Karnataka High Court
Shankari Pandiyan vs Ramachandra Murthy on 12 January, 2024
RFA No.160/2012
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 12TH DAY OF JANUARY, 2024
PRESENT
THE HON'BLE MRS. JUSTICE K.S. MUDAGAL
AND
THE HON'BLE MR. JUSTICE K. V. ARAVIND
REGULAR FIRST APPEAL No.160/2012 (SP)
BETWEEN:
1. SHANKARI PANDIYAN,
W/O SOUNDARA PANDIYAN N.C.,
AGED ABOUT 53 YEARS,
R/AT FLAT NO 15,
MATHRU PRASAD, LOTTEGOLLAHALLI,
RMV II STAGE,
BANGALORE-560 094.
...APPELLANT
(BY SRI ANIL KUMAR SHETTY, ADVOCATE)
AND:
1. RAMACHANDRA MURTHY,
SINCE DEAD BY HIS LR
(a) DR. UMAVATHY R.,
D/O LATE RAMACHANDRA MURTHY,
AGED 36 YEARS,
(b) DR. LAKSHMIKUMARI,
D/O LATE RAMACHANDRA MURTHY,
AGED 34 YEARS,
RFA No.160/2012
2
(c) DR. NETHRAVATHY,
D/O LATE RAMACHANDRA MURTHY,
AGED 30 YEARS,
(a) TO (c) ARE R/AT NO 971/5,
15TH 'A' CROSS, 'A' SECTOR,
YELAHANKA NEW TOWN,
BANGALORE 560 064.
2. P. VIMALA VASANTHAKUMARI,
W/O K. RAMACHANDRA MURTHY,
AGED 55 YEARS,
R/AT NO 1188, HIG, 9TH 'D' CROSS,
YELAHANKA NEW TOWN,
BANGALORE 560 064.
...RESPONDENTS
(BY SRI KEMPANNA, ADVOCATE FOR
R1(a) & (c) AND R2;
R1(b) SERVED)
THIS REGULAR FIRST APPEAL IS FILED UNDER
SECTION 96 OF CPC, PRAYING TO SET ASIDE THE
JUDGMENT AND DECREE DATED 30.09.2011 PASSED IN
O.S.10316/2006 ON THE FILE OF THE XI ADDITIONAL
CITY CIVIL JUDGE, BANGALORE CITY (C.C.H.No.8),
DECREEING THE SUIT FOR SPECIFIC PERFORMANCE.
THIS REGULAR FIRST APPEAL HAVING BEEN HEARD
AND RESERVED FOR JUDGMENT ON 16.11.2023, THIS DAY
K.V. ARAVIND J., PRONOUNCED THE FOLLOWING:
RFA No.160/2012
3
JUDGMENT
The present appeal is by the defendant challenging the judgment and decree dated 30.09.2011 in O.S.No.10316/2006 passed by the XI Additional City Civil Judge, Bangalore City, decreeing the suit for specific performance of agreement of sale.
2. For the purpose of convenience, parties are referred to as per their ranks in the original suit.
3. Brief facts of the case are:-
The subject matter of suit is, property bearing No.29 (Old No.226, 227 and 228), II Main Road, Sheshadripuram, Bengaluru, (hereinafter referred as 'suit schedule property' for short). Defendant is the absolute owner of the suit schedule property. Plaintiff Nos.1 and 2 entered into agreement of sale dated 13.05.2005 (Ex.P.1) regarding the suit property with the defendant. In terms of the agreement, total sale consideration agreed is Rs.24,50,000/-. As on the date of agreement, plaintiffs RFA No.160/2012 4 have paid a sum of Rs.12,00,000/- as advance, out of which, Rs.2,00,000/- by way of cash, Rs.1,00,000/- by Cheque bearing No.736426, dated 03.05.2005 and a sum of Rs.9,00,000/- by Cheque bearing No.736427, dated 13.05.2005. Both cheques were drawn on Bank of India, Margosa Road, Bengaluru. The plaintiffs paid a further sum of Rs.2,40,000/- on 21.12.2005 at the request of the defendant. The plaintiffs have paid property tax of Rs.1,03,688/- on behalf of the defendant. The balance sale consideration of Rs.9,06,312/- was agreed to be paid at the time of registration of the sale deed. The agreed time for execution of sale deed was 45 days from the date execution of agreement of sale. In terms of the agreement, sale of the schedule property shall be free from all encumbrances, attachments, court or acquisition proceedings or charges of any kind.
4. The defendant issued legal notice Ex.P4 dated 14.10.2006 terminating the agreement of sale due to failure on the part of the plaintiffs to pay the balance RFA No.160/2012 5 consideration and get the sale deed registered in their favour. The plaintiffs issued reply notice dated 30.10.2006 Ex.P.5 stating that the plaintiffs were always ready and willing to perform their part of contract and called upon the defendant to receive the balance consideration and execute the sale deed.
5. The defendant on summons being issued appeared and filed written statement denying the plaint averments that agreement of sale was executed on receipt of advance consideration of Rs.12,00,000/-. The sale deed was to be registered within 45 days from the date of agreement of sale, time was essence of the contract. In view of failure on the part of the plaintiffs to get the sale deed registered by paying the balance sale consideration, defendant requested the plaintiffs to return the original title deeds and take back the advance consideration. At that point of time, plaintiffs requested the defendant to grant some more time and paid further advance amount of Rs.2,40,000/- with an assurance that they would get the RFA No.160/2012 6 sale deed registered before March 2006 by paying the balance consideration amount. It was alleged that even after lapse of six months from the date of their further assurance, plaintiffs failed to get the sale deed registered in their favour by paying the balance consideration. The defendant left with no other alternative, issued notice terminating the agreement of sale dated 13.05.2005 and calling upon the plaintiffs to return all original title deeds and to collect an amount of Rs.10,80,000/- after deducting 25% of the advance amount towards damages.
6. The defendant contends that there were tenants in the building and she agreed to sell the schedule property at a lower price than the market value on the plaintiffs undertaking the responsibility of evicting the tenants. Had the defendant paid the balance consideration within the agreed time, she could have discharged her Company's (M/s. Hidden Hotels Private Limited) loan under One Time Settlement scheme of the Karnataka State Finance Corporation by the sale proceeds of the schedule property. RFA No.160/2012 7 In view of failure of the plaintiffs to perform their part of the contract by paying the remaining consideration within the agreed time, defendant was compelled to sell another property to clear the loan of her Company with KSFC. It is the plaintiffs who were not ready and willing to get the sale deed registered by paying the balance consideration. Thus, defendant sought dismissal of the suit.
7. The Trial Court on the aforesaid pleadings framed the following issues;
i) Whether the plaintiffs prove that the defendant has agreed to sell the schedule property for consideration of Rs.24,50,000/- and by receiving an advance amount of Rs.12,00,000/- as entered into an agreement of sale on 13.06.2005?
ii) Whether the plaintiffs prove that they were and are always ready and willing to perform their part of the contract?
iii) Whether the time is essence of the contract?
RFA No.160/20128
iv) Whether the defendant proves that due to the non-compliance of the agreement of sale, she has terminated the agreement as alleged in para No.7 of the written statement?
v) Whether the plaintiffs are entitled for the relief of specific performance of the sale agreement?
vi) What decree or order?
8. Plaintiff No.1 got examined himself as PW.1 and one Sri Deepak H. Mamtura witness to Ex.P1 was examined as PW.2. Plaintiffs got marked Exs.P.1 to P.19 as their documentary evidence. The defendant examined herself as DW.1 and got marked Exs.D.1 to D.14 as documentary evidence in support of her case.
9. The Trial Court on hearing the parties and considering the oral and documentary evidence proceeded to hold that plaintiffs have proved that defendant has agreed to sell the schedule property in their favour for RFA No.160/2012 9 consideration of Rs.24,50,000/- and receiving advance consideration of Rs.12,00,000/- executed agreement of sale on 13.05.2005. The Trial Court further held that plaintiffs were always ready and willing to perform their part of the contract. Insofar as issue No.3, in view of receipt of an advance of Rs.2,40,000/- on 21.12.2005, much after the expiry of stipulated time of 45 days, held that time was not essence of the contract. Insofar as issue No.4 regarding termination of agreement, Trial Court held that as plaintiffs were always ready and willing to perform their part of the contract and time was not essence of contract, the defendant cannot cancel the agreement unilaterally by issuing legal notice dated 14.10.2006.
10. The Trial Court proceeded to hold that plaintiffs are entitled for the relief of specific performance of sale agreement and decreed the suit directing the plaintiffs to deposit balance consideration of Rs.9,06,312/- in the Court within two months from the date of the order and directed the defendant to execute registered sale deed conveying RFA No.160/2012 10 the suit schedule property in terms of agreement of sale Ex.P.1 within one month from the date of deposit of balance consideration amount in the Court by the plaintiffs. The plaintiffs were granted liberty to get their sale deed registered through process of Court in the event of failure on the part of the defendant to comply with the direction to execute the registered sale deed. The defendant is declared to be entitled for balance consideration of Rs.9,06,312/-, which would be deposited by the plaintiff.
11. The defendant/appellant being aggrieved by the above judgment and decree has preferred this appeal.
12. Submissions of Sri Anil Kumar Shetty, learned counsel for the appellant;
i) There is no dispute regarding execution of sale agreement and terms of the agreement. Payment of further advance of Rs.2,40,000/- is also admitted, whereas disputed the other payments said to have been incurred by the defendant by way of property tax.
RFA No.160/201211
ii) The agreement of sale with stipulation of period of 45 days to complete the transaction was entered into for the purpose of clearing the loan raised by the defendant's Company from KSFC. As the intention of sale was to clear One Time Settlement offered by KSFC, time being essence of contract has to be gathered from the surrounding circumstances. The plaintiffs had no intention to purchase the property for themselves. To clear the loan, defendant had to sell other property which is subject matter of Ex.D.14. The second property at Ex.D.14 was sold for the purpose of repayment of loan and Ex.D.9 would evidence repayment of loan to KSFC. The extension of time, if any was only upto 31.03.2006. The plaintiffs were not ready and willing to perform their part of the contract till the legal notice Ex.P.4 was issued by the defendant terminating the agreement to sell dated 13.05.2005.
iii) There was no offer or communication made by the plaintiffs to perform their part of the contract in relation to Ex.P.1. The Trial Court has not recorded any reasons RFA No.160/2012 12 supporting the finding on the sufficiency and availability of funds during 45 days of the contract period. Readiness can only be proved by demonstrating the availability of funds. Exs.P.17 to P.19, Bank Passbooks of plaintiffs do not disclose availability of funds during 45 days of the agreement. The agreement to sell at Ex.P.1 has been terminated through legal notice dated 14.10.2006 Ex.P.4. Without seeking declaration to nullify Ex.P.4, the suit was not maintainable.
iv) The contention of the plaintiffs that in view of existence of tenants in the schedule property, which was an impediment to execute the sale deed and lead to impossibility of performance as contended by the plaintiffs is incorrect as they were statutory tenants. PW.1 has clearly admitted that handing over vacant possession was not the condition in the sale agreement. Therefore, the decree for specific performance is unsustainable. The appeal deserves to be allowed and suit shall be dismissed. RFA No.160/2012 13
13. In support of his contentions, learned counsel placed reliance on the following judgments;
i) I.S. Sikandar (D) by LRs. Vs. K. Subramani and others in (2013) 15 SCC 27.
ii) C. Haridasan vs. Anappath Parakkattu Vasudeva Kurup and others in Civil Appeal No.4072 of 2022 (Arising out of SLP (C) No.2567 of 2022).
iii) Desh Raj and others vs. Rohtash Singh in AIR 2023 SC 163.
iv) Chand Rani (Dead) by LRs. vs. Kamal Rani (Dead) by LRs. in AIR 1993 SC 1742.
v) K. Karuppuraj vs. M. Ganesan in AIR 2021 SC 4652.
vi) Her Highness Maharani Shantidevi P. Gaikwad vs. Savjibai Haribai Patel and others in AIR 2001 SC 1462.
vii) Rajasthan Breweries Ltd. vs. The Stroh Brewery Company in AIR 2000 Delhi 450.
RFA No.160/201214
14. Submissions of Sri Kempanna, learned counsel for respondent Nos.1(a) and (c);
i) The defendant has nowhere stated in the pleading that agreement of sale was to clear the loan. It is only during evidence, by way of amendment of the written statement, the theory of sale agreement to clear the loan was introduced. The loan was only Rs.4,00,000/- and the loan was not availed by the defendant. No hardship has been caused to the defendant. Exs.P.17 to P.19, Bank Passbooks would demonstrate availability of remaining consideration to be payable to the defendant to get the sale deed executed, which would demonstrate readiness and willingness on the part of the plaintiffs.
ii) By accepting further consideration of Rs.2,40,000/- on 21.12.2005, time was extended for completion of the sale till 31.03.2006. At the request of the defendant, plaintiffs have paid property tax of the schedule property. The tax paid receipt at Ex.P.2 would show plaintiff No.1 as RFA No.160/2012 15 payer of the tax. Electricity Bills also have been paid to an extent of Rs.9,927/- as per Exs.P.7 to P.12.
iii) The intention of defendant to sell the schedule property can be gathered from Clause (6) of Ex.P.1, which would disprove the theory of sale for repayment of loan through One Time Settlement canvassed by the defendant. As per Clause (6) of Ex.P.1, execution of the sale deed had to take place only after the schedule property is free from all encumbrances, attachments, court or acquisition proceedings or charges of any kind. The schedule property was occupied by tenants, HRC cases were pending and pendency of HRC cases between the defendant and the tenants was not disclosed to the plaintiffs.
iv) As the recitals in sale agreement Ex.P.1 and in sale deed Ex.D.14, the intention of sale agreement was not for the purpose of repayment of loan to KSFC. PW.1 in her cross-examination has clearly admitted that on receipt of Rs.2,40,000/- on 21.12.2005, period of agreement to sell was extended till end of March 2006. No forfeiture clause RFA No.160/2012 16 in the agreement and hence, defendant is not entitled to forfeit any part of advance consideration.
15. In support of his submissions, learned counsel for the respondents placed reliance on the following judgments;
i) Basavaraj vs. Padmavathi and another in AIR 2023 SC 282.
ii) P. Ramasubamma vs. V. Vijayalakshmi and others in (2022) 7 SCC 384.
iii) P. Daivasigamani vs. S. Sambandan in AIR 2022 SC 5009.
iv) Shri Pandurang vs. Shri Ravi in RFA No.100230/2017, DD 08.05.2020.
16. On hearing the parties and on examination of records, the points that arise for our consideration are;
i) Whether the plaintiffs prove that they were ready and willing to perform their part of the contract?
RFA No.160/201217
ii) Whether time was the essence of the
contract?
iii) Whether termination of agreement by the
defendant is justified and without seeking declaration regarding termination, suit is maintainable?
Re. Point No.1
17. The plaintiffs in the plaint have categorically pleaded that total consideration agreed was Rs.24,50,000/-, defendant received advance amount of Rs.12,00,000/- i.e. Rs.2,00,000/- by way of cash and Rs.1,00,000/- and Rs.9,00,000/- by way of cheques. The agreement is dated 13.05.2005. The time agreed to execute the sale deed is 45 days from the date of agreement subject to compliance of other conditions by the defendant. The defendant has received a further sum of Rs.2,40,000/- on 21.12.2005 and extended the agreement time till March 2006. In addition to the advance consideration, plaintiffs have paid a sum of Rs.1,03,688/- as property tax and Rs.9,927/- RFA No.160/2012 18 towards electricity charges relating to the schedule property. The balance consideration payable was Rs.9,06,312/-. The plaintiffs had sufficient source to make the payment. The defendant has not disputed execution of agreement and receipt of consideration of Rs.12,50,000/- and Rs.2,40,000/-. The defendant has alternatively pleaded that, even if the additional advance consideration of Rs.2,40,000/- was received on 21.12.2005 and extended the agreement till end of March 2006, in view of plaintiffs having not registered the sale deed before March 2006, plaintiffs are not entitled for specific performance as their readiness and willingness was not proved.
18. Section 16 of the Specific Relief Act, 1963, (hereinafter referred to as 'S.R. Act' for short) as it stood during relevant time, imposes conditions for relief of specific performance. Section 16 reads as under:
"16. Personal bars to relief.--Specific performance of a contract cannot be enforced in favour of a person--RFA No.160/2012
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(a) who would not be entitled to recover compensation for its breach; or
(b) who has become incapable of performing, or violates any essential term of, the contract that on his part remains to be performed, or acts in fraud of the contract, or wilfully acts at variance with, or in subversion of, the relation intended to be established by the contract; or
(c) 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 terms the performance of which has been prevented or waived by the defendant.
Explanation.--For the purposes of clause (c),--
(i) where a contract involves the payment of money, it is not essential for the plaintiff to actually tender to the defendant or to deposit in court any money except when so directed by the court;RFA No.160/2012 20
(ii) the plaintiff must aver performance of, or readiness and willingness to perform, the contract according to its true construction."
19. The sale agreement is dated 13.05.2005. Hence, Section 16 of S.R. Act as existed prior to amendment is applicable, as extracted above. In compliance of the conditions of Section 16(c) read with Explanation to the said Clause, the plaintiffs have proved that they were always ready and willing to perform the essential terms of the contract which are to be performed by them. The plaintiffs have proved the availability of funds to pay the remaining consideration in performance of the contract.
20. The contention of defendant that plaintiffs have to prove availability of funds within the time limit of 45 days of the agreement is not acceptable for the reason that in view of receipt of further advance of Rs.2,40,000/- on 21.12.2005 much after expiry of 45 days as stipulated in the agreement Ex.P.1, the time limit of 45 days has been waived. Further, in cross-examination, DW.1 has RFA No.160/2012 21 specifically accepted that on receipt of further advance consideration of Rs.2,40,000/-, the time limit was extended till March 2006. In the examination-in-chief, the defendant has specifically made an averment that the period to execute the sale deed was extended till March 2006. In view of receipt of Rs.2,40,000/- on 21.12.2005 and agreement to extend the time provided in Ex.P.1 would establish that plaintiffs were ready and willing to perform their part of the contract.
21. The Hon'ble Supreme Court in the case of Govind Prasad Chaturvedi vs. Hari Dutt Shastri and another in (1977) 2 SCC 539 has held as under;
" It is settled law that the fixation of period within which the contract has to be performed does not make the stipulation as to time the essence of the contract. When a contract relates to sale of immovable property, it will normally be presumed that time is the essence of the contract. It may also be mentioned that the language used in the agreement is not such as to indicate in unmistakable terms that the time is of the essence of the contract. The intention to treat time as the RFA No.160/2012 22 essence of the contract may be evidenced by circumstances which are sufficiently strong to displace the normal presumption that in a contract of sale of land stipulation as to time is not the essence of the contract."
22. The Hon'ble Supreme Court in the case of M/s. Hind Construction Contractors by its Sole Proprietor Bhikam Chand Mulchand Jai (Dead) by LRs vs. State of Maharashtra in (1972) 2 SCC 70, has held that when the parties to the contract have stipulated time to complete the agreement and if the same is extended and on extension of the said stipulated period by the parties to the contract, such clause has to be construed as rendering ineffective the express provisions relating to the time being essence of the contract. In the present case, even if the stipulation of 45 days to complete the transactions is considered as time being the essence of the contract, in view of subsequent extension by the defendant on acceptance of additional advance, the stipulated period gets waived and is to be held that 45 days was never RFA No.160/2012 23 intended by the parties to be of the essence of the contract.
23. Applying the above principle to the facts of the present case, though Ex.P.1 agreement stipulated 45 days to complete the transaction, the defendant on receipt of further advance consideration on 21.12.2005 extending the period till March 2006 would show that the time was not the essence of the contract and that rendered the clause regarding stipulation of time ineffective.
24. It is the specific plea of the plaintiffs that Ex.P.1 mandates the defendant/vendor to make the schedule property free from all encumbrances, attachments, court or acquisition proceedings or charges of any kind. DW.1 in her cross-examination has accepted pendency of HRC proceedings. That goes to show that defendant had not performed her part of contract namely clearing the suit schedule property from court proceedings. Therefore, the defendant's contention that plaintiffs failed to prove their readiness and willingness deserves no merit. RFA No.160/2012 24
25. Ex.P.17 - Passbook of Bank of India and Ex.P.19 - Passbook of Canara Bank of plaintiff No.1 and Ex.P.18 - Passbook of plaintiff No.2 would clearly establish that not only during the period of 45 days of agreement and also during extension of time till March 2006, sufficient funds to make payment of balance consideration of Rs.9,06,312/- was available. Further, the transactions as reflected in Exs.P.17 to P.19 would clearly establish that plaintiffs had sufficient source for making payment of remaining consideration.
26. In view of Explanation (i) to Clause (c) to Section 16 of S.R. Act, the plaintiffs need not actually deposit the money with the defendant or before the Court. Hence, it has to be accepted that plaintiffs were ready and willing to perform their part of the contract. As recorded by the Trial Court, pending litigation with the tenants of schedule property was the reason for delay in execution of sale deed on the part of the defendant.
RFA No.160/201225
27. The defendant's specific contention that till notice at Ex.P.4 terminating the agreement to sell Ex.P.1 was issued, there was no attempt made by the plaintiffs to get the sale deed registered, is also not acceptable. In view of Clause (6) of Ex.P.1, it was the obligation on the part of the defendant to make the schedule property free from court proceedings.
28. Further contention of the defendant that even as on the date of suit, schedule property was occupied by tenants, circumstances has not changed compared to the period of agreement, existence of tenants was not hindrance or impediment for execution of sale deed, is also not correct and cannot be accepted. Though Ex.P.1 does not contemplate handing over of vacant possession, Clause (6) of Ex.P.1 mandates making schedule property free from court proceedings. It is by virtue of notice issued on 14.10.2006 Ex.P.4 expressing the intention of defendant not to perform her part of the contract, plaintiffs were constrained to seek specific performance of the contract by RFA No.160/2012 26 filing the suit. Total consideration agreed as per Ex.P.1 is Rs.24,50,000/-. By the date of termination of agreement and much before filing of suit, plaintiffs had paid Rs.15,43,688/-, which is substantial portion of consideration. Plaintiffs have proved through Exs.P.17 to P.19 regarding availability of funds.
29. Learned counsel for the appellant relied on the judgment of Hon'ble Supreme Court in the case of C.Haridasan (supra), to contend that even though there was an impediment by way of tenants occupying the schedule property and disputes pending before the Court, there was no impediment for the plaintiffs to deposit the remaining consideration to demonstrate their readiness and willingness and no steps were taken to execute the sale deed by the plaintiffs. The Hon'ble Supreme Court observed that plaintiff therein had merely paid 4% of the consideration, no efforts were made to get the sale deed executed, no steps were taken to perform his part of the contract, no notice was issued and no explanation offered RFA No.160/2012 27 for the delay in getting the sale deed executed. In such circumstances, the Hon'ble Supreme Court held that the plaintiff is not entitled for specific performance in terms of Section 16 (c) of S.R. Act.
Whereas in the present case, the total consideration agreed is Rs.24,50,000/- and Rs.12,50,000/- was paid at the time of the agreement, further advance consideration of Rs.2,40,000/- was paid on 21.12.2005, a sum of Rs.1,03,688/- was paid as property tax on behalf of the defendant, in all, a sum of Rs.15,93,688/-. The consideration due was only Rs.9,06,312/-. As substantial amounts was already paid and the plaintiffs proved availability of remaining consideration by Exs.P.17 to P.19, the above judgment is not applicable to the facts of the present case.
30. Learned counsel for the respondents has placed reliance on the judgments of the Hon'ble Supreme Court in the case of Basavaraj v. Padmavathi and another and P. Ramasubbamma vs. V. Vijayalakshmi and others RFA No.160/2012 28 referred to supra, to contend that substantial consideration has been paid and availability of funds have been proved. Hence, the plaintiffs were always ready and willing to perform their part of the contract. The above judgments are aptly applicable to the facts of the present case and advance the plaintiffs' case.
31. In view of the above discussion, we hold that plaintiffs were always ready and willing to perform their part of the contract. Point No.1 is answered accordingly. Re. Point No.2.
32. The defendant contends that she agreed to sell the property to clear the loan borrowed by her Company namely, M/s. Hidden Hotels Private Limited from KSFC, this period of 45 days was agreed to complete the sale. Thereby, time was essence of the contract. Whereas, the defendant has received a sum of Rs.2,40,000/- on 21.12.2005 and an endorsement has been made in Ex.P.1 accepting receipt of Rs.2,40,000/- after expiry of 45 days of the time agreed under agreement of sale. DW.1 in her RFA No.160/2012 29 written statement has admitted acceptance of the request made by the plaintiffs to extend the time and acceptance of further advance of Rs.2,40,000/- by extending the time till March 2006. Contrary to the extension of time till March 2006, the defendant has contended that time was the essence of contract. The receipt of additional advance of Rs.2,40,000/- on 21.12.2005 and extension of time till March 2006 has also been accepted by the defendant in her affidavit evidence and cross-examination. It is further agreed that there was no written agreement/endorsement for extension of time. It is further admitted in the cross- examination that in the event of default by either of the parties, they are entitled to seek damages.
33. In view of the law laid down by the Hon'ble Supreme Court in the cases of Govind Prasad Chaurvedi and M/s. Hind Construction Contractors (supra), the facts and circumstances and conduct of the parties would not displace the presumption that when contract relates to sale RFA No.160/2012 30 of immovable property, time is not the essence of the contract.
34. The specific admissions made regarding acceptance of additional advance of Rs.2,40,000/- and making endorsement to that effect on Ex.P.1 and specific admission of the defendant in her cross-examination regarding the extension of agreement period till March 2006, would clearly establish that parties to the contract never intended or agreed to that time was essence of the contract.
35. Further admission of the defendant that there was no written agreement/endorsement regarding extension of time, which is made much after expiry of 45 days agreed in Ex.P.1 would also clearly establish that time was not essence of the contract. Ex.P.1 is dated 13.05.2005, 45 days would expire on 28.06.2005. After expiry of six months from the end of 45 days, defendant has accepted additional advance of Rs.2,40,000/- on 21.12.2005, agreed and extended the contract till March 2006. In view RFA No.160/2012 31 of the aforesaid facts and the judgments of Hon'ble Supreme Court in the cases of Govind Prasad Chaurvedi and M/s. Hind Construction Contractors (supra), it has to be held that time was not the essence of the contract.
36. It is settled position of law that in the case of sale of immovable property, there is no presumption as to time being the essence of contract. Even if it is not the essence of contract, Court may infer that it has to be performed in a reasonable time by considering the express terms of contract, nature of the property and surrounding circumstances. In view of evidence of DW.1 accepting additional advance and extending time, recitals of Ex.P.1 and Ex.D.14 would not indicate that purpose of sale was to clear the liability under One Time Settlement with KSFC. Clause (6) of Ex.P.1 mandates property shall be conveyed free from court proceedings. As admitted by DW.1, proceedings at the instance of tenants were pending in the Court. Considering the above circumstances, when default in performing the obligations are attributable to the RFA No.160/2012 32 defendant, it cannot be held that time was essence of the contract to deny relief to the plaintiffs/purchasers.
37. Ex.P.14 was relied on by the defendant to contend that plaintiffs' failure to get the sale deed executed compelled the defendant to sell another property in order to repay the loan to KSFC under One Time Settlement and purpose of Ex.P.1 is frustrated. Ex.D.6 letter dated 16.01.2006 by KSFC in favour of defendant, Ex.D.7 letter dated 02.02.2006 by defendant to KSFC, Ex.D.8 letter dated 22.03.2006 by KSFC to defendant, Ex.D.9 letter dated 27.04.2006 by defendant to KSFC, Exs.D.10 and D.11 demand drafts, Ex.D.12 receipt by KSFC and Ex.D.13 letter by KSFC intimating closure of loan though have proximity to Ex.D.14 Sale deed, the averments in Ex.D.14 would not indicate or prove that property under Ex.D.14 was sold only for the purpose of repayment of loan and such sale necessitated due to failure of the plaintiffs to complete the contract in terms of Ex.P.1. Therefore, such contention cannot be accepted.
RFA No.160/201233
38. Learned counsel for the appellant has placed reliance on the judgment of the Hon'ble Supreme Court in the case of Desh Raj (supra) to contend that, in view of time stipulated under the agreement to complete the transaction, time is essence of the contract. The above judgment is not applicable to the facts of the present case. The Hon'ble Supreme Court has only recorded a finding that though specific contention has been raised regarding time bound performance being an essence of the contract, the Courts below have failed to render any finding on that aspect. In the present case, though parties have agreed to perform the contract within a period of 45 days, subject to compliance of other conditions, defendant has extended the time on receipt of further consideration of Rs.2,40,000/- on 21.12.2005. Thus, the understanding of the parties to the agreement would substantiate that time was not essence of the contract.
39. Learned counsel for the appellant has further placed reliance on the judgment of Hon'ble Supreme Court in the RFA No.160/2012 34 case of Chand Rani (supra), to contend that even if time is not essence of the contract, Court has to infer that it has to be performed within a reasonable time by considering the express terms of the contract, nature of the property and surrounding circumstances. The above judgment is not applicable to the facts of the present case in view of the express terms of the contract and conduct of the parties in extending the period of compliance of the contract and nature of the property which is occupied by the tenants, agreement between the parties for handing over the said property free from court proceedings. The defendant contended that the purpose of sale of the property was to clear loan with KSFC. However, the sale agreement does not refer to the said purpose. Further, the loan was not in relation to the defendant, but in respect of the Company allegedly owned by her.
40. In view of the above discussion, we are of the view that Trial Court has rightly arrived at the conclusion that time was not essence of the contract.
RFA No.160/201235 Re. Point No.3.
41. It is the specific contention of the defendant that since plaintiffs failed to perform their part of contract in time bound manner, the agreement of sale dated 13.05.2005 has been duly terminated by notice dated 14.10.2006, without seeking declaration regarding validity of the same, the suit is not maintainable.
42. Ex.P.1 Clause(4) refers to completion of execution of sale deed within 45 days from the date of agreement i.e. 13.05.2005. However, the defendant on 21.12.2005 has received an additional consideration of Rs.2,40,000/-. In the written statement, affidavit evidence and in her cross- examination defendant has admitted that in view of receipt of further advance of Rs.2,40,000/-, the period for execution of the sale deed has been extended till March 2006. The defendant has admitted that disputes by the tenants are pending before the Court. In view of the above admissions, it is clear that the schedule property is RFA No.160/2012 36 not free from court proceedings as has been agreed in Ex.P.1 at Clause (6).
43. The plaintiffs have proved that they were ready and willing to perform their part of the contract and by Exs.P.17 to P.19, availability of funds for payment of remaining consideration has also been proved. Further, readiness and willingness of the plaintiffs and availability of funds for payment of remaining consideration has been held in favour of the plaintiffs while answering Point No.1. Hence, the Trial Court has rightly arrived at the conclusion that in view of plaintiffs always being ready and willing to perform their part of the contract, availability of funds and also in view of the conclusion that time was not essence of the contract, plaintiffs have not committed any breach of the terms of agreement of sale Ex.P.1.
44. The defendant has not performed her obligation under the agreement, which amounts to breach of conditions by her. Therefore, it is not open to the defendant to allege breach by plaintiffs and terminate the RFA No.160/2012 37 agreement to sell by defeating the very purpose of the agreement. Challenge to the termination of agreement is required only when vendor has complied her part of obligation under the Agreement. On violating the agreement, if she terminates the agreement prematurely, it would amount to arbitrary action and leads to illegal termination, which need not be challenged.
45. If the purchaser establishes readiness and willingness as per Section 16 (c) of S.R Act, termination has no consequences. In terms of Ex.P.1, parties have not agreed for termination of contract as a consequence of either party defaulting the conditions of the agreement. When the agreed conditions do not provide for termination of agreement, unilateral termination of agreement carries no legal sanctity and does not extinguish the right accrued to the purchaser to seek specific performance of the agreement. Therefore, plaintiffs cannot be compelled to seek declaration regarding such termination. RFA No.160/2012 38
46. The judgment of Hon'ble Supreme Court relied on by learned counsel for the defendant/appellant in the case of I.S. Sikandar (D) by LRs (supra), is not applicable to the facts of the present case. In the case before the Hon'ble Supreme Court, the period to execute the sale deed was extended on mutual agreement. The plaintiff was not ready and willing to perform his part of the contract. Legal notice was issued requesting for extension, extension was granted, even after expiry of the extended period, plaintiff could not get the sale deed executed. In the suit filed by the plaintiffs vendor, specific issue was framed by the Trial Court regarding readiness and willingness on the part of the plaintiff to perform his part of the contract and the same was answered against the plaintiff. In the said suit no prayer was made challenging the termination of agreement of sale. In view of the finding that plaintiff was not ready and willing to perform his part of the contract, the Hon'ble Supreme Court proceeded to hold that in view of the valid termination of agreement to sell by issuance of legal notice, without seeking declaratory relief regarding RFA No.160/2012 39 termination of agreement of sale, suit for specific performance is not maintainable.
Whereas, in the present case, the plaintiffs have proved that they were ready and willing throughout to perform their part of the contract. They had sufficient funds to meet the remaining consideration. The defendant has accepted additional advance consideration and extended the time for execution of sale deed. Under Ex.P.1 defendant had agreed to transfer the schedule property without any court proceedings. As admitted by the defendant, court proceedings were pending between defendant and the tenants. The plaintiffs in their reply notice and plaint have specifically contended that the delay in not seeking registration of sale deed was due to non- compliance of the conditions of agreement by the defendant herself. Further, in view of our answer to Point Nos.1 and 2 holding that plaintiffs were always ready and willing to perform their part of the contract and time was not essence of the contract, the judgment of Hon'ble RFA No.160/2012 40 Supreme Court referred to supra is not applicable to the facts and circumstances of the present case.
47. Reliance is placed on the judgment of the Hon'ble Apex Court in the case of K. Karuppuraj (supra), to contend that change of stand is not permitted without amendment of pleadings to contend that it was never agreed to execute the sale deed after eviction of the tenants. Clause (6) of the agreement does not or could not be read to mean that the property should be free from occupancy. In view of specific language in Clause 6 of the agreement and also in view of the specific admission of the defendant in her cross-examination regarding litigating tenants being in possession even as on the date of suit, the above contention is not acceptable and the judgment is not applicable to the facts of the present case.
48. Reliance was placed on the judgment of the Hon'ble Apex Court in the case of Her Highness Maharani Shantidevi P. Gaikwad vs. Savjibai Haribai Patel and others (supra) and of Delhi High Court in the case of RFA No.160/2012 41 Rajasthan Breweries Ltd. (supra), to contend that in view of non-performance of the contract, defendant was at liberty to terminate the contract. In the present case, as agreed between the parties, either party committing breach, the aggrieved party was entitled to enforce specific performance and there was no specific Clause or agreement for termination of the contract. Whereas, in the case before the Hon'ble Supreme Court, the terms of contract provided for termination of agreement. Hence, those judgments are not applicable to the facts of the present case.
49. Reliance is placed by learned counsel for the respondents on the judgment of the Hon'ble Supreme Court in the case of P. Daivasigamani (supra) to contend that delay in filing specific performance suit is to be considered with reference to the conduct of the vendee and while exercising the discretionary relief, Court has to consider factors including hardship to the vendor as well as the vendee.
RFA No.160/201242
50. Further reliance has been placed on the Division Bench judgment of this Court in the case of Pandurang vs. Ravi in RFA No.100230/2027, dated 08.05.2020. The above judgment refers to the relief to be granted in consideration of Section 20 of S.R. Act on the ground of hardship. Section 20 of S.R Act confers discretionary jurisdiction on the Court to grant decree for specific performance subject to discretion guided by judicial principles and not being arbitrary.
51. Section 20(2) of S.R. Act provides for circumstances in which Court may exercise discretion not to grant decree of specific performance. To attract, Section 20(2) of S.R. Act, the defendant has to specifically plead the circumstances attracting Section 20(2) of S.R. Act. In the present case, the defendant has not pleaded any circumstance provided under Section 20(2) of S.R. Act.
Section 20(3) of S.R. Act provides for exercising discretion to decree specific performance when plaintiff has RFA No.160/2012 43 done substantial acts in consequence of contract. In the present case, out of total consideration of Rs.24,50,000/-, substantial amount of Rs.15,43,688/- has been paid. Failure to exercise discretion to grant decree for specific performance would cause hardship to the plaintiff. The plaintiffs have paid substantial amounts out of the agreed consideration and made available the remaining consideration in their accounts during the agreement period. The plaintiffs were always ready and willing to perform their part of the contract. It is the defendant who failed to perform her obligation under the contract while enjoying the benefit of substantial consideration paid. If a discretion to grant decree for specific performance is not exercised in respect of agreement dated 13.05.2005 after lapse of 18 years, the plaintiffs would be deprived of the property as well as utilization of the substantial amounts paid. In view of investment of time, money, the resources and after lapse of approximately 18 years, the plaintiffs would not be in a position to acquire similar property or refund of the substantial amount would not have the same RFA No.160/2012 44 value due to inflation. The Trial Court has rightly exercised the discretion. Therefore, the above referred judgment aptly applies to the facts of the present case.
52. The Trial Court on sound appreciation of evidence and applicable law has rightly granted decree for specific performance. We find no infirmity in the judgment of the Trial Court warranting interference of this Court. Hence, the following;
Order Appeal is dismissed with costs.
Sd/-
JUDGE Sd/-
JUDGE mv