Calcutta High Court
P.G. Sinha (Panchu Gopal Singh) vs Commodore K.C. Chatterjee And Others on 25 April, 1991
Equivalent citations: AIR1991CAL327, AIR 1991 CALCUTTA 327
ORDER Monoranjan Mallick, J.
1. This is an appeal against the judgment and decree passed by the Assistant District Judge, 2nd Court, Nadaia dated 17th July, 1986 dismissing the plaintiff-appellant's suit for specific performance of contract.
2. The facts, which are necessary to dispose of the appeal may be briefly stated as follows:--
Oh or about the 12-3-83 the defendant No. 1 who is the owner of the suit property proposed to sell the same to the plaintiff for a consideration of Rs. 40,000/- and asked for an advance of Rs. 10,000/- to be paid within a month from that date. The plaintiff accepted the said proposal with this modification that he could not pay the advance within one month and subsequently the plaintiff sent to the defendant No. 1 a sum of Rs. 8,000/- by bank draft and offered to pay the balance amounting to Rs. 10,000/ - within two months thereafter. The defendant No. 1 accepted the bank draft, waiving the time element as well as the short advance. It was agreed between the parties that the balance amount of consideration would be paid after the permission has been obtained from the Estate Manager, Development and Planning Department, Kalyani, whose permission was necessary for the transfer of the suit property as the suit property is situated at Kalyani. Therefore, both the plaintiff and the defendant No. 1 applied for approval of transfer. In the meantime the plaintiff came into possession of the suit property. Necessary permission could not, however, be obtained from the office of the defendant No. 2 because certain amounts found to have been outstanding against the defendant No. 1. The defendant No. 1 cleared up his dues payable to the defendant No. 2 in a certificate case but it was also detected that the defendant No. 1 had not paid the defendant No. 2 the last instalment for acquiring the house property. The said instalment was, however, actually paid by the defendant No. 2 by a bank draft which was even though received but it was misplaced and the Department could present it for encashment. The dispute over the draft could not be resolved and the plaintiff, therefore, failed to get the transaction completed as per agreement even though he was all along ready and willing to fulfil the part of the contract. The plaintiff by a lawyer's notice asked the defendant No. 1 to execute and register the sale deed in his favour by accepting the balance amount due as per contract within 15-5-83. As the defendant No. 1 did not respond the plaintiff has filed the suit for specific performance of the contract against the defendant. The defendants on contesting the suit have made the following allegations.
There was never any proposal for sale nor was there any acceptance of any such proposal. Under certain misconception of fact he made an offer to the plaintiff for payment of an advance of Rs. 10,000/- by April, 1980 and invited the plaintiff to enter into a proper agreement for sale on a payment of a balance consideration of Rs. 10,000 / - but the plaintiff sent him a draft of Rs. 8,000/ - only which was not in accordance with the terms of the offer and the defendant No. 1 accepted the draft on credition that the balance would be paid by the plaintiff within a couple of months. Only on such payment there could not have been a contract for sale. But the plaintiff did not pay the balance amount nor did he have any means either to pay the amount of advance as stipulated or to pay the balance consideration money and was, therefore, never ready and willing to perform his part of the contract. The plaintiff did not occupy the suit premises with the plaintiffs permission but as an employee of M/s. Andrew Yule & Co. Ltd., who are actually the tenant in respect of the suit property under the defendant No. 1. The defendant No. 1 sent back Rs. 8,000/- to the plaintiff and there being no concluded contract between the parties, the plaintiff is not entitled to any relief in this suit. The defendant No. 2, the Estate Manager filed a written statement before the learned trial Judge contending, inter alia, that the defendant No. 1 had certain dues no doubt but the dues have all been paid and the dispute towards the payment of the last instalment has been resolved and the plaintiff has paid the full amount and the deed of conveyance in respect of the suit property was duly executed and registered on 10-1-1985 and the defendant No. 1 has become the sole owner of the property and no permission for transfer or sale is now required from the Government.
3. The Learned Trial Judge on considering the evidence adduced has found that there is no concluded contract between the plaintiff and the defendant No. 1 over the sale of the suit property and that even if it be conceded that there was a concluded contract the plaintiff was not in a position to procure sufficient funds for the purpose of purchasing the suit property and was, therefore, not ready and willing to perform his part of the contract. In view of the above finding he has dismissed the plaintiffs suit.
4. Being aggrieved the plaintiff has preferred this appeal. It is contended that the Learned Trial Judge has failed to appreciate the facts disclosed by evidence which would conclusively prove that there was a concluded contract for sale entered into between the plaintiff and the defendant No. 1, that the plaintiff-appellant also produced sufficient evidence before the Learned Trial Judge to hold that he was ready and willing to perform his part of the contract and the defendant No. 1 illegally repudiated the contract and the Learned Trial Jude committed a great error in dismissing the suit for specific performance. The appeal has been contested by the respondent No. 1. As it was transpired that during the pendency of the suit the respondent No. 1 has already sold away the suit premises to the purchasers (who) have been added in this appeal as respondents Nos. 3 and 4 and they have also contested the appeal supporting the case of the respondent No. 1.
5. In order to obtain a decree for specific performance of contract it is essential for the plaintiff to establish that there was a concluded contract between the parties for sale of the suit property, the same has been challenged by the defendant No. 1 in the written statement. On behalf of the plaintiff-appellant it is urged that even though there was no formal agreement for sale, the agreement for sale has been concluded by correspondence that passed between the parties from which it is clear that the defendant No. 1 agreed to sell the suit property for consideration of Rs. 40,000/- and wanted the earnest money of Rs. 10,000/- within a period not exceeding one month from March 12, 1980 and on receipt of concurrence from the authorities regarding the sale, the balance amount of consideration money to be paid in lump sum. It is further submitted that the plaintiff could not pay the advance earnest money within the stipulated period but by the letter dated 23rd May, 1980 sent Rs. 8000/-by a bank draft and promised to pay the balance amount of Rs. 2000/- within a couple of months, that the defendant No. I accepted the said earnest money and gave time to pay the balance of the earnest money, that thereafter both the plaintiff and the defendant No. 1 filed formal application in the office of the Estate Manager, the defendant No. 2 seeking permission for the sale transaction and that there was delay in obtaining such permission from the defendant No. 2 the sale transaction could not be finalised even though the plaintiff was all along ready and willing to perform his part of the contract.
6. On the other hand, it is the case of the defendant-respondent No. 1 that there was merely an offer by the defendant No. 1 to sell the suit property to the plaintiff but the plaintiff did not accept the said offer by paying the earnest money of Rs. 10,000/-within the stipulated period, that the defendant No. 1 also made a counter-offer demanding 95% of the sale proceeds after the plaintiff who is an Officer of Andrew Yule & Co. Ltd. with whom the suit property was tenanted obtained permission from his employer, Andrew Yule & Co. Ltd. to occupy the property and actually occupied but never accepted the defendant No. Ps counter-offer to complete the sale transaction on immediately paying 95% of the consideration money as he had already been occupying the property. The plaintiff never accepted that offer and in the circumstance the defendant No. 1 had intimated the plaintiff that, he was withdrawing the offer and also threatened to forfeit the earnest money but did not actually forfeit the earnest money but returned the same to the plaintiff. It is, therefore, contended that there was no concluded contract between the parties. The counter-offer made by the defendant No. 1 not having been accepted by the plaintiff and the earnest money paid having been returned to the plaintiff. There was no concluded contract between the parties and the plaintiffs suit for specific performance is liable to fail. It is also submitted that the plaintiff was not at least ready and willing to perform his part of the obligation and the plaintiffs suit for specific performance is also liable to be dismissed. It is also contended that after obtaining the proper deed of conveyance from the defendant No. 2, the defendant No. I has already sold away the property to Dr. A.K. Banerjee and Smt. Bela Banerjee on 19-1-1985 by a registered deed of sale.
7. The respondents Nos. 3 and 4 being the transferees, who have purchased the property during the pendency of the suit have been added in the appeal and they have, also supported the defendant-respondent No. I in this appeal.
8. On considering the submissions made by the learned Advocate for the appellant as well as the learned Advocates for the respondents, we are of the view that it is a case in which there was no formal agreement for sale deed and there was initially a talk between the parties in the Kalyani Office of the Andrew Yule & Co. with one Mr. Mukherjee, an officer of the Company and thereafter the defendant No. 1 by his letter dated 14-3-80 sent his terms for selling the suit property. That letter has been exhibited as Ext. I. By that letter the proposal for sale was made by the defendant No. 1 to the plaintiff, which, inter alia, stipulated that within a period not exceeding one month from March 12, 1980 the plaintiff has to pay Rs. 10,000/- as advance towards the purchase of the property and occupy it and on receipt of the con-
currence of the authority the plaintiff would have to pay the balance. The defendant No. 1 also agreed to consider the plaintiffs proposal for reduction of the sale price as suggested by the plaintiff. Therefore, at that stage the sale price was not actually fixed. The next letter is from the plaintiff to defendant No. 1 dated 26-3-1980 Ext. A, by which the plaintiff appears to have accepted the proposal but asked for some more time to pay the earnest money of Rs.10,000/-. By the letter Ext. A(1) dated 11-4-1980 the plaintiff again asked for further time to pay the earnest money of Rs. 10,000/-. Ext. 1(1) is a letter dated 15-4-80 sent by the defendant No. 1 to the plaintiff granting the plaintiff time till May, 1980 and to pay Rs. 10,000/- Ext. 1(a) is the letter dated 23-5-80 by which the bank draft of Rs. 8,000/-as advance towards the total selling price of Rs. 10,000/- was sent to the defendant No. 1 by the plaintiff asking for a time to pay the balance of Rs. 2,000/- within a couple of months. By that letter the plaintiff also agreed to pay the balance consideration money on receipt of formal concurrence from the respective authorities regarding the transfer/ preparation of the final deed. After the amount was paid, copy of which was sent to the personal manager of Andrew Yule & Co. The plaintiff was allotted by his employer the suit property which was already taken lease of by the Company from the defendant No. 1 prior to the date when the proposal for sale of the suit property to the plaintiff by the defendant No. 1 was made by the letter dated 14-3-1980. It is gathered from the letter dated 28-5-1980 Ext. 1(b) the defendant No. 1 acknowledged the receipt of the earnest money of Rs. 10,000/- and gave the plaintiff time to pay the balance amount of Rs. 2,000/-within a couple of months and asked for the procedure required from the authorities to obtain sale permission.
9. When an agreement is created by exchange of letters it is also a form of written agreement. But in such a case it is necessary for the Court to decide as to at what particular stage such a contract had been concluded or whether the letter that was exchanged between the parties constituted a concluded contract or not. Mr. Roy Chowdhury appear-
ing for the respondents has submitted that correspondence that passed between the parties did not construe a concluded contract. But on considering the letters to which we have already made reference it has now become clear that after the earnest money of Rs. 8,000/- was sent to the defendant No. 1 and the defendant No. 1 accepted it and asked him to pay the balance of Rs. 2000/- within two months and the sale consideration money of Rs. 40,000/- as indicated in the defendant's letter dated 23rd May, 1980 was also not disputed by the defendant No. 1 and was virtually accepted by him and the contract for sale was concluded. When the defendant No. 1 acknowledged receipt of the earnest money of Rs. 8000/ - and gave him time to pay Rs. 2000/- within two months and also to proceed with the above formalities, the defendant No. 1 in cross-examination has also admitted that the consideration money was fixed at Rs. 40,000/- and the defendant was initially to pay Rs. 10,000/- as earnest money and the balance amount by way of lump sum after the formalities with the authorities were completed. It is also clear from the subsequent correspondence that both the plaintiff and the defendant No. 1 wrote letter to the Estate Manager seeking the formal permission. It has now been disclosed that no such formal permission was necessary if the defendant No. 1 paid all the dues, There was some dispute no doubt as regards all the dues were paid but it is now an admitted position that the defendant No. 1 paid the certificate debt of the defendant No. 2 and also resolved the dispute as regards the payment of the last instalment. If the payment was made and no amount was due from the owner of the Kalyani property to the defendant No. 2, then the formal permission of the defendant No. 2 was not necessary. But even then letters were sent to the defendant No. 2 seeking the permission of the estate manager. Such letters could not have been sent if there were no concluded contract. Therefore, we are of the view that there was a concluded contract between the plaintiff and the defendant No. 1 after the plaintiff sent Rs. 8000/ -by demand draft by the letter dated 23-5-1980, which was also acknowledged by the defendant No. 1 by the letter dated 28-5-1980, Ext. 1(b). However, thereafter by the letter dated 16-8-1980 Ext. 1(c) the defendant No. 1 asked for 95% of the sale proceeds indicating about his urgent financial commitment for which he was very anxious to dispose of the house. So, he asked the plaintiff as he had already occupied the premises to pay 95% of the sale proceeds to him so that he could meet his commitment and the balance 5% could be paid when all papers would be completed. He also assured the plaintiff to give a proper receipt for the same and affidavit to say that he had sold the house to him. As a result thereof the plaintiff would not have to pay the rental which he had to pay for occupying the suit premises. He also threatened that he was in a position only to commit after he heard from you when the plaintiff would be in a position to pay the balance of Rs. 28,000/- more as 95% of the payment. He also indicated that he needed this money certainly before November, 17, 1980. The defendant No. 1 by his letter dated 10-9-80 Ext. 1(f) he again demanded from the defendant No. 1 to make payment of 95% of the sale proceeds and asked for his confirmation in this respect. It appears that the plaintiff did not respond to any of these letters for several months.
10. Then the defendant No. 1 by the letter dated 22-6-81 Ext. D again asked him to fulfil the plaintiffs obligation which according to the plaintiff he failed to comply and indicated in para 4 of that letter that if he did not receive the plaintiffs letters confirming the terms as in para 3 of the letter above, then he would consider that the plaintiff was no longer interested and in that case the earnest money would stand forfeited for breach of understanding and intent.
11. Then the defendant No. 1 wrote the letter dated 20-7-81 in which he has again reiterated his demand for the balance consideration money of 95% of the sale proceeds immediately and also indicated that if he had to wait for the payment till the Government of West Bengal decided to clear the papers then he was not at all interested in the deal any more because he needed money immediately.
He also wrote to the plaintiff that if the arrangement did not suit him then he should let it be known to him.
12. It is, however, an admitted fact that the defendant No. 1 thereafter returned back Rs. 8000/- paid by way of earnest money to the plaintiff. The plaintiff admits that fact but claims that by the lawyer's letter Ext. 1(h) he claims to have returned the said bank draft to the defendant No. 1. The defendant No. 1 in his evidence, however, denied to have received back the said bank draft.
13. After the said advocate's letter the plaintiff has filed the present suit on 30th May, 1983.
14. On considering the above correspondence we are not in agreement with the submission made by Mr. Roy Chowdhury appearing for the respondent No. 1 that any counter-offer was made subsequent to the original offer made. There was a concluded contract for sale of the suit property by the plaintiff and the defendant No. I and the subsequent correspondence that was made by the defendant No. 1 was a modified proposal as to how the balance consideration money would have to be paid. Originally the term was that Rs. 10,000/- was to be paid by earnest and the balance Rs. 30,000/- on the completion of the sale arrangement. But when after paying Rs. 8000/- the plaintiff could occupy the house and the defendant No. 1 claimed that he was in urgent need of money for financial commitment and having apprehended that the sale permission from the authority might take more time. He wanted the defendant No. 1 to pay 95% of the considertion money and the balance 5% on the completion of the sale. He also assured that on such payment he would give him an affidavit recognising him the plaintiff to be the owner of the property so that the plaintiff would not have to pay rent for the premises to his employer.
15. But when the contract had already been concluded the said demand for 95% of the consideration money immediately as conveyed, in the letters already indicated in the above, cannot be treated to be a counter-offer. Therefore, we are convinced that there was actually a concluded contract between the plaintiff and the defendant No. 1 for sale of the suit property by the defendant No. 1 to the plaintiff at a consideration money of Rs. 40,000/- and the same was concluded by correspondence.
16. The next point for consideration is whether the plaintiff is entitled to get the decree for specific performance of contract.
17. Mr. Roy Chowdhury appearing for the defendant No. 1 has submitted that even though there is a concluded contract for sale between the parties in view of S. 20 of Specific Relief Act, the Court has the discretion either to grant or refuse to grant the decree for specific performance of contract. It is also submitted that apart from the fact that the decree for specific performance of contract is in the discretion of the Court and cannot be granted to the plaintiff as a matter of right. Yet in this particular case there was sufficient ground for the Learned Trial Judge to refuse such decree as the facts in this case clearly reveal that the plaintiff was not ready and willing to perform his part of the contract. It is contended that even though the defendant No. 1 performed his part of the contract and even accepted the earnest money of Rs. 8000/- so that the plaintiff could be allotted the property by his employer and the plaintiff did not perform his part of the contract that even though he agreed to pay the earnest money of Rs. 2000/- within a couple of months from his letter dated 23rd May, 1980. He did not send the said Rs. 2000/- to the plaintiff at any time even up to the date when he through his advocate called upon the defendantNo. 1 to execute the deed of sale by accepting the balance consideration money. It is also pointed out that only in that letter it was indicated that if the defendant No. 1 wanted the balance amount of Rs. 2000/- then the plaintiff was agreeable be paid (sic). It is also contended that after the defendant No. 1 could occupy the premises the defendant could legitimately ask for payment of 95% of the consideration money and the fact that the plaintiff did not send any reply to any of those letters sent by the defendant No. 1 and kept his complete silence as regards such request by the defendant No. 1 would clearly indicate that he was neither ready nor willing to perform his part of the contract and in the circumstances no illegality was committed by the defendant No. 1 to repudiate that contract and to return the earnest money of Rs. 8000/-paid by the plaintiff with his letter dated 23-5-1980.
18. In view of S. 16 of the Specific Relief Act it is necessary for the plaintiff to allege and prove his continuous readiness and willingness to perform his part of the contract from the date of the contract till the date of hearing. Mere pleading is not enough, the plaintiff has to state during trial that he is still ready and willing to perform his part of the contract. Reference may be made to the decision of the Supreme Court in Premraj v. D.L.P. Housing and Construction (P) Ltd., , Gomathinayagam v. Palaniswami, and Sandhya Rani v. Sudha Rani . It is also well settled that in order to prove readiness the plaintiff has to prove that he had the necessary means from the date of the contract till the date of the filing of the suit to pay the balance consideration money. It is contended by Mr. Roy Chowdhury that the Learned Trial Judge was right in holding that the plaintiff has failed to prove his readiness and willingness to perform his part of the contract.
19. There is no doubt that the plaintiff agreed to pay the earnest money of Rupees 10,000/- in terms of the defendant No. 1's proposal dated 14-3-1980. He, however, wanted time till May, 1980 for making such payment. But even when he sent Rs. 8000/-towards the earnest money, his letter dated 23-5-1980 clearly shows that he was unable to procure Rs. 10,000/- towards the earnest money and asked for time to make such payment. The defendant No. 1 at that stage agreed to give him about two months' time to make the payment of Rs. 2000/-. But the plaintiff has in his evidence stated that he never sent the balance amount of Rs. 2000/-
to the defendant No. 1. He took the plea that as the defendant No. 1 demanded 95% of the consideration money he did not send Rupees 2000/- being the balance earnest money.
20. It was the obligation of the plaintiff to perform his part of the contract. Even if he did not agree to pay 95% of the balance consideration money as was subsquently made by the defendant No. I after he had occupied the suit premises, the plaintiff could have intimated that he was not willing to make the 95% of the consideration money immediately but was performing his part of the contract by paying the balance amount of Rs. 2000/-. The fact that the plaintiff did not take any step whatsoever to pay Rs. 2000/- being the balance earnest money which he even agreed to pay within two months from the letter dated 23-5-1980 but the explanation given by the plaintiff in his evidence for not performing that part of the original contract clearly militates against his readiness to perform at least his part of the contract. Moreover, the correspondence clearly revealed that the defendant No. 1 in view of his financial commitment wanted to dispose of his Calcutta properties to get the sale proceeds thereof quickly. As he found that the permission of the State Government might take more time he demanded the payment of 95% of the sale proceeds which amounts to Rs. 38,000 / -. It is surprising that the repeated demands to that effect given by several letters failed to evoke any response from the plaintiff. The correspondence clearly reveals that his financial position was not good that is why he could not make initial payment of Rs. 10,000/ -within one month of 12th March, 1980 and even if the defendant No. 1 gave him time till the month of May, 1980 to pay Rs. 10,000/-, the plaintiff could not make such payment. He asked for two months' time to make the payment of Rs. 2000/- but could not pay even Rs. 2000/- to the defendant and only in the letter of the Advocate made sometime in 1983 prior to the filing of the suit he made a very weak and half-hearted offer to pay the balance of Rs. 2000/ - if the defendant No. 1 insisted upon it. The plaintiff has in his evidence stated that he had Provident Fund amounting to Rs. 35,000/- or Rs. 36,000/- to his credit and he could procure the same from his authority on production of the agreement for sale. No document was produced to show really what amount is lying to his credit at the time when the agreement for sale was entered into. Moreover, the Learned Trial Judge has rightly pointed out that there was no talk of formal agreement for sale and in such case when there was no such formal agreement for sale how could he procure money even from his P.F. Account. The defendant No. 1 performed his part of the contract submitted the application with the Estate Manager seeking the permission for sale. He also paid the certificate dues even though he wanted the plaintiff to pay 95% of the consideration money in order to meet his urgent commitment. If the plaintiff had really (shown?) his readiness to purchase the property, there is no reason as to why he would not respond to it. The fact that he remained completely silent to such request for money by the plaintiff shows that he did not have the readiness namely the financial capability to pay 95% of the consideration money as per the request of the defendant No. 1. The defendant No. 1 has in his evidence stated that when he became convinced that he was not in a position to fulfil his obligation under the contract, he returned back the earnest money. We are unable to hold that such return of earnest money and revoking contract was in any way unjustified. In that view we are satisfied that the plaintiff has failed to prove his readiness and willingness to perform his part of the contract from the date of the agreement till the date of the suit. Even he has not produced sufficient evidence before the Court to show that he had the capability to procure the full consideration money if a decree was passed in his favour, In that view of the matter we are satisfied that the plaintiff is not entitled to get the decree for specific performance of the contract. The appeal, therefore, fails and is hereby dismissed. However, in the facts of the present case we direct the parties to bear the respective costs of this appeal themselves.
Manabendra Nath Roy, J.
21. I agree.
22. Appeal dismissed.