pending, the appellant could not have conveyed the property in the manner desired by the respondent.
18. The Hon'ble Supreme Court observed that whenever any party insists on new conditions for payment of balance of consideration etc., the same would constitute the factor for the court to reject the specific performance. In Chand Rani v. Kamal Rani (4 supra) the Supreme Court rejected the relief of specific performance when the agreement holder insisted on fulfillment of a condition for payment of balance of consideration, which was not contemplated under the agreement. The same is evident from the following:
"The analysis of evidence would also point out that the plaintiff was not willing to pay this amount unless vacant delivery of possession of one room on the ground floor was given. In cross-examination it was deposed that since income-tax clearance certificate had not been obtained the sum of Rs. 98,000/- was not paid. Unless the property was redeemed the payment would not be made. If this was the attitude it is clear that the plaintiff was insisting upon delivery of possession as a condition precedent for making this payment. The income-tax certificate was necessary only for completion of sale. We are unable to see how these obligations on the part of the defendant could be insisted upon for payment of Rs. 98,000/-."
19. It was observed that the conduct of the plaintiff therein belied his readiness and willingness, and ultimately it as held as under:
"Therefore, even as late as 24-9-71 the plaintiff was never willing to make the payment of Rs. 98,000/-. In this connection, we have already seen the oral evidence. It shows there was no readiness and willingness. We are in agreement with the conclusion of the Division Bench."
20. It also needs to be noticed that the respondent did not choose to deposit the balance of sale consideration in the court to show his readiness and willingness.
21. Section 20 of the Specific Relief Act in clear terms provides the guidelines in the matter of granting or refusing the relief of the specific performance. The Supreme Court also has sounded a note of caution that where the subject matter of suit for specific performance is an urban property where the escalation of consideration is almost in geometrical proportions, the courts will be advised not to exercise the discretion in favour of granting the decrees.
22. From the above discussion of the facts and law it is evident that ever since the date of execution of the agreement, the conduct of the respondent was far from being satisfactory. The mode of payment and failure to pay balance even by 1-10-1980, which itself was third extension are factors which show the attitude exhibited by the respondent from time to time.
23. The demand made by the respondent in Ex.A-5 was nothing but unreasonable. On the one hand he refers to a litigation which was instituted two years after the date of agreement and on the other hand he insisted for the transfer and conveyance to be made within two months free from any litigation and any encumbrance.
24. When the law is to the effect that even where the court is satisfied as to the execution of agreement of sale and the conduct of the parties, relief of specific performance can be refused if it results in conferring the undue benefit on the persons seeking the same, it is too difficult to grant such relief in favour of the respondent in view of the facts referred to above. It is not in dispute that the property is abutting Kakinada Municipality which is a fast growing township. Enormous injustice would be caused to the appellant if she is required to part with about 1,500 Sq. yds., for a paltry sum paid at staggered intervals.
25 One peculiar aspect of the decree under appeal is that the trial court, having directed the appellant to execute the sale deed did not say anything about the balance consideration. In my view, the cumulative effect of all these factors would disentitle the respondent for any decree for specific performance.
26. Now it remains to be seen as to whether the respondent is entitled for the alternative relief of refund of the amount paid by him together with damages.
27. It is not in dispute that an amount of Rs. 11,000/- was paid by the respondent to the appellant. The learned counsel for the appellant did not draw my attention to any clause for forfeiture of the amounts paid on occurrence of certain eventualities. Therefore, in law and as well as in equity, the respondent is entitled for the same. In addition to the amount of Rs. 11,000/- he has also claimed an amount of Rs. 9,000/-towards damages. Inasmuch as the non-performance of the contract cannot be attributed to the appellant, in the facts and circumstances of the case stated above, the respondent is not entitled for any damages. There shall however be a decree for Rs. 11,000/- and the same shall carry interest at 15% from the date of filing of the suit.
28. In the result, the appeal is partly allowed and the decree of the trial court shall stand modified to the extent indicated above. No costs.