Madras High Court
Nanjappan vs Ramasamy on 17 November, 2011
Author: S. Manikumar
Bench: S.Manikumar
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 17.11.2011 CORAM THE HONOURABLE MR.JUSTICE S.MANIKUMAR S.A.No.332 of 2005 Nanjappan ... Appellant vs. 1.Ramasamy 2.Govindaswamy ... Respondents Prayer: Second Appeal filed under Section 100 CPC against the judgment and decree dated 30.12.2003, made in A.S.No.119 of 2002, on the file of the 1st Additional District Judge, Coimbatore, reversing the judgment and decree made in O.S.No.323 of 1995, dated 21.12.2001, made by the Subordinate Judge of Coimbatore. For Appellant : Mr.V.Nicholas For Respondents : Mrs.Mythili Suresh for M/s.Sarvabhauman Associates JUDGMENT
Being aggrieved by the reversal judgment in A.S.No.119 of 2002, dated 30.12.2003, on the file of the 1st Additional District Judge, Coimbatore, directing the defendant to execute the sale deed, in respect of the suit property, in favour of the plaintiffs/respondents, by receiving the balance sale consideration of Rs.2,500/- and to put the plaintiffs in possession, the defendant has filed the present appeal.
2. The plaint averments are as follows:
The plaintiffs and defendant have entered into an agreement on 30.09.1987, registered as document No.2230 of 1987 in Book No.I, SRO, Periyanaickenpalayam, whereunder, the defendant has agreed to sell the suit property, for a sum of Rs.45,000/-, to the plaintiffs or their nominees, within the period of two and half years from the date of agreement. A sum of Rs.25,000/- was received by the defendant, as sale consideration. According to the plaintiffs, such a long period mentioned in the contract was for the reason that the defendant had to make an alternative arrangement for shifting his residence.
3. The plaintiffs have further submitted that the second agreement was entered into between the same parties, wherein, the earlier agreement has also been referred to, and that the defendant has received a further advance of Rs.15,000/-. This time, the time for performance of the contract, was extended for a further period of three years from 21.03.1990. The second agreement was also registered as Document No.853 of 1990 in Book I of SRO, Periyanaickenpalayam Coimbatore.
4. The plaintiffs have further submitted that they were ready and willing to perform their part of contract. When the period fixed in the second agreement was nearing its end, the defendant has requested them, to extend the period of contract, as he could not find any alternative residential accommodation. The said request was accepted by the plaintiffs and thereafter, a third and fresh agreement was entered into between the parties on 09.03.1993, wherein, a reference has also been made to the previous two registered agreements. A sum of Rs.2,500/- was also paid as an advance sale consideration on 09.03.1993. According to the plaintiffs, a total sum of Rs.42,500/- has been paid as advance to the defendant, out of the sale consideration of Rs.45,000/- and that time for performance of the contract time was extended, for a further period of two years, from 09.03.1993.
5. According to the plaintiffs, both the parties were employees of Lakshmi Machine Works Factory at Periyanaickenpalayam and they were members of rival trade unions. When the plaintiffs have approached the defendant on 14.02.1995, with a request to receive the balance sale consideration of Rs.2,500/- and fix a date for execution of the sale, the defendant refused the same. Left with no other alternative, the plaintiffs have caused a legal notice on 18.02.1995, expressing their readiness and willingness to perform their part of the contract and called upon the defendant to execute the sale deed.
6. According to the plaintiffs, quite contrary to the terms of agreement, stated supra, the defendant has sent a reply, contending inter alia, that even before the execution of the first agreement, he had put up a construction, measuring 1,200 Sq.ft., and that the property would be worth, nearly Rs.15 Lakhs. He has further contended that a low figure of Rs.45,000/- was deliberately quoted to minimize the registration charges. The defendant in his reply notice, has further contended that the plaintiffs were not ready and willing to perform their part of the contract and due to their inability to pay the balance sale consideration of Rs.2,60,000/-, time was further extended by two more years and that they have failed to utilize the time and perform their part of contract. They further contended that only out of compulsion, a sum of Rs.2,500/- was received and though he had signed the agreements, he did not consent for registration.
7. According to the plaintiffs, the contentions raised in the reply notice were untrue and that they were made only to defeat the contract. In the abovesaid circumstances, the plaintiffs have filed a suit in O.S.No.323 of 1995 on the file of the Principal Subordinate Court, Coimbatore, for a direction, directing the defendant to execute the sale deed in respect of the schedule mentioned property in their favour and to register the same at their cost, after receiving the balance sale consideration of Rs.2,500/- and also put them in possession of the suit mentioned property, within the stipulated date, failing which, the sale deed may be executed by the Court and they should be put in possession.
8. The defendant in his written statement, has submitted that the plaintiffs are not only his friends, but also his colleagues. According to him, he is the absolute owner of the suit property, covered under the sale deed No.1732/79, to an extent of 10 Cents and odd. After getting approval from the concerned authorities, the defendant has put up a construction, to an extent of 1200 Sq.ft., in the year 1980 itself and that the remaining area was vacant. It is his further contention that even in the year 1987, the entire area, including the constructed portion, would fetch more than Rs.3 Lakhs and that as on the date of filing of the written statement, the property would be worth Rs.10 Lakhs.
9. The defendant has further submitted that he was in debt and paying the accrued interest. Therefore, he offered to sell the suit property for Rs.3 Lakhs. As the plaintiffs were close to him, they have expressed their intention to purchase the property for the abovesaid sum. They entered into an agreement, in respect of the suit property. However, on the request of the plaintiffs, they have not mentioned the actual sale amount of Rs.3 Lakhs, in the sale agreement, in order to avoid stamp duty.
10. The defendant has further submitted that since the period for payment of sale consideration, was already over, in order to grab the suit property, for a very low sale consideration, the plaintiffs have approached him on 21.03.1990 and paid a sum of Rs.5,000/-. Without knowing the idea behind such payment, he has accepted the said amount and inadvertently, signed the document, for extension of time for performance of the contract executed earlier. Had the plaintiffs paid a sum of Rs.2,60,000/-, the defendant would have settled the dues to his creditor and saved some amount, from the sale proceeds. On 09.03.1993, taking advantage of his financial position, the plaintiffs have put a sum of Rs.2,500/- in his pocket and obtained his signature in the document, extending the period for performance of contract upto 21.03.1993.
11. Though the defendant has admitted the execution of the three agreements of sale, as stated supra, it is his specific contention that the plaintiffs have taken advantage of the recitals in the sale agreement, attempted to grab the property, worth Rs.10 Lakhs. According to him, he had never intended and agreed to execute the sale deed for Rs.45,000/-, that is the reason why, the third agreement was not registered, as done in the past. According to him, the plaintiffs were also unable to arrange the balance sale consideration of Rs.2,57,000/- with the registration charges, within the time stipulated in the alleged sale agreement. As time is the essence of contract and that the plaintiffs have failed to perform their contract, in not paying the balance consideration, as stated supra, and for other reasons, he has prayed for dismissal of the suit.
12. On the above pleadings, the trial Court has framed the following issues for consideration,
(i)Whether the agreement of sale, dated 30.09.1997, is true and valid?
(ii)Pursuant to the sale agreement, dated 30.09.1987, whether the plaintiffs were ready and willing to perform their part of contract?
(iii)Whether the plaintiffs are entitled to the relief sought for?
(iv)Whether the plaintiffs are entitled to any other relief?
13. When the suit was reserved for orders, the trial Court framed an additional issue, which is as follows:
"Whether the parties to the agreement of sale have consented to reduce the suit property valued at Rs.3 Lakhs, mentioning a lessor price, in Ex.A1, Sale Agreement?"
14. Before the lower Court, the first plaintiff examined himself as PW.1 and marked Exs.A1 to A5. The defendant examined himself as DW.1 and marked Exs.B1 to B5.
15. On evaluation of pleadings and evidence, the trial Court has dismissed the suit. Being aggrieved by the same, the plaintiffs have preferred an appeal in A.S.No.119 of 2002, on the file of the learned Additional District Judge, Coimbatore. Upon consideration of the materials on record, the lower appellate Court has reversed the judgment and decree, stated supra and directed the defendant to execute a sale deed, in favour of the plaintiff, on receipt of Rs.2,500/-, within three months from the date of judgment.
16. Being aggrieved by the reversing judgment, the defendant has filed the present second appeal, which has been entertained on the following substantial questions of law, "(a) When the evidence on record and the conduct of the plaintiffs in extending the period for eight years to complete the sale transaction would clearly show that the plaintiffs were not ready and willing to perform their part of the contract, whether the lower appellate Curt is correct in granting the relief of specific performance to the plaintiffs? and
(b) When under the agreement, the plaintiffs and the defendant had agreed that the defendant should pay a sum of Rs.25,000/- along with the amounts already paid towards the agreement, if the defendant failed to complete the sale deed or the plaintiff could deposit the balance amount in Court and seek the relief of performance, the main clause of the return of Rs.25,000/- along with the amounts received by the defendant only would prevail and consequently, the plaintiffs are not entitled for the relief of specific performance, whether the lower appellate Court is correct in granting the relief of specific performance to the plaintiffs?"
17. In support of the above substantial questions of law and taking this Court through Ex.A1, dated 30.09.1987, Ex.A2, dated 21.03.1990 and Ex.A3, dated 09.03.1993, agreements entered into between the parties and the long duration between each of the agreements, learned counsel for the appellant/defendant submitted that the actual value of the suit property was Rs.3 Lakhs and that the plaintiffs have agreed to purchase the same, for the abovesaid value, but by mutual consent, the sale consideration has been mentioned as Rs.45,000/-, in the agreement, with a view to avoid the excess stamp duty on the sale deed. He further submitted that the actual sale consideration of Rs.3 Lakhs was agreed, taking into consideration, the existence of a building in the suit property, to an extent of 1165 Sq.Ft. According to him, if the actual sale consideration was only Rs.45,000/-, there was absolutely no necessity to fix the period as 2= years for performance of contract, under Ex.A1, Sale Agreement, dated 30.09.1987, after the payment of an advance amount of Rs.25,000/-.
18. Learned counsel for the appellant/defendant further submitted that for the remaining payment of Rs.20,000/-, there was no need to extend the period for another three years, under Ex.A2, Sale Agreement, dated 21.03.1990 and a further period of three years, by executing another agreement of sale, under Ex.A3, dated 09.03.1993. According to him, the period of extension was from 1987 to 1993, ie., for nearly eight years, for payment of actual sale consideration of Rs.3 Lakhs, agreed to upon by the parties, would clearly establish that the plaintiffs were unable to raise funds and consequently, not ready and willing to perform their part of the contract.
19. Learned counsel for the appellant/defendant further submitted that the lower appellate Court has failed to consider that as per the conditions of the agreement of sale, if the defendant fails to execute the sale deed, he would be liable to pay a sum of Rs.25,000/-, along with the sum already paid or in the alternative, the plaintiffs could deposit the balance amount into the Court and get compulsory registration of the sale deed, through the process of the Court. According to him, when the terms of agreement entered into between the parties, provide for an option to the defendant to repay a sum of Rs.25,000/- along with other amounts received, the lower appellate Court, having regard to the provisions of the Specific Relief Act, ought to have refused to exercise its discretion in granting a decree for specific performance and in the alternative, directed the defendant to return the amount received. In support of the contention that the relief of decree for specific performance is always discretionary, on the facts and circumstances of the case, reliance has been placed on the following decisions,
(i) K.S.Vidyanadam v. Vairavan reported in 1997 (3) SCC 1
(ii) K.N.Krishna Murthy v. G.K.Sridhar reported in AIR 2009 (NOC) 263 (Kar.)
(iii) Lakshmamma v. Rathinamma reported in 2011 (5) CTC 543
20. Taking this Court through the recitals in Exs.A1 to A3, agreements of sale and the oral testimony of the plaintiffs, learned counsel for the appellant/defendant further submitted that the findings of the lower appellate Court that the plaintiffs were ready and willing to perform their part of the contract, is perverse and therefore, it requires reversal. He also submitted that it was never the intention of the defendant to execute an agreement for sale of the property, worth Rs.3 Lakhs, for a lesser sale consideration. He further submitted that in the event of non-performance on the part of the plaintiffs of their obligation under the agreements of sale, stated supra, the intention of the plaintiffs was only to receive adequate compensation from the defendant and that therefore, there is an apparent error committed by the lower Court in granting a decree for specific performance. He also submitted that even as per the agreements of sale, the period of performance of the contract, had expired on 09.03.1993, and without prejudice to the contentions, stated supra, he submitted that as time is an essence of the contract, the plaintiffs are not entitled to enforce the agreements, as they have become time barred.
21. Learned counsel for the appellant further submitted that except the subject property, the defendant has no other dwelling place. Even assuming without admitting for argument sake that an agreement has been entered into between the parties, fixing the value at Rs.45,000/- in the year 1987, as per Ex.A1, dated 30.09.1987, the plaintiffs have taken nearly seven years to come forward to perform their part of the contract and in view of the escalation in the value of the property, the plaintiffs would be in an advantageous position over the defendant and in the abovesaid circumstances, it would be inappropriate to allow them to get a decree for the specific performance and on the contrary, as per the conditions in Ex.A2, he could always be adequately compensated. He further submitted that even in the third agreement, Ex.A3, dated 09.03.1993, there was no recital to the effect that the plaintiffs were ready and willing to perform their part of the contract and that the plaintiffs had only sought for time.
22. Per contra, Mrs.Mythili Suresh, learned counsel for the respondents/plaintiffs submitted that at the time of execution of Ex.A1, both the parties were working under the same management and it was mutually agreed upon by them to enter into an agreement of sale, under Ex.A1, dated 30.09.1987, when the plaintiffs have agreed to purchase a house property for sale consideration of Rs.45,000/- and that the said agreement was registered as document No.2230 of 1987. An advance amount of Rs.25,000/- was received by the defendant on the same day. The period of execution of sale agreement was 2= years from 30.09.1987.
23. Learned counsel for the respondents/plaintiffs further submitted that as the defendant did not have any other place to reside, he requested the plaintiffs to give some more time to find out an alternative place and even before completion of 2= years, fixed for execution of the sale agreement, under Ex.A1, dated 30.09.1987, both the parties have mutually agreed to extend the time and accordingly, the second agreement, under Ex.A2, dated 21.03.1990, was executed in the presence of the witnesses, extending the period for another three years and that a sum of Rs.15,000/- has been paid to the defendant, on the same day.
24. Referring to the recitals in Ex.A2, dated 21.03.1990, learned counsel for the plaintiffs further submitted that though the plaintiffs were not in a position to pay the balance sale consideration and equally, the defendant was also unable to find out an alternate residence and thereby, quit and deliver the vacant possession, therefore again, it was mutually agreed by the parties to extend the time for execution of the sale deed for another three years and at the time of execution of Ex.A2, a sum of Rs.15,000/- was paid to the defendant.
25. Taking this Court through the recitals in Ex.A3, dated 09.03.1993, the last agreement entered into between the parties, learned counsel for the plaintiffs further submitted that when they have voluntarily came forward to execute the sale deed, the defendant has refused to do so and hence, a suit notice, dated 18.02.1995, was issued and in the abovesaid circumstances, she submitted that having signed Ex.A3, dated 09.03.1993, it is not open to the defendant to rescind from the contract. She further submitted that the lower appellate Court has properly appreciated the evidence and granted a decree, which cannot be termed as perverse, warranting reversal. For the reasons stated supra, she prayed for dismissal of the second appeal.
Heard the learned counsel for the parties and perused the materials available on record.
26. Before adverting to the issues raised, a cursory look at the provisions of the Specific Relief Act, 1963, is required. Section 10 of the Act, deals with the cases in which specific performance of contract enforceable and the said Section is extracted hereunder:-
"Except as otherwise provided in this Chapter, the specific performance of any contract may, in the discretion of the court, be enforced-
(a) when there exists no standard for ascertaining the actual damage caused by the non-performance of the act agreed to be done; or
(b) when the act agreed to be done is such that compensation in money for its non-performance would not afford adequate relief.
Explanation.-Unless and until the contrary is proved, the court shall presume-
(i) that the breach of a contract to transfer immovable property cannot be adequately relieved by compensation in money; and
(ii) that the breach of a contract to transfer movable property can be so relieved except in the following cases:-
(a) where the property is not an ordinary article of commerce, or is of special value or interest to the plaintiff, or consists of goods which are not easily obtainable in the market;
(b) where the property is held by the defendant as the agent or trustee of the plaintiff.
27. Section 12 deals with the specific performance of part of contract, which is as follows:
"12. Specific performance of part of contract.- (1) Except as otherwise hereinafter provided in this section, the court shall not direct the specific performance of a part of a contract.
(2) Where a party to a contract is unable to perform the whole of his part of it, but the part which must be left unperformed bears only a small proportion to the whole in value and admits of compensation in money, the court may, at the suit of either party, direct the specific performance of so much of the contract as can be performed, and award compensation in money for the deficiency.
(3) Where a party to a contract is unable to perform the whole of his part of it, and the part which must be left unperformed either-
(a) forms a considerable part of the whole, though admitting of compensation in money; or
(b) does not admit of compensation in money;
he is not entitled to obtain a decree for specific performance; but the court may, at the suit of the other party, direct the party in default to perform specifically so much of his part of the contract as he can perform, if the other party-
(i) in a case falling under clause (a), pays or has paid the agreed consideration for the whole of the contract reduced by the consideration for the part which must be left unperformed and in a case falling under clause (b), pays or has paid] the consideration for the whole of the contract without any abatement; and
(ii) in either case, relinquishes all claims to the performance of the remaining part of the contract and all right to compensation, either for the deficiency or for the loss or damage sustained by him through the default of the defendant.
(4) When a part of a contract which, taken by itself, can and ought to be specifically performed, stands on a separate and independent footing from another part of the same contract which cannot or ought not to be specifically performed, the court may direct specific performance of the former part.
Explanation.-For the purposes of this section, a party to a contract shall be deemed to be unable to perform the whole of his part of it if a portion of its subject-matter existing at the date of the contract has ceased to exist at the time of its performance.
28. As per Sub-(3) of Section 14 of the Act, states that notwithstanding anything contained in clause (a) or clause (c) or clause (d) of sub-section (1), the court may enforce specific performance in the following cases:-
(a) where the suit is for the enforcement of a contract,-
(i) to execute a mortgage or furnish any other security for security for securing the repayment of any loan which the borrower is not willing to repay at once:
Provided that where only a part of the loan has been advanced the lender is willing to advance the remaining part of the loan in terms of the contract; or (ii) to take up and pay for any debentures of a company;
(b) where the suit is for,-
(i) the execution of a formal deed of partnership, the parties having commenced to carry on the business of the partnership; or
(ii) the purchase of a share of a partner in a firm,
(c) where the suit is for the enforcement of a contract for the construction of any building or the execution of any other work on land:
Provided that the following conditions are fulfilled, namely:-
(i) the building or other work is described in the contract in terms sufficiently precise to enable the court to determine the exact nature of the building or work;
(ii) the plaintiff has a substantial interest in the performance of the contract and the interest is of such a nature that compensation in money for non-performance of the contract is not an adequate relief; and
(iii) the defendant has, in pursuance of the contract, obtained possession of the whole or any part of the land on which the building is to be constructed or other work is to be executed.
29. Section 16(c) of the Specific Relief Act 1963 (`Act' for short) bars the specific performance of a contract in favour of a plaintiff, " 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 of the performance of which has been prevented or waived by the defendant)." Explanation (ii) to section 16 provides that for purposes of clause (c) of section 16, "the plaintiff must aver performance of, or readiness and willingness to perform, the contract according to its true construction."
30. Section 20 empowers the discretion of the Court in decreeing specific performance and the said Section reads as follows:
"20. Discretion as to decreeing specific performance.- (1) The jurisdiction to decree specific performance is discretionary, and the court is not bound to grant such relief merely because it is lawful to do so; but the discretion of the court is not arbitary but sound and reasonable, guided by judicial principles and capable of correction by a court of appeal.
(2) The following are cases in which the court may properly exercise discretion not to decree specific performance-
(a) where the terms of the contract or the conduct of the parties at the time of entering into the contract or the other circumstances under which the contract was entered into are such that the contract, though not voidable, gives the plaintiff an unfair advantage over the defendant; or
(b) where the performance of the contract would involve some hardship on the defendant which he did not foresee, whereas its non-performance would involve no such hardship on the plaintiff;
(c) where the defendant entered into the contract under circumstances which though not rendering the contract voidable, makes it inequitable to enforce specific performance.
Explanation 1.-Mere inadequacy of consideration, or the mere fact that the contract is onerous to the defendant or improvident in its nature, shall not be deemed to constitute an unfair advantage within the meaning of clause (a) or hardship within the meaning of clause (b). Explanation 2.-The question whether the performance of a contract would involve hardship on the defendant within the meaning of clause (b) shall, except in cases where the hardship has resulted from any act of the plaintiff subsequent to the contract, be determined with reference to the circumstances existing at the time of the contract.
(3) The court may properly exercise discretion to decree specific performance in any case where the plaintiff has done substantial acts or suffered losses in consequence of a contract capable of specific performance.
(4) The court shall not refuse to any party specific performance of a contract merely on the ground that the contract is not enforceable at the instance of the other party.
31. In K.S.Vidyanadam v. Vairavan reported in 1997 (3) SCC 1, the Supreme Court, while explaining the scope of discretionary power, conferred on the Court to grant a decree for specific performance, at Paragraph 10, held as follows:
"10. It has been consistently held by the courts in India, following certain early English decisions, that in the case of agreement of sale relating to immovable property, time is not of the essence of the contract unless specifically provided to that effect. The period of limitation prescribed by the Limitation Act for filing a suit is three years. From these two circumstances, it does not follow that any and every suit for specific performance of the agreement [which does not provide specifically that time is of the essence of the contract] should be decreed provided it is filed within the period of limitation notwithstanding the time limits stipulated in the agreement for doing one or the other thing by one or the other party. That would amount to saying that the time-limits prescribed by the parties in the agreement have no significance or value and that they mean nothing. Would it be reasonable to say that because time is not made the essence of the contract, the time-limits specified in the agreement have no relevance and can be ignored with impunity? It would also mean denying the discretion vested in the court by both Sections 10 and 20. As held by a Constitution Bench of this Court in Chand Rani v. Kamal Rani reported in (1993) 1 SCC 519, "it is clear that in the case of sale of immovable property there is no presumption as to time being th essence of the contract. Even if it is not of the essence of the contract, the court may infer that it is to be performed in a reasonable time if the conditions are (evident?): (1) from the express terms of the contract; (2) from the nature of the property; and (3) from the surrounding circumstances, for example, the object of making the contract".
In other words, the court should look at all the relevant circumstances including the time-limits specified in the agreement and determine whether its discretion to grant specific performance should be exercised. Now in the case of urban properties in India, it is well-known that their prices have been going up sharply over the last few decades - particularly after 1973. In this case, the suit property is the house property situated in Madurai, which is one of the major cities of Tamil Nadu. The suit agreement was in December 1978 and the six months' period specified therein for completing the sale expired with 15th of June, 1979. The suit notice was issued by the plaintiff only on 11.7.1981, i.e., more than two years after the expiry of six months' period. The question is what was the plaintiff doing in this interval of more than two years? The plaintiff says that he has been calling upon Defendants 1 to 3 to get the tenant vacated and execute the sale deed and that the defendants were postponing the same representing that the tenant is not vacating the building. The defendants have denied this story. According to them, the plaintiff never moved in the matter and never called upon them to execute the sale deed. The Trial Court has accepted the defendants' story whereas the High Court has accepted the plaintiffs story. Let us first consider whose story is more probable and acceptable. For this purpose, we may first turn to the terms of the agreement. In the agreement of sale, there is no reference to the existence of any tenant in the building. What it says is that within the period of six months, the plaintiff should purchase the stamp papers and pay the balance consideration whereupon the defendants will execute the sale deed and that prior to the registration of the sale deed, the defendants shall vacate and deliver possession of the suit house to the plaintiff. There is not a single letter or notice from the plaintiff to the defendants calling upon them to get the tenant vacated and get the sale deed executed until he issued the suit notice on 11.7.1981. It is not the plaintiffs case that within six months, he purchased the stamp papers and offered to pay the balance consideration. Defendants' case is that the tenant is their own relation, that he is ready to vacate at any point of time and that the very fact that the plaintiff has in his suit notice offered to purchase the house with the tenant itself shows that the story put forward by him is false. The tenant has been examined by the defendant as DW-2. He stated that soon after the agreement, he was searching for a house but could not secure one. Meanwhile [i.e., on the expiry of six months from the date of agreement], he stated, the defendants told him that since the plaintiff has abandoned the agreement, he need not vacate. It is equally an admitted fact that between December 15, 1978 and July 11, 1981, the plaintiff has purchased two other properties. The defendants' consistent refrain has been that the prices of house properties in Madurai have been rising fast, that within the said interval of 2= years, the prices went up by three times and that only because of the said circumstance has the plaintiff [who had earlier abandoned any idea of going forward with the purchase of the suit property] turned round and demanded specific performance. Having regard to the above circumstances and the oral evidence of the parties, we are inclined to accept the case put forward by Defendants 1 to 3. We reject the story put forward by the plaintiff that during the said period of 2= years, he has been repeatedly asking the defendants to get the tenant vacated and execute the sale deed and that they were asking for time on the ground that tenant was not vacating. The above finding means that from 15.12.1978 till 11.7.1981, i.e., for a period of more than 2= years, the plaintiff was sitting quiet without taking any steps to perform his part of the contract under the agreement though the agreement specified a period of six months within which he was expected to purchase stamp papers, tender the balance amount and call upon the defendants to execute the sale deed and deliver possession of the property. We are inclined to accept the defendant's case that the values of the house property in Madurai town was rising fast and this must have induced the plaintiff to wake up after 2= years and demand specific performance.
32. In N.Saraswathi Ammal v. Jayaram Rao reported in 1998 (II) CTC 613, after considering a catena of decisions, this Court at Paragraph 14, has culled out the principles of law, as follows:
"(a) In sale of immovable property, the normal presumption is that time is not the essence of the Contract.
(b) The presumption can be rebutted by positive evidence regarding the actual intention and conduct of the parties.
(c) The mere stipulation of a date or time limit by itself will not mean that time was of the essence of the contract and if consideration of other clauses in the contract, intention, conduct of the parties and surrounding circumstances pointed out otherwise, the stipulation of time limit becomes ineffective."
Ultimately, at Paragraph 16, this Court held as follows:
"16. Therefore, considering the above facts there cannot be a stronger case for a purchaser to plead that the agreement did not consider time to be of the essence of the contract. It is also very pertinent to note that the appellate Court had recorded a positive finding of fact holding that the date 25.1.1976 could not be held to be a time limit for the purpose of the contract and the finding of the trial Court in that context was specifically held to be erroneous. The finding of fact thus recorded by the appellate Court has to be sustained and has not been shown to suffer from any illegality or perversity. Even, so, I have independently considered the evidence as discussed above. But inspite of having held so, the learned appellate Judge fell into an error in thinking that it is only the first limb of Article 54 of the Limitation Act which would apply."
33. The decisions relied on by this Court in N.Saraswathi Ammal's case (cited supra) are as follows:
"12. The Supreme Court in a number of cases has pointed out that fixation of the period within which the contract has to be performed, does not make the stipulation as to one of the time being the essence of the contract and that when a contract relates to immovable property, the normal presumption was that time was not the essence of the contract. But this presumption can of course be rebutted by positive evidence by showing that the parties did mean to treat the time as the essence of the contract. Equally, even When a fixed time is mentioned in the agreement, it would be open to the parties to prove from the contract of the parties that it was not intended to be so. In Govind Prasad v. Hari Dutt [AIR 1977 SC 1005], the Supreme Court dealt with a clause in the agreement which stipulated that the purchaser should get the sale deed completed and executed within two months, namely upto 24.5.1964 failing which the purchaser shall forfeit the earnest money. The Supreme Court held that notwithstanding the stipulation of time limit, the vendor did not establish that the time was of the essence of the contract. In Hind Constn. Constractors v. State of Maharashtra, AIR 1979 SC 720, the Supreme Court again dealt with a case where a period of 12 months was prescribed for completion of the contract and it was also specifically provided that time was of the essence of the contract, and it was held that such a provision had to be rend along with other parts of the agreement. A clause providing for extension of time would render the clause providing time limit, ineffective.
13. In Chand Rani v. Kamal Rani [AIR 1993 SC 1742], a Constitution Bench of the Supreme Court has held as follows:-
"It is not merely because of specification of time at or before which the thing to be done under the contract is promised to be done and default in compliance therewith, that the other parly may avoid the contract, such an option arises only if it is intended by the parties that time is of the essence of the contract. Intention to make time of the essence, if expressed in writing, must be in language which is unmistakable; it may also be inferred from the nature of the property agreed to be sold, conduct of the parties and the surrounding circumstances at or before the contract. Specific performance of a contract will ordinarily be granted, notwithstanding default in carrying out the contract within the specified period; if having regard to the express stipulation of the parties, nature of the property and the surrounding circumstances, it is not inequitable to grant the relief. If the contract relates to sale of immovable property, it would normally be presumed that time was not of the essence of the contract. Mere incorporation in the written agreement of a clause imposing penalty in case of default does not by itself evidence an intention to make time of the essence."
34. In the above reported case, the plaintiff has remained quiet for more than 2= years, without any demand for execution of the agreement and hence, the Apex Court was not inclined to grant a decree for specific performance. Whereas, in the case on hand, even before the expiry of the period stipulated for execution of the sale agreement, time has been periodically extended and agreed to upon by both parties and that at every time, balance sale consideration has been received by the defendant, reiterating the intention of the parties to complete the sale.
35. In K.N.Krishna Murthy v. G.K.Sridhar reported in AIR 2009 (NOC) 263 (Kar.), the plaintiff therein did not have the requisite funds for the purchase of property within the stipulated time and also entered into an agreement to sell the very same property to another person for a higher sale consideration to make profit. Therefore, he sought for an extension of time for registration of sale deed. The suit was filed for enforcement of specific performance. On the abovesaid facts, a Division Bench of Karnataka High Court held that the delayed suit filed by the plaintiff, after realising that the value of property had escalated, is not bona fide and therefore, held that the plaintiff, who had approached the Court with unclean hands, is not entitled to equitable relief of specific performance.
36. In the abovesaid case, it was observed by the Division Bench that the plaintiff, who sought for a specific performance of the immovable property, on the basis of the agreement of sale, admittedly does not require the suit property for his own, but only wanted to sell away the same. Therefore, it was observed in the reported case that the conduct of the plaintiff had caused hardship to defendant/owner, inasmuch as he could not purchase another property, out of consideration from the agreement in question. Hence, the Division Bench has refused to exercise the discretion in favour of the plaintiff. The above reported decision is not applicable to the facts of this case, in the instant case, for the reason that both the parties were not in a position to perform their part of the contract, at one point of time and that the same is evident from the recitals in Ex.A2 and that therefore, they have mutually agreed, that if the plaintiffs pay a sum of Rs.25,000/-, the balance sale consideration, within a period of three years, then the defendant would execute a sale agreement. Advance of Rs.15,000/- has also been received, on the date of execution of the agreement of sale.
37. In Yet another decision relied on by the learned counsel for the appellant/defendant, in Chandrashekar G. Sullad & Ors., v. Tuheed Co-operative Housing Socieity (Regd.) & Anr., reported in AIR 2009 (NOC) 264 (Kar.), the Division Bench of Karnataka High Court, considering the fact that there was a substantial increase in the price of the property and also taking note of the fact that in view of Section 79-B of the Karnataka Land Reforms Act, 1961, a Co-operative Society is not eligible to possess agricultural land and that the transaction was with reference to purchase of an agricultural land by the Society, which is forbidden by Section 23 of the Contract Act and on the facts and circumstances of the above case, refused to grant the relief of specific performance of the agreement in favour of the Co-operative Society. In the said case, the Society has also approached the Court after seven long years. The abovesaid judgment is inapposite to the facts of the present case for the reason that the very transaction of purchase of an agricultural land by the society is forbidden.
38. In Vimal Chand Ghevarchand Jain and Others v. Ramakant Eknath Jadoo reported in 2009 (5) SCC 713, at Paragraph 36 and 37, held as follows:
"36. if the appellants were able to prove that the deed of sale was duly executed and it was neither a sham transaction nor represented a transaction of different character, a suit for recovery of possession was maintainable. A heavy onus lay on the respondent to show that the apparent state of affairs was not the real state of affairs. It was for the defendant in a case of this nature to prove his defence. The first appellate Court, therefore, in our opinion, misdirected itself in passing the impugned judgement insofar as it failed to take into consideration the relevant facts and based its decision on wholly irrelevant consideration.
37. A heavy burden of proof lay upon the defendnt to show that the transaction was a sham one. It was not a case where the parties did not intend to enter into any transaction at all. Admittedly, a transaction had taken place. Only the nature of transaction was in issue. A distinction must be borne in mind in regard to the nominal nature of a transaction which is no transaction in the eye of the law at all and the nature and character of a transaction as reflected in a deed of conveyance. The construction of the deed clearly shows that it was a deed of sale. The stipulation with regard to payment of compensation in the event the appellants are dispossessed was by way of an indemnity and did not affect the real nature of transaction. In any event, the said stipulation could not have been read in isolation. The judgement of the first appellate Court was, therefore, perverse. The High Court, thus, failed to consider the real dispute between the parties."
39. In Laxman Tatyaba Kankate v. Taramati Harishchandra Dhatrak reported in 2010 (7) SCC 717, the Supreme Court, at Paragraphs 18 to 22, 25 and 26, held as follows:
"18. The learned counsel appearing for the appellants drew our attention to Section 13 (1) (c) of the Specific Relief Act, 1963 (for short `the Act'), which clearly postulates that where a person contracts to sell immovable property with an imperfect title and the property is encumbered for an amount not exceeding the purchase money, the purchaser has the right to compel the seller to redeem the mortgage and obtain a valid discharge and then specifically perform the contract in its favour. Even from this point of view, the right of the present respondent is fully protected.
19. It will also be useful to refer to the provisions of Section 20 of the Act which vests the Court with a wide discretion either to decree the suit for specific performance or to decline the same. Reference in this regard can also be made to the case of Bal Krishna v. Bhagwan Das[(2008) 12 SCC 145], where this Court held as under :
"13. ........The compliance with the requirement of Section 16(c) is mandatory and in the absence of proof of the same that the plaintiff has been ready and willing to perform his part of the contract suit cannot succeed. The first requirement is that he must aver in plaint and thereafter prove those averments made in the plaint. The plaintiff's readiness and willingness must be in accordance with the terms of the agreement. The readiness and willingness of the plaintiff to perform the essential part of the contract would be required to be demonstrated by him from the institution of the suit till it is culminated into decree of the court.
14. It is also settled by various decisions of this Court that by virtue of Section 20 of the Act, the relief for specific performance lies in the discretion of the court and the court is not bound to grant such relief merely because it is lawful to do so. The exercise of the discretion to order specific performance would require the court to satisfy itself that the circumstances are such that it is equitable to grant decree for specific performance of the contract. While exercising the discretion, the court would take into consideration the circumstances of the case, the conduct of parties, and their respective interests under the contract. No specific performance of a contract, though it is not vitiated by fraud or misrepresentation, can be granted if it would give an unfair advantage to the plaintiff and where the performance of the contract would involve some hardship on the defendant, which he did not foresee. In other words, the court's discretion to grant specific performance is not exercised if the contract is not equal and fair, although the contract is not void."
20. Similar view was taken by this Court in the case of Mohammadia Cooperative Building Society Ltd., v. Lakshmi Srinivasa Cooperative Building Society Ltd., [(2008) 7 SCC 310], where the Court reiterated the principle that jurisdiction of the Court to grant specific performance is discretionary and role of the plaintiff is one of the most important factor to be taken into consideration.
21. We may also notice that in the case of P.V. Joseph's son Mathew v. N. Kuruvila's Son [AIR 1987 SC 2328], this Court further cautioned that while exercising discretionary jurisdiction in terms of Section 20 of the Act, the Court should meticulously consider all facts and circumstances of the case. The Court is expected to take care to see that the process of the Court is not used as an instrument of oppression giving an unfair advantage to the plaintiff as opposed to the defendant in the suit.
22. The discretion of the Court has to be exercised as per the settled judicial principles. All the aforesaid principles are squarely satisfied in the present case and it is the appellants before us who have taken advantage of the pendency of the proceedings. They have used the sum of Rs. 10,000/-, which was given as earnest money for all this period, as well as, have enjoyed the fruits of the property. The present case does not fall within the ambit of any of the aforesaid cases specified under Section 20 (2) of the Act. In the present case, it is not only lawful but even equity and facts of the case demand that a decree for specific performance should be granted in favour of the respondent. Besides all this, the respondent before us has agreed to pay much higher consideration than what was payable in terms of the agreement to sell between the parties.
25. It was contended on behalf of the appellants that there has been considerable increase in the price of the land in question. Though that may be true, it cannot be a ground for denying the decree of specific performance to the respondent. The learned First Appellate Court, by a well reasoned judgment, has granted the relief of specific performance instead of only granting refund of money, as given by the Trial Court. The judgment of the First Appellate Court has been upheld by the High Court and we see no reason whatsoever to interfere with the concurrent findings of facts and law as stated in the judgment under appeal. However, the learned counsel appearing for the respondent volunteered and after taking instructions stated that they would be willing to pay a sum of Rs. 1,50,000/- instead of Rs. 40,000/- as the total sale consideration. We find this offer of the respondent to be very fair.
26. We have already held that the defence taken up by the appellants in the suit was totally unbelievable. There is no reason or ground as to why the relief of specific performance should be declined to the respondent. She satisfied all the requirements of Section 20 of the Act. Even then, if we examine this case purely from the point of view of equity, the offer now made by the respondent substantially balances the equities between the parties and the very argument raised on behalf of the appellants that there has been increase in the price of the land in question loses its significance. Now, no prejudice will be caused to the appellants in any manner whatsoever."
40. In Man Kaur v. Hartar Singh Sangha reported in 2010 (10) SCC 512, the plaintiff, purchaser of the property was a non-resident Indian. Agreement of sale was entered into between the parties through power of attorney-holders. Agreement on behalf of the plaintiff signed by different attorney-holder and that the suit was filed by another attorney-holder. The attorney-holder who had executed agreement on behalf of the purchaser was not examined. Another attorney-holder who had filed suit was examined, but pleaded unawareness of the transaction, before the issuing the suit notice. The plaintiff could not arrange for balance amount on the day fixed. The defendant vendor contended that the plaintiff was not ready and willing to perform the contract and that the suit was not filed by a competent person. Agreement provided for payment of double amount of earnest money in case of breach by the vendor. It did not provide for specific performance of contract. The High Court affirmed the concurrent findings of the Court's below decreeing the suit. Hence, the appeal before the Apex Court. After considering the provisions of the Act and decisions on specific performance, the Apex Court, at paragraphs 25 to 29, held as follows:
"Section 10 of the Act deals with cases in which specific performance of contract is enforceable. It provides that except as otherwise provided in that Chapter (dealing with Specific Performance of Contracts) of the Act, specific performance of any contract may, in the discretion of the court, be enforced when the act agreed to be done is such that compensation in money for its non-performance would not afford adequate relief. Explanation (i) to section 10 provides that:
"Explanation:- Unless and until the contrary is proved, the court shall presume:-
(i) that the breach of a contract to transfer immovable property cannot be adequately relieved by compensation in money."
26. Sub-sections (2) and (5) of section 21 of the Act provide that in a suit for specific performance, if, "the court decides that specific performance ought not to be granted, but that there is a contract between the parties which has been broken by the defendant, and that the plaintiff is entitled to compensation for that breach, it shall award him such compensation accordingly";
and that no compensation, "shall be awarded under this section unless the plaintiff has claimed such compensation in his plaint.
27. Section 23 of the Act provides that:
"23. Liquidation of damages not a bar to specific performance:- (1) A contract otherwise proper to be specifically enforced, may be so enforced, though a sum be named in it as the amount to be paid in case of its breach and the party in default is willing to pay the same, if the court, having regard to the terms of the contract and other attending circumstances, is satisfied that the sum was named only for the purpose of securing performance of the contract and not for the purpose of giving to the party in default an option of paying money in lieu of specific performance."
28. It is thus clear that for a plaintiff to seek specific performance of a contract of sale relating to immovable property, and for a court to grant such specific performance, it is not necessary that the contract should contain a specific provision that in the event of breach, the aggrieved party will be entitled to specific performance. The Act makes it clear that if the legal requirements for seeking specific enforcement of a contract are made out, specific performance could be enforced as provided in the Act even in the absence of a specific term for specific performance in the contract. It is evident from section 23 of the Act that even where the agreement of sale contains only a provision for payment of damages or liquidated damages in case of breach and does not contain any provision for specific performance, the party in breach cannot contend that in view of specific provision for payment of damages, and in the absence of a provision for specific performance, the court cannot grant specific performance. But where the provision naming an amount to be paid in case of breach is intended to give to the party in default an option to pay money in lieu of specific performance, then specific performance may not be permissible.
29. We may attempt to clarify the position by the following illustrations (not exhaustive):
(A). The agreement of sale provides that in the event of breach by the vendor, the purchaser shall be entitled to an amount equivalent to the earnest money as damages. The agreement is silent as to specific performance. In such a case, the agreement indicates that the sum was named only for the purpose of securing performance of the contract. Even if there is no provision in the contract for specific performance, the court can direct specific performance by the vendor, if breach is established. But the court has the option, as per Section 21 of the Act, to award damages, if it comes to the conclusion that it is not a fit case for granting specific performance.
(B). The agreement provides that in the event of the vendor failing to execute a sale deed, the purchaser will not be entitled for specific performance but will only be entitled for return of the earnest money and/or payment of a sum named as liquidated damages. As the intention of the parties to bar specific performance of the contract and provide only for damages in the event of breach, is clearly expressed, the court may not grant specific performance, but can award liquidated damages and refund of earnest money.
(C). The agreement of sale provides that in the event of breach by either party the purchaser will be entitled to specific performance, but the party in breach will have the option, instead of performing the contract, to pay a named amount as liquidated damages to the aggrieved party and on such payment, the aggrieved party shall not be entitled to specific performance. In such a case, the purchaser will not be entitled to specific performance, as the terms of the contract give the party in default an option of paying money in lieu of specific performance.
31. The agreement does not specifically provide for specific performance. Nor does it bar specific performance. It provides for payment of damages in the event of breach by either party. The provision for damages in the agreement is not intended to provide the vendor an option of paying money in lieu of specific performance. Therefore, we are of the view that plaintiff will be entitled to seek specific performance (even in the absence of a specific provision therefor) subject to his proving breach by the defendant and that he was ready and willing to perform his obligation under the contract, in terms of the contract."
41. The Apex Court in Man Kaur's case, has considered decisions in N.P.Thirugnanam v. Dr.R.Jagan Mohan Rao reported in 1995 (5) SCC 115 and Agiglase Yohannan v. Ramlatha reported in 2005 (7) SCC 534, which are worth reproduction, "13. In the first case, this Court held: (N.P.Thirugnanam v. Dr.R.Jagan Mohan Rao reported in 1995 (5) SCC 115) "The continuous readiness and willingness on the part of the plaintiff is a condition precedent to grant the relief of specific performance. This circumstance is material and relevant and is required to be considered by the court while granting or refusing to grant the relief. If the plaintiff fails to either aver or prove the same, he must fail. To adjudge whether the plaintiff is ready and willing to perform his part of the contract, the court must take into consideration the conduct of the plaintiff prior and subsequent to the filing of the suit along with other attending circumstances. The amount of consideration which he has to ay to the defendant must of necessity be proved to be available. Right from the date of the execution till date of the decree he must prove that he is ready and has always been willing to perform his part of the contract. As stated, the factum of his readiness and willingness to perform his part of the contract is to be adjudged with reference to the conduct of the party and the attending circumstances. The court may infer from the facts and circumstances whether the plaintiff was ready and was always ready and willing to perform his part of contract."
23. The respondent next relied upon the following observations of this Court in Agiglase Yohannan v. Ramlatha reported in 2005 (7) SCC 534:
"12. The basic principle behind Section 16(c) read with Explanation (ii) is that any person seeking benefit of the specific performance of contract must manifest that his conduct has been blemishless throughout entitling him to the specific relief. The provision imposes a personal bar. The Court is to grant relief on the basis of the conduct of the person seeking relief. If the pleadings manifest that the conduct of the plaintiff entitles him to get the relief on perusal of the plaint he should not be denied the relief."
This Court further held that the averments relating to readiness and willingness are not a mathematical formula which should be expressed in specific words and if the averments in the plaint as a whole, do clearly indicate the readiness and willingness of the plaintiff to fulfil his part of the obligations under the contract, the fact that the wording was different, will not militate against the readiness and willingness of the plaintiff.
42. In Lakshmamma v. Rathinamma reported in 2011 (5) CTC 543, the respondent therein filed a suit for specific performance of agreement of sale, alleged to have been executed by the appellant therein. The trial Court, dismissed the suit, holding that the document was not intended to be acted upon as agreement of sale and it was executed only as a security in favour of the plaintiff. The lower appellate Court reversed the judgment and decree passed by the trial Court and decreed the suit in favour of the plaintiff. While considering as to whether the abovesaid judgement could be interfered with, with reference to Section 20(2) of the Specific Relief Act, at Paragraph 22, held as follows:
"22. Further, under Section 20(2) of the Specific Relief Act, the Court in its discretion not to decree specific performance, when the performance of the contract would involve some hardhsip on the defendant which he did not foresee or whereas its non-performance would involve no such hardship on the plaintiff and where the terms of the contract gives the plaintiff an unfair advantage over the defendant and it is inequitable to enforce specific performance."
43. Let me now extract the relevant documents, viz., Ex.A1, dated 30.09.1987 and Ex.A2, dated 21.03.1990, sale agreements executed by both parties in the presence of the witnesses. The contents in Ex.A1, dated 30.09.1987, are as follows:
"1987k; tUlk; brg;lk;gh; khjk; 30e; njjp nfhaKj;J}h; jhYf;fh tPughz;o fpuhkk; tPughz;og;g[J}h; gpu!;fhydp (p.o.) 7/62/ be/ tPl;oy; trpj;J tUk; kh!;jp ft[z;lh; mth;fs; Fkhuh; L.M.W.tpy; gzpg[hpa[k; M.e";rg;gd; (1) nkw;go jhY}f;fh nfhit-38. K.K.g[J}h; (p.o.) 6tJ bjU fpUc&;zh efh; 11-5 be/ tPl;oy; trpj;J tUk; tPuhrhkp mth;fs; Fkhuh; V.uhkrhkp (2) nkw;go jhY}f;fh nfhit-31/ Fulk;ghisak; fpuhkk; uhf;fpghisak (p.o.) btj;jpiyf; fhdpghisak; 11-122 be/ tPl;oy; trpj;J tUk; rPdpthreha[L mth;fs; Fkhuh; kpy; ntiy S.nfhtpe;jrhkp (3) Mfpa ehk; K:tUk; nrh;e;J vGjp itj;Jf;bfhz;l fpua xg;ge;jk; vd;dbtd;why;/ ek;kdpy; 1 yf;fkpl;ltUf;F 1 g[j;jfk; 630 bjhFjp 387 Kjy; 389 tiu gf;f';fspy; 1732/1979 bek;guhfg; gjpt[ bra;ag;gl;l gj;jpug;go ghj;jpag;gl;lij 2. 3 yf;fkpl;lth;fSf;F U:/45.000-=f;F tpy;y';fRj;jpahff; fpuak; bra;J bfhLg;gjhff; fpuak; bra;J bfhLg;gjhfg; ngrp xg;g[f; bfhz;L ,d;W ,jd; fPH;f;fhZk; rhl;rpfs; Kd;ghf nkw;go fpuaj;J ifapy; Kd;gzkhf U:/25.000-=. 2. 3 yf;fkpl;lth;fsplkpUe;J buhf;fkhfg; bgw;Wf; bfhz;Ls;shh;/
2. 3 yf;fkpl;lth;fs; ,d;W Kjy; 2= tUlf;fhyf; bfhtpw;Fs; kPjpf; fpuaj;Jifia 1 yf;fkpllthplk; brYj;jptpl;L 2. 3 yf;fkpl;lth;fs; j';fs; brhe;j brytpy; fpuak; Koj;Jf; bfhs;sntz;oaJ/ nkw;go 2= tUlf; bfLtpw;Fs; 1 yf;fkpl;lth; fpuak; Koj;Jf;bfhLf;f te;J 2. 3 yf;fkpl;lth;fs; fpuak; Koj;Jf; bfhs;sj;jth;e;jhy; 1 yf;fkpl;lthplk; brYj;jpa[s;s ml;thd;!; Jifia ,Ge;J tpLtJld; ,e;j xg;ge;jKk; uj;jhfptpLk;/ nkw;go fhyf; bfLtpw;Fs; 2. 3 yf;fkpl;lth;fs; fpuak; Koj;Jf; bfhs;s te;J 1 yf;fkpl;lth; fpuak; Koj;Jf; bfhLf;fj; jth;e;jhy; 2. 3 yf;fkpl;lth;fsplkpUe;J bgw;Wf; bfhz;Ls;s mlthd;!; JifapDlk; Tljyhf U:/25.000-= nrh;j;J ,ul;og;g[j; jifia 2. 3 yf;fkpl;lth;fSf;F 1 yf;fkpl;lth; bfhLj;Jtpl ntz;oaJ/ my;yJ fpuaj;Jifapy; Kd;gzj;ijf; fHpj;J kPjpf;fpua Jifia nfhh;l;oy; brYj;jpf; fl;lhag; gjpt[ bra;J bfhs;s ,jdhy; 2. 3 yf;fkpl;lth;fSf;F rfy chpika[k; cz;L/ fpuak; xU fpuakhfnth gy fpua';fshfnth 2. 3 egh;fs; TWk; egh; my;yJ egh;fs; bgaUf;F 1 yf;fkpl;lth; Koj;Jf; bfhLf;f ntz;oaJ/ ,e;jg;gof;F ehk; rk;kjpj;J vGjp itj;Jf; bfhz;l fpua xg;ge;jk;/"
Translated version of the above content is given below:
"On this day, the 30th day of September 1987, the deed of agreement of sale executed jointly by three of us, namely (1) M.Nanjappan, S/o.Masthi Gounder, working in L.M.W., and residing at D.No.7/62, Veerapandi Pudur Press Colony (P.O.), Veerapandi Village, Coimbatore Taluk, (2) V.Ramasamy, S/o.Veerasamy, residing at Door No.11/5, Krishna Nagar, 6th Street, K.K.Pudur (P.O.), Coimbatore-38, of the aforesaid Taluk and (3) S.Govindasamy, S/o.Seenivasa Naidu, employed in Mill and residing at Door No.11/122, Vethilai Kanipalayam, is as follows:-
It was negotiated and agreed to sell the property of the 1st party amongst us, as per the deed, which was registered as Document No.1732/1979, in Page Nos.387 to 389 of Book No.1, Volume 630, to and in favour of 2nd and 3rd parties, amongst us, for a sum of Rs.45,000/- free of any encumbrance, and the 1st party amongst us, received Rs.25,000/- in cash as advance, from the 2nd, 3rd parties in the presence of the witnesses mentioned hereunder.
The 2nd, 3rd parties shall pay the 1st party, the remaining sale consideration, within 2= years from today and the 2nd, 3rd parties shall register the sale of the property on their own expenses.
If the 1st party is ready to execute the sale within the aforesaid period of 2= years and the 2nd, 3rd parties fail to execute the sale, the advance amount paid to the 1st party shall be forfeited and this deed of agreement also will stand cancelled.
In the event of the 2nd, 3rd party having come to complete the sale within the stipulated period and the 1st party failing to execute the sale, the first party shall pay the second and third parties the additional amount of Rs.25,000/- along with the advance amount received or the 2nd, 3rd party reserve the absolute rights to pay the remaining sale consideration in the Court after deducting the advance amount and to have compulsory registration.
The first party shall execute the sale either as single deed of sale or multiple deeds of sale in the name of the person or persons mentioned by 2nd, 3rd parties. Accordingly, this is the deed of agreement of sale executed by us, with our consent."
44. Under Ex.A1, registered Document No.2213/1987, in the Office of the Sub Registrar, Periyanaickenpalayam, both the parties have agreed for the sale consideration of Rs.45,000/- for the abovesaid property and that the time for execution of the sale has been fixed as 2= years from 30.09.1987. A sum of Rs.25,000/- has been received as advance on 30.09.1987. As per the recitals, the plaintiffs have to pay the balance sale consideration within 2= years and should register the sale agreement, failing which, the defendant would forfeit the advance and that the sale agreement would come to an end. In default, on the part of the defendant to execute the sale deed, the plaintiffs have to deposit the balance sale consideration in the Court and seek for an appropriate remedy for compulsory registration. 2= years fixed for execution expired on 30.03.1990.
45. Admittedly, before the completion of the period prescribed under Ex.A1, dated 30.09.1987, the parties have entered into another sale agreement under Ex.A2, dated 21.03.1990 with the same conditions. However, there was a condition or option given to the plaintiffs to seek for repayment, when the defendant was not in a position to fulfill his obligation under the agreement of sale, Ex.A2, dated 21.03.1990 . This Court deems it fit to extract the said agreement, which is as follows:
"1990k; tUlk; khh;r; khjk; 21e; njjp nfhaKj;J}h; jhYf;fh tPughz;o fpuhkk; tPughz;og;g[J}h; gpu!;fhydp (p.o.) 7/62/ be/ tPl;oy; trpj;J tUk; kh!;jp ft[z;lh; mth;fs; Fkhuh; L.M.W.tpy; gzpg[hpa[k; M.e";rg;gd; (1) nkw;go jhY}f;fh nfhit-38. K.K.g[J}h; (p.o.) 6tJ bjU fpUc&;zh efh; 11-5 be/ tPl;oy; trpj;J tUk; tPuhrhkp khuh; V.uhkrhkp (2) nkw;go jhY}f;fh nfhit-31/ Fulk;ghisak; fpuhkk; uhf;fpghisak; (p.o.) btj;jpiyf; fhdpghisak; 11-122 be/ tPl;oy; trpj;J tUk; rPdpthreha[L mth;fs; Fkhuh; kpy; ntiy S.nfhtpe;jrhkp (3) Mfpa ehk; K:tUk; nrh;e;J vGjp itj;Jf;bfhz;l fpua xg;ge;j fhy bfL ePog;g[ xg;ge;jk; vd;dbtd;why;/ ek;kdpy; 1 yf;fkpl;ltUf;F 1732/1979 bek;guhfg; gjpt[ bra;ag;gl;lij 2. 3 yf;fkpl;lth;fSf;F U:/45.000-=f;F fpuak; bra;J bfhLg;gjhf ngrp xg;g[f; bfhz;L 30/09/1987y; xU fpua vf;hpbkz;l; vGjpf; bfhz;Ls;nshk;/ nkw;go fpua vf;hpbkz;l; bghpaehaf;fd;ghisak; S.R.O., tpy; 1 g[j;jfk; 851 bjhFjp 103 Kjy; 106 tiu gf;f';fspy; 2213-1987 bek;guhf gjpthfa[s;sJ/ nkw;go fpua vf;hpbkz;l;oy; ml;thd;rhf 2. 3 yf;fkpl;lth;fsplkpUe;J 1 yf;fkpl;lth; ml;thd;rhfg; bgw;Wf; bfhz;lJ U:/25.000-=. (U:gha; ,Ugj;ije;jhapuk; kl;Lk;) kPjp fpuaj; bjhifia nkw;go 30/09/1987 njjpapypUe;J 2= tUl fhyj;jpw;Fs; 2. 3 yf;fkpl;lth;fsplkpUe;J 1 yf;fkpl;lth; bgw;Wf; bfhz;L fpuak; Koj;Jf; bfhs;tjhf vGjg;gl;Ls;ssJ/ nkw;go vf;hpbkz;l;oy; fz;Ls;sgo 2. 3 yf;fkpl;lth;fshy; kPJ fpuhaj; bjhifia 1 yf;fkpl;lth; trk; brYj;jp fpuaj;ij Koj;Jf; bfhs;s KoahjhjhYk;. 1 yf;fkpl;ltUk; jw;nghJ tPl;il fhyp bra;aKoahj epiyapy; cs;sjhYk; ehk; K:tUk; rk;kjpj;J 2. 3 yf;fkpl;lth;fsplkpUe;J nkYk; ml;thd;!; bjhifia (U:gha; 15.000-= U:gha gjpide;jhapuk; kl;Lk;) 1 yf;fkpl;thh; fPH;fhZk; rhl;rpfspd; Kd;dpiyapy; buhf;fkhf bgw;Wf; bfhz;L fpuaf;fhyf; bfLit ,d;wpypUe;J nkYk; 3 (K:d;W) tUl';fSf;F ePoj;Jf; bfhz;Ls;nshk;/ nkw;go 3 K:d;W tUl fhyj;jpw;Fs; kPjpf; fpuaj; bjhifia 2. 3 yf;fkpl;lth;fs; 1 yf;fkpl;lth; trk; brYj;jptpl;L 2. 3 yf;fkpl;lth;fs; bgahpnyh mth;fs; nfhUk; egh;fspd; bgahpnyh tpy;y';f Rj;jkhf fpuak; bra;J bfh;ss ntz;oaJ/ Vw;fdnt 2213-1987 bek;guhf gjpt[ bra;ag;gl;l fpua xg;ge;jj;jpy; fz;Ls;s bghJ c&uj;Jf;fs; ,jw;Fk; fl;Lg;gLk; vd;W ehk; K:tUk; rk;kjpj;J vGjp itj;Jf; bfhz;l fpua xg;ge;jj;jpd; fhy bfL ePog;g[ xg;ge;jk;/"
Translated version of the above content is given below:
"On this, the 21st day of March 1990, the agreement for extension of time in respect of the sale agreement jointly made by three of us, namely, (1) M.Nanjappan, S/o.Masthi Gounder, working in L.M.W., residing at D.No.7/62, Veerapandi Pudur Press Colony (P.O.), Veerapandi Village, Coimbatore Taluk, (2) V.Ramasamy, S/o.Veerasamy Marar, residing at Door No.11/5, Krishna Nagar, 6th Street, K.K.Pudur (P.O.), Coimbatore-38, of the aforesaid Taluk and (3) S.Govindasamy, S/o.Seenivasa Naidu, employed in Mill and residing at Door No.11/122, Vethilai Kanipalayam, is as follows:-
It was negotiated and agreed to sell the property of the 1st party amongst us, which was registered as Document No.1732/1979 to 2nd and 3rd parties, amongst us, for a sum of Rs.45,000/- and a deed of sale agreement to that effect was executed on 30.09.1987. The aforesaid deed of agreement of sale was registered in the Office of the S.R.O., Periyanaicken Palayam, as Document No.2213/1987 in Page Nos.103 to 106 of Book No.1, Volume 851. The amount received by the 1st party from the 2nd and 3rd parties as advance in said deed of sale agreement, is Rs.25,000/- (Rupees twenty five thousand only). It has been mentioned therein, that the 1st party shall execute the sale on receiving the balance sale consideration from the 2nd, 3rd parties within 2= years, from the aforesaid date, 30.09.1987.
Since the 2nd and 3rd parties were unable to realise the sale by paying the balance sale consideration to the 1st party, as mentioned in the aforesaid deed of sale agreement, and since the 1st party is also not in a position to vacate the house, at present, the 1st party received a further advance amount of Rs.15,000/- (Rupees fifteen thousand only) in cash from the 2nd, 3rd parties, in the presence of the witnesses hereunder, and thus extend the due date for paying the sale consideration for 3 more years from today.
Further, the 2nd, 3rd parties shall pay the remaining sale consideration to the 1st party, within the aforesaid period of three years, and shall execute the sale either in their favour or in the name of the persons, mentioned by them, free of any encumbrance. All the three of us agree and execute this deed of agreement for extension of time. The general clauses mentioned in the deed of agreement of sale, which has already been registered as document No.2213/1987, will also bind this deed."
46. Reading of Ex.A2, dated 21.03.1990, extracted above, indicates that though a period of 2= years, since 30.09.1987, has been fixed for the performance of the obligation agreed to upon by both the parties, by mutual content, under Ex.A2, the parties have intended to extend the period for execution of the sale agreement. Ex.A2 starts with the following nomenclature, "fpua vf;hpbkd;od; fhy bfL ePog;g[ xg;ge;jk;/" [Extension of time for agreement of sale"]. The schedule mentioned in Ex.A1, dated 30.09.1987, is as follows:
brhj;J tpguk;
nfhaKj;J}h; hpo/ bghpa ehaf;fz;ghisak; rg; o/nfh/jh/ be/4 tPughz;o fpuhkk; fr 352-1 be/fhiy V 1/25/ ,jpy; R.jhnkhjud; g{kpf;F tlf;F/ bjd;tly; 12 mo nuhLf;Fk; fpHf;F/ fr 352-2 be/fhiyf;Fk; bjw;F/ ,jpd; kj;jpapy; fpHnky; ,Ug[wKk; 46 mo bjd;tly; ,Ug[wKk; 94 1-2 mo ,e;j mst[fs; cs;sJ 10 gj;J brz;l; fhypaplKk; nkw;go ,lj;jpy; 300 rJuoapy; fl;lg;gl;lLs;s tpy;iy tPLk; mjd; fjt[ epyt[ fl;Lf;nfhg;g[k; rfpjk;/ nkw;go tPL kz;fyitahy; MdJ/ nkw;go tPl;od; taJ 6 tUl';fs;/ nkw;go brhj;jpd; jw;fhy kjpg;g[ U:/45.000-=/ Translated version of the above content is given below:
"Within the Sub Registration District, Periyanaicken Palayam and Registration District, Coimbatore, the vacant site of an extent of 10 Cents measuring 46 feet, from East to West on both sides and 94= feet, from South to North on both sides, out of the area of an extent of 1.25 acres in Survey No.352/1, No.4, Veerapandi Village, the tiled house constructed in 300 Sq.Ft., in the aforesaid place with its door and door frames. The aforesaid house is constructed with the mixture of mud. The age of the aforesaid house is 6 years and the present value of the aforesaid property is Rs.45,000/-.
The aforesaid property is bounded on the North by the land, belonging to R.Damodharan, on the East by the 12 feet road running from South to North and on the South by the land in Survey No.352/2."
47. In Ex.A2, dated 21.03.1990, Agreement of Sale, the schedule remains the same. Though both the parities have inter alia contended that there is a failure on the either side to perform their part of the contract, within the stipulated time, as per Exs.A1 and A2, the fact remains that both the parties have never intended to end the sale transaction of the schedule mentioned property under Exs.A1 and A2 respectively and that for the purpose of completing the sale, they have again extended the period by another three years from 21.03.1990 to 21.03.1993, subject to the conditions stated in Ex.A2, dated 21.03.1990.
48. Though under Ex.A1, dated 30.09.1987, there is a specific recital, giving an option to the plaintiffs to deposit the balance sale consideration in the Court, in the event of default made by the defendant to execute the sale deed, within the stipulated period of 2= years from 30.09.1987 and insist the defendant to execute the sale deed, liability has also been fastened on the defendant to pay a sum of Rs.25,000/- to the plaintiffs, in addition to the advance amount of Rs.25,000/-, received on the date of execution of Ex.A1, dated 30.08.1987, sale agreement, which the defendant has failed to do so. From the reading of Ex.A2, dated 21.03.1990, it is evident that both the parties have intended to extend the period for fulfilment of their part of the contract under Ex.A1, by a further period of three years from the date of execution of Ex.A2. Though the parties have accused each other in not performing their part of the contract under the earlier agreement, within the stipulated time and that the defendant has also averred that the plaintiffs were not ready and willing to perform their part of the contract, as they did not have the means to pay the balance sale consideration under Ex.A1, dated 30.09.1987, reading of the recitals under Ex.A2, dated 21.03.1990, sale agreement, makes it clear that the defendant was not in a position to shift his residence and execute the sale agreement, within the time stipulated under Ex.A1.
49. Thus, when both the parties were not able to fulfil their obligations under Ex.A1, dated 30.09.1987, by mutual consent, they have voluntarily executed another agreement, under Ex.A2, dated 21.03.1990, extending the period of contract, by three years from 21.03.1990 to 21.03.1993, on the same terms and conditions, agreed to upon by them, under Ex.A1. Indisputably, on the date of execution of the second sale agreement, dated 21.03.1990, the defendant has also received a sum of Rs.15,000/- towards the value of the property.
50. As stated supra, the schedule mentioned property described in the abovesaid sale agreements, is one and the same. The value of the property determined by the parties is also the same. Under Exs.A1 and A2, the plaintiffs have paid a sum of Rs.40,000/- towards advance and that the same is not disputed. Indisputably, sale agreements, Exs.A1 and A2, dated 30.09.1997 and 21.03.1990 respectively, are registered documents on the file of the Office of the Sub Register Periyanayakanpalayam, as Document Nos.2213 of 1987 and 853 of 1990 respectively, executed and registered in the presence of the witnesses, wherein, parties have specifically and intentionally determined the value of the property at Rs.45,000/-, for which, advances have been received by the defendant on 30.08.1987 and 21.03.1990 respectively.
51. There is no dispute that Ex.A3, dated 09.03.1993, third agreement into between the parties, is within the stipulated time of three years, as per Ex.A2. The agreement is for a specific amount of Rs.45,000/- only. But unlike Exs.A1 and A2, stated supra, the third agreement, entered into between the parties is not a registered one. Nevertheless, it is evident from Ex.A3, dated 09.03.1993 that Rs.25,000/- and Rs.15,000/- have been received as advance amount on 30.09.1987 and 21.03.1990 respectively, under Exs.A1 and A2, dated 30.09.1987 and 21.03.1990. Another sum of Rs.2,500/- has also been received by the defendant, as advance amount on 09.03.1993 in the presence of witnesses.
52. The defendant has also acknowledged the receipt of the total advance amount of Rs.42,500/- under three agreements of sale, stated supra and as rightly contended by the learned counsel for the plaintiffs, they have volunteered to execute a sale agreement, within a period of two years from the date of execution of Ex.A3, dated 09.03.1993. As rightly contended by the learned counsel for the plaintiffs, Ex.A3, has also been executed by both the parties, within the stipulated time of three years, for fulfillment of the obligations, by the parties under Ex.A2, dated 21.03.1990.
53. Though Ex.A2, started with a specific nomenclature, "Extension of time for agreement of sale", Ex.A3, Agreement, is a fresh agreement entered into between the parties, by which, the earlier payments made by the plaintiffs, pursuant to Ex.A1 and A2, have been acknowledged by the defendant and wherein, the defendant has also agreed to execute the sale agreement, within two years, on receipt of the balance sale consideration and in the event of failure on the part of the plaintiffs, in not fulfilling their part of the contract, there would be a forfeiture of advance amount and that the agreement of sale, would be unenforceable.
54. Ex.A3, also makes it clear that in the event of the plaintiffs, expressing their readiness and willingness to perform their part of the terms of contract and if the defendant with an intention to refuse or protract execution, then the plaintiffs could remit the balance sale consideration into the Court and seek for enforcement of Ex.A3. The schedule mentioned property in all the three agreements of sale, Exs.A1 to A3, remain the same, ie., vacant land, measuring 10 Cents and constructed portion of tiled house, measuring 300 Sq.Ft. Boundaries are also the same.
55. Thus, it could be seen from the perusal of all the three agreements of sale entered into between the parties, the sale price of the property has been fixed only at Rs.45,000/- and that despite the increase in valuation of the property, the parties have mutually and in unequivocal terms, have intended not to enhance the value of the property, though for some reason or other, the sale agreement could not be executed by the parties. The contention that the defendant had put a construction, to an extent of 1200 Sq.ft., in the year 1980 itself and that the same was not intended to be conveyed to the plaintiffs also, cannot be accepted, for the reason that the defendant has not produced any authentic material or documentary evidence to prove that he had put up a construction of 1200 Sq.ft.
56. As stated supra, there is no change in the description and extent of the suit property, in all the three agreements, besides, the defendant has also not examined any witness to prove that the parties have intended to get the property registered for value of Rs.3 Lakhs, in the year 1987, when the first agreement was entered into between them. Though the defendant had contended that he had put up a construction for 1200 Sq.Ft., the same cannot be accepted for the simple reason that in the schedule mentioned in all the three agreements, the constructed portion of the tiled house has been mentioned only as 310 Sq.Ft. Therefore, the contention of the defendant that the parties have agreed to fix the value of the property at Rs.3 Lakhs and but for the purpose of avoiding the stamp duty, mentioned the same at Rs.45,000/- in all the three agreements, is not supported with any evidence.
57. Both the lower Courts, on appreciation of oral and documentary evidence, have come to the conclusion that there is no change or variation in the sale consideration and also in the schedule of the property, intended to be conveyed and therefore, have rejected the contentions of the defendant. The findings of the Court below on the abovesaid aspects cannot be interfered with in the present second appeal, as no perversity can be inferred.
58. All the three agreements have been entered into between the parties with sound state of mind and that the only question remains to be considered is whether the plaintiffs were ready and willing to perform their part of the contract, by making a balance amount of Rs.2,500/-, within two years from the date of execution of Ex.A3, dated 09.03.1993 and in the event of failure, approached the Court of competent jurisdiction. There is no dispute that within the expiry of two years period, under Ex.A5, suit notice has been issued to the defendant and that the execution of the sale agreement has been denied by the defendant.
59. Going through the material on record, this Court is of the view that the plaintiffs have established a case for specific performance. The conduct of the parties clearly prove that they wanted the sale to be completed and it is not the intention to put an end to the transactions. There is no proof that the defendant came forward to retun the advance amount, received by him. On the contrary, every time, when there was an extension, he has received the balance sale consideration voluntarily. Escalation in price cannot be the reason for denying to perform the contractual obligations.
60. There is no perversity in the judgment of the lower appellate Court. The discretion has been properly exercised. The substantial questions of law are answered against the appellant. There shall be a decree in the same terms as ordered by the lower appellate Court. The second appeal is dismissed. No costs.
17.11.2011 Index: Yes Internet: Yes skm To
1. The 1st Additional District Judge, Coimbatore.
2. The Subordinate Judge, Coimbatore.
S. MANIKUMAR, J.
skm S.A.No.332 of 2005 17.11.2011