Madras High Court
Narasimhan vs Balammal on 12 September, 1988
Equivalent citations: (1988)2MLJ211
ORDER Srinivasan, J.
1. This revision petition is filed by the legal representative of the defendant in the suit O.S. No. 1798 of 1974 on the file of the Fifth Assistant Judge, City Civil Court, Madras against an order dismissing an application under section 28 of the Specific Relief Act, to rescind the contract. The suit was filed by the respondent. herein for specific performance of an agreement dated 29.11.1973. Under the agreement the consideration agreed was Rs. 12,300, out of which a sum of Rs. 500 was paid in advance. It was agreed that the respondent should discharge the mortgage over the property executed by the vendor, the father of the present petitioner. It was further agreed that the transaction should be completed within three months from the date of the agreement and that after discharging the mortgage and paying certain taxes, the balance should be paid before the Sub Registrar at the time of registration of the sale deed.
2. The respondent averred in the suit that in spite of her notice before the suit, the defendant was not willing to perform his part of the contract and consequently the filing of the suit was necessitated.
3. The trial Court held that the respondent was ready and willing to do her part of the contract and, she was entitled to a decree for specific performance.
4. With regard to the payment of the balance of sale price, the trial Court took note of the fact that under the agreement the plaintiff was to discharge the mortgage debt and pay the arrears of tax and pay the balance only before the Sub Registrar at the time of registration of the document. Hence, the trial Court did not think it necessary or proper to give a direction to the plaintiff to deposit the balance of sale price into Court. Consequently a decree was passed by the trial Court, directing the defendant to execute a sale deed in favour of the plaintiff as per the agreement dated 29-11-1973 for Rs. 12,300. The decree contained a clause that if the defendant failed to execute the sale deed, the plaintiff was at liberty to take out necessary steps to have the deed executed by the Court.
5. The decree was passed on 8-3-1976. The plaintiff filed a petition for execution of the decree on 29-1-1979. The defendant died on 28-2-1978 before service of notice in the execution proceedings. The plaintiff filed a petition to bring the legal representatives on record and the petitioner herein and his sister, who died later, were brought on record as legal representatives. The petitioner had filed a counter affidavit, contesting the execution proceedings. On 28-11-1980 the executing Court passed an order in the following terms Enquiry and deposit of amount by 20-12.
The matter was posted to 20-12-1980. It is not in dispute that the respondent deposited a sum of Rs. 11,800 on 18-12-1980 into Court within the time specified. The said amount was calculated by deducting the sum of Rs. 500 paid by way of advance at the time of the agreement from the total consideration of Rs. 12,300.
6. The execution petition was dismissed on 14-12-1981 on the ground that the relief was sought in the execution proceedings against the dead person and, therefore, it was not maintainable. The executing Court made an observation that the decree holder had not deposited the sale price into Court or disclosed her willingness. Obviously the deposit made on 18-12-1980 was not taken into account by the executing Court. However, the respondent filed C.M.P.No. 3754 of 1981 in this Court against the order dated 14-12-1981 and it was allowed on 25-8-1982. The execution proceedings were remanded to the executing Court with a direction to dispose of the same in accordance with law. That execution proceeding is stated to be still pending.
7. The petitioner herein filed I.A.No. 15777 of 1986 in the trial Court under Section 28 of the Specific Relief Act for rescinding the contract. That application was dismissed by the trial Court. It is against the said order of dismissal that the present revision petition is filed.
8. Learned Counsel for the petitioner contends that the deposit made by the decree-holder on the direction given by the executing Court could not be treated as a valid deposit, as the executing Court had no jurisdiction to extend the time for making deposit. According to learned Counsel for the petitioner, though the decree had not fixed any time for deposit of the consideration amount, the decree-holder ought to have made the deposit within a reasonable time. Learned Counsel points out that under the agreement of 1973 the parties had agreed to complete the transaction within three months from the date of the agreement. It is submitted that the decree-holder ought to have made the deposit within three months from the date of the decree. It is urged that the decree-holder was bound to discharge the mortgage before paying the balance of consideration and before insisting upon the execution of a sale deed and the decree-holder has not so far discharged the mortgage. It is not in dispute that the mortgagee has filed a suit O.S.No. 609 of 1980 and obtained a decree against petitioner as well as the respondent on foot of the mortgage. It is the contention of learned Counsel for the petitioner that the respondent not having performed part of the contract and there being no explanation for her inaction from 8-7-1976, the date of the decree till 29-1-1979, on which the execution petition was filed, the trial Court ought to have rescinded the contract.
9. Learned Counsel for the respondent contends that the decree had not fixed any time for making any payment or deposit and the decree-holder was entitled to make the payment within the period of limitation prescribed for executing the decree and she had filed the execution petition in time. It is submitted by learned Counsel for the respondent that on the direction given by the executing Court, she had made the deposit on 18-12-1980 and the order of the executing Court was not challenged by the petitioner herein by way of revision or appeal and it is not now open to the petitioner to contend that the deposit should not be considered to be a valid deposit. Learned Counsel on both sides invited my attention to several decisions on the question of rescission of contract after passing of the decree. I will refer to them later.
10. Section 28 of the Specific Relief Act, insofar as it is relevant herein is in the following terms:
28. (1) Where in any suit a decree for specific performance of a contract for the sale or lease of immovable property has been made and the purchaser or lessee does not, within the period allowed by the decree or such further period as the court may allow, pay the purchase money or other sum which the court has ordered him to pay, the vendor or lesson may apply in the same suit in which the decree is made, to have the contract rescinded and on such application the court may, by order, rescind the contract either so far as regards the party in default or altogether, as the justice of the case may require.
The section contemplates the failure on the part of the purchaser to pay the purchase money or other sum which the Court has ordered him to pay within the period allowed by the decree or such further period as the Court may grant. Even though the section does not by its terms apply to a decree where no time limit is fixed or no time is granted for payment of money, it is now well settled that the principles of the section would apply even to cases in which the decree has not fixed any time for payment of money.
11. The statement of the law relating to the decrees in suits for specific performance is found in the decision of a Division Bench of this Court in Abdul Shaker Sahib v. Abdul Rahman Sahib 44 M.L.J. 167 : 17 L.W. 216 : A.I.R. 1923 Mad. 284 : I.L.R. 46 Mad. 148, the Division Bench held that a decree in a suit for specific performance is in the nature of a preliminary decree and the Original Court keeps control over the action. The relevant passage in the judgment is found at page 154 which reads thus:
In my judgment, this decree is in the nature of a preliminary decree, the Original Court keeping control over the action and having full power to make any just and necessary orders therein, including in appropriate cases the extension of the time. If I am wrong in this and the proper interpretation of this decree is as contended for by the appellant, then, in my judgment, this decree is wrong and I should, if necessary, order that it be set right by eleminating the condition which ought not to have been imposed upon the successful plaintiffs, except at a much later date and upon definite refusal by him to complete. Even in that case such condition could only be imposed at the request of the defendant who, as I have pointed out, has other various, remedies.
This has been accepted to be the correct position in a number of subsequent decisions.
12. In Anandilal v. Gunendra , the Calcutta High Court has referred to the decision of the said Division Bench and followed the principle of law laid down therein. Dealing with the question of rescission of contracts, the learned Judge of the Calcutta High Court has stated thus:
The true character of a decree for specific performance has been discussed in the decisions of A.I.R. 1923 Mad. 284 corresponding to I.L.R. 46 Mad. 148 and A.I.R. 1933 Mad. 386 corresponding to I.L.R. 46 Mad. 796. Schwabe C.J. in Abdul Shaker's case I.L.R. 46 Mad. 148 : A.I.R. 1923 Mad. 284 said that a decree for specific performance was in the nature of a preliminary decree and the original Court kept control over the action and had full power to make any just and necessary orders therein, including the appropriate cases an extension of time. An application in the suit in which the decree for specific performance was made was held competent in that case, in Akkshalingam's case I.L.R. 56 Mad. 796 : A.I.R. 1933 Mad. 386 it was held relying on the authority of the decision of the Judicial Committee in Ardeshir H. Mama v. Flora Sassoon 55 M.L.J. 523 : 28 L.N. 527 : 55 Ind. App. 360 : A.I.R. 1928 P.C. 208, that the sections of the Specific Relief Act both as to substantive law and practice should be interpreted in the light of the principles recognised by the English Courts, and if there is any express divergence, then the Act will be strictly adhered to whatever be the English law. Secondly, it was said that a decree for specific performance operates in favour of both parties. Thirdly, that the passing of the decree does not terminate the suit.
13. The Supreme Court had occasion to deal with this aspect of the matter in Hungerford Investment Ltd., v. Haridas Mundhra . The relevant observation is found in paragraph 28 of the judgment, which reads thus:
The fact that the decree did not fix a time for completing the contract did not prevent either party from demanding performance from other party within a reasonable time and thus make time essential, as the parties had that liberty before the decree was passed and the decree did not abrogate that liberty in any way, and if the party from whom performance was demanded evinced by his conduct that he was unwilling to perform his part, then it was open to the party claiming performance to rescind the contract and obtain an order from the Court adjudging rescission of the contract and the decree thereon. We do not think in case the Court comes to the conclusion that the party moved against has by conduct evinced an intention not to perform his part of the contract, the fact that no time has been fixed in the decree would preclude it from adjudging the contract as rescinded. The observation of Fry already quoted does not mean that unless a time is specified in the decree there can be no default. It only means that if the conduct of the party moved against is equivocal, an order for rescission will be made only in default of completion within a specified time. Nor can the observation quoted above from the Halsburys Laws of England bear any other construction.
14. A Division Bench of the Madhya Pradesh High Court laid down a similar proposition in Kannaiyalal v. Abdul Hussain A.I.R. 1986 M.P. 2. The Bench observed in the following terms:
It is true that no time to pay or deposit was fixed in the decree for specific performance of the contract but the question of fixing the time by the High Court in the decree passed in First Appeal No. 13 of 1962 did not arise as it was not an appeal against the decree for specific performance of the contract but an appeal by the plaintiff only for enhancement of the compensation under Section 19 of the Specific Relief Act. When no time for payment or deposit is fixed in the decree for specific performance the law implies a reasonable time within which the contract is to be performed. When the (sic) it should be performed within reasonable time. The decree or contract is silent as to the performance/reasonable time depends upon the facts and circumstances of each case. In the present case, the contract as stated earlier was entered into on 25th May, 1958 and the sale-deed had to be obtained on payment of balance of consideration within a month. The non-payment of balance of consideration till 1-10-1959 is understandable as the Madhya Bharat Tenancy and Land Revenue Act was in force under which the permission of the Collector was to be obtained for sale of land and as no permission was obtained the defendant could not be said to be at fault. But on 2-10-1959 the above Madhya Bharat Tenancy and Land Revenue Act was repealed and Madhya Pradesh Land Revenue Code, 1959 came into force under which there was no provision by which the permission of the Collector was necessary. As discussed above, the defendant had either any funds nor any means to make the payment of consideration right from the year 1959 upto the date of passing of the decree for specific performance. The defendant could not pay even upto the date of decree rescinding the contract. Thus more than sufficient time had elapsed within which the defendant could have made the payment but he failed to do so. In these circumstances, it could not be said that the contract was rescinded before the expiry of the reasonable time. See Dinakaraj v. Sukhdayal A.I.R. 1947 Bom. 293.
In Abdul Shaker Sahib v. Abdul Rahman Sahib A.I.R. 1923 Mad. 234 a Division Bench took the view that it is a well established principle that persons who desire the assistances of the Court in obtaining equitable relief must come quickly. In the present case not only the defendant failed to come quickly but he absolutely failed to come forward with the amount at any stage of the relevant proceedings.
15. Bearing in mind the above principles if the facts of the case are looked into, it is seen that the respondent herein waited for nearly 3 years before initiating the execution proceedings. There is no explanation on her part for inaction for such a long period. No doubt, under the decree, she was not bound to pay any amount before the registration of the document. She could have insisted upon the registration of the document and paid the balance of money in the presence of the Sub Registrar. Even for insisting on the registration of the document, the respondent ought to have performed her part of the contract under the agreement viz., the discharge of the mortgage which was outstanding. If she had paid the mortgage amount and called upon the vendor to execute a sale deed and if the vendor failed to do so, the respondent could have failed an execution petition. But, the respondent did not care to discharge the mortgage and allowed the mortgagee to file a suit and obtain a decree. In the absence of any explanation whatever for the failure on the part of the respondent to perform her part of the contract from 8-7-1976 to 29-1-1979, the date on which the execution petition was filed, it cannot be said that the respondent had proved her readiness and willingness to perform her part of the contract. As the decree passed in the suit is only a preliminary decree and the Court has got control over the action, it would be open to the trial Court to pass appropriate orders. Learned Counsel for the respondent places strong reliance on the factum of deposit of the money pursuant to the direction of the executing Court. The deposit was actually made on 18-12-1980. Learned Counsel for the respondent contends that the order, directing the respondent to deposit, could be taken as an order fixing time for deposit or extending the time for deposit. That contention cannot be accepted. The order directing the respondent to deposit the amount could be made only by the trial Court and not by the executing Court. The executing Court had no jurisdiction to direct the respondent to deposit the money. As the respondent had not performed his part of the contract within the reasonable time, the question of rescinding the contract has arisen.
16. Reliance is placed upon a decision in Vaiyapuri Reddi v. Sivalinga Mudaliar (1970) 1 M.L.J. 92. In that case the decree holder did not deposit the money within the time granted by the Court. An application was filed for reminding the decree under Section 23 of the Specified Relief Act. While dealing with that application the trial Court passed an order extending the period for making the deposit. That order was challenged by Way of revision in this Court. The learned Judge dismissed the revision petition, upholding the order of the trial Court extending the period. Learned Counsel contends that if the Court had the power to extend the time even on an application under Section 28 of the Act, in the present case the deposit made by the respondent long before the filing of the application under Section 23 of the Act should be treated as proper compliance with the decree. The facts in the above case are entirely different from the facts of the present case. In that case the application was made to the trial Court which passed the decree. That Court had certainly jurisdiction either to grant further time or to rescind the decree. On the facts of the case the Court chose to grant further time to the decree-holder for making deposit. That order was upheld by, this Court. The learned Judge held that on the facts of the case there was no positive refusal by the decree-holder to perform his part of the contract and in the absence of such positive refusal, the Court could not rescind the contract. In support of the said conclusion, the learned Judge relied on the following observation of Schewabe, C.J., in Abdul Shaker Sahib v. Abdul Rahman Sahib I.L.R. 46 Mad. 148, at page 153.
... If the default is made by the purchaser in paying the purchase money, there are several remedies open to the vendor. (1) He may on motion in the action obtain an order fixing a definite time and place for payment and delivery over of the conveyance and title-deeds and can, after the expiration of that time, levy execution for the amount, if not paid. (2) He may apply by motion in the action for an order rescinding, not the judgment but the contract, and in order to succeed in such a motion he has to satisfy the Court that there has been a positive refusal to complete which it may be observed in the present case, the respondent has certainly not proved....
17. As regards the requirement of positive refusal by the decree-holder for the purpose of rescinding the contract, a later Division Bench of this Court in Saraswathi alias Kalpan v. P.S.S. Somasundaram Chettiar 80 L.W. 454, expressed its dissent from the observations made in Abdul Shaker's case I.L.R. 46 Mad. 148. After referring to the earlier Bench judgment, the later Bench observed thus:
Thus, the real point which the Bench considered was whether such a decree should be treated to be a preliminary decree. The trial Court retaining full control over the suit, or it should be treated as a final decree. Only because the learned Judges took the view that such a decree must be treated as a preliminary decree, they observed that if it was intended to be a final decree, the learned Judge had no jurisdiction to pass such a final decree. Therefore, the decision relied on by the learned Counsel for the appellant cannot be said to have laid down any proposition that the trail Court which passes a decree for specific performance has no jurisdiction at all to fix a time-limit for depositing the money due by the decree-holder, provided the decree is treated as a preliminary decree and the Court retains control over the entire action. If at all, the only passage in the judgment of Wallace, J. with which We do not agree is that which regards the decree itself as a contract. Equally, we do not agree with the learned Chief Justice when he observed that the vendor can succeed in his motion for rescission of the contract only when there has been a positive refusal on the part of the vendor to complete and a default on his part to comply with the direction of the Court is not sufficient.
18. In my view, the opinion of the Division Bench in the later case is more correct and in accord with law than the opinion of the Division Bench in the earlier case. I prefer to follow the Division Bench judgment in the later case. It must also be pointed out that the judgment of the Division Bench in Saraswathi alias Kalpana v. P.S. S. Somasundaram Chettiar 90 L.W. 454 has been affirmed in so far as the principles of law are concerned by the Supreme Court in K. Kalpana Saraswathi v. Somasundaram Chettiar . The principles of law laid down were left undisturbed by the Supreme Court though the Supreme Court though fit to grant some time to the decree-holder to deposit the balance of consideration.
19. From the facts of the case it is seen that the proceedings before the Division Bench arose out of a decree for specific performance. The plaintiff, who obtained a decree for specific performance, filed an appeal as against the directions contained in the decree, fixing a time-limit for depositing the amount of consideration. It was contended that the Court had no jurisdiction to fix a time-limit for depositing the consideration. That contention was rejected by the Bench. The Bench, however, accepted the second contention that the Court had no jurisdiction to include a default clause in the decree. There was an application before the Bench for extension of time to pay the amount of consideration. That application was dismissed by the Bench. The Supreme Court accepted that application and granted further time to the decree-holder' for deposit of amount of consideration. In other respects, the judgment of the Bench was affirmed by the Supreme Court.
20. On the facts of this case, the respondent has not proved her readiness and willingness to perform her part of the contract within a reasonable time after the decree. Though the decree in the present case has not specified any time to deposit the amount, it was duty of the respondent to have performed her part within a reasonable time. The time taken viz. 3 years and odd cannot be said to be reasonable by any standard. Hence, the contract has to be rescinded as prayed for by the petitioner. The Court below is wrong in dismissing the application filed by the petitioner. The application filed under Section 28 of the Specific Relief Act will have to be allowed.
21. However, the amount having been deposited by the respondent in Court is December, 1980, equity requires that she should be compensated for the loss of interest which she has suffered. Section 30 of the Specific Relief Act empowers the Court, which rescinds the contract, to provide for compensation to the decree-holder. Hence, the petitioner is directed to pay interest on the sum of Rs. 11,300 at the rate of 18% per annum from 18.12.1980 till the date of payment to the respondent by way of compensation. The petitioner prays for time to pay the amount. The petitioner shall pay the amount to the respondent on or before 31-1-1989 failing which it is open to the respondent to execute this order and recover the amount from the petitioner. The respondent is entitled to withdraw the amount of Rs. 11,800 already deposited by her in the executing Court,
22. The Civil Revision Petition is allowed in the above terms. The parties will bear their respective costs in this revision petition.